As filed with the Securities and Exchange Commission on August 22, 1997
1933 Act Registration No. 333-30551
1940 Act Registration No. 811-7787
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
-
Pre-Effective Amendment No. 1 [X]
-
Post-Effective Amendment No. [ ]
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
-
Amendment No. 1 [X]
GT GLOBAL SERIES TRUST
(formerly known as GT Global Asset Allocation Trust)
(Exact name of registrant as specified in charter)
50 California Street, 27th Floor
San Francisco, California 94111
(Address of principal executive offices)
Registrant's telephone number, including area code: (415) 392-6181
Phillip S. Gillespie, Esq.
Chancellor LGT Asset Management, Inc.
50 California Street, 27th Floor
San Francisco, California 94111
(Name and address of agent for service)
Copies to:
ARTHUR J. BROWN, Esq.
R. DARRELL MOUNTS, Esq.
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W., Second Floor
Washington, D.C. 20036-1800
Telephone: (202) 778-9000
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement.
Pursuant to the provisions of Rule 24f-2 under the Investment Company Act of
1940, Registrant has previously elected to register an indefinite number of
its shares.
Registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
GT GLOBAL SERIES TRUST
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement consists of the following papers and documents:
Cover Sheet
Contents of Registration Statement
Cross Reference Sheet
Part A - Prospectuses
Part B - Statements of Additional Information
Part C - Other Information
Signature Pages
Exhibits
<PAGE>
GT GLOBAL SERIES TRUST
FORM N-1A CROSS REFERENCE SHEET
PROSPECTUS---CLASS A AND CLASS B
Item No. of
Part A of Form N-1A Prospectus Caption
------------------- -----------------------
1. Cover Page Cover Page
2. Synopsis Prospectus Summary
3. Condensed Financial Information Performance
4. General Description of Registrant Investment Objective and Policies;
Description of the Underlying Theme
Funds; Risk Factors and Special
Considerations; Management; Other
Information
5. Management of the Fund Management
5A. Management's Discussion of Not Applicable
Fund Performance
6. Capital Stock and Other Securities Dividends, Other Distributions and
Federal Income Taxation; Other
Information
7. Purchase of Securities Being Offered Alternative Purchase Plan; How to
Invest; How to Make Exchanges;
Calculation of Net Asset Value;
Management
8. Redemption or Repurchase Alternative Purchase Plan; How to
Redeem Shares; Calculation of Net
Asset Value
9. Pending Legal Proceedings Not Applicable
PROSPECTUS---ADVISOR CLASS
Item No. of
Part A of Form N-1A Prospectus Caption
------------------- ------------------
1. Cover Page Cover Page
2. Synopsis Prospectus Summary
3. Condensed Financial Information Performance
<PAGE>
Item No. of
Part A of Form N-1A Prospectus Caption
------------------- ------------------
4. General Description of Registrant Investment Objective and Policies;
Description of the Underlying Theme
Funds; Risk Factors and Special
Considerations; Management; Other
Information
5. Management of the Fund Management
5A. Management's Discussion of Not Applicable
Fund Performance
6. Capital Stock and Other Dividends, Other Distributions and
Securities Federal Income Taxation; Other
Information
7. Purchase of Securities Being How to Invest; How to Make
Offered Exchanges; Calculation of Net
Asset Value; Management
8. Redemption or Repurchase How to Redeem Shares; Calculation
of Net Asset Value
9. Pending Legal Proceedings Not Applicable
STATEMENT OF ADDITIONAL INFORMATION---CLASS A AND CLASS B
Item No. Of Statement of Additional Information
Part B of Form N-1A Caption
------------------- -------
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Cover Page; Additional Information
13. Investment Objectives and Policies Investment Objective and Policies;
Investment Limitations; Options,
Futures and Currency Strategies;
Risk Factors of the Underlying
Theme Funds; Execution of Portfolio
Transactions
14. Management of the Registrant Trustees and Executive Officers;
Management
15. Control Persons and Principal Trustees and Executive Officers;
Holders of Securities Management
17. Brokerage Allocation and Execution of Portfolio Transactions
Other Practices
18. Capital Stock and Other Securities Not Applicable
19. Purchase, Redemption and Pricing of Valuation of Fund Shares;
Securities Being Offered Information Relating to Sales and
Redemptions
<PAGE>
Item No. Of Statement of Additional Information
Part B of Form N-1A Caption
------------------- -------
20. Tax Status Taxes
21. Underwriters Management
22. Calculation of Performance Data Investment Results
23. Financial Statements Financial Statements
STATEMENT OF ADDITIONAL INFORMATION---ADVISOR CLASS
Item No. Of Statement of Additional Information
Part B of Form N-1A Caption
------------------- -------
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Cover Page; Additional Information
13. Investment Objectives and Investment Objective and Policies;
Policies Investment Limitations; Options,
Futures and Currency Strategies;
Risk Factors of the Underlying
Theme Funds; Execution of Portfolio
Transactions
14. Management of the Registrant Trustees and Executive Officers;
Management
15. Control Persons and Principal Trustees and Executive Officers;
Holders of Securities Management
16. Investment Advisory and Other Management; Additional Information
Services
17. Brokerage Allocation and Execution of Portfolio Transactions
Other Practices
<PAGE>
Item No. Of Statement of Additional Information
Part B of Form N-1A Caption
------------------- -------
18. Capital Stock and Other Not Applicable
Securities
19. Purchase, Redemption, and Valuation of Fund Shares;
Pricing of Securities Being Information Relation to Sales and
Offered Redemptions
20. Tax Status Taxes
21. Underwriters Management
22. Calculation of Performance Data Investment Results
23. Financial Statements Financial Statements
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 of this Registration Statement.
