LEVCO SERIES TRUST, N-1A EL, 1997-01-06

LEVCO SERIES TRUST
N-1A EL, 1997-01-06

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. ___ [ ]
Post-Effective Amendment No. ___ [ ]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. ___ [ ]
(Check appropriate box or boxes.)

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LEVCO SERIES TRUST
(Exact Name of Registrant as Specified in Charter)

One Rockefeller Plaza, New York, NY 10020
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code: (212) 332-8400

Norris Nissim, Esq.
John A. Levin & Co., Inc.
One Rockefeller Plaza, 25th Floor
New York, New York 10020
(Name and Address of Agent for Service)

Copy to:

Kenneth S. Gerstein, Esq.
Schulte Roth & Zabel LLP
900 Third Avenue
New York, New York 10022

Approximate Date of Proposed Public Offering:
As soon as practicable after this Registration Statement is declared effective.

It is proposed that this filing will become effective (check appropriate box)

[_] immediately upon filing pursuant to paragraph (b)
[_] on (date) pursuant to paragraph (b)
[_] 60 days after filing pursuant to paragraph (a)(1)
[_] 75 days after filing pursuant to paragraph (a)(2)
[_] on date pursuant to paragraph (a)(1)
[_] on (date) pursuant to paragraph (a)(2) of rule 485.

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Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the
Registrant hereby elects to register an indefinite number of shares of
beneficial interest.
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FORM N-1A

LEVCO SERIES TRUST

CROSS REFERENCE SHEET
<TABLE>
<CAPTION>

PART A
ITEM NUMBER CAPTION PROSPECTUS CAPTION
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<S> <C> <C>
1. Cover Page Cover Page

2. Synopsis Prospectus Summary

3. Condensed Financial Information *

4. General Description of The About the Fund
Registrant

5. Management of Fund Management

5A. Management's Discussion of Fund *
Performance

6. Capital Stock and Other Securities Additional Information

7. Purchase of Securities About Your Investment
Being Offered

8. Redemption of Repurchase About Your Investment

9. Pending Legal Proceedings *

PART B
ITEM NUMBER CAPTION PROSPECTUS CAPTION
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10. Cover Page Cover Page

11. Table of Contents Table of Contents

12. General Information and History *

13. Investment Objectives and Investment Objectives
Policies and Policies

14. Management of the Fund Trustees and Officers

15. Control Persons and Principal Additional Information
Holders of Securities

</TABLE>

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<TABLE>
<CAPTION>

PART B
ITEM NUMBER CAPTION PROSPECTUS CAPTION
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<S> <C> <C>
16. Investment Advisory and Investment Advisory
Other Services Agreement

17. Brokerage Allocation and Portfolio Transactions
Other Practices and Brokerage

18. Capital Stock and Other Cover Page
Securities

19. Purchase, Redemption and Pricing Determination of Net
of Securities Being Offered Asset Value, Purchases
and Redemptions of
Shares

20. Tax Status Taxes

21. Underwriters Distributor

22. Calculation of Performance Performance Information
Data

23. Financial Statements Statement of Assets
and Liabilities
</TABLE>
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* Omitted because answer is negative or inapplicable.

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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
STATE.

PRELIMINARY PROSPECTUS -- SUBJECT TO COMPLETION -- JANUARY 3, 1997

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Prospectus Dated [ ], 1997

LEVCO EQUITY VALUE FUND
(a series of LEVCO Series Trust)

One Rockefeller Plaza
25th Floor
New York, New York 10020
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LEVCO Equity Value Fund (the "Fund") is a series of LEVCO Series Trust (the
"Trust"), an open-end, diversified, management investment company (commonly
known as a "mutual fund"). The investment objective of the Fund is to achieve
long-term growth of capital through an emphasis on the preservation of capital
and an attempt to control volatility as measured against the Standard & Poor's
Composite 500 Stock Index (the "S&P 500"). The Fund pursues this objective by
investing its assets primarily in common stocks and other securities having
equity characteristics, which, in the opinion of the Fund's investment adviser,
are currently undervalued in relation to their intrinsic value. In pursuing its
objective, the Fund may utilize a variety of investment techniques. See
"INVESTMENT OBJECTIVE AND POLICIES" and "INVESTMENT DESCRIPTIONS AND PRACTICES."
Options on securities, stock index options and stock index futures and related
options may be used by the Fund for hedging purposes and involve certain risks.
See "HEDGING STRATEGIES."

John A. Levin & Co., Inc. (the "Investment Adviser") serves as the
investment adviser of the Fund.

The shares of the Fund being offered by this Prospectus ("Shares"), which
are Class A Shares, are distributed by LEVCO Securities, Inc. (the
"Distributor"). Shares are sold only to certain life insurance companies
("Participating Companies") and their separate accounts ("Separate Accounts") to
fund benefits under variable annuity contracts ("Contracts") and variable life
insurance policies ("Policies") offered by Participating Companies. The Separate
Accounts invest in Shares in accordance with allocation instructions received
from Contract and Policy owners ("Contract Owners" and "Policy Owners"). These
allocation rights are described in the prospectus for the Separate Account that
accompanies this Prospectus. Shares are redeemed to the extent necessary to
provide benefits under the Contracts and Policies.

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This Prospectus sets forth concisely the information about the Fund that a
prospective investor ought to know before investing. It should be read and
retained for future reference. A Statement of Additional Information containing
more detailed information about the Fund dated [xxxxxxxx, 1997], has been filed
with the Securities and Exchange Commission and is incorporated herein by
reference. The Statement of Additional Information is available, without charge,
upon request by calling 1-800-xxx-xxxx.

____________________

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>

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TABLE OF CONTENTS
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PAGE
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PROSPECTUS SUMMARY............................................................ 4

ABOUT THE FUND................................................................ 7

INVESTMENT OBJECTIVE AND POLICIES............................................. 7

INVESTMENT DESCRIPTIONS AND PRACTICES......................................... 8

INVESTMENT RESTRICTIONS.......................................................11

HEDGING STRATEGIES............................................................12

MANAGEMENT....................................................................14

FUND EXPENSES.................................................................15

ABOUT YOUR INVESTMENT.........................................................15

DISTRIBUTIONS AND TAXES.......................................................16

SHAREHOLDER COMMUNICATIONS....................................................17

PERFORMANCE INFORMATION.......................................................17

ADDITIONAL INFORMATION........................................................18

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PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the detailed
information appearing elsewhere in this Prospectus and in the Statement of
Additional Information.

The Fund LEVCO Equity Value Fund (the "Fund") is a series of
LEVCO Series Trust, a Delaware business trust which
is an open-end, diversified, management investment
company (commonly known as a mutual fund). The
investment objective of the Fund is to achieve
long- term growth of capital through an emphasis
on the preservation of capital and an attempt to
control volatility as measured against the
Standard & Poor's Composite 500 Stock Index (the
"S&P 500"). The Fund pursues its objective by
investing its assets primarily in common stocks
and other securities having equity characteristics
which, in the opinion of the Fund's investment
adviser, are currently undervalued in relation to
their intrinsic value. See "INVESTMENT OBJECTIVES
AND POLICIES" and "INVESTMENT DESCRIPTIONS AND
PRACTICES." For hedging purposes, the Fund may use
options on securities, stock index options, and
stock index futures and related options. Use of
these instruments involves certain risks. See
"HEDGING STRATEGIES."

Investment Adviser John A. Levin & Co., Inc., serves as the Fund's
investment adviser (the "Investment Adviser").
Together with its predecessors, the Investment
Adviser has provided investment advisory services
to clients since 1982. The Investment Adviser is a
wholly-owned subsidiary of Baker, Fentress &
Company ("Baker Fentress"), a closed-end investment
company listed on the New York Stock Exchange.
Clients of the Investment Adviser include U.S. and
foreign individuals, trusts, non-profit
organizations, registered investment funds,
investment partnerships, endowments, and pension
and profit-sharing funds. The Investment Adviser
currently manages in excess of $6 billion in assets
for its clients. See "MANAGEMENT - Investment
Adviser."

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The Offering The shares of the Fund being offered by this
Prospectus ("Shares") are offered by LEVCO
Securities, Inc., which serves as the distributor
of Shares (the "Distributor"). Shares are sold
only to certain life insurance companies
("Participating Companies") and their separate
accounts (collectively, "Separate Accounts") to
fund benefits under variable annuity contracts
("Contracts") and variable life insurance policies
("Policies") offered by Participating Companies.
The Separate Accounts invest in Shares in
accordance with allocation instructions received
by Participating Companies from Contract and
Policy owners ("Contract Owners" and "Policy
Owners"). These allocation rights are further
described in the prospectus for the Separate
Account that accompanies this Prospectus. Shares
are redeemed to the extent necessary to provide
benefits under the Contracts and Policies and to
reflect the allocation instructions of Contract
and Policy owners.

Share Price Shares are being offered at net asset value per
share without any sales charge. See "ABOUT YOUR
INVESTMENT - Purchase of Shares." Shares are
redeemable at their then current net asset value
per Share which may be more or less than their
cost. See "ABOUT YOUR INVESTMENT - Redemption of
Shares."

Administrator [ ] (the "Administrator") supplies various
administrative services to the Fund.

Dividends and Capital The Fund declares and pays income dividends
Gains Distributions quarterly. Capital gains, if any, are distributed
at least annually. See "DISTRIBUTIONS AND TAXES."

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Risks Considerations The net asset value per Share and dividends of the
Fund will fluctuate and will depend on the changes
in the values of the Fund's investments and the
income and dividends received on those investments.
Investors should review carefully the investment
objective, policies and practices of the Fund and
consider their ability to assume the risks
associated with an investment in Shares. Certain of
the investment practices of the Fund involve
various risks. These practices include: the use of
repurchase agreements; the purchase of non-
investment grade debt securities and foreign
securities; lending securities; the use of options
on securities, stock index options, and stock index
futures and related options. See "INVESTMENT
OBJECTIVE AND POLICIES" and "INVESTMENT
DESCRIPTIONS AND PRACTICES" and "HEDGING
STRATEGIES." No assurance can be given that the
investment objective of the Fund will be achieved.

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ABOUT THE FUND

LEVCO Equity Value Fund (the "Fund") is a series of LEVCO Series Trust (the
"Trust"), a business trust that is registered under the Investment Company Act
of 1940 (the "1940 Act") with the Securities and Exchange Commission (the "SEC")
as an open-end, diversified, management investment company. The Trust was
organized on [ , 1997] under the laws of the State of Delaware. As of the
date of this Prospectus, the Fund is the Trust's sole investment portfolio and
had not yet commenced operations. Shares of the Fund being offered by this
Prospectus ("Shares"), which are Class A shares of the Fund, are sold by LEVCO
Securities, Inc. (the "Distributor") only to certain life insurance companies
("Participating Companies") and their separate accounts ("Separate Accounts") to
fund benefits under variable annuity contracts ("Contracts") and variable life
insurance policies ("Policies") offered by Participating Companies. The Separate
Accounts invest in Shares in accordance with allocation instructions received
from the owners of Contracts and Policies ("Contract Owners" and "Policy
Owners"). These allocation rights are described in the prospectus for the
Separate Account that accompanies this Prospectus. Shares are redeemed to the
extent necessary to provide benefits under Contracts and Policies.

Participating Companies may not be affiliated with each other. In addition,
Participating Companies and their Separate Accounts may be subject to insurance
regulation that varies from state to state and may be subject to state insurance
and federal tax or other regulation that varies between Contracts and Policies.
The Trust does not currently foresee any disadvantages to Contract or Policy
Owners arising from these circumstances. However, it is theoretically possible
that the interests of Contract or Policy Owners participating in the Fund
through the Separate Accounts might at some time be in conflict. In some cases,
one or more Separate Accounts might redeem their investment in the Fund, which
could possibly force the Fund to sell portfolio securities at disadvantageous
prices. The Board of Trustees of the Trust intends to monitor events in order to
identify any material irreconcilable conflicts that may possibly arise and to
determine what action, if any, should be taken in response thereto.

INVESTMENT OBJECTIVE AND POLICIES

The investment objective of the Fund is to achieve long-term growth of
capital through an emphasis on the preservation of capital and an attempt to
control volatility as measured against the Standard & Poor's Composite 500 Stock
Index (the "S&P 500"). The Fund pursues this objective by investing its assets
primarily in common stocks and other securities having equity characteristics,
such as convertible debt and convertible preferred securities, preferred stocks,
warrants and rights (collectively, "Equity Securities"). The Fund invests in
Equity Securities which, in the opinion of the Investment Adviser, are currently
undervalued in relation to their intrinsic value as indicated by the earnings
and cash flow potential or the asset value of their issuers. The Investment
Adviser's determination of value also takes into consideration growth and new
products on a selective basis. In evaluating investments for the Fund,
consideration is given to such factors as: security prices that reflect a market
valuation which is judged to be below the estimated present or future value of
the company; favorable earnings growth prospects; expected above average return
on equity and dividend yield; the financial condition of the issuer; and various
qualitative factors. Although payment of current dividends and income are
considered by the Investment Adviser in selecting investments for the Fund, they
are not primary factors in the selection of investments.

Under normal market conditions, the Fund invests at least 85% of its total
assets in Equity Securities. For hedging purposes, the Fund may use options on
securities, stock index options, and stock

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index futures and related options. These investments involve certain risks. See
"HEDGING STRATEGIES." The Fund may also invest in debt securities, including
U.S. Government securities and corporate debt securities (such as bonds, notes
and debentures). Certain of the Fund's investments in debt securities will be
obligations which, at the time of purchase, are rated "A" or better by Standard
& Poor's Corporation ("S&P") or Moody's Investors Service, Inc. ("Moody's") or,
if unrated, are of comparable quality as determined by the Investment Adviser.
However, the Fund may invest up to 10% of the value of its total assets in
non-convertible, non-investment grade debt securities (commonly known as "high
yield" or "junk" bonds). These investments involve certain risks. See
"INVESTMENT DESCRIPTIONS AND PRACTICES - Non-Investment Grade Debt Securities".
The Fund may also invest in money market instruments (see "INVESTMENT
DESCRIPTIONS AND PRACTICES - Short-Term Investments"), including repurchase
agreements. Investments in debt securities will generally be made to reduce the
Fund's equity exposure. During periods of high market valuations or adverse
market conditions or for liquidity purposes, all or any portion of the Fund's
assets may be invested temporarily in high quality debt securities or money
market instruments, or held as cash.

No assurance can be given that the investment objective of the Fund will be
achieved.

INVESTMENT DESCRIPTIONS AND PRACTICES

The types of securities in which the Fund invests and the investment
practices in which the Fund may engage are summarized below. In addition, the
Fund may use options on securities, stock index options and stock index futures,
and related options, for hedging purposes. See "HEDGING STRATEGIES."

Common Stock. Common stock are shares of a corporation or other entity that
represent an equity interest and entitle the holder to share in the profits, if
any, of the entity after required payments to holders of preferred stock and
debt securities.

Convertible Securities. A convertible security is a bond, debenture, note,
preferred stock or other security that may be converted into or exchanged for a
prescribed amount of common stock of the same or a different issuer within a
particular period of time at a specified price or formula. Before conversion,
convertible securities ordinarily provide a stream of income with generally
higher yields than those of common stocks of the same or similar issuers, but
lower than the yields on non-convertible debt. Convertible securities are
usually subordinated to comparable non-convertible securities, but rank senior
to common stock in a corporation's capital structure.

Warrants and Rights. Among the Equity Securities the Fund may purchase are
warrants and rights to purchase securities. Warrants and rights are derivative
instruments that permit, but do not obligate, the holder to purchase securities
at a specified price during a specified time period. Neither warrants nor rights
carry with them the right to dividends or voting rights with respect to the
securities that they entitle the holder to purchase, and they do not represent
any rights in the assets of the issuer. They involve the risk that they will
decline in value if the price of the related securities declines. If the price
of the related security does not increase to a price higher than the price at
which the warrants or rights may be exercised, the warrant or right may become
worthless. As a result, warrants and rights are more speculative than certain
other types of equity investments. In addition, the value of a warrant or right
does not necessarily change with the value of the underlying securities, and a
warrant or right ceases to have value if it is not exercised prior to its
expiration date.

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Preferred Stock. Preferred stocks generally pay dividends at specified
rates and have a preference over common stock in the payment of dividends and
the liquidation of an issuer's assets. However, preferred stock is junior to the
debt securities of the issuer in those same respects. Unlike interest payments
on debt securities, dividends on preferred stock are generally payable at the
discretion of the issuer's board of directors. The market prices of preferred
stocks will fluctuate based, in part, on changes in interest rates and are more
sensitive to changes in the issuer's creditworthiness than are the prices of
debt securities. Preferred stock may decline in value if dividends are not paid.

