Filed with the Securities and Exchange Commission on April 28, 2000
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. -----78----- -x-
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 -x-
Amendment No. -----25------ -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 Michael R. Rosella, 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.
934438.3
<PAGE>
(Lepercq-Istel Fund Logo)
Lepercq-Istel Fund
Providing long-term capital appreciation
PROSPECTUS
April 28, 2000
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
<PAGE>
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
Principal Investment Strategy ....................................... 6
Investment Risks .................................................... 6
Management of the Fund .............................................. 7
Distribution of Shares .............................................. 8
YOUR ACCOUNT INFORMATION
Purchase of Fund Shares ............................................. 8
Redemption of Fund Shares ........................................... 11
Pricing of Fund Shares .............................................. 12
Dividends and Capital Gain Distributions ............................ 12
Tax Matters ......................................................... 12
ADDITIONAL INFORMATION
Individual Retirement Accounts ...................................... 13
Financial Highlights ................................................ 14
Trustees and Officers ............................................... 15
FOR MORE INFORMATION
The back cover tells you how to obtain more information about the fund.
2
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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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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.
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.
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:
wish to invest for the long-term
want to diversify their portfolios
are willing to accept a degree of volatility and risk
This fund may not be appropriate for people who:
wish to invest for the short-term
3
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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, 1999 compare with the S&P 500 Index.
Lerpercq-Istel Fund
Calendar Year Returns (as of 12/31)
Year Percent
1989 0.217
1990 -0.066
1991 0.17
1992 0.053
1993 0.135
1994 -0.051
1995 0.271
1996 0.263
1997 0.09
1998 0.154
1999 0.305
Best Quarter: Q4 1999 34.10%
Worst Quarter: Q3 1998 (20.58)%
Average annual total return
through 12/31/99 1 Year 5 Year 10 Year
Leperq-Istel Fund 30.48% 21.35% 12.60%
S&P 500 Index 21.04% 28.56% 18.21%
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.
4
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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
Maximum Deferred Sales Charge (Load)
(as a percentage of offering price) None
Maximum Sales Charge (Load) Imposed on
Reinvested Dividends None
Redemption Fee None1
Exchange Fee None
Annual Fund Operating Expenses
(expenses deducted from fund assets)
Management Fees 0.75%
Distribution and Service (12b-1) Fees2 0.00%
Other Expenses 0.60%
-----
Total Annual Fund Operating Expenses 1.35%
=====
1 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 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, 1999. 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 did not incur
any Rule 12b-1 fees for the fiscal year ended December 31, 1999 and 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,
2000. 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
------ ------- ------- --------
$137 $428 $739 $1,624
5
<PAGE>
INVESTMENT OBJECTIVE
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The investment objective of the Lepercq-Istel Fund is long-term capital
appreciation.
PRINCIPAL 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 on
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 companies located in 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
- --------------------------------------------------------------------------------
The following risks are specific to the fund in addition to the risks
mentioned in the Overview section.
Small and Medium-Sized 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 portfolio.
6
<PAGE>
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. 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
- --------------------------------------------------------------------------------
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, 1999, Lepercq
had approximately $575 million of assets under management.
Portfolio Managers
Tsering Ngudu is the Senior Vice President of 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 Lepercq 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.
7
<PAGE>
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, N.A., an affiliate of Firstar Mutual Fund Services, LLC,
serves as the fund's custodian.
DISTRIBUTION OF SHARES
- --------------------------------------------------------------------------------
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
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, 1999, the fund had no payments under
the plan.
The Statement of Additional Information contains more information about the
distribution plan.
PURCHASE OF FUND SHARES
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You may purchase shares at the next
determined net asset value after the transfer
agent receives your order. The fund does not Minimum Investment
apply any sales charges. To purchase shares, $1,000
you need to invest at least $1,000 initially. ($500 for UGMA, 401(k),
Investments made under the Uniform Gift to Keogh, and other pension
Minor's Act, a 401(k) plan, a Keogh plan or & profit sharing.)
some other pension or profit sharing accounts sharing.)
need to be at least $500 to start. Once you Additional Investment
have an account with the fund, you may make $100
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.
8
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Purchasing
shares: Opening an account: Adding to an account:
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
o By Telephone Call Lepercq-Istel Fund at 1-800-497-1411 Call Lepercq-Istel Fund at
to place the order. (Note: For security 1-800-497-1411 to place the order.
reasons, requests by telephone may be (Note: For security reasons, requests
recorded.) by telephone may be recorded.)
- --------------------------------------------------------------------------------------------------------------------
o By Mail o Complete the purchase application form. o Make out a check for the investment
o Make out a check for the investment amount payable to Lepercq-Istel
amount payable to Lepercq-Istel Fund. Fund.
o Send to: o Fill out the detachable investment
Lepercq-Istel Fund slip from an account statement. If
c/o Firstar Mutual Fund Services, LLC you do not have a slip, include a note
P.O. Box 701 specifying the fund name, your
Milwaukee, WI 53201-0701 account number, and the name(s) in
Phone: 1-800-497-1411 which the account is registered.
o Send to the address listed to the left.
- --------------------------------------------------------------------------------------------------------------------
o By Overnight o Complete the purchase application form. o Make out a check for the investment
or Express o Make out a check for the investment amount payable to Lepercq-Istel
Mail amount payable to Lepercq-Istel Fund. Fund.
o Send to: o Fill out the detachable investment slip
Lepercq-Istel Fundslip from an account statement. If
c/o Firstar Mutual you do not have a slip, include a note
Fund Services, LLC specifying the fund name, your
615 East Michigan Street account number, and the name(s) in
Milwaukee, WI 53202 which the account is registered.
Phone: 1-800-497-1411 o Send to the address listed to the left.
- --------------------------------------------------------------------------------------------------------------------
o By Wire o Forward your application to Lepercq-Istel o Call Lepercq-Istel Fund at
Fund at the address listed above. 1-800-497-1411 to notify of
o Call 1-800-497-1411 to obtain an account incoming wire.
number and to notify of incoming wire. o Use the following instructions:
o Wire funds using the instructions to the right. Firstar Bank, N.A.
Cincinnati, OH 43202
ABA #: 075000022
Credit: Firstar Mutual Fund
Services, LLC
Account #: 112-952-137
Further Credit: Lepercq-Istel Fund
(name/title on the account)
(account #)
- --------------------------------------------------------------------------------------------------------------------
9
<PAGE>
- --------------------------------------------------------------------------------------------------------------------
Purchasing
shares: Opening an account: Adding to an account:
- --------------------------------------------------------------------------------------------------------------------
o Through Your You may purchase shares through your own You may make additional purchases
Broker broker, but keep in mind that the broker may through your own broker, but keep in
impose a service charge for his or her services. mind that the broker may impose a
service charge for his or her services.
- --------------------------------------------------------------------------------------------------------------------
o Through Open a fund account with one of the methods If you didn't set up an automatic
Automatic above. Be sure to include your checking investment plan with your original
Investment account number on the appropriate section application, call Lepercq-Istel Fund at
Plan of your application. 1-800-497-1411. Additional investments
(minimum of $50 per period) will be taken
automatically monthly, bimonthly, quarterly
or yearly from your checking account.
- --------------------------------------------------------------------------------------------------------------------
</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. When making a purchase 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 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.
10
<PAGE>
REDEMPTION OF FUND SHARES
- --------------------------------------------------------------------------------
When Redemption Proceeds Are Sent to You When making a redemption
request, make sure your
You may redeem your shares at any time request is in good order.
without a charge. Once the transfer agent "Good order" means your letter
receives your redemption request in good of instruction includes:
order, your request will be processed at the o the name of the fund
next determined net asset value. If you o the number of shares or the
purchase shares using a check and request a dollar amount of shares to
redemption within 12 days after your be redeemed
purchase, the fund will honor the redemption o signatures of all registered
request, but will not mail the proceeds until shareholders exactly as the
your purchase check has cleared (usually shares are registered
within 12 days). o the account registration
number
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
- --------------------------------------------------------------------------------
o 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.)
- --------------------------------------------------------------------------------
o 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 shareholder or sent to an
address other than an address of record.
- --------------------------------------------------------------------------------
o 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.
- --------------------------------------------------------------------------------
o Through Automatic Call Lepercq-Istel at 1-800-497-1411 or complete a
Plan Withdrawal 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 You may redeem shares through your own broker, but keep
Broker in mind that the broker may impose a service charge for
his or her services.
- --------------------------------------------------------------------------------
11
<PAGE>
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
- --------------------------------------------------------------------------------
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 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
- --------------------------------------------------------------------------------
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 following information is based on tax laws and regulations in effect on
the date of this prospectus. The fund will provide you with detailed tax
information on the fund's distributions for reporting purposes after the end of
each year. You should consult your own tax adviser regarding tax consequences of
investing in the fund 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. Ordinary income is currently subject to a maximum individual tax rate
of 39.6%. Distributions paid by the fund of net realized long-term capital gains
are taxable as capital gains. Capital gains realized by corporations are taxed
at the same ordinary income rate. However, capital gains are taxable at a
maximum rate of 20% to noncorporate shareholders who have holding periods of
more than 12 months. 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. You will have to pay
taxes on distributions from the
12
<PAGE>
fund whether received in cash or reinvested in additional shares of the
fund. The fund expects that, because of its investment objective, distributions
will consist primarily of long and short-term capital gains.
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 the shares sold. Any loss realized on a taxable sale of
shares within six months from the date of purchase will be treated as a
long-term capital loss to the extent of any net capital gain distributions
received with respect to the 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.
In the case of certain corporate shareholders, (ie, other than S
corporations and certain other corporations) a portion of the distributions
from the fund (attributable to qualifying dividends from domestic corporations
received by the fund) may qualify for the 70% dividends-received deduction.
However, since the fund anticipates that investment income will include interest
and dividends from foreign corporations and long and short-term capital gains,
only a small portion of the distributions paid by the fund may qualify for the
dividends-received deduction.
Some of the fund's investment income may be subject to foreign income taxes
that are withheld at the source. If this occurs, the fund's distributable income
will be reduced.
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.
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
1-800-497-1411.
13
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
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 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>
<CAPTION>
Year ended December 31
Per share data: 1999 1998 1997 1996 1995
------------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 19.91 $ 19.21 $ 19.03 $ 15.83 $ 13.17
------ ------ ------ ------ ------
Income from investment operations:
Net investment income (loss) 0.02 (0.07)(1) (0.07)(1) (0.11)(1) 0.14(1)
Net realized and unrealized
gains on securities 6.01 2.90 1.69 4.26 3.42
------ ------ ------ ------ ------
Total from investment operations 6.03 2.83 1.62 4.15 3.56
------ ------ ------ ------ ------
Less distributions:
Dividends from net
investment income (0.02) -- -- -- (0.13)
Distributions from capital gains (0.35) (2.13) (1.44) (0.95) (0.77)
------ ------ ------ ------ ------
Total distributions (0.37) (2.13) (1.44) (0.95) (0.90)
------ ------ ------ ------ ------
Net asset value, end of year $ 25.57 $ 19.91 $ 19.21 $ 19.03 $ 15.83
====== ====== ====== ====== ======
Total return 30.5% 15.4% 9.0% 26.3% 27.1%
Supplemental data and ratios:
Net assets, in millions, end of year $40.7 $32.8 $28.4 $24.2 $20.2
Ratio of expenses to average
net assets 1.35% 1.48% 1.51% 1.65%(2) 1.50%
Ratio of net investment income
(loss) to average net assets 0.07% (0.40)% (0.40)% (0.65)%(2) 0.89%
Portfolio turnover rate 95.70% 83.06% 71.20% 54.13% 59.72%
</TABLE>
(1) Net investment income (loss) per share is calculated using ending
balances prior to consideration or adjustment for permanent book and tax
differences.
(2) 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)%.
14
<PAGE>
TRUSTEES AND OFFICERS
- --------------------------------------------------------------------------------
Trustees
+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.
+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, Demachy
*Marvin Schiller, Ph.D. Director, Tutor Time Learning Systems, Inc.; General
Partner, Reprise Capital Corp.
*Franz Skryanz Financial Consultant
Marie-Monique Steckel Consultant; 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.
+Jean-Michel Terrein Managing Director, Lepercq Corporation Management
Ltd.
- --------------------------------------------------------------------------------
* Member of Audit, Ethics and Nominating Committees
+ Interested Trustees
Officers
Tsering Ngudu President
Jerry Getsos Executive Vice President
Peter Hartnedy Treasurer and Secretary
Investment Adviser Lepercq, de Neuflize & Co. Incorporated, New York
Underwriter and
Distributor Lepercq, de Neuflize Securities Inc., New York
Transfer Agent,
Dividend Paying
Agent, Fund
Accountant,
Administrator Firstar Mutual Fund Services, LLC, Milwaukee
Custodian Firstar Bank, N.A., Cincinnati
Legal Counsel Battle Fowler LLP, New York
Independent Auditors KPMG LLP, Chicago
15
<PAGE>
(Lepercq-Istel Fund Logo)
Lepercq-Istel Fund
For more information
--------------------------------------
You may obtain the following and
other information on the
Lepercq-Istel Fund free of charge:
[LOGO]
Annual and Semi-Annual Reports to
Shareholders
The annual and semi-annual reports
provide the fund's most recent LEPERCQ-ISTEL FUND
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.
PROSPECTUS
Statement of Additional Information APRIL, 28, 2000
(SAI)dated April 28, 2000
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. Lepercq-Istel Fund
1675 Broadway
To receive any of these documents: New York, New York 10019
1800-197-1411
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 or by electronic request
at [email protected].
Investment Company Act File # 811-631
<PAGE>
Lepercq-Istel Fund
A series of Lepercq-Istel Trust
STATEMENT OF ADDITIONAL INFORMATION
April 28, 2000
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, 2000. 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,
1999 are incorporated by reference to the Fund's 1999 Annual Report.
Lepercq-Istel Fund
c/o Firstar Mutual Fund Services, LLC
P.O. Box 701
Milwaukee, Wisconsin 53201-0701
934435.4
<PAGE>
TABLE OF CONTENTS
General Information And History.............. ................................1
Classification of The Fund....................................................3
Investment Objective And Policies.............................................3
Investment Objective..........................................................3
Investment Techniques.........................................................4
Investment Restrictions.......................................................6
Temporary Defensive Position..................................................8
Portfolio Turnover............................................................8
Management of The Trust.......................................................8
Control Persons And Principal Shareholders...................................10
The Investment Adviser.......................................................11
Shareholder Servicing Plan...................................................12
Administrative Services......................................................13
Fund Accounting Services.....................................................13
Custodian....................................................................13
Distribution Plan............................................................13
The Distributor..............................................................15
Brokerage Commissions........................................................15
Purchase of Shares...........................................................17
Redemption of Shares.........................................................17
How Net Asset Value Is Computed..............................................18
Tax Information..............................................................18
Performance Information......................................................23
Performance Comparisons......................................................24
Code of Ethics...............................................................24
Independent Accountants......................................................24
Financial Statements.........................................................24
934435.4
<PAGE>
LEPERCQ-ISTEL FUND
GENERAL INFORMATION AND HISTORY
On April 8, 1986, the shareholders of Istel Fund, Inc. (the predecessor
of the Leperq-Istel Trust (the "Trust")) 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 Leperq-Istel 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 (the "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 the 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
934435.4
-1-
<PAGE>
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 have been 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;
934435.4
-2-
<PAGE>
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 is a diversified, open-end management investment
company (or mutual fund) organized into one series: Lepercq-Istel 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.
934435.4
-3-
<PAGE>
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.
934435.4
-4-
<PAGE>
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 as 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.
934435.4
-5-
<PAGE>
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.
934435.4
-6-
<PAGE>
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. 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.
6. 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.
934435.4
-7-
<PAGE>
7. 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.
8. 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, 1999 and 1998 were as
follows:
DECEMBER 31, 1999 DECEMBER 31, 1998
----------------- -----------------
95.70% 83.06%
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 nine 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
Commonwealth of Massachusetts in this regard. The Trust compensates all Trustees
except for its interested trustees: Francois Letaconnoux, Bruno Desforges [and
Jean-Michel Terrein].
The Trustees and Officers of the Trust, their addresses, ages and their
principal occupations for the last five years are set forth below.
934435.4
-8-
<PAGE>
<TABLE>
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NAME AND ADDRESS AGE POSITION(S) HELD PRINCIPAL OCCUPATION(S) DURING
WITH REGISTRANT PAST 5 YEARS
- --------------------------------------------------------------------------------------------------------------------------
* Bruno Desforges 73 Trustee and Chairman Managing Director, Lepercq, de Neuflize & Co
1675 Broadway of the Board Incorporated; Director and Chairman of the
New York, New York 10019. Board, Lepercq, de Neuflize Securities Inc.
since 1981
- --------------------------------------------------------------------------------------------------------------------------
Stanley A. Deitch 54 Trustee Principal, CPI Associates, Inc., from 1991 to
774 Dumont Place present; Member, American Institute of CPAs.
North Woodmere, New York 11581
- --------------------------------------------------------------------------------------------------------------------------
* Francois Letaconnoux 48 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 53 Trustee Managing Director, Banque de Neuflize,
3 Avenue Hoche 75008 Schlumberger, Mallet, Demachy since 1994.
Paris, France
- --------------------------------------------------------------------------------------------------------------------------
Marvin Schiller, Ph.D. 65 Retired; Former Managing Director, A.T.
17319 St. James Court Kearney, Inc. from 1990 to 1997.
Boca Raton, Florida 33496
- --------------------------------------------------------------------------------------------------------------------------
Franz Skryanz 61 Trustee Financial Consultant from 1991 to present.
30 East 81st Street
New York, New York 10028
- --------------------------------------------------------------------------------------------------------------------------
* Jean-Michel Terrein 34 Trustee Managing Director, Lepercq Corporation
c/o Lepercq Corporation Management Management Ltd. since January, 2000; Vice
Penthouse, Sterling House President, International Department Valores
PO Box 2363 Mexicanos SA de C.V. from 1997 to 2000;
Hamilton, HMJX Senior Trader, Latinvest Securities Inc. from
Bermuda 1995 to 1997.
- --------------------------------------------------------------------------------------------------------------------------
Jerry Getsos 37 Executive Vice Senior Vice President of Lepercq, de Neuflize &
1675 Broadway President Co. Incorporated from 1996 to present; Research
New York, New York 10019 Analyst at Lexington Management Corporation
from 1987 to 1995.
- --------------------------------------------------------------------------------------------------------------------------
* Peter Hartnedy 49 Trustee, Controller, Senior Vice President, Treasurer and Secretary,
1675 Broadway Treasurer and Lepercq, de Neuflize & Co. Incorporated;
New York, New York 10019 Secretary Director, Vice President, Treasurer and
Secretary, Lepercq, de Neuflize Securities Inc.;
Treasurer and Secretary, Lepercq Inc. since
1983.
- --------------------------------------------------------------------------------------------------------------------------
* Tsering Ngudu 43 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 48 Trustee President and Chief Executive Officer, New
575 Highland Ave. Century Education Corp. since 1996; Vice
Ridgewood, New Jersey 07450 President and Chief Operating Officer,
Paramount Communications Business, Technical
and Professional Group from 1987 to 1996.
- --------------------------------------------------------------------------------------------------------------------------
Marie-Monique Steckel 59 Trustee Consultant; President, France Telecom North
1675 Broadway America, 1979 to 1999.
New York, New York 10019
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Deemed to be interested person (as defined by the 1940 Act) of the Trust.
934435.4
-9-
<PAGE>
COMPENSATION
The following table indicates the compensation received by each Trustee
from the Trust for the 12-month period ended December 31, 1999.
<TABLE>
<CAPTION>
PENSION OR TOTAL
RETIREMENT ESTIMATED COMPENSATION
AGGREGATE BENEFITS ANNUAL FROM FUND
COMPENSA- ACCRUED AS BENEFITS AND FUND
TION FROM PART OF FUND UPON COMPLEX PAID
NAME AND POSITION TRUST (1) EXPENSES RETIREMENT TO TRUSTEES (1)
<S> <C> <C> <C> <C>
* Bruno Desforges, Trustee None None None None
Stanley A. Deitch, Trustee 3,000 None None 3, 000
* Francois Letaconnoux, None None None None
Trustee
Jean-Louis Milin, Trustee 1,500 None None 1,500
Dennis Tarzian, Trustee 2,250 None None 2,250
Marvin Schiller, Ph.D. Trustee 2,625 None None 2,625
Franz Skryanz, Trustee 3,375 None None 3,375
Marie-Monique Steckel, 2,250 None None 2,250
Trustee
</TABLE>
* Deemed to be interested person (as defined by the 1940 Act) of the
Trust.
(1) Compensation does not include reimbursement for travel expenses.
CONTROL PERSONS AND PRINCIPAL SHAREHOLDERS
As of March 31, 2000, the following shareholders owned, directly or
indirectly, 5% or more of the outstanding shares of the Fund:
<TABLE>
<CAPTION>
Name and Address Percent of Fund Shares Outstanding
- ----------------------- ---------------------------------------------
<S> <C>
Bear Stearns Securities Corp. 39.49%
1 Metrotech Cntr. N
Brooklyn, NY 11201
Warburg Dillon Read, LLC 9.05%
677 Washington Blvd.
Stamford, CT 06901
</TABLE>
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.
934435.4
-10-
<PAGE>
MANAGEMENT OWNERSHIP
As of December 31, 1999, the Trustees and officers of the Fund, as a
group, owned 4.16% 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 16, 2000.
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 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, 1999,
1998 and 1997, the Adviser earned and was paid the following amounts, unless
some portion of the fee was waived as indicated in the parenthesis:
934435.4
-11-
<PAGE>
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1999 1998 1997
- ----------------------------------------------------------------------------------------------------------------------
$246,995 $227,951 $186,157
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
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, 1999, totaling approximately
$575 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 entities.
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.
934435.4
-12-
<PAGE>
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:
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1999 1998 1997
- ----------------------------------------------------------------------------------------------------------------------
$43,967 $31,426 $28,377
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
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 $30,000 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:
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1999 1998 1997
- ----------------------------------------------------------------------------------------------------------------------
$22,491 $23,250 $24,896
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
CUSTODIAN
Firstar Bank, 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
934435.4
-13-
<PAGE>
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 16, 2000 .
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, 1999.
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------
<S> <C>
Advertising $ 0
Printing and mailing of Prospectuses $ 0
to other than current shareholders
Compensation to underwriters $ 0
Compensation to broker-dealer $ 0
Interest, carrying or other financing charges $ 0
---------------
Other $ 0
Total $ 0
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
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
934435.4
-14-
<PAGE>
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
16, 2000.
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
934435.4
-15-
<PAGE>
commissions accordingly. The brokerage commissions the Fund paid for the fiscal
years ended December 31, 1996, 1997, 1998 and 1999, are listed below. The
percentage amounts received by Lepercq, de Neuflize Securities Inc. of the total
commissions paid is also shown on the table.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
BROKER 1999 % 1998 % 1997 %
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Lepercq, de Neuflize $16,240 30% $10,173 22% $ 15,950 32%
Securities Inc.
Other brokers $38,640 70% $36,660 78% $34,334 68%
Total Commissions Paid $54,880 100% $46,833 100% $50,284 100%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
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 1999, the Fund allocated 70% 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.
934435.4
-16-
<PAGE>
PURCHASE OF SHARES
Purchase Confirmations
The investor will receive from the Transfer Agent and the Dividend
Paying Agent (also referred to herein as the "Transfer Agent") for the Fund, a
confirmation indicating the number of full shares and fractional shares (if any)
acquired. The Transfer 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 Transfer 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.
934435.4
-17-
<PAGE>
Systematic Withdrawal Plan
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 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.
934435.4
-18-
<PAGE>
Qualification as a Regulated Investment Company
The Fund has elected and intends to qualify to be taxed as a regulated
investment company under the Internal Revenue Code (the "Code"). As a regulated
investment company, the Fund is not subject to federal income tax on the portion
of its net investment income (i.e., taxable interest, dividends and other
taxable ordinary income, net of expenses) and net capital gain (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, 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 for this purpose.
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 total 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 one issuer and as to which the Fund does not hold more than 10% of
the outstanding voting securities of one issuer), and no more than 25% of the
value of its total assets may be invested in the securities (other than U.S.
Government securities and securities of other regulated investment companies) of
any one issuer, or in two or more issuers which the Fund controls and which are
engaged in the same or similar trades or businesses.
In addition, 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 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.
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 certain circumstances, all or a portion of certain gains
relating to foreign currency, hedging, option and various transactions may be
characterized as ordinary income.
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, may (unless it has
made a taxable year election for excise tax purposes as discussed below) 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,
on the first day of the next year.
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
934435.4
-19-
<PAGE>
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). The balance of such
income must be distributed during the next 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, 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 certain 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 (as defined in the Code) received by the Fund
from domestic corporations for the taxable year. In addition, in certain
circumstances, the dividends-received deduction for a corporate shareholder may
be disallowed or reduced.
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.
Conversely, if the Fund decides to retain its net capital gain, the
Fund will be taxed thereon (except to the extent of any available capital loss
carryovers) at the regular corporate tax rate. If the Fund decides to retain its
net capital gain, the Fund intends to 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.
934435.4
-20-
<PAGE>
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. After the end of each year, shareholders will be provided with
detailed information on the Fund's distributions made (or deemed made) during
the year for reporting purposes.
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,
934435.4
-21-
<PAGE>
(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. Long-term capital gain recognized by a noncorporate
shareholder will be taxed at a maximum rate of 20% (10% if the noncorporate
shareholder is, and would be after accounting for such gains, eligible for the
15% tax bracket for ordinary income), if the Shareholder has held such shares
for more than 12 months at the time of sale. 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. Capital losses in any year are deductible
only to the extent of capital gains plus, in the case of a noncorporate
taxpayer, $3,000 ($1,500 if married filing separately) 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.
residents 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.
934435.4
-22-
<PAGE>
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's average annual total return for the one-, five- and ten-year periods
ended December 31, 1999 were 30.5%, 21.4% and 12.6%, respectively.
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
934435.4
-23-
<PAGE>
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, Chicago, Illinois, 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, 1999 filed
with the Securities and Exchange Commission on March 9, 2000. Shareholders will
receive a copy of the Audited Annual Report at no additional charge when
requesting a copy of the Statement of Additional Information.
934435.4
-24-
<PAGE>
LEPERCQ-ISTEL FUND
PART C
OTHER INFORMATION
ITEM 23. EXHIBITS
(a) Agreement and Declaration of Trust is filed herewith.
(b) By-laws are filed herewith.
(c) Not applicable.
(d) Investment Advisory Agreement is filed herewith.
(e) Distribution Agreement is filed herewith.
(f) Not applicable.
(g) Custodian Agreement and Addendum thereto are filed herewith.
(h) Administration Servicing Agreement is filed herewith.
(h)(1) Fund Accounting Servicing Agreement is filed herewith.
(h)(2) Shareholder Servicing Agent Agreement is filed herewith.
(i) Not applicable.
(j) Consent of KPMG LLP is filed herewith.
(k) Audited Financial Statements for year ended December 31, 1999 are
incorporated by reference to Registrant's N-30D as filed on March 9,
2000, accession number 0000898531-00-000088.
(l) Initial Capital Agreements are incorporated by reference to the
Registrant's Registration Statement on Form N-1A.
(m) Distribution Plan is filed herewith.
(m)(1) Shareholder Servicing Plan is filed herewith.
(n) Not applicable.
(o) Reserved.
(p) Code of Ethics is filed herewith.
934438.3
<PAGE>
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND
Not applicable.
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
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.
934438.3
<PAGE>
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
934438.3
<PAGE>
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) The following are the directors and officers of Lepercq,
de Neuflize Securities, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Officers Position and Offices with Underwriter
Business Address with Registrant
<S> <C>
Bruno Desforges Managing Director
1675 Broadway
New York, NY 10019
Chairman of the Board
Peter Hartnedy Vice President and Director
1675 Broadway
New York, NY 10019
Controller, Treasurer and Secretary
Francois Letaconnoux President and Director
1675 Broadway
New York, NY 10019
Director
Tsering Ngudu Executive Vice President and Director
1675 Broadway
New York, NY 10019
President
</TABLE>
(c) Not applicable.
934438.3
<PAGE>
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.
ITEM 30. UNDERTAKINGS
None.
934438.3
<PAGE>
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 26th
day of April, 2000.
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.
