Reg. ICA No. 811-
File No. 333-
AS FILED VIA EDGAR WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER __,
1998
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [_]
Post-Effective Amendment No.
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No.
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DESSAUER GLOBAL EQUITY FUND
---------------------------
(Exact Name of Registrant as Specified in Charter)
5 Bay State Court
P.O. Box 1689
Orleans, Massachusetts 02653
----------------------------
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code: ____________
Susan Penry-Williams, Esq.
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, New York 10022
------------------------
(Name and Address of Agent for Service)
Copy to:
Thomas P. McIntyre
Dessauer Global Equity Fund
5 Bay State Court
P.O. Box 1689
Orleans, Massachusetts 02653
Approximate Date of Proposed Public Offering: _____________________
It is proposed that this filing will become effective:
[_] Immediately upon filing pursuant to [ ] on ________ __, 1998 pursuant
paragraph (b) to paragraph (b)
[_] 60 days after filing pursuant to [_] on (date) pursuant to
paragraph (a)(1) paragraph (a)(1)
[_] 75 days after filing pursuant to [_] on (date) pursuant to
paragraph (a)(2) paragraph (a)(2), of rule 485(b).
If appropriate, check the following box:
[X] 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 404 showing location in each form of Prospectus of
the responses to the Items in Part A and location in each form of Prospectus and
the Statement of Additional Information of the responses to the Items in Part B
of Form N-1A).
DESSAUER GLOBAL EQUITY FUND
Item Number
Form N-1A, Statement of Additional
Part A Prospectus Caption Information Caption
------ ------------------ -------------------
1(a) Front Cover Page *
(b) Back Cover Page *
2(a) Risk/Return Summary: Investment *
Objective
(b) Investment Strategies *
(c) Principal Risks; Bar Chart and *
Performance Table
3 Fees and Expenses of the Fund *
4(a) Investment Objective, Principal *
Strategies and Related Risk
(b) Investment Strategies *
(c) Risks of Investing in Mutual Funds; *
Risks of Investing
5 Not Applicable *
6(a) Investment Adviser and Investment *
Advisory Agreement
(b) Not Applicable *
7(a) Finances - Net Asset Value *
(b) Shareholder Guide: Your Account *
with Dessauer Global Equity Fund -
Investment Minimums, Pre-
Authorized Investment Plan, How to
Purchase, Exchange and Sell Shares,
Subsequent Investments
(c) Shareholder Guide: Your Account *
with Dessauer Global Equity Fund -
Investment Minimums, How to
Redeem Shares, Redemption Issues
<PAGE>
Item Number
Form N-1A, Statement of Additional
Part A Prospectus Caption Information Caption
------ ------------------ -------------------
(d) Finances - Net Asset Value, *
Dividends and Capital Gains
Distributions
(e) Finances - Tax Issues *
(f) Not Applicable *
8(a) Not Applicable *
(b) Not Applicable *
(c) Not Applicable *
9 Financial Highlights *
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DESSAUER GLOBAL EQUITY
Item Number
Form N-1A, Statement of Additional
Part B Prospectus Caption Information Caption
------ ------------------ -------------------
10 * Front Cover Page
11 * Fund History
12(a) * Fund History
12(b) Investment Practices and
Policies
12(c) * Investment Practices and
Policies
12(d) * Investment Practices and
Policies
12(e) Risk Factors
13(a)-(d) * Management of the Fund
13(e) * Not Applicable
14(a) * Not Applicable
14(b) * Management of the Fund
14(c) * Management of the Fund
15(a) Investment Adviser and
Advisory Agreement
(b) * Not Applicable
(c) Investment Adviser and
Advisory Agreement
(d) * Investment Adviser and
Investment Advisory
Agreement
(e) * Not Applicable
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(f) * Not Applicable
(g) * Not Applicable
(h) * Service Providers
16(a)-(c) * Portfolio Transactions and
Brokerage
* Portfolio Transactions and
Brokerage
(d) * Not Applicable
(e) * Not Applicable
17(a) * Shares of Beneficial Interest
(b) * Not Applicable
18(a) Purchasing Shares;
Additional Purchase and
Redemption Information
(b) * Not Applicable
(c) Computation of Net Asset
Value
(d) * Not Applicable
19(a) * Tax Matters
(b) * Tax Matters
20(a) * Not Applicable
(b) * Not Applicable
(c) * Not Applicable
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21(a) * Not Applicable
(b) * Performance Information
22(a) * Financial Statements
(b) * Financial Statements
(c) * Financial Statements
* See Prospectus
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.
[GRAPHIC]
PROSPECTUS [DECEMBER __, 1998]
DESSAUER GLOBAL EQUITY FUND
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED THE SHARES OF THE FUND
AS AN INVESTMENT. THE SECURITIES AND EXCHANGE COMMISSION ALSO HAS NOT DETERMINED
WHETHER THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY PERSON WHO TELLS YOU THAT
THE SECURITIES AND EXCHANGE COMMISSION HAS MADE SUCH AN APPROVAL OR
DETERMINATION IS COMMITTING A CRIME.
<PAGE>
TABLE OF CONTENTS
[To Be Added if Needed]
DESSAUER GLOBAL EQUITY FUND
RISK/RETURN SUMMARY
INVESTMENT OBJECTIVE.
The Dessauer Global Equity Fund's (the "Fund") is a no-load mutual fund with the
investment objective of long-term capital appreciation. The Fund seeks to
achieve its investment objective by investing primarily in the securities of
issuers that it believes are positioned to benefit from growth in the global
economy. Generally, the companies in which the Fund invests are traded in the
markets of, or will derive a substantial portion of their revenues from business
activities within, North America (the U.S. and Canada), Western Europe, Hong
Kong and Japan (collectively, the "Major Markets"). Under normal market
conditions, the Fund invests at least 65% of its total assets in a portfolio of
equity securities of companies located in at least three different countries.
INVESTMENT STRATEGIES.
The Fund takes advantage of economic growth on a global scale by investing in
companies with business interests in North America (the United States and
Canada), Western Europe, Hong Kong and Japan. In selecting investments, the Fund
may take into consideration a company's sector or industry in order to avoid
concentrating in any one economic sector or industry.
PRINCIPAL RISKS.
The Dessauer Global Equity Fund is subject to the risks common to all mutual
funds that invest in equity securities and foreign securities. You may lose
money by investing in this Fund if any of these occur:
o The stock markets of the United States, Canada, Western Europe, Hong Kong
or Japan go down
o A stock or stocks in the Fund's portfolio do not perform as well as
expected
In addition, the Fund is non-diversified which means that the Fund could have a
portfolio with as few as twelve issuers. To the extent that the Fund invests in
a small number of issuers, there may be a greater risk of losing money than in a
diversified investment company. The Fund, however, intends to comply with the
diversification requirements of federal tax law as necessary to qualify as a
regulated investment company.
See "Investment Risks" on page ___ for a more detailed discussion of the risks
associated with investing in this Fund.
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BAR CHART AND PERFORMANCE TABLE
The following chart demonstrates the risks of investing in the Fund by showing
changes in the Fund's performance from May 30, 1997 (the date of inception)
through December 31, 1997. Past performance is not an indication of future
performance.
FEES AND
EXPENSES OF
THE FUND
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Dessauer Global Equity Fund.
SHAREHOLDER FEES (Fees paid directly from your investment)
SHAREHOLDER TRANSACTION EXPENSES
Sales Charge (Load) Imposed on Purchases None
Dividend Reinvestment and Cash Purchase Plan Fees None
ANNUAL EXPENSES
Shareholder Service Plan 0.25%
Advisory Fees 0.75%
Administration Fees 0.10%
Other Expenses 0.45%
Total Annual Expenses 1.55%
Expense Ratio 1.55%
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SHAREHOLDER TRANSACTION EXPENSES represent charges paid when you purchase shares
of the Fund.
EXAMPLE OF EXPENSES
You would pay the following expenses on a $10,000 investment in the
Fund, assuming a 5% annual return:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$ $ $ $
The purpose of the above table is to assist you in understanding the various
costs and expenses that an investor in the Fund would bear directly or
indirectly. See "Management of the Fund" for more complete descriptions of such
costs and expenses.
INVESTMENT OBJECTIVE, PRINCIPAL STRATEGIES AND RELATED RISK
As with all mutual funds, investing in the Fund involves certain risks. We
cannot guarantee that the Fund will meet its investment objective or that the
Fund will perform as it has in the past. You may lose money if you invest in the
Fund.
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The Fund may use various investment techniques, some of which involve greater
amounts of risk. These investment techniques are discussed in detail in the
Statement of Additional Information. To reduce risk, the Fund is subject to
certain limitations and restrictions, which are also described in the Statement
of Additional Information.
INVESTMENT OBJECTIVE. The Fund's investment objective is long-term capital
appreciation. The Fund seeks to achieve its investment objective by investing
primarily in the securities of issuers that it believes are positioned to
benefit from growth in the global economy. The Fund's investment objective and
strategies may be changed without shareholder approval.
INVESTMENT STRATEGIES. Generally, the companies in which the Fund invests will
be traded in the markets of, or will derive a substantial portion of their
revenues from business activities within, North America (the U.S. and Canada),
Western Europe, Hong Kong and Japan (collectively, the "Major Markets"). Under
normal market conditions, the Fund will invest at least 65% of its total assets
in a portfolio of equity securities of companies located in at least three
different countries.
RISKS OF INVESTING IN MUTUAL FUNDS
The following risks are common to all mutual funds and therefore apply
to the Fund:
o MARKET RISK. The market value of a security may go up or down, sometimes
rapidly and unpredictably. These fluctuations may cause a security to be
worth less than it was at the time of purchase. Market risk applies to
individual securities, a particular sector or the entire economy.
o MANAGER RISK. Fund management affects Fund performance. A Fund may lose
money if the Fund manager's investment strategy does not achieve the Fund's
objective or the manager does not implement the strategy properly.
o YEAR 2000 RISK. The Fund or its service providers could be disrupted by
problems in their computer systems related to the Year 2000.
RISKS OF INVESTING IN FOREIGN SECURITIES
The following risks are common to mutual funds that invest in foreign securities
and therefore apply to the Fund:
o LEGAL SYSTEM AND REGULATION RISK. Foreign countries have different legal
systems and different regulations concerning financial disclosure,
accounting and auditing standards. Corporate financial information that
would be disclosed under U.S. law may not be available. Foreign accounting
and auditing standards may render a foreign corporate balance sheet more
difficult to understand and interpret than one subject to U.S. law and
standards. Additionally, government oversight of foreign stock exchanges
and brokerage industries may be less stringent than in the U.S.
o CURRENCY RISK. Most foreign stocks are denominated in the currency of the
stock exchange where they are traded. The Fund's Net Asset Value is
denominated in U.S. Dollars. The exchange rate between the U.S. Dollar and
most foreign currencies fluctuates; therefore the
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Net Asset Value of the Fund will be affected by a change in the exchange
rate between the U.S. Dollar and the currencies in which the Fund's stocks
are denominated. The Fund may also incur transaction costs associated with
exchanging foreign currencies into U.S. Dollars.
o STOCK EXCHANGE AND MARKET RISK. Foreign stock exchanges generally have less
volume than U.S. stock exchanges. Therefore, it may be more difficult to
buy or sell shares of foreign securities, which increases the volatility of
share prices on such markets. Additionally, trading on foreign stock
markets may involve longer settlement periods and higher transaction costs.
o EXPROPRIATION RISK. Foreign governments may expropriate the Fund's
investments either directly by restricting the Fund's ability to sell a
security or by imposing exchange controls that restrict the sale of a
currency or by taxing the Fund's investments at such high levels as to
constitute confiscation of the security. There may be limitations on the
ability of the Fund to pursue and collect a legal judgment against a
foreign government.
RISKS OF INVESTING IN HONG KONG
The following risks are common to all mutual funds that invest in Hong Kong and
therefore apply to the portion of the Fund that is invested in Hong Kong to the
extent that the Fund invests in securities that give rise to such risks.
o POLITICAL RISKS. In 1984 China and Britain signed the Joint Declaration
which allowed for the termination of British rule in Hong Kong on June 30,
1997, but which maintains the previously existing capitalist economic and
social system of Hong Kong for 50 years beyond that date. Although China
has committed itself by treaty to preserve the economic and social freedoms
enjoyed in Hong Kong, the continuation of these freedoms is dependent on
the government of China. Also, a small number of companies represent a
large percentage of the Hong Kong market. This smaller number can lead to a
greater amount of volatility in this market. The following risks should be
considered when considering investing in Hong Kong:
1. that political instability may arise as a result of indecisive
leadership;
2. that hard line Communist might regain the political initiative;
3. that social tensions caused by widely differing levels of
economic prosperity within Chinese society might create unrest.
RISKS OF INVESTING IN EUROPE
The following risks are common to all mutual funds that invest in Europe and
therefore apply to the portion of the Fund that is invested in Europe to the
extent that the Fund invests in securities that give rise to such risks.
o MARKET CONCENTRATION. Many foreign stock markets are more concentrated than
the U.S. stock market since a smaller number of companies make up a larger
percentage of the market. Therefore, the performance of a single company or
group of companies could have a much greater impact on a foreign stock
market than a single company or group of companies would
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<PAGE>
on the U.S. stock market.
o THE EURO. In January 1999 the new European common currency, called the
Euro, will begin circulation. The nations that use the Euro will have the
same monetary policy regardless of their domestic economy, which could have
adverse effects on those economies. The Euro could fail as a common
currency, making those nations return to using their original currencies,
which could increase the cost of trade, decrease corporate profits and have
other adverse effects.
o PRIVATIZATION RISK. Many European countries are privatizing state run
and/or owned companies. There is the risk that this could cause labor
unrest and political instability or that those privatization efforts could
fail.
