Filed with the Securities and Exchange Commission on April 28, 1999
1933 Act Registration File No. 2-10841
1940 Act File No. 811-631
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 -x-
Pre-Effective Amendment No. ------------ ---
Post-Effective Amendment No. ---77---- -x-
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 -x-
Amendment No. ---24---- -x-
LEPERCQ-ISTEL TRUST
--------------------
(Exact Name of Registrant as Specified in Charter)
1675 Broadway, New York, New York 10019
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 698-0749
Andrew Hanson Copy to:
Tsering Ngudu William J. Renahan, Esq
Lepercq-Istel Trust Battle Fowler LLP
1675 Broadway 75 East 55th Street
New York, New York 10019 New York, NY 10022
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
--x-- immediately upon filing pursuant to paragraph (b)
----- on ---------------------------- pursuant to paragraph (b)
----- 60 days after filing pursuant to paragraph (a)(1)
----- on --------------------------- pursuant to paragraph (a)(1)
----- 75 days after filing pursuant to paragraph (a)(2)
----- on ---------------------------- pursuant to paragraph (a)(2) of Rule
485.
If appropriate, check the following box:
------This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
[LEPERCQ-ISTEL FUND LOGO]
LEPERCQ-ISTEL FUND
Providing long-term capital appreciation
PROSPECTUS
April 28, 1999
The Securities and Exchange Commission has not approved or disapproved these
securities or determined whether this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
1675 Broadway New York, New York 10019 1-800-497-1411
TABLE OF CONTENTS
THE FUND
Investment Objective and Strategy Overview 3
Main Risks 3
Who May Want to Invest 3
Past Performance (Bar Chart and Table) 4
Expenses 5
Investment Objective 6
Investment Strategy 6
Investment Risks 7
Management of the Fund 8
Distribution of Shares 9
YOUR ACCOUNT INFORMATION
Purchase of Fund Shares 9
Redemption of Fund Shares 11
Pricing of Fund Shares 13
Dividends and Capital Gain Distributions 13
Tax Matters 13
ADDITIONAL INFORMATION
Individual Retirement Accounts 14
Year 2000 Issue 15
Financial Highlights 16
Trustees and Officers 17
FOR MORE INFORMATION
The back cover tells you how to obtain more information about the fund.
INVESTMENT OBJECTIVE AND STRATEGY OVERVIEW
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The investment objective of the LEPERCQ-ISTEL FUND is long-term capital
appreciation. The fund seeks to achieve its goal by investing in common stock
of companies undergoing a transformation that might include a realignment of
business focus, re-engineering of business process, or entry into new markets
that provides an opportunity for capital appreciation. The investment adviser
purchases securities when, in its view, the positive changes taking place in a
company are not properly recognized by the stock market.
MAIN RISKS OF THE FUND
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O STOCK MARKET RISKS: Stock mutual funds are subject to stock market risks
and significant fluctuations in value. If the stock market declines in
value, the fund is likely to decline in value and you could lose money.
O STOCK SELECTION RISKS: The stocks selected by the investment adviser may
decline in value or not increase in value when the stock market in general
is rising.
O LIQUIDITY RISKS: The investment adviser may not be able to sell stocks at
an optimal time or price.
WHO MAY WANT TO INVEST IN THE FUND
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This fund may be appropriate for people who:
o wish to invest for the long term
o want to diversify their portfolios
o are willing to accept a degree of volatility and risk
This fund may not be appropriate for people who:
o wish to invest for a short term
PAST PERFORMANCE
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The bar chart and table below illustrate the variability of the fund's returns.
The bar chart indicates the risks of investing in the fund by showing the
changes in the fund's performance from year to year (on a calendar year basis).
The table shows how the fund's average annual returns for one-year, five-year
and ten-year periods ending December 31, 1998 compare with the S&P 500 Index.
LERPERCQ-ISTEL FUND
CALENDAR YEAR RETURNS (AS OF 12/31)
1989 21.7%
1990 -6.6%
1991 17.0%
1992 5.3%
1993 13.5%
1994 -5.1%
1995 27.1%
1996 26.3%
1997 9.0%
1998 15.4%
BEST QUARTER: Q4 1998 28.5%
WORST QUARTER: Q3 1998 (20.6)%
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Average annual total return
through 12/31/98 1 Year 5 Year 10 Year
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Leperq-Istel Fund 15.4% 13.9% 11.8%
S&P 500 Index 28.6% 24.1% 19.2%
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The fund's past performance is not necessarily an indication of how the fund
will perform in the future.
The S&P 500 Index is an unmanaged index of 500 domestic stocks created by
Standard & Poor's Corporation.
EXPENSES
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As an investor, you pay certain fees and expenses in connection with the fund.
These fees are described on the table below and further explained in the example
that follows.
FEE TABLE
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) None1<F1>
Maximum Deferred Sales Charge (Load)
(as a percentage of offering price) None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends None
Redemption Fee None1<F1>
Exchange Fee None
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)
Management Fees 0.75%
Distribution and Service (12b-1) Fees2<F2> 0.02%
Other Expenses 0.71%
-----
Total Annual Fund Operating Expenses 1.48%
-----
-----
1<F1> Although no sales loads or transaction fees are charged, you will be
assessed a $12.00 fee for outgoing wire transfers and a $25.00 fee for
returned checks.
2<F2> The amount shown for Rule 12b-1 fees indicates the actual Rule 12b-1 fees
the fund incurred for the fiscal year ended December 31, 1998. Under the
fund's Rule 12b-1 Plan, the maximum fee the fund may incur for annual
sales and distribution expenses is 0.75%. However, the fund has
voluntarily capped the amount paid under the plan to 0.10% per year of
the fund's average daily net assets for the fiscal year ending December
31, 1999. Investors will be given 30 days' prior notice if the fund
decides to discontinue the cap.
EXPENSE EXAMPLE
The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes
that:
1. You invest $10,000 in the fund for the time periods indicated and then
redeem all of your shares at the end of those periods,
2. Your investment has a 5% return each year, and
3. The fund's operating expenses remain the same.
Although your actual costs may be higher or lower, based on these assumptions
your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- -------- --------
$151 $468 $808 $1,768
INVESTMENT OBJECTIVE
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The investment objective of the LEPERCQ-ISTEL FUND is long-term capital
appreciation.
INVESTMENT STRATEGY
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The fund seeks to achieve its goal by investing in common stock of companies
undergoing a transformation that the fund's investment adviser believes:
o has not been adequately recognized by the stock market, and
o provides an opportunity for capital appreciation.
Consistent with its strategy, the fund invests in companies, regardless of size
and market sector, while seeking capital appreciation opportunities. The
adviser's approach of investing in corporate transformations rests on the belief
that attractive returns are possible from the early recognition that changes
taking place in a corporation will be successful.
Examples of the kind of changes that might significantly improve the business
prospects of a company include refocusing a company around its core competencies
or re-engineering a company to improve its effectiveness. Because it is the
adviser's belief that the success of a company emanates from the abilities of
its top management, the adviser places a great deal of emphasis investigating
the qualifications of company management.
In pursuing its investment approach, the adviser is indifferent to whether the
investments adhere to either the growth or value style of investing. The
adviser purchases an investment when it believes that the positive changes in a
company are not properly recognized by the market and sells an investment when
it concludes that either the positive changes are adequately recognized or that
the outcome will be less attractive than previously expected.
While the majority of the fund's portfolio will be invested in common
stocks of the United States, the fund may invest a portion of its assets in
convertible securities, bonds and foreign securities. Convertible securities
are bonds or preferred stock that can be converted into common stock. Bonds
may be short-term or long-term debt securities. Foreign securities may be
purchased in the form of American Depositary Receipts.
Furthermore, to respond to adverse market, economic, political or other
conditions, the fund may invest up to 100% of its assets in U.S. and foreign
short-term money market instruments including repurchase agreements and cash.
To the extent the fund engages in this temporary, defensive strategy, the fund
may not achieve its investment objective.
INVESTMENT RISKS
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The following risks are specific to the fund in addition to the risks
mentioned in the Overview section.
SMALL AND MEDIUM COMPANIES RISKS: The fund may invest in the stocks of
small to medium-sized companies. Small and medium sized companies often have
narrower markets and more limited managerial and financial resources than
larger, more established companies. As a result, their performance can be more
volatile and they face greater risk of business failure, which could increase
the volatility of the fund's portfolios.
FOREIGN SECURITIES RISKS: The fund may invest in foreign securities, which
can carry higher returns, but involve more risks than those associated with
domestic investments. Additional risks include currency fluctuations, political
and economic instability, differences in financial reporting standards and less
stringent regulation of securities markets.
BOND RISKS: To the extent the fund invests in bonds, it will be exposed to
the risks of bond investing. A bond's market value is affected significantly by
changes in interest rates. Generally, when interest rates rise, the bond's
market value declines and when interest rates decline, the market value rises.
Also, the longer a bond's maturity, the greater the risk and the higher its
yield. Conversely, the shorter a bond's maturity, the lower the risk and the
lower its yield. A bond's value can also be affected by changes in the bond's
credit quality rating or its issuer's financial condition. Because bond values
fluctuate, the fund's share price fluctuates. So, when you sell your
investment, you may receive more or less money than you originally invested.