<TABLE>
<CAPTION>
Signatures Title Date
<S> <C> <C>
/s/ Tsering Ngudu President April 26, 2000
_______________________
Tsering Ngudu
/s/ Peter Hartnedy Treasurer April 26, 2000
_______________________
Peter Hartnedy
/s/ Franz Skryanz Trustee April 26, 2000
_______________________
Franz Skryanz
/s/ Bruno Desforges Trustee April 26, 2000
_______________________
Bruno Desforges
/s/ Francois Letaconnoux Trustee April 26, 2000
_______________________
Francois Letaconnoux
934438.3
<PAGE>
/s/ Jean-Louis Milin Trustee April 26, 2000
_______________________
Jean-Louis Milin
/s/ Marvin Schiller, Ph.D. Trustee April 26, 2000
_______________________
Marvin Schiller Ph.D.
/s/ Marie-Monique Steckel Trustee April 26, 2000
_______________________
Marie-Monique Steckel
/s/ Dennis Tarzian Trustee April 26, 2000
_______________________
Dennis Tarzian
/s/ Stanley A. Deitch Trustee April 26, 2000
_______________________
Stanley A. Deitch
Trustee April 26, 2000
*
_______________________
Jean-Michel Terrein
/s/ Peter Hartnedy
_______________________
* Peter Hartnedy,
Attorney-in-Fact
Pursuant to a power of
attorney dated
February 16, 2000
filed herewith.
</TABLE>
934438.3
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints Peter Hartnedy, with full power of substitution, as his
true and lawful attorney and agent to execute in his name and on his behalf, in
any and all capacities, the Registration Statement on Form N-1A, and any and all
amendments thereto (including post-effective amendments) filed by Lepercq-Istel
Trust (the "Trust") with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, and under the Investment Company Act of
1940, as amended, and any and all other instruments which such attorney and
agent deems necessary or advisable to enable the Trust to comply with the
Securities Act of 1933, as amended, the Investment Company Act of 1940, as
amended, the rules, regulations and requirements of the Securities and Exchange
Commission, and the securities or Blue Sky laws of any state or other
jurisdiction; and the undersigned hereby ratifies and confirms as his own act
and deed any and all that such attorney and agent shall do or cause to be done
by virtue hereof.
/s/ Franz Skryanz
_______________________
Franz Skryanz
934438.3
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints Peter Hartnedy, with full power of substitution, as his
true and lawful attorney and agent to execute in his name and on his behalf, in
any and all capacities, the Registration Statement on Form N-1A, and any and all
amendments thereto (including post-effective amendments) filed by Lepercq-Istel
Trust (the "Trust") with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, and under the Investment Company Act of
1940, as amended, and any and all other instruments which such attorney and
agent deems necessary or advisable to enable the Trust to comply with the
Securities Act of 1933, as amended, the Investment Company Act of 1940, as
amended, the rules, regulations and requirements of the Securities and Exchange
Commission, and the securities or Blue Sky laws of any state or other
jurisdiction; and the undersigned hereby ratifies and confirms as his own act
and deed any and all that such attorney and agent shall do or cause to be done
by virtue hereof.
/s/ Bruno Desforges
_______________________
Bruno Desforges
934438.3
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints Peter Hartnedy, with full power of substitution, as his
true and lawful attorney and agent to execute in his name and on his behalf, in
any and all capacities, the Registration Statement on Form N-1A, and any and all
amendments thereto (including post-effective amendments) filed by Lepercq-Istel
Trust (the "Trust") with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, and under the Investment Company Act of
1940, as amended, and any and all other instruments which such attorney and
agent deems necessary or advisable to enable the Trust to comply with the
Securities Act of 1933, as amended, the Investment Company Act of 1940, as
amended, the rules, regulations and requirements of the Securities and Exchange
Commission, and the securities or Blue Sky laws of any state or other
jurisdiction; and the undersigned hereby ratifies and confirms as his own act
and deed any and all that such attorney and agent shall do or cause to be done
by virtue hereof.
/s/ Francois Letaconnoux
__________________________
Francois Letaconnoux
934438.3
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints Peter Hartnedy, with full power of substitution, as his
true and lawful attorney and agent to execute in his name and on his behalf, in
any and all capacities, the Registration Statement on Form N-1A, and any and all
amendments thereto (including post-effective amendments) filed by Lepercq-Istel
Trust (the "Trust") with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, and under the Investment Company Act of
1940, as amended, and any and all other instruments which such attorney and
agent deems necessary or advisable to enable the Trust to comply with the
Securities Act of 1933, as amended, the Investment Company Act of 1940, as
amended, the rules, regulations and requirements of the Securities and Exchange
Commission, and the securities or Blue Sky laws of any state or other
jurisdiction; and the undersigned hereby ratifies and confirms as his own act
and deed any and all that such attorney and agent shall do or cause to be done
by virtue hereof.
/s/ Jean-Louis Milin
_______________________
Jean-Louis Milin
934438.3
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints Peter Hartnedy, with full power of substitution, as his
true and lawful attorney and agent to execute in his name and on his behalf, in
any and all capacities, the Registration Statement on Form N-1A, and any and all
amendments thereto (including post-effective amendments) filed by Lepercq-Istel
Trust (the "Trust") with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, and under the Investment Company Act of
1940, as amended, and any and all other instruments which such attorney and
agent deems necessary or advisable to enable the Trust to comply with the
Securities Act of 1933, as amended, the Investment Company Act of 1940, as
amended, the rules, regulations and requirements of the Securities and Exchange
Commission, and the securities or Blue Sky laws of any state or other
jurisdiction; and the undersigned hereby ratifies and confirms as his own act
and deed any and all that such attorney and agent shall do or cause to be done
by virtue hereof.
/s/ Marvin Schiller
_______________________
Marvin Schiller
934438.3
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints Peter Hartnedy, with full power of substitution, as his
true and lawful attorney and agent to execute in his name and on his behalf, in
any and all capacities, the Registration Statement on Form N-1A, and any and all
amendments thereto (including post-effective amendments) filed by Lepercq-Istel
Trust (the "Trust") with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, and under the Investment Company Act of
1940, as amended, and any and all other instruments which such attorney and
agent deems necessary or advisable to enable the Trust to comply with the
Securities Act of 1933, as amended, the Investment Company Act of 1940, as
amended, the rules, regulations and requirements of the Securities and Exchange
Commission, and the securities or Blue Sky laws of any state or other
jurisdiction; and the undersigned hereby ratifies and confirms as his own act
and deed any and all that such attorney and agent shall do or cause to be done
by virtue hereof.
/s/ Marie-Monique Steckel
_______________________
Marie-Monique Steckel
934438.3
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints Peter Hartnedy, with full power of substitution, as his
true and lawful attorney and agent to execute in his name and on his behalf, in
any and all capacities, the Registration Statement on Form N-1A, and any and all
amendments thereto (including post-effective amendments) filed by Lepercq-Istel
Trust (the "Trust") with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, and under the Investment Company Act of
1940, as amended, and any and all other instruments which such attorney and
agent deems necessary or advisable to enable the Trust to comply with the
Securities Act of 1933, as amended, the Investment Company Act of 1940, as
amended, the rules, regulations and requirements of the Securities and Exchange
Commission, and the securities or Blue Sky laws of any state or other
jurisdiction; and the undersigned hereby ratifies and confirms as his own act
and deed any and all that such attorney and agent shall do or cause to be done
by virtue hereof.
/s/ Dennis Tarzian
_______________________
Dennis Tarzian
934438.3
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints Peter Hartnedy, with full power of substitution, as his
true and lawful attorney and agent to execute in his name and on his behalf, in
any and all capacities, the Registration Statement on Form N-1A, and any and all
amendments thereto (including post-effective amendments) filed by Lepercq-Istel
Trust (the "Trust") with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, and under the Investment Company Act of
1940, as amended, and any and all other instruments which such attorney and
agent deems necessary or advisable to enable the Trust to comply with the
Securities Act of 1933, as amended, the Investment Company Act of 1940, as
amended, the rules, regulations and requirements of the Securities and Exchange
Commission, and the securities or Blue Sky laws of any state or other
jurisdiction; and the undersigned hereby ratifies and confirms as his own act
and deed any and all that such attorney and agent shall do or cause to be done
by virtue hereof.
/s/ Stanley A. Deitch
_______________________
Stanley A. Deitch
934438.3
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints Peter Hartnedy, with full power of substitution, as his
true and lawful attorney and agent to execute in his name and on his behalf, in
any and all capacities, the Registration Statement on Form N-1A, and any and all
amendments thereto (including post-effective amendments) filed by Lepercq-Istel
Trust (the "Trust") with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, and under the Investment Company Act of
1940, as amended, and any and all other instruments which such attorney and
agent deems necessary or advisable to enable the Trust to comply with the
Securities Act of 1933, as amended, the Investment Company Act of 1940, as
amended, the rules, regulations and requirements of the Securities and Exchange
Commission, and the securities or Blue Sky laws of any state or other
jurisdiction; and the undersigned hereby ratifies and confirms as his own act
and deed any and all that such attorney and agent shall do or cause to be done
by virtue hereof.
/s/ Jean-Michel Terrein
_______________________
Jean-Michel Terrein
934438.3
<PAGE>
INDEX TO EXHIBITS
Exhibit
(a) Agreement and Declaration of Trust.
(b) By-laws.
(d) Investment Advisory Agreement.
(e) Distribution Agreement.
(g) Custodian Agreement and Addendum thereto.
(h) Administration Servicing Agreement.
(h)(1) Fund Accounting Servicing Agreement.
(h)(2) Shareholder Servicing Agent Agreement.
(j) Consent of KPMG LLP.
(m) Distribution Plan.
(m)(1) Shareholder Servicing Plan.
(p) Code of Ethics.
934438.3
LEPERCQ-ISTEL TRUST
______________________________
AGREEMENT AND DECLARATION OF TRUST
______________________________
AGREEMENT AND DECLARATION OF TRUST made this 8th day of April, 1986, by the
Trustees hereunder, and by the holders of shares of beneficial interest to be
issued hereunder as hereinafter provided.
WITNESSETH that
WHEREAS, this Trust has been formed to carry on the business of an
investment company; and
WHEREAS, the Trustees have agreed to manage all property coming into their
hands as trustees of a Massachusetts voluntary association with transferable
shares in accordance with the provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby declare that they will hold all cash,
securities and other assets, which they may from time to time acquire in any
manner as Trustees hereunder IN TRUST to manage and dispose of the same upon the
following terms and conditions for the pro rata benefit of the holders from time
to time of Shares in this Trust as hereinafter set forth.
ARTICLE I
NAME AND DEFINITIONS
Section 1. Name. This Trust shall be known as "Lepercq-Istel Trust," and
the Trustees shall conduct the business of the Trust under that name or any
other name as they may from time to time determine.
Section 2. Definitions. Whenever used herein, unless otherwise required by
the context or specifically provided:
(a) The "Trust" refers to the Massachusetts business trust established by
this Agreement and Declaration of Trust, as amended from time to time;
935545.1
<PAGE>
(b) "Trustees" refers to the Trustees of the Trust named herein or elected
in accordance with Article IV;
(c) "Shares" means the equal proportionate transferable units of interest
into which the beneficial interest in the Trust shall be divided from time to
time or, if more than one series of Shares is authorized by the Trustees, the
equal proportionate transferable units into which each series of shares shall be
divided from time to time;
(d) "Shareholder" means a record owner of Shares;
(e) The "1940 Act" refers to the Investment Company Act of 1940 and the
Rules and Regulations thereunder, all as amended from time to time;
(f) The terms "Affiliated Person", "Assignment", "Commission", "Interested
Person", "Principal Underwriter" and "Majority Shareholder Vote" (the 67% or 50%
requirement of the third sentence of Section 2(a)(42)of the 1940 Act,
whichever may be applicable) shall have the meanings given them in the 1940 Act;
(g) "Declaration of Trust" shall mean this Agreement and Declaration of
Trust as amended or restated from time to time; and
(h) "By-laws" shall mean the By-laws of the Trust as amended from time to
time.
ARTICLE II
PURPOSE OF TRUST
The purpose of the Trust is to provide investors a managed investment
primarily in securities and debt instruments and to carry on such other business
as the Trustees may from time to time determine pursuant to their authority
under this Declaration of Trust.
ARTICLE III
SHARES
Section 1. Division of Beneficial Interest. The Shares of the Trust shall
be issued in one or more series as the Trustees may, without shareholder
approval, authorize. Each series shall be preferred over all other series in
respect of the assets allocated to that series. The beneficial interest in each
series shall at all times be divided into Shares, with a par value of $1.00 per
share, each of which shall represent an equal proportionate interest in the
series with each other Share of the same series, none having priority or
preference over another. The number of Shares authorized shall be unlimited. The
Trustees may from time to time divide or combine the Shares into a greater or
lesser number without thereby changing the proportionate beneficial interests in
the series.
935545.1
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<PAGE>
Section 2. Ownership of Shares. The ownership of Shares shall be recorded
on the books of the Trust or a transfer or similar agent. No certificates
certifying the ownership of Shares shall be issued except as the Trustees may
otherwise determine from time to time. The Trustees may make such rules as they
consider appropriate for the issuance of Share certificates, the transfer of
Shares and similar matters. The record books of the Trust as kept by the Trust
or any transfer or similar agent, as the case may be, shall be conclusive as to
who are the Shareholders of each series and as to the number of Shares of each
series held from time to time by each Shareholder.
Section 3. Investment in the Trust. The Trustees shall accept investments
in the Trust from such persons and on such terms and for such consideration,
which may consist of cash or tangible or intangible property or a combination
thereof, as they from time to time authorize.
All consideration received by the Trust for the issue or sale of Shares of
each series, together with all income, earnings, profits, and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation thereof,
and any funds or payments derived from any reinvestment of such proceeds in
whatever form the same may be, shall irrevocably belong to the series of Shares
with respect to which the same were received by the Trust for all purposes,
subject only to the rights of creditors, and shall be so handled upon the books
of account of the Trust and are herein referred to as "assets of" such series.
Section 4. No Preemptive Rights. Shareholders shall have no preemptive or
other right to subscribe to any additional Shares or other securities issued by
the Trust.
Section 5. Status of Shares and Limitation of Personal Liability. Shares
shall be deemed to be personal property giving only the rights provided in this
instrument. Every Shareholder by virtue of having become a Shareholder shall be
held to have expressly assented and agreed to the terms hereof and to have
become a party hereto. The death of a Shareholder during the continuance of the
Trust shall not operate to terminate the same nor entitle the representative of
any deceased Shareholder to an accounting or to take any action in court or
elsewhere against the Trust or the Trustees, but only to the rights of said
decedent under this Trust. Ownership of Shares shall not entitle the Shareholder
to any title in or to the whole or any part of the Trust property or right to
call for a partition or division of the same or for an accounting, nor shall the
ownership of Shares constitute the Shareholders partners. Neither the Trust nor
the Trustees, nor any officer, employee or agent of the Trust shall have any
power to bind personally any Shareholder, nor except as specifically provided
herein to call upon any Shareholder for the payment of any sum of money or
assessment whatsoever other than such as the Shareholder may at any time
personally agree to pay.
935545.1
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<PAGE>
ARTICLE IV
THE TRUSTEES
Section 1. Election. The persons who shall act as Trustees until the first
annual meeting or until their successors are duly chosen and qualify are the
initial Trustees executing this Agreement and Declaration of Trust or any
counterpart thereof. The number of Trustees shall be as provided in the By-laws
or as fixed from time to time by the Trustees. The shareholders may elect
Trustees at any meeting of Shareholders called by the Trustees for that purpose.
Each Trustee shall serve during the continued lifetime of the Trust until he
dies, resigns or is removed, or, if sooner, until the next meeting of
Shareholders called for the purpose of electing Trustees and the election and
qualification of his successor. Any Trustee may resign at any time by written
instrument signed by him and delivered to any officer of the Trust, to each
other Trustee or to a meeting of the Trustees. Such resignation shall be
effective upon receipt unless specified to be effective at some other time.
Except to the extent expressly provided in a written agreement with the Trust,
no Trustee resigning and no Trustee removed shall have any right to any
compensation for any period following his resignation or removal, or any right
to damages on account of such removal.
Section 2. Effect of Death, Resignation, etc. of a Trustee. The death,
declination, resignation, retirement, removal or incapacity of the Trustees, or
any one of them, shall not operate to annul the Trust or to revoke any existing
agency created pursuant to the terms of this Declaration of Trust.
Section 3. Powers. Subject to the provisions of this Declaration of Trust,
the business of the Trust shall be managed by the Trustees, and they shall have
all powers necessary or convenient to carry out that responsibility. Without
limiting the foregoing, the Trustees may adopt By-laws not inconsistent with
this Declaration of Trust providing for the conduct of the business of the Trust
and may amend and repeal them to the extent that such By-laws do not reserve
that right to the Shareholders; they may enlarge or reduce their number, may
fill vacancies in their number, including vacancies caused by enlargement of
their number, and may remove Trustees with or without cause; they may elect and
remove, with or without cause, such officers and appoint and terminate such
agents as they consider appropriate; they may appoint from their own number, and
terminate, any one or more committees consisting of two or more Trustees,
including an executive committee which may, when the Trustees are not in
session, exercise some or all of the power and authority of the Trustees as the
Trustees may determine; they may employ one or more custodians of the assets of
the Trust and may authorize such custodians to employ sub-custodians and to
deposit all or any part of such assets in a system or systems for the central
handling of securities, retain a transfer agent or a Shareholder servicing
agent, or both, provide for the distribution of Shares by the Trust, through one
or more principal underwriters or otherwise, set record dates for the
determination of Shareholders with respect to various matters, and in general
delegate such authority as they consider desirable to any officer of the Trust,
to any committee of the Trustees and to any agent or employee of the Trust or to
any such custodian or underwriter.
935545.1
4
<PAGE>
Without limiting the foregoing, the Trustees shall have power and
authority:
(a) To invest and reinvest cash, and to hold cash uninvested;
(b) To sell, exchange, lend, pledge, mortgage, hypothecate, write options
on and lease any or all of the assets of the Trust;
(c) To act as a distributor of shares and as underwriter of, or broker or
dealer in, securities or other property;
(d) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and deliver
proxies or powers of attorney to such person or persons as the Trustees shall
deem proper, granting to such person or persons such power and discretion with
relation to securities or property as the Trustees shall deem proper;
(e) To exercise powers and rights of subscription or otherwise which in any
manner arise out of ownership of securities;
(f) To hold any security or property in a form not indicating any trust,
whether in bearer, unregistered or other negotiable form, or in the name of the
Trustees or of the Trust or in the name of a custodian, sub-custodian or other
depositary or a nominee or nominees or otherwise;
(g) To allocate assets, liabilities and expenses of the Trust to a
particular series of Shares or to apportion the same among two or more series,
provided that any liabilities or expenses incurred by a particular series of
Shares shall be payable solely out of the assets of that series;
(h) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer, any security of which is
or was held in the Trust; to consent to any contract, lease, mortgage, purchase
or sale of property by such corporation or issuer, and to pay calls or
subscriptions with respect to any security held in the Trust;
(i) To join with other security holders in acting through a committee,
depositary, voting trustee or otherwise, and in that connection to deposit any
security with, or transfer any security to, any such committee, depositary or
trustee, and to delegate to them such power and authority with relation to any
security (whether or not so deposited or transferred) as the Trustees shall deem
proper, and to agree to pay, and to pay, such portion of the expenses and
compensation of such committee, depositary or trustee as the Trustees shall deem
proper;
(j) To compromise, arbitrate or otherwise adjust claims in favor of or
against the Trust or any matter in controversy, including but not limited to
claims for taxes;
(k) To enter into joint ventures, general or limited partnerships and any
other combinations or associations;
(l) To borrow funds;
935545.1
5
<PAGE>
(m) To enter into contracts of every kind and description;
(n) To endorse or guarantee the payment of any notes or other obligations
of any person; to make contracts of guaranty or suretyship, or otherwise assume
liability for payment thereof; and to mortgage and pledge the Trust property or
any part thereof to secure any of or all such obligations;
(o) To purchase and pay for entirely out of Trust property such insurance
as they may deem necessary or appropriate for the conduct of the business,
including without limitation, insurance policies insuring the assets of the
Trust and payment of distributions and principal on its portfolio investments,
and insurance policies insuring the Shareholders, Trustees, officers, employees,
agents, investment advisers or managers, principal underwriters, or independent
contractors of the Trust individually against all claims and liabilities of
every nature arising by reason of holding, being or having held any such office
or position, or by reason of any action alleged to have been taken or omitted by
any such person as Shareholder, Trustee, officer, employee, agent, investment
adviser or manager, principal underwriter, or independent contractor, including
any action taken or omitted that may be determined to constitute negligence,
whether or not the Trust would have the power to indemnify such person against
such liability;
(p) To pay pensions for faithful service, as deemed appropriate by the
Trustees, and to adopt, establish and carry out pension, profit-sharing, share
bonus, share purchase, savings, thrift and other retirement, incentive and
benefit plans, trusts and provisions, including the purchasing of life insurance
and annuity contracts as a means of providing such retirement and other
benefits, for any or all of the Trustees, officers, employees and agents of the
Trust; and
(q) To engage in any other lawful act or activity in which corporations
organized under the Massachusetts Business Corporation Law may engage.
The Trustees shall not in any way be bound or limited by any present or
future law or custom in regard to investments by trustees.
Except as otherwise provided herein or from time to time in the By-laws,
any action to be taken by the Trustees may be taken by a majority of the
Trustees present at a meeting of Trustees (a quorum being present), within or
without Massachusetts, including any meeting held by means of a conference
telephone or other communications equipment by means of which all persons
participating in the meeting can hear each other at the same time and
participation by such means shall constitute presence in person at a meeting, or
by written consents of a majority of the Trustees then in office.
Section 4. Payment of Expenses by Trust. The Trustees are authorized to pay
or to cause to be paid out of the principal or income of the Trust, or partly
out of principal and partly out of income, as they deem fair, all expenses,
fees, charges, taxes and liabilities incurred or arising in connection with the
Trust, in connection with the management thereof, or in connection with the
financing of the sale of Shares, including, but not limited to, the Trustees'
compensation and such expenses and charges for the services of the Trust's
officers, employees, any investment adviser, manager, or sub-adviser, principal
underwriter, auditor, counsel, custodian, transfer
935545.1
6
<PAGE>
agent, shareholder servicing agent, and such other agents or independent
contractors and such other expenses and charges as the Trustees may deem
necessary or proper to incur, provided, however, that all expenses, fees,
charges, taxes and liabilities incurred or arising in connection with a
particular series of Shares as determined by the Trustees, shall be payable
solely out of the assets of that series.
Section 5. Ownership of Assets of the Trust. Title to all of the assets of
each series of Shares and of the Trust shall at all times be considered as
vested in the Trustees.
Section 6. Advisory, Management and Distribution Services. The Trustees
may, at any time and from time to time, contract for exclusive or nonexclusive
advisory and/or management services with any corporation, trust, association or
other organization (the "Manager"), every such contract to comply with such
requirements and restrictions as may be set forth in the By-laws; and any such
contract may provide for one or more subadvisers who shall perform all or part
of the obligations of the Manager under such contract and may contain such other
terms interpretive of or in addition to said requirements and restrictions as
the Trustees may determine, including, without limitation, authority to
determine from time to time what investments shall be purchased, held, sold or
exchanged and what portion, if any, of the assets of the Trust shall be held
uninvested and to make changes in the Trust's investments. The Trustees may
also, at any time and from time to time, contract with the Manager or any other
corporation, trust, association or other organization, appointing it exclusive
or nonexclusive distributor or principal underwriter for the Shares, every such
contract to comply with such requirements and restrictions as may be set forth
in the By-laws; and any such contract may contain such other terms interpretive
of or in addition to said requirements and restrictions as the Trustees may
determine.
The fact that:
(i) any of the Shareholders, Trustees or officers of the Trust is a
shareholder, director, officer, partner, trustee, employee, manager, adviser,
principal underwriter or distributor or agent of or for any corporation, trust,
association, or other organization, or of or for any parent or affiliate of any
organization, with which an advisory or management contract, or principal
underwriter's or distributor's contract, or transfer, shareholder servicing or
other agency contract may have been or may hereafter be made, or that any such
organization, or any parent or affiliate thereof, is a Shareholder or has an
interest in the Trust, or that
(ii) any corporation, trust, association or other organization with which
an advisory or management contract or principal underwriter's or distributor's
contract, or transfer, shareholder servicing or other agency contract may have
been or may hereafter be made also has an advisory or management contract, or
principal underwriter's or distributor's contract, or transfer, shareholder
servicing or other agency contract with one or more other corporations, trusts,
associations or other organizations, or has other business or interests shall
not affect the validity of any such contract or disqualify any Shareholder,
Trustee or officer of the Trust from voting upon or executing the same or create
any liability or accountability to the Trust or its Shareholders.
935545.1
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<PAGE>
ARTICLE V
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Shareholders shall have such power to vote as is provided for in, and may
hold meetings and take actions pursuant to the provisions of the By-laws. A
majority of the outstanding Trust shares may vote to remove a trustee at a
special meeting called for that purpose or by a written declaration filed with
the Trust's custodian. A special meeting of shareholders for the purpose of
removal of a trustee shall be called upon the written request of at least ten
percent (10%) of the Trust shares then outstanding. A special meeting of
shareholders may be called for any other purpose upon the request of holders of
at least 25 percent of the Trust shares then outstanding.
ARTICLE VI
DISTRIBUTIONS, REDEMPTIONS AND REPURCHASES
Section 1. Distributions. The Trustees may each year, or more frequently if
they so determine, distribute to the Shareholders of each series such income and
capital gains relating to such series, accrued or realized, as the Trustees may
determine, after providing for actual and accrued expenses and liabilities
(including such reserves as the Trustees may establish) determined in accordance
with good accounting practices. The Trustees shall have full discretion to
determine which items shall be treated as income and which items as capital and
their determination shall be binding upon the Shareholders. Distributions of
each year's income of each series shall be distributed pro rata to Shareholders
of a series in proportion to the number of Shares of such series held by each of
them. Such distributions shall be made in cash or Shares or a combination
thereof as determined by the Trustees. Any such distribution paid in Shares of a
series will be paid at the net asset value thereof as determined in accordance
with the By-laws.
Section 2. Redemptions and Repurchases. The Trust shall purchase such
Shares as are offered by any Shareholder for redemption, upon the presentation
of any certificate for the Shares to be purchased, a proper instrument of
transfer and a request directed to the Trust or a person designated by the Trust
that the Trust purchase such Shares, or in accordance with such other procedures
for redemption as the Trustees may from time to time authorize; and the Trust
will pay therefor the net asset value thereof, as next determined in accordance
with the By-laws, less such redemption charge or fee as the Trustees may
determine from time to time. Payment for said Shares shall be made by the Trust
to the Shareholder within seven days after the date on which the request is
made. The obligation set forth in this Section 2 is subject to the provision
that in the event that any time the New York Stock Exchange is closed for other
than customary weekends or holidays or, if permitted by rules of the Commission,
during periods when trading on the Exchange is restricted or during any
emergency which makes it impractical for the Trust to dispose of its investments
or to determine fairly the value of its net assets, or during any other period
permitted by order of the Commission for the protection of investors, such
obligation may be suspended or postponed by the Trustees. The Trust may also
purchase or repurchase Shares at a price not exceeding the net asset value of
such Shares in effect when the purchase or repurchase or any contract to
purchase or repurchase is made.
935545.1
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<PAGE>
Section 3. Redemptions at the Option of the Trust. The Trust shall have the
right at its option and at any time to redeem Shares of any Shareholder at the
net asset value thereof as determined in accordance with the By-laws: (i) if at
such time such Shareholder owns fewer Shares of a particular series than, or
Shares of a particular series having an aggregate net asset value of less than,
an amount determined from time to time for such series by the Trustees; or (ii)
to the extent that such Shareholder owns Shares of a particular series of Shares
equal to or in excess of a percentage of the outstanding Shares of that series
determined from time to time by the Trustees; or (iii) to the extent that such
Shareholder owns Shares of the Trust representing a percentage equal to or in
excess of such percentage of the aggregate number of outstanding Shares of the
Trust or the aggregate net asset value of the Trust determined from time to time
by the Trustees.
Section 4. Dividends, Distributions, Redemptions and Repurchases. No
dividend or distribution (including, without limitation, any distribution paid
upon termination of the Trust or of any series) with respect to, nor any
redemption or repurchase of, the Shares of any series shall be effected by the
Trust other than from the assets allocated to such series.
