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Dessauer & McIntyre
Asset Management, Inc.
[LOGO] The Dessauer
Global Equity Fund
A no-load growth fund
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[GRAPHIC]
Annual Report
March 31, 2000
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The Dessauer Global Equity Fund
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April 26, 2000
Dear Shareholder:
I am delighted to once again report on the performance of The Dessauer Global
Equity Fund. For the twelve months ended March 31, 2000 the Net Asset Value
increased from $14.97 to $23.56 per share. This represented a twelve-month
return of +58.18%.
This investment return compares favorably to the Lipper Global Fund Index of
+36.33% and easily surpassed the S&P 500 Index return of +17.94%. Obviously this
was a spectacular year for the Fund and its shareholders.
Clearly, we are doing many things right, which the financial media has finally
discovered. During the past year, I have been quoted in Barron's Weekly, Money
Magazine, The Wall Street Journal and the London Financial Times. Everyone wants
to know the same thing: what are we buying and more importantly why.
As I wrote to you last year, our results over the years have come about by
combining value investing with our global perspective. This approach requires
independent thinking and analysis. Here at Dessauer & McIntyre Asset Management
("DAMCo.") we do our own research and we form our own investment opinions.
In last year's letter to you the shareholders, I outlined the reasons why we
have been successful over the years and how applying our skills in a focused
manner provides me with a very optimistic view of the likelihood of success in
the years to come. In this year's letter, I would like to update you on these
aspects of what we do and at the same time talk about many of the particular
companies which have given rise to our outstanding investment returns.
Secrets of Our Success
We have continued to focus upon our investment philosophy and strategies to
bring about these positive results. This philosophy is summarized by the
following six points:
1. We invest in the best companies in the most exciting industries in the
world----This point of view drives us in making all of our stock selections.
We invest in companies with a global franchise regardless of where they
happen to have their corporate headquarters. We do not however invest
directly in emerging markets but participate in the global economy through
the reaches of many of our companies with worldwide operations. Enron
Corporation which has been a Fund holding for nearly three years is a
perfect example. The company operates networks throughout the world to
develop and enhance energy and broadband communication services. This
company has successfully transformed itself to fully participate globally in
the New Economy. In fact, Enron was named by Fortune as "America's Most
Innovative Company" for the second year in a row. The stock which has
performed spectacularly for us is viewed as a core holding and gives us
exposure to such global trends as the deregulation on electricity, energy
services, power plant operations around the globe and of course
telecommunications services through the company's 14,300 mile fiber optic
cable line. Enron is clearly a play on the global economy.
2. We get to know the management of the companies we invest in---One of the
lessons I learned many years ago is to invest alongside management teams
whose passion is to drive their share prices higher. It is not enough to
merely invest in an undervalued situation. It
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The Dessauer Global Equity Fund
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is very important to have a management team in place that has a plan to
bring about value for the shareholders. Face-to-face meetings with
management are very important to me. A prime example of this is Bally Total
Fitness which has been a Fund holding for nearly three years. I have known
Lee Hillman, the CEO of Bally, for nearly ten years. Lee was instrumental in
the turnaround that occurred at Bally Entertainment before it was sold to
Hilton in 1996. In early 1997 Lee took over Bally Fitness and the stock has
gone from four dollars per share to the mid twenties where I think it still
has tremendous potential. Lee's passion for producing results and his track
record at being able to convert these results into share price appreciation
are key reasons why we have a positive outlook for the shares of Bally Total
Fitness.
3. We seek already-successful companies whose management is driven to
constantly improve their competitive position---The Fund's portfolio has
benefited greatly by this trend. Time Warner and GlaxoWellcome are two
examples of Fund holdings that entered into merger agreements with the sole
intent of enhancing further their global presence and market position. In
the case of TimeWarner, the company has agreed to merge with AOL in a deal
that will likely be completed by the end of the year 2000. The combined
company will create the ultimate marriage of content and distribution for
the future. I think the new company will be a powerhouse in the
entertainment, Internet distribution and news industries and will be a must
own stock for the next several years. The Fund has already wracked up huge
gains in the shares of Time Warner and we look positively upon the merger.
In the case of GlaxoWellcome the Fund is also the beneficiary of a great
company seeking once again to enhance its position in the global
pharmaceutical industry. GlaxoWellcome is in the final stages of merging
with its British neighbor SmithKline Beecham. The deal will create the
world's largest pharmaceutical firm with some $25 billion in sales and 7.3%
of the global market. In addition, the combined company will have a R&D
budget of about $4 billion per year will lead to many new drugs which should
make this stock an excellent performer over the next several years.
