File No. 33-8746
ICA No. 811-4840
As filed with the Securities and Exchange Commission on February 28, 1997
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 16
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 18
THE TOCQUEVILLE TRUST
(Exact Name of Registrant as Specified in Charter)
1675 Broadway
New York, New York 10019
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 698-0800
Francois D. Sicart
President
The Tocqueville Trust
1675 Broadway
New York, New York 10018
(Name and Address of Agent for Service)
Copies to:
Susan J. Penry-Williams, Esq.
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, New York 10022
It is proposed that this filing will become effective (check appropriate box)
[x] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective
date for a previously filed post-effective amendment.
Indefinite number of Shares registered under Rule 24f-2 by filing of initial
registration statement, effective January 7, 1987. Pursuant to paragraph (b)(1)
of Rule 24f-2, Registrant filed on December 26, 1996 a Rule 24f-2 Notice for the
fiscal year ended October 31, 1996.
<PAGE>
THE TOCQUEVILLE TRUST
Registration Statement on Form N-1A
CROSS REFERENCE SHEET
The Tocqueville Fund
The Tocqueville Asia-Pacific Fund
The Tocqueville International Value Fund
The Tocqueville Small Cap Value Fund
The Tocqueville Government Fund
Form N-1A
Item Number
- -----------
Part A Prospectus Caption
- ------ ------------------
1. Cover Page
2. Highlights; Fee Table
3. Selected Financial Information
4. Organization and Description of Shares of the Trust;
Investment Objective, Policy and Risks; Additional
Investment Policies and Risks
5.(a)(b)(c) Investment Advisor and Investment Advisory Agreement(s)
(d) Distribution Plans
(e) Custodian, Transfer Agent and Dividend Paying Agent
(f) Investment Advisor and Investment Advisory Agreement(s)
(g) Brokerage Allocation
5A Performance Calculation
6.(a) Organization and Description of Shares of the Trust
(b) Investment Advisor and Investment Advisory Agreement(s)
(c) Organization and Description of Shares of the Trust
(d) Purchase of Shares; Redemption of Shares
(e) Cover Page
(f)(g) Dividend Distribution and Tax Matters
7.(a)(b) Purchase of Shares
(c) Purchase of Shares
(d) Purchase of Shares
(e) *
(f) Distribution Plan
8. Redemption of Shares
9. *
- 2 -
<PAGE>
Part B Statement of Additional Information Caption
- ------ -------------------------------------------
10. Cover Page
11. Table of Contents
12. *
13. Investment Objective, Policy and Risks; Investment
Restrictions
14. Management
15. General Information
16.(a)(b) Investment Advisor and Investment Advisory Agreements
(c) *
(d) *
(e) *
(f) Distribution Plans
(g) *
(h) See Prospectus
(i) *
17.(a) Portfolio Transactions and Brokerage
(b) *
(c) Portfolio Transactions and Brokerage
(d) *
(e) *
18. General Information
19.(a) Purchase and Redemption of Shares
(b) Computation of Net Asset Value
(c) *
20. Tax Matters
21. Distribution Plans
22. Performance Calculation
23. Financial Statements
Part C Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.
- --------------------------
* Not Applicable
- 3 -
<PAGE>
THE TOCQUEVILLE TRUST
THE TOCQUEVILLE FUND
THE TOCQUEVILLE SMALL CAP VALUE FUND
THE TOCQUEVILLE INTERNATIONAL VALUE FUND
THE TOCQUEVILLE GOVERNMENT FUND
The Tocqueville Trust (the "Trust") is a Massachusetts business trust
currently consisting of five separate funds (each, a "Fund," and collectively,
the "Funds"), four of which are offered through this Prospectus. The following
Funds are open-end, diversified management investment companies with the
following investment objectives:
THE TOCQUEVILLE FUND -- This Fund's investment objective is long-term
capital appreciation primarily through investments in securities of
United States issuers. There is minimal emphasis on current income.
THE TOCQUEVILLE SMALL CAP VALUE FUND -- This Fund's investment
objective is long-term capital appreciation primarily through
investments in securities of small capitalization United States
issuers. For purposes of this prospectus, a small capitalization issuer
is a company with market capitalization of less than $1 billion. There
is minimal emphasis on current income.
THE TOCQUEVILLE INTERNATIONAL VALUE FUND -- This Fund's investment
objective is long-term capital appreciation consistent with
preservation of capital primarily through investments in securities of
non-U.S. issuers.
THE TOCQUEVILLE GOVERNMENT FUND - This Fund's investment objective is
to provide high current income consistent with the maintenance of
principal and liquidity through investments in obligations issued or
guaranteed by the U.S. Treasury, agencies of the U.S. Government or
instrumentalities that have been established or sponsored by the U.S.
Government.
Tocqueville Asset Management L.P. provides each Fund with investment
advisory and certain administrative services. This Prospectus sets forth
concisely the information that a prospective investor should know before
investing in shares of each Fund and should be read and retained for future
reference. A Statement of Additional Information, dated February 28, 1997,
containing additional information about each Fund has been filed with the
Securities and Exchange Commission and is hereby incorporated by reference into
this Prospectus. A copy of the Statement of Additional Information can be
obtained without charge by calling 1-800-697-3863 or writing the Trust at c/o
Firstar Trust Company, P.O. Box 701, Milwaukee, Wisconsin 53201-0701.
-----------------
INVESTMENTS IN THE FUNDS ARE SUBJECT TO RISK -- INCLUDING POSSIBLE LOSS
OF PRINCIPAL -- AND WILL FLUCTUATE IN VALUE. SHARES OF THE FUNDS ARE NOT BANK
DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY A BANK AND ARE NOT
INSURED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED BY THE U.S. GOVERNMENT, THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
AGENCY.
-----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-----------------
The date of this Prospectus is February 28, 1997.
<PAGE>
TABLE OF CONTENTS
Page
Highlights ...................................................................
Fee Table.....................................................................
Financial Highlights........................................................
Performance Calculation.......................................................
Investment Objective, Policies and Risks......................................
Additional Investment Policies and Risk
Considerations..............................................................
Investment Advisor and Investment
Advisory Agreements.........................................................
Distribution Plans............................................................
Administrative Services Agreements............................................
Brokerage Allocation..........................................................
Purchase of Shares............................................................
Initial Sales Charges.........................................................
Purchases at Net Asset Value..................................................
Reduced Initial Sales Charges.................................................
Methods of Payment............................................................
Redemption of Shares..........................................................
Shareholder Privileges........................................................
Dividends, Distributions and Tax Matters
Organization and Description of Shares of
the Trust...................................................................
Custodian, Transfer Agent and Dividend
Paying Agent................................................................
Counsel and Independent Accountants...........................................
Shareholder Inquiries.........................................................
Other Information.............................................................
-----------------
<PAGE>
HIGHLIGHTS
WHAT IS THE TOCQUEVILLE TRUST?
The Tocqueville Trust, a business trust formed under the laws of the
Commonwealth of Massachusetts, is currently comprised of five series. The
Tocqueville Fund, The Tocqueville Small Cap Value Fund, The Tocqueville
Asia-Pacific Fund, The Tocqueville International Value Fund and The Tocqueville
Government Fund are each open-end, diversified management investment companies,
as defined by the Investment Company Act of 1940, as amended (the "1940 Act").
Shares of each Fund may be purchased at a price equal to the next determined net
asset value per share plus a charge which may be imposed at the time of
purchase. As open-end investment companies, the Funds have an obligation to
redeem their respective shares held by an investor at the net asset value of the
shares next determined after receipt of a redemption request in proper form.
(See "Organization and Description of Shares of the Trust.")
WHAT IS THE TOCQUEVILLE FUND AND HOW IS ITS INVESTMENT OBJECTIVE ACHIEVED?
The Tocqueville Fund is an open-end, diversified management investment
company whose investment objective is long-term capital appreciation primarily
through investments in securities of United States issuers. The Fund will invest
in common stocks of companies that are considered by its investment advisor to
be out of favor and undervalued in relation to their potential growth or earning
power. The Fund does not intend to engage on an ongoing basis in short-term
trading. (See "Investment Objective, Policies and Risks.")
WHAT IS THE TOCQUEVILLE SMALL CAP VALUE FUND AND HOW IS ITS INVESTMENT OBJECTIVE
ACHIEVED?
The Tocqueville Small Cap Value Fund is an open-end, diversified
management investment company whose investment objective is long-term capital
appreciation primarily through investments in securities of small capitalization
United States issuers. The Fund will invest substantially all and normally no
less than 65% of its total assets in a diversified portfolio consisting of
common stocks of small capitalization United States companies that are
considered by the Investment Advisor to be strong proprietary businesses, to be
either out of favor or less well known in the financial community, or to be
undervalued in relation to either their potential long-term growth or earning
power. The Fund does not intend to engage on an ongoing basis in short-term
trading. A small capitalization issuer is a company with market capitalization
of less than $1 billion. (See "Investment Objective, Policies and Risks.")
WHAT IS THE TOCQUEVILLE INTERNATIONAL VALUE FUND AND HOW IS ITS INVESTMENT
OBJECTIVE ACHIEVED?
The Tocqueville International Value Fund is an open-end, diversified
management investment company which seeks long-term capital appreciation
consistent with preservation of capital primarily through investments in
securities of non-U.S. issuers. The Fund will invest in securities of companies
that are considered by its investment advisor to be out of favor and undervalued
in relation to their potential growth or earning power. The Fund will invest at
least 65% of its total assets in securities of issuers located in at least three
different countries outside the United States, including common stock,
investment grade debt convertible into common stock, depository receipts for
these securities and warrants. The Fund does not intend to engage on an ongoing
basis in short-term trading. (See "Investment Objective, Policies and Risks.")
<PAGE>
WHAT IS THE TOCQUEVILLE GOVERNMENT FUND AND HOW IS ITS INVESTMENT OBJECTIVE
ACHIEVED?
The Tocqueville Government Fund is an open-end, diversified management
investment company whose investment objective is to provide high current income
consistent with the maintenance of principal and liquidity through investments
in obligations issued or guaranteed by the U.S. Treasury, agencies of the
U.S.Government or instrumentalities that have been established or sponsored by
the U.S. Government.
The Fund will invest at least 65% of its assets in short and
intermediate-term securities backed by the full faith and credit of the
U.S.Government as well, as in repurchase agreements collateralized by such
securities. Also, at least 50% of the Fund's assets will be invested in
U.S.Treasury bills, notes and bonds, as well as in repurchase agreements
collateralized by such securities. The dollar-weighted average maturity of the
Fund is expected to range from 0 to 12 years.
The balance of the Fund's assets may be invested in obligations issued
or guaranteed by the U.S. Treasury, agencies of the U.S. Government or
instrumentalities that have been established or sponsored by the U.S.
Government, as well as in repurchase agreements collateralized by such
securities. The Fund may also invest in bond (interest rate) futures and options
to a limited extent. (See "Investment Objective, Policies and Risks.")
WHO MANAGES THE FUNDS?
Tocqueville Asset Management L.P. (the "Investment Advisor") serves as
each Fund's investment advisor pursuant to an Investment Advisory Agreement.
Under the terms of each Agreement, the Investment Advisor supervises all aspects
of a Fund's operations and provides investment advisory services. As
compensation, the Investment Advisor receives a fee based on each Fund's average
daily net assets. The Investment Advisor also is engaged in the business of
acting as investment advisor to private accounts with combined assets of more
than $600 million. (See "Investment Advisor and Investment Advisory
Agreements.")
DISTRIBUTION PLANS
Each Fund has adopted a distribution plan, pursuant to Rule 12b-1 of
the 1940 Act, that allows a Fund to incur distribution expenses related to the
sale of its shares of up to .25% per annum of the Fund's average daily net
assets. (See "Distribution Plans").
SPECIAL RISK CONSIDERATIONS
An investor should be aware that there are risks associated with
certain investment techniques and strategies employed by the Funds, including
those relating to investments in foreign securities and option transactions. In
addition, an investor in The Tocqueville Small Cap Value Fund should be aware
that investments in small capitalization issuers may be more volatile than
investments in issuers with market capitalization greater than $1 billion due to
the lack of diversification in the business activities, and corresponding
greater susceptibility to changes in the business cycle of small capitalization
issuers. An investor in The Tocqueville Government Fund should be aware that the
net asset value of the Fund will fluctuate as general levels of interest rates
fluctuate. When interest rates decline, the net asset value of the Fund can be
expected to rise, and, conversely, when interest rates rise, the net asset value
of the Fund can be expected to fall. (See "Investment Objective, Policies and
Risks" and "Additional Investment Policies and Risk Considerations.")
-2-
<PAGE>
FEE TABLE
<TABLE>
<CAPTION>
TOCQUEVILLE SMALL CAP INTERNATIONAL GOV'T
FUND VALUE FUND VALUE FUND FUND
---- ---------- ---------- ----
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load on Purchases....... 4.00% 4.00% 4.00% 4.00%
Maximum Sales Load Imposed on
Reinvested Dividends............... None None None None
Maximum Deferred Sales Load........... None None None None
Redemption Fee*.......................
Exchange Fee**........................
ANNUAL FUND OPERATING EXPENSES:
(as a % of average net assets)
Management Fee........................ .75% .75% 1.00% .50%
12b-1 Fee(1).......................... .25% .25% .25% .25%
Other Expenses........................ .40% .75% .75% .25%
------ ------ ------ -----
Total Operating Expenses....................... 1.40%(2) 1.75%(2) 2.00(2) 1.00%(3)
</TABLE>
- ----------
(1) Under each Fund's Distribution Plan, the Advisor is permitted to carry
forward expenses not reimbursed by the distribution fee to subsequent
fiscal years for submission by the Fund for payment, subject to the
continuation of the Plan. Such amounts are not recognized in the Fund's
financial statements as expenses and liabilities, since the Distribution
Plan can be terminated on an annual basis without further liability to the
Fund. The Rule 12b-1 fee may represent the equivalent of an annual
asset-based sales charge to an investor. As a result of distribution fees,
a long-term shareholder in the Funds may pay more than the economic
equivalent of the maximum front-end sales charge permitted by the Rules of
the National Association of Securities Dealers, Inc.
(2) Total Operating Expenses reflect the voluntary waiver and/or the
reimbursement of certain expenses. Absent such voluntary waiver and/or
reimbursement, Other Expenses and Total Operating Expenses for each Fund
would be: Tocqueville Fund: .65% and 1.65%, respectively; Tocqueville Small
Cap Value Fund: 1.69% and 2.69%, respectively; and Tocqueville
International Value Fund: 1.28% and 2.53%, respectively. The Advisor has
voluntarily undertaken to waive and/or reimburse expenses during the
current fiscal year so that Total Fund Operating Expenses do not exceed
those stated in the Fee Table. Should the Advisor decide during the current
fiscal year that such waiver and/or reimbursement cannot be maintained,
shareholders will receive 30 days notice of the change.
(3) Tocqueville Government Fund's operating expenses will be capped at 1%
through November 29, 1999. Without voluntary fee waivers, deferrals and/or
expense reimbursements, Other Expenses would be 1.97% and Total Operating
Expenses would be 2.72%.
* The Transfer Agent charges a $12 service fee for each payment of redemption
proceeds made by wire.
** The Transfer Agent charges a $5 fee for each telephone exchange.
-3-
<PAGE>
EXAMPLE: You would pay the following expenses on a $1000 investment, assuming
(1) 5% annual return and (2) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Tocqueville Fund $54 $ 83 $114 $201
Tocqueville Small Cap Value Fund $57 $ 93 $131 $238
Tocqueville International Value Fund $59 $100 $143 $263
Tocqueville Government Fund $50 $ 71 $ 93 $158
</TABLE>
The purpose of the expense summary provided above is to assist
investors in understanding the various costs and expenses that a shareholder in
a Fund will bear directly or indirectly. The "Annual Fund Operating Expenses"
summary shows the management fee, Rule 12b-1 fee, and other operating expenses
expected to be incurred by each Fund during the current fiscal year. The
"Example" set forth above assumes all dividends and other distributions are
reinvested and that the percentages under "Annual Fund Operating Expenses"
remain the same in the years shown. The example includes the initial sales
charge.
These examples should not be considered a representation of past or
future expenses and actual expenses may be greater or lesser than those shown.
-4-
<PAGE>
FINANCIAL HIGHLIGHTS
The tables below set forth certain financial information with respect
to the financial highlights for the Funds for the periods indicated. The
information below has been derived from financial statements audited by
McGladrey & Pullen, LLP as independent accountants for the Trust, whose reports
thereon, together with the financial statements of the Funds, are incorporated
by reference into the Statement of Additional Information. The information set
forth below is for a share outstanding of each Fund for each period indicated.
THE TOCQUEVILLE FUND
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Per share operating performance
(For a share outstanding throughout the
period)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........ $14.07 $13.74 $13.67 $11.83 $11.33
------ ------ ------ ------ ------
Income (loss) from investment operations:
Net investment income (loss) ............ 0.07 0.15 0.12 0.11 0.17
Net realized and unrealized gain (loss) 2.92 1.70 0.88 2.55 1.33
---- ---- ---- ---- ----
Total from investment operations ..... 2.99 1.85 1.00 2.66 1.50
---- ---- ---- ---- ----
Less distributions:
Dividends from net investment income .... (0.15) (0.11) (0.14) (0.16) (0.36)
Distributions from net realized gains ... (1.06) (1.41) (0.79) (0.66) (0.64)
----- ----- ----- ----- -----
Total Distributions .................. (1.21) (1.52) (0.93) (0.82) (1.00)
----- ----- ----- ----- -----
Change in net asset value for the period .... 1.78 0.33 0.07 1.84 0.50
---- ---- ---- ---- ----
Net asset value, end of period .............. $15.85 $14.07 $13.74 $13.67 $11.83
====== ====== ====== ====== ======
Total Return(a) ............................. 22.7% 16.0% 7.7% 23.7% 14.9%
Ratios/supplemental data:
Net assets, end of period (000) ............. $42,414 $33,438 $29,140 $27,745 $19,496
Ratio to average net assets :
Expenses(b) ............................ 1.49% 1.54% 1.54% 1.56% 1.74%
Net investment income(b) ................ .44% 1.07% 0.87% 0.96% 1.44%
Portfolio turnover rate ..................... 48% 47% 52% 64% 89%
Average commission rate paid(c) ............. $.0596
YEAR ENDED OCTOBER 31,
1991 1990 1989 1988 1987**
---- ---- ---- ---- ------
Per share operating performance
(For a share outstanding throughout the
period)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........ $10.21 $11.33 $9.98 $8.63 $10.00
------ ------ ----- ----- ------
Income (loss) from investment operations:
Net investment income (loss) ............ 0.33 0.56 0.33 0.08 --
Net realized and unrealized gain (loss) 1.41 (0.90) 1.29 1.68 (1.37)
---- ----- ---- ---- -----
Total from investment operations ..... 1.74 (0.34) 1.62 1.76 (1.37)
---- ----- ---- ---- -----
Less distributions:
Dividends from net investment income .... (0.51) (0.37) (0.06) (0.02) --
Distributions from net realized gains ... (0.11) (0.41) (0.21) (0.39) --
----- ----- ----- -----
Total Distributions .................. (0.62) (0.78) (0.27) (0.41) --
----- ----- ----- -----
Change in net asset value for the period .... 1.12 (1.12) 1.35 1.35 (1.37)
---- ----- ---- ---- -----
Net asset value, end of period .............. $11.33 $10.21 $11.33 $9.98 $8.63
====== ====== ====== ===== =====
Total Return(a) ............................. 17.7% (3.4)% 16.7% 21.1% (13.70)%
Ratios/supplemental data:
Net assets, end of period (000) ............. $17,388 $13,377 $17,014 $15,515 $9,477
Ratio to average net assets :
Expenses(b) ............................ 1.96% 1.61% 1.70% 2.09% 2.50%
Net investment income(b) ................ 3.38% 4.71% 2.86% 0.85% (0.03)%*
Portfolio turnover rate ..................... 97% 125% 34% 65% 73%
Average commission rate paid(c) .............
</TABLE>
- -------------------
(a) Does not include maximum initial sales charge of 4.00%.
(b) Net of fees waived amounting to 0.16%, 0.02%, 0.61% and 0.16% of average
net assets, for the periods ended October 31, 1996, 1995, 1988 and 1987,
respectively.
(c) Average per share amounts of brokerage commissions on portfolio
transactions. Required by regulations issued in 1995.
* Annualized.
** From commencement of operations, January 13, 1987.
-5-
<PAGE>
THE TOCQUEVILLE SMALL CAP VALUE FUND
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED OCTOBER 31, AUGUST 1, 1994
1996 1995 TO OCTOBER 31, 1994
---- ---- -------------------
<S> <C> <C> <C>
Per share operating performance
(For a share outstanding throughout the period)
Net asset value, beginning of period............ $11.91 $10.22 $10.00
------ ------ ------
Income (loss) from investment operations:
Net investment income (loss).................. (0.10) (0.05) 0.02
Net realized and unrealized gain (loss)........ 2.33 1.96 0.20
------ ------- ------
Total from investment operations....... 2.23 1.91 0.22
------ ------- ------
Less Distributions:
Dividends from net investment income............ -- (0.03) --
Distributions from net realized gains.......... (0.77) (0.19) --
------ --------- ------
Total Distributions.................... (0.77) (0.22) --
------ --------- ------
Change in net asset value for the period................. 1.46 1.69 0.22
------ -------- ------
Net asset value, end of period........................... $13.37 $ 11.91 $10.22
====== ======= ======
Total Return(a).......................................... 19.7% 19.2% 2.2%
Ratios/supplemental data:
Net assets, end of period (000).......................... $11,545 $9,383 $6,755
Ratio to average net assets :
Expenses(b)..................................... 2.36% 2.50% 2.08%*
Net investment income(b)....................... (1.18)% (0.53)% 0.85%*
Portfolio turnover rate................................. 107% 88% 9%
Average commission rate paid(c) $.0599
</TABLE>
- --------------------
(a) Does not include maximum initial sales charge of 4.00%. For the period
ended October 31, 1994, not annualized.
(b) Net of fees waived amounting to 0.33%, 0.33% and 0.75% of average net
assets for the periods ended October 31, 1996, 1995, and 1994,
respectively.
(c) Average per share amounts of brokerage commissions on portfolio
transactions. Required by regulations issued in 1995.
* Annualized.
-6-
<PAGE>
THE TOCQUEVILLE INTERNATIONAL VALUE FUND(1a/c)
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED OCTOBER 31, AUGUST 1, 1994
1996 1995 TO OCTOBER 31, 1994
---- ---- -------------------
<S> <C> <C> <C>
Per share operating performance
(For a share outstanding throughout the period)
Net asset value, beginning of period .............. $10.83 $10.02 $10.00
------ ------ ------
Income (loss) from investment operations:
Net investment income (loss) ..................... 0.16 (0.01) (0.04)
Net realized and unrealized gain (loss) .......... 1.58 0.82 0.06
------ ------ ------
Total from investment operations .............. 1.74 0.81 0.02
---- ------ ------
Less Distributions:
Dividends from net investment income............... -- -- --
Distributions from net realized gains ............. -- -- --
------ ------ ------
Total Distributions .......................... -- -- --
------ ------ ------
Change in net asset value for the period ............. 1.74 0.81 0.02
------ ------ ------
Net asset value, end of period ....................... $12.57 $10.83 $10.02
====== ====== ======
Total Return(b) ...................................... 16.1% 8.1% 0.2%
Ratios/supplemental data:
Net assets, end of period (000) ...................... $23,932 $6,270 $2,516
Ratio to average net assets:
Expenses(c) ....................................... 1.98% 4.43% 6.18%(e)
Net investment income(c) .......................... 1.45% (0.53)% (2.47%)(e)
Portfolio turnover rate ............................. 135% 109% 0%
Average commission rate paid(d) ...................... $.0040
</TABLE>
- --------------------
(a) Effective February 28, 1997, The Tocqueville Europe Fund changed its
investment objective and policies to invest primarily in the securities
of non-U.S. issuers as described in this Prospectus. In addition, the
name of the Fund was changed to The Tocqueville International Value Fund.
(b) Does not include maximum initial sales charge of 4.00%.
(c) Net of fees waived amounting to .55%, 1.28% and 1.00% of average net
assets for the periods ended October 31, 1996, 1995, and 1994,
respectively.
(d) Average per share amounts of brokerage commissions on portfolio
transactions. Required by regulations issued in 1995.
(e) Annualized.
-7-
<PAGE>
THE TOCQUEVILLE GOVERNMENT FUND
<TABLE>
<CAPTION>
PERIOD FROM
SEPTEMBER 4, 1995
YEAR ENDED TO OCTOBER 31,
OCTOBER 31, 1996 1995
---------------- ----
<S> <C> <C>
Per share operating performance
(For a share outstanding throughout the period)
Net asset value, beginning of period...................... $ 10.05 $ 10.00
------- -------
Income (loss) from investment operations:
Net investment income (loss).............................. 0.49 0.05
Net realized and unrealized gain (loss)................... 0.08 0.05
------- ------
Total from investment operations....................... 0.57 0.10
------- ------
Less Distributions:
Dividends from net investment income...................... (0 .49) (0.05)
Distributions from net realized gains..................... -- --
------- -------
Total distributions.................................... (0.49) (0.05)
-------- --------
Change in net asset value for the period...................... $ 0.08 0.05
------- -------
Net asset value, end of period............................ $ 10.13 $ 10.05
======= =======
Total Return (a).............................................. 5.9% 6.3%(c)
Ratios/supplemental data:
Net assets, end of period..................................... $9,788 $6,506
Ratio to average net assets :
Expenses(b)............................................... 1.47% 2.74%(c)
Net investment income(b)................................. 4.94% 3.08%(c)
Portfolio turnover rate....................................... 85% 0%
</TABLE>
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(a) Does not include maximum initial sales charge of 4.00%.
(b) Net of fees waived amounting to 1.25% and 0.77% of average net assets for
the periods ended October 31, 1996 and 1995, respectively.
(c) Annualized.
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PERFORMANCE CALCULATION
Each Fund calculates performance on a total return basis for various
periods. The total return basis combines changes in principal and dividends and
distributions for the periods shown, as well as the deduction of all charges and
expenses. The total return basis reflects the deduction of the maximum initial
sales charge at the time of purchase. Principal changes are based on the
difference between the beginning and closing net asset value for the period.
Calculations assume reinvestment of all dividends and distributions paid by each
Fund. Dividends and distributions are comprised of net investment income and net
realized capital gains, respectively. In addition, each Fund may calculate
performance on a total return basis at net asset value.
Performance will vary from time to time and past results are not
necessarily representative of future results. A shareholder should remember that
performance is a function of portfolio management in selecting the type and
quality of portfolio securities and is affected by operating expenses.
Comparative performance information may be used from time to time in
the advertising or marketing of each Fund's shares, including data from Lipper
Analytical Services, Inc. and Morningstar Mutual Funds. Such comparative
performance information will be stated in the same terms in which the
comparative data and indices are stated. All advertisements of a Fund will
disclose the maximum sales charge to which investments in shares of the Fund may
be subject.
The Tocqueville Government Fund will provide 30-day "yield" quotations.
The "yield" quotations of the Fund will be based upon net investment income
earned by the Fund over a thirty day or one month period (which period shall be
stated in any advertisement or communication with a shareholder). The "yield" is
then "annualized" by assuming that the income generated over the period will be
generated over a one year period. A "yield" quotation, unlike a total rate of
return quotation, does not reflect changes in net asset value.
INVESTMENT OBJECTIVE, POLICIES AND RISKS
Each Fund's investment objective is fundamental and may not be changed
without a vote of the holders of a majority of its outstanding voting securities
(as defined in the Statement of Additional Information). There can be no
assurance that a Fund will achieve its investment objective.
THE TOCQUEVILLE FUND
The investment objective of The Tocqueville Fund is long-term capital
appreciation. Toward this end the Fund invests in a diversified portfolio
consisting of common stocks of United States companies that are considered by
the Investment Advisor to be out of favor and undervalued in relation to their
potential growth or earning power. Generally, stocks which have under performed
market indices such as Standard & Poor's Composite Index for at least one year
and companies which have a historically low stock price in relation to such
factors as sales, potential earnings or underlying assets will be considered by
the Investment Advisor to be out of favor. The Investment Advisor searches for
companies based on its judgment of relative value and growth potential. The
potential growth and earning power of a company will be evaluated by the
Investment Advisor either on the basis of past growth and profitability, as
reflected in their financial statements, or on the Investment Advisor's
conclusion that the company has achieved better results than similar companies
in a depressed industry which the Investment Advisor believes will improve
within the next two years. There is no assurance that the Investment Advisor's
evaluation will be accurate in its selection of stocks for the Fund's portfolio
or that the Fund's objective will be achieved. If the stocks in which the Fund
invests never attain their perceived potential or the valuation of such stocks
in the marketplace does not in fact reflect significant undervaluation, there
may be little or no appreciation or a depreciation in the value of such stocks.
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<PAGE>
The Fund may invest up to 25% of its total assets in common stock of
foreign companies which are traded in the United States or purchase American
Depository Receipts (ADRs). The Fund also may invest up to 10% of its total
assets in gold bullion from U.S. institutions. Gold bullion assists the Fund in
its goal of capital appreciation because the price of gold bullion tends to rise
during periods of economic or political instability. In addition, the Fund may
invest up to 5% of its net assets in repurchase agreements which are fully
collateralized by obligations of the U.S. Government or U.S. Government
agencies. The Fund may also invest up to 5% of its total assets in debt
instruments convertible into common stock. The Fund may, from time to time,
borrow up to 10% of the value of its total assets from banks at prevailing
interest rates as a temporary measure for extraordinary or emergency purposes.
The Fund may not purchase securities while borrowings exceed 5% of the value of
its total assets.
Special Considerations. The Investment Advisor will manage the Fund's
portfolio to assure that the Fund will not acquire or dispose of gold bullion if
such acquisition or disposition would risk the Fund's status as a regulated
investment company under the Internal Revenue Code. In general, the Fund could
fail to qualify as a regulated investment company if the Fund derived 10% or
more of its gross income from gains from sales or other dispositions of gold
bullion. The Fund may be required to make less than optimal investment
decisions, including foregoing the opportunity to realize gains, if necessary to
permit the Fund to qualify as a regulated investment company. In addition, the
Fund's investments in gold bullion subject the Fund to the following risks: the
price of gold bullion may be subject to wide fluctuation; the market for gold
bullion is relatively limited; the sources of gold bullion are concentrated in
countries with potential instability; and currently the market for gold bullion
is unregulated. Investments in gold bullion will cause the Fund to incur
additional costs for insurance, shipping and storage.
THE TOCQUEVILLE SMALL CAP VALUE FUND
The Tocqueville Small Cap Value Fund's investment objective is
long-term capital appreciation primarily through investments in securities of
small capitalization United States issuers. While the Fund expects to receive
some dividends and interest from its portfolio investments, income generation is
only an incidental objective of the Fund. In the pursuit of its objective, the
Fund intends to invest substantially all and normally no less than 65% of its
total assets in a diversified portfolio consisting of common stocks of small
capitalization United States companies that are considered by the Investment
Advisor to be strong proprietary businesses, to be either out of favor or less
well known in the financial community, or to be undervalued in relation to
either their potential long-term growth or earning power. Companies with market
capitalizations of less than $1 billion are deemed to have a small
capitalization and to be generally less well known. Generally, stocks which have
underperformed market indices such as the Standard & Poor's Composite Index for
at least one year and companies which have a historically low stock price in
relation to such factors as sales, potential earnings or underlying assets will
be considered by the Investment Advisor to be out of favor. Strong proprietary
businesses generally have some but not necessarily all of the following
characteristics: capable management; good finances; strong manufacturing; broad
distribution; and, lastly, products which are somewhat differentiated from their
competitors.
The Investment Advisor will identify companies that are undervalued
based on its judgment of relative value and growth potential. The growth
potential and earning power of a company will be evaluated by the Investment
Advisor on the basis of past growth and profitability, as reflected in its
financial statements, on the basis of potential new products resulting from
research and development spending, or on the Investment Advisor's conclusion
that the company has achieved better results than similar companies in a
depressed industry which the Investment Advisor believes will improve within the
next two years. There is no assurance that the Investment Advisor's evaluation
will be accurate in its selection of stocks for the Fund's portfolio or that the
Fund's objective will be achieved. If the stocks in which the Fund invests never
attain their perceived potential of if the valuation of such stocks in the
marketplace does not in fact reflect significant undervaluation, there may be
little or no appreciation or, instead, a depreciation in the value of such
stocks.
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<PAGE>
In addition, the Fund may invest up to 25% of its total assets in
common stock of small capitalization companies located in developed countries in
Europe and Asia. Such securities will be denominated in foreign currencies and
will be listed on a foreign stock exchange. See "Additional Investment Policies
and Risk Considerations - Risks Associated with Foreign Investments."
The Fund may invest up to 25% of its total assets in common stock of
foreign companies which are traded in the United States or purchase ADRs. The
Fund also may invest: (1) up to 5% of its net assets in repurchase agreements
which are fully collateralized by U.S. Government obligations or obligations of
its agencies or instrumentalities, or short-term money market securities; and
(2) up to 10% of its total assets in investment grade debt instruments
convertible into common stock. The Fund may, from time to time, borrow up to 10%
of the value of its total assets from banks at prevailing interest rates as a
temporary measure for extraordinary or emergency purposes. The Fund, however,
may not purchase securities while borrowings exceed 5% of the value of its total
assets.
Special Considerations. An investor should be aware that investment in
small capitalization issuers carry more risks than issuers with market
capitalization greater than $1 billion. Generally, small companies rely on
limited product lines, financial resources, and business activities that may
make them more susceptible to setbacks or downturns. In addition, the stock of
such companies may be more thinly traded. Accordingly, the performance of small
capitalization issuers may be more volatile.
THE TOCQUEVILLE INTERNATIONAL VALUE FUND
The investment objective of The Tocqueville International Value Fund
is long-term capital appreciation consistent with preservation of capital
primarily through investments in securities of non-U.S. issuers. Toward this end
the Fund invests in a diversified portfolio consisting of common stocks of
companies that are considered by the Investment Advisor to be out of favor and
undervalued in relation to their potential growth or earning power. Generally,
stocks which have under performed market indices for at least one year and
companies which have a historically low stock price in relation to such factors
as sales, potential earnings or underlying assets will be considered by the
Investment Advisor to be out of favor. The Investment Advisor searches for
companies based on its judgment of relative value and growth potential. The
potential growth and earning power of a company will be evaluated by the
Investment Advisor either on the basis of past growth and profitability, as
reflected in their financial statements, or on the Investment Advisor's
conclusion that the company has achieved better results than similar companies
in a depressed industry which the Investment Advisor believes will improve
within the next two years. There is no assurance that the Investment Advisor's
evaluation will be accurate in its selection of stocks for the Fund's portfolio
or that the Fund's objective will be achieved. If the stocks in which the Fund
invests never attain their perceived potential or the valuation of such stocks
in the marketplace does not in fact reflect significant undervaluation, there
may be little or no appreciation or a depreciation in the value of such stocks.
Under normal conditions, at least 65% of the Fund's total assets will be
invested in at least three different countries outside the United States. The
Fund will invest most of its assets in developed countries, although it may
purchase securities of companies located in developing countries . In addition,
the Fund may invest up to 20% of its assets in the United States.
The Fund may, from time to time, borrow up to 10% of the value of its
total assets from banks at prevailing interest rates as a temporary measure for
extraordinary or emergency purposes. The Fund may not purchase securities while
borrowings exceed 5% of the value of its total assets.
Special Considerations. The Tocqueville International Value Fund may
invest in all types of securities, most of which will be denominated in foreign
currencies. Since opportunities for long-term growth are primarily expected from
equity securities, the Fund will normally invest substantially all of its assets
in
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<PAGE>
such securities, including common stock, investment grade debt convertible into
common stock, depository receipts for these securities and warrants. Each Fund
may, however, invest in preferred stock and investment grade debt securities if
the Investment Advisor believes that the capital appreciation available from an
investment in such securities will equal or exceed the capital appreciation
available from an investment in equity securities. The Fund's objective is
capital appreciation, placing emphasis on dividends or interest income only when
it believes that such income will have a favorable influence on the market value
of a security.
All common stock in which the Fund will invest will be listed on a
foreign stock exchange or traded in an over-the-counter market. There is no
minimum capitalization requirement for a security to be eligible for inclusion
in the Fund's portfolio. The Fund will generally purchase securities of medium
to large size companies in the principal international markets, although it may
purchase securities of companies which have a lower market capitalization on the
smaller regional markets.
By investing in foreign securities, the Investment Advisor will attempt
to take advantage of differences between economic trends and performance of
securities markets in various countries. When allocating investments among
individual countries, the Investment Advisor will consider various criteria that
in its view are deemed relevant based on its experience, such as the relative
economic growth potential of the various economies and the performance of
securities markets in the region, expected levels of inflation, government
policies influencing business conditions, and the outlook for currency
relationships. To date, the market values of securities of issuers located in
different countries have moved relatively independently of each other and during
certain periods the return on equity investments in some countries has exceeded
the return on similar investments in the United States. The Investment Advisor
believes that, in comparison with investment companies investing solely in
domestic securities, it may be possible to obtain significant appreciation from
a portfolio of foreign investments and also achieve increased diversification.
The Fund will gain increased diversification by combining securities from
various markets that offer different investment opportunities and are affected
by different economic trends. International diversification reduces the effect
that events in any one country will have on the Fund's entire investment
holdings. Of course, a decline in the value of the Fund's investments in one
country may offset potential gains from investments in another country.
THE TOCQUEVILLE GOVERNMENT FUND
The Tocqueville Government Fund's investment objective is to provide
high current income consistent with the maintenance of principal and liquidity
through investments in obligations issued or guaranteed by the U.S. Treasury,
agencies of the U.S. Government or instrumentalities that have been established
or sponsored by the U.S. Government.
In pursuit of its objective, the Fund intends to invest at least 65% of
its assets in short and intermediate term securities backed by the full faith
and credit of the U.S. Government, as well as in repurchase agreements
collateralized by such securities. Also, at least 50% of the Fund's assets will
be invested in U.S. Treasury bills, notes and bonds, as well as in repurchase
agreements collateralized by such securities. The dollar-weighted average
maturity of the Fund is expected to range from 0 to 12 years.
The balance of the Fund's assets may be invested in obligations issued
or guaranteed by the U.S. Treasury, agencies of the U.S. Government or
instrumentalities that have been established or sponsored by the U.S.
Government, as well as in repurchase agreements collateralized by such
securities. The Fund may also invest in bond (interest rate) futures and options
to a limited extent.
The Fund may invest up to 35% of its assets in Government National
Mortgage Association ("GNMA") pass-through certificates. GNMA pass-through
certificates are mortgage-backed securities representing part ownership of a
pool of mortgage loans. Monthly mortgage payments of both interest and principal
"pass through" from homeowners to certificate investors, such as the Fund. The
Fund reinvests the principal portion
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<PAGE>
in additional securities and distributes the interest portion as income to the
Fund's shareholders. Under normal circumstances, GNMA pass-through certificates
are expected to provide higher yields than U.S. Treasury securities of
comparable maturity.
The mortgage loans underlying GNMA pass-through certificates--issued by
lenders such as mortgage bankers, commercial banks, and savings and loan
associations--are either insured by the Federal Housing Administration (FHA) or
guaranteed by the Veterans Administration (VA). Each pool of mortgage loans must
also be approved by GNMA, a U.S. Government corporation within the U.S.
Department of Housing and Urban Development. Once GNMA approval is obtained, the
timely payment of interest and principal on each underlying mortgage loan is
guaranteed by the "full faith and credit" of the U.S. Government.
Although stated maturities on GNMA pass-through certificates generally
range from 25 to 30 years, effective maturities are usually shorter due to the
prepayment of the underlying mortgages by homeowners. On average, GNMA
pass-through certificates are repaid within 12 years and so are classified as
intermediate-term securities.
The Fund also may invest up to 35% of its assets in: (a) agencies or
instrumentalities of the U.S. Government, including but not limited to: (i)
fixed rate or adjustable rate mortgage-backed securities issued or guaranteed by
the Federal National Mortgage Association ("FNMA") and the Federal Home Loan
Mortgage Corporation ("FHLMC") and (ii) securities issued by the Student Loan
Marketing Association (SLMA) and the Federal Home Loan Bank System ("FHLB"); and
(b) collateralized mortgage obligations ("CMOs"). The Fund will limit its
investments in CMOs to 10% of its portfolio.
FNMA mortgage securities are pass-through mortgage-backed securities
that are issued by FNMA, a U.S. Government sponsored corporation owned by
private stockholders. FNMA mortgage securities are guaranteed as to timely
payment of principal and interest by FNMA but are not backed by the full faith
and credit of the U.S. Government.
FHLMC mortgage securities are mortgage-backed securities representing
interests in residential mortgage loans pooled by FHLMC, a U.S. Government
sponsored corporation. FHLMC mortgage securities are guaranteed as to timely
payment of interest and ultimate collection of principal but are not backed by
the full faith and credit of the U.S. Government.
SLMA securities consist of debt obligations including nonguaranteed
discount notes, short-term floating rate notes, long-term floating rate
securities and fixed-rate securities. SLMA securities are supported by the
ability of SLMA to borrow from the U.S. Government, but are not backed by the
full faith and credit of the U.S. Government.
FHLB securities are debt securities issued in the form of consolidated
bonds and discount notes. FHLB securities are supported by the ability of FHLB
to borrow from the U.S. Government, but are not backed by the full faith and
credit of the U.S. Government.
CMOs are mortgage securities that are collateralized by the original
mortgage loan or mortgage pass-through security and redirect the cash flow of
such loan or pass-through security to the individual bond holders. The cash
flows may show very different market characteristics than the original loan
depending on how the CMO is structured. The Fund may only invest in CMOs that
are backed by the full faith and credit of the U.S. Government, FNMA or FHLMC
and are determined not to be "high-risk" under guidelines issued by the Federal
Financial Institutions Examination Council ("FFIEC"). The test established by
FFIEC determines whether additional capital is required by the institution to
cover potential market risk. In order to qualify as an eligible investment, a
CMO must meet each of the following criteria: (i) the weighted average life
("WAL") is under 10 years; (ii) the WAL cannot shorten more than 6 years or
lengthen more than 4 years in a 300 basis
-13-
<PAGE>
point interest rate movement; and (iii) the price cannot move more than 17% in a
300 basis point interest rate movement. FFIEC requires independent verification
of this test.
Special Considerations. Shares of the Fund are neither insured nor
guaranteed by the U.S. Government or its agencies or instrumentalities.
Moreover, the net asset value of the shares of an open-end investment company
such as the Fund, which invests in fixed income securities, changes as the
general levels of interest rates fluctuate. When interest rates decline, the net
asset value of the Fund can be expected to rise. Conversely, when interest rates
rise, the net asset value of the Fund can be expected to decline and the
expected maturity of its mortgaged backed securities may increase, which will
have the effect of increasing the duration of the Fund's portfolio, resulting in
greater price volatility and investment risk.
Unlike other government securities, mortgage-backed securities are
subject to "prepayment risk" and "extension risk". Prepayment risk is the
possibility that, as interest rates fall, homeowners are more likely to
refinance their home mortgages, thereby repaying the principal prior to the
scheduled payment date to the holders of the securities. The Fund must then
reinvest the unanticipated principal in government or agency securities, at a
time when interest rates are falling. Prepayment risk has two important effects
on the Fund:
o When interest rates fall and additional mortgage payments must be
reinvested at lower interest rates, the income of the Fund will be
reduced; and
o When interest rates fall, prices on mortgage-backed securities will
not rise as much as comparable Treasury bonds, as bond market
investors anticipate an increase in mortgage prepayments and a likely
decline in income.
Extension risk is the possibility that, as interest rates rise, prepayments of
mortgages will decrease, thereby increasing the expected duration of the Fund's
mortgage-backed securities. As the duration of a mortgage security increases,
its market value decreases at an accelerating rate. Accordingly, in an upwardly
moving interest rate environment, mortgage-backed securities may depreciate more
quickly than other types of debt instruments.
An investor in the Fund should carefully consider the affects of
prepayment risk and extension risk created by large exposures to mortgage-backed
securities when comparing this Fund to other government funds.
ADDITIONAL INVESTMENT POLICIES AND RISK CONSIDERATIONS
The following investment strategies and techniques are not fundamental
policies of the Funds and may be changed without prior shareholder approval.
Each Fund will notify shareholders in writing and amend the Prospectus
accordingly should any such modifications in investment strategies or techniques
occur.
REPURCHASE AGREEMENTS
Each Fund may enter into repurchase agreements subject to resale to a
bank or dealer at an agreed upon price which reflects a net interest gain for
the Fund. Each Fund will receive interest from the institution until the time
when the repurchase is to occur.
A Fund will always receive collateral (i.e., U.S. Government
obligations or obligations of its agencies or instrumentalities, or short-term
money market securities) acceptable to it whose market value is equal to at
least 100% of the amount invested by the Fund, and the Fund will make payment
for such securities only upon the physical delivery or evidence of book entry
transfer to the account of its custodian. If the seller institution defaults,
the Fund might incur a loss or delay in the realization of proceeds if the value
of the collateral securing the repurchase agreement declines and the Fund might
incur disposition costs in liquidating the
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<PAGE>
collateral. Each Fund attempts to minimize such risks specifying the required
value of the underlying collateral.
ILLIQUID SECURITIES
Each Fund will not invest more than 10% of its net assets in illiquid
securities, including repurchase agreements with maturities in excess of seven
days.
RESTRICTED SECURITIES
Each Fund may invest in securities that are subject to restrictions on
resale because they have not been registered under the Securities Act of 1933
(the "1933 Act"). These securities are sometimes referred to as private
placements. Although securities which may be resold only to "qualified
institutional buyers" in accordance with the provisions of Rule 144A under the
1933 Act are technically considered "restricted securities," the Funds may each
purchase Rule 144A securities without regard to the limitation on investments in
illiquid securities described above in the "Illiquid Securities" section,
provided that a determination is made that such securities have a readily
available trading market. The Investment Advisor will determine the liquidity of
Rule 144A securities under the supervision of the Board of Trustees . The
liquidity of Rule 144A securities will be monitored by the Investment Advisor,
and if as a result of changed conditions, it is determined that a Rule 144A
security is no longer liquid, a Fund's holdings of illiquid securities will be
reviewed to determine what, if any, action is required to assure that the Fund
does not exceed its applicable percentage limitation for investments in illiquid
securities.
TEMPORARY INVESTMENTS
The Tocqueville Fund, The Tocqueville Small Cap Value Fund, and The
Tocqueville International Value Fund do not intend to engage in short-term
trading on an ongoing basis. Current income is not an objective of the Funds,
and any current income derived from a Fund's portfolio will be incidental. For
temporary defensive purposes, when deemed necessary by the Investment Advisor,
each Fund may invest up to 100% of its assets in U.S. Government obligations or
"high-quality" debt obligations of companies incorporated and having principal
business activities in the United States. When a Fund's assets are so invested,
they are not invested so as to meet the Fund's investment objective.
"High-quality" short-term obligations are those obligations which, at the time
of purchase, (1) possess a rating in one of the two highest ratings categories
from at least one nationally recognized statistical ratings organization
("NRSRO") (for example, commercial paper rated "A-1" or "A-2" by Standard &
Poor's Corporation ("S&P") or "P-1" or "P-2" by Moody's Investors Service, Inc.
("Moody's")) or (2) are unrated by an NRSRO but are determined by the Investment
Advisor to present minimal credit risks and to be of comparable quality to rated
instruments eligible for purchase by the Fund under guidelines adopted by the
Board of Trustees (the "Trustees").
PORTFOLIO TURNOVER
It is anticipated that the annual turnover rate for each Fund should
not exceed 150%. A higher rate of portfolio turnover will result in higher
transaction costs, including brokerage commissions. Also, to the extent that
higher portfolio turnover results in a higher rate of net realized capital gains
to a Fund, the portion of the Fund's distributions constituting taxable capital
gains may increase.
INVESTMENTS IN DEBT SECURITIES
With respect to investment by The Tocqueville Small Cap Value Fund and
The Tocqueville International Value Fund in debt securities, there is no
requirement that all such securities be rated by a recognized rating agency.
However, it is the policy of each Fund that investments in debt securities,
whether rated or unrated, will be made only if they are, in the opinion of the
Investment Advisor, of equivalent quality
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to "investment grade" securities. "Investment grade" securities are those rated
within the four highest quality grades as determined by Moody's or S&P .
Securities rated Aaa by Moody's and AAA by S&P are judged to be of the best
quality and carry the smallest degree of risk. Securities rated Baa by Moody's
and BBB by S&P lack high quality investment characteristics and, in fact, have
speculative characteristics as well. Debt securities are interest-rate
sensitive, therefore their value will tend to decrease when interest rates rise
and increase when interest rates fall. Such increase or decrease in value of
longer-term debt instruments as a result of interest rate movement will be
larger than the increase or decrease in value of shorter-term debt instruments.
INVESTMENTS IN OTHER INVESTMENT COMPANIES
The Tocqueville Small Cap Value Fund and The Tocqueville International
Value Fund may invest in other investment companies. As a shareholder in an
investment company, a Fund would bear its ratable share of that investment
company's expenses, including its advisory and administration fees. The
Investment Advisor has agreed to waive its management fees with respect to the
portion of a Fund's assets invested in shares of other investment companies.
SHORT SALES
The Tocqueville Fund and The Tocqueville Small Value Cap Fund will not
make short sales of securities or maintain a short position unless, at all times
when a short position is open, the Fund owns an equal amount of such securities
or securities convertible into or exchangeable, without payment of any further
consideration, for securities of the same issue as, and equal in amount to, the
securities sold short. This is a technique known as selling short "against the
box." Such a transaction serves to defer a gain or loss for Federal income tax
purposes.
OPTIONS TRANSACTIONS
The Tocqueville International Value Fund may purchase put and call
options on securities and on stock indices to attempt to hedge its portfolio and
to increase its total return. The Fund may purchase call options when, in the
opinion of the Investment Advisor, the market price of the underlying security
or index will increase above the exercise price. The Fund may purchase put
options when the Investment Advisor expects the market price of the underlying
security or index to decrease below the exercise price. When the Fund purchases
a call option it will pay a premium to the party writing the option and a
commission to the broker selling the option. If the option is exercised by the
Fund, the amount of the premium and the commission paid may be greater than the
amount of the brokerage commission that would be charged if the security were to
be purchased directly.
The Fund may purchase puts and calls on foreign currencies that are
traded on a securities or commodities exchange or quoted by major recognized
dealers in such options for the purpose of protecting against declines in the
dollar value of foreign securities and against increases in the dollar cost of
foreign securities to be acquired. If a decline in the dollar value of a foreign
currency is anticipated, the decline in value of portfolio securities
denominated in that currency may be partially offset by purchasing puts on that
foreign currency. If a rise is anticipated in the dollar value of a foreign
currency in which securities to be acquired are denominated, the increased cost
of such securities may be partially offset by purchasing calls on that foreign
currency. However, in the event of rate fluctuations adverse to the Fund's
position, it would lose the premium it paid and transactions costs. This
discussion is a general summary. See the Statement of Additional Information for
information concerning the Fund's options transactions and strategies.
FUTURES AND OPTIONS ON FUTURES TRANSACTIONS
The Tocqueville Government Fund may enter into futures contracts which
provide for the future acquisition or delivery of fixed income securities or
which are based on indexes of fixed income securities. This
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<PAGE>
investment technique is designed only to hedge against anticipated future
changes in interest rates which otherwise might either adversely affect the
value of the Fund's portfolio securities or adversely affect the prices of
long-term bonds which are intended to be purchased at a later date. If interest
rates move in an unexpected manner, the Fund will not achieve the full
anticipated benefits of futures contracts or may realize a loss. The Fund may
also purchase options on futures contracts for hedging purposes.
The Tocqueville International Value Fund may enter into contracts for
the future delivery of securities or foreign currencies and futures contracts
based on a specific security, class of securities, foreign currency or an index,
purchase or sell options on any such futures contracts and engage in related
closing transactions. A futures contract on a securities index is an agreement
obligating either party to pay, and entitling the other party to receive, while
the contract is outstanding, cash payments based on the level of a specified
securities index.
Although the Fund is permitted to engage in the purchase and sale of
futures contracts and options thereon solely for hedging purposes, the use of
such instruments does involve certain transaction costs and risks.
The Fund's ability to hedge effectively all or a portion of its portfolio
through transactions in futures, options on futures or options on related
indexes depends on the degree to which movements in the value of the currencies,
securities or index underlying such hedging instrument correlate with movements
in the value of the relevant portion of the Fund's portfolio. The trading of
futures and options on indexes involves the additional risk of imperfect
correlation between movements in the futures or option price and the value of
the underlying index. While the Fund will establish a future or option position
only if there appears to be a liquid secondary market therefor, there can be no
assurance that such a market will exist for any particular futures or option
contract at any specific time. In such event, it may not be possible to close
out a position held by the Fund, which could require the Fund to purchase or
sell the instrument underlying the position, make or receive a cash settlement,
or meet ongoing variation margin requirements. Investments in futures contracts
on fixed income securities and related indexes involve the risk that if the
Investment Advisor's judgment concerning the general direction of interest rates
is incorrect, the Fund's overall performance may be poorer than if it had not
entered into any such contract.
WRITING COVERED CALL OPTION CONTRACTS
The Tocqueville Government Fund may write (sell) covered call options
in order to hedge against changes in the market value of the Fund's securities
caused by fluctuating interest rates. The Tocqueville International Value Fund
may write covered call options on securities or stock indices, but will not
write such options if immediately after such sale the aggregate value of the
obligations under the outstanding options would exceed 25% of its net assets. A
call option is "covered" if the Fund owns the underlying security covered by the
call. The Fund will not write covered call option contracts for speculative
purposes.
When a covered call option expires unexercised, the writer realizes a
gain in the amount of the premium received. If the covered call option is
exercised, the writer realizes either a gain or loss from the sale or purchase
of the underlying security with the proceeds to the writer being increased by
the amount of the premium. Any gain or loss from such transaction will depend on
whether the amount paid is more or less than the premium received for the option
plus related transaction costs.
Risks associated with writing covered call option contracts are similar
to the risks discussed in the section concerning "Futures and Options on Futures
Transactions," above.
RISKS ASSOCIATED WITH FOREIGN INVESTMENTS
GENERAL. Consistent with their respective investment objectives and
policies, The Tocqueville Fund and The Tocqueville Small Cap Value Fund may
invest indirectly in foreign assets through ADRs, which are certificates issued
by U.S. banks representing the right to receive securities of a foreign issuer
deposited with
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that bank or a correspondent bank, and The Tocqueville Small Cap Value Fund and
The Tocqueville International Value Fund may directly or indirectly invest in
securities of foreign issuers. Direct and indirect investments in securities of
foreign issuers may involve risks that are not present with domestic investments
and there can be no assurance that a Fund's foreign investments will present
less risk than a portfolio of domestic securities. Compared to United States
issuers, there is generally less publicly available information about foreign
issuers and there may be less governmental regulation and supervision of foreign
stock exchanges, brokers and listed companies. Foreign issuers are not generally
subject to uniform accounting, auditing and financial reporting standards,
practices and requirements comparable to those applicable to domestic issuers.
Securities of some foreign issuers are less liquid and their prices are more
volatile than securities of comparable domestic issuers. Settlement of
transactions in some foreign markets may be delayed or less frequent than in the
United States, which could affect the liquidity of each Fund's portfolio. Fixed
brokerage commissions on foreign securities exchanges are generally higher than
in the United States. Income from foreign securities may be reduced by a
withholding tax at the source or other foreign taxes. In some countries, there
may also be the possibility of expropriation or confiscatory taxation,
limitations on the removal of funds or other assets of a Fund, political or
social instability or revolution, or diplomatic developments which could affect
investments in those countries.
The value of each Fund's investments denominated in foreign currencies
may depend in part on the relative strength of the U.S. dollar, and a Fund may
be affected favorably or unfavorably by exchange control regulations or changes
in the exchange rate between foreign currencies and the U.S. dollar. When a Fund
invests in foreign securities they will usually be denominated in foreign
currency, and the Fund may temporarily hold funds in foreign currencies. Thus,
each Fund's net asset value per share will be affected by changes in currency
exchange rates. Changes in foreign currency exchange rates may also affect the
value of dividends and interest earned, gains and losses realized on the sale of
securities and net investment income and gains, if any, to be distributed to
shareholders by each Fund. The rate of exchange between the U.S. dollar and
other currencies is determined by the forces of supply and demand in the foreign
exchange markets.
SPECIAL RISKS ASSOCIATED WITH THE TOCQUEVILLE INTERNATIONAL VALUE FUND.
