Reg. ICA No. 811-7691
File No. 333-63753
As filed via EDGAR with the Securities and Exchange Commission on April 28, 1999
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-1A/A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |_|
Pre-Effective Amendment No. 2 |X|
Post-Effective Amendment No.
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No.
THE DESSAUER GLOBAL EQUITY FUND
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(Exact Name of Registrant as Specified in Charter)
4 Main Street
Orleans, Massachusetts 02653
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(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code: 1-800-560-0086
Susan Penry-Williams, Esq.
Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022
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(Name and Address of Agent for Service)
Copy to:
Thomas P. McIntyre
The Dessauer Global Equity Fund
4 Main Street
Orleans, Massachusetts 02653
Approximate Date of Proposed Public Offering: _____________________
It is proposed that this filing will become effective:
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|_| Immediately upon filing pursuant to |_| on 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).
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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
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Item Number
Form N-1A, Statement of Additional
Part A Prospectus Caption Information Caption
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1(a) Front Cover Page *
(b) Back Cover Page *
2(a) Risk/Return Summary: Investment *
Objective
(b) Investment Strategies *
(c) Principal Risks; Bar Chart and *
Performance Table
3 Fees and Expenses of the Fund *
4(a) Investment Objective, Principal *
Strategies and Related Risk
(b) Investment Strategies *
(c) Risks of Investing in Mutual Funds; *
Risks of Investing
5 Not Applicable *
6(a) Investment Adviser and Investment *
Advisory Agreement
(b) Not Applicable *
7(a) Finances - Net Asset Value *
(b) Shareholder Guide: Your Account *
with Dessauer Global Equity Fund -
Investment Minimums, Pre-
Authorized Investment Plan, How to
Purchase, Exchange and Sell Shares,
Subsequent Investments
(c) Shareholder Guide: Your Account *
with Dessauer Global Equity Fund -
Investment Minimums, How to
Redeem Shares, Redemption Issues
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Item Number
Form N-1A, Statement of Additional
Part A Prospectus Caption Information Caption
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(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
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10 * Front Cover Page
11 * Fund History
12(a) * Fund History
12(b) * Investment Practices and
Policies
12(c) * Investment Practices and
Policies
12(d) * Investment Practices and
Policies
12(e) Risk Factors
13(a)-(d) * Management of the Fund
13(e) * Not Applicable
14(a) * Not Applicable
14(b) * Management of the Fund
14(c) * Management of the Fund
15(a) Investment Adviser and
Advisory Agreement
(b) * Not Applicable
(c) Investment Adviser and
Advisory Agreement
(d) * Investment Adviser and
Investment Advisory
Agreement
(e) * Not Applicable
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Item Number
Form N-1A, Statement of Additional
Part B Prospectus Caption Information Caption
------ ------------------ -------------------
(f) * Not Applicable
(g) * Not Applicable
(h) * Service Providers
16(a)-(c) * Portfolio Transactions and
Brokerage
* Portfolio Transactions and
Brokerage
(d) * Not Applicable
(e) * Not Applicable
17(a) * Shares of Beneficial Interest
(b) * Not Applicable
18(a) Purchasing Shares;
Additional Purchase and
Redemption Information
(b) * Not Applicable
(c) Computation of Net Asset
Value
(d) * Not Applicable
19(a) * Tax Matters
(b) * Tax Matters
20(a) * Not Applicable
(b) * Not Applicable
(c) * Not Applicable
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21(a) * Not Applicable
(b) * Performance Information
22(a) * Financial Statements
(b) * Financial Statements
(c) * Financial Statements
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* See Prospectus
Part C
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Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.
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[GRAPHIC]
PROSPECTUS April 29, 1999, 1999
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.
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Table of Contents
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Page
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Risk/Return Summary: Investments, Risks, and Performance
- Investment Objectives/Goals
- Principle Investment Strategies of the Fund
- Principal Risks of Investing in the Fund
- Risk/Return Bar Chart and Performance Table
Investment Objective, Principal Strategies and Related Risks
- Risks
Risks of Investing in Mutual Funds
Risks of Investing In Foreign Securities
Risks of Investing in Hong Kong
Risks of Investing in Europe
Risks of Investing in Debt Securities
Investment Adviser and Investment Advisory Agreement
Administrator
Shareholder Servicing Plan
Shareholder Guide - Your Account with The Dessauer Global Equity Fund
Investment Minimums
Net Asset Value
How to Purchase, Exchange and Sell Shares
- Mail
- Wire
- Auto-Buy
- Subsequent Investments
- Third Party Check or Starter Check
- Purchase Order Cut-Off
How to Redeem Shares
- Mail
- Telephone
- Wire
- Systematic Withdrawal Plan
- Signature Guarantee
Redemption Issues
- Redemption Fee
- Redemption by Corporations
- Redemption in Kind
- Small Accounts
- Check Clearance
Dividends and Capital Gains Distributions
Buying Before a Dividend
Tax Issues
Financial Highlights
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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 by focusing on fundamentals, business trends, and management of the
companies and their 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.
Principal Risks of Investing in the Fund.
The Fund is subject to the risks common to all mutual funds that invest in
equity and foreign securities. You may lose money by investing in this Fund if
any of the following 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 a foreign currency declines 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 investments to decline.
In addition, the Fund is non-diversified, which means that the Fund may have a
portfolio with as few as twelve issuers. To the extent that the Fund invests in
a small number of issuers, an investment in the Fund may involve greater risk
than an investment in a diversified fund.
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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 January 1, 1998 through December 31,
1998. Past performance is not an indication of future performance.
During this period, the Fund's best performance for a quarter was 31.8% (for the
quarter ended December 31, 1998). The Fund's worst performance was -21.83% (for
the quarter ended September 30, 1998).
These risks are also demonstrated by the table below which shows how the Fund's
average annual returns compare with those of the Morgan Stanley Capital
International World Index.
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Average Annual Returns as of
12/31/98 1 Year Since Inception
(May 30, 1997)
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The Dessauer Global Equity Fund 26.27% 12.89%
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Morgan Stanley Capital International 22.77% 16.98%
World Index
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Fee Table
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge Imposed on Purchases None
Maximum Sales Charge Imposed on Reinvested Dividends Cash None
60- Day Redemption Fee (as a percentage of amount redeemed) 1.00%
Annual Fund Operating Expenses (expenses that are deducted from the
Fund's assets)
(as a % of average net assets)
Management Fees 0.75%
Shareholder Service Plan 1 0.25%
Administrative Fee 0.10%
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1 Until April 23, 1999 the Fund operated as a registered closed-end investment
company. As a closed-end fund, the Fund did not have a Shareholder Service Plan.
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Other Expenses 0.45%
Total Annual Expenses 1.55%
Example of Expenses
This example is to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds.
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 your investment has a 5% return each year
and that the Fund's operating expenses have remained the same. Although your
actual costs may be higher or lower, based on these assumptions, the cost would
be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$158 $490 $845 $1,845
Investment Objective, Principal Strategies and Related Risks
Investment Objective. The Fund's investment objective is long-term capital
appreciation. The Fund's investment objective and strategies may be changed
without shareholder approval.
Generally, the Fund stays fully invested and deals with market turmoil by being
extremely selective and extensively 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.
Risks. 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 intends to
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comply with the diversification requirements of federal tax law as necessary to
qualify as a regulated investment company.
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 more or less than it was at the time of purchase. Market risk applies
to individual securities, a particular sector, or the entire economy.
o Manager Risk. Fund management affects Fund performance. A Fund may lose
money if the Fund manager's investment strategy does not achieve the Fund's
objective or the manager does not implement the strategy properly.
o Year 2000 Risk. The operations of the Fund, its ability to use services
provided by third parties, or its portfolio investments could be disrupted
by problems related to the failure of computer systems to properly process
and calculate date-related information starting on January 1, 2000. The
Fund or its service providers could have problems performing various
functions such as calculating net asset value, redeeming shares, delivering
account statements and providing other information to shareholders.
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. laws 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
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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 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 performance of a single company or group of companies would
have on the U.S. stock market.
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 indirectly 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 Fund to the extent that it invests in Hong Kong.
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, which may lead to greater
volatility in this market than in less concentrated markets. The following
risks should be considered when considering investing in the Fund:
1. political instability may arise as a result of indecisive leadership;
2. hard line Communists might regain the political initiative;
3. social tensions caused by widely differing levels of economic
prosperity within Chinese society may 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 Fund to the extent that it invests in debt securities.
o The Euro. The recent conversion of the currency of certain European
countries to the common currency called the "Euro" may subject the Fund to
additional risks to the
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extent the Fund invests in these countries. The Euro could fail as a new
currency, forcing participating countries to return to their original
currency which could result in increased trade costs, decreased corporate
profits or other adverse effects. The profit margins of companies in which
the Fund invests may decrease due to the competitive impact of the Euro,
failure to modify information technology systems to accommodate the Euro,
or increased currency exchange costs. In addition, the Fund's service
providers could fail to make appropriate systems modifications to
accommodate the conversion to the Euro.
o Privatization Risk. Many European countries are privatizing state operated
and/or owned companies. There is the risk that this could cause labor
unrest and political instability or that those privatization efforts could
fail.
Risks of Investing in Debt Securities
The following risks are common to all mutual funds that invest in debt
securities and therefore apply to the portion of the Fund that is invested in
such debt to the extent that the Fund invests in securities that give rise to
such risks:
o Interest Rate Risk. The value of a debt security typically decreases when
interest rates rise. In general, debt securities with longer maturities are
more sensitive to changes in interest rates.
o Inflation Risk. A debt security may lose value if the rate of inflation
increases. Fixed debt securities are more susceptible to this risk than
floating debt securities.
o Reinvestment Risk. A fund may obtain a lower rate of return when
reinvesting investment income or sale proceeds.
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., 4 Main Street, Orleans, MA
02653 is the investment adviser of the Fund (the "Adviser"). The Adviser, an
investment adviser registered with the SEC, was founded in 1986 and as of
February 28, 1999 managed $418 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
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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 together
own 100% of the Adviser.
o Mr. McIntyre is the manager of the Fund's portfolio. He joined the Adviser
in 1989 and became President in 1992. Mr. McIntyre has served as President
and portfolio manager of the Fund since its inception. For two years prior
to joining the Adviser, 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 of a closed-end equity fund with assets of $140
million. 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 20 years experience in financial
analysis and portfolio management.
Administrator
The Fund has entered into an administration agreement with Investment
Company Administration, L.L.C. ("ICA"). Under the administration agreement, ICA
will supervise the administration of all aspects of the Fund's operations,
including paying for certain outside services provided to the Fund, providing
the Fund with general office facilities, and providing, 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 facilities, the Fund has agreed to pay ICA a monthly fee at an
annual rate of .10% of its average weekly net assets.
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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
Regular-(these accounts are taxable) Retirement-(these accounts are
generally nontaxable)
o Individual o Roth IRA
o Joint Tenant o Regular IRA
o UGMA/UTMA o Rollover IRA
o Trust o Roth Conversion
o Corporate o SIMPLE IRA
o SEP IRA
o 401(k)
o 403 (b)
Investment Minimums. The minimum initial investments are:
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
The Fund may reduce or waive the minimum investment requirements in some cases.
Net Asset Value. The net asset value ("NAV") per share of the Fund is determined
as of 4:00 p.m. Eastern Standard Time on each day the New York Stock Exchange is
open for business. The NAV is calculated by subtracting the Fund's liabilities
from its assets and then dividing that number by the total number of outstanding
shares. This procedure is in accordance with Generally Accepted Accounting
Principles as well as 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.