4. We invest in industries that propel the growth in the global economy---Our
perspective calls for us to invest in industries which will propel the
growth in the global economy, including financial services, healthcare,
entertainment, telecommunications and technology. The portfolio then is our
way of investing in the successful future of the global economy. Just as in
the last twelve months the next twelve will see the Fund's portfolio
continue to reflect the dominant themes of our time, such as the growth of
international trade, the decline of inflation, America's ascendancy to
economic leadership, breakthrough medical discoveries and the development of
e-commerce. An exciting example of a Fund holding at the crossroads of many
of these developments is MCI Worldcom. The shares have been held by the Fund
almost since its inception and the company is poised to lead the global
revolution going on in all areas of communications including being one of
the biggest Internet backbone plays around. The combination of quality of
assets and outlook for consistency of growth makes this won of the Fund's
core telecom holdings.
5. We profit from the Internet without investing in hugely overpriced
"Internet" stocks--- The significance of this last investment principle
cannot be overstated. The Fund's investment performance has not been as a
result of reaching for performance by investing in "dot.com" companies.
Recent market events have shown the danger of such a practice. We told you
one year ago that we would avoid these plays but still be active in this
communications revolution by investing in companies who are providing the
infrastructure growth for the Internet. Such companies as Cable & Wireless,
LSI Logic, Scientific Atlanta, Time Warner, Qwest Communications all fall
into this category and seem to have extremely bright
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The Dessauer Global Equity Fund
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futures. Our focus on real companies with current earnings and outstanding
growth prospects makes the Fund's portfolio less vulnerable to the ever-
changing mood swings on Wall Street.
6. We make investing less taxing for you---Although it cannot always be
achieved, we strive for after tax returns. The Fund's turnover ratio is
quite low. Gains are realized only upon careful consideration and this
year's payout of only .0882 cents of long term gains is illustrative of
this. We strive to emphasize the long term after tax return to the
shareholders of the Fund.
Looking Ahead
As I stated in last year's letter to shareholders, I remain a bull on the future
prospects of the progress of the global economy. In addition, I remain very
optimistic about the prospects of the Fund's portfolio. While no one has a
crystal ball and we will certainly see more volatility, three or four years down
the road I expect the Fund's portfolio to have grown considerably. I have put my
money where my investment judgement is as well. I remain the Fund's largest
individual shareholder. My nearly 45,000 shares of the Fund were worth more than
one million dollars as of March 31, 2000.
On behalf of everyone here at DAMCo., I thank you for your loyalty and many
written letters of appreciation and support. You are welcome to visit our
website at dessauerandmcintyre.com throughout the year for various updates on
our investment thinking.
Sincerely,
/s/ Thomas P. McIntyre
Thomas P. McIntyre, CFA
Chairman, President and Chief Executive Officer
Past performance of the Fund or 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 Lipper Global Fund Index is composed of the 30 largest funds in the global
equity objective. Lipper defines a Global Equity Fund as a fund that invests at
least 25% of its portfolio in securities traded outside the United States but
that may own U.S. securities as well. The S&P 500 Index is an unmanaged
capitalization-weighted index of 500 stocks designed to represent the broad
domestic economy. 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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Comparison of the change in value of a $10,000 investment in The
Dessauer Global Equity Fund, the Morgan Stanley Capital International
World Index, and the Lipper Global Fund Index.
Plot Points
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Lipper
Dessauer MSCI Global
Global World Index Fund Index
----------------------------------------------------------------------------
May '97 $10,000 $10,000 $10,000
Jun '97 $10,000 $10,497 $10,428
Sep '97 $10,480 $10,797 $10,487
Dec '97 $ 9,602 $10,531 $10,440
Mar '98 $11,727 $12,040 $11,837
Jun '98 $11,769 $12,284 $11,940
Sep '98 $ 9,200 $10,811 $10,212
Dec '98 $12,125 $13,093 $11,964
Mar '99 $12,846 $13,562 $12,269
Jun '99 $13,944 $14,209 $13,077
Sep '99 $13,438 $13,999 $12,985
Dec '99 $16,128 $16,360 $15,996
Mar '00 $20,319 $16,528 $16,727
Past performance is not indicative of future performance.