RISKS OF INVESTING IN DEBT SECURITIES
The following risks are common to all mutual funds that invest in debt
securities and therefore apply to the portion of the Fund that is invested in
such debt to the extent that the Fund invests in securities that give rise to
such risks:
o INTEREST RATE RISK. The value of a debt security typically decreases when
interest rates rise. In general, debt securities with longer maturities are
more sensitive to changes in interest rates.
o CREDIT RISK. The issuer of a debt security may be unable to make timely
payments of principal or interest, or may default on the debt.
INVESTMENT ADVISER AND INVESTMENT ADVISORY AGREEMENT
Dessauer & McIntyre Asset Management, Inc., 5 Orleans Brewster Office
Park, Orleans, MA 02653 is the investment manager of the Fund. The Adviser, an
investment adviser registered with the SEC, was founded in 1986 and as of
____________, 1998 managed $[ ] million in both U.S. and international assets.
o ADVISORY SERVICES. The Adviser provides the Fund with investment management
and financial advisory services, including purchasing and selling the
securities in the Fund's portfolio at all times subject to the policies set
forth by the Board of Trustees. The Adviser identifies and analyzes
possible investments for the Fund, determines the amount and timing of such
investments and determines the forms of investments. The Adviser also
monitors and reviews the Fund's portfolio. For the months of June through
December, 1997, the Fund paid a monthly advisory fee calculated at an
annual rate of 1% of the Fund's average weekly net assets. During the
remainder of the fiscal year, ending March 31, 1998, the Fund paid a
monthly advisory fee calculated at an annual rate of .60%. On June 27,
1998, shareholders approved amendments to the Fund's Investment Advisory
Agreement to reflect the resignation of Guinness Flight Investment
Management, Ltd. as co-manager of the Fund. In addition, shareholders
approved a change in the advisory fees from 1.00% to .75%.
o MANAGEMENT OF THE ADVISER. John P. Dessauer and Thomas P. McIntyre are
principals
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of the Adviser and manage the Fund's portfolio. Mr. Dessauer has more than
25 years experience as an investment professional. In the 1970s, Mr.
Dessauer was a seniorinvestment officer in Europe for Citibank and was
responsible for managing all of Citibank's European money management
services for four years. He later served as a member of the investment
policy committee of a German private bank in Dusseldorf. Mr. Dessauer has
experience in foreign currencies, international stocks and international
bonds. He founded John Dessauer's Investor's World, an investment
newsletter, in order to bring professional, international money management
services within the reach of individual investors. John Dessauer's
Investor's World is a monthly investor newsletter specializing in
international investing with a circulation of approximately [84,000] as of
_________, 1998. Mr. Dessauer is also 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.
o Mr. McIntyre joined Dessauer in 1989 and became President in 1992. For two
years prior to joining Dessauer he served as an assistant treasurer for the
National Association of Securities Dealers, Inc. and was responsible for
their $84 million fixed-income portfolio. He previously served as Vice
President and Controller for a $140 million closed-end equity fund. 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 Accountant and a Chartered
Financial Analyst with over 15 years' experience in financial analysis and
portfolio management.
SHAREHOLDER SERVICING PLAN
The Fund has adopted a Shareholder Servicing Plan whereby it pays the
Adviser or other financial institutions for shareholder services and account
maintenance, including responding to shareholder inquiries and direct
shareholder communications.
Shareholder Guide: Your Account with Dessauer Global Equity Fund
REGULAR-These accounts are taxable Retirement-These accounts are
generally nontaxable
o Individual o Roth IRA
o Joint Tenant o Regular IRA
o UGMA/UTMA o Rollover IRA
o Trust+- o Roth Conversion
o Corporate o SIMPLE IRA
o SEP IRA
o 401(k)
o 403 (b)
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Investment Minimums. The minimum initial investments are:
Minimum
Regular (New Investor) [$2,500]
Regular (Dessauer Global Equity Fund Shareholders) [$1,000]
Retirement (Roth and Regular) [$1,000]
Gift [$250]
Pre-authorized Investment Plan (Initial and Installment payments) [$100]
Additional Investments [$250]
We may reduce or waive the minimum investment requirements in some cases.
PRE-AUTHORIZED INVESTMENT PLAN. With a pre-authorized investment plan your
personal bank account is automatically debited on a monthly or quarterly basis
to purchase shares of a Fund.
You will receive the Net Asset Value (NAV) of the date the debit is made.
HOW TO PURCHASE, EXCHANGE AND SELL SHARES. The Transfer Agent is open from 8
a.m. to 6 p.m. Eastern Standard Time for purchase, redemption and exchange
orders. The transfer agent must receive your request by 4 p.m. on a day the New
York Stock Exchange is open for business to receive the NAV of that day. If your
request is received after 4 p.m. it will be processed the next business day. The
phone number you should call for account transaction requests is [(800)
000-0000].
HOW TO PURCHASE AND EXCHANGE SHARES. You may purchase shares of the Fund by
mail, wire or auto-buy. A broker may charge you a transaction fee for making a
purchase for you.
MAIL (GRAPHIC): To purchase by mail, you should:
o Complete and sign the account application
o To open a regular account, write a check payable to "Dessauer Global Equity
Fund"
o To open a retirement account, write a check payable to the custodian or
trustee
o Send your account application and check or exchange request to one of the
following addresses:
FOR A BUSINESS REPLY ENVELOPE: FOR A STAMPED ENVELOPE:
DESSAUER GLOBAL EQUITY FUND DESSAUER GLOBAL EQUITY FUND
[ ] [ ]
FOR AN OVERNIGHT PACKAGE:
National Financial Data Services
ATTN: Dessauer Global Equity Fund
1004 Baltmore
Kansas City, MO 64105-1807
WIRE (GRAPHIC): To purchase by wire, call the Transfer Agent at (800) 000-0000
between 8 a.m. and 6 p.m. Eastern Standard Time on a business day to get an
account number and detailed
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instructions. You must then provide the Transfer Agent with a signed application
within 10 business days of the initial purchase. Instruct your bank to send the
wire to:
ICAC
ABA #00000000000
Shareholder and Custody Services
DDA # 00000000
ATTN: [Your Name]
(Fund Account Number)
AUTO-BUY. You may purchase additional shares of the Fund by ACH (Automated
Clearing House) after you elect the Auto-Buy option on your account. To elect
the Auto-Buy option, call the Transfer Agent and request an optional shareholder
services form. ACH is similar to the pre-authorized investment plan, except that
you may choose the date on which you want to make the purchase. The Transfer
Agent must receive a voided check or deposit slip before you may purchase by
ACH.
SUBSEQUENT INVESTMENTS. If you are making an additional investment in the Fund,
you should include either the stub from a previous confirmation statement or a
letter to the Transfer Agent providing your name and account number to ensure
that the money is invested in your existing account.
PURCHASE ORDER CUT-OFF. The Transfer Agent may cease taking purchase orders for
the Fund at any time when it believes that it is in the best interest of our
current shareholders. The purpose of such action is to limit increased Fund
expenses incurred when certain investors buy and sell shares of the Fund for the
short-term when the markets are highly volatile.
HOW TO REDEEM SHARES. You may redeem shares by mail or telephone. Your request
must be received by the Transfer Agent by 4 p.m. Eastern Time on a day the New
York Stock Exchange is open for business to receive the NAV as of that day.
Since some portfolio securities are primarily listed on foreign exchanges, the
Fund's net asset value may change on day when you will not be able to purchase
or redeem Fund shares. If you redeem through a broker, the broker may charge you
a transaction fee. If you purchased your shares by check, you may not redeem the
account until the investment has been in the account for 15 calendar days. You
may receive the proceeds of redemption by wire or through a systematic
withdrawal plan as described below.
MAIL. To redeem by mail, please:
o Provide your name and account number
o Specify the number of shares or dollar amount
o Sign the redemption request (the signature must be the same as the one on
your account application). Make sure all required parties sign the request
that is required by the account registration
o Send your request to the appropriate address (above under Purchasing by
Mail)
TELEPHONE. You may redeem your shares either in writing or by telephone if you
authorized telephone redemption on your account application. To redeem by
telephone, call the Transfer Agent at (800) 000-0000 between the hours of 8 a.m.
and 6 p.m. on a day the New York Stock
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Exchange is open for business. You will receive the NAV for the date your
exchange order is received if it is received by 4 p.m. For your protection
against fraudulent telephone transactions the Transfer Agent will use reasonable
procedures to verify your identity. As long as the Transfer Agent follows these
procedures it will not be liable for any loss or cost to you if it acts on
instructions to redeem your account that we reasonably believe to be authorized
by you. You will be notified if the Transfer Agent refuses any telephone
redemption or exchange. Telephone exchanges or redemptions may be difficult
during periods of extreme market or economic conditions. If this is the case,
please send your exchange request my mail or overnight courier.
WIRE. You may have the proceeds of the redemption request wired to your bank
account for redemptions of $500 or more. Please provide the name, location, ABA
or bank routing number of your bank and your bank account number. Payment will
be made within 3 business days after the Transfer Agent receives your written or
telephone redemption request. There is a $10 fee for redemption by wire.
SYSTEMATIC WITHDRAWAL PLAN. You may establish a systematic withdrawal plan where
you have regular monthly or quarterly payments redeemed from your account and
sent to either you or a third party you designate. Payments must be at least
$100 and your account must have an account value of at least $1,000. You will
receive the NAV on the date of the scheduled withdrawal and will redeem enough
full and fractional shares at that NAV to equal the requested withdrawal. You
may realize either a capital gain or loss on the withdrawals that must be
reported for tax purposes. You may purchase additional shares of a Fund under
this plan as long as the additional purchases are equal to at least one year's
scheduled withdrawals.
SIGNATURE GUARANTEE. The following redemption requests require a signature
guarantee. You can get a signature guarantee from certain banks, brokers,
dealers, credit unions, securities exchanges, clearing agencies and savings
associations. A notarization and acknowledgment by a notary public is not a
signature guarantee:
o Redemptions by corporations, partnerships, trusts or other fiduciary
accounts
o Redemption of an account with a value of at least $50,000 if you are making
the request in writing (if you have authorized telephone redemption on your
account, you may redeem by telephone without a signature guarantee)
o Redemption of an account where proceeds are to be paid to someone other
than the record owner
o Redemption of an account where the proceeds are to be sent to an address
other than the record address
REDEMPTION ISSUES
o REDEMPTION FEE. There is a redemption fee of [1% ] of the value of the
shares being redeemed from the Fund if the shares are redeemed within 60
days of purchase. There will not be a redemption fee if the shares were
acquired though reinvestment of distributions. Redemptions are made on a
first-in, first-out basis.
o SMALL ACCOUNTS. To reduce Fund expenses, we may redeem an account if the
total value of the account falls below $500 due to redemptions. You will be
given 30 days' prior written notice of this redemption. During that period
you may purchase additional shares to avoid
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the redemption.
o CHECK CLEARANCE. The proceeds from a redemption request will be delayed up
to 15 calendar days from the date of the receipt of a purchase check until
the check clears. If the check does not clear, the shareholder will be
responsible for the loss. This delay can be avoided by purchasing shares by
wire or certified bank checks.
FINANCES
NET ASSET VALUE. The Net Asset Value (NAV) per share of the Fund is determined
as of 4:00 p.m. Eastern Standard Time on each day the New York Stock Exchange is
open for business. The NAV is calculated by subtracting the Fund's liabilities
from its assets and then dividing that number by the total number of outstanding
shares. This procedure is in accordance with Generally Accepted Accounting
Principles. Securities without a readily available price quotation may be priced
at fair value. Fair value is determined in good faith by or under the
supervision of the Fund's officers under methods authorized by the Board of
Trustees.
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS. The Fund intends to distribute all or
most of its net investment income and net capital gains to shareholders
annually.
Your dividends and/or capital gains distributions will be automatically
reinvested on the ex-dividend date when there is a distribution, unless you
elect otherwise, so that you will be buying more of both full and fractional
shares of the Fund. You will be buying those new shares at the NAV per share on
the ex-dividend date. You may choose to have dividends and capital gains
distributions paid to you in cash. You may authorize this option by calling the
Transfer Agent at [(800) 000-0000] and requesting an optional shareholder
services form. You must complete the form and return it to the Transfer Agent
before the record date in order for the change to be effective for that dividend
or capital gains distribution.
BUYING BEFORE A DIVIDEND. If you buy shares of the Fund just before a
distribution (on or before the record date), you will pay the full price for the
shares and receive a portion of the purchase price back as a taxable
distribution. This is called "buying a dividend." For example, if you bought
shares on or before the record date and paid $10.00 per share, and, shortly
thereafter, the Fund paid you a dividend of $1.00 per share, then your shares
would now be worth $9.00 per share. Unless your account is a tax-deferred
account, dividends paid to you would be included in your gross income for tax
purposes even though you may not have participated in the increase of NAV of the
Fund, regardless of whether you reinvested the dividends.
TAX ISSUES. The Fund has elected and intends to continue to qualify to be
treated as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"), by distributing substantially all
of its net investment income and net capital gains to its shareholders and
meeting other requirements of the Code relating to the sources of its income and
diversification of assets. Accordingly, the Fund generally will not be liable
for federal income tax or excise tax based on net income except to the extent
its earnings are not distributed or are distributed in a manner that does not
satisfy the requirements of the Code. If the Fund is unable to meet certain Code
requirements, it may be subject to taxation as a corporation.
For federal income tax purposes, any dividends derived from net investment
income and any
- 11 -
<PAGE>
excess of net short-term capital gain over net long-term capital loss that
investors (other than certain tax-exempt organizations that have not borrowed to
purchase fund shares) receive from the Fund are considered ordinary income. Part
of the distributions paid by the Fund may be eligible for the dividends-received
deduction allowed to corporate shareholders under the Code. Distributions of the
excess of net long-term capital gain over net short-term capital loss from
transactions of the Fund are treated by shareholders as long-term capital gains
regardless of the length of time the Fund's shares have been owned.