Debt Securities. The Fund's investments in debt securities may include
bonds, notes, bills, debentures, bank obligations, loan participations, and
other similar instruments. These securities include U.S. Government securities,
which are debt obligations that are issued or guaranteed by the U.S. Government
or by one of its agencies or instrumentalities, and debt obligations issued by
corporations, banks or other business entities. There are no restrictions on the
maximum maturity and duration of debt securities purchased by the Fund. The
interest rates payable on debt securities may be fixed, floating or variable or
may be zero coupon debt securities.

Non-Investment Grade Debt Securities. The Fund may invest up to 10% of the
value of its total assets in non-convertible, non-investment grade debt
securities. Convertible debt securities purchased by the Fund are not subject to
this limitation because they are purchased based upon their potential for
capital growth. Non-investment grade debt securities (typically called "junk
bonds") are securities that have received a rating from a nationally recognized
statistical rating organization ("NRSRO") of below investment grade or have been
given no rating, and are considered by the NRSRO to be predominantly speculative
with respect to the issuer's capacity to pay interest and repay principal. Non-
investment grade debt securities in the lowest rating categories may involve a
substantial risk of default or may be in default. Changes in economic conditions
or developments regarding the individual issuer are more likely to cause price
volatility and weaken the capacity of the issuers of non-investment grade debt
securities to make principal and interest payments than is the case for higher
grade debt securities. An economic downturn affecting an issuer of non-
investment grade debt securities may result in an increased incidence of
default. In addition, the market for lower grade debt securities may be thinner
and less active than for higher grade debt securities. A debt security will not
be considered non-investment grade for purposes of the percentage limitation set
forth above if it has received an investment grade rating from one or more
NRSRO's, notwithstanding the fact that a lower rating has been given by any
other NRSRO.

Short-Term Investments. The Fund may invest in money market instruments,
which are high quality short-term debt obligations. Money market instruments
generally have remaining maturities of one year or less. Among the types of
money market instruments that may be purchased by the Fund are: short-term U.S.
government securities, certificates of deposit, bankers' acceptances, commercial
paper, short-term corporate obligations and repurchase agreements.

Repurchase Agreements. The Fund may enter into repurchase agreements with
respect to any of the types of debt securities in which it is authorized to
invest. Repurchase agreements will be effected only with banks, savings
institutions and broker-dealers. These agreements involve the purchase by the
Fund of a debt security with the condition that after a stated period of time,
the original seller will buy back the same security at a predetermined price or
yield. Repurchase agreements are used to enhance liquidity and to earn income
for periods as short as overnight. In the event the original seller defaults on
its obligation to repurchase the securities, as a result of its bankruptcy or
otherwise, the Fund will seek to sell the securities. Such action could involve
costs or delays, and the Fund's ability to dispose of the securities may be
restricted. To minimize risk, the securities underlying each repurchase
agreement will be maintained with the Fund's custodian, or a subcustodian, in an
amount at least equal to the repurchase

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price under the agreement (including accrued interest thereunder), and such
agreements will only be effected with parties that meet certain creditworthiness
standards. However, in the event the other party to a repurchase agreement fails
to repurchase the securities subject to the agreement, the Fund could suffer a
loss to the extent it is precluded from selling the securities or, if due to
delays, proceeds from the sale are less than the repurchase price.

Restricted Securities. The Fund may invest up to 10% of its total assets
in securities subject to restrictions on disposition under the Securities Act of
1933, as amended ("restricted securities"). Such investments, however, will be
limited to certain restricted securities that may be sold to institutional
investors pursuant to Rule 144A. In some cases, these securities may be
difficult to value to the extent that they are not publicly traded, and may be
difficult to sell promptly at favorable prices. The Fund's policies are
intended to enable it to invest a limited portion of its assets in investments
that are illiquid, but which nevertheless are considered to be attractive by the
Investment Adviser. Except as described above the Fund does not purchase
illiquid securities, including repurchase agreements maturing in more than seven
days.

Foreign Securities. The Fund may invest up to 20% of its total assets in
securities of foreign issuers, including depository receipts, such as American
Depository Receipts ("ADRs"), which represent ownership of specific foreign
securities. Investments in foreign securities involve certain risks. There may
be more limited publicly available information regarding foreign securities than
would be the case with respect to the securities of U.S. issuers, and different
accounting standards may be used by foreign issuers. Foreign securities markets
in which securities purchased by the Fund may trade are in some cases not as
liquid as U.S. markets. Foreign securities also entail certain additional risks
such as the risks of changes in the value of foreign currency relative to the
U.S. dollar, possible imposition of withholding or confiscatory taxes, possible
currency transfer restrictions, expropriation or other adverse political or
economic developments, and the difficulty of enforcing obligations in foreign
jurisdictions. The purchase of securities denominated in foreign currencies
will subject the value of the Fund's investments in those securities to
fluctuations due to changes in foreign exchange rates. Due to these factors,
the prices of securities of foreign issuers may be more volatile than those of
comparable domestic issuers.

To hedge against the effects of changes in foreign exchange rates, the Fund
may enter into forward foreign currency exchange contracts ("forward
contracts"). These contracts represent agreements to exchange an amount of
currency at an agreed upon future time and rate. The Fund will generally use
forward contracts only to "lock in" the price in U.S. dollars of a foreign
security intended to be purchased or sold, but in certain limited cases may use
such contracts to hedge against an anticipated substantial decline in the price
of a foreign currency against the U.S. dollar. Forward contracts will not be
used in all cases and, in any event, cannot protect the Fund against declines in
the prices of the securities; nor do they completely protect against all changes
in the values of foreign securities due to fluctuations in foreign exchange
rates. If anticipated currency movements are not accurately predicted, the Fund
will sustain losses on these contracts.

Lending Securities. In order to earn additional income, the Fund may lend
its portfolio securities to brokers, dealers and other financial institutions,
provided that such loans are callable at any time by the Fund and are at all
time secured by collateral, consisting of cash or U.S. Government securities, or
any combination thereof, equal to not less than 100% of the market value,
determined daily, of the securities loaned. Any cash collateral will be
invested by the Fund in short-term investments. Lending securities involves
certain risks, the most significant of which is the risk that a borrower may
fail to return a portfolio security. The Fund's Board of Trustees has adopted
policies designed to minimize such risks. The Fund may lend securities in an
amount not exceeding one-third of the value of its total assets,

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measured at the time any such loan is made. Securities lending involves a form
of leverage, and the Fund may incur a loss if securities purchased with the
collateral from securities loans decline in value or if the income earned does
not cover the Fund's transaction costs.

When-Issued Securities. In order to help ensure the availability of
suitable securities for investment, the Fund may purchase securities on a "when-
issued" or on a "forward delivery" basis. Securities purchased in this manner
will be delivered to the Fund at a future date beyond the customary settlement
time. It is expected that, in normal circumstances, the Fund will take delivery
of such securities. In general, the Fund does not pay for the securities or
become entitled to dividends or interest until the purchase of the securities is
settled. There are no percentage of asset limitations on this practice.
However, while awaiting delivery of any securities purchased on such a basis,
the Fund will establish a segregated account consisting of cash or liquid
securities equal to the amount of its commitments to purchase securities on a
"when-issued" basis.

PORTFOLIO TURNOVER

There are no fixed limitations regarding portfolio turnover. However, it
is estimated that the Fund's annual portfolio turnover rate will not exceed
100%. Although the Fund generally does not engage in short-term trading,
securities may be sold without regard to the time they have been held when
investment considerations warrant such action. As a result, under certain
market conditions, the portfolio turnover rate of the Fund may be higher.
Brokerage costs will be commensurate with the rate of the Fund's trading
activity so that a higher turnover rate will result in higher brokerage costs.

INVESTMENT CHARACTERISTICS

The investment performance of the Fund will vary over time based upon
changes in the values of its investments and the dividends and interest received
on those investments. The value of the Fund's investments will be affected by a
variety of factors, including the perceived financial condition and earnings of
issuers; market and industry trends; economic, social and political
developments; and changes in interest rates. The net asset value per share of
the Fund can be expected to fluctuate daily.

INVESTMENT RESTRICTIONS

The Fund has adopted certain investment policies and restrictions which are
described in this Prospectus and in the Statement of Additional Information.
Except as otherwise noted, these policies and restrictions are not fundamental
and may be changed by the Board of Trustees of the Trust. However, the Fund's
investment objective may not be changed without the vote of the holders of a
majority of the Fund's outstanding shares (a "Majority Shareholder Vote"), which
means the affirmative vote of the lesser of: (1) more than 50% of the
outstanding shares of the Fund (including shares of all classes); or (2) 67% or
more of the shares present at a meeting of shareholders if more than 50% of the
Fund's outstanding shares (including shares of all classes) are represented at
the meeting in person or by proxy. The following investment restrictions, and
certain additional investment restrictions set forth in the Statement of
Additional Information, are fundamental and may not be changed without a
Majority Shareholder Vote. Under these restrictions, the Fund may not:

1. Purchase a security, other than U.S. Government securities, if as a
result of such purchase more than 5% of the value of the Fund's total assets
would be invested in the securities of any one issuer, or the Fund would own
more than 10% of the voting securities, or of any class of securities, of any
one

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issuer. For purposes of this restriction, all outstanding indebtedness of
an issuer is deemed to be a single class.

2. Purchase a security, other than U.S. Government securities, if as a
result of such purchase 25% or more of the value of the Fund's total assets
would be invested in the securities of issuers in any one industry.

HEDGING STRATEGIES

The Fund may purchase and sell (or write) options on individual stocks,
baskets of stocks, and stock indices, and may purchase and sell stock index
futures and related options, but only for hedging purposes. Use of these
techniques involves certain risks. See "Risks of Futures and Options" below.
The Fund engages in these transactions in order to protect against declines in
the value of securities it holds or increases in the costs of securities to be
acquired. More detailed descriptions of the Fund's use of options and futures
are contained in the Statement of Additional Information.

FUTURES AND OPTIONS TRANSACTIONS

The Fund may use futures contracts and related options for the purpose of
seeking to reduce the overall investment risk that would otherwise be associated
with the securities in which it invests. For example, the Fund may sell a stock
index futures contract in anticipation of a general market or market sector
decline that might adversely affect prices of the Fund's portfolio securities.
To the extent that there is a correlation between the Fund's portfolio and a
particular stock index, the sale of futures contracts on that index could reduce
general market risk and permit the Fund to retain its securities positions.

The Fund may purchase call options on individual stocks and baskets of
stocks, or purchase stock index futures contracts (and call options on such
contracts) to hedge against a market advance that might increase the prices of
securities that the Fund is planning to acquire. Alternatively, the Fund may
purchase put options on individual stocks and baskets of stocks, or sell stock
index futures contracts (or purchase puts on such contracts) to provide
protection against a decline in the price of a security below a specified level
or a sector or general market decline. The Fund may purchase and write options
in combination with each other to adjust the risk and return of its overall
investment positions. For example, the Fund may purchase a put option and write
a call option on the same underlying instrument, in order to synthesize a
position similar to that which would be achieved by selling a futures contract.

By purchasing a put option on an individual stock, the Fund could hedge the
risk of a devaluation of that individual stock. The value of the put option
would be expected to rise as a result of a market decline and thus could offset
all or a portion of losses resulting from declines in the prices of individual
securities held by the Fund. However, option premiums tend to decrease over time
as the expiration date nears. Therefore, because of the cost of the option (in
the form of premium and transaction costs), the Fund would suffer a loss in the
put option if prices do not decline sufficiently to offset the deterioration in
the value of the option premium.

By purchasing a call option on a stock index, the Fund would attempt to
participate in potential price increases of the underlying index, with results
similar to those obtainable from purchasing a futures contract, but with risk
limited to the cost of the option if stock prices fell. At the same time, the
Fund would suffer a loss if stock prices do not rise sufficiently to offset the
cost of the option.

-12-
<PAGE>

The Fund may engage in the writing (selling) of covered call options with
respect to the securities in the Fund's portfolio to supplement the Fund's
income and enhance total returns. The Fund may write (sell) listed or over-the-
counter call options on individual securities held by the Fund, on baskets of
such securities or on the Fund's portfolio as a whole. The Fund will write only
covered call options, that is, call options in which the Fund has in its
portfolio (or has the right to acquire at no cost) the securities subject to the
option. A written option may also be considered to be covered if the Fund owns
an option that entirely or partially offsets its obligations under the written
option. Index options will be considered covered if the pattern of price
fluctuations of the Fund's portfolio or a portion thereof substantially
replicates the pattern of price fluctuations in the index underlying the option.
A call option written by the Fund obligates the Fund to sell specified
securities to the holder of the option at a predetermined price if the option is
exercised on or before its expiration date. An index call option written by the
Fund obligates the Fund to make a cash payment to the holder of the option if
the option is exercised and the value of the index has risen above a
predetermined level on or before the expiration date of the option. The Fund
may terminate its obligations under a call option by purchasing an option
identical to the one written. Writing covered call options provides the Fund
with opportunities to increase the returns earned from portfolio securities
through the receipt of premiums paid by the purchasers of the options. Writing
covered call options may reduce the Fund's returns if the value of the
underlying security or index increases and the option position is exercised or
closed out by the Fund at a loss.

RISKS OF FUTURES AND OPTIONS

The purchase and sale of options, and futures contracts and related
options, involve risks different from those involved with direct investments in
securities, and also require different skills from the Investment Adviser in
managing the Fund's portfolio of investments. While utilization of options,
futures contracts and similar instruments may be advantageous to the Fund, if
the Investment Adviser is not successful in employing such instruments in
managing the Fund's investments or in predicting market changes, the Fund's
performance will be worse than if the Fund did not make such investments. It is
possible that there will be imperfect correlation, or even no correlation,
between price movements of the investments being hedged and the options or
futures used. It is also possible that the Fund may be unable to purchase or
sell a portfolio security at a time that otherwise would be favorable for it to
do so, or that the Fund may need to sell a portfolio security at a
disadvantageous time, due to the need for the Fund to maintain "cover" or to
segregate securities in connection with hedging transactions and that the Fund
may be unable to close out or liquidate its hedged position. In addition, the
Fund will pay commissions and other costs in connection with such investments,
which may increase the Fund's expenses and reduce its yield. A more complete
discussion of the possible risks involved in transactions in options and
futures contracts is contained in the Statement of Additional Information. The
Fund's current policy is to limit options and futures transaction to those
described above. The Fund may purchase and write both over-the-counter and
exchange traded options.

The Fund will not enter into any futures contracts or related options if
the sum of the initial margin deposits on futures contracts and premiums paid
for unexpired options on such contracts, other than for bona fide hedging
purposes as defined by the Commodity Futures Trading Commission, would exceed 5%
of the liquidation value of the Fund's assets, after taking into account
unrealized profits and losses on such contracts and options. The in-the-money
amount of an option on a futures contract may be excluded in calculating this 5%
limitation. The Fund may invest up to [5%] of the value of its total assets,
represented by the premiums paid, for the purchase of options on securities and
stock index options. The Fund may not write options on securities or stock
indices with aggregate exercise prices in excess of [30%] of the value of the
Fund's assets measured at the time an option is written.

-13-
<PAGE>

MANAGEMENT

The business and affairs of the Fund are managed under the general
direction and supervision of the Board of Trustees of the Trust. Responsibility
for management of the Fund's investments has been delegated by the Board to the
Investment Adviser. Other matters relating to the Fund's day-to-day operations
are handled by the Trust's officers, each of whom is an officer or employee of
the Investment Adviser or of the Administrator.

INVESTMENT ADVISER

John A. Levin & Co., Inc. (the "Investment Adviser") provides investment
advisory services to the Fund pursuant to an Investment Advisory Agreement with
the Fund (the "Advisory Agreement"). Subject to such policies as the Board of
Trustees may determine, the Investment Adviser makes all investment decisions
for the Fund and places all orders for the purchase and sale of investments by
the Fund. The Investment Adviser also provides certain administrative services
to the Fund and the Trust to the extent that those services are not provided by
other organizations retained by the Fund, and furnishes, without expense to the
Fund, the services of its personnel to serve as officers and Trustees of the
Trust. In consideration of the services provided by the Investment Adviser, the
Fund pays the Investment Adviser a monthly fee computed at the annual rate of
[0.85]% of the Fund's average daily net assets.