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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 the Fund. You will receive the NAV as of the date the
debit is made.
How to Purchase, Exchange and Sell Shares. National Financial Data Services Inc.
("NFDS"), the Fund's transfer agent, 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.
You may purchase shares of the Fund by mail, wire or auto-buy. You may be able
to invest in and redeem shares of the Fund through a broker or dealer if the
broker has made arrangements with First Fund Distributors, Inc. the Fund's
distributor. The broker-dealer is authorized to designate intermediaries to
accept orders on the Fund's behalf. Your broker-dealer may place an order for
you with the Fund; the Fund will be deemed to have received the order when the
broker-dealer accepts the order. A broker-dealer or other agent may charge you a
fee for placing either an investment or redemption order, but you can avoid
paying such a fee by sending an Application Form and payment directly to the
Fund. The broker-dealer may also hold shares you purchase in an omnibus account
in its name rather than in your name on the records of the Fund's transfer
agent. The Fund may reimburse the broker-dealer or other agent for maintaining
records of your account as well as for other services provided to you. If you
wish to add any account feature after your account is established, you must 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
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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:
Investors Fiduciary Trust Company
ABA #101003621
Shareholder and Custody Services
The Dessauer Global Equity Fund
DDA #7561016
ATTN: [Account Registration]
[Your A/C #]
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 bank 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.
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.
Purchase Order Cut-Off. The Fund, at the direction of the Board of Trustees, may
cease taking purchase orders at any time when it believes that it is in the best
interest of current shareholders.
How to Redeem Shares. You may redeem shares by mail or telephone. Your request
must be received at NFDS by 4 p.m. Eastern Standard Time on a day the New York
Stock Exchange is open for business in order to receive the NAV for that day.
Since some portfolio securities are listed primarily 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. You may receive the proceeds of redemption by wire or through
a systematic withdrawal plan as described below. There is a $10 fee for
redemption by wire and a maximum of $50,000 which can be redeemed daily.
Mail. To redeem by mail, please:
o Provide your name and account number
o Specify the number of shares or dollar amount to be redeemed
o Sign the redemption request (the signature must be the same as the one on
your account application). Make sure all parties required to sign the
request have done so.
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o Send your request to the appropriate address (shown above under "Purchasing
by Mail")
Telephone. You may redeem your shares 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. If your redemption request
is received by 4 p.m. Eastern Standard Time you will receive the NAV for that
day. 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 reasonably believed to be authorized by you. You will be notified
if NFDS refuses any telephone redemption. Telephone redemptions may be difficult
during periods of extreme market or economic conditions. If you are unable to
redeem by telephone, please send your redemption request by mail or overnight
courier.
Wire. You may have the proceeds of your redemption request wired to your bank
account for redemptions of $500 or more. To have your proceeds wired, please
provide the name, location, ABA or bank routing number of your bank and your
bank account number. Payment will be made within three business days after NFDS
receives your written or telephone redemption request.
Systematic Withdrawal Plan. You may establish a systematic withdrawal plan which
allows you to 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. 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:
o Redemptions by corporations, partnerships, trusts or other fiduciary
accounts
o Redemptions from 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
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.
Redemption Issues
- 11 -
<PAGE>
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 is no 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 Redemption in Kind. The Fund reserves the right to redeem your shares "in
kind". For example, if you redeem a large number of shares and the Fund is
unable to sell securities to raise cash, the Fund may send you a
combination of cash and shares of the Fund's securities.
o Small Accounts. To reduce Fund expenses, we may redeem an account if the
total value of the account falls below $1,000 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
until the purchase check clears, which may be up to 15 calendar days. 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.
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 NFDS
at (800) 560- 0086 and requesting this change. You must complete the form and
return it to 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 before 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 the NAV of
the Fund, regardless of whether you reinvested the dividends.
- 12 -
<PAGE>
Tax Issues. The Fund has elected, and intends to continue to qualify, to be
treated as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"), by distributing substantially all
of its net investment income and net capital gains to its shareholders and
meeting other requirements of the Code relating to the sources of its income and
diversification of assets. Accordingly, the Fund generally will not be liable
for federal income tax or excise tax based on net income except to the extent
its earnings are not distributed or are distributed in a manner that does not
satisfy the requirements of the Code. If the Fund is unable to meet certain Code
requirements, it may be subject to taxation as a corporation.
For federal income tax purposes, any dividends derived from net investment
income and any 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 represent 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.
- 13 -
<PAGE>
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:
Net investment income 0.10
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 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%++
- 14 -
<PAGE>
Portfolio turnover rate 74.47%+
* Commencement of the Fund.
** Includes the impact of a $330,000 ($0.06 per share) charge for offering
expenses paid pursuant to the terms of the Prospectus dated May 30,
1997.
+ Not Annualized.
++ Annualized.
- 15 -
<PAGE>
[back cover page]
Statement of Additional Information. The Statement of Additional Information
provides a more complete discussion about the Fund and is incorporated by
reference into this prospectus, which means that it is considered a part of this
prospectus.
Annual and Semi-Annual Reports. The annual and semi-annual reports to
shareholders contain additional information about the Fund's investments,
including a discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during its last fiscal year.
To Review or Obtain this Information: The Statement of Additional Information
and annual and semi-annual reports are available without charge upon your
request by calling the 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
http:\\www.sec.gov. 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.
File No.: 811-7691
- 16 -
<PAGE>
PURCHASE APPLICATION
TO BE ADDED
- 17 -
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
THE DESSAUER GLOBAL EQUITY FUND
4 MAIN STREET
ORLEANS, MASSACHUSETTS 02653
April 29, 1999
This Statement is not a prospectus but should be read in conjunction with the
current Prospectus dated April 2_, 1999 (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
<PAGE>
TABLE OF CONTENTS
Page
Organization of The Dessauer Global Equity Fund........................... 1
Management of the Fund.................................................... 1
Board of Trustees..................................................... 1
Investment Adviser and Investment Advisory Agreement...................... 2
Advisory Agreement.................................................... 2
Management of the Adviser............................................. 2
Principal Shareholders................................................ 2
Service Providers......................................................... 3
Investment Practices and Policies......................................... 3
Investment Practices.................................................. 3
Investment Policies................................................... 3
Investment Restrictions................................................... 4
Risk Factors.............................................................. 5
Economic and Political Factors Affecting Foreign Countries............ 5
Foreign Currency Considerations....................................... 5
Trading Markets in Foreign Countries.................................. 6
Repatriation; Investment Controls..................................... 6
Foreign Taxation...................................................... 7
Portfolio Turnover Risk............................................... 7
Portfolio Transactions and Brokerage...................................... 7
Allocation of Investments................................................. 7
Computation of Net Asset Value............................................ 8
Purchasing Assets......................................................... 8
Redeeming Shares........................................................... 9
Shares of Beneficial Interest in the Fund.................................. 9
Additional Purchase and Redemption Information............................. 9
Tax Matters................................................................ 9
Qualification as a Regulated Investment Company........................ 9
Excise Tax on Regulated Investment Companies.......................... 12
Fund Distributions.................................................... 12
Sale or Redemption of Shares.......................................... 14
Foreign Shareholders.................................................. 15
Effect of Future Legislation; Local Tax Considerations................ 15
Performance Information................................................... 15
-i-
<PAGE>
Adviser
- -------
Dessauer & McIntyre Asset Management, Inc.
Administrator
- -------------
Investment Company Administration, L.L.C.
Distributor
- -----------
First Fund Distributors, Inc.
Custodian
- ---------
Investors Bank and Trust Company
Transfer Agent and Dividend Paying Agent
- ----------------------------------------
National Financial Data Services
Counsel
- -------
Kramer Levin Naftalis & Frankel LLP
Independent Accountants
- -----------------------
Ernst & Young LLP
-ii-
<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 commenced offering its shares as an open-end
fund on April 29, 1999.
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, L.L.C. ("ICA") 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., 4 Main Street, Orleans,
Massachusetts 02653.
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATIONS
NAME AND AGE WITH REGISTRANT DURING PAST 5 YEARS
------------ --------------- -------------------
<S> <C> <C>
John P. Dessauer, 62 Chairman and Trustee Dessauer & McIntyre Asset
Management, Inc.
Thomas P. McIntyre, 42 President and 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>
-1-
<PAGE>
The annual compensation of the Trustees is noted below.
<TABLE>
<CAPTION>
NAME OF PERSON AGGREGATE PENSION OR RETIREMENT ESTIMATED TOTAL COMPENSATION
COMPENSATION BENEFITS ACCRUED AS ANNUAL FROM
FROM FUND PART OF THE FUND EXPENSES BENEFITS FUND AND FUND COMPLEX
UPON RETIREMENT PAID TO TRUSTEES
<S> <C> <C> <C> <C>
John P. Dessauer.... -- -- -- --
Thomas P. McIntyre.. -- -- -- --
Max A. Fischer...... $3,750 -- -- $3,750
Ingrid R. Hendershot $3,750 -- -- $3,750
Kevin Melich........ $3,750 -- -- $3,750
J. Brooks Reece..... $3,750 -- -- $3,750
</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 meetings 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 continues from year to year, 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 own
100% of the common stock of the Adviser and are therefore "Control Persons" as
defined in the 1940 Act.
PRINCIPAL SHAREHOLDERS. As of March 23, 1999, the Directors and Officers
of the Fund as a group owned 1.57% of the Fund's outstanding shares. As of March
23, 1999, to the knowledge of management, no person owned beneficially or of
record more than 5% of the outstanding shares of the Fund.
-2-
<PAGE>
SERVICE PROVIDERS
ICA acts as the Fund's administrator pursuant to an administration
agreement with the Fund. Under the administration agreement, ICA supervises 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, provides the Fund
with general office facilities, and provides, 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 ICA and its affiliates. For these services and
facilities, the Fund pays ICA a monthly fee at an annual rate of .10% of the
average weekly net assets of the Fund.
First Fund Distributors, Inc. ("FFD") receives orders for the purchase
of the shares of the Fund and transmits such orders and funds received by it in
payment for such shares to the transfer agent or custodian, as appropriate, as
promptly as practicable. FFD also has the right to enter into selected dealer
agreements with securities dealers of its choice ("selected dealers") for the
sale of shares.
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.
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,
-3-
<PAGE>
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.
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 if the Fund is operating as an
open-end investment company, (ii) for such short-term
credits necessary for the clearance or settlement of the
transactions, (iii) to finance repurchase of its Shares or
(iv) 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 in amounts not exceeding 5% of its
total assets (including the amount borrowed and excluding
the liability for the borrowings).
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.
-4-
<PAGE>
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.
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
-5-
<PAGE>
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 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.
-6-
<PAGE>
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."
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 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
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.
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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.
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.
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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.
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
30 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
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(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.
In addition to satisfying the Distribution Requirement, a regulated
investment company must derive at least 90% of its gross income from dividends,
interest, certain payments with respect to securities loans, gains from the sale
or other disposition of stock or securities or foreign currencies (to the extent
such currency gains are directly related to the regulated investment company's
principal business of investing in stock or securities) and other income
(including but not limited to gains from options, futures or forward contracts)
derived with respect to its business of investing in such stock, securities or
currencies (the "Income Requirement").
In general, gain or loss recognized by the Fund on the disposition of an
asset will be a capital gain or loss. In addition, gain will be recognized as a
result of certain constructive sales, including short sales "against the box."
