As filed, via EDGAR, with the Securities and Exchange Commission on March 12,
1998.
File No.:33-78574
ICA No.: 811-631
SCHEDULE 14A (RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant |X|
Filed by a party other than the registrant [ ]
Check the appropriate box:
[x] Preliminary proxy statement [ ] Confidential, for Use of the
[ ] Definitive proxy statement Commission Only
[ ] Definitive additional materials (as permitted by Rule 14a-6(e)(2))
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
LEPERCQ-ISTEL TRUST
(Name of Registrant as Specified in Its Charter)
Laura E. Fahey
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
|X| No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
<PAGE>
PRELIMINARY PROXY MATERIALS - SUBJECT TO COMPLETION
LEPERCQ-ISTEL TRUST
LEPERCQ-ISTEL FUND
1675 BROADWAY
NEW YORK, NEW YORK 10019
(800) 497-1411
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD
APRIL 27, 1998
Notice is hereby given that a special meeting of the shareholders (the
"Meeting") of the Lepercq-Istel Fund (the "Fund"), a series of the Lepercq-Istel
Trust (the "Trust"), a Massachusetts business trust, will be held on April 27,
1998 at 10:00 a.m. Eastern time, at the offices of the Trust, 1675 Broadway, New
York, New York, for the following purposes:
1. To elect eight (8) Trustees to hold office until the election and
qualification of their successors;
2. To consider and act upon a proposal to modify the Fund's
investment objective;
3. To consider and act upon a proposal to reclassify, modify or
eliminate certain fundamental investment restrictions of the
Fund;
4. To transact such other business as may properly come before the
Meeting or any adjournment(s) thereof.
Shareholders of record at the close of business on March 11, 1998 are
entitled to notice of, and to vote at, the Meeting or any adjournment(s)
thereof.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE FILL IN, SIGN,
DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE POSTAGE PAID RETURN
ENVELOPE ENCLOSED, SO THAT A QUORUM WILL BE PRESENT AND A MAXIMUM NUMBER OF
SHARES MAY BE VOTED. IT IS MOST IMPORTANT AND IN YOUR INTEREST FOR YOU TO SIGN
YOUR PROXY CARD AND RETURN IT. THE PROXY IS REVOCABLE AT ANY TIME PRIOR TO ITS
USE.
By Order of the Board of Trustees,
-------------------------
Stephen T. Murphy, Secretary
Dated: March , 1998
<PAGE>
PRELIMINARY PROXY MATERIALS - SUBJECT TO COMPLETION
LEPERCQ-ISTEL TRUST
LEPERCQ ISTEL FUND
1675 BROADWAY
NEW YORK, NEW YORK 10019
(800) 497-1411
PROXY STATEMENT
DATED MARCH __, 1998
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD
APRIL 27, 1998
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Trustees of the Lepercq-Istel Trust (the "Trust"), a
Massachusetts business trust, on behalf of the Lepercq-Istel Fund (the "Fund")
for use at a special meeting of shareholders (the "Meeting") to be held on April
27, 1998, at 10:00 a.m. Eastern time, at the offices of the Trust, 1675
Broadway, New York, New York, and at any adjournment(s) thereof, and was first
mailed to shareholders on or about March 23, 1998. Even if you sign and return
the accompanying proxy, you may revoke it by giving written notice of such
revocation to the Secretary of the Trust prior to the Meeting or by delivering a
subsequently dated proxy or by attending and voting at the Meeting in person.
Management expects to solicit proxies principally by mail, but Management, or
agents appointed by Management, may also solicit proxies by telephone, telegraph
or personal interview. The costs of preparation of the proxy and solicitation of
shareholders will be borne by the Fund.
The Meeting has been called for the following purposes:
1. To elect eight (8) Trustees to hold office until the election and
qualification of their successors;
2. To consider and act upon a proposal to modify the Fund's
investment objective;
3. To consider and act upon a proposal to reclassify, modify or
eliminate certain fundamental investment restrictions of the
Fund;
4. To transact such other business as may properly come before the
Meeting or any adjournment(s) thereof.
The Board of Trustees has fixed the close of business on March 11, 1998
as the record date for the determination of the shareholders entitled to notice
of and to vote at the Meeting or any
<PAGE>
adjournment(s) thereof. As of that date, there were approximately 1,482,212.756
outstanding shares of the Fund, each share being entitled to one vote on each
matter to come before the Meeting. As of March 11, 1998 the Trustees and
executive officers of the Trust as a group beneficially owned 46,270.797 of the
outstanding shares of the Fund. As of March 11, 1998, the following shareholders
each owned, directly or indirectly, 5% or more of the Fund's shares:
Number of Percentage of
Name and Address Shares Owned Fund Outstanding
Morgan Stanley & Co. Inc. 512,952.802 34.6%
Special Custody Account for the
Exclusive Benefit of Customers
1 Pierrepont Plaza, Suite 10
Brooklyn, New York 11201-2776
Donaldson Lufkin & Jenrette 117,132.040 7.91%
Securities Corp.