The MSCI World Index measures performance for a diverse range of developed
country global stock markets, including the U.S., Canada, Europe, Australia, New
Zealand and the Far East. The Index reflects the reinvestment of distributions,
if any, but does not reflect fees, brokerage commissions, or other cost
investing.
The Lipper Global Fund Index measures the performance of the 30 largest mutual
funds in the global fund investment objective, as determined by Lipper, Inc.
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The Dessauer Global Equity Fund
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PORTFOLIO OF INVESTMENTS BY INDUSTRY at March 31, 2000
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<TABLE>
<CAPTION>
Equity Securities (99.9%) Shares Value
----------------------------------------------------------------------------------------------------
<S> <C> <C>
Consumer Services: (6.3%)
Cendant Corporation (United States)*................................... 275,717 $ 5,100,764
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Entertainment: (12.1%)
Pixar, Inc. (United States)*........................................... 29,527 1,053,745
Time Warner Inc. (United States)....................................... 88,607 8,766,555
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9,820,300
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Financial Services: (9.6%)
AXA ADR (France)...................................................... 19,539 1,400,702
Citigroup Inc. (United States)......................................... 59,658 3,538,465
SEI Investments Company (United States)................................ 24,654 2,796,688
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7,735,855
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Health & Personal Care: (9.9%)
Bally Total Fitness Holding Corporation (United States)*............... 78,899 1,952,750
Elan Corporation Plc ADR (Ireland)*.................................... 74,554 3,541,315
Glaxo Wellcome Plc ADR (United Kingdom)................................ 20,999 1,203,505
Novartis AG ADR (Switzerland).......................................... 20,082 1,373,139
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8,070,709
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Hotel / Gaming: (2.8%)
Park Place Entertainment Corporation (United States)*................. 197,534 2,271,641
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Internet Software: (0.8%)
At Home Corporation (United States)*................................... 20,000 658,750
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Conglomerate: (5.4%)
Enron Corporation (United States)...................................... 59,007 4,418,149
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Technology: (20.3%)
Koninklijke (Royal) Philips Electronics N.V. ADR (Netherlands)......... 19,692 3,379,640
LSI Logic Corporation (United States)*................................. 157,533 11,312,838
Lucent Technologies, Inc. (United States).............................. 29,721 1,805,551
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16,498,029
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Telecommunications Services: (32.7%)
Cable & Wireless Plc ADR (United Kingdom).............................. 17,450 978,291
Global Crossing Ltd. (Bermuda)*........................................ 1,989 81,425
KPNQuest N.V. (Netherlands)*........................................... 9,943 539,408
MCI WorldCom, Inc. (United States)*.................................... 76,375 3,470,289
Qwest Communications International Inc. (United States)*............... 157,895 7,578,960
Scientific Atlanta, Inc. (United States)............................... 198,752 12,496,532
Vodafone AirTouch Plc ADR (United Kingdom)............................. 24,786 1,377,172
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26,522,077
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Total Equity Securities
(Cost $32,870,310)................................................... 81,096,274
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</TABLE>
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The Dessauer Global Equity Fund
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PORTFOLIO OF INVESTMENTS BY INDUSTRY at March 31, 2000 (Continued)
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<TABLE>
<CAPTION>
Principal
Short-Term Investments (0.2%) Amount Value
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<S> <C> <C>
Repurchase Agreement (0.2%)
Investors Bank and Trust Company Repurchase
Agreement, 5.30%, due 4/03/2000, [(Collateralized by $152,568
Federal Home Loan Mortgage Corporation Pool # 846734, 7.243%
due 11/01/2015) (Market Value $160,020)] (Proceeds $151,770)
(Cost $151,703)...................................................... $ 151,703 $ 151,703
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Total Investments (100.1%)
(Cost $33,022,013**)................................................. 81,247,977
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Liabilities in excess of Other Assets (-0.1%).......................... (74,230)
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Net Assets (100.0%).................................................... $ 81,173,747
=============
**Cost for federal income tax purposes is the same.
Net unrealized appreciation consists of:
Gross unrealized appreciation................................. $ 48,559,866
Gross unrealized depreciation................................. (333,902)
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Net unrealized appreciation................................. $ 48,225,964
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</TABLE>
ADR - American depositary receipt.
* Non-income producing security.
