(Lepercq-Istel Fund Logo)
LEPERCQ-ISTEL FUND
ANNUAL REPORT
DECEMBER 31, 1996
LEPERCQ-ISTEL FUND
FEBRUARY 14, 1997
DEAR SHAREHOLDERS:
1996 was another rewarding year for investors. The net asset value of Lepercq-
Istel Fund, adjusted for capital-gains distributions, increased by 26.3%. By
comparison the average growth and income fund, as tracked by Lipper Analytical
Services, increased by 20.7% and the gain for the Standard and Poor's 500 Index,
including dividends, was 23.0%.
As has been our custom, at the occasion of the new year let us briefly revisit
the objectives and policies of the Fund, review the past year, and share with
you some of our current thoughts.
INVESTMENT OBJECTIVES AND POLICIES
The primary investment objective of your Fund is long-term capital appreciation
with investment income as a secondary objective. We pursue these objectives
through investing in growth companies when they represent good value. We also
invest in companies that are undergoing a turnaround.
REVIEW OF 1996
Continued expansion of the U.S. economy coupled with low inflation and the
record inflow of cash into stock mutual funds fueled yet another strong year for
the U.S. stock market. Sectors of the market that outperformed were energy,
financial and technology stocks. Lagging the market were industrial-cyclical and
smaller-capitalization companies.
Sectors that positively contributed to your Fund's performance were its
investments in energy and energy services, software, semiconductors,
communications and insurance. Sectors of the Fund's portfolio that lagged were
commercial services, retailers, diversified industrial and telephone services.
OUR CURRENT OUTLOOK
The productivity-driven expansion that the U.S. has enjoyed over the past six
years has provided an ideal combination of good growth and benign inflation.
This period has been exceptionally rewarding for stock investors. While prices
for raw materials remain quiescent, after a long period of dormancy, there are
emerging pressures from wages. With the U.S. economy currently at full
employment, labor is starting to win some concessions after many years of
absorbing restructuring costs. While the expansion, in the near term, appears
sustainable, wage pressures have gained the spotlight as a potential negative
factor.
We will stick to our strategy of investing in corporate turnarounds and in
growth companies that are reasonably valued. Our particular focus for potential
investment ideas are areas that have been relatively neglected by investors such
as smaller-capitalization stocks and companies that have experienced temporary
interruptions of their growth. Other areas of interest are those that continue
to see secular growth such as energy, finance, healthcare and technology.
Thank you for your continued support.
Sincerely,
/s/ Andrew Merz Hanson /s/ Tsering Ngudu
Andrew Merz Hanson, CFA Tsering Ngudu
Co-President Co-President
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN LEPERCQ-ISTEL FUND AND THE S&P 500
1 YEAR
DATE S&P 500 LEPERCQ-ISTEL
- ----- -------- -------------
12/95 10,000 10,000
3/96 10,537 10,581
6/96 11,010 11,321
9/96 11,350 12,212
12/96 12,297 12,627
5 YEARS
DATE S&P 500 LEPERCQ-ISTEL
- ---- -------- -------------
12/91 10,000 10,000
6/92 9,933 9,665
12/92 10,762 10,546
6/93 11,287 11,410
12/93 11,846 11,975
6/94 11,445 11,676
12/94 12,002 11,374
6/95 14,428 13,404
12/95 16,513 14,456
6/96 18,180 16,364
12/96 20,304 18,252
AVERAGE ANNUAL RATE OF RETURN(%)
for Periods Ended December 31, 1996
One Year - 26.26
Five Years - 12.79
Ten Years - 10.25
10 YEARS
DATE S&P 500 LEPERCQ-ISTEL
- ---- -------- -------------
12/86 10,000 10,000
12/87 10,525 10,175
12/88 12,273 10,903
12/89 16,163 13,284
12/90 15,662 12,395
12/91 20,434 14,541
12/92 21,991 15,336
12/93 24,207 17,414
12/94 24,527 16,540
12/95 33,744 21,020
12/96 41,492 26,540
Returns shown include the reinvestment of all dividends. Past performance is not
predictive of future performance. Investment return and principal value will
fluctuate, so that your shares, when redeemed, may be worth more or less than
the original cost.
