DESSAUER & MCINTYRE
ASSET MANAGEMENT, INC.
[LOGO OF THE DESSAUER GLOBAL EQUITY FUND]
A no-load growth fund
Semi-Annual Report
For the Six Months Ending
September 30, 2000
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Dessauer Global Equity Fund
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November 17, 2000
Dear Shareholder:
I am once again pleased to be able to update you on the performance of The
Dessauer Global Equity Fund. As of September 30, 2000 the Net Asset Value of the
Fund was $20.41. This represented a cumulative return of 9.14% calendar
year-to-date. By comparison during the same period, the S&P 500 Index showed a
decline of 2.23% and the Dow Jones World Stock Index declined 6.85%. The Fund's
one-year total return and annualized total return through September 30, 2000
were 30.99% and 18.45%, respectively.
The Fund's results have recently earned it a 5-star rating in the Morningstar
system as of October 31, 2000. The Fund was rated exclusively against 291 funds
in the World Stock Funds category as maintained by Morningstar.
I am very excited and pleased with the Fund's performance. As the largest
individual shareholder of the Fund with some 45,000 shares, I continue to eat my
own cooking, as some people would like to say. I always like to see high levels
of stock ownership in the companies in which we invest and I consider it an
important feature to point out to you, my fellow shareholders in the Fund.
The current investment climate has been one of the more difficult ones in many
years. Concerns over the direction of interest rates, growth in earnings,
political elections and the collapse of the speculative bubble in the dot com
world have all come together to produce a down year for most investors.
Our continued focus upon stock selection has been the difference so far in 2000.
Investments made years ago in such names as Scientific Atlanta, SEI Investments
and Enron just to name a few, have turned into huge winners even in this
difficult environment.
Our methodology remains the same. I have never relied upon broad stock market
advances to create gains. Success comes from owning top-quality companies that
profit from the long-term trends that are driving the global economy. One of
these trends, of course, is tchnology and telecommunications. We continue to
take advantage of the current negative sentiment to position the Fund for the
next couple of years.
Being opportunistic has always been our hallmark and the declines in many of the
high quality names such as WorldCom or LSI Logic will not persist. The emphasis
on productivity and efficiency is only going to intensify in the years ahead and
the Fund's portfolio is increasingly becoming more focused on companies that are
going to lead that charge.
The Fund's portfolio continues then to hold shares in such world class names
such as Philips Electronics, Qwest Communications which has now emerged as THE
telecommunications stock to own and, of course, Time Warner. Time Warner is now
in the final stages of merging with AOL. The combined company will represent a
very powerful force in the global economy of the future.
All in all, I believe that the pull back in the market is currently providing
long-term investors with one of the best opportunities of the past several years
to buy high-quality companies without having to pay outrageous multiples for
them. In fact, one of the side effects of the current technology sell off is
that it has once again put a premium upon stock selection and fundamental
analysis.
This new found respect for fundamentals along with my expectation that the
Federal Reserve Board has completed its cycle of raising interest rates makes me
feel quite excited about the Fund's prospects for the future.
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The Dessauer Global Equity Fund
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On behalf of everyone here at Dessauer & McIntyre Asset Management Inc., I would
like to thank you for your continued support.
Sincerely,
/s/ Thomas P. McIntyre
Thomas P. McIntyre, CFA
Chairman, President & Chief Executive Officer
Morningstar proprietary ratings on World Stock Funds reflect historical
risk-adjusted performance as of 10/31/00. The ratings are subject to change
every month. Morningstar ratings on World Stock Funds are calculated from a
fund's 3-year average annual returns in excess of 90-day U.S. Treasury Bill
returns with appropriate fee adjustments, and a risk factor that reflects fund
performance below 90-day U.S. Treasury Bill returns. The Dessauer Global Equity
Fund received 5 stars for the 3-year period. The top 10% of the funds in a broad
asset class receive 5 stars.
Past performance of the Fund and indexes is not predictive of future
performance. Fund share values will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than the original investment. The Advisor
waived a portion of its fee during the period which had the affect of increasing
Fund performance.
The S&P 500 Index is an unmanaged capitalization-weighted index of 500 stocks
designed to represent the broad domestic economy. The Dow Jones World Stock
Index is a market-capitalization weighted index that tracks daily stock price
and total return performance of investable securities worldwide. The index is
designed to capture approximately 85% of the total market capitalization
available to foreign investors in each of 26 countries across all continents.
Indexes are not available for direct investment and do not incur expenses.