Together with its predecessors, the Investment Adviser has provided
investment advisory services to clients since 1982. The Investment Adviser is a
wholly-owned subsidiary of Baker, Fentress & Company ("Baker Fentress"), a
closed-end investment company listed on the New York Stock Exchange. Clients of
the Investment Adviser include U.S. and foreign individuals, trusts, non-profit
organizations, registered investment funds, investment partnerships, endowments,
and pension and profit-sharing funds. The Investment Adviser currently manages
in excess of $6 billion in assets for its clients.

The following persons serve as the portfolio managers of the Fund:

John A. Levin: President of the Investment Adviser (and its
predecessor) since 1982; Director, President and Chief Executive
Officer of Baker Fentress since June, 1996.

Melody L. Prenner Sarnell: Executive Vice President of the Investment
Adviser; securities analyst and portfolio manager of the Investment
Adviser since 1984; Director of Baker Fentress since June, 1996.

Jeffrey A. Kigner: Executive Vice President of the Investment
Adviser; securities analyst and portfolio manager of the Investment
Adviser since 1984; Director of Baker Fentress since June, 1996.

ADMINISTRATOR AND TRANSFER AGENT

-14-
<PAGE>

filings, prospectuses and shareholder reports; providing, at its own expense,
the services of its personnel to serve as officers of the Trust; and preparing
and disseminating materials for meetings of the Board of Trustees and
shareholders. For these services, the Fund pays the Administrator a monthly fee
calculated at the annual rate of [ ].

FUND EXPENSES

The Fund pays all of its expenses other than those expressly assumed by the
Investment Adviser or the Distributor. Expenses of the Fund are deducted from
the Fund's total income before dividends are paid. The Fund's expenses include,
but are not limited to: fees paid to the Investment Adviser and the
Administrator; fees of the Fund's independent accountants and custodian and
certain related expenses; taxes; organization costs; brokerage fees and
commissions; interest, costs incident to meetings of the Board of Trustees of
the Trust and meetings of the Fund's shareholders; costs of printing and mailing
prospectuses and reports to shareholders and the filing of reports with
regulatory bodies; legal fees and disbursements; fees payable to federal and
state regulatory authorities; fees and expenses of Trustees who are not
affiliated with the Investment Adviser, the Distributor or the Administrator;
and any extraordinary expenses.

ABOUT YOUR INVESTMENT

PURCHASE OF SHARES

Shares are offered for sale on a continuous basis directly by LEVCO, as
distributor, to the Separate Accounts at net asset value per share on each day
on which the New York Stock Exchange ("NYSE") is open for business, without any
sales charge. Net asset value per share is calculated once daily at 4:15 p.m.,
New York time, Monday through Friday, each day the NYSE is open. Net asset
value per share is computed by subtracting the Fund's liabilities (including
accrued expenses and dividends payable) from the value of the Fund's investments
and other assets and dividing the result by the total number of shares of the
Fund outstanding. The determination of net asset value is made separately for
each class of shares of the Fund.

The Fund effects orders to purchase or redeem Shares, that are based on
premium payments, surrender and transfer requests and any other transaction
requests from Contract Owners and Policy Owners, annuitants and beneficiaries at
the net asset value per share next computed after the Separate Account receives
such transaction request. Any orders to purchase or redeem Shares that are not
based on actions by Contract Owners or Policy Owners, annuitants, and
beneficiaries will be effected at the net asset value per share next computed
after the order is received by the Distributor. The Fund reserves the right to
suspend the sale of Shares in response to conditions in the securities markets
or for other reasons.

Individuals may not place orders to purchase Shares directly. Please refer
to the prospectus for the Separate Account of the Participating Company for more
information on the purchase of Shares.

REDEMPTION OF SHARES

A Separate Account may redeem all or any portion of the Shares that it
holds at any time at the next computed net asset value per share, as described
above. Shares that are redeemed are entitled to any dividends that have been
declared as payable to record owners up to and including the day the redemption
is effected. There is no redemption charge. Payment of the redemption price
will normally be made within seven days after receipt of such tender for
redemption.

-15-
<PAGE>

The right of redemption may be suspended and the date of payment of the
redemption price may be postponed for any period during which the NYSE is closed
(other than customary weekend and holiday closings) or during which the SEC
determines that trading thereon is restricted, or for any period during which an
emergency (as determined by the SEC) exists as a result of which disposal by the
Fund of securities is not reasonably practicable or as a result of which it is
not reasonably practicable for the Fund fairly to determine the value of its net
assets, or for such other periods as the SEC may by order permit for the
protection of shareholders.

DISTRIBUTIONS AND TAXES

DISTRIBUTIONS

The Fund declares and distributes dividends from net investment income
quarterly and will distribute its net capital gains, if any, at least annually.
Payment of all dividends and capital gains distributions will be made in Shares.

TAX MATTERS

The Fund intends to qualify each year as a regulated investment company by
satisfying the requirements of Subchapter M of the Internal Revenue Code, as
amended (the "Code"), concerning the diversification of the Fund's assets,
distribution of its income, and sources of its income. If so qualified, the
Fund will not be subject to Federal income tax to the extent that it distributes
its net income to shareholders as required by the Code. Certain federal income
and excise taxes would be imposed on the Fund if it failed to make certain
required distributions of its income to shareholders. The Fund intends to make
distributions in a manner which will avoid the imposition of any such taxes.
If, however, for any taxable year the Fund does not qualify as a regulated
investment company, then all of its taxable income will be subject to tax at
regular corporate rates (without any deduction for distributions made to the
Separate Accounts), and the receipt of such distributions will be taxable to the
extent that the distributing Fund has current and accumulated earnings and
profits.

Distributions by the Fund are taxable, if at all, to the Separate Accounts,
and not to Contract or Policy Owners. An Account will include distributions in
its taxable income in the year in which they are received (notwithstanding the
fact that they are reinvested). Redemptions of the Shares held by the Separate
Accounts generally will not result in gain or loss for the Separate Accounts and
will not result in gain or loss for Contract or Policy Owners.

The foregoing discussion of Federal income tax consequences is based on tax
laws and regulations as in effect on the date of this Prospectus, and is subject
to change by legislative or administrative action. The foregoing discussion
also assumes that the Separate Accounts are the owners of Shares and that
Policies or Contracts qualify as life insurance policies or annuities,
respectively, under the Code. If the foregoing requirements are not met, then
the Contract Owners or Policy Owners will be treated as recognizing income (from
distributions or otherwise) related to the ownership of Shares.

The foregoing discussion regarding Federal taxation is for general
information only. Contract Owners and Policy Owners should consult the
prospectuses of the Separate Account for information concerning the Federal
income tax consequences of owning Contracts or Policies, and should consult
their own tax advisors concerning Federal and state tax consequences.

-16-
<PAGE>

SHAREHOLDER COMMUNICATIONS

It is expected that Contract Owners and Policy Owners who have given
instructions for Separate Accounts to invest in Shares will receive from the
Participating Companies reports that will include, among other things, the
Fund's unaudited semi-annual financial statements and year-end financial
statements audited by the Trust's independent accountants. Each report will
show the investments owned by the Fund and will provide other information about
the Fund and its operations. The Fund may pay a portion of the cost of
preparing certain of those reports. Contract Owners and Policy Owners may
obtain information about their investment on any business day by calling toll-
free 1-800-[xxx-xxxx] between 8:15 a.m. and 6:00 p.m., New York time.

Each Separate Account owning Shares will vote its shares in accordance with
instructions received from Contract Owners or Policy Owners, annuitants and
beneficiaries. Shares held by a Separate Account as to which no instructions
have been received will be voted for or against any matter, or in abstention, in
the same proportion as the Shares held by that Account as to which instructions
have been received. Shares held by a Separate Account that are not attributable
to Contracts or Policies will also be voted for or against any proposition in
the same proportion as the Shares for which voting instructions are received by
the Separate Account. If a Participating Company determines, however, that it
is permitted to vote any such Shares in its own right, it may elect to do so,
subject to the then current interpretations of the 1940 Act and the rules
thereunder.

PERFORMANCE INFORMATION

From time to time the Fund may advertise or report certain information
about its investment performance. The Fund may present standardized and
nonstandardized total return in advertisements or other material. Standardized
total return is calculated in accordance with a formula prescribed by the SEC.
Under this method, total return is calculated by determining the difference
between the net asset value of all Shares held at the end of the period for
which a quotation is being given and the net asset value per share for each
Share held at the beginning of the period (assuming reinvestment of dividends
and other distributions), and then dividing that difference by the per Share net
asset value at the beginning of the period. (The calculations implicitly
reflect the compounding of dividends and other distributions by assuming
reinvestment.) The average annual compounded rate of return is the yearly rate
of return that, when applied evenly to each annual period and compounded, would
produce the total return for the period quoted. Nonstandardized total return
differs from standardized total return in that it may be related to a
nonstandard period or presented as an aggregate rate of return, rather than as
an annual average. Quotations of total return do not reflect charges imposed at
the Account level.

The performance of the Fund may be compared to the performance of other
mutual funds with similar investment objectives and to other relevant indices or
to rankings prepared by independent services or other financial or industry
publications that monitor the performance of mutual funds. For example,
performance information may be compared with data published by Lipper Analytical
Services, Inc. or to unmanaged indices of performance, including, but not
limited to, the S&P 500 Index. The performance information may also include
evaluations of the Fund published by nationally recognized ranking services and
by various national or local financial publications, such as Business Week,
Forbes, Fortune, Institutional Investor, Money, The Wall Street Journal,
Barron's, Changing Times, Morningstar, Mutual Fund Values, U.S.A. Today, The New
York Times, or other industry or financial publications.

Quotations of performance are historical, and should not be considered as
indicative of future results.

-17-
<PAGE>

ADDITIONAL INFORMATION

Description of Shares. The Trust is a Delaware business trust organized
pursuant to a Certificate of Trust dated ______________. It is authorized to
issue an unlimited number of shares of beneficial interest, [______] par value,
and to issue one or more series of such shares, each representing interests in a
separate investment portfolio. As of the date of this Prospectus, the Trust has
established only one series of its shares, representing interests in the Fund.
The Board of Trustees has the power to establish additional series of shares
representing interests in other investment portfolios and, subject to the 1940
Act and other applicable laws and regulations, to issue two or more classes of
shares of each series. Shares are fully paid and non-assessable, and have no
preemptive or conversion rights.

Shares being offered pursuant to this Prospectus are Class A shares of the
Fund. Class B shares of the Fund are offered pursuant to a separate prospectus.
The Class A and Class B shares each represent interests in the Fund, but differ
in that the Class B shares, unlike Class A shares, bear certain expenses
associated with the different investor services and distribution arrangement
that has been implemented for that class.

Shareholders of the Fund, together with shareholders of any other series of
the Trust that may in the future be organized, are entitled to vote on the
election of Trustees and the ratification of the Trust's independent accountants
when those matters are voted upon at a meeting of shareholders. On other matters
affecting the Fund on which shareholders of the Fund are entitled to vote,
shares of the Fund and any other series would generally be voted as a separate
class. Although shares of each class of the Fund will generally vote together on
matters affecting the Fund and the Trust, each class has exclusive voting rights
on matters which relate solely to its distribution or investor services
arrangements and will vote separately on any matter as to which the interests of
shareholders of the classes differ. Each Share (and fractional Share) is
entitled to that number of votes which equals the net asset value of such Share
(or fraction thereof). All shares of the Trust have non-cumulative voting
rights, meaning that shareholders entitled to cast more than 50% of the votes
for the election of Trustees can elect all of the Trustees standing for election
if they choose to do so.

Under Delaware law, shareholders of the Fund could, under certain
circumstances, be held personally liable for the obligations of the Trust but
only to the extent of the shareholder's investment. However, the Declaration of
Trust disclaims liability of the shareholders, Trustees or officers of the Trust
for acts or obligations of the Trust, which are binding only on the assets and
property of the Trust and requires that notice of the disclaimer be given in
each contract or obligation entered into or executed by the Trust or the
Trustees. The risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which the Trust itself
would be unable to meet its obligations and should be considered remote.

Annual meetings of shareholders will not be held except as required by the
1940 Act or other applicable law. A meeting will be held on the removal of a
Trustee or Trustees of the Trust if requested in writing by holders of not less
than 10% of the outstanding shares of the Trust.

Custodian. [ ] serves as custodian of
the assets of the Fund. The custodian maintains custody of all securities and
other assets of the Fund, and is authorized to hold the Fund's investments in
securities depositions and to use sub-custodians which have been approved by the
Trust.

-18-
<PAGE>

Distributor. The Distributor, LEVCO Securities, Inc., One Rockefeller
Plaza, New York, New York 10020, serves as the distributor of Shares. The
Distributor is an indirect, wholly-owned subsidiary of Baker Fentress.

Independent Accountants. [____________], [address], serve as the
independent accountants of the Fund. Financial Statements of the Fund appearing
in the Fund's annual report will be audited by [___________].

Counsel. Schulte Roth & Zabel LLP, 900 Third Avenue, New York, New York
10022, serves as counsel to the Fund, and also serves as counsel to the
Investment Adviser and its affiliates on certain matters.

Additional Information. This Prospectus, including the Statement of
Additional Information which has been incorporated herein by reference, does not
contain all the information set forth in the Registration Statement filed by the
Trust with the SEC. Copies of the Registration Statement may be obtained at a
reasonable charge from the SEC or may be examined, without charge, at the office
of the SEC in Washington, D.C.

-19-
<PAGE>

- -------------------------------------------------------------------------------
LEVCO EQUITY VALUE FUND
- -------------------------------------------------------------------------------

INVESTMENT ADVISER

John A. Levin & Co., Inc.
One Rockefeller Center, 25th Floor
New York, New York 10020

DISTRIBUTOR

LEVCO Securities, Inc.
One Rockefeller Center, 25th Floor
New York, New York 10020

CUSTODIAN
[ ]
[ ]

TRANSFER AGENT
[ ]
[ ]

INDEPENDENT PUBLIC ACCOUNTANTS
[ ]
[ ]

LEGAL COUNSEL

Schulte Roth & Zabel LLP
900 Third Avenue
New York, New York 10022

SHAREHOLDER INQUIRIES

1 (800) [ ]

- -------------------------------------------------------------------------------
NO DEALER, SALES REPRESENTATIVE OR ANY OTHER PERSON HAS BEEN
AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN
THOSE CONTAINED IN THIS PROSPECTUS OR IN APPROVED SALES LITERATURE IN CONNECTION
WITH THE OFFER CONTAINED HEREIN, AND IF GIVEN OR MADE, SUCH OTHER INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST
OR THE DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER BY THE TRUST OR
BY THE DISTRIBUTOR TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER.
- -------------------------------------------------------------------------------
<PAGE>

PRELIMINARY PROSPECTUS -- SUBJECT TO COMPLETION -- JANUARY 3, 1997

- --------------------------------------------------------------------------------

Prospectus Dated [ ], 1997
LEVCO EQUITY VALUE FUND
(a series of LEVCO Series Trust)

One Rockefeller Plaza, 25th Floor
New York, New York 10020

- --------------------------------------------------------------------------------

John A. Levin & Co., Inc. (the "Investment Adviser") serves as the
investment adviser of the Fund.

The shares of the Fund being offered by this Prospectus ("Shares"), which
are Class B Shares, are distributed by LEVCO Securities, Inc. (the
"Distributor"). Shares are sold only to certain life insurance companies
("Participating Companies") and their separate accounts ("Separate Accounts") to
fund benefits under variable annuity contracts ("Contracts") and variable life
insurance policies ("Policies") offered by Participating Companies. The Separate
Accounts invest in Shares in accordance with allocation instructions received
from Contract and Policy owners ("Contract Owners" and "Policy Owners"). These
allocation rights are described in the prospectus for the Separate Account that
accompanies this Prospectus. Shares are redeemed to the extent necessary to
provide benefits under the Contracts and Policies.

____________________

- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>

PAGE
----
<S> <C>
PROSPECTUS SUMMARY............................................................3
ABOUT THE FUND................................................................6
INVESTMENT OBJECTIVE AND POLICIES.............................................6
INVESTMENT DESCRIPTIONS AND PRACTICES.........................................7
INVESTMENT RESTRICTIONS......................................................10
HEDGING STRATEGIES...........................................................11
MANAGEMENT...................................................................13
FUND EXPENSES................................................................14
ABOUT YOUR INVESTMENT........................................................14
DISTRIBUTION PLAN............................................................15
DISTRIBUTIONS AND TAXES......................................................15
SHAREHOLDER COMMUNICATIONS...................................................16
PERFORMANCE INFORMATION......................................................17
ADDITIONAL INFORMATION.......................................................17
</TABLE>

2
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the detailed
information appearing elsewhere in this Prospectus and in the Statement of
Additional Information.

