Reg. ICA No. 811-7691
File No. 33-
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 3, 1996
U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM N-2
|X| REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
|_| Pre-Effective Amendment No.
|_| Post-Effective Amendment No.
and/or
|X| REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
|_| Amendment No._______________________
THE DESSAUER GLOBAL EQUITY FUND
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Exact Name of Registrant as Specified in Charter
201 South Lake Avenue, Suite 510 Pasadena, California 91101
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Address of Principal Executive Offices (Number, Street, City, State, Zip Code)
(818) 795-0039
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Registrant's Telephone Number, including Area Code
Kramer, Levin, Naftalis & Frankel
Susan Penry-Williams, Esq. 919 Third Avenue, New York, New York 10022
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Name and Address of Agent (Number, Street, City, State, Zip Code)
for Service
As soon as practicable after the effective date of this registration statement
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Approximate Date of Proposed Offering
If any securities being registered on this form will be offered on a delayed or
continuous basis in reliance on Rule 415 under the Securities Act of 1933, other
than securities offered in connection with a dividend reinvestment plan, check
the following box. |_|
It is proposed that this filing will become effective (check appropriate box)
|_| when declared effective pursuant to section 8(c)
If appropriate, check the following box:
|_| This amendment designates a new effective date for a previously filed
registration statement.
|_| This form is filed to register an additional securities for an offering
pursuant to Rule 462(b) under the Securities Act and the Securities Act
registration statement number of the earlier effective registration
statement for the same offering is ____.
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CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
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Title of Securities Amount Being Proposed Maximum Proposed Maximum Amount of
Being Registered Registered Offering Price per Unit Aggregate Offering Price Registration Fee
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<S> <C> <C> <C> <C>
Common Stock 2,000,000 shares $12.50 $25,000,000 $8,625.00
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE>
CROSS-REFERENCE SHEET
(Pursuant to Rule 495(a) showing location in the form of Prospectus of the
responses to the Items in Part A and location in the form of Prospectus and the
Statement of Additional Information of the responses to the Items in Part B of
Form N-2).
Item Number
Form N-2,
Part A Prospectus Caption
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1 Front Cover Page
2 Inside Front and Outside Back Cover Page
3(1) Summary of the Company's Expenses
(2) Prospectus Summary
4 Not Applicable
5 Plan of Distribution
6 Not Applicable
7 The Company and Its Objectives, Policies and
Risks
8(1) Prospectus Summary; The Company and Its
Objectives, Policies and Risks
(2) The Company and Its Objectives, Policies and
Risks
(3) The Company and Its Objectives, Policies and
Risks
(4) The Company and Its Objectives, Policies and
Risks
(5) Not Applicable
(6) Not Applicable
9(a) Management of the Company
(b) Management of the Company
(c) Management of the Company
(d) Management of the Company
(e) Management of the Company
(f) Management of the Company
10(1) Capital Stock of the Company
(2) Not Applicable
(3) Not Applicable
(4) Taxes
(5) Not Applicable
(6) Not Applicable
11 Not Applicable
12 Not Applicable
13 Table of Contents of the Statement of
Additional Information
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Item Number
Form N-2, Statement of Additional
Part B Prospectus Caption Information Caption
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<S> <C> <C>
14 * Front Cover Page
15 * Front Cover Page
16 * Not Applicable
17 The Company and its Objectives, Investment Objective and Policies;
Policies and Risks Investment Strategies and Risks;
Investment Restrictions and Policies
18 Management of the Company Management of the Company
19 * Not Applicable
20 * Investment Advisory and Investment Advisory Agreements
21 * Portfolio Transactions and Brokerage
22 * Tax Matters
23 * Not Applicable
</TABLE>
Part C
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Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.
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PROSPECTUS
________________ _____, 1996
2,000,000 SHARES
THE DESSAUER GLOBAL EQUITY FUND
COMMON STOCK
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The Dessauer Global Equity Fund (the "Company") is a non-diversified
closed-end management investment company. The Company's primary investment
objective is long-term capital appreciation through investments in established
companies around the world. The Company will seek to achieve its objectives by
investing primarily in a portfolio of equity securities in companies located in
North America (the U.S. and Canada), Japan, Asia (primarily Hong Kong) and
Europe (collectively the "Major Markets"). In addition, the Company may invest
not more than 10% of its assets in smaller, less established markets. Under
normal circumstances not more than 50% of the Company's assets will be invested
in any one of the Major Markets. There is no assurance that the Company will
achieve its objectives. See "The Company and its Objectives, Policies, and
Risks."
Dessauer Asset Management Company ("DAMCO") and Guinness Flight Global
Asset Management ("GFGAM") are the Company's co-investment advisers. The address
of DAMCO is ____________, Orleans, Massachusetts and its phone number is
____________. The address of GFGAM is Lighterman's Court, 5 Gainesford Street,
Tower Bridge, London, England and its phone number is 011-44-171-522-2100.
Investment Company Administration Corporation ("ICAC") is the Company's
administrator. Its address is 2025 Financial Way, Suite 101, Glendora,
California 91740 and its phone number is (818) 852-1033. [Underwriter]
("[Underwriter]") is the Company's underwriter. Its address is ____________ ,
____________ Street, New York, New York ____________ and its phone number is
(212) ____________.
---------------------
Prior to this offering, there has been no public market for the common
stock of the Company. The Company has filed an application for listing of its
common stock on the New York Stock Exchange. The symbol for the common stock of
the Company is _______.
The common stock is being offered on a best efforts basis. No arrangement
has been made to place funds received in an escrow, trust, or similar
arrangement. It is anticipated that this offering will terminate on
________________, 1996.
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PRICE TO SALES PROCEEDS TO
PUBLIC LOAD COMPANY(1)
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Total Minimum ............ $_______.00 $________ $_________
Total Maximum . . . . . $_______.00 $________ $_________
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(1) Before deducting offering expenses payable by the Company estimated at
$________. These expenses will be amortized and charged as expenses
against the income of the Company.
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The Prospectus sets forth concisely information about the Company that a
prospective investor ought to know before investing. Investors are advised to
read this Prospectus carefully and retain it for future reference. A Statement
of Additional Information about the Company has been filed with the Securities
and Exchange Commission and is available, without charge, upon writing or
calling [Underwriter] at the above location. The Statement of Additional
Information has been incorporated by reference into this Prospectus. The table
of contents of the Statement of Additional Information appears on page __ of
this Prospectus.
-----------
INVESTORS SHOULD BE AWARE THAT SHARES OF A CLOSED-END EQUITY FUND TEND TO
TRADE FREQUENTLY AT A DISCOUNT. ACCORDINGLY, AN INVESTOR WHO PURCHASES THE
COMMON STOCK OF THE COMPANY IN THIS INITIAL PUBLIC OFFERING MAY HAVE A RISK OF
LOSS TO CAPITAL WHEN SUCH SHARES COMMENCE PUBLIC TRADING.
-----------
PRINCIPAL UNDERWRITER
[UNDERWRITER]
-----------
The date of this Prospectus and the Statement of Additional Information is
___________, 1996.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-----------
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the more
detailed information included elsewhere in this Prospectus.
THE COMPANY The Dessauer Global Equity Fund (the
"Company") is a newly organized
non-diversified closed-end management
investment company. See "The Company and its
Objectives, Policies and Risks."
THE OFFERING The Company is offering 2 million shares of
common stock at an offering price of $12.50
per share. The common stock is being offered
by [Underwriter]. See "Plan of
Distribution."
INVESTMENT OBJECTIVES The Company's primary investment objective
is long-term capital appreciation through
investments in established companies around
the world. The Company will seek to achieve
its objectives by investing primarily in a
portfolio of equity securities in companies
located in North America (the U.S. and
Canada), Japan, Asia (primarily Hong Kong)
and Europe (collectively, the "Major
Markets"). In addition, the Company may
invest not more than 10% of its assets in
smaller, less established markets. Under
normal circumstances, not more than 50% of
the Company's assets will be invested in any
one of the Major Markets. See "The Company
and its Objectives, Policies and Risks."
INVESTMENT ADVISERS Dessauer Asset Management Company ("DAMCO")
and Guinness Flight Global Asset Management
Limited ("GFGAM") will act as the Company's
co-investment advisers (collectively, the
"Investment Advisers"). The Company will pay
DAMCO a monthly fee at an annual rate of
.60% of the average weekly net assets of the
Company and will pay GFGAM a monthly fee at
an annual rate of .40% of the average weekly
net assets of the Company. This fee,
collectively, is higher than that paid by
many other investment companies. See
"Management of the Company."
ADMINISTRATOR Investment Company Administration
Corporation ("ICAC") will act as the
Company's administrator. The Company will
pay ICAC a monthly fee at an annual rate of
.25% of the average weekly net assets of the
Company, subject to an annual minimum fee of
$___. See "Management of the Company."
DISTRIBUTIONS The Company's policy is to distribute to its
shareholders all of its net investment
income and net realized capital gains, if
any, for each year. All distributions to
shareholders whose shares are registered in
their own names will be automatically
reinvested in additional shares of the
Company, unless they elect to receive cash.
Shareholders whose shares are held in the
name of a broker or nominee should contact
such broker or nominee to determine whether
or how they may participate in the Company's
dividend reinvestment plan. See "Taxes" and
"Automatic Dividend Reinvestment Plan."
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ESTIMATED EXPENSES The Company's annual operating expenses,
including advisory and administrative fees
and other expenses (excluding interest
expenses), are estimated to be approximately
$____ in its first full year of operations.
Estimated offering expenses of $____ will be
charged to capital upon completion of the
offering of the common stock. Organizational
expenses are estimated to be $_____ and will
be amortized over a period not to exceed 60
months from the date the Company commences
operations. See "Summary of the Company's
Expenses" and "Management of the Company."
LISTING The common stock has been approved for
listing on the New York Stock Exchange. The
symbol for the common stock is ______.
SPECIAL RISK CONSIDERATIONS
An investment in the Company's common stock cannot be considered a complete
investment program. Because the Company's investment portfolio will be
non-diversified, the shares may be subject to greater risk than the shares of a
closed-end management investment company whose portfolio is diversified.