ARTICLE VII
COMPENSATON AND LIMITATION OF LIABILITY OF TRUSTEES
Section 1. Compensation. The Trustees as such shall be entitled to
reasonable compensation from the Trust; they may fix the amount of their
compensation. Nothing herein shall in any way prevent the employment of any
Trustee for advisory, management, legal, accounting, investment banking,
underwriting, brokerage, or investment dealer or other services and payment for
the same by the Trust.
Section 2. Limitation of Liability. The Trustees shall not be responsible
or liable in any event for any neglect or wrongdoing of any officer, agent,
employee, manager or principal underwriter of the Trust, nor shall any Trustee
be responsible for the act or omission of any other Trustee, but nothing herein
contained shall protect any Trustee against any liability 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.
Every note, bond, contract, instrument, certificate or undertaking and
every other act or thing whatsoever executed or done by or on behalf of the
Trust or the Trustees or any of them in connection with the Trust shall be
conclusively deemed to have been executed or done only in or with respect to
their or his or her capacity as Trustees or Trustee, and such Trustees or
Trustee shall not be personally liable thereon.
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<PAGE>
ARTICLE VIII
INDEMNIFICATION
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 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 mater (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
9335545.1
10
<PAGE>
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, 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.
Section 4. Shareholders. In case any Shareholder or former Shareholder
shall be held to be personally liable solely by reason of his or her being or
having been a Shareholder and not because of his or her acts or omissions or for
some other reason, the Shareholder or former Shareholder (or his or her heirs,
executors, administrators or other legal representatives or in the case of a
corporation or other entity, its corporate or other general successor) shall be
entitled to be held harmless from and indemnified against all loss and expense
arising from such liability, but only out of the assets of the particular series
of Shares of which he or she is or was a Shareholder.
935545.1
11
<PAGE>
ARTICLE IX
MISCELLANEOUS
Section 1. Trustees, Shareholders, etc. Not Personally Liable; Notice. All
persons extending credit to, contracting with or having any claim against the
Trust or a particular series of Shares shall look only to the assets of the
Trust or the assets allocated to that particular series of Shares for payment
under such credit, contract or claim; and neither the Shareholders nor the
Trustees, nor any of the Trust's officers, employees or agents, whether past,
present or future, shall be personally liable therefor. Nothing in this
Declaration of Trust shall protect any Trustee against any liability to which
such Trustee would otherwise be subject by reason of wilful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee.
Every note, bond, contract, instrument, certificate or undertaking made or
issued by the Trustees or by any officer or officers shall give notice that this
Declaration of Trust is on file with the Secretary of The Commonwealth of
Massachusetts and shall recite that the same was executed or made by or on
behalf of the Trust or by them as Trustee or Trustees or as officer or officers
and not individually and that the obligations of such instrument are not binding
upon any of them or the Shareholders individually but are binding only upon the
assets and property of the Trust, and may contain such further recital as he or
she or they may deem appropriate, but the omission thereof shall not operate to
bind any Trustee or Trustees or officer or officers or Shareholder or
Shareholders individually.
Section 2. Trustee's Good Faith Action, Expert Advice, No Bond or Surety.
The exercise by the Trustees of their powers and discretions hereunder shall be
binding upon everyone interested. A Trustee shall be liable for his or her own
wilful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office of Trustee, and for nothing else,
and shall not be liable for errors of judgment or mistakes of fact or law. The
Trustees may take advice of counsel or other experts with respect to the meaning
and operation of this Declaration of Trust, and shall be under no liability for
any act or omission in accordance with such advice or for failing to follow such
advice. The Trustees shall not be required to give any bond as such, nor any
surety if a bond is required.
Section 3. Liability of Third Persons Dealing with Trustees. No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the Trust or upon
its order.
Section 4. Duration and Termination of Trust. Unless terminated as provided
herein, the Trust shall continue without limitation of time. The Trust may be
terminated at any time by the vote of Shareholders holding at least a majority
of the Shares of each series entitled to vote or by the Trustees by written
notice to the Shareholders. Any series of Shares may be terminated at any time
by vote of Shareholders holding at least a majority of the Shares of such series
entitled to vote or by the Trustees by written notice to the Shareholders of
such series.
935545.1
12
<PAGE>
Upon termination of the Trust or of any one or more series of Shares, after
paying or otherwise providing for all charges, taxes, expenses and liabilities,
whether due or accrued or anticipated, of the Trust or of the particular series
as may be determined by the Trustees, the Trust shall in accordance with such
procedures as the Trustees consider appropriate reduce the remaining assets to
distributable form in cash or shares or other securities, or any combination
thereof, and distribute the proceeds to the Shareholders of the series involved,
ratably according to the number of Shares of such series held by the several
Shareholders of such series on the date of termination.
Section 5. Filing of Copies, References, Headings. The original or a copy
of this instrument and of each amendment hereto shall be kept at the office of
the Trust where it may be inspected by any Shareholder. A copy of this
instrument and of each amendment hereto shall be filed by the Trust with the
Secretary of the Commonwealth of Massachusetts and with the Boston City Clerk,
as well as any other governmental office where such filing may from time to time
be required. Anyone dealing with the Trust may rely on a certificate by an
officer of the Trust as to whether or not any such amendments have been made and
as to any matters in connection with the Trust hereunder, and, with the same
effect as if it were the original, may rely on a copy certified by an officer of
the Trust to be a copy of this instrument or of any such amendments. In this
instrument and in any such amendment, references to this instrument and all
expressions like "herein," "hereof" and "hereunder" shall be deemed to refer to
this instrument as amended or affected by any such amendments. Headings are
placed herein for convenience of reference only and shall not be taken as a part
hereof or control or affect the meaning, construction or effect of this
instrument. This instrument may be executed in any number of counterparts each
of which shall be deemed an original.
Section 6. Applicable Law. This Declaration of Trust is created under and
is to be governed by and construed and administered according to the laws of The
Commonwealth of Massachusetts. The Trust shall be of the type commonly called a
Massachusetts business trust, and without limiting the provisions hereof, the
Trust may exercise all powers which are ordinarily exercised by such a trust.
Section 7. Amendments. This Declaration of Trust may be amended at any time
by an instrument in writing signed by a majority of the then Trustees when
authorized to do so by vote of Shareholders holding a majority of the Shares of
each series entitled to vote, except that an amendment which shall affect the
holders of one or more series of Shares but not the holders of all outstanding
series shall be authorized by vote of the Shareholders holding a majority of the
Shares entitled to vote of each series affected and no vote of Shareholders of a
series not affected shall be required. Amendments having the purpose of changing
the name of the Trust or of supplying any omission, curing any ambiguity or
curing, correcting or supplementing any defective or inconsistent provision
contained herein shall not require authorization by Shareholder vote.
9335545.1
13
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this instrument as of the day
and year first above written.
____________________________________
Paul Lepercq
____________________________________
Bruno Desforges
The address for Messrs. Lepercq and Desforges is 345 Park Avenue, New York, NY
10154
STATE OF New York)
: ss.:
COUNTY OF New York)
On this day of February, 1986 before me personally appeared Paul
Lepercq to me known to be one of the persons described in and who executed the
foregoing instrument, and acknowledged that he executed the same as his free act
and deed.
__________________________________
Notary Public
STATE OF New York)
: ss.:
COUNTY OF New York)
On this day of February, 1986 before me personally appeared Bruno
Desforges to me known to be one of the persons described in and who executed the
foregoing instrument, and acknowledged that he executed the same as his free act
and deed.
__________________________________
Notary Public
9335545.1
14
As amended April 9, 1986
------------------------
BY-LAWS
OF
LEPERCQ-ISTEL TRUST
ARTICLE 1
Agreement and Declaration of Trust and Principal Office
1.1 Agreement and Declaration of Trust. These By-laws shall be subject to
the Agreement and Declaration of Trust, as from time to time in effect (the
"Declaration of Trust"), of Lepercq-Istel Trust, the Massachusetts business
trust established by the Declaration of Trust (the "Trust").
1.2 Principal Office of the Trust. The principal office of the Trust shall
be located within or without Massachusetts as the Trustees may determine or as
they may authorize.
ARTICLE 2
Meetings of Trustees
2.1 Regular Meetings. Regular meetings of the Trustees may be held without
call or notice at such places and at such times as the Trustees may from time to
time determine, provided that notice of the first regular meeting following any
such determination shall be given to absent Trustees. A regular meeting of the
Trustees may be held without call or notice immediately after and at the same
place as the annual meeting of the shareholders.
2.2 Special Meetings. Special meetings of the Trustees may be held at any
time and at any place designated in the call of the meeting when called by the
Chairman of the Trustees, the President or the Treasurer or by two or more
Trustees, sufficient notice thereof being given to each Trustee by the Secretary
or an Assistant Secretary or by the officer or the Trustees calling the meeting.
2.3 Notice. It shall be sufficient notice to the Trustee of a special
meeting to send notice by mail at least forty-eight hours or by telegram, telex
or telecopy or other electronic facsimile transmission method at least
twenty-four hours before the meeting addressed to the Trustee at his or her
usual or last known business or residence address or to give notice to him or
her in person or by telephone at least twenty-four hours before the meeting.
Notice of a meeting need not be given to any Trustee if a written waiver of
notice, executed by him or her before the meeting, is
<PAGE>
filed with the records of the meeting, or to any Trustee who attends the meeting
without protesting prior thereto or at its commencement the lack of notice to
him or her. Neither notice of a meeting nor a waiver of a notice need specify
the purposes of the meeting.
2.4 Quorum. At any meeting of the Trustees a majority of the Trustees then
in office shall constitute a quorum. Any meeting may be adjourned from time to
time by a majority of the votes cast upon the question, whether or not a quorum
is present, and the meeting may be held as adjourned without further notice.
ARTICLE 3
Officers, Chairman of the Trustees and Agents
3.1 Enumeration; Qualification. The officers of the Trust shall be a
President, a Treasurer, a Secretary, and such other officers as the Trustees
from time to time may in their discretion elect. The Trust may also have such
agents as the Trustees from time to time may in their discretion appoint. The
Chairman of the Trustees, if one is appointed, shall be a Trustee and may but
need not be an officer or shareholder; and any officer may but need not be a
Trustee or a shareholder. Any two or more offices may be held by the same
person.
3.2 Election. The President, the Treasurer, and the Secretary shall be
elected annually by the Trustees. Other officers, if any, may be elected or
appointed by the Trustees at said meeting or at any other time. Vacancies in any
office may be filled at any time.
3.3 Tenure. The President, the Treasurer and the Secretary shall hold
office until their respective successors are chosen and qualified, or in each
case until he or she sooner dies, resigns, is removed or becomes disqualified.
Each other officer shall hold office and the Chairman of the Trustees, if one is
appointed and each agent shall retain authority at the pleasure of the Trustees.
3.4 Powers. Subject to the other provisions of these By-laws, each officer
shall have, in addition to the duties and powers herein and in the Declaration
of Trust set forth, such duties and powers as are commonly incident to the
office occupied by him or her as if the Trust were organized as a Massachusetts
business corporation and such other duties and powers as the Trustees may from
time to time designate.
3.5 Chairman; President. Unless the Trustees otherwise provide, the
Chairman of the Trustees or, if there is none or in the absence of the Chairman,
the President shall preside at all meetings of the shareholders and of the
Trustees. The President shall be the chief executive officer.
3.6 Treasurer. The Treasurer shall be the chief financial and accounting
officer of the Trust, and shall, subject to the provisions of the Declaration of
Trust and to any arrangement made by the Trustees with a custodian, investment
adviser or manager, or transfer, shareholder servicing or similar agent, be in
charge of the valuable papers, books of account and accounting
<PAGE>
records of the Trust, and shall have such other duties and powers as may be
designated from time to time by the Trustees or by the President.
3.7 Secretary. The Secretary shall record all proceedings of the
shareholders and the Trustees in books to be kept therefor, which books or a
copy thereof shall be kept at the principal office of the Trust. In the absence
of the Secretary from any meeting of the shareholders or Trustees, an assistant
secretary, or if there be none or if he or she is absent, a temporary secretary
chosen at such meeting shall record the proceedings thereof in the aforesaid
books.
3.8 Resignations. Any officer may resign at any time by written instrument
signed by him or her and delivered to the Chairman, the President or the
Secretary or to a meeting of the Trustees. Such resignation shall be effective
upon receipt unless specified to be effective at some other time. Except to the
extent expressly provided in a written agreement with the Trust, no officer
resigning and no officer removed shall have any right to any compensation for
any period following his or her resignation or removal, or any right to damages
on account of such removal.
ARTICLE 4
Committees
4.1 Quorum; Voting. A majority of the members of any Committee of the
Trustees shall constitute a quorum for the transaction of business, and any
action of such a Committee may be taken at a meeting by a vote of a majority of
the members present (a quorum being present) or evidenced by one or more
writings signed by such a majority. Members of a Committee may participate in a
meeting of such Committee by means of a conference telephone or other
communications equipment by means of which all persons participating in the
meeting can hear each other at the same time and participation by such means
shall constitute presence in person at a meeting.
ARTICLE 5
Reports
5.1 General. The Trustees and officers shall render reports at the time and
in the manner required by the Declaration of Trust or any applicable law.
Officers and Committees shall render such additional reports as they may deem
desirable or as may from time to time be required by the Trustees.
ARTICLE 6
Fiscal Year
6.1 General. Except as from time to time otherwise provided by the
Trustees, the initial fiscal year of the Trust shall end on December 31.
<PAGE>
ARTICLE 7
Seal
7.1 General. The seal of the Trust shall consist of a flat-faced die with
the word "Massachusetts", together with the name of the Trust and the year of
its organization cut or engraved thereon but, unless otherwise required by the
Trustees, the seal shall not be necessary to be placed on, and its absence shall
not impair the validity of, any document, instrument or other paper executed and
delivered by or on behalf of the Trust.
ARTICLE 8
Execution of Papers
8.1 General. Except as the Trustees may generally or in particular cases
authorize the execution thereof in some other manner, all deeds, leases,
contracts, notes and other obligations made by the Trustees shall be signed by
the President or by the Treasurer and need not bear the seal of the Trust.
ARTICLE 9
Issuance of Share Certificates
9.1 Share Certificates. In lieu of issuing certificates for shares, the
Trustees or the transfer agent may either issue receipts therefor or may keep
accounts upon the books of the Trust for the record holders of such shares, who
shall in either case be deemed, for all purposes hereunder, to be the holders of
certificates for such shares as if they had accepted such certificates and shall
be held to have expressly assented and agreed to the terms hereof.
The Trustees may at any time authorize the issuance of share certificates.
In that event, each shareholder shall be entitled to a certificate stating the
number of shares owned by him, in such form as shall be prescribed from time to
time by the Trustees. Such certificates shall be signed by the president or
vice-president and by the treasurer or assistant treasurer. Such signatures may
be facsimile if the certificate is signed by a transfer agent, or by a
registrar, other than a Trustee, officer or employee of the Trust. In case any
officer who has signed or whose facsimile signature has been placed on such
certificate shall cease to be such officer before such certificate is issued, it
my be issued by the Trust with the same effect as if he were such officer at the
time of its issue.
9.2 Loss of Certificates. In case of the alleged loss or destruction or the
mutilation of a share certificate, a duplicate certificate may be issued in
place thereof, upon such terms as the Trustees shall prescribe.
<PAGE>
9.3 Issuance of New Certificates to Pledgee. A pledgee of shares
transferred as collateral security shall be entitled to a new certificate if the
instrument of transfer substantially describes the debt or duty that is intended
to be secured thereby. Such new certificates shall express on its face that it
is held as collateral security, and the name of the pledgor shall be stated
thereon, who alone shall be liable as a shareholder and entitled to vote
thereon.
9.4 Discontinuance of Issuance of Certificates. The Trustees may at any
time discontinue the issuance of share certificates and may, by written notice
to each shareholder, require the surrender of share certificates to the Trust
for cancellation. Such surrender and cancellation shall not effect the ownership
of shares in the Trust.
ARTICLE 10
Provisions Relating to the Conduct of the Trust's Business
10.1 Certain Definitions. When used herein the following words shall have
the following meanings: "Distributor" shall mean any one or more corporations,
firms or associations which have distributor's or principal underwriter's
contracts in effect with the Trust providing that redeemable shares issued by
the Trust shall be offered and sold by such Distributor. "Adviser" shall mean
any corporation, firm or association which may at the time have an advisory or
management contract with the Trust and any corporation, firm or association
which may at any time have a sub-advisory contract relating to the Trust with
any such Adviser.
10.2 Limitation on Holdings by the Trust of Certain Securities and on
Dealings with Officers or Trustees. The Trust may not purchase or retain shares
or securities issued by an issuer if one or more of the holders of the shares or
securities issued by an issuer or one or more of the officers or directors of
such issuer is an officer or Trustee of the Trust or officer or director of the
Adviser and if one or more of such officers, Trustees or directors owns
beneficially more than 1/2 of 1% of the shares or securities, or both, of such
issuer and such officers, Trustees and directors owning more than 1/2 of 1% of
such shares or securities together own beneficially more than 5% of such shares
or securities. Each officer and Trustee of the Trust shall keep the Treasurer of
the Trust informed of the names of all issuers shares or securities of which are
held in the portfolio of the Trust in which such officer or Trustee owns as much
as 1/2 of 1% of the outstanding shares or securities.
The Trust will not lend any of its assets to the Distributor or Adviser or
to any officer or director of the Distributor or Adviser or any officer or
Trustee of the Trust, and shall not permit any officer or Trustee or any officer
or director of the Distributor or Adviser to deal for or on behalf of the Trust
with himself or herself as principal or agent, or with any partnership,
association or corporation in which he or she has a financial interest; provided
that the foregoing provisions shall not prevent (a) officers and Trustees of the
Trust or officers and directors of the Distributor or Adviser from buying,
holding or selling shares in the Trust or from being partners, officers or
directors of or otherwise financially interested in the Distributor or the
Adviser; (b) purchases or sales of securities or other property if such
transaction is permitted by or is exempt or exempted from the provisions of the
Investment Company Act of 1940 or any Rule
<PAGE>
or Regulation thereunder; (c) employment of legal counsel, registrar, transfer
agent, shareholder servicing agent, dividend disbursing agent or custodian who
is, or has a partner, shareholder, officer or director who is, an officer or
Trustee of the Trust or an officer or director of the Distributor or Adviser;
(d) sharing statistical, research, legal and management expenses and officer
hire and expenses with any other investment company in which an officer or
Trustee of the Trust or an officer or director of the Distributor or Adviser is
an officer or director or otherwise financially interested.
10.3 Limitation on Dealing in Securities of the Trust by Certain Officers,
Trustees, Distributor or Adviser. Neither the Distributor nor Adviser, nor any
officer or Trustee of the Trust or officer or director of the Distributor or
Adviser shall take long or short positions in securities issued by the Trust;
provided, however, that:
(a) the Distributor may purchase from the Trust and otherwise deal in
shares issued by the Trust pursuant to the terms of its contract with the Trust;
(b) any officer or Trustee of the Trust or officer or director of the
Distributor or Adviser or any trustee or fiduciary for the benefit of any of
them may at any time, or from time to time, purchase from the Trust or from the
Distributor shares issued by the Trust at the price available to the public or
to such officer, Trustee, director, trustee or fiduciary, no such purchase to be
in contravention of any applicable state or federal requirement; and
(c) the Distributor or the Adviser may at any time, or from time to
time, purchase for investment shares issued by the Trust.
10.4 Securities and Cash of the Trust to be held by Custodian subject to
certain Terms and Conditions.
(a) All securities and cash owned by this Trust shall be held by or
deposited with a company which is a member of a national securities exchange as
defined in the Securities Act of 1934, or one or more banks or trust companies
having (according to its last published report) not less than $5,000,000
aggregate capital, surplus and undivided profits (any such member of a national
securities exchange or bank or trust company being hereby designated as
"Custodian"), provided such a Custodian can be found ready and willing to act;
subject to such rules regulations and orders, if any, as the Securities and
Exchange Commission may adopt, this Trust may, or may permit any Custodian to,
deposit all or any part of the securities owned by this Trust in a system for
the central handling of securities pursuant to which all securities of any
particular class or series of any issue deposited within the system may be
transferred or pledged by bookkeeping entry, without physical delivery. The
Custodian may appoint, subject to the approval of the Trustees, one or more
sub-custodians.
(b) The Trust shall enter into a written contract with each Custodian
regarding the powers, duties and compensation of such Custodian with respect to
the cash and securities of the Trust held by such Custodian. Said contract and
all amendments thereto shall be approved by the Trustees.
<PAGE>
(c) The Trust shall upon the resignation or inability to serve of any
Custodian or upon change of any Custodian:
(i) in case of such resignation or inability to serve, use its
best efforts to obtain a successor Custodian;
(ii) require that the cash and securities owned by the Trust be
delivered directly to the successor Custodian; and
(iii) in the event that no successor Custodian can be found,
submit to the shareholders, before permitting delivery of the cash and
securities owned by the Trust otherwise than to a successor Custodian, the
question whether the Trust shall be liquidated or shall function without a
Custodian.
10.5 Requirements and Restrictions Regarding the Management Contract. Every
advisory or management contract entered into by the Trust shall provide that in
the event that the total expenses of any series of shares of the Trust for any
fiscal year should exceed the limits imposed on investment company expenses
imposed by any statute or regulatory authority of any jurisdiction in which
shares of the Trust are offered for sale, the compensation due the Adviser for
such fiscal year shall be reduced by the amount of such excess by a reduction or
refund thereof.
10.6 Reports to Shareholders; Distributions from Realized Gains. The Trust
shall send to each shareholder of record at least semi-annually a statement of
the condition of the Trust and of the results of its operations, containing all
information required by applicable laws or regulations.
10.7 Determination of Net Asset Value Per Share. Net asset value per share
of each series of shares of the Trust shall mean: (i) the value of all the
assets of such series; (ii) less total liabilities of such series; (iii) divided
by the number of shares of such series outstanding, in each case at the time of
each determination. The net asset value per share of each series shall be
determined as of the normal close of trading on the New York Stock Exchange on
each day on which such Exchange is open. As of any time other than the normal
close of trading on such Exchange, the Trustees may cause the net asset value
per share last determined to be determined again in a similar manner or adjusted
to reflect changes in market values of securities in the portfolio, such
adjustment to be made on the basis of changes in selected security prices
determined by the Trustees to be relevant to the portfolio of such series or in
averages or in other standard and readily ascertainable market data, and the
Trustees may fix the time when such redetermined or adjusted net asset value per
share of each series shall become effective.
In valuing the portfolio investments of any series for determination of net
asset value per share of such series, securities for which market quotations are
readily available shall be valued at prices which, in the opinion of the
Trustees or the person designated by the Trustees to make the determination,
most nearly represent the market value of such securities, and other securities
<PAGE>
and assets shall be valued at their fair value as determined by or pursuant to
the direction of the Trustees, which in the case of short-term debt obligations,
commercial paper and repurchase agreements may, but need not, be on the basis of
quoted yields for securities of comparable maturity, quality and type, or on the
basis of amortized cost. Expenses and liabilities of the Trust shall be accrued
each day. Liabilities may include such reserves for taxes, estimated accrued
expenses and contingencies as the Trustees or their designates may in their sole
discretion deem fair and reasonable under the circumstances. No accruals shall
be made in respect of taxes on unrealized appreciation of securities owned
unless the Trustees shall otherwise determine. Dividends payable by the Trust
shall be deducted as at the time of but immediately prior to the determination
of net asset value per share on the record date therefor.
ARTICLE 11
Shareholders' Voting Powers and Meetings
11.1 Voting Powers. The Shareholders shall have power to vote only (i) for
the election of Trustees as provided in Article IV, Section 1 and Article V of
the Declaration of Trust, provided, however, that no meeting of Shareholders is
required to be called for the purpose of electing Trustees unless and until such
time as less than a majority of the Trustees have been elected by the
Shareholders, (ii) with respect to any Adviser or Sub-Adviser as provided in
Article IV, Section 6 of the Declaration of Trust to the extent required by the
Investment Company Act of 1940 and the rules and regulations thereunder, (iii)
with respect to any termination of this Trust to the extent and as provided in
Article IX, Section 4 of the Declaration of Trust, (iv) with respect to any
amendment of the Declaration of Trust to the extent and as provided in Article
IX, Section 7 of the Declaration of Trust, (v) to the same extent as the
stockholders of a Massachusetts business corporation as to whether or not a
court action, proceeding or claim should or should not be brought or maintained
derivatively or as a class action on behalf of the Trust or the Shareholders,
and (vi) with respect to such additional matters relating to the Trust as may be
required by law, the Declaration of Trust, these By-laws or any registration of
the Trust with the Commission (or any successor agency) or any state, or as the
Trustees may consider necessary or desirable. Each whole Share shall be entitled
to one vote as to any matter on which it is entitled to vote and each fractional
Share shall be entitled to a proportionate fractional vote. On any matter
submitted to a vote of Shareholders all Shares of the Trust then entitled to
vote shall be voted by individual series, except (i) when required by the 1940
Act, Shares shall be voted in the aggregate and not by individual series and
(ii) when the Trustees have determined that the mater affects only the interests
of one or more series, then only Shareholders of such series shall be entitled
to vote thereon. There shall be no cumulative voting in the election of
Trustees. Shares held in the name of two or more persons shall be valid if
executed by any one of them unless at or prior to exercise of the proxy the
Trust receives a specific written notice to the contrary from any one of them. A
proxy purporting to be executed by or on behalf of a Shareholder shall be deemed
valid unless challenged at or prior to its exercise and the burden of proving
invalidity shall rest on the challenger. Until Shares are issued, the Trustees
may exercise all rights of Shareholders and may take any action required by law,
the Declaration of Trust or these By-laws to be taken by Shareholders.
<PAGE>
11.2 Voting Power and Meetings. Meetings of the Shareholders may be called
by the Trustees for the purpose of electing Trustees as provided in Article IV,
Section 1 of the Declaration of Trust and for such other purposes as may be
prescribed by law, by the Declaration of Trust or by these By-laws. Meetings of
the Shareholders may also be called by the Trustees from time to time for the
purpose of taking action upon any other matter deemed by the Trustees to be
necessary or desirable. A meeting of Shareholders may be held at any place
designated by the Trustees. Written notice of any meeting of Shareholders shall
be given or caused to be given by the Trustees by mailing such notice at least
seven days before such meeting, postage prepaid, stating the time and place of
the meeting, to each Shareholder at the Shareholder's address as it appears on
the records of the Trust. Whenever notice of a meeting is required to be given
to a Shareholder under the Declaration of Trust or these By-laws, a written
waiver thereof, executed before or after the meeting by such Shareholder or his
attorney thereunto authorized and filed with the records of the meeting, shall
be deemed equivalent to such notice.
11.3 Quorum and Required Vote. A majority of Shares entitled to vote shall
be a quorum for the transaction of business at a Shareholders' meeting, except
that where any provision of law or of the Declaration of Trust or these By-laws
permits or requires that holders of any series shall vote as a series, then a
majority of the aggregate number of Shares of that series entitled to vote shall
be necessary to constitute a quorum for the transaction of business by that
series. Any lesser number shall be sufficient for adjournments. Any adjourned
session or sessions may be held, within a reasonable time after the date set for
the original meeting, without the necessity of further notice. Except when a
larger vote is required by any provision of law or the Declaration of Trust or
these By-laws, a majority of the Shares voted shall decide any questions and a
plurality shall elect a Trustee, provided that where any provision of law or of
the Declaration of Trust or these By-laws permits or requires that the holders
of any series shall vote as a series, then a majority of the Shares of that
series voted on the matter (or a plurality with respect to the election of a
Trustee) shall decide that matter insofar as that series is concerned.
11.4 Action by Written Consent. Any action taken by Shareholders may be
taken without a meeting if a majority of Shareholders entitled to vote on the
matter (or such larger proportion thereof as shall be required by any express
provision of law or the Declaration of Trust or these By-laws) consent to the
action in writing and such written consents are filed with the records of the
meetings of Shareholders. Such consent shall be treated for all purposes as a
vote taken at a meeting of Shareholders.
11.5 Record Dates. For the purpose of determining the Shareholders who are
entitled to vote or act at any meeting or any adjournment thereof, or who are
entitled to receive payment of any dividend or of any other distribution, the
Trustees may from time to time fix a time, which shall be not more than 60 days
before the date of any meeting of Shareholders or the date for the payment of
any dividend or of any other distribution, as the record date for determining
the Shareholders having the right to notice of and to vote at such meeting and
any adjournment thereof or the right to receive such dividend or distribution,
and in such case only Shareholders of record on such record date shall have such
right notwithstanding any transfer of shares on the
<PAGE>
books of the Trust after the record date; or without fixing such record date the
Trustees may for any of such purposes close the register or transfer books for
all or any part of such period.