PORTFOLIO OF INVESTMENTS BY COUNTRY at March 31, 2000
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Percent of
Country Net Assets
Bermuda............................................................. 0.1%
France.............................................................. 1.7%
Ireland............................................................. 4.4%
Netherlands......................................................... 4.8%
Switzerland......................................................... 1.7%
United Kingdom...................................................... 4.4%
United States....................................................... 83.0%
Liabilities in excess of Other Assets............................... (0.1%)
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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 March 31, 2000
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<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investments in securities, at value (cost $33,022,013)........................ $ 81,247,977
Receivables for:
Securities sold............................................................. 716,876
Dividends and interest...................................................... 19,966
Fund shares sold............................................................ 16,798
Prepaid expenses.............................................................. 21,347
Other assets.................................................................. 18,575
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Total assets................................................................ 82,041,539
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LIABILITIES
Payables for:
Securities purchased........................................................ 683,750
Fund shares redeemed........................................................ 70,655
Due to Advisor.............................................................. 20,160
Accrued expenses.............................................................. 93,227
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Total liabilities........................................................... 867,792
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NET ASSETS.................................................................... $ 81,173,747
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Net asset value, offering and redemption price per share
($81,173,747/3,445,237 shares outstanding; 50,000,000
shares authorized, $0.01 par value)......................................... $ 23.56
============
SOURCE OF NET ASSETS
Paid-in capital............................................................. $ 27,413,575
Accumulated net realized gain on investments and foreign currency........... 5,534,208
Net unrealized appreciation on investments.................................. 48,225,964
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Net assets................................................................ $ 81,173,747
============
</TABLE>
See accompanying notes to financial statements.
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THE DESSAUER GLOBAL EQUITY FUND
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STATEMENT OF OPERATIONS
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For the
Year Ended
March 31, 2000
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INVESTMENT INCOME
Income
Dividends (Net of foreign taxes withheld of $11,422)........... $ 431,703
Interest....................................................... 32,441
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Total investment income...................................... 464,144
Expenses
Advisory fees.................................................. 543,444
Legal fees..................................................... 277,465
Shareholder service fee........................................ 166,644
Reports to shareholders........................................ 125,184
Transfer agent fees............................................ 123,423
Amortization of deferred organization costs.................... 86,821
Administration fees............................................ 72,459
Accounting fees................................................ 57,767
Registration expense........................................... 35,080
Custodian fees................................................. 29,028
Auditing fees.................................................. 22,900
Trustee fees................................................... 21,968
Insurance expense.............................................. 10,607
Miscellaneous.................................................. 12,896
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Total expenses............................................... 1,585,686
Less: fees waived............................................ (338,602)
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Net expenses before interest and commitment fee.............. 1,247,084
Interest expense............................................. 41,609
Commitment fee on credit line................................ 10,955
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Net expenses................................................. 1,299,648
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Net investment loss........................................ (835,504)
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REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments............................... 8,214,246
Unrealized gain on investments................................. 26,609,581
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Net realized and unrealized gain on investments.............. 34,823,827
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Net Increase in Net Assets Resulting from Operations......... $ 33,988,323
================
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>
For the For the
Year Ended Year Ended
March 31, 2000 March 31, 1999
--------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS
Net investment loss.................................................... $ (835,504) $ (261,447)
Net realized gain on investments and foreign currency.................. 8,214,246 14,571
Unrealized appreciation on investments and foreign currency............ 26,609,581 8,169,677
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Net increase in net assets resulting
from operations.................................................... 33,988,323 7,922,801
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DISTRIBUTIONS TO SHAREHOLDERS
From net investment income............................................. - (143,995)
From realized gain on investments...................................... (327,838) -
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Total distributions to shareholders.................................. (327,838) (143,995)
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CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold.............................................. 3,699,833 -