1 Pershing Plaza
Jersey City, New Jersey 07399-0001
As of March 11, 1998, to the best of the Fund's knowledge, no person
within the above omnibus accounts beneficially owned more than 5% of the Fund's
shares.
A copy of the Fund's annual report and most recent semi-annual report
succeeding the annual report may be received, free of charge, by calling the
Fund, toll free, at 1-800-497-1411.
The affirmative vote of a plurality of the votes cast at the Meeting in
person or by proxy is required for the election of Trustees (Proposal 1, below).
The affirmative vote of the holders of a "majority of the outstanding voting
securities" of the Fund, as defined in the Investment Company Act of 1940, as
amended (the "1940 Act"), is required to approve the proposal to modify the
investment objective of the Fund (Proposal 2, below), and to approve the
proposal to reclassify, modify or eliminate certain of the Fund's fundamental
investment restrictions (Proposal 3, below). A "majority of the outstanding
voting securities" of the Fund as defined in the 1940 Act means the lesser of
(a) 67% of the Fund's shares present at a meeting of its shareholders if the
owners of more than 50% of the shares of the Fund then outstanding are present
in person or by proxy, or (b) more than 50% of the Fund's outstanding shares (a
"Majority Vote").
In addition to the solicitation of proxies by mail, the Fund may
utilize the services of officers and employees of the Trust, Lepercq de Neuflize
& Co. Incorporated (the "Adviser"), and Lepercq, de Neuflize Securities Inc.,
the Fund's distributor, none of whom will receive any compensation therefor, to
solicit proxies by telephone, telegraph and personal interview, and may also
provide shareholders with a procedure for recording their votes by telegraph,
facsimile, telephone or other electronic means. The estimated cost of
preparation of the proxy and solicitation of shareholders is expected to be
approximately $15,000 in the aggregate for the Fund and will be borne by the
Fund. The Fund may request brokers, custodians, nominees and fiduciaries to
forward proxy material to the beneficial owners of shares of record. Persons
holding shares as nominees will, upon request, be reimbursed for their
reasonable expenses incurred in sending soliciting material to their principals.
- 2 -
<PAGE>
If a proxy represents a broker "non-vote" (that is, a proxy from a
broker or nominee indicating that such person has not received instructions from
the beneficial owner or other person entitled to vote shares on a particular
matter with respect to which the broker or nominee does not have discretionary
power) or marked with an abstention (collectively, "abstentions"), the shares
represented thereby will be considered to be present at the meeting for purposes
of determining the existence of a quorum for the transaction of business and
will have the effect of a vote against the proposal.
At the Meeting, the presence in person or by proxy of shareholders of a
majority of the outstanding shares entitled to vote at the Meeting shall be
necessary and sufficient to constitute a quorum for the transaction of business.
In the event that a quorum of shareholders is not represented at the Meeting, or
if a quorum is present but sufficient votes to approve one or more of the
Proposals are not received, the shareholders entitled to vote thereat, present
in person or represented by proxy, shall have the power to adjourn the Meeting
to be held within a reasonable time after the date originally set for the
Meeting, without notice other than announcement at the Meeting, to permit
further solicitation of proxies. At such adjourned meeting at which a quorum
shall be present or represented, any business may be transacted at the meeting
as originally notified. In determining whether to adjourn the Meeting, the
following factors may be considered: the nature of the Proposals that are the
subject of the Meeting, the percentage of votes actually cast, the percentage of
negative votes actually cast, the nature of any further solicitation and the
information to be provided to shareholders with respect to the reasons for the
solicitation.
THE PERSONS NAMED IN THE ACCOMPANYING PROXY WILL VOTE THE NUMBER OF
SHARES REPRESENTED THEREBY AS DIRECTED BY THE PROXY OR, IN THE ABSENCE OF SUCH
DIRECTION, TO ELECT THE SLATE OF EIGHT NOMINEES TO SERVE AS MEMBERS OF THE BOARD
OF TRUSTEES AND FOR PROPOSALS 2 AND 3.
PROPOSAL 1
ELECTION OF TRUSTEES
It is proposed that shareholders elect as trustees the individuals (the
"Nominees") listed below, each to serve until their successors have been elected
and shall have qualified. The Board of Trustees will consist of eight Trustees.