C-6
<PAGE>
GT GLOBAL NEW DIMENSION FUND
Prospectus -- ________ __, 1997
GT Global New Dimension Fund (the "Fund") is a diversified series of GT Global
Series Trust (the "Trust"), an open-end management investment company. The Fund
seeks long-term growth of capital. Unlike a typical mutual fund, which invests
directly in portfolio securities, the Fund invests primarily in shares of the GT
Global theme mutual funds: GT Global Consumer Products and Services Fund; GT
Global Financial Services Fund; GT Global Health Care Fund; GT Global
Infrastructure Fund; GT Global Natural Resources Fund; and GT Global
Telecommunications Fund (collectively, the "Underlying Theme Funds").
There is no assurance that the Fund will achieve its investment objective.
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR GUARANTEED BY,
ANY BANK, NOR ARE THEY FEDERALLY INSURED OR OTHERWISE PROTECTED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
The Fund is managed by Chancellor LGT Asset Management, Inc. (the "Manager").
The Manager and its worldwide affiliates are part of Liechtenstein Global Trust,
a provider of global asset management and private banking products and services
to individual and institutional investors.
This Prospectus sets forth concisely the information an investor should know
before investing and should be read carefully and retained for future reference.
A Statement of Additional Information, dated ________ __, 1997, has been filed
with the Securities and Exchange Commission ("SEC") and, as supplemented or
amended from time to time, is incorporated by reference. The Statement of
Additional Information is available without charge by writing to the Fund at 50
California Street, 27th Floor, San Francisco, California 94111, or by calling
(800) 824-1580. It is also available, along with other related materials, on the
SEC's Internet web site (http://www.sec.gov).
FOR FURTHER INFORMATION, CALL (800) 824-1580 OR CONTACT YOUR FINANCIAL ADVISER.
GT GLOBAL
A Member of Liechtenstein Global Trust
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED ON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE>
T A B L E O F C O N T E N T S
Page
----
PROSPECTUS SUMMARY........................................................ 3
ALTERNATIVE PURCHASE PLAN..................................................8
INVESTMENT OBJECTIVE AND POLICIES.........................................10
DESCRIPTION OF THE UNDERLYING THEME FUNDS.................................11
RISK FACTORS AND SPECIAL CONSIDERATIONS...................................14
HOW TO INVEST.............................................................18
PURCHASING CLASS A SHARES.................................................19
PURCHASING CLASS B SHARES.................................................23
CONTINGENT DEFERRED SALES CHARGE WAIVERS..................................25
PROGRAMS APPLICABLE TO CLASS A SHARES AND CLASS B SHARES..................26
HOW TO MAKE EXCHANGES.....................................................27
HOW TO REDEEM SHARES......................................................29
SHAREHOLDER ACCOUNT MANUAL................................................31
CALCULATION OF NET ASSET VALUE............................................33
DIVIDENDS, OTHER DISTRIBUTIONS AND FEDERAL INCOME TAXATION................34
MANAGEMENT................................................................36
OTHER INFORMATION.........................................................39
PERFORMANCE...............................................................41
APPENDIX ...............................................................44
Prospectus Page 2
<PAGE>
GT GLOBAL NEW DIMENSION FUND
PROSPECTUS SUMMARY
- -----------------------------------------------------------------------------
The following summary is qualified in its entirety by the more detailed
information appearing in the body of this Prospectus. Cross-references in the
summary are to headings in the body of this Prospectus.
