<PAGE>
THE DESSAUER
GLOBAL EQUITY FUND
SEMI ANNUAL
REPORT
SEPTEMBER 30, 1997
<PAGE>
[PHOTO]
JOHN DESSAUER
Dear Shareholder,
The Dessauer Global Equity Fund was successfully launched on May 30,
1997. On June 4, 1997, the Fund commenced investment operations. During the
period from the initial public offering to September 30, 1997, the net asset
value per share rose from $11.88 to $12.45, an increase of 4.8% for the
period. During the same period, the price per share rose from $12.50 to
$12.75 for a total return of 2.00%. The market price on September 30, 1997
represented a 2.41% premium to the net asset value.
This was the first closed-end, international equity fund in a long
time. Most on Wall Street told me it could not be done. But, my partner Tom
McIntyre and I firmly believe that the closed-end form of fund is in the best
interest of the shareholders. We felt even more strongly about this in
today's market environment.
With a closed-end fund, we raised a specific amount of money all at
once. Under the terms of the automatic conversion provision, we knew that the
money would stay in the fund for at least eighteen months. As you probably
know, the automatic conversion provision is set up such that the Dessauer
Global Equity Fund will convert to an open-end fund if, after 18 months, its
shares close at a market price that is at a 5% or greater discount to the net
asset value of the fund on the last business day of any week and for each of
the next 14 days.
The closed-end format means that we are able to patiently watch the
markets, looking for specific opportunities. We have not been under pressure
to rush and buy stocks at just any price.
I am pleased to tell you that the fund's assets are substantially
invested in what we believe are high quality stocks from around the world. We
are holding a modest amount of cash, not because we are trying to time the
markets, but because we want to be prepared should any established markets
give us an extraordinary opportunity.
As expected, the last few months of world markets have been mixed,
sometimes volatile and full of surprises. Not all the surprises have been
pleasant. Emerging markets in the Pacific Rim, for example, were very hard
hit. Other markets - England is an example - showed surprising strength. The
mixed performance was not confined to whole markets. Among individual stocks,
there has been a huge performance gap. Some like Nestle, the
Switzerland-based global foods giant, and General Motors produced handsome
gains. Others, such as some of the most popular U.S. blue chips, fell quite
sharply.
<PAGE>
At this point, opinions on the future of the world's equity markets
are as mixed as the performance of the individual markets. I was in Europe
recently. There I heard a gloomy chorus. Many argue that weakness in the
Japanese economy, the currency crises in Asian countries, plus earnings
slowdowns in Europe and North America will soon mean an end to the wonderful
rising stock trend of the last few years. This view is certainly not new.
Many European money managers completely missed the rise in U.S. stocks. In
several cases, they made a double mistake, buying Japanese stocks that went
down, while avoiding U.S. stocks that went up. These managers are now under
tremendous pressure and they don't know what to do. They are afraid to sell
Japanese stocks at a loss and equally afraid of buying U.S. stocks that have
risen so nicely. Therefore they adopt a gloomy view, which I suppose is more
of a wish than a forecast. They wish markets like the U.S. market would crash
and give them a chance to buy low like the others did before.
We take all opinions from genuine professionals seriously. It is
true, for example, that the Japanese economy is having a difficult time.
Japanese consumers are discouraged. For two decades they thought their system
was invincible. Now they know that was wrong and they are depressed, probably
unduly down on themselves. Japan is a major economic player. When any major
economy struggles, we must take notice.
In my opinion, the sluggish Japanese economy plus the aftermath of
the currency crises in Thailand, Malaysia, Indonesia and the Philippines are
a definite drag on the global economy. Add in slow growth and high
unemployment in Europe and, if that were the whole story, the gloomsters
would have a real point. A full blown global recession with deflation would
not be much fun for equity investors. Fortunately, that is far from the whole
story. The United States continues to confound the experts with solid growth
and low inflation. Latin America is another bright spot with respectable
economic growth. And China, the most populous nation on earth, is growing at
a 10% annual rate.
In the past few months, I have traveled to Europe, Singapore,
Indonesia and Hong Kong. I travel to see for myself the condition of the
world's economies. I remain convinced that we live in a world of opportunity
and that the future is, if anything, brighter than the past.