In addition to the risks described above, the economies of other countries may
differ unfavorably from the United States economy in such respects as growth of
domestic product, rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments positions. Further, such economies
generally are heavily dependent upon international trade and, accordingly, have
been and may continue to be adversely affected by any trade barriers, managed
adjustments in relative currency values and other protectionist measures imposed
or negotiated by countries with which they trade. These economies also have been
and may continue to be adversely affected by economic conditions in countries
with which they trade.
The Fund may invest, without limit, in companies located in emerging
markets. An emerging market is any country that the World Bank has determined to
have a low or middle income economy and may include every country in the world
except the United States, Australia, Canada, Japan, New Zealand and most
countries in Western Europe such as Belgium, Denmark, France, Germany, Great
Britain, Italy, the Netherlands, Norway, Spain, Sweden and Switzerland.
Specifically, any change in the leadership or policies of the governments of
emerging market countries in which the Funds invest or in the leadership or
policies of any other government which exercises a significant influence over
those countries, may halt the expansion of or reverse certain beneficial
economic policies of such countries and thereby eliminate any investment
opportunities which may currently exist.
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INVESTMENT ADVISOR AND INVESTMENT ADVISORY AGREEMENTS
Tocqueville Asset Management L.P., 1675 Broadway, New York, New York
10019, acts as Investment Advisor to each Fund under a separate investment
advisory agreement (the "Agreements") which provides that the Investment Advisor
identify and analyze possible investments for each Fund, and determine the
amount, timing, and form of such investments. The Investment Advisor has the
responsibility of monitoring and reviewing each Fund's portfolio, on a regular
basis, and recommending the ultimate disposition of such investments. It is the
Investment Advisor's responsibility to cause the purchase and sale of securities
in each Fund's portfolio, subject at all times to the policies set forth by the
Board of Trustees. The Investment Advisor is an affiliate of Tocqueville
Securities L.P., each Fund's distributor.
Francois Sicart serves the Investment Advisor as the co-manager of The
Tocqueville Fund, and as the portfolio manager of The Tocqueville International
Value Fund . Mr. Sicart, the Chairman of Tocqueville Management Corporation, the
general partner of the Investment Advisor, has been a principal manager of The
Tocqueville Fund since its inception in 1987. Prior to forming the Investment
Advisor, and for the 18 year period from 1969 to 1986, he held various senior
positions within Tucker Anthony, Incorporated, where he managed private
accounts.
Robert W. Kleinschmidt serves the Investment Advisor as the co-manager
of The Tocqueville Fund and The Tocqueville Government Fund. Mr. Kleinschmidt is
the President of Tocqueville Management Corporation. He previously held
executive positions at the investment management firm David J. Greene & Co.
since 1978, resigning as a partner in 1991.
Jean-Pierre Conreur is the portfolio manager of The Tocqueville Small
Cap Value Fund's portfolio. Mr. Conreur, a graduate of Lycee Chanzy in 1954, was
employed as a research analyst at Tucker Anthony, Incorporated from April 1976
to December 1983. From December 1983 to March of 1990, he held the position of
Vice President--Foreign Department at Tucker Anthony. Since the formation of the
Investment Advisor, Mr. Conreur has held the title of Executive Vice President
and Director of Tocqueville Management Corporation.
He is also a trustee of the Investment Advisor's retirement plan.
Christopher P. Culp serves the Investment Advisor as co-manager of The
Tocqueville Government Fund. He was a Vice President of Belle Haven Investments
L.P. from 1994 to 1995, before joining the Investment Advisor, and was (i) an
independent financial consultant from 1993 to 1994, and (ii) a bond trader with
Swiss Bank Corp. from 1991 to 1993 and with Carroll McEntee, a subsidiary of
HSBC Corp., from 1990 to 1991.
Under the terms of the Agreements, each Fund pays the cost of all its
expenses (other than those expenses specifically assumed by the Investment
Advisor or the Fund's distributor), including the pro rata costs incurred in
connection with each Fund's maintenance of its registration under the 1933 Act
and the 1940 Act, printing of prospectuses distributed to shareholders, taxes or
governmental fees, brokerage commissions, custodial, transfer and shareholder
servicing agent costs, expenses of outside counsel and independent accountants,
preparation of shareholder reports, trustees' fees and shareholder meetings.
The Investment Advisor receives a fee from: (1) both The Tocqueville
Fund and The Tocqueville Small Cap Value Fund, calculated daily and payable
monthly, for the performance of its services at an annual rate of .75% on the
first $100 million of the average daily net assets of each Fund, .70% of average
daily net assets in excess of $100 million but not exceeding $500 million, and
.65% of average daily net assets in excess of $500 million; (2) The Tocqueville
International Value Fund, calculated daily and payable monthly, for the
performance of its services at an annual rate of 1.00% on the first $50 million
of the average daily net assets of
the Fund, .75% of average daily net assets in excess of $50 million but not
exceeding $100 million, and .65% of the average daily net assets in excess of
$100 million; and (3) The Tocqueville Government Fund, calculated daily and
payable monthly, for the performance of its services at an annual rate of .50%
on the first $500 million of the average daily net assets of the Fund, .40% of
average daily net assets in excess of $500 million
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but not exceeding $1 billion, and .30% of average daily net assets in excess of
$1 billion. Each fee is accrued daily for the purposes of determining the
offering and redemption price of such Fund's shares.
DISTRIBUTION PLANS
Each Fund has adopted a distribution plan (each a "Plan") pursuant to
Rule 12b-1 of the 1940 Act. Pursuant to the Plans, a Fund may incur distribution
expenses related to the sale of its shares of up to .25% per annum of the Fund's
average daily net assets.
The Plans provide that a Fund may finance activities which are
primarily intended to result in the sale of the Fund's shares, including, but
not limited to, advertising, printing of prospectuses and reports for other than
existing shareholders, preparation and distribution of advertising material and
sales literature and payments to dealers and shareholder servicing agents
including Tocqueville Securities L.P. ("Tocqueville Securities" or the
"Distributor"), the Fund's distributor, who enter into agreements with the Fund
or Tocqueville Securities. The Plans will only make payments for expenses
actually incurred on a first-in, first-out basis. The Plans may carry forward
for an unlimited number of years any unreimbursed expenses. If a Plan is
terminated in accordance with its terms, the obligations of the Fund to make
payments pursuant to the Plan will cease and the Fund will not be required to
make any payments past the date the Plan terminates. (See the Statement of
Additional Information--"Distribution Plan" for further information about the
Plan.)
As of October 31, 1996, The Tocqueville Fund, The Tocqueville Small Cap
Value Fund, The Tocqueville International Value Fund, and The Tocqueville
Government Fund had $96,670, $78,055, $71,716 and $22,255, respectively, of
unreimbursed distribution expenses (0.23%, 0.68%, 0.30% and 0.23%, respectively,
as a percentage of each Fund's net assets as of October 31, 1996). (See the
Statement of Additional Information--"Distribution Plans" for further
information about the Plans.)
ADMINISTRATIVE SERVICES AGREEMENTS
Under an Administrative Services Agreement, Tocqueville Asset
Management L.P. supervises the administration of all aspects of a Fund's
operations, including the Fund's receipt of services for which the Fund is
obligated to pay, provides the Fund with general office facilities and provides,
at the Fund's expense, the services of persons necessary to perform such
supervisory, administrative and clerical functions as are needed to effectively
operate the Fund. Those persons, as well as certain employees and Trustees of
the Funds, may be directors, officers or employees of (and persons providing
services to a Fund may include) Tocqueville Asset Management L.P. and its
affiliates. For these services and facilities, Tocqueville Asset Management L.P.
receives with respect to each Fund a fee computed and paid monthly at an annual
rate of .15% of the average daily net assets of the Fund. Certain administrative
responsibilities have been delegated to and are being performed by Firstar Trust
Company.
BROKERAGE ALLOCATION
Subject to the supervision of the Board of Trustees, decisions to buy
and sell securities for each Fund are made by the Investment Advisor. The
Investment Advisor, subject to obtaining the best price and execution, may
allocate brokerage transactions in a manner that takes into account the sale of
shares of each Fund. Generally, the primary consideration in placing portfolio
securities transactions with broker-dealers for execution is to obtain, and
maintain the availability of, execution at the best net price available and in
the most effective manner possible. The Funds' brokerage allocation policies may
permit each Fund to pay a broker-dealer which furnishes research services a
higher commission than that which might be charged by another broker-dealer
which does not furnish research services, provided that such commission is
deemed reasonable in relation to
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the value of the services provided by such broker-dealer. Subject to the
supervision of the Trustees, the Investment Advisor is authorized to allocate
brokerage to affiliated broker-dealers on an agency basis to effect portfolio
transactions. The Trustees have adopted procedures incorporating the standards
of Rule 17e-1 of the 1940 Act, which require that the commission paid to
affiliated broker-dealers must be reasonable and fair compared to the
commission, fee or other remuneration received, or to be received, by other
brokers in connection with comparable transactions involving similar securities
during a comparable period of time. It is expected that brokerage will be
allocated to the Distributor, Tocqueville Securities L.P., an affiliate of the
Investment Advisor. For a complete discussion of portfolio transactions and
brokerage allocation, see "Portfolio Transactions and Brokerage" in the
Statement of Additional Information.
PURCHASE OF SHARES
GENERAL INFORMATION
Shares are sold to investors at the net asset value next determined
after a purchase order becomes effective (as described below) plus a varying
initial sales charge.
The minimum initial investment in The Tocqueville Trust is $5,000
except for 401(k), IRA, Keogh and other pension or profit sharing plan accounts
where the minimum is $2,000. For example, an investor may choose to make an
initial investment in a Fund equal to an amount which is less than $5,000 so
long as such investor's total initial investments in the Funds are equal to
$5,000. The minimum subsequent investment in the Trust is $1,000. The
Distributor may, in its discretion, waive the minimum investment requirements
for purchases, including those made via the Automatic Investment Plan, which is
discussed below .
Shares of a Fund may be purchased from the following entities: (a) the
Funds' distributor, Tocqueville Securities; (b) authorized securities dealers
which have entered into sales agreements with Tocqueville Securities (the
"Selling Brokers") on a best efforts basis and brokers who have entered into
agreements with the Trust to provide distribution and shareholder services; and
(c) the Funds' transfer agent, Firstar Trust Company (the "Transfer Agent").
Each Fund reserves the right to cease offering shares for sale at any time or to
reject any order for the purchase of shares.
A purchase order becomes effective upon receipt of the order by
Tocqueville Securities, a Selling Broker or other broker or the Transfer Agent.
Purchase orders received prior to 4:00 p.m. New York time are priced according
to the net asset value per share next determined on that day. Purchase orders
received after 4:00 p.m. New York time are priced according to the net asset
value per share next determined on the following day.
The net asset value per share is determined by dividing the market
value of a Fund's investments as of the close of trading plus any cash or other
assets (including dividends receivable and accrued interest) less all
liabilities (including accrued expenses) by the number of Fund shares
outstanding. Each Fund will determine the net asset value of its shares once
daily as of the close of trading on the New York Stock Exchange (the "Exchange")
on each "Fund business day" which is any day on which the Exchange is open for
business.
Investors who already have a brokerage account with Tocqueville
Securities , a Selling Broker or another broker may purchase a Fund's shares
through such broker. Payment for purchase orders through Tocqueville Securities
, the Selling Broker or another broker must be made to Tocqueville Securities ,
the Selling Broker or another broker within three business days of the purchase
order. All dealers are responsible for forwarding orders for the purchase of a
Fund's shares on a timely basis.
Each Fund's shares normally will be maintained in book entry form and
share certificates will be issued only on request. The Distributor reserves the
right to refuse to sell shares of the Funds to any person.
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INITIAL SALES CHARGES
The initial sales charge, imposed upon a sale of shares, varies
according to the size of the purchase as follows:
CONCESSION
INITIAL SALES CHARGE TO DEALERS
-------------------- ----------
% OF % OF NET % OF
OFFERING AMOUNT OFFERING
AMOUNT OF PURCHASE PRICE INVESTED PRICE
----- -------- -----
Less than $100,000...................... 4.00 4.16 3.50
$100,000 to $249,999.................... 3.50 3.63 3.00
$250,000 to $499,999.................... 2.50 2.56 2.00
$500,000 to $999,999.................... 1.50 1.52 1.00
$1,000,000 and over..................... 1.00 1.01 0.50
The reduced initial sales charges apply to the aggregate of purchases
of shares of a Fund made at one time by any "person", which term includes an
individual, spouse and children under the age of 21, or a trustee or other
fiduciary of a trust, estate or fiduciary account.
Upon notice to Selling Brokers, Tocqueville Securities may reallow up
to the full applicable initial sales charge and such Selling Broker may
therefore be deemed an "underwriter" under the Securities Act of 1933, as
amended, during such periods. The Distributor may, from time to time, provide
promotional incentives to certain Selling Brokers whose representatives have
sold or are expected to sell significant amounts of one or all of the funds in
the Trust. At various times the Distributor may implement programs under which a
Selling Broker's sales force may be eligible to win cash or material awards for
certain sales efforts or under which the Distributor will reallow an amount not
exceeding the total applicable initial sales charges generated by the Selling
Broker during such programs to any Selling Broker that sponsors sales contests
or recognition programs conforming to criteria established by the Distributor or
participates in sales programs sponsored by the Distributor. The Distributor may
provide marketing services to Selling Brokers, consisting of written
informational material relating to sales incentive campaigns conducted by such
Selling Brokers for their representatives.
PURCHASES OF SHARES AT NET ASSET VALUE
PURCHASES THROUGH CERTAIN BROKERAGE ACCOUNTS. Shares may be purchased
at net asset value through brokerage accounts with Tocqueville Securities L.P.,
Selling Brokers and other brokers who have entered into agreements with the
Trust to provide distribution and shareholder services.
QUALIFIED PERSONS. There is no initial sales charge for "Qualified
Persons", which are the following (a) active or retired trustees, directors,
officers, partners or employees (their spouses and children under age 21) of (i)
the Investment Advisor and Distributor or any affiliates or subsidiaries thereof
(the directors, officers or employees of which shall also include their parents
and siblings for all purchases of Fund shares), (ii) Selling Brokers or other
brokers who have entered into agreements with the Trust to provide distribution
and shareholder services, or (iii) trade organizations to which the Investment
Advisor belongs and (b) trustees or custodians of any qualified retirement plan
or IRA established for the benefit of a person in (a) above.
PURCHASES THROUGH INVESTMENT ADVISORS AND STATE AUTHORITIES. Purchases
also may be made with no initial sales charge through a registered investment
adviser who has registered with the Securities and
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Exchange Commission or appropriate state authorities and who (a) clears such
Fund share transaction through a broker/dealer, bank or trust company, (each of
whom may impose transaction fees with respect to such transaction), or (b)
purchases shares for its own account, or an account for which the investment
adviser has discretion and is authorized to make investment decisions.
QUALIFIED AND OTHER RETIREMENT PLANS. In addition, no initial sales
charge will apply to any purchase of shares by an investor (a) through a 401(k)
Plan sponsored by the Investment Advisor or the Distributor, through a 401(k)
Plan sponsored by an institution which has a custodial relationship with the
Funds' custodian or through a discount broker-dealer which imposes a transaction
charge with respect to such purchase, (b) a 403(b) Plan or 457 (state deferred
compensation) Plan, or (c) through a tax-free rollover or transfer of assets
provided, (i) the IRA is sponsored by the Funds' custodian and the contribution
for the tax-free rollover or transfer of assets is a distribution from any tax
qualified retirement plan sponsored by an institution for which the Funds'
custodian serves as trustee or custodian of such plan or of any other qualified
or nonqualified retirement or deferred compensation plan maintained by such
institution, or (ii) the contribution for the tax-free rollover or transfer of
assets is a distribution from any tax qualified retirement plan where any
portion of the investor-participant's account was invested in any Fund of the
Trust.
RECENTLY REDEEMED SHARES. Shares of a Fund may be purchased at net
asset value by persons who have, within the previous 30 days, redeemed their
shares of the Fund. The amount which may be purchased at net asset value is
limited to an amount up to, but not exceeding, the net amount of redemption
proceeds. Such purchases may also be handled by a securities dealer, who may
charge the shareholder a fee for this service.
SHAREHOLDERS AS OF JANUARY 1, 1994. Shareholders who held shares of a
Fund of the Tocqueville Trust prior to January 1, 1994, may purchase shares of
any Fund of the Trust at net asset value for as long as they continue to own
shares of any Fund of the Trust, provided that there is no change in the account
registration. However, once a shareholder has closed an account by redeeming all
of their Fund shares for a period of more than thirty days such shareholder will
no longer be able to purchase shares of the Fund at net asset value.
REDUCED INITIAL SALES CHARGES
CUMULATIVE QUANTITY DISCOUNT. Shares of a Fund may be purchased by any
person at a reduced initial sales charge which is determined by (a) aggregating
the dollar amount of the new purchase and the greater of the purchaser's total
(i) net asset value or (ii) cost of all shares of such Fund and the other Funds
of the Trust, acquired by exchange from such other Fund, provided such Fund
charged an initial sales load at the time of the exchange then held by such
person and (b) applying the initial sales charge applicable to such aggregate.
The privilege of the cumulative quantity discount is subject to modification or
discontinuance at any time with respect to all shares purchased thereafter.
GROUP PURCHASES. An individual who is a member of a qualified group (as
defined below) may also purchase shares of a Fund at the reduced initial sales
charge applicable to the group taken as a whole. The reduced initial sales
charge is based upon the aggregate dollar value of shares previously purchased
and still owned by the group plus the securities currently being purchased and
is determined as stated above under "Cumulative Quantity Discount". For example,
if members of the group had previously invested and still held $90,000 of shares
and now were investing $15,000, the initial sales charge would be 3.50%. In
order to obtain such discount, the purchaser or investment dealer must provide
the Transfer Agent with sufficient information, including the purchaser's total
cost, at the time of purchase to permit verification that the purchaser
qualifies for a cumulative quantity discount, and confirmation that the order is
subject to such verification. Information concerning the current initial sales
charge applicable to a group may be obtained by contacting the Transfer Agent.
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A "qualified group" is one which: (a) has been in existence for more
than six months; (b) has a purpose other than acquiring shares at a discount;
and (c) satisfies uniform criteria which enables the Distributor to realize
economies of scale in its costs of distributing shares. A qualified group must
have more than 10 members, must be available to arrange for group meetings
between representatives of the Funds and the members, must agree to include
sales and other materials related to the Funds in its publications and mailings
to members at reduced or no cost to the Distributor, and must seek to arrange
for payroll deduction or other bulk transmission of investments in the Funds.
This privilege is subject to modification or discontinuance at any time with
respect to all shares purchased thereafter.
LETTER OF INTENT. Investors may also qualify for reduced initial sales
charges by signing a Letter of Intent (the "LOI"). This enables the investor to
aggregate purchases of shares of a Fund with purchases of shares of any other
Fund of the Trust acquired by exchange, during a 13-month period. The initial
sales charge is based on the total amount invested in shares during the 13-month
period. Shares of the Funds currently owned by the investor including such Fund,
if any, will be credited as purchases (at their current offering prices on the
date the LOI is signed) toward completion of the LOI. A 90-day back-dating
period can be used to include earlier purchases at the investor's cost. The
13-month period would then begin on the date of the first purchase during the
90-day period. No retroactive adjustment will be made if purchases exceed the
amount indicated in the LOI. A shareholder must notify the Transfer Agent or
Distributor whenever a purchase is being made pursuant to a LOI.
The LOI is not a binding obligation on the investor to purchase, or on
the Fund to sell, the full amount indicated; however, on the initial purchase
(or subsequent purchases if necessary), 5% of the dollar amount specified in the
LOI will be held in escrow by the Transfer Agent in shares registered in the
shareholder's name in order to assure payment of the proper initial sales
charge. If total purchases pursuant to the LOI (less any dispositions and
exclusive of any distributions on such shares automatically reinvested) are less
than the amount specified, the investor will be requested to remit to the
Transfer Agent an amount equal to the difference between the initial sales
charge paid and the initial sales charge applicable to the aggregate purchases
actually made. If not remitted within 20 days after written request, an
appropriate number of escrowed shares will be redeemed in order to realize the
difference. This privilege is subject to modification or discontinuance at any
time with respect to all shares purchased thereunder. Shareholders will be paid
distributions, either in additional shares or cash, upon such escrowed shares.
METHODS OF PAYMENT
BY CHECK. Investors who wish to purchase shares directly from the
Transfer Agent may do so by sending a completed purchase application (included
with this Prospectus or obtainable from the Trust) to The Tocqueville Trust, c/o
Firstar Trust Company, P.O. Box 701, Milwaukee, WI 53201-0701, accompanied by a
check payable to the Fund whose shares are being purchased. Purchase
applications sent to the Funds will be forwarded to the Transfer Agent, and will
not be effective until received by the Transfer Agent. The price per share is
the next determined per share net asset value (plus a varying initial sales
charge) after receipt of an application by Firstar Trust Company. Purchase
applications should be mailed directly to: The Tocqueville Trust [name of fund],
c/o Firstar Trust Company, P.O. Box 701, Milwaukee, Wisconsin 53201-0701. The
U.S. Postal Service and other independent delivery services are not agents of
the Trust. Therefore, deposit of purchase applications in the mail or with such
services does not constitute receipt by Firstar Trust Company or the Trust.
Please do not mail letters by overnight courier to the post office box address.
To purchase shares by overnight or express mail, please use the following street
address: The Tocqueville Trust [name of fund], c/o Firstar Trust Company, Mutual
Fund Services, Third Floor, 615 East Michigan Street, Milwaukee, Wisconsin
53202. All applications must be accompanied by payment in the form of a check
drawn on a U.S. bank payable to The Tocqueville Trust or by direct wire
transfer. No cash will be accepted. Firstar Trust Company will charge a $20 fee
against a shareholder's account for any payment check returned to the custodian.
The shareholder will also be responsible for any losses suffered by the Fund as
a result.
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BY AUTOMATIC INVESTMENT PLAN. The Funds have an Automatic Investment
Plan which permits an existing shareholder to purchase additional shares of any
Fund (minimum $100 per transaction) at regular intervals. Under the Automatic
Investment Plan, shares are purchased by transferring funds from a shareholder's
checking, bank money market, NOW account, or savings account in an amount of
$100 or more designated by the shareholder. At the shareholder's option, the
account designated will be debited and shares will be purchased on the date
selected by the shareholder. There must be a minimum of seven days between
automatic purchases. If the date selected by the shareholder is not a business
day, funds will be transferred the next business day thereafter. Only an account
maintained at a domestic financial institution which is an Automated Clearing
House member may be so designated. To establish an Automatic Investment Account,
complete and sign Section F of the Purchase Application and send it to the
Transfer Agent. Shareholders may cancel this privilege or change the amount of
purchase at any time by calling 1-800-697-3863 or by mailing written
notification to: The Tocqueville Trust [name of fund], c/o Firstar Trust
Company, P.O. Box 701, Milwaukee, Wisconsin 53201-0701. The change will be
effective five business days following receipt of notification by the Transfer
Agent. A Fund may modify or terminate this privilege at any time or charge a
service fee, although no such fee currently is contemplated. However, a $20 fee
will be imposed by Firstar Trust Company if sufficient funds are not available
in the shareholder's account at the time of the automatic transaction .
While investors may use this option to purchase shares in their IRA or
other retirement plan accounts, neither the Distributor nor the Transfer Agent
will monitor the amount of contributions to ensure that they do not exceed the
amount allowable for Federal tax purposes. Firstar Trust Company will assume
that all retirement plan contributions are being made for the tax year in which
they are received.
BY WIRE. Investors who purchase shares directly from the Transfer Agent
may also purchase shares by wire. Funds should be wired to:
Firstar Bank Milwaukee, N.A.
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
ABA # 075000022
Credit: Firstar Trust Company
Account # 112952137
Further credit: The Tocqueville Trust
Name of shareholder and account number (if known)
(Wired funds must be received prior to 4:00 p.m. Eastern time to be
eligible for same day pricing.)
The establishment of a new account or any additional purchases for an
existing account by wire transfer should be preceded by a phone call to Firstar
Trust Company, 1-800-697-3863, to provide information for the account. A
properly signed share purchase application marked "Follow Up" must be sent for
all new accounts opened by wire transfer. Applications are subject to acceptance
by the Fund, and are not binding until so accepted.
REDEMPTION OF SHARES
GENERAL INFORMATION
In order to redeem shares purchased through Tocqueville Securities , a
Selling Broker or other broker, the broker must be notified by telephone or mail
to execute a redemption. A properly completed order to redeem shares received by
the broker's office will be executed at the net asset value next determined
after receipt by the broker of the order. Redemption proceeds will be held in a
shareholder's account with Tocqueville Securities unless the broker is
instructed to remit all proceeds directly to the shareholder.
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Shares purchased through the Transfer Agent may be redeemed by the
Transfer Agent at the next determined net asset value upon receipt of a request
in good order. Payment will be made for redeemed shares as soon as practicable,
but in no event later than three business days after receipt of a redemption
notification in good order. If the shares being redeemed were purchased directly
from the Transfer Agent by check, payment may be delayed for the minimum time
needed to verify that the purchase check has been honored. This is not normally
more than 15 days from the time of receipt of the check by the Transfer Agent.
"Good order" means that the request complies with the following: (a) where the
shareholder has not elected to permit telephone redemptions, the request must be
in writing, specifying the number of shares or dollar amount to be redeemed and
sent to the Transfer Agent, Attn. [name of Fund] at P.O. Box 701, Milwaukee,
Wisconsin 53201-0701. The U.S. Postal Service and other independent delivery
services are not agents of the Trust. Therefore, deposit of redemption requests
in the mail or with such services does not constitute receipt by Firstar Trust
Company or the Trust. Please do not mail letters by overnight courier to the
post office box address. Redemption requests sent by overnight or express mail
should be directed to: [name of fund] c/o Firstar Trust Company, Mutual Fund
Services, Third Floor, 615 East Michigan Street, Milwaukee, Wisconsin 53202.
Requests for redemption by telegram and requests which are subject to any
special conditions or which specify an effective date other than as provided
herein cannot be honored; (b) where share certificates have been issued, a
shareholder must endorse the certificates and include them in the redemption
request; (c) signatures on the redemption request and on endorsed certificates
submitted for redemption must be guaranteed by a commercial bank which is a
member of the Federal Deposit Insurance Corporation, a trust company or a member
firm (broker-dealer) of a national securities exchange (a notary public or a
savings and loan association is not an acceptable guarantor); and, (d) the
request must include any additional legal documents concerning authority and
related matters in the case of estates, trusts, guardianships, custodianships,
partnerships and corporations. Any written requests sent to a Fund will be
forwarded to the Transfer Agent and the effective date of a redemption request
will be when the request is received by the Transfer Agent. Shareholders who
purchased shares through the Transfer Agent may arrange for the proceeds of
redemption requests to be sent by Federal Fund wire to a designated bank account
by sending wiring instructions to Firstar Trust Company, P.O. Box 701,
Milwaukee, Wisconsin 53201-0701. The Transfer Agent charges a $12 service fee
for each payment of redemption proceeds made by Federal Fund wire. Additional
information regarding redemptions may be obtained by calling 1-800-697-3863.
Redemption of the Funds' shares or payments therefore may be suspended
at such times (a) when the Exchange is closed, (b) when trading on the Exchange
is restricted, (c) when an emergency exists which makes it impractical for a
Fund to either dispose of securities or make a fair determination of net asset
value, or (d) for such other period as the Securities and Exchange Commission
may permit for the protection of a Fund's shareholders. There is no assurance
that the net asset value received upon redemption will be greater than that paid
by a shareholder upon purchase.
The Funds reserve the right to close an account that has dropped below
$500 in value for a period of three months or longer other than as a result of a
decline in the net asset value per share. Shareholders are notified at least 60
days prior to any proposed redemption and are invited to add to their account if
they wish to continue as shareholders of the Fund.
TELEPHONE REDEMPTION
Shareholders of the Funds will also be permitted to redeem fund shares
by telephone. To redeem shares by telephone, call 1-800-697-3863 with your
account name, account number and amount of redemption. Redemption proceeds will
only be sent to a shareholder's address or a pre-authorized bank account of a
commercial bank located within the United States as shown on the Transfer
Agent's records. (Available only if established on the account application and
if there has been no change of address by telephone within the preceding 15
days.)
The Funds reserve the right to refuse a telephone redemption if they
believe it is advisable to do so. Procedures for redeeming shares by telephone
may be modified or terminated by the Funds at any time upon
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notice to shareholders. During periods of substantial economic or market change,
telephone redemptions may be difficult to implement. If a shareholder is unable
to contact the Transfer Agent by telephone, shares may also be redeemed by
delivering the redemption request to the Transfer Agent.
In an effort to prevent unauthorized or fraudulent redemption requests
by telephone, the Funds and the Transfer Agent employ reasonable procedures to
confirm that such instructions are genuine. Among the procedures used to
determine authenticity, investors electing to redeem or exchange by telephone
will be required to provide their account number. All such telephone
transactions will be tape recorded. The Tocqueville Funds may implement other
procedures from time to time. If reasonable procedures are not implemented, the
Funds and/or the Transfer Agent may be liable for any loss due to unauthorized
or fraudulent transactions. In all other cases, the shareholder is liable for
any loss for unauthorized transactions.
SHAREHOLDER PRIVILEGES
SYSTEMATIC WITHDRAWAL PLAN. The funds offer a Systematic Withdrawal
Plan for shareholders who own shares worth at least $10,000 at current net asset
value of any Fund. Under the Systematic Withdrawal Plan, a fixed sum (minimum
$500) will be distributed at regular intervals (on any day, either monthly or
quarterly). In electing to participate in the Systematic Withdrawal Plan,
investors should realize that within any given period the appreciation of their
investment in a particular Fund may not be as great as the amount withdrawn. A
shareholder may vary the amount of frequency of withdrawal payments or
temporarily discontinue them by notifying Firstar Trust Company at
1-800-697-3863. The Systematic Withdrawal Plan does not apply to shares of any
Fund held in Individual Retirement Accounts or defined contribution retirement
plans. For additional information or to request an application please call
Firstar Trust Company at 1-800-697-3863.
EXCHANGE PRIVILEGE. Subject to certain conditions, shares of a Fund may
be exchanged for the shares of another Fund of The Tocqueville Trust at such
Fund's then current net asset value. No initial sales charge is imposed on the
shares being acquired through an exchange. The dollar amount of the exchange
must be at least equal to the minimum investment applicable to the shares of the
Fund acquired through such exchange. You should note that any such exchange,
which may only be made in states where shares of the Funds of The Tocqueville
Trust are qualified for sale, may create a gain or loss to be recognized for
federal income tax purposes. Exchanges must be made between accounts having
identical registrations and addresses. Exchanges may be authorized by telephone.
In order to protect itself and shareholders from liability for unauthorized or
fraudulent telephone transactions, each Fund will use reasonable procedures in
an attempt to verify the identity of a person making a telephone exchange
request. Each Fund reserves the right to refuse a telephone exchange request if
it believes that the person making the request is not the record owner of the
shares being exchanged, or is not authorized by the shareholder to request the
exchange. Shareholders will be promptly notified of any refused request for a
telephone exchange. As long as these normal identification procedures are
followed, neither the Funds nor their agents will be liable for loss, liability
or cost which results from acting upon instructions of a person believed to be a
shareholder with respect to the telephone exchange privilege. You will not
automatically be assigned this privilege unless you check the box on the
Purchase Application which indicates that you wish to have the privilege. The
exchange privilege may be modified or discontinued at any time.
Shareholders may also exchange shares of any or all of an investment in
the Funds for shares of the Portico Money Market Fund, the Portico Tax-Exempt
Money Market Fund, or the Portico U.S. Government Fund (collectively the "Money
Market Funds"). This Exchange Privilege is a convenient way for shareholders to
buy shares in a money market fund in order to respond to changes in their goals
or market conditions. Before exchanging into the Money Market Funds,
shareholders must read the Portico Money Market Funds' Prospectus. To obtain the
Money Market Funds' Prospectus and the necessary exchange authorization forms,
call the Transfer Agent at 1-800-697-3863. The Transfer Agent charges a $5 fee
for each telephone exchange which will be deducted from the investor's account
from which the funds are being withdrawn prior to effecting
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<PAGE>
the exchange. There is no charge for exchange transactions that are requested by
mail. Use of the Exchange Privilege is subject to the minimum purchase and
redemption amounts set forth in the Prospectus for the Money Market Funds. All
accounts opened in a Money Market Fund as a result of using the Exchange
Privilege must be registered in the identical name and taxpayer identification
number as a shareholder's existing account with the Funds.
For purposes of the Exchange Privilege, exchanges into and out of the
Money Market Funds will be treated as shares owned in the Funds. For example, if
an investor who owned shares in any one of the Funds moved an investment from
one of the Funds to one of the Money Market Funds and then decided at a later
date to move the investment back to one of the Funds, he or she would be deemed,
once again, to own shares of one of the Funds and may do so without the
imposition of any additional sales charges, so long as the investment has been
continuously invested in shares of the Money Market Fund during the period
between withdrawal and reinvestment.
Remember that each exchange represents the sale of shares of one fund
and the purchase of shares of another. Therefore, shareholders may realize a
taxable gain or loss on the transaction. Before making an exchange request, an
investor should consult a tax or other financial adviser to determine the tax
consequences of a particular exchange. The Distributor is entitled to receive a
fee from the Money Market Funds for certain support services at the annual rate
of .20 of 1% of the average daily net asset value of the shares for which it is
the holder or dealer of record. Because excessive trading can hurt the Funds'
performance and shareholders, the Funds reserve the right to temporarily or
permanently limit the number of exchanges or to otherwise prohibit or restrict
shareholders from using the Exchange Privilege at any time, without notice to
shareholders. In particular, a pattern of exchanges with a "market timing"
strategy may be disruptive to the Funds and may thus be restricted or refused.
Excessive use of the Exchange Privilege is defined as more than five exchanges
per calendar year. The restriction or termination of the Exchange Privilege does
not affect the rights of shareholders to redeem shares, as discussed in the
Prospectus.
The Money Market Funds are managed by Firstar Investment Research and
Management Company, an affiliate of Firstar Trust Company. The Portico Funds,
including the Money Market Funds, are unrelated to The Tocqueville Trust.
CHECK REDEMPTION. A shareholder may request on the Purchase Application
or by later written request to establish check redemption privileges for any of
the Money Market Funds. The Redemption Checks ("Checks") will be drawn on the
Money Market Fund in which the investor has made an investment. Checks will be
sent only to the registered owner(s) and only to the address of record. Checks
may be made payable to the order of any person in the amount of $250 or more.
Dividends are earned until the Check clears the Transfer Agent. When a Check is
presented to the Transfer Agent for payment, the Transfer Agent, as the
investor's agent, will cause the particular Money Market Fund involved to redeem
a sufficient number of the investor's shares to cover the amount of the Check.
Checks will not be returned to shareholders after clearance.
The initial checkbook is free, additional checkbooks are $5. The fee for
additional checkbooks will be deducted from the shareholder's account. There is
no charge to the investor for the use of the Checks; however, the Transfer Agent
will impose a $20 charge for stopping payment of a Check upon the request of the
investor, or if the Transfer Agent cannot honor a Check due to insufficient
funds or other valid reason. Because dividends on each Money Market Fund accrue
daily, Checks may not be used to close an account, as a small balance is likely
to result.
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<PAGE>
DIVIDENDS, DISTRIBUTIONS, AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS. Dividends from net investment income are
declared daily and paid monthly by The Tocqueville Government Fund . Dividends
are paid at least annually by The Tocqueville Fund, The Tocqueville Small Cap
Value Fund, and The Tocqueville International Value Fund . The Funds also
distribute net capital gains (if any) at least annually. Dividends and
distributions of shares may be reinvested at net asset value without an initial
sales charge. Shareholders should indicate on the purchase application whether
they wish to receive dividends and distributions in cash. Otherwise, all income
dividends and capital gains distributions are automatically reinvested in the
Fund making the distribution at the next determined net asset value unless the
Transfer Agent receives written notice from an individual shareholder prior to
the record date, requesting that the distributions and dividends be distributed
to the investor in cash.
TAX MATTERS. Each Fund intends to qualify as a regulated investment
company by satisfying the requirements under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"), including requirements with
respect to diversification of assets, distribution of income and sources of
income. It is each Fund's policy to distribute to shareholders all of its
investment income (net of expenses) and any capital gains (net of capital
losses) in accordance with the timing requirements imposed by the Code so that
the Fund will satisfy the distribution requirement of Subchapter M and not be
subject to federal income or the 4% excise tax. If a Fund fails to satisfy any
of the Code requirements for qualification as a regulated investment company, it
will be taxed at regular corporate tax rates on all of its taxable income
(including any capital gains) without any deduction for distributions to
shareholders, and distributions to shareholders will be taxable as ordinary
dividends (even if derived from a Fund's net long-term capital gains) to the
extent of that Fund's current and accumulated earnings and profits.
Distributions by a Fund of its net investment income and the excess, if
any, of its net short-term capital gain over its net long-term capital loss are
generally taxable to shareholders as ordinary income. These distributions are
treated as dividends for federal income tax purposes. Because it is anticipated
that the investment income of The Tocqueville International Value Fund and The
Tocqueville Government Fund will not include dividends from domestic
corporations, none of the ordinary income dividends paid by such Fund should
qualify for the 70% dividends-received deduction for corporate shareholders.
Distributions by a Fund of the excess, if any, of its net long-term capital gain
over its net short-term capital loss are designated as capital gain dividends
and are taxable to shareholders as long-term capital gains, regardless of the
length of time a shareholder has held his shares.
Portions of each Fund's investment income may be subject to foreign
income taxes withheld at the source. The economic effect of such withholding
taxes or the total return of each Fund cannot be predicted. The Tocqueville
International Value Fund may elect to "pass through" to its shareholders these
foreign taxes, in which event each shareholder will be required to include their
pro rata portion thereof in their gross income, but will be able to deduct or
(subject to various limitations) claim a foreign tax credit for such amount.
Distributions by a Fund to shareholders will be treated in the same
manner for federal income tax purposes whether received in cash or reinvested in
additional shares of the Fund. In general, distributions by a Fund are taken
into account by the shareholders in the year in which they are made. However,
certain distributions made during January will be treated as having been paid by
the Fund and received by the shareholders on December 31 of the preceding year.
A statement setting forth the federal income tax status of all distributions
made or deemed made during the year, including any amount of foreign taxes
"passed through", will be sent to shareholders promptly after the end of each
year if the Fund so designates. A shareholder who purchases shares of a Fund
just prior to the record date will be taxed on the entire amount of the dividend
received, even though the net asset value per share on the date of such purchase
may have reflected the amount of such dividend.
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<PAGE>
A shareholder will recognize gain or loss upon the sale or redemption
of shares of a Fund in an amount equal to the difference between the proceeds of
the sale or redemption and the shareholder's adjusted tax basis in the shares.
Any loss recognized upon a taxable disposition of shares within six months from
the date of their purchase will be treated as a long-term capital loss to the
extent of any capital gain dividends received on such shares. All or a portion
of any loss recognized upon a taxable disposition of shares of a Fund may be
disallowed if other shares of the Fund are purchased within 30 days before or
after such disposition.
Ordinary income dividends paid to non-resident alien or foreign entity
shareholders generally will be subject to United States withholding tax at a
rate of 30% (or lower rate under an applicable treaty). Foreign shareholders are
urged to consult their own tax advisers concerning the applicability of United
States withholding taxes.
Under the backup withholding rules of the Code, certain shareholders
may be subject to 31% backup withholding tax on ordinary income dividends,
capital gain dividends and redemption proceeds paid by the Funds. In order to
avoid this backup withholding, a shareholder must provide the Funds with a
correct taxpayer identification number (which for most individuals is their
Social Security number) and certify that it is a corporation or otherwise exempt
from or not subject to backup withholding.
The foregoing discussion of federal income tax consequences is based on
tax laws and regulations in effect on the date of this Prospectus, and is
subject to change by legislative or administrative action. As the foregoing
discussion is for general information only, a prospective shareholder should
also review the more detailed discussion of federal income tax considerations
relevant to the Funds that is contained in the Statement of Additional
Information. In addition, each prospective shareholder should consult with his
own tax adviser as to the tax consequences of investments in the Funds,
including the application of state and local taxes which may differ from the
federal income tax consequences described above.
ORGANIZATION AND DESCRIPTION OF SHARES OF THE TRUST
The Trust was organized as a Massachusetts business trust under the
laws of the Commonwealth of Massachusetts. The Trust's Declaration of Trust
filed September 17, 1986, permits the Trustees to issue an unlimited number of
shares of beneficial interest with a par value of $0.01 per share in an
unlimited number of series of shares. On August 19, 1991, the Declaration of
Trust was amended to change the name of the Trust to "The Tocqueville Trust,"
and on August 4, 1995, the Declaration of Trust was amended to permit the
division of a series into classes of shares. Each share of beneficial interest
has one vote and shares equally in dividends and distributions when and if
declared by a Fund and in a Fund's net assets upon liquidation. All shares, when
issued, are fully paid and nonassessable. There are no preemptive or conversion
rights. Fund shares do not have cumulative voting rights and, as such, holders
of at least 50% of the shares voting for trustees can elect all trustees and the
remaining shareholders would not be able to elect any trustees. The Board of
Trustees may classify or reclassify any unissued shares of the Trust into shares
of any series by setting or changing in any one or more respects, from time to
time, prior to the issuance of such shares, the preference, conversion or other
rights, voting powers, restrictions, limitations as to dividends, or
qualifications of such shares. Any such classification or reclassification will
comply with the provisions of the 1940 Act.
There will not normally be annual shareholder meetings. Shareholders
may remove Trustees from office by votes cast at a meeting of shareholders or by
written consent.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND PAYING AGENT
Firstar Trust Company serves as custodian for the portfolio securities
and cash of The Tocqueville Fund, The Tocqueville Small Cap Value Fund and The
Tocqueville Government Fund, and as each Fund's
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Transfer and Dividend Paying Agent, and in those capacities maintains certain
financial and accounting books and records pursuant to agreements with the
Trust. Its mailing address is 615 East Michigan Street, Milwaukee, WI 53202. The
Chase Manhattan Bank serves as custodian for the portfolio securities and cash
of The Tocqueville International Value Fund.
COUNSEL AND INDEPENDENT ACCOUNTANTS
Kramer, Levin, Naftalis & Frankel, 919 Third Avenue, New York, N.Y.
10022, is counsel for the Trust. McGladrey & Pullen, LLP, 555 Fifth Avenue, New
York, N.Y. 10017-2416, has been appointed independent accountants for the Trust.
SHAREHOLDER INQUIRIES
Shareholder inquiries should be directed to The Tocqueville Trust c/o
Firstar Trust Company, 615 East Michigan Street, Milwaukee, Wisconsin 53202,
Attention: [name of Fund], or may be made by calling 1- 800-697-3863.
OTHER INFORMATION
This Prospectus omits certain information contained in the registration
statement filed with the Securities and Exchange Commission. Copies of the
registration statement, including items omitted herein, may be obtained from the
Commission by paying the charges prescribed under its rules and regulations. The
Statement of Additional Information included in such registration statement may
be obtained without charge from the Trust.
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, and information
or representations not herein contained, if given or made, must not be relied
upon as having been authorized by the Trust. This Prospectus does not constitute
an offer or solicitation in any jurisdiction in which such offering may not
lawfully be made.
The Code of Ethics of the Investment Advisor and the Funds prohibits
all affiliated personnel from engaging in personal investment activities which
compete with or attempt to take advantage of a Fund's planned portfolio
transactions. Both organizations maintain careful monitoring of compliance with
the Code of Ethics.
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THE TOCQUEVILLE FUND
THE TOCQUEVILLE SMALL CAP VALUE FUND
THE TOCQUEVILLE
INTERNATIONAL VALUE FUND
AND
INVESTMENT ADVISOR
Tocqueville Asset Management L.P. THE TOCQUEVILLE GOVERNMENT FUND
1675 Broadway
New York, New York 10019 Series of
Telephone: (212) 698-0800 The Tocqueville Trust
Telecopier: (212) 262-0154
DISTRIBUTOR
Tocqueville Securities L.P.
1675 Broadway
New York, New York 10019
Telephone: (800) 697-3863
Telecopier: (212) 262-0154
February 28, 1997
SHAREHOLDERS' SERVICING,
CUSTODIAN AND TRANSFER AGENT Prospectus
Firstar Trust Company
P.O. Box 701
Milwaukee, Wisconsin 53201-0701
Telephone: (800) 697-3863
BOARD OF TRUSTEES
Francois Sicart -- Chairman
Bernard F. Combemale
James B. Flaherty
Inge Heckel
Robert W. Kleinschmidt
Francois Letaconnoux
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THE TOCQUEVILLE TRUST
THE TOCQUEVILLE ASIA-PACIFIC FUND
The Tocqueville Trust (the "Trust") is a Massachusetts business trust
currently consisting of five separate funds. Each Fund of the Trust is an
open-end, diversified management investment company. This Prospectus relates to
The Tocqueville Asia-Pacific Fund only. The investment objective of The
Tocqueville Asia-Pacific Fund (the "Fund") is long-term capital appreciation
consistent with preservation of capital primarily through investments in
securities of issuers located in Asia and the Pacific Basin.
Tocqueville Asset Management L.P. provides the Fund with investment
advisory and certain administrative services. This Prospectus sets forth
concisely the information that a prospective investor should know before
investing in shares of the Fund and should be read and retained for future
reference. A Statement of Additional Information, dated February 28, 1997,
containing additional information about the Fund has been filed with the
Securities and Exchange Commission and is hereby incorporated by reference into
this Prospectus. A copy of the Statement of Additional Information can be
obtained without charge by calling 1-800-697-3863 or writing the Trust at c/o
Firstar Trust Company, P.O. Box 701, Milwaukee, Wisconsin 53201-0701.
-----------------
INVESTMENTS IN THE FUND ARE SUBJECT TO RISK -- INCLUDING POSSIBLE LOSS
OF PRINCIPAL -- AND WILL FLUCTUATE IN VALUE. SHARES OF THE FUND ARE NOT BANK
DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY A BANK AND ARE NOT
INSURED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED BY THE U.S. GOVERNMENT, THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
AGENCY.
-----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-----------------
The date of this Prospectus is February 28, 1997.
<PAGE>
TABLE OF CONTENTS
Page
----
Highlights ..................................................................
Fee Table....................................................................
Financial Highlights.......................................................
Performance Calculation......................................................
Investment Objective, Policies and Risks.....................................
Additional Investment Policies and Risk
Considerations.............................................................
Investment Advisor and Investment
Advisory Agreement........................................................
Distribution Plan...........................................................
Administrative Services Agreements...........................................
Brokerage Allocation.........................................................
Purchase of Shares...........................................................
Initial Sales Charges........................................................
Purchases at Net Asset Value.................................................
Reduced Initial Sales Charges................................................
Methods of Payment...........................................................
Redemption of Shares.........................................................
Shareholder Privileges.......................................................
Dividends, Distributions and Tax Matters
Organization and Description of Shares of
the Trust..................................................................
Custodian, Transfer Agent and Dividend
Paying Agent...............................................................
Counsel and Independent Accountants..........................................
Shareholder Inquiries........................................................
Other Information............................................................
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<PAGE>
HIGHLIGHTS
WHAT IS THE TOCQUEVILLE TRUST?
The Tocqueville Trust, a business trust formed under the laws of the
Commonwealth of Massachusetts, is currently comprised of five series. The
Tocqueville Fund, The Tocqueville Small Cap Value Fund, The Tocqueville
Asia-Pacific Fund, The Tocqueville International Value Fund and The Tocqueville
Government Fund are each open-end, diversified management investment companies,
as defined by the Investment Company Act of 1940, as amended (the "1940 Act").
Shares of each Fund may be purchased at a price equal to the next determined net
asset value per share plus a charge which may be imposed at the time of
purchase. As open-end investment companies, the Funds have an obligation to
redeem their respective shares held by an investor at the net asset value of the
shares next determined after receipt of a redemption request in proper form.
(See "Organization and Description of Shares of the Trust.")
WHAT IS THE TOCQUEVILLE ASIA-PACIFIC FUND AND HOW IS ITS INVESTMENT OBJECTIVE
ACHIEVED?
The Tocqueville Asia-Pacific Fund is an open-end, diversified
management investment company which seeks long-term capital appreciation
consistent with preservation of capital primarily through investments in
securities of issuers located in Asia and the Pacific Basin. The Fund will
invest at least 65% of its total assets in securities of issuers located in Asia
and the Pacific Basin, including common stock, investment grade debt convertible
into common stock, depository receipts for these securities and warrants.
(See"Investment Objective, Policies and Risks.")
WHO MANAGES THE FUND?
Tocqueville Asset Management L.P. (the "Investment Advisor") serves as
the Fund's investment advisor pursuant to an Investment Advisory Agreement.
Under the terms of the Agreement, the Investment Advisor supervises all aspects
of the Fund's operations and provides investment advisory services. As
compensation, the Investment Advisor receives a fee based on the Fund's average
daily net assets. The Investment Advisor also is engaged in the business of
acting as investment advisor to private accounts with combined assets of more
than $600 million. (See "Investment Advisor and Investment Advisory
Agreements.")
DISTRIBUTION PLAN
The Fund has adopted a distribution plan, pursuant to Rule 12b-1 of the
1940 Act, that allows a Fund to incur distribution expenses related to the sale
of its shares of up to .25% per annum of the Fund's average daily net assets.
(See "Distribution Plan").
SPECIAL RISK CONSIDERATIONS
An investor should be aware that there are risks associated with
certain investment techniques and strategies employed by the Fund, including
those relating to investments in foreign securities and option transactions.
(See "Investment Objective, Policies and Risks" and "Additional Investment
Policies and Risk Considerations.")
<PAGE>
FEE TABLE
ASIA-PACIFIC FUND
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load on Purchases 4.00%
Maximum Sales Load Imposed on
Reinvested Dividends................................. None
Maximum Deferred Sales Load............................. None
Redemption Fee*.........................................
Exchange Fee**..........................................
ANNUAL FUND OPERATING EXPENSES:
(as a % of average net assets)
Management Fee.......................................... 1.00%
12b-1 Fee(1). ......................................... .25%
Other Expenses.......................................... .75%
------
Total Operating Expenses......................................... 2.00%(2)
- -----------------------
(1) Under the Fund's Distribution Plan, the Advisor is permitted to carry
forward expenses not reimbursed by the distribution fee to subsequent
fiscal years for submission by the Fund for payment, subject to the
continuation of the Plan. Such amounts are not recognized in the Fund's
financial statements as expenses and liabilities, since the
Distribution Plan can be terminated on an annual basis without further
liability to the Fund. The Rule 12b-1 fee may represent the equivalent
of an annual asset-based sales charge to an investor. As a result of
distribution fees, a long-term shareholder in the Fund may pay more
than the economic equivalent of the maximum front-end sales charge
permitted by the Rules of the National Association of Securities
Dealers, Inc.
(2) Total Operating Expenses reflect the voluntary waiver and/or the
reimbursement of certain expenses. Absent such voluntary waiver and/or
reimbursement, Other Expenses and Total Operating Expenses for the Fund
would be 2.04% and 3.29%, respectively. The Advisor has voluntarily
undertaken to waive and/or reimburse expenses during the current fiscal
year so that Total Fund Operating Expenses do not exceed 2.00%. Should
the Advisor decide during the current fiscal year that such waiver
and/or reimbursement cannot be maintained, shareholders will receive 30
days notice of the change.
* The Transfer Agent charges a $12 service fee for each payment of
redemption proceeds made by wire.
** The Transfer Agent charges a $5 fee for each telephone exchange.
EXAMPLE: You would pay the following expenses on a $1000 investment, assuming
(1) 5% annual return and (2) redemption at the end of each time period.
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
$59 $100 $143 $263
-2-
<PAGE>
The purpose of the expense summary provided above is to assist
investors in understanding the various costs and expenses that a shareholder in
the Fund will bear directly or indirectly. The "Annual Fund Operating Expenses"
summary shows the management fee, Rule 12b-1 fee, and other operating expenses
expected to be incurred by the Fund during the current fiscal year. The
"Example" set forth above assumes all dividends and other distributions are
reinvested and that the percentages under "Annual Fund Operating Expenses"
remain the same in the years shown. The example includes the initial sales
charge.
The example should not be considered a representation of past or future
expenses and actual expenses may be greater or lesser than those shown.
-3-
<PAGE>
FINANCIAL HIGHLIGHTS
The tables below set forth certain financial information with respect
to the financial highlights for the Fund for the periods indicated. The
information below has been derived from financial statements audited by
McGladrey & Pullen, LLP as independent accountants for the Trust, whose reports
thereon, together with the financial statements of the Fund, are incorporated by
reference into the Statement of Additional Information. The information set
forth below is for a share outstanding of the Fund for each period indicated.
<TABLE>
<CAPTION>
PERIOD FROM
NOVEMBER 12, 1991 TO
YEAR ENDED OCTOBER 31, OCTOBER 31, 1992
----------------
1996 1995 1994(A) 1993
<S> <C> <C> <C> <C> <C>
Per share operating performance $ 9.07
(For a share outstanding throughout
the period)
Net asset value, beginning of period $ 12.16 $ 11.26 $ 10.50 $10.00
--------- --------- --------- ------
Income (loss) from investment
operations:
Net investment income (loss) -- (0.01) (0.05) (0.21) (0.07)
Net realized and unrealized gain
(loss)....................... 0.01 (1.39) 1.45 1.62 0.57
--------- --------- ------- ------- -------
Total from investment operations 0.01 (1.40) 1.40 1.41 0.50
--------- --------- ------- ------- -------
Less Distributions :
Dividends from net investment
income....................... -- -- -- -- --
Distributions from net realized
gains........................ -- (1.69) (0.50) (0.65) (0.00)
---- -------- ------- -------- --------
Total distributions -- (1.69) (0.50) (0.65) (0.00)
-------- --------- -------- -------- --------
Change in net asset value for the
period.......................... 0.01 (3.09) 0.90 0.76 0.50
---------- --------- ------- ------- -------
Net asset value, end of period. $ 9.08 $ 9.07 $ 12.16 $ 11.26 $ 10.50
========= ======== ========== ======== ========
Total Return(b)................. 0.1% (11.6%) 12.8% 15.0% 5.0%
Ratios/supplemental data:......
Net assets, end of period (000). $18,138 $4,686 $5,187 $3,886 $1,898
Ratio to average net assets :
Expenses(c).................. 2.63% 3.55% 2.82% 4.63% 4.90%(e)
Net investment income(c)..... (0.06)% (0.26)% (0.87)% (2.42)% (0.73)%(e)
Portfolio turnover rate......... 61% 106% 168% 216%(d) 101%
Average commission rate paid(f) $.0060
</TABLE>
- --------------------
(a) Effective April 29, 1994, The Tocqueville Euro-Pacific Fund changed its
investment policies to invest primarily in the securities of issues
located in Asia and the Pacific Basin. In addition, the name of the
Fund was changed to The Tocqueville Asia-Pacific Fund.
(b) Does not include maximum initial sales charge of 4.00%.
(c) 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, 1995, 1994
and 1992, respectively.
(d) The portfolio turnover rate doubled from the previous year because the
Fund shifted its asset allocation from primarily Hong Kong to several
other markets, including Australia, Singapore and Malaysia.
Notwithstanding the possibility of unforeseen events that may require
the movement of assets, the Fund does not anticipate an annual turnover
rate of 200% in future years.
-4-
<PAGE>
(e) Annualized.
(f) Average per share amounts of brokerage commissions on portfolio
transactions. Required by regulations issued in 1995.
-5-
<PAGE>
PERFORMANCE CALCULATION
The Fund calculates performance on a total return basis for various
periods. The total return basis combines changes in principal and dividends and
distributions for the periods shown, as well as the deduction of all charges and
expenses. The total return basis reflects the deduction of the maximum initial
sales charge at the time of purchase. Principal changes are based on the
difference between the beginning and closing net asset value for the period.
Calculations assume reinvestment of all dividends and distributions paid by the
Fund. Dividends and distributions are comprised of net investment income and net
realized capital gains, respectively. In addition, the Fund may calculate
performance on a total return basis at net asset value.
Performance will vary from time to time and past results are not
necessarily representative of future results. A shareholder should remember that
performance is a function of portfolio management in selecting the type and
quality of portfolio securities and is affected by operating expenses.
Comparative performance information may be used from time to time in
the advertising or marketing of the Fund's shares, including data from Lipper
Analytical Services, Inc. and Morningstar Mutual Funds. Such comparative
performance information will be stated in the same terms in which the
comparative data and indices are stated. All advertisements of the Fund will
disclose the maximum sales charge to which investments in shares of the Fund may
be subject.