Distributions of income and capital gains are taxed in the manner described
above, whether they are taken in cash or are reinvested in additional shares of
the Fund.
Part of the Fund's investment income may be subject to foreign income taxes that
are withheld at the source. If the Fund meets certain requirements under the
Code, it may pass through these foreign taxes to shareholders, who may then
claim a credit or deduction against their own taxes for their share of foreign
taxes paid.
The Fund will inform its investors of the source of their dividends and
distributions at the time they are paid, and will promptly after the close of
each calendar year advise investors of the tax status of those distributions and
dividends. Investors (including tax exempt and foreign investors) are advised to
consult their own tax advisers regarding the particular tax consequences to them
of an investment in shares of the Fund. Additional information on tax matters
relating to the Fund and its shareholders is included in the Statement of
Additional Information.
FINANCIAL HIGHLIGHTS
This financial highlights table is intended to help you understand the Fund's
financial performance for the period since its inception on May 30, 1997.
Certain information reflects financial results for a single share of the Fund.
The total returns in the table represents the rate that an investor would have
earned (or lost) on an investment in the Fund assuming reinvestment of all
dividends and distributions. Ernst & Young LLP has audited this information.
Ernst & Young's report along with further detail on the Fund's financial
statements are included in the annual report which is available upon request.
FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT THE PERIOD
May 30, 1997*
through
March 31, 1998
Net asset value, beginning of period 11.88+
------
Income (loss) from investment operations: 0.10
Net investment income
- 12 -
<PAGE>
Net realized and unrealized gain (loss) on investments 1.90**+
-------
Total from investment operations 2.00
Less distributions:
Dividends from net investment income (0.06)
Distributions from taxable net capital gains (0.13)+
Total distributions: (0.19)+
Net asset value, end of period $13.69++
Total return 17.25%++
Net assets, end of period (thousands) $82,807
Ratios/supplemental data: 1.54%+
Ratio of expenses to average net assets:
Ratio of net investment income to average net assets 0.99%+
Portfolio turnover rate 74.47%++
Average Commission Rate Paid # $0.0135
* 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.
+ Annualized.
++ Not Annualized.
# A fund is required to disclose its average commission rate per share for
security trades on which commissions are charged. This amount may vary from
period to period and fund to fund depending on the mix of trades executed in
various markets where trading practices and commission rate structures may
differ.
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<PAGE>
STATEMENT OF ADDITIONAL INFORMATION. The Statement of Additional Information
provides a more complete discussion about the Fund and is incorporated by
reference into this prospectus, which means that it is considered a part of this
prospectus.
ANNUAL AND SEMI-ANNUAL REPORTS. The annual and semi-annual reports to
shareholders contain additional information about the Fund's investments,
including a discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during its last fiscal year.
TO REVIEW OR OBTAIN THIS INFORMATION: The Statement of Additional Information
and annual and semi-annual reports are available without charge upon your
request by calling Dessauer Global Equity Fund at (800) [ ] or by calling or
writing a broker-dealer or other financial intermediary that sells the Fund.
This information may be reviewed at the Public Reference Room of the Securities
and Exchange Commission or by visiting the SEC's World Wide Web site at [ ]. In
addition, this information may be obtained for a fee by writing or calling the
Public Reference Room of the Securities and Exchange Commission, Washington,
D.C. 20549- 6009, telephone (800) SEC-0330.
- 14 -
<PAGE>
PURCHASE APPLICATION
TO BE ADDED
- 15 -
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
DESSAUER GLOBAL EQUITY FUND
5 BAY STATE COURT
P.O. BOX 1689
ORLEANS, MASSACHUSETTS 02653
December __ 1998
This Statement is not a prospectus but should be read in conjunction with the
current prospectus dated December __, 1998 (the "Prospectus"), pursuant to which
the Fund is offered. Please retain this document for future reference.
To obtain the Prospectus please call the FUND at 1-800-[ ]
TABLE OF CONTENTS
Page
[NOT YET ADDED INTO DOCUMENT]
Manager
Dessauer & McIntyre Asset Management, Inc.
Administrator,
Investment Company Administration Corporation
Custodian
Investors Bank and Trust Company
Transfer Agent and Dividend Paying Agent
National Financial Data Services
Counsel
Kramer, Levin, Naftalis & Frankel
Independent Accountants
Ernst & Young LLP
<PAGE>
ORGANIZATION OF DESSAUER GLOBAL EQUITY FUND
Dessauer Global Equity Fund (the "Fund") is a non-diversified open-end
management investment company commonly known as a mutual fund. The Fund was
organized in Delaware on June 27, 1986 as a closed-end fund with an Automatic
Conversion Provision and converted to an open-end fund on December __, 1998.
MANAGEMENT OF THE FUND
BOARD OF TRUSTEES
The overall management of the business and affairs of the Fund is
vested in the Board of Trustees. The Board of Trustees approves all significant
agreements between the Fund and persons or companies furnishing services to the
Fund, including the Fund's investment advisory agreements with Dessauer &
McIntyre Asset Management, Inc. (the "Adviser"), the agreement with Investors
Bank and Trust Company ("IB&T") as the custodian, the agreement with National
Financial Data Services as transfer agent, the agreement with Investment Company
Administration Corporation ("ICAC") as the administrator. The day-to-day
operations of the Fund are delegated to the officers, subject to the investment
objective and policies of the Fund and to the general supervision of the Board
of Trustees.
The Trustees and principal executive officers of the Fund and their
principal occupations are noted below. The address of each individual is c/o
Dessauer & McIntyre Asset Management, Inc., 5 Bay State Court, P.O. Box 1689,
Orleans, Massachusetts 02653.
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATIONS
NAME AND AGE WITH REGISTRANT DURING PAST 5 YEARS
------------ --------------- -------------------
<S> <C> <C>
John P. Dessauer, 62 Chairman, Trustee Chairman, Dessauer & McIntyre Asset
Management, Inc.
Thomas P. McIntyre, 42 President, Trustee President, Dessauer & McIntyre Asset
Management, Inc.
Max A. Fischer, 61 Trustee Independent Financial Consultant.
Ingrid R. Hendershot, 40 Trustee President, Hendershot Investments; Vice
President, Financial Analyst, Growth Stock
Outlook, Inc.
Kevin Melich, 57 Trustee Partner, Chartwell Investment Partners; Portfolio
Manager, Delaware Investment Advisers
J. Brooks Reece, 51 Trustee Vice President, Sales & Marketing, Adcole
Corporation; Trustee, Guinness Flight Investment
Funds
</TABLE>
-2-
<PAGE>
The annual compensation of the Trustees is noted below.
<TABLE>
<CAPTION>
NAME OF PERSON AGGREGATE PENSION OR RETIREMENT ESTIMATED TOTAL COMPENSATION
COMPENSATION BENEFITS ACCRUED AS ANNUAL FROM
FROM FUND PART OF THE FUND EXPENSES BENEFITS FUND AND FUND COMPLEX
UPON RETIREMENT PAID TO TRUSTEES
<S> <C> <C> <C> <C>
John P. Dessauer........ -- -- -- --
Thomas P. McIntyre...... -- -- -- --
Max A. Fischer.......... $5,000 -- -- $5,000
Ingrid R. Hendershot.... $5,000 -- -- $5,000
Kevin Melich............ $5,000 -- -- $5,000
J. Brooks Reece......... $5,000 -- -- $5,000
</TABLE>
INVESTMENT ADVISER AND INVESTMENT ADVISORY AGREEMENT
ADVISORY AGREEMENT. Under the terms of its investment advisory
agreement (the "Advisory Agreement"), the Fund pays all of its expenses (other
than those expenses specifically assumed by the Adviser) including the costs
incurred in connection with its registration under the Securities Act and the
1940 Act; printing of the prospectus 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). The Adviser may from time to time, subject to the Board of Trustees
approval, contract with other service providers to perform support services that
aid in managing the assets of the Fund.
The Fund's Advisory Agreement was approved initially by the Board of
Trustees (including the affirmative vote of all the Trustees who were not
parties to the Agreement or interested persons of any such party) on May 23,
1997. The Advisory Agreement may be terminated without penalty on 60 days'
written notice by a vote of the majority of the Fund's Board of Trustees or by
the investment adviser or by holders of a majority of the Fund's outstanding
shares. The 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. The 1940 Act requires that
the Advisory Agreement and any renewal thereof be approved by a vote of the
majority of the Fund'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.
Pursuant to the Advisory Agreement, the Fund pays Dessauer a monthly
fee calculated at an annual rate of .75% of the Fund's average daily net assets.
From time to time, the Adviser may voluntarily agree to defer or waive fees or
absorb some or all of the expenses of the Fund. To the extent it should do so,
it may seek reimbursement of such deferred fees and absorbed expenses after they
discontinue this practice. For the period ended _________, 1998 the Fund paid
___ dollars in advisory fees.
MANAGEMENT OF THE ADVISER. John P. Dessauer and Thomas P. McIntyre are
principals of the Adviser. Together they own 100% of the common stock of the
Adviser and are therefore "Control Persons" as defined in the 1940 Act.
PRINCIPAL SHAREHOLDERS. As of ___________, 1998, the Directors and
Officers of the Fund as a group owned less than 1% of the Fund's outstanding
shares. As of September 1, 1998, to the knowledge of management, no person owned
beneficially or of record more than 5% of the outstanding shares of the Fund.
-3-
<PAGE>
SERVICE PROVIDERS
ICAC will supervise administration of the Fund pursuant to an
administration agreement with the Fund. As of the date of this Prospectus, ICAC
acts as administrator of registered investment companies with total assets of
approximately $_________. Under the administration agreement, ICAC will
supervise the administration of all aspects of the Fund's operations, including
the Fund's receipt of services for which the Fund is obligated to pay, provide
the Fund with general office facilities, and provide, at the Fund's expense, the
services of persons necessary to perform such supervisory, administrative, and
clerical functions as are needed to operate the Fund effectively. Those persons,
as well as certain employees and trustees of the Fund, may be directors,
officers, or employees of ICAC and its affiliates. For these services and
facilities, the Fund has agreed to pay ICAC a monthly fee at an annual rate of
.10% of the average weekly net assets of the Fund.
National Financial Data Services ________________________ serves as the
Transfer Agent of the Fund. The Transfer Agent provides recordkeeping services
for the Fund and its shareholders. Investors Bank and Trust Company, 200
Clarendon Street, Boston, Massachusetts 02116, serves as the custodian of the
Fund. The custodian holds the securities, cash and other assets of the Fund.
Ernst & Young LLP, 5l5 South Flower Street, Los Angeles, CA 90071 serves as the
Fund's independent accountants. The independent accountants will audit the
financial statements and the financial highlights of the Fund, as well as
provide reports to the trustees. Kramer, Levin, Naftalis & Frankel, 919 Third
Avenue, New York, New York 10022, serves as counsel to the Fund.
INVESTMENT PRACTICES AND POLICIES
INVESTMENT PRACTICES.
Although the Fund will not have a general limit as to the types of
securities which it can purchase, most of the Fund'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. Securities other than common stock or securities convertible into common
stock may be held from time to time, but the Fund normally will not invest in
fixed income securities except for defensive purposes or to temporarily employ
uncommitted cash balances. At times it may become necessary for the Fund to take
a temporary defensive position which may be inconsistent with the Fund's
principal investment strategy in order to respond to adverse market economic,
political, or other conditions. If such measures are deemed necessary the Fund
may not achieve its investment objective.
INVESTMENT POLICIES.
In pursuing its investment objective, the Fund does not intend to lend
portfolio securities or invest in illiquid or restricted securities. In
addition, the Fund will observe a non-fundamental policy of not investing for
the purpose of exercising control over 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 Fund on its obligations pursuant to the provisions of a
purchase agreement or instrument governing the rights of a senior security held
by the Fund.
The Fund will not 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
policy 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 Fund.
-4-
<PAGE>
INVESTMENT RESTRICTIONS
Investment restrictions are fundamental policies and cannot be changed
without approval of the holders of a majority (as defined in the Investment
Company Act of 1940, as amended) of the outstanding shares of the Fund. As used
in the Prospectus and the Statement of Additional Information, the term
"majority of the outstanding shares" of the Fund means, respectively, the vote
of the lesser of (i) 67% or more of the shares of the Fund present at a meeting,
if the holders of more than 50% of the outstanding shares of the Fund are
present or represented by proxy, or (ii) more than 50% of the outstanding shares
of the Fund. The following are the Fund's investment restrictions set forth in
their entirety. The Fund may not:
1. (a) With respect to 50% of its assets, invest more
than 5% of its total assets, at market value, in the
securities of one issuer (except the securities of
the United States Government) and may not purchase
more than 10% of the outstanding voting securities of
a single issuer.
(b) With respect to the other 50% of its assets,
invest more than 25% of the market value of its total
assets in a single issuer.
These two restrictions, hypothetically, could give
rise to a portfolio with as few as 12 issuers. To the extent that the
Fund's assets are invested in a small number of issuers, there may be a
greater risk in an investment in the Fund than in a diversified
investment company. In addition, the Fund may not:
2. Borrow money or issue senior securities or pledge its
assets, except that the Fund may borrow up to 33 1/3%
of the value of its total assets from a bank (i) for
temporary or emergency purposes, including to meet
redemption requests, (ii) for such short-term credits
necessary for the clearance or settlement of the
transactions, (iii) to pay dividends required to be
distributed in order for the Fund to maintain its
qualification as a regulated investment company under
the Code or otherwise to avoid taxation under the
Code.
3. 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.