However, gain recognized on the disposition of a debt obligation purchased by
the Fund at a market discount (generally, at a price less than its principal
amount) will be treated as ordinary income to the extent of the portion of the
market discount which accrued during the period of time the Fund held the debt
obligation. In addition, under the rules of Code section 988, gain or loss
recognized on the disposition of a debt obligation denominated in a foreign
currency or an option with respect thereto (but only to the extent attributable
to changes in foreign currency exchange rates), and gain or loss recognized on
the disposition of a foreign currency forward contract, futures contract, option
or similar financial instrument, or of foreign currency itself, except for
regulated futures contracts or non-equity options subject to Code Section 1256
(unless the Fund elects otherwise), will generally be treated as ordinary income
or loss.
In general, for purposes of determining whether capital gain or loss
recognized by the Fund on the disposition of an asset is long-term or
short-term, the holding period of the asset may be affected if (1) the asset is
used to close a "short sale" (which includes for certain purposes the
acquisition of a put option) or is substantially identical to another asset so
used, (2) the asset is otherwise held by the Fund as part of a "straddle" (which
term generally excludes a situation where the asset is stock and the Fund grants
a qualified covered call option (which, among other things, must not be
deep-in-the-money) with respect thereto) or (3) the asset is stock and the Fund
grants an in-the-money qualified covered call option with respect thereto. In
addition, the Fund may be required to defer the recognition of a loss on the
disposition of an asset held as part of a straddle to the extent of any
unrecognized gain on the offsetting position. Any gain recognized by the Fund on
the lapse of, or any gain or loss recognized by the Fund from a closing
transaction with respect to, an option written by the Fund will be treated as a
short-term capital gain or loss.
Further, the Code also treats as ordinary income a portion of the
capital gain attributable to a transaction where substantially all of the return
realized is attributable to the time value of a Fund's net investment in the
transaction and: (1) the transaction consists of the acquisition of property by
the Fund and a contemporaneous contract to sell substantially identical property
in the future; (2) the transaction is a straddle within the meaning of section
1092 of the Code; (3) the transaction is one that was marketed or sold to the
Fund on the basis that it would have the economic characteristics of a loan but
the interest-like return would be taxed as capital gain; or (4) the transaction
is described as a conversion transaction in the Treasury Regulations. The amount
of the gain recharacterized generally will not exceed the amount of the interest
that would have accrued on the net investment for the relevant period at a yield
equal to 120% of the federal long-term, mid-term, or short-term rate, depending
upon the type of instrument at issue, reduced by an amount equal to: (1) prior
inclusions of ordinary income items from the conversion transaction and (2) the
capital interest on acquisition indebtedness under Code section 263(g). Built-in
losses will be preserved where the Fund has a built-in loss with respect to
property that becomes a part of a conversion transaction. No authority exists
that indicates that the converted character of the income will not be passed
through to the Fund's shareholders.
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Certain transactions that may be engaged in by the Fund (such as
regulated futures contracts, certain foreign currency contracts, and options on
stock indexes and futures contracts) will be subject to special tax treatment as
"Section 1256 contracts." Section 1256 contracts are treated as if they are sold
for their fair market value on the last business day of the taxable year, even
though a taxpayer's obligations (or rights) under such contracts have not
terminated (by delivery, exercise, entering into a closing transaction or
otherwise) as of such date. Any gain or loss recognized as a consequence of the
year-end deemed disposition of Section 1256 contracts is taken into account for
that year together with any other gain or loss that was previously recognized
upon the termination of Section 1256 contracts during the year. Any capital gain
or loss for the taxable year with respect to Section 1256 contracts (including
any capital gain or loss arising as a consequence of the year-end deemed sale of
such contracts) is generally treated as 60% long-term capital gain or loss and
40% short-term capital gain or loss. The Fund, however, may elect not to have
this special tax treatment apply to Section 1256 contracts that are part of a
"mixed straddle" with other investments of the Fund that are not Section 1256
contracts.
The Fund may purchase securities of certain foreign investment funds or
trusts which constitute passive foreign investment companies ("PFICs") for
federal income tax purposes. If the Fund invests in a PFIC, it has three
separate options. First, it may elect to treat the PFIC as a qualifying electing
fund (a "QEF"), in which case it will each year have ordinary income equal to
its pro rata share of the PFIC's ordinary earnings for the year and long-term
capital gain equal to its pro rata share of the PFIC's net capital gain for the
year, regardless of whether the Fund receives distributions of any such ordinary
earnings or capital gains from the PFIC. Second, for tax years beginning after
December 31, 1997, the Fund may make a mark-to-market election with respect to
its PFIC stock. Pursuant to such an election, the Fund will include as ordinary
income any excess of the fair market value of such stock at the close of any
taxable year over its adjusted tax basis in the stock. If the adjusted tax basis
of the PFIC stock exceeds the fair market value of such stock at the end of a
given taxable year, such excess will be deductible as ordinary loss in the
amount equal to the lesser of the amount of such excess or the net
mark-to-market gains on the stock that the Fund included in income in previous
years. The Fund's holding period with respect to its PFIC stock subject to the
election will commence on the first day of the following taxable year. If the
Fund makes the mark-to-market election in the first taxable year it holds PFIC
stock, it will not incur the tax described below under the third option.
Finally, if the Fund does not elect to treat the PFIC as a QEF and does
not make a mark-to-market election, then, in general, (1) any gain recognized by
the Fund upon a sale or other disposition of its interest in the PFIC or any
"excess distribution" (as defined) received by the Fund from the PFIC will be
allocated ratably over the Fund's holding period in the PFIC stock, (2) the
portion of such gain or excess distribution so allocated to the year in which
the gain is recognized or the excess distribution is received shall be included
in the Fund's gross income for such year as ordinary income (and the
distribution of such portion by the Fund to shareholders will be taxable as an
ordinary income dividend, but such portion will not be subject to tax at the
Fund level), (3) the Fund shall be liable for tax on the portions of such gain
or excess distribution so allocated to prior years in an amount equal to, for
each such prior year, (i) the amount of gain or excess distribution allocated to
such prior year multiplied by the highest tax rate (individual or corporate, as
the case may be) in effect for such prior year, plus (ii) interest on the amount
determined under clause (i) for the period from the due date for filing a return
for such prior year until the date for filing a return for the year in which the
gain is recognized or the excess distribution is received, at the rates and
methods applicable to underpayments of tax for such period, and (4) the
distribution by the Fund to shareholders of the portions of such gain or excess
distribution so allocated to prior years (net of the tax payable by the Fund
thereon) will again be taxable to the shareholders as an ordinary income
dividend.
Treasury Regulations permit a regulated investment company, in
determining its investment company taxable income and net capital gain (i.e.,
the excess of net long-term capital gain over net short-term capital loss) for
any taxable year, to elect (unless it made a taxable year election for excise
tax purposes as discussed below) to treat all or any part of any net capital
loss, any net long-term capital loss or any net foreign currency loss
(including, to the extent provided in Treasury Regulations, losses recognized
pursuant to the PFIC mark-to-market election) incurred after October 31 as if it
had been incurred in the succeeding year.
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<PAGE>
In addition to satisfying the requirements described above, the Fund
must satisfy an asset diversification test in order to qualify as a regulated
investment company. Under this test, at the close of each quarter of the Fund's
taxable year, at least 50% of the value of the Fund's assets must consist of
cash and cash items, U.S. Government securities, securities of other regulated
investment companies, and securities of other issuers (as to each of which the
Fund has not invested more than 5% of the value of its total assets in
securities of such issuer and does not hold more than 10% of the outstanding
voting securities of such issuer), and no more than 25% of the value of its
total assets may be invested in the securities of any one issuer (other than
U.S. Government securities and securities of other regulated investment
companies), or in two or more issuers which the Fund controls and which are
engaged in the same or similar trades or businesses. Generally, an option (a
call or a put) with respect to a security is treated as issued by the issuer of
the security not the issuer of the option.
If for any taxable year the Fund does not qualify as a regulated
investment company, all of its taxable income (including its net capital gain)
will be subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and such distributions will be taxable to the
shareholders as ordinary dividends to the extent of the Fund's current and
accumulated earnings and profits. Such distributions may be eligible for the
dividends-received deduction in the case of corporate shareholders.
Excise Tax on Regulated Investment Companies
A 4% non-deductible excise tax is imposed on a regulated investment
company that fails to distribute in each calendar year an amount equal to 98% of
its ordinary taxable income for the calendar year and 98% of its capital gain
net income for the one-year period ended on October 31 of such calendar year
(or, at the election of a regulated investment company having a taxable year
ending November 30 or December 31, for its taxable year (a "taxable year
election")). The balance of such income must be distributed during the next
calendar year. For the foregoing purposes, a regulated investment company is
treated as having distributed any amount on which it is subject to income tax
for any taxable year ending in such calendar year.
For purposes of the excise tax, a regulated investment company shall:
(1) reduce its capital gain net income (but not below its net capital gain) by
the amount of any net ordinary loss for the calendar year; and (2) exclude
foreign currency gains and losses and ordinary gains or losses arising as a
result of a PFIC mark-to-market election (or upon an actual disposition of the
PFIC stock subject to such election) incurred after October 31 of any year (or
after the end of its taxable year if it has made a taxable year election) in
determining the amount of ordinary taxable income for the current calendar year
(and, instead, include such gains and losses in determining ordinary taxable
income for the succeeding calendar year).
The Fund intends to make sufficient distributions or deemed
distributions of its ordinary taxable income and capital gain net income prior
to the end of each calendar year to avoid liability for the excise tax. However,
investors should note that the Fund may in certain circumstances be required to
liquidate portfolio investments to make sufficient distributions to avoid excise
tax liability.
Fund Distributions
The Fund anticipates distributing substantially all of its investment
company taxable income for each taxable year. Such distributions will be taxable
to shareholders as ordinary income and treated as dividends for federal income
tax purposes, but they will qualify for the 70% dividends-received deduction for
corporate shareholders only to the extent discussed below.
The Fund may either retain or distribute to shareholders its net capital
gain for each taxable year. The Fund currently intends to distribute any such
amounts. Net capital gain that is distributed and designated as a capital gain
dividend will be taxable to shareholders as long-term capital gain, regardless
of the length of time a shareholder has held his shares or whether such gain was
recognized by the Fund prior to the date on which the shareholder
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acquired his shares. The Code provides, however, that under certain conditions
only 50% (58% for alternative minimum tax purposes) of the capital gain
recognized upon the Fund's disposition of domestic "small business" stock will
be subject to tax.
Conversely, if the Fund elects to retain its net capital gain, the Fund
will be taxed thereon (except to the extent of any available capital loss
carryovers) at the 35% corporate tax rate. If the Fund elects to retain its net
capital gain, it is expected that the Fund also will elect to have shareholders
of record on the last day of its taxable year treated as if each such
shareholder received a distribution of his pro rata share of such gain, with the
result that each shareholder will be required to report his pro rata share of
such gain on his tax return as long-term capital gain, will receive a refundable
tax credit for his pro rata share of tax paid by the Fund on the gain, and will
increase the tax basis for his shares by an amount equal to the deemed
distribution less the tax credit.
Ordinary income dividends paid by the Fund with respect to a taxable
year will qualify for the 70% dividends-received deduction generally available
to corporations (other than corporations, such as S corporations, which are not
eligible for the deduction because of their special characteristics and other
than for purposes of special taxes such as the accumulated earnings tax and the
personal holding company tax) to the extent of the amount of qualifying
dividends received by the Fund from domestic corporations for the taxable year.