Shares of a closed-end equity fund tend to trade frequently at a discount.
Accordingly, an investor who purchases the common stock of the Company in this
initial public offering may have a risk of loss to capital when such shares
commence public trading.
The Declaration of Trust of the Company provides that the Company will
automatically convert to an open-end management company if, after the Company
has been in operation for a period of at least 24 months as measured from the
date of its initial public offering, its common stock trades at a discount of 5%
or more for a period of 15 consecutive days. This provision may be amended only
by the affirmative vote of at least 80% of the Company's outstanding voting
stock.
The Declaration of Trust also includes certain "anti-takeover" provisions
requiring the approval of three-quarters of the outstanding voting stock for
certain transactions. These provisions and others in the Declaration of Trust
could have the effect of depriving stockholders of an opportunity to sell their
shares at a premium over prevailing market prices by discouraging third parties
from seeking to gain control in a tender offer, proxy contest or similar
transaction. See "The Company and its Objectives, Policies and Risks" and
"Capital Stock of the Company."
A majority of the Company's investments may be denominated in foreign
currencies and income paid by such investments will be in foreign currencies.
Accordingly, the value of the Company's assets, as measured in U.S. dollars may
be affected favorably or unfavorably by fluctuations in currency rates and
exchange control regulations. In addition, with respect to an investment in any
foreign country, there is the possibility of nationalization, expropriation or
confiscatory taxation, political changes, government regulations, social
instability or diplomatic developments (including war) which could adversely
affect the economies of an investment in such countries.
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SUMMARY OF THE COMPANY'S EXPENSES
The expense summary below was developed to help you make your investment
decisions. You should consider this expense information along with other
important information in this Prospectus, including the Company's investment
objective.
A. SHAREHOLDER TRANSACTION EXPENSES
Sales Load (as a percentage of offering price) 0.00%
Dividend Reinvestment and Cash Purchase Plan Fees ____%
B. ANNUAL EXPENSES (AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)
Advisory Fees 1.00%
Administration Fees 0.25%
Other Expenses 0.50%
----
Total Annual Expenses 1.75%
====
C. EXAMPLE
You would pay the following expenses on a $1,000 investment in the
Company, assuming a 5% annual return:
1 Year 3 Years
$-------- $--------
The purpose of the above table is to assist you in understanding the
various costs and expenses that an investor in the Company would bear
directly or indirectly.
A. SHAREHOLDER TRANSACTION EXPENSES represent charges paid when you purchase
shares of the Company.
B. ANNUAL EXPENSES are based on the Company's anticipated expenses for the
current fiscal year. "Other Expenses" are based on estimated amounts for the
current fiscal year.
C. The EXAMPLE OF EXPENSES is a hypothetical example that illustrates the
expenses associated with a $1,000 investment in the Company over periods of one
and three years, based on the estimated expenses in the above table and an
assumed annual rate of return of 5%. THE 5% RETURN AND EXPENSES SHOULD NOT BE
CONSIDERED A REPRESENTATION OF FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER
OR LESSER THAN THOSE SHOWN.
THE COMPANY AND ITS OBJECTIVES, POLICIES AND RISKS
I. INVESTMENT OBJECTIVES AND POLICIES
The Company is a closed-end, non-diversified management investment company
that was created on June 28, 1996 under the laws of the State of Delaware. The
Company intends to allocate the net proceeds of the offering in accordance with
the investment objectives and policies as described below. The investment
advisers believe the net proceeds of the offering will be fully invested within
six months or earlier depending on market conditions.
The Company's primary investment objective is long-term capital
appreciation through investments in established companies around the world. The
Company will seek to achieve its objectives by investing in a
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portfolio of equity securities in companies located in North America (the U.S.
and Canada), Japan, Asia (primarily Hong Kong) and Europe (collectively, the
"Major Markets"). In addition, the Company may invest not more than 10% of its
assets in smaller, less established markets. Under normal circumstances not more
than 50% of the Company's assets will be invested in any one of the Major
Markets.
While there is no general limit as to types of securities which can be
purchased, most of the Company's investments will be in marketable common stocks
or marketable securities convertible into common stocks. Such securities may be
traded on an exchange or in the over-the-counter market. The Company may also
purchase Restricted Securities. As used herein, the term "Restricted Securities"
means securities the transfer of which is limited by legal or contractual
restrictions. See "Restricted Securities" below, for information regarding the
Company's policies as to such purchases. Securities other than common stock or
securities convertible into common stock may be held from time to time, but the
Company will not normally invest in fixed income securities except for defensive
purposes or to temporarily employ uncommitted cash balances.
As a non-diversified investment company, the Company has no specific policy
on diversification of assets nor is it intended that the Company will have any
such policy in the future. However, the Company intends to qualify for tax
treatment as a regulated investment company under the Internal Revenue Code of
1986, as amended (the "Code"), in years in which it anticipates taxable net
investment income or taxable realized net capital gains. In those years, the
Company would endeavor to diversify its assets so that, at the close of each
quarter of its taxable year: (a) at least 50% of the total value of its assets
are represented by cash and cash items, government securities and other
securities with respect to which the Company will not invest more than 5% of its
total assets, at market value, in the securities of any one issuer or more than
10% of the outstanding voting securities of any one issuer and (b) not more than
25% of the total value of its assets are invested in securities of any one
issuer or of any two or more issuers controlled by the Company which, pursuant
to the regulations under the Code, may be deemed to be engaged in the same,
similar or related trades or businesses. Changes in the market value of
securities in the Company's portfolio generally will not cause the Company to
cease to qualify as a regulated investment company unless any failure to satisfy
these restrictions exists immediately after the acquisition of any security or
other property and is wholly or partly the result of such acquisition.
II. NON-FUNDAMENTAL INVESTMENT PRACTICES AND RISKS
In order to achieve its investment objectives, the Company may engage in
the following nonfundamental investment practices.
A. LENDING OF PORTFOLIO SECURITIES. In order to generate additional income,
the Company may lend its portfolio securities in an amount up to 33-1/3% of its
total assets to broker-dealers, major banks, or other recognized domestic
institutional borrowers of securities. No lending may be made to any companies
affiliated with the Company. The borrower at all times during the loan must
maintain with the lending Company cash or cash equivalent collateral equal in
value at all times to at least 100% of the value of the securities loaned.
During the time portfolio securities are on loan, the borrower pays the Company
any dividends or interest paid on such securities, and the Company may invest
the cash collateral and earn additional income, or it may receive an agreed-upon
amount of interest income from the borrower who has delivered equivalent
collateral. The Company will have the right to regain record ownership of loaned
securities to exercise beneficial rights, such as voting rights and subscription
rights. There is the risk of failure by the borrower to return the securities
involved in such transaction.
B. ILLIQUID SECURITIES. The Company will not invest in illiquid securities
if immediately after such investment more than 15% of the Company's total assets
(taken at market value) would be invested in such securities. This limitation
may be subject to additional restrictions imposed by jurisdictions in which the
Company's shares are offered for sale. For this purpose, illiquid securities
include (a) securities that are illiquid by virtue of the absence of a readily
available market or legal or contractual restrictions on resale,
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(b) participation interests in loans that are not subject to puts, and (c)
repurchase agreements not terminable within seven days.
C. RESTRICTED SECURITIES. Historically, illiquid securities have included
securities subject to contractual or legal restrictions on resale because they
have not been registered under the Securities Act of 1933, as amended
("Securities Act"). Securities that have not been registered under the
Securities Act are referred to as private placements or restricted securities
and are purchased directly from the issuer or in the secondary market.
In recent years, a large institutional market has developed for certain
securities that are not registered under the Securities Act including repurchase
agreements, commercial paper, foreign securities, municipal securities and
corporate bonds and notes. Institutional investors depend on an efficient
institutional market in which the unregistered security can be readily resold or
on an issuer's ability to honor a demand for repayment. The fact that there are
contractual or legal restrictions on resale to the general public or to certain
institutions may not be indicative of the liquidity of such investments.
The Securities and Exchange Commission has adopted Rule 144A, which allows
a broader institutional trading market for securities otherwise subject to
restriction on resale to the general public. Rule 144A establishes a "safe
harbor" from the registration requirements of the Securities Act applicable to
resales of certain securities to qualified institutional buyers.
The Company may invest up to 15% of its total assets in restricted
securities issued under Section 4(2) of the Securities Act, which exempts from
registration "transactions by an issuer not involving any public offering."
Section 4(2) instruments are restricted in the sense that they can only be
resold through the issuing dealer and only to institutional investors; they
cannot be resold to the general public without registration.
D. EXERCISING CONTROL OR MANAGEMENT. The Company will observe a
non-fundamental policy of not investing for the purpose of exercising control or
management, even though it may take substantial positions in securities of small
companies and in certain circumstances this may result in the acquisition of
such control. Such circumstances could arise, for example, when existing
controlling persons of an issuer dispose of their holdings to larger groups or
to the public or where an issuer defaults to the Company on its obligations
pursuant to the provisions of a purchase agreement or instrument governing the
rights of a senior security held by the Company.
III. INVESTMENT RESTRICTIONS AND INVESTMENT POLICIES
Investment restrictions are fundamental policies and cannot be changed
without approval of the holders of a majority (as defined in the 1940 Act) of
the outstanding shares of the Company. The term "majority of the outstanding
shares" of the Company means, respectively, the vote of the lesser of (i) 67% or
more of the shares of the Company present at a meeting, if the holders of more
than 50% of the outstanding shares of the Company are present or represented by
proxy, or (ii) more than 50% of the outstanding shares of the Company. The
following are the Company's investment restrictions set forth in their entirety.
Investment policies are not fundamental and may be changed by the Board of
Trustees without shareholder approval.
A. INVESTMENT RESTRICTIONS. The Company may not:
1. Issue senior securities, except that the Company may borrow up
to 33 1/3% of the value of its total assets from a bank (i) to
increase its holdings of portfolio securities, (ii) to meet redemption
requests, or (iii) for such short-term credits as may be necessary for
the clearance or settlement of the transactions. The Company may
pledge its assets to secure such borrowings.
2. Invest 25% or more of the total value of its assets in a
particular industry, except that this restriction shall not apply to
U.S. Government Securities.