The Statement of Additional Information contains more information about the
fund and the type of securities in which it may invest.
MANAGEMENT OF THE FUND
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INVESTMENT ADVISER
The fund's investment adviser is Lepercq, de Neuflize & Co. Incorporated
located at 1675 Broadway, New York, New York 10019. Lepercq has served as
investment adviser to the fund and its predecessor, Istel Fund, Inc., since
1953. The investment decisions made by Lepercq are subject to direction of the
fund's board of trustees. (The Statement of Additional Information contains
more information about the board of trustees.) The adviser conducts investment
research and supervision for the fund and is responsible for the purchase and
sale of securities for the fund's portfolio. The adviser receives an annual fee
from the fund for its services equal to 0.75% of the fund's average daily net
assets.
Besides managing the fund, the adviser also manages portfolios for
individuals and various institutional clients. As of December 31, 1998, Lepercq
had approximately $405 million of assets under management.
PORTFOLIO MANAGER
Tsering Ngudu is the Senior Vice President to the adviser and has been with
the adviser since December 1985. Mr. Ngudu also serves as President and co-
manager to the fund. Mr. Ngudu is primarily responsible for the day-to-day
management of the fund's investment portfolio and has been managing the fund
since 1993. Mr. Ngudu also provides investment advice to other non-mutual fund
clients on a discretionary and non-discretionary basis depending on the advisory
contract with the client. Mr. Ngudu earned his Bachelor of Arts degree from
Dartmouth College in 1979 and his Masters of Business Administration from Pace
University in 1987.
Jerry P. Getsos is the Senior Vice President of the adviser. Mr. Getsos
also serves as Executive Vice President and co-manager to the fund. Together
with Mr. Ngudu, he is responsible for the day-to-day management of the fund's
investment portfolio. Prior to joining Leperq in 1996, Mr. Getsos was a
research analyst at Lexington Management Corporation. Mr. Getsos earned his
Masters of Business Administration and Bachelor of Science degrees from Fordham
University.
TRANSFER AGENT, DIVIDEND DISBURSEMENT AGENT, FUND ACCOUNTANT AND ADMINISTRATOR
Firstar Mutual Fund Services, LLC, located in Milwaukee, Wisconsin serves
as the fund's transfer agent and dividend paying agent. Firstar Mutual Fund
Services, LLC also serves as the fund's accountant and administrator. As such,
Firstar Mutual Fund Services, LLC provides shareholder services and accounting
services relating to the fund's portfolio transactions.
CUSTODIAN
Firstar Bank Milwaukee, N.A., an affiliate of Firstar Mutual Fund
Services, LLC, serves as the fund's custodian.
DISTRIBUTION OF SHARES
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DISTRIBUTOR
Lepercq, de Neuflize Securities Inc. is the distributor for the fund.
Lepercq, de Neuflize Securities Inc. is a wholly owned subsidiary of the adviser
and is a member of the New York Stock Exchange.
DISTRIBUTION PLAN
The fund has adopted a distribution plan under Rule 12b-1 of the
Investment Company Act of 1940. The distribution plan allows the fund to
finance activities that promote the sale of the fund's shares such as printing
prospectuses and reports and preparing and distributing advertising material and
sales literature. Rule 12b-1 fees are paid out of fund assets on an on-going
basis. Over time, these fees will increase the cost of your investment and may
cost you more than paying other types of sales charges.
Under the plan, the fund may incur distribution expenses of up to 0.75%
per year of its average daily net assets. However, the fund has voluntarily
capped the amount paid under the plan to 0.10% per year of its average daily net
assets. Furthermore, the fund will only make payments to the distributor for
expenses actually incurred. Expenses will not be carried over from year to
year. During the fiscal year ended December 31, 1998, the fund spent 0.02%
under the plan.
The Statement of Additional Information contains more information about
the distribution plan.
PURCHASE OF FUND SHARES
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MINIMUM INVESTMENT
$1,000
($500 FOR ugma, 401(k) Keogh, and oother pension & profit sharing
ADDITIONAL INVESTMENT
$100
You may purchase shares at the next determined net asset value after the
transfer agent receives your order. The fund does not apply any sales charges.
To purchase shares, you need to invest at least $1,000 initially. Investments
made under the Uniform Gift to Minor's Act, a 401(k) plan, a Keogh plan or some
other pension or profit sharing accounts need to invest only $500 to start.
Once you have an account with the fund, you may make additional investments in
amounts as low as $100. If you invested in the fund prior to May 1, 1997, the
fund has waived this minimum additional investment.
15
<TABLE>
PURCHASING SHARES: OPENING AN ACCOUNT: ADDING TO AN ACCOUNT:
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<S> <C> <C>
BY TELEPHONE
Call LEPERCQ-ISTEL FUND at 1-800-497-1411 to place Call LEPERCQ-ISTEL FUND at 1-800-497-1411 to
the order. (Note: For security reasons, requests place the order. (Note: For security reasons,
by telephone may be recorded.) requests by telephone may be recorded.)
- ------------------------------------------------------------------------------------------------------------------------------------
BY MAIL O Complete the purchase application form. O Make out a check for the investment amount
payable to LEPERCQ-ISTEL FUND.
O Make out a check for the investment amount payable
to LEPERCQ-ISTEL FUND. O Fill out the detachable investment slip
from an account statement. If you do not
O Send to: have a slip, include a note specifying the
Lepercq-Istel Fund fund name, your account number, and the
c/o Firstar Mutual Fund Services, LLC name(s) in which the account is
P.O. Box 701 registered.
Milwaukee, WI 53201-0701
Phone: (800) 497-1411
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BY OVERNIGHT OR O Complete the purchase application form. O Make check payable to LEPERCQ-ISTEL FUND.
EXPRESS MAIL
O Make check payable to LEPERCQ-ISTEL FUND. O Fill out the detachable investment slip
from an account statement. If you do not
O Send to: have a slip, include a note specifying the
Lepercq-Istel Fund fund name, your account number, and the
c/o Firstar Mutual Fund Services, LLC name(s) in which the account is
615 East Michigan Street registered.
Milwaukee, WI 53202
Phone: (800) 497-1411 O Send to:
Lepercq-Istel Fund
c/o Firstar Mutual Fund Services, LLC
615 East Michigan Street
Milwaukee, WI 53202
Phone: (800) 497-1411
- ------------------------------------------------------------------------------------------------------------------------------------
BY WIRE O Forward your application to LEPERCQ-ISTEL FUND O Call LEPERCQ-ISTEL FUND at 1-800-497-1411
at the address above. to notify of incoming wire.
O Call 1-800-497-1411 to obtain an account number. O Use the following instructions:
Firstar Bank, N.A.
O Wire funds using the instructions to the right. Milwaukee, WI 53202
ABA #: 075000022
Credit: Firstar Mutual Fund Services, LLC
Account #: 112-952-137
Further Credit:Lepercq-Istel Fund
(name/title on the account)
(account #)
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THROUGH YOUR BROKER You may purchase shares through your own broker, You may make additional purchases through your
but keep in mind that the broker may impose a own broker. Keep in mind that the broker may
service charge for his or her services. impose a service charge for his or her
services.
- ------------------------------------------------------------------------------------------------------------------------------------
THROUGH AUTOMATIC Open a fund account with one of the methods above. If you didn't set up an automatic investment
INVESTMENT PLAN Be sure to include your checking account number on plan with your original application, call
the appropriate section of your application. LEPERCQ-ISTEL FUND at 1-800-497-1411.
Additional investments (minimum of $50 per
period) will be taken automatically monthly,
bimonthly, quarterly or yearly from your
checking account.
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</TABLE>
NOTE: You will be charged a $25 fee for any check returned for insufficient
funds. Furthermore, the fund does not consider the U.S. Postal Service or other
independent delivery services to be its agents. Therefore, deposits in the mail
or with such services, or receipt at Firstar Mutual Fund Services, LLC's post
office box of purchase applications or redemption requests do not constitute
receipt by Firstar Mutual Fund Services, LLC or the fund.
RECEIPT OF ORDERS
Shares may only be purchased on days the New York Stock Exchange and the
Federal Reserve wire system are open for business. If you are paying with
federal funds (wire), your order will be considered received when Firstar Bank
receives the federal funds.
O the name of the fund
O the dollar amount of shares to be purchased
O purchase application or investment slip
O check payable to LEPERCQ - ISTEL FUND
TIMING OF REQUESTS
All requests received in good order by Firstar Mutual Fund Services, LLC before
4:00 p.m. (Eastern time) will be executed on that same day. Requests received
after 4:00 p.m. will be processed on the next business day.
REDEMPTION OF FUND SHARES
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WHEN REDEMPTION PROCEEDS ARE SENT TO YOU
When making a redemption request, make sure your request is in good order. "Good
order" means your letter of instruction includes:
O the name of the fund
O the number of shares or the dollar amount of shares to be redeemed
O signatures of all registered shareholders exactly as the shares are
registered
O the account registration number
You may redeem your shares at any time without a charge. Once the transfer
agent receives your redemption in good order, your request will be processed at
the next determined net asset value. If you purchase shares using a check and
request a redemption within 12 days after your purchase, the fund will honor the
redemption request, but will not mail the proceeds until your purchase check has
cleared (usually within 12 days).