The Fund is distributed by First Fund Distributors, Inc., 4455 East Camelback
Road, Suite 261E, Phoenix, AZ 85018.
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The Dessauer Global Equity Fund
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SCHEDULE OF INVESTMENTS BY INDUSTRY at September 30, 2000 (Unaudited)
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Common Stocks: 100.3% Shares Value
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Cellular Telecom: 2.7%
Vodafone AirTouch PLC ADR (United Kingdom) ............. 49,758 $ 1,844,156
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Conglomerate: 5.4%
Enron Corp. (United States) ............................ 41,940 3,664,508
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Consumer Services: 4.6%
Cendant Corp. (United States)* ......................... 290,402 3,158,122
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Diversified Manufacturing: 2.3%
Tyco International Ltd. (Bermuda) ...................... 30,000 1,558,125
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Entertainment: 11.6%
Pixar, Inc. (United States)* ........................... 29,493 947,463
Time Warner Inc. (United States) ....................... 88,506 6,927,364
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7,874,827
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Financial Services: 9.7%
Citigroup Inc. (United States) ......................... 70,000 3,788,750
SEI Investments Co. (United States) .................... 40,000 2,835,000
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6,623,750
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Health and Personal Care: 9.2%
Bally Total Fitness Holding Corp. (United States)* ..... 60,000 1,496,250
Elan Corp. PLC ADR (Ireland)* .......................... 64,000 3,492,000
Glaxo Wellcome PLC ADR (United Kingdom) ................ 20,975 1,267,677
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6,255,927
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Hotel / Gaming: 4.2%
Park Place Entertainment Corp. (United States)* ........ 191,700 2,887,481
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Internet Software: 2.3%
At Home Corp. (United States)* ......................... 110,000 1,553,750
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Technology: 11.6%
Koninklijke (Royal) Philips Electronics N.V. ADR
(Netherlands) .......................................... 76,315 3,248,157
LSI Logic Corp. (United States)* ....................... 157,353 4,622,244
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7,870,401
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Telecommunications Services: 14.3%
Cable & Wireless PLC ADR (United Kingdom) .............. 31,300 1,330,250
Global Crossing Ltd . (Bermuda)* ....................... 1,987 61,721
KPNQuest N.V . (Netherlands)* .......................... 53,920 1,563,680
Qwest Communications International Inc. (United States)* 140,000 6,737,500
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9,693,151
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Telecommunication Equipment: 14.8%
Scientific Atlanta, Inc. (United States) ............... 160,000 10,090,000
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The Dessauer Global Equity Fund
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SCHEDULE OF INVESTMENTS BY INDUSTRY at September 30, 2000 (Unaudited) -
(Continued)
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Shares Value
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Telephone - Integrated: 3.9%
WorldCom, Inc. (United States)* ........................ 86,288 $ 2,620,998
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Wireless Equipment: 3.7%
Motorola, Inc. (United States) ......................... 90,000 2,536,875
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Total Common Stocks
(Cost $36,802,876) ..................................... 68,232,071
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Principal
Short-Term Investments (0.6%) Amount Value
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Repurchase Agreement (0.6%)
Investors Bank and Trust Company Repurchase
Agreement, 5.750%, due 10/2/2000, [(Collateralized
by $414,427 Government National Mortgage Association
Pool #87431, 8.000% due 2/1/2018) (Market Value
$411,440)] (Proceeds $411,340) (Cost $391,847) ....... $ 391,847 $ 391,847
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Total Investments In Securities (100.9%)
(Cost $37,194,723) ..................................... 68,623,918
Liabilities in excess of Other Assets (0.9%) ........... (598,608)
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Net Assets (100.0%) .................................... $68,025,310
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ADR - American depositary receipt.
* Non-income producing security.
+ At September 30, 2000, the basis of investments for Federal income tax
purposes was the same as their cost for financial reporting purposes.
Unrealized appreciation and depreciation were as follows:
Gross unrealized appreciation .......................... $35,504,314
Gross unrealized depreciation .......................... (4,075,119)
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Net unrealized appreciation ............................ $31,429,195
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See accompanying notes to financial statements.
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The Dessauer Global Equity Fund
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PORTFOLIO OF INVESTMENTS BY COUNTRY at September 30, 2000 (Unaudited)
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Percent of
Country Net Assets
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Bermuda ................................................ 2.4%
Ireland ................................................ 5.1%
Netherlands ............................................ 7.1%
United Kingdom ......................................... 6.6%
United States .......................................... 79.7%
Liabilities in excess of Other Assets .................. (0.9%)
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Net Assets ............................................. 100.0%
======
See accompanying notes to financial statements.