INVESTMENT OBJECTIVE, POLICIES AND RISKS
The Fund's investment objective is fundamental and may not be changed
without a vote of the holders of a majority of its outstanding voting securities
(as defined in the Statement of Additional Information). There can be no
assurance that the Fund will achieve its investment objective.
The investment objective of The Tocqueville Asia-Pacific Fund is
long-term capital appreciation consistent with preservation of capital primarily
through investments in securities of issuers located in Asia and the Pacific
Basin. While the Investment Advisor may invest the Fund's assets in securities
of issuers in any country, under normal conditions at least 65% of the Fund's
total assets will be invested in Asia and the Pacific Basin countries. Pacific
Basin countries are Australia, Hong Kong, Indonesia, Japan, Malaysia, New
Zealand, Republic of Korea, Singapore, Taiwan, Thailand and the Philippines.
Asian countries are India and the People's Republic of China, which is accessed
through Pacific Basin countries (as described above), most notably Hong Kong.
The Investment Advisor believes that it will usually have assets invested in
most of the countries located in Asia and the Pacific Basin; however, under
normal market conditions the Fund will be invested in a minimum of five
countries. Investments will not normally be made in securities of issuers
located in the United States or Canada. The Fund may, from time to time, borrow
up to 10% of the value of its total assets from banks at prevailing interest
rates as a temporary measure for extraordinary or emergency purposes. The Fund
may not purchase securities while borrowings exceed 5% of the value of its total
assets.
Special Considerations. The Fund may invest in all types of securities,
most of which will be denominated in foreign currencies. Since opportunities for
long-term growth are primarily expected from equity securities, the Fund will
normally invest substantially all of its assets in such securities, including
common stock, investment grade debt convertible into common stock, depository
receipts for these securities and warrants. The Fund may, however, invest in
preferred stock and investment grade debt securities if the Investment Advisor
believes that the capital appreciation available from an investment in such
securities will equal or exceed the capital appreciation available from an
investment in equity securities. The Fund's objective is capital appreciation,
placing emphasis on dividends or interest income only when it believes that such
income will have a favorable influence on the market value of a security.
All common stock in which the Fund will invest will be listed on a
foreign stock exchange or traded in an over-the-counter market. There is no
minimum capitalization requirement for a security to be eligible for inclusion
in the Fund's portfolio. The Fund will generally purchase securities of medium
to large size companies in the principal international markets, although it may
purchase securities of companies which have a lower market capitalization on the
smaller regional markets.
-6-
<PAGE>
By investing in foreign securities, the Investment Advisor will attempt
to take advantage of differences between economic trends and performance of
securities markets in various countries. When allocating investments among
individual countries, the Investment Advisor will consider various criteria that
in its view are deemed relevant based on its experience, such as the relative
economic growth potential of the various economies and the performance of
securities markets in the region, expected levels of inflation, government
policies influencing business conditions, and the outlook for currency
relationships. To date, the market values of securities of issuers located in
different countries have moved relatively independently of each other and during
certain periods the return on equity investments in some countries has exceeded
the return on similar investments in the United States. The Investment Advisor
believes that, in comparison with investment companies investing solely in
domestic securities, it may be possible to obtain significant appreciation from
a portfolio of foreign investments and also achieve increased diversification.
The Fund will gain increased diversification by combining securities from
various markets that offer different investment opportunities and are affected
by different economic trends. International diversification reduces the effect
that events in any one country will have on the Fund's entire investment
holdings. Of course, a decline in the value of the Fund's investments in one
country may offset potential gains from investments in another country.
ADDITIONAL INVESTMENT POLICIES AND RISK CONSIDERATIONS
The following investment strategies and techniques are not fundamental
policies of the Fund and may be changed without prior shareholder approval. The
Fund will notify shareholders in writing and amend the Prospectus accordingly
should any such modifications in investment strategies or techniques occur.
REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements subject to resale to a
bank or dealer at an agreed upon price which reflects a net interest gain for
the Fund. The Fund will receive interest from the institution until the time
when the repurchase is to occur.
The Fund will always receive collateral (i.e., U.S. Government
obligations or obligations of its agencies or instrumentalities, or short-term
money market securities) acceptable to it whose market value is equal to at
least 100% of the amount invested by the Fund, and the Fund will make payment
for such securities only upon the physical delivery or evidence of book entry
transfer to the account of its custodian. If the seller institution defaults,
the Fund might incur a loss or delay in the realization of proceeds if the value
of the collateral securing the repurchase agreement declines and the Fund might
incur disposition costs in liquidating the collateral. The Fund attempts to
minimize such risks specifying the required value of the underlying collateral.
ILLIQUID SECURITIES
The Fund will not invest more than 10% of its net assets in illiquid
securities, including repurchase agreements with maturities in excess of seven
days.
RESTRICTED SECURITIES
The Fund may invest in securities that are subject to restrictions on
resale because they have not been registered under the Securities Act of 1933
(the "1933 Act"). These securities are sometimes referred to as private
placements. Although securities which may be resold only to "qualified
institutional buyers" in accordance with the provisions of Rule 144A under the
1933 Act are technically considered "restricted securities," the Fund may each
purchase Rule 144A securities without regard to the limitation on investments in
illiquid securities described above in the "Illiquid Securities" section,
provided that a determination is made that such securities have a readily
available trading market. The Investment Advisor will determine the liquidity of
Rule 144A securities under the supervision of the Board of Trustees . The
liquidity of Rule 144A securities will be monitored by the Investment Advisor,
and if as a result of changed conditions, it is determined that a Rule 144A
security is no longer liquid, the Fund's holdings of illiquid securities will be
reviewed to determine what, if any, action is required to assure that the Fund
does not exceed its applicable percentage limitation for investments in illiquid
securities.
-7-
<PAGE>
TEMPORARY INVESTMENTS
The Fund does not intend to engage in short-term trading on an ongoing
basis. Current income is not an objective of the Fund, and any current income
derived from the Fund's portfolio will be incidental. For temporary defensive
purposes, when deemed necessary by the Investment Advisor, the Fund may invest
up to 100% of its assets in U.S. Government obligations or "high-quality" debt
obligations of companies incorporated and having principal business activities
in the United States. When the Fund's assets are so invested, they are not
invested so as to meet the Fund's investment objective. "High-quality"
short-term obligations are those obligations which, at the time of purchase, (1)
possess a rating in one of the two highest ratings categories from at least one
nationally recognized statistical ratings organization ("NRSRO") (for example,
commercial paper rated "A-1" or "A-2" by Standard & Poor's Corporation ("S&P")
or "P-1" or "P-2" by Moody's Investors Service, Inc. ("Moody's")) or (2) are
unrated by an NRSRO but are determined by the Investment Advisor to present
minimal credit risks and to be of comparable quality to rated instruments
eligible for purchase by the Fund under guidelines adopted by the Board of
Trustees (the "Trustees").
PORTFOLIO TURNOVER
It is anticipated that the annual turnover rate for the Fund should not
exceed 150%. A higher rate of portfolio turnover will result in higher
transaction costs, including brokerage commissions. Also, to the extent that
higher portfolio turnover results in a higher rate of net realized capital gains
to the Fund, the portion of the Fund's distributions constituting taxable
capital gains may increase.
INVESTMENTS IN DEBT SECURITIES
With respect to Fund's investment in debt securities, there is no
requirement that all such securities be rated by a recognized rating agency.
However, it is the policy of the Fund that investments in debt securities,
whether rated or unrated, will be made only if they are, in the opinion of the
Investment Advisor, of equivalent quality to "investment grade" securities.
"Investment grade" securities are those rated within the four highest quality
grades as determined by Moody's or S&P. Securities rated Aaa by Moody's and AAA
by S&P are judged to be of the best quality and carry the smallest degree of
risk. Securities rated Baa by Moody's and BBB by S&P lack high quality
investment characteristics and, in fact, have speculative characteristics as
well. Debt securities are interest-rate sensitive, therefore their value will
tend to decrease when interest rates rise and increase when interest rates fall.
Such increase or decrease in value of longer-term debt instruments as a result
of interest rate movement will be larger than the increase or decrease in value
of shorter-term debt instruments.
INVESTMENTS IN OTHER INVESTMENT COMPANIES
The Fund may invest in other investment companies. As a shareholder in
an investment company, the Fund would bear its ratable share of that investment
company's expenses, including its advisory and administration fees. The
Investment Advisor has agreed to waive its management fees with respect to the
portion of the Fund's assets invested in shares of other investment companies.
OPTIONS TRANSACTIONS
The Fund may purchase put and call options on securities and on stock
indices to attempt to hedge the Fund's portfolio and to increase the Fund's
total return. The Fund may purchase call options when, in the opinion of the
Investment Advisor, the market price of the underlying security or index will
increase above the exercise price. The Fund may purchase put options when the
Investment Advisor expects the market price of the underlying security or index
to decrease below the exercise price. When the Fund purchases a call option it
will pay a premium to the party writing the option and a commission to the
broker selling the option. If the option is exercised by the Fund, the amount of
the premium and the commission paid may be greater than the amount of the
brokerage commission that would be charged if the security were to be purchased
directly.
The Fund may purchase puts and calls on foreign currencies that are
traded on a securities or commodities exchange or quoted by major recognized
dealers in such options for the purpose of protecting against declines in the
dollar value of foreign securities and against increases in the dollar cost of
foreign securities to be acquired. If a decline in the dollar value of a foreign
currency is anticipated, the decline in value of portfolio securities
denominated in that currency may be partially offset by purchasing puts on that
foreign currency. If a rise is anticipated in the dollar value of a foreign
currency in which securities to be
-8-
<PAGE>
acquired are denominated, the increased cost of such securities may be partially
offset by purchasing calls on that foreign currency. However, in the event of
rate fluctuations adverse to the Fund's position, it would lose the premium it
paid and transactions costs. This discussion is a general summary. See the
Statement of Additional Information for information concerning the Fund's
options transactions and strategies.
FUTURES AND OPTIONS ON FUTURES TRANSACTIONS
The Fund may enter into contracts for the future delivery of securities
or foreign currencies and futures contracts based on a specific security, class
of securities, foreign currency or an index, purchase or sell options on any
such futures contracts and engage in related closing transactions. A futures
contract on a securities index is an agreement obligating either party to pay,
and entitling the other party to receive, while the contract is outstanding,
cash payments based on the level of a specified securities index.
Although the Fund is permitted to engage in the purchase and sale of
futures contracts and options thereon solely for hedging purposes, the use of
such instruments does involve certain transaction costs and risks. The Fund's
ability to hedge effectively all or a portion of its portfolio through
transactions in futures, options on futures or options on related indexes
depends on the degree to which movements in the value of the currencies,
securities or index underlying such hedging instrument correlate with movements
in the value of the relevant portion of the Fund's portfolio. The trading of
futures and options on indexes involves the additional risk of imperfect
correlation between movements in the futures or option price and the value of
the underlying index. While the Fund will establish a future or option position
only if there appears to be a liquid secondary market therefor, there can be no
assurance that such a market will exist for any particular futures or option
contract at any specific time. In such event, it may not be possible to close
out a position held by the Fund, which could require the Fund to purchase or
sell the instrument underlying the position, make or receive a cash settlement,
or meet ongoing variation margin requirements. Investments in futures contracts
on fixed income securities and related indexes involve the risk that if the
Investment Advisor's judgment concerning the general direction of interest rates
is incorrect, the Fund's overall performance may be poorer than if it had not
entered into any such contract.
WRITING COVERED CALL OPTION CONTRACTS
The Fund may write covered call options on securities or stock indices,
but will not write such options if immediately after such sale the aggregate
value of the obligations under the outstanding options would exceed 25% of the
Fund's respective net assets. A call option is "covered" if the Fund owns the
underlying security covered by the call. The Fund will not write covered call
option contracts for speculative purposes.
When a covered call option expires unexercised, the writer realizes a
gain in the amount of the premium received. If the covered call option is
exercised, the writer realizes either a gain or loss from the sale or purchase
of the underlying security with the proceeds to the writer being increased by
the amount of the premium. Any gain or loss from such transaction will depend on
whether the amount paid is more or less than the premium received for the option
plus related transaction costs.
Risks associated with writing covered call option contracts are similar
to the risks discussed in the section concerning "Futures and Options on Futures
Transactions," above.
RISKS ASSOCIATED WITH FOREIGN INVESTMENTS
GENERAL. Consistent with its investment objective and policies, the
Fund may directly or indirectly invest in securities of foreign issuers. Direct
and indirect investments in securities of foreign issuers may involve risks that
are not present with domestic investments and there can be no assurance that the
Fund's foreign investments will present less risk than a portfolio of domestic
securities. Compared to United States issuers, there is generally less publicly
available information about foreign issuers and there may be less governmental
regulation and supervision of foreign stock exchanges, brokers and listed
companies. Foreign issuers are not generally subject to uniform accounting,
auditing and financial reporting standards, practices and requirements
comparable to those applicable to domestic issuers. Securities of some foreign
issuers are less liquid and their prices are more volatile than securities of
comparable domestic issuers. Settlement of transactions in some foreign markets
may be delayed or less frequent than in the United States, which could affect
the liquidity of the Fund's portfolio. Fixed brokerage commissions on foreign
securities exchanges are generally higher than in the United States. Income from
foreign securities may be reduced by a withholding tax at the source or other
foreign taxes. In some countries, there may also be the possibility of
expropriation or
-9-
<PAGE>
confiscatory taxation, limitations on the removal of funds or other assets of
the Fund, political or social instability or revolution, or diplomatic
developments which could affect investments in those countries.
The value of the Fund's investments denominated in foreign currencies
may depend in part on the relative strength of the U.S. dollar, and the Fund may
be affected favorably or unfavorably by exchange control regulations or changes
in the exchange rate between foreign currencies and the U.S. dollar. When the
Fund invests in foreign securities they will usually be denominated in foreign
currency, and the Fund may temporarily hold funds in foreign currencies. Thus,
the Fund's net asset value per share will be affected by changes in currency
exchange rates. Changes in foreign currency exchange rates may also affect the
value of dividends and interest earned, gains and losses realized on the sale of
securities and net investment income and gains, if any, to be distributed to
shareholders by the Fund. The rate of exchange between the U.S. dollar and other
currencies is determined by the forces of supply and demand in the foreign
exchange markets.
SPECIAL RISKS ASSOCIATED WITH THE FUND. In addition to the risks
described above, there are risks inherent in any investment in Hong Kong. In
1984 China and Britain signed the Sino-British Declaration which allowed for the
termination of British rule in Hong Kong in July 1997. The declaration, however,
provided that the existing capitalist economic and social system of Hong Kong
would be maintained for 50 years beyond the date. The Investment Advisor
believes that given the degree of current interdependence between China and Hong
Kong, China will not dramatically alter the operation of Hong Kong's economy and
Hong Kong will continue to offer attractive investment opportunities after China
takes control of Hong Kong.
The Fund may invest, without limit, in companies located in emerging
markets. An emerging market is any country that the World Bank has determined to
have a low or middle income economy and may include every country in the world
except the United States, Australia, Canada, Japan, New Zealand and most
countries in Western Europe such as Belgium, Denmark, France, Germany, Great
Britain, Italy, the Netherlands, Norway, Spain, Sweden and Switzerland.
Specifically, any change in the leadership or policies of the governments of
emerging market countries in which the Fund invest or in the leadership or
policies of any other government which exercises a significant influence over
those countries, may halt the expansion of or reverse certain beneficial
economic policies of such countries and thereby eliminate any investment
opportunities which may currently exist.
In addition to the risks described above, the economies of other
countries may differ unfavorably from the United States economy in such respects
as growth of domestic product, rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments positions. Further, such economies
generally are heavily dependent upon international trade and, accordingly, have
been and may continue to be adversely affected by any trade barriers, managed
adjustments in relative currency values and other protectionist measures imposed
or negotiated by countries with which they trade. These economies also have been
and may continue to be adversely affected by economic conditions in countries
with which they trade.
INVESTMENT ADVISOR AND INVESTMENT ADVISORY AGREEMENT
Tocqueville Asset Management L.P., 1675 Broadway, New York, New York
10019, acts as Investment Advisor to the Fund under a separate investment
advisory agreement (the "Agreement") which provides that the Investment Advisor
identify and analyze possible investments for the Fund, and determine the
amount, timing, and form of such investments. The Investment Advisor has the
responsibility of monitoring and reviewing the Fund's portfolio, on a regular
basis, and recommending the ultimate disposition of such investments. It is the
Investment Advisor's responsibility to cause the purchase and sale of securities
in the Fund's portfolio, subject at all times to the policies set forth by the
Board of Trustees. The Investment Advisor is an affiliate of Tocqueville
Securities L.P., the Fund's distributor.
Francois Sicart serves the Investment Advisor as portfolio manager of
the Fund. Mr. Sicart is the Chairman of Tocqueville Management Corporation, the
general partner of the Investment Advisor. Prior to forming the Investment
Advisor, and for the 18 year period from 1969 to 1986, he held various senior
positions within Tucker Anthony, Incorporated, where he managed private
accounts.
-10-
<PAGE>
Under the terms of the Agreement, the Fund pays the cost of all its
expenses (other than those expenses specifically assumed by the Investment
Advisor or the Fund's distributor), including the pro rata costs incurred in
connection with the Fund's maintenance of its registration under the 1933 Act
and the 1940 Act, printing of prospectuses distributed to shareholders, taxes or
governmental fees, brokerage commissions, custodial, transfer and shareholder
servicing agent costs, expenses of outside counsel and independent accountants,
preparation of shareholder reports, trustees' fees and shareholder meetings.
The Investment Advisor receives a fee from the Fund, calculated daily
and payable monthly, for the performance of its services at an annual rate of
1.00% on the first $50 million of the average daily net assets of the Fund, .75%
of average daily net assets in excess of $50 million but not exceeding $100
million, and .65% of the average daily net assets in excess of $100 million. The
fee is accrued daily for the purposes of determining the offering and redemption
price of the Fund's shares.
DISTRIBUTION PLAN
The Fund has adopted a distribution plan (the "Plan") pursuant to Rule
12b-1 of the 1940 Act. Pursuant to the Plan, the Fund may incur distribution
expenses related to the sale of its shares of up to .25% per annum of the Fund's
average daily net assets.
The Plan provide that the Fund may finance activities which are
primarily intended to result in the sale of the Fund's shares, including, but
not limited to, advertising, printing of prospectuses and reports for other than
existing shareholders, preparation and distribution of advertising material and
sales literature and payments to dealers and shareholder servicing agents
including Tocqueville Securities L.P. ("Tocqueville Securities" or the
"Distributor"), the Fund's distributor, who enter into agreements with the Fund
or Tocqueville Securities. The Plan will only make payments for expenses
actually incurred on a first-in, first-out basis. The Plan may carry forward for
an unlimited number of years any unreimbursed expenses. If a Plan is terminated
in accordance with its terms, the obligations of the Fund to make payments
pursuant to the Plan will cease and the Fund will not be required to make any
payments past the date the Plan terminates. (See the Statement of Additional
Information--"Distribution Plan" for further information about the Plan.)
As of October 31, 1996, the Fund had $66,730 of unreimbursed
distribution expenses (0.37% as a percentage of the Fund's net assets as of
October 31, 1996). (See the Statement of Additional Information--"Distribution
Plan" for further information about the Plan.)
ADMINISTRATIVE SERVICES AGREEMENT
Under an Administrative Services Agreement, Tocqueville Asset
Management L.P. supervises the administration of all aspects of the Fund's
operations, including the Fund's receipt of services for which the Fund is
obligated to pay, provides the Fund with general office facilities and provides,
at the Fund's expense, the services of persons necessary to perform such
supervisory, administrative and clerical functions as are needed to effectively
operate the Fund. Those persons, as well as certain employees and Trustees of
the Fund, may be directors, officers or employees of (and persons providing
services to the Fund may include) Tocqueville Asset Management L.P. and its
affiliates. For these services and facilities, Tocqueville Asset Management L.P.
receives with respect to the Fund a fee computed and paid monthly at an annual
rate of .15% of the average daily net assets of the Fund. Certain administrative
responsibilities have been delegated to and are being performed by Firstar Trust
Company.
BROKERAGE ALLOCATION
Subject to the supervision of the Board of Trustees, decisions to buy
and sell securities for the Fund are made by the Investment Advisor. The
Investment Advisor, subject to obtaining the best price and execution, may
allocate brokerage transactions in a manner that takes into account the sale of
shares of the Fund. Generally, the primary consideration in placing portfolio
securities transactions with broker-dealers for execution is to obtain, and
maintain the availability of, execution at the best net price available and in
the most effective manner possible. The Fund' brokerage allocation policies may
permit the Fund to pay a broker-dealer which furnishes research services a
higher commission than that which might be charged by another broker-dealer
which does not furnish research services, provided that such commission is
deemed reasonable in relation to
-11-
<PAGE>
the value of the services provided by such broker-dealer. Subject to the
supervision of the Trustees, the Investment Advisor is authorized to allocate
brokerage to affiliated broker-dealers on an agency basis to effect portfolio
transactions. The Trustees have adopted procedures incorporating the standards
of Rule 17e-1 of the 1940 Act, which require that the commission paid to
affiliated broker-dealers must be reasonable and fair compared to the
commission, fee or other remuneration received, or to be received, by other
brokers in connection with comparable transactions involving similar securities
during a comparable period of time. It is expected that brokerage will be
allocated to the Distributor, Tocqueville Securities L.P., an affiliate of the
Investment Advisor. For a complete discussion of portfolio transactions and
brokerage allocation, see "Portfolio Transactions and Brokerage" in the
Statement of Additional Information.
PURCHASE OF SHARES
GENERAL INFORMATION
Shares are sold to investors at the net asset value next determined
after a purchase order becomes effective (as described below) plus a varying
initial sales charge.
The minimum initial investment in The Tocqueville Trust is $5,000
except for 401(k), IRA, Keogh and other pension or profit sharing plan accounts
where the minimum is $2,000. For example, an investor may choose to make an
initial investment in the Fund equal to an amount which is less than $5,000 so
long as such investor's total initial investments in the Fund are equal to
$5,000. The minimum subsequent investment in the Trust is $1,000. The
Distributor may, in its discretion, waive the minimum investment requirements
for purchases, including those made via the Automatic Investment Plan, which is
discussed below .
Shares of the Fund may be purchased from the following entities: (a)
the Fund's distributor, Tocqueville Securities; (b) authorized securities
dealers which have entered into sales agreements with Tocqueville Securities
(the "Selling Brokers") on a best efforts basis and brokers who have entered
into agreements with the Trust to provide distribution and shareholder services;
and (c) the Fund's transfer agent, Firstar Trust Company (the "Transfer Agent").
The Fund reserves the right to cease offering shares for sale at any time or to
reject any order for the purchase of shares.
A purchase order becomes effective upon receipt of the order by
Tocqueville Securities, a Selling Broker or other broker or the Transfer Agent.
Purchase orders received prior to 4:00 p.m. New York time are priced according
to the net asset value per share next determined on that day. Purchase orders
received after 4:00 p.m. New York time are priced according to the net asset
value per share next determined on the following day.
The net asset value per share is determined by dividing the market
value of the Fund's investments as of the close of trading plus any cash or
other assets (including dividends receivable and accrued interest) less all
liabilities (including accrued expenses) by the number of Fund shares
outstanding. The Fund will determine the net asset value of its shares once
daily as of the close of trading on the New York Stock Exchange (the "Exchange")
on each "Fund business day" which is any day on which the Exchange is open for
business.
Investors who already have a brokerage account with Tocqueville
Securities , a Selling Broker or another broker may purchase the Fund's shares
through such broker. Payment for purchase orders through Tocqueville Securities
, the Selling Broker or another broker must be made to Tocqueville Securities ,
the Selling Broker or another broker within three business days of the purchase
order. All dealers are responsible for forwarding orders for the purchase of the
Fund's shares on a timely basis.
The Fund's shares normally will be maintained in book entry form and
share certificates will be issued only on request. The Distributor reserves the
right to refuse to sell shares of the Fund to any person.
-12-
<PAGE>
INITIAL SALES CHARGES
The initial sales charge, imposed upon a sale of shares, varies
according to the size of the purchase as follows:
<TABLE>
<CAPTION>
CONCESSION
INITIAL SALES CHARGE TO DEALERS
-------------------- ----------
% OF % OF NET % OF
OFFERING AMOUNT OFFERING
AMOUNT OF PURCHASE PRICE INVESTED PRICE
----- -------- -----
<S> <C> <C> <C>
Less than $100,000........................................... 4.00 4.16 3.50
$100,000 to $249,999......................................... 3.50 3.63 3.00
$250,000 to $499,999......................................... 2.50 2.56 2.00
$500,000 to $999,999......................................... 1.50 1.52 1.00
$1,000,000 and over.......................................... 1.00 1.01 0.50
</TABLE>
The reduced initial sales charges apply to the aggregate of purchases
of shares of the Fund made at one time by any " person", which term includes an
individual, spouse and children under the age of 21, or a trustee or other
fiduciary of a trust, estate or fiduciary account.
Upon notice to Selling Brokers, Tocqueville Securities may reallow up
to the full applicable initial sales charge and such Selling Broker may
therefore be deemed an "underwriter" under the Securities Act of 1933, as
amended, during such periods. The Distributor may, from time to time, provide
promotional incentives to certain Selling Brokers whose representatives have
sold or are expected to sell significant amounts of one or all of the funds in
the Trust. At various times the Distributor may implement programs under which a
Selling Broker's sales force may be eligible to win cash or material awards for
certain sales efforts or under which the Distributor will reallow an amount not
exceeding the total applicable initial sales charges generated by the Selling
Broker during such programs to any Selling Broker that sponsors sales contests
or recognition programs conforming to criteria established by the Distributor or
participates in sales programs sponsored by the Distributor. The Distributor may
provide marketing services to Selling Brokers, consisting of written
informational material relating to sales incentive campaigns conducted by such
Selling Brokers for their representatives.
PURCHASES OF SHARES AT NET ASSET VALUE
PURCHASES THROUGH CERTAIN BROKERAGE ACCOUNTS. Shares may be purchased
at net asset value through brokerage accounts with Tocqueville Securities L.P.,
Selling Brokers and other brokers who have entered into agreements with the
Trust to provide distribution and shareholder services.
QUALIFIED PERSONS. There is no initial sales charge for "Qualified
Persons", which are the following (a) active or retired trustees, directors,
officers, partners or employees (their spouses and children under age 21) of (i)
the Investment Advisor and Distributor or any affiliates or subsidiaries thereof
(the directors, officers or employees of which shall also include their parents
and siblings for all purchases of Fund shares), (ii) Selling Brokers or other
brokers who have entered into agreements with the Trust to provide distribution
and shareholder services, or (iii) trade organizations to which the Investment
Advisor belongs and (b) trustees or custodians of any qualified retirement plan
or IRA established for the benefit of a person in (a) above.
PURCHASES THROUGH INVESTMENT ADVISERS AND STATE AUTHORITIES. Purchases
also may be made with no initial sales charge through a registered investment
adviser who has registered with the Securities and Exchange Commission or
appropriate state authorities and who (a) clears such Fund share transaction
through a broker/dealer, bank or trust company, (each of whom may impose
transaction fees with respect to such transaction), or (b) purchases shares for
its own account, or an account for which the investment adviser has discretion
and is authorized to make investment decisions.
QUALIFIED AND OTHER RETIREMENT PLAN. In addition, no initial sales
charge will apply to any purchase of shares by an investor (a) through a 401(k)
Plan sponsored by the Investment Advisor or the Distributor, through a 401(k)
Plan sponsored by an institution which has a custodial relationship with the
Fund's custodian
-13-
<PAGE>
or through a discount broker-dealer which imposes a transaction charge with
respect to such purchase, (b) a 403(b) Plan or 457 (state deferred compensation)
Plan, or (c) through a tax-free rollover or transfer of assets provided, (i) the
IRA is sponsored by the Fund's custodian and the contribution for the tax-free
rollover or transfer of assets is a distribution from any tax qualified
retirement plan sponsored by an institution for which the Fund's custodian
serves as trustee or custodian of such plan or of any other qualified or
nonqualified retirement or deferred compensation plan maintained by such
institution, or (ii) the contribution for the tax-free rollover or transfer of
assets is a distribution from any tax qualified retirement plan where any
portion of the investor-participant's account was invested in any Fund of the
Trust.
RECENTLY REDEEMED SHARES. Shares of the Fund may be purchased at net
asset value by persons who have, within the previous 30 days, redeemed their
shares of the Fund. The amount which may be purchased at net asset value is
limited to an amount up to, but not exceeding, the net amount of redemption
proceeds. Such purchases may also be handled by a securities dealer, who may
charge the shareholder a fee for this service.
SHAREHOLDERS AS OF JANUARY 1, 1994. Shareholders who held shares of the
Fund of the Tocqueville Trust prior to January 1, 1994, may purchase shares of
any Fund of the Trust at net asset value for as long as they continue to own
shares of any Fund of the Trust, provided that there is no change in the account
registration. However, once a shareholder has closed their account by redeeming
all of their Fund shares for a period of more than thirty days such shareholder
will no longer be able to purchase shares of the Fund at net asset value.
REDUCED INITIAL SALES CHARGES
CUMULATIVE QUANTITY DISCOUNT. Shares of the Fund may be purchased by
any person at a reduced initial sales charge which is determined by (a)
aggregating the dollar amount of the new purchase and the greater of the
purchaser's total (i) net asset value or (ii) cost of all shares of such Fund
and the other Funds of the Trust, acquired by exchange from such other Fund,
provided such Fund charged an initial sales load at the time of the exchange
then held by such person and (b) applying the initial sales charge applicable to
such aggregate. The privilege of the cumulative quantity discount is subject to
modification or discontinuance at any time with respect to all shares purchased
thereafter.
GROUP PURCHASES. An individual who is a member of a qualified group (as
defined below) may also purchase shares of the Fund at the reduced initial sales
charge applicable to the group taken as a whole. The reduced initial sales
charge is based upon the aggregate dollar value of shares previously purchased
and still owned by the group plus the securities currently being purchased and
is determined as stated above under "Cumulative Quantity Discount". For example,
if members of the group had previously invested and still held $90,000 of shares
and now were investing $15,000, the initial sales charge would be 3.50%. In
order to obtain such discount, the purchaser or investment dealer must provide
the Transfer Agent with sufficient information, including the purchaser's total
cost, at the time of purchase to permit verification that the purchaser
qualifies for a cumulative quantity discount, and confirmation that the order is
subject to such verification. Information concerning the current initial sales
charge applicable to a group may be obtained by contacting the Transfer Agent.
A "qualified group" is one which: (a) has been in existence for more
than six months; (b) has a purpose other than acquiring shares at a discount;
and (c) satisfies uniform criteria which enables the Distributor to realize
economies of scale in its costs of distributing shares. A qualified group must
have more than 10 members, must be available to arrange for group meetings
between representatives of the Fund and the members, must agree to include sales
and other materials related to the Fund in its publications and mailings to
members at reduced or no cost to the Distributor, and must seek to arrange for
payroll deduction or other bulk transmission of investments in the Fund. This
privilege is subject to modification or discontinuance at any time with respect
to all shares purchased thereafter.
LETTER OF INTENT. Investors may also qualify for reduced initial sales
charges by signing a Letter of Intent (the "LOI"). This enables the investor to
aggregate purchases of shares of the Fund with purchases of shares of any other
Fund of the Trust acquired by exchange, during a 13-month period. The initial
sales charge is based on the total amount invested in shares during the 13-month
period. Shares of the Fund currently owned by the investor including such Fund,
if any, will be credited as purchases (at their current offering prices on the
date the LOI is signed) toward completion of the LOI. A 90-day back-dating
period can
-14-
<PAGE>
be used to include earlier purchases at the investor's cost. The 13-month period
would then begin on the date of the first purchase during the 90-day period. No
retroactive adjustment will be made if purchases exceed the amount indicated in
the LOI. A shareholder must notify the Transfer Agent or Distributor whenever a
purchase is being made pursuant to a LOI.
The LOI is not a binding obligation on the investor to purchase, or on
the Fund to sell, the full amount indicated; however, on the initial purchase
(or subsequent purchases if necessary), 5% of the dollar amount specified in the
LOI will be held in escrow by the Transfer Agent in shares registered in the
shareholder's name in order to assure payment of the proper initial sales
charge. If total purchases pursuant to the LOI (less any dispositions and
exclusive of any distributions on such shares automatically reinvested) are less
than the amount specified, the investor will be requested to remit to the
Transfer Agent an amount equal to the difference between the initial sales
charge paid and the initial sales charge applicable to the aggregate purchases
actually made. If not remitted within 20 days after written request, an
appropriate number of escrowed shares will be redeemed in order to realize the
difference. This privilege is subject to modification or discontinuance at any
time with respect to all shares purchased thereunder. Shareholders will be paid
distributions, either in additional shares or cash, upon such escrowed shares.
METHODS OF PAYMENT
BY CHECK. Investors who wish to purchase shares directly from the
Transfer Agent may do so by sending a completed purchase application (included
with this Prospectus or obtainable from the Trust) to The Tocqueville Trust, c/o
Firstar Trust Company, P.O. Box 701, Milwaukee, WI 53201-0701, accompanied by a
check payable to the Fund whose shares are being purchased. Purchase
applications sent to the Fund will be forwarded to the Transfer Agent, and will
not be effective until received by the Transfer Agent. The price per share is
the next determined per share net asset value (plus a varying initial sales
charge) after receipt of an application by Firstar Trust Company. Purchase
applications should be mailed directly to: The Tocqueville Trust [name of fund],
c/o Firstar Trust Company, P.O. Box 701, Milwaukee, Wisconsin 53201-0701. The
U.S. Postal Service and other independent delivery services are not agents of
the Trust. Therefore, deposit of purchase applications in the mail or with such
services does not constitute receipt by Firstar Trust Company or the Trust.
Please do not mail letters by overnight courier to the post office box address.
To purchase shares by overnight or express mail, please use the following street
address: The Tocqueville Trust - The Tocqueville Asia-Pacific Fund, c/o Firstar
Trust Company, Mutual Fund Services, Third Floor, 615 East Michigan Street,
Milwaukee, Wisconsin 53202. All applications must be accompanied by payment in
the form of a check drawn on a U.S. bank payable to The Tocqueville Trust or by
direct wire transfer. No cash will be accepted. Firstar Trust Company will
charge a $20 fee against a shareholder's account for any payment check returned
to the custodian. The shareholder will also be responsible for any losses
suffered by the Fund as a result.
BY AUTOMATIC INVESTMENT PLAN. The Fund have an Automatic Investment
Plan which permits an existing shareholder to purchase additional shares of any
Fund (minimum $100 per transaction) at regular intervals. Under the Automatic
Investment Plan, shares are purchased by transferring funds from a shareholder's
checking, bank money market, NOW account, or savings account in an amount of
$100 or more designated by the shareholder. At the shareholder's option, the
account designated will be debited and shares will be purchased on the date
selected by the shareholder. There must be a minimum of seven days between
automatic purchases. If the date selected by the shareholder is not a business
day, funds will be transferred the next business day thereafter. Only an account
maintained at a domestic financial institution which is an Automated Clearing
House member may be so designated. To establish an Automatic Investment Account,
complete and sign Section F of the Purchase Application and send it to the
Transfer Agent. Shareholders may cancel this privilege or change the amount of
purchase at any time by calling 1-800-697-3863 or by mailing written
notification to: The Tocqueville Trust [name of fund], c/o Firstar Trust
Company, P.O. Box 701, Milwaukee, Wisconsin 53201-0701. The change will be
effective five business days following receipt of notification by the Transfer
Agent. The Fund may modify or terminate this privilege at any time or charge a
service fee, although no such fee currently is contemplated. However, a $20 fee
will be imposed by Firstar Trust Company if sufficient funds are not available
in the shareholder's account at the time of the automatic transaction .
While investors may use this option to purchase shares in their IRA or
other retirement plan accounts, neither the Distributor nor the Transfer Agent
will monitor the amount of contributions to ensure that they do not exceed the
amount allowable for Federal tax purposes. Firstar Trust Company will assume
that all retirement plan contributions are being made for the tax year in which
they are received.
-15-
<PAGE>
BY WIRE. Investors who purchase shares directly from the Transfer Agent
may also purchase shares by wire. Funds should be wired to:
Firstar Bank Milwaukee, N.A.
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
ABA # 075000022
Credit: Firstar Trust Company
Account # 112952137
Further credit: The Tocqueville Trust
Name of shareholder and account number (if known)
(Wired funds must be received prior to 4:00 p.m. Eastern time to be
eligible for same day pricing.)
The establishment of a new account or any additional purchases for an
existing account by wire transfer should be preceded by a phone call to Firstar
Trust Company, 1-800-697-3863, to provide information for the account. A
properly signed share purchase application marked "Follow Up" must be sent for
all new accounts opened by wire transfer. Applications are subject to acceptance
by the Fund, and are not binding until so accepted.
REDEMPTION OF SHARES
GENERAL INFORMATION
In order to redeem shares purchased through Tocqueville Securities , a
Selling Broker or other broker, the broker must be notified by telephone or mail
to execute a redemption. A properly completed order to redeem shares received by
the broker's office will be executed at the net asset value next determined
after receipt by the broker of the order. Redemption proceeds will be held in a
shareholder's account with Tocqueville Securities unless the broker is
instructed to remit all proceeds directly to the shareholder.
Shares purchased through the Transfer Agent may be redeemed by the
Transfer Agent at the next determined net asset value upon receipt of a request
in good order. Payment will be made for redeemed shares as soon as practicable,
but in no event later than three business days after receipt of a redemption
notification in good order. If the shares being redeemed were purchased directly
from the Transfer Agent by check, payment may be delayed for the minimum time
needed to verify that the purchase check has been honored. This is not normally
more than 15 days from the time of receipt of the check by the Transfer Agent.
"Good order" means that the request complies with the following: (a) where the
shareholder has not elected to permit telephone redemptions, the request must be
in writing, specifying the number of shares or dollar amount to be redeemed and
sent to the Transfer Agent, Attn. The Tocqueville Asia-Pacific Fund at P.O. Box
701, Milwaukee, Wisconsin 53201-0701. The U.S. Postal Service and other
independent delivery services are not agents of the Trust. Therefore, deposit of
redemption requests in the mail or with such services does not constitute
receipt by Firstar Trust Company or the Trust. Please do not mail letters by
overnight courier to the post office box address. Redemption requests sent by
overnight or express mail should be directed to: The Tocqueville Asia- Pacific
Fund c/o Firstar Trust Company, Mutual Fund Services, Third Floor, 615 East
Michigan Street, Milwaukee, Wisconsin 53202. Requests for redemption by telegram
and requests which are subject to any special conditions or which specify an
effective date other than as provided herein cannot be honored; (b) where share
certificates have been issued, a shareholder must endorse the certificates and
include them in the redemption request; (c) signatures on the redemption request
and on endorsed certificates submitted for redemption must be guaranteed by a
commercial bank which is a member of the Federal Deposit Insurance Corporation,
a trust company or a member firm (broker-dealer) of a national securities
exchange (a notary public or a savings and loan association is not an acceptable
guarantor); and, (d) the request must include any additional legal documents
concerning authority and related matters in the case of estates, trusts,
guardianships, custodianships, partnerships and corporations. Any written
requests sent to the Fund will be forwarded to the Transfer Agent and the
effective date of a redemption request will be when the request is received by
the Transfer Agent. Shareholders who purchased shares through the Transfer Agent
may arrange for the proceeds of redemption requests to be sent by Federal Fund
wire to a designated bank account by sending wiring instructions to Firstar
Trust Company, P.O. Box 701, Milwaukee, Wisconsin 53201-0701. The Transfer Agent
charges a $12 service fee for each payment of redemption proceeds made by
Federal Fund wire. Additional information regarding redemptions may be obtained
by calling 1-800-697-3863.
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<PAGE>
Redemption of the Fund's shares or payments therefore may be suspended
at such times (a) when the Exchange is closed, (b) when trading on the Exchange
is restricted, (c) when an emergency exists which makes it impractical for the
Fund to either dispose of securities or make a fair determination of net asset
value, or (d) for such other period as the Securities and Exchange Commission
may permit for the protection of the Fund's shareholders. There is no assurance
that the net asset value received upon redemption will be greater than that paid
by a shareholder upon purchase.
The Fund reserve the right to close an account that has dropped below
$500 in value for a period of three months or longer other than as a result of a
decline in the net asset value per share. Shareholders are notified at least 60
days prior to any proposed redemption and are invited to add to their account if
they wish to continue as shareholders of the Fund.
TELEPHONE REDEMPTION
Shareholders of the Fund will also be permitted to redeem fund shares
by telephone. To redeem shares by telephone, call 1-800-697-3863 with your
account name, account number and amount of redemption. Redemption proceeds will
only be sent to a shareholder's address or a pre-authorized bank account of a
commercial bank located within the United States as shown on the Transfer
Agent's records. (Available only if established on the account application and
if there has been no change of address by telephone within the preceding 15
days.)
The Fund reserve the right to refuse a telephone redemption if they
believe it is advisable to do so. Procedures for redeeming shares by telephone
may be modified or terminated by the Fund at any time upon notice to
shareholders. During periods of substantial economic or market change, telephone
redemptions may be difficult to implement. If a shareholder is unable to contact
the Transfer Agent by telephone, shares may also be redeemed by delivering the
redemption request to the Transfer Agent.
In an effort to prevent unauthorized or fraudulent redemption requests
by telephone, the Fund and the Transfer Agent employ reasonable procedures to
confirm that such instructions are genuine. Among the procedures used to
determine authenticity, investors electing to redeem or exchange by telephone
will be required to provide their account number. All such telephone
transactions will be tape recorded. The Tocqueville Funds may implement other
procedures from time to time. If reasonable procedures are not implemented, the
Fund and/or the Transfer Agent may be liable for any loss due to unauthorized or
fraudulent transactions. In all other cases, the shareholder is liable for any
loss for unauthorized transactions.
SHAREHOLDER PRIVILEGES
SYSTEMATIC WITHDRAWAL PLAN. The funds offer a Systematic Withdrawal
Plan for shareholders who own shares worth at least $10,000 at current net asset
value of any Fund. Under the Systematic Withdrawal Plan, a fixed sum (minimum
$500) will be distributed at regular intervals (on any day, either monthly or
quarterly). In electing to participate in the Systematic Withdrawal Plan,
investors should realize that within any given period the appreciation of their
investment in a particular Fund may not be as great as the amount withdrawn. A
shareholder may vary the amount of frequency of withdrawal payments or
temporarily discontinue them by notifying Firstar Trust Company at
1-800-697-3863. The Systematic Withdrawal Plan does not apply to shares of any
Fund held in Individual Retirement Accounts or defined contribution retirement
plans. For additional information or to request an application please call
Firstar Trust Company at 1-800-697-3863.
EXCHANGE PRIVILEGE. Subject to certain conditions, shares of the Fund
may be exchanged for the shares of another Fund of The Tocqueville Trust at such
Fund's then current net asset value. No initial sales charge is imposed on the
shares being acquired through an exchange. The dollar amount of the exchange
must be at least equal to the minimum investment applicable to the shares of the
Fund acquired through such exchange. You should note that any such exchange,
which may only be made in states where shares of the Fund of The Tocqueville
Trust are qualified for sale, may create a gain or loss to be recognized for
federal income tax purposes. Exchanges must be made between accounts having
identical registrations and addresses. Exchanges may be authorized by telephone.
In order to protect itself and shareholders from liability for unauthorized or
fraudulent telephone transactions, the Fund will use reasonable procedures in an
attempt to verify the identity of a person making a telephone exchange request.
The Fund reserves the right to refuse a telephone exchange request if it
believes that the person making the request is not the record owner of the
shares being exchanged, or is not authorized by the shareholder to request the
exchange. Shareholders will be
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<PAGE>
promptly notified of any refused request for a telephone exchange. As long as
these normal identification procedures are followed, neither the Fund nor their
agents will be liable for loss, liability or cost which results from acting upon
instructions of a person believed to be a shareholder with respect to the
telephone exchange privilege. You will not automatically be assigned this
privilege unless you check the box on the Purchase Application which indicates
that you wish to have the privilege. The exchange privilege may be modified or
discontinued at any time.
Shareholders may also exchange shares of any or all of an investment in
the Fund for shares of the Portico Money Market Fund, the Portico Tax-Exempt
Money Market Fund, or the Portico U.S. Government Fund (collectively the "Money
Market Funds"). This Exchange Privilege is a convenient way for shareholders to
buy shares in a money market fund in order to respond to changes in their goals
or market conditions. Before exchanging into the Money Market Funds,
shareholders must read the Portico Money Market Funds' Prospectus. To obtain the
Money Market Funds' Prospectus and the necessary exchange authorization forms,
call the Transfer Agent at 1-800-697-3863. The Transfer Agent charges a $5 fee
for each telephone exchange which will be deducted from the investor's account
from which the funds are being withdrawn prior to effecting the exchange. There
is no charge for exchange transactions that are requested by mail. Use of the
Exchange Privilege is subject to the minimum purchase and redemption amounts set
forth in the Prospectus for the Money Market Funds. All accounts opened in a
Money Market Fund as a result of using the Exchange Privilege must be registered
in the identical name and taxpayer identification number as a shareholder's
existing account with the Fund.
For purposes of the Exchange Privilege, exchanges into and out of the
Money Market Funds will be treated as shares owned in the Fund. For example, if
an investor who owned shares in any one of the Fund moved an investment from one
of the Fund to one of the Money Market Funds and then decided at a later date to
move the investment back to one of the Fund, he or she would be deemed, once
again, to own shares of one of the Fund and may do so without the imposition of
any additional sales charges, so long as the investment has been continuously
invested in shares of the Money Market Fund during the period between withdrawal
and reinvestment.
Remember that each exchange represents the sale of shares of one fund
and the purchase of shares of another. Therefore, shareholders may realize a
taxable gain or loss on the transaction. Before making an exchange request, an
investor should consult a tax or other financial adviser to determine the tax
consequences of a particular exchange. The Distributor is entitled to receive a
fee from the Money Market Funds for certain support services at the annual rate
of .20 of 1% of the average daily net asset value of the shares for which it is
the holder or dealer of record. Because excessive trading can hurt the Fund'
performance and shareholders, the Fund reserve the right to temporarily or
permanently limit the number of exchanges or to otherwise prohibit or restrict
shareholders from using the Exchange Privilege at any time, without notice to
shareholders. In particular, a pattern of exchanges with a "market timing"
strategy may be disruptive to the Fund and may thus be restricted or refused.
Excessive use of the Exchange Privilege is defined as more than five exchanges
per calendar year. The restriction or termination of the Exchange Privilege does
not affect the rights of shareholders to redeem shares, as discussed in the
Prospectus.
The Money Market Funds are managed by Firstar Investment Research and
Management Company, an affiliate of Firstar Trust Company. The Portico Funds,
including the Money Market Funds, are unrelated to The Tocqueville Trust.
CHECK REDEMPTION. A shareholder may request on the Purchase Application
or by later written request to establish check redemption privileges for any of
the Money Market Funds. The Redemption Checks ("Checks") will be drawn on the
Money Market Fund in which the investor has made an investment. Checks will be
sent only to the registered owner(s) and only to the address of record. Checks
may be made payable to the order of any person in the amount of $250 or more.
Dividends are earned until the Check clears the Transfer Agent. When a Check is
presented to the Transfer Agent for payment, the Transfer Agent, as the
investor's agent, will cause the particular Money Market Fund involved to redeem
a sufficient number of the investor's shares to cover the amount of the Check.
Checks will not be returned to shareholders after clearance. The initial
checkbook is free, additional checkbooks are $5. The fee for additional
checkbooks will be deducted from the shareholder's account. There is no charge
to the investor for the use of the Checks; however, the Transfer Agent will
impose a $20 charge for stopping payment of a Check upon the request of the
investor, or if the Transfer Agent cannot honor a Check due to insufficient
funds or other valid reason. Because dividends on each Money Market Fund accrue
daily, Checks may not be used to close an account, as a small balance is likely
to result.
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<PAGE>
DIVIDENDS, DISTRIBUTIONS, AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS. Dividends are paid at least annually by
the Fund. The Fund also distribute net capital gains (if any) at least annually.
Dividends and distributions of shares may be reinvested at net asset value
without an initial sales charge. Shareholders should indicate on the purchase
application whether they wish to receive dividends and distributions in cash.
Otherwise, all income dividends and capital gains distributions are
automatically reinvested in the Fund making the distribution at the next
determined net asset value unless the Transfer Agent receives written notice
from an individual shareholder prior to the record date, requesting that the
distributions and dividends be distributed to the investor in cash.
TAX MATTERS. The Fund intends to qualify as a regulated investment
company by satisfying the requirements under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"), including requirements with
respect to diversification of assets, distribution of income and sources of
income. It is the Fund's policy to distribute to shareholders all of its
investment income (net of expenses) and any capital gains (net of capital
losses) in accordance with the timing requirements imposed by the Code so that
the Fund will satisfy the distribution requirement of Subchapter M and not be
subject to federal income or the 4% excise tax. If the Fund fails to satisfy any
of the Code requirements for qualification as a regulated investment company, it
will be taxed at regular corporate tax rates on all of its taxable income
(including any capital gains) without any deduction for distributions to
shareholders, and distributions to shareholders will be taxable as ordinary
dividends (even if derived from the Fund's net long-term capital gains) to the
extent of that Fund's current and accumulated earnings and profits.
Distributions by the Fund of its net investment income and the excess,
if any, of its net short-term capital gain over its net long-term capital loss
are generally taxable to shareholders as ordinary income. These distributions
are treated as dividends for federal income tax purposes. Because it is
anticipated that the investment income of The Fund will not include dividends
from domestic corporations, none of the ordinary income dividends paid by the
Fund should qualify for the 70% dividends-received deduction for corporate
shareholders. Distributions by the Fund of the excess, if any, of its net
long-term capital gain over its net short-term capital loss are designated as
capital gain dividends and are taxable to shareholders as long-term capital
gains, regardless of the length of time a shareholder has held his shares.
Portions of the Fund's investment income may be subject to foreign
income taxes withheld at the source. The economic effect of such withholding
taxes or the total return of the Fund cannot be predicted. The Fund may elect to
"pass through" to its shareholders these foreign taxes, in which event each
shareholder will be required to include their pro rata portion thereof in their
gross income, but will be able to deduct or (subject to various limitations)
claim a foreign tax credit for such amount.
Distributions by the Fund to shareholders will be treated in the same
manner for federal income tax purposes whether received in cash or reinvested in
additional shares of the Fund. In general, distributions by the Fund are taken
into account by the shareholders in the year in which they are made. However,
certain distributions made during January will be treated as having been paid by
the Fund and received by the shareholders on December 31 of the preceding year.
A statement setting forth the federal income tax status of all distributions
made or deemed made during the year, including any amount of foreign taxes
"passed through", will be sent to shareholders promptly after the end of each
year if the Fund so designates. A shareholder who purchases shares of the Fund
just prior to the record date will be taxed on the entire amount of the dividend
received, even though the net asset value per share on the date of such purchase
may have reflected the amount of such dividend.
A shareholder will recognize gain or loss upon the sale or redemption
of shares of the Fund in an amount equal to the difference between the proceeds
of the sale or redemption and the shareholder's adjusted tax basis in the
shares. Any loss recognized upon a taxable disposition of shares within six
months from the date of their purchase will be treated as a long-term capital
loss to the extent of any capital gain dividends received on such shares. All or
a portion of any loss recognized upon a taxable disposition of shares of the
Fund may be disallowed if other shares of the Fund are purchased within 30 days
before or after such disposition.
Ordinary income dividends paid to non-resident alien or foreign entity
shareholders generally will be subject to United States withholding tax at a
rate of 30% (or lower rate under an applicable treaty). Foreign shareholders are
urged to consult their own tax advisers concerning the applicability of United
States withholding taxes.
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Under the backup withholding rules of the Code, certain shareholders
may be subject to 31% backup withholding of federal income tax on ordinary
income dividends, capital gain dividends and redemption proceeds paid by the
Fund. In order to avoid this backup withholding, a shareholder must provide the
Fund with a correct taxpayer identification number (which for most individuals
is their Social Security number) and certify that it is a corporation or
otherwise exempt from or not subject to backup withholding.
The foregoing discussion of federal income tax consequences is based on
tax laws and regulations in effect on the date of this Prospectus, and is
subject to change by legislative or administrative action. As the foregoing
discussion is for general information only, a prospective shareholder should
also review the more detailed discussion of federal income tax considerations
relevant to the Fund that is contained in the Statement of Additional
Information. In addition, each prospective shareholder should consult with his
own tax adviser as to the tax consequences of investments in the Fund, including
the application of state and local taxes which may differ from the federal
income tax consequences described above.
ORGANIZATION AND DESCRIPTION OF SHARES OF THE TRUST
The Trust was organized as a Massachusetts business trust under the
laws of the Commonwealth of Massachusetts. The Trust's Declaration of Trust
filed September 17, 1986, permits the Trustees to issue an unlimited number of
shares of beneficial interest with a par value of $0.01 per share in an
unlimited number of series of shares. On August 19, 1991, the Declaration of
Trust was amended to change the name of the Trust to "The Tocqueville Trust,"
and on August 4, 1995, the Declaration of Trust was amended to permit the
division of a series into classes of shares. Each share of beneficial interest
has one vote and shares equally in dividends and distributions when and if
declared by the Fund and in the Fund's net assets upon liquidation. All shares,
when issued, are fully paid and nonassessable. There are no preemptive or
conversion rights. Fund shares do not have cumulative voting rights and, as
such, holders of at least 50% of the shares voting for trustees can elect all
trustees and the remaining shareholders would not be able to elect any trustees.
The Board of Trustees may classify or reclassify any unissued shares of the
Trust into shares of any series by setting or changing in any one or more
respects, from time to time, prior to the issuance of such shares, the
preference, conversion or other rights, voting powers, restrictions, limitations
as to dividends, or qualifications of such shares. Any such classification or
reclassification will comply with the provisions of the 1940 Act.
There will not normally be annual shareholder meetings. Shareholders
may remove Trustees from office by votes cast at a meeting of shareholders or by
written consent.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND PAYING AGENT
Firstar Trust Company serves the Fund's Transfer and Dividend Paying
Agent, and in those capacities maintains certain financial and accounting books
and records pursuant to agreements with the Trust. Its mailing address is 615
East Michigan Street, Milwaukee, WI 53202. The Chase Manhattan Bank serves as
custodian for the portfolio securities and cash of the Fund.
COUNSEL AND INDEPENDENT ACCOUNTANTS
Kramer, Levin, Naftalis & Frankel, 919 Third Avenue, New York, N.Y.
10022, is counsel for the Trust. McGladrey & Pullen, LLP, 555 Fifth Avenue, New
York, N.Y. 10017-2416, has been appointed independent accountants for the Trust.
SHAREHOLDER INQUIRIES
Shareholder inquiries should be directed to The Tocqueville Trust c/o
Firstar Trust Company, 615 East Michigan Street, Milwaukee, Wisconsin 53202,
Attention: The Tocqueville Asia Pacific Fund, or may be made by calling
1-800-697-3863.
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OTHER INFORMATION
This Prospectus omits certain information contained in the registration
statement filed with the Securities and Exchange Commission. Copies of the
registration statement, including items omitted herein, may be obtained from the
Commission by paying the charges prescribed under its rules and regulations. The
Statement of Additional Information included in such registration statement may
be obtained without charge from the Trust.
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, and information
or representations not herein contained, if given or made, must not be relied
upon as having been authorized by the Trust. This Prospectus does not constitute
an offer or solicitation in any jurisdiction in which such offering may not
lawfully be made.
The Code of Ethics of the Investment Advisor and the Fund prohibits all
affiliated personnel from engaging in personal investment activities which
compete with or attempt to take advantage of the Fund's planned portfolio
transactions. Both organizations maintain careful monitoring of compliance with
the Code of Ethics.
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<PAGE>
THE TOCQUEVILLE
ASIA-PACIFIC FUND
INVESTMENT ADVISOR
Tocqueville Asset Management L.P.
1675 Broadway
New York, New York 10019 Series of
Telephone: (212) 698-0800 The Tocqueville Trust
Telecopier: (212) 262-0154
DISTRIBUTOR
Tocqueville Securities L.P.