If authority is granted on the accompanying proxy to vote in the election of
Trustees, it is the intention of the persons named in the proxy to vote at the
Meeting for the election of the Nominees named below, each of whom has consented
to serve if elected. If any of the Nominees is unavailable to serve for any
reason, the persons named as proxies will vote for such other Nominee or
Nominees selected by the Board of Trustees or the Board may reduce the number of
Trustees as provided in the Fund's By-Laws. The Trust currently knows of no
reason why any of the Nominees listed below will be unable to serve if elected.
- 3 -
<PAGE>
NOMINEES FOR ELECTION TO THE BOARD OF TRUSTEES
<TABLE>
<CAPTION>
Shares Owned
Year First Beneficially
Nominee's Name Became March 11,
Address*** and Age Principal Occupation for Past 5 Years A Trustee 1998**
- -------------------------- ------------------------------------- ---------- -----
<S> <C> <C> <C>
Stanley A. Deitch, 52 Principal, CPI Associates, Inc.; Member, American Nominee 0
774 Dumont Place Institute of CPAs and New York State Society of
No. Woodmere, NY 11581 CPAs; Director and Officer of the Cary L. Guy
Foundation
*Bruno Desforges, 72 Managing Director, Lepercq, de Neuflize & Co. 1976 17,145.396
Incorporated; Director and Chairman of the Board,
Lepercq, de Neuflize Securities Inc.
*Francois Letaconnoux, 47 Director, President and Chief Executive Officer, 1994 16,308.667
Lepercq Inc., Lepercq, de Neuflize & Co.
Incorporated and Lepercq, de Neuflize Securities Inc.
Jean-Louis Milin, 52 Managing Director, Banque de Neuflize, 1988 0
3, Avenue Hoche Schlumberger, Mallet.
75008 Paris, France
Dr. Marvin Schiller, 64 Director, Salant Corporation; Director, Tutor Time 1974 6,193.842
17319 St. James Court Learning Systems, Inc.; General Partner, Reprise
Boca Raton, Florida 33496 Capital Corp.; Former Managing Director, A.T.
Kearney, Inc.
Franz Skryanz, 60 Financial Consultant; prior thereto, Vice President, 1976 0
30 East 81st Street Sutton & Edwards; prior thereto, Treasurer and Chief
New York, New York Financial Officer, Schenkers International.
10028
Marie-Monique Steckel, 58 President, France Telecom North America since 1979; Nominee 0
210 West 90th Street, 11B Director, Microcard Technologies Inc.; Director,
New York, NY 10024 GlobeCast North America Inc.; Director, C&P Press,
Inc.
Dennis Tarzian, 47 President and Chief Executive Officer, New Century Nominee 0
575 Highland Ave. Education Corp.; Director and Chief Operating
Ridgwood, NJ 07450 Officer, National Registered Agents, Inc.; Vice
President and Chief Operating Officer, Paramount
Communications Business, Technical and Professional
Group.
</TABLE>
- ------------
* An "interested person" of the Trust, as defined by Section 2(a)(19) of the
1940 Act.
** Beneficial ownership is defined in accordance with the rules of the
Securities and Exchange Commission and means generally the power to vote or
dispose of shares, regardless of any economic interest therein.
*** Unless otherwise indicated, the address of each Nominee is 1675 Broadway,
New York, New York 10019.
- 4 -
<PAGE>
The Board of Trustees met four times during the twelve months ended December 31,
1997, and each of the Trustees except Jean-Louis Milin attended at least 75% of
those meetings. The Board has an Audit Committee and a Nominating Committee,
each consisting of Dr. Marvin Schiller and Franz Skryanz. The Audit Committee is
responsible for reviewing the scope and results of the Fund's annual audit with
the Fund's independent accountants and for recommending the engagement of the
independent accounts. The Nominating Committee is responsible for selecting
nominees to the Board of Trustees. The Nominating Committee does not consider
nominees recommended by shareholders. The Audit Committee met one time during
the twelve months ended December 31, 1997. The Nominating Committee met one time
during the twelve months ended December 31, 1997.
Set forth in the following table are the current Trustees and officers
of the Trust.
TRUSTEES AND OFFICERS OF THE TRUST
<TABLE>
<CAPTION>
Shares Beneficially
Position(s) Held Principal Occupation(s) Owned
Name, Address***, Age with Registrant During Past 5 Years March 11, 1998**
--------------------- --------------- ------------------- ----------------
<S> <C> <C> <C>
*Bruno Desforges, 72 Trustee and Managing Director, Lepercq, de Neuflize & Co. 17,145.396
Chairman of Incorporated; Director and Chairman of the Board,
the Board Lepercq, de Neuflize Securities Inc.
*Francois Letaconnoux, 47 Trustee Director, President and Chief Executive Officer, 16,308.667
Lepercq Inc., Lepercq, de Neuflize & Co.