4. 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.
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.
Changes in the market value of securities in the
Fund's portfolio generally will not cause the Fund to violate these
investment restrictions 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.
-5-
<PAGE>
RISK FACTORS
The Fund should be considered as an investment for only a portion of an
investor's assets and not as a complete investment program. Investors should
carefully consider the following risk factors described below before investing
in the Fund:
ECONOMIC AND POLITICAL FACTORS AFFECTING FOREIGN COUNTRIES
In the course of investment in foreign countries, the Fund may be
exposed to the direct or indirect consequences of political, social and economic
changes in one or more countries. The economies of individual foreign countries
may differ favorably or unfavorably from the U.S. economy in such respects as
growth of gross domestic product, rate of inflation, currency appreciation or
depreciation, capital reinvestment, resource self-sufficiency and balance of
payments position. These economies may also be dependent upon international
trade and, as a result, have been and may continue to be adversely affected by
trade barriers, exchange controls, managed adjustments in relative currency
values and other protectionist measures imposed or negotiated by the countries
with which they trade.
The possibility exists in some, if not all, foreign countries of
nationalization, expropriation or confiscatory taxation, political changes,
government regulation, social instability or diplomatic developments (including
war) that could affect adversely the economies of those countries or the value
of the Fund's investments in the countries. It may be difficult for a company
operating in a foreign country to obtain and enforce a legal judgment outside of
the United States. In emerging countries in particular, there is increased risk
of hyperinflation, currency devaluation and government intervention in the
economy in general.
FOREIGN CURRENCY CONSIDERATIONS
The Fund will invest in securities denominated or quoted in currencies
other than the U.S. dollar. As a result, changes in foreign currency exchange
rates will affect the value of securities in the Fund's portfolio and the
unrealized appreciation or depreciation of the Fund's investments. The Fund will
also incur costs in connection with conversions between various currencies.
Although the Fund is authorized to use various investment strategies to
hedge currency exchange rate risk, many of these strategies may not initially be
used by the Fund to a significant extent. The Fund will conduct its foreign
currency exchange transactions either on a spot (that is, cash) basis at the
spot rate prevailing in the foreign currency exchange market, or by entering
into forward, futures or options contracts to purchase or sell foreign
currencies. The use of forwards, futures and options contracts entails certain
special risks. The variable degree of correlation between exchange rate
movements of futures contracts and exchange rate movements of the related
portfolio position of the Fund, for example, could create the possibility that
losses on the hedging instrument would be greater than gains in the value of the
Fund's position. In addition, forwards, futures and options markets may not be
liquid in all circumstances and certain over-the-counter options may have no
markets. As a result, in certain markets, the Fund may not be able to close out
a transaction without incurring substantial losses. Although the use of
forwards, futures and options transactions for hedging would tend to minimize
the risk of loss due to a decline in the value of the hedged position, at the
same time it could limit any potential gains that might result from an increase
in value of the position. Finally, the daily variation margin requirements for
futures contracts create a greater ongoing potential financial risk than would
purchases of options, in which case the exposure is limited to the cost of the
initial premium.
Some of the income received by the Fund may be in foreign currencies.
The Fund will, however, compute and distribute its income in U.S. dollars, and
the computation of income will be made on the date on which the income is earned
by the Fund at the foreign exchange rate in effect on that date. As a result, if
the value of the foreign currencies in which the Fund receives its income falls
relative to the U.S. dollar between the receipt of the
-6-
<PAGE>
income and the time at which the Fund converts the foreign currencies to U.S.
dollars, the Fund may be required to liquidate securities in order to make
distributions if the Fund has insufficient cash in U.S. dollars to meet
distribution requirements. The liquidation of investments, if required, could
have an adverse effect on the Fund's performance.
TRADING MARKETS IN FOREIGN COUNTRIES
Trading volume in certain foreign country securities markets is
substantially less than that in the securities markets of the United States or
other developed countries. In addition, securities of some companies located in
foreign countries will be less liquid and more volatile than securities of
comparable U.S. companies. Commissions for trading on foreign country stock
exchanges are generally higher than commissions for trading on U.S. exchanges,
although the Fund will seek the most favorable net results on its portfolio
transactions and may, in certain instances, be able to purchase its portfolio
investments on stock exchanges on which commissions are negotiable. Further,
some foreign markets are subject to less government supervision and regulation
of the securities markets and their participants and have significantly smaller
capitalization as compared to the U.S. markets. Investments in certain foreign
markets are also likely to experience delays in settlement of securities
transactions. Clearing and registration of securities transactions in certain
countries are subject to significant risks not associated with investments in
the U.S. and other more developed markets.
Companies in certain foreign countries are not generally subject to
uniform accounting, auditing and financial reporting standards, practices and
disclosure requirements comparable to those applicable to U.S. companies.
Consequently, less information about a foreign company may be available than
about a U.S. publicly-traded company. When a foreign issuer's financial
statements are not deemed to reflect accurately its financial situation, the
Adviser may take additional steps to evaluate the proposed investment. These
steps may include an on-site inspection of the company, interviews with its
management and consultations with accountants, bankers and other specialists. In
certain cases, financial statements must be developed or verified by these
specialists. In addition, government supervision and regulation of foreign stock
exchanges, brokers and listed companies is generally less than in the United
States.
REPATRIATION; INVESTMENT CONTROLS
Foreign investment in certain countries may be restricted or controlled
to varying degrees by local or national governments. These restrictions or
controls at times may include the requirement of governmental approval for the
repatriation of investment income or the proceeds of sales of securities by
foreign investors. Certain countries may require governmental approval prior to
investments by foreign persons, limit the amount of investment by foreign
persons in a particular company, limit the investment by foreign persons only to
a specific class of securities of a company that may have less advantageous
rights than the classes available for purchase by domiciliaries of the countries
and/or impose additional taxes on foreign investors. Certain countries may also
restrict investment opportunities in issuers in industries deemed important to
national interests. The Fund could be adversely affected by delays in, or a
refusal to grant, any required governmental approval for repatriation of
capital, as well as by the application to the Fund of any restrictions on
investments. Indirect foreign investment in the securities of companies listed
and traded on the stock exchanges in emerging countries may be permitted by
certain of these countries in certain instances through investment funds that
have been specifically authorized.
FOREIGN TAXATION
Dividends, interest and capital gains received by the Fund may be
subject to withholding and other taxes imposed by foreign countries, whose taxes
would reduce the return to the Fund on those securities; this reduction may not
be recoverable by the Fund or its shareholders. See "Tax Matters."
-7-
<PAGE>
PORTFOLIO TURNOVER RISK
The Fund may trade actively and frequently to achieve the Fund's goals.
This may result in higher income and capital gains distributions, which would
increase your tax liability. Frequent trading may also increase the Fund's costs
which would affect the Fund's performance over time.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to the supervision of the Board of Trustees, decisions to buy
and sell securities for the Fund will be made by the Adviser. The Adviser is
authorized to allocate the orders placed by it on behalf of the Fund to such
brokers who also provide research or statistical material, or other services to
the Fund or the Adviser for the Fund's use. Such allocation shall be in such
amounts and proportions as the Adviser shall determine and the Investment
Advisers will report on such allocations regularly to the Board of Trustees
indicating the brokers to whom such allocations have been made and the basis
thereof. In addition, the Adviser may consider sales of shares of the Fund as a
factor in the selection of unaffiliated brokers to execute portfolio
transactions for the Fund, subject to the requirements of best execution.
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 Fund on
a continuing basis. Accordingly, the cost of the brokerage commissions to the
Fund in any transaction may be greater than that available from other brokers if
the difference is justified reasonably by other aspects of the portfolio
execution services offered. Subject to such policies and procedures as the Board
of Trustees may determine, the Adviser shall not be deemed to have acted
unlawfully or to have breached any duty solely by reason of its having caused
the Fund to pay an unaffiliated broker that provides research services to the
Adviser for the Fund's use a commission for effecting a portfolio investment
transaction in excess of the commission another broker would have charged for
effecting the same transaction. The Adviser must determine in good faith,
however, that the commission was reasonable in relation to the value of the
research service provided by such broker with respect to the particular
transaction or the Adviser's ongoing responsibilities with respect to the Fund.
ALLOCATION OF INVESTMENTS
The Adviser has other advisory clients, that have investment objectives
similar to the Fund's investment objective. As such, there will be times when
the Adviser may recommend purchases and/or sales of the same portfolio
securities for the Fund and their other clients. In such circumstances, it will
be the policy of the Adviser to allocate purchases and sales among the Fund and
their other clients in a manner which the Adviser 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 amount of a security
purchased by the Fund.
COMPUTATION OF NET ASSET VALUE
The net asset value of the Fund is determined at 4:00 p.m. New York
time, on each day that the New York Stock Exchange is open for business and on
such other days as there is sufficient trading in the Fund securities to affect
materially the net asset value per share of the Fund. The Fund will be closed on
New Years Day, Presidents' Day, Martin Luther King, Jr.'s Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
-8-
<PAGE>
The Fund will invest in foreign securities, and as a result, the
calculation of the Fund's net asset value may not take place contemporaneously
with the determination of the prices of certain of the portfolio securities used
in the calculation. Occasionally, events which affect the values of such
securities and such exchange rates may occur between the times at which they are
determined and the close of the New York Stock Exchange and will therefore not
be reflected in the computation of the Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities may be valued at their fair value as determined in good faith
under procedures established by and under the supervision of the Board of
Trustees. Portfolio securities of the Fund that are traded both on an exchange
and in the over-the-counter market will be valued according to the broadest and
most representative market. All assets and liabilities initially expressed in
foreign currency values will be converted into U.S. Dollar values at the mean
between the bid and offered quotations of the currencies against U.S. Dollars as
last quoted by any recognized dealer. When portfolio securities are traded, the
valuation will be the last reported sale price on the day of valuation. (For
securities traded on the New York Stock Exchange, the valuation will be the last
reported sales price as of the close of the Exchange's regular trading session,
currently 4:00 p.m. New York time.) If there is no such reported sale or the
valuation is based on the over-the-counter market, the securities will be valued
at the last available bid price or at the mean between the bid and asked prices,
as determined by the Board of Trustees. As of the date of this Statement of
Additional Information, such securities will be valued by the latter method.
Securities for which reliable quotations are not readily available and all other
assets will be valued at their respective fair market value as determined in
good faith by, or under procedures established by, the Board of Trustees of the
Fund.
Money market instruments with less than 60 days remaining to maturity
when acquired by the Fund will be valued on an amortized cost basis by the Fund,
excluding unrealized gains or losses thereon from the valuation. This is
accomplished by valuing the security at cost and then assuming a constant
amortization to maturity of any premium or discount. If the Fund acquires a
money market instrument with more than sixty days remaining to its maturity, it
will be valued at current market value until the 60th day prior to maturity, and
will then be valued on an amortized cost basis based upon the value on such date
unless the Board of Trustees determines during such 60 day period that this
amortized cost value does not represent fair market value.
All liabilities incurred or accrued are deducted from the Fund's total
assets. The resulting net assets are divided by the number of shares of the Fund
outstanding at the time of the valuation and the result (adjusted to the nearest
cent) is the net asset value per share.
PURCHASING SHARES
Investors will be permitted to purchase shares from the Fund's transfer
agent or from other selected securities brokers or dealers. A buyer whose
purchase order is received by the transfer agent before the close of trading on
the NYSE, currently 4:00 p.m. Eastern time, will acquire shares at the net asset
value determined as of that day. A buyer whose purchase order is received by the
transfer agent after the close of trading on the NYSE will acquire shares at the
net asset value set as of the next trading day. A broker may charge a
transaction fee for the purchase.
The Fund may further reduce or waive the minimums for certain
retirement and other employee benefit plans; for the Adviser's employees,
clients and their affiliates; for advisers or financial institutions offering
investors a program of services; or any other person or organization deemed
appropriate by the Fund.
[The Fund has instituted a Shareholder Servicing Plan permitting
payment of up to 0.25% per annum of the Fund's average daily net assets. The
Plan provides that the Fund may finance activities which are primarily intended
to result in the sale of the Fund's shares, including, but not limited to,
advertising, printing of prospectuses and reports for other than existing
shareholders, preparation and distribution of advertising material and sales
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literature and payments to dealers and shareholder servicing agents who enter
into agreements with the Fund or its distributor.]
REDEEMING SHARES
Investors are permitted to redeem shares through the transfer agent of
the Fund or from other selected securities brokers or dealers. A shareholder
whose redemption order is received by the Transfer Agent before the close of
trading on the NYSE, currently 4:00 p.m. Eastern time, will redeem shares at the
net asset value set as of that day. A shareholder whose redemption order is
received by the Transfer Agent after the close of trading on the NYSE will
redeem shares at the net asset value set as of the next trading day on the NYSE.
A broker may charge a transaction fee for the redemption.
SHARES OF BENEFICIAL INTEREST IN THE FUND
The Fund is authorized to issue 50 million shares of beneficial
interest, par value $.01 per share. Each share has equal voting, dividend,
distribution, and liquidation rights. The shares have no preemptive, conversion,
or cumulative voting rights.
Shares entitle the holders to one vote per share. The shareholders have
certain rights, as set forth in the Bylaws of the Fund, to call a meeting for
any purpose, including the purpose of voting on removal of one or more Trustees.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
The Fund reserves the right to close an account that has dropped below
$1,000 in value for a period of three months or longer other than as a result of
a decline in the net asset value per share. Shareholders are notified at least
60 days prior to any proposed redemption and are invited to add to their account
if they wish to continue as a shareholder of the Fund, however, the Fund does
not presently contemplate making such redemptions and the Fund will not redeem
any shares held in tax-sheltered retirement plans.
