Reg. ICA No. 811-7691
File No. 333-63753
As filed via EDGAR with the Securities and Exchange Commission on December 1,
1998
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A/A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. 1 [X]
Post-Effective Amendment No.
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 1
THE 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: 800 560 0086
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.
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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 *
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Item Number
Form N-1A, Statement of Additional
Part A Prospectus Caption Information Caption
------ ------------------ -------------------
(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
(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
(f) * Not Applicable
(g) * Not Applicable
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(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
21(a) * Not Applicable
(b) * Performance Information
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22(a) * Financial Statements
(b) * Financial Statements
(c) * Financial Statements
* See Prospectus
Part C
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.
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[GRAPHIC]
PROSPECTUS [December __, 1998]
THE DESSAUER GLOBAL EQUITY FUND
The Securities and Exchange Commission has not approved nor disapproved 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]
The Dessauer Global Equity Fund
Risk/Return Summary: Investments, Risks, and Performance
Investment Objectives/Goals.
The Dessauer Global Equity Fund (the "Fund") is a no-load mutual fund with the
investment objective of long-term capital appreciation.
Principle Investment Strategies of the Fund.
The Fund seeks to achieve its investment objective by investing primarily in the
securities of issuers in established markets that it believes are positioned to
benefit from growth in the global economy. The Fund invests in value oriented
securities focusing on fundamentals, business trends, management of the company
and its financial strength. 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. 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 (which includes Austria, Belgium, Denmark, Finland,
France, Germany, Greece, Ireland, Italy, Netherlands, Norway, Portugal, Spain,
Sweden, Switzerland and the United Kingdom), 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.
Generally, the Fund stays fully invested and deals with market turmoil by being
extremely selective and extensive, researching the companies in which it
invests. At times it may become necessary for the Fund to take a temporary
defensive position inconsistent with its principal investment strategies. At
that time the Fund may invest up to 100% of its assets in cash, cash equivalents
or high quality short-term money market instruments.
Principal Risks of Investing in the Fund.
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;
o the value of foreign currencies decline relative to the U.S. dollar;
o a foreign government expropriates the Fund's assets ; or
o political, social or economic instability in a foreign country causes the
value of the Fund's
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investments to decline.
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.
Risk/Return 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
Maximum Sales Charge Imposed on Purchases None
Maximum Sales Charge Imposed on Reinvested Dividends None
Redemption Fee (as a percentage of amount redeemed) 1.00%
ANNUAL FUND OPERATING EXPENSES
Shareholder Service Plan 0.25%
Management Fees 0.75%
Administration Fees 0.10%
Other Expenses 0.45%
Total Annual Expenses 1.55%
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Shareholder Transaction Expenses represent charges paid when you purchase shares
of the Fund.
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EXAMPLE OF EXPENSES
The Example assumes that you invest $10,000 in the Fund for the time
periods indicated and then redeem all of your shares at the end of those
periods. The Example also assumes that the investor redeems all of his or her
shares at the end of each period and that your investment has a 5% return each
year and that the Fund's operating expenses remain the same. Although your
actual costs may be higher or lower, based on these assumptions your cost would
be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$158 $490 $845 $1845
The Example does not reflect sales charges on reinvested dividends [and other
distributions]. If these sales charges were included, your costs would be
higher. 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.
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. The Fund, however, intends to comply with
the diversification requirements of federal tax law as necessary to qualify as a
regulated investment company.
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
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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 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.
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<PAGE>
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 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.
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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 adviser of the Fund. The Adviser, an
investment adviser registered with the SEC, was founded in 1986 and as of
October 31, 1998 managed $348 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 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 senior investment 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 [80,000] as of
October 31, 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.
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Administrator
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. For these
services and facility the Fund has agreed to pay ICA a monthly fee at an annual
rate of .10% of the average weekly net assets of the Fund.
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 The Dessauer Global Equity Fund
<TABLE>
<CAPTION>
Regular-These accounts are taxable Retirement-These accounts are generally nontaxable
<S> <C>
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)
</TABLE>
Investment Minimums. The minimum initial investments are:
Minimum
Regular (New Investor) $1,000
Additional Investment (Current Fund Shareholders) $100
Retirement (Roth and Regular) $1,000
Educational IRA $500
Gift $250
Pre-authorized Investment Plan (Initial and Installment payments) $100
Additional Investments $250
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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. National Financial Data Services
("NFDS") is open from 9 a.m. to 6 p.m. Eastern Standard Time for purchase,
redemption and exchange orders. NFDS must receive your request by 4 p.m. Eastern
Standard Time 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) 560-0086].
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. A shareholder who wishes to add any account feature after
their account is established needs to have the instructions signature
guaranteed.
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 "The 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 return envelope:
The Dessauer Global Equity Fund
P.O. Box 419227
Kansas City, MO 64141-6227
For an overnight delivery:
National Financial Data Services
ATTN: The Dessauer Global Equity Fund
330 West Ninth Street
Kansas City, MO 64105
Wire (graphic): To purchase by wire, call NFDS at (800) 560-0086 between 9 a.m.
and 6 p.m. Eastern Standard Time on a business day to get an account number and
detailed instructions. You must then provide NFDS with a signed application
within 10 business days of the initial purchase. Instruct your bank to send the
wire to:
Investor Fiduciary Trust Company
ABA # 101003621
Shareholder and Custody Services
DDA # 7561016
ATTN: [Your Name]
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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 NFDS 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. NFDS 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 NFDS providing your name and account number to ensure that the money
is invested in your existing account.