Our challenge as investors is to grapple with the fact that real
opportunity always comes alongside real risk. It only takes a glance around
the world to see that all markets and all stocks are not alike. Mexico's
stock market plunged after the peso was devalued. Stock markets in Thailand,
Malaysia and Indonesia fell 30%-50% this year as their currencies plunged. A
major Philippine bank stock lost 80% as bad loans piled up. These real risks
and real losses terrify many investors. They worry that their portfolios will
end up with more losses than gains. Others worry that Mexico, Thailand,
Malaysia and Indonesia are just the beginning of a worldwide stock market
plunge.
In developing the portfolio for your future fund, we have used our
time-tested approach. First we satisfy ourselves that there is a world of
opportunity. Then we go about selecting the investments one-by-one, paying
special attention to the risks. We do not chase stocks. After studying a
company, getting to know management, and concluding that there is real
opportunity in the specific company, we wait for weakness to develop, either
in the market or the particular stock.
CONTINUED ON BACK PANEL
<PAGE>
THE DESSAUER GLOBAL EQUITY FUND
PORTFOLIO OF INVESTMENTS BY COUNTRY AT SEPTEMBER 30, 1997
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares EQUITY SECURITIES 87.1% Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------
AUTO: 4.5%
40,000 General Motors Corporation (United States)....................... $ 2,677,500
10,000 Magna International Class A ADR (Canada)......................... 691,250
------------
3,368,750
------------
BANKING/FINANCE: 13.2%
30,000 Banco Santander S.A. ADR (Spain)................................. 982,500
5,000 Citicorp (United States)......................................... 669,687
50,000 CountryWide Credit Industries Inc. (United States)............... 1,821,876
80,000 Dao Heng Bank Group Ltd. (Hong Kong/China)....................... 360,817
100,000 Espirito Santo Financial Group ADR (Portugal).................... 2,081,251
200,000 First Pacific Company (Hong Kong/China).......................... 200,310
20,000 First Union Corporation (N.C.) (United States)................... 1,001,250
16,000 HSBC Holdings Plc (Hong Kong/China).............................. 535,539
40,000 Hang Seng Bank (Hong Kong/China)................................. 492,375
55,000 SEI Investments Co. (United States).............................. 1,815,000
------------
9,960,605
------------
BEVERAGES & FOOD: 8.8%
500,000 Fosters Brewing Group Ltd. (Australia)........................... 1,055,967
50,000 Guinness Plc ADR (United Kingdom)................................ 2,393,751
53,900 Koninklijke Ahold NV ADR (Netherlands)........................... 1,462,037
25,000 Nestle S.A. Sponsored ADR (Switzerland).......................... 1,744,532
------------
6,656,287
------------
CONSUMER STAPLES: 3.6%
30,000 Eastman Kodak Company (United States)............................ 1,948,125
15,000 Nike Inc. Class B (United States)................................ 795,000
------------
2,743,125
------------
CONSTRUCTION, MINING & MATERIALS HANDLING: 0.8%
200,000 Boral Ltd. (Australia)........................................... 606,873
------------
DEPARTMENT STORES: 0.8%
400,000 David Jones Limited (Australia).................................. 586,697
------------
ELECTRICAL/INDUSTRIAL APPARATUS: 6.3%
50,000 LSI Logic (United States)*....................................... 1,606,250
20,000 Motorola, Inc. (United States)................................... 1,437,500
20,000 Philips Electronics N.V. ADR (Netherlands)....................... 1,680,000
------------
4,723,750
------------
</TABLE>
1
<PAGE>
THE DESSAUER GLOBAL EQUITY FUND
PORTFOLIO OF INVESTMENTS BY COUNTRY AT SEPTEMBER 30, 1997
(UNAUDITED), CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
- --------------------------------------------------------------------------------------------
<C> <S> <C>
ENTERTAINMENT: 4.2%
20,000 Pixar Inc. (United States)*...................................... $ 472,500
50,000 Time Warner Inc. (United States)................................. 2,709,375
------------
3,181,875
------------
HEALTH & PERSONAL CARE: 8.4%
5,000 AKZO Nobel NV ADR (Netherlands).................................. 428,125
30,000 Bally Total Fitness Holding (United States)*..................... 517,501
30,000 Glaxo Wellcome Plc ADR (United Kingdom).......................... 1,348,126
30,000 Novartis AG ADR (Switzerland).................................... 2,315,625
5,000 Rhone - Poulenc Rorer Inc. (United States)....................... 483,438
30,000 Rhone Poulenc S.A. ADR (France).................................. 1,213,125
------------
6,305,940
------------
HOTEL/GAMING: 8.1%
800,000 CDL Hotel International (Hong Kong/China)........................ 289,480
