As filed via EDGAR with the Securities and Exchange Commission on April 29, 1996
ICA No. 811-631, Registration No. 2-10841
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. 73 |X|
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
Amendment No. 20 |X|
--------
(Check appropriate box or boxes.)
LEPERCQ-ISTEL TRUST
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(Exact name of Registrant as specified in Charter)
1675 BROADWAY, NEW YORK, NEW YORK 10019
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(Address of Principal Executive Office)
Registrant's Telephone Number, including Area Code (212) 698-0749
ANDREW HANSON COPY TO:
TSERING NGUDU CARL FRISCHLING, ESQ.
LEPERCQ-ISTEL TRUST KRAMER, LEVIN, NAFTALIS, NESSEN,
KAMIN & FRANKEL
1675 BROADWAY 919 THIRD AVENUE
NEW YORK, NEW YORK 10019 NEW YORK, NEW YORK 10022
(NAME AND ADDRESS OF AGENT FOR SERVICE)
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IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE:
|X| IMMEDIATELY UPON FILING PURSUANT TO |_| ON ( ) PURSUANT TO
PARAGRAPH (B) PARAGRAPH (B)
|_| 60 DAYS AFTER FILING PURSUANT TO |_| ON ( ) PURSUANT TO
PARAGRAPH (A)(1) PARAGRAPH (A)(1)
|_| 75 DAYS AFTER FILING PURSUANT TO |_| ON ( ) PURSUANT TO
PARAGRAPH (A)(2) OF PARAGRAPH (A)(2) RULE 485.
IF APPROPRIATE, CHECK THE FOLLOWING BOX:
|_| THIS POST-EFFECTIVE AMENDMENT DESIGNATES A NEW EFFECTIVE DATE FOR A
PREVIOUSLY FILED POST- EFFECTIVE AMENDMENT.
THE REGISTRANT HAS REGISTERED AN INDEFINITE NUMBER OF ITS SHARES UNDER THE
SECURITIES ACT OF 1933 AND PURSUANT TO RULE 24F-2 UNDER THE INVESTMENT COMPANY
ACT OF 1940 AND HAS FILED ITS RULE 24F-2 NOTICE FOR THE YEAR ENDING DECEMBER 31,
1995 ON FEBRUARY 26, 1996 IN ACCORDANCE WITH THE REQUIREMENTS OF RULE 24F-2.
<PAGE>
LEPERCQ-ISTEL TRUST
REGISTRATION STATEMENT ON FORM N-1A
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER
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PART A PROSPECTUS CAPTION PROSPECTUS PAGE NUMBER
- ------ ------------------ ----------------------
1. Cover Page Cover Page
2. Fee Table 3
3.(a) Financial Highlights 4
(b) *
(c) Performance Information 8
4. Cover Page; The Fund; Investment Objectives
and Policies Cover Page; 5
5.(a-b) Investment Adviser 11
(c) *
(d) Custodian, Transfer Agent, Dividend Paying
Agent, Accounting Services and Administrator 15
(e) Investment Adviser 11
(f) *
(g) Performance Information 8
6. (a) General Information 14
(b) *
(c-d) General Information 14
7. (a) How to Purchase Shares 8
(b) How Net Asset Value is Computed 14
(c) Individual Retirement Accounts 14
(d) How to Purchase Shares 8
(e) The Distribution Plan 13
8.(a-c) How to Redeem Shares 4
9. *
* Not applicable.
(i)
<PAGE>
Statement of Additional Statement of Additional
Part B Information Caption Information Page Number
- ------ ------------------- -----------------------
10. Cover Page Cover Page
11. Table of Contents Cover Page
12. General Information and
History 2
13.(a-c) Investment Objectives and
Policies; Investment
Restrictions 4;5
14.(a-b) Trustees and Officers of
the Trust 7;8
(c) *
15. *
16.(a-b) The Investment Adviser;
Distribution Agreement 9;13
(c-e) *
(f) Distribution Plan 10
(g) *
(h) See Part A - Custodian,
Transfer Agent, Dividend Paying Agent,
Accounting Services Agent and Administrator
17. Brokerage Commissions 11
18. See Part A - General Information
19.(a) Redemption of Shares 13
(b) How Net Asset Value is Computed 13
(c) See Part A - How to Redeem Shares 11
(d) *
20. Taxes 15
21. The Distributor; Investment
Advisory and Distribution
Agreements 12;13
22. Performance Information 14
23. Financial Statements 22
* Not applicable.
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.
(ii)
<PAGE>
LOGO
LEPERCQ-ISTEL FUND
a growth & income fund
P R O S P E C T U S
APRIL 29, 1996
Lepercq-Istel Fund
1675 Broadway
New York, New York 10019
800-655-7766
<PAGE>
LOGO
LEPERCQ-ISTEL FUND
a growth & income fund
P R O S P E C T U S
APRIL 29, 1996
NEW ACCOUNT & SHAREHOLDER INFORMATION (800) 655-7766
INVESTMENT
OBJECTIVE
The principal investment objective of the Lepercq-Istel Fund (the
"Fund") is long-term capital appreciation. Investment income is a
secondary consideration. In pursuit of its investment objectives
the Fund invests in companies that are undergoing a
transformation that is unrecognized by the stock market. The Fund
also invests in companies which the Adviser considers to have
growth prospects that are not fully valued by the stock market.
HIGHLIGHTS
*No Sales Charges: Investors in the Fund pay no sales
commissions, service charges or redemption fees on shares
purchased directly. The Fund has a distribution plan through
which the Fund could incur distribution expenses not to exceed
0.75% per annum of its average daily net assets. Additionally,
the Fund may pay a servicing fee in an amount not to exceed 0.25%
per annum of its average daily net assets. (See page 14)
*Professional Management: Investors have access to investment
areas and techniques with professional management that would be
difficult to achieve as individual investors.
(See page 7)
* Systematic Withdrawal: The Fund offers plans whereby investors
may arrange monthly or quarterly systematic withdrawals from
their investment accounts. (See page 11)
*Retirement Plans: Investors may invest in the Fund through IRAs,
Profit-Sharing, and Money Purchase Plans. (See page 14)
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<PAGE>
ABOUT THIS
PROSPECTUS
This prospectus should be read and retained for future reference.
Additional information about the Fund is contained in the
Statement of Additional Information dated April 29, 1996 which is
available at no charge upon written request to the Fund at the
address printed on the cover or by calling (800) 655-7766 . The
Statement of Additional Information is incorporated herein by
reference.
TABLE OF CONTENTS
Fee Table 3
Financial Highlights 4
Investment Objective 5
Investment Policies 5
Risk Factors 6
Investment Restrictions 6
Writing Covered Call Options 6
Portfolio Managers 7
Management of the Fund 7
Fees & Expenses 7
Performance Information 8
Portfolio Turnover 8
How to Purchase Shares 8
How to Redeem Shares 9
Systematic Withdrawal Plan 11
The Investment Adviser 11
Distributions 12
Tax Matters 12
Distribution Plan 13
Reinvestment of Distributions 14
How Net Asset Value is Computed 4
Individual Retirement Accounts 14
General Information 15
Code of Ethics 15
Custodian, Transfer Agent, Dividend
Paying Agent , Accounting Services
Agent and Administrator 15
Shareholder Inquiries 16
Trustees & Officers 17
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.
- 2 -
<PAGE>
FEE TABLE
The purpose of this table is to assist an investor in understanding the
various costs and expenses which may be borne directly or indirectly by an
investment in the Fund. Below is a summary of the annual operating expenses
expected to be incurred by the Fund for the year ended December 31, 1996. For
the fiscal year ended December 31, 1995, total Fund expenses equalled 1.50% of
average net assets.
Shareholder Transaction Expense.............. None*
Annual Fund Operating Expenses
(as a % of average net assets)
Management Fees.............................. 0.75%
Rule 12b-1 Fees (after fee deferrals)....... 0.10%**
Other Expenses............................... 0.77%
--------
Total Fund Expenses.......................... 1.62%
=======
* No sales loads or transaction fees are charged in connection with
the purchase or redemption of Fund shares. Shareholders, however,
will be assessed fees for outgoing wire transfers, returned
checks and stop payment orders.
** Under the Fund's Rule 12b-1 Plan, the Fund may incur distribution
and servicing expenses of up to 1% per annum of the Fund's
average daily net assets. For the current fiscal year, the Fund
will limit such payments to 0.10% per annum of its average daily
net assets. As a result of distribution fees, a long-term
shareholder in the Fund may pay more than the economic equivalent
of the Fund's maximum sales charges permitted by the rules of the
National Association of Securities Dealers, Inc.
EXAMPLE:
1 year 3 years 5 years 10 years
------ ------- ------- --------
You would pay the following expenses on a
$1,000 investment assuming (1) 5% annual
return and (2) redemption at the end of each
time period : $16 $51 $88 $192
You would pay the following expenses on the
same investment, assuming no redemption: $16 $51 $88 $192
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<PAGE>
LEPERCQ-ISTEL FUND
FINANCIAL HIGHLIGHTS
The following information has been audited by KPMG Peat Marwick LLP,
independent auditors, whose report is incorporated by reference from the Annual
Report. See accompanying notes to financial statements.
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
- --------------------------------------------
Year ended December 31,
--------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $13.17 $14.84 $14.17 $14.05 $12.46 $14.00 $12.33 $12.23 $13.29 $13.89
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment income 0.14 0.18 0.29 0.40 0.47 0.60 0.61 0.52 0.40 0.40
Net gain (loss) on securities
(both realized and unrealized) 3.42 (0.93) 1.62 0.35 1.65 (1.52) 2.06 0.35 (0.04) 0.72
---- ----- ---- ---- ---- ----- ---- ---- ----- ----
Total from investment operations 3.56 (0.75) 1.91 0.75 2.12 (0.92) 2.67 0.87 0.36 1.12
---- ----- ---- ---- ---- ----- ---- ---- ---- ----
Less distributions:
Dividends from net investment
income (0.13) (0.18) (0.29) (0.40) (0.47) (0.60) (0.61) (0.52) (0.40) (0.40)
Dividends in excess of net
investment income -- (0.03) (0.03) (0.01) (0.06) (0.02) (0.02) (0.02) (0.17) (0.24)
Distributions from capital gains (0.77) (0.71) (0.92) (0.22) 0.00 0.00 (0.37) (0.23) (0.85) (1.08)
----- ----- ----- ----- ---- ---- ----- ----- ----- -----
Total distributions (0.90) (0.92) (1.24) (0.63) (0.53) (0.62) (1.00) (0.77) (1.42) (1.72)
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Net asset value, end of year $15.83 $13.17 $14.84 $14.17 $14.05 $12.46 $14.00 $12.33 $12.23 $13.29
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total return (as a %) 27.1 (5.1) 13.5 5.3 17.0 (6.6) 21.7 7.1 2.7 8.1
Ratios/supplemental data
Net assets, end of year
(in millions) 20.2 18.5 16.6 17.0 17.4 19.2 22.0 20.1 22.3 23.6
Ratio of expenses to average
net assets (as a %) 1.50 1.56 1.51 1.53 1.54 1.50 1.48 1.50 1.44 1.67
Ratio of net investment income to
average net assets (as a %) 0.89 1.36 2.00 2.90 3.80 4.57 4.41 4.13 2.69 3.01
Portfolio turnover rate (as a %) 59.72 70.66 19.88 20.37 21.81 24.28 48.33 72.09 67.05 44.71
</TABLE>
- 4 -
<PAGE>
INVESTMENT
OBJECTIVE
The primary investment objective of the Lepercq-Istel Fund is
long-term capital appreciation. The Fund's secondary investment
objective is to provide dividend income. There can be no
assurance that the objectives of the Fund will be realized, nor
can there be any assurance against possible loss in value of the
Fund's portfolio.
INVESTMENT
POLICIES
The Fund seeks to achieve its investment objectives by investing
primarily in common stocks. The principal investment approach of
the Fund will be to invest in common stock and other securities
of companies that the Adviser believes are undergoing a
transformation that is unrecognized by the stock market. The Fund
also invests in companies which the Adviser considers to have
growth prospects that are not fully valued by the stock market.
Investments will be made in stocks of issuers (including foreign
issuers) ranging from small to large in market capitalizations.
The Fund will be managed with a long-term perspective and will
not engage in short-term trading on a regular basis.
The Fund may invest up to 20% of its total assets in securities
of foreign issuers with the foregoing characteristics. The Fund
may invest in the securities of foreign issuers in the form of
American Depository Receipts ("ADRs") or other securities
convertible into securities of foreign issuers. ADRs are receipts
typically issued by U.S. banks representing the right to receive
securities of a foreign issuer deposited with that bank or a
correspondent bank. The Fund may also invest in the securities of
foreign issuers directly in foreign markets so long as, in the
Adviser's judgment, an established public trading market exists
for those securities.