ARTICLE 12
Amendments to the By-laws
12.1 General. These By-laws may be amended or repealed, in whole or in
part, by a majority of the Trustees then in office at any meeting of the
Trustees, or by one or more writings signed by such a majority.
* * *
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made this 30th day of March, 1988 by and between
LEPERCQ-ISTEL TRUST, a Massachusetts Business Trust (the "Trust") and LEPERCQ,
DE NEUFLIZE & CO. INCORPORATED, a New York corporation (the "Adviser"), with
respect to the following recital of fact:
R E C I T A L
WHEREAS, the Trust is registered as an open-end, diversified management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and is engaged in the business of
acting as an investment adviser; and
WHEREAS, the Trust offers its shares in several series; and
WHEREAS, the Trust and the Adviser desire to enter into an agreement to
provide for the management of the assets of Lepercq-Istel Fund (the "Fund") on
the terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt whereof is
hereby acknowledged, the parties hereto agree as follows:
1. Investment Management. The Advisor shall act as investment adviser
for the Fund and shall, in such capacity, supervise the investment and
reinvestment of the cash, securities or other properties comprising the Fund's
assets, subject at all times to the policies and control of the Trust's
Trustees. The Adviser shall give the Fund the benefit of its best judgment,
efforts and facilities in rendering its services as investment adviser.
2. Duties of Investment Adviser. In carrying out its obligation under
paragraph 1 hereof, the Adviser shall:
(a) obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data, domestic,
foreign or otherwise, whether affecting the economy generally or the
portfolio of the Fund, and whether concerning the individual companies
whose securities are included in the Fund's portfolio or the activities
in which they engage, or with respect to
922941.1
<PAGE>
securities which the Adviser considers desirable for inclusion in the
Fund's portfolio.
(b) determine what industries and companies shall be represented
in the Fund's portfolio and regularly report upon them to the Trust's
Trustees;
(c) formulate and implement continuing programs for the purchases
and sales of the securities of such companies and regularly report
thereon to the Trust's Trustees; and
(d) take, on behalf of the Fund, all actions which appear to the
Fund necessary to carry into effect such purchase and sale programs and
supervisory functions as aforesaid, including the placing of orders for
the purchase and sale of portfolio securities.
3. Broker-Dealer Relationships. The Adviser is responsible for
decisions to buy and sell securities for the Fund, broker-dealer selection, and
negotiation of its brokerage commission rates. The Adviser may select Lepercq,
de Neuflize Securities Inc. as the broker- dealer to effect security
transactions which are effected on The New York Stock Exchange, Inc. or the
American Stock Exchange or which are listed on NASDAQ. The Adviser's primary
consideration in effecting a security transaction will be execution at a price
that is reasonable and fair compared to the commission, fee or other
remuneration received or to be received by other brokers in connection with
comparable transactions including similar securities being purchased or sold on
a securities exchange during a comparable period of time.
In selecting a broker-dealer to execute each particular transaction,
the Adviser will take the following into consideration: the best net price
available; the reliability, integrity and financial condition of the
broker-dealer; the size of and difficulty in executing the order; and the value
of the expected contribution of the broker-dealer to the investment performance
of the Fund on a continuing basis. Accordingly, the price to the Fund in any
transaction may be less favorable than that available from another broker-dealer
if the difference is reasonably justified by other aspects of the portfolio
execution services offered. Subject to such policies and procedures as the
Trustees may determine, the Adviser shall not be deemed to have acted unlawfully
or to have breached any duty created by this Agreement or otherwise solely by
reason of its having caused the Fund to pay a broker or dealer that provides
brokerage and research services to the Adviser for the Fund's use an amount of
commission for effecting a portfolio investment transaction in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction, if the Advisor determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or the Adviser's overall responsibilities with respect to
the Fund. The Adviser is further authorized to allocate the orders placed by it
on behalf of the Fund to such
922941.1
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<PAGE>
brokers and dealers who also provide research or statistical material, or other
services to the Fund or the Adviser for the Fund's use. Such allocation shall be
in such amounts and proportions as the Adviser shall determine and the Adviser
will report on said allocations regularly to the Trustees of the Trust
indicating the brokers to whom such allocations have been made and the basis
therefor.
4. Control by Trustees. Any investment program undertaken by the
Adviser pursuant to this Agreement, as well as any other activities undertaken
by the Adviser on behalf of the Fund thereto, shall at all times be subject to
any directives of the Trustees of the Trust.
5. Compliance with Applicable Requirements. In carrying out its
obligations under this Agreement, the Advisor shall at all times conform to:
(a) all applicable provisions of the 1940 Act and any rules and
regulations adopted thereunder;
(b) the provisions of the Registration Statements of the Trust
under the Securities Act of 1933 and the 1940 Act;
(c) the provisions of the Declaration of Trust of the Trust, as
amended;
(d) the provisions of the By-laws of the Trust, as amended; and
(e) any other applicable provisions of state and Federal law.
6. Expenses. The expenses connected with the Fund shall be allocable
between the Fund and the Adviser as follows:
(a) The Adviser shall furnish, at its expense and without cost to
the Fund, the services of a President, Secretary and one or more Vice
Presidents of the Trust, to the extent that such additional officers
may be required by the Trust for the proper conduct of its affairs.
(b) The Adviser shall further maintain, at its expense and without
cost to the Fund, a trading function in order to carry out its
obligations under subparagraph (d) of paragraph 2 hereof to place
orders for the purchase and sale of portfolio securities for the Fund.
(c) Nothing in subparagraph (a) hereof shall be construed to
require the Adviser to bear:
922941.1
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<PAGE>
(i) any of the costs (including applicable office space,
facilities and equipment) of the services of a principal financial
officer of the Trust whose normal duties consist of maintaining
the financial accounts and books and records of the Fund;
including the reviewing of calculations of daily net asset value
and preparing tax returns; or
(ii) any of the costs (including applicable office space,
facilities and equipment) of the services of any of the personnel
operating under the direction of such principal financial officer.
Notwithstanding the obligation of the Fund to bear the expense of
the functions referred to in clauses (i) and (ii) of this
subparagraph (c), the Adviser may pay the salaries, including any
applicable employment or payroll taxes and other salary costs, of
the principal financial officer and other personnel carrying out
such functions and the Fund shall reimburse the Adviser therefor
upon proper accounting.
(d) All of the ordinary business expenses incurred in the
operations of the Fund and the offering of its shares shall be borne by
the Fund unless specifically provided otherwise in this paragraph 6.
These expenses include but are not limited to brokerage commissions,
legal, auditing, taxes or governmental fees, the cost of preparing
share certificates, custodian, transfer and shareholder service agent
costs, expenses of issue, sale, redemption and repurchase of shares,
expenses of registering and qualifying shares for sale, expenses
relating to trustee and shareholder meetings, the cost of preparing and
distributing reports and notices to shareholders, the fees and other
expenses incurred by the Fund in connection with membership in
investment company organizations and the cost of printing copies of
prospectuses and statements of additional information distributed to
shareholders.
7. Delegation of Responsibilities. Upon the request of the Trustees,
the Adviser may perform services on behalf of the Fund which are not required by
this Agreement. Such services will be performed on behalf of the Fund and the
Adviser's cost in rendering such services may be billed monthly to the Fund,
subject to examination by the Fund's independent accountants. Payment or
assumption by the Adviser of any Fund expense that the Adviser is not required
to pay or assume under this Agreement shall not relieve the Adviser of any of
its obligations to the Fund nor obligate the Adviser to pay or assume any
similar Fund expense on any subsequent occasions.
8. Compensation. The Fund shall pay the Adviser in full compensation
for services rendered hereunder an annual investment advisory fee, payable
quarterly, of 3/4 of 1% of the average daily net assets of the Fund. The average
daily net assets of the Fund shall be determined in the manner set forth in the
Declaration of Trust and prospectus of the Trust.
922941.1
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<PAGE>
9. Expense Limitation. If, for any fiscal year, the total of all
ordinary business expenses of the Fund, including all investment advisory fees
but excluding brokerage commissions and fees, taxes, interest and extraordinary
expenses such as litigation, would exceed the expense limitations applicable to
the Fund imposed by the securities laws or regulations thereunder of any state
in which the Fund's shares are qualified for sale, the aggregate of all such
investment advisory fees shall be reduced by the amount of such excess. The
amount of any such reduction to be borne by the Adviser shall be deducted from
the quarterly investment advisory fee otherwise payable to the Adviser during
such fiscal year; and if such amount should exceed such quarterly fee, the
Adviser agrees to pay to the Fund such excess expenses no later than the last
day of the first month of the next succeeding fiscal year. For the purposes of
this paragraph, the term "fiscal year" shall exclude the portion of the current
fiscal year which shall have elapsed prior to the date hereof and shall include
the portion of the then current fiscal year which shall have elapsed at the date
of termination of this Agreement.
10. Non-Exclusivity. The services of the Adviser to the Fund are not
deemed to be exclusive, and the Adviser shall be free to render investment
advisory and corporate administrative or other services to others (including
other investment companies) and to engage in other activities. It is understood
and agreed that officers or directors of the Adviser may serve as officers or
trustees of the Trust, and that officers and trustees of the Trust may serve as
officers or directors of the Adviser to the extent permitted by law; and that
the officers and directors of the Adviser are not prohibited from engaging in
any other business activity or from rendering services to any other person, or
from serving as partners, officers or directors of any other firm or
corporation, including other investment companies.
11. Term and Approval. This Agreement shall become effective at the
close of business on the date set forth above (the "Effective Date") and shall,
unless terminated as hereinafter provided, continue in force and effect for two
years from the Effective Date and from year to year thereafter, provided that
such continuance is specifically approved at least annually:
(a) (i) by the Trustees or (ii) by the vote of a majority of the
outstanding voting securities (as defined in Section 2(a)(42) of the
1940 Act), and
(b) by the affirmative vote of a majority of the Trustees who are
not parties to this Agreement or interested persons of a party to this
Agreement (other than as Trustees), by votes cast in person at a
meeting specifically called for such purpose.
12. Termination. This Agreement may be terminated at any time, without
the payment of any penalty, by vote of the Trustees or by vote of a majority of
the Fund's
922941.1
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<PAGE>
outstanding voting securities, or by the Adviser, on sixty (60) days' written
notice to the other party. The notice provided for herein may be waived by
either party. This Agreement shall automatically terminate in the event of its
assignment, the term "assignment" for this purpose having the meaning defined in
Section 2(a)(4) of the 1940 Act.
13. Liability of Adviser and Indemnification. In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of obligations or
duties hereunder on the part of the Adviser or any of its officers, directors or
employees, it shall not be subject to liability to the Fund or to any
shareholder of the Fund for any act or omission in the course of, or connected
with, rendering services hereunder or for any losses that may, from time to
time, be sustained in the purchase, holding or sale of any security.
14. Liability of Fund Shareholders and Trustees. The Declaration of
Trust establishing the Trust, dated March 7, 1986, a copy of which, together
with the amendments thereto ("Declaration"), is on file in the office of the
Secretary of the Commonwealth of Massachusetts, provides that the name
"Lepercq-Istel Trust" refers to the Trustees under the Declaration collectively
as Trustees, but not as individuals or personally; and no Trustee, shareholder,
officer, employee or agent of the Trust may be held to any personal liability,
nor may resort be had to their private property for the satisfaction of any
obligation or claim or otherwise in connection with the affairs of the Fund but
the Fund's property only shall be liable.
15. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Trust
and that of the Adviser shall be 345 Park Avenue, New York, New York 10154.
16. Questions of Interpretation. Any question of interpretation of any
term or provision of this Agreement having a counterpart in or otherwise derived
from a term or provision of the 1940 Act shall be resolved by reference to such
term or provision of the Act and to interpretations thereof, if any, by the
United States Courts or in the absence of any controlling decision of any such
court, by rules, regulations or orders of the Securities and Exchange Commission
issued pursuant to said Act. In addition, where the effect of a requirement of
the 1940 Act reflected in any provision of this Agreement is released by rules,
regulation or order of the Securities and Exchange Commission, such provision
shall be deemed to incorporate the effect of such rule, regulation and order.
922941.1
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed in duplicate by their respective officers on the day and year first
above written.
LEPERCQ-ISTEL TRUST
Attest: By: /s/ Bruno Desforges
------------------------------------
Bruno Desforges, President
/s/ G.J. McKinney
- ------------------------------- LEPERCQ, DE NEUFLIZE & CO.
INCORPORATED
Attest: By: /s/ Barney Goodman
------------------------------------
Barney Goodman, President
/s/ G.J. McKinney
- -------------------------------
922941.1
-7-
DISTRIBUTION AGREEMENT
between
LEPERCQ-ISTEL TRUST
and
LEPERCQ, de NEUFLIZE SECURITIES INC.
THIS AGREEMENT made this 30th day of March, 1988, by and between
LEPERCQ-ISTEL TRUST, a Massachusetts business trust (hereinafter referred to as
the "Trust") on behalf of the Lepercq-Istel Aggressive Growth Fund (the "Fund"),
and Lepercq, de Neuflize Securities Inc., a New York corporation (hereinafter
referred to as the "Distributor").
W I T N E S S E T H:
In consideration of the mutual covenants herein contained and other
good and valuable consideration, the receipt whereof is hereby acknowledged, the
parties hereto agree as follows:
FIRST: The Trust hereby appoints the Distributor as its underwriter to
promote and sell shares of beneficial interest of the Fund to the public through
its sales representatives and to investment dealers in the states set forth in
Exhibit A.
SECOND: The Fund shall not sell any of its shares in the states set
forth in Exhibit A except to the Distributor and under the terms and conditions
set forth in paragraph FOURTH below. Notwithstanding the provisions of the
foregoing sentence, however,
(A) the Fund may issue shares to any other investment company or
personal holding company, or to the shareholders thereof, in exchange for all or
a majority of the shares or assets of any such company; and
(B) the Fund may issue its shares at their net asset value to any
shareholder of the Fund purchasing such shares with dividends or other cash
distributions received from the Fund pursuant to an offer made to all
shareholders; and
(C) the Fund may issue its shares to shareholders of other investment
companies, which investment companies are participating with the Fund in an
approved exchange privilege, as set forth in the then current prospectus of the
Trust, in exchange for shares of such investment companies at the respective net
asset values per share of the investment companies involved.
922935.1
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<PAGE>
THIRD: The Distributor hereby accepts appointment as underwriter for
the sale of the shares of the Fund in the states set forth in Exhibit A and
agrees that it will use its best efforts to sell such stock; provided, however,
that:
(A) the Distributor may, and when requested by the Fund shall, suspend
its efforts to effectuate sales of the shares of the Fund at any time when in
the opinion of the Distributor or of the Fund no sales should be made because of
market or other economic considerations or abnormal circumstances of any kind;
and
(B) the Fund may withdraw the offering of its shares (i) at any time
with the consent of the Distributor, or (ii) without such consent when so
required by the provisions of any statute or of any order, rule or regulation of
any governmental body having jurisdiction. It is mutually understood and agreed
that the Distributor does not undertake to sell all or any specific portion of
the shares of the Fund.
FOURTH: The price at which the shares may be sold (the "offering
price") shall be the net asset value per share. For the purpose of computing the
offering price, the net asset value per share shall be determined in the manner
provided in the By-laws of the Trust relating to shares of the Fund as amended
from time to time.
FIFTH: The Fund shall bear:
(A) the expenses of qualification of shares of the Fund for sale in
connection with such public offerings in such states as shall be selected by the
Distributor and of continuing the qualification therein until the Distributor
notifies the Fund that it does not wish such qualification continued; and
(B) all legal expenses in connection with the foregoing.
SIXTH: The Distributor shall bear:
(A) the expenses of printing and distributing prospectuses and
statements of additional information (other than those prospectuses and
statements of additional information required by applicable laws and regulations
to be distributed to shareholders by the Fund and pursuant to any Rule 12b-1
distribution plan), and any other promotional or sales literature used by the
Distributor or furnished by the Distributor to purchasers or dealers in
connection with the Distributor's activities pursuant to this Agreement;
(B) expenses of advertising used by the Distributor in connection with
such public offering; and
(C) all legal expenses in connection with the foregoing.
922935.1
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<PAGE>
SEVENTH: The Distributor will accept orders for shares of the Fund
only to the extent of purchase orders actually received and not in excess of
such orders, and it will not avail itself of any opportunity of making a profit
by expediting or withholding orders.
EIGHTH:
(A) The Trust and the Distributor shall each comply with all
applicable provisions of the Investment Company Act of 1940, the Securities Act
of 1933, and of all other Federal and state laws, rules and regulations
governing the issuance and sale of shares of the Fund.
(B) In absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of obligations or duties hereunder on the part of the
Distributor, the Fund agrees to indemnify the Distributor against any and all
claims, demands, liabilities and expenses which the Distributor may incur under
the Securities Act of 1933, or common law or otherwise, arising out of or based
upon any alleged untrue statement of a material fact contained in any
registration statement, statement of additional information or prospectus of the
Fund, or any omission of which makes any statement contained therein misleading,
unless such statement or omission was made in reliance upon, and in conformity
with information furnished to the Fund in connection therewith by or on behalf
of the Distributor. The Distributor agrees to indemnify the Fund against any and
all claims, demands, liabilities and expenses which the Fund may incur arising
out of or based upon any act or deed of sales representatives of the Distributor
which is outside the scope of their authority.
(C) The Distributor agrees to indemnify the Fund against any and all
claims, demands, liabilities and expenses which the Fund may incur under the
Securities Act of 1933, or common law or otherwise, arising out of or based upon
any alleged untrue statement of a material fact contained in any registration
statement, statement of additional information or prospectus of the Fund, or any
omission to state a material fact therein if such statement or omission was made
in reliance upon, and in conformity with, information furnished to the Fund in
connection therewith by or on behalf of the Distributor.
NINTH: Nothing herein contained shall require the Fund to take any
action contrary to any provision of Agreement and Declaration of Trust or to any
applicable statute or regulation.
TENTH: This Agreement shall become effective at the close of business
on the date hereof, and shall remain in force and effect subject to ELEVENTH
hereof and shall be submitted to shareholders for approval at the first meeting
of the Fund's shareholders which shall take place not more than two years from
the date hereof. If approved at such meeting by a vote of a majority of the
outstanding voting securities of the Fund as defined in the Investment Company
Act of 1940, the Agreement shall continue in force and effect for successive
annual periods, provided that such continuance is specifically approved at least
922935.1
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<PAGE>
annually (a)(i) by the Board of Trustees of the Trust or (ii) by vote of a
majority of the Fund's outstanding voting securities (as defined in Section
2(a)(42) of the Investment Company Act of 1940), and by vote of a majority of
the Trust's Trustees who are not interested persons (as defined in Section
2(a)(19) of the Investment Company Act of 1940) of the Distributor by votes cast
in person at a meeting called for such purpose.
ELEVENTH:
(A) This Agreement may be terminated at any time, without the payment
of any penalty, by vote of the Board of Trustees of the Trust or by vote of a
majority of the outstanding voting securities of the Fund, or by the
Distributor, on sixty (60) days written notice to the other party.
(B) This Agreement shall automatically terminate in the event of its
assignment, the term "assignment" for this purpose having the meaning defined in
Section 2(a)(4) of the Investment Company Act of 1940.
TWELFTH: A copy of the Trust's Agreement and Declaration of Trust is
on file with the Secretary of The Commonwealth of Massachusetts, and notice is
hereby given that this instrument is executed on behalf of the Trustees of the
Trust as trustees and not individually and that the obligations of this
Agreement are not binding upon any of the Trustees or shareholders individually
but are binding only upon the Fund. It is further understood and agreed that the
Distributor shall look solely to the Fund's assets and property with respect to
the enforcement of any claim.
THIRTEENTH: Any notice under this Agreement shall be in writing,
addressed and delivered, or mailed, postage paid, to the other party at such
address as such other party may designate for the receipt of such notices. Until
further notice to the other party, it is agreed that the address of the Trust
and Distributor shall be 345 Park Avenue, New York, New York 10154.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed in duplicate on the day and year first above written.
ATTEST: LEPERCQ-ISTEL TRUST
/s/ Harry DuBrin By: /s/ Bruno Desforges
- ------------------------------------ ---------------------------
Harry DuBrin, Secretary Bruno Desforges, President
ATTEST: LEPERCQ, de NEUFLIZE
SECURITIES, INC.
/s/ Harry DuBrin By: /s/ Bruno Desforges
- -------------------------- --------------------------
Harry DuBrin, Secretary Bruno Desforges, President
922935.1
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CUSTODIAN AGREEMENT
THIS AGREEMENT made on October 1, 1995, between Lepercq-Istel Trust, a
Massachusetts Business Trust conllsisting of the Lepercq-Istel Fund (hereinafter
called the ("Fund"), and FIRSTAR TRUST COMPANY, a corporation organized under
the laws of the State of Wisconsin (hereinafter called "Custodian"),
WITHNESSETH:
WHEREAS, the Fund desires that its securities and cash shall be
hereafter held and administered by Custodian pursuant to the terms of this
Agreement;
NOW, THEREFORE, in consideration of the mutual agreements herein made,
the Fund and Custodian agree as follows:
1. Definitions
The word "securities" as used herein includes stocks, shares, bonds,
debentures, notes, mortgages or other obligations, and any certificates,
receipts, warrants or other instruments representing rights to receive, purchase
or subscribe for the same, or evidencing or representing any other rights or
interests therein, or in any property or assets.
The words "officers' certificate" shall mean a request or direction or
certification in writing signed in the name of the Fund by any two of the
President, a Vice President, the Secretary and the Treasurer of the Fund, or any
other persons duly authorized to sign by the Board of Trustees.
The word "Board" shall mean Board of Trustees of Lepercq-Istel Trust.
2. Names, Titles, and Signatures of the Fund's Officers
An officer of the Fund will certify to Custodian the names and
signatures of those persons authorized to sign the officers' certificates
described in Section 1 hereof, and the names of the members of the Board of
Trustees, together with any changes which may occur from time to time.
3. Receipt and Disbursement of Money
A. Custodian shall open and maintain a separate account or accounts in
the name of the Fund, subject only to draft or order by Custodian acting
pursuant to the terms of this Agreement. Custodian shall hold in such account or
accounts, subject to the provisions hereof, all cash received by it from or for
the account of the Fund. Custodian shall make payments of cash to, or for the
account of, the Fund from such cash only:
<PAGE>
(a) for the purchase of securities for the portfolio of the Fund upon
the delivery of such securities to Custodian, registered in the
name of the Fund or of the nominee of Custodian referred to in
Section 7 or in proper form for transfer;
(b) for the purchase or redemption of shares of the common stock of
the Fund upon delivery thereof to Custodian, or upon proper
instructions from Lepercq-Istel Trust;
(c) for the payment of interest, dividends, taxes, investment
adviser's fees or operating expenses (including, without
limitation thereto, fees for legal, accounting, auditing and
custodian services and expenses for printing and postage);
(d) for payments in connection with the conversion, exchange or
surrender of securities owned or subscribed to by the Fund held by
or to be delivered to Custodian; or
(e) for other proper corporate purposes certified by resolution of the
Board of Trustees of the Fund.
Before making any such payment, Custodian shall receive (and may rely
upon) an officers' certificate requesting such payment and stating that it is
for a purpose permitted under the terms of items (a), (b), (c), or (d) of this
Subsection A, and also, in respect of item (e), upon receipt of an officers'
certificate specifying the amount of such payment, setting forth the purpose for
which such payment is to be made, declaring such purpose to be a proper
corporate purpose, and naming the person or persons to whom such payment is to
be made, provided, however, that an officers' certificate need not precede the
disbursement of cash for the purpose of purchasing a money market instrument, or
any other security with same or next-day settlement, if the President, a Vice
President, the Secretary or the Treasurer of the Fund issues appropriate oral or
facsimile instructions to Custodian and an appropriate officers' is received by
Custodian within two business days thereafter.
B. Custodian is hereby authorized to endorse and collect all checks,
drafts or other orders for the payment of money received by Custodian for the
account of the Fund.
C. Custodian shall, upon receipt of proper instructions, make federal
funds available to the Fund as of specified times agreed upon from time to time
by the Fund and the custodian in the amount of checks received in payment for
shares of the Fund which are deposited into the Fund's account.
2
<PAGE>
4. Segregated Accounts
Upon receipt of proper instructions, the Custodian shall establish and
maintain a segregated account(s) for and on behalf of the portfolio, into which
account(s) may be transferred cash and/or securities.
5. Transfer, Exchange, Redelivery, etc. of Securities
Custodian shall have sole power to release or deliver any securities of
the Fund held by it pursuant to this Agreement. Custodian agrees to transfer,
exchange or deliver securities held by it hereunder only:
(a) for sales of such securities for the account of the Fund upon
receipt by Custodian of payment therefore;
(b) when such securities are called, redeemed or retired or otherwise
become payable;
(c) for examination by any broker selling any such securities in
accordance with "street delivery" custom;
(d) in exchange for, or upon conversion into, other securities alone
or other securities and cash whether pursuant to any plan of
merger, consolidation, reorganization, recapitalization or
readjustment, or otherwise;
(e) upon conversion of such securities pursuant to their terms into
other securities;
(f) upon exercise of subscription, purchase or other similar rights
represented by such securities;
(g) for the purpose of exchanging interim receipts or temporary
securities for definitive securities;
(h) for the purpose of redeeming in kind shares of common stock of the
Fund upon delivery thereof to Custodian; or
(i) for other proper corporate purposes.
As to any deliveries made by Custodian pursuant to items (a), (b), (d),
(e), (f), and (g), securities or cash receivable in exchange therefore shall be
deliverable to Custodian.
Before making any such transfer, exchange or delivery, Custodian shall
receive (and may rely upon) an officers' certificate requesting such transfer,
exchange or delivery, and stating that it is for a purpose permitted under the
terms of items (a), (b), (c), (d), (e), (f), (g), or (h) of this Section 5 and
also, in respect of item (i), upon receipt of an officers' certificate
specifying the
3
<PAGE>
securities to be delivered, setting forth the purpose for which
such delivery is to be made, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom delivery of such securities
shall be made, provided, however, that an officers' certificate need not precede
any such transfer, exchange or delivery of a money market instrument, or any
other security with same or next-day settlement, if the President, a Vice
President, the Secretary or the Treasurer of the Fund issues appropriate oral or
facsimile instructions to Custodian and an appropriate officers' certificate is
received by Custodian within two business days thereafter.
6. Custodian's Acts Without Instructions
Unless and until Custodian receives an officers' certificate to the
contrary, Custodian shall: (a) present for payment all coupons and other income
items held by it for the account of the Fund, which call for payment upon
presentation and hold the cash received by it upon such payment for the account
of the Fund; (b) collect interest and cash dividends received, with notice to
the Fund, for the account of the Fund; (c) hold for the account of the Fund
hereunder all stock dividends, rights and similar securities issued with respect
to any securities held by it hereunder; and (d) execute, as agent on behalf of
the Fund, all necessary ownership certificates required by the Internal Revenue
Code or the Income Tax Regulations of the United States Treasury Department or
under the laws of any state now or hereafter in effect, inserting the Fund's
name on such certificates as the owner of the securities covered thereby, to the
extent it may lawfully do so.
7. Registration of Securities
Except as otherwise directed by an officers' certificate, Custodian
shall register all securities, except such as are in bearer form, in the name of
a registered nominee of Custodian as defined in the Internal Revenue Code and
any Regulations of the Treasury Department issued hereunder or in any provision
of any subsequent federal tax law exempting such transaction from liability for
stock transfer taxes, and shall execute and deliver all such certificates in
connection therewith as may be required by such laws or regulations or under the
laws of any state. Custodian shall use its best efforts to the end that the
specific securities held by it hereunder shall be at all times identifiable in
its records.
The Fund shall from time to time furnish to Custodian appropriate
instruments to enable Custodian to hold or deliver in proper form for transfer,
or to register in the name of its registered nominee, any securities which it
may hold for the account of the Fund and which may from time to time be
registered in the name of the Fund.
8. Voting and Other Action
Neither Custodian nor any nominee of Custodian shall vote any of the
securities held hereunder by or for the account of the Fund, except in
accordance with the instructions contained in an officers' certificate.
Custodian shall promptly deliver, or cause to be executed and delivered, to the
Corporation all notices, proxies and proxy soliciting materials with relation to
4
<PAGE>
such securities, such proxies to be executed by the registered holder of such
securities (if registered otherwise than in the name of the Fund), but without
indicating the manner in which such proxies are to be voted.