Generally, a dividend received by the Fund will not be treated as a qualifying
dividend (1) if it has been received with respect to any share of stock that the
Fund has held for less than 46 days (91 days in the case of certain preferred
stock), excluding for this purpose under the rules of Code section 246(c)(3) and
(4) any period during which the Fund has an option to sell, is under a
contractual obligation to sell, has made and not closed a short sale of, is the
grantor of a deep-in-the-money or otherwise nonqualified option to buy, or has
otherwise diminished its risk of loss by holding other positions with respect
to, such (or substantially identical) stock; (2) to the extent that the Fund is
under an obligation (pursuant to a short sale or otherwise) to make related
payments with respect to positions in substantially similar or related property;
or (3) to the extent that the stock on which the dividend is paid is treated as
debt-financed under the rules of Code section 246A. The 46-day holding period
must be satisfied during the 90-day period beginning 45 days prior to each
applicable ex-dividend date; the 91-day holding period must be satisfied during
the 180-day period beginning 90 days before each applicable ex-dividend date.
Moreover, the dividends-received deduction for a corporate shareholder may be
disallowed or reduced (1) if the corporate shareholder fails to satisfy the
foregoing requirements with respect to its shares of the Fund or (2) by
application of Code section 246(b) which in general limits the
dividends-received deduction to 70% of the shareholder's taxable income
(determined without regard to the dividends-received deduction and certain other
items).
Alternative minimum tax ("AMT") is imposed in addition to, but only to
the extent it exceeds, the regular tax and is computed at a maximum marginal
rate of 28% for noncorporate taxpayers and 20% for corporate taxpayers on the
excess of the taxpayer's alternative minimum taxable income ("AMTI") over an
exemption amount. For purposes of the corporate AMT, the corporate
dividends-received deduction is not itself an item of tax preference that must
be added back to taxable income or is otherwise disallowed in determining a
corporation's AMTI. However, corporate shareholders generally will be required
to take the full amount of any dividend received from the Fund into account
(without a dividends-received deduction) in determining their adjusted current
earnings, which are used in computing an additional corporate preference item
(i.e., 75% of the excess of a corporate taxpayer's adjusted current earnings
over its AMTI (determined without regard to this item and the AMT net operating
loss deduction)) includable in AMTI.
Investment income that may be received by the Fund from sources within
foreign countries may be subject to foreign taxes withheld at the source. The
United States has entered into tax treaties with many foreign countries which
entitle the Fund to a reduced rate of, or exemption from, taxes on such income.
It is impossible to determine the effective rate of foreign tax in advance since
the amount of the Fund's assets to be invested in various countries is not
known. If more than 50% of the value of the Fund's total assets at the close of
its taxable year consist of the stock or securities of foreign corporations, the
Fund may elect to "pass through" to the Fund's shareholders the amount of
foreign taxes paid by the Fund. If the Fund so elects, each shareholder would be
required to include in
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gross income, even though not actually received, his pro rata share of the
foreign taxes paid by the Fund, but would be treated as having paid his pro rata
share of such foreign taxes and would therefore be allowed to either deduct such
amount in computing taxable income or use such amount (subject to various Code
limitations) as a foreign tax credit against federal income tax (but not both).
For purposes of the foreign tax credit limitation rules of the Code, each
shareholder would treat as foreign source income his pro rata share of such
foreign taxes plus the portion of dividends received from the Fund representing
income derived from foreign sources. No deduction for foreign taxes could be
claimed by an individual shareholder who does not itemize deductions. Each
shareholder should consult his own tax adviser regarding the potential
application of foreign tax credits.
Distributions by the Fund that do not constitute ordinary income
dividends or capital gain dividends will be treated as a return of capital to
the extent of (and in reduction of) the shareholder's tax basis in his shares;
any excess will be treated as gain realized from a sale of the shares, as
discussed below.
Distributions by the Fund will be treated in the manner described above
regardless of whether such distributions are paid in cash or reinvested in
additional shares of the Fund (or of another fund). Shareholders receiving a
distribution in the form of additional shares will be treated as receiving a
distribution in an amount equal to the fair market value of the shares received,
determined as of the reinvestment date. In addition, if the net asset value at
the time a shareholder purchases shares of the Fund reflects realized but
undistributed income or gain or unrealized appreciation in the value of assets
held by the Fund distributions of such amounts to the shareholder will be
taxable in the manner described above, although economically they constitute a
return of capital to the shareholder.
Ordinarily, shareholders are required to take distributions by the Fund
into account in the year in which they are made. However, dividends declared in
October, November or December of any year and payable to shareholders of record
on a specified date in such month will be deemed to have been received by the
shareholders (and made by the Fund) on December 31 of such calendar year
provided such dividends are actually paid in January of the following year.
Shareholders will be advised annually as to the U.S. federal income tax
consequences of distributions made (or deemed made) during the year.
The Fund will be required in certain cases to withhold and remit to the
U.S. Treasury 31% of distributions and the proceeds of redemption of shares,
paid to any shareholder who (1) has failed to provide a correct taxpayer
identification number, (2) is subject to backup withholding for failure properly
to report the receipt of interest or dividend income, or (3) failed to certify
to the Fund that it is not subject to backup withholding or that it is an
"exempt recipient" (such as a corporation).
Sale or Redemption of Shares
A shareholder will recognize gain or loss on a sale or redemption of
shares of the Fund in an amount equal to the difference between the proceeds of
the sale or redemption and the shareholder's adjusted tax basis in the shares.
All or a portion of any loss so recognized may be disallowed if the shareholder
purchases other shares of the Fund within 30 days before or after the sale or
redemption. In general, any gain or loss arising from (or treated as arising
from) the sale or redemption of shares of the Fund will be considered capital
gain or loss and will be long-term capital gain or loss if the shares were held
for longer than one year. However, any capital loss arising from the sale or
redemption of shares held for six months or less will be treated as a long-term
capital loss to the extent of the amount of capital gain dividends received on
such shares. For this purpose, the special holding period rules of Code Section
246(c)(3) and (4) generally will apply in determining the holding period of
shares. Capital losses in any year are deductible only to the extent of capital
gains plus, in the case of a noncorporate taxpayer, $3,000 of ordinary income.
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Foreign Shareholders
Taxation of a shareholder who, as to the United States, is a nonresident
alien individual, foreign trust or estate, foreign corporation, or foreign
partnership ("foreign shareholder"), depends on whether the income from the Fund
is "effectively connected" with a U.S. trade or business carried on by such
shareholder.
If the income from the Fund is not effectively connected with a U.S.
trade or business carried on by a foreign shareholder, ordinary income dividends
paid to a foreign shareholder will be subject to U.S. withholding tax at the
rate of 30% (or lower applicable treaty rate) upon the gross amount of the
dividend. Furthermore, such foreign shareholder may be subject to U.S.
withholding tax at the rate of 30% (or lower applicable treaty rate) on the
gross income resulting from a Fund's election to treat any foreign taxes paid by
it as paid by its shareholders, but may not be allowed a deduction against this
gross income or a credit against this U.S. withholding tax for the foreign
shareholder's pro rata share of such foreign taxes which it is treated as having
paid. Such a foreign shareholder would generally be exempt from U.S. federal
income tax on gains realized on the sale of shares of a Fund, capital gain
dividends and amounts retained by the Fund that are designated as undistributed
capital gains.
If the income from the Fund is effectively connected with a U.S. trade
or business carried on by a foreign shareholder, then ordinary income and
capital gain dividends, and any gains realized upon a sale of shares of the Fund
will be subject to U.S. federal income tax at the rates applicable to U.S.
taxpayers.
In the case of a noncorporate foreign shareholder, the Fund may be
required to withhold U.S. federal income tax at a rate of 31% on distributions
that are otherwise exempt from withholding (or subject to withholding at a
reduced treaty rate) unless the shareholder furnishes the Fund with proper
notification of its foreign status.
The tax consequences to a foreign shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described
herein. Foreign shareholders are urged to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in the Fund,
including the applicability of foreign taxes.
Effect of Future Legislation; Local Tax Considerations
The foregoing general discussion of U.S. federal income tax consequences
is based on the Code and the Treasury Regulations issued thereunder as in effect
on the date of this Statement of Additional Information. Future legislative or
administrative changes or court decisions may significantly change the
conclusions expressed herein, and any such changes or decisions may have a
retroactive effect.
Rules of state and local taxation of ordinary income and capital gain
dividends from regulated investment companies may differ from the rules for U.S.
federal income taxation described above. Shareholders are urged to consult their
tax advisers as to the consequences of these and other state and local tax rules
affecting an investment in the Fund.
PERFORMANCE INFORMATION
For purposes of quoting and comparing the performance of the Fund to
that of other mutual funds and to stock or other relevant indices in
advertisements or in reports to shareholders, performance will be stated both in
terms of total return and in terms of yield. The total return basis combines
principal and dividend income changes for the periods shown. Principal changes
are based on the difference between the beginning and closing net asset values
for the period and assume reinvestment of dividends and distributions paid by
the Fund. Dividends and distributions are comprised of net investment income and
net realized capital gains. Under the rules of the
-15-
<PAGE>
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
-16-
<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.
FINANCIAL STATEMENTS
The Financial Statements for the Fund for the fiscal year ended
_________, 1998 are incorporated by reference from the Annual Report to
shareholders dated ____________, 1998.
-17-
<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 National
Financial Data Services, Inc., is filed herewith.
(h) (2) Form of Distribution Agreement between
Registrant and First Fund Distributors, Inc. (4)
(h) (3) Form of Administration Agreement by and between
Registrant and Investment Company Administration
Corporation. (4)
(h) (4) Form of Amendment to Administration Agreement by and
between The Dessauer Global Equity Fund and
Investment Company Administration Corporation,
L.L.C., is filed herewith.
(i) (1) Opinion of Kramer Levin Naftalis & Frankel LLP
as to legality of securities being registered. (4)
C-1
<PAGE>
(i)(2) Opinion of Morris, Nichols, Arsht & Tunnell. (4)
(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. (5)
(l) Agreement between the Registrant and Dessauer and
McIntyre 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 Registrant's Registration Statement
on Form N-1A filed electronically on September 18, 1998,
accession number 0000922423-98-001042 and incorporated
herein by reference.
(4) Filed as an Exhibit to Pre-Effective Amendment No. 1 to
Registrant's Registration Statement on Form N-1A filed
electronically on December 2, 1998, accession number
0000922423-98-001344 and incorporated herein by reference.
(5) Filed pursuant to the Rule 30D filing made by the Registrant
on May 27, 1998, accession number 0000927356-98-000907 and
incorporated herein by reference.
C-2
<PAGE>
ITEM 24. Persons Controlled By or Under Common Control with Registrant
-------------------------------------------------------------
None.
C-3
<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-4
<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;
C-5
<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 Millennium Fund
(b) The following information is furnished with respect to the
officers and directors of First Fund Distributors, Inc., Registrant's principal
underwriter:
<TABLE>
<CAPTION>
Name and Principal Position and Offices with Position and Offices
Business Address Principal Underwriter with Registrant
- ---------------- --------------------- ---------------
<S> <C> <C>
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
</TABLE>
(c) not applicable
C-6
<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-7
<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 28 day of
April, 1999.