1675 Broadway
New York, New York 10019
Telephone: (800) 697-3863
Telecopier: (212) 262-0154
February 28, 1997
SHAREHOLDERS' SERVICING,
CUSTODIAN AND TRANSFER AGENT Prospectus
Firstar Trust Company
P.O. Box 701
Milwaukee, Wisconsin 53201-0701
Telephone: (800) 697-3863
BOARD OF TRUSTEES
Francois Sicart -- Chairman
Bernard F. Combemale
James B. Flaherty
Inge Heckel
Robert W. Kleinschmidt
Francois Letaconnoux
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STATEMENT OF ADDITIONAL INFORMATION - February 28, 1997
THE TOCQUEVILLE TRUST
THE TOCQUEVILLE FUND
THE TOCQUEVILLE SMALL CAP VALUE FUND
THE TOCQUEVILLE INTERNATIONAL VALUE FUND
THE TOCQUEVILLE GOVERNMENT FUND
This Statement of Additional Information is not a prospectus. This
Statement of Additional Information is incorporated by reference in its entirety
into the Prospectus and should be read in conjunction with the Trust's current
Prospectus, copies of which may be obtained by writing The Tocqueville Trust,
c/o Firstar Trust Company, 615 East Michigan Street, Milwaukee, Wisconsin 53202
or calling (800) 697-3863.
This Statement of Additional Information relates to the Trust's
Prospectus which is dated February 28, 1997.
TABLE OF CONTENTS
PAGE
----
Investment Policies and Risks.............................................. 2
Investment Restrictions..................................................... 6
Management................................................................. 7
Investment Advisor and Investment Advisory Agreements...................... 9
Distribution Plans......................................................... 10
Administrative Services Agreement......................................... 11
Portfolio Transactions and Brokerage....................................... 11
Allocation of Investments.................................................. 12
Computation of Net Asset Value............................................. 12
Purchase and Redemption of Shares.......................................... 13
Tax Matters................................................................ 13
Performance Calculation.................................................... 19
General Information........................................................ 21
Reports .................................................................. 22
Financial Statements....................................................... 22
<PAGE>
The Tocqueville Trust (the "Trust") is a Massachusetts business trust
currently consisting of five separate funds (the "Fund" or the "Funds"). Each
Fund is an open-end, diversified management investment company with a different
investment objective. This Statement of Additional Information relates to the
following four funds only: The Tocqueville Fund, The Tocqueville Small Cap Value
Fund, The Tocqueville International Value Fund and The Tocqueville Government
Fund. The Tocqueville Fund's investment objective is long-term capital
appreciation primarily through investments in securities of United States
issuers. The Tocqueville Small Cap Value Fund's (the "Small Cap Fund")
investment objective is long-term capital appreciation primarily through
investments in securities of small-capitalization United States issuers. The
Tocqueville International Value Fund's (the "International Fund") investment
objective is long-term capital appreciation consistent with preservation of
capital primarily through investments in securities of non-U.S. issuers. The
Tocqueville Government Fund's (the "Government Fund") investment objective is to
provide high current income consistent with the maintenance of principal and
liquidity through investments in obligations issued or guaranteed by the U.S.
Treasury, agencies of the U.S. Government or instrumentalities that have been
established or sponsored by the U.S. Government. In each Fund, there is minimal
emphasis on current income. Much of the information contained in this Statement
of Additional Information expands on subjects discussed in the Prospectus.
Capitalized terms not defined herein are used as defined in the Prospectus. No
investment in shares of the Funds should be made without first reading the
Funds' Prospectus.
INVESTMENT POLICIES AND RISKS
The following descriptions supplement the investment policies of each Fund set
forth in the Prospectus. Each Fund's investments in the following securities and
other financial instruments are subject to the investment policies and
limitations described in the Prospectus and this Statement of Additional
Information.
1. WRITING COVERED CALL OPTIONS ON SECURITIES AND STOCK INDICES
The International Fund and the Government Fund may write covered call
options on optionable securities or stock indices of the types in which they are
permitted to invest from time to time as their Investment Advisor determines is
appropriate in seeking to attain their objective. A call option written by a
Fund give the holder the right to buy the underlying securities or index from
the Fund at a stated exercise price. Options on stock indices are settled in
cash.
The International Fund and the Government Fund may write only covered
call options, which means that, so long as a Fund is obligated as the writer of
a call option, it will own the underlying securities subject to the option (or
comparable securities or cash satisfying the cover requirements of securities
exchanges).
The International Fund and the Government Fund will receive a premium
for writing a covered call option, which increases the return of a Fund in the
event the option expires unexercised or is closed out at a profit. The amount of
the premium will reflect, among other things, the relationship of the market
price of the underlying security or index to the exercise price of the option,
the term of the option and the volatility of the market price of the underlying
security or index. By writing a covered call option, a Fund limits its
opportunity to profit from any increase in the market value of the underlying
security or index above the exercise price of the option.
The International Fund and the Government Fund may terminate an option
that they have written prior to the option's expiration by entering into a
closing purchase transaction in which an option is purchased having the same
terms as the option written. A Fund will realize a profit or loss from such
transaction if the cost of such transaction is less or more than the premium
received from the writing of the option. Because increases in the market price
of a call option will generally reflect increases in the market price of the
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underlying security or index, any loss resulting from the repurchase of a call
option is likely to be offset in whole or in part by unrealized appreciation of
the underlying security (or securities) owned by a Fund.
2. PURCHASING PUT AND CALL OPTIONS ON SECURITIES AND STOCK INDICES
The International Fund may purchase put options to protect its
portfolio holdings in an underlying stock index or security against a decline in
market value. Such hedge protection is provided during the life of the put
option since the Fund, as holder of the put option, is able to sell the
underlying security or index at the put exercise price regardless of any decline
in the underlying market price of the security or index. In order for a put
option to be profitable, the market price of the underlying security or index
must decline sufficiently below the exercise price to cover the premium and
transaction costs. By using put options in this manner, the Fund will reduce any
profit it might otherwise have realized in its underlying security or index by
the premium paid for the put option and by transaction costs, but it will retain
the ability to benefit from future increases in market value.
The International Fund may also purchase call options to hedge against
an increase in prices of stock indices or securities that it ultimately wants to
buy. Such hedge protection is provided during the life of the call option since
the Fund, as holder of the call option, is able to buy the underlying security
or index at the exercise price regardless of any increase in the underlying
market price of the security or index. In order for a call option to be
profitable, the market price of the underlying security or index must rise
sufficiently above the exercise price to cover the premium and transaction
costs. By using call options in this manner, the Fund will reduce any profit it
might have realized had it bought the underlying security or index at the time
it purchased the call option by the premium paid for the call option and by
transaction costs, but it limits the loss it will suffer if the security or
index declines in value to such premium and transaction costs.
3. BORROWING
Each Fund may, from time to time, borrow up to 10% of the value of its
total assets from banks at prevailing interest rates as a temporary measure for
extraordinary or emergency purposes. A Fund may not purchase securities while
borrowings exceed 5% of the value of its total assets.
4. REPURCHASE AGREEMENTS
Each Fund may enter into repurchase agreements subject to resale to a
bank or dealer at an agreed upon price which reflects a net interest gain for
the Fund. The Funds will receive interest from the institution until the time
when the repurchase is to occur.
The Funds will always receive as collateral U.S. Government or
short-term money market securities whose market value is equal to at least 100%
of the amount invested by a Fund, and the Funds will make payment for such
securities only upon the physical delivery or evidence by book entry transfer to
the account of its custodian. If the seller institution defaults, a Fund might
incur a loss or delay in the realization of proceeds if the value of the
collateral securing the repurchase agreement declines and it might incur
disposition costs in liquidating the collateral. The Funds attempt to minimize
such risks by entering into such transactions only with well-capitalized
financial institutions and specifying the required value of the underlying
collateral.
5. FUTURES CONTRACTS
The Government Fund and the International Fund may enter into futures
contracts, options on futures contracts and stock index futures contracts and
options thereon for the purposes of remaining fully invested and reducing
transaction costs. Futures contracts provide for the future sale by one party
and purchase by another party of a specified amount of a specific security,
class of securities, currency or an index at a specified future time and at a
specified price. A stock index futures contract is a bilateral agreement
pursuant to which two parties agree to take or make delivery of an amount of
cash equal to a specified dollar amount times
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<PAGE>
the difference between the stock index value at the close of trading of the
contracts and the price at which the futures contract is originally struck.
Futures contracts which are standardized as to maturity date and underlying
financial instrument are traded on national futures exchanges. Futures exchanges
and trading are regulated under the Commodity Exchange Act by the Commodity
Futures Trading Commission (the "CFTC"), a U.S. Government agency.
Although futures contracts by their terms call for actual delivery and
acceptance of the underlying securities, in most cases the contracts are closed
out before the settlement date without the making or taking of delivery. Closing
out an open futures position is done by taking an opposite position (buying a
contract which has previously been "sold," or "selling" a contract previously
purchased) in an identical contract to terminate the position. A futures
contract on a securities index is an agreement obligating either party to pay,
and entitling the other party to receive, while the contract is outstanding,
cash payments based on the level of a specified securities index. The
acquisition of put and call options on futures contracts will, respectively,
give the Fund the right (but not the obligation), for a specified price, to sell
or to purchase the underlying futures contract, upon exercise of the option, at
any time during the option period. Brokerage commissions are incurred when a
futures contract is bought or sold.
Futures traders are required to make a good faith margin deposit in
cash or government securities with a broker or custodian to initiate and
maintain open positions in futures contracts. A margin deposit is intended to
assure completion of the contract (delivery or acceptance of the underlying
security) if it is not terminated prior to the specified delivery date. Minimal
initial margin requirements are established by the futures exchange and may be
changed. Brokers may establish deposit requirements which are higher than the
exchange minimums. Initial margin deposits on futures contracts are customarily
set at levels much lower than the prices at which the underlying securities are
purchased and sold, typically ranging upward from less than 5% of the value of
the contract being traded.
After a futures contract position is opened, the value of the contract
is marked-to-market daily. If the futures contract price changes to the extent
that the margin on deposit does not satisfy margin requirements, payment of
additional "variation" margin will be required. Conversely, change in the
contract value may reduce the required margin, resulting in a repayment of
excess margin to the contract holder. Variation margin payments are made to and
from the futures broker for as long as the contract remains open. Each Fund
expects to earn interest income on its margin deposits.
In addition to the margin restrictions discussed above, transactions in
futures contracts may involve the segregation of funds pursuant to requirements
imposed by the CFTC. Under those requirements, where a Fund has a long position
in a futures contract, it may be required to establish a segregated account (not
with a futures commission merchant or broker, except as may be permitted under
CFTC rules) containing cash or certain liquid assets equal to the purchase price
of the contract (less any margin on deposit). For a short position in futures or
forward contracts held by a Fund, those requirements may mandate the
establishment of a segregated account (not with a futures commission merchant or
broker, except as may be permitted under CFTC rules) with cash or certain liquid
assets that, when added to the amounts deposited as margin, equal the market
value of the instruments underlying the futures contracts (but are not less than
the price at which the short positions were established). However, segregation
of assets is not required if a Fund "covers" a long position. For example,
instead of segregating assets, a Fund, when holding a long position in a futures
contract, could purchase a put option on the same futures contract with a strike
price as high or higher than the price of the contract held by the Fund. In
addition, where a Fund takes short positions, or engages in sales of call
options, it need not segregate assets if it "covers" these positions. For
example, where the Fund holds a short position in a futures contract, it may
cover by owning the instruments underlying the contract. A Fund may also cover
such a position by holding a call option permitting it to purchase the same
futures contract at a price no higher than the price at which the short position
was established. Where the Fund sells a call option on a futures contract, it
may cover either by entering into a long position in the same contract at a
price no higher than the strike price of the call option or by owning the
instruments underlying the futures contract. A Fund could also cover this
position by holding a separate call option permitting it to purchase the same
futures contract at a price no higher than the strike price of the call option
sold by the Fund.
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When interest rates are expected to rise or market values of portfolio
securities are expected to fall, a Fund can seek through the sale of futures
contracts to offset a decline in the value of its portfolio securities. When
interest rates are expected to fall or market values are expected to rise, a
Fund, through the purchase of such contracts, can attempt to secure better rates
or prices for the Fund than might later be available in the market when it
effects anticipated purchases.
A Fund will only sell futures contracts to protect securities and
currencies it owns against price declines or purchase contracts to protect
against an increase in the price of securities it intends to purchase.
A Fund's ability to effectively utilize futures trading depends on
several factors. First, it is possible that there will not be a perfect price
correlation between the futures contracts and their underlying stock index.
Second, it is possible that a lack of liquidity for futures contracts could
exist in the secondary market, resulting in an inability to close a futures
position prior to its maturity date. Third, the purchase of a futures contract
involves the risk that the Fund could lose more than the original margin deposit
required to initiate a futures transaction.
RISK FACTORS IN FUTURES TRANSACTIONS
Positions in futures contracts may be closed out only on an exchange
which provides a secondary market for such futures. However, there can be no
assurance that a liquid secondary market will exist for any particular futures
contract at any specific time. Thus, it may not be possible to close a futures
position. In the event of adverse price movements, a Fund would continue to be
required to make daily cash payments to maintain the required margin. In such
situations, if a Fund has insufficient cash, it may have to sell portfolio
securities to meet daily margin requirements at a time when it may be
disadvantageous to do so. In addition, the Fund may be required to make delivery
of the instruments underlying futures contracts it holds. The inability to close
options and futures positions also could have an adverse impact on the ability
to effectively hedge them. The Fund will minimize the risk that it will be
unable to close out a futures contract by only entering into futures contracts
which are traded on national futures exchanges and for which there appears to be
a liquid secondary market.
The risk of loss in trading futures contracts in some strategies can be
substantial, due both to the low margin deposits required, and the extremely
high degree of leverage involved in futures pricing. Because the deposit
requirements in the futures markets are less onerous than margin requirements in
the securities market, there may be increased participation by speculators in
the futures market which may also cause temporary price distortions. A
relatively small price movement in a futures contract may result in immediate
and substantial loss (as well as gain) to the investor. For example, if at the
time of purchase, 10% of the value of the futures contract is deposited as
margin, a subsequent 10% decrease in the value of the futures contract would
result in a total loss of the margin deposit, before any deduction for the
transaction costs, if the account were then closed out. A 15% decrease would
result in a loss equal to 150% of the original margin deposit if the contract
were closed out. Or sale of a futures contract may result in losses in excess of
the amount invested in the contract. However, because the futures strategies
engaged in by the Funds are only for hedging purposes, the Investment Advisor
does not believe that the Funds are subject to the risks of loss frequently
associated with futures transactions. A Fund would presumably have sustained
comparable losses if, instead of the futures contract, it had invested in the
underlying financial instrument and sold it after the decline.
Utilization of futures transactions by the Funds does involve the risk
of imperfect or no correlation where the securities underlying futures contract
have different maturities than the portfolio securities being hedged. It is also
possible that a Fund could both lose money on futures contracts and also
experience a decline in value of its portfolio securities. There is also the
risk of loss by a Fund of margin deposits in the event of bankruptcy of a broker
with whom the Fund has an open position in a futures contract or related option.
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CONCLUSION
Unlike the fundamental investment objective of each Fund set forth
above and the investment restrictions set forth below which may not be changed
without shareholder approval, the Funds have the right to modify the investment
policies described above without shareholder approval.
INVESTMENT RESTRICTIONS
The following fundamental policies and investment restrictions have
been adopted by the Funds and except as noted, such policies and restrictions
cannot be changed without approval by the vote of a majority of the outstanding
voting shares of a Fund which, as defined by the Investment Company Act of 1940,
as amended (the "1940 Act"), means the affirmative vote of the lesser of (a) 67%
or more of the shares of the Fund present at a meeting at which the holders of
more than 50% of the outstanding shares of the Fund are represented in person or
by proxy, or (b) more than 50% of the outstanding shares of the Fund.
The Funds may not:
(1) issue senior securities;
(2) concentrate their investments in particular industries. No
more than 25% of the value of a Fund's assets will be invested in any
one industry;
(3) with respect to 75% of the value of a Fund's assets, purchase
any securities (other than obligations issued or guaranteed by the
U.S. Government or its agencies or instrumentalities) if, immediately
after such purchase, more than 5% of the value of the Fund's total
assets would be invested in securities of any one issuer, or more than
10% of the outstanding voting securities of any one issuer would be
owned by the Fund;
(4) make loans of money or securities other than (a) through the
purchase of publicly distributed bonds, debentures or other corporate
or governmental obligations, (b) by investing in repurchase
agreements, and (c) by lending its portfolio securities, provided the
value of such loaned securities does not exceed 33-1/3% of its total
assets;
(5) borrow money in excess of 10% of the value of a Fund's total
assets from banks. A Fund may not purchase securities while borrowings
exceed 5% of the value of its total assets;
(6) buy or sell real estate, commodities, or commodity contracts,
except a Fund may purchase or sell futures or options on futures;
(7) underwrite securities;
(8) invest in precious metals other than in accordance with a
Fund's investment objective and policy, if as a result the Fund would
then have more than 10% of its total assets (taken at current value)
invested in such precious metals; and
(9) participate in a joint investment account.
The following restrictions are non-fundamental and may be changed by
the Funds' Board of Trustees. Pursuant to such restrictions, the Funds will not:
(1) make short sales of securities, other than short sales
"against the box," or purchase securities on margin except for
short-term credits necessary for clearance of portfolio transactions,
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provided that this restriction will not be applied to limit the use of
options, futures contracts and related options, in the manner
otherwise permitted by the investment restrictions, policies and
investment program of a Fund;
(2) purchase the securities of any other investment company, if a
purchasing Fund, immediately after such purchase or acquisition, owns
in the aggregate, (i) more than 3% of the total outstanding voting
stock of such investment company, (ii) securities issued by such
investment company having an aggregate value in excess of 5% of the
value of the total assets of the Fund, or (iii) securities issued by
such investment company and all other investment companies having an
aggregate value in excess of 10% of the value of the total assets of
the Fund;
(3) invest more than 10% of its total net assets in illiquid
securities. Illiquid securities are securities that are not readily
marketable or cannot be disposed of promptly within seven days and in
the usual course of business without taking a materially reduced
price. Such securities include, but are not limited to, time deposits
and repurchase agreements with maturities longer than seven days.
Securities that may be resold under Rule 144A or securities offered
pursuant to Section 4(2) of the Securities Act of 1933, as amended,
shall not be deemed illiquid solely by reason of being unregistered.
The Investment Advisor shall determine whether a particular security
is deemed to be liquid based on the trading markets for the specific
security and other factors; and
(4) except for The Tocqueville International Value Fund, invest
in securities of foreign issuers other than in accordance with the
respective Fund's investment objective and policy, if as a result a
Fund would then have more than 25% of its total assets (taken at
current value) invested in such foreign securities.
MANAGEMENT
The overall management of the business and affairs of each Fund is
vested with the Board of Trustees. The Board of Trustees approves all
significant agreements between the Trust or each Fund and persons or companies
furnishing services to the Funds, including a Fund's agreement with an
investment advisor, custodian and transfer agent. The day-to-day operations of
the Funds are delegated to each Fund's officers subject always to the investment
objectives and policies of each Fund and to general supervision by the Trust's
Board of Trustees.
The Trustees and officers and their principal occupations are noted
below. Unless otherwise indicated the address of each Trustee and executive
officer is 1675 Broadway, New York, New York 10019.
FRANCOIS DANIEL SICART,* CHAIRMAN, PRINCIPAL EXECUTIVE OFFICER AND TRUSTEE.
Chairman and Chief Executive Officer, Tocqueville Management Corporation, the
General Partner of Tocqueville Asset Management L.P. and Tocqueville Securities
L.P. from January, 1990 to present; Chairman and Chief Executive Officer,
Tocqueville Asset Management Corp. from December, 1985 to January, 1990; Vice
Chairman of Tucker Anthony Management Corporation, from 1981 to October 1986;
Vice President (formerly general partner) and other positions with Tucker
Anthony, Inc. from 1969 to January, 1990.
JAMES B. FLAHERTY, TRUSTEE. President and Partner, Troutbeck Conference Center
and Country Inn from October, 1979 to present; Vice President, Leedsville Realty
and Construction Corp. from 1980 to present; Associate Creative Director, Young
and Rubicam Advertising, and Dentsu, Young and Rubicam from March, 1983 to
February, 1985; Creative Director and Senior Vice President, Tinker Campbell
Ewald from October,
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* Interested person of the Funds as defined in the 1940 Act.
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1977 to November, 1980; Partner/owner of Freshfields Restaurant, W. Cornell, CT;
President/Creative Director of JBF Ltd., an advertising company.
INGE HECKEL, TRUSTEE. Management Consultant, 1988 to present; Executive
Director, Princess Grace Foundation U.S.A. from June, 1986 to September, 1988;
Vice President and Assistant Secretary, The Asia Society from September, 1984 to
June, 1986; Executive Director, Metropolitan Boston Zoos from September, 1982 to
July, 1984; President, Bradford College, Bradford, Massachusetts from September,
1979 to June, 1982; Trustee of Bradford College; Former Director and Chairman,
Public Relations Committee, International Counsel of Museums (UNESCO); Former
Director, BayBank/Merrimack Valley; Member, Art Advisory Board, Mount Holyoke
College Art Museum.
ROBERT KLEINSCHMIDT,* PRESIDENT, PRINCIPAL OPERATING OFFICER AND TRUSTEE.
President, Tocqueville Asset Management L.P. from January, 1994 to present and
Managing Director from July, 1991 to January, 1994. Partner, David J. Greene &
Co., May, 1978 to July, 1991. Assistant Vice President, Irving Trust Co., July,
1976 to May, 1978.
FRANCOIS LETACONNOUX, TRUSTEE. President, Lepercq de Neuflize & Co. from July,
1993 to present; Director, Lepercq 99 First Management Inc. from 1988 to
present; Director, Lepercq de Neuflize & Co., Inc. (investment bank) from 1988
to present; Managing Director, Lepercq Capital Partners (real estate investment
firm), from 1974 to present.
BERNARD F. COMBEMALE, TRUSTEE. Investment Management Consultant, 1981 to
present; Chairman and Chief Executive Officer, Trusthouse Forte Inc., 1984 to
1988; Chairman of the Executive Committee & Director, Western World Insurance
Company, 1981 to present; Director, Westco Holding Corporation, 1981 to present;
Director, The French-American Foundation, 1980 to present; Trustee, The Princess
Grace Foundation -U.S.A., 1980 to present.
JOSEPH COOPER, SECRETARY AND TREASURER. Vice President and Treasurer,
Tocqueville Management Corporation, the General Partner of Tocqueville Asset
Management L.P. and Tocqueville Securities L.P. from January, 1990 to present.
Vice President, Treasurer and Chief Financial Officer, Tocqueville Asset
Management Corporation from December, 1985 to February, 1990. Self-employed as a
public accountant.
KIERAN LYONS, VICE PRESIDENT AND PRINCIPAL FINANCIAL OFFICER. Chief Financial
Officer, Tocqueville Management Corporation, the General Partner of Tocqueville
Asset Management L.P. and Tocqueville Securities L.P. from January, 1992 to
present. Certified Public Accountant, Pegg & Pegg, February, 1985 to January,
1992.
Under the terms of the Massachusetts General Corporation Law, the Funds
may indemnify any person who was or is a Trustee, officer or employee of each
Fund to the maximum extent permitted by the Massachusetts General Corporation
Law; provided, however, that any such indemnification (unless ordered by a
court) shall be made by the Funds only as authorized in the specific case upon a
determination that indemnification of such persons is proper in the
circumstances. Such determination shall be made (i) by the Board of Trustees, by
a majority vote of a quorum which consists of Trustees who are neither
"interested persons" of the Trust, as defined in Section 2(a)(19) of the 1940
Act, nor parties to the proceeding, or (ii) if the required quorum is not
obtained or if a quorum of such Trustees so directs, by independent legal
counsel in a written opinion. No indemnification will be provided by a Fund to
any Trustee or officer of the Fund for any liability to a Fund or it
shareholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of duty.
The Funds do not pay direct remuneration to any officer of a Fund. As
of o, 1997, the Trustees and officers as a group owned beneficially o% of The
Tocqueville Fund's outstanding shares, o% of the International Fund's
outstanding shares, o% of the Small Cap Fund's outstanding shares, and o% of the
Government Fund's outstanding shares, all of which were acquired for investment
purposes. Certain of the
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Trustees and officers may have investment discretion for institutional and
private accounts which own shares of the Funds, however the Trustees and
officers do not have the power to vote such shares and have disclaimed
beneficial ownership of such shares. For the fiscal year ended October 31, 1996,
the Trust paid the "disinterested" Trustees an aggregate of $12,000; each
disinterested Trustee received $750 per quarter, notwithstanding the number of
Board Meetings and Audit Committee Meetings attended. "Interested" Trustees do
not receive Trustees' fees. The Trust did not reimburse Trustee expenses.
The table below illustrates the compensation paid to each Trustee for
the Trust's most recently completed fiscal year:
<TABLE>
<CAPTION>
Pension or Total
Retirement Compensation
Aggregate Benefits Accrued Estimated Annual from Fund and
Name of Person, Compensation as Part of Fund Benefits Upon Fund Complex
Position from Fund Expenses Retirement Paid to Trustees
- --------------- ------------ ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Francois Sicart $0 $0 $0 $0
Bernard F. Combemale $3,000 $0 $0 $3,000
James B. Flaherty $3,000 $0 $0 $3,000
Inge Heckel $3,000 $0 $0 $3,000
Robert Kleinschmidt $0 $0 $0 $0
Francois Letaconnoux $3,000 $0 $0 $3,000
</TABLE>
INVESTMENT ADVISOR AND INVESTMENT ADVISORY AGREEMENTS
Tocqueville Asset Management L.P. (the "Investment Advisor"), 1675
Broadway, New York, New York 10019, acts as the Investment Advisor to each Fund
under a separate investment advisory agreement (the "Agreement" or
"Agreements"). Each Agreement provides that the Investment Advisor identify and
analyze possible investments for each Fund, determine the amount and timing of
such investments, and the form of investment. The Investment Advisor has the
responsibility of monitoring and reviewing each Fund's portfolio, and, on a
regular basis, to recommend the ultimate disposition of such investments. It is
the Investment Advisor's responsibility to cause the purchase and sale of
securities in each Fund's portfolio, subject at all times to the policies set
forth by the Trust's Board of Trustees. In addition, the Investment Advisor also
provides certain administrative and managerial services to the Funds.
The Investment Advisor receives a fee from: (1) both The Tocqueville
Fund and The Tocqueville Small Cap Value Fund, calculated daily and payable
monthly, for the performance of its services at an annual rate of .75% on the
first $100 million of the average daily net assets of each Fund, .70% of average
daily net assets in excess of $100 million but not exceeding $500 million, and
.65% of average daily net assets in excess of $500 million; (2) The Tocqueville
International Value Fund, calculated daily and payable monthly, for the
performance of its services at an annual rate of 1.00% on the first $50 million
of the average daily net assets , .75% of average daily net assets in excess of
$50 million but not exceeding $100 million, and .65% of the average daily net
assets in excess of $100 million; and (3) The Tocqueville Government Fund,
calculated daily and payable monthly, for the performance of its services at an
annual rate of .50% on the first $500 million of the average daily net assets of
the Fund, .40% of average daily net assets in excess of $500 million but not
exceeding $1 billion, and .30% of average daily net assets in excess of $1
billion. Each fee is accrued daily for the purposes of determining the offering
and redemption price of such Fund's shares. The advisory fees are higher than
that paid by most investment companies but the Board of Trustees believes them
to be reasonable
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<PAGE>
in light of the services each Fund receives thereunder. For the years ended
October 31, 1994, 1995 and 1996, with respect to The Tocqueville Fund , the
Investment Advisor earned advisory fees of $219,470, $240,219, and $256,312,
respectively, after waivers of $0, $0 and $36,154, respectively. For the period
August 1, 1994 to October 31, 1994 and the fiscal years ended October 31, 1995
and 1996, with respect to the International Fund , the Investment Advisor earned
advisory fees of $0, $0, and $99,116, respectively, after waivers of $4,201,
$35,890, and $68,161, respectively. For the period August 1, 1994 to October 31,
1994 and the fiscal years ended October 31, 1995 and 1996, with respect to the
Small Cap Fund , the Investment Advisor earned advisory fees of $0, $58,456, and
$62,717, respectively, after waivers of $11,420, $4,147, and $19,096,
respectively. Finally, for the period August 14, 1995 to October 31, 1995 and
the fiscal year ended October 31, 1996, with respect to the Government Fund ,
the Investment Advisor earned advisory fees of $0 and $0, respectively, after
waivers of $3,453 and $44,692, respectively.
Under the terms of the Agreements, each Fund pays all of its expenses
(other than those expenses specifically assumed by the Investment Advisor and
each Fund's distributor) including the costs incurred in connection with the
maintenance of its registration under the Securities Act of 1933, as amended,
and the 1940 Act, printing of prospectuses distributed to shareholders, taxes or
governmental fees, brokerage commissions, custodial, transfer and shareholder
servicing agents, expenses of outside counsel and independent accountants,
preparation of shareholder reports, and expenses of Trustee and shareholder
meetings.
Each Agreement may be terminated without penalty on 60 days' written
notice by a vote of the majority of the Trust's Board of Trustees or by the
Investment Advisor, or by holders of a majority of each Fund's outstanding
shares. Each Fund's Agreement will continue for two years from its effective
date and from year-to-year thereafter provided it is approved, at least
annually, in the manner stipulated in the 1940 Act. This requires that each
Agreement and any renewal thereof be approved by a vote of the majority of the
Fund's Trustees who are not parties thereto or interested persons of any such
party, cast in person at a meeting specifically called for the purpose of voting
on such approval.
DISTRIBUTION PLANS
Each Fund has adopted a distribution plan pursuant to Rule 12b-1 of the
1940 Act (each a "Plan"). The Plans provide that a Fund may incur distribution
expenses related to the sale of shares of up to .25% per annum of such Fund's
average daily net assets.
Each plan provides that a Fund may finance activities which are
primarily intended to result in the sale of each Fund's shares, including, but
not limited to, advertising, printing of prospectuses and reports for other than
existing shareholders, preparation and distribution of advertising material and
sales literature and payments to dealers and shareholder servicing agents
including Tocqueville Securities L.P. ("Tocqueville Securities") who enter into
agreements with each Fund or its distributor. The Tocqueville Fund accrued after
waiver $73,157, $80,011 and $97,578, respectively, in distribution expenses for
the years ended October 31, 1994, 1995, and 1996, respectively. The
International Fund accrued after waiver $0, $0 and $27,121, respectively, for
the period August 1, 1994 to October 31, 1994 and the fiscal years ended October
31, 1995 and 1996, respectively. The Small Cap Fund accrued after waiver $0, $0
and $14,595, respectively, for the period August 1, 1994 to October 31, 1994 and
the fiscal years ended October 31, 1995 and 1996, respectively. The Government
Fund accrued after waiver $0 and $8,058, respectively, for the period August 14,
1995 to October 31, 1995 and the fiscal year ended October 31, 1996,
respectively.
As of October 31, 1996, The Tocqueville Fund, Small Cap Fund,
International Fund, and Government Fund had $96,670, $78,055 , $71,716, and
$22,255, respectively, (0.23%, 0.68%, 0.30%, and 0.23%, respectively, as a
percentage of each Fund's net assets) of unreimbursed distribution expenses.
In approving the Plans in accordance with the requirements of Rule
12b-1 under the 1940 Act, the Trustees (including the "disinterested" Trustees,
as defined in the 1940 Act) considered various factors and
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<PAGE>
determined that there is a reasonable likelihood that each Plan will benefit its
Fund and its shareholders. Each Plan will continue in effect from year to year
if specifically approved annually (a) by the majority of such Fund's outstanding
voting shares or by the Board of Trustees and (b) by the vote of a majority of
the disinterested Trustees. While the Plans remain in effect, each Fund's
Principal Financial Officer shall prepare and furnish to the Board of Trustees a
written report setting forth the amounts spent by each Fund under the Plan and
the purposes for which such expenditures were made. The Plans may not be amended
to increase materially the amount to be spent for distribution without
shareholder approval and all material amendments to each of the Plans must be
approved by the Board of Trustees and by the disinterested Trustees cast in
person at a meeting called specifically for that purpose. While the Plans are in
effect, the selection and nomination of the disinterested Trustees shall be made
by those disinterested Trustees then in office.
ADMINISTRATIVE SERVICES AGREEMENT
Tocqueville Asset Management L.P., supervises administration of the
Funds pursuant to an Administrative Services Agreement with each Fund. Under the
Administrative Services Agreement, Tocqueville Asset Management L.P. supervises
the administration of all aspects of each Fund's operations, including each
Fund's receipt of services for which the Fund is obligated to pay, provides the
Funds with general office facilities and provides, at each Fund's expense, the
services of persons necessary to perform such supervisory, administrative and
clerical functions as are needed to effectively operate the Funds. Those
persons, as well as certain employees and Trustees of the Funds, may be
directors, officers or employees of (and persons providing services to the Funds
may include) Tocqueville Asset Management L.P. and its affiliates. For these
services and facilities, Tocqueville Asset Management L.P. receives with respect
to each Fund a fee computed and paid monthly at an annual rate of 0.15% of the
average daily net assets of each Fund.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to the supervision of the Board of Trustees, decisions to buy
and sell securities for each Fund are made by the Investment Advisor. The
Investment Advisor is authorized to allocate the orders placed by it on behalf
of a Fund to such unaffiliated brokers who also provide research or statistical
material, or other services to the Fund or the Investment Advisor for the Fund's
use. Such allocation shall be in such amounts and proportions as the Investment
Advisor shall determine and the Investment Advisor will report on said
allocations regularly to the Board of Trustees indicating the unaffiliated
brokers to whom such allocations have been made and the basis therefor. In
addition, the Investment Advisor may consider sales of shares of each Fund and
of any other funds advised or managed by the Investment Advisor as a factor in
the selection of unaffiliated brokers to execute portfolio transactions for each
Fund, subject to the requirements of best execution. The Trustees have
authorized the allocation of brokerage to affiliated broker-dealers on an agency
basis to effect portfolio transactions. The Trustees have adopted procedures
incorporating the standards of Rule 17e-1 of the 1940 Act, which require that
the commission paid to affiliated broker-dealers must be "reasonable and fair
compared to the commission, fee or other remuneration received, or to be
received, by other brokers in connection with comparable transactions involving
similar securities during a comparable period of time." At times, a Fund may
also purchase portfolio securities directly from dealers acting as principals,
underwriters or market makers. As these transactions are usually conducted on a
net basis, no brokerage commissions are paid by the Fund.
In selecting a broker to execute each particular transaction, the
Investment Advisor will take the following into consideration: the best net
price available; the reliability, integrity and financial condition of the
broker; the size and difficulty in executing the order; and, the value of the
expected contribution of the broker to the investment performance of the Funds
on a continuing basis. Accordingly, the cost of the brokerage commissions to a
Fund in any transaction may be greater than that available from other brokers if
the difference is reasonably justified by other aspects of the portfolio
execution services offered. Subject to such policies and
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<PAGE>
procedures as the Board of Trustees may determine, the Investment Advisor shall
not be deemed to have acted unlawfully or to have breached any duty solely by
reason of its having caused a Fund to pay an unaffiliated broker that provides
research services to the Investment Advisor for each Fund's use an amount of
commission for effecting a portfolio investment transaction in excess of the
amount of commission another broker would have charged for effecting the
transaction, if the Investment Advisor determines in good faith that such amount
of commission was reasonable in relation to the value of the research service
provided by such broker viewed in terms of either that particular transaction of
the Investment Advisor's ongoing responsibilities with respect to the Funds. For
the fiscal year ended October 31, 1994, the Tocqueville Fund, Small Cap Fund,
and International Fund paid total brokerage commissions on portfolio
transactions in the amount of $84,586, $25,057 and $1,116, respectively, and for
the fiscal year ended October 31, 1995, the Tocqueville Fund, Small Cap Fund,
International Fund, and Government Fund paid total brokerage commissions on
portfolio transactions in the amount of $71,728, $71,128, $39,142, and $7,913,
respectively. For the fiscal year ended October 31, 1996, the Tocqueville Fund,
Small Cap Fund, International Fund, and Government Fund paid total brokerage
commissions on portfolio transactions in the amount of $103,140, $101,089,
$130,401, and $24,363, respectively. Commissions earned by Tocqueville
Securities L.P., the Funds' distributor for services rendered as a registered
broker-dealer in securities transactions for the fiscal year ended October 31,
1994, 1995 and 1996, respectively, were: the Tocqueville Fund: $_____, $39,665
and $63,555, respectively; the Small Cap Fund: $_____, $23,016 and $47,933
respectively; the International Fund: $_____, $0 and $1,509 respectively; and
the Government Fund: $_____, $7,912 and $9,213 respectively. For the fiscal year
ended October 31, 1996, the percentage of each Fund's brokerage commissions
paid, and the aggregate dollar amount of transactions involving the payment of
such commissions, to Tocqueville Securities L.P. were: the Tocqueville Fund:
____% and $_____, respectively; the Small Cap Fund: _____% and $_____,
respectively; the International Fund: _____% and $_____, respectively; and the
Government Fund: _____% and $_____, respectively.
ALLOCATION OF INVESTMENTS
The Investment Advisor has other advisory clients which include
individuals, trusts, pension and profit sharing funds, some of which have
similar investment objectives to the Funds. As such, there will be times when
the Investment Advisor may recommend purchases and/or sales of the same
portfolio securities for each Fund and its other clients. In such circumstances,
it will be the policy of the Investment Advisor to allocate purchases and sales
among the Funds and its other clients in a manner which the Investment Advisor
deems equitable, taking into consideration such factors as size of account,
concentration of holdings, investment objectives, tax status, cash availability,
purchase cost, holding period and other pertinent factors relative to each
account. Simultaneous transactions may have an adverse effect upon the price or
volume of a security purchased by each Fund.
COMPUTATION OF NET ASSET VALUE
Each Fund will determine the net asset value of its shares once daily
as of the close of trading on the New York Stock Exchange (the "Exchange") on
each day that the Exchange is open for business. It is expected that the
Exchange will be closed on Saturdays and Sundays and on New Year's Day,
President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. Each Fund may make or cause to be made a
more frequent determination of the net asset value and offering price, which
determination shall reasonably reflect any material changes in the value of
securities and other assets held by a Fund from the immediately preceding
determination of net asset value. The net asset value is determined by dividing
the market value of a Fund's investments as of the close of trading plus any
cash or other assets (including dividends receivable and accrued interest) less
all liabilities (including accrued expenses) by the number of the Fund's shares
outstanding. Securities traded on the New York Stock Exchange or the American
Stock Exchange will be valued at the last sale price, or if no sale, at the mean
between the latest bid and asked price. Securities traded in any other U.S. or
foreign market shall be valued in a manner as similar as possible
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<PAGE>
to the above, or if not so traded, on the basis of the latest available price.
Securities sold short "against the box" will be valued at market as determined
above; however, in instances where a Fund has sold securities short against a
long position in the issuer's convertible securities, for the purpose of
valuation, the securities in the short position will be valued at the "asked"
price rather than the mean of the last "bid" and "asked" prices. Investments in
gold bullion will be valued at their respective fair market values determined on
the basis of the mean between the last current bid and asked prices based on
dealer or exchanges quotations. Where there are no readily available quotations
for securities they will be valued at a fair value as determined by the Board of
Trustees acting in good faith.
PURCHASE AND REDEMPTION OF SHARES
A complete description of the manner by a which a Fund's shares may be
purchased and redeemed, including discussions concerning the front-end sales
load appears in the Prospectus under the headings "Purchase of Shares" and
"Redemption of Shares" respectively.
TAX MATTERS [Subject to review by KL Tax Dept.]
The following is only a summary of certain additional tax
considerations generally affecting each Fund and its shareholders that are not
described in the Prospectus. No attempt is made to present a detailed
explanation of the tax treatment of each Fund or its shareholders, and the
discussions here and in the Prospectus are not intended as substitutes for
careful tax planning.
Qualification as a Regulated Investment Company
Each Fund has elected to be taxed as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). As a regulated investment company, a Fund is not subject to federal
income tax on the portion of its net investment income (i.e., taxable interest,
dividends and other taxable ordinary income, net of expenses) and capital gain
net income (i.e., the excess of capital gains over capital losses) that it
distributes to shareholders, provided that it distributes at least 90% of its
investment company taxable income (i.e., net investment income and the excess of
net short-term capital gain over net long-term capital loss) for the taxable
year (the "Distribution Requirement"), and satisfies certain other requirements
of the Code that are described below. Distributions by a Fund made during the
taxable year or, under specified circumstances, within twelve months after the
close of the taxable year, will be considered distributions of income and gains
of the taxable year and can therefore satisfy the Distribution Requirement.
In addition to satisfying the Distribution Requirement, a regulated
investment company must: (1) derive at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans, gains
from the sale or other disposition of stock or securities or foreign currencies
(to the extent such currency gains are directly related to the regulated
investment company's principal business of investing in stock or securities) and
other income (including but not limited to gains from options, futures or
forward contracts) derived with respect to its business of investing in such
stock, securities or currencies (the "Income Requirement"); and (2) derive less
than 30% of its gross income (exclusive of certain gains on designated hedging
transactions that are offset by realized or unrealized losses on offsetting
positions) from the sale or other disposition of stock, securities or foreign
currencies (or options, futures or forward contracts thereon) held for less than
three months (the "Short-Short Gain Test"). However, foreign currency gains,
including those derived from options, futures and forwards, will not in any
event be characterized as Short-Short Gain if they are directly related to the
regulated investment company's investments in stock or securities (or options or
futures thereon). Because of the Short-Short Gain Test, a Fund may have to limit
the sale of appreciated securities that it has held for less than three months.
However, the Short-Short Gain Test will not prevent a Fund from disposing of
investments at a loss, since the recognition of a loss before the expiration of
the three-month holding period is disregarded for this purpose. Interest
(including original issue discount) received by a
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Fund at maturity or upon the disposition of a security held for less than three
months will not be treated as gross income derived from the sale or other
disposition of such security within the meaning of the Short-Short Gain Test.
However, income that is attributable to realized market appreciation will be
treated as gross income from the sale or other disposition of securities for
this purpose.
In general, gain or loss recognized by a Fund on the disposition of an
asset will be a capital gain or loss. However, gain recognized on the
disposition of a debt obligation purchased by a Fund at a market discount
(generally, at a price less than its principal amount) will be treated as
ordinary income to the extent of the portion of the market discount which
accrued during the period of time the Fund held the debt obligation. In
addition, under the rules of Code Section 988, gain or loss recognized on the
disposition of a debt obligation denominated in a foreign currency or an option
with respect thereto (but only to the extent attributable to changes in foreign
currency exchange rates), and gain or loss recognized on the disposition of a
foreign currency forward contract, futures contract, option or similar financial
instrument, or of foreign currency itself, except for regulated futures
contracts or non-equity options subject to Code Section 1256 (unless a Fund
elects otherwise), will generally be treated as ordinary income or loss.
In general, for purposes of determining whether capital gain or loss
recognized by the the Government Fund or International Fund on the disposition
of an asset is long-term or short-term, the holding period of the asset may be
affected if (1) the asset is used to close a "short sale" (which includes for
certain purposes the acquisition of a put option) or is substantially identical
to another asset so used, (2) the asset is otherwise held by the Fund as part of
a "straddle" (which term generally excludes a situation where the asset is stock
and the Fund grants a qualified covered call option (which, among other things,
must not be deep-in-the-money) with respect thereto) or (3) the asset is stock
and the Fund grants an in-the-money qualified covered call option with respect
thereto. However, for purposes of the Short-Short Gain Test, the holding period
of the asset disposed of may be reduced only in the case of clause (1) above. In
addition, the Government Fund or the International Fund may be required to defer
the recognition of a loss on the disposition of an asset held as part of a
straddle to the extent of any unrecognized gain on the offsetting position.
Any gain recognized by the the Government Fund or International Fund on
the lapse of, or any gain or loss recognized by the International Fund from a
closing transaction with respect to, an option written by the Fund will be
treated as a short-term capital gain or loss. For purposes of the Short-Short
Gain Test, the holding period of an option written by a Fund will commence on
the date it is written and end on the date it lapses or the date a closing
transaction is entered into. Accordingly, a Fund may be limited in its ability
to write options which expire within three months and to enter into closing
transactions at a gain within three months of the writing of options.
Transactions that may be engaged in by the Government Fund or
International Fund (such as regulated futures contracts, certain foreign
currency contracts, and options on stock indexes and futures contracts) will be
subject to special tax treatment as "Section 1256 contracts." Section 1256
contracts are treated as if they are sold for their fair market value on the
last business day of the taxable year, even though a taxpayer's obligations (or
rights) under such contracts have not terminated (by delivery, exercise,
entering into a closing transaction or otherwise) as of such date. Any gain or
loss recognized as a consequence of the year-end deemed disposition of Section
1256 contracts is taken into account for the taxable year together with any
other gain or loss that was previously recognized upon the termination of
Section 1256 contracts during that taxable year. Any capital gain or loss for
the taxable year with respect to Section 1256 contracts (including any capital
gain or loss arising as a consequence of the year-end deemed sale of such
contracts) is generally treated as 60% long-term capital gain or loss and 40%
short-term capital gain or loss. The Fund, however, may elect not to have this
special tax treatment apply to Section 1256 contracts that are part of a "mixed
straddle" with other investments of the Fund that are not Section 1256
contracts. The IRS has held in several private rulings (and Treasury Regulations
now provide) that gains arising from Section 1256 contracts will be treated for
purposes of the Short-Short Gain Test as being derived from securities held for
not less than three months if the gains arise as a result of a constructive sale
under Code Section 1256.
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<PAGE>
The International Fund may purchase securities of certain foreign
investment funds or trusts which constitute passive foreign investment companies
("PFICs") for federal income tax purposes. If the Fund invests in a PFIC, it may
elect to treat the PFIC as a qualifying electing fund (a "QEF") in which event
the Fund will each year have ordinary income equal to its pro rata share of the
PFIC's ordinary earnings for the year and long-term capital gain equal to its
pro rata share of the PFIC's net capital gain for the year, regardless of
whether the Fund receives distributions of any such ordinary earning or capital
gain from the PFIC. If the Fund does not (because it is unable to, chooses not
to or otherwise) elect to treat the PFIC as a QEF, then in general (1) any gain
recognized by the Fund upon sale or other disposition of its interest in the
PFIC or any excess distribution received by the Fund from the PFIC will be
allocated ratably over the Fund's holding period of its interest in the PFIC,
(2) the portion of such gain or excess distribution so allocated to the year in
which the gain is recognized or the excess distribution is received shall be
included in the Fund's gross income for such year as ordinary income (and the
distribution of such portion by the Fund to shareholders will be taxable as an
ordinary income dividend, but such portion will not be subject to tax at the
Fund level), (3) the Fund shall be liable for tax on the portions of such gain
or excess distribution so allocated to prior years in an amount equal to, for
each such prior year, (i) the amount of gain or excess distribution allocated to
such prior year multiplied by the highest tax rate (individual or corporate) in
effect for such prior year plus (ii) interest on the amount determined under
clause (i) for the period from the due date for filing a return for such prior
year until the date for filing a return for the year in which the gain is
recognized or the excess distribution is received at the rates and methods
applicable to underpayments of tax for such period, and (4) the distribution by
the Fund to shareholders of the portions of such gain or excess distribution so
allocated to prior years (net of the tax payable by the Fund thereon) will again
be taxable to the shareholders as an ordinary income dividend.
Under recently proposed Treasury Regulations the International Fund can
elect to recognize as gain the excess, as of the last day of its taxable year,
of the fair market value of each share of PFIC stock over the Fund's adjusted
tax basis in that share ("mark to market gain"). Such mark to market gain will
be included by the Fund as ordinary income, such gain will not be subject to the
Short-Short Gain Test, and the Fund's holding period with respect to such PFIC
stock commences on the first day of the next taxable year. If the Fund makes
such election in the first taxable year it holds PFIC stock, the Fund will
include ordinary income from any mark to market gain, if any, and will not incur
the tax described in the previous paragraph.
Treasury Regulations permit a regulated investment company, in
determining its investment company taxable income and net capital gain (i.e.,
the excess of net long-term capital gain over net short-term capital loss) for
any taxable year, to elect (unless it has made a taxable year election for
excise tax purposes as discussed below) to treat all or any part of any net
capital loss, any net long-term capital loss or any net foreign currency loss
incurred after October 31 as if it had been incurred in the succeeding year.
In addition to satisfying the requirements described above, each Fund
must satisfy an asset diversification test in order to qualify as a regulated
investment company. Under this test, at the close of each quarter of a Fund's
taxable year, at least 50% of the value of the Fund's assets must consist of
cash and cash items, U.S. Government securities, securities of other regulated
investment companies, and securities of other issuers (as to which the Fund has
not invested more than 5% of the value of the Fund's total assets in securities
of such issuer and as to which the Fund does not hold more than 10% of the
outstanding voting securities of such issuer), and no more than 25% of the value
of its total assets may be invested in the securities of any one issuer (other
than U.S. Government securities and securities of other regulated investment
companies), or in two or more issuers which the Fund controls and which are
engaged in the same or similar trades or businesses. Generally, an option (call
or put) with respect to a security is treated as issued by the issuer of the
security not the issuer of the option.
If for any taxable year a Fund does not qualify as a regulated
investment company, all of its taxable income (including its net capital gain)
will be subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and such distributions will be taxable to the
shareholders as ordinary dividends to the extent of the Fund's current and
accumulated earnings and profits. Such distributions generally will be eligible
for the dividends-received deduction in the case of corporate shareholders.
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Excise Tax on Regulated Investment Companies
A 4% non-deductible excise tax is imposed on a regulated investment
company that fails to distribute in each calendar year an amount equal to 98% of
ordinary taxable income for the calendar year and 98% of capital gain net income
for the one-year period ended on October 31 of such calendar year (or, at the
election of a regulated investment company having a taxable year ending November
30 or December 31, for its taxable year (a "taxable year election")). The
balance of such income must be distributed during the next calendar year. For
the foregoing purposes, a regulated investment company is treated as having
distributed any amount on which it is subject to income tax for any taxable year
ending in such calendar year.
For purposes of the excise tax, a regulated investment company shall:
(1) reduce its capital gain net income (but not below its net capital gain) by
the amount of any net ordinary loss for the calendar year; and (2) exclude
foreign currency gains and losses incurred after October 31 of any year (or
after the end of its taxable year if it has made a taxable year election) in
determining the amount of ordinary taxable income for the current calendar year
(and, instead, include such gains and losses in determining ordinary taxable
income for the succeeding calendar year).
Each Fund intends to make sufficient distributions or deemed
distributions of its ordinary taxable income and capital gain net income prior
to the end of each calendar year to avoid liability for the excise tax. However,
investors should note that a Fund may in certain circumstances be required to
liquidate portfolio investments to make sufficient distributions to avoid excise
tax liability.
Fund Distributions
Each Fund anticipates distributing substantially all of its investment
company taxable income for each taxable year. Such distributions will be taxable
to shareholders as ordinary income and treated as dividends for federal income
tax purposes. Such dividends paid by the Tocqueville Fund and the Small Cap Fund
will qualify for the 70% dividends-received deduction for corporate shareholders
only to the extent discussed below. Such dividends paid by the International
Fund generally should not qualify for the 70% dividends-received deduction for
corporate shareholders.
A Fund may either retain or distribute to shareholders its net capital
gain for each taxable year. Each Fund currently intends to distribute any such
amounts. If net capital gain is distributed and designated as a capital gain
dividend, it will be taxable to shareholders as long-term capital gain,
regardless of the length of time the shareholder has held his shares or whether
such gain was recognized by a Fund prior to the date on which the shareholder
acquired his shares. The Code provides, however, that under certain conditions
only 50% of the capital gain recognized upon a Fund's disposition of domestic
"small business" stock will be subject to tax.
Conversely, if a Fund elects to retain its net capital gain, the Fund
will be taxed thereon (except to the extent of any available capital loss
carryovers) at the 35% corporate tax rate. If a Fund elects to retain its net
capital gain, it is expected that the Fund also will elect to have shareholders
of record on the last day of its taxable year treated as if each received a
distribution of his pro rata share of such gain, with the result that each
shareholder will be required to report his pro rata share of such gain on his
tax return as long-term capital gain, will receive a refundable tax credit for
his pro rata share of tax paid by the Fund on the gain, and will increase the
tax basis for his shares by an amount equal to the deemed distribution less the
tax credit.
Ordinary income dividends paid by the Tocqueville Fund and the Small
Cap Fund with respect to a taxable year will qualify for the 70%
dividends-received deduction generally available to corporations (other than
corporations, such as S corporations, which are not eligible for the deduction
because of their special characteristics and other than for purposes of special
taxes such as the accumulated earnings tax and the personal holding company tax)
to the extent of the amount of qualifying dividends received by the Fund from
domestic corporations for the taxable year. A dividend received by the Fund will
not be treated as a qualifying dividend (1) if it has been received with respect
to any share of stock that the Fund has held for less than 46
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days (91 days in the case of certain preferred stock), excluding for this
purpose under the rules of Code Section 246(c)(3) and (4): (i) any day more than
45 days (or 90 days in the case of certain preferred stock) after the date on
which the stock becomes ex-dividend and (ii) any period during which the Fund
has an option to sell, is under a contractual obligation to sell, has made and
not closed a short sale of, is the grantor of a deep-in-the- money or otherwise
nonqualified option to buy, or has otherwise diminished its risk of loss by
holding other positions with respect to, such (or substantially identical)
stock; (2) to the extent that the Fund is under an obligation (pursuant to a
short sale or otherwise) to make related payments with respect to positions in
substantially similar or related property; or (3) to the extent the stock on
which the dividend is paid is treated as debt-financed under the rules of Code
Section 246A. Moreover, the dividends-received deduction for a corporate
shareholder may be disallowed or reduced (1) if the corporate shareholder fails
to satisfy the foregoing requirements with respect to its shares of the Fund or
(2) by application of Code Section 246(b) which in general limits the
dividends-received deduction to 70% of the shareholder's taxable income
(determined without regard to the dividends-received deduction and certain other
items). Since an insignificant portion of the International Fund will be
invested in stock of domestic corporations, the ordinary dividends distributed
by the Fund will not qualify for the dividends-received deduction for corporate
shareholders.
Alternative minimum tax ("AMT") is imposed in addition to, but only to
the extent it exceeds, the regular tax and is computed at a maximum marginal
rate of 28% for noncorporate taxpayers and 20% for corporate taxpayers on the
excess of the taxpayer's alternative minimum taxable income ("AMTI") over an
exemption amount. In addition, under the Superfund Amendments and
Reauthorization Act of 1986, a tax is imposed for taxable years beginning after
1986 and before 1996 at the rate of 0.12% on the excess of a corporate
taxpayer's AMTI (determined without regard to the deduction for this tax and the
AMT net operating loss deduction) over $2 million. For purposes of the corporate
AMT and the environmental superfund tax (which are discussed above), the
corporate dividends-received deduction is not itself an item of tax preference
that must be added back to taxable income or is otherwise disallowed in
determining a corporation's AMTI. However, corporate shareholders will generally
be required to take the full amount of any dividend received from the Fund into
account (without a dividends-received deduction) in determining its adjusted
current earnings, which are used in computing an additional corporate preference
item (i.e., 75% of the excess of a corporate taxpayer's adjusted current
earnings over its AMTI (determined without regard to this item and the AMT net
operating loss deduction)) includable in AMTI.
Investment income that may be received by the International Fund from
sources within foreign countries may be subject to foreign taxes withheld at the
source. The United States has entered into tax treaties with many foreign
countries which entitle the Fund to a reduced rate of, or exemption from, taxes
on such income. It is impossible to determine the effective rate of foreign tax
in advance since the amount of the Fund's assets to be invested in various
countries is not known. If more than 50% of the value of the Fund's total assets
at the close of its taxable year consist of the stock or securities of foreign
corporations, the Fund may elect to "pass through" to the Fund's shareholders
the amount of foreign taxes paid by the Fund. If the Fund so elects, each
shareholder would be required to include in gross income, even though not
actually received, his pro rata share of the foreign taxes paid by the Fund, but
would be treated as having paid his pro rata share of such foreign taxes and
would therefore be allowed to either deduct such amount in computing taxable
income or use such amount (subject to various Code limitations) as a foreign tax
credit against federal income tax (but not both). For purposes of the foreign
tax credit limitation rules of the Code, each shareholder would treat as foreign
source income his pro rata share of such foreign taxes plus the portion of
dividends received from a Fund representing income derived from foreign sources.
No deduction for foreign taxes could be claimed by an individual shareholder who
does not itemize deductions. Each shareholder should consult his own tax adviser
regarding the potential application of foreign tax credits.
Distributions by a Fund that do not constitute ordinary income
dividends or capital gain dividends will be treated as a return of capital to
the extent of (and in reduction of) the shareholder's tax basis in his shares;
any excess will be treated as gain from the sale of his shares, as discussed
below.