9. Transfer Tax and Other Disbursements
The Fund shall pay or reimburse Custodian from time to time for any
transfer taxes payable upon transfers of securities made hereunder, and for all
other necessary and proper disbursements and expenses made or incurred by
Custodian in the performance of this Agreement.
Custodian shall execute and deliver such certificates in connection
with securities delivered to it or by it under this Agreement as may be required
under the provisions of the Internal Revenue Code and any Regulations of the
Treasury Department issued thereunder, or under the laws of any state, to exempt
from taxation any exemptable transfers and/or deliveries of any such securities.
10. Concerning Custodian
Custodian shall be paid as compensation for its services pursuant to
this Agreement such compensation as may from time to time be agreed upon in
writing between the two parties. Until modified in writing, such compensation
shall be as set forth in Exhibit A attached hereto.
Custodian shall not be liable for any action taken in good faith upon
any certificate herein described or certified copy of any resolution of the
Board, and may rely on the genuineness of any such document which it may in good
faith believe to have been validly executed.
The Fund agrees to indemnify and hold harmless Custodian and its
nominee from all taxes, charges, expenses, assessments, claims and liabilities
(including counsel fees) incurred or assessed against it or by its nominee in
connection with the performance of this Agreement, except such as may arise from
its or its nominee's own negligent action, negligent failure to act or willful
misconduct. Custodian is authorized to charge any account of the Fund for such
items. In the event of any advance of cash for any purpose made by Custodian
resulting from orders or instructions of the Fund, or in the event that
Custodian or its nominee shall incur or be assessed any taxes, charges,
expenses, assessments, claims or liabilities in connection with the performance
of this Agreement, except such as may arise from its or its nominee's own
negligent action, negligent failure to act or willful misconduct, any property
at any time held for the account of the Fund shall be security therefore.
11. Foreign Subcustodians
Custodian is hereby authorized to engage another bank or trust company
as a Subcustodian for all or any part of the Fund's assets, so long as any such
bank or trust company is a bank or trust company organized under the laws of any
state of the United States, having an
5
<PAGE>
aggregate capital, surplus and undivided profit, as shown by its last published
report, of not less than Two Million Dollars ($2,000,000) and provided further
that, if the Custodian utilizes the services of a Subcustodian, the Custodian
shall remain liable as if the Custodian was directly responsible for any such
losses under the terms of the Custodian Agreement/
Notwithstanding anything contained herein, if the Fund requires the
Custodian to engage specific Foreign Subcustodians for the safekeeping and/or
clearing of assets, the Fund agrees to indemnify and hold harmless Custodian
from all claims, expenses and liabilities incurred or assessed against it in
connection with the use of such Foreign Subcustodian in regard to the Fund's
assets, except as may arise from the its own negligent action, negligent failure
to act or willful misconduct.
12. Reports by Custodian
Custodian shall furnish the Fund periodically as agreed upon with a
statement summarizing all transactions and entries for the account of the Fund.
Custodian shall furnish to the Fund, at the end of every month, a list of the
portfolio securities showing aggregate cost of each issue. The books and records
of Custodian pertaining to its actions under this Agreement shall be open to
inspection and audit at reasonable times by officers of, and of auditors
employed by, the Fund.
13. Termination or Assignment
This Agreement may be terminated by the Fund, or by Custodian, on
ninety (90) days notice, given in writing and sent by registered mail to
Custodian at P.O. Box 2054, Milwaukee, Wisconsin 53201, or to the Fund at
Lepercq-Istel Trust located at 1675 Broadway, New York, New York 10019, as the
case may be. Upon any termination of this Agreement, pending appointment of a
successor to Custodian or a vote of the shareholders of the Fund to dissolve or
to function without a custodian of its cash, securities and other property,
Custodian shall not deliver cash, securities or other property of the Fund to
the Fund, but may deliver them to a bank or trust company of its own selection,
having an aggregate capital, surplus and undivided profits, as shown by its last
published report of not less than Two Million Dollars ($2,000,000) as a
Custodian for the Fund to be held under terms similar to those of this
Agreement, provided, however, that Custodian shall not be required to make any
such delivery or payment until full payment shall have been made by the Fund of
all liabilities constituting a charge on or against the properties then held by
Custodian or on or against Custodian, and until full payment shall have been
made to Custodian of all its fees, compensation, costs and expenses, subject to
the provisions of Section 10 of this Agreement.
This Agreement may not be assigned by Custodian without the consent of
the Fund, authorized or approved by a resolution of its Board of Trustees.
14. Deposits of Securities in Securities Depositories
6
<PAGE>
No provision of this Agreement shall be deemed to prevent the use by
Custodian of a central securities clearing agency or securities depository,
provided, however, that Custodian and the central securities clearing agency or
securities depository meet all applicable federal and state laws and
regulations, and the Board of Trustees of the Fund approves by resolution the
use of such central securities clearing agency or securities depository.
15. Records
To the extent that Custodian in any capacity prepares or maintains any
records required to be maintained and preserved by the Fund pursuant to the
provisions of the Investment Company Act of 1940, as amended, or the rules and
regulations promulgated thereunder, Custodian agrees to make any such records
available to the Fund upon request and to preserve such records for the periods
prescribed in Rule 31a-2 under the Investment Company Act of 1940, as amended.
Trustees and shareholders shall not be personally liable for
obligations of the Fund in connection with any matter arising from or in
connection with this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and their respective corporate seals to be affixed hereto as of the
date first above-written by their respective officers thereunto duly authorized.
Executed in several counterparts, each of which is an original.
Attest: FIRSTAR TRUST COMPANY
- -------------------------------- ----------------------------
Assistant Secretary Vice President
Attest: Lepercq-Istel Trust
- -------------------------------- ----------------------------
Vice President, Treasurer and Secretary Co-President
7
Fund Administration Servicing Agreement
This Agreement is made and entered into on this 1st day of October, 1995 by
and between Lepercq-Istel Trust, a Massachusetts Business Trust sponsoring the
Lepercq-Istel Fund (hereinafter referred to as the "Fund") and Firstar Trust
Company, a corporation organized under the laws of the State of Wisconsin
(hereinafter referred to as "FTC").
WHEREAS, the Fund is an open-ended management investment company/companies
which is/are registered under the Investment Company Act of 1940;
WHEREAS, FTC is a trust company and, among other things, is in the business
of providing fund administration services for the benefit of its customers;
NOW, THEREFORE, the Fund and FTC do mutually promise and agree as follows:
I. Duties and Responsibilities of FTC
A. General Fund Management
1. Act as liaison among all fund service providers
2. Coordinate board communication by:
a. Assisting fund counsel in establishing meeting agendas
b. Preparing board reports based on financial advisory and
administrative data
c. Evaluating independent auditor
d. Securing and monitoring fidelity bond and director and
officers liability coverage and SEC reporting
3. Audits
a. Prepare appropriate schedules and assist independent auditors
b. Provide information to SEC and facilitate audit process
c. Provide office facilities
4. Assist in overall operations of the Fund
B. Compliance
1. Regulatory Compliance
a. Periodically monitor compliance with Investment Company Act
of 1940 requirements
1) Asset diversification tests
2) Total return and SEC yield calculations
3) Maintenance of books and records under Rule 31a-3
4) Code of ethics
b. Periodically monitor prospectus investment limitation
<PAGE>
2. Blue Sky Compliance
a. File initial state application and all subsequent reports
b. Monitor status in each state
3. SEC Registration and Reporting
a. Assisting Fund's counsel in updating prospectus, statement of
additional information, proxy statements, and Rule 248-2
notice
b. Annual, semiannual reports and quarterly reports
c. Fidelity Bond renewal
4. IRS Compliance
a. Periodically monitor Fund's status as a regulated investment
company under Subchapter M through review of the following:
1) Asset diversification requirements
2) Qualifying income requirements
3) Distribution requirements
b. Monitor short short testing
c. Calculate required distributions (including excise tax
distributions)
d. Annual tax letter to shareholders
C. Financial Reporting
1. Provide financial data required by fund prospectus and statement
of additional information
2. Prepare financial reports for shareholders, the board, the SEC,
and independent auditors
3. Monitor expense accruals and payments
D. Tax Reporting
1. Prepare appropriate federal and state tax returns including forms
1120/8610 with any necessary schedules
2. Prepare state income breakdowns where relevant
3. File 1099 Miscellaneous for payments to trustees
4. Monitor wash losses
5. Calculate eligible dividend income for corporate shareholders
<PAGE>
II. Compensation
The Fund agrees to pay FTC for performance of the duties listed in this
Agreement and the fees and out-of-pocket expenses as set forth in the
attached Schedule A.
These fees may be changed from time to time, subject to mutual written
Agreement between the Fund and FTC.
The Fund agrees to pay all fees and reimbursable expenses within ten (10)
business days following the mailing of the billing notice.
III. Performance of Service; Limitation of Liability
FTC shall exercise reasonable care in the performance of its duties under
the Agreement. The Fund agrees to reimburse and make FTC whole for any loss
or damages (including reasonable fees and expenses of legal counsel)
arising out of or in connection with its actions under this Agreement so
long as FTC acts in good faith and is not negligent or guilty of any
willful misconduct.
FTC shall not be liable or responsible for delays or errors occurring by
reason of circumstances beyond its control, including acts of civil or
military authority, natural or state emergencies, fire, mechanical
breakdown, flood or catastrophe, act of God, insurrection, war, riots, or
failure of transportation, communication, or power supply.
In the event of a mechanical breakdown beyond its control, FTC shall take
all reasonable steps to minimize service interruptions for any period that
such interruption continues beyond FTC's control. FTC will make every
reasonable effort to restore any lost or damaged data and correct any
errors resulting from such breakdown at the expense of FTC. FTC agrees that
it shall, at all times, have reasonable contingency plans with appropriate
parties, making reasonable provisions for emergency use of electrical data
processing equipment to the extent appropriate equipment is available.
Representatives of the Fund shall be entitled to inspect FTC's premises and
operating capabilities at any time during regular business hours of FTC,
upon reasonable notice to FTC.
This indemnification includes any act, omission to act, or delay by FTC in
reliance upon, or in accordance with, any written or oral instruction it
receives from any duly authorized officer of the Fund.
Regardless of the above, FTC reserves the right to reprocess and correct
administrative errors at its own expense.
IV. Confidentiality
FTC shall handle, in confidence, all information relating to the Fund's
business which is received by FTC during the course of rendering any
service hereunder.
V. Data Necessary to Perform Service
The Fund or its agent, which may be FTC, shall furnish to FTC the data
necessary to perform the services described herein at times and in such
form as mutually agreed upon.
<PAGE>
VI. Terms of Agreement
This Agreement shall become effective as of the date hereof and, unless
sooner terminated as provided herein, shall continue in effect with respect
to the Fund for a period of two years. Thereafter, if not terminated, this
Agreement shall continue automatically in effect for successive annual
periods unless otherwise terminated by either party upon giving ninety (90)
days prior written notice to the other party or such shorter period as is
mutually agreed upon by the parties.
VII. Duties in the Event of Termination
In the event that, in connection with termination, a successor to any of
FTC's duties or responsibilities hereunder is designated by the Fund by
written notice to FTC, FTC will promptly, upon such termination and at the
expense of the Fund, transfer to such successor all relevant books,
records, correspondence, and other data established or maintained by FTC
under this Agreement in a form reasonably acceptable to the Fund (if such
form differs from the form in which FTC has maintained, the Fund shall pay
any expenses associated with transferring the data to such form), and will
cooperate in the transfer of such duties and responsibilities, including
provision for assistance from FTC's personnel in the establishment of
books, records, and other data by such successor.
VIII. Choice of Law
This Agreement shall be construed in accordance with the laws of the State
of Wisconsin.
Lepercq-Istel Trust FIRSTAR TRUST COMPANY
By: /s/ Tsering Ngudu
----------------------------------- By: __________________________
Tsering Ngudu
Co-President
Attest: /s/ Sheila McKinney
------------------------------- Attest: __________________________
Sheila McKinney Assistant Secretary
Vice President, Treasurer and
Secretary
930312.1
<PAGE>
FIRST AMENDMENT TO THE FUND ADMINISTRATION
AGREEMENT BETWEEN FIRSTAR TRUST COMPANY
AND LEPERCQ-ISTEL FUND
WHEREAS, the above parties have entered into an Agreement dated October 1, 1995
where Firstar Trust Company ("FTC") has agreed to provide fund administration
services to Lepercq- Istel Trust (the "Fund"); and
WHEREAS, the parties would like to further clarify the responsibilities of FTC
and the Fund as it relates to the above referenced Agreement;
NOW THEREFORE, the Fund and FTC agree to amend section I.B.1.a.4 as follows:
...monitor code of ethics compliance for the disinterested directors of the Fund
and report the results of such monitoring to the Board of Directors on a
quarterly basis. All other code of ethics monitoring will be performed by the
Fund's investment advisor, Lepercq, de Neuflize & Co. Incorporated.
Dated this 30th day of April, 1997
LEPERCQ-ISTEL TRUST FIRSTAR TRUST COMPANY
BY: __________________________ BY: _________________________
Tsering Ngudu
ATTEST: _______________________ ATTEST: _________________________
930312.1
<PAGE>
Addendum to Firstar Servicing Agreements
This Addendum to the Fund Administration, Fund Accounting and Fulfillment
Servicing Agreements dated October 1, 1995 and to the Shareholder Servicing
Agent Agreement dated April 4, 1989, is entered into by and between Firstar
Mutual Fund Services, LLC and the Lepercq-Istel Trust on this 28th day of
October, 1998.
WHEREAS, the mutual funds servicing division of Firstar Trust Company became a
limited liability company and separate subsidiary of Firstar Bank, Milwaukee on
September 30, 1998; and
WHEREAS, the entity known as Firstar Trust Company ceased operations on
September 30, 1998;
NOW, THEREFORE, Firstar Mutual Fund Services, LLC will be the successor
responsible party to each of the Agreements referenced above and will assume all
responsibility for any acts or omissions during the time Firstar Trust Company
was the named service provider under these same Agreements.
Firstar Mutual Fund Services, LLC Lepercq-Istel Trust
BY: __________________________ BY: _________________________
ATTEST: _______________________ ATTEST: _________________________
930312.1
FUND ACCOUNTING SERVICING AGREEMENT
This contract between Lepercq-Istel Trust, a Massachusetts Business Trust
sponsoring the Lepercq-Istel Fund, hereinafter called the "Fund", and Firstar
Trust Company, a Wisconsin corporation, hereinafter called "FTC", is entered
into on this 1st day of October, 1995.
WITNESSETH:
WHEREAS, Lepercq-Istel Trust, is a financial services company providing
investment opportunities through mutual funds to various investors; and
WHEREAS, the manager has entered into an Investment Advisory Agreement
with the Fund (the "Investment Advisory Agreement") whereby manager has agreed
to make certain payments and pay certain expenses on behalf of the Fund and
portfolios;
WHEREAS, Firstar Trust Company ("FTC") is in the business of providing,
among other things, mutual fund accounting services to investment companies;
NOW, THEREFORE, the parties do mutually promise and agree as follows:
1. Services. FTC agrees to provide the following mutual fund accounting
services to the Fund:
A. Portfolio Accounting Services:
(1) Maintain portfolio records on a trade date +1 basis using
security trade information communicated from the investment manager
on a timely basis.
(2) For each valuation date, obtain prices from a pricing source
approved by the Board of Trustees and apply those prices to the
portfolio positions. For those securities where market quotations
are not readily available, the Board of Trustees shall approve, in
good faith, the method for determining the fair value for such
securities.
(3) Identify interest and dividend accrual balances as of each
valuation date and calculate gross earnings on investments for the
accounting period.
(4) Determine gain/loss on security sales and identify them as to
short- short, short- or long-term status; account for periodic
distributions of gains or losses to shareholders and maintain
undistributed gain or loss balances as of each valuation date.
930353.1
<PAGE>
B. Expense Accrual and Payment Services:
(1) For each valuation date, calculate the expense accrual
amounts as directed by the Fund as to methodology, rate or dollar
amount.
(2) Record payments for Fund expenses upon receipt of written
authorization from the Fund.
(3) Account for fund expenditures and maintain expense accrual
balances at the level of accounting detail, as agreed upon by FTC
and the Fund.
(4) Provide expense accrual and payment reporting.
C. Fund Valuation and Financial Reporting Services:
(1) Account for fund share purchases, sales, exchanges,
transfers, dividend reinvestments, and other fund share activity as
reported by the transfer agent on a timely basis.
(2) Apply equalization accounting as directed by the Fund.
(3) Determine net investment income (earnings) for the Fund as of
each valuation date. Account for periodic distributions of earnings
to shareholders and maintain undistributed net investment income
balances as of each valuation date.
(4) Maintain a general ledger for the Fund in the form as agreed
upon.
(5) For each day the Fund is open as defined in the prospectus,
determine the net asset value of the Fund according to the
accounting policies and procedures set forth in the prospectus.
(6) Calculate per share net asset value, per share net earnings,
and other per share amounts reflective of fund operation at such
time as required by the nature and characteristics of the Fund.
(7) Communicate, at an agreed upon time, the per share price for
each valuation date to parties as agreed upon from time to time.
(8) Prepare monthly reports which document the adequacy of
accounting detail to support month-end ledger balances.
930353.1
-2-
<PAGE>
D. Tax Accounting Services:
(1) Maintain tax accounting records for the investment
portfolio/portfolios of the Fund to support the tax reporting
required for IRS- defined regulated investment companies.
(2) Maintain tax lot detail for the investment portfolio.
(3) Calculate taxable gain/loss on security sales using the tax
cost basis designated by the Fund.
(4) Provide the necessary financial information to support the
taxable components of income and capital gains distributions to the
transfer agent to support tax reporting to the shareholders.
E. Compliance Control Services:
(1) Support reporting to regulatory bodies and support financial
statement preparation by making the fund accounting records
available to Lepercq-Istel Trust, the Securities and Exchange
Commission, and the outside auditors.
(2) Maintain accounting records according to the Investment
Company Act of 1940 and regulations provided thereunder.
2. Changes in Accounting Procedures. Any resolution passed by the Board
of Trustees that affects accounting practices and procedures under this
agreement shall be effective upon written receipt and acceptance by the FTC.
3. Changes in Equipment, Systems, Service, Etc. FTC reserve the right
to make changes from time to time, as it deems advisable, relating to its
services, systems, programs, rules, operating schedules and equipment, so long
as such changes do not adversely affect the service provided to the Fund under
this Agreement.
4. Compensation. FTC shall be compensated for providing the services
set forth in this Agreement in accordance with the Fee Schedule attached hereto
as Exhibit A and as mutually agreed upon and amended from time to time.
5. Performance of Service. FTC shall exercise reasonable care in the
performance of its duties under the Agreement. The Fund agrees to reimburse and
make FTC whole for any loss or damages (including reasonable fees and expenses
of legal counsel) arising out of or in connection with its actions under this
Agreement so long as FTC acts in good faith and is not negligent or guilty of
any willful misconduct.
FTC shall not be liable or responsible for delays or errors
occurring by reason of circumstances beyond its control, including acts of civil
or military authority, natural or state
930353.1
-3-
<PAGE>
emergencies, fire, mechanical breakdown, flood or catastrophe, acts of God,
insurrection, war, riots or failure of transportation, communication or power
supply.
In the event of a mechanical breakdown beyond its control, FTC shall
take all reasonable steps to minimize service interruptions for any period that
such interruption continues beyond FTC's control. FTC will make every reasonable
effort to restore any lost or damaged data and the correcting of any errors
resulting from such a breakdown will be at the expense of FTC. FTC agrees that
it shall at all time have reasonable contingency plans with appropriate parties,
making reasonable provision for emergency use of electrical data processing
equipment to the extent appropriate equipment is available. Representatives of
the Fund shall be entitled to inspect FTC's premises and operating capabilities
at any time during regular business hours of FTC, upon reasonable notice to FTC.
This indemnification includes any act, omission to act, or delay by
FTC in reliance upon, or in accordance with, any written or oral instruction it
receives from any duly authorized officer of the Fund.
Regardless of the above, FTC reserves the right to reprocess and
correct administrative errors at its own expense.
6. No Agency Relationship. Nothing herein contained shall be deemed to
authorize or empower FTC to act as agent for any other party to this Agreement,
or to conduct business in the name of, or for the account of, any other party to
this Agreement.
7. Ownership of Records. All records prepared or maintained by FTC on
behalf of the Fund remain the property of the Fund and will be surrendered
promptly on the written request of an authorized officer of the Fund.
8. Confidentiality. FTC shall handle in confidence all information
relating to the Fund's business, which is received by FTC during the course of
rendering any service hereunder.
9. Data Necessary to Perform Services. The Fund or its agent, which may
be FTC, shall furnish to FTC the data necessary to perform the services
described herein at times and in such form as mutually agreed upon.
10. Notification of Error. The Fund will notify FTC of any balancing or
control error caused by FTC within three (3) business days after receipt of any
reports rendered by FTC to the Fund, or within three (3) business days after
discovery of any error or omission not covered in the balancing or control
procedure, or within three (3) business days of receiving notice from any
shareholder.
930353.1
-4-
<PAGE>
11. Term of Agreement. This Agreement may be terminated by either party
upon giving ninety (90) days prior written notice to the other party or such
shorter period as is mutually agreed upon by the parties. However, this
Agreement may be replaced or modified by a subsequent agreement between the
parties.
12. Duties in the Event of Termination. In the event that in connection
with termination a Successor to any of FTC's duties or responsibilities
hereunder is designated by Lepercq-Istel Trust by written notice to FTC, FTC
will promptly, upon such termination and at the expense of Lepercq-Istel Trust,
transfer to such Successor all relevant books, records, correspondence and other
data established or maintained by FTC under this Agreement in a form reasonably
acceptable to Lepercq-Istel Trust (if such form differs from the form in which
FTC has maintained the same, Lepercq-Istel Trust shall pay any expenses
associated with transferring the same to such form), and will cooperate in the
transfer of such duties and responsibilities, including provision for assistance
from FTC's personnel in the establishment of books, records and other data by
such successor.
13. Choice of Law. This Agreement shall be construed in accordance with
the laws of the State of Wisconsin.
IN WITNESS WHEREOF, the due execution hereof on the date first above
written.
ATTEST: Firstar Trust Company
By
- ---------------------------------- -----------------------------------
ATTEST: Lepercq-Istel Trust
/s/ Sheila McKinney By /s/ Tsering Ngudu
- ---------------------------------- -----------------------------------
Sheila McKinney
Vice President, Treasurer and Secretary
930353.1
-5-
<PAGE>
Addendum to Firstar Servicing Agreements
This Addendum to the Fund Administration, Fund Accounting and Fulfillment
Servicing Agreements dated October 1, 1995 and to the Shareholder Servicing
Agent Agreement dated April 4, 1989, is entered into by and between Firstar
Mutual Fund Services, LLC and the Lepercq-Istel Trust on this 28th day of
October, 1998.
WHEREAS, the mutual funds servicing division of Firstar Trust Company became a
limited liability company and separate subsidiary of Firstar Bank, Milwaukee on
September 30, 1998; and
WHEREAS, the entity known as Firstar Trust Company ceased operations on
September 30, 1998; NOW,
THEREFORE, Firstar Mutual Fund Services, LLC will be the successor responsible
party to each of the Agreements referenced above and will assume all
responsibility for any acts or omissions during the time Firstar Trust Company
was the named service provider under these same Agreements.
Firstar Mutual Fund Services, LLC Lepercq-Istel Trust
BY: ----------------------------- BY: ---------------------------------
ATTEST: ------------------------- ATTEST: -----------------------------
930353.1
-6-
SHAREHOLDER SERVICING AGENT AGREEMENT
THIS AGREEMENT, made and entered into on this 4th day of April, 1989, by
and between Lepercq-Istel Trust (hereinafter referred to as the "Trust") and
FIRST WISCONSIN TRUST COMPANY, a corporation organized under the laws of the
State of Wisconsin, (hereinafter referred to as "Agent").
WITNESSETH:
WHEREAS, the Trust is an open-end management investment company which is
registered under the Investment Company Act of 1940; and
WHEREAS, the Agent is a trust company and is a registered transfer agent
under the Securities and Exchange Act of 1934, and as such is in the business of
administering transfer and dividend disbursing agent functions for the benefit
of its customers.
NOW, THEREFORE, the Trust and the Agent do mutually promise and agree as
follows:
1. Employment. The Trust hereby employs Agent to act as Shareholder
Servicing Agent for the Trust. Agent shall, at its own expense, render the
services and assume the obligations herein set forth subject to being
compensated therefor as herein provided.
2. Authority of Agent. Agent is hereby authorized by the Trust to receive
all cash which may from time to time be delivered to it by or for the account of
the Trust; to issue confirmations and/or certificates for shares of capital
stock of the Trust upon receipt of payment; to redeem or repurchase on behalf of
the Trust shares of capital stock of the Trust upon receipt of certificates
properly endorsed or properly executed written requests as described in the
Prospectus of the Trust and to act as dividend disbursing agent for the Trust.
3. Duties of the Agent: Agent hereby agrees to:
A. Process new accounts.
B. Process purchases, both initial and subsequent in accordance with
conditions set forth in the Trust's prospectus as mutually agreed by
the Trust and the Agent.
C. Transfer shares of capital stock to an existing account or to a new
account upon receipt of required documentation in good order.
<PAGE>
D. Redeem uncertificated and/or certificated shares upon receipt of
required documentation in good order.
E. Issue and/or cancel certificates as instructed; replace lost, stolen
or destroyed certificates upon receipt of satisfactory
indemnification or bond.
F. Distribute dividends and/or capital gain distributions. This
includes disbursement as cash or reinvestment and to change the
disbursement option at the request of shareholders.
G. Process exchanges between trusts, (process and direct
purchase/redemption and initiate new account or process to existing
account).
H. Make miscellaneous changes to records, including, but not
necessarily limited to, address changes and changes in plans (such
as systematic withdrawal, dividend reinvestment, etc.)
I. Prepare and mail a year-to-date confirmation and statement as each
transaction is recorded in a shareholder account as follows:
original to shareholder. Duplicate confirmations to be available on
request within current year.
J. Handle telephone calls and correspondence in reply to shareholder
requests except those items set forth in referrals to the Trust.
K. Reports to the Trust:
Daily - transaction journal with analysis of accounts.
Monthly - analysis of transactions and accounts by types.
Quarterly - state sales analysis; sales by size; analysis of
systematic withdrawals, Keogh, IRA and 403 (b)(7) plans; printout of
shareholder balances.
L. Daily control and reconciliation of Trust shares with Agent's
records and the Trust office records.
M. Mail and tabulate proxies for one Annual Meeting of Shareholders,
including preparation of certified shareholder list and daily report
to Trust management, if required.
<PAGE>
N. Prepare and mail annual Form 1099, Form W-2P and 5498 to
shareholders to whom dividends or distributions are paid, with a
copy for the IRS.
O. Provide readily obtainable data which may from time to time be
requested for audit purposes.
P. Replace lost or destroyed checks.
Q. Continuously maintain all records for active and closed accounts.
R. Furnish shareholder data information for a current calendar year in
connection with IRA and Keogh Plans in a format suitable for mailing
to shareholders.
4. Referrals to Trust. Agent hereby agrees to refer to the Trust for reply
the following:
A. Requests for investment information, including performance and
outlook.
B. Requests for information about specific plans: (i.e., IRA, KEOGH,
Systematic Withdrawal).
C. Requests for information about exchanges between the trusts.
D. Requests for historical trust prices.
E. Requests for information about the value and timing of dividend
payments.
F. Questions regarding correspondence from the Trust and newspaper
articles.
G. Any requests for information from non-shareholders.
H. Any other types of shareholder requests as the Trust may request
from Agent in writing.
5. Compensation to Agent. Agent shall be compensated for its services
hereunder as may from time to time be agreed upon in writing between the two
parties. (See attached Schedules A & B.) The Trust will reimburse Agent for all
out-of-pocket expenses, including, but not necessarily limited to, postage,
confirmation forms, etc. Special projects, not included in the fee schedule and
requested by proper instructions from the Trust, shall be completed by Agent and
invoiced to the Trust as mutually agreed upon.
<PAGE>
6. Rights and Powers of Agent. Agent's rights and powers with respect to
acting for and on behalf of the Trust, including rights and powers of Agent's
officers and directors, shall be as follows:
A. No order, direction, approval, contract or obligation on behalf of
the Trust with or in any way affecting Agent shall be deemed binding
unless made in writing and signed on behalf of the Trust by an
officer or officers of the Trust who have been duly authorized to so
act on behalf of the Trust by its Board of Trustees.
