<PAGE>
As filed with the Securities and Exchange Commission on March __, 1997
Investment Company Act File No. 811-_______
Securities Act File No. 33-______
--------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
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.)
-----------------------
LEVCO INVESTMENT 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)
Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
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.
- --------------------------------------------------------------------------------
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.
<PAGE>
FORM N-1A
LEVCO SERIES TRUST
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
PART A
ITEM NUMBER CAPTION LOCATION
- ----------- ------- --------
<C> <S> <C>
1. Cover Page Cover Page
2. Synopsis Prospectus Summary and
Summary of Expenses
3. Condensed Financial Information *
4. General Description of Prospectus Summary; About
Registrant the Fund; Investment
Objectives and Policies;
Investment Restrictions;
Special Investment Techniques;
Additional Information
5. Management of Fund Prospective Summary; Management;
Additional Information; Fund
Expenses;
5A. Management's Discussion of
Fund Performance *
6. Capital Stock and Other Prospectus Summary; Additional
Securities Information; Distributions and
Taxes; Shareholder
Communications
7. Purchase of Securities How to Buy Shares
Being Offered
8. Redemption or Repurchase How to Redeem Shares
9. Pending Legal Proceedings *
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
PART B
ITEM NUMBER CAPTION LOCATION
- ----------- ------- --------
<C> <S> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History *
13. Investment Objectives and Investment Objectives and
Policies Policies; Investment
Restrictions; Special
Investment Techniques
14. Management of the Fund Trustees and Officers
15. Control Persons and Principal Additional Information
Holders of Securities
16. Investment Advisory and Investment Advisory Agreement;
Other Services Additional Information
17. Brokerage Allocation and Portfolio Transactions and
Other Practices Brokerage
18. Capital Stock and Other *
Securities
19. Purchase, Redemption and Pricing Determination of Net Asset
of Securities Being Offered Value; Purchases and Redemptions
of Shares
20. Tax Status Taxes
21. Underwriters Distributor
22. Calculation of Performance Data Performance Information
</TABLE>
-ii-
<PAGE>
<TABLE>
<CAPTION>
PART B
ITEM NUMBER CAPTION LOCATION
- ----------- ------- --------
<C> <S> <C>
23. Financial Statements Because Registrant has no
assets, financial statements
are omitted
</TABLE>
- -------------------------------------------------------------------------------
* Omitted because answer is negative or inapplicable.
PART C
- ------
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.
-iii-
<PAGE>
PRELIMINARY PROSPECTUS--SUBJECT TO COMPLETION--March 14, 1997
- --------------------------------------------------------------------------------
Prospectus Dated [ ], 1997
CRESCENDO GROWTH AND INCOME FUND
One Rockefeller Plaza
25th Floor
New York, New York 10020
- --------------------------------------------------------------------------------
Crescendo Growth and Income Fund (the "Fund") is a series of LEVCO
Investment Trust (the "Trust"), an open-end, diversified, management investment
company (commonly known as a mutual fund). The investment objectives of the
Fund are long-term growth of capital and current income. The Fund pursues these
objectives by investing its assets primarily in common stocks and other
securities having equity characteristics which, in the opinion of the Fund's
investment adviser, offer superior potential for growth and pay current
dividends. The Fund will also purchase common stocks and other equity
securities which do not pay current dividends, but which offer prospects for
growth of capital and future income, and may purchase debt securities to earn
current income. In pursuing its objectives, the Fund may utilize a variety of
investment techniques. See "INVESTMENT OBJECTIVES AND POLICIES." Options on
securities and stock index options may be used in pursuing the Fund's
objectives. These instruments as well as stock index futures and related
options may also be used for hedging purposes. Use of these instruments
involves certain risks. See "SPECIAL INVESTMENT TECHNIQUES."
John A. Levin & Co., Inc. (the "Investment Adviser") serves as the
investment adviser of the Fund.
Shares of the Fund are distributed on a continuous basis at their current
net asset value per share, without imposition of any sales charge, by LEVCO
Securities, Inc. (the "Distributor"). The minimum initial investment in the
Fund is $2,000. Subsequent investments may be made in any amount of $500 or
more. See "HOW TO BUY SHARES."
The Fund's investment policies and practices involve certain risks and
there can be no assurance that the Fund will achieve its investment objectives.
See "INVESTMENT OBJECTIVES AND POLICIES."
____________________
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.
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 ANY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE.
<PAGE>
- -------------------------------------------------------------------------------
TABLE OF CONTENTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
PROSPECTUS SUMMARY.......................................................... 1
SUMMARY OF EXPENSES......................................................... 3
ABOUT THE FUND.............................................................. 5
INVESTMENT OBJECTIVES AND POLICIES.......................................... 5
INVESTMENT RESTRICTIONS..................................................... 9
SPECIAL INVESTMENT TECHNIQUES............................................... 10
MANAGEMENT.................................................................. 11
FUND EXPENSES............................................................... 12
HOW TO BUY SHARES........................................................... 13
HOW TO REDEEM SHARES........................................................ 14
DISTRIBUTIONS AND TAXES..................................................... 16
SHAREHOLDER COMMUNICATIONS.................................................. 17
PERFORMANCE INFORMATION..................................................... 17
ADDITIONAL INFORMATION...................................................... 17
</TABLE>
<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 Crescendo Growth and Income Fund (the "Fund") is a
series of LEVCO Investment Trust (the "Trust"), an
open-end, diversified, management investment
company (commonly known as a mutual fund). The
investment objectives of the Fund are long-term
growth of capital and current income. The Fund
pursues these objectives by investing its assets
primarily in common stocks and other securities
having equity characteristics which show potential
for growth and pay current dividends. The Fund
may also purchase common stocks and other equity
securities which do not pay current dividends, but
which offer prospects for growth of capital and
future income, and may purchase debt securities to
earn current income. See "INVESTMENT OBJECTIVES
AND POLICIES." The Fund may use options on
securities and stock index options in pursuing its
investment objectives. It may also use these
instruments as well as stock index futures and
related options for hedging purposes. Use of
these instruments involves certain risks. See
"SPECIAL INVESTMENT TECHNIQUES."
The Fund's investment policies and practices
involve certain risks and there can be no
assurance that the Fund will achieve its
investment objectives. See "INVESTMENT OBJECTIVES
AND POLICIES."
Investment Adviser John A. Levin & Co., Inc., serves as the Fund's
investment adviser (the "Investment Adviser").
Together with its predecessor, 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 whose shares are 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."
Purchasing Shares Shares of the Fund are distributed on a continuous
basis at their current net asset value per share,
without imposition of any sales charge, by LEVCO
Securities, Inc. (the "Distributor"). The minimum
initial investment in the Fund is $2,000.
Subsequent investments may be made in any amount
of $500 or more. See "HOW TO BUY SHARES."
Redeeming Shares Shares are redeemable at their then current net
asset value per share, which may be more or less
than their cost. See "HOW TO REDEEM
<PAGE>
SHARES."
Administrator [__________] (the "Administrator") supplies
various administrative services to the Fund.
Fees and Expenses The Fund pays a fee to the Investment Adviser
which is calculated daily and payable monthly at
the annual zate of 0.75% of average daily net
assets of the Fund. The Administrator is paid a
monthly fee which is calculated at the annual rate
of [____] of the average daily net assets of the
Fund. In addition, the Fund bears other expenses
associated with its operations. See "FUND
EXPENSES."
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."
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 of 1996, as amended (the "Code"). 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.
Shareholders will have to pay any applicable
federal, state and local income taxes on the
dividends and distributions they receive from the
Fund, whether paid in cash or reinvested in
additional shares of the Fund. See "DISTRIBUTIONS
AND TAXES."
Risk 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 objectives, policies and practices
of the Fund and consider their ability to assume
the risks associated with an investment in the
Fund. Certain of the Fund's investment practices
involve special 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 OBJECTIVES AND POLICIES" and "SPECIAL
INVESTMENT TECHNIQUES."
2
<PAGE>
SUMMARY OF EXPENSES
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases NONE
(as a percentage of offering price)
Maximum Sales Load Imposed on Reinvestment of Dividends NONE
Maximum Deferred Sales Load NONE
Redemption Fees NONE
ANNUAL FUND OPERATING EXPENSES: Net of
(as a percentage of average net assets): Reimbursement
-------------
Management Fee 0.75%
12b-1 Fees None
Other Expenses (after reimbursement) 0.35%
------
Total Fund Operating Expenses 1.10%
The purpose of the foregoing table is to assist investors in understanding
the various costs and expenses that they will bear directly or indirectly as
shareholders of the Fund. The amounts set forth under "Other Expenses," as well
as the amounts in the example below, are based upon estimates of expenses for
the current fiscal year. The Investment Adviser has voluntarily agreed to waive
its fee and to absorb expenses of the Fund to the extent necessary to maintain
the ordinary operating expenses of the Fund at no greater than 1.10% of the
Fund's average daily net assets. See "FUND EXPENSES." Absent this undertaking
by the Investment Adviser, and assuming average net assets of the Fund of
$__________ (which cannot be assured), Other Expenses would be __% of the Fund's
average net assets (based on estimated expenses for the Fund's first year of
operations) and Total Fund Operating Expenses would be __% of the Fund's average
net assets. The Investment Adviser reserves the right to modify or terminate at
any time its agreement to waive fees and absorb expenses.
EXAMPLE: 1 3
YEAR YEARS
---- -----
You would pay the following expenses on
a $1,000 investment, assuming (1) a 5%
annual return and (2) redemption at $___ $____
the end of each time period:
The above example is based upon estimated Total Operating Expenses as set
forth in the table above, which reflect the Investment Adviser's agreement to
waive its fee and to absorb certain expenses of the Fund. The example should
not be considered a representation of past or future expenses and actual
expenses may be greater or less than those shown. Annual return may also be
greater or less than the annual return assumed in the example.
3
<PAGE>
For a more complete description of fees and expenses, see "FUND EXPENSES"
and "MANAGEMENT - Investment Adviser."
4
<PAGE>
ABOUT THE FUND
Crescendo Growth and Income Fund (the "Fund"), is a series of LEVCO
Investment Trust (the "Trust"), a Delaware 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 Fund's investment adviser is John A. Levin & Co., Inc.
(the "Investment Adviser"). As of the date of this Prospectus, the Fund had
not yet commenced operations.
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives of the Fund are long-term growth of capital and
current income. The Fund pursues these objectives 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"), which, in the opinion
of the Investment Adviser, offer superior potential for growth and also pay
current dividends. In evaluating the growth potential of 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; the potential impact of new products and services; and various
qualitative factors. The payment of current dividends and income are also
considered by the Investment Adviser in selecting investments in Equity
Securities. However, the Fund may purchase common stocks and other equity
securities which do not pay current dividends, but which offer prospects for
growth of capital and future income. The Fund may also purchase debt securities
and write covered call options in order to earn current income.
The Fund may use options on securities and stock index options in pursuing
its investment objectives. In addition, the Fund may use these options and
stock index futures and related options for hedging purposes. These investments
involve special risks. See "SPECIAL INVESTMENT TECHNIQUES."
Debt securities purchased by the Fund may include U.S. Government
securities and corporate debt securities (such as bonds, notes and debentures),
including non-investment grade debt securities (commonly known as "high yield"
or "junk" bonds) which involve certain risks. See "Non-Investment Grade Debt
Securities". The Fund may also invest in money market instruments (see "Short-
Term Investments"), including repurchase agreements. During periods of 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.
The Investment Adviser will allocate the Fund's investments among different
industries and companies, and will adjust the percentage of the Fund's assets
invested in different types of securities, as it determines in its investment
judgment to be appropriate from time to time, consistent with the investment
objectives of the Fund. Under normal market conditions, the Fund intends to
invest at least 50% of the value of its total assets in Equity Securities which
pay current dividends.
The Fund's investment policies and practices involve certain risks and
there can be no assurance that the Fund will achieve its investment objectives.
5
<PAGE>
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 to manage its exposure to changing stock and bond prices.
See "Special Investment Techniques."
Common Stock. Common stocks are shares of a company that represent an
equity interest and entitle the holder to share in the profits, if any, of the
company 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 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. 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. 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 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 or duration of debt securities purchased by the Fund. The
interest rates payable on debt securities may be fixed, floating or variable.
Some debt securities, such as zero coupon bonds, do not pay current interest,
but are purchased at a discount from their face values. Debt securities
purchased by the Fund may also include money market instruments.
6
<PAGE>
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
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
NRSROs, notwithstanding the fact that a lower rating has been given by any other
NRSRO.
Money Market Instruments. 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 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.
Illiquid Securities. The Fund may invest up to 10% of its total assets in
illiquid securities, including securities that are subject to restrictions on
disposition under the Securities Act of 1933, as amended ("restricted
securities"). Illiquid securities involve the risk that the securities will not
be able to be sold at the time desired by the Investment Adviser or at prices
approximating the value at which the Fund is carrying the securities. The Fund
is not required to receive registration rights in connection with the purchase
of restricted and illiquid securities and, in the absence of such rights,
marketability and value can be adversely affected. Investments in restricted
securities may include securities which may be resold to institutional investors
pursuant to Rule 144A under the Securities Act of 1933. The Board of Trustees
of the Trust may adopt policies under which certain securities purchased in Rule
144A offerings
7
<PAGE>
may be deemed to be liquid if they satisfy specified criteria. Securities
meeting these criteria will not be subject to the 10% limitation on investments
in restricted securities.