All requests received in good order by the fund before 4:00 p.m. (Eastern
time), will normally be wired to the bank you indicate or mailed on the
following day to the address of record. In no event will proceeds be wired or a
check mailed more than 7 days after the fund receives a redemption request in
good order.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the fund may
mail you a notice if your account falls below $1,000 requesting that you bring
the account back up to $1,000 or close it out. If you do not respond to the
request within 30 days, the fund may close your account and send you the
proceeds.
TO SELL SOME OR ALL OF YOUR SHARES
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BY TELEPHONE Call LEPERCQ-ISTEL FUND at 1-800-497-1411 to redeem any
amount of shares. (Note: For security reasons, requests
by telephone may be recorded.)
BY MAIL Send a letter instructing the fund to redeem the amount
you wish. The letter should contain the fund's name, the
account number and the number of shares or the dollar
amount of shares to be redeemed. Be sure to have all
shareholders of record sign the letter. Signature
guarantees are required for any redemption in excess of
$50,000 or any redemption request payable to a person
other than the registered holder or sent to an address
other than an address of record.
BY WIRE Call LEPERCQ-ISTEL FUND at 1-800-497-1411 to request the
amount of money you want. Be sure to have all necessary
information from your bank. The transfer agent charges a
$12 wire fee. Your bank may also charge a fee to receive
wired funds.
THROUGH AUTOMATIC Call LEPERCQ-ISTEL FUND at 1-800-497-1411 or complete a
WITHDRAWAL PLAN Systematic Withdrawal Form to arrange for regular monthly,
quarterly or annually fixed withdrawal payments. You must
own shares having a total value of at least $10,000. The
minimum payment you may receive is $50 per period. Note
that this plan may deplete your investment and affect your
income or yield.
THROUGH YOUR BROKER You may redeem shares through your own broker, but keep in
mind that the broker may impose a service charge for his
or her services.
NOTE: If you hold fund shares in an Individual Retirement Account or other
retirement plan, you must indicate on your redemption request whether federal
income tax should be withheld by the fund. All IRA redemptions will be subject
to withholding tax unless you specifically instruct the fund not to withhold on
your redemption request.
PRICING OF FUND SHARES
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HOW NAV IS DETERMINED
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. The net
asset value is determined as of the close of business of the New York Stock
Exchange on each day that the Exchange is open. The fund does not determine net
asset value on the following days:
o days on which there is insufficient trading in its portfolio securities to
materially affect the net asset value
o days on which no shares are purchased or redeemed
o the following holidays:
o New Year's Day o Good Friday o Labor Day
o Martin Luther King, Jr.'s Day o Memorial Day o Thanksgiving Day
o Presidents' Day o Independence Day o Christmas Day
DIVIDENDS & CAPITAL GAIN DISTRIBUTIONS
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The fund declares and pays dividends from its net investment income and any
net realized capital gains at least annually. Dividends and capital gain
distributions will generally be paid in December.
Unless you elect to receive distributions in cash, all ordinary income
dividends and capital gain distributions will automatically be reinvested in
shares of the fund. All reinvestments will be made at the net asset value on
the reinvestment date and you will receive confirmation indicating the number of
full and fractional shares purchased. Distributions will be treated in the same
manner for federal income tax purposes whether you receive them in cash or they
are reinvested in additional shares of the fund.
TAX MATTERS
- --------------------------------------------------------------------------------
The fund intends to pay no federal income tax because it expects to meet certain
Internal Revenue Code requirements. The fund will provide you with detailed tax
information for reporting purposes. You should consult your own tax adviser
regarding tax consequences under federal, state and local laws.
Unless otherwise exempt, shareholders are required to pay federal income
tax on any dividends and other distributions received, including capital gain
distributions. This applies whether dividends and distributions are received in
the form of cash or additional shares. All dividends paid by the fund and
distributions of net realized short-term capital gains are taxable as ordinary
income. Distributions paid by the fund from net realized long-term capital
gains are taxable as a capital gain. The capital gain holding period and the
applicable tax rate is determined by the length of time that the fund has held
the security and not the length of time that you have held shares in the fund.
The fund expects that, because of its investment objective, distributions will
consist primarily of long and short-term capital gains.
In the case of corporate shareholders, a portion of these distributions
(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. Since the fund anticipates that it's investment
income will include interest and dividends from foreign corporations and since
the fund may have long-term capital gains, substantially less than 100% of
ordinary income dividends paid by the fund may qualify for the
dividends-received deduction.
You will recognize gain or loss upon sale of shares of the fund in an
amount equal to the difference between the proceeds of the sale and your
adjusted tax basis in shares. All or a portion of any loss recognized upon a
taxable disposition of shares of the fund may be disallowed if other shares of
the fund are purchased within thirty days before or after such disposition.
Under the backup withholding rules of the Internal Revenue Code, certain
shareholders may be subject to withholding of federal income tax on dividends
and redemption payments made by the fund. In order to avoid backup withholding,
you must provide the fund with a correct taxpayer identification number (which
for an individual is usually his/her Social Security number), or certify that
you are a corporation or otherwise exempt from or not subject to back up
withholding. The account application provides a place for you to indicate these
certification requirements.
In addition, you should consult with your tax adviser regarding the tax
consequences of investing in the fund. State and local taxes may differ from
the federal consequences described above.
INDIVIDUAL RETIREMENT ACCOUNTS
- --------------------------------------------------------------------------------
The fund offers Individual Retirement Accounts as well as various other
retirement plan accounts. To obtain the appropriate disclosure documentation
and more complete information on how to open a retirement account, call (800)
497-1411.
YEAR 2000 ISSUE
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Like other mutual funds, financial and business organizations and
individuals around the world, the fund could be adversely affected if the
computer systems used by the adviser, the administrator and other service
providers do not properly process and calculate date-related information and
data from and after January 1, 2000. This is commonly known as the "Year 2000
Issue." The investment adviser and the administrator are taking steps that they
believe are reasonably designed to address the Year 2000 Issue with respect to
computer systems that they use. The investment adviser and administrator are
also obtaining reasonable assurances that comparable steps are being taken by
the fund's other major service providers.
Although there can be no assurance at this time that there will be no
adverse impact on the fund, the fund's service providers have advised the fund
that they have been actively working on necessary changes to their computer
systems to prepare for the year 2000. The fund's service providers expect that
their systems, and those of other parties they deal with, will be adapted in
time for that event. However, there can be no assurance that the computer
systems of the companies in which the fund invests will be timely converted or
that the value of such investments will not be adversely affected by the Year
2000 Issue.
FINANCIAL HIGHLIGHTS
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The financial highlights table set forth below is intended to help you
understand the fund's financial performance for the past 5 years. Most of the
information reflects financial results with respect to a single fund share as of
each year end. The total returns in the table represent the rates an investor
would have earned (or lost) on an investment in the fund (assuming reinvestment
of all dividends and distributions). This information has been audited by KPMG
LLP, whose report, along with the fund's financial statements, is included in
the fund's annual report, which is available upon request.
<TABLE>
YEAR ENDED DECEMBER 31
-----------------------
PER SHARE DATA: 1998 1997 1996 1995 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $19.21 $19.03 $15.83 $13.17 $14.84
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
NET INVESTMENT INCOME (LOSS) (0.07)(1)<F4> (0.07)(1)<F4> (0.11)(1)<F4> 0.14(1)<F4> 0.18
NET GAIN OR LOSSES ON SECURITIES
(BOTH REALIZED AND UNREALIZED) 2.90 1.69 4.26 3.42 (0.93)
TOTAL FROM INVESTMENT OPERATIONS 2.83 1.62 4.15 3.56 (0.75)
LESS DISTRIBUTIONS:
DIVIDENDS (FROM NET INVESTMENT INCOME) --- --- --- (0.13) (0.18)
DIVIDENDS IN EXCESS OF NET
INVESTMENT INCOME --- --- --- --- (0.03)
DISTRIBUTIONS (FROM CAPITAL GAINS) (2.13) (1.44) (0.95) (0.77) (0.71)
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (2.13) (1.44) (0.95) (0.90) (0.92)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF YEAR $19.91 $19.21 $19.03 $15.83 $13.17
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN 15.4% 9.0% 26.3% 27.1% (5.1)%
RATIOS/SUPPLEMENTAL DATA
NET ASSETS (IN MILLIONS) END OF YEAR $32.8 $28.4 $24.2 $20.2 $18.5
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.48% 1.51% 1.65%(2)<F5> 1.50% 1.56%
RATIO OF NET INCOME (LOSS)
TO AVERAGE NET ASSETS (0.40)% (0.40)% (0.65)%(2)<F5> 0.89% 1.36%
PORTFOLIO TURNOVER RATE 83.06% 71.20% 54.13% 59.72% 70.66%
2
(1)<F4>Net investment income per share is calculated using ending balances prior to consideration or adjustment for permanent book
and tax differences.
(2)<F5>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)%.
</TABLE>
TRUSTEES AND OFFICERS
- --------------------------------------------------------------------------------
TRUSTEES
+<F8>Bruno Desforges Chairman of the Board, Lepercq-Istel Trust;
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.