TAX MATTERS
The following is only a summary of certain additional federal income
tax considerations generally affecting the Fund and its shareholders that are
not described in the Prospectus. No attempt is made to present a detailed
explanation of the tax treatment of the Fund or its shareholders, and the
discussions here and in the Prospectus are not intended as substitutes for
careful tax planning.
QUALIFICATION AS A REGULATED INVESTMENT COMPANY.
The Fund has elected to be taxed as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). As a regulated investment company, the Fund is not subject to federal
income tax on the portion of its net investment income (i.e., taxable interest,
dividends and other taxable ordinary income, net of expenses) and capital gain
net income (i.e., the excess of capital gains over capital losses) that it
distributes to shareholders, provided that it distributes at least 90% of its
investment company taxable income (i.e., net investment income and the excess of
net short-term capital gain over net long-term capital loss) for the taxable
year (the "Distribution Requirement"), and satisfies certain other requirements
of the Code that are described
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below. Distributions by the Fund made during the taxable year or, under
specified circumstances, within twelve months after the close of the taxable
year, will be considered distributions of income and gains of the taxable year
and will therefore count toward satisfaction of the Distribution Requirement.
In addition to satisfying the Distribution Requirement, a regulated
investment company must derive at least 90% of its gross income from dividends,
interest, certain payments with respect to securities loans, gains from the sale
or other disposition of stock or securities or foreign currencies (to the extent
such currency gains are directly related to the regulated investment company's
principal business of investing in stock or securities) and other income
(including but not limited to gains from options, futures or forward contracts)
derived with respect to its business of investing in such stock, securities or
currencies (the "Income Requirement").
In general, gain or loss recognized by the Fund on the disposition of
an asset will be a capital gain or loss. In addition, gain will be recognized as
a result of certain constructive sales, including short sales "against the box."
However, gain recognized on the disposition of a debt obligation purchased by
the Fund at a market discount (generally, at a price less than its principal
amount) will be treated as ordinary income to the extent of the portion of the
market discount which accrued during the period of time the Fund held the debt
obligation. In addition, under the rules of Code section 988, gain or loss
recognized on the disposition of a debt obligation denominated in a foreign
currency or an option with respect thereto (but only to the extent attributable
to changes in foreign currency exchange rates), and gain or loss recognized on
the disposition of a foreign currency forward contract, futures contract, option
or similar financial instrument, or of foreign currency itself, except for
regulated futures contracts or non-equity options subject to Code Section 1256
(unless the Fund elects otherwise), will generally be treated as ordinary income
or loss.
In general, for purposes of determining whether capital gain or loss
recognized by the Fund on the disposition of an asset is long-term or
short-term, the holding period of the asset may be affected if (1) the asset is
used to close a "short sale" (which includes for certain purposes the
acquisition of a put option) or is substantially identical to another asset so
used, (2) the asset is otherwise held by the Fund as part of a "straddle" (which
term generally excludes a situation where the asset is stock and the Fund grants
a qualified covered call option (which, among other things, must not be
deep-in-the-money) with respect thereto) or (3) the asset is stock and the Fund
grants an in-the-money qualified covered call option with respect thereto. In
addition, the Fund may be required to defer the recognition of a loss on the
disposition of an asset held as part of a straddle to the extent of any
unrecognized gain on the offsetting position. Any gain recognized by the Fund on
the lapse of, or any gain or loss recognized by the Fund from a closing
transaction with respect to, an option written by the Fund will be treated as a
short-term capital gain or loss.
Further, the Code also treats as ordinary income a portion of the
capital gain attributable to a transaction where substantially all of the return
realized is attributable to the time value of a Fund's net investment in the
transaction and: (1) the transaction consists of the acquisition of property by
the Fund and a contemporaneous contract to sell substantially identical property
in the future; (2) the transaction is a straddle within the meaning of section
1092 of the Code; (3) the transaction is one that was marketed or sold to the
Fund on the basis that it would have the economic characteristics of a loan but
the interest-like return would be taxed as capital gain; or (4) the transaction
is described as a conversion transaction in the Treasury Regulations. The amount
of the gain recharacterized generally will not exceed the amount of the interest
that would have accrued on the net investment for the relevant period at a yield
equal to 120% of the federal long-term, mid-term, or short-term rate, depending
upon the type of instrument at issue, reduced by an amount equal to: (1) prior
inclusions of ordinary income items from the conversion transaction and (2) the
capital interest on acquisition indebtedness under Code section 263(g). Built-in
losses will be preserved where the Fund has a built-in loss with respect to
property that becomes a part of a conversion transaction. No authority exists
that indicates that the converted character of the income will not be passed
through to the Fund's shareholders.
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Certain transactions that may be engaged in by the Fund (such as
regulated futures contracts, certain foreign currency 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
that year together with any other gain or loss that was previously recognized
upon the termination of Section 1256 contracts during the 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 Fund, 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 Fund that are not Section 1256
contracts.
The Fund may purchase securities of certain foreign investment funds or
trusts which constitute passive foreign investment companies ("PFICs") for
federal income tax purposes. If the Fund invests in a PFIC, it has three
separate options. First, it may elect to treat the PFIC as a qualifying electing
fund (a "QEF"), in which case it will each year have ordinary income equal to
its pro rata share of the PFIC's ordinary earnings for the year and long-term
capital gain equal to its pro rata share of the PFIC's net capital gain for the
year, regardless of whether the Fund receives distributions of any such ordinary
earnings or capital gains from the PFIC. Second, for tax years beginning after
December 31, 1997, the Fund may make a mark-to-market election with respect to
its PFIC stock. Pursuant to such an election, the Fund will include as ordinary
income any excess of the fair market value of such stock at the close of any
taxable year over its adjusted tax basis in the stock. If the adjusted tax basis
of the PFIC stock exceeds the fair market value of such stock at the end of a
given taxable year, such excess will be deductible as ordinary loss in the
amount equal to the lesser of the amount of such excess or the net
mark-to-market gains on the stock that the Fund included in income in previous
years. The Fund's holding period with respect to its PFIC stock subject to the
election will commence on the first day of the following taxable year. If the
Fund makes the mark-to-market election in the first taxable year it holds PFIC
stock, it will not incur the tax described below under the third option.
Finally, if the Fund does not elect to treat the PFIC as a QEF and does
not make a mark-to-market election, then, in general, (1) any gain recognized by
the Fund upon a sale or other disposition of its interest in the PFIC or any
"excess distribution" (as defined) received by the Fund from the PFIC will be
allocated ratably over the Fund's holding period in the PFIC stock, (2) the
portion of such gain or excess distribution so allocated to the year in which
the gain is recognized or the excess distribution is received shall be included
in the Fund's gross income for such year as ordinary income (and the
distribution of such portion by the Fund to shareholders will be taxable as an
ordinary income dividend, but such portion will not be subject to tax at the
Fund level), (3) the Fund shall be liable for tax on the portions of such gain
or excess distribution so allocated to prior years in an amount equal to, for
each such prior year, (i) the amount of gain or excess distribution allocated to
such prior year multiplied by the highest tax rate (individual or corporate, as
the case may be) in effect for such prior year, plus (ii) interest on the amount
determined under clause (i) for the period from the due date for filing a return
for such prior year until the date for filing a return for the year in which the
gain is recognized or the excess distribution is received, at the rates and
methods applicable to underpayments of tax for such period, and (4) the
distribution by the Fund to shareholders of the portions of such gain or excess
distribution so allocated to prior years (net of the tax payable by the Fund
thereon) will again be taxable to the shareholders as an ordinary income
dividend.
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 made a taxable year election for excise
tax purposes as discussed below) to treat all or any part of any net capital
loss, any net long-term capital loss or any net foreign currency loss
(including, to the extent provided in Treasury Regulations, losses recognized
pursuant to the PFIC mark-to-market election) incurred after October 31 as if it
had been incurred in the succeeding year.
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<PAGE>
In addition to satisfying the requirements described above, the Fund
must satisfy an asset diversification test in order to qualify as a regulated
investment company. Under this test, at the close of each quarter of the Fund's
taxable year, at least 50% of the value of the Fund's assets must consist of
cash and cash items, U.S. Government securities, securities of other regulated
investment companies, and securities of other issuers (as to each of which the
Fund has not invested more than 5% of the value of its total assets in
securities of such issuer and does not hold more than 10% of the outstanding
voting securities of such issuer), and no more than 25% of the value of its
total assets may be invested in the securities of any one issuer (other than
U.S. Government securities and securities of other regulated investment
companies), or in two or more issuers which the Fund controls and which are
engaged in the same or similar trades or businesses. Generally, an option (a
call or a 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 Fund does not qualify as a regulated
investment company, all of its taxable income (including its net capital gain)
will be subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and such distributions will be taxable to the
shareholders as ordinary dividends to the extent of the Fund's current and
accumulated earnings and profits. Such distributions may be eligible for the
dividends-received deduction in the case of corporate shareholders.
Excise Tax on Regulated Investment Companies
A 4% non-deductible excise tax is imposed on a regulated investment
company that fails to distribute in each calendar year an amount equal to 98% of
its ordinary taxable income for the calendar year and 98% of its capital gain
net income for the one-year period ended on October 31 of such calendar year
(or, at the election of a regulated investment company having a taxable year
ending November 30 or December 31, for its taxable year (a "taxable year
election")). The balance of such income must be distributed during the next
calendar year. For the foregoing purposes, a regulated investment company is
treated as having distributed any amount on which it is subject to income tax
for any taxable year ending in such calendar year.
For purposes of the excise tax, a regulated investment company shall:
(1) reduce its capital gain net income (but not below its net capital gain) by
the amount of any net ordinary loss for the calendar year; and (2) exclude
foreign currency gains and losses and ordinary gains or losses arising as a
result of a PFIC mark-to-market election (or upon an actual disposition of the
PFIC stock subject to such election) incurred after October 31 of any year (or
after the end of its taxable year if it has made a taxable year election) in
determining the amount of ordinary taxable income for the current calendar year
(and, instead, include such gains and losses in determining ordinary taxable
income for the succeeding calendar year).
The Fund intends to make sufficient distributions or deemed
distributions of its ordinary taxable income and capital gain net income prior
to the end of each calendar year to avoid liability for the excise tax. However,
investors should note that the Fund may in certain circumstances be required to
liquidate portfolio investments to make sufficient distributions to avoid excise
tax liability.
Fund Distributions
The Fund anticipates distributing substantially all of its investment
company taxable income for each taxable year. Such distributions will be taxable
to shareholders as ordinary income and treated as dividends for federal income
tax purposes, but they will qualify for the 70% dividends-received deduction for
corporate shareholders only to the extent discussed below.
The Fund may either retain or distribute to shareholders its net
capital gain for each taxable year. The Fund currently intends to distribute any
such amounts. Net capital gain that is distributed and designated as a capital
gain dividend will be taxable to shareholders as long-term capital gain,
regardless of the length of time a shareholder has held his shares or whether
such gain was recognized by the Fund prior to the date on which the shareholder
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acquired his shares. The Code provides, however, that under certain conditions
only 50% (58% for alternative minimum tax purposes) of the capital gain
recognized upon the Fund's disposition of domestic "small business" stock will
be subject to tax.
Conversely, if the Fund elects to retain its net capital gain, the Fund
will be taxed thereon (except to the extent of any available capital loss
carryovers) at the 35% corporate tax rate. If the Fund elects to retain its net
capital gain, it is expected that the Fund also will elect to have shareholders
of record on the last day of its taxable year treated as if each such
shareholder received a distribution of his pro rata share of such gain, with the
result that each shareholder will be required to report his pro rata share of
such gain on his tax return as long-term capital gain, will receive a refundable
tax credit for his pro rata share of tax paid by the Fund on the gain, and will
increase the tax basis for his shares by an amount equal to the deemed
distribution less the tax credit.
Ordinary income dividends paid by the Fund with respect to a taxable
year will qualify for the 70% dividends-received deduction generally available
to corporations (other than corporations, such as S corporations, which are not
eligible for the deduction because of their special characteristics and other
than for purposes of special taxes such as the accumulated earnings tax and the
personal holding company tax) to the extent of the amount of qualifying
dividends received by the Fund from domestic corporations for the taxable year.
Generally, a dividend received by the Fund will not be treated as a qualifying
dividend (1) if it has been received with respect to any share of stock that the
Fund has held for less than 46 days (91 days in the case of certain preferred
stock), excluding for this purpose under the rules of Code section 246(c)(3) and
(4) any period during which the Fund has an option to sell, is under a
contractual obligation to sell, has made and not closed a short sale of, is the
grantor of a deep-in-the-money or otherwise nonqualified option to buy, or has
otherwise diminished its risk of loss by holding other positions with respect
to, such (or substantially identical) stock; (2) to the extent that the Fund is
under an obligation (pursuant to a short sale or otherwise) to make related
payments with respect to positions in substantially similar or related property;
or (3) to the extent that the stock on which the dividend is paid is treated as
debt-financed under the rules of Code section 246A. The 46-day holding period
must be satisfied during the 90-day period beginning 45 days prior to each
applicable ex-dividend date; the 91-day holding period must be satisfied during
the 180-day period beginning 90 days before each applicable ex-dividend date.
Moreover, the dividends-received deduction for a corporate shareholder may be
disallowed or reduced (1) if the corporate shareholder fails to satisfy the
foregoing requirements with respect to its shares of the Fund or (2) by
application of Code section 246(b) which in general limits the
dividends-received deduction to 70% of the shareholder's taxable income
(determined without regard to the dividends-received deduction and certain other
items).