Purchase Order Cut-Off. NFDS 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. This includes market timers or large investment that cannot be
effectively invested.
How to Redeem Shares. You may redeem shares by mail or telephone. Your request
must be received by NFDS by 4 p.m. Eastern Standard 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 a 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 your check has cleared which may take up to 15 calendar days. You
may receive the proceeds of redemption by wire or through a systematic
withdrawal plan as described below.
Third Party Check or Starter Check. No third party checks or starter checks or
non-pre-printed checks will be accepted for initial or subsequent investments.
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 NFDS at (800) 560-0086 between the hours of 9 a.m. and 6 p.m.
Eastern Standard Time on a day the New York Stock 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. Eastern Standard Time. For your protection against fraudulent
telephone transactions, NFDS will use reasonable procedures to verify your
identity. As long as NFDS 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 NFDS refuses
any telephone redemption or exchange. Telephone exchanges or redemptions may be
difficult during periods
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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 NFDS receives your written or telephone
redemption request. There is a $10 fee for redemption by wire and a maximum of
$100,000 which can be redeemed daily.
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 $10,000. 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 the 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 Redemption by Corporations. All redemptions by corporations need to have a
certified copy of the resolution attached to the request.
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 the redemption.
o Check Clearance. The proceeds from a redemption request will be delayed up
to 15
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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.
Redemption In Kind. The Fund has, Pursuant to Rule 18F-1 of the Investment
Company Act of 1940 as amended, elected to commit itself to pay in cash all
redemptions by a shareholder of record.
Net Asset Value. The Net Asset Value 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 net asset value 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 in accordance with federal securities laws and
regulations. 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
NFDS at (800) 560-0086 and requesting this change. You must complete the form
and return it to the NFDS 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.
- 12 -
<PAGE>
For federal income tax purposes, any dividends derived from net investment
income and any 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
- 13 -
<PAGE>
Net investment income
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 17.27%++
Net assets, end of period (thousands) $82,807
Ratios/supplemental data:
Ratio of expenses to average net assets: 1.54%+
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.
- 14 -
<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.
- 15 -
<PAGE>
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 The Dessauer Global Equity Fund at (800) 560-0086 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.
- 16 -
<PAGE>
PURCHASE APPLICATION
TO BE ADDED
- 17 -
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
THE 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 1-800-560-0086
TABLE OF CONTENTS
Page
[NOT YET ADDED INTO DOCUMENT]
Adviser
- -------
Dessauer & McIntyre Asset Management, Inc.
Administrator,
- --------------
Investment Company Administration Corporation
Distributor
- -----------
First Fund Distributor
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 THE DESSAUER GLOBAL EQUITY FUND
The 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 WITH PRINCIPAL OCCUPATIONS
NAME AND AGE 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>
AGGREGATE PENSION OR RETIREMENT ESTIMATED ANNUAL TOTAL COMPENSATION FROM
COMPENSATION BENEFITS ACCRUED AS BENEFITS FUND AND FUND COMPLEX
NAME OF PERSON FROM FUND PART OF THE FUND EXPENSES 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 the Adviser 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 September 30, 1998 the Fund paid
$267,594 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 330 West Ninth Street, Kansas City, MO
64105 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 LLP, 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. The Fund may, at such
times as the Adviser deems appropriate and consistent with the Fund's investment
objective use options, futures contracts and related options. The purpose of
such transactions is to hedge against changes in the market value of the Fund's
portfolio securities caused by fluctuating interest rates, fluctuating currency
exchange rates and changing market conditions.
-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 Adviser 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.
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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.
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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 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.
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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.
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
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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.
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
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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
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.
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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 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,
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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
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Commission, funds advertising performance must include total return quotes
calculated according to the following formula:
P(1 + T)n = ERV
Where P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years (1, 5 or 10)
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the 1, 5 or 10 year
periods or 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
-17-
<PAGE>
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 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.(2)
(c) None.
(d) Investment Advisory Agreement between Registrant and
Dessauer and McIntyre Asset Management, Inc.(3)
(e) Underwriting Agreement between the Registrant and Wheat
First Securities, Inc.(2)
(f) None.
(g) Form of Custodian Agreement between Registrant and
Investors Bank & Trust Company.(2)
(h)(1) Form of Registrar, Transfer Agency and Service Agreement
by and between the Registrant and State Street Bank and
Trust Company.(2)
(h)(2) Form of Distribution Agreement between Registrant and
First Fund Distributors, Inc. is filed herewith.
(h)(3) Form of Administration Agreement by and between
Registrant and Investors Bank and Trust Company.(2)
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<PAGE>
(i)(1) Opinion of Kramer Levin Naftalis & Frankel LLP as to
legality of securities being registered is filed
herewith.