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3. Buy or sell commodities or commodity contracts or real estate
or interests in real estate (including real estate limited
partnerships), except that it may purchase and sell futures contracts
on stock indices, interest rate instruments and foreign currencies,
securities which are secured by real estate or commodities, and
securities of companies which invest or deal in real estate or
commodities.
4. Make loans of money or securities other than (a) through the
purchase of publicly distributed bonds, debentures or other corporate
or governmental obligations, (b) by investing in repurchase
agreements, and (c) by lending its portfolio securities, provided the
value of such loaned securities does not exceed 33-1/3% of its total
assets;
5. Act as an underwriter except to the extent that, in connection
with the disposition of portfolio securities, it may be deemed to be
an underwriter under applicable securities laws.
B. INVESTMENT POLICIES. The Company may not:
1. make short sales of securities, other than short sales
"against the box," or purchase securities on margin except for
short-term credits necessary for clearance of portfolio transactions,
provided that this restriction will not be applied to limit the use of
options, futures contracts and related options, in the manner
otherwise permitted by the investment restrictions, policies and
investment program of the Company; . 2. purchase or retain securities
of an issuer when one or more officers and Trustees of the Company or
of the Company's Investment Advisers, or a person owning more than 10%
of the shares of either, own beneficially more than 1/2 of 1% of the
securities of such issuer and such persons owning more than 1/2 of 1%
of such securities together own beneficially more than 5% of the
securities of such issuer;
3. purchase the securities of any other investment company, if
the Company, immediately after such purchase or acquisition, owns in
the aggregate, (i) more than 3% of the total outstanding voting stock
of such investment company, (ii) securities issued by such investment
company having an aggregate value in excess of 5% of the value of the
total assets of the Company, or (iii) securities issued by such
investment company and all other investment companies having an
aggregate value in excess of 10% of the value of the total assets of
the Company;
4. Invest directly in oil, gas or other mineral exploration or
development programs or leases; provided, however, that if consistent
with the objective of the Company, the Company may purchase securities
of issuers whose principal business activities fall within such areas.
Percentage restrictions apply at the time of acquisition and any subsequent
change in percentages due to changes in market value of portfolio securities or
other changes in total assets will not be considered a violation of such
restrictions.
IV. RISKS ASSOCIATED WITH INVESTMENTS IN FOREIGN SECURITIES
A. GENERAL ECONOMIC AND POLITICAL RISKS. The economies of foreign countries
may differ unfavorably from the United States economy in such respects as growth
of domestic product, rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments positions. Further, such economies
generally are heavily dependent upon international trade and, accordingly, have
been and may continue to be adversely affected by economic conditions in
countries in which they trade, as well as trade barriers, managed adjustments in
relative currency values and other protectionist measures imposed or negotiated
by such countries.
With respect to many foreign countries, there is the possibility of
nationalization, expropriation or confiscatory taxation, political changes,
government regulations, social instability or diplomatic developments
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(including war) which could affect adversely the economies of such countries or
the Company's investments in those countries. In addition, it may be more
difficult to obtain a judgement in a court outside of the United States.
B. SECURITIES MARKETS. Trading volume on foreign stock exchanges may be
substantially less than that on the New York Stock Exchange. Further, securities
of some foreign companies are less liquid and more volatile than securities of
comparable United States companies. Securities without a readily available
market will be treated as illiquid securities for purposes of the Company's
limitation on such purchases. Fixed commissions on foreign markets are generally
higher than negotiated commissions on United States exchanges, although the
Company will endeavor to achieve the most favorable net results on its portfolio
transactions and may be able to purchase the securities in which it may invest
on other stock exchanges where commissions are negotiable.
Many foreign companies are not generally subject to uniform accounting,
auditing, and financial reporting standards practices and disclosure
requirements comparable to those applicable to United States companies.
Consequently, there may be less publicly available information about such
companies than about United States companies. Further, there is generally less
governmental supervision and regulation of foreign stock exchanges, brokers and
listed companies than in the United States.
C. INVESTMENT AND REPATRIATION RESTRICTIONS. Some foreign countries have
laws and regulations which currently preclude direct foreign investment in the
securities of their companies. However, indirect foreign investment in the
securities listed and traded on the stock exchanges in these countries is
permitted by certain foreign countries through investment funds which have been
specially authorized. The Company may invest in these investment funds subject
to the provisions of the Investment Company Act of 1940, as amended. If the
Company invests in such investment funds, the Company's shareholders will bear
not only their proportionate share of the expenses of the Company, but also will
bear indirectly similar expenses of the underlying investment funds. DAMCO and
GFGAM have agreed to waive their management fees with respect to their portion
of the Company's assets invested in shares of other open-end investment
companies. The Company would continue to pay its own management fees and other
expenses with respect to its investments in shares of closed-end investment
companies.
In addition to the foregoing investment restrictions, prior governmental
approval for foreign investments may be required under certain circumstances in
some foreign countries, and the extent of foreign investment in foreign
companies may be subject to limitation. Foreign ownership limitations also may
be imposed by the charters of individual companies to prevent, among other
concerns, violation of foreign investment limitations.
Repatriation of investment income, capital and the proceeds of sales by
foreign investors may require governmental registration and/or approval in some
foreign countries. The Company could be adversely affected by delays in or a
refusal to grant any required governmental approval for such repatriation.
D. FOREIGN CURRENCY CONSIDERATIONS. Although a majority of the Company's
investments may be denominated in foreign currencies and most income paid by
such investments will be in foreign currencies, the Company will compute and
distribute its income in dollars. The computation of income will be made on the
date of its receipt by the Company at the foreign exchange rate in effect on
that date. Therefore, if the value of the foreign currencies in which the
Company receives its income falls relative to the dollar between the receipt of
the income and the making of Company distributions, the Company will be required
to liquidate securities in order to make distributions if the Company has
insufficient cash in dollars to meet distribution requirements.
The value of the assets of the Company as measured in dollars also may be
affected favorably or unfavorably by fluctuations in currency rates and exchange
control regulations. Further, the Company may incur costs in connection with
conversions between various currencies.
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MANAGEMENT OF THE COMPANY
BOARD OF TRUSTEES
The overall management of the business and affairs of the Company is
vested in the Board of Trustees. The Board of Trustees approves all significant
agreements between the Company and persons or companies furnishing services to
the Company, including the Company's investment advisory agreements with DAMCO
and GFGAM, the agreement with Investors Bank and Trust Company ("IB&T") as the
custodian, the agreement with ICAC as the administrator, and the agreement with
____________ as the principal underwriter. The day-to-day operations of the
Company are delegated to the officers, subject always to the objective and
policies of the Company and to the general supervision of the Board of Trustees.
INVESTMENT ADVISERS
DAMCO and GFGAM are co-investment managers of the Company. DAMCO, an
investment adviser registered with the Securities and Exchange Commission, was
founded in 1986 and currently manages approximately $100 million in both U.S.
and international equities primarily traded on established markets. GFGAM, also
an investment adviser registered with the Securities and Exchange commission,
was founded in 198__ and currently manages approximately $____________ billion
in international equities primarily traded on established markets.
Pursuant to separate investment advisory agreements, DAMCO and GFGAM
provide to the Company investment management and financial advisory services,
including causing the purchase and sale of securities in the Company's portfolio
subject at all times to the policies set forth by the Board of Trustees. At this
time, it is expected that DAMCO will be responsible for investment decisions
related to North America and that GFGAM will be responsible for investment
decisions related to Europe, Asia, and Japan. A committee consisting of three
members (two being representatives of DAMCO and one being a representative of
GFGAM) will allocate assets of the Company among the various regions of the
world.
DAMCO will be paid, pursuant to the investment advisory agreement, a
monthly fee from the Company calculated at an annual rate of .60% of its average
weekly net assets and GFGAM will be paid, pursuant to a separate investment
advisory agreement, a monthly fee from the Company calculated at an annual rate
of .40% of its average weekly net assets. These fees in total are higher than
those paid by many other investment companies. However, the Board of Trustees
believe that such fees are appropriate because of the complexity of managing
funds that invest in international securities. DAMCO and/or GFGAM may however,
from time to time, voluntarily agree to defer or waive fees or absorb some or
all of the expense of the Company. To the extent that they should do so, they
may seek repayment of such deferred fees and absorbed expenses after this
practice is discontinued. However, no repayment would be made if it would result
in the Company's expense ratio exceeding 1.75%. The Board of Trustees has
determined that it is reasonably possible that the Company will become large
enough to permit such repayments.
John P. Dessauer and Thomas P. McIntyre are principals of DAMCO and will
manage the portion of the Company's portfolio advised by DAMCO. Mr. Dessauer has
more than 25 years experience as an investment professional. In the 1970's, Mr.
Dessauer was a senior investment officer in Europe for Citibank. He was
responsible for managing all of Citibank's European money management services
and served as a member of the investment policy committee of a German private
bank in Dusseldorf. Mr. Dessauer has depth of experience and understanding in
currencies, international stocks and international bonds. He started Investor's
World and DAMCO in order to bring professional, international money management
services within the reach of individual investors. Investor's World is a monthly
investor newsletter specializing in international investing with a circulation
of 70,000. Mr. Dessauer also is a regular panelist on "Wall Street Week with
Louis Rukeyser," and the author of two books on international investing,
Passport to Profits and International Strategies for American Investors.
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<PAGE>
Mr. McIntyre served as Chief Financial Officer for a $140 million
closed-end equity fund. Prior to joining DAMCO, he was an assistant treasurer
for the National Association of Securities Dealers, Inc. (NASD) and was
responsible for their $84 million fixed-income portfolio. Mr. McIntyre graduated
from Notre Dame University (with high honors) in 1977 with a degree in economics
and went on to earn an M.B.A. from Notre Dame in 1979. Mr. McIntyre is a
Certified Public Account and a Chartered Financial Analyst with over 15 years
experience in financial analysis and portfolio management.