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The Dessauer Global Equity Fund
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STATEMENT OF ASSETS AND LIABILITIES at September 30, 2000 (Unaudited)
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ASSETS
Investments in securities, at value (cost $37,194,723) ........... $ 68,623,918
Receivables:
Securities sold .................................................. 328,910
Dividends and interest ........................................... 17,053
Fund shares sold ................................................. 22,500
Prepaid expenses and other assets ................................ 24,230
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Total assets ..................................................... 69,016,611
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LIABILITIES
Payables:
Securities purchased ............................................. 293,100
Loans ............................................................ 500,000
Fund shares redeemed ............................................. 62,159
Due to Advisor ................................................... 42,597
Accrued expenses ................................................. 93,445
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Total liabilities ................................................ 991,301
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NET ASSETS ....................................................... $ 68,025,310
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Net asset value, offering and redemption price per share
($68,025,310/3,333,484 shares outstanding; 50,000,000
shares authorized, $0.01 par value) ............................. $ 20.41
============
COMPONENTS OF NET ASSETS
Paid-in capital .................................................. $ 25,028,320
Accumulated net investment loss .................................. (417,730)
Accumulated net realized gain on investments and foreign currency 11,985,525
Net unrealized appreciation on investments ....................... 31,429,195
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Net assets ....................................................... $ 68,025,310
============
See accompanying notes to financial statements.
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The Dessauer Global Equity Fund
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STATEMENT OF OPERATIONS (Unaudited)
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Six Months
Ended
September 30, 2000
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INVESTMENT INCOME
Income
Dividends (Net of taxes withheld of $7,384) ................ $ 227,854
Interest ................................................... 9,793
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Total investment income................................. 237,647
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Expenses
Advisory fees .............................................. 278,017
Shareholder service fee .................................... 92,672
Transfer agent fees ........................................ 50,412
Legal fees ................................................. 48,989
Administration fees ........................................ 37,069
Reports to shareholders .................................... 29,178
Accounting fees ............................................ 27,635
Auditing fees .............................................. 15,537
Custodian fees ............................................. 14,301
Registration fees .......................................... 13,946
Trustees' fees ............................................. 9,081
Insurance .................................................. 6,486
Miscellaneous .............................................. 5,328
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Total expenses ........................................ 628,651
Add: expenses recouped by Advisor (Note 3) ............ 16,072
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Net expenses before interest and commitment fee ....... 644,723
Interest expense ...................................... 5,727
Commitment fee on credit line ......................... 4,927
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Net expenses .......................................... 655,377
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Net investment loss ................................... (417,730)
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REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments and foreign currency ...... 6,451,317
Net unrealized depreciation on investments and foreign
currency .................................................. (16,796,769)
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Net realized and unrealized loss on investments
and foreign currency................................... (10,345,452)
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Net Decrease in Net Assets Resulting from Operations ....... $(10,763,182)
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See accompanying notes to financial statements
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The Dessauer Global Equity Fund
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STATEMENT OF CHANGES IN NET ASSETS
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<TABLE>
<CAPTION>
Six Months Year
Ended Ended
September 30, March 31,
2000# 2000
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS
Net investment loss .................................... $ (417,730) $ (835,504)
Net realized gain on investments and foreign
currency .............................................. 6,451,317 8,214,246
Net change in unrealized appreciation on investments
and foreign currency .................................. (16,796,769) 26,609,581
------------ ------------
Net (decrease) increase in net assets resulting
from operations.................................... (10,763,182) 33,988,323
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
From net realized gain ................................. -- (327,838)
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CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold .............................. 3,301,231 3,699,833
Proceeds from reinvestment of distributions ............ -- 157,260
Cost of shares redeemed ................................ (5,686,486) (46,929,734)
------------ ------------
Net decrease from capital share transactions........ (2,385,255) (43,072,641)
------------ ------------
Total decrease in net assets........................ (13,148,437) (9,412,156)
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NET ASSETS
Beginning of period .................................... 81,173,747 90,585,903
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End of period .......................................... $ 68,025,310 $ 81,173,747
============ ============
CHANGES IN SHARES
Shares sold ............................................ 146,704 202,389
Shares reinvested from distributions ................... -- 9,011
Shares redeemed ........................................ (258,457) (2,816,367)
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Net decrease ........................................... (111,753) (2,604,967)
============ ============
</TABLE>
# Unaudited
See accompanying notes to financial statements.