THE DESSAUER GLOBAL EQUITY FUND
By: /s/ Thomas P. McIntyre
---------------------------------------
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.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
- ------------------------------------ Chairman of the Board April 28, 1999
John P. Dessauer and (Trustee)
- ------------------------------------ President, Chief
Thomas P. McIntyre Executive Officer and
Trustee
* /s/ Max A. Fischer Trustee April 28, 1999
- ------------------------------------
Max A. Fischer
*/s/ Ingrid R. Hendershot Trustee April 28, 1999
- ------------------------------------
Ingrid R. Hendershot
*/s/ Kevin Melich Trustee April 28, 1999
- ------------------------------------
Kevin Melich
*/s/ J. Brooks Reece, Jr. Trustee April 28, 1999
- ------------------------------------
J. Brooks Reece, Jr.
*/s/ By: Susan J. Penry-Williams
- ------------------------------------
Susan J. Penry-Williams
Attorney-in-Fact
</TABLE>
C-8
<PAGE>
EXHIBIT INDEX
-------------
EX-99.B9(1) Form of Transfer Agency and Service
Agreement.
EX-99.B9(2) Form of Amendment to Administration
Agreement.
EX-99.B10 Consent of Kramer Levin Naftalis &
Frankel LLP Counsel for the
Registrant.
EX-99.B11 Consent of Ernst & Young LLP,
Independent Auditors for the
Registrant.
EX-99.B27 Financial Data Schedule
C-9
TRANSFER AGENCY AND SERVICE AGREEMENT
Between
THE DESSAUER GLOBAL EQUITY FUND
And
NATIONAL FINANCIAL DATA SERVICES, INC.
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
<S> <C> <C>
1. Terms of Appointment and Duties................................................... 1
2. Third Party Administrators for Defined Contribution Plans......................... 4
3. Fees and Expenses................................................................. 4
4. Representations and Warranties of the Transfer Agent.............................. 5
5. Representations and Warranties of the Fund........................................ 5
6. Wire Transfer Operating Guidelines................................................ 6
7. Data Access and Proprietary Information........................................... 8
8. Indemnification................................................................... 9
9. Standard of Care.................................................................. 10
10. Year 2000......................................................................... 10
11. Confidentiality................................................................... 11
12. Covenants of the Fund and the Transfer Agent...................................... 11
13. Termination of Agreement.......................................................... 12
14. Assignment and Third Party Beneficiaries.......................................... 12
15. Subcontractors.................................................................... 13
16. Miscellaneous..................................................................... 14
17. Limitations of Liability of the Trustees and Shareholders......................... 15
</TABLE>
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
-------------------------------------
AGREEMENT made as of the day of ______, 1999, by and between THE DESSAUER GLOBAL
EQUITY FUND, a Delaware business trust, having its principal office and place of
business at 5 Bay State Court, Orleans, Massachusetts 02653 (the "Fund"), and
NATIONAL FINANCIAL DATA SERVICES, INC., a Massachusetts corporation having its
principal office and place of business at The Poindexter Building, 333 W. 9th
Street, Kansas City, Missouri 64105 (the "Transfer Agent").
WHEREAS, the Fund desires to appoint the Transfer Agent as its transfer agent,
dividend disbursing agent, custodian of certain retirement plans and agent in
connection with certain other activities, and the Transfer Agent desires to
accept such appointment.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
1. Terms of Appointment and Duties
-------------------------------
1.1 Transfer Agency Services. Subject to the terms and conditions set
forth in this Agreement, the Fund hereby employs and appoints the
Transfer Agent to act as, and the Transfer Agent agrees to act as its
transfer agent for the Fund's authorized and issued shares of its
beneficial interest, $_______ par value ("Shares"), dividend
disbursing agent, custodian of certain retirement plans and agent in
connection with any accumulation, open-account or similar plan
provided to the shareholders of the Fund ("Shareholders") and set out
in the currently effective prospectus and statement of additional
information ("prospectus") of the Fund, including without limitation
any periodic investment plan or periodic withdrawal program. In
accordance with procedures established from time to time by agreement
between the Fund and the Transfer Agent, the Transfer Agent agrees
that it will perform the following services:
(a) Receive for acceptance, orders for the purchase of Shares, and
promptly deliver payment and appropriate documentation thereof to the
Custodian of the Fund authorized pursuant to the Declaration of Trust
of the Fund (the "Custodian");
(b) Pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the appropriate Shareholder account;
(c) Receive for acceptance redemption requests and redemption
directions and deliver the appropriate documentation thereof to the
Custodian;
(d) In respect to the transactions in items (a), (b) and (e) above,
the Transfer Agent shall execute transactions directly with
broker-dealers authorized by the Fund;
(e) At the appropriate time as and when it receives monies paid to it
by the Custodian with respect to any redemption, pay over or cause to
be paid over in the appropriate manner such monies as instructed by
the redeeming Shareholders;
<PAGE>
(f) Effect transfers of Shares by the registered owners thereof upon
receipt of appropriate instructions;
(g) Prepare and transmit payments for dividends and distributions
declared by the Fund;
(h) Issue replacement certificates for those certificates alleged to
have been lost, stolen or destroyed upon receipt by the Transfer Agent
of indemnification satisfactory to the Transfer Agent and protecting
the Transfer Agent and the Fund, and the Transfer Agent at its option,
may issue replacement certificates in place of mutilated stock
certificates upon presentation thereof and without such indemnity;
(i) Maintain records of account for and advise the Fund and its
Shareholders as to the foregoing; and
(j) Record the issuance of Shares of the Fund and maintain pursuant to
SEC Rule 17Ad-10(e) a record of the total number of Shares of the Fund
which are authorized, based upon data provided to it by the Fund, and
issued and outstanding. The Transfer Agent shall also provide the Fund
on a regular basis with the total number of Shares which are authorized
and issued and outstanding and shall have no obligation, when recording
the issuance of Shares, to monitor the issuance of such Shares or to
take cognizance of any laws relating to the issue or sale of such
Shares, which functions shall be the sole responsibility of the Fund.
1.2 Additional Services. In addition to, and neither in lieu nor in
contravention of, the services set forth in the above paragraph, the
Transfer Agent shall perform the following services:
(a) Other Customary Services. Perform the customary services of a
transfer agent, dividend disbursing agent, custodian of certain
retirement plans and, as relevant, agent in connection with
accumulation, open-account or similar plan (including without
limitation any periodic investment plan or periodic withdrawal
program), including but not limited to: maintaining all Shareholder
accounts, preparing Shareholder meeting lists, mailing Shareholder
proxies, Shareholder reports and prospectuses to current Shareholders,
withholding taxes on U.S. resident and non-resident alien accounts,
preparing and filing U.S. Treasury Department Forms 1099 and other
appropriate forms required with respect to dividends and distributions
by federal authorities for all Shareholders, preparing and mailing
confirmation forms and statements of account to Shareholders for all
purchases and redemptions of Shares and other confirmable transactions
in Shareholder accounts, preparing and mailing activity statements for
Shareholders, and providing Shareholder account information.
(b) Control Book (also known as "Super Sheet"). Maintain a daily record
and produce a daily report for the Fund of all transactions and
receipts and disbursements of money and securities and deliver a copy
of such report for the Fund for each business day to
2
<PAGE>
the Fund no later than 9:00 AM Eastern Time, or such earlier time as
the Fund may reasonably require, on the next business day;
(c) "Blue Sky" Reporting. The Fund shall (i) identify to the Transfer
Agent in writing those transactions and assets to be treated as exempt
from blue sky reporting for each State and (ii) verify the
establishment of Natital transactions for each State on the system
prior to activation and thereafter monitor the daily activity for each
State. The responsibility of the Transfer Agent for the Fund's blue sky
State registration status is solely limited to the initial
establishment of Natital transactions subject to blue sky compliance by
the Fund and providing a system which will enable the Fund to monitor
the total number of Shares sold in each State;
(d) National Securities Clearing Corporation (the "NSCC"). (i) accept
and effectuate the registration and maintenance of accounts through
Networking and the purchase, redemption, transfer and exchange of
shares in such accounts through Fund/SERV (Natital networking and
Fund/SERV being programs operated by the NSCC on behalf of NSCC's
participants, including the Fund), in accordance with, Natital
instructions transmitted to and received by the Transfer Agent by
transmission from NSCC on behalf of broker-dealers and banks which have
been established by, or in accordance with the instructions of
authorized persons, as hereinafter defined on the dealer file
maintained by the Transfer Agent; (ii) issue instructions to Fund's
banks for the settlement of transactions between the Fund and NSCC
(acting on behalf of its broker-dealer and bank participants); (iii)
provide account and transaction information from the affected Fund's
records on DST Systems, Inc. computer system TA2000 ("TA2000 System")
in accordance with NSCC's Networking and Fund/SERV rules for those
broker-dealers; and (iv) maintain Shareholder accounts on TA2000 System
through Networking.
(e) New Procedures. New procedures as to who shall provide certain of
these services in Section 1 may be established in writing from time to
time by agreement between the Fund and the Transfer Agent. The Transfer
Agent may at times perform only a portion of these services and the
Fund or its agent may perform these services on the Fund's behalf.
(f) Additional Telephone Support Services. If the parties elect to have
the Transfer Agent provide additional telephone support services under
this Agreement, the parties will agree to such services, fees and
sub-contracting as stated in Schedule 1.2(f) entitled "Telephone
Support Services" attached hereto.
2. Third Party Administrators for Defined Contribution Plans
---------------------------------------------------------
2.1 The Fund may decide to make available to certain of its customers, a
qualified plan program (the "Program") pursuant to which the customers
("Employers") may adopt certain plans of deferred compensation ("Plan
or Plans") for the benefit of the individual Plan participant (the
"Plan Participant"), such Plan(s) being qualified under Section 401(a)
of the Internal Revenue Code of 1986, as amended ("Code") and
3
<PAGE>
administered by third party administrators which may be plan
administrators as defined in the Employee Retirement Income Security
Act of 1974, as amended)(the "TPA(s)").
2.2 In accordance with the procedures established in the initial Schedule
2.1 entitled "Third Party Administrator Procedures", as may be amended
by the Transfer Agent and the Fund from time to time ("Schedule 2. 1"),
the Transfer Agent shall:
(a) Treat Shareholder accounts established by the Plans in the name of
the Trustees, Plans or TPAs as the case may be as omnibus accounts;
(b) Maintain omnibus accounts on its records in the name of the TPA or
its designee as the Trustee for the benefit of the Plan; and
(c) Perform all services under Section 1 as transfer agent of the Funds
and not as a record-keeper for the Plans.
2.3 Transactions identified under Section 2 of this Agreement shall be
deemed exception services ("Exception Services") when such
transactions:
(a) Require the Transfer Agent to use methods and procedures other than
those usually employed by the Transfer Agent to perform services under
Section 1 of this Agreement;
(b) Involve the provision of information to the Transfer Agent after
the commencement of the nightly processing cycle of the TA2000 System;
or
(c) Require more manual intervention by the Transfer Agent, either in
the entry of data or in the modification or amendment of reports
generated by the TA2000 System than is usually required by
non-retirement plan and pre-nightly transactions.
3. Fees and Expenses
-----------------
3.1 Fee Schedule. For the performance by the Transfer Agent pursuant to
this Agreement, the Fund agrees to pay the Transfer Agent an annual
maintenance fee for each Shareholder account as set forth in the
attached fee schedule ("Schedule 3.1"). Such fees and out-of-pocket
expenses and advances identified under Section 3.2 below may be changed
from time to time subject to mutual written agreement between the Fund
and the Transfer Agent.