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 in order to protect the U.S.
dollar value of a foreign security held by the Fund. 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
times 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. 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, 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
8
<PAGE>
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
150%. 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 turnover rate of the Fund may be higher than the estimate
set forth above. A high portfolio turnover rate will result in higher brokerage
costs to the Fund and may also result in the realization of greater capital
gains which will be subject to tax, including short-term gains which will be
taxable to shareholders at ordinary income tax rates. See "FUND EXPENSES" and
"DISTRIBUTIONS AND TAXES".
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 objectives 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 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.
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SPECIAL INVESTMENT TECHNIQUES
The Fund may purchase and sell (or write) options on individual stocks (or
baskets of stocks) and stock index options in pursuing its investment objectives
or for hedging purposes. The Fund may also purchase and sell stock index
futures and related options, but only for hedging purposes. Use of these
techniques involves special risks. See "Risks of Futures and Options" below.
There is no requirement that the Fund hedge its investments. More detailed
descriptions of the Fund's use of options and futures and their risks are
contained in the Statement of Additional Information.
Use of Futures and Options
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 (or purchase put options on such contracts) in
anticipation of a general market or market sector decline that might adversely
affect the prices of the Fund's portfolio securities. Similarly, the Fund may
purchase put options on stocks (including baskets of stocks) and on stock
indices to provide protection against a decline in the price of a stock or a
market sector below a specified level or a general market decline. To the
extent that there is a correlation between these financial instruments and the
position being hedged, the use of options and futures can reduce the Fund's
exposure to general market risk and permit the Fund to retain its securities
positions. The value of a put option would be expected to rise as a result of a
decline in the value of the position being hedged and thus could offset all or a
portion of losses resulting from declines in the value of that position.
However, option premiums tend to decrease over time as the expiration date
nears. Therefore, because of the cost of an option (in the form of premium and
transaction costs), the Fund would suffer a loss in a put option if prices do
not decline sufficiently to offset the deterioration in the value of the option
premium.
The Fund may purchase call options on individual stocks, baskets of stocks
and stock indices in seeking to profit from increases in stock prices, and
purchase such options and stock index futures contracts (or purchase 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. 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 fall. At the same time, the Fund would suffer a
loss if stock prices do not rise sufficiently to offset the cost of the option.
The Fund may purchase and write options in combination with each other to adjust
the risk and return of its overall investment positions.
The Fund may also write (sell) covered call options with respect to
securities in its portfolio. The premium that the Fund receives from writing a
call option will supplement the Fund's income and to that extent will provide a
partial hedge against a decline in the price of the securities. The Fund may
also write call options on stock indices. The Fund will write only covered call
options. A call option on securities will be covered if the Fund has in its
portfolio (or has the right to acquire at no cost) the securities subject to the
option, or if the Fund owns an option that 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 on securities 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. A stock 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
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<PAGE>
predetermined level on or before the expiration date of the option. The Fund
may terminate its obligations as the writer of 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. However,
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. The Fund's options transactions may be
effected both on securities exchanges and in the over-the-counter market.
Risks of Futures and Options
The purchase and sale of options, and futures contracts and related
options, involve risks different from those associated with direct investments
in securities, and also require the use of different skills by the Investment
Adviser than those used in managing the Fund's direct investments in stocks.
While utilization of options, futures contracts and similar instruments may be
advantageous to the Fund, if the Investment Adviser is not successful in using
these instruments 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. When
the Fund writes an option, 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, and there is a risk, particularly in the
case of over-the-counter options, that the Fund may be unable to close out or
liquidate its position. Over-the-counter options also involve the risk that the
counterparty to the Fund's transaction will not honor its contractual
commitments under an option. The Fund's options and futures transactions will
subject the Fund to commissions and other costs which may increase the Fund's
expenses and reduce its yield. The Fund's current policy is to limit options
and futures transactions to those described above.
Limitations on Use of Futures and Options
The Fund will not enter into a futures contract or related option 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.
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.
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<PAGE>
Investment Adviser
John A. Levin & Co., Inc. provides investment advisory services to the
Fund. 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 the 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 0.75% of the
Fund's average daily net assets.
Together with its predecessor, 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 whose shares are listed on the New York Stock
Exchange (the "NYSE"). 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 persons who serve as the portfolio managers of the Fund, and their
business experience during the past five years (including positions with the
Investment Adviser and its predecessor), are as follows:
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.
The Investment Adviser may allocate purchase and sale orders for portfolio
securities to broker-dealers that are affiliated with the Investment Adviser, if
the Investment Adviser believes that the quality of the transaction and the
commissions are comparable to what they would be with other qualified broker-
dealers.
Administrator
[ ] (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 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 the 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 LEVCO Securities, Inc. (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
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<PAGE>
Administrator; fees of the Fund's independent accountants, custodian and
transfer agent 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. As discussed under "SUMMARY OF
EXPENSES," the Investment Adviser has voluntarily agreed to waive its fee and to
absorb expenses of the Fund to the extent necessary to limit the ordinary
operating expenses of the Fund to a specified percentage of the Fund's average
daily net assets. The Investment Adviser may modify or terminate this
undertaking at any time.
HOW TO BUY SHARES
Shares of the Fund are available for purchase by investors through
the Distributor. All purchases of shares are effected at the net asset value
per share of the Fund next computed after the receipt of a purchase order by the
Transfer Agent and payment by check or federal funds. See "Share Price" below.
No sales charge is imposed in connection with the purchase of shares. Stock
certificates for shares will not be issued. Instead, the Transfer Agent
maintains an account for each shareholder reflecting full and fractional shares
of the Fund owned, and sends shareholders confirmations of each transaction and
quarterly statements showing account balances. The Fund reserves the right to
reject any order to purchase shares.
The minimum initial investment in the Fund by an investor is $2,000.
Subsequent investments may be made in any amount of $500 or more. The Fund may
waive these minimum investment requirements in special circumstances and may
modify these requirements at any time.
Shares of the Fund may be purchased by check or federal funds wire using
the procedures described below.
The Distributor is an indirect, wholly owned subsidiary of Baker Fentress.
Its address is One Rockefeller Plaza, New York, New York 10020.
Purchase by Mail
Checks to purchase shares of the Fund must be drawn on a U.S. bank and made
payable to "Crescendo Growth and Income Fund." Checks should be sent, together
with a completed Account Application in the case of an initial investment, to:
Crescendo Growth and Income Fund, c/o [_________________]. Subsequent
investments should be accompanied with an investment slip (which will be
enclosed with confirmations and statements sent to investors), and your Fund
account number should be written on the check. Third party checks will not be
accepted.
All checks are accepted subject to collection. In the event that an
investor's check does not clear, the Fund will hold the investor liable for the
full amount of any decrease in the value of the shares that have been issued and
for any collection costs incurred by the Fund. Payments for redemptions of
shares recently purchased by check may be delayed to assure that the purchase
check clears, which may take up to 15 days from the Transfer Agent's receipt of
the check. This delay can be avoided if shares are purchased by wire and will
also not apply if there are sufficient other shares in the account from which to
satisfy the requested redemption.
13
<PAGE>
PURCHASE BY WIRE
Shares can be purchased by federal funds wire. To send a wire payment, you
should have your bank transmit federal funds to: [ ],
Transmit Number [ ], Attn.: Crescendo Growth and Income Fund, Account
Name (Name of Investor). In the case of an initial investment, you should
obtain an account number by calling 1-800-________ before wiring funds. A
completed Account Application, including your account number, should be
submitted promptly after wiring federal funds for an initial investment.
For further information regarding the procedures to be used in purchasing
shares, you may contact the Distributor or call 1-800-________.
PLEASE BE SURE TO SUBMIT A COMPLETED ACCOUNT APPLICATION WITH ALL INITIAL
PURCHASES. AN ACCOUNT APPLICATION MUST BE ON FILE WITH THE TRANSFER AGENT IN
ORDER TO REDEEM SHARES.
SHARE PRICE
The Fund's net asset value per share is determined once daily as of the
close of trading on the floor of the NYSE (currently 4:00 p.m., New York time),
on each day the NYSE is open for business. Net asset value per share is
computed by dividing the value of the Fund's net assets (i.e., the value of its
assets less its liabilities) by the total number of Fund shares outstanding.
The Fund's investments are valued at their market value or, if market quotations
are not readily available, at their fair value as determined by the Investment
Adviser in accordance with procedures adopted by the Fund's Board of Trustees.
HOW TO REDEEM SHARES
Shares of the Fund may be redeemed at any time at their current net asset
value per share next computed after receipt of a redemption request in proper
form. See "HOW TO BUY SHARES - Share Price." No charges are imposed in
connection with redemptions of shares. The value of the shares redeemed may be
more or less than their original cost.
The Fund ordinarily will make payment for all shares redeemed within seven
days after receipt by the Transfer Agent of a redemption request in proper form,
but may be delayed for more than seven days as provided by SEC rules. However,
if you purchase shares by check and submit shortly thereafter a redemption
request, the redemption proceeds will not be transmitted to you until your
purchase check has cleared, which may take up to 15 days. Prior to the time any
redemption is effective, dividends on such shares will accrue and be payable,
and you will be entitled to exercise all other rights of ownership. Shares may
not be redeemed unless you have submitted a completed Account Application which
is on file with the Transfer Agent.
The Fund may suspend redemption privileges or postpone the date of payment
(i) during any period that 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 in its
portfolio, or fairly to determine the value of its assets, and (iii) for such
other periods as the SEC may permit.
The Fund reserves the right to redeem at its option, upon not less than 45
days' written notice, the account of any shareholder that, as a result of a
redemption of shares, has a value of less than $2,000 if
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<PAGE>
the shareholder does not purchase additional shares to increase the account
value to at least $2,000 during the notice period. In addition, although
redemption proceeds will normally be paid by check or wire, if the Board of
Trustees determines that it would be detrimental to the best interests of
remaining shareholders, redemption payments may be made in whole or in part by
the distribution of portfolio securities held by the Fund.
Shares of the Fund may be redeemed by using one of the procedures described
below. For further information regarding redemption procedures, you may contact
the Distributor or call 1-800-________.
WRITTEN REDEMPTION REQUESTS
You may redeem shares by written request mailed to: Crescendo Growth and
Income Fund, c/o [___________]. A written request must be signed by each
shareholder, including each owner of a joint account, and each signature must be
guaranteed. The Transfer Agent has adopted standards and procedures pursuant to
which signature guarantees in proper form generally will be accepted from
domestic banks, brokers, dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings associations,
as well as from participants in the New York Stock Exchange Medallion Signature
Program, the Securities Transfer Agents Medallion Program ("STAMP") and the
Stock Exchanges Medallion Program. If you have any questions with respect to
signature guarantees, please call 1-800-________.
The proceeds of the redemption of shares redeemed by written request will
normally be paid by check made payable to the shareholders of record. However,
you may request that redemption proceeds of $1,000 or more be wired to any
member bank of the Federal Reserve System if you have previously on your Account
Application, or on a Shareholder Services Form filed with the Transfer Agent,
designated an account at such bank to which redemption proceeds may be wired.
TELEPHONE REDEMPTION REQUESTS
You may redeem shares by telephone request if you have checked the
appropriate box on the Account Application or have filed a Shareholder Services
Form with the Transfer Agent. If you have selected this option, you may place a
redemption request by calling 1-800-________. The proceeds of telephone
redemptions in the amount of $1,000 or more will be wired to your account at any
member bank of the Federal Reserve System if you have previously designated an
account at such a bank to which redemption proceeds may be wired. Otherwise
redemption proceeds will be paid by check made payable to the shareholder of
record.
During times of extreme economic or market conditions, you may experience
difficulty in contacting the Transfer Agent by telephone to request a redemption
of Fund shares. In such cases, you should consider using a written redemption
request sent by overnight service to: Crescendo Growth and Income Fund, c/o
[______________________]. Using this procedure may result in your redemption
request being processed at a later time that it would have been if the telephone
redemption procedure had been used. During the delay, the Fund's net asset
value may fluctuate.
By selecting the telephone redemption option, you authorize the Transfer
Agent to act on telephone instructions reasonably believed by the Transfer Agent
to be genuine. The Transfer Agent employs reasonable procedures, such as
requiring a form of personal identification, to confirm that telephone
redemption instructions are genuine, and neither the Fund nor the Transfer Agent
will be liable
15
<PAGE>
for any losses due to unauthorized or fraudulent instructions if such procedures
are followed. The Fund reserves the right to refuse any request made by
telephone, including requests made shortly after a change of address, and may
limit the number of such requests within a specified period.
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,
unless a shareholder has elected to be paid dividends and other distributions by
check.
Taxes
The Fund intends to qualify each year as a regulated investment company by
satisfying the requirements of Subchapter M of the Internal Revenue Code of
1986, 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.
Shareholders will have to pay any applicable federal income taxes on the
dividends and distributions they receive from the Fund, whether paid in cash or
reinvested in additional shares of the Fund. Dividends and distributions will
also be subject to applicable state and local taxes. Dividends derived from net
investment income or net realized short-term capital gains and all or a portion
of any gains realized from the sale or other disposition of certain market
discount bonds will be taxable to shareholders as ordinary income for federal
income tax purposes. Distributions from net realized long-term capital gains
will be taxable to shareholders as long-term capital gains for federal income
tax purposes, regardless of how long a shareholder has held shares. Each year,
shareholders of the Fund will be sent full information on dividends and capital
gains distributions for tax purposes, including information as to the portion
taxable as ordinary income, the portion taxable as long-term capital gains and
the amount of dividends eligible for the dividends received deduction available
for corporations.
Redemptions of shares of the Fund will result in the recognition of any
gain or loss for federal income tax purposes.
The foregoing discussion regarding Federal taxation is for general
information only. It 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. Prospective investors should consult their own tax
advisors concerning federal and state tax consequences.
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<PAGE>
SHAREHOLDER COMMUNICATIONS
Shareholder Reports
The Fund sends shareholders annual and semi-annual reports without charge.