LEPERCQ-ISTEL FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
NUMBER MARKET
OF SHARES VALUE
--------- -------
COMMON STOCKS - 94.49%
COMMUNICATIONS - 11.91%
10,000 Cisco Systems*<F1> $636,250
18,000 Comverse Technology*<F1> 677,250
30,000 Digital Microwave*<F1> 828,750
40,000 Loral Space &
Communications*<F1> 735,000
---------
2,877,250
-----------
COMPUTERS/INFORMATION - 1.81%
12,000 Digital Equipment*<F1> 436,500
-----------
ENERGY/INDEPENDENTS - 11.30%
40,000 Benton Oil & Gas*<F1> 890,000
120,000 HarCor Energy*<F1> 570,000
28,000 KCS Energy 1,001,000
16,700 Monterey Resources*<F1> 269,287
-----------
2,730,287
-----------
ENERGY/OIL SERVICES - 5.47%
100,000 Tesco*<F1> 1,320,537
-----------
FINANCIAL SERVICES/
DIVERSIFIED - 5.64%
50,000 Consumer Portfolio
Services*<F1> 556,250
25,000 Rockford Industries*<F1> 275,000
20,000 United Companies
Financial 532,500
-----------
1,363,750
-----------
INDUSTRIAL/COMMERCIAL
SERVICES - 5.16%
24,000 First Data 876,000
17,500 HealthPlan Services*<F1> 369,687
-----------
1,245,687
-----------
INSURANCE - 5.28%
20,000 Conseco 1,275,000
-----------
MEDIA-BROADCASTING - 4.62%
40,000 Heartland Wireless
Communications*<F1> 520,000
35,000 United Video Satellite
Group, Class A*<F1> 595,000
-----------
1,115,000
-----------
MEDICAL SUPPLIES - 2.48%
30,000 CONMED*<F1> 600,000
-----------
REAL ESTATE INVESTMENT
TRUSTS - 4.78%
25,000 Ambassador Apartments 590,625
15,000 Storage USA 564,375
-----------
1,155,000
-----------
RETAILERS - 4.63%
20,000 Department 56*<F1> 495,000
60,000 Kmart*<F1> 622,500
-----------
1,117,500
-----------
SEMICONDUCTOR - 11.36%
40,000 Adaptec*<F1> 1,600,000
25,000 Lattice Semiconductor*<F1>1,143,750
-----------
2,743,750
-----------
SOFTWARE/PROCESSING - 20.05%
20,000 Adobe Systems 747,500
20,000 BMC Software*<F1> 827,500
11,250 Computer Associates
International 559,687
30,000 FileNet*<F1> 952,500
31,852 Sterling Commerce*<F1> 1,122,783
20,000 Sterling Software*<F1> 632,500
-----------
4,842,470
-----------
Total Common Stocks
(Cost $14,123,317) 22,822,731
-----------
RESTRICTED
SECURITIES - 0.00% (NOTE 2)
38,020 Westfed Holdings,
Series B, Common*<F1> 1
128,290 Westfed Holdings,
15.50%, Convertible
Preferred*<F1> 1
-----------
Total Restricted Securities
(Cost $11,126,810) 2
-----------
Principal Market
Amount Value
---------- -------
U.S. TREASURY NOTES - 0.11%
$ 25,000 U.S. Treasury Notes,
9.00%, due 5/15/98 $ 25,992
-----------
Total U.S. Treasury Notes
(Cost $24,961) 25,992
-----------
U.S. TREASURY BILLS - 5.45%
50,000 U.S. Treasury Bills,
due 1/09/97 49,942
1,285,000 U.S. Treasury Bills,
due 4/10/97 1,267,300
-----------
Total U.S. Treasury Bills
(Cost $1,317,222) 1,317,242
-----------
Total Investments -100.05%
(Cost $26,592,310) 24,165,967
-----------
Liabilities, less
Other Assets - (0.05)% (10,875)
-----------
NET ASSETS - 100.00% $24,155,092
===========
*<F1>Non-income producing security.