80,000 Circus Circus Enterprises (United States)*....................... 2,015,000
50,000 Harrah's Entertainment Inc. (United States)*..................... 1,121,875
80,000 Hilton Hotels Corp. (United States).............................. 2,695,000
------------
6,121,355
------------
INSURANCE: 1.8%
40,000 AXA - UAP, Sponsored ADR (France)................................ 1,357,500
------------
MISCELLANEOUS BUSINESS SERVICES: 2.0%
35,000 Hutchison Whampoa (Hong Kong/China).............................. 344,888
100,000 Swire Pacific Ltd., Class A (Hong Kong/China).................... 765,701
100,000 Television Broadcasts Ltd. (Hong Kong/China)..................... 354,096
------------
1,464,685
------------
REGIONAL ADMINISTRATION OF COMMODITIES, ELECTRICITY, GAS,
AND OTHERS: 4.7%
30,000 ENDESA S.A. ADR (Spain).......................................... 645,000
45,000 Enron Corporation (United States)................................ 1,732,500
200,000 Hong Kong & China Gas (Hong Kong/China).......................... 412,251
150,000 Hong Kong Telecom (Hong Kong/China).............................. 339,234
10,000 USX - Marathon Group (United States)............................. 371,875
------------
3,500,860
------------
</TABLE>
2
<PAGE>
THE DESSAUER GLOBAL EQUITY FUND
PORTFOLIO OF INVESTMENTS BY COUNTRY AT SEPTEMBER 30, 1997
(UNAUDITED), CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
- --------------------------------------------------------------------------------------------
<C> <S> <C>
RETAIL - HYPER MARKETS: 1.0%
800,000 Dairy Farm International Holdings (Hong Kong/China).............. $ 760,000
------------
REAL ESTATE: 5.7%
80,000 China Resources Enterprises (Hong Kong/China).................... 334,970
248,000 HKR International Ltd. (Hong Kong/China)......................... 293,254
250,000 Hang Lung Development Company (Hong Kong/China).................. 470,083
300,000 Hong Kong Land Holdings Ltd. (Hong Kong/China)................... 1,020,000
104,000 Hysan Development Company (Hong Kong/China)...................... 311,139
280,000 Keppel Land Limited (Singapore).................................. 706,636
160,000 New World Development (Hong Kong/China).......................... 967,691
18,000 Sun Hung Kai Properties Ltd. (Hong Kong/China)................... 211,682
------------
4,315,455
------------
SAWMILLS & PLANING MILLS: 0.3%
20,000 Fletcher Challenge Ltd. ADR (New Zealand)........................ 250,000
------------
STEELS: 1.1%
10,000 China Steel Corp. GDR (Taiwan)*.................................. 201,250
30,000 Inland Steel Industries Inc. (United States)..................... 656,250
------------
857,500
------------
TELECOMMUNICATIONS SERVICES: 11.8%
30,000 AT & T Corporation (United States)............................... 1,329,375
30,000 Ascend Communications, Inc. (United States)*..................... 971,250
50,000 Cable & Wireless Communications Plc ADR (United Kingdom)......... 1,293,750
10,000 Ericsson (L. M.) Telephone ADR (Sweden).......................... 479,375
50,000 GTE Corporation (United States).................................. 2,268,750
50,000 LCI International Inc. (United States)*.......................... 1,331,250
50,000 Scientific-Atlanta Inc. (United States).......................... 1,134,375
------------
8,808,125
------------
Total Equity Securities
(Identified Cost $61,814,140).................................. $ 65,569,382
------------
</TABLE>
3
<PAGE>
THE DESSAUER GLOBAL EQUITY FUND
PORTFOLIO OF INVESTMENTS BY COUNTRY AT SEPTEMBER 30, 1997
(UNAUDITED), CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount CONVERTIBLE BONDS 0.4% Value
- -------------------------------------------------------------------------------------------
<C> <S> <C>
$ 300,000 Formosa Chemical & Fiber (Taiwan), 1.75%, due 07/19/01
(Identified Cost $339,000)..................................... $ 331,260
------------
- -------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS 13.6%
- -------------------------------------------------------------------------------------------
GOVERNMENT OBLIGATIONS 12.0%
9,000,000 United States Treasury Bill,
4.81%, due 10/02/97 (Identified Cost $8,998,796)............... $ 8,998,796
------------
REPURCHASE AGREEMENT 1.6%
1,182,002 Investors Bank and Trust Company Repurchase Agreement, 5.62%, due
10/01/97, (Collateralized by $1,214,994 Federal National
Mortgage Association, 6.375%, due 11/25/2022)
(Identified Cost $1,182,002)................................... 1,182,002
------------
Total Short-Term Investments
(Identified Cost $10,180,798).................................. 10,180,798
------------
Total Investments 101.1%
(Identified Cost $72,333,938**)................................ $ 76,081,440
------------
Liabilities in excess of Other Assets (1.1%)..................... (825,534)