+<F8>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
*<F7>Marvin Schiller, Ph.D. Director, Salant Corporation; Director, Tutor
Time Learning Systems, Inc.; General Partner,
Reprise Capital Corp.
*<F7>Franz Skryanz Financial Consultant
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.
*<F7>Member of Audit, Ethics and Nominating Committees
+<F8>Interested Trustees
OFFICERS
Tsering Ngudu President
Jerry Getsos Executive Vice President
Peter Hartnedy Controller, Treasurer and Secretary
Investment Adviser Lepercq, de Neuflize & Co. Incorporated, New
York
Underwriter and Lepercq, de Neuflize Securities Inc., New
Distributor York
Transfer Agent, Firstar Mutual Fund Services, LLC,
Dividend Paying Milwaukee
Agent, Fund
Accountant,
Administrator
Custodian Firstar Bank Milwaukee, N.A., Milwaukee
Legal Counsel Battle Fowler LLP, New York
Independent Auditors KPMG LLP, Milwaukee
LEPERCQ-ISTEL FUND
FOR MORE INFORMATION
- --------------------------------------------------------------------------------
YOU MAY OBTAIN THE FOLLOWING AND OTHER INFORMATION ON THE LEPERCQ-ISTEL FUND
FREE OF CHARGE:
O ANNUAL AND SEMI-ANNUAL REPORTS TO SHAREHOLDERS
The annual and semi-annual reports provide the fund's most recent financial
reports and portfolio listings. The annual report contains a discussion of
the market conditions and investment strategies that affected the fund's
performance during the last fiscal year.
O STATEMENT OF ADDITIONAL INFORMATION (SAI) DATED APRIL 28, 1999
The SAI is incorporated into this prospectus by reference (i.e., legally
made a part of this prospectus). The SAI provides more details about the
fund's policies and management.
TO RECEIVE ANY OF THESE DOCUMENTS:
- -----------------------------------
BY TELEPHONE:
1-800-497-1411
BY MAIL:
Lepercq-Istel Fund
c/o Firstar Mutual Fund Services, LLC
P.O. Box 701
Milwaukee, Wisconsin 53201-0701
ON THE INTERNET
Text only versions of fund documents can be viewed online or downloaded from:
HTTP://WWW.SEC.GOV
- ------------------
FROM THE SEC:
You may review and obtain copies of fund information (including the SAI) at the
SEC Public Reference Room in Washington, D.C. Please call 1-800-SEC-0330 for
information relating to the operation of the Public Reference Room. Copies of
the information may be obtained for a fee by writing the Public Reference
Section, Securities and Exchange Commission, Washington, D.C. 20549-6009.
Investment Company Act File # 811-631
LEPERCQ-ISTEL FUND
A SERIES OF LEPERCQ-ISTEL TRUST
STATEMENT OF ADDITIONAL INFORMATION
April 28, 1999
This Statement of Additional Information is not a Prospectus and should be read
together with the Prospectus of the Lepercq-Istel Fund dated April 28, 1999. To
receive a copy of the Prospectus, write to Lepercq-Istel Fund or call 1-800-497-
1411 or (212) 698-0749.
The Fund's audited financial statements for the fiscal year ended December 31,
1998 are incorporated by reference to the Fund's 1998 Annual Report.
LEPERCQ-ISTEL FUND
C/O FIRSTAR MUTUAL FUND SERVICES, LLC
P.O. BOX 701
MILWAUKEE, WISCONSIN 53201-0701
TABLE OF CONTENTS
GENERAL INFORMATION AND HISTORY............................3
CLASSIFICATION OF THE FUND.................................5
INVESTMENT OBJECTIVE AND POLICIES..........................5
INVESTMENT RESTRICTIONS....................................7
TEMPORARY DEFENSIVE POSITION...............................9
PORTFOLIO TURNOVER.........................................9
MANAGEMENT OF THE TRUST...................................10
CONTROL PERSONS AND PRINCIPAL SHAREHOLDERS................13
THE INVESTMENT ADVISER....................................13
SHAREHOLDER SERVICING PLAN................................14
ADMINISTRATIVE SERVICES...................................15
FUND ACCOUNTING SERVICES..................................15
CUSTODIAN.................................................15
DISTRIBUTION PLAN.........................................16
THE DISTRIBUTOR...........................................17
BROKERAGE COMMISSIONS.....................................17
PURCHASE OF SHARES........................................18
REDEMPTION OF SHARES......................................19
HOW NET ASSET VALUE IS COMPUTED...........................19
TAX INFORMATION...........................................20
PERFORMANCE INFORMATION...................................25
PERFORMANCE COMPARISONS...................................26
CODE OF ETHICS............................................26
INDEPENDENT ACCOUNTANTS...................................26
FINANCIAL STATEMENTS......................................27
LEPERCQ-ISTEL FUND
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.
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,
non-assessable 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. 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.
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 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. 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.
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.
The Fund pays its own expenses including, without limitation:
O its investment management fee;
O interest, taxes and brokerage commissions;
O extraordinary expenses, including but not limited to legal claims and
liabilities and litigation costs and any indemnification related
thereto;
O 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;
O all fees payable by the Fund to federal, state or other government
agencies;
O 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);
O 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;
O all expenses of shareholders' and Trustees' meetings and of preparing,
printing and mailing of proxy statements and reports to shareholders;
O 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;
O any distribution fee up to the maximum aggregate rate of 0.75% per
annum of the Fund's average daily net assets payable by the Fund under
its Rule 12b-1 Plan of Distribution;
O any shareholder service fee up to the maximum aggregate rate of 0.25%
per annum of the Fund's average daily net assets payable by the Fund
under its Shareholder Servicing Plan;
O expenses of legal counsel and of independent public accountants in
connection with any matter relating to the Fund;
O 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
O 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.
CLASSIFICATION OF THE FUND
- -------------------------------------------------------------------------------
Lepercq-Istel Trust (the "Trust") is a diversified, open-end management
investment company (or mutual fund) organized into one series: Lepercq-Istel
Fund (the "Fund").
INVESTMENT OBJECTIVE AND POLICIES
- -------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
As described in the Fund's Prospectus, the investment objective of the Fund
is long-term capital appreciation. There is no assurance that the Fund's
investment objective will be achieved. Investment in the Fund does not
constitute a complete investment program.
INVESTMENT TECHNIQUES
Writing Covered Call Option Contracts. 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 on or at any time prior to the stated expiration date of
the option. By writing 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 to the
expiration of the option that 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.
Only call options that 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 received 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. 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.
Variable Rate Demand Notes. The Fund may invest in variable rate master
--------------------------
demand notes. Variable rate master demand notes are notes issued by
corporations to finance their current operations. Master demand notes are
direct lending arrangements between the Fund and the corporation. There is no
secondary market for the notes, but the Fund may demand payment of the principal
of the instrument at any time.
Lending Portfolio Securities. To a limited extent, the Fund may lend its
----------------------------
portfolio securities to broker-dealers and other financial institutions,
provided it receives cash collateral which at all times is maintained in an
amount equal to at least 100% of the current market value of the securities
loaned. By lending its portfolio securities, the Fund can increase its income
through the investment of the cash collateral. From time to time, the Fund may
return to the borrower or a third party which is unaffiliated with the Fund, and
which is acting as a "placing broker," a part of the interest earned from the
investment of collateral received for securities loaned. The Fund's loans will
not exceed 33 1/3% of the Fund's total assets.
The Securities and Exchange Commission currently requires that the
following conditions must be met whenever portfolio securities are loaned:
(1) the Fund must receive at least 100% cash collateral from the
borrower;
(2) the borrower must increase such collateral whenever the market
value of the securities rises above the level of such collateral;
(3) the Fund must be able to terminate the loan at any time;
(4) the Fund must receive reasonable interest on the loan, as well as
any dividends, interest or other distributions payable on the
loaned securities, and any increase in market value;
(5) the Fund may pay only reasonable custodian fees in connection with
the loan; and
(6) while voting rights on the loaned securities may pass to the
borrower, the Fund's Board of Trustees must terminate the loan and
regain the right to vote the securities if a material event
adversely affecting the investment occurs. These conditions are
subject to future modification.
Warrants. The Fund may also invest up to 10% of its total assets in
--------
rights or warrants to subscribe for or purchase common stock. Warrants are
basically options to purchase common stock at a specific price (usually at a
premium above the market value of the optioned common stock at issuance) valid
for a specific period of time. Warrants may have a life ranging from less than
a year to twenty years or may be perpetual. However, most warrants have
expiration dates after which they are worthless. In addition, if the market
price of the common stock does not exceed the warrant's exercise price during
the life of the warrant, the warrant will expire as worthless. Warrants have no
voting rights, pay no dividends, and have no rights with respect to the assets
of the corporation issuing them. The percentage increase or decrease in the
market price of the warrant may tend to be greater than the percentage increase
or decrease in the market price of the optioned common stock. Warrants required
in units or attached to securities may be deemed to be without value for
purposes of this policy.
Foreign Issuers. The Fund may invest up to 20% of its total assets in
---------------
securities of foreign issuers with the consistent with its investment objective.
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 judgment of the adviser,
an established public trading market exists for those securities.
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.
Other Risks. In seeking capital appreciation, investors should be aware
-----------
that investments in small and medium capitalization issuers carry more risks
than investments in issuers with market capitalization greater than $1 billion.