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Distributions by a Fund will be treated in the manner described above
regardless of whether such distributions are paid in cash or reinvested in
additional shares of the Fund (or of another fund). Shareholders receiving a
distribution in the form of additional shares will be treated as receiving a
distribution in an amount equal to the fair market value of the shares received,
determined as of the reinvestment date. In addition, if the net asset value at
the time a shareholder purchases shares of a Fund reflects undistributed net
investment income or recognized capital gain net income, or unrealized
appreciation in the value of the assets of the Fund, distributions of such
amounts will be taxable to the shareholder in the manner described above,
although such distributions economically constitute a return of capital to the
shareholder.
Ordinarily, shareholders are required to take distributions by a Fund
into account in the year in which the distributions are made. However, dividends
declared in October, November or December of any year and payable to
shareholders of record on a specified date in such a month will be deemed to
have been received by the shareholders (and made by a Fund) on December 31 of
such calendar year if such dividends are actually paid in January of the
following year. Shareholders will be advised annually as to the U.S. federal
income tax consequences of distributions made (or deemed made) during the year.
Each Fund will be required in certain cases to withhold and remit to
the U.S. Treasury 31% of ordinary income dividends and capital gain dividends,
and the proceeds of redemption of shares, paid to any shareholder (1) who has
provided either an incorrect tax identification number or no number at all, (2)
who is subject to backup withholding by the IRS for failure to report the
receipt of interest or dividend income properly, or (3) who has failed to
certify to the Fund that it is not subject to backup withholding or that it is a
corporation or other "exempt recipient."
Sale or Redemption of Shares
A shareholder will recognize gain or loss on the sale or redemption of
shares of a Fund in an amount equal to the difference between the proceeds of
the sale or redemption and the shareholder's adjusted tax basis in the shares.
All or a portion of any loss so recognized may be disallowed if the shareholder
purchases other shares of a Fund within 30 days before or after the sale or
redemption. In general, any gain or loss arising from (or treated as arising
from) the sale or redemption of shares of a Fund will be considered capital gain
or loss and will be long-term capital gain or loss if the shares were held for
longer than one year. However, any capital loss arising from the sale or
redemption of shares held for six months or less will be treated as a long-term
capital loss to the extent of the amount of capital gain dividends received on
such shares. For this purpose, the special holding period rules of Code Section
246(c)(3) and (4) (discussed above in connection with the dividends-received
deduction for corporations) generally will apply in determining the holding
period of shares. Long-term capital gains of noncorporate taxpayers are
currently taxed at a maximum rate 11.6% lower than the maximum rate applicable
to ordinary income. Capital losses in any year are deductible only to the extent
of capital gains plus, in the case of a noncorporate taxpayer, $3,000 of
ordinary income.
If a shareholder (1) incurs a sales load in acquiring shares of a Fund,
(2) disposes of such shares less than 91 days after they are acquired and (3)
subsequently acquires shares of the Fund or another fund at a reduced sales load
pursuant to a right to reinvest at such reduced sales load acquired in
connection with the acquisition of the shares disposed of, then the sales load
on the shares disposed of (to the extent of the reduction in the sales load on
the shares subsequently acquired) shall not be taken into account in determining
gain or loss on the shares disposed of but shall be treated as incurred on the
acquisition of the shares subsequently acquired.
Foreign Shareholders
Taxation of a shareholder who, as to the United States, is a
nonresident alien individual, foreign trust or estate, foreign corporation, or
foreign partnership ("foreign shareholder"), depends on whether the income from
a Fund is "effectively connected" with a U.S. trade or business carried on by
such shareholder.
If the income from a Fund is not effectively connected with a U.S.
trade or business carried on by a foreign shareholder, ordinary income dividends
paid to a foreign shareholder will be subject to U.S. withholding
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<PAGE>
tax at the rate of 30% (or lower treaty rate) upon the gross amount of the
dividend. Furthermore, such a foreign shareholder may be subject to U.S.
withholding tax at the rate of 30% (or lower treaty rate) on the gross income
resulting from the Asia-Pacific Fund's or the International Fund's election to
treat any foreign taxes paid by it as paid by its shareholders, but may not be
allowed a deduction against this gross income or a credit against this U.S.
withholding tax for the foreign shareholder's pro rata share of such foreign
taxes which it is treated as having paid. Such a foreign shareholder would
generally be exempt from U.S. federal income tax on gains realized on the sale
of shares of a Fund, capital gain dividends and amounts retained by the Fund
that are designated as undistributed capital gains.
If the income from a Fund is effectively connected with a U.S. trade or
business carried on by a foreign shareholder, then ordinary income dividends,
capital gain dividends, and any gains realized upon the sale of shares of the
Fund will be subject to U.S. federal income tax at the rates applicable to U.S.
citizens or domestic corporations.
In the case of foreign noncorporate shareholders, a Fund may be
required to withhold U.S. federal income tax at a rate of 31% on distributions
that are otherwise exempt from withholding tax (or taxable at a reduced treaty
rate) unless such shareholders furnish the Fund with proper notification of its
foreign status.
The tax consequences to a foreign shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described
herein. Foreign shareholders are urged to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in a Fund,
including the applicability of foreign taxes.
Effect of Future Legislation; Local Tax Considerations
The foregoing general discussion of U.S. federal income tax
consequences is based on the Code and the Treasury Regulations issued thereunder
as in effect on the date of this Statement of Additional Information. Future
legislative or administrative changes or court decisions may significantly
change the conclusions expressed herein, and any such changes or decisions may
have a retroactive effect with respect to the transactions contemplated herein.
Rules of state and local taxation of ordinary income dividends and
capital gain dividends from regulated investment companies often differ from the
rules for U.S. federal income taxation described above. Shareholders are urged
to consult their tax advisers as to the consequences of these and other state
and local tax rules affecting investment in a Fund.
PERFORMANCE CALCULATION
For purposes of quoting and comparing the performance of each Fund to
that of other mutual funds and to other relevant market indices in
advertisements or in reports to shareholders, performance may be stated in terms
of total return. Under rules promulgated by the Securities and Exchange
Commission ("SEC"), a fund's advertising performance must include total return
quotations calculated according to the following formula:
P(1 + T)n = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years (1, 5 or 10)
ERV = ending redeemable value of a hypothetical $1,000
payment, made at the beginning of the 1,5 or 10 year
period, at the end of such period (or fractional
portion thereof.)
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Under the foregoing formula, the time periods used in advertising will
be based on rolling calendar quarters, updated to the last day of the most
recent quarter prior to submission of the advertising for publication, and will
cover 1, 5 and 10 year periods of a Fund's existence or such shorter period
dating from the effectiveness of the Fund's Registration Statement. In
calculating the ending redeemable value, all dividends and distributions by a
Fund are assumed to have been reinvested at net asset value as described in the
Prospectus on the reinvestment dates during the period. Total return, or "T" in
the formula above, is computed by finding the average annual compounded rates of
return over the 1, 5 and 10 year periods (or fractional portion thereof) that
would equate the initial amount invested to the ending redeemable value. Any
recurring account charges that might in the future be imposed by a Fund would be
included at that time.
In addition to the total return quotations discussed above, a Fund may
advertise its yield based on a 30-day (or one month) period ended on the date of
the most recent balance sheet included in the Fund's Post-Effective Amendment to
its Registration Statement, computed by dividing the net investment income per
share earned during the period by the maximum offering price per share on the
last day of the period, according to the following formula:
a-b
YIELD = 2[( ----- +1)6-1]
cd
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends.
d = the maximum offering price per share on the last day of
the period.
Under this formula, interest earned on debt obligations for purposes of
"a" above, is calculated by (1) computing the yield to maturity of each
obligation held by the Fund based on the market value of the obligation
(including actual accrued interest) at the close of business on the last day of
each month, or, with respect to obligations purchased during the month, the
purchase price (plus actual accrued interest), (2) dividing that figure by 360
and multiplying the quotient by the market value of the obligation (including
actual accrued interest as referred to above) to determine the interest income
on the obligation for each day of the subsequent month that the obligation is in
the Fund's portfolio (assuming a month of 30 days) and (3) computing the total
of the interest earned on all debt obligations and all dividends accrued on all
equity securities during the 30-day or one month period. In computing dividends
accrued, dividend income is recognized by accruing 1/360 of the stated dividend
rate of a security each day that the security is in the Fund's portfolio. For
purposes of "b" above, Rule 12b-1 expenses are included among the expenses
accrued for the period. Undeclared earned income, computed in accordance with
generally accepted accounting principles, may be subtracted from the maximum
offering price calculation required pursuant to "d" above.
Any quotation of performance stated in terms of yield will be given no
greater prominence than the information prescribed under the SEC's rules. In
addition, all advertisements containing performance data of any kind will
include a legend disclosing that such performance data represents past
performance and that the investment return and principal value of an investment
will fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost.
Calculated pursuant to the SEC's formula and assuming an ending
redeemable value of an initial $1,000 investment, The Tocqueville Fund's total
return for the 1 year, 3 year, 5 year and since inception periods ended October
31, 1996 was 17.74%, 13.74%, 15.91% and 11.47%, respectively; the total return
for the International Fund for the 1 year and since inception periods ended
October 31, 1996 was 11.44% and 8.68%; the total return for the Small Cap Fund
for the 1 year and since inception periods ended October 31, 1996 was 14.92% and
16.08%; and the total return for the Government Fund for the 1 year and since
inception periods ended October 31, 1996 was 1.62% and 2.22%. For the 30 day
period ended October 31, 1996, the Government Fund's yield was 3.54%.
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GENERAL INFORMATION
ORGANIZATION AND DESCRIPTION OF SHARES OF THE TRUST
The Trust was organized as a Massachusetts business trust under the
laws of The Commonwealth of Massachusetts. The Trust's Declaration of Trust
filed September 17, 1986, permits the Trustees to issue an unlimited number of
shares of beneficial interest with a par value of $0.01 per share in the Trust
in an unlimited number of series of shares. The Trust consists of five series,
The Tocqueville Fund, The Tocqueville Small Cap Value Fund, The Tocqueville
Asia-Pacific Fund, The Tocqueville International Value Fund and The Tocqueville
Government Fund. On August 19, 1991, the Declaration of Trust was amended to
change the name of the Trust to "The Tocqueville Trust," and on August 4, 1995,
the Declaration of Trust was amended to permit the division of a series into
classes of shares. Each share of beneficial interest has one vote and shares
equally in dividends and distributions when and if declared by a Fund and in the
Fund's net assets upon liquidation. All shares, when issued, are fully paid and
nonassessable. There are no preemptive, conversion or exchange rights. Fund
shares do not have cumulative voting rights and, as such, holders of at least
50% of the shares voting for Trustees can elect all Trustees and the remaining
shareholders would not be able to elect any Trustees. The Board of Trustees may
classify or reclassify any unissued shares of the Trust into shares of any
series by setting or changing in any one or more respects, from time to time,
prior to the issuance of such shares, the preference, conversion or other
rights, voting powers, restrictions, limitations as to dividends, or
qualifications of such shares. Any such classification or reclassification will
comply with the provisions of the 1940 Act. Shareholders of each series as
created will vote as a series to change, among other things, a fundamental
policy of each Fund and to approve the Investment Advisory Agreement and
Distribution Plan.
The Trust is not required to hold annual meetings of shareholders but
will hold special meetings of shareholders when, in the judgment of the
Trustees, it is necessary or desirable to submit matters for a shareholder vote.
Shareholders have, under certain circumstances, the right to communicate with
other shareholders in connection with requesting a meeting of shareholders for
the purpose of removing one or more Trustees. Shareholders also have, in certain
circumstances, the right to remove one or more Trustees without a meeting. No
material amendment may be made to the Trust's Declaration of Trust without the
affirmative vote of the holders of a majority of the outstanding shares of each
series affected by the amendment.
Under Massachusetts law, shareholders of a Massachusetts business trust
may, under certain circumstances, be held personally liable as partners for its
obligations. However, the Trust's Declaration of Trust contains an express
disclaimer of shareholder liability for acts or obligations of the Trust and
provides for indemnification and reimbursement of expenses out of the Trust
property for any shareholder held personally liable for the obligations of the
Trust. The Trust's Declaration of Trust further provides that obligations of the
Trust are not binding upon the Trustees individually but only upon the property
of the Trust and that the Trustees will not be liable for any action or failure
to act, errors of judgment or mistakes of fact or law, but nothing in the
Declaration of Trust protects a Trustee against any liability to which he would
otherwise be subject by reason of wilful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of his
office.
PRINCIPAL HOLDERS
As of January 31, 1997, the following shareholders owned 5% or more
of a Fund's shares:
- - The Tocqueville Fund Tocqueville Asset Management L.P. held discretion over
___________ shares (____%)
- - The Tocqueville Small Cap Value Fund Tocqueville Asset Management L.P. held
discretion over ___________ shares (____%)
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- - The Tocqueville International Value Fund Tocqueville Asset Management L.P.
held discretion over ___________ (_____%)
- - The Tocqueville Government Fund Tocqueville Asset Management L.P. held
discretion over ___________ shares (_____%)
The address of Tocqueville Asset Management L.P. is 1675 Broadway, New
York, New York 10019.
REPORTS
Shareholders receive reports at least semi-annually showing each Fund's
holdings and other information. In addition, shareholders receive financial
statements examined by the Trust's independent accountants.
FINANCIAL STATEMENTS
The Financial Statements for each Fund for the fiscal year ended
October 31, 1996 and for the six months ended April 30, 1996, respectively, are
incorporated by reference from the Annual Report to Shareholders dated October
31, 1996 and the Semi-Annual Report to Shareholders dated April 30, 1996,
respectively.
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STATEMENT OF ADDITIONAL INFORMATION - February 28, 1997
THE TOCQUEVILLE TRUST
THE TOCQUEVILLE ASIA-PACIFIC FUND
This Statement of Additional Information is not a prospectus. This
Statement of Additional Information is incorporated by reference in its entirety
into the Prospectus and should be read in conjunction with the Trust's current
Prospectus, copies of which may be obtained by writing The Tocqueville Trust,
c/o Firstar Trust Company, 615 East Michigan Street, Milwaukee, Wisconsin 53202
or calling (800) 697-3863.
This Statement of Additional Information relates to Trust's Prospectus
which is dated February 28, 1997.
TABLE OF CONTENTS
PAGE
Investment Policies and Risks.............................................. 2
Investment Restrictions..................................................... 5
Management.................................................................. 7
Investment Advisor and Investment Advisory Agreement....................... 9
Distribution Plan.......................................................... 10
Administrative Services Agreement.......................................... 10
Portfolio Transactions and Brokerage........................................ 11
Allocation of Investments................................................... 11
Computation of Net Asset Value.............................................. 12
Purchase and Redemption of Shares........................................... 12
Tax Matters................................................................. 12
Performance Calculation..................................................... 19
General Information......................................................... 20
Reports ................................................................... 22
Financial Statements........................................................ 22
<PAGE>
The Tocqueville Trust (the "Trust") is a Massachusetts business trust
currently consisting of five separate funds (the "Funds"). Each Fund is an
open-end, diversified management investment company with a different investment
objective. This Statement of Additional Information relates to The Tocqueville
Asia-Pacific Fund (the "Fund") only. The Fund's investment objective is
long-term capital appreciation consistent with preservation of capital primarily
through investment in securities of issuers located in Asia and the Pacific
Basin. There is minimal emphasis on current income. Much of the information
contained in this Statement of Additional Information expands on subjects
discussed in the Prospectus. Capitalized terms not defined herein are used as
defined in the Prospectus. No investment in shares of the Fund should be made
without first reading the Fund's Prospectus.
INVESTMENT POLICIES AND RISKS
The following descriptions supplement the investment policies of the Fund set
forth in the Prospectus. The Fund's investments in the following securities and
other financial instruments are subject to the investment policies and
limitations described in the Prospectus and this Statement of Additional
Information.
1. WRITING COVERED CALL OPTIONS ON SECURITIES AND STOCK INDICES
The Fund may write covered call options on optionable securities or
stock indices of the types in which they are permitted to invest from time to
time as its Investment Advisor determines is appropriate in seeking to attain
their objective. A call option written by the Fund give the holder the right to
buy the underlying securities or index from the Fund at a stated exercise price.
Options on stock indices are settled in cash.
The Fund may write only covered call options, which means that, so long
as the Fund is obligated as the writer of a call option, it will own the
underlying securities subject to the option (or comparable securities or cash
satisfying the cover requirements of securities exchanges).
The Fund will receive a premium for writing a covered call option,
which increases the return of the Fund in the event the option expires
unexercised or is closed out at a profit. The amount of the premium will
reflect, among other things, the relationship of the market price of the
underlying security or index to the exercise price of the option, the term of
the option and the volatility of the market price of the underlying security or
index. By writing a covered call option, the Fund limits its opportunity to
profit from any increase in the market value of the underlying security or index
above the exercise price of the option.
The Fund may terminate an option that it has written prior to the
option's expiration by entering into a closing purchase transaction in which an
option is purchased having the same terms as the option written. The Fund will
realize a profit or loss from such transaction if the cost of such transaction
is less or more than the premium received from the writing of the option.
Because increases in the market price of a call option will generally reflect
increases in the market price of the underlying security or index, any loss
resulting from the repurchase of a call option is likely to be offset in whole
or in part by unrealized appreciation of the underlying security (or securities)
owned by the Fund.
2. PURCHASING PUT AND CALL OPTIONS ON SECURITIES AND STOCK INDICES
The Fund may purchase put options to protect their portfolio holdings
in an underlying stock index or security against a decline in market value. Such
hedge protection is provided during the life of the put option since the Fund,
as holder of the put option, is able to sell the underlying security or index at
the put exercise price regardless of any decline in the underlying market price
of the security or index. In order for a put option to be profitable, the market
price of the underlying security or index must decline sufficiently below the
exercise
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<PAGE>
price to cover the premium and transaction costs. By using put options in this
manner, the Fund will reduce any profit it might otherwise have realized in its
underlying security or index by the premium paid for the put option and by
transaction costs, but it will retain the ability to benefit from future
increases in market value.
The Fund may also purchase call options to hedge against an increase in
prices of stock indices or securities that it wants ultimately to buy. Such
hedge protection is provided during the life of the call option since the Fund,
as holder of the call option, is able to buy the underlying security or index at
the exercise price regardless of any increase in the underlying market price of
the security or index. In order for a call option to be profitable, the market
price of the underlying security or index must rise sufficiently above the
exercise price to cover the premium and transaction costs. By using call options
in this manner, the Fund will reduce any profit it might have realized had it
bought the underlying security or index at the time it purchased the call option
by the premium paid for the call option and by transaction costs, but it limits
the loss it will suffer if the security or index declines in value to such
premium and transaction costs.
3. BORROWING
The Fund may, from time to time, borrow up to 10% of the value of its
total assets from banks at prevailing interest rates as a temporary measure for
extraordinary or emergency purposes. The Fund may not purchase securities while
borrowings exceed 5% of the value of its total assets.
4. REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements subject to resale to a
bank or dealer at an agreed upon price which reflects a net interest gain . The
Fund will receive interest from the institution until the time when the
repurchase is to occur.
The Fund will always receive as collateral U.S. Government or
short-term money market securities whose market value is equal to at least 100%
of the amount invested by the Fund, and the Fund will make payment for such
securities only upon the physical delivery or evidence by book entry transfer to
the account of its custodian. If the seller institution defaults, the Fund might
incur a loss or delay in the realization of proceeds if the value of the
collateral securing the repurchase agreement declines and it might incur
disposition costs in liquidating the collateral. The Fund attempts to minimize
such risks by entering into such transactions only with well-capitalized
financial institutions and specifying the required value of the underlying
collateral.
5. FUTURES CONTRACTS
The Fund may enter into futures contracts, options on futures contracts
and stock index futures contracts and options thereon for the purposes of
remaining fully invested and reducing transaction costs. Futures contracts
provide for the future sale by one party and purchase by another party of a
specified amount of a specific security, class of securities, currency or an
index at a specified future time and at a specified price. A stock index futures
contract is a bilateral agreement pursuant to which two parties agree to take or
make delivery of an amount of cash equal to a specified dollar amount times the
difference between the stock index value at the close of trading of the
contracts and the price at which the futures contract is originally struck.
Futures contracts which are standardized as to maturity date and underlying
financial instrument are traded on national futures exchanges. Futures exchanges
and trading are regulated under the Commodity Exchange Act by the Commodity
Futures Trading Commission (the "CFTC"), a U.S. Government agency.
Although futures contracts by their terms call for actual delivery and
acceptance of the underlying securities, in most cases the contracts are closed
out before the settlement date without the making or taking of delivery. Closing
out an open futures position is done by taking an opposite position (buying a
contract which has previously been "sold," or "selling" a contract previously
purchased) in an identical contract to terminate the position. A futures
contract on a securities index is an agreement obligating either party to pay,
and entitling the other party to receive, while the contract is outstanding,
cash payments based on the level of a specified
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<PAGE>
securities index. The acquisition of put and call options on futures contracts
will, respectively, give the Fund the right (but not the obligation), for a
specified price, to sell or to purchase the underlying futures contract, upon
exercise of the option, at any time during the option period. Brokerage
commissions are incurred when a futures contract is bought or sold.
Futures traders are required to make a good faith margin deposit in
cash or government securities with a broker or custodian to initiate and
maintain open positions in futures contracts. A margin deposit is intended to
assure completion of the contract (delivery or acceptance of the underlying
security) if it is not terminated prior to the specified delivery date. Minimal
initial margin requirements are established by the futures exchange and may be
changed. Brokers may establish deposit requirements which are higher than the
exchange minimums. Initial margin deposits on futures contracts are customarily
set at levels much lower than the prices at which the underlying securities are
purchased and sold, typically ranging upward from less than 5% of the value of
the contract being traded.
After a futures contract position is opened, the value of the contract
is marked-to-market daily. If the futures contract price changes to the extent
that the margin on deposit does not satisfy margin requirements, payment of
additional "variation" margin will be required. Conversely, change in the
contract value may reduce the required margin, resulting in a repayment of
excess margin to the contract holder. Variation margin payments are made to and
from the futures broker for as long as the contract remains open. The Fund
expects to earn interest income on its margin deposits.
In addition to the margin restrictions discussed above, transactions in
futures contracts may involve the segregation of funds pursuant to requirements
imposed by the CFTC. Under those requirements, where the Fund has a long
position in a futures contract, it may be required to establish a segregated
account (not with a futures commission merchant or broker, except as may be
permitted under CFTC rules) containing cash or certain liquid assets equal to
the purchase price of the contract (less any margin on deposit). For a short
position in futures or forward contracts held by the Fund, those requirements
may mandate the establishment of a segregated account (not with a futures
commission merchant or broker, except as may be permitted under CFTC rules) with
cash or certain liquid assets that, when added to the amounts deposited as
margin, equal the market value of the instruments underlying the futures
contracts (but are not less than the price at which the short positions were
established). However, segregation of assets is not required if the Fund
"covers" a long position. For example, instead of segregating assets, the Fund,
when holding a long position in a futures contract, could purchase a put option
on the same futures contract with a strike price as high or higher than the
price of the contract held by the Fund. In addition, where the Fund takes short
positions, or engages in sales of call options, it need not segregate assets if
it "covers" these positions. For example, where the Fund holds a short position
in a futures contract, it may cover by owning the instruments underlying the
contract. The Fund may also cover such a position by holding a call option
permitting it to purchase the same futures contract at a price no higher than
the price at which the short position was established. Where the Fund sells a
call option on a futures contract, it may cover either by entering into a long
position in the same contract at a price no higher than the strike price of the
call option or by owning the instruments underlying the futures contract. The
Fund could also cover this position by holding a separate call option permitting
it to purchase the same futures contract at a price no higher than the strike
price of the call option sold by the Fund.
When interest rates are expected to rise or market values of portfolio
securities are expected to fall, the Fund can seek through the sale of futures
contracts to offset a decline in the value of its portfolio securities. When
interest rates are expected to fall or market values are expected to rise, the
Fund, through the purchase of such contracts, can attempt to secure better rates
or prices for the Fund than might later be available in the market when it
effects anticipated purchases.
The Fund will only sell futures contracts to protect securities and
currencies it owns against price declines or purchase contracts to protect
against an increase in the price of securities it intends to purchase.
The Fund's ability to effectively utilize futures trading depends on
several factors. First, it is possible that there will not be a perfect price
correlation between the futures contracts and their underlying stock
-4-
<PAGE>
index. Second, it is possible that a lack of liquidity for futures contracts
could exist in the secondary market, resulting in an inability to close a
futures position prior to its maturity date. Third, the purchase of a futures
contract involves the risk that the Fund could lose more than the original
margin deposit required to initiate a futures transaction.
RISK FACTORS IN FUTURES TRANSACTIONS
Positions in futures contracts may be closed out only on an exchange
which provides a secondary market for such futures. However, there can be no
assurance that a liquid secondary market will exist for any particular futures
contract at any specific time. Thus, it may not be possible to close a futures
position. In the event of adverse price movements, the Fund would continue to be
required to make daily cash payments to maintain the required margin. In such
situations, if the Fund has insufficient cash, it may have to sell portfolio
securities to meet daily margin requirements at a time when it may be
disadvantageous to do so. In addition, the Fund may be required to make delivery
of the instruments underlying futures contracts it holds. The inability to close
options and futures positions also could have an adverse impact on the ability
to effectively hedge them. The Fund will minimize the risk that it will be
unable to close out a futures contract by only entering into futures contracts
which are traded on national futures exchanges and for which there appears to be
a liquid secondary market.
The risk of loss in trading futures contracts in some strategies can be
substantial, due both to the low margin deposits required, and the extremely
high degree of leverage involved in futures pricing. Because the deposit
requirements in the futures markets are less onerous than margin requirements in
the securities market, there may be increased participation by speculators in
the futures market which may also cause temporary price distortions. A
relatively small price movement in a futures contract may result in immediate
and substantial loss (as well as gain) to the investor. For example, if at the
time of purchase, 10% of the value of the futures contract is deposited as
margin, a subsequent 10% decrease in the value of the futures contract would
result in a total loss of the margin deposit, before any deduction for the
transaction costs, if the account were then closed out. A 15% decrease would
result in a loss equal to 150% of the original margin deposit if the contract
were closed out. Thus, a purchase or sale of a futures contract may result in
losses in excess of the amount invested in the contract. However, because the
futures strategies engaged in by the Fund are only for hedging purposes, the
Investment Advisor does not believe that the Fund is subject to the risks of
loss frequently associated with futures transactions. The Fund would presumably
have sustained comparable losses if, instead of the futures contract, it had
invested in the underlying financial instrument and sold it after the decline.
Utilization of futures transactions by the Fund does involve the risk
of imperfect or no correlation where the securities underlying futures contract
have different maturities than the portfolio securities being hedged. It is also
possible that the Fund could both lose money on futures contracts and also
experience a decline in value of its portfolio securities. There is also the
risk of loss by the Fund of margin deposits in the event of bankruptcy of a
broker with whom the Fund has an open position in a futures contract or related
option.
CONCLUSION
Unlike the fundamental investment objective of the Fund set forth above
and the investment restrictions set forth below which may not be changed without
shareholder approval, the Fund has the right to modify the investment policies
described above without shareholder approval.
INVESTMENT RESTRICTIONS
The following fundamental policies and investment restrictions have
been adopted by the Fund and except as noted, such policies and restrictions
cannot be changed without approval by the vote of a majority of the outstanding
voting shares of the Fund which, as defined by the Investment Company Act of
1940, as
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<PAGE>
amended (the "1940 Act"), means the affirmative vote of the lesser of (a) 67% or
more of the shares of the Fund present at a meeting at which the holders of more
than 50% of the outstanding shares of the Fund are represented in person or by
proxy, or (b) more than 50% of the outstanding shares of the Fund.
The Fund may not:
(1) issue senior securities;
(2) concentrate its investments in particular industries. No more
than 25% of the value of the Fund's assets will be invested in any one
industry;
(3) with respect to 75% of the value of the Fund's assets,
purchase any securities (other than obligations issued or guaranteed
by the U.S. Government or its agencies or instrumentalities) if,
immediately after such purchase, more than 5% of the value of the
Fund's total assets would be invested in securities of any one issuer,
or more than 10% of the outstanding voting securities of any one
issuer would be owned by the Fund;
(4) make loans of money or securities other than (a) through the
purchase of publicly distributed bonds, debentures or other corporate
or governmental obligations, (b) by investing in repurchase
agreements, and (c) by lending its portfolio securities, provided the
value of such loaned securities does not exceed 33-1/3% of its total
assets;
(5) borrow money in excess of 10% of the value of the Fund's
total assets from banks. A Fund may not purchase securities while
borrowings exceed 5% of the value of its total assets;
(6) buy or sell real estate, commodities, or commodity contracts,
except the Fund may purchase or sell futures or options on futures;
(7) underwrite securities;
(8) invest in precious metals other than in accordance with the
Fund's investment objective and policy, if as a result the Fund would
then have more than 10% of its total assets (taken at current value)
invested in such precious metals; and
(9) participate in a joint investment account.
The following restrictions are non-fundamental and may be changed by
the Trust's Board of Trustees. Pursuant to such restrictions, the Fund will not:
(1) make short sales of securities, other than short sales
"against the box," or purchase securities on margin except for
short-term credits necessary for clearance of portfolio transactions,
provided that this restriction will not be applied to limit the use of
options, futures contracts and related options, in the manner
otherwise permitted by the investment restrictions, policies and
investment program of the Fund;
(2) purchase the securities of any other investment company, if ,
immediately after such purchase or acquisition, owns in the aggregate,
(i) more than 3% of the total outstanding voting stock of such
investment company, (ii) securities issued by such investment company
having an aggregate value in excess of 5% of the value of the total
assets of the Fund, or (iii) securities issued by such investment
company and all other investment companies having an aggregate value
in excess of 10% of the value of the total assets of the Fund; and
(3) invest more than 10% of its total net assets in illiquid
securities. Illiquid securities are securities that are not readily
marketable or cannot be disposed of promptly within seven days and in
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<PAGE>
the usual course of business without taking a materially reduced
price. Such securities include, but are not limited to, time deposits
and repurchase agreements with maturities longer than seven days.
Securities that may be resold under Rule 144A or securities offered
pursuant to Section 4(2) of the Securities Act of 1933, as amended,
shall not be deemed illiquid solely by reason of being unregistered.
The Investment Advisor shall determine whether a particular security
is deemed to be liquid based on the trading markets for the specific
security and other factors.
MANAGEMENT
The overall management of the business and affairs of the Fund is
vested with the Board of Trustees. The Board of Trustees approves all
significant agreements between the Trust or the Fund and persons or companies
furnishing services to the Fund, including the Fund's agreement with an
investment advisor, custodian and transfer agent. The day-to-day operations of
the Fund are delegated to the Fund's officers subject always to the investment
objectives and policies of the Fund and to general supervision by the Trust's
Board of Trustees.
The Trustees and officers and their principal occupations are noted
below. Unless otherwise indicated the address of each Trustee and executive
officer is 1675 Broadway, New York, New York 10019.
FRANCOIS DANIEL SICART,* CHAIRMAN, PRINCIPAL EXECUTIVE OFFICER AND TRUSTEE.
Chairman and Chief Executive Officer, Tocqueville Management Corporation, the
General Partner of Tocqueville Asset Management L.P. and Tocqueville Securities
L.P. from January, 1990 to present; Chairman and Chief Executive Officer,
Tocqueville Asset Management Corp. from December, 1985 to January, 1990; Vice
Chairman of Tucker Anthony Management Corporation, from 1981 to October 1986;
Vice President (formerly general partner) and other positions with Tucker
Anthony, Inc. from 1969 to January, 1990.
JAMES B. FLAHERTY, TRUSTEE. President and Partner, Troutbeck Conference Center
and Country Inn from October, 1979 to present; Vice President, Leedsville Realty
and Construction Corp. from 1980 to present; Associate Creative Director, Young
and Rubicam Advertising, and Dentsu, Young and Rubicam from March, 1983 to
February, 1985; Creative Director and Senior Vice President, Tinker Campbell
Ewald from October, 1977 to November, 1980; Partner/owner of Freshfields
Restaurant, W. Cornell, CT; President/Creative Director of JBF Ltd., an
advertising company.
INGE HECKEL, TRUSTEE. Management Consultant, 1988 to present; Executive
Director, Princess Grace Foundation U.S.A. from June, 1986 to September, 1988;
Vice President and Assistant Secretary, The Asia Society from September, 1984 to
June, 1986; Executive Director, Metropolitan Boston Zoos from September, 1982 to
July, 1984; President, Bradford College, Bradford, Massachusetts from September,
1979 to June, 1982; Trustee of Bradford College; Former Director and Chairman,
Public Relations Committee, International Counsel of Museums (UNESCO); Former
Director, BayBank/Merrimack Valley; Member, Art Advisory Board, Mount Holyoke
College Art Museum.
ROBERT KLEINSCHMIDT,* PRESIDENT, PRINCIPAL OPERATING OFFICER AND TRUSTEE.
President, Tocqueville Asset Management L.P. from January, 1994 to present and
Managing Director from July, 1991 to January, 1994. Partner, David J. Greene &
Co., May, 1978 to July, 1991. Assistant Vice President, Irving Trust Co., July,
1976 to May, 1978.
FRANCOIS LETACONNOUX, TRUSTEE. President, Lepercq de Neuflize & Co. from July,
1993 to present; Director, Lepercq 99 First Management Inc. from 1988 to
present; Director, Lepercq de Neuflize & Co., Inc.
- --------
* Interested person of the Funds as defined in the 1940 Act.
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<PAGE>
(investment bank) from 1988 to present; Managing Director, Lepercq Capital
Partners (real estate investment firm), from 1974 to present.
BERNARD F. COMBEMALE, TRUSTEE. Investment Management Consultant, 1981 to
present; Chairman and Chief Executive Officer, Trusthouse Forte Inc., 1984 to
1988; Chairman of the Executive Committee & Director, Western World Insurance
Company, 1981 to present; Director, Westco Holding Corporation, 1981 to present;
Director, The French-American Foundation, 1980 to present; Trustee, The Princess
Grace Foundation -U.S.A., 1980 to present.
JOSEPH COOPER, SECRETARY AND TREASURER. Vice President and Treasurer,
Tocqueville Management Corporation, the General Partner of Tocqueville Asset
Management L.P. and Tocqueville Securities L.P. from January, 1990 to present.
Vice President, Treasurer and Chief Financial Officer, Tocqueville Asset
Management Corporation from December, 1985 to February, 1990. Self-employed as a
public accountant.
KIERAN LYONS, VICE PRESIDENT AND PRINCIPAL FINANCIAL OFFICER. Chief Financial
Officer, Tocqueville Management Corporation, the General Partner of Tocqueville
Asset Management L.P. and Tocqueville Securities L.P. from January, 1992 to
present. Certified Public Accountant, Pegg & Pegg, February, 1985 to January,
1992.
Under the terms of the Massachusetts General Corporation Law, the Fund
may indemnify any person who was or is a Trustee, officer or employee of the
Fund to the maximum extent permitted by the Massachusetts General Corporation
Law; provided, however, that any such indemnification (unless ordered by a
court) shall be made by the Fund only as authorized in the specific case upon a
determination that indemnification of such persons is proper in the
circumstances. Such determination shall be made (i) by the Board of Trustees, by
a majority vote of a quorum which consists of Trustees who are neither
"interested persons" of the Trust, as defined in Section 2(a)(19) of the 1940
Act, nor parties to the proceeding, or (ii) if the required quorum is not
obtained or if a quorum of such Trustees so directs, by independent legal
counsel in a written opinion. No indemnification will be provided by the Fund to
any Trustee or officer of the Fund for any liability to the Fund or it
shareholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of duty.
The Fund does not pay direct remuneration to any officer of the Fund.
As of o, 1997, the Trustees and officers as a group owned beneficially o% of the
Fund's outstanding shares, all of which were acquired for investment purposes.
Certain of the Trustees and officers may have investment discretion for
institutional and private accounts which own shares of the Fund , however the
Trustees and officers do not have the power to vote such shares and have
disclaimed beneficial ownership of such shares. For the fiscal year ended
October 31, 1996, the Trust paid the "disinterested" Trustees an aggregate of
$12,000; each disinterested Trustee received $750 per quarter, notwithstanding
the number of Board Meetings and Audit Committee Meetings attended. "Interested"
Trustees do not receive Trustees' fees. The Trust did not reimburse Trustee
expenses.
The table below illustrates the compensation paid to each Trustee for
the Trust's most recently completed fiscal year:
<TABLE>
<CAPTION>
Pension or Total
Retirement Compensation
Aggregate Benefits Accrued Estimated Annual from Fund and
Name of Person, Compensation as Part of Fund Benefits Upon Fund Complex
Position from Fund Expenses Retirement Paid to Trustees
- --------------- ------------ ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Francois Sicart $0 $0 $0 $0
Bernard F. Combemale $3,000 $0 $0 $3,000
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<PAGE>
James B. Flaherty $3,000 $0 $0 $3,000
Inge Heckel $3,000 $0 $0 $3,000
Robert Kleinschmidt $0 $0 $0 $0
Francois Letaconnoux $3,000 $0 $0 $3,000
</TABLE>
INVESTMENT ADVISOR AND INVESTMENT ADVISORY AGREEMENT
Tocqueville Asset Management L.P. (the "Investment Advisor"), 1675
Broadway, New York, New York 10019, acts as the Investment Advisor to the Fund
under a separate investment advisory agreement (the "Agreement"). The Agreement
provides that the Investment Advisor identify and analyze possible investments
for the Fund, determine the amount and timing of such investments, and the form
of investment. The Investment Advisor has the responsibility of monitoring and
reviewing the Fund's portfolio, and, on a regular basis, to recommend the
ultimate disposition of such investments. It is the Investment Advisor's
responsibility to cause the purchase and sale of securities in the Fund's
portfolio, subject at all times to the policies set forth by the Trust's Board
of Trustees. In addition, the Investment Advisor also provides certain
administrative and managerial services to the Fund.
The Investment Advisor receives a fee from the Fund, calculated daily
and payable monthly, for the performance of its services at an annual rate of
1.00% on the first $50 million of the average daily net assets of the Fund, .75%
of average daily net assets in excess of $50 million but not exceeding $100
million, and .65% of the average daily net assets in excess of $100 million. The
fee is accrued daily for the purposes of determining the offering and redemption
price of the Fund's shares. The advisory fee is higher than that paid by most
investment companies but the Board of Trustees believes it to be reasonable in
light of the services the Fund receives thereunder. For the years ended October
31, 1994, 1995, and 1996, the Investment Advisor earned advisory fees of $0, $0
and $46,714, respectively after waivers of $44,646, $48,530, and $56,680,
respectively.
Under the terms of the Agreement, the Fund pays all of its expenses
(other than those expenses specifically assumed by the Investment Advisor and
the Fund's distributor) including the costs incurred in connection with the
maintenance of its registration under the Securities Act of 1933, as amended,
and the 1940 Act, printing of prospectuses distributed to shareholders, taxes or
governmental fees, brokerage commissions, custodial, transfer and shareholder
servicing agents, expenses of outside counsel and independent accountants,
preparation of shareholder reports, and expenses of Trustee and shareholder
meetings.
The Agreement may be terminated without penalty on 60 days' written
notice by a vote of the majority of the Trust's Board of Trustees or by the
Investment Advisor, or by holders of a majority of the Fund's outstanding
shares. The Fund's Agreement will continue for two years from its effective date
and from year-to-year thereafter provided it is approved, at least annually, in
the manner stipulated in the 1940 Act. This requires that the Agreement and any
renewal thereof be approved by a vote of the majority of the Fund's Trustees who
are not parties thereto or interested persons of any such party, cast in person
at a meeting specifically called for the purpose of voting on such approval.
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<PAGE>
DISTRIBUTION PLAN
The Fund has adopted a distribution plan pursuant to Rule 12b-1 of the
1940 Act (the "Plan"). The Plan provides that the Fund may incur distribution
expenses related to the sale of shares of up to .25% per annum of the average
daily net assets.
The Plan provides that the Fund may finance activities which are
primarily intended to result in the sale of the Fund's shares, including, but
not limited to, advertising, printing of prospectuses and reports for other than
existing shareholders, preparation and distribution of advertising material and
sales literature and payments to dealers and shareholder servicing agents
including Tocqueville Securities L.P. ("Tocqueville Securities") who enter into
agreements with the Fund or its distributor. The Fund accrued after waiver $37,
$0 and $18,319, respectively, in distribution expenses for the years ended
October 31, 1994, 1995, and 1996, respectively.
As of October 31, 1996 , the Fund had $66,730 (0.37% as a percentage
net assets) of unreimbursed distribution expenses.
In approving the Plan in accordance with the requirements of Rule 12b-1
under the 1940 Act, the Trustees (including the "disinterested" Trustees, as
defined in the 1940 Act) considered various factors and determined that there is
a reasonable likelihood that the Plan will benefit the Fund and its
shareholders. The Plan will continue in effect from year to year if specifically
approved annually (a) by the majority of the Fund's outstanding voting shares or
by the Board of Trustees and (b) by the vote of a majority of the disinterested
Trustees. While the Plan remains in effect, the Fund's Principal Financial
Officer shall prepare and furnish to the Board of Trustees a written report
setting forth the amounts spent by the Fund under the Plan and the purposes for
which such expenditures were made. The Plan may not be amended to increase
materially the amount to be spent for distribution without shareholder approval
and all material amendments to the Plan must be approved by the Board of
Trustees and by the disinterested Trustees cast in person at a meeting called
specifically for that purpose. While the Plan is in effect, the selection and
nomination of the disinterested Trustees shall be made by those disinterested
Trustees then in office.
ADMINISTRATIVE SERVICES AGREEMENT
Tocqueville Asset Management L.P., supervises administration of the
Fund pursuant to an Administrative Services Agreement with the Fund. Under the
Administrative Services Agreement, Tocqueville Asset Management L.P. supervises
the administration of all aspects of the Fund's operations, including the Fund's
receipt of services for which the Fund is obligated to pay, provides the Fund
with general office facilities and provides, at the Fund's expense, the services
of persons necessary to perform such supervisory, administrative and clerical
functions as are needed to effectively operate the Fund. Those persons, as well
as certain employees and Trustees of the Fund, may be directors, officers or
employees of (and persons providing services to the Funds may include)
Tocqueville Asset Management L.P. and its affiliates. For these services and
facilities, Tocqueville Asset Management L.P. receives with a fee computed and
paid monthly at an annual rate of 0.15% of average daily net assets .
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<PAGE>
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to the supervision of the Board of Trustees, decisions to buy
and sell securities for the Fund are made by the Investment Advisor. The
Investment Advisor is authorized to allocate the orders placed by it on behalf
of the Fund to such unaffiliated brokers who also provide research or
statistical material, or other services to the Fund or the Investment Advisor
for the Fund's use. Such allocation shall be in such amounts and proportions as
the Investment Advisor shall determine and the Investment Advisor will report on
said allocations regularly to the Board of Trustees indicating the unaffiliated
brokers to whom such allocations have been made and the basis therefor. In
addition, the Investment Advisor may consider sales of shares of the Fund and of
any other funds advised or managed by the Investment Advisor as a factor in the
selection of unaffiliated brokers to execute portfolio transactions for the
Fund, subject to the requirements of best execution. The Trustees have
authorized the allocation of brokerage to affiliated broker-dealers on an agency
basis to effect portfolio transactions. The Trustees have adopted procedures
incorporating the standards of Rule 17e-1 of the 1940 Act, which require that
the commission paid to affiliated broker-dealers must be "reasonable and fair
compared to the commission, fee or other remuneration received, or to be
received, by other brokers in connection with comparable transactions involving
similar securities during a comparable period of time." At times, the Fund may
also purchase portfolio securities directly from dealers acting as principals,
underwriters or market makers. As these transactions are usually conducted on a
net basis, no brokerage commissions are paid by the Fund.
In selecting a broker to execute each particular transaction, the
Investment Advisor will take the following into consideration: the best net
price available; the reliability, integrity and financial condition of the
broker; the size and difficulty in executing the order; and, the value of the
expected contribution of the broker to the investment performance of the Fund on
a continuing basis. Accordingly, the cost of the brokerage commissions to the
Fund in any transaction may be greater than that available from other brokers if
the difference is reasonably justified by other aspects of the portfolio
execution services offered. Subject to such policies and procedures as the Board
of Trustees may determine, the Investment Advisor shall not be deemed to have
acted unlawfully or to have breached any duty solely by reason of its having
caused the Fund to pay an unaffiliated broker that provides research services to
the Investment Advisor for the Fund's use an amount of commission for effecting
a portfolio investment transaction in excess of the amount of commission another
broker would have charged for effecting the transaction, if the Investment
Advisor determines in good faith that such amount of commission was reasonable
in relation to the value of the research service provided by such broker viewed
in terms of either that particular transaction of the Investment Advisor's
ongoing responsibilities with respect to the Fund. For the fiscal years ended
October 31, 1994, 1995 and 1996, the Fund paid total brokerage commissions on
portfolio transactions in the amount of $83,423, $26,286 and $158,625,
respectively. Commissions earned by Tocqueville Securities L.P., the Fund's
distributor for services rendered as a registered broker-dealer in securities
transactions for the fiscal year ended October 31, 1994, 1995 and 1996,
respectively; $_____, $0 and $175, respectively. For the fiscal year ended
October 31, 1996, the percentage of the Fund's brokerage commissions paid, and
the aggregate dollar amount of transactions involving the payment of such
commissions, to Tocqueville Securities L.P. were _____% and $_____,
respectively.
ALLOCATION OF INVESTMENTS
The Investment Advisor has other advisory clients which include
individuals, trusts, pension and profit sharing funds and the other funds of the
Trust, some of which have similar investment objectives to the Fund. As such,
there will be times when the Investment Advisor may recommend purchases and/or
sales of the
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<PAGE>
same portfolio securities for the Fund and its other clients. In such
circumstances, it will be the policy of the Investment Advisor to allocate
purchases and sales among the Fund and its other clients in a manner which the
Investment Advisor deems equitable, taking into consideration such factors as
size of account, concentration of holdings, investment objectives, tax status,
cash availability, purchase cost, holding period and other pertinent factors
relative to each account. Simultaneous transactions may have an adverse effect
upon the price or volume of a security purchased by the Fund.
COMPUTATION OF NET ASSET VALUE
The Fund will determine the net asset value of its shares once daily as
of the close of trading on the New York Stock Exchange (the "Exchange") on each
day that the Exchange is open for business. It is expected that the Exchange
will be closed on Saturdays and Sundays and on New Year's Day, President's Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. The Fund may make or cause to be made a more frequent
determination of the net asset value and offering price, which determination
shall reasonably reflect any material changes in the value of securities and
other assets held by the Fund from the immediately preceding determination of
net asset value. The net asset value is determined by dividing the market value
of the Fund's investments as of the close of trading plus any cash or other
assets (including dividends receivable and accrued interest) less all
liabilities (including accrued expenses) by the number of the Fund's shares
outstanding. Securities traded on the New York Stock Exchange or the American
Stock Exchange will be valued at the last sale price, or if no sale, at the mean
between the latest bid and asked price. Securities traded in any other U.S. or
foreign market shall be valued in a manner as similar as possible to the above,
or if not so traded, on the basis of the latest available price. Securities sold
short "against the box" will be valued at market as determined above; however,
in instances where the Fund has sold securities short against a long position in
the issuer's convertible securities, for the purpose of valuation, the
securities in the short position will be valued at the "asked" price rather than
the mean of the last "bid" and "asked" prices. Investments in gold bullion will
be valued at their respective fair market values determined on the basis of the
mean between the last current bid and asked prices based on dealer or exchanges
quotations. Where there are no readily available quotations for securities they
will be valued at a fair value as determined by the Board of Trustees acting in
good faith.
PURCHASE AND REDEMPTION OF SHARES
A complete description of the manner by a which the Fund's shares may
be purchased and redeemed, including discussions concerning the front-end sales
load appears in the Prospectus under the headings "Purchase of Shares" and
"Redemption of Shares" respectively.
TAX MATTERS
The following is only a summary of certain additional tax
considerations generally affecting the Fund and its shareholders that are not
described in the Prospectus. No attempt is made to present a detailed
explanation of the tax treatment of the Fund or its shareholders, and the
discussions here and in the Prospectus are not intended as substitutes for
careful tax planning.
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Qualification as a Regulated Investment Company
The Fund has elected to be taxed as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). As a regulated investment company, the Fund is not subject to federal
income tax on the portion of its net investment income (i.e., taxable interest,
dividends and other taxable ordinary income, net of expenses) and capital gain
net income (i.e., the excess of capital gains over capital losses) that it
distributes to shareholders, provided that it distributes at least 90% of its
investment company taxable income (i.e., net investment income and the excess of
net short-term capital gain over net long-term capital loss) for the taxable
year (the "Distribution Requirement"), and satisfies certain other requirements
of the Code that are described below. Distributions by the Fund made during the
taxable year or, under specified circumstances, within twelve months after the
close of the taxable year, will be considered distributions of income and gains
of the taxable year and can therefore satisfy the Distribution Requirement.
In addition to satisfying the Distribution Requirement, a regulated
investment company must: (1) derive at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans, gains
from the sale or other disposition of stock or securities or foreign currencies
(to the extent such currency gains are directly related to the regulated
investment company's principal business of investing in stock or securities) and
other income (including but not limited to gains from options, futures or
forward contracts) derived with respect to its business of investing in such
stock, securities or currencies (the "Income Requirement"); and (2) derive less
than 30% of its gross income (exclusive of certain gains on designated hedging
transactions that are offset by realized or unrealized losses on offsetting
positions) from the sale or other disposition of stock, securities or foreign
currencies (or options, futures or forward contracts thereon) held for less than
three months (the "Short-Short Gain Test"). However, foreign currency gains,
including those derived from options, futures and forwards, will not in any
event be characterized as Short-Short Gain if they are directly related to the
regulated investment company's investments in stock or securities (or options or
futures thereon). Because of the Short-Short Gain Test, the Fund may have to
limit the sale of appreciated securities that it has held for less than three
months. However, the Short-Short Gain Test will not prevent the Fund from
disposing of investments at a loss, since the recognition of a loss before the
expiration of the three-month holding period is disregarded for this purpose.
Interest (including original issue discount) received by the Fund at maturity or
upon the disposition of a security held for less than three months will not be
treated as gross income derived from the sale or other disposition of such
security within the meaning of the Short-Short Gain Test. However, income that
is attributable to realized market appreciation will be treated as gross income
from the sale or other disposition of securities for this purpose.
In general, gain or loss recognized by the Fund on the disposition of
an asset will be a capital gain or loss. However, gain recognized on the
disposition of a debt obligation purchased by the Fund at a market discount
(generally, at a price less than its principal amount) will be treated as
ordinary income to the extent of the portion of the market discount which
accrued during the period of time the Fund held the debt obligation. In
addition, under the rules of Code Section 988, gain or loss recognized on the
disposition of a debt obligation denominated in a foreign currency or an option
with respect thereto (but only to the extent attributable to changes in foreign
currency exchange rates), and gain or loss recognized on the disposition of a
foreign currency forward contract, futures contract, option or similar financial
instrument, or of foreign currency itself, except for regulated futures
contracts or non-equity options subject to Code Section 1256 (unless the Fund
elects otherwise), will generally be treated as ordinary income or loss.
In general, for purposes of determining whether capital gain or loss
recognized by the Fund on the disposition of an asset is long-term or
short-term, the holding period of the asset may be affected if (1) the asset is
used to close a "short sale" (which includes for certain purposes the
acquisition of a put option) or is
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substantially identical to another asset so used, (2) the asset is otherwise
held by the Fund as part of a "straddle" (which term generally excludes a
situation where the asset is stock and the Fund grants a qualified covered call
option (which, among other things, must not be deep-in-the-money) with respect
thereto) or (3) the asset is stock and the Fund grants an in-the-money qualified
covered call option with respect thereto. However, for purposes of the
Short-Short Gain Test, the holding period of the asset disposed of may be
reduced only in the case of clause (1) above. In addition, the Fund may be
required to defer the recognition of a loss on the disposition of an asset held
as part of a straddle to the extent of any unrecognized gain on the offsetting
position.
Any gain recognized by the Fund on the lapse of, or any gain or loss
recognized by the Fund from a closing transaction with respect to, an option
written by the Fund will be treated as a short-term capital gain or loss. For
purposes of the Short-Short Gain Test, the holding period of an option written
by the Fund will commence on the date it is written and end on the date it
lapses or the date a closing transaction is entered into. Accordingly, the Fund
may be limited in its ability to write options which expire within three months
and to enter into closing transactions at a gain within three months of the
writing of options.
Transactions that may be engaged in by the Fund (such as regulated
futures contracts, certain foreign currency contracts, and options on stock
indexes and futures contracts) will be subject to special tax treatment as
"Section 1256 contracts." Section 1256 contracts are treated as if they are sold
for their fair market value on the last business day of the taxable year, even
though a taxpayer's obligations (or rights) under such contracts have not
terminated (by delivery, exercise, entering into a closing transaction or
otherwise) as of such date. Any gain or loss recognized as a consequence of the
year-end deemed disposition of Section 1256 contracts is taken into account for
the taxable year together with any other gain or loss that was previously
recognized upon the termination of Section 1256 contracts during that taxable
year. Any capital gain or loss for the taxable year with respect to Section 1256
contracts (including any capital gain or loss arising as a consequence of the
year-end deemed sale of such contracts) is generally treated as 60% long-term
capital gain or loss and 40% short-term capital gain or loss. The Fund, however,
may elect not to have this special tax treatment apply to Section 1256 contracts
that are part of a "mixed straddle" with other investments of the Fund that are
not Section 1256 contracts. Gains arising from Section 1256 contracts will be
treated for purposes of the Short-Short Gain Test as being derived from
securities held for not less than three months if the gains arise as a result of
a constructive sale under Code Section 1256.
The Fund may purchase securities of certain foreign investment funds or
trusts which constitute passive foreign investment companies ("PFICs") for
federal income tax purposes. If the Fund invests in a PFIC, it may elect to
treat the PFIC as a qualifying electing fund (a "QEF") in which event the Fund
will each year have ordinary income equal to its pro rata share of the PFIC's
ordinary earnings for the year and long-term capital gain equal to its pro rata
share of the PFIC's net capital gain for the year, regardless of whether the
Fund receives distributions of any such ordinary earning or capital gain from
the PFIC. If the Fund does not (because it is unable to, chooses not to or
otherwise) elect to treat the PFIC as a QEF, then in general (1) any gain
recognized by the Fund upon sale or other disposition of its interest in the
PFIC or any excess distribution received by the Fund from the PFIC will be
allocated ratably over the Fund's holding period of its interest in the PFIC,
(2) the portion of such gain or excess distribution so allocated to the year in
which the gain is recognized or the excess distribution is received shall be
included in the Fund's gross income for such year as ordinary income (and the
distribution of such portion by the Fund to shareholders will be taxable as an
ordinary income dividend, but such portion will not be subject to tax at the
Fund level), (3) the Fund shall be liable for tax on the portions of such gain
or excess distribution so allocated to prior years in an amount equal to, for
each such prior year, (i) the amount of gain or excess distribution allocated to
such prior year multiplied by the highest tax rate (individual or corporate) in
effect for such prior year plus (ii) interest on the amount determined
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under clause (i) for the period from the due date for filing a return for such
prior year until the date for filing a return for the year in which the gain is
recognized or the excess distribution is received at the rates and methods
applicable to underpayments of tax for such period, and (4) the distribution by
the Fund to shareholders of the portions of such gain or excess distribution so
allocated to prior years (net of the tax payable by the Fund thereon) will again
be taxable to the shareholders as an ordinary income dividend.
Under proposed Treasury Regulations the Fund can elect to recognize as
gain the excess, as of the last day of its taxable year, of the fair market
value of each share of PFIC stock over the Fund's adjusted tax basis in that
share ("mark to market gain"). Such mark to market gain will be included by the
Fund as ordinary income, such gain will not be subject to the Short-Short Gain
Test, and the Fund's holding period with respect to such PFIC stock commences on
the first day of the next taxable year. If the Fund makes such election in the
first taxable year it holds PFIC stock, the Fund will include ordinary income
from any mark to market gain, if any, and will not incur the tax described in
the previous paragraph.
Treasury Regulations permit a regulated investment company, in
determining its investment company taxable income and net capital gain (i.e.,
the excess of net long-term capital gain over net short-term capital loss) for
any taxable year, to elect (unless it has made a taxable year election for
excise tax purposes as discussed below) to treat all or any part of any net
capital loss, any net long-term capital loss or any net foreign currency loss
incurred after October 31 as if it had been incurred in the succeeding year.