(i)(2) Opinion of Morris, Nichols, Arsht & Tunnell is filed
herewith.
(j)(1) Consent of Kramer Levin Naftalis & Frankel LLP, 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 year ended March 31, 1998 is
incorporated by reference from the Rule 30D filing made
by the Registrant on (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. (2)
(m) None
(n) None
(o) None
- ----------
(1) Filed as an Exhibit to Registrant's Registration
Statement on Form N-2 filed electronically on July 3,
1996, accession number 0000922423-96-000153 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 Registration Statement on Form
N-1A filed electronically on September 18, 1998,
accession number 0000922423-98-001042 and incorporated
herein by reference.
ITEM 24. Persons Controlled By or Under Common Control with Registrant
None.
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<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 advisory services
to the Registrant. To the best of the Registrant's knowledge, the directors and
officers have not 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;
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<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 1st day
of December, 1998.
DESSAUER GLOBAL EQUITY FUND
By: /s/ Thomas P. McIntyre
--------------------------
President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Pre-Effective Amendment to the 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 December 1, 1998
- --------------------------------- ------------------
John P. Dessauer
/s/ Thomas P. McIntyre Trustee December 1, 1998
- --------------------------------- ------------------
Thomas P. McIntyre
* /s/ Max A. Fischer Trustee December 1, 1998
- --------------------------------- ------------------
Max A. Fischer
* /s/ Ingrid R. Hendershot Trustee December 1, 1998
- --------------------------------- ------------------
Ingrid R. Hendershot
* /s/ Kevin Melich Trustee December 1, 1998
- ----------------------------- ------------------
Kevin Melich.
* /s/ J. Brooks Reece, Jr. Trustee December 1, 1998
- ------------------------------ ------------------
J. Brooks Reece, Jr.
* /s/ Susan J. Penry-Williams
- -----------------------------
By Susan J. Penry-Williams
Attorney-in-Fact
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<PAGE>
EXHIBIT INDEX
EX-99.B6 Form of Distribution Agreement
EX-99.B9 Form of Amendment to Administration Agreement
EX-99.B10 Opinion of Kramer Levin Naftalis
& Frankel LLP, Counsel for the Registrant
EX-99.B10(a) Consent of Kramer Levin Naftalis & Frankel LLP
Ex-99.B10(b) Opinion of Morris, Nichols, Arsht & Tunnell,
Delaware Counsel
EX-99.B11 Consent of Ernst & Young LLP,
Independent Auditors for the Registrant
C-8
FORM OF DISTRIBUTION AGREEMENT
This Agreement made this_______ day of ______, 199 by and between THE
DESSAUER GLOBAL EQUITY FUND, a Delaware business trust (the "Trust"), and FIRST
FUND DISTRIBUTORS, INC., a Delaware corporation (the "Distributor").
W I T N E S S E T H:
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940 (the "1940 Act") and it is in
the interest of the Trust to offer its shares for sale continuously; and
WHEREAS, the Distributor is registered as a broker-dealer under the
Securities Exchange Act of 1934 (the "1934 Act") and is a member in good
standing of the National Association of Securities Dealers, Inc. (the "NASD");
and
WHEREAS, the Trust and the Distributor wish to enter into an agreement
with each other with respect to the continuous offering of the Trust's shares of
beneficial interest (the "Shares");
NOW, THEREFORE, the parties agree as follows:
1. Appointment of Distributor. The Trust hereby appoints the
Distributor as exclusive agent to sell and to arrange for the sale of the
Shares, on the terms and for the period set forth in this Agreement, and the
Distributor hereby accepts such appointment and agrees to act hereunder directly
and/or through the Trust's transfer agent in the manner set forth in the
Prospectuses (as defined below). It is understood and agreed that the services
of the Distributor hereunder are not exclusive, and the Distributor may act as
principal underwriter for the shares of any other registered investment company.
2. Services and Duties of the Distributor.
(a) The Distributor agrees to sell the Shares, as agent for
the Trust, from time to time during the term of this Agreement upon the terms
described in a Prospectus. As used in this Agreement, the term "Prospectus"
shall mean a prospectus and statement of additional information included as part
of the Trust's Registration Statement, as such prospectus and statement of
additional information may be amended or supplemented from time to time, and the
term "Registration Statement" shall mean the Registration Statement most
recently filed from time to time by the Trust with the Securities and Exchange
Commission ("SEC") and effective under the Securities Act of 1933 (the "1933
Act") and the 1940 Act, as such Registration Statement is amended by any
amendments thereto at the time in effect. The Distributor shall not be obligated
to sell any certain number of Shares.
(b) Upon commencement of operations of the series, the
Distributor will hold itself available to receive orders, satisfactory to the
Distributor, for the purchase of the
<PAGE>
Shares and will accept such orders and will transmit such orders and funds
received by it in payment for such Shares as are so accepted to the Trust's
transfer agent or custodian, as appropriate, as promptly as practicable.
Purchase orders shall be deemed accepted and shall be effective at the time and
in the manner set forth in the series' Prospectuses. The Distributor shall not
make any short sales of Shares.