Incorporated and Lepercq, de Neuflize Securities
Inc.
Jean-Louis Milin, 52 Trustee Managing Director, Banque de Neuflize, 0
3 Avenue Hoche Schlumberger, Mallet.
75008 Paris, France
Dr. Marvin Schiller, 64 Trustee Director, Salant Corporation; Director, Tutor Time 6,193.842
17319 St. James Court Learning Systems, Inc.; General Partner, Reprise
Boca Raton, Florida 33496 Capital Corp.; Former Managing Director, A.T.
Kearney, Inc.
Franz Skryanz, 60 Trustee Financial Consultant; prior thereto, Vice President, 0
30 East 81st Street Sutton & Edwards; prior thereto, Treasurer and
New York, New York 10028 Chief Financial Officer, Schenkers International.
*Peter Hartnedy, 48 Controller Senior Vice President, Treasurer and Secretary, 3,147.839
Lepercq, de Neuflize & Co. Incorporated;
Director, Vice President, Treasurer and Secretary,
Lepercq, de Neuflize Securities Inc.; Treasurer and
Secretary, Lepercq Inc.
*Stephen T. Murphy, 31 Secretary and Vice President, Lepercq, de Neuflize Securities 0
Treasurer Inc. since February 1997, prior thereto Assistant
Vice President, Merrill Lynch & Co.
*Tsering Ngudu, 42 President Senior Vice President, Lepercq, de Neuflize & Co. 3,475.053
Incorporated; Executive Vice President and
Director, Lepercq, de Neuflize Securities Inc.
</TABLE>
- 5 -
<PAGE>
- ------------
* An "interested person" of the Trust, as defined by Section 2(a)(19) of the
1940 Act.
** Beneficial ownership is defined in accordance with the rules of the
Securities and Exchange Commission and means generally the power to vote or
dispose of shares, regardless of any economic interest therein.
*** Unless otherwise indicated, the address of each Trustee and Officer is 1675
Broadway, New York New York 10019.
- 6 -
<PAGE>
REMUNERATION OF TRUSTEES AND CERTAIN EXECUTIVE OFFICERS
Each Trustee is reimbursed for expenses incurred in attending each
meeting of the Board of Trustees or any committee thereof up to a maximum of
$500 per meeting. Each Trustee except Francois Letaconnoux and Bruno Desforges
receives a fee for serving on the Board of Trustees of the Fund.
Set forth below is information regarding compensation paid or accrued
for the fiscal year ended December 31, 1997 for each Trustee:
<TABLE>
<CAPTION>
====================================================================================================================================
Pension or Total Compensation
Retirement Benefits Estimated Annual From Number of
Aggregate Accrued as Part of Benefits Upon Fund and Fund Directorships
Name of Director Compensation from Fund Fund Expenses Retirement Complex in Fund Complex
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Bruno Desforges $0 $0 $0 $0 1
- ------------------------------------------------------------------------------------------------------------------------------------
Francois Letaconnoux $0 $0 $0 $0 1
- ------------------------------------------------------------------------------------------------------------------------------------
Jean-Louis Milin $1,500 $0 $0 $1,500 1
- ------------------------------------------------------------------------------------------------------------------------------------
Dr. Marvin Schiller $3,375 $0 $0 $3,375 1
- ------------------------------------------------------------------------------------------------------------------------------------
Franz Skryanz $3,375 $0 $0 $3,375 1
====================================================================================================================================
</TABLE>
THE BOARD OF THE TRUST RECOMMEND THAT SHAREHOLDERS VOTE FOR THE ELECTION OF
NOMINEES TO THE BOARD OF TRUSTEES.
PROPOSAL 2
MODIFICATION OF THE INVESTMENT OBJECTIVE OF THE FUND
At a meeting held on February 11, 1998, the Fund's Board of Trustees
adopted a resolution proposing and declaring it advisable to modify the
investment objective of the Fund.
Currently, the Fund's primary investment objective is long-term capital
appreciation. The Fund's secondary investment objective is to provide dividend
income.
Subject to shareholder approval, the Trustees intend to change the
Fund's investment objective to eliminate the Fund's secondary investment
objective of providing dividend income.
REASONS FOR THE PROPOSAL. To achieve the Fund's primary investment objective,
the Adviser seeks to invest the Fund in companies that are undergoing a
transformation that is unrecognized by the stock market and is creating value
that should result in increased earnings and, accordingly, enhanced stock
prices. To achieve the Fund's secondary objective, the Adviser sought to
purchase dividend paying companies. During the past five years, however, the
average dividend yield of the Standard & Poor's 500 has decreased from 2.8% to
1.6%. Many companies no longer emphasize the payment of dividends, but instead
seek to enhance shareholder value through other techniques, such as stock
buy-backs. Therefore, the Adviser believes that investing in common stocks with
undervalued growth prospects without regard to the provision of dividend income
will provide the Adviser with greater flexibility to pursue an investment
strategy that may permit greater capital appreciation of the Fund's shares than
a strategy that also seeks dividend income. Shareholders should be aware,
however, that investment
- 7 -
<PAGE>
strategies that possess greater potential for capital appreciation also possess
greater potential for capital loss than more conservative strategies.