Generally, such companies rely on limited product lines, financial resources and
business activities that may make them more susceptible to setbacks or
downturns. In addition, the stock of such companies may be more thinly traded.
Accordingly, the performance of small and medium capitalization issuers may be
more volatile.
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 than 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 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. Lending Securities. 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.
2. Investing in Real Estate, Commodities or Commodity Contracts. The Fund
------------------------------------------------------------
will not buy or sell real estate, commodities, or commodity contracts,
except the Fund may purchase or sell futures or options on futures.
3. Diversification of Investments. The Fund will maintain a diversification
------------------------------
of investments among industries. Consistent with this policy, the Fund
will not invest more than 25% of it assets in any one industry. 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.
4. Senior Securities. The Fund will not issue senior securities.
-----------------
5. Borrowing Money. 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.
The following restrictions are non-fundamental and may be changed by the Fund's
Board of Trustees:
1. Short-Selling. The Fund will not sell securities short.
-------------
2. Other Investment Companies. The Fund may purchase securities of other
--------------------------
investment companies. Pursuant to the 1940 Act, the Fund will limit its
investment in other investment companies to:
O no more than 3% of the total outstanding voting stock of any
investment company,
O no more than 5% of their total assets in any one investment company,
O no more than 10% of their total assets in investment companies in
general.
3. The Fund will not purchase or acquire any security issued by a registered
closed-end investment company if immediately after the purchase or
acquisition 10% or more of the voting securities of the closed-end
investment company would be owned by the Fund and other investment
companies having the same adviser and companies controlled by these
investment companies. The Fund will purchase securities of closed-end
investment companies only in open market transactions involving only
customary broker's commissions. However, these limitations are not
applicable if the securities are acquired in a merger, consolidation,
reorganization, or acquisition of assets. It should be noted that
investment companies incur certain expenses, such as management fees, and,
therefore, any investment by the fund in these securities would be subject
to duplicate expenses.
4. Purchasing for Exercise and Control. The Fund will not purchase securities
-----------------------------------
for the purpose of exercising control or management of any issuer.
5. Investing in New Issuers. 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.
6. Restricted and Illiquid Securities The fundamental policies of the Fund do
----------------------------------
not restrict the acquisition of securities that 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 its 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.
7. Oil, Gas or Mineral Exploration. The Trustees have determined as a matter
--------------------------------
of policy that the Fund will not invest in interests in oil, gas or other
mineral exploration or development programs.
8. Puts and Calls. The Fund will not invest in puts, calls, straddles,
---------------
spreads or any combinations thereof, except as otherwise set forth in the
Fund's Prospectus.
9. Writing Covered Call Options. As a matter of policy, 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.
TEMPORARY DEFENSIVE POSITION
For temporary defensive purposes (up to 100% of total assets) and to maintain
liquidity (up to 35% of total assets), the fund may invest in U.S. and
foreign short-term money market instruments including:
O commercial paper;
O obligations of the U.S. government or its agencies or
instrumentalities;
O repurchase agreements; and
O other short-term instruments.
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, 1998, and 1997 were
as follows:
DECEMBER 31, 1998 DECEMBER 31, 1997
----------------- -----------------
83.06% 71.20%
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).
MANAGEMENT OF THE TRUST
- -------------------------------------------------------------------------------
The Trust is managed by its officers and a Board of Trustees. The Board of
Trustees consists of eight individuals, six of whom are not "interested persons"
of the Trust as that term is defined in the 1940 Act. The Trustees are
fiduciaries for the Fund's shareholders and are governed by the laws of the
State of Massachusetts in this regard. The Trust compensates all Trustees
except for its interested trustees: Francois Letaconnoux and Bruno Desforges.
The Trustees and Officers of the Trust, their addresses, ages and their
principal occupations for the last five years are set forth below.
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
POSITION(S) HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS AGE WITH REGISTRANT DURING PAST 5 YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
*<F11>Bruno Desforges 72 Trustee and Chairman of the Board Managing Director, Lepercq, de Neuflize & Co
1675 Broadway Incorporated; Director and Chairman of the
New York, New York 10019. Board, Lepercq, de Neuflize Securities Inc.
since 1981.
- ------------------------------------------------------------------------------------------------------------------------------------
Stanley A. Deitch 53 Trustee Principal, CPI Associates, Inc., from 1991 to
1675 Broadway present; Member, American Institute of CPAs.
New York, New York 10019
- ------------------------------------------------------------------------------------------------------------------------------------
*<F11>Francois Letaconnoux 47 Trustee Director, President and Chief Executive Co.
1675 Broadway Officer, Lepercq Inc., Lepercq, de Neuflize &
New York, New York 10019 Incorporated and Lepercq, de Neuflize
Securities Inc. since 1993.
- ------------------------------------------------------------------------------------------------------------------------------------
Jean-Louis Milin 52 Trustee Managing Director, Banque de Neuflize,
3 Avenue Hoche Schlumberger, Mallet. since 1994.
75008 Paris, France
- ------------------------------------------------------------------------------------------------------------------------------------
Marvin Schiller, Ph.D. 64 Trustee Retired; Former Managing Director, A.T.
17319 St. James Court Kearney, Inc. from 1990 to 1997.
Boca Raton, Florida 33496
- ------------------------------------------------------------------------------------------------------------------------------------
Franz Skryanz 60 Trustee Financial Consultant from 1991 to present;
30 East 81st Street Vice President, Sutton & Edwards from 1991 to
New York, New York 10028 1991; Treasurer and Chief Financial Officer,
Schenkers International from 1990 to 1991.
- ------------------------------------------------------------------------------------------------------------------------------------
Jerry Getsos 36 Executive Vice President Senior Vice President of Lepercq, de Neuflize &
1675 Broadway Co. Incorporated from 1996 to present; Research
New York, New York 10019 Analyst at Lexington Management Corporation
from 1987 to 1995.
- ------------------------------------------------------------------------------------------------------------------------------------
*<F11> Peter Hartnedy 48 Treasurer and Secretary Senior Vice President, Treasurer and
1675 Broadway Secretary, Lepercq, de Neuflize & Co.
New York, New York 10019 Incorporated; Director, Vice President,
Treasurer and Secretary, Lepercq, de Neuflize
Securities Inc.; Treasurer and Secretary,
Lepercq Inc. since 1983.
- ------------------------------------------------------------------------------------------------------------------------------------
*<F11>Tsering Ngudu 42 President Senior Vice President, Lepercq, de Neuflize &
1675 Broadway Co. Incorporated since 1989; Executive Vice
New York, New York 10019 President and Director, Lepercq, de Neuflize
Securities Inc. from 1989.
- ------------------------------------------------------------------------------------------------------------------------------------
Dennis Tarzian 47 Trustee President and Chief Executive Officer, New
1675 Broadway Century Education Corp. since 1996; Vice
New York, New York 10019 President and Chief Operating Officer,
Paramount Communications Business, Technical
and Professional Group from 1987 to 1996.
- ------------------------------------------------------------------------------------------------------------------------------------
Marie-Monique Steckel 58 Trustee President, France Telecom North America since
1675 Broadway 1979.
New York, New York 10019
- ------------------------------------------------------------------------------------------------------------------------------------
*<F11>Deemed to be interested person (as defined by the 1940 Act) of the Trust.
</TABLE>
COMPENSATION
The following table indicates the compensation received by each Trustee
from the Trust for the 12-month period ended December 31, 1998.
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
NAME AND POSITION AGGREGATE PENSION OR ESTIMATED ANNUAL TOTAL COMPENSATION
COMPENSATION RETIREMENT BENEFITS BENEFITS UPON FROM FUND AND FUND
FROM TRUST (1)<F13> ACCRUED AS PART OF RETIREMENT COMPLEX PAID TO
FUND EXPENSES TRUSTEES (1)<F13>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
*<F12>Bruno Desforges, Trustee None None None None
Stanley A. Deitch, Trustee $2,250 None None $2,250
*<F12>Francois Letaconnoux, Trustee None None None None
Jean-Louis Milin, Trustee $2,250 None None $2,250
Dennis Tarzian, Trustee $1,500 None None $1,500
Marvin Schiller, Ph.D.
Trustee $3,375 None None $3,375
Franz Skryanz,
Trustee $3,375 None None $3,375
Marie-Monique Steckel, Trustee $1,500 None None $1,500
</TABLE>
*<F12> Deemed to be interested person (as defined by the 1940 Act) of the
Trust.
(1)<F13>Compensation does not include reimbursement for travel expenses.
CONTROL PERSONS AND PRINCIPAL SHAREHOLDERS
- --------------------------------------------------------------------------------
As of March 31, 1999, the following shareholders owned, directly or
indirectly, 5% or more of the outstanding shares of the Fund:
Name and Address Percent of Fund Shares Outstanding
- ---------------- ----------------------------------
Morgan Stanley & Co., Inc. 38.37%
Special Custody Account
for the Exclusive Benefit
of Customers
Attn: Steven Singer/Mutual Funds
1 Pierrepont Plaza, Suite 10
Brooklyn, New York 11201-2776
Warburg Dillon Read LLC 7.91%
Ansbacher, Bahamas Ltd.