3.2 Out-of-Pocket Expenses. In addition to the fee paid under Section 3.1
above, the Fund agrees to reimburse the Transfer Agent for
out-of-pocket expenses, including but not limited to confirmation
production, postage, forms, telephone, microfilm, microfiche, mailing
and tabulating proxies, records storage, or advances incurred by the
Transfer Agent for the items set out in Schedule 3.1 attached hereto.
In addition, any other expenses incurred by the Transfer Agent at the
request or with the consent of the Fund, will be reimbursed by the
Fund.
4
<PAGE>
3.3 Postage. Postage for mailing of dividends, proxies, Fund reports and
other mailings to all shareholder accounts shall be advanced to the
Transfer Agent by the Fund at least seven (7) days prior to the mailing
date of such materials.
3.4 Invoices. The Fund agrees to pay all fees and reimbursable expenses
within thirty (30) days following the receipt of the respective billing
notice, except for any fees or expenses which are subject to good faith
dispute. In the event of such a dispute, the Fund may only withhold
that portion of the fee or expense subject to the good faith dispute.
The Fund shall notify the Transfer Agent in writing within twenty-one
(21) calendar days following the receipt of each billing notice if the
Fund is disputing any amounts in good faith. If the Fund does not
provide such notice of dispute within the required time, the billing
notice will be deemed accepted by the Fund.
4. Representations and Warranties of the Transfer Agent
----------------------------------------------------
The Transfer Agent represents and warrants to the Fund that:
4.1 It is a corporation duly organized and existing and in good standing
under the laws of The Commonwealth of Massachusetts.
4.2 It is duly qualified to carry on its business in The Commonwealth of
Massachusetts and the State of Missouri.
4.3 It is empowered under applicable laws and by its Charter and By-Laws to
enter into and perform this Agreement.
4.4 All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
4.5 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under
this Agreement.
5. Representations and Warranties of the Fund
------------------------------------------
The Fund represents and warrants to the Transfer Agent that:
5.1 It is a business trust duly organized and existing and in good standing
under the laws of the State of Delaware.
5.2 It is empowered under applicable laws and by its Declaration of Trust
and By-Laws to enter into and perform this Agreement.
5.3 All corporate proceedings required by said Declaration of Trust and
By-Laws have been taken to authorize it to enter into and perform this
Agreement.
5
<PAGE>
5.4 It is an open-end non-diversified management investment company
registered under the Investment Company Act of 1940, as amended.
5.5 A registration statement under the Securities Act of 1933, as amended
is currently effective and will remain effective, and appropriate state
securities law filings have been made and will continue to be made,
with respect to all Shares of the Fund being offered for sale.
6. Wire Transfer Operating Guidelines/Articles 4A of the Uniform
Commercial Code
-----------------------------------------------------------------------
6.1 The Transfer Agent is authorized to promptly debit the appropriate Fund
account(s) upon the receipt of a payment order in compliance with the
selected security procedure (the "Security Procedure") chosen for funds
transfer and in the amount of money that the Transfer Agent has been
instructed to transfer. The Transfer Agent shall execute payment orders
in compliance with the Security Procedure and with the Fund
instructions on the execution date provided that such payment order is
received by the customary deadline for processing such a request,
unless the payment order specifies a later time. All payment orders and
communications received after this the customary deadline will be
deemed to have been received the next business day.
6.2 The Fund acknowledges that the Security Procedure it has designated on
the Fund Selection Form was selected by the Fund from security
procedures offered by the Transfer Agent. The Fund shall restrict
access to confidential information relating to the Security Procedure
to authorized persons as communicated to the Transfer Agent in writing.
The Fund must notify the Transfer Agent immediately if it has reason to
believe unauthorized persons may have obtained access to such
information or of any change in the Fund's authorized personnel. The
Transfer Agent shall verify the authenticity of all Fund instructions
according to the Security Procedure.
6.3 The Transfer Agent shall process all payment orders on the basis of the
account number contained in the payment order. In the event of a
discrepancy between any name indicated on the payment order and the
account number, the account number shall take precedence and govern.
6.4 The Transfer Agent reserves the right to decline to process or delay
the processing of a payment order which (a) is in excess of the
collected balance in the account to be charged at the time of the
Transfer Agent's receipt of such payment order; (b) if initiating such
payment order would cause the Transfer Agent, in the Transfer Agent's
sole judgement, to exceed any volume, aggregate dollar, network, time,
credit or similar limits which are applicable to the Transfer Agent; or
(c) if the Transfer Agent, in good faith, is unable to satisfy itself
that the transaction has been properly authorized.
6.5 The Transfer Agent shall use reasonable efforts to act on all
authorized requests to cancel or amend payment orders received in
compliance with the Security Procedure provided that such requests are
received in a timely manner affording the Transfer
6
<PAGE>
Agent reasonable opportunity to act. However, the Transfer Agent
assumes no liability if the request for amendment or cancellation
cannot be satisfied.
6.6 The Transfer Agent shall assume no responsibility for failure to detect
any erroneous payment order provided that the Transfer Agent complies
with the payment order instructions as received and the Transfer Agent
complies with the Security Procedure. The Security Procedure is
established for the purpose of authenticating payment orders only and
not for the detection of errors in payment orders.
6.7 The Transfer Agent shall assume no responsibility for lost interest
with respect to the refundable amount of any unauthorized payment
order, unless the Transfer Agent is notified of the unauthorized
payment order within thirty (30) days of notification by the Transfer
Agent of the acceptance of such payment order. In no event (including
failure to execute a payment order) shall the Transfer Agent be liable
for special, indirect or consequential damages, even if advised of the
possibility of such damages.
6.8 When the Fund initiates or receives Automated Clearing House credit and
debit entries pursuant to these guidelines and the rules of the
National Automated Clearing House Association and the New England
Clearing House Association, the Transfer Agent will act as an
Originating Depository Financial Institution and/or receiving
depository Financial Institution, as the case may be, with respect to
such entries. Credits given by the Transfer Agent with respect to an
ACH credit entry are provisional until the Transfer Agent receives
final settlement for such entry from the Federal Reserve Bank. If the
Transfer Agent does not receive such final settlement, the Fund agrees
that the Transfer Agent shall receive a refund of the amount credited
to the Fund in connection with such entry, and the party making payment
to the Fund via such entry shall not be deemed to have paid the amount
of the entry.
6.9 Confirmation of Transfer Agent's execution of payment orders shall
ordinarily be provided within twenty-four (24) hours notice of which
may be delivered through the Transfer Agent's proprietary information
systems, or by facsimile or call-back. Fund must report any objections
to the execution of an order within thirty (30) days.
7. Data Access and Proprietary Information
---------------------------------------
7.1 The Fund acknowledges that the databases, computer programs, screen
formats, report formats, interactive design techniques, and
documentation manuals furnished to the Fund by the Transfer Agent as
part of the Fund's ability to access certain Fund-related data
("Customer Data") maintained by the Transfer Agent on data bases under
the control and ownership of the Transfer Agent or other third party
("Data Access Services") constitute copyrighted, trade secret, or other
proprietary information (collectively, "Proprietary Information") of
substantial value to the Transfer Agent or other third party. In no
event shall Proprietary Information be deemed Customer Data. The Fund
agrees to treat all Proprietary Information as proprietary to the
Transfer Agent and further agrees that it shall not divulge any
Proprietary Information to any
7
<PAGE>
person or organization except as may be provided hereunder. Without
limiting the foregoing, the Fund agrees for itself and its employees
and agents to:
(a) Use such programs and databases (i) solely on the Fund's computers,
or (ii) solely from equipment at the location agreed to between the
Fund and the Transfer Agent and (iii) solely in accordance with the
Transfer Agent's applicable user documentation;
(b) Refrain from copying or duplicating in any way (other than in the
normal course or performing processing on the Fund's computer(s)), the
Proprietary Information;
(c) Refrain from obtaining unauthorized access to any portion of the
Proprietary Information, and if such access is inadvertently obtained,
to inform in a timely manner of such fact and dispose of such
information in accordance with the Transfer Agent's instructions;
(d) Refrain from causing or allowing information transmitted from the
Transfer Agent's computer to the Fund's terminal to be retransmitted to
any other computer terminal or other device except as expressly
permitted by the Transfer Agent (such permission not to be unreasonably
withheld);
(e) Allow the Fund to have access only to those authorized transactions
as agreed to between the Fund and the Transfer Agent; and
(f) Honor all reasonable written requests made by the Transfer Agent to
protect at the Transfer Agent's expense the rights of the Transfer
Agent in Proprietary Information at common law, under federal copyright
law and under other federal or state law.
7.2 Proprietary Information shall not include all or any portion of any of
the foregoing items that: (i) are or become publicly available without
breach of this Agreement; (ii) are released for general disclosure by a
written release by the Transfer Agent; or (iii) are already in the
possession of the receiving party at the time or receipt without
obligation of confidentiality or breach of this Agreement.
7.3 The Fund acknowledges that its obligation to protect the Transfer
Agent's Proprietary Information is essential to the business interest
of the Transfer Agent and that the disclosure of such Proprietary
Information in breach of this Agreement would cause the Transfer Agent
immediate, substantial and irreparable harm, the value of which would
be extremely difficult to determine. Accordingly, the parties agree
that, in addition to any other remedies that may be available in law,
equity, or otherwise for the disclosure or use of the Proprietary
Information in breach of this Agreement, the Transfer Agent shall be
entitled to seek and obtain a temporary restraining order, injunctive
relief, or other equitable relief against the continuance of such
breach.
7.4 If the Fund notifies the Transfer Agent that any of the Data Access
Services do not operate in material compliance with the most recently
issued user documentation for
8
<PAGE>
such services, the Transfer Agent shall endeavor in a timely manner to
correct such failure. Organizations from which the Transfer Agent may
obtain certain data included in the Data Access Services are solely
responsible for the contents of such data and the Fund agrees to make
no claim against the Transfer Agent arising out of the contents of such
third-party data, including, but not limited to, the accuracy thereof.
DATA ACCESS SERVICES AND ALL COMPUTER PROGRAMS AND SOFTWARE
SPECIFICATIONS USED IN CONNECTION THEREWITH ARE PROVIDED ON AN AS IS,
AS AVAILABLE BASIS. THE TRANSFER AGENT EXPRESSLY DISCLAIMS ALL
WARRANTIES EXCEPT THOSE EXPRESSLY STATED HEREIN INCLUDING, BUT NOT
LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
7.5 If the transactions available to the Fund include the ability to
originate electronic instructions to the Transfer Agent in order to (i)
effect the transfer or movement of cash or Shares or (ii) transmit
Shareholder information or other information, then in such event the
Transfer Agent shall be entitled to rely on the validity and
authenticity of such instruction without undertaking any further
inquiry as long as such instruction is undertaken in conformity with
security procedures established by the Transfer Agent from time to
time.
7.6 Each party shall take reasonable efforts to advise its employees of
their obligations pursuant to this Section 7. The obligations of this
Section shall survive any earlier termination of this Agreement.