These reports include financial statements and will also generally include
information regarding the Fund's investment performance. The financial
statements of the Fund appearing in the Fund's annual reports are audited by
[________________], the Fund's independent public accountants.
Shareholder Inquiries
For questions concerning shareholder accounts, dividends and share purchase
and redemption procedures, a shareholder may contact the Distributor or may call
the Transfer Agent toll free at 1-800-xxx-xxxx.
PERFORMANCE INFORMATION
From time to time the Fund may advertise or report certain information
about its investment performance. The Fund may present standardized and non-
standardized 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. Non-standardized 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.
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 stock market performance. 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.
ADDITIONAL INFORMATION
Description of Shares. The Trust is a Delaware business trust organized
pursuant to a Certificate of Trust dated ______________. Under its Declaration
of Trust, the Trust is authorized to issue an unlimited number of shares of
beneficial interest, $.001 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,
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<PAGE>
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.
Shareholders of the Fund 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, and also have the right to vote on
certain other matters as provided by the 1940 Act and the Declaration of Trust.
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 shareholders, Trustees and 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, and also provides transfer agency services and dividend disbursing
services. The custodian maintains custody of all securities and other assets of
the Fund, and is authorized to hold the Fund's investments in securities
depositories and to use sub-custodians which have been approved by the Trust.
Control Persons. As of the date of this Prospectus, all of the outstanding
shares of the Fund were owned by M.__________, an interested person of the Fund.
This control relationship 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 the shares, the
controlling person set forth above may be able to determine the outcome of
shareholder voting on matters as to which shareholder approval is required.
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.
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- --------------------------------------------------------------------------------
CRESCENDO GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
Investment Adviser
John A. Levin & Co., Inc.
One Rockefeller Center
New York, New York 10020
Distributor
LEVCO Securities, Inc.
One Rockefeller Center
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 -- SUBJECT TO COMPLETION -- MARCH 14, 1997
- --------------------------------------------------------------------------------
Statement of Additional Information dated [__________ __], 1997
CRESCENDO GROWTH AND INCOME FUND
(a series of LEVCO Investment Trust)
One Rockefeller Plaza
25th Floor
New York, New York 10020
- --------------------------------------------------------------------------------
Crescendo Growth and Income Fund (the "Fund") is a series of LEVCO
Investment Trust (the "Trust"), an open-end, diversified, management investment
company (commonly known as a "mutual fund"). The investment objectives of the
Fund are long-term growth of capital and current income. The Fund pursues these
objectives by investing its assets primarily in common stocks and other
securities having equity characteristics, which, in the opinion of the Fund's
investment adviser, offer superior potential for growth and pay current
dividends. The Fund will also purchase common stocks and other equity securities
which do not pay current dividends, but which offer prospects for growth of
capital and future income, and may purchase debt securities to earn current
income. In pursuing its objectives, the Fund may utilize a variety of investment
techniques. See "INVESTMENT OBJECTIVES 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. See "SPECIAL INVESTMENT
TECHNIQUES."
John A. Levin & Co., Inc. (the "Investment Adviser") serves as the
investment adviser of the Fund.
LEVCO Securities, Inc. (the "Distributor"), an affiliate of the Investment
Adviser, is the distributor of the Fund's shares. Shares may be purchased from
the distributor without the imposition of any sales charges. The minimum initial
investment in the Fund is $2,000. Subsequent investments may be made in any
amount of $500 or more.
------------------------
Information about the Fund is set forth in a separate Prospectus for the
Fund, dated _______________, 1997, which provides the basic information you
should know before investing. To obtain a copy of the Fund's Prospectus, please
write to the Fund at the address printed on this page or call 1-800-xxx-xxxx.
This Statement of Additional Information is not a prospectus, but contains
information in addition to and more detailed than that set forth in the
Prospectus. It is intended to provide you with additional information regarding
the activities and operations of the Fund and the Trust, and should be read in
conjunction with the Prospectus.
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 ANY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS STATEMENT OF ADDITIONAL INFORMATION DOES NOT CONSTITUTE A
PROSPECTUS.
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TABLE OF CONTENTS
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INVESTMENT OBJECTIVES AND POLICIES......................................... 3
INVESTMENT RESTRICTIONS.................................................... 8
PORTFOLIO TRANSACTIONS AND BROKERAGE....................................... 10
DETERMINATION OF NET ASSET VALUE........................................... 11
TAXES...................................................................... 12
PURCHASES AND REDEMPTIONS OF SHARES........................................ 14
TRUSTEES AND OFFICERS...................................................... 14
INVESTMENT ADVISORY AGREEMENT.............................................. 16
DISTRIBUTOR................................................................ 17
SPECIAL INVESTMENT TECHNIQUES.............................................. 17
PERFORMANCE INFORMATION.................................................... 20
ADDITIONAL INFORMATION..................................................... 21
STATEMENT OF ASSETS AND LIABILITIES........................................ 23
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INVESTMENT OBJECTIVES AND POLICIES
----------------------------------
The sections below describe, in greater detail than described in the Fund's
Prospectus, some of the different types of investments which may be made by the
Fund, as well as the different investment practices in which the Fund may
engage. The use of options and futures contracts by the Fund is discussed on
page B-17 under "SPECIAL INVESTMENT TECHNIQUES". Investors should see the
Prospectus for a description of the general investment policies of the Fund.
Types of Equity Securities
- --------------------------
Equity securities purchased by the Fund may include common, 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 a corporation's earnings through
dividends declared by the corporation. Unlike common stocks, preferred stocks
are entitled to stated dividends payable from the corporation's earnings, which
if prior stated dividends have not been paid may be "cumulative". Dividends
payable on preferred stock have priority over distributions to holders of common
stock, and holders of preferred stocks generally have a preference 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. The rights of common and preferred
stocks are generally subordinate to the rights of the holders of 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 period. For this reason, the values of
rights and warrants are affected by factors similar to those which determine the
prices of common stocks. Rights and warrants may be purchased directly or may
be acquired in connection with a corporate reorganization or exchange offer.
Convertible Securities
- ----------------------
Convertible securities (e.g., convertible debt obligations and convertible
preferred stock) entitle the holder to exchange the security for a fixed number
of shares of common stock (or other equity security), usually at a fixed price
and for a specified period of time. The holder receives the interest paid on a
convertible bond or the dividend preference of a preferred stock until the date
of conversion.
Convertible securities have an "investment value", which is defined as the
theoretical value determined by the yield they provide in comparison with
similar securities without the conversion feature. The investment value changes
based upon prevailing interest rates and other factors. Convertible securities
also have a "conversion value", which is the market value of the convertible
security were it to be exchanged for the underlying equity security. The
conversion value fluctuates with changes in the price of the underlying
security. If the conversion value is substantially below the investment value,
the price of the convertible security is governed principally by its investment
value. If the conversion value is near or above the investment value, the price
of the convertible security generally will rise above the investment value and
may represent a premium over the 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. An investment
in a convertible security, when the price of such security is influenced
primarily by the conversion value, will generally yield less than a senior
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<PAGE>
non-convertible security of comparable investment value. Convertible securities
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 since 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 securities purchased by means of American
Depository Receipts ("ADRs") and other depository receipts. 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 currency exchange rates changes,
exchange control regulations, changes in governmental administration and
economic or monetary policy (both in the U.S. and abroad), political events,
expropriation, nationalization and confiscatory taxation. Dividends and
interest paid on foreign securities may be subject to foreign taxes, including
withholding taxes. In addition, there may be less publicly available
information about foreign issuers than is available about 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 securities in certain foreign markets are less
liquid and more volatile than domestic securities, and foreign brokerage
commissions are generally higher than those 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. Furthermore, costs
are incurred in converting one currency to another. Exchange rates are
determined by forces of supply and demand, which are affected by a variety of
factors, including international balances of payments, economic and financial
conditions, government intervention and speculation. Foreign currency exchange
transactions 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.
All these factors can make foreign investments more volatile than an
investment in domestic securities.
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 either guaranteed by the U.S. Government or issued by its
agencies or instrumentalities and include, 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 backing of the U.S. Treasury. Other
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<PAGE>
types of money market instruments include certificates of deposit, bankers'
acceptances, commercial paper, letters of credit, short-term corporate
obligations, and other obligations as discussed below.
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, (2) instruments secured by such obligations, including obligations of
foreign branches of U.S. banks and (3) 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 additional risks of the type generally associated with
investment in foreign securities. See "Foreign Securities". Similar risks may
apply to the obligations of foreign branches of U.S. banks. There currently are
no reserve requirements applicable to obligations issued by foreign banks or
foreign branches of U.S. banks. Also, not all federal and state banking laws
and regulations applicable to domestic banks relating to the maintenance of
reserves, loan limits and the promotion of financial soundness apply to foreign
branches of domestic banks, and none 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, will only be purchased subject to a repurchase agreement with
(or guaranteed as to principal and interest by) a domestic or foreign bank, a
domestic savings institution, a corporation which meets such 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 securities which are eligible for purchase by the Fund.
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 typically provides that the
investor will sell back to the institution, and the institution will repurchase,
the underlying security (the "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 investor will receive interest from the institution until the repurchase
date. 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 the Investment Adviser as creditworthy
based upon periodic review under guidelines established and monitored by the
Trustees of the Fund. In addition, the
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<PAGE>
value of the collateral underlying the repurchase agreement, which is 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 earned
on the repurchase agreement. In the event of a default by or the bankruptcy of 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 may 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 so 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" in the Prospectus.
Debt obligations are subject to various risks. In addition, investors should
recognize that although securities ratings issued by securities rating services
generally serve as a useful guide 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 the net asset value 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") and unrated obligations determined by the Investment Adviser to be of
comparable quality, 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
change in the rating or quality of a security held by the Fund will 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 where such disposal is
determined to be necessary to assure that the Fund's overall investments are
consistent with its investment objectives.
Lower rated obligations are affected differently from other securities by
interest rates and the economy. For example, the prices of such 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 will adversely affect their ability to service their principal and
interest payment obligations, meet projected business goals, and 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 such 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. No interest payments are made on zero coupon securities
prior to maturity and, for this reason, zero coupon securities of longer
maturities may trade at a deep discount from their face or par
B-6
<PAGE>
value and may be 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 investor who 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 to exchange an amount of currency at some future time
at an agreed upon rate. The rate may 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,
through the use of forward contracts, against a decline in the value of a
currency does not eliminate fluctuations in the prices of securities or prevent
losses if such prices 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 either 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 and securities in the account will equal
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 deemed appropriate by the 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 its
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 U.S.
Government securities, or any combination thereof, 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
B-7
<PAGE>
loaned securities. The advantage of such loans is that the Fund continues to
receive the income on the loaned securities while at the same time earning
interest on the amounts deposited as collateral.
A loan may be terminated by the borrower on one business day's 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 may use the
collateral to replace the securities while holding the borrower liable for the
excess of the replacement cost over the collateral. As with any extensions of
credit, there are risks of delayed recovery and in some cases even loss of
rights in the collateral should the borrower 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
will only be made when the income to be earned justifies the attendant risks.
The borrower is required to return the securities upon the termination of the
loan. Any gain or loss in the market price during the loan period will inure to
the Fund.
When voting or consent rights accompanying 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 the loan would result in the Fund having loaned securities in
excess of one third of its 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.
"WHEN-ISSUED" SECURITIES
- ------------------------
Securities purchased on a forward commitment or when-issued basis are
subject to changes in value (generally changing in the same way, i.e.,
appreciating when interest rates decline and depreciating when interest rates
rise) based upon the public's perception of the creditworthiness of the issuer
and changes, real or anticipated, in the level of interest rates. Securities
purchased on a forward commitment or when-issued basis may expose the Fund to
risks because they may experience such fluctuations prior to their actual
delivery. The purchase of securities on a when-issued basis can involve the
additional risk that the yield available in the market when the delivery takes
place actually may be higher than that obtained in the transaction itself. The
purchase of securities on a forward commitment or when-issued basis when the
Fund is fully or almost fully invested may result in greater potential
fluctuation in the value of the Fund's net assets and its net asset value per
share.
ILLIQUID SECURITIES
- -------------------
The Fund may invest up to 10% of its total assets in illiquid securities,
including securities subject to restrictions on disposition under the Securities
Act of 1933, as amended ("restricted securities"). In some cases, restricted
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.
INVESTMENT RESTRICTIONS
-----------------------
The Fund has adopted various investment restrictions on its investment
activities. Some are fundamental policies, which may only be changed by vote of
a majority of the Fund's outstanding
B-8
<PAGE>
voting shares, as defined in the Investment Company Act of 1940 (the "1940
Act"). A majority for this purpose is defined as the lesser 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.
Under its fundamental policies, the Fund may not:
1. Purchase or sell commodities, except that the Fund may purchase and
sell financial futures and related options and, in connection with its
investments in foreign securities, may enter into transactions
involving foreign currency, options on foreign currency and forward
foreign currency exchange contracts, in each case in accordance with
such investment policies as may be adopted by the Board of Trustees.
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
borrowings exceeding 5% of the value of its total assets 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, or 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.
6. Purchase a security, other than U.S. Government Securities, if as a
result of such purchase 25% or more of the value of its total assets
would be invested in the securities of issuers engaged in any one
industry.
7. 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 any class of securities, or of the
voting securities, of any one issuer. For purposes of this
restriction, all outstanding indebtedness of an issuer is deemed to be
a single class.
B-9
<PAGE>
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
control, but the Fund may exercise its 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. Invest more than 10% of its total assets in illiquid securities.
5. Purchase securities of other investment companies, except to the
extent permitted under the 1940 Act.