( c) The offering price of the Shares shall be the net asset
value per share of the Shares, plus the sales charge, if any, (determined as set
forth in the Prospectuses). The Trust shall furnish the Distributor, with all
possible promptness, an advice of each computation of net asset value and
offering price.
(d) The Distributor shall have the right to enter into
selected dealer agreements with securities dealers of its choice ("selected
dealers") for the sale of Shares. Shares sold to selected dealers shall be for
resale by such dealers only at the offering price of the Shares as set forth in
the Prospectuses. The Distributor shall offer and sell Shares only to such
selected dealers as are members in good standing of the NASD.
3. Duties of the Trust.
(a) Maintenance of Federal Registration. The Trust shall, at
its expense, take, from time to time, all necessary action and such steps,
including payment of the related filing fees, as may be necessary to register
and maintain registration of a sufficient number of Shares under the 1933 Act.
The Trust agrees to file from time to time such amendments, reports and other
documents as may be necessary in order that there may be no untrue statement of
a material fact in a Registration Statement or Prospectus, or necessary in order
that there may be no omission to state a material fact in the Registration
Statement or Prospectus which omission would make the statements therein
misleading.
(b) Maintenance of "Blue Sky" Qualifications. The Trust shall, at
its expense, file notices and pay required fees as are necessary to maintain an
exemption for the offer and sale of its shares under the securities laws of such
states as the Distributor and the Trust may approve, and, if necessary or
appropriate in connection therewith, to qualify and maintain the qualification
of the Trust or the series as a broker or dealer in such states; provided that
the Trust shall not be required to amend its Declaration of Trust or By-Laws to
comply with the laws of any state, to maintain an office in any state, to change
the terms of the offering of the Shares in any state, to change the terms of the
offering of the Shares in any state from the terms set forth in Prospectuses, to
qualify as a foreign Trust in any state or to consent to service of process in
any state other than with respect to claims arising out of the offering and sale
of the Shares. The Distributor shall furnish such information and other material
relating to its affairs and activities as may be required by the Trust or its
series in connection with such exemptions and qualifications.
(c) Copies of Reports and Prospectuses. The Trust shall, at its
expense, keep the Distributor fully informed with regard to its affairs and in
connection therewith shall furnish to the Distributor copies of all information,
financial statements and other papers which the Distributor may reasonably
request for use in connection with the distribution of Shares, including such
reasonable number of copies of Prospectuses and annual and interim reports as
- 2 -
<PAGE>
the Distributor may request and shall cooperate fully in the efforts of the
Distributor to sell and arrange for the sale of the Shares and in the
performance of the Distributor under this Agreement.
4. Conformity with Applicable Law and Rules. The Distributor agrees
that in selling Shares hereunder it shall conform in all respects with the laws
of the United States and of any state in which Shares may be offered, and with
applicable rules and regulations of the NASD.
5. Independent Contractor. In performing its duties hereunder, the
Distributor shall be an independent contractor and neither the Distributor, nor
any of its officers, directors, employees, or representatives is or shall be an
employee of the Trust in the performance of the Distributor's duties hereunder.
The Distributor shall be responsible for its own conduct and the employment,
control, and conduct of its agents and employees and for injury to such agents
or employees or to others through its agents or employees. The Distributor
assumes full responsibility for its agents and employees under applicable
statutes and agrees to pay all employee taxes thereunder.
6. Indemnification.
(a) Indemnification of Trust. The Distributor agrees to
indemnify and hold harmless the Trust and each of its present or former
Trustees, officers, employees, representatives and each person, if any, who
controls or previously controlled the Trust within the meaning of Section 15 of
the 1933 Act against any and all losses, liabilities, damages, claims or
expenses (including the reasonable costs of investigating or defending any
alleged loss, liability, damage, claims or expense and reasonable legal counsel
fees incurred in connection therewith) to which the Trust or any such person may
become subject under the 1933 Act, under any other statute, at common law, or
otherwise, arising out of the acquisition of any Shares by any person which (i)
may be based upon any wrongful act by the Distributor or any of the
Distributor's directors, officers, employees or representatives, or (ii) may be
based upon any untrue statement or alleged untrue statement of a material fact
contained in a Registration Statement, Prospectus, shareholder report or other
information covering Shares filed or made public by the Trust or any amendment
thereof or supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading if such statement or omission was made in
reliance upon and in conformity with information furnished to the Trust by the
Distributor. In no case (i) is the Distributor's indemnity in favor of the
Trust, or any person indemnified to be deemed to protect the Trust or such
indemnified person against any liability to which the Trust or such person would
otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of the Trust's or such person's duties or by
reason of reckless disregard of the Trust's or such person's obligations and
duties under this Agreement or (ii) is the Distributor to be liable under its
indemnity agreement contained in this Paragraph with respect to any claim made
against the Trust or any person indemnified unless the Trust or such person, as
the case may be, shall have notified the Distributor in writing of the claim
within a reasonable time after the summons or other first written notification
giving information of the nature of the claim shall have been served upon the
Trust or upon such person (or after the Trust or such person shall
- 3 -
<PAGE>
have received notice of such service on any designated agent). However, failure
to notify the Distributor of any such claim shall not relieve the Distributor
from any liability which the Distributor
may have to the Trust or any person against whom such action is brought
otherwise than on account of the Distributor's indemnity agreement contained in
this Paragraph.