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The Dessauer Global Equity Fund
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FINANCIAL HIGHLIGHTS for a capital share outstanding throughout each period
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<TABLE>
<CAPTION>
Six Months Year Year May 30, 1997*
Ended Ended Ended to
September 30, 2000 # March 31, 2000 March 31, 1999 March 31, 1998
-------------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period............. $23.56 $14.97 $13.69 $11.88
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) .................. (0.13) (0.24) (0.05) 0.10
Net realized and unrealized gain
(loss) on investments ........................ (3.02) 8.92 1.35 1.90**
------ ------ ------ ------
Total from investment operations ................ (3.15) 8.68 1.30 2.00
------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income........... 0.00 0.00 (0.02) (0.06)
Distributions from net realized gain........... 0.00 (0.09) 0.00 (0.13)
------ ------ ------ ------
Total distributions ............................. 0.00 (0.09) (0.02) (0.19)
------ ------ ------ ------
Net asset value, end of period .................. $20.41 $23.56 $14.97 $13.69
====== ====== ====== ======
Initial offering price .......................... N/A N/A $12.50 $12.50
New York Stock Exchange closing
price, end of period .......................... N/A N/A $14.13 $12.50
Total investment return+++ ...................... N/A N/A 13.20%(1) 1.76%+(1)
Total return .................................... (13.37%)+ 58.18%(2) 9.54%(2) 17.27%+(2)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions)........... $ 68.0 $ 81.2 $ 90.6 $ 82.8
Ratio of expenses to average net assets
including interest expense:
Before fees waived and expenses absorbed....... 1.72%++ 2.26% 1.43% 1.54%++
After fees waived and expenses absorbed ....... 1.76%++ 1.79% N/A N/A
Ratio of net investment income (loss)
to average net assets:
Before fees waived and expenses absorbed....... (1.08%)++ (1.62%) (0.32%) 0.99%++
After fees waived and expenses absorbed ....... (1.12%)++ (1.15%) N/A N/A
Portfolio turnover rate ......................... 19.28%+ 9.63% 51.68% 74.47%+
</TABLE>
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* 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.
+++ Does not reflect sales charges.
(1) Based on the market price of the Fund's shares and including the investment
of dividends and distributions at prices obtained by participants in the
Fund's dividend reinvestment plan.
(2) Based on net asset value per share and including the reinvestment of
dividends and distributions.
# Unaudited
See accompanying notes to financial statements.
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The Dessauer Global Equity Fund
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Notes to Financial Statements (Unaudited)
Note 1 -- Organization
The Dessauer Global Equity Fund (the "Fund") is a Delaware business trust that
was organized on June 27, 1996 and registered under the Investment Company Act
of 1940 (the "1940 Act") as a non-diversified, closed-end management investment
company. The Fund commenced operations on May 30, 1997 and has, as its
objective, long-term capital appreciation. On April 22, 1999, the Fund ceased to
operate as a closed-end fund. Effective April 29, 1999, the Fund commenced
operations as an open-end fund.
Note 2 -- Significant Accounting Policies
The following is a summary of significant accounting policies consistently
followed by the Fund. These policies are in conformity with accounting
principles generally accepted in the United States.
A. Security Valuation. Investments in securities traded on a primary exchange
are valued at the last reported sale price at the close of regular trading on
the last business day of the period; securities traded on an exchange for which
there have been no sales are valued at the mean between the bid and asked price.
Securities for which quotations are not readily available are valued at their
respective fair values as determined in good faith by the Board of Trustees.
Short-term investments are stated at cost, which, when combined with accrued
interest, approximates market value.
U.S. Government securities with less than 60 days remaining to maturity when
acquired by the Fund are valued on an amortized cost basis. U.S. Government
securities with more than 60 days remaining to maturity are valued at the
current market value (using the mean between the bid and asked price) until the
60th day prior to maturity, and are then valued at amortized cost based upon the
value on such date unless the Board determines during such 60-day period that
this amortized cost basis does not represent fair value.
Foreign securities are recorded in the financial statements after translation to
U.S. dollars based on the applicable exchange rate at the end of the period. The
Fund does not isolate that portion of the results of operations arising as a
result of changes in the currency exchange rate from the fluctuations arising as
a result of changes in the market prices of investments during the period.
Interest income is translated at the exchange rates which existed at the dates
the income was accrued. Exchange gains and losses related to interest income are
included in interest income on the accompanying Statement of Operations.