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 in 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 for the dealer. In underwritten
offerings, securities are purchased at a fixed price which includes 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 commissions or discounts are paid. The Fund
anticipates that its transactions involving foreign securities will be effected
primarily on the 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
B-10
<PAGE>
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 its
portfolio 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 it believes provide the most
favorable prices and which are capable of providing efficient executions. If the
Investment Adviser believes such prices and execution are obtainable from more
than one broker or dealer, it may give consideration to placing transactions
with 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 its own research and
facilities, the Investment Adviser believes the value of such services is not
determinable and does not significantly reduce its 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 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 comparable 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 Fund's net asset value per
share is computed for purposes of the purchase and redemption of shares, and
also sets forth the times as of which such computation is made and the
requirements applicable to the processing of purchase and redemption orders. Net
asset value per share is computed once daily each day the New York Stock
Exchange (the
B-11
<PAGE>
"NYSE") is open. The 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, 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 price 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. Other assets, including securities
for which quotations are not readily available, are appraised at fair value as
determined pursuant to procedures adopted in good faith by the Board of Trustees
of the Fund. Absent unusual circumstances, short-term debt securities will be
valued at their current market value when available, or otherwise at their 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. 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 value.
The value of securities held by the Fund and other assets used in computing
net asset value is 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 their 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.
B-12
<PAGE>
It is the policy of the Fund each fiscal year to distribute substantially
all of its net investment income and net realized capital gains, if any, to the
shareholders. The Fund intends to qualify as a regulated investment company
under the provisions of the Internal Revenue Code of 1986, as amended. If so
qualified, the Fund will not be subject to federal income tax on that part of
its net investment income and net realized capital gains which is distributed to
the shareholders. To qualify for such tax treatment, the Fund must generally,
among other things, (a) derive at least 90% of its gross income from dividends,
interest (including payments received with respect to loans of stock and
securities) and gains from the sale or other disposition of stock or securities
and certain related income; (b) derive less than 30% of its gross income from
the sale or other disposition of stock or securities or options or futures
thereon and certain other investments held less than three months; and (c)
diversify its holdings so that at the end of each fiscal quarter (i) 50% of the
market value of the Fund's assets is represented by cash, Government Securities
and other securities limited, in respect of any one issuer, to an amount not
greater than 5% of the Fund's assets or 10% of the voting securities of the
issuer, and (ii) not more than 25% of the value of its assets is invested in the
securities of any one issuer (other than Government Securities). These
requirements may limit the ability of the Fund to engage in transactions
involving options and futures.
Under present Delaware law, the Trust is not subject to any state income
taxation during any fiscal year in which the Fund qualifies as a regulated
investment company. However, the Trust might be subject to Delaware income taxes
for any taxable year in which the Fund does not so qualify. Further, the Trust
may be subject to tax in certain states where it does business. In those states
which have income tax laws, the tax treatment of the Trust and its shareholders
in respect to distributions may differ from federal tax treatment.
Shareholders will be notified annually by the Fund as to the federal tax
status of dividends and distributions paid to or reinvested by the shareholder
for the preceding taxable year. In addition, dividend and long-term capital
gains distributions may also be subject to state and local taxes. Each
shareholder is advised to consult its own tax adviser concerning the tax effects
of share ownership.
It should be noted that both dividends and capital gains distributions
received by a shareholder have the effect of reducing the net asset value of the
shares by the exact amount of the dividend or capital gains distribution. If the
net asset value of the shares should be reduced below a shareholder's cost as a
result of the distribution of realized long-term capital gains, such
distribution would be at least a partial return of capital but nonetheless
taxable at capital gains rates. Therefore, an investor should consider the tax
consequences of purchasing shares immediately prior to a distribution record
date.
Dividends and interest received by the Fund on foreign investments may give
rise to withholding and other taxes imposed by foreign countries. Tax
conventions between the United States and foreign countries may reduce or
eliminate such taxes.
Distributions by the Fund of net investment income and the excess of net
short-term capital gains over net long-term capital loss are taxable to
shareholders of the Fund as ordinary income regardless of whether such
distributions are reinvested in additional shares or paid in cash. Distributions
of net long-term gains, if any, are taxable as long-term capital gains
regardless of how long the investor has held the shares and regardless of
whether the distribution is received in additional shares or in cash.
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
B-13
<PAGE>
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.
PURCHASES AND REDEMPTIONS OF SHARES
-----------------------------------
Reference is made to the Prospectus under the headings "How to Buy Shares"
and "How to Redeem Shares", which describe the method of purchase and redemption
of shares.
The Fund reserves the right, in its sole discretion, to (i) suspend the
offering of shares 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 NYSE or the bond market is closed or trading on
the NYSE is restricted as determined by the Securities and Exchange Commission
(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 in its portfolio, or fairly to determine the value
of its assets, and (iii) for such other periods as the SEC may permit.
If the Board of Trustees should determine that it would be detrimental to
the best interests of the remaining shareholders of the Fund to make payment
wholly or partly in cash, the Fund may pay redemption proceeds in whole or in
part by a distribution in kind of securities from its portfolio, in lieu of
cash, in conformity with the applicable rules of the SEC. If shares are redeemed
in kind, the redeeming shareholder might incur brokerage costs in converting the
assets into cash. Where the Fund makes a redemption in kind, such redemption
will be made in readily marketable securities whose value is easily
ascertainable. The method of valuing portfolio securities for this purpose is as
described under "DETERMINATION OF NET ASSET VALUE". The Trust has, however,
elected to be governed by Rule 18f-1 under the 1940 Act pursuant to which it is
obligated to redeem shares solely in cash up to the lesser of $250,000 or 1% of
its net assets during any 90-day period for any one shareholder.
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-14
<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>
Principal Occupations
Name, Age and Address Position(s) with Trust During Last Five Years
- ------------------------------ ---------------------- --------------------------------------
<S> <C> <C>
Jeffrey A. Kigner, 36* Trustee, Co-Chairman Executive Vice President of the
One Rockefeller Plaza and Treasurer Investment Adviser. Prior to this,
25th Floor Mr. Kigner was a portfolio manager at
New York, NY 10020 the predecessor of the Investment
Adviser. Director of the Distributor.
Melody L. Prenner Sarnell, 41* Trustee and Co-Chairman Executive Vice President of the
One Rockefeller Plaza Investment Adviser. Prior to this, Ms.
25th Floor Sarnell was a portfolio manager at the
New York, NY 10020 predecessor of the Investment Adviser.
Director and Executive Vice President
of the Distributor.
Norris Nissim, 30 Secretary Director of Legal Affairs of the
One Rockefeller Plaza Investment Adviser and Distributor.
25th Floor Prior to this, Mr. Nissim was an
New York, NY 10020 associate at Schulte Roth and Zabel
LLP. Prior to that, Mr. Nissim was
an associate at Fried Frank Harris
Shriver and Jacobson.
Glenn A. Aigen, 34 Chief Financial Officer Chief Financial Officer of the Invest-
One Rockefeller Plaza ment Adviser. Prior to this, Mr. Aigen
25th Floor was the Director of Operations of the
New York, NY 10020 predecessor of the Investment Adviser.
</TABLE>
*Designates a Trustee who is an "interested person" of the Trust as defined by
the 1940 Act.
Jeffrey A. Kigner and Melody L. Prenner Sarnell 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-15
<PAGE>
Trustee compensation from the Trust is estimated as follows:
Compensation Table
------------------
<TABLE>
<CAPTION>
Aggregate Pension or Retirement Estimated Total Compensation
Name of Person, Compensation Benefits Accrued as Benefits Upon from Trust
Position from Fund Part of Fund Expenses Retirement Paid to Trustees
- ------------------------- ------------ --------------------- ------------- ------------------
<S> <C> <C> <C> <C>
Jeffrey A. Kigner $0 $0 $0 $0
Melody L. Prenner Sarnell $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 an
indirect wholly-owned subsidiary of Baker, Fentress & Company, a registered
closed-end investment company listed on the NYSE.
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
on 60 days' notice, without penalty, by the Trust's Board of Trustees 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 initial term of the Advisory Agreement
expires on [__________ __], [1999], and the Agreement may be continued in effect
from year to year thereafter subject to the approval thereof by (i) the Trust's
Board of Trustees or (ii) the 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
of Trustees. 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 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 operation of the Trust and
the Fund. In addition, the Investment Adviser pays the salaries of Trust
officers, as well
B-16
<PAGE>
as any fees and expenses of the 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. The Investment
Adviser also bears the cost of telephone service, heat, light, power and other
utilities associated with the services it provides. The Advisory Agreement
provides that the Investment Adviser will use its best efforts in the management
of the investment activities of the Fund, but in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations thereunder, the Investment Adviser shall not be liable to the Fund
or any of the shareholders for any error of judgment or mistake of law or for
any act or omission by the Investment Adviser or for any losses sustained by the
Fund or the shareholders.
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
.75% of the Fund's average daily net assets.
DISTRIBUTOR
-----------
Shares of the Fund are offered for sale to investors by the Distributor on
a continuous basis at their current net asset value per share, without
imposition of any front-end or contingent deferred sales charge. The
Distributor provides these services to the Fund pursuant to a Distribution
Agreement with the Trust dated [__________ __], 1997 (the "Distribution
Agreement"). 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, and was
also approved on such date by the vote of the sole shareholder of the Trust on
such date. The Distribution Agreement is terminable without penalty, on 60
days' notice, by the Trust's Board of Trustees 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 of the Trust's Board of Trustees or by 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 the distribution of 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. As stated in the Distribution Agreement,
the Trust has agreed to indemnify the Distributor to the extent permitted by law
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.
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
B-17
<PAGE>
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 it effects 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
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% ceiling. (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 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 by 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
- ---------------------------------
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 the 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 in a substantial
number of stocks included in the index is halted or if dissemination of the
current level of an underlying index is interrupted. If trading in index
options is interrupted, the Fund will be unable to close out options 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 the policy of the
Fund to purchase options only on indices which include a sufficient number of
stocks so as to minimize the likelihood of a trading halt in the index.
The purchaser of an index option may also be subject to a timing risk. If
an option is exercised by the Fund before the final determination of the closing
index value for that day, a 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 to the assigned writer the
difference between the closing index value and the exercise price of the option
(times the applicable multiplier). 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
B-18
<PAGE>
earlier than those fixed for other types of options and may occur before the
announcement of definitive closing index values. Alternatively, when the index
level is close to the exercise price, the Fund may choose to 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 for 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 the risk in connection with such transaction is no greater
than the 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 to or
received by the Fund upon the purchase or sale of a futures contract. Instead,
the law presently requires the Fund to deposit in its segregated asset account
an amount of cash or qualifying securities (currently U.S. Treasury bills)
ranging from approximately 10% to 15% of the contract amount, commonly referred
to as the "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 to its broker during the term of
the contracts. Such payments will be required where, during the term of a stock
index futures contract purchased by the Fund, the price of the underlying stock
index has 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. If the Fund, as a result, concluded not to make the planned investment
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 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 may distort the normal relationship between the index 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, leading to
temporary price distortions. Due to the possibility of price
B-19
<PAGE>
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 be forced to sell securities to meet variation margin requirements at a
time when it is 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, the Trust may, from time to time,
disseminate quotations of total return and other performance related and/or
comparative information.
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 stock market performance. 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. In addition, the Fund's return may be compared to the
cost of living (measured by the Consumer Price Index).
The Trust may, in its advertising materials, 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, as well as 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 historical data averages.
B-20
<PAGE>
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
where "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 the 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 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
operations have commenced, whichever is later. The Fund may also provide
quotations of total return for other periods and quotations of cumulative total
returns reflecting 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 value, adjusted net asset
value, and benchmark index may be used in performance exhibits. 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 the date of this Statement of Additional Information, all of the
outstanding shares were owned by M.________________, an interested person of the
Fund. This control relationship 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 the shares,
the controlling person set forth above may be able to determine the outcome of
shareholder voting on matters as to which shareholder approval is required.
B-21
<PAGE>
Independent Accountants
- -----------------------
[____________], [address], serves as the independent accountant 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
- -------------------------------------------------------
The Administrator provides various administrative, accounting, and transfer
agency services to the Fund pursuant to an Accounting Services and
Administration Agreement dated as of [ ]. Under the
Administration Agreement, the Administrator provides the Fund with necessary
accounting services incident to its operations and securities transactions,
determines the net asset value per share of the Fund in accordance with policies
adopted by the Trust'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 plus certain
expenses, with lower percentage rates applicable if such assets exceed $[____]
million. The Administrator also provides transfer agency and dividend
disbursing services to the Fund.
Reports to Shareholders
- -----------------------
Shareholders of the Fund will be kept fully informed through annual and
semi-annual reports showing investment diversification, securities owned and
other information regarding the Fund's activities. The financial statements of
the Fund will 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 serves
as counsel to the Investment Adviser and its affiliates on certain matters.
Registration Statement
- ----------------------
The Prospectus and this Statement of Additional Information do not contain
all of the information set forth in the Registration Statement filed with the
SEC. Investors may obtain the complete Registration Statement from the SEC upon
payment of a fee as prescribed by the rules and regulations of the SEC.
B-22
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
-----------------------------------
*To be filed by pre-effective amendment
B-23
<PAGE>
FORM N-1A
LEVCO INVESTMENT TRUST
PART C - OTHER INFORMATION
<TABLE>
<CAPTION>
<S> <C>
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 March 12, 1997.
(b) Declaration of Trust dated March 14, 1997.