677 Washington Boulevard
Stamford, CT 06901-3793
A shareholder who beneficially owns, directly or indirectly, more than 25%
of the Portfolio's voting securities may be deemed a "control person" (as
defined in the 1940 Act) of the Fund.
MANAGEMENT OWNERSHIP
As of December 31, 1998, the Trustees and officers of the Fund, as a group,
owned 1.62% of outstanding shares of the Fund.
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.
Either party may terminate the Investment Advisory Agreement on 60 days'
notice without penalty. The Agreement 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 Agreement terminates
automatically if assigned and can be amended only by a vote of a majority of the
outstanding voting securities of the Fund. The Board of Trustees approved the
continuance of the Investment Advisory Agreement at a Board of Trustees' Meeting
held on February 10, 1999.
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. The expenses relating to other services are borne by
the Fund. Other services include:
O fees and expenses of non-interested Trustees;
O fees and expenses of legal counsel and independent accountants; and
O fees and expenses involved in the registering and maintaining registration of
O the Fund's shares under state securities laws.
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.
The Investment Adviser makes investment decisions for the Fund. These
investment-advisory decisions are reviewed regularly by the Trustees. For its
services, the Adviser receives an annual investment advisory fee from the Fund
as described in the Prospectus. For the fiscal years ended December 31, 1998,
1997 and 1996, the Adviser earned and was paid the following amounts, unless
some portion of the fee was waived as indicated in the parenthesis:
- --------------------------------------------------------------------------------
1998 1997 1996 (WAIVED AMOUNT)
- --------------------------------------------------------------------------------
$227,951 $186,157 $166,414 ($13,000)
- --------------------------------------------------------------------------------
The Investment Adviser also acts as investment adviser to clients other
than investment companies under discretionary and non-discretionary advisory
contracts covering net assets as of December 31, 1998, totaling approximately
$405 million. Investment decisions for the Fund are made independently from
those for other clients that 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 the investment clients is considered at
or 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 that
it seeks to purchase or sell.
The adviser is wholly owned by Lepercq Inc., a holding company owned by
several entites.
SHAREHOLDER SERVICING PLAN
- --------------------------------------------------------------------------------
The Fund has adopted a Shareholder Servicing Plan that was approved by the
Trustees on February 10, 1999. In accordance with the Shareholder Servicing
Plan, the Fund may enter into Shareholder Service Agreements under which it pays
fees of up to 0.25% of the average daily net assets for fees incurred in
connection with the personal service and maintenance of accounts holding the
shares of the Fund. Such agreements are entered into between the Trust and
various shareholder servicing agents, including the Distributor and its
affiliates, and other financial institutions and securities brokers (each, a
"Shareholder Servicing Agent"). Among the services provided by Shareholder
Servicing Agents are:
O answering customer inquiries regarding account matters;
O assisting shareholders in designating and changing various account
options;
O aggregating and processing purchase and redemption orders and
transmitting and receiving funds for shareholder orders;
O transmitting, on behalf of the Trust, proxy statements, Prospectuses
and shareholder reports to shareholders and tabulating proxies;
O processing dividend payments and providing sub-accounting services for
Fund shares held beneficially; and
O providing such other services as the Trust or a shareholder may
request.
Shareholder Servicing Agents may periodically waive all or a portion of
their respective shareholder servicing fees.
ADMINISTRATIVE SERVICES
- --------------------------------------------------------------------------------
Firstar Mutual Fund Services, LLC, 615 East Michigan Street, Milwaukee,
Wisconsin 53201-0701 ("Firstar"), provides administrative personnel and services
to the Fund. Firstar provides services such as legal compliance and accounting
services. Firstar provides these services at an minimum annual fee of $35,000.
Firstar charges the Fund an annual fee of 0.05% of the average daily net assets
on the first $100 million, 0.04% on the next $400 million, and 0.03% on the
balance. Over the last three fiscal years the Trust on behalf of the Fund paid
the following amount in administrative fees:
- --------------------------------------------------------------------------------
1998 1997 1996
- --------------------------------------------------------------------------------
$31,426 $28,377 $23,779
- --------------------------------------------------------------------------------
The administrative services include, but are not limited to, providing office
space, equipment, telephone facilities, various personnel, including clerical
and supervisory, and computers, as is necessary or beneficial to provide
compliance and accounting services to the Fund.
FUND ACCOUNTING SERVICES
Firstar Mutual Fund Services, LLC, 615 East Michigan Street, Milwaukee,
Wisconsin 53201-0701 ("Firstar"), provides fund accounting personnel and
services to the Fund pursuant to a Fund Accounting Service Agreement. Under the
agreement, Firstar has agreed to maintain the financial accounts and records of
the Fund and provide other accounting services to the Fund. Firstar provides
these services at an annual rate of $22,000 for the first $400 million, 0.01% of
the average daily net assets of the fund on the next $200 million, and 0.005% on
the balance. Firstar is also entitled to certain out of pocket expenses,
including pricing expenses. Over the last three fiscal years the Trust on
behalf of the Fund paid the following amount in fund accounting fees:
- --------------------------------------------------------------------------------
1998 1997 1996
- --------------------------------------------------------------------------------
$23,250 $24,896 $20,759
- --------------------------------------------------------------------------------
CUSTODIAN
- --------------------------------------------------------------------------------
Firstar Bank Milwaukee, N.A. is custodian for the securities and cash of
the Fund. Under the Custodian Agreement, Firstar Bank holds the Fund's
portfolio securities in safekeeping and keeps all necessary records and
documents relating to its duties. The custodian receives an annual fee equal to
0.02% of the Fund's average daily net assets.
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 February 10, 1999.
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 0.75% 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. The Fund has
voluntarily capped the amount paid under the Plan to 0.10% per year of its
average daily net assets. No officer or Trustee has any substantial interest in
the Plan except to the extent the Distributor will be reimbursed for expenses it
might otherwise have been required to pay pursuant to its Distribution Agreement
with the Fund. Listed below are the itemized expenses the Fund paid for the
fiscal year ended December 31, 1998.
- --------------------------------------------------------------------------------
Advertising $ 0
Printing and mailing of Prospectuses
to other than current shareholders $ 600
Compensation to underwriters $ 0
Compensation to broker-dealers $ 0
Interest, carrying or other financing charges $ 0
Other $ 0
-------------
Total $ 600
- --------------------------------------------------------------------------------
With the exception of Lepercq, de Neuflize & Co. Incorporated, in its
capacity as the Fund's investment adviser, and Lepercq, de Neuflize Securities
Inc., in its capacity as distributor of the Fund's shares, no "interested
person" of the Fund, as defined in the 1940 Act, and no trustee of the Fund who
is not an "interested person" has or had a direct or indirect financial interest
in the Plan or any related agreement.
The Fund's Plan may be continued from year to year 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.
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 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.
Either party may terminate this Distribution Agreement on 60 days notice
without penalty. The Agreement 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 Agreement terminates automatically if
assigned and can be amended only by a vote of a majority of the outstanding
voting securities of the Fund. The Trustees approved the continuation of the
Agreement on at a Board of Trustees Meeting held on February 10, 1999.
The Distributor promotes and sells shares of the Fund as well as purchases
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.
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, the broker or
dealer may charge a service fee for services rendered to the purchaser.
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, Managing Director; Francois
Letaconnoux, President and Director; Peter Hartnedy, Vice President, Treasurer,
Secretary and Director; and Tsering Ngudu, Executive Vice President and
Director. Some of the officers of the Distributor are also officers of the
Trust.
BROKERAGE COMMISSIONS
- --------------------------------------------------------------------------------
When buying and selling securities for the Fund's portfolio, the Adviser
uses brokers to complete the transactions. Brokers receive certain commissions
for performing the transactions. Lepercq, de Neuflize Securities Inc. completes
many of the brokerage transactions and receives commissions accordingly. The
brokerage commissions the Fund paid for the fiscal years ended December 31,
1996, 1997 and 1998, are listed below. The percentage amounts received by
Lepercq, de Neuflize Securities Inc. of the total commissions paid is also shown
on the table.
- --------------------------------------------------------------------------------
BROKER 1998 % 1997 % 1996 %
- --------------------------------------------------------------------------------
Lepercq, de Neuflize
Securities Inc. $10,173 22% $15,950 32% $ 1,764 3%
Other brokers $36,660 78% $34,334 68% $50,444 97%
Total Commissions Paid $46,833 100% $50,284 100% $52,508 100%
- --------------------------------------------------------------------------------
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 1998, the Fund allocated 78% 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
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.
PURCHASE OF SHARES
- --------------------------------------------------------------------------------
PURCHASE CONFIRMATIONS
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.
CERTIFICATES
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 can be
lost or stolen and 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.
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 the Securities and Exchange Commission has by order
permitted such suspension.
LARGE REDEMPTIONS
The Fund has elected to be governed by Rule 18f-1 of the Investment
Company Act of 1940, as amended, 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.
SIGNATURE GUARANTEES
When redeeming shares in excess of $50,000, shareholder signatures must be
Medallion guaranteed. Medallion guarantees are available from a commercial
bank, which is a member of 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.