In addition to satisfying the requirements described above, the Fund
must satisfy an asset diversification test in order to qualify as a regulated
investment company. Under this test, at the close of each quarter of the Fund's
taxable year, at least 50% of the value of the Fund's assets must consist of
cash and cash items, U.S. Government securities, securities of other regulated
investment companies, and securities of other issuers (as to which the Fund has
not invested more than 5% of the value of the Fund's total assets in securities
of such issuer and as to which the Fund does not hold more than 10% of the
outstanding voting securities of such issuer), and no more than 25% of the value
of its total assets may be invested in the securities of any one issuer (other
than U.S. Government securities and securities of other regulated investment
companies), or in two or more issuers which the Fund controls and which are
engaged in the same or similar trades or businesses. Generally, an option (call
or put) with respect to a security is treated as issued by the issuer of the
security not the issuer of the option.
If for any taxable year the Fund does not qualify as a regulated
investment company, all of its taxable income (including its net capital gain)
will be subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and such distributions will be taxable to the
shareholders as ordinary dividends to the extent of the Fund's current and
accumulated earnings and profits. Such distributions generally will be eligible
for the dividends-received deduction in the case of corporate shareholders.
Excise Tax on Regulated Investment Companies
A 4% non-deductible excise tax is imposed on a regulated investment
company that fails to distribute in each calendar year an amount equal to 98% of
ordinary taxable income for the calendar year and 98% of capital gain net income
for the one-year period ended on October 31 of such calendar year (or, at the
election of a regulated investment company having a taxable year ending November
30 or December 31, for its taxable year (a "taxable year election")). The
balance of such income must be distributed during the next calendar year. For
the foregoing purposes, a regulated investment company is treated as having
distributed any amount on which it is subject to income tax for any taxable year
ending in such calendar year.
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<PAGE>
For purposes of the excise tax, a regulated investment company shall:
(1) reduce its capital gain net income (but not below its net capital gain) by
the amount of any net ordinary loss for the calendar year; and (2) exclude
foreign currency gains and losses incurred after October 31 of any year (or
after the end of its taxable year if it has made a taxable year election) in
determining the amount of ordinary taxable income for the current calendar year
(and, instead, include such gains and losses in determining ordinary taxable
income for the succeeding calendar year).
The Fund intends to make sufficient distributions or deemed
distributions of its ordinary taxable income and capital gain net income prior
to the end of each calendar year to avoid liability for the excise tax. However,
investors should note that the Fund may in certain circumstances be required to
liquidate portfolio investments to make sufficient distributions to avoid excise
tax liability.
Fund Distributions
The Fund anticipates distributing substantially all of its investment
company taxable income for each taxable year. Such distributions will be taxable
to shareholders as ordinary income and treated as dividends for federal income
tax purposes. Such dividends paid by the Fund generally should not qualify for
the 70% dividends-received deduction for corporate shareholders.
The Fund may either retain or distribute to shareholders its net
capital gain for each taxable year. The Fund currently intends to distribute any
such amounts. If net capital gain is distributed and designated as a capital
gain dividend, it will be taxable to shareholders as long-term capital gain,
regardless of the length of time the shareholder has held his shares or whether
such gain was recognized by the Fund prior to the date on which the shareholder
acquired his shares. The Code provides, however, that under certain conditions
only 50% of the capital gain recognized upon the Fund's disposition of domestic
"small business" stock will be subject to tax.
Conversely, if the Fund elects to retain its net capital gain, the Fund
will be taxed thereon (except to the extent of any available capital loss
carryovers) at the 35% corporate tax rate. If the Fund elects to retain its net
capital gain, it is expected that the Fund also will elect to have shareholders
of record on the last day of its taxable year treated as if each received a
distribution of his pro rata share of such gain, with the result that each
shareholder will be required to report his pro rata share of such gain on his
tax return as long-term capital gain, will receive a refundable tax credit for
his pro rata share of tax paid by the Fund on the gain, and will increase the
tax basis for his shares by an amount equal to the deemed distribution less the
tax credit.
Since an insignificant portion of the Fund will be invested in stock of
domestic corporations, the ordinary dividends distributed by the Fund will not
qualify for the dividends-received deduction for corporate shareholders.
Alternative minimum tax ("AMT") is imposed in addition to, but only to
the extent it exceeds, the regular tax and is computed at a maximum marginal
rate of 28% for noncorporate taxpayers and 20% for corporate taxpayers on the
excess of the taxpayer's alternative minimum taxable income ("AMTI") over an
exemption amount. For purposes of the corporate AMT, the corporate
dividends-received deduction is not itself an item of tax preference that must
be added back to taxable income or is otherwise disallowed in determining a
corporation's AMTI.
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<PAGE>
However, a corporate shareholder will generally be required to take the full
amount of any dividend received from the Fund into account (without a
dividends-received deduction) in determining its adjusted current earnings,
which are used in computing an additional corporate preference item (i.e., 75%
of the excess of a corporate taxpayer's adjusted current earnings over its AMTI
(determined without regard to this item and the AMT net operating loss
deduction)) includable in AMTI.
Investment income that may be received by the Fund from sources within
foreign countries may be subject to foreign taxes withheld at the source. The
United States has entered into tax treaties with many foreign countries which
entitle the Fund to a reduced rate of, or exemption from, taxes on such income.
It is impossible to determine the effective rate of foreign tax in advance since
the amount of the Fund's assets to be invested in various countries is not
known. If more than 50% of the value of the Fund's total assets at the close of
its taxable year consist of the stock or securities of foreign corporations, the
Fund may elect to "pass through" to the Fund's shareholders the amount of
foreign taxes paid by the Fund. If the Fund so elects, each shareholder would be
required to include in gross income, even though not actually received, his pro
rata share of the foreign taxes paid by the Fund, but would be treated as having
paid his pro rata share of such foreign taxes and would therefore be allowed to
either deduct such amount in computing taxable income or use such amount
(subject to various Code limitations) as a foreign tax credit against federal
income tax (but not both). For purposes of the foreign tax credit limitation
rules of the Code, each shareholder would treat as foreign source income his pro
rata share of such foreign taxes plus the portion of dividends received from the
Fund representing income derived from foreign sources. No deduction for foreign
taxes could be claimed by an individual shareholder who does not itemize
deductions. Each shareholder should consult his own tax adviser regarding the
potential application of foreign tax credits.
Distributions by the Fund that do not constitute ordinary income
dividends or capital gain dividends will be treated as a return of capital to
the extent of (and in reduction of) the shareholder's tax basis in his shares;
any excess will be treated as gain from the sale of his shares, as discussed
below.
Distributions by the Fund will be treated in the manner described above
regardless of whether such distributions are paid in cash or reinvested in
additional shares of the Fund (or of another fund). Shareholders receiving a
distribution in the form of additional shares will be treated as receiving a
distribution in an amount equal to the fair market value of the shares received,
determined as of the reinvestment date. In addition, if the net asset value at
the time a shareholder purchases shares of the Fund reflects undistributed net
investment income or recognized capital gain net income, or unrealized
appreciation in the value of the assets of the Fund, distributions of such
amounts will be taxable to the shareholder in the manner described above,
although such distributions economically constitute a return of capital to the
shareholder.
Ordinarily, shareholders are required to take distributions by the Fund
into account in the year in which the distributions are made. However, dividends
declared in October, November or December of any year and payable to
shareholders of record on a specified date in such a month will be deemed to
have been received by the shareholders (and made by the Fund) on December 31 of
such calendar year if such dividends are actually paid in January of the
following year. Shareholders will be advised annually as to the U.S. federal
income tax consequences of distributions made (or deemed made) during the year.
The Fund will be required in certain cases to withhold and remit to the
U.S. Treasury 31% of ordinary income dividends and capital gain dividends, and
the proceeds of redemption of shares, paid to any shareholder (1) who has
provided either an incorrect tax identification number or no number at all, (2)
who is subject to backup withholding by the IRS for failure to report the
receipt of interest or dividend income
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properly, or (3) who has failed to certify to the Fund that it is not subject to
backup withholding or that it is a corporation or other "exempt recipient."
Sale or Redemption of Shares
A shareholder will recognize gain or loss on the sale or redemption of
shares of the Fund in an amount equal to the difference between the proceeds of
the sale or redemption and the shareholder's adjusted tax basis in the shares.
All or a portion of any loss so recognized may be disallowed if the shareholder
purchases other shares of the Fund within 30 days before or after the sale or
redemption. In general, any gain or loss arising from (or treated as arising
from) the sale or redemption of shares of the Fund will be considered capital
gain or loss and will be long-term capital gain or loss if the shares were held
for longer than one year. However, any capital loss arising from the sale or
redemption of shares held for six months or less will be treated as a long-term
capital loss to the extent of the amount of capital gain dividends received on
such shares. For this purpose, the special holding period rules of Code Section
246(c)(3) and (4) (discussed above in connection with the dividends-received
deduction for corporations) generally will apply in determining the holding
period of shares. Long-term capital gains of noncorporate taxpayers are
currently taxed at a maximum rate 11.6% lower than the maximum rate applicable
to ordinary income. Capital losses in any year are deductible only to the extent
of capital gains plus, in the case of a noncorporate taxpayer, $3,000 of
ordinary income.
If a shareholder (1) incurs a sales load in acquiring shares of the
Fund, (2) disposes of such shares less than 91 days after they are acquired and
(3) subsequently acquires shares of the Fund or another fund at a reduced sales
load pursuant to a right to reinvest at such reduced sales load acquired in
connection with the acquisition of the shares disposed of, then the sales load
on the shares disposed of (to the extent of the reduction in the sales load on
the shares subsequently acquired) shall not be taken into account in determining
gain or loss on the shares disposed of but shall be treated as incurred on the
acquisition of the shares subsequently acquired.
Foreign Shareholders
Taxation of a shareholder who, as to the United States, is a
nonresident alien individual, foreign trust or estate, foreign corporation, or
foreign partnership ("foreign shareholder"), depends on whether the income from
the Fund is "effectively connected" with a U.S. trade or business carried on by
such shareholder.
If the income from the Fund is not effectively connected with a U.S.
trade or business carried on by a foreign shareholder, ordinary income dividends
paid to a foreign shareholder will be subject to U.S. withholding tax at the
rate of 30% (or lower treaty rate) upon the gross amount of the dividend.
Furthermore, such a foreign shareholder may be subject to U.S. withholding tax
at the rate of 30% (or lower treaty rate) on the gross income resulting from the
Fund's election to treat any foreign taxes paid by it as paid by its
shareholders, but may not be allowed a deduction against this gross income or a
credit against this U.S. withholding tax for the foreign shareholder's pro rata
share of such foreign taxes which it is treated as having paid. Such a foreign
shareholder would generally be exempt from U.S. federal income tax on gains
realized on the sale of shares of the Fund, capital gain dividends and amounts
retained by the Fund that are designated as undistributed capital gains.
If the income from the Fund is effectively connected with a U.S. trade
or business carried on by a foreign shareholder, then ordinary income dividends,
capital gain dividends, and any gains realized upon the sale of shares of the
Fund will be subject to U.S. federal income tax at the rates applicable to U.S.
citizens or domestic corporations.
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In the case of foreign noncorporate shareholders, the Fund may be
required to withhold U.S. federal income tax at a rate of 31% on distributions
that are otherwise exempt from withholding tax (or taxable at a reduced treaty
rate) unless such shareholders furnish the Fund with proper notification of
their foreign status.
The tax consequences to a foreign shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described
herein. Foreign shareholders are urged to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in the Fund,
including the applicability of foreign taxes.
Effect of Future Legislation; Local Tax Considerations
The foregoing general discussion of U.S. federal income tax
consequences is based on the Code and the Treasury Regulations issued thereunder
as in effect on the date of this Statement of Additional Information. Future
legislative or administrative changes or court decisions may significantly
change the conclusions expressed herein, and any such changes or decisions may
have a retroactive effect with respect to the transactions contemplated herein.
Rules of state and local taxation of ordinary income dividends and
capital gain dividends from regulated investment companies often differ from the
rules for U.S. federal income taxation described above. Shareholders are urged
to consult their tax advisers as to the consequences of these and other state
and local tax rules affecting investment in the Fund.
PERFORMANCE CALCULATION
For purposes of quoting and comparing the performance of the Fund to
that of other mutual funds and to other relevant market indices in
advertisements or in reports to shareholders, performance may be stated in terms
of total return. Under rules promulgated by the Securities and Exchange
Commission ("SEC"), a fund's advertising performance must include total return
quotations calculated according to the following formula:
P(1 + T)n = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years (1, 5 or 10)
ERV = ending redeemable value of a hypothetical $1,000 payment,
made at the beginning of the 1,5 or 10 year period, at
the end of such period (or fractional portion thereof.)
Under the foregoing formula, the time periods used in advertising will
be based on rolling calendar quarters, updated to the last day of the most
recent quarter prior to submission of the advertising for publication, and will
cover 1, 5 and 10 year periods of the Fund's existence or such shorter period
dating from the effectiveness of the Fund's Registration Statement. In
calculating the ending redeemable value, all dividends and distributions by the
Fund are assumed to have been reinvested at net asset value as described in the
Prospectus on the reinvestment dates during the period. Total return, or "T" in
the formula above, is computed by finding the average annual compounded rates of
return over the 1, 5 and 10 year periods (or fractional portion thereof) that
would equate the initial amount invested to the ending redeemable value. Any
recurring account charges that might in the future be imposed by the Fund would
be included at that time.
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<PAGE>
In addition to the total return quotations discussed above, the Fund
may advertise its yield based on a 30-day (or one month) period ended on the
date of the most recent balance sheet included in the Fund's Post-Effective
Amendment to its Registration Statement, computed by dividing the net investment
income per share earned during the period by the maximum offering price per
share on the last day of the period, according to the following formula:
a-b
YIELD = 2[( ----- +1)6-1]
cd
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the period
that were entitled to receive dividends.
d = the maximum offering price per share on the last day of the period.
Under this formula, interest earned on debt obligations for purposes of
"a" above, is calculated by (1) computing the yield to maturity of each
obligation held by the Fund based on the market value of the obligation
(including actual accrued interest) at the close of business on the last day of
each month, or, with respect to obligations purchased during the month, the
purchase price (plus actual accrued interest), (2) dividing that figure by 360
and multiplying the quotient by the market value of the obligation (including
actual accrued interest as referred to above) to determine the interest income
on the obligation for each day of the subsequent month that the obligation is in
the Fund's portfolio (assuming a month of 30 days) and (3) computing the total
of the interest earned on all debt obligations and all dividends accrued on all
equity securities during the 30-day or one month period. In computing dividends
accrued, dividend income is recognized by accruing 1/360 of the stated dividend
rate of a security each day that the security is in the Fund's portfolio. For
purposes of "b" above, Rule 12b-1 expenses are included among the expenses
accrued for the period. Undeclared earned income, computed in accordance with
generally accepted accounting principles, may be subtracted from the maximum
offering price calculation required pursuant to "d" above.
Any quotation of performance stated in terms of yield will be given no
greater prominence than the information prescribed under the SEC's rules. In
addition, all advertisements containing performance data of any kind will
include a legend disclosing that such performance data represents past
performance and that the investment return and principal value of an investment
will fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost.
Calculated pursuant to the SEC's formula and assuming an ending
redeemable value of an initial $1,000 investment, the total return for the Fund
for the 1 year, 3 year and since inception periods ended October 31, 1996 was
(3.92%), (1.42%) and 2.97%.
GENERAL INFORMATION
ORGANIZATION AND DESCRIPTION OF SHARES OF THE TRUST
The Trust was organized as a Massachusetts business trust under the
laws of The Commonwealth of Massachusetts. The Trust's Declaration of Trust
filed September 17, 1986, permits the Trustees to issue an unlimited number of
shares of beneficial interest with a par value of $0.01 per share in the Trust
in an unlimited
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number of series of shares. The Trust consists of five series, The Tocqueville
Fund, The Tocqueville Small Cap Value Fund, The Tocqueville Asia-Pacific Fund,
The Tocqueville International Value Fund and The Tocqueville Government Fund. On
August 19, 1991, the Declaration of Trust was amended to change the name of the
Trust to "The Tocqueville Trust," and on August 4, 1995, the Declaration of
Trust was amended to permit the division of a series into classes of shares.
Each share of beneficial interest has one vote and shares equally in dividends
and distributions when and if declared by a Fund and in the Fund's net assets
upon liquidation. All shares, when issued, are fully paid and nonassessable.
There are no preemptive, conversion or exchange rights. Fund shares do not have
cumulative voting rights and, as such, holders of at least 50% of the shares
voting for Trustees can elect all Trustees and the remaining shareholders would
not be able to elect any Trustees. The Board of Trustees may classify or
reclassify any unissued shares of the Trust into shares of any series by setting
or changing in any one or more respects, from time to time, prior to the
issuance of such shares, the preference, conversion or other rights, voting
powers, restrictions, limitations as to dividends, or qualifications of such
shares. Any such classification or reclassification will comply with the
provisions of the 1940 Act. Shareholders of each series as created will vote as
a series to change, among other things, a fundamental policy of each Fund and to
approve the Investment Advisory Agreement and Distribution Plan.
The Trust is not required to hold annual meetings of shareholders but
will hold special meetings of shareholders when, in the judgment of the
Trustees, it is necessary or desirable to submit matters for a shareholder vote.
Shareholders have, under certain circumstances, the right to communicate with
other shareholders in connection with requesting a meeting of shareholders for
the purpose of removing one or more Trustees. Shareholders also have, in certain
circumstances, the right to remove one or more Trustees without a meeting. No
material amendment may be made to the Trust's Declaration of Trust without the
affirmative vote of the holders of a majority of the outstanding shares of each
series affected by the amendment.
Under Massachusetts law, shareholders of a Massachusetts business trust
may, under certain circumstances, be held personally liable as partners for its
obligations. However, the Trust's Declaration of Trust contains an express
disclaimer of shareholder liability for acts or obligations of the Trust and
provides for indemnification and reimbursement of expenses out of the Trust
property for any shareholder held personally liable for the obligations of the
Trust. The Trust's Declaration of Trust further provides that obligations of the
Trust are not binding upon the Trustees individually but only upon the property
of the Trust and that the Trustees will not be liable for any action or failure
to act, errors of judgment or mistakes of fact or law, but nothing in the
Declaration of Trust protects a Trustee against any liability to which he would
otherwise be subject by reason of wilful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of his
office.
PRINCIPAL HOLDERS
As of January 31, 1997, the following shareholders owned 5% or more of
the Fund's shares:
- - Tocqueville Asset Management L.P. held discretion over ___________ shares
(____%)
The address of Tocqueville Asset Management L.P. is 1675 Broadway, New York, New
York 10019.
REPORTS
-21-
<PAGE>
Shareholders receive reports at least semi-annually showing the
Fund's holdings and other information. In addition, shareholders receive
financial statements examined by the Trust's independent accountants.
FINANCIAL STATEMENTS
The Financial Statements for the Fund for the fiscal year ended October
31, 1996 and for the six months ended April 30, 1996, respectively, are
incorporated by reference from the Annual Report to Shareholders dated October
31, 1996 and the Semi-Annual Report to Shareholders dated April 30, 1996,
respectively.
-22-
<PAGE>
PART C. OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits
(a) Financial statements.
In Part A: None.
In Part B: Semi-Annual Report for the six
months ended April 30, 1996 and Annual
Report for the year ended October 31,
1996 are incorporated by reference into
the Statement of Additional Information.
In Part C: Annual Report for the year ended October 31, 1996.
(b) Exhibits
EX-99.B1
(a) Agreement and Declaration of Trust of
Registrant.(1)
(b) Amendment to the Agreement and
Declaration of Trust of Registrant dated
August 4, 1995.(5)
EX-99.B2. By-laws of Registrant.(1)
EX-99.B3. None.
EX-99.B4. Specimen certificate for shares of
beneficial interest of Registrant.(2)
EX-99.B5. (a) Investment Advisory Agreement
between Registrant on behalf of The
Tocqueville Fund and Tocqueville Asset
Management L.P.(3)
(b) Investment Advisory Agreement between
Registrant on behalf of The Tocqueville
Asia-Pacific Fund and Tocqueville Asset
Management L.P.(5)
(c) Investment Advisory Agreement between
Registrant on behalf of The Tocqueville
Europe Fund and The Tocqueville Asset
Management L.P.(5)
(d) Investment Advisory Agreement between
Registrant on behalf of The Tocqueville
Small Cap Value Fund and Tocqueville
Asset Management L.P.(5)
(e) Investment Advisory Agreement Between
Registrant on behalf of The Tocqueville
Government Fund and Tocqueville Asset
Management L.P. (5)
EX-99.B6. Distribution Agreement between
Registrant and Tocqueville Securities
L.P.(5)
EX-99.B7. None.
EX-99.B8. (a) Custodian Agreement between
Registrant and Firstar Trust Company.(6)
- 4 -
<PAGE>
EX-99.B8. (b) Global Custody Tri-Party Agreement
between The Chase Manhattan Bank,
Firstar Trust and the Registrant on
behalf of The Tocqueville Asia-Pacific
Fund.(6)
EX-99.B8. (c) Global Custody Tri-Party Agreement
between The Chase Manhattan Bank,
Firstar Trust and the Registrant on
behalf of The Tocqueville Europe Fund
EX-99.B9. (a) Administration Agreement between
Registrant and Tocqueville Asset
Management L.P.(5)
EX-99.B9. (b) Transfer Agent Agreement between the
Registrant and Firstar Trust Company.(6)
EX-99.B9. (c) Fund Accounting Servicing Agreement
between the Registrant and Firstar Trust
Company.(6)
EX-99.B10. None.
EX-99.B11 (a). Consent of Kramer, Levin, Naftalis &
Frankel, Counsel for the Registrant.(6)
EX-99.B11 (b). Consent of McGladrey & Pullen, LLP,
independent accountants for the
Registrant.(6)
EX-99.B12. The Tocqueville Trust Annual Report to
Shareholders for the year ended October
31, 1996, including the Report of
Independent Certified Public
Accountants.(6)
EX-99.B13. Certificate re: initial $100,000 capital.
(2)
EX-99.B14. None.
EX-99.B15. (a) Rule 12b-1 Plan for the Class A shares of
The Tocqueville Fund, as amended.(5)
(b) Rule 12b-1 Plan for the Class B shares
of The Tocqueville Fund.(5)
(c) Rule 12b-1 Plan for the Class A shares
of The Tocqueville Asia-Pacific Fund, as
amended.(5)
(d) Rule 12b-1 Plan for the Class B shares
of The Tocqueville Asia-Pacific Fund.(5)
(e) Rule 12b-1 Plan for the Class A shares
of The Tocqueville Europe Fund.(5)
(f) Rule 12b-1 Plan for the Class B shares
of The Tocqueville Europe Fund.(5)
(g) Rule 12b-1 Plan for the Class A shares
of The Tocqueville Small Cap Value
Fund.(5)
(h) Rule 12b-1 Plan for the Class B shares
of The Tocqueville Small Cap Value
Fund.(5)
- 5 -
<PAGE>
(i) Rule 12b-1 Plan for the Class A Shares
of The Tocqueville Government Fund.(5)
(j) Rule 12b-1 Plan for the Class B shares
of The Tocqueville Government Fund.(5)
EX-99.B16. Schedule for computation of
performance quotation.(4)
EX-99.B18. Rule 18f-3 Plan for The Tocqueville
Trust.(4)
EX-27 (a) Financial Data Schedule - The
Tocqueville Fund - Class A.(6)
(b) Financial Data Schedule - The
Tocqueville Small Cap Value Fund - Class
A.(6)
(c) Financial Data Schedule - The
Tocqueville Asia-Pacific Fund - Class
A.(6)
(d) Financial Data Schedule - The
Tocqueville Europe Fund - Class A.(6)
(e) Financial Data Schedule - The
Tocqueville Government Fund - Class
A.(6)
- -----------------
(1)Previously filed in the Fund's Registration Statement on September 15, 1986.
(2)Previously filed in Pre-Effective Amendment No. 1 on December 2, 1986.
(3)Previously filed in Post-Effective Amendment No. 4 on December 29, 1989.
(4)Previously filed in Post-Effective Amendment No. 13 on July 19, 1995.
(5)Previously filed in Post-Effective Amendment No. 14 on February 28, 1996.
(6)Filed herewith.
ITEM 25. Persons Controlled By or Under Common Control with Registrant
None
ITEM 26. Number of Holders of Securities
Number of Record Holders
Title of Class as of January 31, 1997
- -------------- --------------------------
Shares of beneficial interest:
The Tocqueville Fund 719
The Tocqueville Asia-Pacific Fund 227
The Tocqueville Europe Fund 110
The Tocqueville Small Cap Value Fund 188
The Tocqueville Government Fund 292
($.01 par value)
- 6 -
<PAGE>
ITEM 27. Indemnification
Article VIII of the Registrant's Declaration of Trust provides as
follows:
The Trust shall indemnify each of its Trustees, officers (including
persons who serve at its request as directors, officers or trustees of another
organization in which it has any interest, as a shareholder, creditor or
otherwise) against all liabilities and expenses (including amounts paid in
satisfaction of judgments, in compromise, as fines and penalties, and as counsel
fees) reasonably incurred by him in connection with the defense or disposition
of any action, suit or other proceeding, whether civil or criminal, in which he
may be involved or with which he may be threatened, while in office or
thereafter, by reason of his being or having been such a trustee, officer,
employee or agent, except with respect to any matter to which he shall have been
adjudicated to have acted in bad faith, willful misfeasance, gross negligence or
reckless disregard of his duties; provided, however, that as to any matter
disposed of by a compromise payment by such person, pursuant to a consent decree
or otherwise, no indemnification either for said payment or for any other
expenses shall be provided unless the Trust shall have received a written
opinion from independent legal counsel approved by the Trustees to the effect
that if the matter of willful misfeasance, gross negligence or reckless
disregard of duty, or the matter of good faith and reasonable belief as to the
best interests of the Trust, had been adjudicated, it would have been
adjudicated in favor of such person. The rights accruing to any Person under
these provisions shall not exclude any other right to which he may be lawfully
entitled; provided that no Person may satisfy any right of indemnity or
reimbursement granted herein or in Section 5.1 or to which he may be otherwise
entitled except out of the property of the Trust, and no Shareholder shall be
personally liable to any Person with respect to any claim for indemnity or
reimbursement or otherwise. The Trustees may make advance payments in connection
with indemnification under this Section 5.3, provided that the indemnified
person shall have given a written undertaking to reimburse the Trust in the
event it is subsequently determined that he is not entitled to such
indemnification.
Insofar as the conditional advancing of indemnification monies for
actions based upon the Investment Company Act of 1940 may be concerned, such
payments will be made only on the following conditions: (1) the advances must be
limited to amounts used, or to be used, for the preparation or presentation of a
defense to the action, including costs connected with the preparation of a
settlement; (ii) advances may be made only upon receipt of a written promise by,
or on behalf of, the recipient to repay that amount of the advance which exceeds
that amount to which it is ultimately determined that he is entitled to receive
from the Registrant by reason of indemnification; and (iii) (a) such promise
must be secured by a surety bond, other suitable insurance or an equivalent form
of security which assures that any repayments may be obtained by the Registrant
without delay or litigation, which bond, insurance or other form of security
must be provided by the recipient of the advance, or (b) a majority of a quorum
of the Registrant's disinterested, non-party Trustees, or an independent legal
counsel in a written opinion, shall determine, based upon a review of readily
available facts, that the recipient of the advance ultimately will be found
entitled to indemnification.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to Trustees, officers and controlling persons of
the Registrant pursuant to the foregoing provisions or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a Trustee, officer or controlling person of the Registrant in
connection with the successful defense of any action, suit or proceeding) is
asserted by such Trustee, officer or controlling person in connection with
shares being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
ITEM 28. Business and Other Connections of Investment Adviser
None.
- 7 -
<PAGE>
ITEM 29. Principal Underwriters
(a) None.
(b) The following information is furnished with respect to the officers
and Partners of Tocqueville Securities L.P., the Registrant's principal
underwriter. The business address for all persons listed below is 1675 Broadway,
New York, New York 10019.
Positions and
Name and Principal Offices with Positions and Offices
Business Address Principal Underwriters with Registrant
- ---------------- ---------------------- ---------------
Tocqueville Management Corp. General Partner None
1675 Broadway
New York, New York 10019
Tocqueville Asset Management L.P. Limited Partner Investment Adviser
1675 Broadway
New York, New York 10019
(c) Not Applicable. The Registrant's principal underwriter is an
affiliated person of the Registrant.
ITEM 30. Location of Accounts and Records
As required by Section 31(a) of the Investment Company Act of 1940, the
accounts, books or other documents relating to each of The Tocqueville Fund's,
The Tocqueville Asia-Pacific Fund's, The Tocqueville Europe Fund's, The
Tocqueville Small Cap Value Fund's, and The Tocqueville Government Fund's budget
and accruals will be kept by Firstar Trust Company, 615 East Michigan Street,
Milwaukee, WI 53202. The accounts, books or other documents of each Fund
relating to shareholder accounts and records and dividend disbursements also
will be kept by Firstar Trust Company at the same address.
ITEM 31. Management Services
There are no management-related service contracts not discussed in
Parts A and B.
ITEM 32. Undertakings
(1) Registrant undertakes to call a meeting of shareholders for the
purpose of voting upon the question of removal of a trustee or
trustees if requested to do so by the holders of at least 10% of
the Registrant's outstanding voting securities, and to assist in
communications with other shareholders as required by Section
16(c) of the Investment Company Act of 1940, as amended.
(2) Registrant undertakes to furnish each person to whom a
prospectus relating to The Tocqueville Fund, The Tocqueville
Asia-Pacific Fund, The Tocqueville Europe Fund, The Tocqueville
Small Cap Value Fund, The Tocqueville Government Fund is
delivered, a copy of a Fund's latest annual report to
shareholders which will include the information required by Item
5A, upon request and without charge.
- 8 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has certified that it meets all
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Post-Effective Amendment to the Registration Statement on Form N-1A to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of New
York, and State of New York, on this 27th day of February, 1997.
THE TOCQUEVILLE TRUST
By: /s/Francois D. Sicart
---------------------------------
Francois D. Sicart
Principal Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to its Registration Statement has been signed below by
the following persons in the capacities and on the dates indicated:
Signatures Title
- ---------- -----
/s/Francois D. Sicart
- ------------------------------- Principal Executive Officer
Francois D. Sicart and Trustee
Trustee
- -------------------------------
Bernard F. Combemale
/s/James B. Flaherty Trustee
- -------------------------------
James B. Flaherty
/s/Inge Heckel Trustee
- -------------------------------
Inge Heckel
/s/Robert Kleinschmidt
- ------------------------------- President, Principal Operating
Robert Kleinschmidt Officer and Trustee
/s/Francois Letaconnoux Trustee
- -------------------------------
Francois Letaconnoux
/s/Kieran Lyons
- ------------------------------- Vice President and
Kieran Lyons Principal Financial Officer
- 9 -
<PAGE>
INDEX TO EXHIBITS
Exhibit Caption
EX-99.B8.(a) Custodian Agreement between the Registrant and Firstar Trust
Company.(6)
EX-99.B8.(b) Global Custody Tri-Party Agreement between The Chase
Manhattan Bank, Firstar Trust and the Registrant on behalf
of The Tocqueville Asia-Pacific Fund.(6)
EX-99.B8.(c) Global Custody Tri-Party Agreement between The Chase
Manhattan Bank, Firstar Trust and the Registrant on behalf of
The Tocqueville Europe Fund.(6)
EX-99.B9.(b) Transfer Agent Agreement between the Registrant and
Firstar Trust Company.(6)
EX-99.B9.(c) Fund Accounting Servicing Agreement between the Registrant
and Firstar Trust Company.(6)
EX-99.B11.(a) Consent of Kramer, Levin, Naftalis & Frankel, counsel for
Registrant.
EX-99.B11.(b) Consent of McGladrey & Pullen, independent
accountants for the Registrant.
EX-99.B12 The Tocqueville Trust Annual Report to Shareholders.
EX-27.(a) Financial Data Schedule - The Tocqueville Fund.
EX-27.(b) Financial Data Schedule - The Tocqueville Small Cap Value Fund.
EX-27.(c) Financial Data Schedule - The Tocqueville Asia-Pacific Fund.
EX-27.(d) Financial Data Schedule - The Tocqueville Europe Fund.
EX-27.(e) Financial Data Schedule - The Tocqueville Government Fund.
CUSTODIAN AGREEMENT
THIS AGREEMENT made on this second day of October, 1996, between The
Tocqueville Trust, a Massachusetts business trust consisting 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 (hereinafter called the ("Funds"), and FIRSTAR TRUST COMPANY, a
corporation organized under the laws of the State of Wisconsin (hereinafter
called "Custodian"),
WHEREAS, the Funds desires that its securities and cash shall be
hereafter held and administered by Custodian pursuant to the terms of this
Agreement;
NOW, THEREFORE, in consideration of the mutual agreements herein made,
the Funds and Custodian agree as follows:
1. Definitions
The word "securities" as used herein includes stocks, shares, bonds,
debentures, notes, mortgages or other obligations, and any certificates,
receipts, warrants or other instruments representing rights to receive, purchase
or subscribe for the same, or evidencing or representing any other rights or
interests therein, or in any property or assets.
The words "officers' certificate" shall mean a request or direction or
certification in writing signed in the name of the Funds by any two of the
President, a Vice President, the Secretary and the Treasurer of the Funds, or
any other persons duly authorized to sign by the Board of Trustees.
The word "Board" shall mean Board of Trustees of The Tocqueville Trust.
2. Names, Titles, and Signatures of the Funds' Officers
An officer of the Funds will certify to Custodian the names and
signatures of those persons authorized to sign the officers' certificates
described in Section 1 hereof, and the names of the members of the Board of
Trustees, together with any changes which may occur from time to time.
Additional Series. The Tocqueville Trust is authorized to issue
separate Series of shares of beneficial interest representing interests in
separate investment portfolios. The parties intend that each portfolio
established by the trust, now or in the future, be covered by the terms and
conditions of this agreement.
<PAGE>
3. Receipt and Disbursement of Money
A. Custodian shall open and maintain a separate account or accounts in
the name of the Funds, subject only to draft or order by Custodian acting
pursuant to the terms of this Agreement. Custodian shall hold in such account or
accounts, subject to the provisions hereof, all cash received by it from or for
the account of the Funds. Custodian shall make payments of cash to, or for the
account of, the Funds from such cash only:
(a) for the purchase of securities for the portfolio of the Funds
upon the delivery of such securities to Custodian, registered in
the name of the Funds or of the nominee of Custodian referred to
in Section 7 or in proper form for transfer;
(b) for the purchase or redemption of shares of the common stock of
the Funds upon delivery thereof to Custodian, or upon proper
instructions from the The Tocqueville Trust;
(c) for the payment of interest, dividends, taxes, investment
adviser's fees or operating expenses (including, without
limitation thereto, fees for legal, accounting, auditing and
custodian services and expenses for printing and postage);
(d) for payments in connection with the conversion, exchange or
surrender of securities owned or subscribed to by the Funds held
by or to be delivered to Custodian; or
(e) for other proper corporate purposes certified by resolution of
the Board of Trustees of the Funds.
Before making any such payment, Custodian shall receive (and may rely
upon) an officers' certificate requesting such payment and stating that it is
for a purpose permitted under the terms of items (a), (b), (c), or (d) of this
Subsection A, and also, in respect of item (e), upon receipt of an officers'
certificate specifying the amount of such payment, setting forth the purpose for
which such payment is to be made, declaring such purpose to be a proper
corporate purpose, and naming the person or persons to whom such payment is to
be made, provided, however, that an officers' certificate need not precede the
disbursement of cash for the purpose of purchasing a money market instrument, or
any other security with same or next-day settlement, if the President, a Vice
President, the Secretary or the Treasurer of the Funds issues appropriate oral
or facsimile instructions to Custodian and an appropriate officers' certificate
is received by Custodian within two business days thereafter.
B. Custodian is hereby authorized to endorse and collect all checks,
drafts or other orders for the payment of money received by Custodian for the
account of the Funds.
C. Custodian shall, upon receipt of proper instructions, make federal
funds available to the Funds as of specified times agreed upon from time to time
by the Funds and the custodian
2
<PAGE>
in the amount of checks received in payment for shares of the Funds which are
deposited into the Funds' account.
4. Segregated Accounts
Upon receipt of proper instructions, the Custodian shall establish and
maintain a segregated account(s) for and on behalf of the portfolio, into which
account(s) may be transferred cash and/or securities.
5. Transfer, Exchange, Redelivery, etc. of Securities
Custodian shall have sole power to release or deliver any securities of
the Funds held by it pursuant to this Agreement. Custodian agrees to transfer,
exchange or deliver securities held by it hereunder only:
(a) for sales of such securities for the account of the Funds upon
receipt by Custodian of payment therefore;
(b) when such securities are called, redeemed or retired or otherwise
become payable;
(c) for examination by any broker selling any such securities in
accordance with "street delivery" custom;
(d) in exchange for, or upon conversion into, other securities alone
or other securities and cash whether pursuant to any plan of
merger, consolidation, reorganization, recapitalization or
readjustment, or otherwise;
(e) upon conversion of such securities pursuant to their terms into
other securities;
(f) upon exercise of subscription, purchase or other similar rights
represented by such securities;
(g) for the purpose of exchanging interim receipts or temporary
securities for definitive securities;
(h) for the purpose of redeeming in kind shares of common stock of
the Funds upon delivery thereof to Custodian; or
(i) for other proper corporate purposes.
As to any deliveries made by Custodian pursuant to items (a), (b), (d),
(e), (f), and (g), securities or cash receivable in exchange therefore shall be
deliverable to Custodian.
3
<PAGE>
Before making any such transfer, exchange or delivery, Custodian shall
receive (and may rely upon) an officers' certificate requesting such transfer,
exchange or delivery, and stating that it is for a purpose permitted under the
terms of items (a), (b), (c), (d), (e), (f), (g), or (h) of this Section 5 and
also, in respect of item (i), upon receipt of an officers' certificate
specifying the securities to be delivered, setting forth the purpose for which
such delivery is to be made, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom delivery of such securities
shall be made, provided, however, that an officers' certificate need not precede
any such transfer, exchange or delivery of a money market instrument, or any
other security with same or next-day settlement, if the President, a Vice
President, the Secretary or the Treasurer of the Funds issues appropriate oral
or facsimile instructions to Custodian and an appropriate officers' certificate
is received by Custodian within two business days thereafter.
6. Custodian's Acts Without Instructions
Unless and until Custodian receives an officers' certificate to the
contrary, Custodian shall: (a) present for payment all coupons and other income
items held by it for the account of the Funds, which call for payment upon
presentation and hold the cash received by it upon such payment for the account
of the Funds; (b) collect interest and cash dividends received, with notice to
the Funds, for the account of the Funds; (c) hold for the account of the Funds
hereunder all stock dividends, rights and similar securities issued with respect
to any securities held by it hereunder; and (d) execute, as agent on behalf of
the Funds, all necessary ownership certificates required by the Internal Revenue
Code or the Income Tax Regulations of the United States Treasury Department or
under the laws of any state now or hereafter in effect, inserting the Funds'
name on such certificates as the owner of the securities covered thereby, to the
extent it may lawfully do so.
7. Registration of Securities
Except as otherwise directed by an officers' certificate, Custodian
shall register all securities, except such as are in bearer form, in the name of
a registered nominee of Custodian as defined in the Internal Revenue Code and
any Regulations of the Treasury Department issued hereunder or in any provision
of any subsequent federal tax law exempting such transaction from liability for
stock transfer taxes, and shall execute and deliver all such certificates in
connection therewith as may be required by such laws or regulations or under the
laws of any state. Custodian shall use its best efforts to the end that the
specific securities held by it hereunder shall be at all times identifiable in
its records.
The Funds shall from time to time furnish to Custodian appropriate
instruments to enable Custodian to hold or deliver in proper form for transfer,
or to register in the name of its registered nominee, any securities which it
may hold for the account of the Funds and which may from time to time be
registered in the name of the Funds.
4
<PAGE>
8. Voting and Other Action
Neither Custodian nor any nominee of Custodian shall vote any of the
securities held hereunder by or for the account of the Funds, except in
accordance with the instructions contained in an officers' certificate.
Custodian shall deliver, or cause to be executed and delivered, to the
Corporation all notices, proxies and proxy soliciting materials with relation to
such securities, such proxies to be executed by the registered holder of such
securities (if registered otherwise than in the name of the Funds), but without
indicating the manner in which such proxies are to be voted.
9. Transfer Tax and Other Disbursements
The Funds shall pay or reimburse Custodian from time to time for any
transfer taxes payable upon transfers of securities made hereunder, and for all
other necessary and proper disbursements and expenses made or incurred by
Custodian in the performance of this Agreement.
Custodian shall execute and deliver such certificates in connection
with securities delivered to it or by it under this Agreement as may be required
under the provisions of the Internal Revenue Code and any Regulations of the
Treasury Department issued thereunder, or under the laws of any state, to exempt
from taxation any exemptable transfers and/or deliveries of any such securities.
10. Concerning Custodian
Custodian shall be paid as compensation for its services pursuant to
this Agreement such compensation as may from time to time be agreed upon in
writing between the two parties. Until modified in writing, such compensation
shall be as set forth in Exhibit A attached hereto.
Custodian shall not be liable for any action taken in good faith upon
any certificate herein described or certified copy of any resolution of the
Board, and may rely on the genuineness of any such document which it may in good
faith believe to have been validly executed.
The Funds agrees to indemnify and hold harmless Custodian and its
nominee from all taxes, charges, expenses, assessments, claims and liabilities
(including counsel fees) incurred or assessed against it or by its nominee in
connection with the performance of this Agreement, except such as may arise from
its or its nominee's own negligent action, negligent failure to act or willful
misconduct. Custodian is authorized to charge any account of the Funds for such
items.
In the event of any advance of cash for any purpose made by Custodian resulting
from orders or instructions of the Funds, or in the event that Custodian or its
nominee shall incur or be assessed any taxes, charges, expenses, assessments,
claims or liabilities in connection with the performance of this Agreement,
except such as may arise from its or its nominee's own negligent action,
negligent failure to act or willful misconduct, any property at any time held
for the account of the Funds shall be security therefore.
5
<PAGE>
Custodian agrees to indemnify and hold harmless Funds from all charges,
expenses, assessments, and claims/liabilities (including counsel fees) incurred
or assessed against it in connection with the performance of this agreement,
except such as may arise from the Funds' own negligent action, negligent failure
to act, or willful misconduct.
11. Subcustodians
Custodian is hereby authorized to engage another bank or trust company
as a Subcustodian for all or any part of the Funds' assets, so long as any such
bank or trust company is a bank or trust company organized under the laws of any
state of the United States, having an aggregate capital, surplus and undivided
profit, as shown by its last published report, of not less than Two Million
Dollars ($2,000,000) and provided further that, if the Custodian utilizes the
services of a Subcustodian, the Custodian shall remain fully liable and
responsible for any losses caused to the Funds by the Subcustodian as fully as
if the Custodian was directly responsible for any such losses under the terms of
the Custodian Agreement.
Notwithstanding anything contained herein, if the Funds requires the
Custodian to engage specific Subcustodians for the safekeeping and/or clearing
of assets, the Funds agrees to indemnify and hold harmless Custodian from all
claims, expenses and liabilities incurred or assessed against it in connection
with the use of such Subcustodian in regard to the Funds' assets, except as may
arise from its own negligent action, negligent failure to act or willful
misconduct.
12. Reports by Custodian
Custodian shall furnish the Funds periodically as agreed upon with a
statement summarizing all transactions and entries for the account of Funds.
Custodian shall furnish to the Funds, at the end of every month, a list of the
portfolio securities showing the aggregate cost of each issue. The books and
records of Custodian pertaining to its actions under this Agreement shall be
open to inspection and audit at reasonable times by officers of, and of auditors
employed by, the Funds.
13. Termination or Assignment
This Agreement may be terminated by the Funds, or by Custodian, on
ninety (90) days notice, given in writing and sent by registered mail to
Custodian at P.O. Box 2054, Milwaukee, Wisconsin 53201, or to the Funds at The
Tocqueville Trust located at 1675 Broadway, New York, N.Y. 10019, as the case
may be. Upon any termination of this Agreement, pending appointment of a
successor to Custodian or a vote of the shareholders of the Funds to dissolve or
to function without a custodian of its cash, securities and other property,
Custodian shall not deliver cash, securities or other property of the Funds to
the Funds, but may deliver them to a bank or trust company of its own selection,
having an aggregate capital, surplus and undivided profits, as shown by its last
published report of not less than Two Million Dollars ($2,000,000) as a
Custodian for the Funds to be held under terms similar to those of this
Agreement, provided, however, that Custodian shall not be required to make any
such delivery or payment until full payment shall have been made by the Funds of
all liabilities constituting a
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charge on or against the properties then held by Custodian or on or against
Custodian, and until full payment shall have been made to Custodian of all its
fees, compensation, costs and expenses, subject to the provisions of Section 10
of this Agreement.
This Agreement may not be assigned by Custodian without the consent of
the Funds, authorized or approved by a resolution of its Board of Trustees.
14. Deposits of Securities in Securities Depositories
No provision of this Agreement shall be deemed to prevent the use by
Custodian of a central securities clearing agency or securities depository,
provided, however, that Custodian and the central securities clearing agency or
securities depository meet all applicable federal and state laws and
regulations, and the Board of Trustees of the Funds approves by resolution the
use of such central securities clearing agency or securities depository.
15. Records
To the extent that Custodian in any capacity prepares or maintains any
records required to be maintained and preserved by the Funds pursuant to the
provisions of the Investment Company Act of 1940, as amended, or the rules and
regulations promulgated thereunder, Custodian agrees to make any such records
available to the Funds upon request and to preserve such records for the periods
prescribed in Rule 31a-2 under the Investment Company Act of 1940, as amended.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and their respective corporate seals to be affixed hereto as of the
date first above-written by their respective officers thereunto duly authorized.
Executed in several counterparts, each of which is an original.
Attest: FIRSTAR TRUST COMPANY
/s/ Gail M. Zesf By /s/ Joe D. Redwine
- -------------------------- ---------------------
Gail M. Zesf Joe D. Redwine
Assistant Secretary Vice President
Attest: THE TOCQUEVILLE TRUST
/s/ Marcella D. Lang By /s/ Kieran Lyons
- -------------------- -------------------
Marcella D. Lang Kieran Lyons
Vice President
<PAGE>
EXHIBIT A MUTUAL FUND SERVICES
MUTUAL FUND CUSTODIAL AGENT SERVICE
DOMESTIC PORTFOLIOS
ANNUAL FEE SCHEDULE
o Fund groups less than $500 million
o Annual fee based on market value assets:
o $0.20 per $1,000 (2.0 basis points)
o Minimum annual fee per fund: $3,000
o Investment transactions: (purchase, sale, exchange, tender, redemption,
maturity, receipt delivery)
o $12.00 per book entry security (depository or Federal Reserve system)
o $25.00 per definitive security (physical)
o $75.00 per Euroclear
o $78.00 per principal reduction on pass-through certificates
o $35.00 per option/future contracts
* 15% discount applies to the above fees for the first 3 years, not
including out-of-pocket expenses.
o Variable Amount Notes: Used as a short-term investment, variable amount
notes offer safety and prevailing high interest rates. Our charge, which is
1/4 of 1%, is deducted from the variable amount note income at the time is
credited to your account.
o Extraordinary expenses: Based on time and complexity involved
o Out-of-pocket expenses: Charged to the account, including but not limited
to:
o $10.00 per variation margin transaction
o $10.00 per Fed wire deposit or withdrawal
o Fees are billed monthly, based on market value at the beginning of the
month
GLOBAL CUSTODY TRI-PARTY AGREEMENT
This AGREEMENT is effective November 1, 1996, and is between THE CHASE
MANHATTAN BANK, N.A. (the "Bank") and Firstar Trust (the "Customer") and
The Tocqueville Asia-Pacific Fund (the "Fund").
1. CUSTOMER ACCOUNTS.
The Bank agrees to establish and maintain the following accounts
("Accounts"):
(a) A custody account in the name of the Customer ("Custody Account")
for any and all stocks, shares, bonds, debentures, notes, mortgages or other
obligations for the payment of money, bullion, coin and any certificates,
receipts, warrants or other instruments representing rights to receive, purchase
or subscribe for the same or evidencing or representing any other rights or
interests therein and other similar property whether certificated or
uncertificated as may be received by the Bank or its Subcustodian (as defined in
Section 3) for the account of the Customer ("Securities"); and
(b) A deposit account in the name of the Customer ("Deposit Account")
for any and all cash in any currency received by the Bank or its Subcustodian
for the account of the Customer, which cash shall not be subject to withdrawal
by draft or check.
The Customer warrants its authority to: 1) deposit the cash and
Securities ("Assets") received in the Accounts and 2) give Instructions (as
defined in Section 11) concerning the Accounts. The Bank may deliver securities
of the same class in place of those deposited in the Custody Account.
Upon written agreement between the Bank and the Customer, additional
Accounts may be established and separately accounted for as additional Accounts
under the terms of this Agreement.
2. MAINTENANCE OF SECURITIES AND CASH AT BANK AND SUBCUSTODIAN LOCATIONS.
Unless Instructions specifically require another location acceptable to
the Bank:
(a) Securities will be held in the country or other jurisdiction in
which the principal trading market for such Securities is located, where such
Securities are to be presented for payment or where such Securities are
acquired; and
(b) Cash will be credited to an account in a country or other
jurisdiction in which such cash may be legally deposited or is the legal
currency for the payment of public or private debts.
Cash may be held pursuant to Instructions in either interest or
non-interest bearing accounts as may be available for the particular currency.
To the extent Instructions are issued and the Bank can comply with such
Instructions, the Bank is authorized to maintain cash balances on deposit for
the Customer with itself or one of its affiliates at such reasonable rates of
interest as may from time to time be paid on such accounts, or in non-interest
bearing accounts as the Customer may direct, if acceptable to the Bank.
If the Customer wishes to have any of its Assets held in the custody of
an institution other than the established Subcustodians as defined in Section 3
(or their securities depositories), such arrangement must be authorized by a
written agreement, signed by the Bank and the Customer.
<PAGE>
3. SUBCUSTODIANS AND SECURITIES DEPOSITORIES.
The Bank may act under this Agreement through the subcustodians listed
in Schedule A of this Agreement with which the Bank has entered into
subcustodial agreements ("Subcustodians"). The Customer authorizes the Bank to
hold Assets in the Accounts in accounts which the Bank has established with one
or more of its branches or Subcustodians. The Bank and Subcustodians are
authorized to hold any of the Securities in their account with any securities
depository in which they participate.
The Bank reserves the right to add new, replace or remove
Subcustodians. The Customer will be given reasonable notice by the Bank of any
amendment to Schedule A. Upon request by the Customer, the Bank will identify
the name, address and principal place of business of any Subcustodian of the
Customer's Assets and the name and address of the governmental agency or other
regulatory authority that supervises or regulates such Subcustodian.
4. USE OF SUBCUSTODIAN.
(a) The Bank will identify such Assets on its books as belonging to
the Customer.
(b) A Subcustodian will hold such Assets together with assets belonging
to other customers of the Bank in accounts identified on such Subcustodian's
books as special custody accounts for the exclusive benefit of customers of the
Bank.
(c) Any Assets in the Accounts held by a Subcustodian will be subject
only to the instructions of the Bank or its agent. Any Securities held in a
securities depository for the account of a Subcustodian will be subject only to
the instructions of such Subcustodian.
(d) Any agreement the Bank enters into with a Subcustodian for holding
its customer's assets shall provide that such assets will not be subject to any
right, charge, security interest, lien or claim of any kind in favor of such
Subcustodian except for safe custody or administration, and that the beneficial
ownership of such assets will be freely transferable without the payment of
money or value other than for safe custody or administration. The foregoing
shall not apply to the extent of any special agreement or arrangement made by
the Customer with any particular Subcustodian.
5. DEPOSIT ACCOUNT TRANSACTIONS.
(a) The Bank or its Subcustodians will make payments from the Deposit
Account upon receipt of Instructions which include all information required by
the Bank.
(b) In the event that any payment to be made under this Section 5
exceeds the funds available in the Deposit Account, the Bank, in its discretion,
may advance the Customer such excess amount which shall be deemed a loan payable
on demand, bearing interest at the rate customarily charged by the Bank on
similar loans.
(c) If the Bank credits the Deposit Account on a payable date, or at
any time prior to actual collection and reconciliation to the Deposit Account,
with interest, dividends, redemptions or any other amount due, the Customer will
promptly return any such amount upon oral or written notification: (i) that such
amount has not been received in the ordinary course of business or (ii) that
such amount was incorrectly credited. If the Customer does not promptly return
any amount upon such notification, the Bank shall be entitled, upon oral or
written notification to the
2
<PAGE>
Customer, to reverse such credit by debiting the Deposit Account for the amount
previously credited. The Bank or its Subcustodian shall have no duty or
obligation to institute legal proceedings, file a claim or a proof of claim in
any insolvency proceeding or take any other action with respect to the
collection of such amount, but may act for the Customer upon Instructions after
consultation with the Customer.
6. CUSTODY ACCOUNT TRANSACTIONS.
(a) Securities will be transferred, exchanged or delivered by the Bank
or its Subcustodian upon receipt by the Bank of Instructions which include all
information required by the Bank. Settlement and payment for Securities received
for, and delivery of Securities out of, the Custody Account may be made in
accordance with the customary or established securities trading or securities
processing practices and procedures in the jurisdiction or market in which the
transaction occurs, including, without limitation, delivery of Securities to a
purchaser, dealer or their agents against a receipt with the expectation of
receiving later payment and free delivery. Delivery of Securities out of the
Custody Account may also be made in any manner specifically required by
Instructions acceptable to the Bank.
(b) The Bank, in its discretion, may credit or debit the Accounts on a
contractual settlement date with cash or Securities with respect to any sale,
exchange or purchase of Securities. Otherwise, such transactions will be
credited or debited to the Accounts on the date cash or Securities are actually
received by the Bank and reconciled to the Account.
(i) The Bank may reverse credits or debits made to the Accounts in its
discretion if the related transaction fails to settle within a
reasonable period, determined by the Bank in its discretion, after the
contractual settlement date for the related transaction.
(ii) If any Securities delivered pursuant to this Section 6 are
returned by the recipient thereof, the Bank may reverse the credits and
debits of the particular transaction at any time.
7. ACTIONS OF THE BANK.
The Bank shall follow Instructions received regarding assets held in
the Accounts. However, until it receives Instructions to the contrary, the Bank
will:
(a) Present for payment any Securities which are called, redeemed or
retired or otherwise become payable and all coupons and other income items which
call for payment upon presentation, to the extent that the Bank or Subcustodian
is actually aware of such opportunities.
(b) Execute in the name of the Customer such ownership and other
certificates as may be required to obtain payments in respect of Securities.
(c) Exchange interim receipts or temporary Securities for definitive
Securities.
(d) Appoint brokers and agents for any transaction involving the
Securities, including, without limitation, affiliates of the Bank or any
Subcustodian.
(e) Issue statements to the Customer, at times mutually agreed upon,
identifying the Assets in the Accounts.
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<PAGE>
The Bank will send the Customer an advice or notification of any
transfers of Assets to or from the Accounts. Such statements, advices or
notifications shall indicate the identity of the entity having custody of the
Assets. Unless the Customer sends the Bank a written exception or objection to
any Bank statement within sixty (60) days of receipt, the Customer shall be
deemed to have approved such statement. In such event, or where the Customer has
otherwise approved any such statement, the Bank shall, to the extent permitted
by law, be released, relieved and discharged with respect to all matters set
forth in such statement or reasonably implied therefrom as though it had been
settled by the decree of a court of competent jurisdiction in an action where
the Customer and all persons having or claiming an interest in the Customer or
the Customer's Accounts were parties.
All collections of funds or other property paid or distributed in
respect of Securities in the Custody Account shall be made at the risk of the
Customer. The Bank shall have no liability for any loss occasioned by delay in
the actual receipt of notice by the Bank or by its Subcustodians of any payment,
redemption or other transaction regarding Securities in the Custody Account in
respect of which the Bank has agreed to take any action under this Agreement.
8. CORPORATE ACTIONS; PROXIES.
Whenever the Bank receives information concerning the Securities which
requires discretionary action by the beneficial owner of the Securities (other
than a proxy), such as subscription rights, bonus issues, stock repurchase plans
and rights offerings, or legal notices or other material intended to be
transmitted to securities holders ("Corporate Actions"), the Bank will give the
Customer notice of such Corporate Actions to the extent that the Bank's central
corporate actions department has actual knowledge of a Corporate Action in time
to notify its customers.