See accompanying notes to financial statements.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
ASSETS:
Investments, at market value
(Cost $26,592,310) (Note 2) $24,165,967
Cash 59,564
Dividends receivable 3,893
Interest receivable 292
Other assets 12,855
-----------
Total Assets 24,242,571
-----------
LIABILITIES:
Payable to adviser 32,531
Accrued expenses and
other liabilities 54,948
-----------
Total Liabilities 87,479
-----------
NET ASSETS $24,155,092
===========
NET ASSETS CONSIST OF:
Capital stock $26,674,121
Accumulated undistributed
net investment income 25,000
Accumulated undistributed net
realized (loss) on investments (117,686)
Net unrealized (depreciation)
on investments (Note 2) (2,426,343)
-----------
Total Net Assets $24,155,092
===========
Shares outstanding
(unlimited shares of
$1.00 par value authorized) 1,269,389
Net Asset Value (offering and
redemption price) $19.03
======
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
INVESTMENT INCOME:
Dividend income $161,494
Interest income 55,138
Other income 3,006
----------
Total income 219,638
----------
EXPENSES:
Investment advisory fee 166,414
Administration fee 23,779
Shareholder servicing and
accounting costs 51,065
Custody fees 9,399
Federal and state registration 12,744
Professional fees 53,975
Reports to shareholders 11,542
Trustee fees and expenses 10,777
Distribution expenses 9,732
Insurance 11,141
Other 17,170
----------
Total expenses
before waived fees 377,738
Less: Waived fees from Adviser (13,000)
----------
Total expenses 364,738
----------
NET INVESTMENT (LOSS) (145,100)
----------
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Net realized gain on investments 1,413,250
Change in unrealized
depreciation on investments 3,920,329
----------
Net realized and unrealized
gain on investments 5,333,579
----------
NET INCREASE IN
NET ASSETS RESULTING
FROM OPERATIONS $5,188,479
==========
See accompanying notes to financial statements.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995
----------------- -----------------
OPERATIONS:
Net investment income (loss) $(145,100) $171,228
Net realized gain on investments 1,413,250 938,539
Change in unrealized depreciation
on investments 3,920,329 3,433,435
----------- -----------
Net increase in net assets resulting
from operations 5,188,479 4,543,202
----------- -----------
DISTRUBUTIONS TO SHAREHOLDERS FROM:
Net investment income -- (162,737)
Net realized gains (1,160,547) (954,393)
----------- -----------
Total distributions (1,160,547) (1,117,130)
----------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares subscribed 779,689 1,370,119
Shares issued to holders in reinvestment
of dividends 968,529 860,687
Cost of shares redeemed (1,852,021) (3,928,451)
----------- -----------
Net (decrease) in net assets from
capital share transactions (103,803) (1,697,645)
----------- -----------
TOTAL INCREASE IN NET ASSETS 3,924,129 1,728,427
----------- -----------
NET ASSETS:
Beginning of year 20,230,963 18,502,536
----------- -----------
End of year (including undistributed
net investment income of $25,000
and $3,110, respectively) $24,155,092 $20,230,963
=========== ===========
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
DECEMBER 31,
-------------------------------------------
1996 1995 1994 1993 1992
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period $15.83 $13.17 $14.84 $14.17 $14.05
------ ------ ------ ------ ------
Income from investment operations:
Net investment income (loss) (0.11)(1) 0.14(1) 0.18 0.29 0.40
<F2> <F2>
Net realized and unrealized gains
(losses) on investments 4.26 3.42 (0.93) 1.62 0.35
------ ------ ------- ------ -------
Total from investment operations 4.15 3.56 (0.75) 1.91 0.75
------ ------ ------- ------ -------
Less distributions:
Dividends from net investment income -- (0.13) (0.18) (0.29) (0.40)
Dividends in excess of net
investment income -- -- (0.03) (0.03) (0.01)
Distributions from capital gains (0.95) (0.77) (0.71) (0.92) (0.22)
------ ------ ------- ------ -------
Total distributions (0.95) (0.90) (0.92) (1.24) (0.63)
------ ------ ------- ------ -------
Net asset value, end of period $19.03 $15.83 $13.17 $14.84 $14.17
====== ====== ====== ====== ======
Total return 26.3% 27.1% (5.1)% 13.5% 5.3%
Supplemental data and ratios:
Net assets (in millions) end of period $24.2 $20.2 $18.5 $16.6 $17.0
Ratio of expenses to average
net assets 1.65%(2) 1.50% 1.56% 1.51% 1.53%
<F3>
Ratio of net investment income (loss)
to average net assets (0.65)%(2) 0.89% 1.36% 2.00% 2.90%
<F3>
Portfolio turnover rate 54.13% 59.72% 70.66% 19.88% 20.37%
Average commission rate per share $0.0917(3) -- -- -- --
<F4>
(1)<F2>Net investment income per share is calculated using ending balances prior
to consideration or adjustment for permanent book and tax differences.