The Fund may invest in debt securities and preferred stock that
are convertible into or carry rights to acquire common stock, and
other short-term and long-term debt securities that are
investment grade and lower-quality, high-yielding debt
instruments as rated by Moody's or Standard & Poor's. The Fund
intends to limit its investments in these securities to less than
25% of its total assets.
The Fund may also invest up to 10% of its total assets in rights
or warrants to subscribe for or purchase common stock.
It is anticipated that the major portion of the portfolio will at
all times be invested in common stock. The Fund reserves the
right, as a temporary defensive measure, to hold other types of
securities including short-term U.S. Government securities, money
market securities, including repurchase agreements, or cash, in
such proportions as, in the opinion of the Adviser, prevailing
market or economic conditions warrant.
- 5 -
<PAGE>
RISK FACTORS
In seeking capital appreciation, the Fund will purchase common
stock of small and medium size companies which may fluctuate in
price more than common stocks of larger, more mature companies,
such as many of those included in the Standard & Poor's 500.
Investments in securities of foreign issuers involve certain
risks, including fluctuations in foreign exchange rates, future
political and economic developments, and possible imposition of
exchange controls or other foreign governmental laws or
restrictions. In addition, foreign companies are not subject to
accounting, auditing, and financial reporting standards and
requirements comparable to those of United States companies.
Delays or problems with settlement could affect the liquidity of
the Fund's portfolio and adversely affect the Fund's performance.
To the extent such investments are subject to withholding or
other taxes, or to regulations relating to repatriation of
assets, the Fund's distributable income will be reduced. The
prices of securities in different countries are subject to
different economic, financial, political and social factors.
The Fund may purchase lower-graded debt securities (those rated
Ba or lower by Moody's or BB or lower by Standard & Poor's) that
have poor protection against default in the payment of principal
and interest. These securities are often considered to be
speculative and involve greater risk of loss or price change due
to change in the issuer's capacity to pay. The market prices of
lower-rated debt securities may fluctuate more then those of
higher-rated debt securities, and may decline significantly in
periods of general economic difficulty, which may follow periods
of rising interest rates.
INVESTMENT
RESTRICTIONS
The Fund has also adopted the following restrictions, which are
matters of fundamental policy and cannot be changed without the
approval of the lesser of: (a) 67% or more of the voting
securities present at a meeting if the holders of more than 50%
are present or represented by proxy; or (b) more than 50% of the
voting securities.
Investments will not be made for the purpose of exercising
control or management of any company. The Fund will not purchase
securities of any issuer if, as a result of such purchase, the
Fund would hold more than 10% of the voting securities of such
issuer. Not more than 5% at the time of purchase of the Fund's
total net assets, taken at market value, will be invested in the
securities of any one issuer (excluding United States Government
Securities). Not more than 25% of the Fund's total net assets
will be concentrated in companies of any one industry or group of
related industries.
WRITING COVERED
CALL OPTIONS
The Fund is authorized to write (i.e., sell) covered call options
on the equity securities in which it may invest and to enter into
closing transactions with respect to such options. A covered call
option is an option where the Fund, in return for a premium,
gives another party a right to buy specified securities owned by
the Fund at the stated exercise price at any time until the
stated expiration date of the option. By writing
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<PAGE>
covered call options, the Fund gives up the opportunity, while
the option is in effect, to profit from an increase in price of
the underlying security above the option's exercise price. In
addition, the Fund's ability to sell the underlying security will
be limited while the option is in effect unless the Fund effects
a closing purchase transaction. A closing purchase transaction
cancels out the Fund's position as the writer of an option by
means of an offsetting purchase of an identical option prior the
expiration of the option it has written. The Fund intends to
employ covered call options for the purpose of partially reducing
portfolio risk and the possibility of enhancing portfolio income.
The Fund may not write covered call options in underlying
securities in an amount whereby portfolio securities exceeding
15% of the Fund's net assets would be subject to covered call
options.
PORTFOLIO
MANAGERS
Andrew Merz Hanson and Tsering Ngudu are primarily responsible
for the day-to-day management of the Fund's investment portfolio.
Mr. Hanson is Co-President of the Fund and Senior Vice President
and Director of Equity Research of the Adviser. Mr. Hanson has
been with the Adviser since November 1989. Mr. Ngudu is also Co-
President of the Fund and Senior Vice President of the Adviser.
Mr. Ngudu has been with the Adviser since December 1985. Mr.
Hanson and Mr. Ngudu have been primarily responsible for managing
the Fund's investment portfolio since December 1993.
MANAGEMENT
OF THE FUND
The business affairs of the Fund are managed under the direction
of its Board of Trustees. There are currently five Trustees (of
whom three are non-affiliated persons) who meet four times each
year. The Statement of Additional Information contains additional
information regarding the trustees and officers of the Fund.
FEES AND
EXPENSES
The Fund pays its own expenses including, without limitation: its
investment management fee; interest, taxes and brokerage
commissions; extraordinary expenses, including but not limited to
legal claims and liabilities and litigation costs and any
indemnification related thereto; the charges and expenses of any
registrar, any custodian or depository appointed by the Fund for
the safekeeping of its cash, portfolio securities and other
property, and any stock transfer, dividend , accounting or
administrator agent or agents appointed by the Fund; all fees
payable by the Fund to federal, state or other government
agencies; the cost and expense of engraving or printing
certificates representing shares of the Fund; all costs and
expenses in connection with the registration and maintenance of
the Fund and its shares with the Securities and Exchange
Commission and various states and other jurisdictions (including
filing fees and legal fees); the cost and expense of printing,
including typesetting, and distributing Prospectuses and
Statements of Additional Information of the Fund, and supplements
thereto, to the Fund's shareholders; all expenses of
- 7 -
<PAGE>
shareholders' and Trustees' meetings and of preparing, printing
and mailing of proxy statements and reports to shareholders; all
expenses incident to the payment of any dividend, distribution,
withdrawal or redemption, whether in shares or in cash; charges
and expenses of any outside service used for pricing of the
Fund's shares; any shareholder service or distribution fee up to
the maximum aggregate rate of 1.0% per annum of the Fund's
average daily net assets payable by the Fund under its Rule 12b-1
Plan of Distribution, and expenses of legal counsel and of
independent public accountants in connection with any matter
relating to the Fund; membership dues of industry associations;
postage; insurance premiums on property or personnel (including
officers and Trustees) of the Fund which inure to its benefit;
and all other charges and costs of the Fund's operations unless
otherwise explicitly assumed by the Adviser. The Fund may also
reimburse the Adviser for the costs of performing certain
internal accounting functions. The expenses may exceed those for
other mutual funds.
PERFORMANCE
INFORMATION
From time to time the Fund may advertise its performance as
compared to other mutual funds with similar investment
objectives, to stock or other indices and to data prepared by
independent services which monitor the performance of mutual
funds. All such advertisements will show the value of an assumed
initial investment of $10,000 in the Fund at the end of a one-,
five- and ten-year period. These values will be calculated by
multiplying the compounded average annual total return for each
time period by the amount of the assumed initial investment. If
the Fund compares its performance to other funds, relevant
indices or independent services, the Fund's performance will be
stated in the same terms in which such comparative data and
indices are stated, which is normally total return rather than
yield.
Performance will fluctuate and any statement of performance
should not be considered as representative of the future
performance of the Fund. Shareholders should remember that the
Fund's performance is generally a function of the type and
quality of instruments held by the Fund, operating expenses and
market conditions. Any fees charged by banks with respect to
customer accounts through which shares of the Fund may be
purchased, although not included in the calculations of
performance for the Fund, will reduce performance results.
PORTFOLIO
TURNOVER
For the year ended December 31, 1995, the Fund's portfolio
turnover rate was 59.72%. The Fund's rate may vary and is not
necessarily indicative of future rates.
HOW TO PURCHASE
SHARES
Shares may be purchased at the next determined net asset value
(see "How Net Asset Value is Computed") after receipt of an order
to purchase such shares. There are no sales charges. Initial
investments are subject to a $500 minimum. Thereafter, the
shareholder may purchase any number of additional shares, but not
less than the value
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<PAGE>
of one share.
BY MAIL:
1. Complete the attached application form.
2. Make check payable to the Lepercq-Istel Fund for the
amount invested.
3. Send both to:
Firstar Trust Company, Mutual Fund Services
P.O. Box 701
Milwaukee, Wisconsin 53201-0701
Firstar's telephone number is (800) 338-1579.
For express or registered mail, send to:
Firstar Trust Company, Mutual Fund Services
3rd Floor
615 East Michigan Street
Milwaukee, WI 53202
Shares may also be purchased through unaffiliated broker/dealers
who will not impose a "sales load" but may instead impose a
service charge for services rendered on behalf of the purchaser.
The investor will receive from the Transfer Agent and the
Dividend Paying Agent (also referred to herein as the
"Shareholder Servicing Agent") for the Fund, a confirmation
indicating the number of full shares and fractional shares (if
any) acquired. The Shareholder Servicing Agent will also provide
the investor with a confirmation of each new transaction in his
or her account. The Fund bears the administrative cost of this
service.
Shareholders may, upon written request to the Shareholder
Servicing Agent, obtain certificates for their full shares. It is
recommended, however, that shareholders not request certificates
until they need them. Certificates, which can be lost or stolen,
are unnecessary except for certain purposes, such as collateral
for a loan. A shareholder retains full voting rights whether or
not he or she receives certificates.
Lepercq, de Neuflize Securities Inc., 1675 Broadway, New York,
New York 10019 (the "Distributor") has agreed to promote and sell
shares of the Fund. The Distributor has agreed to purchase shares
of the Fund only to fill orders received from subscribers or
broker/dealers. The Distributor, however, is not bound to accept
such orders, and the Fund has retained the right to reject orders
received from the Distributor.
HOW TO REDEEM
SHARES
Shareholders of the Fund may redeem their shares at any time
without charge. Upon receipt of a redemption request in good
order, the Shareholder Servicing Agent will effect the requested
redemption at the next determined net asset value. Payment will
- 9 -
<PAGE>
be made as soon as practicable, but in no event later than three
business days after proper receipt of redemption notification,
except that when a purchase has been made by check, the Fund can
hold payment on redemption until the Fund is reasonably satisfied
the check has cleared. (This may normally take up to 3 days for
local personal or corporate checks and up to 7 days for other
personal or corporate checks.) The shareholder's redemption
proceeds will be mailed upon clearance of the purchase check.
THE REDEMPTION REQUEST MUST:
1. Be in writing;
2. Specify account number & account name;
3. Be mailed to :
Firstar Trust Company, Mutual Fund Services
P.O. Box 701
Milwaukee, Wisconsin 53201-0701
Firstar's telephone number is (800) 338-1579
4. Be signed by all account owners;
5. Include endorsed Certificates or Stock Powers, and
6. All signatures must be Medallion guaranteed.
Medallion guarantees are available from a commercial bank which
is a member of the Federal Deposit Insurance Corporation, a trust
company or a member firm (broker/dealer) of a national securities
exchange. A notary public or a savings and loan association is
not an acceptable guarantor.
Shareholders who hold Fund shares in an Individual Retirement
Account or ("IRA") other retirement plan must indicate on their
redemption request whether federal income tax should be withheld
by the Fund. All IRA redemptions will be subject to withholding
tax unless the shareholder specifically instructs the Fund not to
withhold on their redemption request.
The Fund has elected to be governed by Rule 18f-1 of the
Investment Company Act of 1940, under which it is obligated to
redeem the shares of any shareholder solely in cash up to the
lesser of 1% of the net assets of the Fund or $250,000 during any
90- day period. Should any shareholder's redemption exceed this
limitation, the Fund can, at its sole option, redeem the excess
in cash or in portfolio securities selected solely by the Fund
(and valued as in computing the net asset value). In these
circumstances, a shareholder selling such securities would
probably incur a brokerage charge and there can be no assurance
that the price realized by the shareholder upon the sale of such
securities will not be less than the value used in computing the
net asset value for the purpose of such redemption.
- 10 -
<PAGE>
SYSTEMATIC
WITHDRAWAL
PLAN
A shareholder who owns or purchases shares having a total value
of at least $10,000 (at the then current net asset value) may
open a Systematic Withdrawal Plan. The shareholder can request
payments of any amount, but not less than $50 to be paid monthly
or quarterly. The Fund does not make any recommendation as to an
appropriate amount for periodic withdrawal. Payments are made by
the Shareholder Servicing Agent by redeeming as many shares as
necessary to make such periodic payments on the day of the
shareholder's choosing (or, if not a business day, the next
preceding business day). All income dividends and capital-gains
distributions on the shares held under a Systematic Withdrawal
Plan are automatically reinvested at the next determined net
asset value.
The cost of administering a Systematic Withdrawal Plan is
presently borne by the Fund and is an expense of all shareholders
of the Fund. A shareholder may terminate its Systematic
Withdrawal Plan at any time upon 30 days' written notice to the
Shareholder Servicing Agent. A Systematic Withdrawal Plan may
also be terminated by the Fund, the Distributor or the
Shareholder Servicing Agent, upon 30 days' written notice to the
shareholder.