When a rights entitlement or a fractional interest resulting from a
rights issue, stock dividend, stock split or similar Corporate Action is
received which bears an expiration date, the Bank will endeavor to obtain
Instructions from the Customer or its Authorized Person, but if Instructions are
not received in time for the Bank to take timely action, or actual notice of
such Corporate Action was received too late to seek Instructions, the Bank is
authorized to sell such rights entitlement or fractional interest and to credit
the Deposit Account with the proceeds or take any other action it deems, in good
faith, to be appropriate in which case it shall be held harmless for any such
action.
The Bank will deliver proxies to the Customer or its designated agent
pursuant to special arrangements which may have been agreed to in writing. Such
proxies shall be executed in the appropriate nominee name relating to Securities
in the Custody Account registered in the name of such nominee but without
indicating the manner in which such proxies are to be voted; and where bearer
Securities are involved, proxies will be delivered in accordance with
Instructions.
9. NOMINEES.
Securities which are ordinarily held in registered form may be
registered in a nominee name of the Bank, Subcustodian or securities depository,
as the case may be. The Bank may without notice to the Customer cause any such
Securities to cease to be registered in the name of any such nominee and to be
registered in the name of the Customer. In the event that any Securities
registered in a nominee name are called for partial redemption by the issuer,
the Bank may allot the called portion to the respective beneficial holders of
such class of security in any manner the Bank deems to be fair and equitable.
The Customer agrees to hold the Bank, Subcustodians, and their respective
nominees harmless from any liability arising directly or indirectly from their
status as a mere record holder of Securities in the Custody Account.
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<PAGE>
10. AUTHORIZED PERSONS.
As used in this Agreement, the term "Authorized Person" means employees
or agents including investment managers as have been designated by written
notice from the Customer or its designated agent to act on behalf of the
Customer under this Agreement. Such persons shall continue to be Authorized
Persons until such time as the Bank receives Instructions from the Customer or
its designated agent that any such employee or agent is no longer an Authorized
Person.
11. INSTRUCTIONS.
The term "Instructions" means instructions of any Authorized Person
received by the Bank, via telephone, telex, TWX, facsimile transmission, bank
wire or other teleprocess or electronic instruction or trade information system
acceptable to the Bank which the Bank believes in good faith to have been given
by Authorized Persons or which are transmitted with proper testing or
authentication pursuant to terms and conditions which the Bank may specify.
Unless otherwise expressly provided, all Instructions shall continue in full
force and effect until canceled or superseded.
Any Instructions delivered to the Bank by telephone shall promptly
thereafter be confirmed in writing by an Authorized Person (which confirmation
may bear the facsimile signature of such Person), but the Customer will hold the
Bank harmless for the failure of an Authorized Person to send such confirmation
in writing, the failure of such confirmation to conform to the telephone
instructions received or the Bank's failure to produce such confirmation at any
subsequent time. The Bank may electronically record any Instructions given by
telephone, and any other telephone discussions with respect to the Custody
Account. The Customer shall be responsible for safeguarding any testkeys,
identification codes or other security devices which the Bank shall make
available to the Customer or its Authorized Persons.
12. STANDARD OF CARE; LIABILITIES.
(a) The Bank shall be responsible for the performance of only such
duties as are set forth in this Agreement or expressly contained in Instructions
which are consistent with the provisions of this Agreement as follows:
(i) The Bank will use reasonable care with respect to its obligations
under this Agreement and the safekeeping of Assets. The Bank shall be
liable to the Customer for any loss which shall occur as the result of
the failure of a Subcustodian to exercise reasonable care with respect
to the safekeeping of such Assets to the same extent that the Bank
would be liable to the Customer if the Bank were holding such Assets in
New York. In the event of any loss to the Customer by reason of the
failure of the Bank or its Subcustodian to utilize reasonable care, the
Bank shall be liable to the Customer only to the extent of the
Customer's direct damages, to be determined based on the market value
of the property which is the subject of the loss at the date of
discovery of such loss and without reference to any special conditions
or circumstances.
(ii) The Bank will not be responsible for any act, omission, default or
for the solvency of any broker or agent which it or a Subcustodian
appoints unless such appointment was made negligently or in bad faith.
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<PAGE>
(iii) The Bank shall be indemnified by, and without liability to the
Customer for any action taken or omitted by the Bank whether pursuant
to Instructions or otherwise within the scope of this Agreement if such
act or omission was in good faith, without negligence. In performing
its obligations under this Agreement, the Bank may rely on the
genuineness of any document which it believes in good faith to have
been validly executed.
(iv) The Customer agrees to pay for and hold the Bank harmless from any
liability or loss resulting from the imposition or assessment of any
taxes or other governmental charges, and any related expenses with
respect to income from or Assets in the Accounts.
(v) The Bank shall be entitled to rely, and may act, upon the advice of
counsel (who may be counsel for the Customer) on all matters and shall
be without liability for any action reasonably taken or omitted
pursuant to such advice.
(vi) The Bank need not maintain any insurance for the benefit of the
Customer.
(vii) Without limiting the foregoing, the Bank shall not be liable for
any loss which results from: 1) the general risk of investing, or 2)
investing or holding Assets in a particular country including, but not
limited to, losses resulting from nationalization, expropriation or
other governmental actions; regulation of the banking or securities
industry; currency restrictions, devaluations or fluctuations; and
market conditions which prevent the orderly execution of securities
transactions or affect the value of Assets.
(viii) Neither party shall be liable to the other for any loss due to
forces beyond their control including, but not limited to strikes or
work stoppages, acts of war or terrorism, insurrection, revolution,
nuclear fusion, fission or radiation, or acts of God.
(b) Consistent with and without limiting the first paragraph of this
Section 12, it is specifically acknowledged that the Bank shall have no duty or
responsibility to:
(i) question Instructions or make any suggestions to the Customer
or an Authorized Person regarding such Instructions;
(ii) supervise or make recommendations with respect to investments
or the retention of Securities;
(iii) advise the Customer or an Authorized Person regarding any default
in the payment of principal or income of any security other than as
provided in Section 5(c) of this Agreement;
(iv) evaluate or report to the Customer or an Authorized Person
regarding the financial condition of any broker, agent or other party
to which Securities are delivered or payments are made pursuant to this
Agreement;
(v) review or reconcile trade confirmations received from brokers. The
Customer or its Authorized Persons (as defined in Section 10) issuing
Instructions shall bear any responsibility to review such confirmations
against Instructions issued to and statements issued by the Bank.
(c) The Customer authorizes the Bank to act under this Agreement
notwithstanding that the Bank or any of its divisions or affiliates may have a
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<PAGE>
material interest in a transaction, or circumstances are such that the Bank may
have a potential conflict of duty or interest including the fact that the Bank
or any of its affiliates may provide brokerage services to other customers, act
as financial advisor to the issuer of Securities, act as a lender to the issuer
of Securities, act in the same transaction as agent for more than one customer,
have a material interest in the issue of Securities, or earn profits from any of
the activities listed herein.
13. FEES AND EXPENSES.
The Customer agrees to pay the Bank for its services under this
Agreement such amount as may be agreed upon in writing, together with the Bank's
reasonable out-of-pocket or incidental expenses, including, but not limited to,
legal fees. The Bank shall have a lien on and is authorized to charge any
Accounts of the Customer for any amount owing to the Bank under any provision of
this Agreement.
14. MISCELLANEOUS.
(a) Foreign Exchange Transactions. To facilitate the administration of
the Customer's trading and investment activity, the Bank is authorized to enter
into spot or forward foreign exchange contracts with the Customer or an
Authorized Person for the Customer and may also provide foreign exchange through
its subsidiaries, affiliates or Subcustodians. Instructions, including standing
instructions, may be issued with respect to such contracts but the Bank may
establish rules or limitations concerning any foreign exchange facility made
available. In all cases where the Bank, its subsidiaries, affiliates or
Subcustodians enter into a foreign exchange contract related to Accounts, the
terms and conditions of the then current foreign exchange contract of the Bank,
its subsidiary, affiliate or Subcustodian and, to the extent not inconsistent,
this Agreement shall apply to such transaction.
(b) Certification of Residency, etc. The Customer certifies that it is
a resident of the United States and agrees to notify the Bank of any changes in
residency. The Bank may rely upon this certification or the certification of
such other facts as may be required to administer the Bank's obligations under
this Agreement. The Customer will indemnify the Bank against all losses,
liability, claims or demands arising directly or indirectly from any such
certifications.
(c) Access to Records. The Bank shall allow the Customer's independent
public accountant reasonable access to the records of the Bank relating to the
Assets as is required in connection with their examination of books and records
pertaining to the Customer's affairs. Subject to restrictions under applicable
law, the Bank shall also obtain an undertaking to permit the Customer's
independent public accountants reasonable access to the records of any
Subcustodian which has physical possession of any Assets as may be required in
connection with the examination of the Customer's books and records.
(d) Governing Law; Successors and Assigns. This Agreement shall be
governed by the laws of the State of New York and shall not be assignable by
either party, but shall bind the successors in interest of the Customer and the
Bank.
(e) Entire Agreement; Applicable Riders. Customer represents that the
Assets deposited in the Accounts are (Check one):
[ ] Employee Benefit Plan or other assets subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA");
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[X] Mutual Fund assets subject to certain Securities and Exchange
Commission ("SEC") rules and regulations;
[ ] Neither of the above.
This Agreement consists exclusively of this document together with
Schedule A, Exhibits I - _______ and the following Rider(s) [Check
applicable rider(s)]:
[ ] ERISA
[X] MUTUAL FUND
[ ] SPECIAL TERMS AND CONDITIONS
There are no other provisions of this Agreement and this Agreement
supersedes any other agreements, whether written or oral, between the parties.
Any amendment to this Agreement must be in writing, executed by both parties.
(f) Severability. In the event that one or more provisions of this
Agreement are held invalid, illegal or enforceable in any respect on the basis
of any particular circumstances or in any jurisdiction, the validity, legality
and enforceability of such provision or provisions under other circumstances or
in other jurisdictions and of the remaining provisions will not in any way be
affected or impaired.
(g) Waiver. Except as otherwise provided in this Agreement, no failure
or delay on the part of either party in exercising any power or right under this
Agreement operates as a waiver, nor does any single or partial exercise of any
power or right preclude any other or further exercise, or the exercise of any
other power or right. No waiver by a party of any provision of this Agreement,
or waiver of any breach or default, is effective unless in writing and signed by
the party against whom the waiver is to be enforced.
(h) Notices. All notices under this Agreement shall be effective when
actually received. Any notices or other communications which may be required
under this Agreement are to be sent to the parties at the following addresses or
such other addresses as may subsequently be given to the other party in writing:
Bank: The Chase Manhattan Bank, N.A.
Chase MetroTech Center
Brooklyn, NY 11245
Attention: Global Custody Division
or telex:___________________________
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<PAGE>
Customer: _________________________________
_________________________________
_________________________________
Fund: _________________________________
_________________________________
_________________________________
(i) Termination. This Agreement may be terminated by the Customer or
the Bank by giving sixty (60) days written notice to the other, provided that
such notice to the Bank shall specify the names of the persons to whom the Bank
shall deliver the Assets in the Accounts. If notice of termination is given by
the Bank, the Customer shall, within sixty (60) days following receipt of the
notice, deliver to the Bank Instructions specifying the names of the persons to
whom the Bank shall deliver the Assets. In either case the Bank will deliver the
Assets to the persons so specified, after deducting any amounts which the Bank
determines in good faith to be owed to it under Section 13. If within sixty (60)
days following receipt of a notice of termination by the Bank, the Bank does not
receive Instructions from the Customer specifying the names of the persons to
whom the Bank shall deliver the Assets, the Bank, at its election, may deliver
the Assets to a bank or trust company doing business in the State of New York to
be held and disposed of pursuant to the provisions of this Agreement, or to
Authorized Persons, or may continue to hold the Assets until Instructions are
provided to the Bank.
CUSTOMER
By: /s/ Joe D. Redwine
--------------------------
Joe D. Redwine
Vice President
THE CHASE MANHATTAN BANK
By: /s/ Edward G. McGann
--------------------------
Edward G. McGann
FUND
By: /s/ Kieran Lyons
--------------------------
Kieran Lyons
Executive Vice President
9
<PAGE>
STATE OF )
: ss.
COUNTY OF )
On this day of , 19 , before me personally
came , to me known, who being by me duly sworn, did depose
and say that he/she resides in at ;
that he/she is of , the entity described in
and which executed the foregoing instrument; that he/she knows the seal of said
entity, that the seal affixed to said instrument is such seal, that it was so
affixed by order of said entity, and that he/she signed his/her name thereto by
like order.
__________________________
Sworn to before me this ________
day of __________, 19__.
_________________
Notary
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<PAGE>
STATE OF )
: ss.
COUNTY OF )
On this day of , 19 , before me personally
came , to me known, who being by me duly sworn, did depose
and say that he/she resides in at ;
that he/she is of , the entity described in
and which executed the foregoing instrument; that he/she knows the seal of said
entity, that the seal affixed to said instrument is such seal, that it was so
affixed by order of said entity, and that he/she signed his/her name thereto by
like order.
__________________________
Sworn to before me this ________
day of __________, 19__.
_________________
Notary
11
<PAGE>
STATE OF )
: ss.
COUNTY OF )
On this day of , 19 , before me personally
came , to me known, who being by me duly sworn, did depose
and say that he resides in at ;
that he is Vice President of THE CHASE MANHATTAN BANK, the corporation described
in and which executed the foregoing instrument; that he/she knows the seal of
said corporation, that the seal affixed to said instrument is such seal, that it
was so affixed by order of said entity, and that he/she signed his/her name
thereto by like order.
__________________________
Sworn to before me this ________
day of __________, 19__.
_________________
Notary
12
<PAGE>
Mutual Fund Rider to Global Custody Tri-Party Agreement
Between The Chase Manhattan Bank and
Firstar Trust and
The Tocqueville Asia-Pacific Fund, effective November 1, 1996
Customer represents that the Assets being placed in the Bank's custody
are subject to the Investment Company Act of 1940 (the Act), as the same may be
amended from time to time.
Except to the extent that the Bank has specifically agreed to comply
with a condition of a rule, regulation, interpretation promulgated by or under
the authority of the SEC or the Exemptive Order applicable to accounts of this
nature issued to the Bank (Investment Company Act of 1940, Release No. 12053,
November 20, 1981), as amended, or unless the Bank has otherwise specifically
agreed, the Customer shall be solely responsible to assure that the maintenance
of Assets under this Agreement complies with such rules, regulations,
interpretations or exemptive order promulgated by or under the authority of the
Securities Exchange Commission.
The following modifications are made to the Agreement:
Section 3. Subcustodians and Securities Depositories.
Add the following language to the end of Section 3:
The terms Subcustodian and securities depositories as used in this
Agreement shall mean a branch of a qualified U.S. bank, an eligible
foreign custodian or an eligible foreign securities depository, which
are further defined as follows:
(a) "qualified U.S. Bank" shall mean a qualified U.S. bank as defined
in Rule 17f-5 under the Investment Company Act of 1940;
(b) "eligible foreign custodian" shall mean (i) a banking institution
or trust company incorporated or organized under the laws of a country
other than the United States that is regulated as such by that
country's
13
<PAGE>
government or an agency thereof and that has shareholders' equity in
excess of $200 million in U.S. currency (or a foreign currency
equivalent thereof), (ii) a majority owned direct or indirect
subsidiary of a qualified U.S. bank or bank holding company that is
incorporated or organized under the laws of a country other than the
United States and that has shareholders' equity in excess of $100
million in U.S. currency (or a foreign currency equivalent
thereof)(iii) a banking institution or trust company incorporated or
organized under the laws of a country other than the United States or a
majority owned direct or indirect subsidiary of a qualified U.S. bank
or bank holding company that is incorporated or organized under the
laws of a country other than the United States which has such other
qualifications as shall be specified in Instructions and approved by
the Bank; or (iv) any other entity that shall have been so qualified by
exemptive order, rule or other appropriate action of the SEC; and
(c) "eligible foreign securities depository" shall mean a securities
depository or clearing agency, incorporated or organized under the laws
of a country other than the United States, which operates (i) the
central system for handling securities or equivalent book-entries in
that country, or (ii) a transnational system for the central handling
of securities or equivalent book-entries.
The Customer represents that its Board of Directors has approved each
of the Subcustodians listed in Schedule A to this Agreement and the terms of the
subcustody agreements between the Bank and each Subcustodian, which are attached
as Exhibits I through of Schedule A, and further represents that its Board has
determined that the use of each Subcustodian and the terms of each subcustody
agreement are consistent with the best interests of the Fund(s) and its (their)
shareholders. The Bank will supply the Customer with any amendment to Schedule A
for approval. The Customer has supplied or will supply the Bank with certified
copies of its Board of Directors resolution(s) with respect to the foregoing
prior to placing Assets with any Subcustodian so approved.
Section 11. Instructions.
Add the following language to the end of Section 11:
Deposit Account Payments and Custody Account Transactions made pursuant
to Section 5 and 6 of this Agreement may be made only for the purposes
listed below. Instructions must specify the purpose for which any
transaction is to be made and Customer shall be solely responsible to
assure that Instructions are in accord with any limitations or
restrictions applicable to the Customer by law or as may be set forth
in its prospectus.
14
<PAGE>
(a) In connection with the purchase or sale of Securities at prices as
confirmed by Instructions;
(b) When Securities are called, redeemed or retired, or otherwise
become payable;
(c) In exchange for or upon conversion into other securities alone or
other securities and cash pursuant to any plan or merger, consolidation,
reorganization, recapitalization or readjustment;
(d) Upon conversion of Securities pursuant to their terms into other
securities;
(e) Upon exercise of subscription, purchase or other similar rights
represented by Securities;
(f) For the payment of interest, taxes, management or supervisory fees,
distributions or operating expenses;
(g) In connection with any borrowings by the Customer requiring a
pledge of Securities, but only against receipt of amounts borrowed;
(h) In connection with any loans, but only against receipt of adequate
collateral as specified in Instructions which shall reflect any restrictions
applicable to the Customer;
(i) For the purpose of redeeming shares of the capital stock of the
Customer and the delivery to, or the crediting to the account of, the Bank, its
Subcustodian or the Customer's transfer agent, such shares to be purchased or
redeemed;
(j) For the purpose of redeeming in kind shares of the Customer against
delivery to the Bank, its Subcustodian or the Customer's transfer agent of such
shares to be so redeemed;
(k) For delivery in accordance with the provisions of any agreement
among the Customer, the Bank and a broker-dealer registered under the Securities
Exchange Act of 1934 (the "Exchange Act") and a member of The National
Association of Securities Dealers, Inc. ("NASD"), relating to compliance with
the rules of The Options Clearing Corporation and of any registered national
securities exchange, or of any similar organization or organizations, regarding
escrow or other arrangements in connection with transactions by the Customer;
15
<PAGE>
(l) For release of Securities to designated brokers under covered call
options, provided, however, that such Securities shall be released only upon
payment to the Bank of monies for the premium due and a receipt for the
Securities which are to be held in escrow. Upon exercise of the option, or at
expiration, the Bank will receive from brokers the Securities previously
deposited. The Bank will act strictly in accordance with Instructions in the
delivery of Securities to be held in escrow and will have no responsibility or
liability for any such Securities which are not returned promptly when due other
than to make proper request for such return;
(m) For spot or forward foreign exchange transactions to facilitate
security trading, receipt of income from Securities or related transactions;
(n) For other proper purposes as may be specified in Instructions
issued by an officer of the Customer which shall include a statement of the
purpose for which the delivery or payment is to be made, the amount of the
payment or specific Securities to be delivered, the name of the person or
persons to whom delivery or payment is to be made, and a certification that the
purpose is a proper purpose under the instruments governing the Customer; and
(o) Upon the termination of this Agreement as set forth in Section
14(i).
Section 12. Standard of Care; Liabilities.
Add the following subsection (c) to Section 12:
(c) The Bank hereby warrants to the Customer that in its opinion, after
due inquiry, the established procedures to be followed by each of its branches,
each branch of a qualified U.S. bank, each eligible foreign custodian and each
eligible foreign securities depository holding the Customer's Securities
pursuant to this Agreement afford protection for such Securities at least equal
to that afforded by the Bank's established procedures with respect to similar
securities held by the Bank and its securities depositories in New York.
Section 14. Access to Records.
Add the following language to the end of Section 14(c):
Upon reasonable request from the Customer, the Bank shall furnish the
Customer such reports (or portions thereof) of the Bank's system of
internal accounting controls applicable to the Bank's duties under this
Agreement. The Bank shall endeavor to obtain and furnish the Customer
with such similar reports as it may reasonably request with respect to
each Subcustodian and securities depository holding the Customer's
assets.
<PAGE>
SCHEDULE A
SUB-CUSTODIANS EMPLOYED BY
THE CHASE MANHATTAN BANK, GLOBAL CUSTODY
COUNTRY SUB-CUSTODIAN CORRESPONDENT BANK
- ------- ------------- ------------------
ARGENTINA The Chase Manhattan Bank The Chase Manhattan Bank
Arenales 707, 5th Floor Buenos Aires
De Mayo 130/140
1061 Buenos Aires
ARGENTINA
AUSTRALIA The Chase Manhattan Bank The Chase Manhattan Bank
36th Floor Sydney
World Trade Centre
Jamison Street
Sydney
New South Wales 2000
AUSTRALIA
AUSTRIA Creditanstalt - Bankverein Credit Lyonnais Bank
Schottengasse 6 Vienna
A - 1011, Vienna
AUSTRIA
BANGLADESH Standard Chartered Bank Standard Chartered Bank
18-20 Motijheel C.A. Dhaka
Box 536,
Dhaka-1000
BANGLADESH
BELGIUM Generale Bank Credit Lyonnais Bank
3 Montagne Du Parc Brussels
1000 Bruxelles
BELGIUM
BOTSWANA Barclays Bank of Botswana Barclays Bank of Botswana
Limited Gaborone
Barclays House
Khama Crescent
Gaborone
BOTSWANA
<PAGE>
BRAZIL Banco Chase Manhattan, S.A. Banco Chase Manhattan S.A.
Chase Manhattan Center Sao Paulo
Rua Verbo Divino, 1400
Sao Paulo, SP 04719-002
BRAZIL
CANADA The Royal Bank of Canada Royal Bank of Canada
Royal Bank Plaza Toronto
Toronto Ontario M5J 2J5
CANADA
Canada Trust Royal Bank of Canada
Canada Trust Tower Toronto
BCE Place
161 Bay at Front
Toronto
Ontario M5J 2T2
CANADA
CHILE The Chase Manhattan Bank, The Chase Manhattan Bank
Agustinas 1235 Santiago
Casilla 9192
CHILE
COLOMBIA Cititrust Colombia S.A. Cititrust Colombia S.A.
Sociedad Fiduciaria Sociedad Fiduciaria
Carrera 9a No 99-02 Santafe de Bogota
Santafe de Bogota, DC
COLOMBIA
CZECH REPUBLIC Ceskoslovenska Obchodni Komercni Banka, A.S.,
Banka, A.S. Praha
Na Prikope 14
115 20 Praha 1
CZECH REPUBLIC
DENMARK Den Danske Bank Den Danske Bank
2 Holmes Kanala DK 1091 Copenhagen
Copenhagen
DENMARK
ECUADOR Citibank, N.A. Citibank N.A.
Juan Leon Mera Quito
130 y Patria
Quito
ECUADOR
<PAGE>
EGYPT National Bank of Egypt National Bank of Egypt
24 Sherif Street Cairo
Cairo
EGYPT
ESTONIA HansBank Tallinna Bank
Liivalaia 8 Tallinn
EE0100 Tallinn
ESTONIA
EUROBONDS Cedel Bank S.A. A/c The Chase Manhattan
67 Boulevard Grande Bank, N.A.
Duchesse Charlotte London
LUXEMBOURG A/c No. 17817
ECU: Lloyds Bank PLC
International Banking
Division
London
For all other currencies:
see relevant country
EURO CDS First Chicago Clearing Centre ECU: Lloyds Bank PLC
27 Leadenhall Street Banking Division London
London EC3A 1AA For all other currencies:
UNITED KINGDOM see relevant country
FINLAND Merita Bank KOP Merita Bank KOP
Aleksis Kiven 3-5 Helsinki
00500 Helsinki
FINLAND
FRANCE Banque Paribas Societe Generale
Ref 256 Paris
BP 141
3, Rue D'Antin
75078 Paris
Cedex 02
FRANCE
GERMANY Chase Bank A.G. Chase Bank A.G.
Alexanderstrasse 59 Frankfurt
Postrach 90 01 09
60441 Frankfurt/Main
GERMANY
<PAGE>
GHANA Barclays Bank of Ghana Ltd Barclays Bank
Barclays House Accra
High Street
Accra
GHANA
GREECE Barclays Bank Plc National Bank of Greece S.A.
1 Kolokotroni Street Athens
10562 Athens A/c Chase Manhattan Bank,
GREECE London
A/c No 040/7/921578-68
HONG KONG The Chase Manhattan Bank The Chase Manhattan Bank,
40/F One Exchange Square Hong Kong
8, Connaught Place
Central, Hong Kong
HONG KONG
HUNGARY Citibank Budapest, Rt. Citibank Budapest Rt.
Vaci Utca 19-21 Budapest
1052 Budapest V
HUNGARY
INDIA The Hongkong and Shanghai The Hongkong and Shanghai
Banking Corporation Limited Banking Corporation Limited
52/60 Mahatma Gandhi Road Bombay
Bombay 400 001
INDIA
Deutsche Bank AG Deutsche Bank
Securities & Custody Services Bombay
Kodak House
222 D.N. Road, Fort
Bombay 400 001
INDIA
INDONESIA The Hongkong and Shanghai The Chase Manhattan Bank
Banking Corporation Limited Jakarta
World Trade Center
J1. Jend Sudirman Kav. 29-31
Jakarta 10023
INDONESIA
<PAGE>
IRELAND Bank of Ireland Allied Irish Bank
International Financial Dublin
Services Centre
1 Harbourmaster Place
Dublin 1
IRELAND
ISRAEL Bank Leumi Le-Israel B.M Bank Leumi Le-Israel B.M.
19 Herzl Street Tel Aviv
61000 Tel Aviv
ISRAEL
ITALY The Chase Manhattan Bank, The Chase Manhattan Bank,
Piazza Meda 1 Milan
20121 Milan
ITALY
JAPAN The Fuji Bank Ltd. The Chase Manhattan Bank
6-7 Nihonbashi-Kabutocho Tokyo
Chuo-Ku
Tokyo
JAPAN
JORDAN Arab Bank Limited Arab Bank Limited
P O Box 950544-5 Amman
Amman
Shmeisani
JORDAN
KENYA Barclays Bank of Kenya Barclays Bank of Kenya
Third Floor Nairobi
Queensway House
Nairobi
Kenya
LUXEMBOURG Banque Generale du Banque Generale du
Luxembourg S.A. Luxembourg S.A.
50 Avenue J.F. Kennedy Luxembourg
L-2951 LUXEMBOURG
MALAYSIA The Chase Manhattan Bank, The Chase Manhattan Bank,
Pernas International Kuala Lumpur
Jalan Sultan Ismail
50250, Kuala Lumpur
MALAYSIA
<PAGE>
MAURITIUS Hongkong and Shanghai Hongkong and Shanghai
Banking Corporation Ltd. Banking Corporation Ltd.
Curepipe Road Curepipe
Curepipe
MAURITTUS
MEXICO The Chase Manhattan Bank, No correspondent Bank
(Equities) S.A.
Prolongacion Paseo de la
Reforma no. 600,
PB Colonia Santa Fe Pena
Blanca
01210 Mexico D.F.
(Government Bonds) Banco Nacional de Mexico, No correspondent Bank
Avenida Juarex No. 104-11
Piso
06040 Mexico D.F.
MEXICO
MOROCCO Banque Commerciale du Banque Commerciale du
Maroc Maroc
2 Boulevard Moulay Youssef Casablanca
Casablanca 2000
MOROCCO
NAMIBIA Standard Bank Namibia Ltd. Standard Bank of South
Mutual Platz - 3rd Floor Africa Ltd.
P.O. Box 3327 Johannesburg
Windhock
NAMIBIA
NETHERLANDS ABN AMRO N.V. Generale Bank
Securities Centre Nederland N.V.
P O Box 3200 Rotterdam
4800 De Breda
NETHERLANDS
NEW ZEALAND National Nominees Limited National Bank of New
Level 2 BNZ Tower Zealand
125 Queen Street Wellington
Auckland
NEW ZEALAND
<PAGE>
NORWAY Den Norsek Bank Den Norske Bank
Kirkegaten 21 Oslo
Oslo 1
NORWAY
PAKISTAN Citibank N.A. Citibank N.A.
I.I. Chundrigar Road Karachi
AWT Plaza
Karachi
PAKISTAN
Deutsche Bank A.G. Deutsche Bank A.G. Karachi
Unitowers
I.I. Chundrigar Road
Karachi
PAKISTAN
PERU Citibank, N.A. Citibank N.A.
Camino Real 457 Lima
CC Torre Real - 5th Floor
San Isidro, Lima 27
PERU
PHILIPPINES The Hongkong and Shanghai The Hongkong and Shanghai
Banking Corporation Limited Banking Corporation Limited
Hong Kong Bank Centre 3/F Manila
San Miguel Avenue
Ortigas Commercial Centre
Pasig Metro Manila
PHILIPPINES
POLAND Bank Polska Kasa Opieki S.A. Bank Polska Kasa Opieki
Curtis Plaza S.A.
Woloska 18 Warsaw
02-675 Warsaw
POLAND
For Mutual Funds: Bank Polska Kasa Opieki
Bank Handlowy W. S.A.
Warszawic S.A. Warsaw
Custody Dept.
Capital Markets Center
UI, Nowy Swiat 6/12
00-920 Warsaw
POLAND
<PAGE>
PORTUGAL Banco Espirito Santo c Banco Nacional Ultra Marino
Comercial de Lisboa Lisbon
Servico de Gestaode Titulos
R. Mouzinho da Silveira, 36
r/c
1200 Lisbon
PORTUGAL
SHANGHAI (CHINA) The Hongkong and Shanghai Citibank
Banking Corporation Limited New York
Corporate Banking Centre
Unit 504, 5/F Shanghai
Centre
1376 Nanjing Xi Lu
Shanghai
THE PEOPLE'S REPUBLIC
OF CHINA
SHENZHEN (CHINA) The Hongkong and Shanghai The Chase Manhattan Bank
Banking Corporation Limited Hong Kong
1st Floor
Central Plaza Hotel
No. 1 Chun Feng Lu
Shenzhen
THE PEOPLE'S REPUBLIC
OF CHINA
SINGAPORE The Chase Manhattan Bank, The Chase Manhattan Bank,
Shell Tower Singapore
50 Raffles Place
Singapore 0104
SINGAPORE
SLOVAK REPUBLIC Ceskoslovenska Obchodni Ceskoslovenska Obchodni
Banka, A.S. Banka
Michalska 18 Slovak Republic
815 63 Bratislava
SLOVAK REPUBLIC
SOUTH AFRICA Standard Bank of South Africa Standard Bank of South
Standard Bank Chambers Africa
46 Marshall Street South Africa
Johannesburg 2001
SOUTH AFRICA
<PAGE>
SOUTH KOREA The Hongkong & Shanghai The Hongkong & Shanghai
Banking Corporation Limited Banking Corporation Limited
6/F Kyobo Building Seoul
#1 Chongro, 1-ka Chongro-Ku,
Seoul
SOUTH KOREA
SPAIN The Chase Manhattan Bank Chase Manhattan Bank,
Paseo de la Castellana, 51 Madrid
28046 Madrid
SPAIN
SRI LANKA The Hongkong & Shanghai The Hongkong & Shanghai
Banking Corporation Limited Banking Corporation Limited
Unit #02-02 West Block, Colombo
World Trade Center
Colombo 1,
SRI LANKA
SWEDEN Skandinaviska Enskilda Banken Svenska Handelsbanken
Kungstradgardsgatan 8 Stockholm
Stockhold S-106 40
SWEDEN
SWITZERLAND Union Bank of Switzerland Union Bank of Switzerland
45 Bahnhofstrasse Zurich
8021 Zurich
SWITZERLAND
TAIWAN The Chase Manhattan Bank, Republic of China
115 Min Sheng East Road - No correspondent Bank
Sec 3,
9th Floor
Taipei
TAIWAN
THAILAND The Chase Manhattan Bank, The Chase Manhattan Bank,
Bubhajit Building Bangkok
20 North Sathorn Road
Silom, Bangrak
Bangkok 10500
THAILAND
<PAGE>
TUNISIA Banque Internationale Arabe de Banque International Arabe
Tunisie de Tunisie, Tunisia
70-72 Avenue Habib
Bourguiba
P.O. Box 520
1080 Tunis Cedex
TUNISIA
TURKEY The Chase Manhattan Bank, The Chase Manhattan Bank,
Emirhan Cad No. 145 Istanbul
Atakule, A Blok Kat 11
80700-Dikilitas/Bestktas
Istanbul
TURKEY
U.K. The Chase Manhattan Bank, The Chase Manhattan Bank,
Woolgate House London
Coleman Street
London EC2P 2HD
UNITED KINGDOM
URUGUAY The First National Bank of The First National Bank of
Boston Boston
Zabala 1463 Montevidco
Montevidco
URUGUAY
U.S.A. The Chase Manhattan Bank, The Chase Manhattan Bank,
1 Chase Manhattan Plaza New York
New York
NY 10081
U.S.A.
VENEZUELA Citibank N.A. Citibank N.A.
Carmelitas a Altagracia Caracas
Edificio Citibank
Caracas 1010
VENEZUELA
ZAMBIA Barclays Bank of Zambia Barclays Bank of Zambia
Kafue House Lusaka
Cairo Road
P.O. Box 31936
Lusaka
ZAMBIA
<PAGE>
ZIMBABWE Barclays Bank of Zimbabwe Barclays Bank of Zimbabwe
Ground Floor Harare
Tanganyika House
Corner of 3rd Street & Union
Avenue
Harare
ZIMBABWE
<PAGE>
Mutual Fund Services
CHASE GLOBAL SECURITIES SERVICES FEE AGREEMENT
BETWEEN THE CHASE MANHATTAN BANK, N.A. AND
FIRSTAR TRUST COMPANY
I. Portfolio Basis Point Fee
Market Value Basis Points
------------ ------------
$0 to $150MM 14.0
$151MM to $200MM 12.0
Over $200MM 10.0
II. Global Standard Price By Country Banks (see attached)
Asset Holdings Fee Per Transaction Fee
--------------------------------------
Bank "A" -0- Basis Points $30.00
Bank "B" -0- Basis Points $40.00
Bank "C" -0- Basis Points $60.00
Bank "D" -0- Basis Points $90.00
Bank "E" -0- Basis Points 100.00
Bank "F" -0- Basis Points 120.00
Bank "G" 20.0 Basis Points 135.00
Bank "H" 25.0 Basis Points 140.00
III. Out-of-Pocket Expenses
Billed as incurred (e.g., scrip fees, transporting securities out of the
local market)
IV. Global Securities Lending
60%/40% split in clients' for (50%/50% with indemnification)
V. Infostation
$2,500/installation fee plus expenses
VI. Annual VIP Accounting Fees
Monthly - $15,000 per portfolio
VII. Proxy Service Fees
Notification - CDS $25 per meeting
Fax/Telex - $50 per account
Voting - $75/account
<PAGE>
Mutual Fund Services
CHASE GLOBAL SECURITIES SERVICES
GLOBAL CUSTODY
GLOBAL BANDS
Band "A" Band "D" Band "F"
Japan Austria Argentina
CEDEL Finland Brazil
United States Hong Kong Chile
EUROCLEAR Italy Greece
Luxembourg Indonesia
Band "B" Malaysia Jordan
Germany Singapore Pakistan
Netherlands Turkey Philippines
Canada Portugal
Switzerland Band "E" Taiwan
Mexico Spain
Band "C" Thailand
Australia
Belgium
Denmark
France
Ireland
New Zealand
Norway
Sweden
United Kingdom
Emerging Markets Bands
Band "G" Band "H"
Columbia Peru
Hungary
India
Korea
Poland
Shenzen
Sri Lanka
Venezuela
GLOBAL CUSTODY TRI-PARTY AGREEMENT
This AGREEMENT is effective November 1, 1996, and is between THE CHASE
MANHATTAN BANK, N.A. (the "Bank") and Firstar Trust (the "Customer") and
The Tocqueville Europe Fund (the "Fund").
1. CUSTOMER ACCOUNTS.
The Bank agrees to establish and maintain the following accounts
("Accounts"):
(a) A custody account in the name of the Customer ("Custody Account")
for any and all stocks, shares, bonds, debentures, notes, mortgages or other
obligations for the payment of money, bullion, coin and any certificates,
receipts, warrants or other instruments representing rights to receive, purchase
or subscribe for the same or evidencing or representing any other rights or
interests therein and other similar property whether certificated or
uncertificated as may be received by the Bank or its Subcustodian (as defined in
Section 3) for the account of the Customer ("Securities"); and
(b) A deposit account in the name of the Customer ("Deposit Account")
for any and all cash in any currency received by the Bank or its Subcustodian
for the account of the Customer, which cash shall not be subject to withdrawal
by draft or check.
The Customer warrants its authority to: 1) deposit the cash and
Securities ("Assets") received in the Accounts and 2) give Instructions (as
defined in Section 11) concerning the Accounts. The Bank may deliver securities
of the same class in place of those deposited in the Custody Account.
Upon written agreement between the Bank and the Customer, additional
Accounts may be established and separately accounted for as additional Accounts
under the terms of this Agreement.
2. MAINTENANCE OF SECURITIES AND CASH AT BANK AND SUBCUSTODIAN LOCATIONS.
Unless Instructions specifically require another location acceptable to
the Bank:
(a) Securities will be held in the country or other jurisdiction in
which the principal trading market for such Securities is located, where such
Securities are to be presented for payment or where such Securities are
acquired; and
(b) Cash will be credited to an account in a country or other
jurisdiction in which such cash may be legally deposited or is the legal
currency for the payment of public or private debts.
Cash may be held pursuant to Instructions in either interest or
non-interest bearing accounts as may be available for the particular currency.
To the extent Instructions are issued and the Bank can comply with such
Instructions, the Bank is authorized to maintain cash balances on deposit for
the Customer with itself or one of its affiliates at such reasonable rates of
interest as may from time to time be paid on such accounts, or in non-interest
bearing accounts as the Customer may direct, if acceptable to the Bank.
If the Customer wishes to have any of its Assets held in the custody of
an institution other than the established Subcustodians as defined in Section 3
(or their securities depositories), such arrangement must be authorized by a
written agreement, signed by the Bank and the Customer.
<PAGE>
3. SUBCUSTODIANS AND SECURITIES DEPOSITORIES.
The Bank may act under this Agreement through the subcustodians listed
in Schedule A of this Agreement with which the Bank has entered into
subcustodial agreements ("Subcustodians"). The Customer authorizes the Bank to
hold Assets in the Accounts in accounts which the Bank has established with one
or more of its branches or Subcustodians. The Bank and Subcustodians are
authorized to hold any of the Securities in their account with any securities
depository in which they participate.
The Bank reserves the right to add new, replace or remove
Subcustodians. The Customer will be given reasonable notice by the Bank of any
amendment to Schedule A. Upon request by the Customer, the Bank will identify
the name, address and principal place of business of any Subcustodian of the
Customer's Assets and the name and address of the governmental agency or other
regulatory authority that supervises or regulates such Subcustodian.
4. USE OF SUBCUSTODIAN.
(a) The Bank will identify such Assets on its books as belonging to
the Customer.
(b) A Subcustodian will hold such Assets together with assets belonging
to other customers of the Bank in accounts identified on such Subcustodian's
books as special custody accounts for the exclusive benefit of customers of the
Bank.
(c) Any Assets in the Accounts held by a Subcustodian will be subject
only to the instructions of the Bank or its agent. Any Securities held in a
securities depository for the account of a Subcustodian will be subject only to
the instructions of such Subcustodian.
(d) Any agreement the Bank enters into with a Subcustodian for holding
its customer's assets shall provide that such assets will not be subject to any
right, charge, security interest, lien or claim of any kind in favor of such
Subcustodian except for safe custody or administration, and that the beneficial
ownership of such assets will be freely transferable without the payment of
money or value other than for safe custody or administration. The foregoing
shall not apply to the extent of any special agreement or arrangement made by
the Customer with any particular Subcustodian.
5. DEPOSIT ACCOUNT TRANSACTIONS.
(a) The Bank or its Subcustodians will make payments from the Deposit
Account upon receipt of Instructions which include all information required by
the Bank.
(b) In the event that any payment to be made under this Section 5
exceeds the funds available in the Deposit Account, the Bank, in its discretion,
may advance the Customer such excess amount which shall be deemed a loan payable
on demand, bearing interest at the rate customarily charged by the Bank on
similar loans.
(c) If the Bank credits the Deposit Account on a payable date, or at
any time prior to actual collection and reconciliation to the Deposit Account,
with interest, dividends, redemptions or any other amount due, the Customer will
promptly return any such amount upon oral or written notification: (i) that such
amount has not been received in the ordinary course of business or (ii) that
such amount was incorrectly credited. If the Customer does not promptly return
any amount upon such notification, the Bank shall be entitled, upon oral or
written notification to the
2
<PAGE>
Customer, to reverse such credit by debiting the Deposit Account for the amount
previously credited. The Bank or its Subcustodian shall have no duty or
obligation to institute legal proceedings, file a claim or a proof of claim in
any insolvency proceeding or take any other action with respect to the
collection of such amount, but may act for the Customer upon Instructions after
consultation with the Customer.
6. CUSTODY ACCOUNT TRANSACTIONS.
(a) Securities will be transferred, exchanged or delivered by the Bank
or its Subcustodian upon receipt by the Bank of Instructions which include all
information required by the Bank. Settlement and payment for Securities received
for, and delivery of Securities out of, the Custody Account may be made in
accordance with the customary or established securities trading or securities
processing practices and procedures in the jurisdiction or market in which the
transaction occurs, including, without limitation, delivery of Securities to a
purchaser, dealer or their agents against a receipt with the expectation of
receiving later payment and free delivery. Delivery of Securities out of the
Custody Account may also be made in any manner specifically required by
Instructions acceptable to the Bank.
(b) The Bank, in its discretion, may credit or debit the Accounts on a
contractual settlement date with cash or Securities with respect to any sale,
exchange or purchase of Securities. Otherwise, such transactions will be
credited or debited to the Accounts on the date cash or Securities are actually
received by the Bank and reconciled to the Account.
(i) The Bank may reverse credits or debits made to the Accounts in its
discretion if the related transaction fails to settle within a
reasonable period, determined by the Bank in its discretion, after the
contractual settlement date for the related transaction.
(ii) If any Securities delivered pursuant to this Section 6 are
returned by the recipient thereof, the Bank may reverse the credits and
debits of the particular transaction at any time.
7. ACTIONS OF THE BANK.
The Bank shall follow Instructions received regarding assets held in
the Accounts. However, until it receives Instructions to the contrary, the Bank
will:
(a) Present for payment any Securities which are called, redeemed or
retired or otherwise become payable and all coupons and other income items which
call for payment upon presentation, to the extent that the Bank or Subcustodian
is actually aware of such opportunities.
(b) Execute in the name of the Customer such ownership and other
certificates as may be required to obtain payments in respect of Securities.
(c) Exchange interim receipts or temporary Securities for definitive
Securities.
(d) Appoint brokers and agents for any transaction involving the
Securities, including, without limitation, affiliates of the Bank or any
Subcustodian.
(e) Issue statements to the Customer, at times mutually agreed upon,
identifying the Assets in the Accounts.
3
<PAGE>
The Bank will send the Customer an advice or notification of any
transfers of Assets to or from the Accounts. Such statements, advices or
notifications shall indicate the identity of the entity having custody of the
Assets. Unless the Customer sends the Bank a written exception or objection to
any Bank statement within sixty (60) days of receipt, the Customer shall be
deemed to have approved such statement. In such event, or where the Customer has
otherwise approved any such statement, the Bank shall, to the extent permitted
by law, be released, relieved and discharged with respect to all matters set
forth in such statement or reasonably implied therefrom as though it had been
settled by the decree of a court of competent jurisdiction in an action where
the Customer and all persons having or claiming an interest in the Customer or
the Customer's Accounts were parties.
All collections of funds or other property paid or distributed in
respect of Securities in the Custody Account shall be made at the risk of the
Customer. The Bank shall have no liability for any loss occasioned by delay in
the actual receipt of notice by the Bank or by its Subcustodians of any payment,
redemption or other transaction regarding Securities in the Custody Account in
respect of which the Bank has agreed to take any action under this Agreement.
8. CORPORATE ACTIONS; PROXIES.
Whenever the Bank receives information concerning the Securities which
requires discretionary action by the beneficial owner of the Securities (other
than a proxy), such as subscription rights, bonus issues, stock repurchase plans
and rights offerings, or legal notices or other material intended to be
transmitted to securities holders ("Corporate Actions"), the Bank will give the
Customer notice of such Corporate Actions to the extent that the Bank's central
corporate actions department has actual knowledge of a Corporate Action in time
to notify its customers.
When a rights entitlement or a fractional interest resulting from a
rights issue, stock dividend, stock split or similar Corporate Action is
received which bears an expiration date, the Bank will endeavor to obtain
Instructions from the Customer or its Authorized Person, but if Instructions are
not received in time for the Bank to take timely action, or actual notice of
such Corporate Action was received too late to seek Instructions, the Bank is
authorized to sell such rights entitlement or fractional interest and to credit
the Deposit Account with the proceeds or take any other action it deems, in good
faith, to be appropriate in which case it shall be held harmless for any such
action.
The Bank will deliver proxies to the Customer or its designated agent
pursuant to special arrangements which may have been agreed to in writing. Such
proxies shall be executed in the appropriate nominee name relating to Securities
in the Custody Account registered in the name of such nominee but without
indicating the manner in which such proxies are to be voted; and where bearer
Securities are involved, proxies will be delivered in accordance with
Instructions.
9. NOMINEES.
Securities which are ordinarily held in registered form may be
registered in a nominee name of the Bank, Subcustodian or securities depository,
as the case may be. The Bank may without notice to the Customer cause any such
Securities to cease to be registered in the name of any such nominee and to be
registered in the name of the Customer. In the event that any Securities
registered in a nominee name are called for partial redemption by the issuer,
the Bank may allot the called portion to the respective beneficial holders of
such class of security in any manner the Bank deems to be fair and equitable.
The Customer agrees to hold the Bank, Subcustodians, and their respective
nominees harmless from any liability arising directly or indirectly from their
status as a mere record holder of Securities in the Custody Account.
4
<PAGE>
10. AUTHORIZED PERSONS.
As used in this Agreement, the term "Authorized Person" means employees
or agents including investment managers as have been designated by written
notice from the Customer or its designated agent to act on behalf of the
Customer under this Agreement. Such persons shall continue to be Authorized
Persons until such time as the Bank receives Instructions from the Customer or
its designated agent that any such employee or agent is no longer an Authorized
Person.
11. INSTRUCTIONS.
The term "Instructions" means instructions of any Authorized Person
received by the Bank, via telephone, telex, TWX, facsimile transmission, bank
wire or other teleprocess or electronic instruction or trade information system
acceptable to the Bank which the Bank believes in good faith to have been given
by Authorized Persons or which are transmitted with proper testing or
authentication pursuant to terms and conditions which the Bank may specify.
Unless otherwise expressly provided, all Instructions shall continue in full
force and effect until canceled or superseded.
Any Instructions delivered to the Bank by telephone shall promptly
thereafter be confirmed in writing by an Authorized Person (which confirmation
may bear the facsimile signature of such Person), but the Customer will hold the
Bank harmless for the failure of an Authorized Person to send such confirmation
in writing, the failure of such confirmation to conform to the telephone
instructions received or the Bank's failure to produce such confirmation at any
subsequent time. The Bank may electronically record any Instructions given by
telephone, and any other telephone discussions with respect to the Custody
Account. The Customer shall be responsible for safeguarding any testkeys,
identification codes or other security devices which the Bank shall make
available to the Customer or its Authorized Persons.
12. STANDARD OF CARE; LIABILITIES.
(a) The Bank shall be responsible for the performance of only such
duties as are set forth in this Agreement or expressly contained in Instructions
which are consistent with the provisions of this Agreement as follows:
(i) The Bank will use reasonable care with respect to its obligations
under this Agreement and the safekeeping of Assets. The Bank shall be
liable to the Customer for any loss which shall occur as the result of
the failure of a Subcustodian to exercise reasonable care with respect
to the safekeeping of such Assets to the same extent that the Bank
would be liable to the Customer if the Bank were holding such Assets in
New York. In the event of any loss to the Customer by reason of the
failure of the Bank or its Subcustodian to utilize reasonable care, the
Bank shall be liable to the Customer only to the extent of the
Customer's direct damages, to be determined based on the market value
of the property which is the subject of the loss at the date of
discovery of such loss and without reference to any special conditions
or circumstances.
(ii) The Bank will not be responsible for any act, omission, default or
for the solvency of any broker or agent which it or a Subcustodian
appoints unless such appointment was made negligently or in bad faith.
5
<PAGE>
(iii) The Bank shall be indemnified by, and without liability to the
Customer for any action taken or omitted by the Bank whether pursuant
to Instructions or otherwise within the scope of this Agreement if such
act or omission was in good faith, without negligence. In performing
its obligations under this Agreement, the Bank may rely on the
genuineness of any document which it believes in good faith to have
been validly executed.
(iv) The Customer agrees to pay for and hold the Bank harmless from any
liability or loss resulting from the imposition or assessment of any
taxes or other governmental charges, and any related expenses with
respect to income from or Assets in the Accounts.
(v) The Bank shall be entitled to rely, and may act, upon the advice of
counsel (who may be counsel for the Customer) on all matters and shall
be without liability for any action reasonably taken or omitted
pursuant to such advice.
(vi) The Bank need not maintain any insurance for the benefit of the
Customer.
(vii) Without limiting the foregoing, the Bank shall not be liable for
any loss which results from: 1) the general risk of investing, or 2)
investing or holding Assets in a particular country including, but not
limited to, losses resulting from nationalization, expropriation or
other governmental actions; regulation of the banking or securities
industry; currency restrictions, devaluations or fluctuations; and
market conditions which prevent the orderly execution of securities
transactions or affect the value of Assets.
(viii) Neither party shall be liable to the other for any loss due to
forces beyond their control including, but not limited to strikes or
work stoppages, acts of war or terrorism, insurrection, revolution,
nuclear fusion, fission or radiation, or acts of God.
(b) Consistent with and without limiting the first paragraph of this
Section 12, it is specifically acknowledged that the Bank shall have no duty or
responsibility to:
(i) question Instructions or make any suggestions to the Customer
or an Authorized Person regarding such Instructions;
(ii) supervise or make recommendations with respect to investments
or the retention of Securities;
(iii) advise the Customer or an Authorized Person regarding any default
in the payment of principal or income of any security other than as
provided in Section 5(c) of this Agreement;
(iv) evaluate or report to the Customer or an Authorized Person
regarding the financial condition of any broker, agent or other party
to which Securities are delivered or payments are made pursuant to this
Agreement;
(v) review or reconcile trade confirmations received from brokers. The
Customer or its Authorized Persons (as defined in Section 10) issuing
Instructions shall bear any responsibility to review such confirmations
against Instructions issued to and statements issued by the Bank.
(c) The Customer authorizes the Bank to act under this Agreement
notwithstanding that the Bank or any of its divisions or affiliates may have a
6
<PAGE>
material interest in a transaction, or circumstances are such that the Bank may
have a potential conflict of duty or interest including the fact that the Bank
or any of its affiliates may provide brokerage services to other customers, act
as financial advisor to the issuer of Securities, act as a lender to the issuer
of Securities, act in the same transaction as agent for more than one customer,
have a material interest in the issue of Securities, or earn profits from any of
the activities listed herein.
13. FEES AND EXPENSES.
The Customer agrees to pay the Bank for its services under this
Agreement such amount as may be agreed upon in writing, together with the Bank's
reasonable out-of-pocket or incidental expenses, including, but not limited to,
legal fees. The Bank shall have a lien on and is authorized to charge any
Accounts of the Customer for any amount owing to the Bank under any provision of
this Agreement.
14. MISCELLANEOUS.
(a) Foreign Exchange Transactions. To facilitate the administration of
the Customer's trading and investment activity, the Bank is authorized to enter
into spot or forward foreign exchange contracts with the Customer or an
Authorized Person for the Customer and may also provide foreign exchange through
its subsidiaries, affiliates or Subcustodians. Instructions, including standing
instructions, may be issued with respect to such contracts but the Bank may
establish rules or limitations concerning any foreign exchange facility made
available. In all cases where the Bank, its subsidiaries, affiliates or
Subcustodians enter into a foreign exchange contract related to Accounts, the
terms and conditions of the then current foreign exchange contract of the Bank,
its subsidiary, affiliate or Subcustodian and, to the extent not inconsistent,
this Agreement shall apply to such transaction.
(b) Certification of Residency, etc. The Customer certifies that it is
a resident of the United States and agrees to notify the Bank of any changes in
residency. The Bank may rely upon this certification or the certification of
such other facts as may be required to administer the Bank's obligations under
this Agreement. The Customer will indemnify the Bank against all losses,
liability, claims or demands arising directly or indirectly from any such
certifications.
(c) Access to Records. The Bank shall allow the Customer's independent
public accountant reasonable access to the records of the Bank relating to the
Assets as is required in connection with their examination of books and records
pertaining to the Customer's affairs. Subject to restrictions under applicable
law, the Bank shall also obtain an undertaking to permit the Customer's
independent public accountants reasonable access to the records of any
Subcustodian which has physical possession of any Assets as may be required in
connection with the examination of the Customer's books and records.
(d) Governing Law; Successors and Assigns. This Agreement shall be
governed by the laws of the State of New York and shall not be assignable by
either party, but shall bind the successors in interest of the Customer and the
Bank.
(e) Entire Agreement; Applicable Riders. Customer represents that the
Assets deposited in the Accounts are (Check one):
[ ] Employee Benefit Plan or other assets subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA");
7
<PAGE>
[X] Mutual Fund assets subject to certain Securities and Exchange
Commission ("SEC") rules and regulations;
[ ] Neither of the above.
This Agreement consists exclusively of this document together with
Schedule A, Exhibits I - _______ and the following Rider(s) [Check
applicable rider(s)]:
[ ] ERISA
[X] MUTUAL FUND
[ ] SPECIAL TERMS AND CONDITIONS
There are no other provisions of this Agreement and this Agreement
supersedes any other agreements, whether written or oral, between the parties.
Any amendment to this Agreement must be in writing, executed by both parties.
(f) Severability. In the event that one or more provisions of this
Agreement are held invalid, illegal or enforceable in any respect on the basis
of any particular circumstances or in any jurisdiction, the validity, legality
and enforceability of such provision or provisions under other circumstances or
in other jurisdictions and of the remaining provisions will not in any way be
affected or impaired.
(g) Waiver. Except as otherwise provided in this Agreement, no failure
or delay on the part of either party in exercising any power or right under this
Agreement operates as a waiver, nor does any single or partial exercise of any
power or right preclude any other or further exercise, or the exercise of any
other power or right. No waiver by a party of any provision of this Agreement,
or waiver of any breach or default, is effective unless in writing and signed by
the party against whom the waiver is to be enforced.
(h) Notices. All notices under this Agreement shall be effective when
actually received. Any notices or other communications which may be required
under this Agreement are to be sent to the parties at the following addresses or
such other addresses as may subsequently be given to the other party in writing:
Bank: The Chase Manhattan Bank, N.A.
Chase MetroTech Center
Brooklyn, NY 11245
Attention: Global Custody Division
or telex:___________________________
8
<PAGE>
Customer: _________________________________
_________________________________
_________________________________
Fund: _________________________________
_________________________________
_________________________________
(i) Termination. This Agreement may be terminated by the Customer or
the Bank by giving sixty (60) days written notice to the other, provided that
such notice to the Bank shall specify the names of the persons to whom the Bank
shall deliver the Assets in the Accounts. If notice of termination is given by
the Bank, the Customer shall, within sixty (60) days following receipt of the
notice, deliver to the Bank Instructions specifying the names of the persons to
whom the Bank shall deliver the Assets. In either case the Bank will deliver the
Assets to the persons so specified, after deducting any amounts which the Bank
determines in good faith to be owed to it under Section 13. If within sixty (60)
days following receipt of a notice of termination by the Bank, the Bank does not
receive Instructions from the Customer specifying the names of the persons to
whom the Bank shall deliver the Assets, the Bank, at its election, may deliver
the Assets to a bank or trust company doing business in the State of New York to
be held and disposed of pursuant to the provisions of this Agreement, or to
Authorized Persons, or may continue to hold the Assets until Instructions are
provided to the Bank.