The Fund LEVCO Equity Value Fund (the "Fund") is a series of
LEVCO Series Trust, a Delaware business trust which
is an open-end, diversified, management investment
company (commonly known as a mutual fund). The
investment objective of the Fund is to achieve
long-term growth of capital through an emphasis on
the preservation of capital and an attempt to
control volatility as measured against the
Standard & Poor's Composite 500 Stock Index (the
"S&P 500"). The Fund pursues its objective by
investing its assets primarily in common stocks
and other securities having equity characteristics
which, in the opinion of the Fund's investment
adviser, are currently undervalued in relation to
their intrinsic value. See "INVESTMENT OBJECTIVES
AND POLICIES" and "INVESTMENT DESCRIPTIONS AND
PRACTICES." For hedging purposes, the Fund may use
options on securities, stock index options, and
stock index futures and related options. Use of
these instruments involves certain risks. See
"HEDGING STRATEGIES."

3
<PAGE>

Administrator [ ] (the "Administrator") supplies various
administrative services to the Fund.

Fees and Expenses The Fund pays a fee to the Investment Adviser
calculated daily and payable monthly at an annual
rate of [0.85]% of average daily net assets of the
Fund. The Administrator is paid a monthly fee
calculated at the annual rate of [____] of the
average daily net assets of the Fund. In
addition, the Fund bears all of the expenses
associated with its operation. See "FUND
EXPENSES". These expenses include payments in an
amount up to [.25]% annually of the Fund's average
net assets that are made by the Fund to reimburse
the Distributor for expenses it incurs in
connection with assisting Participating Companies
in providing reports and information to
prospective investors and Policy Owners, and
Contract Owners as well as amounts expended to
reimburse Participating Companies for certain of
their costs of training their sales personnel.
See "DISTRIBUTION PLAN".

Dividends and Capital The Fund declares and pays income dividends
Gains Distributions quarterly. Capital gains, if any, are distributed
at least annually. See "DISTRIBUTIONS AND TAXES."

4
<PAGE>

Risks Considerations The net asset value per Share and dividends of the
Fund will fluctuate and will depend on the changes
in the values of the Fund's investments and the
income and dividends received on those investments.
Investors should review carefully the investment
objective, policies and practices of the Fund and
consider their ability to assume the risks
associated with an investment in Shares. Certain
of the investment practices of the Fund involve
various risks. These practices include: the use
of repurchase agreements; the purchase of
non-investment grade debt securities and foreign
securities; lending securities; the use of options
on securities, stock index options, and stock
index futures and related options. See
"INVESTMENT OBJECTIVE AND POLICIES" and
"INVESTMENT DESCRIPTIONS AND PRACTICES" and
"HEDGING STRATEGIES." No assurance can be given
that the investment objective of the Fund will be
achieved.

5
<PAGE>

ABOUT THE FUND

LEVCO Equity Value Fund (the "Fund") is a series of LEVCO Series Trust (the
"Trust"), a business trust that is registered under the Investment Company Act
of 1940 (the "1940 Act") with the Securities and Exchange Commission (the "SEC")
as an open-end, diversified, management investment company. The Trust was
organized on [ , 1997] under the laws of the State of Delaware. As of the date
of this Prospectus, the Fund is the Trust's sole investment portfolio and had
not yet commenced operations. Shares of the Fund being offered by this
Prospectus ("Shares"), which are Class B shares of the Fund, are sold by LEVCO
Securities, Inc. (the "Distributor") only to certain life insurance companies
("Participating Companies") and their separate accounts ("Separate Accounts") to
fund benefits under variable annuity contracts ("Contracts") and variable life
insurance policies ("Policies") offered by Participating Companies. The
Distributor receives a fee representing reimbursement of its expenses incurred
with respect to the distribution of the Shares offered pursuant to this
Prospectus. The Separate Accounts invest in Shares in accordance with allocation
instructions received from the owners of Contracts and Policies ("Contract
Owners" and "Policy Owners"). These allocation rights are described in the
prospectus for the Separate Account that accompanies this Prospectus. Shares are
redeemed to the extent necessary to provide benefits under Contracts and
Policies.

INVESTMENT OBJECTIVE AND POLICIES

6
<PAGE>

Under normal market conditions, the Fund invests at least 85% of its total
assets in Equity Securities. For hedging purposes, the Fund may use options on
securities, stock index options, and stock index futures and related options.
These investments involve certain risks. See "HEDGING STRATEGIES." The Fund
may also invest in debt securities, including U.S. Government securities and
corporate debt securities (such as bonds, notes and debentures). Certain of the
Fund's investments in debt securities will be obligations which, at the time of
purchase, are rated "A" or better by Standard & Poor's Corporation ("S&P") or
Moody's Investors Service, Inc. ("Moody's") or, if unrated, are of comparable
quality as determined by the Investment Adviser. However, the Fund may invest
up to 10% of the value of its total assets in non-convertible, non-investment
grade debt securities (commonly known as "high yield" or "junk" bonds). These
investments involve certain risks. See "INVESTMENT DESCRIPTIONS AND PRACTICES -
Non-Investment Grade Debt Securities". The Fund may also invest in money market
instruments (see "INVESTMENT DESCRIPTIONS AND PRACTICES - Short-Term
Investments"), including repurchase agreements. Investments in debt securities
will generally be made to reduce the Fund's equity exposure. During periods of
high market valuations or adverse market conditions or for liquidity purposes,
all or any portion of the Fund's assets may be invested temporarily in high
quality debt securities or money market instruments, or held as cash.

No assurance can be given that the investment objective of the Fund will be
achieved.

INVESTMENT DESCRIPTIONS AND PRACTICES

Common Stock. Common stock are shares of a corporation or other entity
that represent an equity interest and entitle the holder to share in the
profits, if any, of the entity after required payments to holders of preferred
stock and debt securities.

7
<PAGE>

that they entitle the holder to purchase, and they do not represent any rights
in the assets of the issuer. They involve the risk that they will decline in
value if the price of the related securities declines. If the price of the
related security does not increase to a price higher than the price at which the
warrants or rights may be exercised, the warrant or right may become worthless.
As a result, warrants and rights are more speculative than certain other types
of equity investments. In addition, the value of a warrant or right does not
necessarily change with the value of the underlying securities, and a warrant or
right ceases to have value if it is not exercised prior to its expiration date.

Preferred Stock. Preferred stocks generally pay dividends at specified
rates and have a preference over common stock in the payment of dividends and
the liquidation of an issuer's assets. However, preferred stock is junior to
the debt securities of the issuer in those same respects. Unlike interest
payments on debt securities, dividends on preferred stock are generally payable
at the discretion of the issuer's board of directors. The market prices of
preferred stocks will fluctuate based, in part, on changes in interest rates and
are more sensitive to changes in the issuer's creditworthiness than are the
prices of debt securities. Preferred stock may decline in value if dividends
are not paid.

Debt Securities. The Fund's investments in debt securities may include
bonds, notes, bills, debentures, bank obligations, loan participations, and
other similar instruments. These securities include U.S. Government securities,
which are debt obligations that are issued or guaranteed by the U.S. Government
or by one of its agencies or instrumentalities, and debt obligations issued by
corporations, banks or other business entities. There are no restrictions on
the maximum maturity and duration of debt securities purchased by the Fund. The
interest rates payable on debt securities may be fixed, floating or variable or
may be zero coupon debt securities.

Non-Investment Grade Debt Securities. The Fund may invest up to 10% of the
value of its total assets in non-convertible, non-investment grade debt
securities. Convertible debt securities purchased by the Fund are not subject
to this limitation because they are purchased based upon their potential for
capital growth. Non-investment grade debt securities (typically called "junk
bonds") are securities that have received a rating from a nationally recognized
statistical rating organization ("NRSRO") of below investment grade or have been
given no rating, and are considered by the NRSRO to be predominantly speculative
with respect to the issuer's capacity to pay interest and repay principal. Non-
investment grade debt securities in the lowest rating categories may involve a
substantial risk of default or may be in default. Changes in economic
conditions or developments regarding the individual issuer are more likely to
cause price volatility and weaken the capacity of the issuers of non-investment
grade debt securities to make principal and interest payments than is the case
for higher grade debt securities. An economic downturn affecting an issuer of
non-investment grade debt securities may result in an increased incidence of
default. In addition, the market for lower grade debt securities may be thinner
and less active than for higher grade debt securities. A debt security will not
be considered non-investment grade for purposes of the percentage limitation set
forth above if it has received an investment grade rating from one or more
NRSRO's, notwithstanding the fact that a lower rating has been given by any
other NRSRO.

Repurchase Agreements. The Fund may enter into repurchase agreements with
respect to any of the types of debt securities in which it is authorized to
invest. Repurchase agreements will be effected

8
<PAGE>

only with banks, savings institutions and broker-dealers. These agreements
involve the purchase by the Fund of a debt security with the condition that
after a stated period of time, the original seller will buy back the same
security at a predetermined price or yield. Repurchase agreements are used to
enhance liquidity and to earn income for periods as short as overnight. In the
event the original seller defaults on its obligation to repurchase the
securities, as a result of its bankruptcy or otherwise, the Fund will seek to
sell the securities. Such action could involve costs or delays, and the Fund's
ability to dispose of the securities may be restricted. To minimize risk, the
securities underlying each repurchase agreement will be maintained with the
Fund's custodian, or a subcustodian, in an amount at least equal to the
repurchase price under the agreement (including accrued interest thereunder),
and such agreements will only be effected with parties that meet certain
creditworthiness standards. However, in the event the other party to a
repurchase agreement fails to repurchase the securities subject to the
agreement, the Fund could suffer a loss to the extent it is precluded from
selling the securities or, if due to delays, proceeds from the sale are less
than the repurchase price.

9
<PAGE>

PORTFOLIO TURNOVER

INVESTMENT CHARACTERISTICS

INVESTMENT RESTRICTIONS

10
<PAGE>

proxy. The following investment restrictions, and
certain additional investment restrictions set forth in the Statement of
Additional Information, are fundamental and may not be changed without a
Majority Shareholder Vote. Under these restrictions, the Fund may not:

HEDGING STRATEGIES

FUTURES AND OPTIONS TRANSACTIONS

By purchasing a put option on an individual stock, the Fund could hedge the
risk of a devaluation of that individual stock. The value of the put option
would be expected to rise as a result of a market decline and would thus could
offset all or a portion of losses resulting from declines in the prices of
individual securities held by the Fund. However, option premiums tend to
decrease over time as the expiration date nears. Therefore, because of the cost
of the option (in the form of premium and

11
<PAGE>

transaction costs), the Fund would suffer a loss in the put option if prices do
not decline sufficiently to offset the deterioration in the value of the option
premium.

RISKS OF FUTURES AND OPTIONS

12
<PAGE>

MANAGEMENT

INVESTMENT ADVISER

The following persons serve as the portfolio managers of the Fund:

John A. Levin: President of the Investment Adviser (and its
predecessor) since 1982; Director, President and Chief Executive
Officer of Baker Fentress since June, 1996.

Melody L. Prenner Sarnell: Executive Vice President of the
Investment Adviser; securities analyst and portfolio manager of the
Investment Adviser since 1984; Director of Baker Fentress since June,
1996.

13
<PAGE>

Jeffrey A. Kigner: Executive Vice President of the Investment
Adviser; securities analyst and portfolio manager of the Investment
Adviser since 1984; Director of Baker Fentress since June, 1996.

ADMINISTRATOR AND TRANSFER AGENT

[ ] (the "Administrator") supplies administrative services
to the Fund and generally assists the Fund in all aspects of its administration
and non-investment related operations. The Administrator also provides transfer
agency services and dividend disbursing services to the Fund. The Administrator
provides various services required in connection with the operations of the
Trust and the Fund, including, but not limited to: overseeing the preparation
and maintenance of all documents and records required to be maintained by the
Trust and the Fund; preparing and updating required regulatory filings,
prospectuses and shareholder reports; providing, at its own expense, the
services of its personnel to serve as officers of the Trust; and preparing and
disseminating materials for meetings of the Board of Trustees and shareholders.
For these services, the Fund pays the Administrator a monthly fee calculated at
the annual rate of [ ].

FUND EXPENSES

The Fund pays all of its expenses other than those expressly assumed by the
Investment Adviser or the Distributor. Expenses of the Fund are deducted from
the Fund's total income before dividends are paid. The Fund's expenses include,
but are not limited to: fees paid to the Investment Adviser and the
Administrator; payments to the Distributor pursuant to the Distribution Plan
adopted by the Trust; fees of the Fund's independent accountants and custodian
and certain related expenses; taxes; organization costs; brokerage fees and
commissions; interest, costs incident to meetings of the Board of Trustees of
the Trust and meetings of the Fund's shareholders; costs of printing and mailing
prospectuses and reports to shareholders and the filing of reports with
regulatory bodies; legal fees and disbursements; fees payable to federal and
state regulatory authorities; fees and expenses of Trustees who are not
affiliated with the Investment Adviser, the Distributor or the Administrator;
and any extraordinary expenses.

ABOUT YOUR INVESTMENT

PURCHASE OF SHARES

14
<PAGE>

asset value per share next computed after the order is received by the
Distributor. The Fund reserves the right to suspend the sale of Shares in
response to conditions in the securities markets or for other reasons.

Individuals may not place orders to purchase Shares directly. Please refer
to the prospectus for the Separate Account of the Participating Company for more
information on the purchase of Shares.

REDEMPTION OF SHARES

DISTRIBUTION PLAN

Under a distribution plan adopted by the Trust in accordance with Rule 12b-
1 under the 1940 Act (the "Distribution Plan"), the Fund is authorized to
reimburse the Distributor for expenses it incurs in connection with assisting
Participating Companies in providing reports and information to prospective
investors and to Policy Owners and Contract Owners, as well as amounts expended
to reimburse Participating Companies for certain of their costs of training
their sales personnel. Payments to the Distributor pursuant to the Distribution
Plan may be made at the annual rate of up to [.25]% of the Fund's average net
assets.

DISTRIBUTIONS AND TAXES

DISTRIBUTIONS

TAX MATTERS

15
<PAGE>

make distributions in a manner which will avoid the imposition of any such
taxes. If, however, for any taxable year the Fund does not qualify as a
regulated investment company, then all of its taxable income will be subject to
tax at regular corporate rates (without any deduction for distributions made to
the Separate Accounts), and the receipt of such distributions will be taxable to
the extent that the distributing Fund has current and accumulated earnings and
profits.

SHAREHOLDER COMMUNICATIONS

16
<PAGE>

PERFORMANCE INFORMATION

From time to time the Fund may advertise or report certain information
about its investment performance. The Fund may present standardized and
nonstandardized total return in advertisements or other material. Standardized
total return is calculated in accordance with a formula prescribed by the SEC.
Under this method, total return is calculated by determining the difference
between the net asset value of all Shares held at the end of the period for
which a quotation is being given and the net asset value per share for each
Share held at the beginning of the period (assuming reinvestment of dividends
and other distributions), and then dividing that difference by the per Share net
asset value at the beginning of the period. (The calculations implicitly reflect
the compounding of dividends and other distributions by assuming reinvestment.)
The average annual compounded rate of return is the yearly rate of return that,
when applied evenly to each annual period and compounded, would produce the
total return for the period quoted. Nonstandardized total return differs from
standardized total return in that it may be related to a nonstandard period or
presented as an aggregate rate of return, rather than as an annual average.
Quotations of total return do not reflect charges imposed at the Account level.

Quotations of performance are historical, and should not be considered as
indicative of future results.

ADDITIONAL INFORMATION

Shares being offered pursuant to this Prospectus are Class B shares of the
Fund. Class A shares of the Fund are offered pursuant to a separate prospectus.
The Class A and Class B shares each represent interests in the Fund, but differ
in that the Class B shares, unlike Class A shares, bear certain expenses
associated with the different investor services and distribution arrangement
that has been implemented for that class. See "DISTRIBUTION PLAN".