The Distributor shall be entitled to participate, at its own expense,
in the defense, or, if the Distributor so elects, to assume the defense of any
suit brought to enforce any such claim, but, if the Distributor elects to assume
the defense, such defense shall be conducted by legal counsel chosen by the
Distributor and satisfactory to the Trust, and to the persons indemnified as
defendant or defendants, in the suit. In the event that the Distributor elects
to assume the defense of any such suit and retain such legal counsel, the Trust,
and the persons indemnified as defendant or defendants in the suit, shall bear
the fees and expenses of any additional legal counsel retained by them. If the
Distributor does not elect to assume the defense of any such suit, the
Distributor will reimburse the Trust and the persons indemnified as defendant or
defendants in such suit for the reasonable fees and expenses of any legal
counsel retained by them. The Distributor agrees to promptly notify the Trust of
the commencement of any litigation of proceedings against it or any of its
officers, employees or representatives in connection with the issue or sale of
any Shares.
(b) Indemnification of the Distributor. The Trust agrees to
indemnify and hold harmless the Distributor and each of its present or former
directors, officers, employees, representatives and each person, if any, who
controls or previously controlled the Distributor within the meaning of Section
15 of the 1933 Act against any and all losses, liabilities, damages, claims or
expenses (including the reasonable costs of investigating or defending any
alleged loss, liability, damage, claim or expense and reasonable legal counsel
fees incurred in connection therewith) to which the Distributor or any such
person may become subject under the 1933 Act, under any other statute, at common
law, or otherwise, arising out of the acquisition of any Shares by any person
which (i) may be based upon any wrongful act by the Trust or any of the Trust's
Trustees, officers, employees or representatives, or (ii) may be based upon any
untrue statement or alleged untrue statement of a material fact contained in a
Registration Statement, Prospectus, shareholder report or other information
covering Shares filed or made public by the Trust or any amendment thereof or
supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading unless such statement or omission was made in reliance
upon and in conformity with information furnished to the Trust by the
Distributor. In no case (i) is the Trust's indemnity in favor of the
Distributor, or any person indemnified to be deemed to protect the Distributor
or such indemnified person against any liability to which the Distributor or
such person would otherwise be subject by reason of willful misfeasance, bad
faith, or gross negligence in the performance of such person's duties or by
reason of reckless disregard of such person's obligations and duties under this
Agreement or (ii) is the Trust to be liable under its indemnity agreement
contained in this Paragraph with respect to any claim made against Distributor,
or person indemnified unless the Distributor, or such person, as the case may
be, shall have notified the Trust in writing of the claim within a reasonable
time after the summons or other first written notification giving information of
the nature of the claim shall have been
- 4 -
<PAGE>
served upon the Distributor or upon such person (or after the Distributor or
such person shall have received notice of such service on any designated agent).
However, failure to notify the Trust of any such claim shall not relieve the
Trust from any liability which the Trust may have to the Distributor or any
person against whom such action is brought otherwise than on account of the
Trust's indemnity agreement contained in this Paragraph.
The Trust shall be entitled to participate, at its own expense, in the
defense, or, if the Trust so elects, to assume the defense of any suit brought
to enforce any such claim, but if the Trust elects to assume the defense, such
defense shall be conducted by legal counsel chosen by the Trust and satisfactory
to the Distributor and to the persons indemnified as defendant or defendants, in
the suit. In the event that the Trust elects to assume the defense of any such
suit and retain such legal counsel, the Distributor, the persons indemnified as
defendant or defendants in the suit, shall bear the fees and expenses of any
additional legal counsel retained by them. If the Trust does not elect to assume
the defense of any such suit, the Trust will reimburse the Distributor and the
persons indemnified as defendant or defendants in such suit for the reasonable
fees and expenses of any legal counsel retained by them. The Trust agrees to
promptly notify the Distributor of the commencement of any litigation or
proceedings against it or any of its Trustees, officers, employees or
representatives in connection with the issue or sale of any Shares.
7. Authorized Representations. The Distributor is not authorized by the
Trust to give on behalf of the Trust any information or to make any
representations in connection with the sale of Shares other than the information
and representations contained in a Registration Statement or Prospectus filed
with the SEC under the 1933 Act and/or the 1940 Act, covering Shares, as such
Registration Statement and Prospectus may be amended or supplemented from time
to time, or contained in shareholder reports or other material that may be
prepared by or on behalf of the Trust for the Distributor's use. This shall not
be construed to prevent the Distributor from preparing and distributing
tombstone ads and sales literature or other material as it may deem appropriate
provided that such materials are approved by the Trust prior to distribution. No
person other than the Distributor is authorized to act as principal underwriter
(as such term is defined in the 1940 Act) for the Trust.