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR THE
ABOVE PROPOSAL. IF THE PROPOSAL IS APPROVED BY SHAREHOLDERS, THE
NEW INVESTMENT OBJECTIVE WILL BECOME EFFECTIVE ON OR ABOUT APRIL
28, 1998. IF THE NEW PROPOSAL IS NOT APPROVED, THE CURRENT
INVESTMENT OBJECTIVE WILL REMAIN UNCHANGED.
PROPOSAL 3
TO APPROVE OR DISAPPROVE THE RECLASSIFICATION, MODIFICATION OR
ELIMINATION OF CERTAIN FUNDAMENTAL INVESTMENT RESTRICTIONS OF THE FUND
The 1940 Act requires a registered investment company, including the
Fund, to have certain specific investment policies that can be changed only by
vote of a majority of the company's shareholders. Investment companies may also
elect to designate other policies that may be changed only by a shareholder
vote. Both types of policies are often referred to as "fundamental" investment
restrictions. Certain fundamental policies have been adopted in the past by the
Fund to reflect certain regulatory, business or industry conditions that are no
longer in effect. Accordingly, the Fund's Board authorized a review of the
Fund's fundamental policies with the following goals: (i) to simplify and
modernize the Fund's policies that are required to be fundamental, (ii) to
reclassify as non-fundamental any policies that are not required to be
fundamental under the 1940 Act or the positions of the staff of the Securities
and Exchange Commission (the "SEC") in interpreting the 1940 Act, and (iii) to
reclassify as non-fundamental or to eliminate certain policies previously
required under state securities laws. Non-fundamental policies can be changed by
the Board without shareholder approval, subject to compliance with applicable
SEC disclosure requirements.
This proposal seeks shareholder approval of changes that are intended
to accomplish the foregoing goals. Shareholders of the Fund will be able to vote
for or against or abstain from voting with respect to each of the proposed
changes. The proposed changes to the fundamental investment restrictions are
discussed in detail below. By reducing to a minimum those policies that can be
changed only by a shareholder vote, the Fund in the future should be able to
avoid the costs and delay associated with a shareholder meeting and the Board
believes that the Adviser's ability to manage the Fund's portfolio in a changing
regulatory or investment environment will be enhanced. Before the Fund engages
in any new investment policy, the Board of Trustees must approve it.
If these investment policy changes are approved by shareholders at the
meeting, the Fund's Prospectus and Statement of Additional Information will be
amended or supplemented in order to reflect the elimination, modification and/or
reclassification of the investment policies. Shareholders will be notified by
the Fund of any future investment policy changes, either in the Fund's
Prospectus or Statement of Additional Information, which are updated at least
annually, or in other Fund correspondence.
A. MODIFICATION OF THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION CONCERNING
SECURITIES LENDING
The Fund's current fundamental investment restriction concerning
securities lending provides that:
- 8 -
<PAGE>
"The Fund will not make loans nor will it underwrite securities."
Subject to shareholder approval, the Trustees intend to modify this
restriction so that the Fund may lend up to 33 1/3% of its total assets. Set
forth below is the policy on securities lending, as proposed to be modified:
"The Fund will not make loans nor will it underwrite securities,
except that the Fund may lend portfolio securities provided that the
value of such loaned securities does not exceed 33 1/3% of the value
of the Fund's total assets."
REASONS FOR THE PROPOSAL. The proposed fundamental restriction clarifies and
modernizes the current fundamental restriction in accordance with the 1940 Act.
The practice of lending securities is expected to generate income for the Fund.
Securities loans would be made to banks, brokers and other financial
institutions pursuant to agreements requiring that the loans be continuously
secured by collateral at least equal at all times to the value of the securities
loaned and marked to market on a daily basis. The Fund would invest cash
collateral received in certain temporary investments, including, but not limited
to, certificates of deposit, time deposits, bankers' acceptances, and other
short term debt instruments. The risks in lending portfolio securities, as with
other extensions of secured credit, consist of possible delay in receiving
additional collateral or in the recovery of the securities or possible loss of
rights in the collateral should the borrower fail financially.
B. MODIFICATION OF THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION CONCERNING
INVESTMENT IN REAL ESTATE AND COMMODITIES
The Fund's current fundamental investment restriction concerning
investment in real estate and commodities provides that:
"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."