THE INVESTMENT
ADVISER
Since December 21, 1953, Lepercq, de Neuflize & Co. Incorporated
(or its predecessors), 1675 Broadway, New York, New York 10019
(the "Adviser"), has acted as the investment adviser to the Fund
and to its predecessor, Istel Fund, Inc. The current investment
advisory agreement, dated April 8, 1986, is subject to the annual
review and approval of the Board of Trustees.
The Fund's investment advisory agreement entered into with the
Adviser provides, in substance, that the Adviser will submit
analytical reports and recommendations as to investments of the
Fund, and will furnish office space and general management ,
subject at all times to the policies set forth by the Fund's
Board of Trustees. In return, the Adviser will receive an annual
fee equal to 3/4 of 1% per annum of the Fund's average daily net
assets, paid quarterly, subject to the expense limitations of the
states in which the Fund's shares are currently registered or
qualified for sale. For the years ended December 31, 1995, 1994,
and 1993, the total advisory fees amounted to $144,012, $133,137,
and $127,619 , respectively.
The advisory fee may be higher than those of most other
investment companies; however, the Board of Trustees has
determined that these fees are comparable to those of similar
investment companies with similar investment objectives and
policies. The total of all expenses paid by the Fund in the year
ended December 31, 1995, including the advisory fee, was 1.50% of
the Fund's average daily net assets.
The Adviser provides investment counsel and/or advice for various
institutions, including educational, charitable, industrial,
financial and banking organizations, as well as for individuals.
Lepercq, de Neuflize Securities Inc., a wholly owned subsidiary
- 11 -
<PAGE>
of the Adviser, conducts broker/dealer operations and is a member
of the New York Stock Exchange.
DISTRIBUTIONS
Currently, the Fund intends to declare semi-annual dividends from
its net investment income, to be paid in July and December of
each calendar year. In addition, a year-end distribution of any
net realized capital gains will be paid at least annually and
will generally be made in December.
TAX MATTERS
The Fund intends to qualify as a regulated investment company by
satisfying the requirements under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"), including
requirements with respect to diversification of assets,
distribution of income and sources of income. It is the Fund's
policy to distribute to shareholders all of its investment income
(net of expenses) and any capital gains (net of capital losses)
in accordance with the timing requirements imposed by the Code so
that the Fund will not be subject to the federal income or excise
tax.
Distributions by the Fund of its net investment income and the
excess, if any, of its net short-term capital gain over its net
long-term capital loss are taxable to shareholders as ordinary
income. These distributions are treated as dividends for federal
income-tax purposes, but only a portion thereof (essentially, the
portion attributable to qualifying dividends from domestic
corporations received by the Fund during the year) may qualify
for the 70% dividends-received deduction for corporate
shareholders. Since it is anticipated that the Fund's investment
income will include interest and dividends from foreign
corporations and since the Fund may have short-term capital
gains, substantially less than 100% of ordinary income dividends
paid by the Fund may qualify for the dividends-received
deduction. Distributions by the Fund of the excess, if any, of
its net long-term capital gain over its net short-term capital
loss will be designated as capital-gain dividends and be taxed to
shareholders as long-term capital gains regardless of the holding
periods of Fund shares in the hands of shareholders.
Distributions to shareholders will be treated in the same manner
for federal income-tax purposes whether received in cash or
reinvested in additional shares. In general, distributions by the
Fund are taken into account by the shareholders in the year in
which they are made. However, certain distributions made during
January will be treated as having been paid by the Fund and
received by the shareholders on December 31 of the preceding
year. A statement setting forth the federal income-tax status of
all distributions made or deemed made during the year will be
sent to shareholders promptly after the end of each year.
Shareholders purchasing shares of the Fund shortly before an
ex-dividend date will be taxed on the entire amount of the
dividend received, even though the price they paid for the shares
already reflected the amount of the anticipated dividend.
A shareholder will recognize gain or loss on a sale or redemption
of shares of the Fund in an amount equal to the difference
between the anticipated amount he realizes on the sale or
redemption and his adjusted tax basis in the shares. A loss
realized on a taxable
- 12 -
<PAGE>
disposition of shares within six months from the date of their
purchase will be treated as long-term capital loss to the extent
of any capital gain dividends received in the interim on such
shares. All or a portion of any loss realized on a taxable
disposition of Fund shares may be disallowed if other shares of
the Fund are purchased within thirty days before or after such
disposition.
Under the back-up withholding rules of the Code, certain
shareholders may be subject to withholding of federal income tax
on dividend and redemption payments made by the Fund. In order to
avoid this back-up withholding, a shareholder must provide the
Fund with a correct taxpayer identification number (which for
most individuals, the Social Security number), or certify that it
is a corporation or otherwise exempt from back-up withholding.
The New Account Application enclosed with this Prospectus
provides for shareholder compliance with these certification
requirements.
The foregoing discussion is based on tax laws and regulations in
effect on the date of this Prospectus, and is subject to change
by legislative or administrative action. A prospective
shareholder should also review the more detailed discussion of
federal income tax considerations relevant to the Fund and its
shareholders in the Statement of Additional Information. In
addition, each prospective shareholder should consult with
his/her own tax adviser as to the tax consequences to him of
investing in the Fund in light of his particular circumstances,
including the application of state and local taxes and its
shareholders, which may differ from the federal consequences
described above.
DISTRIBUTION
PLAN
The Board of Trustees, on behalf of the Fund, has adopted a
distribution plan (the "Distribution Plan") pursuant to Rule
12b-1 of the Investment Company Act of 1940, pursuant to which
the Fund may incur distribution expenses of up to 0.75% per annum
of its average daily net assets. Additionally, the Fund may pay a
servicing fee to certain persons in an amount not to exceed 0.25%
of the annual average daily net assets. The aggregate of these
two fees may not exceed 1% of the Fund's annual average daily net
assets in accordance with the National Association of Securities
Dealers asset-based sales charge rule, effective July 7, 1993.
The Distribution Plan provides that the Fund may finance
activities which are primarily intended to result in the sale of
the Fund's shares, including, but not limited to, advertising,
printing of Prospectuses and reports for other than existing
shareholders, preparation and distribution of advertising
material and sales literature and payments to the Distributor and
to other dealers and shareholder servicing agents who enter into
an agreement with the Distributor or the Adviser.
The Glass-Steagall Act and other applicable laws, among other
things, generally prohibit federally chartered or supervised
banks from engaging in the business of underwriting, selling or
distributing securities. Accordingly, the Distributor will engage
banks as shareholder service agents only to perform
administrative and shareholderservicing functions. While the
matter is not free from doubt, the management of the Fund
believes that such laws should not preclude a bank from acting as
a shareholder service agent. However, judicial or administrative
decisions or
- 13 -
<PAGE>
interpretations of such laws, as well as changes in either
Federal or state statutes or regulations relating to the
permissible activities of banks or their subsidiaries or
affiliates, could prevent a bank from continuing to perform all
or a part of its servicing activities. If a bank were prohibited
from so acting, shareholder clients would be permitted to remain
Fund shareholders and alternate means for continuing the
servicing of such shareholders would be sought. In such event,
changes in the operation of the Fund might occur and shareholders
serviced by such bank might no longer be able to avail themselves
of certain services then being provided by such bank. It is not
expected that shareholders would suffer any adverse financial
consequences as a result of any of these occurrences.
The Distribution Plan will only make payments for expenses
actually incurred on behalf of the Fund. The Distribution Plan
will not carry over expenses from year to year and if the
Distribution Plan is terminated in accordance with its terms, the
obligations of the Fund to make reimbursement payments to the
Distributor pursuant to the Distribution Plan will cease and the
Fund will not be required to make any payments for expenses
incurred after the date the Distribution Plan terminates. (See
the Statement of Additional Information "Distribution Plan" for
further information about the Distribution Plan.)
REINVESTMENT OF
DISTRIBUTIONS
All ordinary income dividends and capital-gain distributions are
automatically reinvested in shares of the Fund unless the
shareholder elects to receive such distributions in cash by
completing the applicable section on the New Account Application
form. All reinvestments will be at net asset value on the
reinvestment date and the shareholder will receive a confirmation
indicating the number of full and fractional shares so purchased.
HOW NET ASSET
VALUE IS
COMPUTED
The net asset value per share is equal to the total assets of the
Fund less total liabilities divided by the number of shares
outstanding. It is determined as of the close of business of the
New York Stock Exchange on each day that the Exchange is open. In
addition, the Fund will also determine a net asset value on any
day during which there is sufficient trading in its portfolio
securities that the net asset value may be materially affected,
except for New Year's Day, President's Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas
Day, and only if on any such day the Fund is required to redeem
shares.
INDIVIDUAL
RETIREMENT
ACCOUNTS
The Fund offers Individual Retirement Accounts (IRAs), as well as
various other retirement plan accounts. To obtain the appropriate
disclosure documentation and more
- 14 -
<PAGE>
complete information on how to open a retirement account, call
(800) 655-7766 .
GENERAL
INFORMATION
The Fund is a series of the Lepercq-Istel Trust which is an
open-end management investment company organized as a
Massachusetts business trust on April 8, 1986. As such, the Fund
is not required to hold annual shareholders' meetings. However,
pursuant to its Declaration of Trust, the Trust will hold special
meetings for purposes such as electing Trustees, changing
fundamental policies, approving an investment advisory agreement
or amending its Distribution Plan to increase materially the
amount to be spent by the Fund under its Distribution Plan and,
at the request of its shareholders, to call a meeting to replace
Trustees. In addition, the Trust has undertaken to hold a
shareholders' meeting to fill vacancies created on the Board of
Trustees if less than a majority of the Trustees are not elected
by the shareholders. The Trust currently has one series,
Lepercq-Istel Fund with only one class and with a par value of
$1.00 per share. All shares when issued are fully paid,
nonassessable and redeemable. All shares have equal voting,
dividend and liquidation rights but have no subscription,
preemptive or conversion rights and no sinking-fund provisions.
There is no limitation on the transferability of shares, and no
share is subject to further call. The Board of Trustees may
create additional series of the Trust without shareholder
approval.
CODE OF ETHICS
The Code of Ethics of the Adviser and the Fund prohibits all
affiliated personnel from engaging in personal investment
activities which compete with or attempt to take advantage of the
Fund's planned portfolio transactions. The objective of the Code
of Ethics of both the Fund and Investment Adviser is that their
operations be carried out for the exclusive benefit of the Fund's
shareholders. Both organizations maintain careful monitoring of
compliance with the Code of Ethics.
CUSTODIAN,
TRANSFER AGENT,
DIVIDEND PAYING
AGENT, ACCOUNTING
SERVICES AGENT
AND ADMINISTRATOR
Firstar Trust Company, P.O. Box 701, Milwaukee, Wisconsin
53201-0701 is the Fund's custodian, transfer agent and dividend
paying agent.
First Trust Company also serves as the Fund's accounting services
agent and Fund administrator. As such, Firstar Trust Company
provides a variety of administrative and accounting services to
the Fund, such as accounting relating to the Fund's portfolio and
portfolio transactions, the determination of net asset value and
pricing of the Fund's shares, and maintaining the books of
account of the Fund.
- 15 -
<PAGE>
SHAREHOLDER
INQUIRES
Shareholder inquiries may be made by writing or calling Firstar
Trust Company, Mutual Fund Services, P.O. Box 701, Milwaukee,
Wisconsin 53201-0701, telephone (800) 338-1579 or Lepercq-Istel
Fund at 1675 Broadway, New York, New York 10019, telephone (800)
655-7766 .
- 16 -
<PAGE>
TRUSTEES AND OFFICERS
TRUSTEES
Bruno Desforges Chairman of the Board; Managing Director, Lepercq, de
Neuflize & Co. Incorporated; Director and Chairman of
the Board, Lepercq, de Neuflize Securities Inc.
Francois Letaconnoux Director, President and Chief Executive Officer,
Lepercq Inc. and Lepercq, de Neuflize & Co.
Incorporated; Director and President, Lepercq, de
Neuflize Securities Inc.
Jean-Louis Milin Managing Director, Banque de Neuflize, Schlumberger,
Mallet
*Dr. Marvin Schiller Former Managing Director, A.T. Kearney, Inc.