17
<PAGE>

matters affecting the Fund on which shareholders of the Fund are entitled to
vote, shares of the Fund and any other series would generally be voted as a
separate class. Although shares of each class of the Fund will generally vote
together on matters affecting the Fund and the Trust, each class has exclusive
voting rights on matters which relate solely to its distribution or investor
services arrangements and will vote separately on any matter as to which the
interests of shareholders of the classes differ. Each Share (and fractional
Share) is entitled to that number of votes which equals the net asset value of
such Share (or fraction thereof). All shares of the Trust have non-cumulative
voting rights, meaning that shareholders entitled to cast more than 50% of the
votes for the election of Trustees can elect all of the Trustees standing for
election if they choose to do so.

Under Delaware law, shareholders of the Fund could, under certain
circumstances, be held personally liable for the obligations of the Trust but
only to the extent of the shareholder's investment. However, the Declaration of
Trust disclaims liability of the shareholders, trustees or officers of the Trust
for acts or obligations of the Trust, which are binding only on the assets and
property of the Trust and requires that notice of the disclaimer be given in
each contract or obligation entered into or executed by the Trust or the
trustees. The risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which the Trust itself
would be unable to meet its obligations and should be considered remote.

Annual meetings of shareholders will not be held except as required by the
1940 Act or other applicable law. A meeting will be held on the removal of a
trustee or trustees of the Trust if requested in writing by holders of not less
than 10% of the outstanding shares of the Trust.

Custodian. [ ] serves as custodian of the assets of the
Fund. The custodian maintains custody of all securities and other assets of the
Fund, and is authorized to hold the Fund's investments in securities depositions
and to use sub-custodians which have been approved by the Trust.

18
<PAGE>

- --------------------------------------------------------------------------------
LEVCO EQUITY VALUE FUND
- --------------------------------------------------------------------------------

INVESTMENT ADVISER

John A. Levin & Co., Inc.
One Rockefeller Center, 25th Floor
New York, New York 10020

DISTRIBUTOR

LEVCO Securities, Inc.
One Rockefeller Center, 25th Floor
New York, New York 10020

CUSTODIAN

[ ]
[ ]

TRANSFER AGENT
[ ]
[ ]

INDEPENDENT PUBLIC ACCOUNTANTS
[ ]
[ ]

LEGAL COUNSEL

Schulte Roth & Zabel LLP
900 Third Avenue
New York, New York 10022

SHAREHOLDER INQUIRIES

1 (800) [ ]

- --------------------------------------------------------------------------------
NO DEALER, SALES REPRESENTATIVE OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED
IN THIS PROSPECTUS OR IN APPROVED SALES LITERATURE IN CONNECTION WITH THE OFFER
CONTAINED HEREIN, AND IF GIVEN OR MADE, SUCH OTHER INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST
OR THE DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER BY THE TRUST OR
BY THE DISTRIBUTOR TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER.
- --------------------------------------------------------------------------------
<PAGE>

- --------------------------------------------------------------------------------
Statement of Additional Information dated [__________ __], 1997
LEVCO EQUITY VALUE FUND
(a series of LEVCO Series Trust)

One Rockefeller Plaza
25th Floor
New York, New York 10020
- --------------------------------------------------------------------------------

LEVCO Equity Value Fund (the "Fund") is a series of LEVCO Series Trust (the
"Trust"), an open-end, diversified, management investment company (commonly
known as a "mutual fund"). The investment objective of the Fund is to achieve
long-term growth of capital through an emphasis on the preservation of capital
while attempting to control volatility as measured against the Standard & Poor's
Composite 500 Stock Index (the "S&P 500"). The Fund pursues this objective by
investing its assets primarily in common stocks and other securities having
equity characteristics, which, in the opinion of the Fund's investment adviser,
are currently undervalued in relation to their intrinsic value. In pursuing its
objective, the Fund may utilize a variety of investment techniques. See
"INVESTMENT OBJECTIVE AND POLICIES." Options on securities, stock index options
and stock index futures and related options may be used by the Fund for hedging
purposes and involve certain risks.

John A. Levin & Co., Inc. (the "Investment Adviser") serves as the
investment adviser of the Fund.

Shares of the Fund, consisting of Class A and Class B shares ("Shares"),
are distributed by LEVCO Securities, Inc. (the "Distributor"). Shares are sold
only to certain life insurance companies ("Participating Companies") and their
separate accounts ("Separate Accounts") to fund benefits under variable annuity
contracts ("Contracts") and variable life insurance policies ("Policies")
offered by Participating Companies. The Separate Accounts invest in Shares in
accordance with allocation instructions received from Contract and Policy owners
("Contract Owners" and "Policy Owners"). These allocation rights are described
in the prospectus for the Separate Account. Shares are redeemed to the extent
necessary to provide benefits under the Contracts and Policies.

-------------------------------------------------------------------

A Prospectus for the Fund dated [ ], which
provides the basic information you should know before investing may be obtained
without charge from the Transfer Agent by calling: 1 (800) XXX-XXXX. This
Statement of Additional Information is not a Prospectus. It contains
information in addition to and more detailed than that set forth in the
Prospectus and is intended to provide you additional information regarding the
activities and operations of the Fund. The Statement of Additional Information
should be read in conjunction with the Prospectus.
<PAGE>

TABLE OF CONTENTS
-----------------

Page
----
INVESTMENT OBJECTIVE AND POLICIES................................ B-3
INVESTMENT RESTRICTIONS.......................................... B-8
PORTFOLIO TRANSACTIONS AND BROKERAGE............................. B-10
DETERMINATION OF NET ASSET VALUE................................. B-11
TAXES............................................................ B-12
PURCHASES AND REDEMPTIONS OF SHARES.............................. B-13
TRUSTEES AND OFFICERS............................................ B-13
INVESTMENT ADVISORY AGREEMENT.................................... B-15
DISTRIBUTOR...................................................... B-16
DISTRIBUTION PLAN [Applicable to the Class B Shares Only]........ B-16
SPECIAL INVESTMENT TECHNIQUES.................................... B-17
PERFORMANCE INFORMATION.......................................... B-19
ADDITIONAL INFORMATION........................................... B-21
STATEMENT OF ASSETS AND LIABILITIES.............................. B-23
<PAGE>

INVESTMENT OBJECTIVE AND POLICIES
---------------------------------

The sections below describe, in greater detail than in the Fund's
Prospectus, some of the different types of investments which may be made by the
Fund and the different investment practices in which the Fund may engage. The
use of options and futures contracts by the Fund are discussed on page B-17
under "SPECIAL INVESTMENT TECHNIQUES" The general investment policies of the
Fund are set forth in the Prospectus.

TYPES OF EQUITY SECURITIES
- --------------------------

Equity securities purchased by the Fund may include common and preferred
and convertible preferred stocks, and securities having equity characteristics
such as rights, warrants and convertible debt securities. See "Convertible
Securities." Common stocks and preferred stocks represent equity ownership
interests in a corporation and participate in the corporation's earnings through
dividends which may be declared by the corporation. Unlike common stocks,
preferred stocks are entitled to stated dividends payable from the corporations
earnings, which in some cases may be "cumulative" if prior stated dividends have
not been paid. Dividends payable on preferred stock have priority over
distributions to holders of common stock, and preferred stocks generally have
preferences on the distribution of assets in the event of the corporation's
liquidation. Preferred stocks may be "participating" which means that they may
be entitled to dividends in excess of the stated dividend in certain cases. The
rights of common and preferred stocks are generally subordinate to rights
associated with a corporation's debt securities. Rights and warrants are
securities which entitle the holder to purchase the securities of a company
(generally, its common stock) at a specified price during a specified time
period. Because of this feature, the values of rights and warrants are affected
by factors similar to those which determine the prices of common stocks and
exhibit similar behavior. Rights and warrants may be purchased directly or
acquired in connection with a corporate reorganization or exchange offer. The
purchase of rights and warrants are subject to certain limitations.

CONVERTIBLE SECURITIES
- ----------------------

Securities of this type may be purchased by the Fund. They include
convertible debt obligations and convertible preferred stock. A convertible
security entitles the holder to exchange it for a fixed number of shares of
common stock (or other equity security), usually at a fixed price within a
specified period of time. Until conversion, the holder receives the interest
paid on a convertible bond or the dividend preference of a preferred stock.

Convertible securities have an "investment value" which is the theoretical
value determined by the yield it provides in comparison with similar securities
without the conversion feature. The investment value changes based upon
prevailing interest rates and other factors. They also have a "conversion
value" which is the worth in market value if the security were exchanged for the
underlying equity security. Conversion value fluctuates directly with the price
of the underlying security. If conversion value is substantially below
investment value, the price of the convertible security is governed principally
by its investment value. If the conversion value is near or above investment
value, the price of the convertible security generally will rise above
investment value and may represent a premium over conversion value due to the
combination of the convertible security's right to interest (or dividend
preference) and the possibility of capital appreciation from the conversion
feature. A convertible security's price, when price is influenced primarily by
its conversion value, will generally yield less than a senior non-convertible
security of comparable investment value. Convertible securities

B-3
<PAGE>

may be purchased at varying price levels above their investment values or
conversion values. However, there is no assurance that any premium above
investment value or conversion value will be recovered because prices change
and, as a result, the ability to achieve capital appreciation through conversion
may never be realized.

FOREIGN SECURITIES
- ------------------

The Fund may invest up to 20% of its total assets, at the time of purchase,
in foreign securities, including the securities of certain Canadian issuers and
securities purchased by means of American Depository Receipts ("ADRs").
Investments in foreign securities will be affected by a number of factors which
ordinarily do not affect investments in domestic securities.

Foreign securities may be affected by changes in currency exchange rates,
exchange control regulations, changes in governmental administration or economic
or monetary policy (in the U.S. and abroad), political events, expropriation or
nationalization or confiscatory taxation. Dividends and interest paid on
foreign securities may be subject to foreign withholding and other foreign
taxes. In addition, there may be less publicly available information concerning
foreign issuers than domestic issuers, and foreign issuers may not be subject to
uniform accounting, auditing and financial reporting standards comparable to
those of domestic issuers. Securities of certain foreign issuers and in certain
foreign markets are less liquid and more volatile than domestic issues and
markets, and foreign brokerage commissions are generally higher than in the U.S.
There is also generally less regulation and supervision of exchanges, brokers
and issuers in foreign countries.

Securities denominated in foreign currencies may be affected favorably or
unfavorably by changes in foreign currency exchange rates and costs will be
incurred in converting one currency to another. Exchange rates are determined
by forces of supply and demand which forces are affected by a variety of factors
including international balances of payments, economic and financial conditions,
government intervention and speculation. Foreign currency exchange transactions
of the Fund may be effected on a "spot" basis (cash basis) at the prevailing
spot rate for purchasing or selling currency. The Fund may also utilize forward
foreign currency contracts as described below.

SHORT-TERM INVESTMENTS
- ----------------------

As discussed in the Prospectus, the Fund may invest in a variety of short-
term debt securities ("money market instruments"), including instruments issued
or guaranteed by the U.S. Government or one of its agencies or instrumentalities
("Government Securities") and repurchase agreements for such securities. Money
market instruments are generally considered to be debt securities having
remaining maturities of approximately one year or less. Government securities
are obligations guaranteed by the U.S. Government or issued by its agencies or
instrumentalities including, for example, obligations of the Export-Import Bank
of the United States, the General Services Administration, Federal Land Banks,
Farmers Home Administration and Federal Home Loan Banks. Some Government
Securities, such as U.S. Treasury obligations and obligations issued by the
Export-Import Bank and the Federal Housing Administration, are backed by the
full faith and credit of the U.S. Treasury. Others, such as those issued by
Federal Home Loan Banks, are backed by the issuer's right to borrow from the
U.S. Treasury. Some, such as those issued by the Federal National Mortgage
Association and Federal Farm Credit Banks, are backed only by the issuer's own
credit, with no guarantee of U.S. Treasury backing. Other types of money market
instruments include: certificates of deposit, bankers' acceptances, commercial
paper, letters of credit, short-term corporate obligations, and the other
obligations discussed below.

B-4
<PAGE>

The short-term investments of the Fund in bank obligations may include
certificates of deposit, bankers' acceptances, time deposits and letters of
credit. These investments will be limited to: (1) obligations of U.S.
commercial banks and savings institutions having total assets of $1 billion or
more, and instruments secured by such obligations, including obligations of
foreign branches of U.S. banks and (2) similar obligations of foreign commercial
banks having total assets of $1 billion or more or their U.S. branches which are
denominated in U.S. dollars. Obligations of foreign banks and their-.U.S.
branches are subject to the additional risks of the types generally associated
with investment in foreign securities. See "Foreign Securities." Similar risks
may apply to obligations of foreign branches of U.S. banks. There currently are
no reserve requirements applicable for obligations issued by foreign banks or
foreign branches of U.S. banks. Also, not all of the federal and state banking
laws and regulations applicable to domestic banks relating to maintenance of
reserves, loan limits and promotion of financial soundness apply to foreign
branches of domestic banks, and none of then apply to foreign banks.

Commercial paper constituting the short-term investments of the Fund must
be rated within the two highest grades by Standard & Poor's Corporation ("S&P")
or the highest grade by Moody's Investors Service, Inc. ("Moody's") or, if not
rated, must be issued by a company having an outstanding debt issue rated at
least BBB by S&P or Baa by Moody's. Other types of short-term corporate
obligations (including loan participations and master demand notes) must be
rated at least A by S&P or Moody's to qualify as a short-term investment of the
Fund, or, if not rated, must be issued by a company having an outstanding debt
issue rated at least A by Moody's or S&P. The quality standards described above
may be modified by the Fund upon the approval of its Board of Trustees. Short-
term obligations of the types described above, but not meeting applicable
quality standards, may be purchased if they are purchased subject to a
repurchase agreement with (or guaranteed as to principal and interest by) a
domestic or foreign bank, a domestic savings institution or a corporation which
meets those quality standards, or a foreign government having an outstanding
debt security rated at least AA by S&P or Aa by Moody's.

REPURCHASE AGREEMENTS
- ---------------------

As discussed in the Prospectus, the Fund may enter into repurchase
agreements involving the types of securities which are eligible for purchase by
the Fund. However, there is no limitation upon the maturity of the securities
underlying the repurchase agreements.

Repurchase agreements, which may be viewed as a type of secured lending by
the Fund, typically involve the acquisition of Government Securities or other
securities from a selling financial institution such as a bank, savings and loan
association or broker-dealer. The agreement provides that the Fund will sell
back to the institution, and that the institution will repurchase, the
underlying security ("collateral") at a specified price and at a fixed time in
the future, usually not more than seven days from the date of purchase. The
Fund will receive interest from the institution until the time when the
repurchase is to occur. Although such date is deemed to be the maturity date of
a repurchase agreement, the maturities of securities subject to repurchase
agreements are not subject to any limits and may exceed one year.

While repurchase agreements involve certain risks not associated with
direct investments in debt securities, the Fund follows procedures designed to
minimize such risks. These procedures include a requirement that the Investment
Adviser effect repurchase transactions only with large, well capitalized United
States financial institutions approved by it as creditworthy based upon periodic
review under guidelines established and monitored by the Trustees of the Fund.
In addition, the value of the collateral underlying the repurchase agreement,
which will be held by the Fund's custodian in a segregated account on behalf of
the Fund, will always be at least equal to the repurchase price, including any
accrued interest

B-5
<PAGE>

earned on the repurchase agreement. In the event of a default
or bankruptcy by a selling financial institution, the Fund will seek to
liquidate such collateral. However, the exercise of the Fund's right to
liquidate such collateral could involve certain costs or delays and, to the
extent that proceeds from any sale upon a default of the obligation to
repurchase were less than the repurchase price, the Fund could suffer a loss.
The Fund does not invest in repurchase agreements that do not mature within
seven days. Investments in repurchase agreements may at times be substantial
when, in the view of the Investment Adviser, liquidity or other considerations
warrant.

TYPES OF DEBT SECURITIES
- ------------------------

The types of debt obligations in which the Fund may invest are described in
the Prospectus. These investments are subject to certain quality limitations
and other restrictions and include money market instruments and other types of
obligations. See "INVESTMENT DESCRIPTIONS AND PRACTICES - Short-Term
Investments" and "Equity Securities" in the Prospectus. Debt obligations are
subject to various risks as described in the Prospectus. In addition, investors
should recognize that, although securities ratings issued by a securities rating
service provide a generally useful guide as to credit risks, they do not offer
any criteria to evaluate interest rate risk. Changes in interest rate levels
cause fluctuations in the prices of debt obligations and will, therefore, cause
fluctuations in net asset values per share of the Fund.

The Fund's investments in debt securities may include obligations rated
"investment grade" by a nationally recognized statistical rating organization (a
"NRSRO") or unrated obligations which are determined to be of comparable quality
by the Investment Adviser, and may also include non-investment grade
obligations. As discussed in the Prospectus, non-investment grade obligations
involve certain risks.