8. Indemnification
---------------
8.1 The Transfer Agent shall not be responsible for, and the Fund shall
indemnify and hold the Transfer Agent harmless from and against, any
and all losses, damages, costs, charges, counsel fees, payments,
expenses and liability arising out of or attributable to:
(a) All actions of the Transfer Agent or its agents or subcontractors
required to be taken pursuant to this Agreement, provided that such
actions are taken in good faith and without negligence or willful
misconduct;
(b) The Fund's lack of good faith, negligence or willful misconduct
which arise out of the breach of any representation or warranty of the
Fund hereunder;
(c) The reliance upon, and any subsequent use of or action taken or
omitted, by the Transfer Agent, or its agents or subcontractors on: (i)
any information, records, documents, data, stock certificates or
services, which are received by the Transfer Agent or its agents or
subcontractors by machine readable input, facsimile, CRT data entry,
electronic instructions or other similar means authorized by the Fund,
and which have been prepared, maintained or performed by the Fund or
any other person or firm on behalf of the Fund including but not
limited to any previous transfer agent or registrar; (ii) any
instructions or requests of the Fund or any of its officers; (iii) any
instructions or opinions of legal counsel with respect to any matter
arising in
9
<PAGE>
connection with the services to be performed by the Transfer Agent
under this Agreement which are provided to the Transfer Agent after
consultation with such legal counsel; or (iv) any paper or document,
reasonably believed to be genuine, authentic, or signed by the proper
person or persons;
(d) The offer or sale of Shares in violation of federal or state
securities laws or regulations requiring that such Shares be registered
or in violation of any stop order or other determination or ruling by
any federal or any state agency with respect to the offer or sale of
such Shares;
(e) The negotiation and processing of any checks including without
limitation for deposit into the Fund's demand deposit account
maintained by the Transfer Agent; or
(f) Upon the Fund's request entering into any agreements required by
the National Securities Clearing Corporation (the "NSCC") required by
the NSCC for the transmission of Fund or Shareholder data through the
NSCC clearing systems.
8.2 In order that the indemnification provisions contained in this Section
8 shall apply, upon the assertion of a claim for which the Fund may be
required to indemnify the Transfer Agent, the Transfer Agent shall
promptly notify the Fund of such assertion, and shall keep the Fund
advised with respect to all developments concerning such claim. The
Fund shall have the option to participate with the Transfer Agent in
the defense of such claim or to defend against said claim in its own
name or in the name of the Transfer Agent. The Transfer Agent shall in
no case confess any claim or make any compromise in any case in which
the Fund may be required to indemnify the Transfer Agent except with
the Fund's prior written consent.
9. Standard of Care
----------------
9.1 The Transfer Agent shall at all times act in good faith and agrees to
use its best efforts within reasonable limits to insure the accuracy of
all services performed under this Agreement, but assumes no
responsibility and shall not be liable for loss or damage due to errors
unless said errors are caused by its negligence, bad faith, or willful
misconduct or that of its employees, except as provided in Section 9.2
below.
9.2 In the case of Exception Services as defined in Section 2.3 herein, the
Transfer Agent shall be held to a standard of gross negligence and
encoding and payment processing errors shall not be deemed negligence.
10. Year 2000
---------
The Transfer Agent will take reasonable steps to ensure that its
products (and those of its third-party suppliers) reflect the available
technology to offer products that are Year 2000 ready, including, but
not limited to, century recognition of dates, calculations that
correctly compute same century and multi century formulas and date
values, and interface values that reflect the date issues arising
between now and the next
10
<PAGE>
one-hundred years, and if any changes are required, the Transfer Agent
will make the changes to its products at a price to be agreed upon by
the parties and in a commercially reasonable time frame and will
require third-party suppliers to do likewise.
11. Confidentiality
---------------
11.1 The Transfer Agent and the Fund agree that they will not, at any time
during the term of this Agreement or after its termination, reveal,
divulge, or make known to any person, firm, corporation or other
business organization, any customers' lists, trade secrets, cost
figures and projections, profit figures and projections, or any other
secret or confidential information whatsoever, whether of the Transfer
Agent or of the Fund, used or gained by the Transfer Agent or the Fund
during performance under this Agreement. The Fund and the Transfer
Agent further covenant and agree to retain all such knowledge and
information acquired during and after the term of this Agreement
respecting such lists, trade secrets, or any secret or confidential
information whatsoever in trust for the sole benefit of the Transfer
Agent or the Fund and their successors and assigns. In the event of
breach of the foregoing by either party, the remedies provided by
Section 7.3 shall be available to the party whose confidential
information is disclosed. The above prohibition of disclosure shall not
apply to the extent that the Transfer Agent must disclose such data to
its sub-contractor or Fund agent for purposes of providing services
under this Agreement.
11.2 In the event that any requests or demands are made for the inspection
of the Shareholder records of the Fund, other than request for records
of Shareholders pursuant to standard subpoenas from state or federal
government authorities (i.e., divorce and criminal actions), the
Transfer Agent will endeavor to notify the Fund and to secure
instructions from an authorized officer of the Fund as to such
inspection. The Transfer Agent expressly reserves the right, however,
to exhibit the Shareholder records to any person whenever it is advised
by counsel that it may be held liable for the failure to exhibit the
Shareholder records to such person or if required by law or court
order.
12. Covenants of the Fund and the Transfer Agent
--------------------------------------------
12.1 The Fund shall promptly furnish to the Transfer Agent the following:
(a) A certified copy of the resolution of the Board of Trustees of the
Fund authorizing the appointment of the Transfer Agent and the
execution and delivery of this Agreement; and
(b) A copy of the Declaration of Trust and By-Laws of the Fund and all
amendments hereto.
12.2 The Transfer Agent hereby agrees to establish and maintain facilities
and procedures reasonably acceptable to the Fund for safekeeping of
stock certificates, check forms and
11
<PAGE>
facsimile signature imprinting devices, if any; and for the preparation
or use, and for keeping account of, such certificates, forms and
devices.
12.3 The Transfer Agent shall keep records relating to the services to be
performed hereunder, in the form and manner as it may deem advisable.
To the extent required by Section 31 of the Investment Company Act of
1940, as amended, and the Rules thereunder, the Transfer Agent agrees
that all such records prepared or maintained by the Transfer Agent
relating to the services to be performed by the Transfer Agent
hereunder are the property of the Fund and will be preserved,
maintained and made available in accordance with such Section and
Rules, and will be surrendered promptly to the Fund on and in
accordance with its request.
13. Termination of Agreement
------------------------
13.1 This Agreement may be terminated by either party upon one-hundred
twenty (120) days written notice to the other.
13.2 Should the Fund exercise its right to terminate, all out-of-pocket
expenses or costs associated with the movement of records and material
will be borne by the Fund. Additionally, the Transfer Agent reserves
the right to charge for any other reasonable expenses associated with
such termination and a charge equivalent to the average of three (3)
months' fees. Payment of such expenses or costs shall be in accordance
with Section 3.4 of this Agreement.
13.3 Upon termination of this Agreement, each party shall return to the
other party all copies of confidential or proprietary materials or
information received from such other party hereunder, other than
materials or information required to be retained by such party under
applicable laws or regulations.
14. Assignment and Third Party Beneficiaries.
----------------------------------------
14.1 Except as provided in Section 15.1 below and the Additional Telephone
Support Services Schedule 1.2(f) attached, neither this Agreement nor
any rights or obligations hereunder may be assigned by either party
without the written consent of the other party. Any attempt to do so in
violation of this Section shall be void. Unless specifically stated to
the contrary in any written consent to an assignment, no assignment
will release or discharge the assignor from any duty or responsibility
under this Agreement.
14.2 Except as explicitly stated elsewhere in this Agreement, nothing under
this Agreement shall be construed to give any rights or benefits in
this Agreement to anyone other than the Transfer Agent and the Fund,
and the duties and responsibilities undertaken pursuant to this
Agreement shall be for the sole and exclusive benefit of the Transfer
Agent and the Fund. This Agreement shall inure to the benefit of and be
binding upon the parties and their respective permitted successors and
assigns.
12
<PAGE>
14.3 This Agreement does not constitute an agreement for a partnership or
joint venture between the Transfer Agent and the Fund. Other than as
provided in Section 15.1 and Schedule 1.2(f), neither party shall make
any commitments with third parties that are binding on the other party
without the other party's prior written consent.
15. Subcontractors
--------------
15.1 The Transfer Agent may, without further consent on the part of the
Fund, subcontract for the performance hereof with (i) Boston Financial
Data Services, Inc., a Massachusetts corporation ("BFDS") which is duly
registered as a transfer agent pursuant to Section 17A(c)(2) of the
Securities Exchange Act of 1934, as amended, (ii) a BFDS subsidiary
duly registered as a transfer agent or (iii) a BFDS affiliate duly
registered as a transfer agent; provided, however, that the Transfer
Agent shall be fully responsible to the Fund for the acts and omissions
of BFDS or its subsidiary or affiliate as it is for its own acts and
omissions.
15.2 Nothing herein shall impose any duty upon the Transfer Agent in
connection with or make the Transfer Agent liable for the actions or
omissions to act of unaffiliated third parties such as by way of
example and not limitation, Airborne Services, Federal Express, United
Parcel Service, the U.S. Mails, the NSCC and telecommunication
companies, provided, if the Transfer Agent selected such company, the
Transfer Agent shall have exercised due care in selecting the same.
16. Miscellaneous
-------------
16.1 Amendment. This Agreement may be amended or modified by a written
agreement executed by both parties and authorized or approved by a
resolution of the Board of Trustees of the Fund.
16.2 Massachusetts Law to Apply. This Agreement shall be construed and the
provisions thereof interpreted under and in accordance with the laws of
The Commonwealth of Massachusetts.
16.3 Force Majeure. In the event either party is unable to perform its
obligations under the terms of this Agreement because of acts of God,
strikes, equipment or transmission failure or damage reasonably beyond
its control, or other causes reasonably beyond its control, such party
shall not be liable for damages to the other for any damages resulting
from such failure to perform or otherwise from such causes.
16.4 Consequential Damages. Neither party to this Agreement shall be liable
to the other party for consequential damages under any provision of
this Agreement or for any consequential damages arising out of any act
or failure to act hereunder.
16.5 Survival. All provisions regarding indemnification, warranty,
liability, and limits thereon, and confidentiality and/or protections
of proprietary rights and trade secrets shall survive the termination
of this Agreement.
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<PAGE>
16.6 Severability. If any provision or provisions of this Agreement shall be
held invalid, unlawful, or unenforceable, the validity, legality, and
enforceability of the remaining provisions shall not in any way be
affected or impaired.
16.7 Priorities Clause. In the event of any conflict, discrepancy or
ambiguity between the terms and conditions contained in this Agreement
and any Schedules or attachments hereto, the terms and conditions
contained in this Agreement shall take precedence.
16.8 Waiver. No waiver by either party or any breach or default of any of
the covenants or conditions herein contained and performed by the other
party shall be construed as a waiver of any succeeding breach of the
same or of any other covenant or condition.
16.9 Merger of Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes any prior agreement with
respect to the subject matter hereof whether oral or written.
16.10 Counterparts. This Agreement may be executed by the parties hereto on
any number of counterparts, and all of said counterparts taken together
shall be deemed to constitute one and the same instrument.
16.11 Reproduction of Documents. This Agreement and all schedules, exhibits,
attachments and amendments hereto may be reproduced by any
photographic, photostatic, microfilm, micro-card, miniature
photographic or other similar process. The parties hereto each agree
that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding, whether
or not the original is in existence and whether or not such
reproduction was made by a party in the regular course of business, and
that any enlargement, facsimile or further reproduction shall likewise
be admissible in evidence.
16.12 Notices. All notices and other communications as required or permitted
hereunder shall be in writing and sent by first class mail, postage
prepaid, addressed as follows or to such other address or addresses of
which the respective party shall have notified the other.
(a) If to National Financial Data Services, Inc., to:
National Financial Data Services, Inc.