Timothy Guinness and Howard Flight are principals of GFGAM. The portion of
the Company's portfolio advised by GFGAM will be managed by Mr. Guinness,
Timothy Thomas and Richard Farrell. Mr. Guinness originally joined Guinness
Mahon, a predecessor entity of GFGAM, in 1977 in the Corporate Finance
Department, and later transferred to the Investment Department, becoming Senior
Investment Director in 1982. He served as Fund Manager of both the Guinness
Flight Global Equity Fund and United Kingdom Equity Fund, which are currently
available only to overseas investors. In 1987, he became Joint Managing Director
of GFGAM and leads the Global Equity Team as Investment Director.
Mr. Flight has been involved in asset management for over 25 years
throughout the world. He joined Guinness Mahon in 1979 as a director of the
Investment Department. In 1987, he became Joint Managing Director of GFGAM.
Presently, he is responsible for GFGAM's currency and fixed interest operations
as Investment Director. Until its dissolution, he was a member of H.M. Treasury
Tax Consultative Committee.
Mr. Thomas joined Guinness Mahon in 1984 as an assistant manager in the
Investment Department. After leaving the organization to receive a Master's
Degree in Business Administration, he re-joined Guinness Mahon in 1987 to
specialize in international equity investment. He has managed the Guinness
Flight Global Strategy Fund's Global Equity Fund and the Guinness Flight
International Accumulation Fund's International Equity Fund, which are currently
available to overseas investors.
Mr. Farrell joined Guinness Mahon in 1978. He specializes in Far Eastern
markets and currently is the investment adviser to the Guinness Flight Global
Strategy Fund's Japan Fund, Japan & Pacific Fund, and Japan Smaller Companies
Fund, all of which are currently available to overseas investors. As the head of
Guinness Flight's Asia Equity Desk, Mr. Farrell has strategic input on all of
Guinness Flight's Asia Equity Funds. In addition, Mr. Farrell serves as the
portfolio manager of the Guinness Flight Asia Blue Chip Fund which is currently
offered in the United States.
ADMINISTRATOR, TRANSFER AGENT AND DIVIDEND PAYING AGENT
ICAC supervises administration of the Company pursuant to an
administration agreement with the Company. IB&T acts as the Company's transfer
agent and dividend paying agent. As of the date of this prospectus, ICAC acts as
administrator of registered investment companies with assets of approximately
$____________ billion. As of the date of this Prospectus, ICAC is controlled by
____________.
Under the administration agreement, ICAC supervises the administration of
all aspects of the Company's operations, including the Company's receipt of
services for which the Company is obligated to pay, provides the Company with
general office facilities and provides, at the Company's expense, the services
of persons necessary to perform such supervisory, administrative and clerical
functions as are needed to effectively operate the Company. Those persons, as
well as certain employees and trustees of the Company, may be directors,
officers or employees of ICAC and its affiliates. For these services and
facilities, ICAC receives a fee computed and paid monthly at an annual rate of
.25% of the average weekly net assets of the Company, subject to an annual
minimum fee of $______.
IB&T, a registered transfer agent, acts as the Company's transfer agent and
dividend disbursing agent. IB&T maintains an account for each shareholder of the
Company (unless such accounts are maintained by subtransfer agents or processing
agents) and performs other transfer agency and related functions. For these
services, IB&T will receive an annual fee of $____ plus account and series
charges. The Company will also reimburse IB&T for certain expenses incurred on
behalf of the Company.
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<PAGE>
IB&T is authorized to subcontract any or all of its functions to one or
more qualified sub-transfer agents, shareholder servicing agents, or processing
agents, who may be affiliates of IB&T, and who agree to comply with the terms of
IB&T's agreement with the Company. Among the services provided by such agents
are answering customer inquiries regarding account matters; assisting
shareholders in designating and changing various account options; aggregating
and processing purchase orders and transmitting and receiving funds for
shareholder orders; transmitting, on behalf of the Company, proxy statements,
prospectuses and shareholder reports to shareholders and tabulating proxies;
processing dividend payments and providing subaccounting services for Company
shares held beneficially; and providing such other services at the Company or a
shareholder may request. IB&T may pay these agents for their services, but no
such payment will increase IB&T's compensation from the Company. IB&T is located
at 89 South Street, Boston, Massachusetts.
CUSTODIAN
IB&T also is custodian for the securities and cash of the Company. IB&T
receives a fee computed and paid monthly at an annual rate of __% of the average
weekly net assets of the Company, subject to an annual minimum fee of $_______.
EXPENSES
The Company will bear the expenses of its offering, which are not expected
to exceed $_______, including legal and accounts fees relating to its
organization and the costs of preparing solicitation materials. Organizational
expenses will be capitalized and amortized over a period of five years. In
addition to the expenses to be paid to the investment advisers, administrator,
transfer agent, dividend paying agent and custodian discussed within this
prospectus, the Company will pay all other ongoing expenses, including but not
limited to legal fees, accounting fees for preparation of financial statements
and tax returns, annual audits, brokerage commissions, transfer taxes and other
clearing, settlement and transactional charges.
PLAN OF DISTRIBUTION
[Underwriter] has agreed to distribute 2 million shares of common stock of
the Company on a "best efforts" basis. Under a "best efforts" arrangement,
[Underwriter] will take and pay for only such shares of the Company that it
sells to the public. No arrangement has been made to place funds received in an
escrow, trust, or similar arrangement.
The common stock of the Company will be offered to the public at $12.50 per
share. Investors must pay for the securities by ________, 1996.
[Underwriter] has advised the Company that sales to certain dealers may be
made at a concession not in excess of $_______ per share and that such dealers
may reallow, discounts not in excess of $________ per share on sales to other
dealers. After the initial public offering, the public offering price,
concession and reallowance may be changed.
The Company, DAMCO and GFGAM have agreed to indemnify [Underwriter] against
certain liabilities, including certain liabilities under the Securities Act of
1933, as amended. [Underwriter]'s address is ___________, __________ Street, New
York, New York _______.
AUTOMATIC DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
All shareholders of the Company may elect to become participants in the
Automatic Dividend Reinvestment and Cash Purchase Plan (the "Plan") by filling
and signing the form of authorization accompanying this prospectus. The
authorization must be signed by the registered shareholders of an account.
Participation is voluntary and may be terminated or resumed at any time upon
written notice from the
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<PAGE>
participant received by IB&T, the Plan Agent, prior to the record date of the
next dividend. Additional information regarding the election may be obtained
from the Company.
Dividend payments and other distributions to be made by the Company to
participants in the Plan either will be paid to the Plan Agent in cash (which
then must be used to purchase shares in the open market) or will be represented
by the delivery of shares depending upon which of the two options would be the
most favorable to participants, as hereafter determined. On each date on which
the Company determines the net asset value of the shares (a "Valuation Date"),
and which occurs not more than five business days prior to a date fixed for
payment of a dividend or other distribution from the Company, the Plan Agent
will compare the determined net asset value per share with the market price per
share. For all purposes of the Plan, "market price" shall be deemed to be the
highest price bid at the close of the market by any market maker on the date
which coincides with the relevant Valuation Date, or, if no bids were made on
such date, the next preceding day on which a bid was made. If the net asset
value in any such comparison is found to be lower than said market price, the
Plan Agent will demand that the Company satisfy its obligation with respect to
any such dividend or other distribution by issuing additional shares to the
Participants in the Plan at a price per share equal to the greater of the
determined net asset value per share or ninety-five percent (95%) of the market
price per share determined as of the close of business on the relevant Valuation
Date. However, if the net asset value per share (as determined above) is higher
than the market price per share, then the Plan Agent will demand that the
Company satisfy its obligation with respect to any such dividend or other
distribution by a cash payment to the Plan Agent for the account of Plan
Participants and the Plan Agent then shall use such cash payment to buy
additional shares in the "open market" for the account of the Plan participants,
provided, however, that the Plan Agent shall not purchase shares in the "open
market" at a price in excess of the net asset value as of the relevant Valuation
Date. In the event the Plan Agent is unable to complete its acquisition of
shares to be purchased in the "open market" by the end of the first trading day
following receipt of the cash payment from the Company, any remaining funds
shall be used by the Plan Agent to purchase newly issued shares of the Company's
common stock from the Company at the greater of the determined net asset value
per share or ninety-five (95%) percent of the market price per share as of the
date coinciding with or next preceding the date of the relevant Valuation Date.
Participants in the Plan will also have the option of making additional
cash payments to the Plan Agent, on a monthly basis, for investment in the
Company's shares. Such payments may be made in any amount from a minimum of
$50.00 to a maximum of $1,000.00 per month. The Company may, in its discretion,
waive the maximum monthly limit with respect to any participant. At the end of
each calendar month, the Plan Agent will determine the amount of funds
accumulated. Purchases made from the accumulation of payments during any one
calendar month will be made on or about the first business day of the following
month ("Investment Date"). The funds will be used to purchase shares of the
Company's common stock from the Company. If the net asset value of the shares is
lower than the market price as of the Valuation Date which occurs not more than
five business days prior to the relevant Investment Date, such shares will be
newly issued shares and will be issued at a price per share equal to the greater
of the determined net asset value per share or ninety-five percent (95%) of the
market price per share. If the net asset value per share is higher than the
market price per share, then the Plan Agent shall use such cash payments to buy
additional shares in the "open market" for the account of the Plan Participants,
provided, however, that the Plan Agent shall not purchase shares in the "open
market" at a price in excess of the net asset value as of the relevant Valuation
Date. In the event that the Plan Agent is unable to complete its acquisition of
shares to be purchased in the "open market" by the end of the Investment Date,
any remaining cash payments shall be used by the Plan Agent to purchase newly
issued shares of the Company's common stock from the Company at the greater of
the determined net asset value per share or ninety-five (95%) percent of the
market price per share as of the relevant Valuation Date. All cash payments
received by the Plan Agent in connection with the Plan will be held without
earning interest. To avoid unnecessary cash accumulations, and also to allow
ample time for receipt and processing by the Plan Agent, participants that wish
to make voluntary cash payments should send such payments to the Plan Agent in
such a manner that assures that the Plan Agent will receive and collect Federal
Funds by the end of the month. This procedure will avoid unnecessary
accumulations of cash and will enable participants to realize lower brokerage
commissions and to avoid additional transaction charges. If a voluntary cash
payment is not received in time to purchase shares in any calendar month, such
payment shall be invested on the next Investment Date. A partici-
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<PAGE>
pant may withdraw a voluntary cash payment by written notice to the Plan Agent
if the notice is received by the Plan Agent at least forty-eight hours before
such payment is to be invested by the Plan Agent.
