The Mutual Fund Industry

November 14^th, 2003

Dear Fellow Tocqueville Funds Shareholders,

In view of the scandals enveloping the mutual fund industry, I wish to remind you of our own philosophy and policies regarding the management of our mutual funds.

1. To discourage market timers from trading our funds we instituted a redemption fee of 1.5 % for positions held less than ninety days. In June of this year we increased the redemption fee to 2% for positions held 120 days or less. These fees are paid directly to the funds themselves to compensate shareholders for damage the timers may have caused. As a result of these fees, which make market timing unprofitable, we have very little timer activity that we can ascertain.
2. We have never allowed late trading in any of our funds.
3. We have never used fund transaction commission dollars to compensate distributors for marketing our funds. So called soft dollar payments have only been used to enhance our research capabilities or to gain access to research that would otherwise be unavailable to us.
4. We have instituted expense caps on all of our funds and have waived a portion of our advisory fees, when necessary, to ensure the caps are met.
5. We strictly monitor the trading of all of our portfolio managers and analysts. While all are long-term investors in our funds, none has ever engaged in the short term trading of any of our mutual funds.

We take our own fiduciary responsibility to our shareholders very seriously, and we long ago determined that these policies were in our shareholders best interests.

We are not about to judge others in the mutual fund industry who have different policies or procedures. The process that is playing out now, in the courts and, particularly, in the market place, as investors flee firms that engaged in questionable practices, will do the judging. Nor will we “pile on” those who have been involved in legally trading or timing funds. They broke no laws and their activity was not without risk. We do criticize those individuals and firms who placed their own interests above those of their mutual fund shareholders.

The mutual fund industry has provided millions of investors the opportunity to invest, in small increments, in an amazing variety of professionally managed, broadly diversified portfolios. The activities of some who have betrayed their shareholders’ trust should not obscure the significant benefits that the industry has provided to the investing public.

Sincerely,

Robert W. Kleinschmidt
President
Tocqueville Asset Management, L.P.