Alternative minimum tax ("AMT") is imposed in addition to, but only to
the extent it exceeds, the regular tax and is computed at a maximum marginal
rate of 28% for noncorporate taxpayers and 20% for corporate taxpayers on the
excess of the taxpayer's alternative minimum taxable income ("AMTI") over an
exemption amount. For purposes of the corporate AMT, the corporate
dividends-received deduction is not itself an item of tax preference that must
be added back to taxable income or is otherwise disallowed in determining a
corporation's AMTI. However, corporate shareholders generally will be required
to take the full amount of any dividend received from the Fund into account
(without a dividends-received deduction) in determining their adjusted current
earnings, which are used in computing an additional corporate preference item
(i.e., 75% of the excess of a corporate taxpayer's adjusted current earnings
over its AMTI (determined without regard to this item and the AMT net operating
loss deduction)) includable in AMTI.
Investment income that may be received by the Fund from sources within
foreign countries may be subject to foreign taxes withheld at the source. The
United States has entered into tax treaties with many foreign countries which
entitle the Fund to a reduced rate of, or exemption from, taxes on such income.
It is impossible to determine the effective rate of foreign tax in advance since
the amount of the Fund's assets to be invested in various countries is not
known. If more than 50% of the value of the Fund's total assets at the close of
its taxable year consist of the stock or securities of foreign corporations, the
Fund may elect to "pass through" to the Fund's shareholders the amount of
foreign taxes paid by the Fund. If the Fund so elects, each shareholder would be
required to include in
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gross income, even though not actually received, his pro rata share of the
foreign taxes paid by the Fund, but would be treated as having paid his pro rata
share of such foreign taxes and would therefore be allowed to either deduct such
amount in computing taxable income or use such amount (subject to various Code
limitations) as a foreign tax credit against federal income tax (but not both).
For purposes of the foreign tax credit limitation rules of the Code, each
shareholder would treat as foreign source income his pro rata share of such
foreign taxes plus the portion of dividends received from the Fund representing
income derived from foreign sources. No deduction for foreign taxes could be
claimed by an individual shareholder who does not itemize deductions. Each
shareholder should consult his own tax adviser regarding the potential
application of foreign tax credits.
Distributions by the Fund that do not constitute ordinary income
dividends or capital gain dividends will be treated as a return of capital to
the extent of (and in reduction of) the shareholder's tax basis in his shares;
any excess will be treated as gain realized from a sale of the shares, as
discussed below.
Distributions by the Fund will be treated in the manner described above
regardless of whether such distributions are paid in cash or reinvested in
additional shares of the Fund (or of another fund). Shareholders receiving a
distribution in the form of additional shares will be treated as receiving a
distribution in an amount equal to the fair market value of the shares received,
determined as of the reinvestment date. In addition, if the net asset value at
the time a shareholder purchases shares of the Fund reflects realized but
undistributed income or gain or unrealized appreciation in the value of assets
held by the Fund distributions of such amounts to the shareholder will be
taxable in the manner described above, although economically they constitute a
return of capital to the shareholder.
Ordinarily, shareholders are required to take distributions by the Fund
into account in the year in which they 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 month will be deemed to have been received by the
shareholders (and made by the Fund) on December 31 of such calendar year
provided such dividends are actually paid in January of the following year.
Shareholders will be advised annually as to the U.S. federal income tax
consequences of distributions made (or deemed made) during the year.
The Fund will be required in certain cases to withhold and remit to the
U.S. Treasury 31% of distributions and the proceeds of redemption of shares,
paid to any shareholder who (1) has failed to provide a correct taxpayer
identification number, (2) is subject to backup withholding for failure properly
to report the receipt of interest or dividend income, or (3) failed to certify
to the Fund that it is not subject to backup withholding or that it is an
"exempt recipient" (such as a corporation).
Sale or Redemption of Shares
A shareholder will recognize gain or loss on a sale or redemption of
shares of the Fund in an amount equal to the difference between the proceeds of
the sale or redemption and the shareholder's adjusted tax basis in the shares.
All or a portion of any loss so recognized may be disallowed if the shareholder
purchases other shares of the Fund within 30 days before or after the sale or
redemption. In general, any gain or loss arising from (or treated as arising
from) the sale or redemption of shares of the Fund will be considered capital
gain or loss and will be long-term capital gain or loss if the shares were held
for longer than one year. However, any capital loss arising from the sale or
redemption of shares held for six months or less will be treated as a long-term
capital loss to the extent of the amount of capital gain dividends received on
such shares. For this purpose, the special holding period rules of Code Section
246(c)(3) and (4) generally will apply in determining the holding period of
shares. Capital losses in any year are deductible only to the extent of capital
gains plus, in the case of a noncorporate taxpayer, $3,000 of ordinary income.
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Foreign Shareholders
Taxation of a shareholder who, as to the United States, is a
nonresident alien individual, foreign trust or estate, foreign corporation, or
foreign partnership ("foreign shareholder"), depends on whether the income from
the Fund is "effectively connected" with a U.S. trade or business carried on by
such shareholder.
If the income from the Fund is not effectively connected with a U.S.
trade or business carried on by a foreign shareholder, ordinary income dividends
paid to a foreign shareholder will be subject to U.S. withholding tax at the
rate of 30% (or lower applicable treaty rate) upon the gross amount of the
dividend. Furthermore, such foreign shareholder may be subject to U.S.
withholding tax at the rate of 30% (or lower applicable treaty rate) on the
gross income resulting from a Fund's election to treat any foreign taxes paid by
it as paid by its shareholders, but may not be allowed a deduction against this
gross income or a credit against this U.S. withholding tax for the foreign
shareholder's pro rata share of such foreign taxes which it is treated as having
paid. Such a foreign shareholder would generally be exempt from U.S. federal
income tax on gains realized on the sale of shares of a Fund, capital gain
dividends and amounts retained by the Fund that are designated as undistributed
capital gains.
If the income from the Fund is effectively connected with a U.S. trade
or business carried on by a foreign shareholder, then ordinary income and
capital gain dividends, and any gains realized upon a sale of shares of the Fund
will be subject to U.S. federal income tax at the rates applicable to U.S.
taxpayers.
In the case of a noncorporate foreign shareholder, the Fund may be
required to withhold U.S. federal income tax at a rate of 31% on distributions
that are otherwise exempt from withholding (or subject to withholding at a
reduced treaty rate) unless the shareholder furnishes the Fund 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 Fund,
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.
Rules of state and local taxation of ordinary income and capital gain
dividends from regulated investment companies may differ from the rules for U.S.
federal income taxation described above. Shareholders are urged to consult their
tax advisers as to the consequences of these and other state and local tax rules
affecting an investment in the Fund.
PERFORMANCE INFORMATION
For purposes of quoting and comparing the performance of the Fund to
that of other mutual funds and to stock or other relevant indices in
advertisements or in reports to shareholders, performance will be stated both in
terms of total return and in terms of yield. The total return basis combines
principal and dividend income changes for the periods shown. Principal changes
are based on the difference between the beginning and closing net asset values
for the period and assume reinvestment of dividends and distributions paid by
the Fund. Dividends and distributions are comprised of net investment income and
net realized capital gains. Under the rules of the Commission, funds advertising
performance must include total return quotes calculated according to the
following formula:
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P(1 + T)^n = ERV
Where P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years (1, 5 or 10)
ERV = ending redeemable value of a hypothetical
$1,000 payment made at the beginning of the 1, 5 or
10 year periods or at the end of the 1, 5 or 10 year
periods (or fractional portion thereof)
In calculating the ending redeemable value, all dividends and
distributions by the Fund are assumed to have been reinvested at net asset value
as described in the prospectus on the reinvestment dates during the period.
Total return, or "T" in the formula above, is computed by finding the average
annual compounded rates of return over the 1, 5 and 10 year periods (or
fractional portion thereof) that would equate the initial amount invested to the
ending redeemable value.
The Fund may also from time to time include in such advertising a total
return figure that is not calculated according to the formula set forth above in
order to compare more accurately the Fund's performance with other measures of
investment return. For example, in comparing the Fund's total return with data
published by Lipper Analytical Services, Inc. or similar independent services or
financial publications, the Fund calculates its aggregate total return for the
specified periods of time by assuming the reinvestment of each dividend or other
distribution at net asset value on the reinvestment date. Percentage increases
are determined by subtracting the initial net asset value of the investment from
the ending net asset value and by dividing the remainder by the beginning net
asset value. Such alternative total return information will be given no greater
prominence in such advertising than the information prescribed under the
Commission's rules.
In addition to the total return quotations discussed above, the Fund
may advertise its yield based on a 30day (or one month) period ended on the date
of the most recent balance sheet included in the Fund's Post-Effective Amendment
to its Registration Statement, computed by dividing the net investment income
per share earned during the period by the maximum offering price per share on
the last day of the period, according to the following formula:
ab
YIELD = 2[(( +1)^61]
cd
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends.
d = the maximum offering price per share on the last day
of the period.
Under this formula, interest earned on debt obligations for purposes of
"a" above, is calculated by (1) computing the yield to maturity of each
obligation held by the Fund based on the market value of the obligation
(including actual accrued interest) at the close of business on the last day of
each month, or, with respect to obligations purchased during the month, the
purchase price (plus actual accrued interest), (2) dividing that figure by 360
and multiplying the quotient by the market value of the obligation (including
actual accrued interest as referred to above) to determine the interest income
on the obligation for each day of the subsequent month that the obligation is in
the Fund's portfolio (assuming a month of 30 days) and (3) computing the total
of the interest earned on all debt obligations and all dividends accrued on all
equity securities during the 30day or one month period. In computing dividends
accrued, dividend income is recognized by accruing 1/360 of the stated dividend
rate of a security each day that the security is in the Fund's portfolio. For
purposes of "b" above, Rule 12b1 expenses are
-17-
<PAGE>
included among the expenses accrued for the period. Undeclared earned income,
computed in accordance with generally accepted accounting principles, may be
subtracted from the maximum offering price calculation required pursuant to "d"
above.
Any quotation of performance stated in terms of yield will be given no
greater prominence than the information prescribed under the SEC's rules. In
addition, all advertisements containing performance data of any kind will
include a legend disclosing that such performance data represents past
performance and that the investment return and principal value of an investment
will fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost.
-18-
<PAGE>
PART C. OTHER INFORMATION
ITEM 23. EXHIBITS
(a)(1) Certificate of Trust. (1)
(a)(2) Trust Instrument. (2)
(b) By-laws. (3) filed as Exhibit 99.2B to Pre-effective
Amendment No. 2 to Registrant's Registration Statement on
Form N-2 filed electronically on May 29, 1997 (accession
number 0000950148-97-001593 and incorporated herein by
reference.
(c) None.
(d) Investment Advisory Agreement between Registrant and
Dessauer and McIntyre Asset Management, Inc. is filed
herewith.
(e) Underwriting Agreement between the Registrant and Wheat
First Securities, Inc. filed as Exhibit 99.2H to
Pre-Effective Amendment No. 2 to Registrant's Registration
Statement on Form N-2 filed electronically on May 29, 1997
(accession number 0000950148-97-001593) and is incorporated
herein by reference.(4)
(f) None.
(g) Form of Custodian Agreement between Registrant and Investors
Bank & Trust Company. (5) filed as Exhibit 99.2A to
Pre-Effective Amendment No. 2 to Registrant's Registration
Statement on Form N-2 filed electronically on May 29, 1997
(accession number 0000950148-97-001593) and incorporated
herein by reference.
(h)(1) Form of Registrar, Transfer Agency and Service Agreement
by and between the Registrant and State Street Bank and
Trust Company. Filed as Exhibit EX-99.2K(2) to Pre-Effective
Amendment No. 2 to Registrant's Registration Statement on
Form N-2 filed electronically on May 29, 1997 (accession
number 000050148-97-001593) and incorporated herein by
reference.
(h)(2) Form of Administration Agreement by and between Registrant
and Investors Company Administration Corp. filed as Exhibit
99.2J to Pre-Effective Amendment No. 2 to Registrant's
Registration Statement on Form N-2 filed electronically on
May 29, 1997 (accession number 000050148-97-001593).
C-1
<PAGE>
(i)(1) Opinion of Kramer, Levin, Naftalis & Frankel as to
legality of securities being registered to be filed by
amendment.
(i)(2) Opinion of Morris, Nichols, Arsht & Tunnell to be filed by
amendment.
(j)(1) Consent of Kramer, Levin, Naftalis & Frankel, Counsel
for the Registrant, is filed herewith.
(j)(2) Consent of Ernst & Young LLP, Independent Auditors for the
Registrant, is filed herewith.
(k) Annual Report for the fiscal year ended March 31, 1998 is
incorporated by reference from the Rule 30D filing made by
the Registrant on May 27, 1998 (accession number
0000927356-98 000907).
(l) Agreement between the Registrant and Dessauer Asset
Management, Inc. dated May 23, 1997 in consideration for
providing the initial capital is filed herewith.
(m) None
(n) None
(o) None
(1) Filed as Exhibit 99.2A to Registrant's Registration
Statement on Form N-2 filed electronically on July 3, 1996,
(accession number 0000922423-96-000307) and incorporated
herein by reference.
(2) Filed as an Exhibit to Pre-Effective Amendment No. 2 to
Registrant's Registration Statement on Form N-2 filed
electronically on May 29, 1997, (accession number
0000950148-97-000153) and incorporated herein by reference.
(3) Filed as an Exhibit to Pre-Effective Amendment No. 2 to
Registrant's Registration Statement on Form N-2 filed
electronically on May 29, 1997, (accession number
0000950148-97-000153) and incorporated herein by reference.
(4) Filed as an Exhibit to Pre-Effective Amendment No. 2 to
Registrant's Registration Statement on Form N-2 filed
electronically on May 29, 1997, accession number
0000950148-97-000153 and incorporated herein by reference.
(5) Filed as an Exhibit to Pre-Effective Amendment No. 2 to
Registrant's Registration Statement on Form N-2 filed
electronically on May 29, 1997, accession number
0000950148-98-000153 and incorporated herein by reference.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None.