Subsequent to the purchase of a debt security by the Fund, the ratings or
credit quality of a debt security may deteriorate. Any such subsequent adverse
changes in the rating or quality of a security held by the Fund would not
require the Fund to sell the security. However, the Investment Adviser will
evaluate and monitor the quality of all investments and will dispose of
investments which have deteriorated in their creditworthiness or ratings as
determined to be necessary to assure that the Fund's overall investments are
constituted in a manner consistent with the investment objective of the Fund.

The economy and interest rates affect lower rated obligations differently
from other securities. For example, the prices of these obligations have been
found to be less sensitive to interest rate changes than higher rated
investments but more sensitive to adverse economic changes or individual
corporate developments. Also, during an economic downturn or substantial period
of rising interest rates, highly leveraged issuers may experience financial
stress which would adversely affect their ability to service their principal and
interest payment obligations, to meet projected business goals, and to obtain
additional financing. To the extent that there is no established retail
secondary market, there may be thin trading of lower rated obligations which may
adversely impact the ability of the Investment Adviser to accurately value such
obligations and the Fund's assets, and may also adversely impact the Fund's
ability to dispose of the obligations. Adverse publicity and investor
perceptions, whether or not based on fundamental analysis, may decrease the
values and liquidity of lower rated obligations, especially in a thinly traded
market.

Zero Coupon Securities. Debt securities purchased by the Fund may include
zero coupon securities. These securities do not pay any interest until maturity
and, for this reason, zero coupon securities of longer maturities may trade at a
deep discount from their face or par values and may be

B-6
<PAGE>

subject to greater fluctuations in market value than ordinary debt obligations
of comparable maturity. Current federal tax law requires that the holder of a
zero coupon security accrue a portion of the discount at which the security was
purchased as income each year even though the holder receives no interest
payment that year. It is not anticipated that the Fund will invest more than 5%
of its assets in zero coupon securities in the coming year.

Variable Rate Securities. Debt obligations purchased by the Fund may also
include variable and floating rate securities. The interest rates payable on
these securities are adjusted either at predesignated periodic intervals or
whenever there is a change in an established market rate of interest. Other
features may include a right whereby the Fund which holds the security may
demand prepayment of the principal amount prior to the stated maturity (a
"demand feature") and the right of an issuer to prepay the principal amount
prior to maturity. One benefit of variable and floating rate securities is
that, because of interest rate adjustments on the obligation, changes in market
value that would normally result from fluctuations in prevailing interest rates
are reduced. The benefit of a demand feature is enhanced liquidity.

FORWARD FOREIGN CURRENCY CONTRACTS
- ----------------------------------

As discussed in the Prospectus, the Fund may enter into forward currency
contracts to purchase or sell foreign currencies as a hedge against possible
variations in foreign exchange rates. A forward foreign currency exchange
contract is an agreement between the contracting parties to exchange an amount
of currency at some future time at an agreed upon rate. The rate can be higher
or lower than the spot rate between the currencies that are the subject of the
contract. A forward contract generally has no deposit requirement, and such
transactions do not involve commissions. By entering into a forward contract
for the purchase or sale of the amount of foreign currency invested in a foreign
security, the Fund can hedge against possible variations in the value of the
dollar versus the subject currency either between the date the foreign security
is purchased or sold and the date on which payment is made or received
("transaction hedging"), or during the time the Fund holds the foreign security
("position hedging"). Hedging against a decline in the value of a currency
through the use of forward contracts does not eliminate fluctuations in the
prices of securities or prevent losses if the prices of securities decline.
Hedging transactions preclude the opportunity for gain if the value of the
hedged currency should rise. The Fund will not speculate in forward currency
contracts. If the Fund enters into a "position hedging transaction," which is
the sale of forward non-U.S. currency with respect to a security held by it and
denominated in such foreign currency, the Fund's custodian will place cash or
liquid securities in a separate account in an amount equal to the value of the
Fund's total assets committed to the consummation of such forward contract. If
the value of the securities placed in the account declines, additional cash or
securities will be placed in the account so that the value of cash or securities
in the account will equal the amount of the Fund's commitments with respect to
such contracts. The Fund will not attempt to hedge all of its non-U.S.
portfolio positions and will enter into such transactions only to the extent, if
any, deemed appropriate by its Investment Adviser. The Fund will not enter into
forward contracts for terms of more than one year.

SECURITIES LOANS
- ----------------

Consistent with applicable regulatory requirements, the Fund may lend their
United States portfolio securities to brokers, dealers and other financial
institutions, provided that such loans are callable at any time by the Fund
(subject to notice provisions described below), and are at all times secured by
cash or cash equivalents, which are maintained in a segregated account pursuant
to applicable regulations and that are equal to at least the market value,
determined daily, of the loaned securities. The advantage of such loans is that
the Fund continues to receive the income on the loaned securities while at

B-7
<PAGE>

the same time earning interest on the amounts deposited as collateral, which
will be invested in short-term investments.

A loan may be terminated by the borrower on one business day notice, or by
the Fund on four business days notice. If the borrower fails to deliver the
loaned securities within four days after receipt of notice, the Fund could use
the collateral to replace the securities while holding the borrower liable for
any excess of replacement cost exceeding the collateral. As with any extensions
of credit, there are risks of delay in recovery and in some cases even loss of
rights in the collateral should the borrower of the securities fail financially.
However, loans of securities will only be made to firms deemed by the Investment
Adviser to be creditworthy (such creditworthiness will be monitored on an
ongoing basis) and when the income which can be earned from such loans justifies
the attendant risks. Upon termination of the loan, the borrower is required to
return the securities. Any gain or loss in the market price during the loan
period would inure to the Fund.

When voting or consent rights which accompany loaned securities pass to the
borrower, the Fund will follow the policy of calling the loaned securities, to
be delivered within one day after notice, to permit the exercise of such rights
if the matters involved would have a material effect on the investment in such
loaned securities. The Fund will pay reasonable finder's, administrative and
custodial fees in connection with loans of securities. The Fund will not lend
securities if to do so would cause it to have loaned securities in excess of one
third of the value of the Fund's total assets, measured at the time of such
loan. The Fund may lend foreign securities consistent with the foregoing
requirements, but has no intention of doing so in the foreseeable future.

RESTRICTED SECURITIES
- ---------------------

The Fund may invest up to 10% of its total assets in securities subject to
restrictions on disposition under the Securities Act of 1933, as amended
("restricted securities"). Such investments, however, will be limited to
certain restricted securities that may be sold to institutional investors
pursuant to Rule 144A. In some cases, these securities may be difficult to
value to the extent that they are not publicly traded, and may be difficult to
sell promptly at favorable prices. The Fund's policies are intended to enable
it to invest a limited portion of its assets in investments that are illiquid,
but which nevertheless are considered to be attractive by the Investment
Adviser. Except as described above the Fund does not purchase illiquid
securities, including repurchase agreements maturing in more than seven days.

INVESTMENT RESTRICTIONS
-----------------------

The Fund has adopted various investment restrictions on its investment
activities. Certain of these are fundamental policies which cannot be changed
without approval by the holders of a majority, as defined in the Investment
Company Act of 1940 (the "1940 Act"), of the Fund's outstanding voting shares.
For the Fund to alter a fundamental policy requires the affirmative vote of the
holders of (a) 67% or more of the shares of the Fund present at a meeting of
shareholders, if the holders of at least 50% of the outstanding shares of the
Fund are present or represented by proxy or (b) more than 50% of the outstanding
shares of the Fund, whichever is less.

Under its fundamental policies, the Fund may not:

1. Purchase or sell commodities, except that the Fund may purchase and
sell stock index futures and related options and, in connection with
its investments in foreign securities,

B-8
<PAGE>

may enter into transactions involving foreign currency, options on
foreign currency and forward foreign currency exchange contracts.

2. Purchase or sell real estate or interests therein, or purchase oil,
gas or other mineral leases, rights or royalty contracts or
development programs, except that the Fund may invest in the
securities of issuers engaged in the foregoing activities and may
invest in securities secured by real estate or interests therein.

3. Issue senior securities as defined by the 1940 Act or borrow money,
except that the Fund may borrow from banks for temporary extraordinary
or emergency purposes (but not for investment) in an amount up to 10%
of the value of the Fund's total assets (calculated at the time of the
borrowing). The Fund may not make additional investments while it has
any borrowings outstanding. This restriction shall not be deemed to
prohibit the Fund from purchasing or selling securities on a when-
issued or delayed-delivery basis, or entering into repurchase
agreements, lending portfolio securities, selling securities short
against-the-box, writing covered put and call options on securities,
stock indices and foreign currencies, in each case in accordance with
such investment policies as may be adopted by the Board of Trustees.

4. Underwrite the securities of other issuers, except to the extent that
the Fund may be deemed to be an underwriter in connection with the
disposition of portfolio securities.

5. Make loans of money or securities, except that the Fund may lend money
through the purchase of permitted investments, including repurchase
agreements, and may lend its portfolio securities in an amount not
exceeding 33-1/3% of the value of the Fund's total assets.

The Fund has adopted the following additional investment restrictions which
are not fundamental and may be changed by the Board of Trustees. Under these
restrictions, the Fund may not:

1. Make short sales of securities (other than short sales against-the-
box) or purchase securities on margin, but the Fund may make margin
deposits in connection with its permitted investment activities.

2. Invest in the securities of a company for the purpose of exercising
management or control; however, this shall not be deemed to prohibit
the Fund from exercising voting rights with respect to its portfolio
securities.

3. Pledge, mortgage, hypothecate or otherwise encumber its assets, except
to secure permitted borrowings and to implement collateral and similar
arrangements incident to permitted investment practices.

4. Purchase securities which are illiquid, including repurchase
agreements maturing in more than seven days except the Fund may invest
up to 10% of its total assets in certain restricted securities that
may be sold to institutional investors pursuant to Rule 144A.

5. Purchase securities of other investment companies, except to the
extent permitted under the 1940 Act.

B-9
<PAGE>

Except as otherwise may be stated, all percentage limitations on the Fund's
investment practices apply at the time of an investment or a transaction. A
later change in any percentage resulting from a change in value of the
investment or the total value of the Fund's assets will not constitute a
violation of such restriction.

PORTFOLIO TRANSACTIONS AND BROKERAGE
------------------------------------

Subject to the general supervision of the Fund's Board of Trustees, the
Investment Adviser is responsible for decisions to buy and sell securities for
the Fund, the selection of brokers and dealers to effect the transactions, and
the negotiation of brokerage commissions, if any. Purchases and sales of
securities on a stock exchange are effected through brokers who charge a
commission for their services. In the over-the-counter market, securities are
generally traded on a "net" basis with non-affiliated dealers acting as
principal for their own accounts without a stated commission, although the price
of the security usually includes a profit to the dealer. In underwritten
offerings, securities are purchased at a fixed price which includes an amount of
compensation to the underwriter, generally referred to as the underwriter's
concession or discount. Certain money market instruments may be purchased
directly from an issuer, in which case no commission or discounts are paid. The
Fund anticipates that its transactions involving foreign securities will be
effected primarily on principal stock exchanges for such securities. Fixed
commissions on such transactions are generally higher than negotiated
commissions on domestic transactions. There is also generally less government
supervision and regulation of foreign stock exchanges and brokers than in the
United States.

The Investment Adviser currently serves as investment adviser to a number
of clients, and may in the future act as investment adviser to other clients,
including other registered investment companies. It is the practice of the
Investment Adviser to cause purchase and sale transactions to be allocated among
the portfolios whose assets it manages in such manner as it deems equitable. In
making such allocations, the main factors considered are the respective
investment objectives, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for investment, the size of
investment commitments generally held and the opinions of the persons
responsible for managing the Fund and the other client accounts. This procedure
may, under certain circumstances, have an adverse effect on the Fund.

The policy of the Fund regarding purchases and sales of securities for it
is that primary consideration will be given to obtaining the most favorable
prices and efficient executions of transactions. Consistent with this policy,
when securities transactions are effected on a stock exchange, the Fund's policy
is to pay commissions which are considered fair and reasonable without
necessarily determining that the lowest possible commissions are paid in all
circumstances. The Board of Trustees of the Fund believes that a requirement
always to seek the lowest commission cost could impede effective management and
preclude the Fund and the Investment Adviser from obtaining high quality
brokerage and research services. In seeking to determine the reasonableness of
brokerage commissions paid in any transaction, the Investment Adviser may rely
on its experience and knowledge regarding commissions generally charged by
various brokers and on their judgment in evaluating the brokerage and research
services received from the broker effecting the transaction. Such determinations
are necessarily subjective and imprecise, as in most cases an exact dollar value
for those services is not ascertainable.

In seeking to implement the Fund's policies, the Investment Adviser effects
transactions with those brokers and dealers who they believe provide the most
favorable prices and which are capable of providing efficient executions. If
the Investment Adviser believes such price and execution are obtainable from
more than one broker or dealer, they may give consideration to placing
transactions with

B-10
<PAGE>

those brokers and dealers who also furnish research and other services to the
Fund or the Investment Adviser. Such services may include, but are not limited
to, any one or more of the following: information as to the availability of
securities for purchase or sale; statistical or factual information or opinions
pertaining to investments; wire services; and appraisals or evaluations of
securities. The information and services received by the Investment Adviser from
brokers and dealers may be of benefit in the management of accounts of other
clients and may not in all cases benefit the Fund directly. While such services
are useful and important in supplementing their own research and facilities, the
Investment Adviser believes the value of such services is not determinable and
does not significantly reduce their expenses.

Consistent with the policies described above, brokerage transactions in
securities listed on exchanges or admitted to unlisted trading privileges may be
effected through the Distributor, a registered broker-dealer which is affiliated
with the Investment Adviser. In order for such transactions to be effected, the
commissions, fees or other remuneration received by the Distributor must be
reasonable and fair compared to the commissions, fees or other remuneration paid
to other brokers in connection with comparable transactions involving similar
securities being purchased or sold on an exchange during a comparable period of
time. This standard would allow the Distributor to receive no more than the
remuneration which would be expected to be received by an unaffiliated broker in
a commensurate arm's-length transaction. In approving the use of an affiliated
broker, the Board of Trustees of the Fund, including a majority of the
Independent Trustees, has adopted procedures which are reasonably designed to
provide that any commissions, fees or other remuneration paid are consistent
with the foregoing standard.

DETERMINATION OF NET ASSET VALUE
--------------------------------

The Prospectus describes the days on which the net asset values per share
of the Fund is computed for purposes of purchases and redemptions of shares by
investors, and also sets forth the times as of which such computations are made
and the requirements applicable to the processing of purchase and redemption
orders. Net asset value is computed once daily each day the New York Stock
Exchange is open, except that no computation need be made on a day on which no
orders to purchase or redeem shares have been received. The New York Stock
Exchange ("NYSE") currently observes the following holidays: New Year's Day;
Presidents' Day (third Monday in February); Good Friday (Friday before Easter);
Memorial Day (last Monday in May); Independence Day; Labor Day (first Monday in
September); Thanksgiving Day (last Thursday in November); and Christmas Day.

In valuing the assets of the Fund for purposes of computing net asset
value, securities are appraised at market value as of the close of trading on
each business day when the NYSE is open. Securities, other than stock options,
listed on the NYSE or other exchanges are valued on the basis of the last sale
price on the exchange on which they are primarily traded. However, if the last
sale price on the NYSE is different than the last sale price on any other
exchange, the NYSE price will be used. If there are no sales on that day, then
the securities are valued at the bid price on the NYSE or other primary exchange
for that day. Securities traded in the over-the-counter market are valued on
the basis of the last sales price as reported by NASDAQ. If there are no sales
on that day, then the securities are valued at the mean between the closing bid
and asked prices as reported by NASDAQ. Stock options traded on national
securities exchanges are valued at the last sales price prior to the time of
computation of net asset value per share. Futures contracts and options
thereon, which are traded on commodities exchanges, are valued at their daily
settlement value as of the close of such commodities exchanges. Securities for
which quotations are not readily available and other assets are appraised at
fair value as determined pursuant to procedures adopted in good faith by the
Board of Trustees of the Fund. Short-

B-11
<PAGE>

term debt securities will be valued at their current market value when available
or fair value, which for securities with remaining maturities of 60 days or less
has been determined in good faith by the Board of Trustees to be represented by
amortized cost value, absent unusual circumstances. A pricing service may be
utilized to determine the fair value of securities held by the Fund. Any such
service might value the investments based on methods which include consideration
of: yields or prices of securities of comparable quality, coupon, maturity and
type; indications as to values from dealers; and general market conditions. The
service may also employ electronic data processing techniques, a matrix system
or both to determine valuation. The Board of Trustees will review and monitor
the methods used by such services to assure itself that securities are valued at
their fair values.