------------
NET ASSETS 100.0%................................................ $ 75,255,906
------------
------------
** Cost for federal income tax purposes is the same.
Net unrealized appreciation consists of:
Gross unrealized appreciation............................................. $ 5,158,323
Gross unrealized depreciation............................................. (1,410,821)
------------
Net unrealized appreciation............................................... $ 3,747,502
------------
------------
</TABLE>
* Non-income producing security.
See accompanying notes to financial statements.
4
<PAGE>
THE DESSAUER GLOBAL EQUITY FUND
PORTFOLIO OF INVESTMENTS BY COUNTRY AT SEPTEMBER 30, 1997
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Percent of
Country Net Assets
<S> <C>
- --------------------------------------------------------------------------------------------
Australia....................................................................... 3.0%
Canada.......................................................................... 0.9
France.......................................................................... 3.4
Hong Kong/China................................................................. 11.2
Netherlands..................................................................... 4.7
New Zealand..................................................................... 0.3
Portugal........................................................................ 2.8
Singapore....................................................................... 0.9
Spain........................................................................... 2.3
Sweden.......................................................................... 0.6
Switzerland..................................................................... 5.4
Taiwan.......................................................................... 0.7
United Kingdom.................................................................. 6.7
United States................................................................... 58.2
Liabilities in excess of Other Assets........................................... (1.1)
----------
NET ASSETS...................................................................... 100.0%
----------
----------
</TABLE>
5
<PAGE>
THE DESSAUER GLOBAL EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES AT SEPTEMBER 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $72,333,938)........... $76,081,440
Cash............................................................. 1,292
Receivables:
Dividends and interest....................................... 139,486
Securities sold.............................................. 166,069
Prepaid expenses................................................. 6,388
Deferred organization costs, net................................. 156,909
-----------
Total assets................................................. $76,551,584
-----------
LIABILITIES
Payables for securities purchased................................ 1,044,475
Due to advisor................................................... 173,233
Accrued expenses................................................. 77,970
-----------
Total liabilities............................................ 1,295,678
-----------
Net Assets....................................................... $75,255,906
-----------
-----------
NET ASSET VALUE
($75,255,906/6,046,744 shares outstanding; 50,000,000
number of shares authorized, $0.01 par value)................... $12.45
-----------
-----------
Source of Net Assets
Paid-in capital.............................................. $71,475,910
Undistributed net investment income.......................... 339,678
Accumulated net realized loss on investments and foreign
currency................................................... (307,531)
Net unrealized appreciation on:
Investments.............................................. 3,747,502
Foreign currency......................................... 347
-----------
NET ASSETS........................................... $75,255,906
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
THE DESSAUER GLOBAL EQUITY FUND
STATEMENT OF OPERATIONS (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
May 30, 1997*
to
September 30, 1997
<S> <C>
------------------------------------------------------------------------------
INVESTMENT INCOME
INCOME
Dividends (Net of foreign witholding tax of $4,538)....... $ 197,987
Interest.................................................. 535,544
------------------
Total investment income............................... 733,531
EXPENSES
Advisory fees (Note 3).................................... 230,193
Administration fee (Note 3)............................... 23,019
Legal fees................................................ 37,866
Accounting fees........................................... 18,125
Trustees' fees............................................ 16,962
Custodian fees............................................ 15,079
Deferred organization costs amortization.................. 13,091
Miscellaneous............................................. 11,437
Auditing fees............................................. 9,887
Reports to shareholders................................... 7,383
Transfer agent fees....................................... 5,568
Registration fees......................................... 4,937
Insurance................................................. 306
------------------
Total expenses........................................ 393,853
------------------
NET INVESTMENT INCOME............................. $ 339,678
------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY
Net realized loss from investments........................ (304,781)
Net realized loss from foreign currency................... (2,750)
Net change in unrealized appreciation on investments...... 3,747,502
Net change in unrealized gain on foreign currency......... 347
------------------
Net realized and unrealized gain on investments....... 3,440,318
------------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS.......................................... $3,779,996
------------------
------------------
</TABLE>
* Commencement of the Fund.