*Franz Skryanz Financial Consultant; formerly, Treasurer, Chief
Financial Officer, Schenkers International
*Member of Audit, Ethics and Nominating Committees
OFFICERS
Andrew Hanson Co-President
Tsering Ngudu Co-President
John McCollam Treasurer
Pamela Forrest Secretary
Peter Hartnedy Controller
- 17 -
<PAGE>
Investment Adviser Lepercq, de Neuflize & Co. Incorporated, New York
Underwriter and
Distributor Lepercq, de Neuflize Securities Inc., New York
Custodian, Transfer Firstar Trust Company, Wisconsin
Agent, Dividend
Paying Agent,
Accounting Services
Agent and Administrator
Legal Counsel Kramer, Levin, Naftalis, Nessen, Kamin & Frankel,
New York
Independent Auditors KPMG Peat Marwick LLP, Wisconsin
- 18 -
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
April 29, 1996
LEPERCQ-ISTEL FUND
(a series of Lepercq-Istel Trust)
1675 Broadway
New York, New York 10019
Telephone: (800) 655-7766 or (212) 698-0749
Lepercq-Istel Trust (the "Trust") is a diversified, open-end
management invest- ment company (or mutual fund) organized into one series:
Lepercq-Istel Fund (the "Fund"). This Statement of Additional Information is
intended to provide investors with additional information concerning the Fund.
To avoid repetition of information, investors are referred to the Fund's
Prospectus dated April 29, 1996. Additionally, the Prospectus and the Statement
of Additional Information omit certain information contained in the Trust's
Registration Statement, filed with the United States Securities and Exchange
Commission (the "SEC"). Copies of the Registration Statement may be obtained
from the SEC by paying the charges prescribed under its rules and regulations.
This Statement of Additional Information is intended to supplement the
Fund's Prospectus and should be read in conjunction with the Prospectus which
may be obtained without charge upon written request to the above address or by
calling (800) 655-7766 or (212) 698-0749.
TABLE OF CONTENTS
General Information and History............................ 2
Investment Objectives and Policies......................... 4
Investment Restrictions.................................... 5
Trustees and Officers of the Trust......................... 7
Management of the Trust.................................... 9
The Investment Adviser..................................... 9
Distribution Plan.......................................... 10
Brokerage Commissions...................................... 11
The Distributor............................................ 12
Investment Advisory and Distribution Agreements............ 13
Redemption of Shares ...................................... 13
How Net Asset Value is Computed............................ 13
Performance Information.................................... 14
Taxes...................................................... 15
Independent Auditors....................................... 22
Financial Statements....................................... 22
<PAGE>
GENERAL INFORMATION AND HISTORY
On April 8, 1986, the shareholders of Istel Fund, Inc. (the Trust's
predecessor) approved a plan of reorganization (the "Reorganization") under
which Istel Fund, Inc. converted its corporate structure to change from a
Delaware corporation to a Massachusetts business trust. In accordance with the
terms and conditions of the Reorganization, Istel Fund, Inc. changed its name to
Lepercq-Istel Trust and the shareholders of Istel Fund, Inc. exchanged their
common stock for an equal number of shares of beneficial interest in the Fund. A
copy of the Agreement and Declaration of Trust is on file with the Secretary of
State of The Commonwealth of Massachusetts.
Shares of the Fund are redeemable at the net asset value thereof at
the option of the shareholders or, in certain circumstances, at the option of
the Fund. For information concerning the methods of redemptions and the rights
of share ownership, consult the Prospectus.
The Board of Trustees may classify or reclassify any unissued shares
of any series in addition to those already authorized by setting or changing in
any one or more respects, from time to time, prior to the issuance of such
shares, the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications, or terms or
conditions of redemption, of such shares. Any such classification or
reclassification will comply with the provisions of the Investment Company Act
of 1940, as amended (the "1940 Act"). The Declaration of Trust permits the
Trustees to issue an unlimited number of full and fractional shares, $1.00 par
value, of the Fund. A share represents an equal proportionate interest in the
Fund with each other share of the Fund and is entitled to a proportionate
interest in the dividends and distributions with respect thereto. Additional
information concerning the rights of share ownership is set forth in the
Prospectus. The assets received by the Fund from the issue of its shares and all
income, earnings, profits, losses and proceeds therefrom, subject only to the
rights of creditors, are allocated to the Fund and constitute the underlying
assets of the Fund. The underlying assets of the Fund are segregated and are
charged with the expenses attributable to the Fund and with a share of the
general expenses of the Trust and with expenses incurred directly or allocated
to the Fund.
Under Massachusetts law, shareholders could, under certain
circumstances, be held liable for the obligations of the Trust. However, the
Declaration of Trust disclaims shareholder responsibility for acts or
obligations of the Trust and requires that notice of such disclaimer be given in
each agreement, obligation or instrument entered into or executed by the Trust
or Trustees to all parties, and each party thereto must expressly waive all
rights of action directly against shareholders. The Declaration of Trust
provides for indemnification out of the Fund's property for all loss and expense
of any shareholder of the Fund held liable on account of being or having been a
shareholder. Thus, the risk of a shareholder incurring financial loss on account
of shareholder liability is limited to circumstances in which the Trust or Fund
would be unable to meet its obligations wherein the complaining party was held
not to be bound by the
<PAGE>
disclaimer. The Declaration of Trust further provides that the Trustees will not
be liable for errors of judgment or mistakes of fact or law. However, nothing in
the Declaration of Trust protects a Trustee against any liability to which the
Trustees would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved for the conduct
of his office. The Declaration of Trust provides for indemnification of the
Trustees and officers of the Trust except with respect to any matter to which
any such person did not act in good faith in the reasonable belief that his
action was in or not opposed to the best interest of the Trust. Such person may
not be indemnified against any liability to the Trust or the Fund shareholders
to which he would otherwise be subject by reason of the duties involved in the
conduct of his office. The Declaration of Trust also authorizes the purchase of
liability insurance on behalf of the Trustees and officers, except that such
liability insurance will not indemnify Trustees and officers against actions
adjudicated to have been the result of willful misfeasance, bad faith, gross
negligence or reckless disregard of one's duties.
The Trust will not normally hold annual shareholders' meetings. At
such time as less than a majority of the Trustees have been elected by the
shareholders, the Trustees then in office will call a shareholders' meeting for
the election of Trustees. In addition, Trustees may be removed from office by a
written consent signed by the holders of two-thirds of the Trust's outstanding
shares and filed with the Trust's custodian or by a vote of the holders of
two-thirds of the Trust's outstanding shares at a meeting duly called for the
purpose, which meeting shall be held upon written request of the holders of not
less than 10% of the outstanding shares of the Trust. Upon written request by
ten or more shareholders, who have been such for at least six months and who
hold shares constituting 10% of the Trust's outstanding shares, stating that
such shareholders wish to communicate with the other shareholders for the
purpose of obtaining the signatures necessary to demand a meeting to consider
removal of a Trustee, the Trust has undertaken to provide a list of shareholders
or to disseminate appropriate materials (at the expense of the requesting
shareholders).
Shareholders do not have cumulative voting rights and therefore the
holders of more than 50% of the outstanding shares of the Trust voting together
for election of Trustees may elect all of the members of the Board of Trustees.
In such event, the remaining shareholders cannot elect any members of the Board
of Trustees. Except as otherwise disclosed in the Prospectus and in this
Statement of Additional Information, the Trustees shall continue to hold office
and may appoint their successors.
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
Investment Objectives: As described in the Fund's Prospectus, the
Fund's principal investment objective is long-term capital appreciation. the
Fund's secondary investmetn objective is to provide dividend income. There is no
assurance of attaining the Fund's investment objectives. Investment in the Fund
does not constitute a complete investment program.
Investment Techniques - Writing Covered Call Option Contracts: The
Fund may, at times, write (sell) call options against securities held in its
portfolio, a practice known as covered call options writing. Only call options
which are listed on a national securities exchange will be written. The Fund may
purchase call options of matching maturity and exercise price covering the same
underlying security for the sole and specific purpose of canceling the
obligation incurred through the previous writing of a covered call option. When
it appears that a previously written covered call option is likely to be
exercised, it may be considered appropriate to avoid liquidating its position,
or the Fund may wish to extinguish the previously written call option so as to
be free to sell the underlying security, to realize a profit on the previously
written call option, or to write another call option. The Fund will realize a
short-term capital gain if the amount paid to purchase the call option plus
transaction costs is less than the premium paid for writing the covered call
option. The Fund will realize a short-term capital loss if the amount paid to
purchase the call option plus transaction costs is greater than the premium
received for writing the covered call option. There is no assurance that the
Fund will be able to purchase a call option in a closing transaction at any
given time. Alternatively, the Fund may allow the call obligation to be
extinguished by exercise or expiration.
PORTFOLIO TURNOVER
The frequency of changes in the Fund's investment portfolio during its
fiscal year is known as its portfolio turnover rate. The Fund intends to
purchase securities primarily for investment rather than with a view to trading
for profits. It is the policy of the Trustees to allow only such portfolio
turnover as is in the best interest of the shareholders. The Fund's annual rates
of portfolio turnover for the years ended December 31, 1995, 1994 and 1993 were
59.72%, 70.66%, and 19.88% , respectively. The Fund's rate may vary and is not
necessarily indicative of future rates. In particular, if a substantial number
of the call options written by the Fund are exercised, its portfolio turnover
rate may exceed historical levels. In general, the rate of turnover of portfolio
securities is a ratio determined by dividing the lesser of the purchases or the
sales of portfolio securities during the year by the monthly average of the
aggregate value of the portfolio securities owned during that year (excluding,
in each case, short-term investments).
<PAGE>
INVESTMENT RESTRICTIONS
The Trustees on behalf of the Fund have adopted investment
restrictions as matters of fundamental policy. These restrictions cannot be
altered without the authorization of a majority of the Fund's outstanding voting
securities. The vote of a majority of the outstanding voting securities of the
Fund means the vote, at a special meeting of the security holders of the Fund
duly called (a) of 67% or more of the voting securities present or represented
by proxy at such meeting, if the holders of more than 50% of the outstanding
voting securities of the Fund are present or represented by proxy; or (b) of
more than 50% of the outstanding voting securities of the Fund, whichever is
less.
The following investment restrictions apply to the Fund:
1. The Fund will not make loans nor will it underwrite securities.
2. The Fund will not sell securities short.
3. The Fund may, from time to time, invest up to 10% of its total assets
in the shares of closed-end investment companies particularly if such
shares are selling at less than net asset value, but it will invest
rarely in the shares of other open-end investment companies. No
investment by the Fund in an investment company will at the time it is
made cause the Fund to own in the aggregate more than 3% of the total
outstanding voting stock of the investment company.
4. The Fund will not purchase securities for the purpose of exercising
control or management of any issuer.
5. No securities of any corporation will be purchased or held if after
such purchase any officer or Trustee of the Trust, the Investment
Adviser or the Distributor for its own account, owns beneficially more
than 1/2 of 1% of any securities (taken at market value) of that
corporation, and such persons owning more than 1/2 of 1% of such
securities together own beneficially more than 5% of such securities
taken at market value.
6. The Fund will not purchase or sell real estate or real estate mortgage
loans (other than marketable securities issued by companies which
invest in real estate or interests therein), nor will it engage in the
purchase or sale of commodities or commodity contracts.
7. The Fund will maintain a diversification of investments among
industries. Consistent with this policy, the Fund does not intend to
invest more than 25% of it assets in any one industry.
<PAGE>
8. The Fund will not make any investment which would cause, at the time
of purchase, more than 5% of the value of its total assets to be
invested in the securities of any single issuer, or that would cause
the Fund to own more than 10% of the outstanding voting securities of
any issuer.
9. The Fund will not issue senior securities.
10. The Fund will not borrow money, except from a bank, and only as a
temporary measure to meet extraordinary circumstances (but not for the
purchase of investment securities) and such borrowings will not exceed
5% of the value of its assets.
11. The Fund will not make any investment which would cause, at the time
of purchase, more than 5% of the value of its total assets to be
invested in the securities of issuers which, including any
predecessors, have records of less than 3 years continuous operation.
The fundamental policies of the Fund do not restrict the acquisition
of securities which might require registration under the Securities
Act of 1933 prior to their disposition in a public offering. However,
the Trustees have determined, as a matter of policy, that the Fund
shall make no further investments in such restricted securities, and
that no investment shall be made if it would cause more than 10% of
the net assets to be invested in securities which are not readily
marketable. Included in this category are illiquid assets including,
but not limited to, repurchase agreements which mature in more than
seven days and other securities including securities of foreign
issuers for which a bona fide market does not exist. It is the Fund's
policy to value such securities in good faith at fair value giving
consideration, among other factors, to underlying assets, lack of
marketability, past and prospective earnings and market prices of
similar securities. The Trustees have also determined as a matter of
policy that the Fund will not invest in interests in oil, gas or other
mineral exploration or development programs. Furthermore, the Fund
will not invest in puts, calls, straddles, spreads or any combinations
thereof, except as otherwise set forth in the Fund's Prospectus. The
Trustees have also determined, as a matter of policy that no covered
call option will be written if, as a result, portfolio securities
exceeding in value 25% of the Fund's net assets would be subject to
covered call options.
<PAGE>
TRUSTEES AND OFFICERS OF THE TRUST
The Trustees and Officers of the Trust, their addresses, ages and their
principal occupations for the last five years are set forth below. Unless
otherwise indicated, the address of each Trustee and Officer is 1675 Broadway,
New York, New York 10019.