Subject to shareholder approval, the Trustees intend to modify this
restriction to permit the Fund to purchase and sell futures contracts and
options on futures contracts. Set forth below is the Fund's restriction
concerning the purchase or sale of real estate and commodities, as proposed to
be modified:
"The Fund will not buy or sell real estate, commodities, or commodity
contracts, except that the Fund may purchase or sell futures or
options on futures."
REASONS FOR THE PROPOSAL. The proposed fundamental restriction modernizes
language to conform to the provisions of the 1940 Act and would allow the Fund
greater flexibility in responding to changes in the financial markets.
Shareholders should be aware that investing in futures and options on futures
involves certain risks, including (1) dependence on the Adviser's ability to
predict correctly movements in the direction of interest rates and securities
prices; (2) imperfect correlation between the price of options and futures
contracts and options thereon and movements in the prices of the securities
being hedged; (3) the fact that skills needed to pursue these strategies are
different from those needed to select portfolio securities; (4) the possible
absence of a liquid secondary market for any particular instrument at any time;
(5) the possible need to defer closing out certain hedged positions to avoid
adverse tax consequences; and (6) the possible inability of the Fund to purchase
or sell a portfolio security at a time that otherwise would be favorable for it
to do so, or the possible need for the Fund to sell a portfolio security at a
disadvantageous time, due to the need for the Fund to maintain "cover" or to
segregate securities in
- 9 -
<PAGE>
connection with hedging transactions. The Fund does not intend to engage in the
purchase or sale of futures or options on futures at this time.
C. MODIFICATION OF THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION CONCERNING
DIVERSIFICATION
Set forth below is the Fund's current fundamental investment
restriction concerning diversification:
"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."
Subject to shareholder approval, the Trustees intend to modify this
restriction to enable the Fund to invest a larger portion of its assets in a
single issuer. Set forth below is the Fund's policy on diversification, as
proposed to be modified:
"With respect to 75% of the value of the Fund's assets, the Fund will
not purchase any securities (other than obligations issued or
guaranteed by the U.S. Government or its agencies or
instrumentalities) if, immediately after such purchase, more than 5%
of the value of the Fund's total assets would be invested in
securities of any one issuer, or more than 10% of the outstanding
voting securities of any one issuer would be owned by the Fund."
REASONS FOR THE PROPOSAL. Under the 1940 Act, a "diversified" fund is permitted
to invest, with respect to 75% of its assets, up to 5% of its assets in one
issuer, provided that the investment represents less than 10% of the issuer's
voting securities. The Fund initially adopted more restrictive fundamental
limitations applying the 5% and 10% limitations to 100% of the Fund's assets.
The Board of the Fund believes that these restrictions should be standardized
and conformed to the statutory definition of diversification under the 1940 Act
in order to enhance the Fund's ability to pursue its investment objective by
investing a larger but still limited amount of its assets in a single issuer. If
approved by shareholders, the Fund's new policy on diversification will permit
the Fund to invest, with respect to 25% of its assets, more than 5% of its
assets in an issuer. To the extent that the Fund invests a greater proportion of
its assets in a single issuer, it will be subject to a correspondingly greater
degree of risk associated with that investment.
D. MODIFICATION OF THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION CONCERNING
BORROWINGS
The Fund's current fundamental investment restriction concerning
borrowings provides that:
"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."
Subject to shareholder approval, the Trustees intend to modify this
restriction to permit the Fund to borrow up to 10% of its total assets and to
prohibit the Fund from making additional investments when borrowings exceed 5%
of the value of the Fund's total assets. Set forth below is the Fund's policy on
borrowing, as proposed to be modified:
"The Fund will not borrow money, except from banks for temporary or
emergency purposes, in excess of 10% of the value of the Fund's total
assets. The Fund may not purchase securities while borrowings exceed
5% of the value of its total assets."
- 10 -
<PAGE>
REASONS FOR THE PROPOSAL. The proposed fundamental restriction would permit the
Fund to borrow an amount equal to a greater proportion of the Fund's total
assets, which may serve to increase the total return on the Fund's investments
and will allow the Fund more flexibility in responding to changes in the
financial markets. The risks involved in borrowing securities include a possible
increase in any negative impact to which the value of the Fund's portfolio might
be subject under adverse market conditions and interest rate expenses that may
exceed the return on investments made with the borrowing.
E. RECLASSIFICATION OF THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION
CONCERNING SHORT SALES OF SECURITIES
The Fund's current fundamental investment restriction concerning short
sales of securities provides that:
"The Fund will not sell securities short."