(2) By-Laws.*
(3) Not Applicable
(4) Instruments Defining the Rights of Holders of
Securities.*
(5) Investment Advisory Agreement.*
(6) Underwriting or Distribution Agreement.*
(7) Not Applicable
(8) Custodian Agreement.*
(9) Material Contracts Not Made in the Ordinary
Course of Business.*
(10) Opinion and Consent of Counsel.*
(11) Consent of Independent Accountants.*
(12) Not Applicable
(13) Letter of Investment Intent.*
(14) Not Applicable
</TABLE>
- -----------------------
* To be filed by pre-effective amendment.
C-1
<PAGE>
(15) Not Applicable
(16) Not Applicable
(17) Financial Data Schedule.*
(18) Not Applicable
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH
REGISTRANT
Crescendo Growth and Income Fund (the "Fund"), the initial series of
LEVCO Investment Trust (the "Trust"), may be deemed to be controlled by
M.__________, an interested person of the Fund who owns all of the Fund's
outstanding shares.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
Title of Class Number of Record Holders
- -------------- ------------------------
Shares of Beneficial
Interest in Crescendo NONE
Growth and Income Fund
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 of the Trust (the "Trustees") shall not be responsible or liable in any
event for any neglect or wrongdoing of any officer, agent, employee, investment
adviser or principal underwriter of the Trust, nor shall any Trustee be
responsible for the act or omission of any other Trustee, and the Trust out of
its assets shall have the power to 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, subject to such limitations and
requirements as may be set forth in the By-Laws; 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
- ---------------------
* To be filed by pre-effective amendment.
C-2
<PAGE>
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office.
The Advisory Agreement provides that John A. Levin & Co., Inc. (the
"Investment Adviser") will use its best efforts in the management of the
investment activities of the Fund, but in the absence of willful misfeasance,
bad faith, gross negligence or reckless disregard of its obligations thereunder,
the Investment Adviser shall not be liable to the Fund or any of the
shareholders for any error of judgment or mistake of law or for any act or
omission by the Investment Adviser or for any losses sustained by the Fund or
the shareholders.
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. John A. Levin, the President of the Investment
Adviser, serves as a director of the following investment companies: Morgan
Stanley Africa Investment Fund, Inc.; Morgan Stanley Asia-Pacific Fund, Inc.;
Morgan Stanley Emerging Markets Fund, Inc.; Morgan Stanley Emerging Markets Debt
Fund, Inc.; Morgan Stanley Global Opportunity Bond Fund, Inc.; The Morgan
Stanley High Yield Fund, Inc.; and The Morgan Stanley India Investment Fund,
Inc.
A description of any other business, profession, vocation, or
employment of a substantial nature in which the Investment Adviser, and each
director, executive officer, or partner of any the Investment Adviser, is or has
been, at any time during the past two fiscal years, engaged in for his or her
own account or in the capacity of director, officer, employee, partner or
trustee, is set forth in the Form ADV of John A. Levin & Co., Inc. (File No.
801-52602) as filed with the Securities and Exchange Commission, and is
incorporated herein by this reference.
ITEM 29. PRINCIPAL UNDERWRITERS
LEVCO Securities, Inc., a wholly owned subsidiary of the Investment
Adviser, acts as the sole underwriter distributing securities of the Registrant.
LEVCO
C-3
<PAGE>
Securities, Inc. anticipates that it will also act as principal distributor for
LEVCO Series Trust, LEVCO Zero Coupon/Put Fund I, L.P. and LEVCO Put Fund I,
L.P.
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS WITH UNDERWRITER WITH REGISTRANT
<S> <C> <C>
John A. Levin Director and President None
One Rockefeller Plaza, 25th floor
New York, NY 10020
Jeffrey A. Kigner Director Trustee, Co-Chairman and Treasurer
One Rockefeller Plaza, 25th floor
New York, NY 10020
Melody L. Prenner Sarnell Director and Executive Trustee and Co-Chairman
One Rockefeller Plaza, 25th floor Vice President
New York, NY 10020
Norris Nissim Director of Legal Affairs Secretary
One Rockefeller Plaza, 25th floor
New York, NY 10020
</TABLE>
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:
LEVCO Investment 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
The 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 Securities Act of 1933 and 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
14th, day of March, 1997.
LEVCO INVESTMENT TRUST
By: /s/ Jeffrey A. Kigner
---------------------
Name: Jeffrey A. Kigner
Title: Trustee, Treasurer and
Co-Chairman
By: /s/ Melody L. Prenner Sarnell
-----------------------------
Name: Melody L. Prenner Sarnell
Title: Trustee and Co-Chairman
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.
[CAPTION]
<TABLE>
<S> <C> <C>
/s/ Jeffrey A. Kigner Trustee, Co-Chairman and Treasurer March 14, 1997
- ----------------------------------------------------------------------------------------------
Jeffrey A. Kigner
/s/ Melody L. Prenner Sarnell Trustee and Co-Chairman March 14, 1997
- ----------------------------------------------------------------------------------------------
Melody L. Prenner Sarnell
/s/ Glenn A. Aigen Chief Financial Officer March 14, 1997
- ----------------------------------------------------------------------------------------------
Glenn A. Aigen
</TABLE>
C-5
<PAGE>
FORM N-1A
LEVCO INVESTMENT FUND
EXHIBIT INDEX
EXHIBIT NUMBER DOCUMENT DESCRIPTION
(b)
(1)
(a)Certificate of Trust dated March 12, 1997.
(b)Declaration of Trust dated March 14, 1997.
C-6
<PAGE>
CERTIFICATE OF TRUST
OF
LEVCO INVESTMENT TRUST
This Certificate of Trust of LEVCO INVESTMENT TRUST, a business trust
which will be registered under the Investment Company Act of 1940, as amended
(the "Business Trust"), filed in accordance with the provisions of the Delaware
Business Trust Act (12 Del. Code (S)(S) 3801 et seq.), sets forth the following:
-- ---
FIRST: The name of the Business Trust is LEVCO INVESTMENT
TRUST.
SECOND: As required by 12 Del. Code (S)(S) 3807 and
3810(a)(1)(b), the name and business address of the Business Trust's Registered
Agent for Service of Process and the address of the Business Trust's Registered
Office are:
<TABLE>
<CAPTION>
<S> <C>
Address of Business Trust's
Registered Office and Business
Registered Agent Address of Registered Agent
---------------- ------------------------------
National Corporate 9 East Loockerman Street
Research, Ltd. Dover, Delaware 19901
The name and business address of the initial trustees of the Business
Trust are as follows:
Name Business Address
---- ----------------
Jeffrey A. Kigner One Rockefeller Plaza - 25th Floor
New York, N.Y. 10020
Melody L. Prenner Sarnell One Rockefeller Plaza - 25th Floor
New York, N.Y. 10020
</TABLE>
THIRD: The nature of the business or purpose or purposes of the
Business Trust as set forth in its governing instrument is to conduct, operate
and carry on the business of a management investment company registered under
the Investment Company Act of 1940, as amended, through one or more series of
shares of beneficial interest, investing primarily in securities.
FOURTH: The trustees of the business trust, as set forth in its
governing instrument, reserve the right to amend, alter, change or repeal any
provision contained in this Certificate of Trust, in any manner now or hereafter
prescribed by statute.
<PAGE>
FIFTH: This Certificate of Trust shall become effective
immediately upon its filing with the Office of the Secretary of State of the
State of Delaware.
SIXTH: The debts, liabilities, obligations and expenses
incurred, contracted for or otherwise existing with respect to a particular
series of the Business Trust shall be enforceable against the assets of such
series only, and not against the assets of the Business Trust generally.
IN WITNESS WHEREOF, the undersigned, being the initial trustees of
LEVCO Investment Trust, have duly executed this Certificate of Trust as of this
12th day of March, 1997.
/s/ Jeffrey A. Kigner
----------------------------------------
Jeffrey A. Kigner, as Trustee and not
individually
/s/ Melody L. Prenner Sarnell
----------------------------------------
Melody L. Prenner Sarnell, as Trustee and
not individually
2
<PAGE>
Effective as of
March 14, 1997
DECLARATION OF TRUST
OF
LEVCO INVESTMENT TRUST
A DELAWARE BUSINESS TRUST
PRINCIPAL PLACE OF BUSINESS:
ONE ROCKEFELLER PLAZA - 25th FLOOR
NEW YORK, N.Y. 10020
<PAGE>
TABLE OF CONTENTS
ARTICLE I NAME AND DEFINITIONS.............................................1
Section 1. Name.............................................................1
Section 2. Definitions......................................................1
ARTICLE II PURPOSE OF TRUST.................................................3
ARTICLE III SHARES OF BENEFICIAL INTEREST....................................3
Section 1. Description of Shares............................................3
Section 2. Ownership of Shares..............................................4
Section 3. Investments in the Trust; Consideration..........................4
Section 4. Status of Shares and Limitation of Personal Liability............4
Section 5. Power of Board of Trustees to Change Provisions Relating
to Shares......................................................4
Section 6. Establishment and Designation of Series and Classes..............5
Section 7. Indemnification of Shareholders..................................7
ARTICLE IV THE BOARD OF TRUSTEES............................................8
Section 1. Number, Election and Tenure......................................8
Section 2. Effect of Death, Resignation, etc. of a Trustee..................8
Section 3 Powers...........................................................9
Section 4. Payment of Expenses by the Trust................................12
Section 5. Payment of Expenses by Shareholders.............................12
Section 6. Ownership of Assets of the Trust................................12
Section 7. Service Contracts...............................................13
ARTICLE V SHAREHOLDERS' VOTING POWERS.....................................14
ARTICLE VI NET ASSET VALUE, DISTRIBUTIONS AND REDEMPTIONS..................14
Section 1. Determination of Net Asset Value, Net Income, Dividends
and Distributions.............................................14
Section 2. Redemptions and Repurchases.....................................15
ARTICLE VII COMPENSATION AND LIMITATION OF LIABILITY OF TRUSTEES............15
Section 1. Compensation....................................................15
Section 2. Indemnification and Limitation of Liability.....................15
Section 3. Trustee's Good Faith Action; Expert Advice; No Bond or
Surety........................................................16
Section 4. Insurance.......................................................16
ARTICLE VIII MISCELLANEOUS...................................................16
Section 1. Liability of Third Persons Dealing with Trustees................16
Section 2. Termination of Trust or Series or Class.........................16
Section 3. Merger and Consolidation........................................17
Section 4. Amendments......................................................17
Section 5. Filing of Copies; References; Headings..........................18
Section 6. Applicable Law..................................................18
Section 7. Provisions in Conflict with Law or Regulations..................18
Section 8. Business Trust Only.............................................18
Section 9. Use of the Name "LEVCO".........................................19
<PAGE>
DECLARATION OF TRUST
OF
LEVCO INVESTMENT TRUST
WHEREAS, THIS DECLARATION OF TRUST (the "Declaration") is made and
entered into as of the date set forth below by the Trustees named hereunder (the
"Initial Trustees") for the purpose of forming a Delaware business trust in
accordance with the provisions hereinafter set forth,
NOW, THEREFORE, the Initial Trustees are filing a Certificate of Trust
with the Office of the Secretary of State of the State of Delaware and hereby
declare that all money and property contributed to the trust established hereby
shall be held and managed in trust for the benefit of the persons who may from
time to time hold beneficial interests issued hereunder and subject to the
provisions hereof, to wit:
ARTICLE I
Name and Definitions
Section 1. Name
The name of the trust established hereby (the "Trust") is LEVCO
INVESTMENT TRUST and, insofar as may be practicable, the Trustees shall conduct
the Trust's activities, execute all documents and sue or be sued under that
name, which name (and the word "Trust" wherever herein used) shall refer to the
Trustees as trustees, and not as individuals, or personally, and shall not refer
to the officers, agents, employees or Shareholders of the Trust. If the Trustees
determine that the Trust's use of such name is not advisable or if the Trust is
required to discontinue the use of such name pursuant to Article VIII, Section 9
hereof, then subject to that section the Trustees may adopt such other name for
the Trust as they deem proper and the Trust may hold its property and conduct
its activities under such other name.
Section 2. Definitions.
Whenever used herein, unless otherwise required by the context or
specifically provided:
(a) The "Trust" refers to the Delaware business trust established hereby, by
whatever name it be known, inclusive of each and every Series established
hereunder;
(b) The "Trust Property" means any and all assets and property, real or
personal, tangible or intangible, which are owned or held by or for the
account of the Trust or the Trustees, including without limitation the
rights referenced in Article VIII, Section 9 hereof;
<PAGE>
(c) "Trustee" refers to each of the Initial Trustees who have
signed this Declaration, so long as such persons continue in office in
accordance with the terms hereof, and all other individuals who may from time to
time be duly elected or appointed to serve as Trustees hereunder in accordance
with the provisions hereof, so long as such persons continue in office in
accordance with the terms hereof, and all references herein to a Trustee or the
Trustees shall refer to such person or persons in their capacity as trustees
hereunder;
(d) "Shares" means the units of beneficial interest into which
the beneficial interest in the Trust and each Series and each Class thereof of
the Trust shall be divided from time to time and includes fractions of Shares as
well as whole Shares;
(e) "Shareholder" means a record owner of outstanding Shares;
(f) "Person" means and includes individuals, corporations,
partnerships, trusts, associations, joint ventures, estates and other entities,
whether or not legal entities, and governments and agencies and political
subdivisions thereof, whether domestic or foreign;
(g) The "1940 Act" refers to the Investment Company Act of 1940
and the rules and regulations thereunder, all as amended from time to time and
any orders thereunder which may from time to time be applicable to the Trust;
(h) The terms "Commission" and "Principal Underwriter" shall
have the meanings given them in the 1940 Act;
(i) "Declaration" shall mean this Agreement and Declaration of
Trust, as amended and in effect from time to time. Reference in this Declaration
of Trust to "Declaration," "hereof," "herein," "hereby," and "hereunder" shall
be deemed to refer to this Declaration rather than the article or section in
which such words appear;
(j) "By-Laws" shall mean the By-Laws of the Trust referred to in
Article IV, Section 3 hereof, as amended from time to time and incorporated
herein by reference;
(k) The term "Interested Person" has the meaning given it in the
1940 Act;
(l) "Investment Manager" means a party furnishing services to
the Trust pursuant to any contract described in Article IV, Section 7(a) hereof;
(m) "Series" refers to each Series of the Trust established and
designated under or in accordance with the provisions of Article III hereof;
(n) "Class" means a separately designated class of shares of a
Series established in accordance with the provisions of Article III of this
Declaration, with such varying rights from each other Class of such Series as
may be established in accordance with the provisions of Article III of this
Declaration; and
2
<PAGE>
(o) "Board of Trustees" means such individuals who at any given
time constitute the Trustees.