The values of securities held by the Fund and other assets used in
computing net asset value are determined as of the time trading in such
securities is completed each day, which, in the case of foreign securities,
generally occurs at various times prior to the close of the NYSE. Foreign
currency exchange rates are also generally determined prior to the close of the
NYSE. On occasion, the values of such securities and exchange rates may be
affected by events occurring between the time as of which determinations of such
values or exchange rates are made and the close of the NYSE. When such events
materially affect the value of securities held by the Fund or their liabilities,
such securities and liabilities will be valued at fair value in accordance with
procedures adopted in good faith by the Fund's Board of Trustees. The values of
any assets and liabilities initially expressed in foreign currencies will be
converted to U.S. dollars at the mean between the bid and offer prices of the
currencies against U.S. dollars last quoted by any major bank.

TAXES
-----

The following is only a summary of certain additional tax considerations
that are not described in the Prospectus and generally affect the Fund and its
shareholders. 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.

The Fund intends to qualify to be treated as a "regulated investment
company" ("RIC") under the Internal Revenue Code of 1986 (the "Code"). If so
qualified, the Fund will not be subject to federal income tax on its investment
company taxable income and net capital gains to the extent that such investment
company taxable income and net capital gains are distributed in each taxable
year to the Separate Accounts. In addition, if the Fund distributes annually to
the Separate Accounts its ordinary income and capital gain net income, in the
manner prescribed in the Code, it will also not be subject to the 4% federal
excise tax otherwise applicable to the RIC's on any of its income or gains.
Distributions of net investment income and net short-term capital gains will be
treated as ordinary income and distributions of net long-term capital gains will
be treated as long-term capital gain in the hands of the insurance companies.
Under current tax law, capital gains or dividends from the Fund are not
currently taxable when left to accumulate within a variable annuity or variable
life insurance contract.

Section 817(h) of the Code requires that investments of a segregated asset
account of an insurance company be "adequately diversified", in accordance with
Treasury Regulations promulgated thereunder, in order for the holders of
variable annuity contracts or variable life insurance policies investing in the
account to receive the tax-deferred or tax-free treatment generally afforded
holders of annuities or life insurance policies under the Code. The Department
of the Treasury has issued Regulations under section 817(h) which, among other
things, provide the manner in which a segregated asset account will treat
investments in a RIC for purposes of the applicable diversification
requirements. Under the Regulations, if a RIC satisfies certain conditions,
that RIC will not be treated as a single

B-12
<PAGE>

investment for these purposes, but rather the segregated asset account will be
treated as owning its proportionate share of each of the assets of the RIC. The
Fund plans to satisfy these conditions at all times so that each segregated
asset account of an insurance company investing in the Fund will be treated as
adequately diversified under the Code and Regulations.

Futures Contracts and Related Options. Accounting for futures contracts
and options on futures contracts will be in accordance with generally accepted
accounting principles. Initial margin- deposits made by the Fund upon entering
into futures contracts will be recognized as assets. During the period the
futures contract is open, changes in the value of the contract will be
recognized as unrealized gains or losses by "marking to market" on a daily basis
to reflect the market value of the contract at the end of each day's trading,
Maintenance margin payments will be made or received, depending upon whether
gains or losses are incurred.

Futures contracts, options on futures contracts and options on debt
securities held by the Fund at the end of each fiscal year of the Fund may be
required to be "marked to market" for federal income tax purposes; that is,
treated as having been sold at market value. The straddle rules of Section 1092
of the Code may require the Fund to defer losses incurred in certain
transactions involving securities and options or futures on securities, and may
affect the Fund's holding period in the asset offsetting the option or future.
The Fund's ability to engage in the options and futures transactions may be
limited by these rules.

PURCHASES AND REDEMPTIONS OF SHARES
-----------------------------------

The Fund reserves the right, in its sole discretion, to (i) suspend the
offering of shares of the Funds, and (ii) reject purchase orders when, in the
judgment of the Investment Adviser, such suspension or rejection is in the best
interest of the Fund.

The Fund may suspend redemption privileges or postpone the date of payment
(i) during any period that the New York Stock Exchange (the "NYSE") or the bond
market is closed, or trading on the NYSE is restricted as determined by the SEC,
(ii) during any period when an emergency exists as defined by the rules of the
SEC as a result of which it is not reasonably practicable for the Fund to
dispose of securities owned by it, or fairly to determine the value of its
assets, and (iii) for such other periods as the SEC may permit.

TRUSTEES AND OFFICERS
---------------------

The Board of Trustees of the Trust has the overall responsibility for
monitoring the operations of the Trust and the Fund and for supervising the
services provided by the Investment Adviser and other organizations. The
officers of the Trust are responsible for managing the day-to-day operations of
the Trust and the Fund.

B-13
<PAGE>

Set forth below is information with respect to each of the Trustees and
officers of the Trust, including their principal occupations during the past
five years.

<TABLE>
<CAPTION>
<S> <C> <C>
PRINCIPAL OCCUPATIONS
NAME, AGE AND ADDRESS POSITION(S) WITH TRUST DURING LAST FIVE YEARS
- --------------------- ---------------------- ----------------------------
[ ] Chairman of the Board of Investment adviser to
[Age & Address] Trustees private investment companies.

[ ] Vice-Chairman of the Board of Investment adviser to private
[Age & Address] Trustees and Chief Investment investment companies.
Officer

[ ] Vice President [To be added.]
[Age & Address]

[ ] Vice President [To be added.]
[Age and Address]

[ ] Vice President and Secretary [To be added.]
[Age and Address]

[ ] Vice President, [To be added.]
[Age and Address] Treasurer and
Chief Financial Officer

_________________ _________________ _________________
_________________ _________________ _________________
_________________ _________________ _________________
</TABLE>

Messrs. [ ] and [ ] are
Trustees who are "interested persons" of the Trust (as defined by the 1940 Act)
by virtue of their affiliations with the Investment Adviser or the Distributor.
Trustees who are not officers or employees of the Investment Adviser, the
Distributor or their affiliated companies, are each paid an annual retainer of
[$____] and receive an attendance fee of [$____] for each meeting of the Board
of Trustees they attend. Members of the Audit Committee, of which each of the
Trustees who are not "interested persons" of the Trust (as defined by the 1940
Act) is a member, receive an attendance fee of [$____] for each Audit Committee
meeting they attend. The Chairman of the Audit Committee receives an additional
[$____] annual fee. Officers of the Trust, all of whom are members, officers or
employees of the Investment Adviser, the Distributor, the Administrator or their
affiliates, receive no compensation from the Trust.

B-14
<PAGE>

Trustee compensation from the Trust is estimated as follows:

COMPENSATION TABLE
-------------------
<TABLE>
<CAPTION>

NAME OF AGGREGATE PENSION OR RETIREMENT ESTIMATED TOTAL COMPENSATION
PERSON, COMPENSATION BENEFITS ACCRUED AS BENEFITS UPON FROM TRUST PAID TO
POSITION FROM FUND PART OF FUND EXPENSES RETIREMENT TRUSTEES
- ------------ ------------ --------------------- ------------- ------------------
<S> <C> <C> <C> <C>
[ ] $0 $0 $0 $0

[ ] $0 $0 $0 $0

____________ $______ $0 $0 $______

____________ $______ $0 $0 $______
</TABLE>

INVESTMENT ADVISORY AGREEMENT
-----------------------------

The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "MANAGEMENT - Investment
Adviser."

The Investment Adviser is a Delaware Corporation with offices at One
Rockefeller Plaza, Twenty-fifth floor, New York, New York 10020. It is a
wholly-owned subsidiary of Baker, Fentress & Company.

The Investment Adviser provides investment advisory services to the Fund
pursuant to an Investment Advisory Agreement (the "Advisory Agreement"), dated
[__________ __], 1997 with the Trust. The Advisory Agreement was approved by
the Trust's Board of Trustees, including a majority of the Trustees who are not
"interested persons" (as defined by the 1940 Act) of the Trust at a meeting held
on [__________ __], 1997, and was also approved on such date by the vote of the
sole shareholder of the Trust on such date. The Advisory Agreement is
terminable without penalty, on 60 days notice, by the Trust's Board or by vote
of the holders of a majority of the Fund's shares, or, on not less than 90 days
notice, by the Investment Adviser. The Advisory Agreement has an initial term
expiring on [__________ __], [1999], and may be continued in effect from year to
year thereafter subject to the approval thereof by (i) the Trust's Board or (ii)
vote of a majority (as defined by the 1940 Act) of the outstanding voting
securities of the Fund, provided that in either event the continuance must also
be approved by a majority of the Trustees who are not "interested persons" (as
defined by the 1940 Act) of the Trust or the Investment Adviser, by vote cast in
person at a meeting called for the purpose of voting on such approval. The
Advisory Agreement provides that it will terminate automatically in the event of
its "assignment" (as defined by the 1940 Act and the rules thereunder).

The Investment Adviser manages the Fund's investments in accordance with
the stated policies of the Fund, subject to the supervision of the Trust's
Board. The Investment Adviser is responsible for all investment decisions for
the Fund and for placing orders for the purchase and sale of investments for the
Fund's portfolio. The Investment Adviser also provides such additional
administrative services

B-15
<PAGE>

as the Trust or the Fund may require beyond those furnished by the Administrator
and furnishes, at its own expense, such office space, facilities, equipment,
clerical help, and other personnel and services as may reasonably be necessary
in connection with the operations of the Trust and the Fund. In addition, the
Investment Adviser pays the salaries of officers of the Trust and any fees and
expenses of Trustees of the Trust who are also officers, directors or employees
of the Investment Adviser or who are officers or employees of any company
affiliated with the Investment Adviser and bears the cost of telephone service,
heat, light, power and other utilities associated with the services it provides.

In consideration of the services provided by the Investment Adviser, the
Fund pays the Investment Adviser a monthly fee computed at the annual rate of
[.85]% of the Fund's average daily net assets.

DISTRIBUTOR
-----------

Shares of the Fund are distributed on a continuous basis at their current
net asset value per share, without imposition of any front-end or contingent
deferred sales charge, by LEVCO Securities, Inc. (the "Distributor"). The
Distributor provides these services to the Fund pursuant to a Distribution
Agreement (the "Distribution Agreement"), dated [__________ __], 1997, with the
Trust. The Distribution Agreement was approved by the Board of Trustees,
including a majority of the Trustees who are not parties to the Distribution
Agreement or "interested persons" (as defined by the 1940 Act) of the Investment
Adviser or the Distributor, at a meeting held on [__________ __], 1997. The
Distribution Agreement is terminable without penalty, on 60 days notice, by the
Trust's Board or by vote of the holders of a majority of the Fund's shares, or,
on not less than 90 days notice, by the Distributor. The Distribution Agreement
has an initial term expiring on __________ __, [1999], and may be continued in
effect from year-to-year thereafter, subject to the approval by (i) the Trust's
Board or (ii) vote of the holders of a majority of the Fund's outstanding
shares, provided that in either event the continuance must also be approved by a
majority of the Trustees who are not "interested persons" (as defined by the
1940 Act) of the Investment Adviser or the Distributor, by vote cast in person
at a meeting called for the purpose of voting on such approval. The
Distribution Agreement provides that it will terminate automatically in the
event of its "assignment" (as defined by the 1940 Act and the rules thereunder).

Under the terms of the Distribution Agreement, the Distributor bears all of
the costs associated with distribution of the shares of the Fund, including the
incremental cost of printing prospectuses, statements of additional information,
annual reports and other periodic reports for distribution to prospective
investors and the costs of preparing, distributing and publishing sales
literature and advertising materials. However, pursuant to a plan of
distribution adopted by the Trust, the Fund makes certain payments to the
Distributor for services provided by the Distributor with respect to the Class B
Shares. These payments are borne solely by holders of the Class B Shares and
are not an expense of Class A Shares. See "DISTRIBUTION PLAN." In the
Distribution Agreement, the Trust has agreed to indemnify the Distributor to the
extent permitted by applicable law against certain liabilities under the
Securities Act of 1933, as amended.

The offices of the Distributor are located at One Rockefeller Plaza, 25th
Floor, New York, New York 10020. The Distributor is a wholly-owned subsidiary
of the Investment Adviser.

DISTRIBUTION PLAN [APPLICABLE TO THE CLASS B SHARES ONLY]
---------------------------------------------------------

The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus for Class B Shares entitled
"Distribution Plan."

B-16
<PAGE>

Distribution Plan. Rule 12b-1 (the "Rule") adopted by the Securities and
Exchange Commission under the 1940 Act provides, among other things, that an
investment company may bear expenses of distributing its shares only pursuant to
a plan adopted in accordance with the Rule. The Fund's Board has adopted such a
plan (the "Distribution Plan") with respect to the Class B Shares, pursuant to
which the Fund may pay the Distributor up to [0.25%] annually of the Fund's
average net assets to reimburse the Distributor for the amounts it may expend in
connection with assisting Participating Companies in providing reports,
information to prospective investors and to Policy Owners and Contract Owners,
as well as amounts expended to reimburse Participating Companies for certain of
their costs of training their sales personnel. The Fund's Board believes that
there is a reasonable likelihood that the Distribution Plan will benefit the
Fund and holders of Class B shares.

A quarterly report of the amounts expended under the Distribution Plan, and
the purposes for which such expenditures were incurred, must be made to the
Board for its review. In addition, the Distribution Plan provides that it may
not be amended to increase materially the costs which holders of Class B shares
may bear for distribution pursuant to the Distribution Plan without the approval
of such shareholders and that other material amendments to the Distribution Plan
must be approved by the Board, and by the Board members who are not "interested
persons" (as defined in the 1940 Act) of the Fund and have no direct or indirect
financial interest in the operation of the Distribution Plan or in any
agreements entered into in connection with the Distribution Plan, by vote cast
in person at a meeting called for the purpose of considering such amendments.
The Distribution Plan is subject to annual approval by such vote of the Board
members cast in person at a meeting called for the purpose of voting on the
Distribution Plan. The Distribution Plan may be terminated at any time by vote
of a majority of the Board members who are not "interested persons" and have no
direct or indirect financial interest in the operation of the Distribution Plan
or in any agreements entered into in connection with the Distribution Plan or by
vote of the holders of a majority of shares.

SPECIAL INVESTMENT TECHNIQUES
-----------------------------

As discussed in the Prospectus, the Fund may engage in certain transactions
in options and futures contracts and options on futures contracts. The specific
transactions in which the Fund may engage are noted and described in the
Prospectus. The discussion below provides additional information regarding the
use of options on stock indices and stock index futures.

REGULATORY MATTERS
- ------------------

The Fund will comply with and adhere to all limitations on the manner and
extent to which they effect transactions in futures and options on such futures
currently imposed by the rules and policy guidelines of the Commodity Futures
Trading Commission as conditions for exemption of a mutual fund, or investment
advisers thereto, from registration as a commodity pool operator. Under those
restrictions, the Fund will not, as to any positions, whether long, short or a
combination thereof, enter into futures and options thereon for which the
aggregate initial margins and premiums exceed 5% of the fair market value of its
assets after taking into account unrealized profits and losses on options it has
entered into. In the case of an option that is "in-the-money," the in-the-money
amount may be excluded in computing such 5%. (In general, a call option on a
future is "in-the-money" if the value of the future exceeds the exercise
("strike") price of the call; a put option on a future is "in-the-money" if the
value of the future which is the subject of the put is exceeded by the strike
price of the put.) The Fund may use futures and options thereon solely for bona
fide hedging or for other non-speculative purposes within the meaning and intent
of the applicable provisions of the Commodities Exchange Act and regulations
thereunder. As to long positions which are used as part of the Fund's
investment strategy and are incidental to its

B-17
<PAGE>

activities in the underlying cash market, the "underlying commodity value" of
the Fund's futures and options thereon must not exceed the sum of (i) cash set
aside in an identifiable manner, or short-term U.S. debt obligations or other
dollar-denominated high-quality, short-term money instruments so set aside, plus
sums deposited on margin; (ii) cash proceeds from existing investments due in 30
days; and (iii) accrued profits held at the futures commission merchant. The
"underlying commodity value" of a future is computed by multiplying the size of
the future by the daily settlement price of the future. For an option on a
future, that value is the underlying commodity value of the future underlying
the option.