Subject to shareholder approval, the Trustees intend to reclassify this
restriction as a non-fundamental investment restriction.
REASONS FOR THE PROPOSAL. The reclassification of the investment restriction as
non-fundamental would not change the way in which the Fund's assets are
currently invested. However, the reclassification of the restriction as
non-fundamental would allow changes to be made by the Trustees rather than by
shareholder vote, thereby allowing the Fund more flexibility to respond to
changes in financial markets and regulatory and other developments.
F. RECLASSIFICATION OF THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION
CONCERNING SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund's current fundamental investment restriction concerning
securities of investment companies provides that:
"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."
Subject to shareholder approval, the Trustees intend to reclassify this
restriction as a non-fundamental investment restriction.
REASONS FOR THE PROPOSAL. The reclassification of the investment restriction as
non-fundamental would not change the way in which the Fund's assets are
currently invested. In addition, the 1940 Act limits the amount an investment
company may invest in another investment company. However, the reclassification
of the restriction as non-fundamental would allow changes to be made by the
Trustees rather than by shareholder vote, thereby allowing the Fund more
flexibility to respond to changes in financial markets and regulatory and other
developments.
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<PAGE>
G. RECLASSIFICATION OF THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION
CONCERNING INVESTMENT FOR CONTROL
The Fund's current fundamental investment restriction concerning
investment for control provides that:
"The Fund will not purchase securities for the purpose of exercising
control or management of any issuer."
Subject to shareholder approval, the Trustees intend to reclassify this
restriction as a non-fundamental investment restriction.
REASONS FOR THE PROPOSAL. The reclassification of the investment restriction as
non-fundamental would not change the way in which the Fund's assets are
currently invested. However, the reclassification of the restriction as
non-fundamental would allow changes to be made by the Trustees rather than by
shareholder vote, thereby allowing the Fund more flexibility to respond to
changes in financial markets and regulatory and other developments.
H. RECLASSIFICATION OF THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTIONS
CONCERNING INVESTMENT IN SECURITIES OF ISSUERS IN OPERATION FOR LESS THAN
THREE YEARS AND OTHER STATE REQUIRED RESTRICTIONS
The Fund's current fundamental investment restrictions concerning
investment in securities of issuers in operation for less than three years and
other state required restrictions provides that:
"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."
Subject to shareholder approval, the Trustees intend to reclassify
these restrictions as non-fundamental.
REASONS FOR THE PROPOSAL. The reclassification of these investment restrictions
as non-fundamental would not change the way in which the Fund's assets are
currently invested. However, the reclassification of
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<PAGE>
the restrictions as non-fundamental would allow changes to be made by the
Trustees rather than by shareholder vote, thereby allowing the Fund more
flexibility to respond to changes in financial markets and regulatory and other
developments.
I. ELIMINATION OF THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION CONCERNING
INVESTMENT BY AFFILIATES
The Fund's current fundamental investment restriction concerning
investment by affiliates provides that:
"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 taken together own beneficially more than 5% of such
securities taken at market value."
Subject to shareholder approval, the Trustees intend to eliminate this
fundamental restriction.
REASONS FOR THE PROPOSAL. The elimination of this restriction will allow the
Fund greater flexibility in choosing future investments and relieve the Fund
from the burdens of monitoring compliance with this restriction. This
restriction was previously required under certain state securities laws. Recent
regulatory changes have eliminated the requirements that this fundamental
investment restriction was intended to address.
THE BOARD OF THE TRUST, INCLUDING A MAJORITY OF THE INDEPENDENT TRUSTEES,
RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE RECLASSIFICATION, MODIFICATION
AND/OR ELIMINATION OF THE FUND'S FUNDAMENTAL POLICIES AS DESCRIBED ABOVE. IF THE
PROPOSAL IS APPROVED BY SHAREHOLDERS, THE NEW FUNDAMENTAL AND NON-FUNDAMENTAL
INVESTMENT RESTRICTIONS WILL BECOME EFFECTIVE ON OR ABOUT APRIL 28, 1998. IF THE
PROPOSAL IS NOT APPROVED, THE CURRENT FUNDAMENTAL RESTRICTIONS OF THE FUND WILL
REMAIN UNCHANGED.
PROPOSAL 4
OTHER MATTERS
The Trustees do not know of any matters to be presented at the Meeting
other than those set forth in this Proxy Statement. If any other business should
come before the Meeting, the persons named in the accompanying proxy will vote
thereon in accordance with their best judgment.
ADDITIONAL INFORMATION
The Distributor. Lepercq, de Neuflize Securities Inc. is the
distributor of the Fund. Lepercq de Neuflize Securities Inc. has its principal
offices at 1675 Broadway, New York, New York 10019.