C-2
<PAGE>
ITEM 25. INDEMNIFICATION
(a) "Subject to the exceptions and limitations contained in Subsection
10.02(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:
(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 Subsection (a) of
C-3
<PAGE>
this Section 10.02 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 under this
Section 10.02; 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 under this Section 10.02."
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to trustees, officers, and controlling
persons or Registrant pursuant to the foregoing provisions, or
otherwise, Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Investment Company Act of 1940, as
amended, and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment
by Registrant of expenses incurred or paid by a trustee, officer, or
controlling person of Registrant in the successful defense of any
action, suit, or proceeding) is asserted by such trustee, officer, or
controlling person in connection with the securities being
registered, Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Dessauer & McIntyre Asset Management, Inc. provides management services
to the Registrant. To the best of the Registrant's knowledge, no director or
officer has held at any time during the past two fiscal years or been engaged
for his own account or in the capacity of director, officer, employee, partner
or trustee in any other business, profession, vocation or employment of a
substantial nature.
ITEM 27. PRINCIPAL UNDERWRITERS
(a) First Fund Distributors, Inc., the Registrant's principal
underwriter, also acts as the principal underwriter for the following investment
companies:
(1) Jurika & Voyles Fund Group;
(2) RNC Mutual Fund Group, Inc.;
(3) PIC Investment Trust;
(4) Hotchkis & Wiley Funds;
(5) Masters' Select Equity Fund;
C-4
<PAGE>
(6) O'Shaughnessy Funds Inc.;
(7) Professionally Managed Portfolios;
- Avondale Total Return Fund
- Osterweis Fund
- Perkins Opportunity Fund
- Pro Conscience Women's Equity Mutual Fund
- Academy Value Fund
- Trent Equity Fund
- Leonetti Balanced Fund
- Lighthouse Growth Fund
- U.S. Global Leaders Growth Fund
- Boston Managed Growth Fund
- Harris Bretall & Sullivan & Smith Growth Fund
- Pzena Growth Fund
- Titan Investment Trust
(8) Rainier Investment Management Mutual Funds;
(9) Kayne Anderson Mutual Funds;
(10) The Purisima Total Return Fund;
(11) Advisor's Series Trust;
- American Trust Allegiance Fund
- Information Tech 100 Mutual Fund
- Kaminski Poland Fund
- Ridgeway Helms Millenium Fund
(b) The following information is furnished with respect to the officers
and directors of First Fund Distributors, Inc., Registrant's principal
underwriter:
Name and Principal Position and Offices with Position and Offices
Business Address Principal Underwriter with Registrant
- ---------------- --------------------- ---------------
Robert H. Wadsworth President/Treasurer Assistant Treasurer
4455 East Camelback Road
Suite 261E
Phoenix, AZ 85014
Steven J. Paggioli Vice President/Secretary Secretary
479 West 22nd Street
New York, NY 10011
Eric M. Banhazl Vice President Treasurer
2020 East Financial Way
Suite 100
Glendora, CA 91741
(c) not applicable
C-5
<PAGE>
ITEM 28. 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, 2020 East Financial
Way, Suite 100, Glendora, CA 91741, except for those maintained by the Funds'
Custodian.
ITEM 29. MANAGEMENT SERVICES
Not applicable.
ITEM 30. UNDERTAKINGS
(1) Registrant undertakes to furnish each person to whom a prospectus
is delivered, a copy of the Fund's latest annual report to shareholders which
will include the information required by Item 5A, upon request and without
charge.
(2) Registrant undertakes to call a meeting of shareholders for the
purpose of voting upon the question of removal of a trustee or trustees if
requested to do so by the holders of at least 10% of the Registrant's
outstanding voting securities, and to assist in communications with other
shareholders as required by Section 16(c) of the 1940 Act.
C-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, and the State of New York on this 18th day
of September, 1998.
DESSAUER GLOBAL EQUITY FUND
By: /s/ Thomas P. McIntyre
--------------------------
President
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
Signature Title Date
/s/ John P. Dessauer Treasurer September 18, 1998
- --------------------------------- ------------------
John P. Dessauer
/s/ Thomas P. McIntyre Trustee September 18, 1998
- --------------------------------- ------------------
Thomas P. McIntyre
* /s/ Max A. Fischer Trustee September 18, 1998
- --------------------------------- ------------------
Max A. Fischer
* /s/ Ingrid R. Hendershot Trustee September 18, 1998
- --------------------------------- ------------------
Ingrid R. Hendershot
* /s/ Kevin Melich Trustee September 18, 1998
- ----------------------------- ------------------
Kevin Melich.
* /s/ J. Brooks Reece, Jr. Trustee September 18, 1998
- ------------------------------ ------------------
J. Brooks Reece, Jr.
* /s/ Susan J. Penry-Williams
- -----------------------------
By Susan J. Penry-Williams
Attorney-in-Fact
C-7
<PAGE>
EXHIBIT INDEX
EX-99.SharehldrSrvAg Shareholder Servicing Agreement
EX-99.AdvisoryAgrmnt Advisory Agreement
EX-99.Counselconsent Consent of Kramer, Levin, Naftalis
& Frankel, Counsel for the Registrant
EX-99.Auditorconsent Consent of Ernst & Young LLP,
Independent Auditors for the Registrant
C-8
THE DESSAUER GLOBAL EQUITY FUND
SHAREHOLDER SERVICING PLAN
This Shareholder Servicing Plan (the "Plan") is adopted by The Dessauer Global
Equity Fund, a business trust organized under the laws of Delaware (the "Fund"),
subject to the following terms and conditions:
SECTION 1. ANNUAL FEES.
Shareholder Services Fee. The Fund may pay to financial institutions, including
Dessauer & McIntyre Asset Management, Inc. (the "Adviser"), or other persons
that provide certain services to the Fund (each, a "Service Provider"), a
shareholder services fee under the Plan at the annual rate not to exceed 0.25%
of the average daily net assets of the Fund for which the Service Provider
provides services (the "Services Fee").
Adjustment to Fees. The Fund may pay a Services Fee to the Service Provider at a
lesser rate than the fees specified in Section 1 hereof as agreed upon by the
Board of Trustees and each Service Provider and approved in the manner specified
in Section 3 of this Plan.
Payment of Fees. The Services Fees will be calculated weekly and paid monthly by
the Fund at the annual rates indicated above.
SECTION 2. EXPENSES COVERED BY THE PLAN.
Services Fees may be used by the Service Provider for payments to financial
institutions, including the Adviser, and persons who provide administrative and
support services to their customers who may from time to time beneficially own
shares, which may include: (i) establishing and maintaining accounts and records
relating to shareholders; (ii) processing dividend and distribution payments
from the Fund on behalf of shareholders; (iii) providing information
periodically to shareholders showing their positions in shares and integrating
such statements with those of other transactions and balances in shareholders'
other accounts serviced by such financial institution; (iv) arranging for bank
wires; (v) responding to shareholder inquiries relating to the services
performed; (vi) responding to routine inquiries from shareholders concerning
their investments; (vii) providing subaccounting with respect to shares
beneficially owned by shareholders, or the information to the Fund necessary for
subaccounting; (viii) if required by law, forwarding shareholder communications
from the Fund (such as proxies, shareholder reports, annual and semi-annual
financial statements and dividend, distribution and tax notices) to
shareholders; (ix) assisting in processing purchase, exchange and redemption
requests from shareholders and in placing such orders with service contractors;
(x) assisting shareholders in changing dividend options, account designations
and addresses; (xi) providing shareholders with a service that invests the
assets of their accounts in shares pursuant to specific or pre-authorized
instructions; and (xii) providing such other similar services as the Fund may
reasonably request to the extent the Service Provider is permitted to do so
under applicable statutes, rules and regulations.
<PAGE>
SECTION 3. APPROVAL OF TRUSTEES.
Neither the Plan nor any related agreements will take effect until
approved by a majority of the Board of Trustees of the Trust cast in person at a
meeting called for the purpose of voting on the Plan.
SECTION 4. CONTINUANCE OF THE PLAN.
The Plan will continue in effect until two years from the date of
effectiveness as it pertains to the Fund, and thereafter for successive
twelve-month periods; provided, however, that such continuance is specifically
approved at least annually by the Trustees of the Fund.
SECTION 5. TERMINATION.
The Plan may be terminated at any time (i) by the Fund without the
payment of any penalty, by the vote of a majority of the outstanding voting
securities of the Fund or (ii) by a vote of the Trustees.
SECTION 6. AMENDMENTS.
No material amendment to the Plan may be made unless approved by the
Trust's Board of Trustees in the manner described in Section 3 above.
SECTION 7. LIMIT OF LIABILITY.
The obligations of the Fund under this Plan, if any, shall not be
binding upon the Trustees individually or upon shareholders of the Fund
individually but shall be binding only upon the assets and property of the Fund.
SECTION 8. MEANINGS OF CERTAIN TERMS.
As used in the Plan, the term "majority of the outstanding voting
securities" will be deemed to have the same meaning that term has under the
Investment Company Act of 1940, as amended, by the Securities and Exchange
Commission.
Approved: September _, 1998
2
<PAGE>
SHAREHOLDER SERVICE AGREEMENT
Dessauer Global Equity Fund
5 Bay State Court
P.O. Box 1689
Orleans, Masschusetts 02653
Gentlemen:
We desire to enter into an Agreement with the Dessauer Global Equity
Fund (the "Fund") on behalf of the Fund to provide certain shareholder services
and administration. Subject to the Fund's acceptance of this Agreement, the
terms and conditions of this Agreement, shall be as follows:
1. We shall provide for certain investors who purchase shares of the
Fund as a result of their relationship to us ("Qualified Accounts") shareholder
and administrative services. Such shareholder and administrative services may
include, without limitation, some or all of the following: (i) answering
inquiries regarding the Fund; (ii) assistance in changing dividend options,
account designations and addresses; (iii) assistance in processing purchase and
redemption transactions; and (iv) such other information and services as the
Fund reasonably may request, to the extent we are permitted by applicable
statute, rule or regulation to provide such information or services.
2. We agree to make available to the Fund, upon the Fund's request,
such information relating to our clients who are beneficial owners of Fund
shares and their transactions in Fund shares as may be required by applicable
laws and regulations or as may be reasonably requested by the Fund.
3. We shall provide to the Fund copies of the lists of our clients or
members of our organization, if any, and make available to the Fund any
publications and other facilities of our organization for the placement of
advertisements or promotional materials and sending information regarding the
Fund, to enable the Fund to solicit for sale and to sell shares to such clients
or members.
4. We shall provide such facilities and personnel (which may be all or
any part of the facilities currently used in our business, or all or any
personnel employed by us) as is necessary or beneficial for providing
information and services to shareholders maintaining Qualified Accounts, and to
assist the Fund in servicing the Accounts of such shareholders.
5. Neither we nor any of our employees or agents are authorized to make
any representation concerning Fund shares except those contained in the
then-current Fund Prospectus, copies of which will be supplied by the Fund to
us; and we shall have no authority to act as agent for the Fund.
<PAGE>
6. In consideration of the subtransfer agency services described
herein, we shall be entitled to receive from the Fund fees as agreed to from
time to time and as set forth on the attached Schedule A hereto at an annual
rate equal to .25% of average net daily assets held in the Qualified Accounts
maintained by us.
7. The Fund reserves the right, at the Fund's discretion and without
notice, to suspend the sale of shares or withdraw the sale of shares of the
Fund.
8. This Agreement may be terminated at any time (without payment of any
penalty) by a majority of the Trustees of the Fund (on not more than 60 days'
written notice to us at our principal place of business). We, on 60 days'
written notice addressed to the Fund at its principal place of business, may
terminate this Agreement. The Fund may also terminate this Agreement for cause
on violation by us of any of the provisions of this Agreement, said termination
to become effective on the date of mailing notice to us of such termination. The
Fund's failure to terminate for any cause shall not constitute a waiver of its
right to terminate at a later date for any such cause.
9. A copy of the Certificate of Trust is on file with the Secretary of
the State of Delaware, and notice is hereby given that this instrument is
executed on behalf of the Trustees as trustees and not individually and that the
obligations of this instrument are not binding upon any of the Trustees or
shareholders individually but are binding only upon the assets and property of
the Fund.
10. All communications to the Fund shall be sent to the Fund at the
address set forth above. Any notice to us shall be duly given if mailed or
telegraphed to us at the address set forth below.
11. This Agreement shall become effective as of the date when it is
executed and dated by the Fund below. This Agreement and all the rights and
obligations of the parties hereunder shall be governed by and construed under
the laws of the State of New York.
ACCEPTED: (Service Provider Firm Name)
(Address)
By:
Name:
Title: (City) (State) Zip Code)
Dated: By:
Name:
Title:
2
<PAGE>
SCHEDULE A
Service Provider Shareholder Service Fee
_____ basis points on
Qualified Accounts
3
EXHIBIT A
INVESTMENT ADVISORY AGREEMENT
BETWEEN
THE DESSAUER GLOBAL EQUITY FUND
AND
DESSAUER & MCINTYRE ASSET MANAGEMENT, INC.
INVESTMENT ADVISORY AGREEMENT, dated as of ________, 1998, by and
between THE DESSAUER GLOBAL EQUITY FUND, a Delaware business trust (the "Fund"),
and DESSAUER & MCINTYRE ASSET MANAGEMENT, INC. ( "Dessauer & McIntyre").