Position(s) Held Principal Occupation(s)
Name, Address, Age with Registrant During Past 5 Years
- --------------------------- ------------------- -----------------------------
*Bruno Desforges, 70 Trustee and Managing Director, Lepercq,
Chairman of de Neuflize & Co.
the Board Incorporated; Director and
Chairman of the Board,
Lepercq, de Neuflize
Securities Inc.
*Francois Letaconnoux, 45 Trustee President and Chief Executive
Officer, Lepercq Inc. and
Lepercq, de Neuflize & Co.
Incorporated; Director and
President, Lepercq, de
Neuflize Securities, Inc.
Jean-Louis Milin , 50 Trustee Managing Director, Banque de
3, Avenue Hoche Neuflize, Schlumberger,
75008 Paris, France Mallet.
Dr. Marvin Schiller, 62 Trustee Former Managing Director,
17319 St. James Court A.T. Kearney, Inc.
Boca Raton, Florida 33496
Franz Skryanz , 58 Trustee Financial Consultant; prior
30 East 81st Street thereto, Vice President,
New York, New York 10028 Sutton & Edwards; prior
thereto, Treasurer and Chief
Financial Officer, Schenkers
International.
*Pamela Forrest, 33 Secretary Accout Executive, Lepercq, de
Neuflize Securities Inc.;
prior thereto, Store Manager,
Modern Age Furniture.
*Andrew M. Hanson, C.F.A., 46 Co -President Senior Vice President and
Director of Equity Research,
Lepercq, de Neuflize & Co.
Incorporated; President,
Broadway Capital Growth
Incorporated.
*Peter Hartnedy, 46 Controller Senior Vice President,
Treasurer and Secretary,
Lepercq, de Neuflize & Co.
Incorporated; Director, Vice
President, Treasurer and
Secretary, Lepercq, de
Neuflize Securities Inc.;
Treasurer and Secretary,
Lepercq Inc.
- 7 -
<PAGE>
Position(s) Held Principal Occupation(s)
Name, Address, Age with Registrant During Past 5 Years
- --------------------------- ------------------- -----------------------------
* John McCollam, 41 Treasurer Vice President, Lepercq, de
Neuflize Securities Inc.
*Tsering Ngudu, 40 Co-President Senior Vice President ,
Lepercq, de Neuflize & Co.
Incorporated; Executive Vice
President and Director,
Lepercq, de Neuflize
Securities Inc.
- ---------
*Deemed to be interested person (as defined by the 1940 Act) of the Trust.
The following table indicates the compensation received by
each Trustee from the Trust for the 12 month period ended December 31, 1995.
<TABLE>
<CAPTION>
Total Compensa-
Pension or Retire- tion From
Aggregate ment Benefits Estimated Annual Registrant and
Compensation Accrued As Part of Benefits Upon Fund Complex
Name of Person, Position from Registrant Fund Expenses Retirement Paid to Trustees
- ------------------------ --------------- ---------------------- --------------------- ----------------
<S> <C> <C> <C> <C>
Mark Bilski, Trustee (1) 600 -0- -0- 600
Eugene DeLutio, Trustee (1) 1,800 -0- -0- 1,800
Jean-Louis Milin, Trustee 1,200(2) -0- -0- 1,200(2)
Joseph Mindell, Trustee(3) 2,400 -0- -0- 2,400
Dr. Marvin Schiller, Trustee 3,600 -0- -0- 3,600
Franz Skyranz, Trustee 4,200 -0- -0- 4,200
</TABLE>
- --------------
(1) Resigned
(2) Net amount = $1,020
(3) Deceased
1996 3:16PM
KL2:139609.1
<PAGE>
MANAGEMENT OF THE TRUST
The Trust is managed by its officers and a board of five Trustees
(listed above) who have available to them the services of Lepercq, de Neuflize &
Co. Incorporated. For the years ended December 31, 1995 and 1994, those Trustees
who are not "interested" Trustees received from the Trust an aggregate
remuneration of $13,800 and $11,400, respectively. The Trust compensates all
Trustees except for Francois Letaconnoux and Bruno Desforges.
The Trust's regulation and registration under the 1940 Act do not
involve Federal supervision of management or investment practices.
THE INVESTMENT ADVISER
The firm of Lepercq, de Neuflize & Co. Incorporated (the "Investment
Adviser") is the investment adviser to the Fund pursuant to the investment
advisory agreement (the "Agreement"). The Fund's Agreement, dated April 8, 1986
was adopted by the Trust's Board of Trustees on January 29, 1986 and approved by
the Fund's shareholders on April 8, 1986. The continuance of the Investment
Advisory Agreement was approved by the Trustees at a Board of Trustees' Meeting
held on January 31, 1996.
Under the terms of the Agreement, the expenses incurred relating to
the investment-advisory services performed by the Investment Adviser and the
furnishing of office space, office services and equipment to the Fund and
salaries of the officers of the Trust, except as indicated below, are borne by
the Investment Adviser, and the expenses relating to other services, including,
but not limited to, fees and expenses of non-interested Trustees, fees and
expenses of legal counsel and independent accountants, and the fees and expenses
involved in the registering and maintaining registration of the Fund's shares
under state securities laws are borne by the Fund. The costs (including
applicable office space, facilities and equipment) of the services of a
principal financial officer of the Trust, or any of the personnel operating
under his direction, may be borne by the Fund. Such costs include maintaining
the financial accounts and books and records of the Fund, including the
reviewing calculations of daily net asset value and reviewing tax returns.
Investment decisions for the Fund are made by the Investment Adviser.
These investment-advisory decisions receive regular review by the Trustees.
In addition, the Investment Adviser acts as investment adviser to
clients other than investment companies under discretionary and
non-discretionary advisory contracts covering net assets as of December 31,
1995, totaling approximately $181 million. Investment decisions for the Fund are
made independently from those for other clients which have different investment
objectives than those of the Fund. It is possible that, at times, identical
securities will be acceptable for the Fund and one or more of such investment
clients. However, the position of a client's or the Fund's account in the
securities of the same issue may vary and the length of time that each account
may choose to hold its investment in the securities of the same issue may
likewise vary. The timing and amount of purchase by each account will also be
determined by its cash position. If the purchase or sale of securities
consistent with the investment policies of the Fund and one or more of these
investment clients is considered at or
<PAGE>
about the same time, transactions in such securities will be allocated among the
accounts in a manner deemed equitable by the Investment Adviser. The Investment
Adviser may combine such transactions, in accordance with applicable laws and
regulations, in order to obtain the best net price and most favorable execution.
However, simultaneous transactions could adversely affect the ability of the
Fund to obtain or dispose of the full amount of a security which it seeks to
purchase or sell. As of March 31, 1996, Lepercq Inc. controlled the Investment
Adviser, owning beneficially 100% of the voting stock of Lepercq, de Neuflize &
Co. Incorporated.
The Fund's annual ordinary operating expenses, including the
compensation paid to the Investment Adviser, are subject to the expense
limitations of the state in which the lowest maximum expense limitation is
imposed and in which the Fund's shares are currently registered or qualified for
sale. The Fund believes that currently the more restrictive state expense
limitation is 2-1/2% of the first $30 million of the Fund's average net assets,
2% of the next $70 million of the Fund's average net assets and 1-1/2% of the
excess of such assets over $100 million for any fiscal year.
DISTRIBUTION PLAN
On January 29, 1986, the Board of Trustees, including a majority of
the Trustees who were not interested persons of the Trust and who had no direct
or indirect financial interest in the operations of a distribution plan, on
behalf of the Fund, adopted a Distribution Plan, pursuant to Rule 12b-1 under
the 1940 Act (the "Plan"). The Plan was approved by the Trust's shareholders on
April 8, 1986 and its continuance was approved by the Trustees, including a
majority of the Trustees who are not interested persons and who have no direct
or indirect financial interest in the operation of the Plan, on January 31,
1996.
Pursuant to the Plan, Lepercq, de Neuflize Securities Inc., a wholly
owned subsidiary of the Investment Adviser (the "Distributor"), will be entitled
to reimbursement each month of up to an aggregate maximum of 1% per annum of the
Fund's average daily net assets for actual expenses incurred in the distribution
and promotion of the shares of the Fund, including, but not limited to, the
printing of Prospectuses, Statements of Additional Information, reports used for
sales purposes, advertisements, expenses of preparation and printing of sales
literature, and other distribution-related expenses, including any distribution
or service fees paid to securities dealers or other firms who have executed a
distribution or service agreement with the Distributor. No officer or Trustee
has any substantial interest in the Plan, except to the extent the Distributor,
which is a wholly owned subsidiary of the Investment Adviser, will be reimbursed
for expenses it might otherwise have been required to pay pursuant to its
Distribution Agreement with the Fund. The maximum amount which may be paid to
dealers or other firms by the Distributor under the Plan (which will be
determined according to the services provided in assisting investors with their
accounts and/or shares sold) is an aggregate of 1% (on an annual basis) of the
Fund's average daily net assets owned by clients of that dealer or other firm.
The Fund may incur distribution expenses of up to 0.75% per annum of its average
daily net assets. Additionally, the Fund may pay a servicing fee to certain
persons in an amount not to exceed 0.25% per annum of its average daily net
assets. The Fund paid $4,007 pursuant to the Plan for the year ended December
31, 1995. The maximum annual operating expenses of the Fund, including this
distribution expense, will be subject to the securities laws of the states in
which
<PAGE>
the Fund's shares are or may be sold, as discussed above under "The Investment
Adviser". The expenses of distribution in excess of 1% per annum will be borne
by the Distributor and will not be eligible for any reimbursement or payment by
the Fund under the provisions of the Plan.
The Fund's Plan may be continued in effect until January 31, 1997, and
from year to year thereafter if approved at least annually by the Board of
Trustees (including the affirmative vote of a majority of the Trustees who have
no direct or indirect interest in the Plan or any related agreement and are not
interested persons of any such party) by votes cast in person at a meeting
called for such purpose. The Plan may be terminated at any time as to the Trust
by vote of a majority of the disinterested Trustees or with respect to the Plan,
by a vote of a majority of the outstanding voting securities of the Fund. Any
agreement entered into under the Plan may be terminated at any time on 60 days'
written notice by a vote of a majority of the outstanding voting securities of
the Fund. Any agreement entered into under the Plan will terminate automatically
in the event of its assignment.
The Plan may not be amended to increase materially the amount to be
spent by the Fund under the Plan without the approval of the shareholders of the
Fund, and all material amendments to the provisions of the Plan must be approved
by a vote of the Board of Trustees and the Trustees who have no direct or
indirect interest in the Plan, cast in person at a meeting called for the
purpose of such vote. During the continuance of the Plan, the Investment Adviser
will report in writing to the Board of Trustees quarterly the amounts and
purposes of all payments made pursuant to the Plan. Further, during the term of
the Plan, the selection and nomination of those Trustees who are not interested
persons of the Trust must be committed to the discretion of the Trustees who
have no direct or indirect interest in the Plan or any related agreement.
BROKERAGE COMMISSIONS
For the years ended December 31, 1995, 1994 and 1993 , the Fund paid
$48,481, $54,503 and $24,296, respectively, in brokerage commissions on the
purchase and sale of its portfolio securities. Of the $48,481 of brokerage
commissions paid by the Fund in 1995, $18,638 (38.4%) was paid to the
Distributor, of which $2,927 was paid to other brokers or dealers by the
Distributor. Lepercq, de Neuflize Securities Inc., a wholly owned subsidiary of
the Adviser, conducts broker/dealer operations and holds a seat on the New York
Stock Exchange, Inc.
The Fund does not use a fixed formula in the allocation of brokerage
business but will allocate such business on a transaction-by-transaction basis.
In 1995, 1994 and 1993 , the Fund allocated 61.6%, 73.3% and 74.2% ,
respectively, of its brokerage business to non-affiliated brokers who supplied
the Fund or its Investment Adviser with research. The Fund does not now, nor
does it in the future, intend to allocate its brokerage business if as a result
thereof the Fund does not obtain the best prices and executions. Brokerage
transactions are allocated to brokers whom the Investment Adviser believes will
supply research or statistical services in accordance with the Fund's policy of
obtaining the best prices and executions. Research and/or statistical services
include, but are not limited to, stock analyses, research
<PAGE>
reports, newsletters and updates. To the extent that the research and/or
statistical services supplied by brokers, services which cannot be valued, were
available to aid the Investment Adviser in fulfilling its obligations under its
advisory contract with the Fund, or to its other clients, the receipt of such
services by the Investment Adviser tended to reduce its expenses. When
commissions paid reflect research or statistical services furnished in addition
to execution, the Investment Adviser stands ready to demonstrate that such
services were bona fide and rendered for the benefit of the Fund. Lepercq, de
Neuflize Securities Inc. offers to effect transactions for the Fund at
commission rates at least as low as it offers to effect comparable transactions
for any of its other customers. Whenever Lepercq, de Neuflize Securities Inc.
effects a transaction on the New York Stock Exchange, Inc. for the Fund, it will
transmit the order to an unaffiliated broker for execution on the floor of the
Exchange and pay such broker a negotiated portion of the commission for
rendering such service.