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<PAGE>
The Adviser. Lepercq de Neuflize & Co. Incorporated is the Adviser of
the Fund. The Adviser has its principal offices at 1675 Broadway, New York, New
York 10019.
The Administrator. Firstar Trust Company acts as administrator,
custodian, transfer agent, dividend paying agent and accounting services agent
to the Fund and performs certain administrative and internal accounting
services, including but not limited to, 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.
Submission of Proposals for the Next Meeting of the Fund. Under the
Fund's Trust Instrument and By-Laws, annual meetings of shareholders are not
required to be held unless necessary under the 1940 Act (for example, when fewer
than a majority of the Trustees have been elected by shareholders). Therefore,
the Fund does not hold shareholder meetings on an annual basis. A shareholder
proposal intended to be presented at any meeting hereafter called should be sent
to the Fund c/o Firstar Trust Company, Mutual Fund Services, P.O. Box 701
Milwaukee, Wisconsin 53201, and must be received by the Fund within a reasonable
time before the solicitation relating thereto is made in order to be included in
the notice or proxy statement related to such meeting. The submission by a
shareholder of a proposal for inclusion in a proxy statement does not guarantee
that it will be included. Shareholder proposals are subject to certain
regulations under federal securities law.
THE FUND WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT AND THE MOST
RECENT SEMI-ANNUAL REPORT SUCCEEDING THE ANNUAL REPORT, IF ANY, TO A SHAREHOLDER
UPON REQUEST. ANY SUCH REQUEST SHOULD BE DIRECTED TO THE FUND BY CALLING (800)
497-1411 OR BY WRITING TO THE FUND, 1675 BROADWAY, NEW YORK, NEW YORK 10019.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. IF YOU DO NOT EXPECT TO
ATTEND THE MEETING, PLEASE FILL IN, SIGN AND DATE YOUR PROXY CARD PROMPTLY AND
RETURN IT IN THE ENCLOSED ENVELOPE TO AVOID UNNECESSARY EXPENSE AND DELAY. NO
POSTAGE IS NECESSARY IF MAILED IN THE UNITED STATES.
March __, 1998
By Order of the Board of Trustees,
----------------------------
Stephen T. Murphy, Secretary
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<PAGE>
Preliminary Copy - Subject to Completion (Form of Proxy Card)
LEPERCQ-ISTEL TRUST
LEPERCQ-ISTEL FUND
PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES of the Lepercq-Istel
Trust (the "Trust"), on behalf of the Lepercq-Istel Fund (the "Fund"), for use
at a Special Meeting of Shareholders to be held at the offices of the Trust,
1675 Broadway, New York, New York, on April 27, 1998 at 10:00 a.m. Eastern time.
The undersigned hereby appoints Peter Hartnedy and Stephen T. Murphy,
and each of them, with full power of substitution, as proxies of the undersigned
to vote at the above-stated Special Meeting, and at all adjournments thereof,
all shares of beneficial interest of the Fund that are held of record by the
undersigned on the record date for the Special Meeting, upon the following
matters:
Please mark box in blue or black ink.
ITEM 1. Votes on Proposal to elect eight trustees to serve as members of the
Board of Trustees of the Trust. The nominees are: Stanley A. Deitch,
Bruno Desforges, Francois Letaconnoux, Jean-Louis Milin, Dr. Marvin
Schiller, Franz Skryanz, Marie-Monique Steckel and Dennis Tarzian.
FOR ALL
FOR WITHHOLD EXCEPT
[ ] [ ] [ ] TO WITHHOLD AUTHORITY
TO VOTE FOR ANY
INDIVIDUAL NOMINEE,
MARK THE "FOR ALL
EXCEPT" BOX, AND STRIKE
A LINE THROUGH THE
NOMINEE'S NAME IN THE
LIST ABOVE.
ITEM 2. Vote on Proposal to modify the Fund's investment objective.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
ITEM 3. Vote on Proposal to reclassify, modify or eliminate certain of the
Fund's fundamental investment restrictions.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
- --------------------------------------------------------------------------------
Every properly signed proxy will be voted in the manner specified
thereon and, in the absence of specification, will be treated as
GRANTING authority to vote to elect the slate of eight nominees to
serve as members of the Board of Trustees of the Trust and FOR
Proposals 2 and 3.
Receipt of a Combined Notice of Special Meeting and Proxy Statement is
hereby acknowledged.
PLEASE SIGN, DATE AND RETURN PROMPTLY.
------------------------------------------
Sign here exactly as name(s) appears hereon
------------------------------------------
Dated:________________________________, 1998
IMPORTANT: Joint owners must EACH sign. When
signing as attorney, executor, administrator, trustee,
guardian or corporate officer, please give your full title
as such.