IB&T will perform bookkeeping and other administrative functions, such as
maintaining all shareholder accounts in the Plan and furnishing written
confirmation of all transactions in the account, including information needed by
shareholders for personal and tax records. Shares in the account of each Plan
participant will be held by the Plan Agent in noncertificated form in the name
of the participant, and each shareholder's proxy will include those shares
purchased pursuant to the Plan and of record as of the record date for
determining those shareholders who are entitled to vote on any matter involving
the Company. In case of shareholders such as banks, brokers or nominees, which
hold shares for others who are the beneficial owners, the Plan Agent will
administer the Plan on the basis of the number of shares certified from time to
time by such shareholders as representing and limited to the total number of
shares registered in the shareholder's name and held for the account of
beneficial owners who have elected to participant in the Plan.
There are no special fees or charges to participants other than reasonable
transactions fees, which shall not exceed the lesser of ___ percent (___%) of
the amount reinvested or ______ ($______.00) dollars and a termination fee of up
to _______ ($______.00) dollar.
With respect to purchases from voluntary cash payments, the Plan Agent will
charge _________ ($______.00) dollars, plus a pro rata share of the brokerage
commissions, if any. Brokerage charges for purchasing small blocks of stock for
individual accounts through the Plan are expected to be less than the usual
brokerage charges for such transactions, as the Plan Agent will be purchasing
shares for all participants in larger blocks and prorating the lower commission
rate thus applied.
The automatic reinvestment of dividends and distributions will not relieve
participants of any income tax liability associated therewith.
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Company reserves the right to amend or terminate the Plan as
applied to any voluntary cash payment received and any dividend or distribution
to be paid subsequent to a date specified in a notice of the change sent to all
shareholders at least ninety days before such specified date. The Plan may also
be terminated on at least ninety days' written notice to all shareholders in the
Plan.
CAPITAL STOCK OF THE COMPANY
The Company is authorized to issue 2 million shares of capital stock, par
value $______ per share ("Capital Stock") . Each share of Capital Stock has
equal voting, dividend, distribution and liquidation rights. The shares of
Capital Stock offered hereby, when issued and paid for pursuant to the terms of
this Offer, will be fully paid and non-assessable. The shares of Capital Stock
are not redeemable and have no preemptive, conversion or cumulative voting
rights.
The Company's Declaration of Trust provides that under certain conditions
the affirmative vote of at least three-quarters of the outstanding voting stock
is required: (i) to voluntarily convert the Company into an open-end company;
(ii) to approve any proposal to dissolve, merge or consolidate the Company;
(iii) to sell its assets; or (iv) to effect any amendment to the Declaration of
Trust to voluntarily make the Capital Stock a redeemable security (as well as to
amend any of the foregoing provisions). These provisions and others in the
Declaration of Trust makes it more difficult for a third party to obtain control
of the Company. A copy of the Declaration of Trust may be obtained from the
Securities and Exchange Commission.
The Declaration of Trust also provides that the Company will automatically
convert to an open-end management company if, after the Company has been in
operation for a period of at least 24 months as measured from the date of its
initial public offering, its common stock trades at a discount of 5% or more for
a
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period of 15 consecutive days. This provision may be amended only by the
affirmative vote of at least 80% of the Company's outstanding voting stock.
TAXES
The Company intends to qualify as a "regulated investment company" as
defined by the Internal Revenue Code of 1986, as amended (the "Code"). In order
to be taxed as a regulated investment company, the Company must meet a number of
requirements, including the requirements with respect to diversification of
assets, distribution of income and sources of income.
Shareholders may be proportionately liable for taxes on income and gains of
the Company. Distributions by the Company of its net investment income, and the
excess, if any, of its net short-term capital gain over its net long-term
capital loss will be taxable to shareholders as ordinary income. Distributions
by the Company of the excess, if any, of its net long-term capital gain over its
net short-term capital loss will be designated as capital gain dividends and
will be taxable to shareholders as long-term capital gains, regardless of the
length of time shareholders have held their shares. If the Company fails to
qualify as a regulated investment company, it will be taxed at regular corporate
tax rates on all its taxable income (including capital gains) without any
deduction for distributions to shareholders, and distributions to shareholders
will be taxable as ordinary dividends (even if derived from the Company's net
long-term capital gains) to the extent of the Company's current and accumulated
earnings and profits.
It is the Company's policy to distribute to shareholders all of its
investment income (net of expenses) and any capital gains (net of Capital
losses) in accordance with the requirements imposed by the Code. The Company
may, however, subject to the review of the Board of Trustees, retain the net
realized long-term capital gains of the Company. In such event, the taxes
thereon would be paid by the Company and appropriate credit allowed to the
shareholders of the Company, pursuant to section 852(b)(3)(D) of the Code.
A statement setting forth the Federal income tax status of all
distributions made (or deemed made) during the year will be sent to shareholders
promptly after the end of each year.
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
Management....................................................................2
Investment Advisers and Investment Advisory Agreements........................2
Portfolio Transactions and Brokerage..........................................3
Allocation of Investments.....................................................4
Tax Matters...................................................................4
General Information...........................................................9
Financial Statements.........................................................10
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STATEMENT OF ADDITIONAL INFORMATION - _________ __, 1996
THE DESSAUER GLOBAL EQUITY FUND
The Dessauer Global Equity Fund (the "Company") is a closed-end,
non-diversified management investment company. The Company's primary investment
objective is long-term capital appreciation. The Company will seek to achieve
its objectives by investing primarily in a portfolio of equity securities in
companies located in North America (the U.S. and Canada), Japan, Asia (primarily
Hong Kong) and Europe.
This Statement of Additional Information is not a prospectus. It should be
read in conjunction with the Company's current Prospectus, copies of which may
be obtained by writing ____________ at ____________, ____________ Street, New
York, New York _____.
This Statement of Additional Information relates to the Company's
Prospectus which is dated ______ __, 1996.
TABLE OF CONTENTS
PAGE
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MANAGEMENT................................................................... 2
INVESTMENT ADVISERS AND INVESTMENT ADVISORY AND RESEARCH AGREEMENTS.......... 2
PORTFOLIO TRANSACTIONS AND BROKERAGE......................................... 3
ALLOCATION OF INVESTMENTS.................................................... 4
TAX MATTERS.................................................................. 4
GENERAL INFORMATION.......................................................... 9
FINANCIAL STATEMENTS......................................................... 10
<PAGE>
MANAGEMENT
The overall management of the business and affairs of the Company is vested
with the Board of Trustees. The Board of Trustees approves all significant
agreements between the Company and persons or companies furnishing services to
the Company, including agreements with the investment advisers, administrator,
custodian and transfer agent. The day-to-day operations of the Company are
delegated to its officers subject always to the investment objectives and
policies of each Company and to general supervision by the Company's Board of
Trustees.
The Trustees and officers of the Company and their principal
occupations are noted below. Unless otherwise indicated the address of each
individual is ____________.
PRINCIPAL OCCUPATION
NAME, ADDRESS, AND AGE POSITIONS HELD WITH REGISTRANT DURING PAST 5 YEARS
- ---------------------- ------------------------------ -------------------
The annual compensation of the Trustees is noted below. Since the Company
has not yet completed its first fiscal year, the amounts listed are estimates
based upon an understanding between the Company and each Trustee.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PENSION OR TOTAL COMPENSATION
AGGREGATE RETIREMENT BENEFITS ESTIMATED ANNUAL FROM FUND AND
NAME OF COMPENSATION ACCRUED AS PART BENEFITS FUND COMPLEX
PERSON, POSITION FROM FUND OF FUND EXPENSES UPON RETIREMENT PAID TO TRUSTEES
---------------- --------- ---------------- --------------- ----------------
</TABLE>
INVESTMENT ADVISERS AND INVESTMENT ADVISORY
AND RESEARCH AGREEMENTS
Dessauer Asset Management Company ("DAMCO") and Guinness Flight Global
Asset Management ("GFGAM") (collectively, the "Investment Advisers") are the
Company's co-investment advisers pursuant to separate investment advisory
agreements (the "Advisory Agreements"). The address of DAMCO is ____________,
Orleans, Massachusetts and its phone number is ____________. The address of
GFGAM is Lighterman's Court, 5 Gainesford
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Street, Tower Bridge, London, England and its phone number is
011-44-171-522-2100. John P. Dessauer, ____________ and ____________ own 100% of
the common stock of DAMCO and therefore are "controlling persons" as defined by
the Investment Company Act of 1940, as amended. ____________ and ____________
are "controlling persons" of GFGAM.
The Advisory Agreements provide that DAMCO and GFGAM shall identify and
analyze possible investments for the Company, determine the amount and timing of
such investments, and the form of investment. DAMCO and GFGAM each have the
responsibility of monitoring and reviewing the Company's portfolio, and, on a
regular basis, to recommend the ultimate disposition of such investments. It is
the responsibility of DAMCO and GFGAM to cause the purchase and sale of
securities in the Company's portfolio, subject at all times to the policies set
forth by the Company's Board of Trustees. At this time, it is expected that
DAMCO will be responsible for investment decisions related to North America and
that GFGAM will be responsible for investment decisions related to Europe, Asia,
and Japan. A committee consisting of three members (two being representatives of
DAMCO and one being a representative of GFGAM) will allocate assets of the
Company among the various regions of the world.
DAMCO receives a fee from the Company, payable monthly, for the performance
of its services at an annual rate of 0.60% of its average weekly net assets.
GFGAM receives a fee from the Company, payable monthly, for the performance of
its services at an annual rate of 0.40% of its average weekly net assets. The
advisory fees in total are higher than that paid by most investment companies
but the Board of Trustees believes it to be reasonable in light of the services
the Company receives thereunder.