(2)<F3>Without voluntary expense reimbursements of $13,000 for the year ended
December 31, 1996, the ratio of expenses to average net assets would have been
1.71% and the ratio of net investment loss to average net assets would have been
(0.71)%.
(3)<F4>Average per share amounts of brokerage commissions on portfolio
transactions. Required by regulations first effective for the fiscal year ended
December 31, 1996.
See accompanying notes to financial statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 1996
1. SIGNIFICANT ACCOUNTING POLICIES
Lepercq-Istel Trust (the "Trust") is registered under the Investment Company
Act of 1940, as amended, as a diversified, open-end investment company,
established under a Declaration of Trust dated April 8, 1986. The Trust was
formerly a Delaware corporation established in 1953 known as Istel Fund, Inc.
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. The Trust currently consists of one series, Lepercq-
Istel Fund (the "Fund"). The principal investment objective of the Fund is
long-term capital appreciation. The following is a summary of significant
accounting policies consistently followed by the Fund in the preparation of
its financial statements. These policies are in conformity with generally
accepted accounting principles for investment companies.
a) Investment Valuation--Investments in securities traded on a national
securities exchange are valued at the last reported sale on the primary
exchange on which they are traded. Investments not listed on a securities
exchange and exchange-listed securities for which no sale was reported for
that date are valued at the last reported bid price. Once short-term
securities have a maturity of 60 days or less, they are valued at amortized
cost which approximates market value; prior to that they are marked to
market. Restricted securities for which quotations are not readily available
are valued at fair value as determined by the investment adviser under the
supervision of the Board of Trustees.
b) Federal Income Taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable net income as well as any net
realized gains to its shareholders. Therefore, no federal income tax
provision is required. Generally accepted accounting principles require that
permanent differences between financial reporting and tax reporting be
reclassified between various components of net assets. On the statement of
assets and liabilities, as a result of permanent book-to-tax differences,
accumulated undistributed net investment income has been increased by
$166,990, and accumulated undistributed net realized loss on investments has
been decreased by $365,055, resulting in a net reclassification adjustment
to increase capital stock by $198,065.
c) Distributions to Shareholders--Dividends from net investment income are
declared and paid semi-annually. Distributions of net realized capital
gains, if any, will be declared at least annually.
d) Use of Estimates--The preparation of financial statements in conformity
with generally accepted accounting principals requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
e) Other--Investment and shareholder transactions are recorded no later than
the first business day after the transaction date. The Fund determines the
gain or loss realized from the investment transactions by comparing the
original cost of the security lot sold with the net sales proceeds. Dividend
income is recognized on the ex-dividend date or as soon as information is
available to the Fund, and interest income is recognized on an accrual
basis. Discounts on securities purchased are amortized over the life of the
respective security.
2. RESTRICTED SECURITIES
On December 31, 1996, the Fund held certain restricted securities (i.e.,
securities which may not be publicly sold without registration under the
federal Securities Act of 1933, as amended, or without an exemption under such
Act). These securities were acquired from the Pilgrim Corporate Utilities Fund
on July 29, 1994, under an Agreement on Transfer of Assets between Lepercq, de
Neuflize & Co. Incorporated and Pilgrim Management Corporation. On December
31, 1996 and on the date these restricted securities were acquired, July 29,
1994, there were no market quotations available for unrestricted securities of
the same class. In the opinion of the Fund's Adviser these securities are
worthless. Consequently, each position has been valued at $1 for a total value
for all restricted securities of $2. The value at which these securities were
acquired by the Fund, the original cost of these securities to Pilgrim
Corporate Utilities Fund and the net unrealized loss that accrues to the Fund
from the acquisition of these securities are as follows:
ACQUISITION ORIGINAL COST NET UNREALIZED LOSS
COST TO FUND TO PILGRIM ACCRUED TO FUND
------------ ------------ ------------------
Westfed Holdings, Class B, Common $1 $1,148 $1,147
Westfed Holdings, 15.50%,
Convertible Preferred 1 11,125,662 11,125,661
---------- ----------
Total restricted securities (Market Value
of $2 at December 31, 1996) $11,126,810 $11,126,808
=========== ===========
3. AGREEMENTS
The Fund has entered into an investment advisory agreement with Lepercq, de
Neuflize &Co. Incorporated (the "Adviser"). The Adviser is entitled to receive
a fee, computed and accrued daily and payable quarterly, at the annual rate of
0.75% of the Fund's average daily net assets.