See accompanying notes to financial statements.
7
<PAGE>
THE DESSAUER GLOBAL EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
May 30, 1997*
to
September 30, 1997
<S> <C>
------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS
Net investment income..................................... $ 339,678
Net realized loss on investments.......................... (304,781)
Net realized loss on foreign currency..................... (2,750)
Net unrealized appreciation on investments and foreign
currency................................................. 3,747,849
------------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS.......................................... 3,779,996
------------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold................................. 71,375,910
------------------
TOTAL INCREASE IN NET ASSETS.......................... 75,255,906
NET ASSETS
Beginning of period....................................... 100,000
------------------
End of period (including undistributed net investment
income of $339,678)...................................... $75,155,906
------------------
------------------
CHANGES IN SHARES
Shares sold............................................... 6,046,744
------------------
NET INCREASE.......................................... 6,046,744
------------------
------------------
</TABLE>
* Commencement of the Fund.
See accompanying notes to financial statements.
8
<PAGE>
THE DESSAUER GLOBAL EQUITY FUND
FINANCIAL HIGHLIGHTS
FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT THE PERIOD (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
May 30, 1997*
to
September 30, 1997
<S> <C>
------------------------------------------------------------------------------
Net asset value, beginning of period...................... $ 11.88
--------
Income from investment operations:
Net investment income................................... 0.06
Net realized and unrealized gain on investments......... 0.51**
--------
Total from investment operations.......................... 0.57
--------
Net asset value, end of period............................ $ 12.45
--------
--------
Total return.............................................. 4.80%***
Initial offering price.................................... $ 12.50
New York Stock Exchange closing price, End of Period...... $ 12.75
Total investment return................................... 2.00%***
Net assets, end of period (thousands)..................... $75,256
Ratios/supplemental data:
Ratio of expenses to average net assets................... 1.71%****
Ratio of net investment income to average net assets...... 1.47%****
Portfolio turnover rate................................... 7.11%***
Average Commission Rate Paid.............................. $0.0107
</TABLE>
* Commencement of the Fund.
** Includes the impact of a $330,000 (0.06 per share) charge for offering
expenses paid pursuant to the terms of the prospectus dated May 30, 1997.
*** Not annualized.
**** Annualized.
See accompanying notes to financial statements.
9
<PAGE>
THE DESSAUER GLOBAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
The Dessauer Global Equity Fund (the "Fund") is a Delaware business trust
that was organized on June 27, 1996 and registered under the Investment Company
Act of 1940 (the "1940 Act") as a non-diversified, closed-end management
investment company. The Fund commenced trading on the New York Stock Exchange on
May 30, 1997 and has, as its objective, long-term capital appreciation.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund. These policies are in conformity with generally accepted
accounting principles.
A. SECURITY VALUATION. Investments in securities traded on a primary
exchange are valued at the last reported sale price at the close of regular
trading on the last business day of the period; securities traded on an exchange
for which there have been no sales are valued at the last reported bid price.
Securities for which quotations are not readily available are valued at their
respective fair values as determined in good faith by the Board of Trustees.
Short-term investments are stated at cost, which when combined with accrued
interest, approximates market value.
U.S. Government securities with less than 60 days remaining to maturity when
acquired by the Fund are valued on an amortized cost basis. U.S. Government
securities with more than 60 days remaining to maturity are valued at the
current market value (using the mean between the bid and asked price) until the
60th day prior to maturity, and are then valued at amortized cost based upon the
value on such date unless the Board determines during such 60-day period that
this amortized cost basis does not represent fair value.
Foreign securities are recorded in the financial statements after
translation to U.S. dollars based on the applicable exchange rate at the end of
the period. The Fund does not isolate that portion of the results of operations
arising as a result of changes in the currency exchange rate from the
fluctuations arising as a result of changes in the market prices of investments
during the period.
Interest income is translated at the exchange rates which existed at the
dates the income was accrued. Exchange gains and losses related to interest
income are included in interest income on the accompanying Statements of
Operations.
B. SECURITY TRANSACTIONS, DIVIDENDS AND DISTRIBUTIONS. As is common in the
industry, security transactions are accounted for on the trade date. Dividend
income and distributions to shareholders are recorded on the ex-dividend date.
C. FEDERAL INCOME TAXES. The Fund intends to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to its shareholders. Therefore, no federal
income tax provision is required.