B. Trustees, officers, agents and shareholders of the Trust are or may
at any time or times be interested in Agent as officers, directors,
agents, shareholders, or otherwise. Correspondingly, directors,
officers, agents and shareholders of Agent are or may at any time or
times be interested in the Trust as trustees, officers, agents,
shareholders or otherwise. Agent shall, if it so elects, also have
the right to be a shareholder of the Trust.
C. The services of Agent to the Trust are not to be deemed exclusive
and Agent shall be free to render similar services to others as long
as its services for others does not in any manner or way hinder,
preclude or prevent Agent from performing its duties and obligations
under this Agreement.
D. The Trust will indemnify the Agent and hold it harmless from and
against all costs, losses, and expenses which may be incurred by it
and all claims and liabilities which may be asserted or assessed
against it as a result of any action taken by it without negligence
and in good faith, and for any act, omission, delay or refusal made
by the Agent in connection with this agency in reliance upon or in
accordance with any instruction or advice of any duly authorized
officer of the Trust.
7. Termination of Agreement. This Agreement shall continue in force and
effect until terminated or amended to such an extent that a new Agreement is
deemed advisable by either party. Notwithstanding anything herein to the
contrary, this Agreement may be terminated at any time, without payment of any
penalty, by the Trust or Agent upon ninety (90) days written notice to the other
party.
<PAGE>
8. Amendment. This Agreement may be amended by mutual written consent of
the parties. If, at any time during the existence of this Agreement, the Trust
deems it necessary or advisable in the best interests of Trust that any
amendment of this Agreement be made in order to comply with the recommendations
or requirements of the Securities and Exchange Commission or state regulatory
agencies or other governmental authority, or to obtain any advantage under state
or federal laws, and shall notify Agent of the form of amendment which it deems
necessary or advisable and the reasons therefor, and if Agent declines to assent
to such amendment, Trust may terminate this Agreement forthwith.
9. Notice. Any notice that is required to be given by the parties to each
other under the terms of this Agreement shall be in writing, addressed and
delivered, or mailed postpaid to the other party at the principal place of
business of such party.
LEPERCQ-ISTEL TRUST FIRST WISCONSIN TRUST COMPANY
By: By:
Attest: Attest:
Assistant Secretary
4
<PAGE>
SCHEDULE A
FIRST WISCONSIN TRUST COMPANY
MUTUAL FUND SERVICES
SHAREHOLDER ACCOUNTING SERVICES
NO-LOAD FUNDS
ANNUAL FEE SCHEDULE
Features
- Quarterly Dividends
- Telephone Exchange
- Telephone Redemption
Annual Fee Schedule
$10.00 per Shareholder Account on the first 10,000 accounts
$ 9.50 per Shareholder Account on the first 10,000 accounts
$ 9.00 per Shareholder Account on the first 40,000 accounts
$ 8.50 per Shareholder Account on the first 40,000 accounts
$ 8.00 per Shareholder Account on the balance
Minimum annual fee of $24,000
- $7.50 per Federal Wire Transfer
- $5.00 per Exchange
- $2.00 per Shareholder Account for daily accrual and/or monthly
dividends
Fees are billed monthly
Plus Out-of-Pocket Expenses including, but not limited to:
- Telephone
- Postage
- Programming
- Retention of Records
- Stationery/Envelopes
- Mailing
- Insurance
- Proxies
- Microfilm/Fiche of Records
- Special Reports
- All Other Out-of-Pocket Expenses
<PAGE>
SCHEDULE B
March 16, 1989
Sheila McKinney
Lepercq-Istel Trust
345 Park Ave., 23rd Floor
New York, NY 10154
Dear Sheila:
As a follow-up to our conversation, I wanted to confirm with you that First
Wisconsin Trust Company is willing to maintain their fees as originally quoted
for two years (through 6/30/91). The one caveat that does apply, however, is
that if Mellon were to increase their fees to us during that period, we would
when pass along that increase to you.
It is our intention, Sheila, to earn more of your business once we establish a
long term working relationship. Therefore, we do not intend to jeopardize that
relationship by introducing major pricing fluctuations.
Let me know if you decide to "start the ball rolling" before your board meeting.
I am looking forward to hearing from you.
Sincerely,
Diane G. Sprenger
Telephone: (414) 287-3796
DGS:aa
cc: J. Hintz
B. Kern
6
<PAGE>
Addendum to Firstar Servicing Agreements
This Addendum to the Fund Administration, Fund Accounting and Fulfillment
Servicing Agreements dated October 1, 1995 and to the Shareholder Servicing
Agent Agreement dated April 4, 1989, is entered into by and between Firstar
Mutual Fund Services, LLC and the Lepercq-Istel Trust on this 28th day of
October, 1998.
WHEREAS, the mutual funds servicing division of Firstar Trust Company became a
limited liability company and separate subsidiary of Firstar Bank, Milwaukee on
September 30, 1998; and
WHEREAS, the entity known as Firstar Trust Company ceased operations on
September 30, 1998; NOW,
THEREFORE, Firstar Mutual Fund Services, LLC will be the successor responsible
party to each of the Agreements referenced above and will assume all
responsibility for any acts or omissions during the time Firstar Trust Company
was the named service provider under these same Agreements.
Firstar Mutual Fund Services, LLC Lepercq-Istel Trust
BY:_________________________ BY:________________________
ATTEST:_____________________ ATTEST:____________________
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.
Chicago, Illinois
April 24, 2000
LEPERCQ-ISTEL FUND
DISTRIBUTION PLAN
(As amended)
WHEREAS, Lepercq-Istel Trust (the "Trust") engages in business as an
open-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "Act");
WHEREAS, the Trust desires to amend the Distribution Plan approved by
shareholders of the Fund on April 8, 1986 (the "Plan") pursuant to Rule 12b-1
under the Act (the "Rule") with respect to the Lepercq-Istel Fund (the "Fund");
WHEREAS, the Trust's Board has determined that there is a reasonable
likelihood that adoption of this Plan will benefit the Fund and its
shareholders; and
WHEREAS, the Trust employs Lepercq, de Neuflize Securities Inc., a
wholly owned subsidiary of the Investment Adviser (the "Distributor"), as
Distributor of the Fund's shares pursuant to a Distribution Agreement;
NOW, THEREFORE, the Trust hereby adopts, and the Distributor hereby
agrees to the terms of, this Plan in accordance with Rule 12b-1 under the Act on
the following terms and conditions:
1. 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 expenses of distribution in excess
of 0.75% per annum will be borne by the Distributor and will not be
eligible for any reimbursement or payment by the Fund under the
provisions of the Plan.
2. The terms and provisions of this Plan shall be interpreted and defined
in a manner consistent with the provisions and definitions contained
in (i) the Act, (ii) the Rule and (iii) Section 2830 of the National
Association of Securities Dealers, Inc. Business Conduct Rules or its
successor.
3. This Plan has been approved by vote of a majority of both (a) the
Trust's Board of Trustees and (b) those Trustees who are not
"interested persons" of the Trust (as defined by the Act) and who have
no direct or indirect financial interest in the operation of this Plan
or any agreements related to it (the "Rule 12b-1 Trustees") cast
-1-
<PAGE>
in person at a meeting (or meetings) called for the purpose of voting
on this Plan and such related agreements.
4. This Plan shall continue from year to year so long as such continuance
is specifically approved at least annually in the manner provided for
approval of this Plan in paragraph 3.
5. The Distributor shall provide to the Trust's Board and the Board shall
review, at least quarterly, a written report of amounts paid hereunder
and the purposes for which they were made.
6. This Plan may be terminated at any time by vote of a majority of the
Rule 12b-1 Trustees or by a vote of a majority of its outstanding
voting securities. 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 securities of the Fund.
7. This Plan may not be amended to increase materially the amount of
compensation payable pursuant to paragraph 1 hereof unless such
amendment is approved by a vote of at least a majority (as defined in
the Act) of the outstanding voting securities of the Fund. No material
amendment to the Plan shall be made unless approved in the manner
provided in paragraph 3 hereof.
8. While the Plan is in effect, the selection and nomination of the
Trustees who are not interested persons (as defined in the Act) of the
Trust shall be committed to the discretion of the Trustees who are not
such interested persons.
9. The Trust shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 5 hereof, for a
period of not less than six years from the date of this Plan, any such
agreement or any such report, as the case may be, the first two years
in an easily accessible place.
10. Any agreement entered into under the Plan will terminate automatically
in the event of its assignment.
11. The Plan will only make payments for expenses actually incurred on
behalf of the Fund. The Plan will not carry over expenses from year to
year and if the Plan is terminated in accordance with its terms, the
obligations of the Fund to make reimbursement payments to the
Distributor pursuant to the Plan will cease and the Fund will not be
required to make any payments for expenses incurred after the date the
Plan terminates.
12. All persons dealing with the Trust must look solely to the property of
the Trust for enforcement of any claims against the Trust as neither
the Trustees, officers, agents or
930386.1
-2-
<PAGE>
shareholders assume any personal liability for obligations entered
into on behalf of the Trust.
IN WITNESS WHEREOF, the Trust, on behalf of the Fund, and the
Distributor have executed this Plan.
LEPERCQ-ISTEL TRUST
On Behalf of its LEPERCQ-ISTEL FUND
By: _____________________________
LEPERCQ, DE NEUFLIZE SECURITIES INC.
By: _____________________________
930386.1
-3-
LEPERCQ-ISTEL FUND
SHAREHOLDER SERVICING PLAN
This Shareholder Servicing Plan (the "Plan") is adopted by Lepercq-Istel
Trust, a business trust organized under the laws of The Commonwealth of
Massachusetts, on behalf of its Lepercq-Istel Fund series the "Fund"), subject
to the following terms and conditions:
Section 1. Servicing Agreements; Annual Fees.
Shareholder Servicing Agreements. The Fund and the Distributor of the Fund,
Lepercq, de Neuflize Securities Inc., a wholly owned subsidiary of the Adviser
(the "Distributor"), are each authorized to enter into Shareholder Servicing
Agreements on behalf of the Fund (the "Agreements"), the form of which shall be
approved by the Board of Trustees of the Trust (the "Board"), with financial
institutions and other persons who provide shareholder liaison services
("Service Providers") as set forth in this Plan.
Shareholder Servicing Fee. The Fund may pay either (i) to the Distributor,
who may, in turn, pay Service Providers or, (ii) directly to Service Providers,
a shareholder servicing fee under the Plan at an annual rate of up to 0.25% of
the average daily net assets of the Fund (the "Servicing Fee"). Provided,
however, that the Fund shall not directly or indirectly pay any amounts that
exceed any applicable limits imposed by law or the National Association of
Securities Dealers, Inc.
Adjustment to Fees. The Fund may pay a Servicing Fee to the Distributor at
a lesser rate than the fees specified in Section I hereof as agreed upon by the
Board of Trustees and the Distributor and approved in the manner specified in
Section 3 of this Plan.
Payment of Fees. The Servicing Fees will be calculated daily and paid
monthly at the annual rate indicated above.
Section 2. Expenses Covered by the Plan.
Servicing Fees may be used for payments to Service Providers who provide
personal or account maintenance services to their customers who may from time to
time beneficially own shares to the extent the Distributor or Service Provider
is permitted to do so under applicable statutes, rules and regulations. Such
services may include: answering customer inquiries regarding account matters;
assisting shareholders in designating and changing various account options;
aggregating and processing purchase and redemption orders and transmitting and
receiving funds for shareholder orders; transmitting, on behalf of the Trust,
proxy statements, prospectuses and shareholder reports to shareholders and
tabulating proxies; processing
922957.1
<PAGE>
divided payments and providing subaccounting services for Fund shares held
beneficially; and providing such other services as the Trust or a shareholder
may request.
Section 3. Approval of Trustees.
Neither the Plan nor any related agreements will take effect until approved
by a majority of both (a) the full Board of Trustees of the Trust and (b) those
Trustees who are not interested persons of the Trust and who have no direct or
indirect financial interest in the operation of the Plan or in any agreements
related to it (the "Qualified Trustees"), cast in person at a meeting called for
the purpose of voting on the Plan and the related agreements.
Section 4. Continuance of the Plan.
The Plan will continue in effect for successive twelve-month periods;
provided, however, that such continuance is specifically approved at least
annually by the Fund's Board of Trustees and by a majority of the Qualified
Trustees.
Section 5. Termination.
The Plan may be terminated at any time (i) by the Fund without the payment
of any penalty, by the vote of a majority of the outstanding voting securities
of the Fund or (ii) by a vote of the Qualified Trustees.
Section 6. Amendments.
No material amendment to the Plan may be made unless approved by the Fund's
Board of Trustees in the manner described in Section 3 above.
Section 7. Written Reports.
In each year during which the Plan remains in effect, a person authorized
to direct the disposition of monies paid or payable by the Fund pursuant to the
Plan or any related agreement will prepare and furnish to the Board, and the
Board will review, at least quarterly, written reports which set out the amounts
expended under the Plan and the purposes for which those expenditures were made.
Section 8. Preservation of Materials.
The Fund will preserve copies of the Plan, any agreement relating to the
Plan and any report made pursuant to Section 7 above, for a period of not less
than six years (the first two years in an easily accessible place) from the date
of the Plan, agreement or report.
922957.1
-2-
<PAGE>
Section 9. Limit of Liability.
The limitation of shareholder liability set forth in the Fund's Declaration
of Trust is hereby acknowledged. The obligations of the Fund under this Plan, if
any, shall not be binding upon the Trustees individually or upon holders of
shares of the Fund individually but shall be binding only upon the assets and
property of the Fund, and upon the Trustees insofar as they hold title thereto.
Section . Meanings of Certain Terms.
As used in the Plan, the terms "interested person" and "majority of the
outstanding voting securities" will be deemed to have the same meaning that
those terms have under the Investment Company Act of 1940 by the Securities and
Exchange Commission.
LEPERCQ-ISTEL TRUST ON BEHALF
OF THE LEPERCQ-ISTEL FUND
By: __________________________________
LEPERCQ, DE NEUFLIZE SECURITIES,
INC.
By: __________________________________
922957.1
-3-
LEPERCQ, de NEUFLIZE & CO. INCORPORATED
and
LEPERCQ-ISTEL TRUST
CODE OF ETHICS
- --------------------------------------------------------------------------------
(April 24, 1996)
- --------------------------------------------------------------------------------
WHEREAS, LEPERCQ, de NEUFLIZE & CO. INCORPORATED (the "Adviser")
provides investment advisory services to investment companies and other clients;
and
WHEREAS, certain affiliates of the Adviser provide distribution
services for the Adviser's investment company clients; and
WHEREAS, the investment advisory business involves decisions and
information which may have at least a temporary impact on the market price of
securities, thus creating a potential for conflicts of interest between the
persons engaged in such business and their clients; and
WHEREAS, the Adviser has a fiduciary relationship with respect to
each portfolio under management and the interests of the client accounts and of
the shareholders of the Adviser's investment company clients must take
precedence over the personal interests of the employees of the Adviser, thus
requiring a rigid adherence to the highest standards of conduct by such
employees; and
WHEREAS, every practical step must be taken to ensure that no
intentional or inadvertent action is taken by an employee of the Adviser which
is, or appears to be, adverse to the interests of the Adviser or any of its
client accounts, including the defining of standards of behavior for such
employees, while at the same time avoiding unnecessary interference with the
privacy or personal freedom of such employees; and
WHEREAS, the Adviser originally adopted a Code of Ethics ("the
Code") on ___________, and now deems it advisable to update and revise said Code
in light of new investment companies managed the Adviser and changing
circumstances in the securities markets in which the Adviser conducts business;
and
WHEREAS, Lepercq-Istel Trust (the "Fund") is an open-end
management investment company, registered under the Investment Company Act of
1940 (the "1940 Act"); and
1
<PAGE>
WHEREAS, the Fund is managed by the Adviser; and
NOW, THEREFORE, the Board of Directors of the Adviser and the
Board of Trustees of the Fund hereby adopt the following revised Code pursuant
to the provisions of Rule 17j-1 under the 1940 Act.
2
<PAGE>
1. Applicability
Unless otherwise indicated, the term "employee" as used herein
means: (i) all officers, directors and employees, including "investment
persons", "portfolio managers" and "access persons", as defined in the rules and
procedures ("Procedures") adopted hereunder, of the Adviser and its affiliates
and wholly owned and indirect subsidiaries, if any, and (ii) officers, directors
(who maintain offices at the Adviser) and employees of the Adviser who have an
active part in the management, portfolio selection, underwriting or shareholder
functions with respect to the Adviser's investment company clients or provide
one or more similar services for the Adviser's non-investment company clients.
The term "employee" does not include directors of any
investment company managed by the Adviser provided that they
do not regularly obtain information concerning the
investment recommendations or decisions made by the Adviser
on behalf of client accounts ("independent directors").
2. Interpretation and Enforcement
The Chief Executive Officer of the Adviser shall appoint a Code of
Ethics Compliance Officer (the "Compliance Officer") or designee. The Compliance
Officer or designee shall have the responsibility for interpreting the
provisions of the Code, for adopting and implementing Procedures for the
enforcement of the provisions of the Code, and for determining whether a
violation of the provisions of the Code, or of any such related Procedures has
occurred. The Compliance Officer or designee will monitor personal investment
activity by "access persons" (as defined in the Procedures adopted hereunder),
both before and after any trade occurs and prepare periodic and annual reports,
conduct education seminars and obtain annual employee certifications as deemed
appropriate. In the event of a finding that a violation has occurred, the
Compliance Officer or designee shall take such action as he/she deems
appropriate, which may include recommendations to the Board of Directors of the
Adviser or to the board of any of its affiliates or subsidiaries on the
imposition of sanctions or initiation of disgorgement proceedings. The
Compliance Officer or designee shall also make recommendations and submit
reports to the Board of Trustees of the Adviser's investment company client.
3. Procedures Adopted Under the Code
From time to time, the Compliance Officer or designee shall adopt
Procedures to carry out the intent of the Code. Among other things, the
Procedures require certain new employees to complete an Asset Disclosure Form
and such other forms as deemed appropriate by the Compliance Officer or
designee. Such Procedures are hereby incorporated into the Code and are made a
part of the Code. Therefore, a violation of the Procedures shall be deemed a
violation of the Code itself.
3
<PAGE>
4. Compliance with Governing Laws, Regulations and Procedures
(a) Each employee and director of the Adviser shall have and
maintain knowledge of and shall comply strictly with all
applicable federal and state laws and all rules and
regulations of any governmental agency or self-regulatory
organization governing his/her actions as an employee or
director of the Adviser.
(b) Each employee and director of the Adviser shall comply with
all laws and regulations and the Adviser's Policy Statement
on Insider Trading (see Appendix 1). Trading on material
non-public information, or "inside information", of any sort,
whether obtained in the course of research activities,
through a client relationship or otherwise, is strictly
prohibited.
(c) Each employee and director shall comply with the procedures
and guidelines established by the Adviser to ensure
compliance with applicable federal and state laws and
regulations of governmental agencies and self-regulatory
organizations. No employee shall knowingly participate in,
assist, or condone any act in violation of any statute or
regulation governing the Adviser or any act that would
violate any provision of this Code, or of the Procedures
adopted hereunder.
(d) Each employee and director shall have and maintain knowledge
of and shall comply strictly with the provisions of this Code
and any Procedures adopted hereunder.
(e) Each employee having supervisory responsibility shall
exercise reasonable supervision over employees subject to
his/her control, with a view to preventing any violation by
such persons of applicable statutes or regulations, or the
provisions of the Code, including the Policy Statement on
Insider Trading or the Procedures adopted hereunder.
(f) Any employee obtaining evidence that an act in violation of
applicable statutes, regulations or provisions of the Code,
including the Policy Statement on Insider Trading, or of any
Procedures adopted hereunder has occurred shall immediately
report such evidence to the Compliance Officer or designee of
the Adviser. Such action by the employee will remain
confidential, unless the employee waives confidentiality or
federal or state authorities compel disclosure. Failure to
report such evidence may result in disciplinary proceedings
and may include sanctions as set forth in Section VI hereof.
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5. Ethical Standards
(a) Employees and independent directors shall conduct themselves
in a manner consistent with the highest ethical and fiduciary
standards. They shall avoid any action, whether for personal
profit or otherwise, that results in an actual or potential
conflict of interest with the Adviser or its client accounts
(as defined in the Procedures adopted hereunder), or which
may be otherwise detrimental to the interests of the members
of the Adviser or its client accounts.1\
(b) Employees and directors shall act in a manner consistent with
their fiduciary obligation to clients of the Adviser, and
shall not deprive any client account of an investment
opportunity in order to personally benefit from that
opportunity.
(c) Without the knowledge and approval of the Compliance Officer
or designee of the Adviser, employees shall not engage in a
business activity or practice for compensation in competition
with the Adviser. Each employee, who is deemed to be an
"investment person" as defined in the Procedures adopted
hereunder, shall obtain the written approval of the Adviser's
Compliance Officer or designee to participate on a board of
directors/trustees of any the following organizations:
(i) publicly traded company, partnership or trusts;
(ii) hospital or philanthropic institution:*
(iii) local or state municipal authority:* and/or
(iv) charitable organization.*
_____________
1 Conflicts of interest generally result from a situation in which an
individual has a personal interest in a matter that is or may be competitive
with his or her responsibilities to other persons or entities (such as the
Adviser or its client accounts) or where an individual has or may have competing
obligations or responsibilities to two or more persons or entities. In the case
of the relationship between a client account on the one hand, and the Adviser,
its officers, directors and employees, on the other hand, such conflict may
result from the purchase or sale of securities for a client account and for the
personal account of the individual involved or the account of any "affiliate" of
such individual as such term is defined in the 1940 Act. Such conflict may also
arise from the purchase or sale for a client account of securities in which an
officer, director or employee of the Adviser has an economic interest. Moreover,
such conflict may arise in connection with vendor relationships in which such
employee has direct or indirect financial interest, family interests, or other
personal interest. To the extent of conflicts of interest between the Adviser
and a vendor, such conflicts must be resolved in a manner that is not
disadvantageous to the Adviser. In any such case, potential or actual conflicts
must be disclosed to the Adviser and the first preference and priority must be
to avoid such conflicts of interest wherever possible and, where they
unavoidably occur, to resolve them in a manner that is not disadvantageous to a
client.
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* These restrictions relate to organizations that have or
intend to raise proceeds in a publics securities offering.
(d) Each employee, in making an investment recommendation or
taking any investment action, shall exercise diligence and
thoroughness, and shall have a reasonable and adequate basis
for any such recommendation or action.
(e) Each employee and trustee shall not attempt to improperly
influence for such person's personal benefit any investment
strategy to be followed or investment action to be taken by
the Adviser for its client accounts.
(f) Each employee and trustee shall not improperly use for such
person's personal benefit any knowledge, whether obtained
through such person's relationship with the Adviser or
otherwise, of any investment recommendation made or to be
made, or of any investment action taken or to be taken by the
Adviser for its client accounts.
(g) Employees and independent trustees shall not disclose any
non-public information relating to a client account's
portfolio or transactions or to the investment
recommendations of the Adviser, nor shall any employee
disclose any non-public information relating to the business
or operations of the Adviser unless properly authorized to do
so.
(h) Employees shall not accept, directly or indirectly, from a
broker-dealer or other vendor who transacts business with the
Adviser or its client accounts, any gifts, gratuities or
other things of such value or significance that their
acceptance might reasonably be expected to interfere with or
influence the exercise of independent and objective judgment
in carrying out such person's duties or otherwise gives the
appearance of a possible impropriety.
(i) Each employee who is deemed to be an "investment person" as
defined in the Procedures adopted hereunder (or registered
representative and/or principal2 of any affiliated
broker-dealer of the Adviser) shall not acquire securities
for an account for which he/she has a direct or indirect
beneficial interest in an initial public offering ("IPO") or
on behalf of any person, entity or organization that is not a
client of the Adviser.
(j) All personal securities transactions by employees must be
conducted consistent with this Code and the Procedures
adopted hereunder, and in such a manner as
__________
2 Under Article III, Section I of the NASD's Rules of Fair Practice,
registered representatives and principals may not purchase a new offering until
all public clients have been satisfied.
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to avoid any actual or potential conflicts of interest or
any abuse of such employee's position of trust and
responsibility. Unless an exemption is available, employees
who are deemed to be "access persons" as defined in the
Procedures adopted hereunder, shall pre-clear all
transactions in securities in accordance with the Procedures
adopted hereunder.
(k) Each employee, who is deemed to be an "investment person" as
defined in the Procedures adopted hereunder, shall refrain
from engaging in personal securities transactions in
connection with a security that is not registered under
Section 12 of the Securities Act of 1933 (i.e., a private
placement security) unless such transaction has been
pre-approved by the Compliance Officer or designee.
(l) Employees who are deemed to be "access persons" as defined in
the Procedures adopted hereunder shall not execute a parallel
transaction in connection with the purchase or sale of a
security on any day during which any of the Adviser's
clients, including investment company clients, has a pending
buy or sell order in that same security until that order is
executed or withdrawn. In addition, employees who are deemed
to be "investment persons" as defined in the Procedures
adopted hereunder, may not engage in a transaction in
connection with the purchase or sale of a security within
seven calendar days before and after an investment company
client of the Adviser trades in that security.
(m) Each employee, who is deemed to be an "investment person" as
defined in the Procedures adopted hereunder, may not purchase
and voluntarily sell or sell and voluntarily purchase the
same (or equivalent) securities of the same issuer within 60
calendar days unless such employee complies with the
disgorgement procedures set forth in the Procedures adopted
hereunder. Any transaction under this provision will result
in disgorgement proceedings for any profits received in
connection with such transaction by such employee.
6. Sanctions
Employees violating the provisions of the Code or any Procedures
adopted hereunder may be subject to sanctions, which may include, among other
things, restrictions on such person's personal securities transactions; a letter
of admonition, education or formal censure; fines, suspension, reassignment,
demotion or termination of employment; or other significant remedial action.
Employees may also be subject to disgorgement proceedings for transactions in
securities that are inconsistent with Sections V.L. and V.M. above.
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7. Additional Disclosure
This Code, including the Policy Statement on Insider Trading, and
related Procedures under the Code cannot, and do not, cover every situation in
which choices and decisions must be made, because other company policies,
practices and procedures (as well as good common sense) and good business
judgment also apply. Employees should read and understand these documents
thoroughly. They present important rules of conduct and operating controls for
all employees. Employees are also expected to present questions to the attention
of their supervisors and to the Compliance Officer or designee and to report
suspected violations as set forth in these documents.
8. Policy Statement on Insider Trading
The Adviser's Policy Statement on Insider Trading is attached as
Appendix I hereto. Said Policy Statement applies to all employees and other
persons associated with the Adviser or the Fund.
LEPERCQ, de NEUFLIZE & CO. INCORPORATED
By:
-----------------------------
-----------------------------
Date
LEPERCQ-ISTEL TRUST
By:
-----------------------------
-----------------------------
Date
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Appendix I
LEPERCQ, de NEUFLIZE & CO. INCORPORATED
Policy Statement on Insider Trading
The following policies have been established to aid employees and other persons
associated with Lepercq, de Neuflize & Co. Incorporated (the "Adviser") and the
Lepercq-Istel Trust (the "Fund") in avoiding "insider trading" and to aid the
Adviser in preventing, detecting and imposing sanctions against "insider
trading". All employees and other persons must follow these policies or risk
serious sanctions, including dismissal, substantial personal liability and
criminal penalties. If an employee or other person has a question about these
procedures, such person should contact the Compliance Officer or designee.
1. Description of Insider Trading
The term "insider trading" is not defined in the federal securities
laws, but generally is used to refer to the use of material non-public
information to trade in securities (whether or not someone is an "insider") and
to communications of material non-public information to others.
(A) While the law concerning "insider trading" is not static, it is
generally understood that the law prohibits:
(B) trading by an insider while in possession of material non-public
information; or
(C) trading by a non-insider while in possession of material
non-public information, where the information was either disclosed
to the non-insider in violation of an insider's duty to keep it
confidential or was misappropriated; or
(D) communicating material non-public information to others.
The elements of "insider trading" and the penalties for such unlawful
conduct are discussed below:
1. Who is an Insider?
The concept of "insider" is broad. It includes all employees of a
company. In addition, a person can be a "temporary insider" if he/she
enters into a special confidential relationship in the conduct of a
company's affairs and as a result is given access to information solely
for the company's purposes. A temporary insider can include, among
others, a company's attorneys, accountants, consultants, bank lending
officers and the employees of such organizations. In addition, an
employee of the Adviser may become a temporary insider for a company it
advises or for which it performs other services. According to the
Supreme Court, the company must expect an outsider to keep the
disclosed non-public information confidential and the relationship must
at least imply such a duty before the outsider will be considered an
insider.