Lepercq, de Neuflize Securities Inc. will not encourage or solicit
brokerage business in return for brokerage transactions executed by other
brokers on behalf of the Fund. However, Lepercq, de Neuflize & Co. Incorporated
and Lepercq, de Neuflize Securities Inc. have in the past executed, and Lepercq,
de Neuflize Securities Inc. intends in the future to execute, brokerage
transactions from such other brokers in the normal course of business.
In connection with over-the-counter transactions, the Fund will
attempt to deal directly with the principal market-maker except in those
circumstances where the Fund believes better prices and executions are available
elsewhere.
THE DISTRIBUTOR
Lepercq, de Neuflize Securities Inc. (the "Distributor"), 1675
Broadway, New York, New York 10019, a wholly owned subsidiary of Lepercq, de
Neuflize & Co. Incorporated, is the distributor and underwriter of the shares of
the Fund, pursuant to a Distribution Agreement dated April 9, 1986, and adopted
by the shareholders on April 8, 1986. The continuation of the Agreement was
approved by the Trustees on January 31, 1996. The Distributor offers shares of
the Fund at the net asset value per share, computed once daily at the close of
trading on the New York Stock Exchange, Inc.
The Distributor will be entitled to reimbursement each month under the
terms of the Plan set forth above. If purchases of the Fund's shares are made
directly from the Distributor, without the intervention of another broker or
dealer, the shares may be purchased at the net asset value per share of the Fund
next determined after receipt of an order to purchase such shares. However, if
the Fund's shares are purchased through a broker or a dealer, a service charge
may be incurred for services rendered to the purchaser by the broker or dealer.
Lepercq, de Neuflize Securities Inc. is controlled by its sole parent,
Lepercq, de Neuflize & Co. Incorporated. The officers and directors of Lepercq,
de Neuflize Securities Inc. include Bruno Desforges, Chairman of the Board and
Director; Francois Letaconnoux, President and Director; Peter Hartnedy, Vice
President, Treasurer, Secretary and Director; Tsering Ngudu, Executive Vice
President and Director and John McCollam, Vice President. Some of the officers
of the Distributor are also officers of the Trust.
<PAGE>
INVESTMENT ADVISORY AND DISTRIBUTION AGREEMENTS
The Investment Advisory and Distribution Agreements each may be
terminated by either party on 60 days' notice without penalty. Each contract
remains in effect from year to year provided its continuance is approved at
least annually (a) by the vote of a majority of those members of the Board of
Trustees who are not parties thereto or interested persons (as such term is
defined in the 1940 Act) of any such party, cast in person at a meeting called
for the purpose of voting on such approval, and (b) either by the Board of
Trustees or by the vote of a majority of the outstanding voting securities of
the Fund.
The Investment Advisory and Distribution Agreements terminate
automatically if assigned and can be amended only by a vote of a majority of the
outstanding voting securities of the Fund.
REDEMPTION OF SHARES
The Fund's obligation to redeem shares may be suspended and the date
of payment postponed for more than seven days during any period when (1) trading
on the New York Stock Exchange, Inc., other than weekends or holidays, is
suspended or restricted; (2) an emergency exists, as determined by the
Securities and Exchange Commission; or (3) the Securities and Exchange
Commission has by order permitted such suspension.
HOW NET ASSET VALUE IS COMPUTED
In determining the net asset value, the Fund's investments are valued
at the current value. Investments listed on the New York Stock Exchange, Inc. or
the American Stock Exchange, Inc. are valued at the last reported sale price of
the day or, in the absence of such sale, at the latest bid quotation.
Investments listed on other securities exchanges are similarly valued, unless
the exchange has not closed as of the time of computation in which case the
latest sale price of the day or, in the absence of such a sale, the latest bid
quotation is used. Investments not listed on a securities exchange are valued at
the latest bid quotation. If market quotations are not readily available or when
restricted securities or securities issued by affiliated companies or other
assets are being valued, the value is determined in good faith at fair value by
the Trustees or by the officers as empowered by the Trustees.
Premiums received by the Fund for investing in options are included in
the Fund's assets, and an equal amount is recorded as a liability. This
liability will be adjusted daily to the option's current market value, which
will be the latest sale price at the time as of which the net asset value per
share of the Fund is computed, or, in the absence of such sale, at the latest
asked quotation. If the option's current market value is less than the premium
received, the difference will be unrealized appreciation and, conversely, if the
option's current market value exceeds the premium received, the excess will be
unrealized depreciation. Upon expiration of the option or the purchase of an
identical option in a closing transaction, the liability will be extinguished
and the Fund will realize a gain (or a loss if the purchase price of the closing
option plus transaction costs exceeds the premium received for writing the
covered-call option.) Alternatively, upon exercise of the option, the liability
will be extinguished and the Fund will realize a gain or loss
<PAGE>
from the sale of the underlying securities, with the proceeds of the sale being
increased by the premium received for writing the option.
PERFORMANCE INFORMATION
For the purposes of quoting and comparing the performance of the Fund
to that of other mutual funds and to stock or other relevant indices in
advertisements or in reports to shareholders, performance will be stated in
terms of total return, rather than in terms of yield. Under the rules of the
Securities and Exchange Commission (the "SEC"), funds advertising performance
must include return quotes calculated according to the following formula:
P(1+T)^n = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years (1, 5 or 10)
ERV = ending redeemable value of a hypothetical $1,000 payment made at the
eginning of the 1-, 5- or 10-year periods (or fractional portion thereof)
Under the foregoing formula the time periods used in advertising will be based
on rolling calendar quarters, updated to the last day of the most recent quarter
prior to submission of the advertising for publication, and will cover one-,
five- and ten-year periods or a shorter period dating from the effectiveness of
the Fund's registration date during the period. Total return, or "T" in the
formula above, is computed by finding the average annual compounded rate of
return over the 1-, 5-, or 10-year periods (or fractional portion thereof) that
would equate the initial amount invested to the ending redeemable value.
The Fund may also from time to time include in such advertising a
total-return figure that is not calculated according to the formula set forth
above in order to compare more accurately the Fund's performance with other
measures of investment return. For example, in comparing total return of the
Fund with data published by independent services, or with the performance of
certain stock or other relevant indices, the Fund calculates its total return
for the specified periods of time by assuming the investment of $10,000 in
shares of the Fund and assuming the reinvestment of each dividend of other
distribution at net asset value on the reinvestment date. Percentage changes are
determined by subtracting the initial value of the investment from the ending
value and by dividing the difference by the beginning value. Such alternative
total return information will be given no greater prominence in such advertising
than the information prescribed under SEC rules and all advertisements
containing performance data will include a legend disclosing that such
performance data represent past performance and that the investment return and
principal value of an investment will fluctuate so that the investor's shares,
when redeemed, may be worth more or less than their original cost.
<PAGE>
The total return of the Fund for the one year period ending December
31, 1995, was as follows:
1) Ending redeemable value of initial $1,000 investment calculated
pursuant to the above formula is $1,270.90 which equates to an
average annual total return of (27.09%).
2) Value of an initial investment of $10,000 is $12,790.00 pursuant
to the alternative computation, which equates to (27.09%).
TAXES
The following is only a summary of certain additional tax
considerations generally affecting the Fund and its shareholders that are not
described in the Prospectus. No attempt is made to present a detailed
explanation of the tax treatment of the Fund or its shareholders, and the
discussions here and in the Prospectus are not intended as substitutes for
careful tax planning.
QUALIFICATION AS A REGULATED INVESTMENT COMPANY
The Fund has elected to be taxed as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). As a regulated investment company, the Fund is not subject to federal
income tax on the portion of its net investment income (i.e., taxable interest,
dividends and other taxable ordinary income, net of expenses) and capital gain
net income (i.e., the excess of capital gains over capital losses) that it
distributes to shareholders, provided that it distributes at least 90% of its
investment company taxable income (i.e., net investment income and the excess of
net short-term capital gain over net long-term capital loss) for the taxable
year (the "Distribution Requirement"), and satisfies certain other requirements
of the Code that are described below. Distributions by the Fund made during the
taxable year or, under specified circumstances, within twelve months after the
close of the taxable year, will be considered distributions of income and gains
of the taxable year and can therefore satisfy the Distribution Requirement.
In addition to satisfying the Distribution Requirement, a regulated
investment company must: (1) derive at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans, gains
from the sale or other disposition of stock or securities or foreign currencies
(to the extent such currency gains are directly related to the regulated
investment company's principal business of investing in stock or securities) and
other income (including but not limited to gains from options, futures or
forward contracts) derived with respect to its business of investing in such
stock, securities or currencies (the "Income Requirement"); and (2) derive less
than 30% of its gross income (exclusive of certain gains on designated hedging
transactions that are offset by realized or unrealized losses on offsetting
positions) from the sale or other disposition of stock, securities or foreign
currencies (or options, futures or forward contracts thereon) held for less than
three months (the "Short-Short Gain Test"). However, foreign currency gains,
including those derived from options, futures and
<PAGE>
forwards, will not in any event be characterized as Short-Short Gain if they are
directly related to the regulated investment company's investments in stock or
securities (or options or futures thereon). Because of the Short-Short Gain
Test, the Fund may have to limit the sale of appreciated securities that it has
held for less than three months. However, the Short-Short Gain Test will not
prevent the Fund from disposing of investments at a loss, since the recognition
of a loss before the expiration of the three-month holding period is disregarded
for this purpose. Interest (including original issue discount) received by the
Fund at maturity or upon the disposition of a security held for less than three
months will not be treated as gross income derived from the sale or other
disposition of such security within the meaning of the Short-Short Gain Test.
However, income that is attributable to realized market appreciation will be
treated as gross income from the sale or other disposition of securities for
this purpose.
In general, gain or loss recognized by the Fund on the disposition of
an asset will be a capital gain or loss. However, gain recognized on the
disposition of a debt obligation purchased by the Fund at a market discount
(generally, at a price less than its principal amount) will be treated as
ordinary income to the extent of the portion of the market discount which
accrued during the period of time the Fund held the debt obligation. In
addition, under the rules of Code Section 988, gain or loss recognized on the
disposition of a debt obligation denominated in a foreign currency or an option
with respect thereto (but only to the extent attributable to changes in foreign
currency exchange rates), and gain or loss recognized on the disposition of a
foreign currency forward contract, futures contract, option or similar financial
instrument, or of foreign currency itself, except for regulated futures
contracts or non-equity options subject to Code Section 1256 (unless the Fund
elects otherwise), will generally be treated as ordinary income or loss.
In general, for purposes of determining whether capital gain or loss
recognized by the Fund on the disposition of an asset is long-term or
short-term, the holding period of the asset may be affected if (1) the asset is
used to close a "short sale" (which includes for certain purposes the
acquisition of a put option) or is substantially identical to another asset so
used, or (2) the asset is otherwise held by the Fund as part of a "straddle"
(which term generally excludes a situation where the asset is stock and the Fund
grants a qualified covered call option (which, among other things, must not be
deep-in-the-money) with respect thereto) or (3) the asset is stock and the Fund
grants an in-the-money qualified covered call option with respect thereto.
However, for purposes of the Short-Short Gain Test, the holding period of the
asset disposed of may be reduced only in the case of clause (1) above. In
addition, the Fund may be required to defer the recognition of a loss on the
disposition of an asset held as part of a straddle to the extent of any
unrecognized gain on the offsetting position.
Any gain recognized by the Fund on the lapse of, or any gain or loss
recognized by the Fund from a closing transaction with respect to, an option
written by the Fund will be treated as a short-term capital gain or loss. For
purposes of the Short-Short Gain Test, the holding period of an option written
by the Fund will commence on the date it is written and end on the date it
lapses or the date a closing transaction is entered into. Accordingly, the Fund
may be limited in its ability to write options which expire within three months
and to enter into closing transactions at a gain within three months of the
writing of options.
<PAGE>
Treasury Regulations permit a regulated investment company, in
determining its investment company taxable income and net capital gain (i.e.,
the excess of net long-term capital gain over net short-term capital loss) for
any taxable year, to elect (unless it has made a taxable year election for
excise tax purposes as discussed below) to treat all or any part of any net
capital loss, any net long-term capital loss or any net foreign currency loss
incurred after October 31 as if it had been incurred in the succeeding year.