Under the terms of the Advisory Agreements, the Company pays all of its
expenses (other than those expenses specifically assumed by DAMCO and GFGAM and
the Company's distributor) including the costs incurred in connection with the
maintenance of its registration under the Securities Act of 1933, as amended,
and the 1940 Act, printing of prospectuses distributed to shareholders, taxes or
governmental fees, brokerage commissions, custodial, transfer and shareholder
servicing agents, expenses of outside counsel and independent accountants,
preparation of shareholder reports, and expenses of Trustee and shareholder
meetings. DAMCO and GFGAM may from time to time contract with other service
providers to perform support services that aid in managing the assets of the
Company.
The Company's Advisory Agreements were approved initially by the Board of
Trustees (including the affirmative vote of all the Trustees who were not
parties to the Agreements or interested persons of any such party) on ________,
1996. Each Advisory Agreement may be terminated without penalty on 60 days'
written notice by a vote of the majority of the Company's Board of Trustees or
by DAMCO or GFGAM, or by holders of a majority of the Company's outstanding
shares. Each Advisory Agreement will continue for two years from its effective
date and from year-to-year thereafter provided it is approved, at least
annually, in the manner stipulated in the 1940 Act. This requires that the
Advisory Agreements and any renewal thereof be approved by a vote of the
majority of the Company's Trustees who are not parties thereto or interested
persons of any such party, cast in person at a meeting specifically called for
the purpose of voting on such approval.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to the supervision of the Board of Trustees, decisions to buy and
sell securities for the Company are made by the Investment Advisers. The
Investment Advisers are authorized to allocate the orders placed by it on behalf
of the Company to such unaffiliated brokers who also provide research or
statistical material, or other services to the Company or the Investment
Advisers for the Company's use. Such allocation shall be in such amounts and
proportions as the Investment Advisers shall determine and the Investment
Advisers will report on said allocations regularly to the Board of Trustees
indicating the unaffiliated brokers to whom such allocations have been made and
the basis thereof. In addition, the Investment Advisers may consider sales of
shares of the Company and of any other funds advised or managed by the
Investment Advisers as a factor in the selection of unaffiliated brokers to
execute portfolio transactions for the Company, subject to the requirements of
best execution.
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In selecting a broker to execute each particular transaction, the
Investment Advisers will take the following into consideration: the best net
price available; the reliability, integrity and financial condition of the
broker; the size and difficulty in executing the order; and, the value of the
expected contribution of the broker to the investment performance of the Company
on a continuing basis. Accordingly, the cost of the brokerage commissions to the
Company in any transaction may be greater than that available from other brokers
if the difference is reasonably justified by other aspects of the portfolio
execution services offered. Subject to such policies and procedures as the Board
of Trustees may determine, the Investment Advisers shall not be deemed to have
acted unlawfully or to have breached any duty solely by reason of its having
caused the Company to pay an unaffiliated broker that provides research services
to the Investment Advisers for the Company's use an amount of commission for
effecting a portfolio investment transaction in excess of the amount of
commission another broker would have charged for effecting the transaction, if
the Investment Advisers determine in good faith that such amount of commission
was reasonable in relation to the value of the research service provided by such
broker viewed in terms of either that particular transaction or the Investment
Advisers' ongoing responsibilities with respect to the Company.
ALLOCATION OF INVESTMENTS
The Investment Advisers have other advisory clients which include
individuals, trusts, pension and profit sharing funds, some of which have
similar investment objectives to the Company. As such, there will be times when
the Investment Advisers may recommend purchases and/or sales of the same
portfolio securities for the Company and its other clients. In such
circumstances, it will be the policy of the Investment Advisers to allocate
purchases and sales among the Company and its other clients in a manner which
the Investment Advisers deems equitable, taking into consideration such factors
as size of account, concentration of holdings, investment objectives, tax
status, cash availability, purchase cost, holding period and other pertinent
factors relative to each account. Simultaneous transactions may have an adverse
effect upon the price or volume of a security purchased by the Company.
TAX MATTERS
The following is only a summary of certain additional tax considerations
generally affecting the Company 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 Company or its shareholders, and the discussions here and in
the Prospectus are not intended as substitutes for careful tax planning.
Qualification as a Regulated Investment Company
The Company has elected to be taxed as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). As a
regulated investment company, the Company is not subject to federal income tax
on the portion of its net investment income (i.e., taxable interest, dividends
and other taxable ordinary income, net of expenses) and capital gain net income
(i.e., the excess of capital gains over capital losses) that it distributes to
shareholders, provided that it distributes at least 90% of its investment
company taxable income (i.e., net investment income and the excess of net
short-term capital gain over net long-term capital loss) for the taxable year
(the "Distribution Requirement"), and satisfies certain other requirements of
the Code that are described below. Distributions by the Company made during the
taxable year or, under specified circumstances, within twelve months after the
close of the taxable year, will be considered distributions of income and gains
of the taxable year and can therefore satisfy the Distribution Requirement.
In addition to satisfying the Distribution Requirement, a regulated
investment company must: (1) derive at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans, gains
from the sale or other disposition of stock or securities or foreign currencies
(to the extent such
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currency gains are directly related to the regulated investment company's
principal business of investing in stock or securities) and other income
(including but not limited to gains from options, futures or forward contracts)
derived with respect to its business of investing in such stock, securities or
currencies (the "Income Requirement"); and (2) derive less than 30% of its gross
income (exclusive of certain gains on designated hedging transactions that are
offset by realized or unrealized losses on offsetting positions) from the sale
or other disposition of stock, securities or foreign currencies (or options,
futures or forward contracts thereon) held for less than three months (the
"Short-Short Gain Test"). Because of the Short-Short Gain Test, the Company may
have to limit the sale of appreciated securities that it has held for less than
three months. However, the Short-Short Gain Test will not prevent the Company
from disposing of investments at a loss, since the recognition of a loss before
the expiration of the three-month holding period is disregarded for this
purpose. Interest (including original issue discount) received by the Company at
maturity or upon the disposition of a security held for less than three months
will not be treated as gross income derived from the sale or other disposition
of such security within the meaning of the Short-Short Gain Test. However,
income that is attributable to realized market appreciation will be treated as
gross income from the sale or other disposition of securities for this purpose.
In general, gain or loss recognized by the Company 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 Company 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 Company held the debt obligation.
In general, for purposes of determining whether capital gain or loss
recognized by the Company on the disposition of an asset is long-term or
short-term, the holding period of the asset may be affected if (1) the asset is
used to close a "short sale" (which includes for certain purposes the
acquisition of a put option) or is substantially identical to another asset so
used, (2) the asset is otherwise held by the Company as part of a "straddle"
(which term generally excludes a situation where the asset is stock and the
Company grants a qualified covered call option (which, among other things, must
not be deep-in-the-money) with respect thereto) or (3) the asset is stock and
the Company grants an in-the-money qualified covered call option with respect
thereto. However, for purposes of the Short-Short Gain Test, the holding period
of the asset disposed of may be reduced only in the case of clause (1) above. In
addition, the Company may be required to defer the recognition of a loss on the
disposition of an asset held as part of a straddle to the extent of any
unrecognized gain on the offsetting position.
Any gain recognized by the Company on the lapse of, or any gain or loss
recognized by the Company from a closing transaction with respect to, an option
written by the Company will be treated as a short-term capital gain or loss. For
purposes of the Short-Short Gain Test, the holding period of an option written
by the Company will commence on the date it is written and end on the date it
lapses or the date a closing transaction is entered into. Accordingly, the
Company may be limited in its ability to write options which expire within three
months and to enter into closing transactions at a gain within three months of
the writing of options.
Transactions that may be engaged in by the Company (such as regulated
futures contracts and options on stock indexes and futures contracts) will be
subject to special tax treatment as "Section 1256 contracts." Section 1256
contracts are treated as if they are sold for their fair market value on the
last business day of the taxable year, even though a taxpayer's obligations (or
rights) under such contracts have not terminated (by delivery, exercise,
entering into a closing transaction or otherwise) as of such date. Any gain or
loss recognized as a consequence of the year-end deemed disposition of Section
1256 contracts is taken into account for the taxable year together with any
other gain or loss that was previously recognized upon the termination of
Section 1256 contracts during that taxable year. Any capital gain or loss for
the taxable year with respect to Section 1256 contracts (including any capital
gain or loss arising as a consequence of the year-end deemed sale of such
contracts) is generally treated as 60% long-term capital gain or loss and 40%
short-term capital gain or loss. The Company, however, may elect not to have
this special tax treatment apply to Section 1256 contracts that are part of a
"mixed straddle" with other investments of the Company that are not Section 1256
contracts.
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The IRS has held in several private rulings (and Treasury Regulations now
provide) that gains arising from Section 1256 contracts will be treated for
purposes of the Short-Short Gain Test as being derived from securities held for
not less than three months if the gains arise as a result of a constructive sale
under Code Section 1256.
Treasury Regulations permit a regulated investment company, in determining
its investment company taxable income and net capital gain (i.e., the excess of
net long-term capital gain over net short-term capital loss) for any taxable
year, to elect (unless it has made a taxable year election for excise tax
purposes as discussed below) to treat all or any part of any net capital loss,
or any net long-term capital loss incurred after October 31 as if it had been
incurred in the succeeding year.
In addition to satisfying the requirements described above, the Company
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
Company's taxable year, at least 50% of the value of the Company's assets must
consist of cash and cash items, U.S. Government securities, securities of other
regulated investment companies, and securities of other issuers (as to which the
Company has not invested more than 5% of the value of the Company's total assets
in securities of such issuer and as to which the Company does not hold more than
10% of the outstanding voting securities of such issuer), and no more than 25%
of the value of its total assets may be invested in the securities of any one
issuer (other than U.S. Government securities and securities of other regulated
investment companies), or in two or more issuers which the Company controls and
which are engaged in the same or similar trades or businesses. Generally, an
option (call or put) with respect to a security is treated as issued by the
issuer of the security not the issuer of the option.
If for any taxable year the Company does not qualify as a regulated
investment company, all of its taxable income (including its net capital gain)
will be subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and such distributions will be taxable to the
shareholders as ordinary dividends to the extent of the Company'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
ordinary taxable income for the calendar year and 98% of capital gain net income
for the one-year period ended on October 31 of such calendar year (or, at the
election of a regulated investment company having a taxable year ending November
30 or December 31, for its taxable year (a "taxable year election")). The
balance of such income must be distributed during the next calendar year. For
the foregoing purposes, a regulated investment company is treated as having
distributed any amount on which it is subject to income tax for any taxable year
ending in such calendar year.