CUSTOMER
By:/s/ Joe D. Redwine
--------------------------------------------
Joe D. Redwine, Vice President
THE CHASE MANHATTAN BANK
By:/s/ Edward G. McGann
--------------------------------------------
Edward G. McGann
FUND
By:/s/ Kieran Lyons
--------------------------------------------
Kieran Lyons, Executive Vice President
9
<PAGE>
STATE OF )
: ss.
COUNTY OF )
On this day of , 19 , before me personally
came , to me known, who being by me duly sworn, did depose
and say that he/she resides in at ;
that he/she is of , the entity described in
and which executed the foregoing instrument; that he/she knows the seal of said
entity, that the seal affixed to said instrument is such seal, that it was so
affixed by order of said entity, and that he/she signed his/her name thereto by
like order.
__________________________
Sworn to before me this ________
day of __________, 19__.
_________________
Notary
10
<PAGE>
STATE OF )
: ss.
COUNTY OF )
On this day of , 19 , before me personally
came , to me known, who being by me duly sworn, did depose
and say that he/she resides in at ;
that he/she is of , the entity described in
and which executed the foregoing instrument; that he/she knows the seal of said
entity, that the seal affixed to said instrument is such seal, that it was so
affixed by order of said entity, and that he/she signed his/her name thereto by
like order.
__________________________
Sworn to before me this ________
day of __________, 19__.
_________________
Notary
11
<PAGE>
STATE OF )
: ss.
COUNTY OF )
On this day of , 19 , before me personally
came , to me known, who being by me duly sworn, did depose
and say that he resides in at ;
that he is Vice President of THE CHASE MANHATTAN BANK, the corporation described
in and which executed the foregoing instrument; that he/she knows the seal of
said corporation, that the seal affixed to said instrument is such seal, that it
was so affixed by order of said entity, and that he/she signed his/her name
thereto by like order.
__________________________
Sworn to before me this ________
day of __________, 19__.
_________________
Notary
12
<PAGE>
Mutual Fund Rider to Global Custody Tri-Party Agreement
Between The Chase Manhattan Bank and
Firstar Trust and
The Tocqueville Europe Fund, effective November 1, 1996
Customer represents that the Assets being placed in the Bank's custody
are subject to the Investment Company Act of 1940 (the Act), as the same may be
amended from time to time.
Except to the extent that the Bank has specifically agreed to comply
with a condition of a rule, regulation, interpretation promulgated by or under
the authority of the SEC or the Exemptive Order applicable to accounts of this
nature issued to the Bank (Investment Company Act of 1940, Release No. 12053,
November 20, 1981), as amended, or unless the Bank has otherwise specifically
agreed, the Customer shall be solely responsible to assure that the maintenance
of Assets under this Agreement complies with such rules, regulations,
interpretations or exemptive order promulgated by or under the authority of the
Securities Exchange Commission.
The following modifications are made to the Agreement:
Section 3. Subcustodians and Securities Depositories.
Add the following language to the end of Section 3:
The terms Subcustodian and securities depositories as used in this
Agreement shall mean a branch of a qualified U.S. bank, an eligible
foreign custodian or an eligible foreign securities depository, which
are further defined as follows:
(a) "qualified U.S. Bank" shall mean a qualified U.S. bank as defined
in Rule 17f-5 under the Investment Company Act of 1940;
(b) "eligible foreign custodian" shall mean (i) a banking institution
or trust company incorporated or organized under the laws of a country
other than the United States that is regulated as such by that
country's
13
<PAGE>
government or an agency thereof and that has shareholders' equity in
excess of $200 million in U.S. currency (or a foreign currency
equivalent thereof), (ii) a majority owned direct or indirect
subsidiary of a qualified U.S. bank or bank holding company that is
incorporated or organized under the laws of a country other than the
United States and that has shareholders' equity in excess of $100
million in U.S. currency (or a foreign currency equivalent
thereof)(iii) a banking institution or trust company incorporated or
organized under the laws of a country other than the United States or a
majority owned direct or indirect subsidiary of a qualified U.S. bank
or bank holding company that is incorporated or organized under the
laws of a country other than the United States which has such other
qualifications as shall be specified in Instructions and approved by
the Bank; or (iv) any other entity that shall have been so qualified by
exemptive order, rule or other appropriate action of the SEC; and
(c) "eligible foreign securities depository" shall mean a securities
depository or clearing agency, incorporated or organized under the laws
of a country other than the United States, which operates (i) the
central system for handling securities or equivalent book-entries in
that country, or (ii) a transnational system for the central handling
of securities or equivalent book-entries.
The Customer represents that its Board of Directors has approved each
of the Subcustodians listed in Schedule A to this Agreement and the terms of the
subcustody agreements between the Bank and each Subcustodian, which are attached
as Exhibits I through of Schedule A, and further represents that its Board has
determined that the use of each Subcustodian and the terms of each subcustody
agreement are consistent with the best interests of the Fund(s) and its (their)
shareholders. The Bank will supply the Customer with any amendment to Schedule A
for approval. The Customer has supplied or will supply the Bank with certified
copies of its Board of Directors resolution(s) with respect to the foregoing
prior to placing Assets with any Subcustodian so approved.
Section 11. Instructions.
Add the following language to the end of Section 11:
Deposit Account Payments and Custody Account Transactions made pursuant
to Section 5 and 6 of this Agreement may be made only for the purposes
listed below. Instructions must specify the purpose for which any
transaction is to be made and Customer shall be solely responsible to
assure that Instructions are in accord with any limitations or
restrictions applicable to the Customer by law or as may be set forth
in its prospectus.
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<PAGE>
(a) In connection with the purchase or sale of Securities at prices as
confirmed by Instructions;
(b) When Securities are called, redeemed or retired, or otherwise
become payable;
(c) In exchange for or upon conversion into other securities alone or
other securities and cash pursuant to any plan or merger, consolidation,
reorganization, recapitalization or readjustment;
(d) Upon conversion of Securities pursuant to their terms into other
securities;
(e) Upon exercise of subscription, purchase or other similar rights
represented by Securities;
(f) For the payment of interest, taxes, management or supervisory fees,
distributions or operating expenses;
(g) In connection with any borrowings by the Customer requiring a
pledge of Securities, but only against receipt of amounts borrowed;
(h) In connection with any loans, but only against receipt of adequate
collateral as specified in Instructions which shall reflect any restrictions
applicable to the Customer;
(i) For the purpose of redeeming shares of the capital stock of the
Customer and the delivery to, or the crediting to the account of, the Bank, its
Subcustodian or the Customer's transfer agent, such shares to be purchased or
redeemed;
(j) For the purpose of redeeming in kind shares of the Customer against
delivery to the Bank, its Subcustodian or the Customer's transfer agent of such
shares to be so redeemed;
(k) For delivery in accordance with the provisions of any agreement
among the Customer, the Bank and a broker-dealer registered under the Securities
Exchange Act of 1934 (the "Exchange Act") and a member of The National
Association of Securities Dealers, Inc. ("NASD"), relating to compliance with
the rules of The Options Clearing Corporation and of any registered national
securities exchange, or of any similar organization or organizations, regarding
escrow or other arrangements in connection with transactions by the Customer;
15
<PAGE>
(l) For release of Securities to designated brokers under covered call
options, provided, however, that such Securities shall be released only upon
payment to the Bank of monies for the premium due and a receipt for the
Securities which are to be held in escrow. Upon exercise of the option, or at
expiration, the Bank will receive from brokers the Securities previously
deposited. The Bank will act strictly in accordance with Instructions in the
delivery of Securities to be held in escrow and will have no responsibility or
liability for any such Securities which are not returned promptly when due other
than to make proper request for such return;
(m) For spot or forward foreign exchange transactions to facilitate
security trading, receipt of income from Securities or related transactions;
(n) For other proper purposes as may be specified in Instructions
issued by an officer of the Customer which shall include a statement of the
purpose for which the delivery or payment is to be made, the amount of the
payment or specific Securities to be delivered, the name of the person or
persons to whom delivery or payment is to be made, and a certification that the
purpose is a proper purpose under the instruments governing the Customer; and
(o) Upon the termination of this Agreement as set forth in Section
14(i).
Section 12. Standard of Care; Liabilities.
Add the following subsection (c) to Section 12:
(c) The Bank hereby warrants to the Customer that in its opinion, after
due inquiry, the established procedures to be followed by each of its branches,
each branch of a qualified U.S. bank, each eligible foreign custodian and each
eligible foreign securities depository holding the Customer's Securities
pursuant to this Agreement afford protection for such Securities at least equal
to that afforded by the Bank's established procedures with respect to similar
securities held by the Bank and its securities depositories in New York.
Section 14. Access to Records.
Add the following language to the end of Section 14(c):
Upon reasonable request from the Customer, the Bank shall furnish the
Customer such reports (or portions thereof) of the Bank's system of
internal accounting controls applicable to the Bank's duties under this
Agreement. The Bank shall endeavor to obtain and furnish the Customer
with such similar reports as it may reasonably request with respect to
each Subcustodian and securities depository holding the Customer's
assets.
<PAGE>
SCHEDULE A
SUB-CUSTODIANS EMPLOYED BY
THE CHASE MANHATTAN BANK, GLOBAL CUSTODY
COUNTRY SUB-CUSTODIAN CORRESPONDENT BANK
- ------- ------------- ------------------
ARGENTINA The Chase Manhattan Bank The Chase Manhattan Bank
Arenales 707, 5th Floor Buenos Aires
De Mayo 130/140
1061 Buenos Aires
ARGENTINA
AUSTRALIA The Chase Manhattan Bank The Chase Manhattan Bank
36th Floor Sydney
World Trade Centre
Jamison Street
Sydney
New South Wales 2000
AUSTRALIA
AUSTRIA Creditanstalt - Bankverein Credit Lyonnais Bank
Schottengasse 6 Vienna
A - 1011, Vienna
AUSTRIA
BANGLADESH Standard Chartered Bank Standard Chartered Bank
18-20 Motijheel C.A. Dhaka
Box 536,
Dhaka-1000
BANGLADESH
BELGIUM Generale Bank Credit Lyonnais Bank
3 Montagne Du Parc Brussels
1000 Bruxelles
BELGIUM
BOTSWANA Barclays Bank of Botswana Barclays Bank of Botswana
Limited Gaborone
Barclays House
Khama Crescent
Gaborone
BOTSWANA
<PAGE>
BRAZIL Banco Chase Manhattan, S.A. Banco Chase Manhattan S.A.
Chase Manhattan Center Sao Paulo
Rua Verbo Divino, 1400
Sao Paulo, SP 04719-002
BRAZIL
CANADA The Royal Bank of Canada Royal Bank of Canada
Royal Bank Plaza Toronto
Toronto Ontario M5J 2J5
CANADA
Canada Trust Royal Bank of Canada
Canada Trust Tower Toronto
BCE Place
161 Bay at Front
Toronto
Ontario M5J 2T2
CANADA
CHILE The Chase Manhattan Bank, The Chase Manhattan Bank
Agustinas 1235 Santiago
Casilla 9192
CHILE
COLOMBIA Cititrust Colombia S.A. Cititrust Colombia S.A.
Sociedad Fiduciaria Sociedad Fiduciaria
Carrera 9a No 99-02 Santafe de Bogota
Santafe de Bogota, DC
COLOMBIA
CZECH REPUBLIC Ceskoslovenska Obchodni Komercni Banka, A.S.,
Banka, A.S. Praha
Na Prikope 14
115 20 Praha 1
CZECH REPUBLIC
DENMARK Den Danske Bank Den Danske Bank
2 Holmes Kanala DK 1091 Copenhagen
Copenhagen
DENMARK
ECUADOR Citibank, N.A. Citibank N.A.
Juan Leon Mera Quito
130 y Patria
Quito
ECUADOR
<PAGE>
EGYPT National Bank of Egypt National Bank of Egypt
24 Sherif Street Cairo
Cairo
EGYPT
ESTONIA HansBank Tallinna Bank
Liivalaia 8 Tallinn
EE0100 Tallinn
ESTONIA
EUROBONDS Cedel Bank S.A. A/c The Chase Manhattan
67 Boulevard Grande Bank, N.A.
Duchesse Charlotte London
LUXEMBOURG A/c No. 17817
ECU: Lloyds Bank PLC
International Banking
Division
London
For all other currencies:
see relevant country
EURO CDS First Chicago Clearing Centre ECU: Lloyds Bank PLC
27 Leadenhall Street Banking Division London
London EC3A 1AA For all other currencies:
UNITED KINGDOM see relevant country
FINLAND Merita Bank KOP Merita Bank KOP
Aleksis Kiven 3-5 Helsinki
00500 Helsinki
FINLAND
FRANCE Banque Paribas Societe Generale
Ref 256 Paris
BP 141
3, Rue D'Antin
75078 Paris
Cedex 02
FRANCE
GERMANY Chase Bank A.G. Chase Bank A.G.
Alexanderstrasse 59 Frankfurt
Postrach 90 01 09
60441 Frankfurt/Main
GERMANY
<PAGE>
GHANA Barclays Bank of Ghana Ltd Barclays Bank
Barclays House Accra
High Street
Accra
GHANA
GREECE Barclays Bank Plc National Bank of Greece S.A.
1 Kolokotroni Street Athens
10562 Athens A/c Chase Manhattan Bank,
GREECE London
A/c No 040/7/921578-68
HONG KONG The Chase Manhattan Bank The Chase Manhattan Bank,
40/F One Exchange Square Hong Kong
8, Connaught Place
Central, Hong Kong
HONG KONG
HUNGARY Citibank Budapest, Rt. Citibank Budapest Rt.
Vaci Utca 19-21 Budapest
1052 Budapest V
HUNGARY
INDIA The Hongkong and Shanghai The Hongkong and Shanghai
Banking Corporation Limited Banking Corporation Limited
52/60 Mahatma Gandhi Road Bombay
Bombay 400 001
INDIA
Deutsche Bank AG Deutsche Bank
Securities & Custody Services Bombay
Kodak House
222 D.N. Road, Fort
Bombay 400 001
INDIA
INDONESIA The Hongkong and Shanghai The Chase Manhattan Bank
Banking Corporation Limited Jakarta
World Trade Center
J1. Jend Sudirman Kav. 29-31
Jakarta 10023
INDONESIA
<PAGE>
IRELAND Bank of Ireland Allied Irish Bank
International Financial Dublin
Services Centre
1 Harbourmaster Place
Dublin 1
IRELAND
ISRAEL Bank Leumi Le-Israel B.M Bank Leumi Le-Israel B.M.
19 Herzl Street Tel Aviv
61000 Tel Aviv
ISRAEL
ITALY The Chase Manhattan Bank, The Chase Manhattan Bank,
Piazza Meda 1 Milan
20121 Milan
ITALY
JAPAN The Fuji Bank Ltd. The Chase Manhattan Bank
6-7 Nihonbashi-Kabutocho Tokyo
Chuo-Ku
Tokyo
JAPAN
JORDAN Arab Bank Limited Arab Bank Limited
P O Box 950544-5 Amman
Amman
Shmeisani
JORDAN
KENYA Barclays Bank of Kenya Barclays Bank of Kenya
Third Floor Nairobi
Queensway House
Nairobi
Kenya
LUXEMBOURG Banque Generale du Banque Generale du
Luxembourg S.A. Luxembourg S.A.
50 Avenue J.F. Kennedy Luxembourg
L-2951 LUXEMBOURG
MALAYSIA The Chase Manhattan Bank, The Chase Manhattan Bank,
Pernas International Kuala Lumpur
Jalan Sultan Ismail
50250, Kuala Lumpur
MALAYSIA
<PAGE>
MAURITIUS Hongkong and Shanghai Hongkong and Shanghai
Banking Corporation Ltd. Banking Corporation Ltd.
Curepipe Road Curepipe
Curepipe
MAURITTUS
MEXICO The Chase Manhattan Bank, No correspondent Bank
(Equities) S.A.
Prolongacion Paseo de la
Reforma no. 600,
PB Colonia Santa Fe Pena
Blanca
01210 Mexico D.F.
(Government Bonds) Banco Nacional de Mexico, No correspondent Bank
Avenida Juarex No. 104-11
Piso
06040 Mexico D.F.
MEXICO
MOROCCO Banque Commerciale du Banque Commerciale du
Maroc Maroc
2 Boulevard Moulay Youssef Casablanca
Casablanca 2000
MOROCCO
NAMIBIA Standard Bank Namibia Ltd. Standard Bank of South
Mutual Platz - 3rd Floor Africa Ltd.
P.O. Box 3327 Johannesburg
Windhock
NAMIBIA
NETHERLANDS ABN AMRO N.V. Generale Bank
Securities Centre Nederland N.V.
P O Box 3200 Rotterdam
4800 De Breda
NETHERLANDS
NEW ZEALAND National Nominees Limited National Bank of New
Level 2 BNZ Tower Zealand
125 Queen Street Wellington
Auckland
NEW ZEALAND
<PAGE>
NORWAY Den Norsek Bank Den Norske Bank
Kirkegaten 21 Oslo
Oslo 1
NORWAY
PAKISTAN Citibank N.A. Citibank N.A.
I.I. Chundrigar Road Karachi
AWT Plaza
Karachi
PAKISTAN
Deutsche Bank A.G. Deutsche Bank A.G. Karachi
Unitowers
I.I. Chundrigar Road
Karachi
PAKISTAN
PERU Citibank, N.A. Citibank N.A.
Camino Real 457 Lima
CC Torre Real - 5th Floor
San Isidro, Lima 27
PERU
PHILIPPINES The Hongkong and Shanghai The Hongkong and Shanghai
Banking Corporation Limited Banking Corporation Limited
Hong Kong Bank Centre 3/F Manila
San Miguel Avenue
Ortigas Commercial Centre
Pasig Metro Manila
PHILIPPINES
POLAND Bank Polska Kasa Opieki S.A. Bank Polska Kasa Opieki
Curtis Plaza S.A.
Woloska 18 Warsaw
02-675 Warsaw
POLAND
For Mutual Funds: Bank Polska Kasa Opieki
Bank Handlowy W. S.A.
Warszawic S.A. Warsaw
Custody Dept.
Capital Markets Center
UI, Nowy Swiat 6/12
00-920 Warsaw
POLAND
<PAGE>
PORTUGAL Banco Espirito Santo c Banco Nacional Ultra Marino
Comercial de Lisboa Lisbon
Servico de Gestaode Titulos
R. Mouzinho da Silveira, 36
r/c
1200 Lisbon
PORTUGAL
SHANGHAI (CHINA) The Hongkong and Shanghai Citibank
Banking Corporation Limited New York
Corporate Banking Centre
Unit 504, 5/F Shanghai
Centre
1376 Nanjing Xi Lu
Shanghai
THE PEOPLE'S REPUBLIC
OF CHINA
SHENZHEN (CHINA) The Hongkong and Shanghai The Chase Manhattan Bank
Banking Corporation Limited Hong Kong
1st Floor
Central Plaza Hotel
No. 1 Chun Feng Lu
Shenzhen
THE PEOPLE'S REPUBLIC
OF CHINA
SINGAPORE The Chase Manhattan Bank, The Chase Manhattan Bank,
Shell Tower Singapore
50 Raffles Place
Singapore 0104
SINGAPORE
SLOVAK REPUBLIC Ceskoslovenska Obchodni Ceskoslovenska Obchodni
Banka, A.S. Banka
Michalska 18 Slovak Republic
815 63 Bratislava
SLOVAK REPUBLIC
SOUTH AFRICA Standard Bank of South Africa Standard Bank of South
Standard Bank Chambers Africa
46 Marshall Street South Africa
Johannesburg 2001
SOUTH AFRICA
<PAGE>
SOUTH KOREA The Hongkong & Shanghai The Hongkong & Shanghai
Banking Corporation Limited Banking Corporation Limited
6/F Kyobo Building Seoul
#1 Chongro, 1-ka Chongro-Ku,
Seoul
SOUTH KOREA
SPAIN The Chase Manhattan Bank Chase Manhattan Bank,
Paseo de la Castellana, 51 Madrid
28046 Madrid
SPAIN
SRI LANKA The Hongkong & Shanghai The Hongkong & Shanghai
Banking Corporation Limited Banking Corporation Limited
Unit #02-02 West Block, Colombo
World Trade Center
Colombo 1,
SRI LANKA
SWEDEN Skandinaviska Enskilda Banken Svenska Handelsbanken
Kungstradgardsgatan 8 Stockholm
Stockhold S-106 40
SWEDEN
SWITZERLAND Union Bank of Switzerland Union Bank of Switzerland
45 Bahnhofstrasse Zurich
8021 Zurich
SWITZERLAND
TAIWAN The Chase Manhattan Bank, Republic of China
115 Min Sheng East Road - No correspondent Bank
Sec 3,
9th Floor
Taipei
TAIWAN
THAILAND The Chase Manhattan Bank, The Chase Manhattan Bank,
Bubhajit Building Bangkok
20 North Sathorn Road
Silom, Bangrak
Bangkok 10500
THAILAND
<PAGE>
TUNISIA Banque Internationale Arabe de Banque International Arabe
Tunisie de Tunisie, Tunisia
70-72 Avenue Habib
Bourguiba
P.O. Box 520
1080 Tunis Cedex
TUNISIA
TURKEY The Chase Manhattan Bank, The Chase Manhattan Bank,
Emirhan Cad No. 145 Istanbul
Atakule, A Blok Kat 11
80700-Dikilitas/Bestktas
Istanbul
TURKEY
U.K. The Chase Manhattan Bank, The Chase Manhattan Bank,
Woolgate House London
Coleman Street
London EC2P 2HD
UNITED KINGDOM
URUGUAY The First National Bank of The First National Bank of
Boston Boston
Zabala 1463 Montevidco
Montevidco
URUGUAY
U.S.A. The Chase Manhattan Bank, The Chase Manhattan Bank,
1 Chase Manhattan Plaza New York
New York
NY 10081
U.S.A.
VENEZUELA Citibank N.A. Citibank N.A.
Carmelitas a Altagracia Caracas
Edificio Citibank
Caracas 1010
VENEZUELA
ZAMBIA Barclays Bank of Zambia Barclays Bank of Zambia
Kafue House Lusaka
Cairo Road
P.O. Box 31936
Lusaka
ZAMBIA
<PAGE>
ZIMBABWE Barclays Bank of Zimbabwe Barclays Bank of Zimbabwe
Ground Floor Harare
Tanganyika House
Corner of 3rd Street & Union
Avenue
Harare
ZIMBABWE
<PAGE>
Mutual Fund Services
CHASE GLOBAL SECURITIES SERVICES FEE AGREEMENT
BETWEEN THE CHASE MANHATTAN BANK, N.A. AND
FIRSTAR TRUST COMPANY
I. Portfolio Basis Point Fee
Market Value Basis Points
------------ ------------
$0 to $150MM 14.0
$151MM to $200MM 12.0
Over $200MM 10.0
II. Global Standard Price By Country Banks (see attached)
Asset Holdings Fee Per Transaction Fee
--------------------------------------
Bank "A" -0- Basis Points $30.00
Bank "B" -0- Basis Points $40.00
Bank "C" -0- Basis Points $60.00
Bank "D" -0- Basis Points $90.00
Bank "E" -0- Basis Points 100.00
Bank "F" -0- Basis Points 120.00
Bank "G" 20.0 Basis Points 135.00
Bank "H" 25.0 Basis Points 140.00
III. Out-of-Pocket Expenses
Billed as incurred (e.g., scrip fees, transporting securities out of the
local market)
IV. Global Securities Lending
60%/40% split in clients' for (50%/50% with indemnification)
V. Infostation
$2,500/installation fee plus expenses
VI. Annual VIP Accounting Fees
Monthly - $15,000 per portfolio
VII. Proxy Service Fees
Notification - CDS $25 per meeting
Fax/Telex - $50 per account
Voting - $75/account
<PAGE>
Mutual Fund Services
CHASE GLOBAL SECURITIES SERVICES
GLOBAL CUSTODY
GLOBAL BANDS
Band "A" Band "D" Band "F"
Japan Austria Argentina
CEDEL Finland Brazil
United States Hong Kong Chile
EUROCLEAR Italy Greece
Luxembourg Indonesia
Band "B" Malaysia Jordan
Germany Singapore Pakistan
Netherlands Turkey Philippines
Canada Portugal
Switzerland Band "E" Taiwan
Mexico Spain
Band "C" Thailand
Australia
Belgium
Denmark
France
Ireland
New Zealand
Norway
Sweden
United Kingdom
Emerging Markets Bands
Band "G" Band "H"
Columbia Peru
Hungary
India
Korea
Poland
Shenzen
Sri Lanka
Venezuela
TRANSFER AGENT AGREEMENT
THIS AGREEMENT is made and entered into on this second day of October,
1996, by and between The Tocqueville Trust a Massachusetts business trust
consisting 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 (hereinafter referred to as the "Funds") and
Firstar Trust Company, a corporation organized under the laws of the State of
Wisconsin (hereinafter referred to as the "Agent").
WHEREAS, the Funds are open-ended management investment company which are
registered under the Investment Company Act of 1940; and
WHEREAS, the Agent is a trust company and, among other things, is in the
business of administering transfer and dividend disbursing agent functions for
the benefit of its customers;
NOW, THEREFORE, the Funds and the Agent do mutually promise and agree as
follows:
1. Terms of Appointment; Duties of the Agent
Subject to the terms and conditions set forth in this Agreement, the Funds
hereby employ the Agent to act as transfer agent and dividend disbursing agent.
The Agent shall perform all of the customary services of a transfer agent
and dividend disbursing agent, and as relevant, agent in connection with
accumulation, open account or similar plans (including without limitation any
periodic investment plan or periodic withdrawal program), including but not
limited to:
A. Receive orders for the purchase of shares;
B. Process purchase orders and issue the appropriate number of
certificated or uncertificated shares with such uncertificated shares
being held in the appropriate shareholder account;
C. Process redemption requests received in good order;
D. Pay monies;
E. Process transfers of shares in accordance with the shareowner's
instructions;
F. Process exchanges between funds within the same family of funds;
G. Issue and/or cancel certificates as instructed; replace lost, stolen
or destroyed certificates upon receipt of satisfactory indemnification
or surety bond;
H. Prepare and transmit payments for dividends and distributions declared
by the Funds;
<PAGE>
I. Make changes to shareholder records, including, but not limited to,
address changes in plans (i.e., systematic withdrawal, automatic
investment, dividend reinvestment, etc.);
J. Record the issuance of shares of the Funds and maintain, pursuant to
Securities Exchange Act of 1934 Rule 17ad-10(e), a record of the total
number of shares of the Funds which are authorized, issued and
outstanding;
K. Prepare shareholder meeting lists and, if applicable, mail, receive
and tabulate proxies;
L. Mail shareholder reports and prospectuses to current shareholders;
M. Prepare and file U.S. Treasury Department forms 1099 and other
appropriate information returns required with respect to dividends and
distributions for all shareholders;
N. Provide shareholder account information upon request and prepare and
mail confirmations and statements of account to shareholders for all
purchases, redemptions and other confirmable transactions as agreed
upon with the Funds; and
O. Provide a Blue Sky System which will enable the Funds to monitor the
total number of shares sold in each state. In addition, the Funds
shall identify to the Agent in writing those transactions and assets
to be treated as exempt from the Blue Sky reporting to the Funds for
each state. The responsibility of the Agent for the Funds Blue Sky
state registration status is solely limited to the initial compliance
by the Funds and the reporting of such transactions to the Funds.
2. Compensation
The Funds agree to pay the Agent for performance of the duties listed in
this Agreement; the fees and out-of-pocket expenses include, but are not limited
to the following: printing, postage, forms, stationery, record retention,
mailing, insertion, programming, labels, shareholder lists and proxy expenses.
These fees and reimbursable expenses may be changed from time to time
subject to mutual written agreement between the Funds and the Agent.
The Funds agree to pay all fees and reimbursable expenses within ten (10)
business days following the mailing of the billing notice.
3. Representations of Agent
The Agent represents and warrants to the Funds that:
A. It is a trust company duly organized, existing and in good standing
under the laws of Wisconsin;
B. It is a registered transfer agent under the Securities Exchange Act of
1934 as amended.
C. It is duly qualified to carry on its business in the state of
Wisconsin;
2
<PAGE>
D. It is empowered under applicable laws and by its charter and bylaws to
enter into and perform this Agreement;
E. All requisite corporate proceedings have been taken to authorize it to
enter and perform this Agreement;
F. It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under
this Agreement; and
G. It will comply with all applicable requirements of the Securities Act
of 1933 and the Securities Exchange Act of 1934, as amended, the
Investment Company Act of 1940, as amended, and any laws, rules, and
regulations of governmental authorities having jurisdiction.
4. Representations of the Funds
The Funds represents and warrants to the Agent that:
A. The Funds are an open-ended diversified investment company under the
Investment Company Act of 1940;
B. The Funds are corporations or business trusts organized, existing, and
in good standing under the laws of Massachusetts;
C. The Funds are empowered under applicable laws and by their Declaration
of Trust and bylaws to enter into and perform this Agreement;
D. All necessary proceedings required by the Declaration of Trust have
been taken to authorize them to enter into and perform this Agreement;
E. The Funds will comply with all applicable requirements of the
Securities Act of 1933, as amended, Securities Exchange Act of 1934,
as amended, the Investment Company Act of 1940, as amended, and any
laws, rules and regulations of governmental authorities having
jurisdiction; and
F. A registration statement under the Securities Act of 1933 is currently
effective and will remain effective, and appropriate state securities
law filings have been made and will continue to be made, with respect
to all shares of the Funds being offered for sale.
5. Covenants of the Funds and Agent
The Funds shall furnish the Agent a certified copy of the resolution of the
Board of Trustees of the Funds authorizing the appointment of the Agent and the
execution of this Agreement. The Funds shall provide to the Agent a copy of the
Declaration of Trust, bylaws of the Funds, and all amendments.
3
<PAGE>
The Agent shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Investment Company Act of 1940, as amended, and
the rules thereunder, the Agent agrees that all such records prepared or
maintained by the Agent relating to the services to be performed by the Agent
hereunder are the property of the Funds and will be preserved, maintained and
made available in accordance with such section and rules and will be surrendered
to the Funds on and in accordance with their request.
6. Indemnification; Remedies Upon Breach
The Agent shall exercise reasonable care in the performance of its duties
under this Agreement. The Agent shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Funds in connection with matters
to which this Agreement relates, including losses resulting from mechanical
breakdowns or the failure of communication or power supplies beyond the Agent's
control, except a loss resulting from the Agent's refusal or failure to comply
with the terms of this Agreement or from bad faith, negligence, or willful
misconduct on its part in the performance of its duties under this Agreement.
Notwithstanding any other provision of this Agreement, the FundS shall indemnify
and hold harmless the Agent from and against any and all claims, demands,
losses, expenses, and liabilities (whether with or without basis in fact or law)
of any and every nature (including reasonable attorneys' fees) which the Agent
may sustain or incur or which may be asserted against the Agent by any person
arising out of any action taken or omitted to be taken by it in performing the
services hereunder (i) in accordance with the foregoing standards, or (ii) in
reliance upon any written or oral instruction provided to the Agent by any duly
authorized officer of the Funds, such duly authorized officer to be included in
a list of authorized officers furnished to the Agent and as amended from time to
time in writing by resolution of the Board of Trustees of the Funds.
Further, the Funds will indemnify and hold the Agent harmless against any
and all losses, claims, damages, liabilities or expenses (including reasonable
counsel fees and expenses) resulting from any claim, demand, action, or suit as
a result of the negligence of the Funds or the principal underwriter (unless
contributed to by the Agent's breach of this Agreement or other Agreements
between the Funds and the Agent, or the Agent's own negligence or bad faith); or
as a result of the Agent acting upon telephone instructions relating to the
exchange or redemption of shares received by the Agent and reasonably believed
by the Agent under a standard of care customarily used in the industry to have
originated from the record owner of the subject shares; or as a result of acting
in reliance upon any genuine instrument or stock certificate signed,
countersigned, or executed by any person or persons authorized to sign,
countersign, or execute the same.
In the event of a mechanical breakdown or failure of communication or power
supplies beyond its control, the Agent shall take all reasonable steps to
minimize service interruptions for any period that such interruption continues
beyond the Agent's control. The Agent will make every reasonable effort to
restore any lost or damaged data and correct any errors resulting from such a
breakdown at the expense of the Agent. The Agent agrees that it shall, at all
times, have reasonable contingency plans with appropriate parties, making
reasonable provision for emergency use of electrical data processing equipment
to the extent appropriate equipment is available. Representatives of the Funds
shall be entitled to inspect the Agent's premises and operating capabilities at
any time during regular business hours of the Agent, upon reasonable notice to
the Agent.
Regardless of the above, the Agent reserves the right to reprocess and
correct administrative errors at its own expense.
4
<PAGE>
In order that the indemnification provisions contained in this section
shall apply, it is understood that if in any case the Funds may be asked to
indemnify or hold the Agent harmless, the Funds shall be fully and promptly
advised of all pertinent facts concerning the situation in question, and it is
further understood that the Agent will use all reasonable care to notify the
Funds promptly concerning any situation which presents or appears likely to
present the probability of such a claim for indemnification against the Funds.
The Funds shall have the option to defend the Agent against any claim which may
be the subject of this indemnification. In the event that the Funds so elect, it
will so notify the Agent and thereupon the Funds shall take over complete
defense of the claim, and the Agent shall in such situation initiate no further
legal or other expenses for which it shall seek indemnification under this
section. The Agent shall in no case confess any claim or make any compromise in
any case in which the Funds will be asked to indemnify the Agent except with the
Funds' prior written consent.
The Agent shall indemnify and hold the Funds harmless from and against any
and all claims, demands, losses, expenses, and liabilities (whether with or
without basis in fact or law) of any and every nature (including reasonable
attorneys' fees) which may be asserted against the Funds by any person arising
out of any action taken or omitted to be taken by the Agent as a result of the
Agent's refusal or failure to comply with the terms of this Agreement, its bad
faith, negligence, or willful misconduct.
7. Confidentiality
The Agent agrees on behalf of itself and its employees to treat
confidentially all records and other information relative to the Funds and their
shareholders and shall not be disclosed to any other party, except after prior
notification to and approval in writing by the Funds, which approval shall not
be unreasonably withheld and may not be withheld where the Agent may be exposed
to civil or criminal contempt proceedings for failure to comply after being
requested to divulge such information by duly constituted authorities.
Additional Series. The Tocqueville Trust is authorized to issue separate
Series of shares of beneficial interest by representing interests in separate
investment portfolios. The parties intend that each portfolio established by the
Trust, now or in the future, be covered by the terms and conditions of this
agreement.
8. Records
The Agent shall keep records relating to the services to be performed
hereunder, in the form and manner, and for such period as it may deem advisable
and is agreeable to the Funds but not inconsistent with the rules and
regulations of appropriate government authorities, in particular, Section 31 of
The Investment Company Act of 1940 as amended (the "Investment Company Act"),
and the rules thereunder. The Agent agrees that all such records prepared or
maintained by The Agent relating to the services to be performed by The Agent
hereunder are the property of the Funds and will be preserved, maintained, and
made available with such section and rules of the Investment Company Act and
will be promptly surrendered to the Funds on and in accordance with its request.
9. Wisconsin Law to Apply
This Agreement shall be construed and the provisions thereof interpreted
under and in accordance with the laws of the state of Wisconsin.
5
<PAGE>
10. Amendment, Assignment, Termination and Notice
A. This Agreement may be amended by the mutual written consent of the
parties.
B. This Agreement may be terminated upon ninety (90) day's written notice
given by one party to the other.
C. This Agreement and any right or obligation hereunder may not be
assigned by either party without the signed, written consent of the
other party.
D. Any notice required to be given by the parties to each other under the
terms of this Agreement shall be in writing, addressed and delivered,
or mailed to the principal place of business of the other party. If to
the agent, such notice should to be sent to Firstar Trust
Company/Mutual Fund Services located at 615 East Michigan Street,
Milwaukee, Wisconisn 53202. If to the Funds, such notice should be
sent to The Tocqueville Trust located at 1675 Broadway, New York, N.Y.
10019.
E. In the event that the Funds give to the Agent their written intention
to terminate and appoint a successor transfer agent, the Agent agrees
to cooperate in the transfer of its duties and responsibilities to the
successor, including any and all relevant books, records and other
data established or maintained by the Agent under this Agreement.
F. Should the Funds exercise their right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be
paid by the Funds.
The Tocqueville Trust Firstar Trust Company
By: /s/ Kieran Lyons By: /s/ Joe D. Redwine
----------------- ----------------------
Print: Kieran Lyons Print: Joe D. Redwine
Title: Vice President Title: First Vice President
Date: October 2, 1996 Date: October 10, 1996
Attest: Marcella D. Lang Attest: /s/ Gail M. Zesf
----------------- ---------------------
Gail M. Zesf
Assistant Secretary
<PAGE>
Mutual Fund Services
SHAREHOLDER ACCOUNTING SERVICES
LOAD FUNDS
ANNUAL FEE SCHEDULE
o $16.00 per shareholder account
o Minimum annual fee of $24,000 for the first fund and $10,000 for each
additional fund.
* 15% discount applies to the above fees for the first 3 years, not
including out-of-pocket expenses.
o Plus out-of-pocket expenses, including but not limited to:
o Telephone - toll-free lines
o Postage
o Programming
o Stationery/envelopes
o Mailing
o Insurance
o Proxies
o Retention of records
o Microfilm/fiche of records
o Special reports
o All other out-of-pocket expenses
o ACH fees
o Fees are billed monthly
<PAGE>
Mutual Fund Services
SHAREHOLDER ACCOUNTING SERVICES
NO-LOAD FUNDS
ANNUAL FEE SCHEDULE
o $14.00 per shareholder account
o Minimum annual fee of $21,000 for the first fund and $10,000 for each
additional fund.
* 15% discount applies to the above fees for the first 3 years, not
including out-of-pocket expenses.
o Plus out-of-pocket expenses, including but not limited to:
o Telephone - toll-free lines
o Postage
o Programming
o Stationery/envelopes
o Mailing
o Insurance
o Proxies
o Retention of records
o Microfilm/fiche of records
o Special reports
o All other out-of-pocket expenses
o ACH fees
o Fees are billed monthly
<PAGE>
Mutual Fund Services
SHAREHOLDER FEES
(CHARGED TO INVESTORS)
DEFINED
CONTRIBUTION
403(B)(7), 401(K)
IRA ACCOUNTS PLAN ACCOUNTS
------------ ----------------
I. Qualified Plan Fees
Annual maintenance fee per account $ 12.50 $ 12.50
Transfer to successor trustee 15.00 15.00
Distribution to a participant (exclusive
of systematic withdrawal plans 15.00 15.00
Refund of excess contribution 15.00 15.00
II. Additional Shareholder Fees
AMOUNT
--------------------
Any outgoing wire $7.50/wire
Telephone exchange 5.00/telephone exchange
Return check fee 15.00/return check
Stop payment fee (liquidation,
dividend, draft check) 15.00/stop payment
Research fee 5.00/research item
(For requested items of the second
calendar year [or previous]
to the request)
These fees are subject to change upon notification by
Firstar Trust Company to the Mutual Fund Client
<PAGE>
Mutual Fund Services
SHAREHOLDER ACCOUNTING SERVICES
AUTOMATIC INVESTMENT PLAN PROCESSING
ACH SERVICE
o Automatic Investment Plan
o Telephone Purchase, Liquidation
o EFT Payments of Dividends, Capital Gains, SWP's
o $125.00 per month
o $0.50 per account set-up and/or change
o $0.35 per item
o $3.50 per correction, reversal, or return item
o Fees are billed monthly.
FUND ACCOUNTING SERVICING AGREEMENT
This contract between The Tocqueville Trust, a Massachusetts Business Trust
consisting of five separate funds, The Tocqueville Funds, The Tocqueville Small
Cap Value Fund, The Tocqueville Asia-Pacific Fund, The Tocqueville Europe Fund,
The Tocqueville Government Fund, hereinafter called the "Funds," and Firstar
Trust Company, a Wisconsin corporation, hereinafter called "FTC," is entered
into on this second day of October, 1996.
WHEREAS, The Tocqueville Trust, is an open-ended management investment
company registered under the Investment Company Act of 1940; and
WHEREAS, Firstar Trust Company ("FTC") is in the business of providing,
among other things, mutual fund accounting services to investment companies;
NOW, THEREFORE, the parties do mutually promise and agree as follows:
1. Services. FTC agrees to provide the following mutual fund accounting
services to the Funds:
A. Portfolio Accounting Services:
(1) Maintain portfolio records on a trade date +1 basis using
security trade information communicated from the investment manager on
a timely basis.
(2) For each valuation date, obtain prices from a pricing source
approved by the Board of Trustees and apply those prices to the
portfolio positions. For those securities where market quotations are
not readily available, the Board of Trustees shall approve, in good
faith, the method for determining the fair value for such securities.
(3) Identify interest and dividend accrual balances as of each
valuation date and calculate gross earnings on investments for the
accounting period.
(4) Determine gain/loss on security sales and identify them as to
short-short, short- or long-term status; account for periodic
distributions of gains or losses to shareholders and maintain
undistributed gain or loss balances as of each valuation date.
B. Expense Accrual and Payment Services:
(1) For each valuation date, calculate the expense accrual
amounts as directed by the Funds as to methodology, rate or dollar
amount.
<PAGE>
(2) Record payments for Fund expenses upon receipt of written
authorization from the Funds.
(3) Account for fund expenditures and maintain expense accrual
balances at the level of accounting detail, as agreed upon by FTC and
the Funds.
(4) Provide expense accrual and payment reporting.
C. Fund Valuation and Financial Reporting Services:
(1) Account for fund share purchases, sales, exchanges,
transfers, dividend reinvestments, and other fund share activity as
reported by the transfer agent on a timely basis.
(2) Apply equalization accounting as directed by the Funds.
(3) Determine net investment income (earnings) for the Funds as
of each valuation date. Account for periodic distributions of earnings
to shareholders and maintain undistributed net investment income
balances as of each valuation date.
(4) Maintain a general ledger for the Funds in the form as agreed
upon.
(5) For each day the Funds are open as defined in the prospectus,
determine the net asset value of the according to the accounting
policies and procedures set forth in the prospectus.
(6) Calculate per share net asset value, per share net earnings,
and other per share amounts reflective of fund operation at such time
as required by the nature and characteristics of the Funds.
(7) Communicate, at an agreed upon time, the per share price for
each valuation date to parties as agreed upon from time to time.
(8) Prepare monthly reports which document the adequacy of
accounting detail to support month-end ledger balances.
D. Tax Accounting Services:
(1) Maintain accounting records for the investment portfolios of
the Funds to support the tax reporting required for IRS-defined
regulated investment companies.
(2) Maintain tax lot detail for the investment portfolio.
(3) Calculate taxable gain/loss on security sales using the tax
lot relief method designated by the Funds.
<PAGE>
(4) Provide the necessary financial information to support the
taxable components of income and capital gains distributions to the
transfer agent to support tax reporting to the shareholders.
E. Compliance Control Services:
(1) Support reporting to regulatory bodies and support financial
statement preparation by making the fund accounting records available
to The Tocqueville Trust, the Securities and Exchange Commission, and
the outside auditors.
(2) Maintain accounting records according to the Investment
Company Act of 1940 and regulations provided thereunder.
2. Pricing of Securities. For each valuation date, obtain prices from a
pricing source selected by FTC but approved by the Funds' Board and apply those
prices to the portfolio positions. For those securities where market quotations
are not readily available, the Funds' Board shall approve, in good faith, the
method for determining the fair value for such securities.
If the Funds desires to provide a price which varies from the pricing
source, the Funds shall promptly notify and supply FTC with the valuation of any
such security on each valuation date. All pricing changes made by the Funds will
be in writing and must specifically identify the securities to be changed by
CUSIP, name of security, new price or rate to be applied, and, if applicable,
the time period for which the new prices are effective.
3. Changes in Accounting Procedures. Any resolution passed by the Board of
Trustees that affects accounting practices and procedures under this agreement
shall be effective upon written receipt and acceptance by the FTC.
4. Changes in Equipment, Systems, Service, Etc. FTC reserves the right to
make changes from time to time, as it deems advisable, relating to its services,
systems, programs, rules, operating schedules and equipment, so long as such
changes do not adversely affect the service provided to the Funds under this
Agreement.
5. Compensation. FTC shall be compensated for providing the services set
forth in this Agreement in accordance with the Fee Schedule attached hereto as
Exhibit A and as mutually agreed upon and amended from time to time.
6. Performance of Service.
A. FTC shall exercise reasonable care in the performance of its
duties under this Agreement. FTC shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Funds in
connection with matters to which this Agreement relates, including
losses resulting from mechanical breakdowns or the failure of
communication or power supplies beyond FTC's control, except a loss
3
<PAGE>
resulting from FTC's refusal or failure to comply with the terms of
this Agreement or from bad faith, negligence, or willful misconduct on
its part in the performance of its duties under this Agreement.
Notwithstanding any other provision of this Agreement, the Funds shall
indemnify and hold harmless FTC from and against any and all claims,
demands, losses, expenses, and liabilities (whether with or without
basis in fact or law) of any and every nature (including reasonable
attorneys' fees) which FTC may sustain or incur or which may be
asserted against FTC by any person arising out of any action taken or
omitted to be taken by it in performing the services hereunder (i) in
accordance with the foregoing standards, or (ii) in reliance upon any
written or oral instruction provided to FTC by any duly authorized
officer of the Funds, such duly authorized officer to be included in a
list of authorized officers furnished to FTC and as amended from time
to time in writing by resolution of the Board of Trustees of the
Funds.
In the event of a mechanical breakdown or failure of
communication or power supplies beyond its control, FTC shall take all
reasonable steps to minimize service interruptions for any period that
such interruption continues beyond FTC's control. FTC will make every
reasonable effort to restore any lost or damaged data and correct any
errors resulting from such a breakdown at the expense of FTC. FTC
agrees that it shall, at all times, have reasonable contingency plans
with appropriate parties, making reasonable provision for emergency
use of electrical data processing equipment to the extent appropriate
equipment is available. Representatives of the Funds shall be entitled
to inspect FTC's premises and operating capabilities at any time
during regular business hours of FTC, upon reasonable notice to FTC.
Regardless of the above, FTC reserves the right to reprocess and
correct administrative errors at its own expense.
B. In order that the indemnification provisions contained in this
section shall apply, it is understood that if in any case the Funds
may be asked to indemnify or hold FTC harmless, the Funds shall be
fully and promptly advised of all pertinent facts concerning the
situation in question, and it is further understood that FTC will use
all reasonable care to notify the Funds promptly concerning any
situation which presents or appears likely to present the probability
of such a claim for indemnification against the Funds. The Funds shall
have the option to defend FTC against any claim which may be the
subject of this indemnification. In the event that the Funds so
elects, it will so notify FTC and thereupon the Funds shall take over
complete defense of the claim, and FTC shall in such situation
initiate no further legal or other expenses for which it shall seek
indemnification under this section. FTC shall in no case confess any
claim or make any compromise in any case in which the Funds will be
asked to indemnify FTC except with the Funds' prior written consent.
C. FTC shall indemnify and hold the Funds harmless from and
against any and all claims, demands, losses, expenses, and liabilities
(whether with or without basis in fact or law) of any and every nature
(including reasonable attorneys' fees)
4
<PAGE>
which may be asserted against the Funds by any person arising out of
any action taken or omitted to be taken by FTC as a result of FTC's
refusal or failure to comply with the terms of this Agreement, its bad
faith, negligence, or willful misconduct.
7. Records. FTC shall keep records relating to the services to be performed
hereunder, in the form and manner, and for such period as it may deem advisable
and is agreeable to the Funds but not inconsistent with the rules and
regulations of appropriate government authorities, in particular, Section 31 of
The Investment Company Act of 1940 as amended (the "Investment Company Act"),
and the rules thereunder. FTC agrees that all such records prepared or
maintained by FTC relating to the services to be performed by FTC hereunder are
the property of the Funds and will be preserved, maintained, and made available
with such section and rules of the Investment Company Act and will be promptly
surrendered to the Funds on and in accordance with its request.
8. Confidentiality. FTC shall handle in confidence all information relating
to the Funds' business, which is received by FTC during the course of rendering
any service hereunder.
9. Data Necessary to Perform Services. The Funds or its agent, which may be
FTC, shall furnish to FTC the data necessary to perform the services described
herein at times and in such form as mutually agreed upon.
10. Notification of Error. The Funds will notify FTC of any balancing or
control error caused by FTC within three (3) business days after receipt of any
reports rendered by FTC to the Funds, or within three (3) business days after
discovery of any error or omission not covered in the balancing or control
procedure, or within three (3) business days of receiving notice from any
shareholder.
11. Additional Series. In the event that the The Tocqueville Trust
establishes one or more series of shares with respect to which it desires to
have FTC render accounting services, under the terms hereof, it shall so notify
FTC in writing, and if FTC agrees in writing to provide such services, such
series will be subject to the terms and conditions of this Agreement, and shall
be maintained and accounted for by FTC on a discrete basis. The portfolios
currently covered by this Agreement are: The Tocqueville Fund, The Tocqueville
Small Cap Value Fund, The Tocqueville Asia-Pacific Fund, The Tocqueville Europe
Fund, and The Tocqueville Government Fund.
12. Term of Agreement. This Agreement may be terminated by either party
upon giving ninety (90) days prior written notice to the other party or such
shorter period as is mutually agreed upon by the parties. However, this
Agreement may be replaced or modified by a subsequent agreement between the
parties.
13. Duties in the Event of Termination. In the event that in connection
with termination a Successor to any of FTC's duties or responsibilities
hereunder is designated by The Tocqueville Trust by written notice to FTC, FTC
will promptly, upon such termination and at the expense of The Tocqueville
Trust, transfer to such Successor all relevant books, records, correspondence
and other data established or maintained by FTC under this Agreement in a form
5
<PAGE>
reasonably acceptable to The Tocqueville Trust (if such form differs from the
form in which FTC has maintained the same, The Tocqueville Trust shall pay any
expenses associated with transferring the same to such form), and will cooperate
in the transfer of such duties and responsibilities, including provision for
assistance from FTC's personnel in the establishment of books, records and other
data by such successor.
14. Notices. Notices of any kind to be given by either party to the other
party shall be in writing and shall be duly given if mailed or delivered as
follows: Notice to FTC shall be sent to Mutual Fund Services located at 615 East
Michigan Street, Milwaukee, Wisconsin 53202 and notice to the Funds shall be
sent to The Tocqueville Trust located at 1675 Broadway, New York, N.Y. 10019.
15. Choice of Law. This Agreement shall be construed in accordance with the
laws of the State of Wisconsin.
IN WITNESS WHEREOF, the due execution hereof on the date first above
written.
ATTEST: Firstar Trust Company
/s/ Gail M. Zest By /s/ Joe D. Redwine
- ----------------------- -------------------
Gail M. Zest Joe D. Redwine
Assistant Secretary First Vice President
ATTEST: The Tocqueville Trust
/s/ Marcelle D. Lang By /s/ Kieran Lyons
- -------------------- -------------------
Kieran Lyons
Vice President
<PAGE>
Exhibit A Mutual Fund Services
FUND VALUATION AND ACCOUNTING
DOMESTIC PORTFOLIOS
ANNUAL FEE SCHEDULE
Fixed Income Funds
o Annual fee per fund based on market value of assets:
o $25,000 for the first $40,000,000
o 2/100 of 1% (2 basis points) on the next $200,000,000
o 1/100 or 1% (1 basis point) on the balance
o Out-of-pocket expenses, including daily pricing service
Equity/Balance Funds
o Annual fee per fund based on market value of assets:
o $22,000 for the first $40,000,000
o 1/100 of 1% (1 basis point) on the next $200,000,000
o 5/1000 of 1% (1/2 basis point) on the balance
o Out-of-pocket expenses, including daily pricing service
Money Market Funds
o Annual fee per fund based on market value of assets:
o $25,000 for the first $40,000,000
o 1/100 of 1% (1 basis point) on the next $200,000,000
o 5/1000 of 1% (1/2 basis point) on the balance
o Out-of-pocket expenses, including daily pricing service
* 15% discount applies to the above fees for the first 3 years,
not including out-of-pocket expenses and daily pricing
services.
All fees and out-of-pocket expenses are billed monthly.
<PAGE>
Exhibit A Mutual Fund Services
FUND VALUATION AND ACCOUNTING
ASSET PRICING COST
ASSET TYPE CHARGE PER ITEM PER VALUATION
(DAILY, WEEKLY, ETC.)
Domestic and Canadian Equities $0.15
Options $0.15
Corporate/Government/Agency Bonds $0.50
CMOs $0.80
International Equities and Bonds $0.50
Municipal Bonds $0.80
Money Market Instruments $0.80
Pricing costs are billed monthly.
<PAGE>
Exhibit A Mutual Fund Services
FUND VALUATION AND ACCOUNTING
INTERNATIONAL PORTFOLIOS
ANNUAL FEE SCHEDULE
International Equity Funds
o Annual fee per fund based on market value of assets:
o $25,000 for the first $40,000,000
o 2/100 of 1% (2 basis points) on the next $200,000,000
o 1/100 or 1% (1 basis point) on the balance
o Out-of-pocket expenses, including daily pricing service
International Income Funds
o Annual fee per fund based on market value of assets:
o $27,500 for the first $40,000,000
o 2/100 of 1% (2 basis point) on the next $200,000,000
o 1/100 of 1% (1 basis point) on the balance
o Out-of-pocket expenses, including daily pricing service
* 15% discount applies to the above fee schedule for the first
3 years, not including out-of-pocket expenses and daily
pricing services.
All fees and out-of-pocket expenses are billed monthly.
Kramer, Levin, Naftalis & Frankel
919 THIRD AVENUE
NEW YORK, N.Y. 10022 - 3852
(212) 715 - 9100
Arthur H. Aufses III Monica C. Lord Sherwin Kamin
Thomas D. Balliett Richard Marlin Arthur B. Kramer
Jay G. Baris Thomas E. Molner Maurice N. Nessen
Philip Bentley Thomas H. Moreland Founding Partners
Saul E. Burian Ellen R. Nadler Counsel
Barry Michael Cass Gary P. Naftalis _____
Thomas E. Constance Michael J. Nassau
Michael J. Dell Michael S. Nelson Martin Balsam
Kenneth H. Eckstein Jay A. Neveloff Joshua M. Berman
Charlotte M. Fischman Michael S. Oberman Jules Buchwald
David S. Frankel Paul S. Pearlman Rudolph de Winter
Marvin E. Frankel Susan J. Penry-Williams Meyer Eisenberg
Alan R. Friedman Bruce Rabb Arthur D. Emil
Carl Frischling Allan E. Reznick Maxwell M. Rabb
Mark J. Headley Scott S. Rosenblum James Schreiber
Robert M. Heller Michele D. Ross Counsel
Philip S. Kaufman Max J. Schwartz _____
Peter S. Kolevzon Mark B. Segall
Kenneth P. Kopelman Judith Singer M. Frances Buchinsky
Michael Paul Korotkin Howard A. Sobel Abbe L. Dienstag
Shari K. Krouner Jeffrey S. Trachtman Ronald S. Greenberg
Kevin B. Leblang Jonathan M. Wagner Debora K. Grobman
David P. Levin Harold P. Weinberger Christian S. Herzeca
Ezra G. Levin E. Lisk Wyckoff, Jr. Jane lee
Larry M. Loeb Pinchas Mendelson
Lynn R. Saidenberg
Special Counsel
-----
FAX
February 27, 1997 (212) 715-8000
---
WRITER'S DIRECT NUMBER
(212)715-9100
-------------
The Tocqueville Trust
1675 Broadway
New York, New York 10019
Re: The Tocqueville Trust
---------------------------
Gentlemen:
We hereby consent to the reference to our firm as Counsel in this
amendment to the Registration Statement on Form N-1A.
Very truly yours,
/s/Kramer, Levin, Naftalis & Frankel
-----------------------------------
Kramer, Levin, Naftalis & Frankel
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference of our reports
dated December 13, 1996 on the financial statements of The Tocqueville Fund, The
Tocqueville Asia-Pacific Fund, The Tocqueville Europe Fund (subsequently to be
known as The Tocqueville International Value Fund upon the effectiveness of this
post-effective amendment), The Tocqueville Small Cap Value Fund and The
Tocqueville Government Fund series of The Tocqueville Trust, referred to therein
in the Post-Effective Amendment No. 16 to the Registration Statement on Form
N-1A File No. 33-8746 as filed with the Securities and Exchange Commission.
We also consent to the reference to our firm in each Prospectus under
the captions "Counsel and Independent Accountants" and "Selected Financial
Information."
/s/ McGladrey & Pullen, LLP
---------------------------
New York, New York
February 25, 1997
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
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