In addition to satisfying the requirements described above, the Fund
must satisfy an asset diversification test in order to qualify as a regulated
investment company. Under this test, at the close of each quarter of the Fund's
taxable year, at least 50% of the value of the Fund's assets must consist of
cash and cash items, U.S. Government securities, securities of other regulated
investment companies, and securities of other issuers (as to which the Fund has
not invested more than 5% of the value of the Fund's total assets in securities
of such issuer and as to which the Fund does not hold more than 10% of the
outstanding voting securities of such issuer), and no more than 25% of the value
of its total assets may be invested in the securities of any one issuer (other
than U.S. Government securities and securities of other regulated investment
companies), or in two or more issuers which the Fund controls and which are
engaged in the same or similar trades or businesses. Generally, an option (call
or put) with respect to a security is treated as issued by the issuer of the
security not the issuer of the option. However, with regard to forward currency
contracts, there does not appear to be any formal or informal authority which
identifies the issuer of such instrument.
If for any taxable year the Fund does not qualify as a regulated
investment company, all of its taxable income (including its net capital gain)
will be subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and such distributions will be taxable to the
shareholders as ordinary dividends to the extent of the Fund's current and
accumulated earnings and profits. Such distributions generally will be eligible
for the dividends-received deduction in the case of corporate shareholders.
EXCISE TAX ON REGULATED INVESTMENT COMPANIES
A 4% non-deductible excise tax is imposed on a regulated investment
company that fails to distribute in each calendar year an amount equal to 98% of
ordinary taxable income for the calendar year and 98% of capital gain net income
for the one-year period ended on October 31 of such calendar year (or, at the
election of a regulated investment company having a taxable year ending November
30 or December 31, for its taxable year (a "taxable year election")). The
balance of such income must be distributed during the next calendar year. For
the foregoing purposes, a regulated investment company is treated as having
distributed any amount on which it is subject to income tax for any taxable year
ending in such calendar year.
For purposes of the excise tax, a regulated investment company shall:
(1) reduce its capital gain net income (but not below its net capital gain) by
the amount of any net ordinary loss for the calendar year; and (2) exclude
foreign currency gains and losses incurred after October 31 of any year (or
after the end of its taxable year if it has made a taxable year election) in
determining the amount of ordinary taxable income for the current calendar year
(and,
<PAGE>
instead, include such gains and losses in determining ordinary taxable income
for the succeeding calendar year).
The Fund intends to make sufficient distributions or deemed
distributions of its ordinary taxable income and capital gain net income prior
to the end of each calendar year to avoid liability for the excise tax. However,
investors should note that the Fund may in certain circumstances be required to
liquidate portfolio investments to make sufficient distributions to avoid excise
tax liability.
FUND DISTRIBUTIONS
The Fund anticipates distributing substantially all of its investment
company taxable income for each taxable year. Such distributions will be taxable
to shareholders as ordinary income and treated as dividends for federal income
tax purposes, but they will qualify for the 70% dividends-received deduction for
corporate shareholders only to the extent discussed below.
The Fund may either retain or distribute to shareholders its net
capital gain for each taxable year. The Fund currently intends to distribute any
such amounts. If net capital gain is distributed and designated as a capital
gain dividend, it will be taxable to shareholders as long-term capital gain,
regardless of the length of time the shareholder has held his shares or whether
such gain was recognized by the Fund prior to the date on which the shareholder
acquired his shares. The Code provides, however, that under certain conditions
only 50% of the capital gain recognized upon the Fund's disposition of domestic
"small business" stock will be subject to tax.
Conversely, if the Fund elects to retain its net capital gain, the
Fund will be taxed thereon (except to the extent of any available capital loss
carryovers) at the 35% corporate tax rate. If the Fund elects to retain its net
capital gain, it is expected that the Fund also will elect to have shareholders
of record on the last day of its taxable year treated as if each received a
distribution of his pro rata share of such gain, with the result that each
shareholder will be required to report his pro rata share of such gain on his
tax return as long-term capital gain, will receive a refundable tax credit for
his pro rata share of tax paid by the Fund on the gain, and will increase the
tax basis for his shares by an amount equal to the deemed distribution less the
tax credit.
Ordinary income dividends paid by the Fund with respect to a taxable
year will qualify for the 70% dividends-received deduction generally available
to corporations (other than corporations, such as S corporations, which are not
eligible for the deduction because of their special characteristics and other
than for purposes of special taxes such as the accumulated earnings tax and the
personal holding company tax) to the extent of the amount of qualifying
dividends received by the Fund from domestic corporations for the taxable year.
A dividend received by the Fund will not be treated as a qualifying dividend (1)
if it has been received with respect to any share of stock that the Fund has
held for less than 46 days (91 days in the case of certain preferred stock),
excluding for this purpose under the rules of Code Section 246(c)(3)
<PAGE>
and (4): (i) any day more than 45 days (or 90 days in the case of certain
preferred stock) after the date on which the stock becomes ex-dividend and (ii)
any period during which the Fund has an option to sell, is under a contractual
obligation to sell, has made and not closed a short sale of, is the grantor of a
deep-in-the-money or otherwise nonqualified option to buy, or has otherwise
diminished its risk of loss by holding other positions with respect to, such (or
substantially identical) stock; (2) to the extent that the Fund is under an
obligation (pursuant to a short sale or otherwise) to make related payments with
respect to positions in substantially similar or related property; or (3) to the
extent the stock on which the dividend is paid is treated as debt-financed under
the rules of Code Section 246A. Moreover, the dividends-received deduction for a
corporate shareholder may be disallowed or reduced (1) if the corporate
shareholder fails to satisfy the foregoing requirements with respect to its
shares of the Fund or (2) by application of Code Section 246(b) which in general
limits the dividends-received deduction to 70% of the shareholder's taxable
income (determined without regard to the dividends-received deduction and
certain other items).
Alternative minimum tax ("AMT") is imposed in addition to, but only to
the extent it exceeds, the regular tax and is computed at a maximum marginal
rate of 28% for noncorporate taxpayers and 20% for corporate taxpayers on the
excess of the taxpayer's alternative minimum taxable income ("AMTI") over an
exemption amount. In addition, under the Superfund Amendments and
Reauthorization Act of 1986, a tax is imposed for taxable years beginning after
1986 and before 1996 at the rate of 0.12% on the excess of a corporate
taxpayer's AMTI (determined without regard to the deduction for this tax and the
AMT net operating loss deduction) over $2 million. For purposes of the corporate
AMT and the environmental superfund tax (which are discussed above), the
corporate dividends-received deduction is not itself an item of tax preference
that must be added back to taxable income or is otherwise disallowed in
determining a corporation's AMTI. However, corporate shareholders will generally
be required to take the full amount of any dividend received from the Fund into
account (without a dividends-received deduction) in determining its adjusted
current earnings, which are used in computing an additional corporate preference
item (i.e., 75% of the excess of a corporate taxpayer's adjusted current
earnings over its AMTI (determined without regard to this item and the AMT net
operating loss deduction)) includable in AMTI.
Investment income that may be received by the Fund from sources within
foreign countries may be subject to foreign taxes withheld at the source. The
United States has entered into tax treaties with many foreign countries which
entitle the Fund to a reduced rate of, or exemption from, taxes on such income.
It is impossible to determine the effective rate of foreign tax in advance since
the amount of the Fund's assets to be invested in various countries is not
known.
Distributions by the Fund that do not constitute ordinary income
dividends or capital gain dividends will be treated as a return of capital to
the extent of (and in reduction of) the shareholder's tax basis in his shares;
any excess will be treated as gain from the sale of his shares, as discussed
below.
Distributions by the Fund will be treated in the manner described
above regardless of whether such distributions are paid in cash or reinvested in
additional shares of the Fund (or
<PAGE>
of another fund). Shareholders receiving a distribution in the form of
additional shares will be treated as receiving a distribution in an amount equal
to the fair market value of the shares received, determined as of the
reinvestment date. In addition, if the net asset value at the time a shareholder
purchases shares of the Fund reflects undistributed net investment income or
recognized capital gain net income, or unrealized appreciation in the value of
the assets of the Fund, distributions of such amounts will be taxable to the
shareholder in the manner described above, although such distributions
economically constitute a return of capital to the shareholder.
Ordinarily, shareholders are required to take distributions by the
Fund into account in the year in which the distributions are made. However,
dividends declared in October, November or December of any year and payable to
shareholders of record on a specified date in such a month will be deemed to
have been received by the shareholders (and made by the Fund) on December 31 of
such calendar year if such dividends are actually paid in January of the
following year. Shareholders will be advised annually as to the U.S. federal
income tax consequences of distributions made (or deemed made) during the year.
The Fund will be required in certain cases to withhold and remit to
the U.S. Treasury 31% of ordinary income dividends and capital gain dividends,
and the proceeds of redemption of shares, paid to any shareholder (1) who has
provided either an incorrect tax identification number or no number at all, (2)
who is subject to backup withholding by the IRS for failure to report the
receipt of interest or dividend income properly, or (3) who has failed to
certify to the Fund that it is not subject to backup withholding or that it is a
corporation or other "exempt recipient."
SALE OR REDEMPTION OF SHARES
A shareholder will recognize gain or loss on the sale or redemption of
shares of the Fund in an amount equal to the difference between the proceeds of
the sale or redemption and the shareholder's adjusted tax basis in the shares.
All or a portion of any loss so recognized may be disallowed if the shareholder
purchases other shares of the Fund within 30 days before or after the sale or
redemption. In general, any gain or loss arising from (or treated as arising
from) the sale or redemption of shares of the Fund will be considered capital
gain or loss and will be long-term capital gain or loss if the shares were held
for longer than one year. However, any capital loss arising from the sale or
redemption of shares held for six months or less will be treated as a long-term
capital loss to the extent of the amount of capital gain dividends received on
such shares. For this purpose, the special holding period rules of Code Section
246(c)(3) and (4) (discussed above in connection with the dividends-received
deduction for corporations) generally will apply in determining the holding
period of shares. Long-term capital gains of noncorporate taxpayers are
currently taxed at a maximum rate 11.6% lower than the maximum rate applicable
to ordinary income. Capital losses in any year are deductible only to the extent
of capital gains plus, in the case of a noncorporate taxpayer, $3,000 of
ordinary income.
<PAGE>
FOREIGN SHAREHOLDERS
Taxation of a shareholder who, as to the United States, is a
nonresident alien individual, foreign trust or estate, foreign corporation, or
foreign partnership ("foreign shareholder"), depends on whether the income from
the Fund is "effectively connected" with a U.S. trade or business carried on by
such shareholder.
If the income from the Fund is not effectively connected with a U.S.
trade or business carried on by a foreign shareholder, ordinary income dividends
paid to a foreign shareholder will be subject to U.S. withholding tax at the
rate of 30% (or lower treaty rate) upon the gross amount of the dividend. Such a
foreign shareholder would generally be exempt from U.S. federal income tax on
gains realized on the sale of shares of the Fund, capital gain dividends and
amounts retained by the Fund that are designated as undistributed capital gains.
If the income from the Fund is effectively connected with a U.S. trade
or business carried on by a foreign shareholder, then ordinary income dividends,
capital gain dividends, and any gains realized upon the sale of shares of the
Fund will be subject to U.S. federal income tax at the rates applicable to U.S.
citizens or domestic corporations.
In the case of foreign noncorporate shareholders, the Fund may be
required to withhold U.S. federal income tax at a rate of 31% on distributions
that are otherwise exempt from withholding tax (or taxable at a reduced treaty
rate) unless such shareholders furnish the Fund with proper notification of its
foreign status.
The tax consequences to a foreign shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described
herein. Foreign shareholders are urged to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in the Fund,
including the applicability of foreign taxes.
EFFECT OF FUTURE LEGISLATION; LOCAL TAX CONSIDERATIONS
The foregoing general discussion of U.S. federal income tax
consequences is based on the Code and the Treasury Regulations issued thereunder
as in effect on the date of this Statement of Additional Information. Future
legislative or administrative changes or court decisions may significantly
change the conclusions expressed herein, and any such changes or decisions may
have a retroactive effect with respect to the transactions contemplated herein.
Rules of state and local taxation of ordinary income dividends and
capital gain dividends from regulated investment companies often differ from the
rules for U.S. federal income taxation described above. Shareholders are urged
to consult their tax advisers as to the consequences of these and other state
and local tax rules affecting investment in the Fund.
<PAGE>
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP, Milwaukee, Wisconsin, acts as independent
auditors for the Trust.
FINANCIAL STATEMENTS
The Financial Statements for the Fund are incorporated herein by
reference from the Fund's Audited Annual Report, dated December 31, 1995.
Shareholders will receive a copy of the Audited Annual Report at no additional
charge when requesting a copy of the Statement of Additional Information.
<PAGE>
PART C
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Included in Part A:
Condensed supplementary financial information for
Lepercq-Istel Fund.
Included in Part B:
Financial Statements and the Reports thereon for
Lepercq-Istel Fund filed herein for the fiscal year
ended December 31, 1995 are incorporated into Part B
from the Trust's 1995 Annual Report to Shareholders
as filed with the Securities and Exchange Commission
by the Trust on Form N-30D on February 29, 1996,
accession number 0000948222-96-000075.