ARTICLE II
Purpose of Trust
The purpose of the Trust is to conduct, operate and carry on the
business of a management investment company registered under the 1940 Act
through one or more Series investing primarily in securities.
ARTICLE III
Shares of Beneficial Interest
Section 1. Description of Shares.
The beneficial interest in the Trust shall at all times be divided
into transferable units to be called Shares of beneficial interest, each with a
par value of one tenth of one cent ($.001). The Trustees may, from time to time,
authorize the division of Shares into separate Series and the division of any
Series into two or more separate classes of Shares, as they deem necessary and
desirable. The different Series shall be established and designated, and the
variations in the relative rights and preferences as between the different
Series shall be fixed and determined, by the Trustees, without the requirement
of Shareholder approval.
Subject to the provisions of Section 6 of this Article III, each Share
shall have voting rights as provided in Article V hereof and in the By-Laws, and
holders of the Shares of any Series shall be entitled to receive dividends,
when, if and as declared with respect thereto in the manner provided in Article
VI, Section 1 hereof. No Shares shall have any priority or preference over any
other Share of the same Series or Class with respect to dividends or
distributions upon termination of the Trust or of such Series or Class made
pursuant to Article VIII, Section 2 hereof. All dividends and distributions
shall be made ratably among all Shareholders of a particular Series or Class
thereof from the assets held with respect to such Series according to the number
of Shares of such Series or Class thereof from the assets held with respect to
such Series according to the number of Shares of such Series or Class held of
record by such Shareholder on the record date for any dividend or distribution
or on the date of termination, as the case may be. Shareholders shall have no
preemptive or other right to subscribe to any additional Shares or other
securities issued by the Trust or any Series or Class. The Trustees may from
time to time divide or combine the Shares of any particular Series or Class
without thereby materially changing the proportionate beneficial interest of the
Shares of that Series or Class in the assets held with respect to that Series or
materially affecting the rights of Shares of any other Series or Class.
The number of authorized Shares and the number of Shares of each
Series and Class that may be issued is unlimited. The Trustees may classify or
reclassify any unissued Shares or any Shares previously issued and reacquired of
any Series or Class into one or more Series or Classes that are now or hereafter
established and designated from time to time. The Trustees may hold as treasury
Shares, reissue for such consideration and on such terms as they
3
<PAGE>
may determine, or cancel, at their discretion from time to time, any Shares of
any Series or Class reacquired by the Trust.
Section 2. Ownership of Shares.
The ownership of Shares shall be recorded on the books of the Trust or
of a transfer or similar agent for the Trust, which books shall be maintained
separately for the Shares of each Series or Class. No certificates certifying
the ownership of Shares shall be issued except as the Board of Trustees may
otherwise determine from time to time. The Trustees may make such rules as they
consider appropriate for the transfer of Shares of each Series or Class and
similar matters. The record books of the Trust as kept by the Trust or any
transfer or similar agent, as the case may be, shall be conclusive as to who are
the Shareholders of each Series or Class and as to the number of Shares of each
Series or Class held by each Shareholder.
Section 3. Investments in the Trust; Consideration.
Shares of the Trust shall be offered for sale and sold in such manner
and at such times, and subject to such requirements and for such consideration,
as may be determined from time to time by the Trustees, subject to applicable
requirements of law, including the 1940 Act. To the extent permitted by
applicable law, Shares may be sold subject to imposition of such sales charges,
deferred sales charges, asset-based sales charges and redemption fees as may be
determined by the Trustees. All Shares when issued on the terms determined by
the Trustees shall be fully paid and nonassessable.
Section 4. Status of Shares and Limitation of Personal Liability.
Shares shall be deemed to be personal property giving only the rights
provided in this instrument. Every Shareholder by virtue of having become a
Shareholder shall be held to have expressly assented and agreed to the terms
hereof and to have become a party hereto. The death of a Shareholder shall not
operate to terminate the Trust, and shall not entitle the representative of any
deceased Shareholder to an accounting or to take any action in court or
elsewhere against the Trust or the Trustees, but entitles such representative
only to the rights of said deceased Shareholder under this Trust. Ownership of
Shares shall not entitle the Shareholder to any title in or to the whole or any
part of the Trust Property or to any right to call for a partition or division
of the same or for an accounting, nor shall the ownership of Shares constitute
the Shareholders as partners. Neither the Trust nor the Trustees, nor any
officer, employee or agent of the Trust shall have any power to bind personally
any Shareholders, nor, except as specifically provided herein, to call upon any
Shareholder for the payment of any sum of money or assessment whatsoever other
than such as the Shareholder may at any time personally agree to pay.
Section 5. Power of Board of Trustees to Change Provisions Relating to Shares.
Notwithstanding any other provisions of this Declaration and without
limiting the power of the Board of Trustees to amend the Declaration as provided
elsewhere herein, the Board of Trustees shall have the power to amend this
Declaration, at any time and from time to
4
<PAGE>
time, in such manner as the Board of Trustees may determine in its sole
discretion, without the need for Shareholder action, so as to add to, delete,
replace or otherwise modify any provisions relating to the Shares contained in
this Declaration, provided that before adopting any such amendment without
Shareholder approval the Board of Trustees shall determine that it is consistent
with the fair and equitable treatment of all Shareholders or that Shareholder
approval is not otherwise required by the 1940 Act or other applicable law. If
Shares have been issued, Shareholder approval shall be required to adopt any
amendments to this Declaration which would adversely affect to a material degree
the rights and preferences of the Shares of any Series or Class or to increase
or decrease the par value of the Shares of any Series or Class.
Subject to this Section 5, the Board of Trustees may amend the
Declaration of Trust to amend any of the provisions set forth in paragraphs (a)
through (g) of Section 6 of this Article III.
Section 6. Establishment and Designation of Series and Classes.
The sole initial Series of Shares of the Trust (the "Initial Series"),
which Series is hereby established and designated, is the Crescendo Growth and
Income Fund. Until such time as may otherwise be determined by the Trustees in
accordance with this Declaration, all Shares of such Initial Series shall be of
one Class.
The establishment and designation of any additional Series or Class
shall be effective upon the execution by a majority of the Trustees of an
instrument setting forth such establishment and designation and the relative
rights and preferences of the Shares of such Series or Class, or as otherwise
provided in such instrument. Each instrument referred to in this paragraph shall
have the status of an amendment to this Declaration.
Shares of the Initial Series, and Shares of each additional Series
hereafter established pursuant to this Section 6, unless otherwise provided in
the instrument establishing such Series, shall have the following relative
rights and preferences:
(a) Assets Held With Respect to a Particular Series or Class.
All consideration received by the Trust for the issuance or sale of Shares of a
particular Series or Class together with all assets in which such consideration
is invested or reinvested, all income, earnings and profits thereon, and the
proceeds thereof, from whatever source derived, including, without limitation,
any proceeds derived from the sale, exchange or liquidation of such assets, and
any funds or payments derived from any reinvestment of such proceeds in whatever
form the same may be, shall irrevocably be held with respect to that Series or
Class for all purposes, subject only to the rights of creditors of such Series,
and shall be so recorded upon the books of account of the Trust. All such
consideration, assets, income, earnings, profits and proceeds thereof of a
Series or Class, are herein referred to as "assets held with respect to" that
Series or Class. In the event that there are any assets, income, earnings,
profits and proceeds thereof, funds or payments which are not readily
identifiable as assets held with respect to any particular Series or Class
(collectively "General Assets"), the Trustees shall allocate such General Assets
to, between or among any one or more of the Series or Classes in such manner and
on such basis as the Trustees, in their sole discretion, deem fair and
equitable, and any General Assets so
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allocated to a particular Series or Class shall be assets held with respect to
that Series or Class. Each such allocation by the Trustees shall be conclusive
and binding upon the Shareholders of all Series and Classes for all purposes.
(b) Liabilities Attributable to a Particular Series or Class.
The assets of the Trust held with respect to each particular Series and Class
thereof shall be charged with all liabilities, expenses, costs, charges and
reserves attributable to that Series or Class. All such liabilities, expenses,
costs, charges, and reserves so charged to a Series or Class are herein referred
to as "liabilities attributable to" that Series or Class. Any liabilities of the
Trust which are not readily identifiable as being attributable to any particular
Series or Class thereof ("General Liabilities") shall be allocated and charged
by the Trustees to, between or among any one or more of the Series or Classes in
such manner and on such basis as the Trustees, in their sole discretion, deem
fair and equitable, and any General Liabilities so allocated to a particular
Series or Class shall be liabilities attributable to that Series or Class. Each
such allocation of liabilities, expenses, costs, charges and reserves by the
Trustees shall be conclusive and binding upon the holders of all Series and
Classes for all purposes. All Persons who have extended credit which has been
allocated to a particular Series, or who have a claim or contract which has been
allocated to any particular Series, shall look, and shall be required by
contract to look exclusively, to the assets of that particular Series for
payment of such credit, claim or contract. In the absence of an express
contractual agreement so limiting the claims of such creditors, claimants and
contract providers, each creditor, claimant and contract provider will be deemed
nevertheless to have impliedly agreed to such limitation unless an express
provision to the contrary has been incorporated in the written contract or other
document establishing the claimant relationship.
Without limiting the foregoing, but subject to the right of the
Trustees at the direction of the Investment Manager to allocate liabilities as
herein provided, the liabilities incurred, contracted for or otherwise existing
with respect to a particular Series shall be enforceable against the assets
belonging to such Series only and not against the assets of the Trust generally
or belonging to any other Series. Notice of this contractual limitation on
liability among Series shall be set forth in the Trust's Certificate of Trust
(whether originally or by amendment) as filed or to be filed in the Office of
the Secretary of the State of Delaware, and upon the giving of such notice in
such Certificate of Trust, the statutory provisions of Section 3804 of the
Delaware Business Trust Act, as amended from time to time (the "Delaware Act")
relating to limitation on liabilities among Series (and the statutory effect
under Section 3804 of setting forth such notice in the certificate of trust)
shall become applicable to the Trust and each Series. No beneficial owner or
former beneficial owner of any Series shall have a claim on or any right to any
assets allocated or belonging to any other Series.
(c) Dividends, Distributions, Redemptions and Repurchases.
Notwithstanding any other provisions of this Declaration, including, without
limitation, Article VI: (i) no dividend or distribution, including, without
limitation, any distribution paid upon termination of the Trust or of any
Series or Class with respect to, nor any redemption or repurchase of, the
Shares of any Series or Class, shall be effected by the Trust other than from
the assets held with respect to such Series or Class, and (ii) except as
specifically provided in
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Section 7 of this Article III, no Shareholder of any particular Series or Class
shall otherwise have any right or claim against the assets held with respect to
any other Series or Class, except to the extent that such Shareholder has such a
right or claim hereunder as a Shareholder of such other Series or Class. The
Trustees shall have full discretion, to the extent not inconsistent with the
1940 Act, to determine which items shall be treated as income or capital gains
and which items shall be treated as capital; and each such determination and
allocation shall be conclusive and binding upon the Shareholders.
(d) Voting. All Shares of the Trust entitled to vote on a
matter shall vote separately by Series and by Class: that is, the Shareholders
of each Series and Class shall have the right to approve or disapprove matters
affecting the Trust and that Series and Class as if the Series or Class were
separate companies. There are, however, two exceptions to voting by separate
Series and Classes. First, if as to any matter the 1940 Act requires or permits
all Shares entitled to vote with respect to such matter to be voted in the
aggregate without differentiation between the separate Series and Classes, then
all Shares entitled to vote on such matter shall vote as a single class. Second,
if any matter affects only the interests of some but not all Series or Classes,
then only the Shareholders of such affected Series or Classes shall be entitled
to vote on the matter.
(e) Equality. All the Shares of each particular Series or Class
shall represent an equal proportionate interest in the assets attributable to
that Series or Class (subject to the liabilities attributable to that Series or
Class and such rights and preferences as may have been established and
designated with respect to such Series or Class), and each Share of any
particular Series or Class shall be equal to each other Share of that Series or
Class.
(f) Fractional Shares. Any fractional Share of a Series or
Class shall carry proportionately all the rights and obligations of a whole
share of that Series or Class, including rights with respect to voting, receipt
of dividends and distributions, redemption of Shares and termination of the
Trust.
(g) Exchange Privilege. The Trustees shall have the authority
to provide that the holders of Shares of any Series or Class shall have the
right to exchange said Shares for Shares of one or more other Series or Classes
of Shares in accordance with such requirements, limitations and procedures as
may be established by the Trustees.
Section 7. Indemnification of Shareholders.
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.
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ARTICLE IV
The Board of Trustees
Section 1. Number, Election and Tenure.