The Poindexter Building
333 W. 9th Street
Kansas City, MO 64105
Attention: President
Facsimile: (816) 843-8652
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<PAGE>
(b) If to the Fund, to:
Attention:
17. Limitations of Liability of the Trustees and Shareholders
---------------------------------------------------------
A copy of the Declaration of Trust of the Trust is on file with the
Secretary of The Commonwealth of Massachusetts, and notice is hereby
given that this instrument is executed on behalf of the Trustees of the
Trust as Trustees and not individually and that the obligations of this
instrument are not binding upon any of the Trustees or Shareholders
individually but are binding only upon the assets and property of the
Fund.
15
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly
authorized officers, as of the day and year first above written.
THE DESSAUER GLOBAL EQUITY FUND
BY:
---------------------------------
ATTEST:
- --------------------------------
NATIONAL FINANCIAL DATA SERVICES, INC.
BY:
---------------------------------
President
ATTEST:
- --------------------------------
<PAGE>
SCHEDULE 1.2(f)
ADDITIONAL TELEPHONE SUPPORT FEES AND SERVICES
Dated ___________
I. SERVICES
1. Transfer Agent and Telephone Support Functions
a. Answer telephone inquiries from [XXX 8 a.m. to 8 p.m.
Boston time Monday through Friday XXX] from [XXX existing
customers and prospective customers XXX] of the Fund [XXX
for sales literature XXX] in accordance with the telephone
script provided by the Fund.
b. Answer questions pertaining thereto the extent that such
questions are answerable based upon the information
supplied to the Transfer Agent by the Fund.
c. [XXX As the Fund and the Transfer Agent may agree in
writing, the Transfer Agent will receive calls and take
written transaction requests from shareholders of the
Fund. Transfer Agent transactions include: [XXX telephone
redemptions, account maintenance, exchanges, transfers,
confirmed purchases, account balances and general
inquiries XXX]. Some transactions may result in research
which will be done by the Fund. Other calls may be
referred directly to the Fund. Fax any referrals to [XXX
name of company XXX] on the same day the telephone call is
received.XXX];
2. Incorporate new information into the above referenced script upon
written instructions from the Fund;
3. Maintain prospect detail information for six (6) months
thereafter, provide such information to the Fund in the form that
the Fund may reasonably request;
4. Send all literature orders for information from BFDS/DST [XXX
[how?] [to whom?] XXX] a minimum of [XXX one XXX] transmission
per day;
5. Provide the Fund with a [XXX daily/weekly/monthly XXX] telephone
report detailing the calls received during the [XXX
day/week/month XXX];
6. [XXX Provide the Fund with monthly conversion reports as selected
by the Fund from DST's standard report package. XXX]
<PAGE>
II. SUBCONTRACTORS
1. The Transfer Agent may, without further consent on the part of
the Fund, subcontract ministerial telephone support services for
the performance hereof.
III. FEES
THE DESSAUER GLOBAL EQUITY FUND NATIONAL FINANCIAL DATA
SERVICES, INC.
BY: BY:
--------------------------- -------------------
<PAGE>
SCHEDULE 2.1
THIRD PARTY ADMINISTRATOR(S) PROCEDURES
Dated ___________
1. On each Business Day, the TPA(s) shall receive, on behalf of and as
agent of the Fund(s), Instructions (as hereinafter defined) from the
Plan. Instructions shall mean as to each Fund (i) orders by the Plan for
the purchases of Shares, and (ii) requests by the Plan for the
redemption of Shares; in each case based on the Plan's receipt of
purchase orders and redemption requests by Participants in proper form
by the time required by the term of the Plan, but not later than the
time of day at which the net asset value of a Fund is calculated, as
described from time to time in that Fund's prospectus. Each Business Day
on which the TPA receives Instructions shall be a "Trade Date".
2. The TPA(s) shall communicate the TPA(s)'s acceptance of such
Instructions, to the applicable Plan.
3. On the next succeeding Business Day following the Trade Date on which it
accepted Instructions for the purchase and redemption of Shares, (TD+1),
the TPA(s) shall notify the Transfer Agent of the net amount of such
purchases or redemptions, as the case may be, for each of the Plans. In
the case of net purchases by any Plan, the TPA(s) shall instruct the
Trustees of such Plan to transmit the aggregate purchase price for
Shares by wire transfer to the Transfer Agent on (TD+1). In the case of
net redemptions by any Plan, the TPA(s) shall instruct the Fund's
custodian to transmit the aggregate redemption proceeds for Shares by
wire transfer to the Trustees of such Plan on (TD+1). The times at which
such notification and transmission shall occur on (TD+1) shall be as
mutually agreed upon by each Fund, the TPA(s), and the Transfer Agent.
4. The TPA(s) shall maintain separate records for each Plan, which record
shall reflect Shares purchased and redeemed, including the date and
price for all transactions, and Share balances. The TPA(s) shall
maintain on behalf of each of the Plans a single master account with the
Transfer Agent and such account shall be in the name of that Plan, the
TPA(s), or the nominee of either thereof as the record owner of Shares
owned by such Plan.
5. The TPA(s) shall maintain records of all proceeds of redemptions of
Shares and all other distributions not reinvested in Shares.
6. The TPA(s) shall prepare, and transmit to each of the Plans, periodic
account statements showing the total number of Shares owned by that Plan
as of the statement closing date, purchases and redemptions of Shares by
the Plan during the period covered by the statement, and the dividends
and other distributions paid to the Plan on Shares during the statement
period (whether paid in cash or reinvested in Shares).
<PAGE>
7. The TPA(s) shall, at the request and expense of each Fund, transmit to
the Plans prospectuses, proxy materials, reports, and other information
provided by each Fund for delivery to its shareholders.
8. The TPA(s) shall, at the request of each Fund, prepare and transmit to
each Fund or any agent designated by it such periodic reports covering
Shares of each Plan as each Fund shall reasonably conclude are necessary
to enable the Fund to comply with state Blue Sky requirements.
9. The TPA(s) shall transmit to the Plans confirmation of purchase orders
and redemption requests placed by the Plans; and
10. The TPA(s) shall, with respect to Shares, maintain account balance
information for the Plan(s) and daily and monthly purchase summaries
expressed in Shares and dollar amounts.
11. Plan sponsors may request, or the law may require, that prospectuses,
proxy materials, periodic reports and other materials relating to each
Fund be furnished to Participants in which event the Transfer Agent or
each Fund shall mail or cause to be mailed such materials to
Participants. With respect to any such mailing, the TPA(S) shall, at the
request of the Transfer Agent or each Fund, provide at the TPA(s)'s
expense complete and accurate set of mailing labels with the name and
address of each Participant having an interest through the Plans in
Shares.
THE DESSAUER GLOBAL EQUITY FUND NATIONAL FINANCIAL DATA
SERVICES, INC.
BY: BY:
---------------------------- --------------------
<PAGE>
SCHEDULE 3.1
FEES
Dated_________
<TABLE>
<CAPTION>
Account Service Fees*
- ---------------------
<S> <C> <C>
Monthly Dividend Funds (per open account within a no-load fund) $11.00 per year
Quarterly Dividend Funds (per open account within a no-load fund) $10.00 per year
Annual Dividend Funds (per open account within a no-load fund) $9.00 per year
Closed Account Fee (per open account within a no-load fund) $1.80 per year
Minimum Per Cusip $25,000 per year
* The Account Maintenance Fees will be the higher of open plus closed account
charges, or, the annual per cusip minimum.
Activity Fees (Manual Activity Handled by NFDS)
- -----------------------------------------------
New Account Set Up $4.00 each
Manual Financial Transactions $1.50 each
Manual Non-Financial Transactions $.75 each
Shareholder/Dealer Telephone Calls $3.00 each
Letters to Shareholders/Dealers $3.00 each
Checkwriting Drafts Presented for Payment $1.00 each
Checkwriting Set Up $5.00 each
Investor Processing $1.80 per Investor ID
12(b)-1 Commission Processing $1.20 per account
NSCC Interface Fee (per cusip, if applicable) $1,500 per year
- ------------------
Fund Implementation Fee (excludes converted cusips) $1,500 per cusip
- -----------------------
</TABLE>
Conversion Fee
- --------------
A one-time conversion fee will apply. This fee is based on the files to be
converted and programming requirements needed.
<PAGE>
Out-of-Pocket Expenses
- ----------------------
Out-of-pocket expenses are billed as incurred and include, but are not limited
to mailing expenses (i.e., statements, stationery, checks, certificates, sales
literature, printing, postage, etc.), telecommunication expenses, equipment and
software expenses (client-site only), programming expenses (i.e., charges
necessary to establish consolidated statement), microfiche, freight, ACH bank
charges, NSCC charges, and all other expenses incurred on the Fund's behalf
THE DESSAUER GLOBAL EQUITY FUND NATIONAL FINANCIAL DATA
SERVICES, INC
BY: BY:
--------------------------- -------------------
AMENDMENT TO ADMINISTRATION AGREEMENT
AGREEMENT, dated as of ________________, 1999, by and between THE
DESSAUER GLOBAL EQUITY FUND (the "Trust"), a Delaware Business trust, and
INVESTMENT COMPANY ADMINISTRATION LIMITED LIABILITY COMPANY (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 LIMITED LIABILITY COMPANY
By: ____________________________________________________________________________
Name: __________________________________________________________________________
Title: ________________________________________________________________________
THE DESSAUER GLOBAL EQUITY FUND
By: ____________________________________________________________________________
Name: __________________________________________________________________________
Title: ________________________________________________________________________
[LETTERHEAD OF KRAMER LEVIN NAFTALIS & FRANKEL LLP]
April 28, 1999
Dessauer Global Equity Fund
4 Main Street
Orleans, Massachusetts 02653
Re: Pre-Effective Amendment No.2 to
Registration Statement on Form N-1A
File No.:333-7543
-----------------
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 ERNST&YOUNG LLP]
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Financial
Highlights", "Independent Auditors", and "Service Providers" in Pre-Effective
Amendment No. 2 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.
/s/ Ernst & Young LLP
April 22, 1999
<TABLE> <S> <C>
<ARTICLE> 6
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 65,476,362
<INVESTMENTS-AT-VALUE> 65,504,095
<RECEIVABLES> 140,464
<ASSETS-OTHER> 8,268
<OTHER-ITEMS-ASSETS> 18,575
<TOTAL-ASSETS> 65,671,402
<PAYABLE-FOR-SECURITIES> 609,675
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 55,635
<TOTAL-LIABILITIES> 665,310
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 71,516,575
<SHARES-COMMON-STOCK> 6,050,204
<SHARES-COMMON-PRIOR> 6,050,204
<ACCUMULATED-NII-CURRENT> 279,779
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (6,818,642)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 28,380
<NET-ASSETS> 65,006,092
<DIVIDEND-INCOME> 562,352
<INTEREST-INCOME> 17,091
<OTHER-INCOME> 0
<EXPENSES-NET> 510,251
<NET-INVESTMENT-INCOME> 69,192
<REALIZED-GAINS-CURRENT> (4,451,871)
<APPREC-INCREASE-CURRENT> (13,418,326)
<NET-CHANGE-FROM-OPS> (17,801,005)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (17,801,005)
<ACCUMULATED-NII-PRIOR> 210,587
<ACCUMULATED-GAINS-PRIOR> (2,366,771)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 267,594
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 510,251
<AVERAGE-NET-ASSETS> 79,432,066
<PER-SHARE-NAV-BEGIN> 13.69
<PER-SHARE-NII> 0.01
<PER-SHARE-GAIN-APPREC> (2.96)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.74
<EXPENSE-RATIO> 1.28
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