D. DEFERRED ORGANIZATION COSTS. The Fund has incurred expenses of $170,000
in connection with its organization. These costs have been deferred and are
being amortized on a straight-line basis over a period of sixty months from the
date the Fund commenced investment operations. In the event that any of the
10
<PAGE>
THE DESSAUER GLOBAL EQUITY FUND
PORTFOLIO OF INVESTMENTS
AT SEPTEMBER 30, 1997 (UNAUDITED), CONTINUED
- --------------------------------------------------------------------------------
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
initial shares of Fund are redeemed by the holder during the period of
amortization of the Fund's organization costs, the redemption proceeds will be
reduced by any such unamortized organization costs in the same proportion as the
number of initial shares being redeemed bears to the number of those shares
outstanding at the time of redemption.
E. USE OF ESTIMATES. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
NOTE 3 - INVESTMENT MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund entered into Investment Advisory Agreements with Dessauer &
McIntyre Asset Management, Inc. ("Dessauer") and Guinness Flight Investment
Management Limited ("Guinness Flight") (together, the "Investment Advisers"),
pursuant to which the Investment Advisers will be responsible for providing
investment advisory services to the Fund (the "Advisory Agreements"). For
services under the Advisory Agreements, the Fund will pay Dessauer a monthly fee
at an annual rate of 0.60% of the average weekly net asset value of the Fund and
will pay Guinness Flight a monthly fee at an annual rate of 0.40% of the average
weekly net asset value of the Fund. For the period ending September 30, 1997,
the Fund paid $230,193 in such fees. The Fund is responsible for its own
operating expenses
Investment Company Administration Corporation (the "Administrator") acts as
the Fund's Administrator under an Administration Agreement. The Administrator
prepares various federal and state regulatory filings, prepares reports and
materials to be supplied to the Trustees; monitors the activities of the Fund's
custodian, transfer agent and accountants; coordinates the preparation and
payment of Fund expenses and reviews the Fund's expense accruals. For its
services, the Administrator receives an annual fee equal to 0.10% of average net
assets. For the period ending September 30, 1997 the Fund paid $23,019 in such
fees.
Certain officers of the Fund are also officers and/or Trustees of the
Investment Advisers and the Administrator.
NOTE 4 - PURCHASES AND SALES OF SECURITIES
The cost of purchases and the proceeds from sales of securities, excluding
U.S. Government obligations and short-term investments, for the period ended
September 30, 1997 were $67,752,158 and $5,295,967, respectively.
11
<PAGE>
CONTINUED FROM FRONT PANEL
Our strategy has served the fund well. I am proud of the fact that
on September 30, 1997, the net asset value of your fund had climbed from
$11.88 at the start to $12.45, just a shade below the offering price. In fact
in early October, the net asset value climbed to about the $12.50 offering
price.
I am also proud of the development of our firm. The name of my firm
has been changed to Dessauer & McIntyre Asset Management, Inc. Tom McIntyre
joined Dessauer Asset Management in 1989. Tom has an MBA from the University
of Notre Dame and went through the tedious and demanding process of becoming
a CPA. He then went through another three years of work, study, and
examinations to become a Chartered Financial Analyst or CFA. Tom has
extraordinary skills. He is able to analyze a balance sheet or profit and
loss statement better than anyone in our business. Even more important, Tom
and I have forged a solid partnership. We not only work well together, but
our respective skills complement one another. I am delighted that the name of
the firm now reflects this reality.
I am also very happy to tell you that Nerissa Lee of Guinness Flight
Investment Management Limited is managing the Asian portion of your fund from
Hong Kong. I have a great deal of respect for Nerissa. Born and educated in
Hong Kong, Nerissa has been following companies in Hong Kong and the rest of
Asia for many years. She has an excellent record. We are fortunate to have
her working for our fund.
On behalf of myself, my partner, Tom McIntyre, the staff at Dessauer
& McIntyre, Nerissa Lee and her team at Guinness Flight and your board of
trustees, I thank you for your loyalty and support. We are off to a good
start. Our pledge to you is that we will diligently and professionally
investigate the facts about risk and opportunity in today's global equity
markets. We will continue to apply our collective skills and experience so
that we take no more than reasonable risks in our pursuit of profits for your
fund.
Sincerely,
/s/JOHN P. DESSAUER
JOHN P. DESSAUER
CHAIRMAN
DESSAUER GLOBAL EQUITY FUND
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STATE STREET BANK AND TRUST COMPANY
C/O DESSAUER GLOBAL EQUITY FUND
P.O. BOX 8200
BOSTON, MA 02266-8200
TEL. 1-800-426-5523