Proceeds from reinvestment of distributions............................ 157,260 -
Cost of shares redeemed................................................ (46,929,734) -
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Net decrease from capital share transactions......................... (43,072,641) -
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Net increase (decrease) in net assets................................ (9,412,156) 7,778,806
NET ASSETS
Beginning of period.................................................... 90,585,903 82,807,097
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End of period.......................................................... $ 81,173,747 $ 90,585,903
============== ==============
CHANGES IN SHARES
Shares sold............................................................ 202,389 -
Shares reinvested from distributions................................... 9,011 -
Shares redeemed........................................................ (2,816,367) -
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Net decrease........................................................... (2,604,967) -
============== ==============
</TABLE>
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 the period
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<TABLE>
<CAPTION>
For the Year For the Year May 30, 1997*
Ended Ended to
March 31, 2000 March 31, 1999 March 31, 1998
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<S> <C> <C> <C>
Net asset value, beginning of period........................... $ 14.97 $ 13.69 $ 11.88
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INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)................................. (0.24) (0.05) 0.10
Net realized and unrealized gain
on investments............................................. 8.92 1.35 1.90 **
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Total from investment operations............................... 8.68 1.30 2.00
-------------- -------------- --------------
LESS DISTRIBUTIONS
Dividends from net investment income....................... 0.00 (0.02) (0.06)
Distributions from net realized gain....................... (0.09) 0.00 (0.13)
-------------- -------------- --------------
Total distributions............................................ (0.09) (0.02) (0.19)
-------------- -------------- --------------
Net asset value, end of period................................. $ 23.56 $ 14.97 $ 13.69
============== ============== ==============
Initial offering price......................................... N/A $ 12.50 $ 12.50
New York Stock Exchange closing price, end of period........... N/A $ 14.13 $ 12.50
Total investment return+++..................................... N/A 13.20%/1/ 1.76%/+1/
Total return................................................... 58.18%/2/ 9.54%/2/ 17.27%/+2/
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (thousands).......................... $ 81,174 $ 90,586 $ 82,807
Ratio of expenses to average net assets
including interest expense:
Before fees waived......................................... 2.26% 1.43% 1.54% ++
After fees waived.......................................... 1.79% N/A N/A
Ratio of net investment income (loss) to average
net assets:
Before fees waived......................................... (1.62%) (0.32%) 0.99% ++
After fees waived.......................................... (1.15%) N/A N/A
Portfolio turnover rate........................................ 9.63% 51.68% 74.47% +
</TABLE>
*Commencement of the Fund.
**Includes the impact of a $330,000 ($0.06 per share) charge for offering
expenses paid pursuant to the terms of the prospectus dated May 30, 1997.
+Not annualized.
++Annualized.
+++Does not reflect sales charges.
/1/Based on the market price of the Fund's shares and including the reinvestment
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.
See accompanying Notes to Financial Statements.
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The Dessauer Global Equity Fund
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NOTES TO FINANCIAL STATEMENTS
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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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. Accumulated net realized
gain on investments and foreign currency and net assets were not affected by
this change.
F. Organization Cost. The Fund has adopted AICPA Statement of Position No.
98-5, which requires organization costs to be charged against income when
incurred.
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 year ended March 31, 2000, the Fund
incurred $543,444 in advisory fees.
The Fund is responsible for its own operating expenses. DAMCo. has agreed to
limit the Fund's total operating 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 to which the fee waived and expenses
absorbed relate, provided the aggregate amount of the Fund's current operating
for such fiscal year does not exceed the applicable limitation on Fund's
expenses. For the year ended March 31, 2000 DAMCo. waived fees of $338,602, all
of which may be recaptured by DAMCo. no later than March 31, 2003. 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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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 year ended March 31, 2000, the Fund paid $72,459 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 March 31, 2000, the interest rate, which is
revised from time to time, on the line of credit is 9.00%.
At March 31, 2000, the Fund had no outstanding borrowing. The borrowings under
the line of the credit varied from $0 to $2 million, and averaged $488,000
during the year ended March 31, 2000, with an 8.58% 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 year ended March 31,
2000, were $6,954,596 and $47,988,431 respectively.
13
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Shareholders and Board of Trustees
The Dessauer Global Equity Fund
We have audited the accompanying statement of assets and liabilities of The
Dessauer Global Equity Fund (the "Fund"), including the portfolio of
investments, as of March 31, 2000 and the related statement of operations for
the year then ended, the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the two
years in the period then ended and for the period May 30, 1997 (commencement of
the Fund) through March 31, 1998. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of March 31, 2000, by correspondence with
the custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
Dessauer Global Equity Fund as of March 31, 2000, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended, and the financial highlights for each of the two years
in the period then ended and for the period May 30, 1997 (commencement of the
Fund) through March 31, 1998, in conformity with accounting principles generally
accepted in the United States.
/s/ Ernst & Young LLP
Los Angeles, California
May 5, 2000
14
<PAGE>
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 prospectuse. 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
DESAR 5/00
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