8. Term of Agreement. The term of this Agreement shall begin on the
date first above written, and unless sooner terminated as hereinafter provided,
this Agreement shall remain in effect for a period of two years from the date
first above written. Thereafter, this Agreement shall continue in effect from
year to year, subject to the termination provisions and all other terms and
conditions thereof, so long as such continuation shall be specifically approved
at least annually by (i) the Board of Trustees or by vote of a majority of the
outstanding voting securities of each investment portfolio of the Trust and,
(ii) by the vote, cast in person at a meeting called for the purpose of voting
on such approval, of a majority of the Trustees of the Trust who are not parties
to this Agreement or interested persons of any such party. The Distributor shall
furnish to the Trust, promptly upon its request, such information as may
reasonably be necessary to evaluate the terms of this Agreement or any
extension, renewal or amendment hereof.
- 5 -
<PAGE>
9. Amendment or Assignment of Agreement. This Agreement may not be
amended or assigned except as permitted by the 1940 Act, and this Agreement
shall automatically and immediately terminate in the event of its assignment.
10. Termination of Agreement. This Agreement may be terminated by
either party hereto, without the payment of any penalty, on not more than upon
60 days' nor less than 30 days' prior notice in writing to the other party;
provided, that in the case of termination by the Trust such action shall have
been authorized by resolution of a majority of the Trustees of the Trust who are
not parties to this Agreement or interested persons of any such party, or by
vote of a majority of the outstanding voting securities of each series of the
Trust.
11. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Nothing herein contained shall be deemed to require the Trust to take
any action contrary to its Declaration of Trust or By-Laws, or any applicable
statutory or regulatory requirement to which it is subject or by which it is
bound, or to relieve or deprive the Board of Trustees of the Trust of
responsibility for and control of the conduct of the affairs of the Trust.
12. Definition of Terms. Any question of interpretation of any term or
provision of this Agreement having a counterpart in or otherwise derived from a
term or provision of the 1940 Act shall be resolved by reference to such term or
provision of the 1940 Act and to interpretation 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 SEC validly issued pursuant to the 1940
Act. Specifically, the terms "vote of a majority of the outstanding voting
securities", "interested persons," "assignment," and "affiliated person," as
used in Paragraphs 8, 9 and 10 hereof, shall have the meanings assigned to them
by Section 2(a) of the 1940 Act. In addition, where the effect of a requirement
of the 1940 Act reflected in any provision of this Agreement is relaxed by a
rule, regulation or order of the SEC, whether of special or of general
application, such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
13. Compliance with Securities Laws. The Trust represents that it is
registered as an open-end management investment company under the 1940 Act, and
agrees that it will comply with all the provisions of the 1940 Act and of the
rules and regulations thereunder. The Trust and the Distributor each agree to
comply with all of the applicable terms and provisions of the 1940 Act, the 1933
Act and, subject to the provisions of Section 4(d), all applicable "Blue Sky"
laws. The Distributor agrees to comply with all of the applicable terms and
provisions of the 1934 Act.
- 6 -
<PAGE>
14. Notices. Any notice required to be given pursuant to this Agreement
shall be deemed duly given if delivered or mailed by registered mail, postage
prepaid, to the Distributor at 4455 E. Camelback Road., Suite 261E, Phoenix, AZ
85018 or to the Trust at 5 Bay State Court, Post Office Box 1689, Orleans, MA
02653.
15. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the date first written above.
THE DESSAUER GLOBAL EQUITY FUND
By:________________________________________
Name:
Title:
FIRST FUND DISTRIBUTORS, INC.
By:________________________________________
Name: Eric M. Banhazl
Title: Vice President
- 7 -
FORM OF AMENDMENT AGREEMENT
AGREEMENT, dated as of ________________________, 1998, by and between
THE DESSAUER GLOBAL EQUITY FUND (the "Trust"), a Delaware Business trust, and
INVESTMENT COMPANY ADMINISTRATION CORPORATION (the "Administrator"), a Delaware
corporation.
WHEREAS, the Trust and the Administrator entered into an Administration
Agreement dated as of May 30, 1997 (the "Administration Agreement"); and
WHEREAS, the Trust and the Administrator desire to amend the
Administration Agreement as set forth below.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein set forth, the parties hereto agree as follows:
7. Compensation. As compensation for services rendered by the
Administrator during the term of this Agreement, the Trust will
cause the Fund to pay to the Administrator a monthly fee at the
annual rate of 0.10% of average daily net assets.
IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
executed by its duly authorized officer as of the date and year first above
written.
INVESTMENT COMPANY ADMINISTRATION CORPORATION
By:
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Name:
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Title:
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THE DESSAUER GLOBAL EQUITY FUND
By:
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Name:
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Title:
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[Letterhead of Kramer Levin Naftalis & Frankel LLP]
December 1, 1998
The Dessauer Global Equity Fund
5 Bay State Court
P.O. Box 1689
Orleans, Massachusetts 02653
Re: The Dessauer Global Equity Fund, File Nos.:
333-63753, 811-7691
-------------------------------------------
Ladies and Gentlemen :
We have acted as counsel for The Dessauer Global Equity Fund, a
Delaware business trust (the "Trust"), in connection with certain matters
relating to the creation of the Trust and the issuance of shares of beneficial
interest therein of The Dessauer Global Equity Fund, the sole series of the
Trust (the "Shares"), pursuant to a registration statement on Form N-1A (File
No. 333-63753) (the "Registration Statement"), filed with the Securities and
Exchange Commission under the Securities Act of 1933, and the Investment Company
Act of 1940, as amended. Capitalized terms used herein and not otherwise herein
defined are used as defined in the Trust Instrument of the Trust dated June 27,
1996 (the "Governing Instrument").