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2. What is Material Information?
Trading on inside information is not a basis for liability unless the
information is material. "Material information" is generally defined as
information for which there is a substantial likelihood that a
reasonable investor would consider it important in making his/her
investment decisions or information that is reasonably certain to have
a substantial effect on the price of a company's securities.
Information that employees should consider material includes but is not
limited to: dividend changes, earnings estimates, changes in previously
released earnings estimates, significant merger or acquisition
proposals or agreements, major litigation, liquidation problems and
extraordinary management developments.
Material information does not have to relate to a company's business.
For example, in Carpenter v. U.S., 108 U.S. 316 (1987), the Supreme
Court considered as material certain information about the contents of
a forthcoming newspaper column that was expected to affect the market
price of a security. In that case, a reporter for The Wall Street
Journal was found criminally liable for disclosing to others the dates
that reports on various companies would appear in The Wall Street
Journal and whether those reports would be favorable or not.
3. What is Non-Public Information?
Information is non-public until it has been effectively communicated to
the marketplace. One must be able to point to some fact to show that
the information is generally public. For example, information found in
a report filed with the Securities and Exchange Commission, or
appearing in Dow Jones, Reuters Economic Services, The Wall Street
Journal or other publications of general circulation would be
considered public.
4. Penalties
Penalties for trading on or communicating material non-public
information are severe, both for individuals involved in such unlawful
conduct and their employers. A person can be subject to some or all of
the penalties below even if he/she does not personally benefit from the
violation. Penalties include:
civil injunctions;
treble damages;
disgorgement of profits;
jail sentences;
fines for the person who committed the violation of up to three times
the profit gained or loss avoided, whether or not the person actually
benefited; and fines for the employer or other controlling person of up
to the greater of $1,000,000 or three times the profit gained or loss
avoided.
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In addition, any violations of this Policy Statement on Insider Trading will be
subject to the sanctions described in Section VI. of the Code.
2. Identifying Inside Information
Before a portfolio manager enters into a transaction in the securities
of a company about which he/she may have potential inside information, the
following questions must be resolved:
(1) Is the information material? Is this information that an investor
would consider important in making his/her investment decisions?
Is this information that would substantially affect the market
price of the securities if generally disclosed?
(2) Is the information non-public? To whom has this information been
provided? Has the information been effectively communicated to the
marketplace by being published in Reuters Economic Services, The
Wall Street Journal or other publications of general circulation?
If, after consideration of the above, the portfolio manager believes
that the information is material and non-public, or if he/she has any
questions as to whether the information is material and non-public, the
portfolio manager must take the following steps:
a. report the matter immediately to the Compliance Officer or
designee;
b. refrain from purchasing or selling the securities in a
personal securities transaction or on behalf of others,
including the Adviser's client accounts;
c. refrain from communicating the information inside or outside
the Adviser, other than to the Compliance Officer or
designee; and
d. after the Compliance Officer or designee has reviewed the
issue, the portfolio manager will be instructed to continue
the prohibitions against trading and communications, or will
be allowed to trade on and communicate the information.
3. Restricting Access to Material Non-Public Information
Information in the possession of any employee that may be considered
identified as material and non-public may not be communicated to anyone,
including persons within the Adviser, except as provided in Section II.B. above.
In addition, care should be taken so that such information is secure. For
example, files containing material non-public information should be sealed and
access to computer files containing material non-public information should be
restricted.
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4. Resolving Issues Concerning Insider Trading
If, after consideration of the items set forth in Section II.B. above,
doubt remains as to whether information is material or non-public, or if there
is any unresolved question as to the applicability or interpretation of the
foregoing procedures or as to the propriety of any action, it must be discussed
with the Compliance Officer or designee before trading on or communicating the
information to anyone.
5. Control Procedures
The role of the Compliance Officer or designee of the Adviser is
critical to the implementation and maintenance of the Adviser's policies and
procedures against "insider trading". Control procedures include prevention and
detection of "insider trading".
To prevent "insider trading", the Compliance Officer or designee
should:
a. provide on a regular basis an educational program to familiarize
employees with the Adviser's policies and procedures against
"insider trading";
b. answer questions regarding the Adviser's policies and procedures;
c. resolve issues of whether information received by an employee of
the Adviser is material and non-public;
d. review on a regular basis and update as necessary the Code and
related Procedures of the Adviser and the Funds;
e. promptly review and either approve or disapprove, in writing, each
request of an employee for clearance to trade in specified
securities; and
f. when it has been determined that an employee of the Adviser has
material non-public information:
g. implement measures to prevent dissemination of such information;
and
h. if necessary, restrict employees from trading the securities.
To detect "insider trading", the Compliance Officer or designee
has also established internal auditing controls.
6. Special Reports to Management
Promptly, upon learning of an actual or potential violation of this
Policy Statement, the Compliance Officer or designee shall prepare and maintain
in the Adviser's records a written report providing full details of the
situation and the remedial action taken. Annually, the Compliance Officer or
designee shall report to the Board of Trustees of the Fund with regard to any
issues that arose during the year, under this Policy Statement. (See Section
VI.E. of the Procedures adopted hereunder.)
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LEPERCQ, de NEUFLIZE & CO. INCORPORATED
and
LEPERCQ-ISTEL TRUST
Rules And Procedures Adopted Under The Code Of Ethics
(As Revised April 24, 1996)
1. Introduction
These rules and procedures (collectively, "Procedures") have been
adopted by Lepercq, de Neuflize & Co. Incorporated (the "Adviser") and
Lepercq-Istel Trust (the "Fund") to carry out the intent of the Code of Ethics
("Code") of the Adviser and the Fund and are incorporated by reference into and
made a part of the Adviser's and the Fund's Code. The Code has been approved by
the Adviser and by the Board of Trustees of the Fund.
The Compliance Officer or designee has the responsibility for
interpreting the provisions of the Code, for adopting and implementing these
Procedures, and for determining whether a violation of the provisions of the
Code or of these Procedures has occurred and, if so, for imposing appropriate
sanctions in accordance with the rules adopted by the Compliance Officer or
designee. Further, the Code authorizes the Compliance Officer or designee to
adopt procedures, rules and guidelines designed to establish, maintain and
enforce written policies and procedures reasonably designed to prevent the
misuse of material non-public information.
2. Applicability
These Procedures apply to certain employees of the Adviser as defined
in the Code. Any questions regarding the Code or the Procedures should be
referred to the Compliance Officer or designee of the Adviser.
3. Definitions
For purposes of these Procedures, the following terms shall have the
meanings set forth below:
1. "Beneficial Ownership" means:
a. the receipt of benefits substantially equivalent to those
of relationship, understanding, agreement, contract or
other arrangements; or
b. the power to vest ownership in oneself at once or at some
future time.
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Generally, a person will be regarded as having a direct
or indirect beneficial ownership interest in securities
held in his/her name, as well as in the name of a spouse,
minor children who live with such person, and any other
relative (parents, adult children, brothers, sisters,
in-laws, etc.) whose investments the employee directs or
controls, whether the person lives with the employee or
not. See Exhibit A to these Procedures for a more complete
description of beneficial ownership, as well as examples
of beneficial ownership.
2. "Employee" has the same meaning as set forth in Section I of
the Code. In addition, the following definitions apply:
a. "Access Person" includes all directors, officers and
employees of the Adviser who, in the ordinary course of
their regular functions and duties, participates in or may
obtain information concerning recommendations by the
Adviser in connection with the purchase or sale of a
security by one or more of the Adviser's client accounts.
b. "Investment Person" includes all directors, officers and
employees of the Adviser who have access to information
concerning investment activities for the Adviser's client
accounts, and/or who give investment advice or support to,
or otherwise assist in, the execution of a portfolio
manager's decisions (i.e. traders and securities analysts,
as well as all "portfolio managers").
c. "Portfolio Manager" includes those employees who actively
participate in the portfolio selection, monitoring and
reporting with respect to one or more of the Adviser's
client accounts.
3. "Client Accounts" includes all private accounts and investment
companies who have entered into investment management
administrative and advisory agreements or sub-advisory
agreements with one or more of the members of the Adviser as
described in the Code.
4. "Security" means any note, stock, treasury stock, bond,
debenture, evidence of indebtedness, certificate of interest
or participation in any profit-sharing agreement,
collateral-trust certificate, pre-organization certificate or
subscription, transferable share, investment contract,
voting-trust certificate, certificate of deposit for a
security, fractional undivided interest in oil, gas or other
mineral rights, any put, call, straddle, option or privilege
on any security or on any group or index of securities
(including any interest therein or based on the value
thereof), any put, call, straddle, option or privilege entered
into on a national securities exchange relating to foreign
currency, or, in general, any interest or instrument commonly
known as a "security," or any certificate of interest or
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participation in, temporary or interim certificate for,
receipt for, guarantee of, or warrant or right to subscribe to
or purchase, any of the foregoing.
5. "Equivalent Security" means a security that: (1) is
convertible into another security or (2) gives its holder the
right to purchase another security of the same issuer. For
example, a bond or preferred stock may be convertible into
another security of the same issuer, or an option or warrant
may give the holder the right to purchase stock of the same
issuer.
6. "Reportable Security" means any security that must be reported
to the Compliance Officer or designee after execution of a
trade (see Exhibit B for examples).
7. "Security Requiring Prior Approval" means any reportable
security that must be pre-cleared by the Compliance Officer or
designee prior to execution of a trade (see Exhibit B for
examples).
4. Prohibitions
The Adviser and the Fund have determined that the following courses of
conduct are prohibited for all the Adviser's employees:
1. Insider Trading
Every employee is forbidden from trading, either personally or on
behalf of others (including client accounts managed by the Adviser),
on material non-public information or communicating material
non-public information to others in violation of the law. This
conduct is frequently referred to as "insider trading". This policy
applies to every employee of the Adviser and extends to activities
within and outside their duties at the Adviser. See Appendix I of the
Code for a description of "insider trading" and special procedures
that are designed to detect and prevent "insider trading".
2. Transactions in Securities on the Restricted List
From time to time, employees may obtain material, non-public
information or establish special or "insider" relationships with one
or more issuers of securities (i.e., the employee may become an
officer or director of an issuer, a member of a creditor committee
that engages in material negotiations with an issuer, etc.). In these
cases, the Compliance Officer or designee may maintain a Restricted
List containing the names of issuers whose securities are not
eligible for purchase or sale by employees and/or client accounts.
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Employees who are deemed to be access persons (and registered
representative/principals of any broker-dealer affiliate of the
Adviser) may not trade, either personally or on behalf of client
accounts of the Adviser, in a security of an issuer appearing on the
Restricted List. With respect to personal transactions of employees,
the Compliance Officer or designee will advise each employee during
the prior approval process if a security appears on the Restricted
List. With respect to trading on behalf of client accounts, the
Compliance Officer or designee will advise the portfolio managers
thereof in writing when any issuers are added to or deleted from the
Restricted list.
3. Solicitation or Acceptance of Significant Gifts and Gratuities
Except as noted below, an employee shall not solicit or accept from a
broker/dealer or other vendor that transacts business with the
Adviser or its client accounts any gifts or gratuities or other
things of value. For this purpose, gifts and gratuities and other
things of value do not include unsolicited entertainment (including
meals or tickets to cultural or sporting events) that are not so
frequent or extensive as to raise any question of impropriety. An
employee may not accept unsolicited gifts or other things of more
than de minimis value from any person or entity that does business
with or on behalf of an investment company client account. In any
such case, the value may not exceed $100 per giver per year.
4. Independent Practice for Compensation
Employees shall not undertake a business activity or practice for
compensation that is in competition with the Adviser unless they have
received the written consent of the Compliance Officer or designee of
the Adviser. For this purpose, "business activity or practice"
includes any service that the Adviser currently makes available for
compensation. In addition, employees who are deemed to be investment
persons are prohibited from serving on the board of
directors/trustees of certain organizations without prior written
approval from the Compliance Officer or designee (see Section V.C. of
the Code). In the relatively small number of instances in which board
service is authorized, investment persons serving as directors
normally should be isolated from those making investment decisions
through "Chinese Wall" or other procedures.
Employees shall also avoid any action, whether for personal profit or
otherwise, that results in an actual or potential conflict of
interest with the Adviser or its client accounts, or which may be
otherwise detrimental to the interest of the Adviser or its client
accounts. Such conflict may also arise from the purchase and sale for
a client account of securities in which an officer, director or
employee of the Adviser has an economic interest, Moreover, such
conflict may arise in connection with vendor relationships in which
such employee has any direct or indirect financial interest, family
interests or other personal interest. Such conflicts must be resolved
in favor of the Adviser's client, or if a vendor, in favor of the
Adviser.
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5. Failure to Disclose Personal Interests in a Security
Upon commencement of duty with the Adviser, each investment person
shall disclose, on the appropriate form, all holdings of securities to
the Compliance Officer or designee. An employee who is deemed to be an
investment person shall not cause or attempt to cause client accounts
to acquire or dispose of any such security (including any option,
warrant or other right or interest relating to such security) unless
the employee shall first disclose to the Compliance Officer or designee
all facts reasonably necessary to assure that any conflicts of interest
relating to such security are resolved in a manner that is not
disadvantageous to client accounts.
The disclosures as described above are intended to bring to the
attention of the Compliance Officer or designee any actual or apparent
conflicts of interest and to prevent employees from exerting, or
appearing to exert, improper influence on the management of client
accounts.
6. Depriving Client Accounts of Investment Opportunities
The failure of an employee who is deemed to be a portfolio manager to
recommend an investment opportunity to, or to purchase an investment
opportunity for, a client account in order to obtain a personal benefit
will be considered a course of conduct that deprives a client account
of an investment opportunity. Therefore, such conduct will be
considered to be a violation of Section V.B. of the Code. An example of
this type of prohibited conduct is to effect a personal transaction in
a security and to intentionally fail to recommend, or to fail to
effect, a suitable client account transaction in such security in order
to avoid the appearance of a conflict of interest.
7. "Scalping" or "Front-Running"
Employees shall not acquire or dispose of beneficial ownership of a
security if such acquisition or disposition is based upon the
employee's knowledge of actions already taken, being taken or being
considered by the Adviser on behalf of any of its client accounts. Such
prohibited conduct will be considered to violate one or more of
Sections V.A., V.B. and V.F. of the Code. Examples of this type of
prohibited conduct include:
a. for personal gain, an employee uses knowledge of a
future purchase of a security by a client account and
buys the security or acquires direct or indirect
beneficial ownership of the security before the client
account buys the security; or
b. for personal gain, an employee uses knowledge of a
future sale of a security by a client account and sells
the security for any account with respect to which the
employee is the direct or indirect beneficial owner
before the client account sells the security (e.g., the
employee sells short a
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security based on knowledge of a future sale of the
security by a client account).
5. Restricted Trading Periods ("Blackout Periods")
1. Same Day Restriction
Employees who are deemed to be "access persons" (and
registered representatives and/or principals of any broker-dealer affiliate of
the Adviser) are prohibited from executing a parallel securities transaction on
any day during which a client account has a pending "buy" or "sell" order in the
same (or equivalent) security of the same issuer, until that order is executed
or withdrawn.
2. Seven-Day Restriction
Employees who are deemed to be access persons (and registered
representatives and/or principals of any broker-dealer affiliate of the Adviser)
are prohibited from buying or selling a security for seven calendar days after a
client account executes an opposite trade in the same (or equivalent) security
of the same issuer. For example if a client account sold a security within the
last seven calendar days, access persons (and registered representatives and/or
principals of any broker-dealer affiliate of the Adviser) would be prohibited
from buying the same (or equivalent) security of the same issuer. (Note: The day
of the last client account trade is counted as the first day of this seven
calendar day period.)
Employees who are deemed to be investment persons are
prohibited from buying or selling a security within at least seven calendar days
before or after a client account trades in the same (or equivalent) security of
the same issuer. (Note: The day of the last client account trade is counted as
the first day of this seven calendar day period.) If any client account
purchases or sells a security within seven days before or after a trade by an
investment person, the Compliance Officer or designee will require that the
employee take such action as necessary to unwind, reverse or disgorge such
securities. The Compliance Officer or designee will direct the employee to
disgorge any profits obtained as a result of such subsequent trade.
Depending on the circumstances in each case, it may be
appropriate for the Compliance Officer or designee to impose a "cooling-off
period" longer or shorter than the seven calendar day period described above.
Some of these circumstances could include whether the security is thinly traded,
the number and dollar volume of transactions of employees and client accounts,
and the employee's level of involvement in the investment process.
3. 60-Days Restriction
Employees who are deemed investment persons are prohibited
from profiting from the purchase and voluntary sale, or sale and voluntary
purchase, of the same (or equivalent) securities within 60 calendar days of a
trade by one or more client accounts.
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a. Any such short-term trade will be investigated by the
Compliance Officer or designee who shall render a
finding and determine the appropriate disposition of
the matter.
b. Any profits realized upon such disposition are subject
to disgorgement under such rules as adopted by the
Adviser.
c. The Adviser may adopt rules providing for hardship
exceptions upon application on a case-by case basis.
Note: The Adviser believes that short-term trading by employees who are deemed
to be investment persons is inconsistent with their fiduciary duties and can be
detrimental to both the Adviser and its client accounts. It is, therefore, the
Adviser's judgment that excessive short-term trading can be a time-consuming
distraction, can interfere with an employee's ability to perform his/her duties
in a diligent and thorough manner and can act in a manner inconsistent with the
Adviser's fiduciary duty to clients. Such trading increases the possibility of
actual or apparent conflicts of interests.
6. Disclosure of Confidential Information
Except in the ordinary course of assigned duties, employees shall not
disclose to any non-employee or other non-member of the Adviser information
concerning particular securities that are held or being considered for purchase
or sale by client accounts, any information concerning client accounts or any
other information deemed confidential by the Adviser.
7. Purchase of Non-Investment Grade Corporate Bonds Held in Client Accounts
Employees who are deemed to be access persons shall not acquire direct
or indirect beneficial ownership of a corporate bond if, at the time of such
acquisition, any debt security of the issuer of such bond is held in a client
account and such corporate bond is rated less than investment grade by either
Moody's Investors Services, Inc. ("Moody's") or Standard and Poor's Corporation
("S&P"). (Note: for this purpose, a bond that is not rated by either Moody's or
S&P will be treated as a bond that is rated less than investment grade.)
8. New Issue Purchases During an Initial Public Offering
Employees who are deemed to be investment persons shall not acquire
direct or indirect beneficial ownership of, or otherwise purchase, securities
issued during an initial public offering ("IPO").
9. Private Placements
Employees who are deemed to be investment persons are prohibited from
acquiring an unregistered security issued in a private placement without the
prior written approval of the Compliance Officer or designee. Under normal
circumstances, such approval will not be
7
<PAGE>
withheld if the employee demonstrates in writing that: (1) the investment is
not suitable for one or more client accounts; (2) the investment opportunity was
unique to the individual circumstances of the employee; (3) the investment did
not involve employment with the Adviser as a consideration by the offeree; and
(4) no overreaching would or could occur. Investment persons who have been
authorized to acquire securities in a private placement must disclose such
investment to the Compliance Officer or designee when such investment person
plays a part in any subsequent consideration of any investment in the issuer by
a client account. The decision to purchase securities of the issuer for a
client account shall be subject to an independent review by the Compliance
Officer or designee.
10. Personal Securities Trading
1. Opening of Brokerage Accounts
Each "access person" shall supply to the Compliance Officer or designee
a completed Asset Disclosure Form (see Exhibit C), identifying all
brokerage, company and other institutional accounts subject to the Code
and related Procedures in which the employee has a direct or indirect
beneficial ownership interest, as defined in Section III.A. herein.
Each access person is required to provide an updated Asset Disclosure
Form to the Compliance Officer or designee at any time the employee
opens or closes any brokerage, company or other institutional account
in which he/she has a direct or indirect beneficial ownership interest.
11. Pre-Clearance of Personal Securities Transactions
1. Each employee who is deemed to be an access person shall obtain
written approval from the Compliance Officer or designee prior to
buying or selling a security requiring prior approval. This
requirement applies to the purchase or sale of each security
requiring prior approval in which the employee has a direct or
indirect beneficial ownership interest such as purchases or sales
for the account(s) of the employee, his/her spouse or minor
children, or for accounts of a trust for which the employee is a
trustee or in which the employee has a direct or indirect
beneficial ownership interest.
2. In the absence of the Compliance Officer or designee,
pre-clearance may be obtained from any officer of the investment
department.
3. Notwithstanding Section V.B. I. above, an employee shall not be
required to obtain prior approval for transactions in securities
that are made for any account(s) over which the employee has no
direct or indirect beneficial interest, influence or control.
8
<PAGE>
4. Employees seeking pre-clearance of securities transactions shall
complete Part I of the Pre-Clearance Form (see Exhibit H) and
submit the form to the Compliance Officer or designee. Employees
who are not located at the home office of the Adviser may either
fax the completed form or verbally provide the Compliance Officer
or designee with the information necessary to complete Part I of
the form.
For the purpose of approving or disapproving the securities
transactions of employees, the Compliance Officer or designee shall
follow the pre-clearance procedures set forth in Exhibit G, and such
other procedures approved by the Adviser for internal control purposes.
5. Securities transactions in discretionary accounts of access
persons must also be approved by the Compliance Officer or
designee prior to execution of the trade if the security requires
prior approval, as defined herein. The employee must provide a
copy of the discretionary agreement to the Compliance Officeror
designee upon commencement of employment or upon a discretionary
account.
12. Reporting of Personal Securities Transactions
1. General Reporting Requirement
Each employee who is deemed to be an investment person shall submit, at
the time of employment and annually thereafter, to the Compliance
Officer or designee a report ("Asset Disclosure Form"), of every
position held in a reportable security with respect to which the
employee has a direct or indirect beneficial ownership interest.
Notwithstanding the provisions of Section V.C.I. above, an investment
person shall not be required to report transactions in reportable
securities for any account over which the employee has no direct or
indirect beneficial interest, influence or control, or for
nonvolitional transactions.
2. Provision of Duplicate Confirmations
Except as to the annual report requirement by the employee who is
deemed to be an investment person, the reporting requirement for
investment persons described in Section V.C.1. above may be satisfied
through the provision of duplicate confirmations and monthly/quarterly
brokerage statements to the Compliance Officer or designee. Access
persons are also required to provide duplicate confirmations and
monthly/quarterly brokerage statements for all transactions in
reportable securities. The Compliance Officer or designee will request
each broker/dealer identified on an employee's current Asset Disclosure
Form to provide duplicate confirmations and monthly/quarterly brokerage
statements for all securities transactions in the employee's
9
<PAGE>
account(s). Therefore, it is incumbent upon each employee to make
certain that his/her Asset Disclosure Form is maintained on a current
basis (i.e., all of the employee's brokerage, company and other
institutional accounts are identified) and provided to the Compliance
Officer or designee in a timely manner. Failure to keep such Asset
Disclosure Form current shall result in disciplinary action.
In cases where it is not possible for the access person's broker/dealer
or other institution to provide duplicate confirmations to the
Compliance Officer or designee for transactions in reportable
securities (or in case confirmations are otherwise not available), the
employee is required to furnish a Transaction Report (see Exhibit F) to
the Compliance Officer or designee, no later than 10 days after each
transaction.
3. Annual Disclosure of Personal Securities Holdings
Employees who are deemed to be investment persons must verify annually
(as of each January 31) all holdings of personal securities for which
they have direct or indirect beneficial interest.
Upon adoption of these Procedures, each employee who is deemed an
investment person must provide to the Compliance Officer or designee a
complete report, on the Asset Disclosure Form (see Exhibit C), listing
each of the securities held as of December 31, 1994, for which the
employee has direct or indirect beneficial ownership. This initial
listing of personal securities must be submitted no later than March
31, 1995. Subsequent revised lists must be provided to the Compliance
Officer or designee no later than 30 calendar days (after December 31
of each subsequent Year). In the event that no securities are held as
of the above reporting dates, the report should specify that such
employee did not hold securities on the respective reporting date. This
report should include book entry shares held at companies,
broker/dealers, investment advisers or other institutions and
physically issued certificates held in a safe deposit box, at one's
home, or in the trust department of a bank or trust company.
13. Administrative Procedures
1. Distribution of Code of Ethics and Procedures Adopted Under the
Code
Upon commencement of duty with the Adviser or any of its
affiliates each new employee shall receive a copy of the Code
and related Procedures. Thereafter, each such employee shall
file an Initial Acknowledgment Statement (see Exhibit D) with
the Compliance Officer or designee in a timely manner,
indicating that he/she has read and understands the Code,
including the Policy Statement on Insider Trading, and the
Procedures under the Code.
The employee must also attend an orientation session with
respect to the Adviser's Code and related Procedures within 30
days of employment unless a supervisor requests in writing
that a 30-day extension of time be granted in order to
complete current business.
10
<PAGE>
On an annual basis, each employee shall file with the
Compliance Officer or designee an Annual Acknowledgment
Statement (see Exhibit E) indicating that the employee has
reviewed and understands the provisions of the Code, including
the Policy Statement on Insider Trading, and the Procedures
under the Code, and that he/she has complied and will continue
to comply, with the requirements thereof, unless otherwise
previously disclosed to the Compliance Officer or designee.
2. Record Keeping Responsibilities
The Compliance Officer or designee shall be responsible for
maintaining custody of the following records for a period of five years:
a. all forms supplied to the Compliance Officer or designee by
employees;
b. all duplicate confirmations, Transaction Reports and
brokerage statements supplied to the Compliance Officer or
designee pursuant to the requirements of Section V.C.2. of
these Procedures;
c. all lists of employees used for the purpose of administering
the Code and related Procedures;
d. all Pre-Clearance Forms relating to the personal securities
transactions of employees; a copy of each Code of the
Adviser's and each set of Procedures adopted thereunder;
e. a written record of each violation of the Code or related
Procedures, and a written record of any action taken as a
result of each such violation; and
f. all employee Acknowledgment Statements referred to in Section
V.C.3. of the Procedures.
3. Monitoring of Securities Transactions of Employees
The duplicate confirmations supplied to the Compliance
Officer or designee pursuant to Section V.C.2. of these Procedures shall be
reviewed by the Compliance Officer or designee in order to monitor compliance
with the Code and related Procedures. The Compliance Officer or designee shall
develop review procedures necessary to ensure compliance with the Code,
including the Policy Statement on Insider Trading, and Procedures related
thereto.
4. Annual Seminars
Annually, the Compliance Officer or designee will conduct a
seminar for the purpose of reviewing with all employees the Code and related
Procedures. Attendance at the Annual Review is mandatory. It is the
responsibility of each supervisor to ensure that employees
11
<PAGE>
subject to such person's submission attend the Annual Review. Failure to attend
such review will result in a letter of admonition, censure or other sanction as
deemed appropriate by the Compliance Officer or designee. Such document will be
placed in the violations file. Such file is required to be maintained under the
rules of the Investment Advisers Act of 1940.
5. Special Reports for Directors
The Compliance Officer or designee will prepare on a timely
basis a report to the Directors/Trustees of any investment company managed by
the Adviser explaining significant remedial action taken by the Compliance
Officer or designee or the Adviser in response to violations of the Code,
including the Policy Statement on Insider Trading, and the related Procedures
under the Code.
6. Annual Reports
Once each year, the Compliance Officer or designee will
report to the Board of Trustees of the Adviser's investment company client
accounts with regard to evolving industry practices or developments in
applicable laws or regulations during the past year, recommended changes in the
Policy Statement on Insider Trading or Procedures under the Code, any violative
conduct of a substantial nature requiring significant remedial action occurring
during the last year, and other information as requested the director/trustees.
The Compliance Officer or designee will establish and review
procedures with respect to monitoring all personal security transactions by
employees and make periodic reports to the Board of Trustees of the Adviser's
investment company client.
14. Penalties for Violations of the Code
Employees violating or about to violate the provisions of the
Adviser's Code or these Procedures may be subject to sanctions, which may
include, among other things, restrictions on such person's personal securities
transactions; a letter of admonition, education or formal censure; fines;
suspension, reassignment demotion or termination of employment; or other
significant remedial action.
Employees may also be subject to disgorgement proceedings for
transactions in securities that are inconsistent with Sections V.L. and V.M. of
the Code. Any profits realized on trades within any proscribed period (see
Section IV.H.) are required to be disgorged to charitable organizations,
eleemosynary institutions or nonprofit entities as determined by the Compliance
Officer or designee.