For purposes of the excise tax, a regulated investment company shall reduce
its capital gain net income (but not below its net capital gain) by the amount
of any net ordinary loss for the calendar year.
The Company 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 Company may in certain circumstances be required
to liquidate portfolio investments to make sufficient distributions to avoid
excise tax liability.
Company Distributions
The Company 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
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dividends for federal income tax purposes. Such dividends paid by the Company
will qualify for the 70% dividends-received deduction for corporate shareholders
only to the extent discussed below.
The Company may either retain or distribute to shareholders its net capital
gain for each taxable year. The Company currently intends to distribute any such
amounts. If net capital gain is distributed and designated as a capital gain
dividend, it 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 Company prior to the date on which the
shareholder acquired his shares. The Code provides, however, that under certain
conditions only 50% of the capital gain recognized upon the Company's
disposition of domestic "small business" stock will be subject to tax.
Conversely, if the Company elects to retain its net capital gain, it will
be taxed thereon (except to the extent of any available capital loss carryovers)
at the 35% corporate tax rate. If the Company elects to retain its net capital
gain, it is expected that the Company also will elect to have shareholders of
record on the last day of its taxable year treated as if each received a
distribution of his pro rata share of such gain, with the result that each
shareholder will be required to report his pro rata share of such gain on his
tax return as long-term capital gain, will receive a refundable tax credit for
his pro rata share of tax paid by the Company on the gain, and will increase the
tax basis for his shares by an amount equal to the deemed distribution less the
tax credit.
Ordinary income dividends paid by the Company with respect to a taxable
year will qualify for the 70% dividends-received deduction generally available
to corporations (other than corporations, such as S corporations, which are not
eligible for the deduction because of their special characteristics and other
than for purposes of special taxes such as the accumulated earnings tax and the
personal holding company tax) to the extent of the amount of qualifying
dividends received by the Company from domestic corporations for the taxable
year. A dividend received by the Company will not be treated as a qualifying
dividend (1) if it has been received with respect to any share of stock that the
Company has held for less than 46 days (91 days in the case of certain preferred
stock), excluding for this purpose under the rules of Code Section 246(c)(3) and
(4): (i) any day more than 45 days (or 90 days in the case of certain preferred
stock) after the date on which the stock becomes ex-dividend and (ii) any period
during which the Company has an option to sell, is under a contractual
obligation to sell, has made and not closed a short sale of, is the grantor of a
deep-in-the-money or otherwise nonqualified option to buy, or has otherwise
diminished its risk of loss by holding other positions with respect to, such (or
substantially identical) stock; (2) to the extent that the Company is under an
obligation (pursuant to a short sale or otherwise) to make related payments with
respect to positions in substantially similar or related property; or (3) to the
extent the stock on which the dividend is paid is treated as debt-financed under
the rules of Code Section 246A. Moreover, the dividends-received deduction for a
corporate shareholder may be disallowed or reduced (1) if the corporate
shareholder fails to satisfy the foregoing requirements with respect to its
shares of the Company or (2) by application of Code Section 246(b) which in
general limits the dividends-received deduction to 70% of the shareholder's
taxable income (determined without regard to the dividends-received deduction
and certain other items).
Alternative minimum tax ("AMT") is imposed in addition to, but only to the
extent it exceeds, the regular tax and is computed at a maximum marginal rate of
28% for noncorporate taxpayers and 20% for corporate taxpayers on the excess of
the taxpayer's alternative minimum taxable income ("AMTI") over an exemption
amount. In addition, under the Superfund Amendments and Reauthorization Act of
1986, a tax is imposed for taxable years beginning after 1986 and before 1996 at
the rate of 0.12% on the excess of a corporate taxpayer's AMTI (determined
without regard to the deduction for this tax and the AMT net operating loss
deduction) over $2 million. For purposes of the corporate AMT and the
environmental superfund tax (which are discussed above), 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, corporate shareholders will generally be required
to take the full amount of any dividend received from the Company 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
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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.
Distributions by the Company 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 Company will be treated in the manner described above
regardless of whether such distributions are paid in cash or reinvested in
additional shares of the Company (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 Company reflects undistributed
net investment income or recognized capital gain net income, or unrealized
appreciation in the value of the assets of the Company, 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 Company
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 Company) on December 31
of such calendar year if such dividends are actually paid in January of the
following year. Shareholders will be advised annually as to the U.S. federal
income tax consequences of distributions made (or deemed made) during the year.
The Company will be required in certain cases to withhold and remit to the
U.S. Treasury 31% of ordinary income dividends and capital gain dividends paid
to any shareholder (1) who has provided either an incorrect tax identification
number or no number at all, (2) who is subject to backup withholding by the IRS
for failure to report the receipt of interest or dividend income properly, or
(3) who has failed to certify to the Company that it is not subject to backup
withholding or that it is a corporation or other "exempt recipient."
Sale of Shares
A shareholder will recognize gain or loss on the sale of shares of the
Company in an amount equal to the difference between the proceeds of the sale
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 Company within 30 days before or after the sale. In general, any gain or
loss arising from (or treated as arising from) the sale of shares of the Company
will be considered capital gain or loss and will be long-term capital gain or
loss if the shares were held for longer than one year. However, any capital loss
arising from the sale of shares held for six months or less will be treated as a
long-term capital loss to the extent of the amount of capital gain dividends
received on such shares. For this purpose, the special holding period rules of
Code Section 246(c)(3) and (4) (discussed above in connection with the
dividends-received deduction for corporations) generally will apply in
determining the holding period of shares. Long-term capital gains of
noncorporate taxpayers are currently taxed at a maximum rate 11.6% lower than
the maximum rate applicable to ordinary income. Capital losses in any year are
deductible only to the extent of capital gains plus, in the case of a
noncorporate taxpayer, $3,000 of ordinary income.
Foreign Shareholders
Taxation of a shareholder who, as to the United States, is a nonresident
alien individual, foreign trust or estate, foreign corporation, or foreign
partnership ("foreign shareholder"), depends on whether the income from the
Company is "effectively connected" with a U.S. trade or business carried on by
such shareholder.
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If the income from the Company 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 treaty rate) upon the gross amount of the dividend. Such a
foreign shareholder would generally be exempt from U.S. federal income tax on
gains realized on the sale of shares of the Company, capital gain dividends and
amounts retained by the Company that are designated as undistributed capital
gains.
If the income from the Company 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
Company will be subject to U.S. federal income tax at the rates applicable to
U.S. citizens or domestic corporations.
In the case of foreign noncorporate shareholders, the Company 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 shareholders furnish the Company with proper notification of
its foreign status.
The tax consequences to a foreign shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described
herein. Foreign shareholders are urged to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in the
Company, including the applicability of foreign taxes.
Effect of Future Legislation; 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 with respect to the transactions contemplated herein.
Rules of state and local taxation of ordinary income dividends and capital
gain dividends from regulated investment companies often 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 Company.
GENERAL INFORMATION
SHAREHOLDER AND TRUSTEE LIABILITY
The Company was created on June 28, 1996 in the state of Delaware. Under
Delaware law, shareholders of such a corporation are not held personally liable
for the obligations of the corporation.
The Declaration of Trust of the Company provides that, to the fullest
extent permitted by the law, no Trustee or officer of the corporation will have
any liability to the corporation or its stockholders for damages. The
corporation will indemnify and advance expenses to its Trustees or officers to
the fullest extent that indemnification is permitted by law.
The Declaration of Trust does not waive a Trustee's or officer's duty to
comply with the Securities Act of 1933, as amended, or the Investment Company
Act of 1940, as amended, or any rule, regulation, or order thereunder. Further,
the Declaration of Trust does not protect the officers and Trustees against any
liability to the corporation or its stockholders to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office.
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VOTING RIGHTS
Shares of the Company entitle the holders to one vote per share. The shares
have no preemptive or conversion rights. The dividend rights are described in
the Prospectus. When issued, shares are fully paid and nonassessable. The
shareholders have certain rights, as set forth in the Bylaws, to call a meeting
for any purpose, including the purpose of voting on removal of one or more
Trustees.
Shareholders of the Company shall be entitled to receive distributions as a
class of the assets belonging to the Company. The assets of the Company received
for the issue or sale of the shares of the Company and all income earnings and
the proceeds thereof, subject only to the rights of creditors, are specially
allocated to the Company, and constitute the underlying assets of the Company.
The Declaration of Trust of the Company include certain "anti-takeover"
provisions that could have the effect of depriving stockholders of an
opportunity to sell their shares at a premium over prevailing market prices by
discouraging third parties from seeking to gain control in a tender offer, proxy
contest or similar transaction. These provisions are more fully described in the
Prospectus. A copy of the Declaration of Trust may be obtained from the
Securities and Exchange Commission.
ACCOUNTANTS
Ernst & Young, is the independent accountants of the Company. Generally,
the independent accountants will audit the financial statement and the financial
highlights of the Company, as well as provide reports to the Trustees.
LEGAL COUNSEL
Kramer, Levin, Naftalis & Frankel, 919 Third Avenue, New York, New York
10022 is legal counsel of the Company. Generally, legal counsel reviews
documents relating to the operations of the Company. In addition, legal counsel
will provide counsel to the Board of Trustees of the Company.
FINANCIAL STATEMENTS
Shareholders receive reports at least semi-annually showing the Company's
holdings and other information. In addition, shareholders receive financial
statements examined by the Company's independent accountants.
[Insert Seed Capital Financial Statements]
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PART C. OTHER INFORMATION
-------------------------
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
---------------------------------
(a) Financial statements.
In Part A:
None.
In Part B:
To be filed.
In Part C:
None.
(b) Exhibits.
EX-99.2A Certificate of Trust of Registrant as filed herein.
EX-99.2B By-laws to be filed by pre-effective amendment.
EX-99.2C Not Applicable.
EX-99.2D To be filed by pre-effective amendment.
EX-99.2E To be filed by pre-effective amendment.
EX-99.2F Not Applicable
EX-99.2G To be filed by pre-effective amendment.
EX-99.2H To be filed by pre-effective amendment.