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 Firstar Mutual Fund Services, LLC. A Systematic Withdrawal Plan may
also be terminated by the Fund, the Distributor or Firstar Mutual Fund Services,
LLC, upon 30 days written notice to the shareholder.
HOW NET ASSET VALUE IS COMPUTED
- --------------------------------------------------------------------------------
The Fund will determine the net asset value of its shares once daily as of
the close of trading on the New York Stock Exchange (the "Exchange") on each day
that the Exchange is open for business. It is expected that the Exchange will
be closed on Saturdays and Sundays and on New Year's Day, Martin Luther King
Day, President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. The Fund may make or cause to be made a
more frequent determination of the net asset value and offering price, which
determination shall reasonably reflect any material changes in the value of
securities and other assets held by the Fund from the immediately preceding
determination of net asset value.
The net asset value is equal to the total assets of the Fund less total
liabilities divided by the number of shares outstanding. Securities traded on
the New York Stock Exchange or the American Stock Exchange will be valued at the
last sale price, or if no sale, at the mean between the latest bid and asked
price. Securities traded in any other U.S. or foreign market shall be valued in
a manner as similar as possible to the above, or if not so traded, on the basis
of the latest available price. Where there are no readily available quotations
for securities they will be valued at a fair value as determined by the Board of
Trustees acting in good faith.
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. The Fund will realize 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 from the sale of the underlying securities, with the proceeds of the sale
being increased by the premium received for writing the option.
TAX INFORMATION
- --------------------------------------------------------------------------------
The following is only a summary of certain key additional federal income
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"). The
fund intends to qualify as a regulated investment company by satisfying the
requirements under Subchapter M of the Code including requirements with respect
to diversification of assets, distribution of income and sources of income. 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 will, therefore, count towards the satisfaction of the
Distribution Requirement.
In addition to satisfy the Distribution Requirement, a regulated investment
company must 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").
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.
Further, the Code also treats as ordinary income a portion of the capital
gain attributable to a transaction where substantially all of the return
realized is attributable to the time value of the Fund's net investment in the
transaction and:
(1) the transaction consists of the acquisition of property by the Fund
and a contemporaneous contract to sell substantially identical
property in the future;
(2) the transaction is a straddle within the meaning of section 1092 of
the Code;
(3) the transaction is one that was marketed or sold to the Fund on the
basis that it would have the economic characteristics of a loan but
the interest-like return would be taxed as capital gain; or
(4) the transaction is described as a conversion transaction in the
Treasury Regulations.
The amount of the gain re-characterized as ordinary income generally will
not exceed the amount of the interest that would have accrued on the net
investment for the relevant period at a yield equal to 120% of the applicable
federal long-term, mid-term, or short-term rate, depending upon the type of
instrument at issue, reduced by an amount equal to the sum of:
(1) prior inclusions of ordinary income items from the conversion
transaction and
(2) the capitalized interest on acquisition indebtedness under Code
section 263(g).
Built-in losses, and the character thereof, will be preserved where the
Fund has a built-in loss with respect to property that becomes a part of a
conversion transaction. No authority exists that indicates that the character
of the converted income treated as ordinary under this rule will not be passed
through to the Fund's shareholders.
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.
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.
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 rather than by the issuer of the option.
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 its
ordinary taxable income for such calendar year and 98% of its 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, 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. However, such distributions will qualify for the 70%
dividends-received deduction for corporate shareholders, but 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. Net capital gain that is distributed and designated as a capital gain
dividend 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%
(58% for alternative minimum tax purposes) 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.
Generally, 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) and (4):
(a) 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
(b) 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 that 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. For purposes of the corporate AMT, 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, a corporate shareholder 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 that
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 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 failed to provide a correct taxpayer identification number,
(2) who is subject to backup withholding for failure to properly report
the receipt of interest or dividend income, 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. 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.
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 applicable treaty rate) upon the gross amount of the dividend.
Such 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 a foreign shareholder other than a corporation, 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 shareholder furnishes the Fund with proper
notification of his 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; STATE AND 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.
Rules of state and local taxation of ordinary income dividends and capital
gain dividends from regulated investment companies may 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.
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 beginning 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 returns 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.
PERFORMANCE COMPARISONS
- --------------------------------------------------------------------------------
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.
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 Adviser and the Fund 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.
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
KPMG LLP, Milwaukee, Wisconsin, acts as independent accountants for the
Trust.
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The Financial Statements for the Fund are incorporated herein by reference
to the Fund's Audited Annual Report, dated December 31, 1998 filed with the
Securities and Exchange Commission on February 26, 1999. Shareholders will
receive a copy of the Audited Annual Report at no additional charge when
requesting a copy of the Statement of Additional Information.
LEPERCQ-ISTEL FUND
PART C
OTHER INFORMATION
ITEM 23. EXHIBITS
(a)Articles of Incorporation are hereby incorporated by reference to the
Registration Statement on Form N-1A and Amendments thereto into this post-
effective amendment.
(b)By-laws are hereby incorporated by reference to the Registration Statement on
Form N-1A and Amendments thereto into this post-effective amendment.
(c)Instruments Defining Rights of Security Holders are hereby incorporated by
reference to the Registration Statement on Form N-1A and Amendments thereto
into this post-effective amendment.
(d)Investment Advisor Contracts are hereby incorporated by reference to the
Registration Statement on Form N-1A and Amendments thereto into this post-
effective amendment.
(e)Underwriting Contracts are hereby incorporated by reference to the
Registration Statement on Form N-1A and Amendments thereto into this post-
effective amendment.
(f)Bonus or Profit Sharing Contracts are hereby incorporated by reference to the
Registration Statement on Form N-1A and Amendments thereto into this post-
effective amendment.
(g)Custodian Agreements are hereby incorporated by reference to the Registration
Statement on Form N-1A and Amendments thereto into this post-effective
amendment.
(h)Other Material Contracts are hereby incorporated by reference to the
Registration Statement on Form N-1A and Amendments thereto into this post-
effective amendment.
(i)Legal Opinion of Kramer Levin Naftalis & Frankel LLP is hereby incorporated
by reference to the Registration Statement on Form N-1A and Amendments
thereto into this post-effective amendment.
(j)Other Consents
(1)Consent of KPMG LLP is filed with this amendment.
(k)Omitted Financial Statements are hereby incorporated by reference to the
Registration Statement on Form N-1A and Amendments thereto into this post-
effective amendment.
(l)Initial Capital Agreements are hereby incorporated by reference to the
Registration Statement on Form N-1A and Amendments thereto into this post-
effective amendment.
(m)Rule 12b-1 Plan are hereby incorporated by reference to the Registration
Statement on Form N-1A and Amendments thereto into this post-effective
amendment.
(n)Financial Data Schedule is filed with this amendment.
(o)Rule 18f-3 Plan are hereby incorporated by reference to the Registration
Statement on Form N-1A and Amendments thereto into this post-effective
amendment.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND
None.
ITEM 25. 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:
Section 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 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 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 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISERS
See the Statement of Additional Information, "Trustees and Officers of the
Trust" and "The Investment Adviser."
ITEM 27. PRINCIPAL UNDERWRITERS
(a) None
(b)
<TABLE>
Name and Principal Positions and Officers Position and Offices
Business Address with Underwriter with Registrant
- ---------------- ---------------- ---------------
<S> <C> <C>
Bruno Desforges
1675 Broadway
New York, NY 10019 Managing Director Chairman of the Board
Peter Hartnedy
1675 Broadway
New York, NY 10019 Vice President and Director Controller, Treasurer and Secretary
Francois Letaconnoux
1675 Broadway
New York, NY 10019 President and Director Director
Tsering Ngudu
1675 Broadway
New York, NY 10019 Executive Vice President and Director President
</TABLE>
(c) Not applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
The Transfer and Dividend Disbursing Agent, Firstar Mutual Fund Services, LLC,
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 Administrator, Firstar Mutual Fund
Services, LLC, P.O. Box 701, Milwaukee, Wisconsin 53201.
ITEM 29. MANAGEMENT SERVICES
None.
SIGNATURES
Pursuant to the requirements of Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant 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 28 day of April, 1999.
By:/s/Tsering Ngudu
------------------------
Tsering Ngudu, 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/ Tsering Ngudu
- --------------------------
Tsering Ngudu President April 28, 1999
/s/ Peter Hartnedy
- --------------------------
Peter Hartnedy Treasurer April 28, 1999
*<F14>/s/ Franz Skryanz
- --------------------------
Franz Skryanz Trustee April 28, 1999
*<F14>/s/ Bruno Desforges
- --------------------------
Bruno Desforges Trustee April 28, 1999
*<F14>/s/ Francois Letaconnoux
- -----------------------------
Francois Letaconnoux Trustee April 28, 1999
- --------------------------
Jean-Louis Milin Trustee April 28, 1999
- --------------------------
Marvin Schiller Ph.D. Trustee April 28, 1999
*<F14>/s/ Marie-Monique Steckel
- -------------------------------
Marie-Monique Steckel Trustee April 28, 1999
- --------------------------
Dennis Tarzian Trustee April 28, 1999
*<F14>/s/ Stanley A. Deitch
- --------------------------
Stanley A. Deitch Trustee April 28, 1999
*<F14>/s/ Peter Hartnedy
- --------------------------
Peter Hartnedy, Attorney-in-Fact
Pursuant to a power of attorney
dated April 28, 1999 filed herewith.