12
<PAGE>
Exhibit A
BENEFICIAL OWNERSHIP
The purpose of this exhibit is to illustrate situations in which an employee has
or does not have direct or indirect beneficial ownership of a security. If an
employee has direct or indirect beneficial ownership of a "reportable security"
he/she is required to report transactions in the security according to the
provisions of Section VI. of the procedures adopted under the Code of Ethics
(the "Procedures"). If an employee has or acquires beneficial ownership of a
"security requiring prior approval," he/she is required to pre-clear
transactions in such security according to the provisions of Section VI. of the
Procedures. In other words, with respect to securities beneficially owned by an
employee, the employee reports transactions in "reportable securities" and
pre-clears transactions in "securities requiring prior approval" as if the
transactions were his/her own.
1. General Description of Beneficial Ownership
As used in the Procedures, beneficial ownership will be interpreted in
the same manner as it would be in determining whether a person is
subject to Section 16 of the Securities Exchange Act of 1934, except
that the determination of such ownership shall apply to all securities,
including equity securities. For the purpose of that Act, beneficial
ownership means:
the receipt of benefits substantially equivalent to those of
ownership through relationship, understanding, agreement,
contract or other arrangements; or
the power to vest such ownership in oneself at once, or at
some future time.
Using the above general definition as a broad guideline, the ultimate
determination of beneficial ownership will be made in light of the
facts of the particular case. Key factors are the degree of the
individual's ability to exercise control over the security and the
ability of the individual to benefit from the proceeds of the security.
Employees are encouraged to seek the advice of the Compliance Officer
or designee if they have any questions concerning whether or not they
have beneficial ownership of any security.
2. General Rules
i. Securities Held by Family Members
As a general rule, a person is regarded as the beneficial
owner of securities held in his/her name, as well as the name
of his/her spouse and their minor children. These
relationships ordinarily confer to the holders benefits
substantially equivalent to
A-1
<PAGE>
ownership. In addition, absent countervailing facts, it is
expected that securities held by relatives who share the same
home as the reporting person will be reported as beneficially
owned by such person.
ii. Securities Held by a Corporation or Partnership
Generally, ownership of securities in a company (i.e.,
corporation, partnership, etc.) does not constitute beneficial
ownership with respect to the holdings of the company in the
securities of another issuer. However, an owner of securities
issued by a company will be deemed to have beneficial
ownership in the securities holdings of the company where:
the company is merely a medium through which one or
several persons in a small group invest or trade in
securities;
the owner owns 25% or more of the outstanding voting
securities of, or a 25% or more equity interest in,
the company; and
the company has no other substantial business.
In such cases, the person or persons who are in a position of
control of the company are deemed to have a beneficial
ownership interest in the securities of the company.
iii. Securities Held in Trust
Beneficial ownership of securities in a private trust
includes:
1. the ownership of securities as a trustee where
either the trustee or members of his "immediate
family" have a vested interest in the income or
corpus of the trust;
2. the ownership of a vested beneficial interest in a
trust; and
3. the ownership of securities as a settlor of a
trust in which the settlor has the power to revoke
the trust without obtaining the consent of all
beneficiaries.
As used in this section, the "immediate family" of a trustee
means:
a. a son or daughter of the trustee, or a descendent
of either;
b. a stepson or stepdaughter of the trustee;
c. the father or mother of the trustee; and
A-2
<PAGE>
d. a spouse of the trustee.
For the purpose of determining whether any of the
foregoing relations exists, a legally adopted child of a
person shall be considered a child of such person by blood.
iv. Securities Not Beneficially Owned
Beneficial ownership does not include, however,
indirect investment by any person in portfolio
securities held by:
1. any holding company registered under the Public
Utility Holding Company Act;
2. any investment company registered under the
Investment Company Act;
3. a pension or retirement plan holding securities of
an issuer whose employees generally are the
beneficiaries of the plan; and
4. a business trust with over twenty-five
beneficiaries.
Participation in a pension or retirement plan will result in
beneficial ownership of the portfolio securities if plan
participants can withdraw and trade the securities without
withdrawing from the plan.
Upon selling, transferring or otherwise disposing of
securities in another company's 401(k) plan, the transaction
must be pre-cleared with the Compliance Department, if it
consists of "reportable securities."
3. Examples of Beneficial Ownership
i. Securities Held by Family Members
Example 1-A. X and Y are married. Although Y
has an independent source of income from a family
inheritance and segregates her funds from those of
her husband's, Y contributes to the maintenance of
the family's home. X and Y have engaged in joint
estate planning and have the same financial advisor.
Since X and Y's resources are clearly significantly
directed toward their common property, they will be
deemed to be beneficial owners of each other's
securities.
Example 1-B. X and Y are separated and have
filed for divorce. Neither party contributes to the
support of the other. X has no control over the
financial affairs of his wife. X is not a beneficial
owner of Y's
A-3
<PAGE>
securities.
ii. Securities Held by a Company
Example 2-A. O is a holding company with five
shareholders. Although O's company does no business
on its own, it has several wholly owned subsidiaries
which manufacture oil related products. X is a
controlling shareholder of O's company. X has a
beneficial interest in the securities holdings of O.
iii. Securities Held in Trust
Example 3-A. X is trustee of a trust created for
his minor children. When both of X's children reach
21, each will receive an equal share of the corpus of
the trust. X is a beneficial owner of the trust.
Example 3-B. X is trustee of an irrevocable
trust for his daughter. X is a director of the issuer
of the equity securities held by the trust. The
daughter is entitled to the income of the trust until
she is 25 years old and is then entitled to the
corpus. If the daughter dies before reaching 25, X is
entitled to the corpus. X should report and pre-clear
the securities transactions of the trust as his own.
iv. Book Entry Shares in Public Companies
Certain widely held public companies provide for
automatic share accumulation programs directly from
the respective companies. Initial transactions
pursuant to these programs must be pre-cleared by the
Compliance Officer or designee, but subsequent
investments do not require pre-clearance. However,
such holdings should be reported on the
Initial/Annual Asset Disclosure Form (see Exhibit C).
Other types of automatic programs that do not require
pre-clearance include:
automatic withdrawal from checking account,
monthly, for investments in book entry shares in
public companies; and
automatic reinvestment of dividends in
established book entry accounts with public
companies.
v. Investment Clubs
Transactions by an Investment Club in which an
employee is a participant, partner or otherwise has a
direct or indirect beneficial ownership, are subject
to the pre-clearance and reporting provisions
described in the Procedures.
A-4
<PAGE>
Exhibit B
Distinction Between "Reportable Securities" and "Securities Requiring Prior
Approval"
The Procedures under the Code of Ethics require that certain employees obtain
the approval of the Compliance Officer or designee before purchasing or selling
any security requiring prior approval, and that such employees enable the
Compliance Officer or designee to receive duplicate confirmation for all of
their transactions in reportable securities. The table below is intended to show
the types of securities that are considered to be securities requiring prior
approval and reportable securities. This list does not purport to be an
exhaustive list of securities requiring prior approval and reportable
securities, and questions should be directed to the Compliance Officer or
designee when clarification is necessary.
<TABLE>
<CAPTION>
Securities Requiring Reportable
Types of Securities Prior Approval Securities
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities No No
- ---------------------------------------------------------------------------------------------------------------------
Money market instruments, such as bankers' acceptances,
certificates of deposit or repurchase agreements No No
- ---------------------------------------------------------------------------------------------------------------------
Securities issued by an open-end investment company (including
the Adviser's clients) and unit investment trusts No Yes
- ---------------------------------------------------------------------------------------------------------------------
Municipal bonds, notes and debentures No Yes
- ---------------------------------------------------------------------------------------------------------------------
Securities and stock options issued by the Adviser, if any No Yes
- ---------------------------------------------------------------------------------------------------------------------
Options on a stock market index, foreign currency, etc. No Yes
- ---------------------------------------------------------------------------------------------------------------------
Unregistered or private placement securities Yes Yes
- ---------------------------------------------------------------------------------------------------------------------
Securities issued by a closed-end investment company Yes Yes
- ---------------------------------------------------------------------------------------------------------------------
Securities issued or guaranteed by any foreign government, its
agencies or instrumentalities No No
- ---------------------------------------------------------------------------------------------------------------------
Variable annuities issued by insurance company separate accounts No No
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
B-1
<PAGE>
All securities other than those described above, including but not limited to:
<TABLE>
<S> <C> <C>
- - corporate bonds, notes and debentures
- - equity stock, including common and preferred (and options thereon) Yes Yes
- - foreign securities, including ADRS, GDRS, etc.
- - limited partnership interests
- - rights and warrants
- - securities acquired upon the exercise of rights, warrants and
options
</TABLE>
- --------------------------------------------------------------------------------
Notes:
The following transactions are exempted from the pre-clearance and/or reporting
process, even it the security involved requires pre-clearance and/or reporting:
- Automatic reinvestment plans for mutual funds and other securities (the
initial investment is not exempted from this process)
- Purchases and sales that are non-violation
Municipal bonds, notes and debentures are exempted from the pre-clearance
requirement provided, the Adviser continues not to have any client account
activity in these types of securities.
- --------------------------------------------------------------------------------
B-2
<PAGE>
EXHIBIT C
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Employee Report of Holdings In Securities
Initial/Annual Disclosure of
Personal Securities Holdings
(Asset Disclosure Form)
- ------------------------------------------------------------------------------------------------------------------------------
(Circle Initial Or Annual)
Employee:
Department:
Date:
Employee Number:
I have direct or indirect ownership** Interest in the following securities that are held at the following brokerage/dealers,
companies or other institutions:
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Name of Security Name & Address: Broker/Dealers, Companies or Other Institutions Account Number Account Registration
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
(Use reverse side to enter additional information.)
I have identified above all applicable brokerage, company and other
institutional accounts in which I have a direct or indirect beneficial
ownership interest.
I understand that I must contact the Compliance Officer or designee at
the time an account is closed and/or new account is opened.
Signature: ______________________
C-1
<PAGE>
- -------------------------------------------------------------------------------
**Accounts for which you have a direct or indirect beneficial ownership
interest include, for example, your own accounts as well as accounts
of your spouse and/or minor children, adults living in your home, and
trusts for which you are trustee or in which you have a beneficial
ownership interest. Please call the Compliance Officer or designee if
you are unsure if you have a beneficial ownership interest in a
brokerage account.
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
C-2
<PAGE>
EXHIBIT D
(Privileged And Confidential Information)
LEPERCQ, de NEUFLIZE
& CO. INCORPORATED
CODE OF ETHICS
INITIAL ACKNOWLEDGMENT FORM
I have read Lepercq, de Neuflize & Co. Incorporated Code of Ethics, the
Policy Statement on Insider Trading and the related Procedures, and I understand
the requirements thereof. I certify that I will comply with the above. I
understand that any violation of the Policy Statement on Insider Trading or the
Code and the related Procedures may lead to sanctions or other significant
remedial action.
Print Name
Signature
Date
D-1
<PAGE>
LEPERCQ, de NEUFLIZE
& CO. INCORPORATED
CODE OF ETHICS
INITIAL ACKNOWLEDGMENT FORM
(Investment Persons)
I have read Lepercq, de Neuflize & Co. Incorporated's Code of Ethics,
the Policy Statement on Insider Trading and the related Procedures, and I
understand the requirements thereof. I certify that I will comply with the
above. I understand that any violation of the Policy Statement on Insider
Trading or the Code and the related Procedures may lead to sanctions or other
significant remedial action. I understand that I may also be subject to
disgorgement proceedings for any short-term transactions that I may conduct that
are inconsistent with Sections V.L. and V.M. of the Code.
I have disclosed to the Compliance Officer or designee all personal
securities holdings for which I have direct or indirect beneficial ownership and
I will continue to do so on an annual basis as long as I am employed with
Lepercq, de Neuflize & Co. Incorporated or any of its affiliates, and I will
continue to keep this information current with the Compliance Officer or
designee.
I understand that there are prohibitions, restrictions and blackout
periods on certain types of securities transactions and that I am prohibited
from acquiring any securities in an initial public offering (IPO).
Print Name
Signature
Date
D-2
<PAGE>
Exhibit E
(Privileged And Confidential Information)
LEPERCQ, de NEUFLIZE
& CO. INCORPORATED
CODE OF ETHICS
ANNUAL ACKNOWLEDGMENT FORM
I have read Lepercq, de Neuflize & Co. Incorporated's Code of Ethics, the Policy
Statement on Insider Trading and the related Procedures. I understand the
requirements thereof, and except as otherwise disclosed to the Compliance
Officer or designee, I certify that I have, to date, complied with and will
continue to comply with such requirements. I understand that any violation of
the Policy Statement on Insider Trading or the Code and the related Procedures
may lead to sanctions or significant remedial action.
Print Name
--------------------------
Signature
---------------------------
Date
--------------------------------
E-1
<PAGE>
(Privileged And Confidential Information)
LEPERCQ, de NEUFLIZE
& CO. INCORPORATED
CODE OF ETHICS
ANNUAL ACKNOWLEDGMENT FORM
(Investment Persons)
I have read Lepercq, de Neuflize & Co. Incorporated's Code of Ethics, the Policy
Statement on Insider Trading and the related Procedures. I understand the
requirements thereof, and except as otherwise disclosed to the Compliance
Officer or designee, I certify that I have, to date, complied with, and will
continue to comply with, such requirements. I understand' that any violation of
the Policy Statement on Insider Trading or the Code and the related Procedures
may lead to sanctions or significant remedial action. I understand that I may
also be subject to disgorgement proceedings for any short-term transactions that
I may conduct that are inconsistent with Sections V.L. and V.M. of the Code
In addition, I have reported or disclosed all personal securities transactions
required to be reported or disclosed pursuant to the requirements of the Code
and the related Procedures. I have reported to the Compliance Officer or
designee all additions and/or deletions of accounts for reportable securities
for which I have direct or indirect beneficial ownership held at broker/dealers,
companies or other institutions. I have disclosed all personal securities for
which I have direct or indirect beneficial ownership. I will continue to do so
on an annual basis as long as I am employed by Lepercq, de Neuflize & Co.
Incorporated or its affiliates.
I understand that there are prohibitions, restrictions and blackout periods on
certain types of securities transactions and that I am prohibited from acquiring
any securities in an initial public offering (IPO).
Print Name
--------------------------
Signature
---------------------------
Date
--------------------------------
E-2
<PAGE>
Exhibit F
MEMORANDUM
To: Compliance Officer or designee
From:
(Please print or type)
Date:
Subject: Personal Securities Transaction Report*
This Personal Securities Transaction Report ("Report") is submitted pursuant to
the Procedures under Lepercq, de Neuflize & Co. Incorporated's Code of Ethics.
The table below lists information with respect to purchases or sales in any
reportable security in which I may be deemed to have a direct or indirect
beneficial ownership interest. I understand that I may have direct or indirect
beneficial ownership of securities of which certain other persons are the record
owners as well as securities of which I am the record owner, and I have included
transactions in such securities in this Report where applicable. I also
understand that I am not required to include in this Report transactions
effected for any account over which I do not have any direct or indirect
beneficial interest, influence or control.
I hereby certify that:
1. I am fully familiar with the Code of Ethics and the related Procedures
and the Policy Statement on Insider Trading of Lepercq, de Neuflize &
Co. Incorporated.
2. To the best of my knowledge, the information furnished in this Report
is complete, true and correct.
Employee Signature
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Date of Issuer Title of Shares or **Nature of Price/ Broker,
Transaction Securities Principal Transaction Unit Dealer
Amount or Bank ***
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
F-1
<PAGE>
* Important Note: This Report is due no later than 10 calendar days after
the trade date. The trade date is counted as the
first day.
** Purchase, sale, other type of disposition or acquisition.
*** Enter three stars in this column, if you wish to disclaim beneficial
ownership of any security listed on this Report.
F-2
<PAGE>
Exhibit G
Procedures For The Pre-Clearance Of Personal Securities Transactions
1. Securities Transactions Requiring Pre-Clearance
Employees who are deemed to be access persons desiring to
purchase or sell a security requiring prior approval must request approval from
the Compliance Officer or designee prior to execution of such transaction.
(Note: Pre-clearance is also required for transactions in securities requiring
prior approval whenever an employee has or acquires a beneficial ownership
interest in such security.) Failure to obtain pre-clearance when required will
generally be considered a violation of these Procedures.
Employees are encouraged to seek pre-clearance for all of their
transactions in reportable securities; however, pre-clearance is required only
for transactions in securities requiring prior approval. Exhibit B summarizes
the difference between reportable securities and securities requiring prior
approval.
2. Pre-Clearance Procedure
The procedure described below shall be followed in order to
ascertain whether a proposed personal securities transaction by an employee
should be approved or disapproved. Employees should recognize that this
procedure is designed to provide legal protection to the Adviser, its clients
and employees.
i. Completion of Part I of Pre-Clearance Form
Requests for the pre-clearance of securities transactions
shall be documented by completion of the Pre-Clearance
Form (see Exhibit H). The employee seeking to purchase or
sell a security requiring prior approval shall complete
Part I of the form in full and submit it to the Compliance
Officer or designee or designee, and shall provide all of
the information required by Part I of the form.)
ii. Completion of Part II of Pre-Clearance Form
The Compliance Officer or designee shall review the
information in Part I of the Pre-Clearance Form for
completeness. If the proposed transaction requires
pre-clearance, or the employee seeks preclearance even
though it is not required, the Compliance Officer or
designee or designee works with the Investments Department
to complete Part II of the form.
Part II of the Pre-Clearance Form is completed for the
purpose of ascertaining whether there are any potential
conflicts of interest between recent or anticipated
securities transactions in client accounts and proposed
transactions by employees. However, the Adviser believes
that before an employee engages in any securities
transaction, such employee has a duty to determine that
the proposed transaction would not be in conflict with
recent or proposed securities transactions in client
accounts and would otherwise be in compliance with the
Code and these Procedures.
G-1
<PAGE>
3. Considerations During the Pre-Clearance Process
i. Anticipated Client Account Trades
For access persons if any client account is considering
the purchase of the same or equivalent security, the
Compliance Officer or designee disapproves the proposed
transaction if it is a purchase of the same or equivalent
security of the same issuer. If any client account is
considering the sale of the same or equivalent security,
the Compliance Officer or designee disapproves the
transaction if it is a sale of the same or equivalent
security of the same issuer.
ii. Parallel Transactions
For access persons if a client account has recently
purchased a security, ordinarily there is no reason for
the Compliance Officer or designee to disapprove a
subsequent purchase of the same or equivalent security of
the same issuer, provided all client account transactions
have taken precedence over the employee's proposed
transaction and there are no anticipated client account
transactions in the same or equivalent security of the
same issuer. Likewise, if a client account has recently
sold a security, ordinarily there is no reason for the
Compliance Officer or designee to disapprove a subsequent
sale of the same or equivalent security, so long as there
are no anticipated client account transactions in the same
or equivalent security of the same issuer. Investment
persons are subject to the seven-day blackout period on
all proposed transactions as described in Section II.C.4.
below.
iii. Opposite Transactions
If any client account has, within the past seven calendar
days, sold the same or equivalent security of the same
issuer, the Compliance Officer or designee disapproves the
access person's proposed security transaction if it is a
purchase. If any client account has, within the past seven
calendar days, purchased the same or equivalent security
of the same issuer, the Compliance Officer or designee
disapproves the access person's transaction if it is a
sale. Investment persons are subject to the seven-day
blackout period on all proposed transactions as described
in Section H.C.4. below.
Depending on the circumstances in each case, it may be
appropriate for the Compliance Officer or designee to
impose a "cooling-off period" longer or shorter than the
seven-day period described above. Some of these
circumstances could include whether the security is thinly
traded, the number and dollar volume of transactions of
employees and client accounts, and the employee's
involvement in the investment process. (Note: The day of
the last client account trade is counted as the first day
of this seven day period.)
G-2
<PAGE>
iv. Blackout Periods
A. Same Day
Access persons are prohibited from executing a
securities transaction on any day during which a
client account has a pending "buy" or "sell" order in
that same or equivalent security until that order is
executed or withdrawn. "Pending" shall mean that the
Adviser is awaiting confirmation of the client's
"buy" or "sell" order for that day.
B. Seven-Day
Investment persons are prohibited from buying or
selling a security within at least seven calendar
days before or after a client account trades in the
same or equivalent security. (Note: The day of the
last client account trade is counted as the first day
of this seven calendar day period.)
If any client account purchases or sells a security
within seven days before or after a trade by an
investment person, the Compliance Officer or designee
has the authority to require that the employee's
trade be unwound or canceled. The Compliance Officer
or designee shall require that the employee take such
action as necessary to unwind, reverse or disgorge
such securities. The Compliance Officer or designee
shall direct the employee to relinquish any profits
obtained as a result of unwinding or canceling the
trade. Any losses or associated commissions realized
on trades within the prescribed period are the
responsibility of the employee who executed the trade
during a blackout period and as a result had to
unwind or cancel the trade.
C. 60-Day
Investment persons are prohibited from profiting in
the purchase and voluntary sale, or sale and
voluntary purchase, of the same or equivalent
security within 60 calendar days of a trade by any
client account.
If such employee purchases and sells the same or
equivalent security or other property of the same
issuer during this 60-day blackout period, the
Compliance Officer or designee shall direct the
employee to relinquish any profits obtained from such
short-term transactions. The Compliance Officer or
designee may adopt rules providing for exceptions
upon application on a case-by case basis.
D. Conflict of Interest Monitoring
All personal trades executed by access persons will
be monitored by the Compliance Officer or designee
for current and future conflicts of interest with
client accounts.
G-3
<PAGE>
4. Options
Any transaction in an option by an access person will require
pre-clearance by the Compliance Officer or designee and may be approved
but only if there are no apparent conflicts of interest as a result of
the pre-clearance process.
As described previously, an option relating to common stock will be
treated as an "equity security" for purposes of the pre-clearance
process. If the employee has sought preclearance for an options
transaction, the Compliance Officer or designee reminds the employee
that pre-clearance is required for both the opening and closing
transaction. He/She also advises the employee that if the opening
transaction is approved, the closing transaction could be difficult to
approve due to apparent conflicts of interest or competing obligations
that arise after the time the employee's opening transaction was
approved. In cases where the preclearance process indicates that bona
fide, apparent conflicts of interest exist or where obligations to
client accounts appear to be in competition with the securities
transactions of employees, the first preference and priority must be
given to transactions of client accounts. Consequently, the approval of
options transactions can be delayed in order to establish that first
preference and priority has been given to client accounts. Effectively,
therefore, options transactions take on an added element of risk -- the
rapidly declining time value of options is coupled with the need, in
some cases, to delay closing transactions of individuals to ensure that
first preference and priority is given to the execution of any pending
client account transactions.
Because of the foregoing, employees must recognize that closing options
transactions can be disapproved or delayed in certain cases and that
additional risks can therefore result from engaging in options
transactions.
5. Initial Public Offering (IPOs)
Investment persons may not acquire direct or indirect beneficial
ownership or otherwise purchase securities issued during an IPO.
6. Private Placements
Investment persons are prohibited from acquiring an unregistered
security issued in a private placement without the prior written
approval of the Compliance Officer or designee. Under normal
circumstances, such approval will not be withheld if the
employee demonstrates in writing that: (1) the investment is not
suitable for one or more of the Adviser's clients, (2) the
investment opportunity was unique to the individual
circumstances of the employee, (3) the investment did not
involve employment with the Adviser or its affiliated
broker-dealer as a consideration by the offeree, and (4) no
overreaching would or could occur. Investment persons who have
been authorized to acquire securities in a private placement
must disclose such investment to the Investment Policy Committee
when such investment person plays a part in any subsequent
consideration of any investment in the issuer by a client
account and that the client's decision to purchase securities of
the issuer should be subject to an independent review by the
Committee.
G-4
<PAGE>
7. Non-Investment Grade Corporate Bonds
If an access person wishes to purchase a corporate bond that is
held in one or more client accounts and which is currently not
rated or rated less than investment grade, the Compliance
Officer or designee disapproves the proposed transaction. (For
further details, see Section IV.J. of the Procedures adopted
under the Code.)
8. Approval
Unless the employee's proposed transaction has been disapproved,
the Compliance Officer or designee indicates his approval of the
transaction by signing the Pre-Clearance Form L The form is kept
on file in the Compliance Office, as required under Section
VI.B. of the Procedures.
Ordinarily, the securities transactions of employees will be
disapproved if they fail to meet the foregoing approval
criteria. However, in some circumstances it may be appropriate
for a securities transaction to be approved even though one or
more of the above criterion indicates that the transaction
should be disapproved. In such cases, the reason for justifying
such a trade will be described in the "Comments" section of the
Pre-Clearance Form or on a supplemental sheet to the form.
9. Approval Period
Execution of an approved securities transaction is permissible
through the date indicated in Part I of the Pre-Clearance Form,
provided that, ordinarily, execution shall be effected no later
than the day following the date of the request for
pre-clearance.
10. Procedure for Appealing Disapproved Securities Transactions
If any employee believes that a disapproved securities
transaction should have been approved, he/she may appeal the
decision of the Compliance Officer or designee by presenting a
written request for approval to the Chief Executive Officer of
the Adviser.
G-5
<PAGE>
Exhibit H
Pre-Clearance of Personal Securities Transactions
(Note: Execution of all approved transactions should be effected no later
than the following the date of request for prior approval.)
PART 1: To be completed by Lepercq, de Neuflize & Co. Incorporated employee
seeking pre-clearance.
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
1a. Employee Name:
- ---------------------------------------------------------------------------------------------------------------------------
2. Department:
- ---------------------------------------------------------------------------------------------------------------------------
3. Phone #:
- ---------------------------------------------------------------------------------------------------------------------------
4. Date of Request:
- ---------------------------------------------------------------------------------------------------------------------------
5. Name of Issuer/Security:
- ---------------------------------------------------------------------------------------------------------------------------
5a. Quantity (specify Par/Shares/Contracts):
- ---------------------------------------------------------------------------------------------------------------------------
5b. Is this a purchase or sell transaction?
- ---------------------------------------------------------------------------------------------------------------------------
5c. Security Type (common, option, bond etc.):
- ---------------------------------------------------------------------------------------------------------------------------
5d. CUSIP Number and TICKER Symbol:
- ---------------------------------------------------------------------------------------------------------------------------
5e. Is this security a new issue (IPO)?
- ---------------------------------------------------------------------------------------------------------------------------
5e. Is this an unregistered or private placement security?
- ---------------------------------------------------------------------------------------------------------------------------
5f. Is this security a corporate bond that is unrated below investment grade?
- ---------------------------------------------------------------------------------------------------------------------------
6. Have you purchased or sold equivalent securities, of the same issuer, within the past 60 calendar days
- ----------------------------------------------------------------------------------------------------------------------------
7. Date by which proposed transaction is to be completed:
- ---------------------------------------------------------------------------------------------------------------------------
8. Name of broker/dealer to provide duplicate confirmation to Compliance Office:
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Employee Certification:
To the best of my knowledge, no Lepercq, de Neuflize & Co. Incorporated
client account is considering the purchase or sale of the same (or
equivalent) securities of this issuer.
I have read Lepercq, de Neuflize & Co. Incorporated's Code of Ethics and
related Procedures and the Policy Statement on Insider Trading within
the past year, and I believe that this transaction complies with
Lepercq, de Neuflize & Co. Incorporated's Code and related Procedures
and with the Statement of Policy on Insider Trading.
Employee's Signature:
----------------------
- --------------------------------------------------------------------------------
H-1
<PAGE>
<TABLE>
Pre-Clearance of Personal Securities Transactions
Part II: To be completed by Compliance Officer or designee and Trading Desk
- ------------------------------------------------------------------------------------------------
CUSIP Number or TICKER Symbol:
- ------------------------------------------------------------------------------------------------
Issuer/Issuer/Security Name:
- ------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
<S> <C>
1. Have any transaction involving this security been made in any Lepercq, de Neuflize & Co.
Incorporated client account within the last 15 days?
------------------------------------------------------------------------------------------
2. Are there any pending or anticipated transactions by any Lepercq, de Neuflize & Co.
Incorporated client account involving this security?
------------------------------------------------------------------------------------------
3. Do any Lepercq, de Neuflize & Co. Incorporated client accounts currently hold this
security? If, Yes,
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
4. (a) Qty Held (b) Date and (c) Type ("P" or "S") of last transaction/ (d) "*" if any
transaction is pending
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
</TABLE>
5. Reviewed By:
------------------------
(Head Trader) (Date)
6. Approved By:
-------------------------
(Compliance Officer) (Date)
7.
---------------------------------------------------------------------------
Comments:
---------------------------------------------------------------------------
H-2