B. Security Transactions, Dividends and Distributions. As is common in the
industry, security transactions are accounted for on the trade date. Dividend
income and distributions to shareholders are recorded on the ex-dividend date.
Realized gains and losses from security transactions are calculated using the
specific identification method.
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The Dessauer Global Equity Fund
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C. Federal Income Taxes. The Fund intends to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to its shareholders. Therefore, no federal
income tax provision is required.
D. Use of Estimates. The preparation of financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
E. Reclassification of Capital Accounts. The Fund accounts and reports for
distributions to shareholders in accordance with the American Institute of
Certified Public Accountant's Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital and Return
of Capital Distributions by Investment Companies. For the year ended March 31,
2000, the Fund decreased paid-in capital by $835,504 due to the Fund
experiencing a net investment loss during the year. Net realized loss and net
assets were not affected by this change.
Note 3-- Investment Advisory Fee and Other Transactions With Affiliates
The Fund entered into an Investment Advisory Agreement with Dessauer & McIntyre
Asset Management, Inc. ("DAMCo.") pursuant to which the Investment Adviser is
responsible for providing investment advisory services to the Fund (the
"Advisory Agreement"). Effective June 27, 1998, the Fund pays DAMCo. a monthly
fee at an annual rate of 0.75% of its average daily net asset value of the Fund.
Prior to June 27, 1998, the Fund paid DAMCo. fees at an annual rate of 0.60% of
its average daily net asset. For the six months ended September 30, 2000, the
Fund incurred $278,017 in advisory fees.
The Fund is responsible for its own operating expenses. DAMCo. has agreed to
limit the Fund's total expenses, excluding interest and taxes, to not more than
1.75% of average daily net assets. Any fee withheld and/or any Fund expense
absorbed by DAMCo., if so requested by DAMCo., anytime before the end of the
third fiscal year following the year in which the fees waived and expense
absorbed relate, provided the aggregate amount of the Fund's current operation
for such fiscal year does not exceed the applicable limitation of Fund's
expenses. For the six months ended September 30, 2000 DAMCo. recaptured expenses
of $16,072. The cumulative unreimbursed amount paid or waived by the Advisor
that may be recaptured at September 30, 2000 was $322,530. The Fund must pay its
current ordinary operating expenses before DAMCo. is entitled to any
reimbursement. Any such reimbursement is also contingent upon Board of Directors
review and approval prior to the time the reimbursement is initiated.
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The Dessauer Global Equity Fund
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Investment Company Administration, L.L.C. (the "Administrator") acts as the
Fund's Administrator under an Administration Agreement. The Administrator
prepares various federal and state regulatory filings, prepares reports and
materials to be supplied to the Trustees; monitors the activities of the Fund's
custodian, transfer agent and accountants; coordinates the preparation and
payment of Fund expenses and reviews the Fund's expense accruals. For its
services, the Administrator receives an annual fee equal to 0.10% of average net
assets. For the six months ended September 30, 2000, the Fund paid $37,069 in
such fees.
Certain officers of the Fund are also officers and/or Trustees of the Investment
Advisers and the Administrator.
Note 4 -- Concentration of Risk
The Fund invests a substantial portion of its assets in foreign securities.
Certain price and currency exchange fluctuations, as well as economic and
political situations in the foreign jurisdictions, could have a significant
impact on the Fund's net assets.
Note 5 -- Line of Credit
The Fund currently has a $5 million committed line of credit with a bank that
renews annually on June 30. At September 30, 2000, the interest rate, which is
revised from time to time, on the line of credit is 9.50%.
At September 30, 2000, the Fund had a $500,000 borrowing. The borrowings under
the line of the credit varied from $0 to $2 million, and averaged $500,000
during the six months ended September 30, 2000, with an 9.73% of weighted
average interest rate.
Note 6 -- Purchases and Sales of Securities
The cost of purchases and the proceeds from sales of securities, excluding U. S.
Government obligations and short-term investments, for the six months ended
September 30, 2000, were $14,268,820 and $16,787,571, respectively.
This material is intended for shareholders of The Dessauer Global Equity Fund
and may not be used as sales literature unless preceeded or accompanied by a
current prospect use. The Prospectus contains more information, including the
potential volatility, political, economic and currency risks associated with
foreign investing and the Fund's ongoing fees and expenses. Statements and other
information herein are dated and are subject to change.
The Fund is distributed by First Fund Distributors, Inc., Phoenix, Arizona
85018.
For more information, please call 1-800-560-0086
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