In rendering this opinion, we have examined copies of the following
documents, each in the form provided to us: the Certificate of Trust of the
Trust as filed in the Office of the Secretary of State of the State of Delaware
(the "Recording Office") on June 28, 1996 (the "Certificate"); the Governing
Instrument; the By-laws of the Trust dated as of June 27, 1996 (the "By-laws");
certain resolutions of the Trustees of the Trust prepared for adoption at the
meetings of the Board of Trustees held on May 23, 1997, September 3, 1997,
January 21, 1998, May 11, 1998 and September 9, 1998 (such resolutions, together
with the Governing
<PAGE>
KRAMER LEVIN NAFTALIS & FRANKEL LLP
The Dessauer Global Equity Fund
December 1, 1998
Page 2
Instrument and the By-laws, the "Governing Documents"); the Trust's Notification
of Registration Filed Pursuant to Section 8(a) of the Investment Company Act of
1940 on Form N- 8A as filed with the Securities and Exchange Commission on June
11, 1996; the Registration Statement under the Securities Act of 1933 on Form
N-1A of the Trust as filed with the Securities and Exchange Commission on
September 18, 1998 (the "Registration Statement"); and a certification of good
standing of the Trust obtained as of a recent date from the Recording Office. In
such examinations, we have assumed the genuineness of all signatures, the
conformity to original documents of all documents submitted to us as copies or
drafts of documents to be executed, and the legal capacity of natural persons to
complete the execution of documents. As to any facts material to our opinion,
other than those assumed, we have relied without independent investigation on
the above-referenced documents and on the accuracy, as of the date hereof, of
the matters therein contained.
We are members of the Bar of the State of New York and do not hold
ourselves out as experts as to the law of any other state or jurisdiction. We
have received and relied upon an opinion from Morris, Nichols, Arsht & Tunnell,
special Delaware counsel, a copy of which is attached hereto as Exhibit A,
concerning the organization of the Trust and the authorization and issuance of
the Shares, and our opinion is subject to the qualifications and limitations set
forth therein, which are incorporated herein by reference as though fully set
forth herein.
Based upon and subject to the foregoing, we are of the opinion that:
i. The Trust is a duly formed and validly existing business
trust in good standing under the laws of the State of
Delaware.
ii. The Shares, when issued to shareholders in accordance with
the terms, conditions, requirements and procedures set
forth in the Governing Documents, will constitute legally
issued, fully paid and non-assessable shares of beneficial
interest in the Trust.
This opinion is solely for your benefit and is not to be quoted in
whole or in part, summarized or otherwise referred to, nor is it to be filed
with or supplied to any government agency or other person without the written
consent of this firm. This opinion letter is rendered as of the date hereof, and
we specifically disclaim any responsibility to update or supplement this letter
to reflect any events or state of facts which may hereafter come to our
attention or any changes in statutes or regulations or any court decisions which
may hereafter occur.
Notwithstanding the previous paragraph, we consent to the filing of
this opinion as an exhibit to the Trust's Registration Statement on Form N-1A.
Very truly yours,
/s/ Kramer Levin Naftalis & Frankel LLP
[Letterhead of Kramer Levin Naftalis & Frankel LLP]
December 1, 1998
The Dessauer Global Equity Fund
5 Bay State Court
P.O. Box 1689
Orleans, Massachusetts 02653
Re: The Dessauer Global Equity Fund, File Nos.:
333-63753, 811-7691
--------------------------------------------
Ladies and Gentlemen:
We hereby consent to the reference of our firm as Counsel in this
Registration Statement on Form N-1A.
Very truly yours,
/s Kramer Levin Naftalis & Frankel LLP
[Letterhead of Morris, Nichols, Arsht & Tunnell]
December 1, 1998
Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022
Re: The Dessauer Global Equity Fund
-------------------------------
Ladies and Gentlemen:
We have acted as special Delaware counsel to The Dessauer Global Equity
Fund, a Delaware business trust (the "Trust"), in connection with certain
matters relating to the formation of the Trust and the issuance of Shares of
beneficial interest therein. Capitalized terms used herein and not otherwise
herein defined are used as defined in the Trust Instrument of the Trust dated
June 27, 1996 (the "Governing Instrument").
In rendering this opinion, we have examined and relied upon copies of
the following documents, each in the form provided to us: the Certificate of
Trust of the Trust as filed in the Office of the Secretary of State of the State
of Delaware (the "Recording Office") on June 28, 1996 (the "Certificate"); the
Governing Instrument; the By-laws of the Trust dated as of June 27, 1996 (the
"By-laws"); certain resolutions of the Trustees of the Trust prepared for
adoption at the meetings of the Board of Trustees held on May 23, 1997,
September 3, 1997, January 21, 1998, May 11, 1998 and September 9, 1998 (such
resolutions, together with the Governing Instrument and the By-laws, the
"Governing Documents"); the Trust's Notification of Registration Filed Pursuant
to Section 8(a) of the Investment Company Act of 1940 on Form N-8A as filed with
the Securities and Exchange Commission on June 11, 1996; the Registration
<PAGE>
Statement under the Securities Act of 1933 on Form N-1A of the Trust as filed
with the Securities and Exchange Commission on September 18, 1998 (the
"Registration Statement"); and a certification of good standing of the Trust
obtained as of a recent date from the Recording Office. In such examinations, we
have assumed the genuineness of all signatures, the conformity to original
documents of all documents submitted to us as copies or drafts of documents to
be executed, and the legal capacity of natural persons to complete the execution
of documents.