The Adviser has voluntarily agreed to waive advisory fees to the extent
necessary to ensure that total operating expenses for the fiscal year ended
December 31, 1996 did not exceed the annual rate of 1.65% of the net assets of
the Fund, computed on a daily basis.
For the year ended December 31, 1996, the Fund paid Lepercq, de Neuflize
Securities Inc., a wholly owned subsidiary of the Adviser $24,081 of brokerage
commissions.
Firstar Trust Company, a subsidiary of Firstar Corporation, a publicly held
bank-holding company, serves as the Fund's custodian, transfer agent,
administrator and accounting services agent.
The Board of Trustees, on behalf of the Fund, has adopted a distribution plan
(the "Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940.
Pursuant to the Plan, 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. For the year ended
1996, the Fund agreed to limit such expenses to 0.10% of the Fund's annual
average daily net assets. The Plan provides that the Fund may finance
activities which are primarily intended to result in the sale of the Fund's
shares. The Fund incurred $9,732 pursuant to the Plan for the year ended
December 31, 1996.
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of beneficial interest were as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995
----------------- -------------------
AMOUNT SHARES AMOUNT SHARES
------- ------- -------- -------
Shares subscribed $779,689 44,196 $1,370,119 87,603
Shares issued to holders in
reinvestment of dividends 968,529 51,131 860,687 54,593
Shares redeemed (1,852,021) (103,880) (3,928,451) (268,767)
----------- -------- ---------- ---------
Net (decrease) $(103,803) (8,553) $(1,697,645) (126,571)
========== ======== ========== =========
5. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of securities, excluding short-term
investments, for the Fund for the year ended December 31, 1996, were as
follows:
U.S. GOVERNMENT OTHER
-------------- ----------
Purchases -- $11,543,823
Sales $190,313 13,686,015
At December 31, 1996, gross unrealized appreciation and depreciation of
investments for federal income-tax purposes were as follows:
Appreciation $9,203,796
(Depreciation) (11,630,139)
------------
Net unrealized depreciation on investments $(2,426,343)
============
At December 31, 1996, the cost of investments for federal income-tax purposes
was $26,592,310.
One hundred percent of dividends paid from net investment income qualifies for
the dividend received deduction available to corporate shareholders.
The Fund acquired a tax capital loss carryforward from the Pilgrim
CorporateUtilities Fund on July 29, 1994 under an Agreement on Transfer of
Assets between the Adviser and Pilgrim Management Corporation. The Fund is
limited to recognizing $332,593 of this loss per year until December 31, 2001.
Net unrealized gains and losses may also differ for book and tax purposes as a
result of disallowance for tax purposes of built-in losses that were acquired
under the Agreement on Transfer of Assets.
INDEPENDENT AUDITORS' REPORT
TO THE SHAREHOLDERS AND
BOARD OF TRUSTEES OF
LEPERCQ-ISTEL TRUST:
We have audited the accompanying statement of assets and liabilities of Lepercq-
Istel Fund (the "Fund"), including the schedule of investments, as of December
31, 1996, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the periods presented. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of December 31, 1996, by correspondence with the custodian.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Fund as of December 31, 1996, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended, and the financial highlights for each of the periods presented, in
conformity with generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
Milwaukee, Wisconsin
January 22, 1997
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*<F5> Former Managing Director, A.T. Kearney, Inc.
Franz Skryanz*<F5> Financial Consultant; formerly, Treasurer, Chief
Financial Officer, Schenkers International
*<F5>Member of Audit, Ethics and Nominating Committees
OFFICERS
Andrew Hanson Co-President
Tsering Ngudu Co-President
Pamela Forrest Kaye Secretary
Peter Hartnedy Controller
Investment Adviser Lepercq, de Neuflize & Co. Incorporated, New York
Underwriter & Distributor Lepercq, de Neuflize Securities Inc., New York
Dividend Paying Agent,
Transfer Agent, Custodian,
Administrator and
Accounting Services Agent Firstar Trust Company, Wisconsin
Legal Counsel Kramer, Levin, Naftalis & Frankel, New York
Independent Auditors KPMG Peat Marwick LLP, Wisconsin
LEPERCQ-ISTEL FUND
1675 Broadway, New York, N.Y. 10019
Telephone: (212) 698-0749
Shareholder Services: (800) 497-1411
This report is issued for the information of shareholders of Lepercq-Istel Fund,
and is not authorized for distribution to prospective investors in the Fund
unless it is preceded or accompanied by a current prospectus.