(b) Exhibits:
Exhibits filed under Registration Statement on Form
N-1 and Amendments thereto on Forms N-1 and N-1A are
hereby incorporated by reference into this
post-effective amendment.
The following documents are being filed herewith as
Exhibits.
(10) Consent of Kramer, Levin, Naftalis, Nessen,
Kamin & Frankel.
(11) Consent of KPMG Peat Marwick.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES (AS OF MARCH 31, 1996).
TITLE OF CLASS NUMBER OF RECORD HOLDERS
Shares of Beneficial Interest 594
ITEM 27. INDEMNIFICATION.
Section 8 of the Registrant's Declaration of Trust sets forth
the rights of indemnification of the Trustees and Officers of the Registrant as
follows:
"1. Trustees, Officers, etc. The Trust shall
indemnify each of its Trustees and officers (including persons
who serve at the Trust's request as directors, officers or
trustees of another organization in which the Trust has any
interest, as a shareholder, creditor or otherwise)
(hereinafter referred to as a "Covered Person") against all
liabilities and expenses (including but not limited to amounts
paid in satisfaction of judgments, in compromise or as fines
and penalties, and counsel fees) reasonably incurred by any
Covered Person in connection with the defense or disposition
of any action, suit or other proceeding, whether civil or
criminal, before any court or administrative or legislative
body, in which such Covered Person may
C-1
<PAGE>
be or may have been involved as a party or otherwise or with
which such Covered Person may be or may have been threatened,
while in office or thereafter, by reason of his being or
having been such a Covered Person except with respect to any
matter as to which such Covered Person shall have been finally
adjudicated in any such action, suit or other proceeding (a)
not to have acted in good faith in the reasonable belief that
such Covered Person's action was in the best interests of the
Trust or (b) to be liable to the Trust or its Shareholders by
reason of wilful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of
such Covered Person's office. Expenses, including counsel fees
so incurred by any such Covered Person (but excluding amounts
paid in satisfaction of judgments, in compromise or as fines
or penalties) shall be paid from time to time by the Trust in
advance of the final disposition of any such action, suit or
proceeding upon receipt of an undertaking by or on behalf of
such Covered Person to repay amounts so paid to the Trust if
it is ultimately determined that indemnification of such
expenses is not authorized under this Article, provided,
however, that either (a) such Covered Person shall have
provided appropriate security for such undertaking, (b) the
Trust shall be insured against losses arising from any such
advance payments or (c) either a majority of the disinterested
Trustees acting on the matter (provided that a majority of the
disinterested Trustees then in office act on the matter), or
independent legal counsel in a written opinion shall have
determined, based upon a review of readily available facts (as
opposed to a full trial type inquiry) that there is reason to
believe that such Covered Person will be found entitled to
indemnification under this Article.
Section 2. Compromise Payment. As to any matter
disposed of (whether by a compromise payment, pursuant to a
consent decree or otherwise) without an adjudication by a
court, or by any other body before which the proceeding was
brought, that such Covered Person either (a) did not act in
good faith in the reasonable belief that his or her action was
in the best interests of the Trust or (b) is liable to the
Trust or its Shareholders by reason of wilful misfeasance, bad
faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office, indemnification
shall be provided if (a) approved as in the best interests of
the Trust, after notice that it involves such indemnification,
by at least a majority of the disinterested Trustees acting on
the matter (provided that a majority of the disinterested
Trustees then in office act on the matter) upon a
determination, based upon a review of readily available facts
(as opposed to a full trial type inquiry) that such Covered
Person acted in good faith in the reasonable belief that his
or her action was in the best interests of the Trust and is
not liable to the Trust or its Shareholders by reasons of
wilful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his or her
office, or (b) there has been obtained an opinion in writing
of independent legal counsel, based upon a review of readily
available facts (as opposed to a full trial type inquiry) to
the effect that such Covered Person appears to have acted in
good faith in the reasonable belief that his or her action was
in the best interests of the Trust and that such
indemnification would not protect such Covered Person against
any liability to the Trust to which he or she would otherwise
be subject by reason of wilful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of his or her office. Any approval pursuant to this
Section shall not prevent the recovery from any Covered Person
of any amount paid to
C-2
<PAGE>
such Covered Person in accordance with this Section as
indemnification if such Covered Person is subsequently
adjudicated by a court of competent jurisdiction not to have
acted in good faith in the reasonable belief that such Covered
Person's action was in the best interests of the Trust or to
have been liable to the Trust or its Shareholders by reason of
wilful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such
Covered Person's office.
Section 3. Indemnification Not Exclusive. The right
of indemnification hereby provided shall not be exclusive of
or affect any other rights to which such Covered Person may be
entitled. As used in this Article VIII, the term "Covered
Person" shall include such person's heirs, executors and
administrators and a "disinterested Trustee" is a Trustee who
is not an "interested person" of the Trust as defined in
Section 2(a)(19) of the 1940 Act (or who has been exempted
from being an "interested person" by any rule, regulation or
order of the Commission) and against whom none of such
actions, suits or other proceedings or another action, suit or
other proceeding on the same or similar grounds is then or has
been pending. Nothing contained in this Article shall affect
any rights to indemnification to which personnel of the Trust,
other than Trustees or officers, and other persons may be
entitled by contract or otherwise under law, nor the power of
the Trust to purchase and maintain liability insurance on
behalf of any such person; provided, however, that the Trust
shall not purchase or maintain any such liability insurance in
contravention of applicable law, including without limitation
the 1940 Act.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
See the Statement of Additional Information, "Trustees and
Officers of the Trust" and "The Investment Adviser."
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) None
(b)
Position and Position
Name and Principal Officers and and Offices
Business Address* Underwriter with Registrant
----------------- ----------- ---------------
Bruno Desforges Chairman of the Board and Trustee, Chairman
Director of the Board
Peter Hartnedy Vice President, Treasurer, Controller
Secretary and Director
Francois Letaconnoux President and Director Trustee
John McCollam Vice President Treasurer
Tsering Ngudu Executive Vice President Co-President
and Director
- --------
* 1675 Broadway, New York, New York 10019.
C-3
<PAGE>
(c) Not applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
The Transfer and Dividend Disbursing Agent, Firstar Trust
Company, Mutual Fund Services, P.O. Box 701, Milwaukee, Wisconsin 53201, or its
successor, will maintain accounts and records showing the number of shares of
beneficial interest of the Registrant held by each shareholder.
All other accounts, books and other documents required to be
maintained by Section 31(a) of the Investment Company Act of 1940 and the rules
promulgated thereunder will be maintained by the Registrant.
ITEM 31. MANAGEMENT SERVICES NOT DISCUSSED IN PART A OR B.
None.
ITEM 32. UNDERTAKINGS.
Registrant undertakes to furnish to each person to whom a
prospectus relating to the Lepercq-Istel Fund is delivered, a copy of the Fund's
annual report to shareholders which will include the information required by
item 5A, upon request and without charge.
Registrant further undertakes to call a meeting of
shareholders for the purpose of voting upon the question of removal of a trustee
or trustees if requested to do so by the holder of at least 10% of the
Registrant's outstanding voting securities, and to assist in communications with
other shareholders as required by Section 16(c) of the Investment Company Act of
1940, as amended.
C-4
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of the Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Amendment to
its Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York and the State of New York, on
the 29th day of April, 1996.
By:/s/Andrew Hanson By:/s/Tsering Ngudu
------------------- -------------------
Andrew Hanson, Co-President Tsering Ngudu, Co-President
Pursuant to the requirements of the Securities Act of 1933,
this Amendment to its Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
Signatures Title Date
- ---------- ----- ----
/s/Andrew Hanson Co-President April 29, 1996
- ----------------------
Andrew Hanson
/s/Tsering Ngudu Co-President April 29, 1996
- ----------------------
Tsering Ngudu
/s/John McCollam Treasurer April 29, 1996
- ----------------------
John McCollam
/s/Franz Skryanz Trustee April 29, 1996
- ----------------------
Franz Skryanz
/s/Bruno Desforges Trustee April 29, 1996
- ----------------------
Bruno Desforges
/s/Francois Letaconnoux Trustee April 29, 1996
- ----------------------
Francois Letaconnoux
Trustee April 29, 1996
- ----------------------
Jean Louis Milin
Trustee April 29, 1996
- ----------------------
Dr. Marvin Schiller
C-5
EXHIBIT 10
Consent of Kramer, Levin, Naftalis, Nessen, Kamin & Frankel
C-6
<PAGE>
KRAMER, LEVIN, NAFTALIS, NESSEN, KAMIN & FRANKEL
919 THIRD AVENUE
NEW YORK, NEW YORK 10022-3852
(212) 715-9100
ARTHUR H. AUFSES III Richard Marlin Sherwin Kamin
THOMAS D. BALLIETT Thomas E. Molner Arthur B. Kramer
JAY G. BARIS Thomas H. Moreland Maurice N. Nessen
SAUL E. BURIAN Ellen R. Nadler Founding Partners
BARRY MICHAEL CASS Gary P. Naftali Counsel
THOMAS E. CONSTANCE Michael J. Nassa --------
MICHAEL J. DELL Michael S. Nelson Martin Balsam
KENNETH H. ECKSTEIN Jay A. Neveloff Joshua M. Berman
CHARLOTTE M. FISCHMAN Michael S.Oberman Jules Buchwald
DAVID S. FRANKEL Paul S. Pearlman Rudolph De Winter
MARVIN E. FRANKEL Susan J. Penry-Williams Meyer Eisenberg
ALAN R. FRIEDMAN Bruce Rabb Arthur D. Emil
CARL FRISCHLING Allan E. Reznick Maxwell M. Rabb
MARK J. HEADLEY Scott S. Rosenblum James Schreiber
ROBERT M. HELLER Michele D. Ross Counsel
PHILIP S. KAUFMAN Max J. Schwartz -------
PETER S. KOLEVZON Mark B. Segall M. Frances Buchinsky
KENNETH P. KOPELMAN Judith Singer Debora K. Grobman
MICHAEL PAUL KOROTKIN Howard A. Sobel Christian S. Herzeca
KEVIN B. LEBLANG Steven C. Todrys Pinchas Mendelson
DAVID P. LEVIN Jeffrey S. Trachtman Lynn R. Saidenberg
EZRA G. LEVIN D. Grant Vingoe Jonathan M. Wagner
LARRY M. LOEB Harold P. Weinberger Special Counsel
MONICA C. LORD E. Lisk Wyckoff, Jr. -------
FAX
(212) 715-8000
---
WRITER'S DIRECT NUMBER
(212)715-9100
-------------
April 29, 1996
Lepercq-Istel Trust
1675 Broadway
New York, NY 10019
Re: Lepercq-Istel Trust
Registration No. 2-10841
Post-Effective Amendment No. 73
-------------------------------
Gentlemen:
We consent to the reference to our Firm in the prospectus and statement
of additional information portions of the above-mentioned Registration
Statement.
Very truly yours,
/s/Kramer, Levin, Naftalis, Nessen
Kamin & Frankel
C-7
EXHIBIT 11
Consent of KPMG Peat Marwick
C-8
<PAGE>
Independent Auditors' Consent
To the Shareholders and The Board of Trustees of
Lepercq-Istel Fund:
We consent to the use of our report which is incorporated herein by reference.
/s/KPMG Peat Marwich LLP
Milwaukee, Wisconsin
April 25, 1996
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000052761
<NAME> LEPERCQ ISTEL TRUST
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 26,592
<INVESTMENTS-AT-VALUE> 20,245
<RECEIVABLES> 13
<ASSETS-OTHER> 41
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 20,299
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 68
<TOTAL-LIABILITIES> 68
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 13
<SHARES-COMMON-STOCK> 1,278
<SHARES-COMMON-PRIOR> 1,405
<ACCUMULATED-NII-CURRENT> 3
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (5)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (6,347)
<NET-ASSETS> 20,231
<DIVIDEND-INCOME> 274
<INTEREST-INCOME> 184
<OTHER-INCOME> 0
<EXPENSES-NET> 287
<NET-INVESTMENT-INCOME> 171
<REALIZED-GAINS-CURRENT> 939
<APPREC-INCREASE-CURRENT> 3,433
<NET-CHANGE-FROM-OPS> 4,543
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 163
<DISTRIBUTIONS-OF-GAINS> 954
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 87,603
<NUMBER-OF-SHARES-REDEEMED> 268,767
<SHARES-REINVESTED> 54,593
<NET-CHANGE-IN-ASSETS> 1,728
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 84
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 144
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 288
<AVERAGE-NET-ASSETS> 19,207
<PER-SHARE-NAV-BEGIN> 13.17
<PER-SHARE-NII> 0.14
<PER-SHARE-GAIN-APPREC> 3.42
<PER-SHARE-DIVIDEND> 0.13
<PER-SHARE-DISTRIBUTIONS> 0.77
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.83
<EXPENSE-RATIO> 000000000000.150
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
