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Lepercq Istel Fund
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FIRST QUARTER REPORT
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March 31, 1999
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[LEPERCQ LOGO APPEARS HERE]
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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 accompanied by the currently
effective prospectus dated April 28, 1999.
Lepercq Istel Fund
May 5, 1999
Dear Shareholders:
In the table below is a report on the performance of your Fund for the
first quarter 1999 along with some relevant benchmark indices shown for
comparative purposes.
First Quarter
1999
Lepercq Istel Fund (1.66) %
Lipper Capital Appreciation Average 4.44 %
Lipper General Equity Average 0.93 %
Standard & Poors 500 4.98 %
Optimism has grown over the global economic picture. The U.S. economy
continues to perform robustly and the troubled economies of Asia and
Latin America appear to be gaining some traction. In the context of an
improvement in the global economic environment and a rebound in some
commodity prices, long term interest rates in the U.S. rose from 5.10%
to 5.63% during the first quarter.
With regard to the U.S. stock market, the first quarter saw a continuing
trend of market narrowness that prevailed in 1998. Just five stocks
accounted for half the gain of the S&P 500, while the S&P Midcap and S&P
Smallcap were down 6.4% and 9.0%, respectively.
Some of the key changes made by the Fund in the quarter included
reducing exposure to the software sector. Technology in general and
software in particular have been affected by uncertainty on spending
plans as business focuses on the Y2K problem. We have increased our
investment in communications, as this sector continues to enjoy strong
demand driven by the huge growth in internet usage. The focus of our
investments have been internet enablers such as equipment venders rather
than direct internet plays. We have also increased exposure to the more
economically sensitive sectors as the global economy continues to pick
up steam.
Thank you for your continued support.
Sincerely,
Tsering Ngudu Jerry Getsos
President and Portfolio Manager Executive Vice President and
Portfolio Manager
Past performance is not predictive of future performance
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Lepercq Istel Fund
Performance (Unaudited) for the three months ended March 31, 1999
Net Asset Value per Share, December 31, 1998 $19.91
Distribution during the Period: None
Net Asset Value per Share, March 31, 1999 $19.58
Total Return, Year to Date (1.66%)
Past performance is not predictive of future performance.
3
Lepercq Istel Fund
Schedule of Investments (Unaudited) as of March 31, 1999
Number of Market
Shares Value
COMMON STOCKS 92.3%
Banks 11.2%
40,000 Bank of New York $1,437,500
14,000 Chase Manhattan 1,138,375
30,000 U.S. Bancorp 1,021,875
3,597,750
Clothing 3.8%
60,000 Russell 1,207,500
Communications 13.0%
8,000 AT&T 638,500
15,000 Comverse Technology * 1,275,000
70,000 Loral Space & Communications* 1,010,625
17,000 Motorola 1,245,250
4,169,375
Computers/Information 4.0%
25,000 Compaq Computer 792,187
30,000 Silicon Graphics* 500,625
1,292,812
Drug Based Retailers 1.0%
5,000 McKesson HBOC 330,000
Energy/Pipelines 2.7%
125,000 Ocean Energy* 851,562
Industrial/Commercial
Services 2.7%
20,000 First Data 855,000
Insurance 1.9%
20,000 Conseco 617,500
Media/Broadcasting 4.5%
35,000 CBS 1,432,812
Medical Supplies 5.1%
25,000 Bausch & Lomb 1,625,000
Pharmaceuticals 4.9%
25,000 Pharmacia & Upjohn 1,559,375
Retailers 2.0%
46,000 Borders Group* 646,875
*Non income producing security.
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Lepercq Istel Fund
Schedule of Investments (Unaudited) as of March 31, 1999 (continued)
Number of Market
Shares Value
Software/Processing 16.8%
20,000 BMC Software* 741,250
30,000 Network Associates* 920,625
100,000 Novell* 2,518,750
40,000 Sterling Commerce* 1,230,000
5,410,625
Telephone 6.2%
15,000 Frontier Corporation 778,125
17,000 Qwest Communications 1,225,594
2,003,719
Common Stocks, International 12.5%
35,000 Imax* 682,500
90,000 MacMillan Bloedel 1,012,500
45,000 Newbridge Networks* 1,395,000
15,000 Northern Telecom 931,875
4,021,875
Total Common Stocks 29,621,780
RESTRICTED SECURITIES #
0.0%
38,020 WestFed Holdings, Class B, 1
Common*
128,290 WestFed Holdings, 15.50%, 1
Convertible Preferred*
Total Restricted Securities 2
Principal
Amount
U.S. TREASURY BILL 7.7%
$2,500,000 U.S. Treasury Bill, Due 2,489,439
5/6/99
VARIABLE RATE DEMAND NOTE
0.2%
81,442 Pitney Bowes Credit Corp. 81,442
Total Investments 100.2% 32,192,663
Liabilities Less Other (68,311)
Assets (0.2%)
NET ASSETS 100.0% $32,124,352
Net Asset Value Per Share $19.58
[Based on 1,641,050.658
shares outstanding]
*Non income producing security.
#The Westfed Holdings securities were acquired for a total cost of $2 in
conjunction with the Agreement on Transfer of Assets between Lepercq, de
Neuflize & Co. Incorporated and Pilgrim Management Corporation. As part
of the Agreement on Transfer, the Fund acquired net tax operating loss
carryforwards.
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Lepercq Istel Fund
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.
Stanley A. Deitch Principal, CPI Associates, Inc., Member,
American Institute of CPAs.
**Francois Letaconnoux Director, President and Chief Executive
Officer, Lepercq Inc., Lepercq, de Neuflize &
Co. Incorporated and Lepercq, de Neuflize
Securities Inc.
Jean Louis Milin Managing Director, Banque de Neuflize,
Schlumberger, Mallet
*Marvin Schiller, Ph.D. Director, Salant Corporation; Director, Tutor
Times Learning Systems, Inc.; General
Partner, Reprise Capital Corp.; Former
Managing Director, A.T. Kearney, Inc.
*Franz Skryanz Financial Consultant; prior thereto, Vice
President, Sutton & Edwards; prior thereto,
Treasurer and Chief Financial Officer,
Schenkers International
Marie Monique Steckel President, France Telecom North America;
Director, Microcard Technologies Inc.;
Director, GlobeCast North America Inc.;
Director, C&P Press, Inc.
Dennis Tarzian President and Chief Executive Officer, New
Century Education Corp.; Director, National
Registered Agents, Inc.; prior thereto, Vice
President and Chief Operating Officer,
Paramount Communications Business, Technical
and Professional Group.
* Member of Audit, Ethics and Nominating Committees
** Interested Trustee
Officers
Tsering Ngudu President
Jerry P. Getsos Executive Vice President
Peter Hartnedy Secretary and Treasurer
Investment Adviser Lepercq, de Neuflize & Co. Incorporated, New
York
Underwriter & Distributor Lepercq, de Neuflize Securities Inc., New York
Dividend Paying Agent, Firstar Mutual Fund Services, LLC
Transfer Agent, Administrator
and Accounting Services
Agent
Custodian Firstar Bank Milwaukee, N.A.
Legal Counsel Battle Fowler LLP, New York
Independent Auditors KPMG LLP, Wisconsin
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