We have further assumed for the purpose of this opinion: (i) the due
adoption, authorization, execution and delivery by, or on behalf of, each of the
parties thereto of the above-referenced resolutions, instruments, certificates
and other documents, and of all documents contemplated by the Governing
Instrument and all applicable resolutions of the Trustees to be executed by
investors desiring to become Shareholders; (ii) the payment of consideration for
Shares, and the application of such consideration, as provided in the Governing
Instrument, and compliance with the other terms, conditions and restrictions set
forth in the Governing Instrument and all applicable resolutions of the Trustees
in connection with the issuance of Shares; (iii) that appropriate notation of
the names and addresses of, the number of Shares held by, and the consideration
paid by, Shareholders will be maintained in the appropriate registers and other
books and records of the Trust in connection with the issuance or transfer of
Shares; (iv) that the number of Shares issued in accordance with the terms of
the Governing Instrument will not exceed 50,000,000; (v) that no event has
occurred subsequent to the filing of the Certificate that would cause a
termination or reorganization of the Trust under Sections 11.04 or 11.05 of the
Governing Instrument; (vi) that the Trust is, becomes, or will become prior to
or within 180 days following the first issuance of beneficial interests therein,
a registered investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"); (vii) that the activities of the Trust have been and
will be conducted in accordance with the terms of the Governing Instrument and
the Delaware Business Trust Act, 12 Del. C. ss.ss. 3801 et seq. (the "Delaware
Act"), and that the Trust has converted into an "open-end investment company"
(as such term is defined in the 1940 Act) in accordance with Section 11.06 of
the Governing Instrument; and (viii) that each of the documents examined by us
is in full force and effect, expresses the entire understanding of the parties
thereto with respect to the subject matter thereof and has not been amended,
supplemented or otherwise modified, except as herein referenced. No opinion is
expressed herein with respect to the requirements of, or compliance with,
federal or state securities or blue sky laws. Further, we express no opinion on
the sufficiency or accuracy of any registration or offering materials relating
to the Trust or the Shares. As to any facts material to our opinion, other than
those assumed, we have relied without independent investigation on the
above-referenced documents and on the accuracy, as of the date hereof, of the
matters therein contained.
<PAGE>
Based on and subject to the foregoing, and limited in all respects to
matters of Delaware law, it is our opinion that:
1. The Trust is a duly formed and validly existing business trust in
good standing under the laws of the State of Delaware.
2. The Shares, when issued to Shareholders in accordance with the
terms, conditions, requirements and procedures set forth in the Governing
Documents, will constitute legally issued, fully paid and non-assessable Shares
of beneficial interest in the Trust.
3. Under the Delaware Act and the terms of the Governing Instrument,
each Shareholder of the Trust, in such capacity, will be entitled to the same
limitation of personal liability as that extended to stockholders of private
corporations for profit organized under the general corporation law of the State
of Delaware; provided, however, that we express no opinion with respect to the
liability of any Shareholder who is, was or may become a named Trustee of the
Trust.
We understand that you wish to rely as to certain matters of Delaware
law on the opinions expressed herein in connection with the delivery of your
opinion to the Trust dated on or about the date hereof, and we hereby consent to
such reliance. Except as provided in the immediately preceding sentence, this
opinion may not be relied on by any other person or entity or for any purpose
without our prior written consent. We hereby consent to the filing of a copy of
this opinion with the Securities and Exchange Commission as part of a
pre-effective amendment to the Registration Statement to be filed on or about
the date hereof. In giving this consent, we do not thereby admit that we come
within the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder. This opinion speaks only as of
the date hereof and is based on our understandings and assumptions as to present
facts and our review of the above-referenced documents and certificates and the
application of Delaware law as the same exist on the date hereof, and we
undertake no obligation to update or supplement this opinion after the date
hereof for the benefit of any person or entity with respect to any facts or
circumstances that may hereafter come to our attention or any changes in facts
or law that may hereafter occur or take effect.
Sincerely,
MORRIS, NICHOLS, ARSHT & TUNNELL
/s/ Morris, Nichols, Arsht & Tunnell
------------------------------------
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Financial
Highlights", "Independent Accountants", and "Service Providers" in Pre-Effective
Amendment No. 1 under the Securities Act of 1933 to the Registration Statement
(Form N-1A, No. 811-7691) and related Prospectus and Statement of Additional
Information of 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 included in the Annual Report for
the year ended March 31, 1998, filed with the Securities and Exchange
Commission.
Los Angeles, California
November 30, 1998