RISKS OF OPTIONS ON STOCK INDICES
- ---------------------------------

As discussed in the Prospectus, the purchase and sale of options on stock
indices will be subject to risks applicable to options transactions generally.
In addition, the distinctive characteristics of options on indices create
certain risks that are not present with stock options. Index prices may be
distorted if trading of certain stocks included in the index is interrupted.
Trading in index options also may be interrupted in certain circumstances such
as if trading were halted in a substantial number of stocks included in the
index or if dissemination of the current level of an underlying index is
interrupted. If this occurs, the Fund would not be able to close out options
which it had purchased and, if restrictions on exercise were imposed, may be
unable to exercise an option it holds, which could result in losses if the
underlying index moves adversely before trading resumes. However, it is a
policy to purchase options only on indices which include a sufficient number of
stocks so that the likelihood of a trading halt in the index is minimized.

The purchaser of an index option may also be subject to a timing risk. If
an option is exercised by the Fund before final determination of the closing
index value for that day, the risk exists that the level of the underlying index
may subsequently change. If such a change caused the exercised option to fall
out-of-the-money (that is, the exercising of the option would result in a loss,
not a gain), the Fund would be required to pay the difference between the
closing index value and the exercise price of the option (times the applicable
multiplier) to the assigned writer. Although the Fund may be able to minimize
this risk by withholding exercise instructions until just before the daily
cutoff time, it may not be possible to eliminate this risk entirely because the
exercise cutoff times for index options may be earlier than those fixed for
other types of options and may occur before definitive closing index values are
announced. Alternatively, when the index level is close to the exercise price,
the Fund may sell rather than exercise the option. Although the markets for
certain index option contracts have developed rapidly, the markets for other
index options are not as liquid. The ability to establish and close out
positions on such options will be subject to the development and maintenance of
a liquid secondary market. It is not certain that this market will develop in
all index option contracts. The Fund will not purchase or sell any index option
contract unless and until in the opinion of the Investment Adviser the market
for such options has developed sufficiently that such risk in connection with
such transactions is no greater than such risk in connection with options on
stocks.

STOCK INDEX FUTURES CHARACTERISTICS
- -----------------------------------

Currently, stock index futures contracts can be purchased or sold with
respect to several different stock indices, each based on a different measure of
market performance. A determination as to which of the index contracts would be
appropriate for purchase or sale by the Fund will be based upon, among other
things, the liquidity offered by such contracts and the volatility of the
underlying index.

Unlike when the Fund purchases or sells a security, no price is paid or
received the Fund upon the purchase or sale of a futures contract. Instead, the
Fund will be required to deposit in its segregated

B-18
<PAGE>

asset account an amount of cash or qualifying securities (currently U.S.
Treasury bills) currently ranging from approximately 10% to 15% of the contract
amount. This is called "initial margin." Such initial margin is in the nature of
a performance bond or good faith deposit on the contract which is returned to
the Fund upon termination of the futures contract. Gains and losses on open
contracts are required to be reflected in cash in the form of variation margin
payments which the Fund may be required to make during the term of the contracts
to its broker. Such payments would be required where, during the term of a stock
index futures contract purchased by the Fund, the price of the underlying stock
index declined, thereby making the Fund's position less valuable. In all
instances involving the purchase of stock index futures contracts by the Fund,
an amount of cash together with such other securities as permitted by applicable
regulatory authorities to be utilized for such purpose, at least equal to the
market value of the futures contracts, will be deposited in a segregated account
with the Fund's custodian to collateralize the position. At any time prior to
the expiration of a futures contract, the Fund may elect to close its position
by taking an opposite position which will operate to terminate its position in
the futures contract.

Where futures are purchased to hedge against a possible increase in the
price of a security before the Fund is able to fashion its program to invest in
the security or in options on the security, it is possible that the market may
decline instead. If the Fund, as a result, concluded not to make the planned
investment at that time because of concern as to the possible further market
decline or for other reasons, the Fund would realize a loss on the futures
contract that is not offset by a reduction in the price of securities purchased.

In addition to the possibility that there may be an imperfect correlation
or no correlation at all between movements in the stock index future and the
portion of the portfolio being hedged, the price of stock index futures may not
correlate perfectly with movements in the stock index due to certain market
distortions. All participants in the futures market are subject to margin
deposit and maintenance requirements. Rather than meeting additional margin
deposit requirements, investors may close futures contracts through offsetting
transactions which could distort the normal relationship between the index
itself and the value of a future. Moreover, the deposit requirements in the
futures market are less onerous than margin requirements in the securities
market and may therefore cause increased participation by speculators in the
futures market. Such increased participation may also cause temporary price
distortions. Due to the possibility of price distortion in the futures market
and because of the imperfect correlation between movements in stock indices and
movements in the prices of stock index futures, the value of stock index futures
contracts as a hedging device may be reduced. In addition, if the Fund has
insufficient available cash, it may at times have to sell securities to meet
variation margin requirements. Such sales may have to be effected at a time
when it may be disadvantageous to do so.

PERFORMANCE INFORMATION
-----------------------

The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "PERFORMANCE INFORMATION."

GENERALLY
- ---------

As discussed in the Prospectus, from time to time the Trust may disseminate
quotations of total return and other performance related and comparative
information.

From time to time, the performance of the Fund may be compared to the
performance of other mutual funds following similar objectives or to recognized
market indices. Comparative performance information may be used from time to
time in advertising or marketing the Fund's shares, including data

B-19

<PAGE>

from Lipper Analytical Services, Inc., the S&P 500, the Wilshire 5000 Index, the
Dow Jones Industrial Average, Money Magazine, Morningstar, Inc. and other
industry publications. The Fund's return may also be compared to the cost of
living (measured by the Consumer Price Index) or the return of various
categories of investments (as measured by Ibbotson Associates or others) over
the same period. In addition to performance rankings, the Fund may compare its
total expense ratio to the average total expense ratio of similar funds tracked
by Lipper Analytical Services, Inc.

In advertising materials, the Trust may quote or reprint financial or
business publications and periodicals, including model portfolios or
allocations, as they relate to current economic and political conditions, fund
management, portfolio composition, investment philosophy, investment techniques,
the desirability of owning a particular mutual fund, and the Investment
Adviser's services and products. The Investment Adviser may provide information
designed to clarify investment goals and explore various financial strategies.
Such information may include information about current economic, market, and
political conditions; materials that describe general principles of investing,
such as asset allocation, diversification, risk tolerance, and goal setting.
Materials may also include discussions of other products and services offered by
the Investment Adviser.

The Trust may quote various measures of the volatility and benchmark
correlation of the Fund in advertising. In addition, the Trust may compare these
measures to those of other funds. Measures of volatility seek to compare the
Fund's historical share price fluctuations or total returns to those of a
benchmark. Measures of benchmark correlation indicate how valid a comparative
benchmark may be. All measures of volatility and correlation are calculated
using averages of historical data.

TOTAL RETURN
- ------------

The Fund's quotations of total return will reflect the average annual
compounded rate of return on an assumed investment of $1,000 that equates the
initial amount invested to the ending redeemable value according to the
following formula:

P (1 + T)/n/ = ERV

"P" represents a hypothetical initial investment of $1,000; "T" represents
average annual total return; "n" represents the number of years; and "ERV"
represents the ending redeemable value of the initial investment. Dividends and
other distributions are assumed to be reinvested in shares at the prices in
effect on the reinvestment dates. ERV will be adjusted to reflect the effect of
the Investment Adviser's agreement to absorb certain expenses as discussed in
the Prospectus. Quotations of total return will be for a one year, five year and
ten year periods ended on the date of the most recent balance sheet included in
the Trust's registration statement at such times as the registration statement
has been in effect for such periods. Until such time as the registration has
been effective for the one year, five year and ten year periods, the Fund's
quotations of total return will also include a quotation of total return for the
time period during which the registration statement has been in effect or
commencement of operations, whichever is later. The Fund may also provide
quotations of total return

B-20

<PAGE>

for other periods and quotations of cumulative total returns, which reflect the
actual performance of the Fund over the entire period for which the quotation is
given.

NET ASSET VALUE
- ---------------

Charts and graphs using the Fund's net asset values, adjusted net asset
values, and benchmark indices may be used to exhibit performance. An adjusted
net asset value includes any distributions paid by the Fund and reflects all
elements of its return.

ADDITIONAL INFORMATION
----------------------

CUSTODIAN
- ---------

[name] [address] serves as custodian of the Trust's assets and maintains
custody of the Fund's cash and investments. Cash held by the custodian, which
may at times be substantial, is insured by the Federal Deposit Insurance
Corporation up to the amount of available insurance coverage limits (presently,
$100,000).

CONTROL PERSONS AND HOLDERS OF SECURITIES
- -----------------------------------------

As of [______________], 1997, Baker, Fentress & Company and the Investment
Adviser [ ] may be deemed to control the Trust and the Fund by
virtue of the Investment Adviser's record and beneficial ownership of all of the
outstanding shares of the Fund. These control relationships will continue to
exist until such time as the above-described share ownership represents 25% or
less of the outstanding shares of the Fund. Through the exercise of voting
rights with respect to shares of the Fund, the controlling persons set forth
above may be able to determine the outcome of shareholder voting on matters as
to which approval of shareholders is required.

INDEPENDENT ACCOUNTANTS
- -----------------------

[____________], [address], serve as the independent accountants of the
Fund. Financial Statements of the Fund appearing in the Fund's annual report
will be audited by [___________].

ADMINISTRATIVE, ACCOUNTING AND TRANSFER AGENCY SERVICES
- -------------------------------------------------------

[ , Inc., (the "Administrator")], provides various
administrative, accounting services, and transfer agency services to the Fund
pursuant to an Accounting Services and Administration Agreement dated as of
[ ]. Under the Agreement, the Administrator provides the Fund with
necessary accounting services incident to their operations and securities
transactions, determines the net asset values per share of the Fund in
accordance with policies adopted by the Fund's Board of Trustees, maintains the
Fund's books of account and such required records as may be related to these
services. The Administrator also provides certain administration services in
connection with the operations of the Fund. These services include the
preparation of drafts of various reports, tax returns, and financial
statements, and compliance monitoring. The Fund pays the Administrator a monthly
fee computed at the annual rate of [____%] of the average assets of the Fund
during the month (with lower percentage rates applicable if such assets exceed
$[____] million), plus certain expenses. The Administrator also provides
transfer agency services and dividend disbursing services to the Fund.

B-21

<PAGE>

REPORTS TO SHAREHOLDERS
- -----------------------

Shareholders of the Fund will be kept fully informed through annual and
semi-annual reports showing diversification of investments, securities owned and
other information regarding the Fund's activities. The financial statements of
the Fund must be audited at least once a year by the Fund's independent
accountants.

LEGAL COUNSEL
- -------------

Schulte Roth & Zabel LLP, 900 Third Avenue, New York, New York 10022 and
also serves as counsel to the Investment Adviser and its affiliates on certain
matters.

REGISTRATION STATEMENT
- ----------------------

This Statement of Additional Information and the Prospectus do not contain
all of the information set forth in the Registration Statement the Fund has
filed with the Securities and Exchange Commission. The complete Registration
Statement may be obtained from the Securities and Exchange Commission upon
payment of the fee prescribed by the rules and regulations of the Commission.

B-22

<PAGE>

STATEMENT OF ASSETS AND LIABILITIES
-----------------------------------

*To be filed by pre-effective amendment

B-23
<PAGE>

FORM N-1A

LEVCO SERIES TRUST

PART C - OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS

(a) Financial Statements:

(1) Statement of Assets and Liabilities.*

(2) Report of Independent Accountants.*

(b) Exhibits

(1) (a) Certificate of Trust dated January 2, 1997.*

(b) Declaration of Trust dated January 2, 1997.*

(2) By-Laws.*

(4) Instruments Defining the Rights of Holders of Securities.*

(5) Investment Advisory Contract.*

(6) Underwriting or Distribution Contract.*

(8) Custodian Agreement.*

(9) Contracts Not Made in the Ordinary Course of Business.*

(10) Opinion and Consent of Schulte Roth & Zabel LLP.*

(11) Consent of Independent Accountants.*

*To be filed by Pre-effective Amendment.

C-1
<PAGE>

(13) Letter of Investment Intent.*

(15) Plan Pursuant to Rule 12b-1.*

(17) Financial Data Schedule.*

(18) Plan Pursuant to Rule 18f-3.*

ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT

The Fund may be deemed to be controlled by John A. Levin & Co., an
investment adviser which is registered under the Investment Advisers Act of
1940, as amended (the "Advisers Act"), is the Investment Adviser to the
Registrant. The Investment Adviser is a wholly owned subsidiary of Baker,
Fentress & Company. Levco Securities, Inc., the distributor, is also a wholly
owned subsidiary of Baker, Fentress & Company.

ITEM 26. NUMBER OF HOLDERS OF SECURITIES

<TABLE>
<CAPTION>
Title of Class Number of Record Holders
-------------- ------------------------
<S> <C>
Shares of Beneficial Interest in Levco None.
Equity Value Fund
</TABLE>

ITEM. 27. INDEMNIFICATION

A Delaware business trust may provide in its governing instrument for
indemnification of its officers and trustees from and against any and all claims
and demands whatsoever. Article III, Section 7 of the Declaration of Trust
provides that if any Shareholder or former Shareholder shall be exposed to
liability by reason of a claim or demand relating to his or her being or having
been a Shareholder, and not because of his or her acts or omissions, the
Shareholder or former Shareholder (or his or her heirs, executors,
administrators, or other legal representatives or in the case of a corporation
or other entity, its corporate or other general successor) shall be entitled to
be held harmless from and indemnified out of the assets of the Trust against all
loss and expense arising from such claim or demand.

Pursuant to Article VII, Section 2 of the Declaration of Trust, the
Trustees shall not be responsible or liable in any event for any neglect or
wrongdoing of any officer, agent, employee, Investment Manager or Principal
Underwriter of the Trust, nor shall any Trustee be

*To be filed by Pre-effective Amendment.

C-2

<PAGE>

responsible for the act or omission of any other Trustee, and the Trust out of
its assets shall indemnify and hold harmless each and every Trustee from and
against any and all claims and demands whatsoever arising out of or related to
each Trustee's performance of his duties as a Trustee of the Trust to the
fullest extent permitted by law; provided that nothing herein contained shall
indemnify, hold harmless or protect any Trustee from or against any liability to
the Trust or any Shareholder to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.

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 such 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, officers or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person
in connection with the securities 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 such Act and will be governed by
the final adjudication of such issue.

ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

The Investment Adviser is primarily engaged in the business of
providing investment advice. Reference is made to the Investment Adviser's most
recent Form ADV and Schedules thereto on file with the Commission for a
description of its directors, officers and other required information.

John A. Levin & Co. File No. 801-52602.

ITEM 29. PRINCIPAL UNDERWRITERS

Levco Securities, Inc., a wholly owned subsidiary of Baker, Fentress &
Company, acts as the sole underwriter distributing securities of The Registrant.

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS

All accounting and financial books and records required to be
maintained under Section 31(a) of the Investment Company Act of 1940, as
amended, and the rules promulgated thereunder with respect to the Registrant
will be maintained by the Administrator of the Fund. All other books and records
are maintained at the following office:

C-3
<PAGE>

Levco Series Trust
One Rockefeller Plaza, 25th Floor
New York, New York 10020

ITEM 31. MANAGEMENT SERVICES

Other than as set forth in Parts A and B of this Registration
Statement, the Registrant is not a party to any management-related service
contract.

ITEM 32. UNDERTAKINGS

Registrant undertakes to file a post-effective amendment, using
financial statements which need not be certified, within four to six months from
the effective date of the Registrant's 1933 Act Registration Statement.

C-4
<PAGE>

SIGNATURES

Pursuant to the requirements of the Investment Company Act of 1940 The
Registrant certifies that it has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereto duly authorized, in the City of
New York, and State of New York on the 2nd day of January, 1997.

LEVCO SERIES TRUST

By: /s/ John A. Levin
-----------------
Name: John A. Levin
Title: President

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.

/s/ John A. Levin Trustee January 2, 1997
----------------- ----------------------- ---------------
John A. Levin

/s/ Jeffrey A. Kigner Trustee January 2, 1997
--------------------- ----------------------- ---------------
Jeffrey A. Kigner

/s/ Glenn A. Aigen Chief Financial Officer January 2, 1997
--------------------- ----------------------- ---------------
Glenn A. Aigen

C-5