The number of Trustees constituting the Board of Trustees shall be
fixed from time to time by a written instrument signed, or by resolution
approved at a duly constituted meeting, by a majority of the Board of Trustees;
provided, however, that the number of Trustees shall in no event be less than
one (1) nor more than fifteen (15). The Board of Trustees, by action of a
majority of the then Trustees at a duly constituted meeting, may fill vacancies
in the Board of Trustees or remove Trustees with or without cause; except that
if required by the 1940 Act, a vacancy shall be filled only by a person elected
by Shareholders.
Each Trustee shall serve during the continued lifetime of the Trust
until he dies, resigns, is declared bankrupt or incompetent by a court of
appropriate jurisdiction, or is removed, or, if sooner, until the next meeting
of Shareholders called for the purpose of electing Trustees and until the
election and qualification of his successor. Any Trustee may resign at any time
by written instrument signed by him and delivered to any officer of the Trust or
to a meeting of the Trustees. Such resignation shall be effective upon receipt
unless specified to be effective at some other time. Except to the extent
expressly provided in a written agreement with the Trust, no Trustee resigning
and no Trustee removed shall have any right to any compensation for any period
following his resignation or removal, or any right to damages on account of such
removal. The Shareholders may elect Trustees at any meeting of Shareholders
called by the Trustees for that purpose. Any Trustee may be removed at any
meeting of Shareholders by a vote of two-thirds of the outstanding Shares of the
Trust. A meeting of Shareholders for the purpose of electing or removing one or
more Trustees shall be called (i) by the Trustees upon their own vote, or (ii)
upon the demand of a Shareholder or Shareholders owning Shares representing 10%
or more of all votes entitled to be cast by outstanding Shares.
Section 2. Effect of Death, Resignation, etc. of a Trustee.
The death, declination, resignation, retirement, removal or
incapacity of one or more Trustees, or all of them, shall not operate to annul
the Trust or to revoke any existing agency created pursuant to the terms of this
Declaration. Whenever a vacancy in the Board of Trustees shall occur, until such
vacancy is filled as provided in Article IV, Section 1, the Trustees in office,
regardless of their number, shall have all the powers granted to the Trustees
and shall discharge all the duties imposed upon the Trustees by this
Declaration. As conclusive evidence of such vacancy, a written instrument
certifying the existence of such vacancy may be executed by an officer of the
Trust or by a majority of the Board of Trustees. In the event of the death,
declination, resignation, retirement, removal or incapacity of all the then
Trustees within a short period of time and without the opportunity for at least
one Trustee being able to appoint additional Trustees to fill vacancies, the
Trust's Investment Manager is hereby empowered to appoint new Trustees, subject
to the provisions of Section 16(a) of the 1940 Act.
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Section 3. Powers.
Subject to the provisions of this Declaration, the business of the
Trust shall be managed by the Board of Trustees, and such Board shall have all
powers necessary or convenient to carry out that responsibility.
Without limiting the foregoing, the Trustees may: (i) adopt By-Laws
not inconsistent with this Declaration providing for the regulation and
management of the affairs of the Trust and may amend and repeal the By-Laws to
the extent that such By-Laws do not reserve that right to the Shareholders; (ii)
elect persons to serve as Trustees and fill vacancies in the Board of Trustees,
and remove Trustees from such Board in accordance with the provisions of this
Declaration, and may elect and remove such officers and appoint and terminate
such agents as they consider appropriate; (iii) appoint from their own number
and establish and terminate one or more committees consisting of one or more
Trustees which may exercise the powers and authority of the Board of Trustees to
the extent that the Trustees determine; (iv) employ one or more custodians of
the assets of the Trust and may authorize such custodians to employ sub-
custodians and to deposit all or any part of such assets in a system or systems
for the central handling of securities or with a Federal Reserve Bank, retain a
transfer agent or a shareholder servicing agent, or both, and employ such other
Persons as the Trustees may deem desirable for the transaction of business of
the Trust or any Series; (v) provide for the issuance, sale and distribution of
Shares by the Trust directly or through one or more Principal Underwriters or
otherwise; (vi) redeem, repurchase, retire, cancel, acquire, hold, resell,
reissue, classify, reclassify, and transfer and otherwise deal in Shares
pursuant to applicable law; (vii) set record dates for the determination of
Shareholders with respect to various matters; (viii) declare and pay dividends
and distributions to Shareholders of each Series or Class from the assets of
such Series or Class; (ix) collect all property due to the Trust, pay all
claims, including taxes, against the Trust Property, prosecute, defend,
compromise or abandon any claims relating to the Trust Property, foreclose any
security interest securing any obligations by virtue of which any property is
owed to the Trust, and enter into releases, agreements and other instruments;
(x) incur and pay any expenses which, in the opinion of the Trustees, are
necessary or incidental to carry out the purposes of the Trust, and pay
reasonable compensation from the funds of the Trust to themselves as Trustees;
(xi) engage in and prosecute, defend, compromise, abandon, or adjust, by
arbitration or otherwise, any actions, suits, proceedings, disputes, claims and
demands relating to the Trust expenses incurred in connection therewith,
including those of litigation; (xii) indemnify any Person with whom the Trust
has dealings, including the Shareholders, Trustees, officers, employees, agents,
Investment Managers, or Principal Underwriters of the Trust, to the extent
permitted by law and not inconsistent with any applicable provisions of the By-
Laws as the Trustees shall determine; (xiii) determine and change the fiscal
year of the Trust or any Series and the method by which its accounts shall be
kept; (xiv) adopt a seal for the Trust or any Series; and (xv) in general,
delegate such authority as they consider desirable to any officer of the Trust,
to any committee of the Trustees and to any agent or employee of the Trust or to
any custodian, transfer or shareholder servicing agent, Investment Manager or
Principal Underwriter. Any determination made by the Trustees in good faith as
to what is in the interests of the Trust shall be conclusive. In construing the
provisions of this Declaration, the presumption shall be in favor
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of a grant of power to the Trustees. Unless otherwise specified or required by
law, any action by the Board of Trustees shall be deemed effective if approved
or taken by a majority of the Trustees then in office.
Without limiting the foregoing, the Trust shall have power and
authority:
(a) To invest and reinvest cash, to hold cash uninvested, and to
subscribe for, invest in, reinvest in, purchase or otherwise acquire, own,
hold, pledge, sell, assign, transfer, exchange, distribute, write options
on, lend or otherwise deal in or dispose of contracts for the future
acquisition or delivery of securities of every nature and kind, including,
without limitation, all types of stocks, bonds, bills, notes, debentures,
options, negotiable or non-negotiable instruments, obligations, evidences
of indebtedness, certificates of deposit or indebtedness, commercial paper,
repurchase agreements, bankers' acceptances and other securities of any
kind, issued, created, guaranteed, or sponsored by any and all Persons,
including, without limitation, states, territories, and possessions of the
United States and the District of Columbia and any political subdivision,
agency, or instrumentality thereof, any political subdivision of the U.S.
Government or any foreign government, or any international instrumentality,
or by any bank or saving institution, or by any corporation or organization
organized under the laws of the United States or of any state, territory,
or possession thereof, or by any corporation or organization organized
under any foreign law, or in "when issued" or "delayed delivery" contracts
for any such securities, to change the investments of the assets of the
Trust; and to exercise any and all rights, powers, and privileges of
ownership or interest in respect of any and all such investments of every
kind and description, including, without limitation, the right to consent
and otherwise act with respect thereto, with power to designate one or more
Persons, to exercise any of said rights, powers, and privileges in respect
of any of said instruments;
(b) To enter into futures contracts (including, but not limited to,
interest rate and stock index futures contracts) and options thereon;
(c) To sell, exchange, lend, pledge, mortgage, hypothecate, lease, or
write options with respect to or otherwise deal in any property rights
relating to any or all of the assets of the Trust or any Series;
(d) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and
deliver proxies or powers of attorney to such Person or Persons as the
Trustees shall deem proper, granting to such Person or Persons such power
and discretion with relation to securities or property as the Trustees
shall deem proper;
(e) To exercise powers and rights to subscription or otherwise which
in any manner arise out of ownership of securities;
(f) To hold any security or property in a form not indicating any
trust, whether in bearer, unregistered or other negotiable form, or in its
own name or in the name of a custodian or sub-custodian or a nominee or
nominees or otherwise;
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(g) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer of any security which
is held in the Trust; to consent to any contract, lease, mortgage, purchase
or sale of property by such corporation or issuer; and to pay calls or
subscriptions with respect to any security held in the Trust;
(h) To join with other security holders in acting through a committee,
depositary, voting trustee or otherwise, and in that connection to deposit
any security with, or transfer any security to, any such committee,
depositary or trustee, and to delegate to them such power and authority
with relation to any security (whether or not so deposited or transferred)
as the Trustees shall deem proper, and to agree to pay, and to pay, such
portion of the expenses and compensation of such committee, depositary or
trustee as the Trustees shall deem proper;
(i) To compromise, arbitrate or otherwise adjust claims in favor of or
against the Trust or any matter in controversy, including but not limited
to a claim for taxes;
(j) To enter into joint ventures, general or limited partnerships and
any other combinations or associations;
(k) To borrow funds or other property in the name of the Trust
exclusively for Trust purposes;
(l) To endorse or guarantee the payment of any notes or other
obligations of any Person; to make contracts of guaranty or suretyship, or
otherwise assume liability for payment thereof;
(m) To purchase and pay for out of Trust Property such insurance as
the Trustees may deem necessary or appropriate for the conduct of the
business, including, without limitation, insurance policies insuring the
assets of the Trust or payment of distributions and principal on its
portfolio investments, and insurance policies insuring the Shareholders,
Trustees, officers, employees, agents, Investment Managers, Principal
Underwriters, or independent contractors of the Trust, individually against
all claims and liabilities of every nature arising by reason of holding
Shares, holding, being or having held any such office or position, or by
reason of any action alleged to have been taken or omitted by any such
Person as Trustee, officer, employee, agent, Investment Manager, Principal
Underwriter, or independent contractor, including any action taken or
omitted that may be determined to constitute negligence, whether or not the
Trust would have the power to indemnify such Person against liability,
subject to such limitations as may be imposed by law;
(n) To adopt, establish and carry out pension, profit-sharing, share
bonus, share purchase, savings, thrift and other retirement, incentive and
benefit plans, trusts and provisions, including the purchasing of life
insurance and annuity contracts as a means of providing such retirement and
other benefits, for any or all of the Trustees, officers, employees and
agents of the Trust; and
(o) To conduct, operate and carry on any other lawful business and
engage in any other lawful business activity which the Trustees, in their
sole and absolute
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discretion, consider to be (i) incidental to the business of the Trust as an
investment company, (ii) conducive to or expedient for the benefit or protection
of the Trust or any Series or the Shareholders, or (iii) calculated in any other
manner to promote the interests of the Trust or any Series or the Shareholders.
The Trust shall not be limited to investing in obligations maturing
before the possible termination of the Trust or one or more of its Series. The
Trust shall not in any way be bound or limited by any present or future law or
custom in regard to investment by fiduciaries. The Trust shall not be required
to obtain any court order to deal with any assets of the Trust or take any other
action hereunder.
Section 4. Payment of Expenses by the Trust.
The Trustees are authorized to pay or cause to be paid out of the
principal or income of the Trust, or partly out of the principal and partly out
of income, as they deem fair, all expenses, fees, charges, taxes and liabilities
incurred or arising in connection with the Trust, or in connection with the
management thereof, including, but not limited to, the Trustees' compensation
and such expenses and charges for the services of the Trust's officers,
employees, Investment Managers, Principal Underwriters, auditors, counsel,
custodian, transfer agent, administrator, Shareholder servicing agent, and such
other agents or independent contractors and such other expenses and charges as
the Trustees may deem necessary or proper to incur.
Section 5. Payment of Expenses by Shareholders.
The Trustees shall have the power, as frequently as they may
determine, to cause each Shareholder, or each Shareholder of any particular
Series, to pay directly, in advance or arrears, for charges of the Trust's
custodian or transfer, Shareholder servicing or similar agent, an amount fixed
from time to time by the Trustees, by setting off such charges due from such
Shareholder from declared but unpaid dividends owed such Shareholder and/or by
reducing the number of Shares in the account of such Shareholder by that number
of full and/or fractional Shares which represents the outstanding amount of such
charges due from such Shareholder.
Section 6. Ownership of Assets of the Trust.
Title to all of the assets of the Trust shall at all times be
considered as vested in the Trust, except that the Trustees shall have power to
cause legal title to any Trust Property to be held by or in the name of one or
more of the Trustees, or in the name of the Trust, or in the name of any other
Person as nominee, on such terms as the Trustees may determine. The right, title
and interest of the Trustees in the Trust Property shall vest automatically in
each Person who may hereafter become a Trustee. Upon the resignation, removal or
death of a Trustee he shall automatically cease to have any right, title or
interest in any of the Trust Property, and the right, title and interest of such
Trustee in the Trust Property shall vest automatically in the remaining
Trustees. Such vesting and cessation of title shall be effective whether or not
conveyancing documents have been executed and delivered.
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Section 7. Service Contracts.
(a) Subject to such requirements and restrictions as may be set
forth in the By-Laws, the Trustees may, at any time and from time to time,
contract for exclusive or nonexclusive investment advisory, management and
administrative services for the Trust or for any Series with any
corporation, trust, association or other organization; and any such
contract may contain such other terms as the Trustees may determine,
including without limitation, authority for one or more Investment Managers
to determine from time to time without prior consultation with the Trustees
what investments shall be purchased, held, sold or exchanged and what
portion, if any, of the assets of the Trust shall be held uninvested and to
make changes in the Trust's investments, or such other activities as may
specifically be delegated to such party.