EX-99.2I Not Applicable
EX-99.2J To be filed by pre-effective amendment.
EX-99.2K To be filed by pre-effective amendment.
EX-99.2L To be filed by pre-effective amendment.
EX-99.2M Not Applicable.
EX-99.2N Opinion of Counsel as file herewith.
EX-99.2O To be filed by pre-effective amendment.
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EX-99.2P To be filed by pre-effective amendment.
EX-99.2Q Not Applicable
EX-27. Financial Data Schedule to be filed by pre-effective amendment.
ITEM 25. MARKETING ARRANGEMENTS
----------------------
None.
ITEM 26 OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
-------------------------------------------
Registration Fees $8,625.00
Form N-8A 1,000.00
Federal Taxes *
State Taxes and Fees *
Trustees' and Transfer Agents' Fees *
Cost of Printing and Engraving *
Rating Agency Fees *
Legal and Accounting Fees *
ITEM 27. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
-------------------------------------------------------------
None.
ITEM 28. NUMBER OF HOLDERS OF SECURITIES
-------------------------------
Title of Class; Shares Number of Record Holders
(no par value per share) as of June 28, 1996
-------------------
THE DESSAUER GLOBAL EQUITY FUND 0
ITEM 29. INDEMNIFICATION
---------------
(a) Subject to the exceptions and limitations contained in section
(b):
(i) every person who is, or has been, a Trustee or officer of
the Trust (hereinafter referred to as a "Covered Person") shall be
indemnified by the Trust to the fullest extent permitted by law against
liability and against all expenses reasonably incurred or paid by him
in connection with any claim, action, suit or proceeding in which he
becomes involved as a party or otherwise by virtue of his being or
having been a Trustee or officer and against amounts paid or incurred
by him in the settlement thereof;
(ii) the words "claim," "action," "suit," or "proceeding"
shall apply to all claims, actions, suits or proceedings (civil,
criminal or other, including appeals), actual or threatened while in
office or thereafter, and the words "liability" and "expenses" shall
include, without limitation, attorneys' fees, costs, judgments, amounts
paid in settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered
Person:
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(i) who shall have been adjudicated by a court or body before
which the proceeding was brought (A) to be liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct
of his office or (B) not to have acted in good faith in the reasonable
belief that his action was in the best interest of the Trust; or
(ii) in the event of a settlement, unless there has been a
determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office, (A) by the court or other
body approving the settlement; (B) by at least a majority of those
Trustees who are neither Interested Persons of the Trust nor are
parties to the matter based upon a review of readily available facts
(as opposed to a full trial-type inquiry); or (C) by written opinion of
independent legal counsel based upon a review of readily available
facts (as opposed to a full trial-type inquiry).
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall not be
exclusive of or affect any other rights to which any Covered Person may now or
hereafter be entitled, shall continue as to a person who has ceased to be a
Covered Person and shall inure to the benefit of the heirs, executors and
administrators of such a person. Nothing contained herein shall affect any
rights to indemnification to which Trust personnel, other than Covered Persons,
and other persons may be entitled by contract or otherwise under law.
(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character described in
section (a) may be paid by the Trust or Series from time to time prior to final
disposition thereof upon receipt of an undertaking by or on behalf of such
Covered Person that such amount will be paid over by him to the Trust or Series
if it is ultimately determined that he is not entitled to indemnification;
provided, however, that either (i) such Covered Person shall have provided
appropriate security for such undertaking, (ii) the Trust is insured against
losses arising out of any such advance payments or (iii) either a majority of
the Trustees who are neither Interested Persons of the Trust nor parties to 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
trial-type inquiry or full investigation), that there is reason to believe that
such Covered Person will be found entitled to indemnification.
ITEM 30. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
----------------------------------------------------
Dessauer Asset Management Company and its affiliates provide management
services to the Registrant and individual client accounts. To the best of the
Registrant's knowledge, the directors and officers of Dessauer Asset Management
Company have not held at any time during the past two fiscal years or been
engaged for their own account or in the capacity of director, officer, employee,
partner or trustee in any other businesses, professions, vocations or
employment.
Guinness Flight Global Asset Management Limited and its affiliates
provide management services to the Registrant, the Guinness Flight Investments
Funds, Inc., off-shore funds and separate accounts. To the best of the
Registrant's knowledge, the directors and officers of Guinness Flight Global
Asset Management Limited have not held at any time during the past two fiscal
years or been engaged for their own account or in the capacity of director,
officer, employee, partner or trustee in any other businesses, professions,
vocations or employment.
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ITEM 31. LOCATION OF ACCOUNTS AND RECORDS
--------------------------------
The accounts, books or other documents required to be maintained by
Section 31(a) of the 1940 Act and the rules promulgated thereunder are
maintained by Investment Company Administration Corporation, 2025 East Financial
Way, Suite 101, Glendora, CA 91741, except for those maintained by the Funds'
Custodian.
ITEM 32. MANAGEMENT SERVICES
-------------------
Not applicable.
ITEM 33. UNDERTAKINGS
------------
(1) The Registrant undertakes to suspend the offering of shares until
the prospectus is amended if (1) subsequent to the effective date of its
registration statement, the net asset value declines more than ten percent from
its net asset value as of the effective date of the registration statement or
(2) the net asset value increases to an amount greater than its net proceeds as
stated in the prospectus.
(2) The Registrant undertakes to file a post-effective amendment with
certified financial statements showing the initial capital received before
accepting subscriptions from more than 25 persons.
(3) The Registrant undertakes that for the purpose of determining any
liability under the 1933 Act,the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant under Rule 497(h)
under the Securities Act of 1933 shall be deemed to be part of this registration
statement as of the time it was declared effective.
(4) The Registrant undertakes that for the purpose of determining any
liability under the Securities Act of 1933, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of the securities
at that time shall be deemed to be the initial bona fide offering thereof.
(5) The Registrant undertakes to send by first class mail or other
means designed to ensure equally prompt delivery, within two business days of
receipt of a written or oral request, any Statement of Additional Information.
C-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or the
Investment Company Act of 1940, the Registrant has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto authorized,
in the City of New York, and State of New York, on the 1st day of July, 1996.
THE DESSAUER GLOBAL EQUITY FUND
/s/ James J. Atkinson, Jr.
--------------------------
By: James J. Atkinson, Jr., President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/Susan J. Penry-Williams Trustee July 1, 1996
- --------------------------
Susan J. Penry-Williams
/s/Louis S. Citron Trustee July 1, 1996
- ------------------
Louis S. Citron
C-5
<PAGE>
EXHIBIT INDEX
-------------
EX-99.2A Certificate of Trust of Registrant
EX-99.2N Opinion of Counsel
CERTIFICATE OF TRUST
OF
THE DESSAUER GLOBAL EQUITY FUND
This Certificate of Trust is being executed as of June 27, 1996 for the
purpose of organizing a business trust pursuant to the Delaware Business Trust
Act, 12 Del. C. ss.ss. 3801 et seq.
The undersigned hereby certifies as follows:
1. Name. The name of the business trust is The Dessauer Global Equity Fund
("Trust").
2. Registered Investment Company. The Trust is or will become a registered
investment company under the Investment Company Act of 1940, as amended.
3. Registered Office and Registered Agent. The registered office of the
Trust in the State of Delaware is located at 1013 Center Road, Wilmington,
Delaware 19805. The name of the registered agent of the Trust for service of
process at such location is Corporation Service Company. IN WITNESS WHEREOF, the
undersigned, being the sole trustees of the Trust, have duly executed this
Certificate of Trust as of the day and year first above written.
Trustee Trustee
/s/Susan Penry-Williams /s/Louis S. Citron
- ----------------------- ------------------
Susan Penry-Williams Louis S. Citron
Kramer, Levin, Naftalis & Frankel
9 1 9 T H I R D A V E N U E
NEW YORK, N.Y. 10022 - 3852
(212) 715 - 9100
ARTHUR H. AUFSES III Richard Marlin Sherwin Kamin
THOMAS D. BALLIETT Thomas E. Molner Arthur B. Kramer
JAY G. BARIS Thomas H. Moreland Maurice N. Nessen
SAUL E. BURIAN Ellen R. Nadler Founding Partners
BARRY MICHAEL CASS Gary P. Naftali Counsel
THOMAS E. CONSTANCE Michael J. Nassa --------
MICHAEL J. DELL Michael S. Nelson Martin Balsam
KENNETH H. ECKSTEIN Jay A. Neveloff Joshua M. Berman
CHARLOTTE M. FISCHMAN Michael S.Oberman Jules Buchwald
DAVID S. FRANKEL Paul S. Pearlman Rudolph De Winter
MARVIN E. FRANKEL Susan J. Penry-Williams Meyer Eisenberg
ALAN R. FRIEDMAN Bruce Rabb Arthur D. Emil
CARL FRISCHLING Allan E. Reznick Maxwell M. Rabb
MARK J. HEADLEY Scott S. Rosenblum James Schreiber
ROBERT M. HELLER Michele D. Ross Counsel
PHILIP S. KAUFMAN Max J. Schwartz -------
PETER S. KOLEVZON Mark B. Segall M. Frances Buchinsky
KENNETH P. KOPELMAN Judith Singer Debora K. Grobman
MICHAEL PAUL KOROTKIN Howard A. Sobel Christian S. Herzeca
KEVIN B. LEBLANG Steven C. Todrys Pinchas Mendelson
DAVID P. LEVIN Jeffrey S. Trachtman Lynn R. Saidenberg
EZRA G. LEVIN D. Grant Vingoe Jonathan M. Wagner
LARRY M. LOEB Harold P. Weinberger Special Counsel
MONICA C. LORD E. Lisk Wyckoff, Jr. -------
FAX
(212) 715-8000
---
WRITER'S DIRECT NUMBER
(212)715-9100
-------------
July 2, 1996
The Dessauer Global Equity Fund
201 South Lake Avenue, Suite 510
Pasadena, California 91101
Re: Registration Statement on Form N-2
----------------------------------
Gentlemen:
We hereby consent to the reference of our firm as Counsel in this
Registration Statement on Form N-2.
Very truly yours,
/s/ Kramer, Levin, Naftalis & Frankel
-------------------------------------