W I T N E S S E T H
WHEREAS, the Fund is engaged in business as a closed-end investment
company registered under the Investment Company Act of 1940 (collectively with
the rules and regulations promulgated thereunder, the "Act"); and
WHEREAS, Dessauer & McIntyre is an investment adviser under the
Investment Advisers Act of 1940, as amended, and engages in the business of
acting as an investment adviser; and
WHEREAS, the Fund wishes to engage Dessauer & McIntyre to provide
certain investment advisory services for the Fund, and Dessauer & McIntyre is
willing to provide such services for the Fund on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, it is hereby agreed by and between the parties hereto as
follows:
I. Appointment.
Dessauer & McIntyre agrees, all as more fully set forth herein, to act
as investment adviser to the Fund with respect to the investment of its assets
and to supervise and arrange the purchase of securities for and the sale of
securities held in the portfolio of the Fund.
II. Duties and Obligations of Dessauer & McIntyre With Respect to the
Investment of Assets of the Fund.
<PAGE>
(a) Subject to the succeeding provisions of this section and subject to
the direction and control of the Board of Trustees of the Fund, Dessauer &
McIntyre shall:
(i) monitor continuously the investment program of the Fund and
the composition of its portfolio;
(ii) determine what securities shall be purchased or sold for the
portfolio of the Fund;
(iii)arrange for the purchase and the sale of securities held in
the portfolio of the Fund;
(iv) provide information to the Board of Trustees regarding the
portfolio of the Fund; and
(v) supervise, together with the Administrator, the operations
of the Fund.
(b) Any services furnished by Dessauer & McIntyre under this section
shall at all times conform to, and be in accordance with, any requirements
imposed by:
(i) the provisions of the Act;
(ii) any other applicable provisions of state and Federal law;
(iii)the provisions of the Fund's Declaration of Trust and
By-Laws, as amended from time to time;
(iv) any policies and determinations of the Board of Trustees of
the Fund; and
(v) the fundamental policies of the Fund, as reflected in its
Registration Statement under the Act, as amended from time
to time.
(c) Dessauer & McIntyre shall give the Fund the benefit of its best
judgment and effort in rendering services hereunder, and in connection therewith
Dessauer & McIntyre shall not be liable to the Fund or its security holders for
any error of judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in the execution of portfolio transactions
for the Fund, except for wilful misfeasance, bad faith or gross negligence in
the performance of its duties, or by reason of reckless disregard of its
obligations and duties hereunder. As used in this subsection (c), the term
"Dessauer & McIntyre" shall include board members, officers and employees of
Dessauer & McIntyre as well as the entity referred to as "Dessauer & McIntyre"
itself.
11
<PAGE>
(d) Nothing in this Agreement shall prevent Dessauer & McIntyre or any
affiliated person (as defined in the Act) of Dessauer & McIntyre from acting as
investment adviser or manager for any other person, firm or corporation
(including other investment companies) and shall not in any way limit or
restrict Dessauer & McIntyre or any such affiliated person from buying, selling
or trading any securities for its or their own accounts or for the accounts of
others for whom it or they may be acting; provided, however, that Dessauer &
McIntyre expressly represents that it will undertake no activities which, in its
judgment, will adversely affect the performance of its obligations to the Fund
under this Agreement. Dessauer & McIntyre agrees that it will not deal with
itself, or with the Trustees of the Fund or the Fund's principal underwriter or
distributor, as principals in making purchases or sales of securities or other
property for the account of the Fund, except as permitted by the Act, and will
comply with all other provisions of the Fund's Declaration of Trust and By-Laws
and the then-current prospectus and statement of additional information
applicable to the Fund relative to Dessauer & McIntyre and its board members and
officers.
(e) The Fund will supply Dessauer & McIntyre with certified copies of
the following documents: (i) the Fund's Declaration of Trust and By-Laws, as
amended; (ii) resolutions of the Fund's Board of Trustees and shareholders
authorizing the appointment of Dessauer & McIntyre and approving this Agreement;
(iii) the Fund's Registration Statement, as filed with the Securities and
Exchange Commission; and (iv) the Fund's most recent prospectus and statement of
additional information. The Fund will furnish Dessauer & McIntyre promptly with
copies of all amendments or supplements to the foregoing, if any, and all
documents, notices and reports filed with the Securities and Exchange
Commission.
(f) The Fund will supply, or cause its custodian bank to supply, to
Dessauer & McIntyre such financial information as is necessary or desirable for
the functions of Dessauer & McIntyre hereunder.
III. Broker-Dealer Relationships.
Dessauer & McIntyre is responsible for decisions to buy and sell
securities for the portfolio of the Fund, broker-dealer selection and
negotiation of its brokerage commission rates. Dessauer & McIntyre's primary
consideration in effecting a security transaction will be execution at the most
favorable price. The Fund understands that many of the Fund's portfolio
transactions will be transacted with primary market makers acting as principal
on a net basis, with no brokerage commissions being paid by the Fund. Such
principal transactions may, however, result in a profit to the market makers. In
certain instances, Dessauer & McIntyre may make purchases of underwritten issues
at prices which include underwriting fees. In selecting a broker or dealer to
execute each particular transaction, Dessauer & McIntyre will take the following
into consideration: the best price available; the reliability, integrity and
financial condition of the broker or dealer; the size of and difficulty in
executing the order; and the value of the expected contribution of the broker or
dealer to the investment performance of the Fund on a continuing basis.
Accordingly, the price to the Fund in any transaction may be less favorable than
that available from another broker or dealer if the difference is reasonably
justified by other aspects of the portfolio execution services offered. Subject
to such policies as the Board of Trustees may determine, Dessauer & McIntyre
shall not be deemed to have
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acted unlawfully or to have breached any duty created by this Agreement or
otherwise solely by reason of its having caused the Fund to pay a broker or
dealer that provides brokerage and research services to Dessauer & McIntyre an
amount of commission for effecting a portfolio investment transaction in excess
of the amount of commission another broker or dealer would have charged for
effecting that transaction, if Dessauer & McIntyre determines in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer, viewed in
terms of either that particular transaction or Dessauer & McIntyre's overall
responsibilities with respect to the Fund. Dessauer & McIntyre is further
authorized to allocate the orders placed by it on behalf of the Fund to an
affiliated broker-dealer, if any, or to such brokers and dealers who also
provide research or statistical material, or other services to the Fund (which
material or services may also assist Dessauer & McIntyre in rendering services
to other clients). Such allocation shall be in such amounts and proportions as
Dessauer & McIntyre shall determine and Dessauer & McIntyre will report on said
allocations regularly to the Board of Trustees of the Fund indicating the
brokers to whom such allocations have been made and the basis therefor.
IV. Allocation of Expenses.
Dessauer & McIntyre agrees that it will furnish the Fund, at its
expense, all office space and facilities, equipment and clerical personnel
necessary for carrying out its duties under this Agreement. Dessauer & McIntyre
agrees that it will supply to the Administrator of the Fund all necessary
financial information in connection with the Administrator's duties under any
agreement between the Administrator and the Fund on behalf of the Fund. All
costs and expenses associated with any administrative functions delegated by
Dessauer & McIntyre to the Administrator that are not pursuant to any agreement
between the Administrator and the Fund or Dessauer & McIntyre and the Fund will
be paid by Dessauer & McIntyre. All other costs and expenses not expressly
assumed by Dessauer & McIntyre under this Agreement or by the Administrator
under the Administration Agreement between it and the Fund on behalf of the Fund
shall be paid by the Fund from the assets of the Fund, including, but not
limited to (i) fees paid to Dessauer & McIntyre and the Administrator; (ii)
interest and taxes; (iii) brokerage commissions; (iv) insurance premiums; (v)
compensation and expenses of the trustees other than those affiliated with
Dessauer & McIntyre or the Administrator; (vi) legal, accounting and audit
expenses; (vii) fees and expenses of any transfer agent, distributor, registrar,
dividend disbursing agent or shareholder servicing agent of the Fund; (viii)
expenses, including clerical expenses, incident to the issuance, redemption or
repurchase of shares of the Fund, including issuance on the payment of, or
reinvestment of, dividends; (ix) fees and expenses incident to the registration
under Federal or state securities laws of the Fund or its shares; (x) expenses
of preparing, setting in type, printing and mailing prospectuses, statements of
additional information, reports and notices and proxy material to shareholders
of the Fund; (xi) all other expenses incidental to holding meetings of the
Fund's trustees and shareholders; (xii) expenses connected with the execution,
recording and settlement of portfolio securities transactions; (xiii) fees and
expenses of the Fund's custodian for all services to the Fund, including
safekeeping of funds and securities and maintaining required books and accounts;
(xiv) expenses of calculating net asset value of the shares of the Fund; (xv)
industry membership fees allocable to the Fund; and (xvi) such extraordinary
expenses as may arise, including litigation affecting the Fund and the legal
obligations which the Fund may have to indemnify the officers and directors with
respect thereto.
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V. Compensation of Dessauer & McIntyre.
For the services to be rendered, the Fund shall pay to Dessauer &
McIntyre from the assets of the Fund an investment advisory fee paid monthly at
an annual rate equal to 0.75% of the Fund's average weekly net assets for the
Fund's then-current fiscal year. Except as hereinafter set forth, compensation
under this Agreement shall be calculated and accrued daily and the amounts of
the daily accruals shall be paid monthly. If the Agreement becomes effective
subsequent to the first day of a month or shall terminate before the last day of
a month, compensation for that part of the month this Agreement is in effect
shall be pro rated in a manner consistent with the calculation of the fees as
set forth above. Payment of Dessauer & McIntyre's compensation for the preceding
month shall be made within five days after the end of that month.
VI. Duration, Amendment and Termination.
(a) This Agreement shall go into effect as to the Fund on the date set
forth above (the "Effective Date") and shall, unless terminated as hereinafter
provided, continue in effect for two years from the Effective Date and shall
continue from year to year thereafter, but only so long as such continuance is
specifically approved at least annually by the Board of Trustees of the Fund,
including the vote of a majority of the trustees who are not parties to this
Agreement or "interested persons" (as defined in the Act) of any such party cast
in person at a meeting called for the purpose of voting on such approval, or by
the vote of the holders of a "majority" (as so defined) of the outstanding
voting securities of the Fund and by such a vote of the trustees.
(b) This Agreement may be amended only if such amendment is approved by
the vote of the holders of a "majority" (as defined in the Act) of the
outstanding voting securities of the Fund.
(c) This Agreement may be terminated by Dessauer & McIntyre at any time
without penalty upon giving the Fund sixty (60) days' written notice (which
notice may be waived by the Fund) and may be terminated by the Fund at any time
without penalty upon giving Dessauer & McIntyre sixty (60) days' written notice
(which notice may be waived by Dessauer & McIntyre), provided that such
termination by the Fund shall be approved by the vote of a majority of all the
trustees in office at the time or by the vote of the holders of a "majority" (as
defined in the Act) of the voting securities of the Fund at the time outstanding
and entitled to vote. This Agreement shall automatically terminate in the event
of its "assignment" (as defined in the Act).
VII. Board of Trustees' Meeting.
The Fund agrees that notice of each meeting of the Board of Trustees of
the Fund will be sent to Dessauer & McIntyre and that the Fund will make
appropriate arrangements for the attendance (as persons present by invitation)
of such person or persons as Dessauer & McIntyre may designate.
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VIII. Name.
The Fund hereby acknowledges that any and all rights in or to the name
"Dessauer" which exist on the date of this Agreement or which may arise
hereafter are, and under any and all circumstances shall continue to be, the
sole property of Dessauer & McIntyre; that Dessauer & McIntyre may assign any or
all of such rights to another party or parties without the consent of the Fund;
and that Dessauer & McIntyre may permit other parties, including other
investment companies, to use the word "Dessauer" in their names. If Dessauer &
McIntyre, or its assignee as the case may be, ceases to serve as an adviser to
the Fund, the Fund hereby agrees to take promptly any and all actions which are
necessary or desirable to change its name and the name of the Fund so as to
delete the word "Dessauer".
IX. Notices.
Any notices under this Agreement shall be in writing, addressed and
delivered or mailed postage paid to the other party at such address as such
other party may designate for the receipt of such notice.
X. Questions of Interpretation.
Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or provision
of the Act, as amended, shall be resolved by reference to such term or provision
of the Act and to interpretations thereof, if any, by the United States Courts
or in the absence of any controlling decision of any such court, by rules,
regulations or orders of the Securities and Exchange Commission issued pursuant
to said Act. In addition, where the effect of a requirement of the Act,
reflected in any provision of this Agreement, is revised by rule, regulation or
order of the Securities and Exchange Commission, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
12. This Agreement shall be construed in accordance with the laws of
the State of Delaware, without regard to the conflicts of law provisions
thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered on their behalf by the undersigned, thereunto duly
authorized, all as of the day and year first above written.
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THE DESSAUER GLOBAL EQUITY FUND
By_____________________________
Title:
DESSAUER & MCINTYRE ASSET MANAGEMENT, INC.
By______________________________
Title:
[LETTERHEAD OF KRAMER, LEVIN, NAFTALIS & FRANKEL]
September 18, 1998
Dessauer Global Equity Fund
5 Bay State Court
P.O. Box 1689
Orleans, Massachusetts 02653
Re: Dessauer Global Equity Fund
Registration Statement on Form N-1A
File No. 333-7543; ICA No. 811-7691
-----------------------------------
Dear Gentlemen:
We hereby consent to the reference to our firm as Counsel in this
Registration Statement on Form N-1A.
Very truly yours,
/s/Kramer, Levin, Naftalis & Frankel
------------------------------------
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Financial
Highlights", "Independent Accountants", "Service Providers", and "Financial
Statements" in this Registration Statement on Form N-1A (No. 811- 7691) for The
Dessauer Global Equity Fund and to the incorporation by reference therein of our
report dated April 22, 1998, with respect to the financial statements and
financial highlights of The Dessauer Global Equity Fund included in its Annual
Report for the year ended March 31, 1998 filed with the Securities and Exchange
Commission.
/s/ERNST & YOUNG LLP
--------------------
Los Angeles, California
September 18, 1998