(b) The Trustees may also, at any time and from time to time,
contract with any corporation, trust, association or other organization,
appointing it exclusive or nonexclusive distributor or Principal
Underwriter for the Shares of one or more of the Series or Classes or other
securities to be issued by the Trust.
(c) The Trustees are also empowered, at any time and from time to
time, to contract with any corporation, trust, association or other
organization, appointing it the administrator, custodian, transfer agent or
shareholder servicing agent for the Trust or one or more of its Series.
(d) The Trustees are further empowered, at any time and from time to
time, to contract with any entity to provide such other services to the
Trust or any Series or Class, as the Trustees determine to be in the best
interests of the Trust or the Series or Class.
(e) The fact that:
(i) any of the Shareholders, Trustees, or officers of the Trust
is a shareholder, director, officer, partner, trustee, employee,
Investment Manager, Principal Underwriter, distributor, or affiliate
or agent of or for any corporation, trust, association, or other
organization, or for any parent or affiliate of any organization
with which an advisory, management or administration contract, or
Principal Underwriter's or distributor's contract, or transfer
agent, shareholder servicing or other type of service contract may
have been or may hereafter be made, or that any such organization,
or any parent or affiliate thereof, is a Shareholder or has an
interest in the Trust, or that
(ii) any corporation, trust, association or other organization
with which an advisory, management or administration contract or
Principal Underwriter's or distributor's contract, or transfer
agent, shareholder servicing or other type of service contract may
have been or may hereafter be made also has an advisory, management
or administration contract, or principal underwriter's or
distributor's contract, or transfer agent, shareholder servicing or
other service contract with other organizations, or has other
business or interests,
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shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or executing the
same, or create any liability or accountability to the Trust or its
Shareholders, provided approval of each such contract is made pursuant to the
requirements of the 1940 Act.
ARTICLE V
Shareholders' Voting Powers
Subject to the provisions of Article III, Section 6(d), the
Shareholders shall have power to vote only (i) for the election or removal of
Trustees as provided in Article IV, Section 1, and (ii) with respect to such
additional matters relating to the Trust as may be required by this Declaration,
the By-Laws, the 1940 Act or any registration of the Trust with the Commission
(or any successor agency) or any state, or as the Trustees may consider
necessary or desirable. Each whole Share shall be entitled to one vote as to any
matter on which it is entitled to vote and each fractional Share shall be
entitled to a proportionate fractional vote, except that (i) Shares held in the
Treasury as of the record date, as determined in accordance with the By-Laws,
shall not be voted, and (ii) when Shares of more than one Series or Class vote
together on a matter as a single class, each Share (or fraction thereof) shall
be entitled to that number of votes which is equal to the net asset value of
such Share (or fractional Share) determined as of the applicable record date.
There shall be no cumulative voting in the election of Trustees.
Until Shares are issued, the Trustees may exercise all rights of
Shareholders and may take any action that the law, this Declaration or the By-
Laws require to be taken by Shareholders.
ARTICLE VI
Net Asset Value, Distributions and Redemptions
Section 1. Determination of Net Asset Value, Net Income, Dividends and
Distributions.
Subject to Article III, Section 6 hereof, the Trustees, in their
absolute discretion, may prescribe such bases and times for valuing the net
assets of the Trust and determining the net asset value of Shares, which net
asset value shall be separately determined for each Series and Class, for
determining the net income attributable to the Shares of any Series or Class, or
for declaring and paying dividends and other distributions on Shares of any
Series or Class, as they may deem necessary or desirable.
The Trustees shall, in their sole discretion, consistent with
applicable law, determine whether any cash or property of the Trust or any stock
dividends received by the Shareholders shall be treated as income or as
principal and whether any item of expense shall be charged to the income or the
principal amount, and any such determination made in good faith shall be
conclusive and binding upon the Shareholders.
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Section 2. Redemptions and Repurchases.
The Trust shall purchase such Shares as are offered by any
Shareholder for redemption upon the presentation of a proper instrument of
transfer together with a request directed to the Trust or a Person designated by
the Trust that the Trust purchase such Shares or in accordance with such other
procedures for redemption as the Trustees may from time to time authorize; and
the Trust will pay therefor the net asset value thereof by wire or check, in
accordance with applicable law, less the amount of any deferred sales charge or
redemption fee that is applicable. Payment for said Shares shall be made by the
Trust to the Shareholder within seven days after the date on which the request
is made in proper form, except as may otherwise be permitted by the 1940 Act.
ARTICLE VII
COMPENSATION AND LIMITATION OF LIABILITY OF TRUSTEES
Section 1. Compensation.
The Trustees as such shall be entitled to reasonable compensation
from the Trust, and they may fix the amount of such compensation. Nothing herein
shall in any way prevent the employment of any Trustee for advisory, management,
legal, accounting, investment banking or other services and payment for the same
by the Trust.
Section 2. Indemnification and Limitation of Liability.
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 responsible for the
act or omission of any other Trustee, and the Trust out of its assets shall have
the power to 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, subject to such limitations and requirements as may be
set forth in the By-Laws; 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.
Every note, bond, contract, instrument, certificate or undertaking
and every other act or thing whatsoever issued, executed or done by or on behalf
of the Trust or the Trustees or any of them in connection with the Trust shall
be conclusively deemed to have been issued, executed or done only in or with
respect to their or his capacity as Trustees or Trustee, and such Trustees or
Trustee shall not be personally liable thereon.
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Section 3. Trustee's Good Faith Action; Expert Advice; No Bond or Surety.
The exercise by the Trustees of their powers and discretions
hereunder shall be binding upon everyone interested. A Trustee shall be liable
to the Trust and to any Shareholder solely for his own willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee, and shall not be liable for errors of judgment
or mistakes of fact or law. The Trustees may take advice of counsel or other
experts with respect to the meaning and operation of this Declaration, and shall
be under no liability for any act or omission in accordance with such advice nor
for failing to follow such advice. The Trustees shall not be required to give
any bond as such, nor any surety if a bond is required.
Section 4. Insurance.
The Trustees shall be entitled and empowered to the fullest extent
permitted by law to purchase with Trust assets insurance for liability and for
all expenses reasonably incurred or paid or expected to be paid by a Trustee or
officer in connection with any claim, action, suit or proceeding in which he
becomes involved by virtue of his capacity or former capacity with the Trust.
ARTICLE VIII
Miscellaneous
Section 1. Liability of Third Persons Dealing with Trustees.
No Person dealing with the Trustees shall be bound to make any
inquiry concerning the validity of any transaction made or to be made by the
Trustees or to see to the application of any payments made or property
transferred to the Trust or upon its order.
Section 2. Termination of Trust or Series or Class.
Unless terminated as provided herein, the Trust shall continue
without limitation of time. The Trust may be terminated at any time by vote of
the holders of a majority of the outstanding Shares of each Series entitled to
vote, voting separately by Series, or by the Trustees by written notice to the
Shareholders. Any Series or Class may be terminated at any time by vote of the
holders of a majority of the outstanding Shares of that Series or Class
respectively or by the Trustees by written notice to the Shareholders of that
Series or Class.
Upon termination of the Trust (or any Series or Class, as the case
may be), after paying or otherwise providing for all charges, taxes, expenses
and liabilities held, severally, with respect to each Series (or the applicable
Series or Class), whether due or accrued or anticipated as may be determined by
the Trustees, the Trust shall, in accordance with such procedures as the
Trustees consider appropriate, reduce the remaining assets held, severally, with
respect to each Series (or the applicable Series or Class) to distributable form
in cash or shares or other securities, or any combination thereof, and
distribute the proceeds held with respect to each Series (or the applicable
Series or Class) to the Shareholders of that Series or Class, as a Series or
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Class, ratably according to the number of Shares of that Series or Class held by
the several Shareholders on the date of termination.
Section 3. Merger and Consolidation.
The Trustees may cause (i) the Trust or one or more of its Series to
the extent consistent with applicable law to be merged into or consolidated with
another trust or company, (ii) Shares of the Trust or any Series to be converted
into beneficial interests in another business trust (or series thereof) created
pursuant to this Section 3 of Article VIII, (iii) the sale of substantially all
of the assets of the Trust or one or more of its Series to another trust or
company in exchange for the assumption of the liabilities of the Trust or the
Series and the issuance of beneficial interests in such trust or company, or
(iv) Shares to be exchanged under or pursuant to any state or federal statute to
the extent permitted by law. Such merger or consolidation, Share conversion,
sale of assets or Share exchange must be authorized by vote of the holders of a
majority of the outstanding Shares of the affected Series; provided that in all
respects not governed by applicable law, the Trustees shall have the power to
prescribe the procedures necessary or appropriate to accomplish the transaction,
including the power to create one or more separate business trusts to which all
or any part of the assets, liabilities, profits or losses of the Trust may be
transferred and to provide for the conversion of Shares of the Trust or any
Series into beneficial interests in such separate business trust or trusts (or
series thereof). The Trustees may also cause substantially all of the assets of
any Series (the "Acquired Series") to be sold to another Series if authorized by
vote of the holders of a majority of the outstanding Shares of the Acquired
Series, and to the extent not governed by applicable law, the Trustees shall
have the power to prescribe the procedures necessary or appropriate to
accomplish the transaction. Upon consummation of any transaction contemplated by
this Section 3, the Trust or applicable Series, as the case may be, shall
distribute its remaining assets to Shareholders and terminate as provided by
Section 2 of this Article VIII.
Section 4. Amendments.
(a) This Declaration may be restated or amended at any time by an
instrument in writing signed by a majority of the Trustees and, if required by
applicable law or this Declaration or the By-Laws, by approval of such amendment
by Shareholders in accordance with Article V hereof and the By-Laws. Any such
restatement or amendment hereto shall be effective immediately upon execution
and approval. The Certificate of Trust of the Trust may be restated or amended
by a similar procedure, and any such restatement or amendment shall be effective
immediately upon filing with the Office of the Secretary of State of the State
of Delaware or upon such future date as may be stated therein.
(b) Nothing contained in this Declaration shall permit the amendment
of this Declaration to impair the exemption from personal liability of the
Shareholders, Trustees, officers, employees and agents of the Trust or to permit
assessments on Shareholders.
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Section 5. Filing of Copies; References; Headings.
The original or a copy of this Declaration and of each restatement
and amendment hereto shall be kept at the office of the Trust where it may be
inspected by any Shareholder. Anyone dealing with the Trust may rely on a
certificate by an officer of the Trust as to whether or not any such
restatements or amendments have been made and as to any matters in connection
with the Trust hereunder; and, with the same effect as if it were the original,
may rely on a copy certified by an officer of the Trust to be a copy of this
Declaration or of any such restatement or amendment. Headings are placed herein
for convenience of reference only and shall not be taken as a part hereof or
control or affect the meaning, construction or effect of this Declaration.
Whenever the singular number is used herein, the same shall include the plural;
and the neuter, masculine and feminine genders shall include each other, as
applicable. This Declaration may be simultaneously executed in any number of
counterparts, each of which shall be deemed an original, and such counterparts
together shall constitute one and the same instrument, which shall be
sufficiently evidenced by any such original counterpart.
Section 6. Applicable Law.
This Declaration is created under and is to be governed by and
construed and administered according to the laws of the State of Delaware and
the Delaware Act. The Trust shall be a Delaware business trust pursuant to the
Delaware Act, and without limiting the provisions hereof, the Trust may exercise
all powers which are ordinarily exercised by such a business trust.
Section 7. Provisions in Conflict with Law or Regulations.
(a) The provisions of this Declaration are severable, and if the
Trustees shall determine, with the advice of counsel, that any of such
provisions is in conflict with the 1940 Act, the regulated investment company
provisions of the Internal Revenue Code of 1986, as amended, or with other
applicable laws and regulations, the conflicting provision shall be deemed never
to have constituted a part of the Declaration of Trust; provided, however, that
such determination shall not affect any of the remaining provisions of the
Declaration of Trust or render invalid or improper any action taken or omitted
prior to such determination.
(b) If any provision of the Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any manner
affect such provision in any other jurisdiction or any other provision of the
Declaration in any jurisdiction.
Section 8. Business Trust Only.
It is the intention of the Trustees to create a business trust
pursuant to the Delaware Act and thereby to create only the relationship of
trustee and beneficial owners within the meaning of the Delaware Act between the
Trustees and each Shareholder. It is not the intention of the Trustees to create
a general partnership, limited partnership, joint stock
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association, corporation, bailment, or any form of legal relationship other
than a business trust pursuant to the Delaware Act. Nothing in this Declaration
shall be construed to make the Shareholders, either by themselves or with the
Trustees, partners or members of a joint stock association.
Section 9. Use of the Name "LEVCO".
The name "LEVCO" and all rights to the use of the name "LEVCO"
belong to John A. Levin & Co., Inc. and its affiliates ("Levin & Co."). Levin &
Co. has consented to the use by the Trust of the word "LEVCO" and has granted to
the Trust a non-exclusive license to use such word as part of the name of the
Trust and the name of any Series. In the event an affiliate of Levin & Co. is
not appointed as the Investment Manager or ceases to be the Investment Manager
of the Trust or of any Series, the non-exclusive license granted herein may be
revoked in whole or in part by Levin & Co. and the Trust shall cease using the
name LEVCO as part of its name or the name of any Series, as soon as reasonably
practicable, unless otherwise consented to by Levin & Co. or any successor to
its interest in such name.
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IN WITNESS WHEREOF, the Trustees named below do hereby make and enter
into this Declaration of Trust as of the 14th day of March, 1997.
/s/ Jeffrey A. Kigner
-------------------------------------
Jeffrey A. Kigner, as Trustee and not
individually
/s/ Melody L. Prenner Sarnell
-------------------------------------
Melody L. Prenner Sarnell, as
Trustee and not individually
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