POWER OF ATTORNEY
KNOW TO ALL MEN BY THESE PRESENTS, that the undersigned Trustee of Lepercq-Istel
Trust, a Massachusetts business trust, (the "Trust") constitutes and appoints
Peter Hartnedy my true and lawful attorney-in-fact, with full power of
substitution and resubstitution, for me and in my name, place and stead, in all
and all capacities as a trustee of the Trust, to sign for me and in my name in
the appropriate capacity, any and all Post-Effective Amendments to said
Registration Statements, any Registration Statements on Form N-1A, and any
supplements or other instruments in connection other with, and generally to do
all such things in my name and behalf in connection therewith as said attorney-
in-fact deem necessary or appropriate, and that have been approved by the Board
of Trustees of the Trust or by the appropriate officers of the Trust, acting in
good faith and in a manner they reasonably believe to be in the best interests
of the Trust, upon the advice of counsel, such approval to be conclusively
evidenced by his execution thereof, to comply with the provisions of the
Securities Act of 1933, as amended, and the Investment Company Act of 1940, as
amended, and all related requirements of the Securities and Exchange Commission,
hereby ratifying and confirming all that said attorney-in-fact or his
substitutes may do or cause to be done by virtue hereof. Signed this 28th day
of April, 1999.
/s/ Franz Skryanz
----------------------
Franz Skryanz
POWER OF ATTORNEY
KNOW TO ALL MEN BY THESE PRESENTS, that the undersigned Trustee of Lepercq-Istel
Trust, a Massachusetts business trust, (the "Trust") constitutes and appoints
Peter Hartnedy my true and lawful attorney-in-fact, with full power of
substitution and resubstitution, for me and in my name, place and stead, in all
and all capacities as a trustee of the Trust, to sign for me and in my name in
the appropriate capacity, any and all Post-Effective Amendments to said
Registration Statements, any Registration Statements on Form N-1A, and any
supplements or other instruments in connection other with, and generally to do
all such things in my name and behalf in connection therewith as said attorney-
in-fact deem necessary or appropriate, and that have been approved by the Board
of Trustees of the Trust or by the appropriate officers of the Trust, acting in
good faith and in a manner they reasonably believe to be in the best interests
of the Trust, upon the advice of counsel, such approval to be conclusively
evidenced by his execution thereof, to comply with the provisions of the
Securities Act of 1933, as amended, and the Investment Company Act of 1940, as
amended, and all related requirements of the Securities and Exchange Commission,
hereby ratifying and confirming all that said attorney-in-fact or his
substitutes may do or cause to be done by virtue hereof. Signed this 28th day
of April, 1999.
/s/ Bruno Desforges
----------------------
Bruno Desforges
POWER OF ATTORNEY
KNOW TO ALL MEN BY THESE PRESENTS, that the undersigned Trustee of Lepercq-Istel
Trust, a Massachusetts business trust, (the "Trust") constitutes and appoints
Peter Hartnedy my true and lawful attorney-in-fact, with full power of
substitution and resubstitution, for me and in my name, place and stead, in all
and all capacities as a trustee of the Trust, to sign for me and in my name in
the appropriate capacity, any and all Post-Effective Amendments to said
Registration Statements, any Registration Statements on Form N-1A, and any
supplements or other instruments in connection other with, and generally to do
all such things in my name and behalf in connection therewith as said attorney-
in-fact deem necessary or appropriate, and that have been approved by the Board
of Trustees of the Trust or by the appropriate officers of the Trust, acting in
good faith and in a manner they reasonably believe to be in the best interests
of the Trust, upon the advice of counsel, such approval to be conclusively
evidenced by his execution thereof, to comply with the provisions of the
Securities Act of 1933, as amended, and the Investment Company Act of 1940, as
amended, and all related requirements of the Securities and Exchange Commission,
hereby ratifying and confirming all that said attorney-in-fact or his
substitutes may do or cause to be done by virtue hereof. Signed this 28th day
of April, 1999.
/s/ Francois Letaconnoux
------------------------
Francois Letaconnoux
POWER OF ATTORNEY
KNOW TO ALL MEN BY THESE PRESENTS, that the undersigned Trustee of Lepercq-Istel
Trust, a Massachusetts business trust, (the "Trust") constitutes and appoints
Peter Hartnedy my true and lawful attorney-in-fact, with full power of
substitution and resubstitution, for me and in my name, place and stead, in all
and all capacities as a trustee of the Trust, to sign for me and in my name in
the appropriate capacity, any and all Post-Effective Amendments to said
Registration Statements, any Registration Statements on Form N-1A, and any
supplements or other instruments in connection other with, and generally to do
all such things in my name and behalf in connection therewith as said attorney-
in-fact deem necessary or appropriate, and that have been approved by the Board
of Trustees of the Trust or by the appropriate officers of the Trust, acting in
good faith and in a manner they reasonably believe to be in the best interests
of the Trust, upon the advice of counsel, such approval to be conclusively
evidenced by his execution thereof, to comply with the provisions of the
Securities Act of 1933, as amended, and the Investment Company Act of 1940, as
amended, and all related requirements of the Securities and Exchange Commission,
hereby ratifying and confirming all that said attorney-in-fact or his
substitutes may do or cause to be done by virtue hereof. Signed this 28th day
of April, 1999.
/s/ Marie-Monique Steckel
-------------------------
Marie-Monique Steckel
POWER OF ATTORNEY
KNOW TO ALL MEN BY THESE PRESENTS, that the undersigned Trustee of Lepercq-Istel
Trust, a Massachusetts business trust, (the "Trust") constitutes and appoints
Peter Hartnedy my true and lawful attorney-in-fact, with full power of
substitution and resubstitution, for me and in my name, place and stead, in all
and all capacities as a trustee of the Trust, to sign for me and in my name in
the appropriate capacity, any and all Post-Effective Amendments to said
Registration Statements, any Registration Statements on Form N-1A, and any
supplements or other instruments in connection other with, and generally to do
all such things in my name and behalf in connection therewith as said attorney-
in-fact deem necessary or appropriate, and that have been approved by the Board
of Trustees of the Trust or by the appropriate officers of the Trust, acting in
good faith and in a manner they reasonably believe to be in the best interests
of the Trust, upon the advice of counsel, such approval to be conclusively
evidenced by his execution thereof, to comply with the provisions of the
Securities Act of 1933, as amended, and the Investment Company Act of 1940, as
amended, and all related requirements of the Securities and Exchange Commission,
hereby ratifying and confirming all that said attorney-in-fact or his
substitutes may do or cause to be done by virtue hereof. Signed this 28th day
of April, 1999.
/s/ Stanley A. Deitch
----------------------
Stanley A. Deitch
INDEX TO EXHIBITS
-----------------
Exhibit
- -------
(j) Consent of KPMG LLP
(n) Financial Data Schedule
CONSENT OF INDEPENDENT ACCOUNTANTS
The Shareholders and Board of Trustees
of Lepercq-Istel Trust:
We consent to the use of our report incorporated herein by reference and the
reference to our firm under the headings "Financial Highlights" in the
Prospectus and "Independent Accountants" in the Statement of Additional
Information.
Milwaukee, Wisconsin
April 28, 1999
[ARTICLE] 6
[CIK] 0000052761
[NAME] LEPERCQ ISTEL TRUST
[MULTIPLIER] 1
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] Dec-31-1998
[PERIOD-START] Jan-01-1998
[PERIOD-END] Dec-31-1998
[INVESTMENTS-AT-COST] 35,655,367
[INVESTMENTS-AT-VALUE] 32,900,316
[RECEIVABLES] 22,476
[ASSETS-OTHER] 8,275
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 32,931,067
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 117,778
[TOTAL-LIABILITIES] 117,778
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 35,039,867
[SHARES-COMMON-STOCK] 1,648,277
[SHARES-COMMON-PRIOR] 1,481,018
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 528,473
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (2,755,051)
[NET-ASSETS] 32,813,289
[DIVIDEND-INCOME] 149,839
[INTEREST-INCOME] 176,221
[OTHER-INCOME] 2,427
[EXPENSES-NET] (451,079)
[NET-INVESTMENT-INCOME] (122,592)
[REALIZED-GAINS-CURRENT] 3,024,353
[APPREC-INCREASE-CURRENT] 1,385,309
[NET-CHANGE-FROM-OPS] 4,287,070
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] (3,246,117)
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 127,807
[NUMBER-OF-SHARES-REDEEMED] (92,811)
[SHARES-REINVESTED] 132,263
[NET-CHANGE-IN-ASSETS] 4,364,076
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 1,205,422
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 227,951
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 451,079
[AVERAGE-NET-ASSETS] 30,407,734
[PER-SHARE-NAV-BEGIN] 19.21
[PER-SHARE-NII] (0.07)
[PER-SHARE-GAIN-APPREC] 2.90
[PER-SHARE-DIVIDEND] 0.00
[PER-SHARE-DISTRIBUTIONS] (2.13)
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 19.91
[EXPENSE-RATIO] 1.48
[AVG-DEBT-OUTSTANDING] 0.00
[AVG-DEBT-PER-SHARE] 0.00
</TABLE>