Investment Objective: The Fund seeks long-term growth of capital.
Principal Investments: The Fund seeks its investment objective by
investing in the following global theme
mutual funds: GT Global Consumer Products
and Services Fund ("Consumer Products and
Services Fund"); GT Global Financial
Services Fund ("Financial Services Fund");
GT Global Health Care Fund ("Health Care
Fund"); GT Global Infrastructure Fund
("Infrastructure Fund"); GT Global Natural
Resources Fund ("Natural Resources Fund");
and GT Global Telecommunications Fund
("Telecommunications Fund"). The allocation
of the Fund's assets among the Underlying
Theme Funds is governed strictly by a
formula described herein. See "Investment
Objective and Policies."
There is no assurance that the Fund will
achieve its investment objective. The Fund's
net asset value will fluctuate, reflecting
fluctuations in the net asset value of the
shares of the Underlying Theme Funds.
Investors should review the investment
objectives and policies of the Fund and the
Underlying Theme Funds carefully and
consider their ability to assume these and
other risks involved in purchasing shares of
the Fund. See "Investment Objective and
Policies," "Description of the Underlying
Theme Funds" and "Risk Factors and Special
Considerations." As a newly organized
entity, the Fund has no operating history.
Investment Manager: The Manager is part of Liechtenstein Global
Trust, a provider of global asset management
and private banking products and services to
individual and institutional investors,
entrusted with approximately $87 billion in
total assets as of June 30, 1997. The
Manager and its worldwide asset management
affiliates maintain investment offices in
Frankfurt, Hong Kong, London, New York, San
Francisco, Singapore, Sydney, Tokyo and
Toronto. See "Management."
Alternative Purchase Plan: Investors may select Class A or Class B
shares, each subject to different expenses
and a different sales charge structure.
Class A Shares: Offered at net asset value plus any
applicable sales charge (maximum is 4.75% of
public offering price) and subject to 12b-1
Prospectus Page 3
<PAGE>
GT GLOBAL NEW DIMENSION FUND
PROSPECTUS SUMMARY
- -----------------------------------------------------------------------------
service and distribution fees at the
annualized rate of up to 0.50% of the
average daily net assets of the Class A
shares.
Class B Shares: Offered at net asset value (a maximum
contingent deferred sales charge of 5% of
the lesser of the shares' net asset value or
the original purchase price is imposed on
certain redemptions made within six years of
date of purchase) and subject to 12b-1
service and distribution fees at the
annualized rate of up to 1.00% of the
average daily net assets of the Class B
shares.
Shares Available Through: Class A and Class B shares are available
through broker/dealers who have entered into
agreements to sell shares with the Fund's
distributor, GT Global, Inc. ("GT Global").
Shares also may be acquired directly through
GT Global or through exchanges of shares of
the other GT Global Mutual Funds, which are
open-end management investment companies
advised and/or administered by the Manager.
See "How to Invest" and "Shareholder Account
Manual."
Exchange Privileges: Shares of a class of the Fund may be
exchanged without a sales charge for shares
of the corresponding class of other GT
Global Mutual Funds. See "How to Make
Exchanges" and "Shareholder Account Manual."
Redemptions: Shares may be redeemed either through
broker/dealers or the Fund's transfer agent,
GT Global Investor Services, Inc. ("Transfer
Agent"). See "How to Redeem Shares" and
"Shareholder Account Manual."
Dividends and Other
Distributions: Dividends and capital gain distributions, if
any, are paid annually.
Reinvestment: Dividends and other distributions may be
reinvested automatically in Fund shares of
the distributing class or in shares of the
corresponding class of other GT Global
Mutual Funds without a sales charge.
First Purchase: $500 minimum ($100 for individual retirement
accounts ("IRAs") and reduced amounts for
certain other retirement plans).
Subsequent Purchases: $100 minimum ($25 for IRAs and reduced
amounts for certain other retirement plans).
Net Asset Values: Expected to be quoted daily for both classes
of shares in the financial section of most
newspapers.
Prospectus Page 4
<PAGE>
GT GLOBAL NEW DIMENSION FUND
PROSPECTUS SUMMARY
- -----------------------------------------------------------------------------
Other Features:
Class A Shares Letter of Intent, Dollar Cost Averaging
Program, Quantity Discounts, Automatic
Investment Plan, Right of Accumulation,
Systematic Withdrawal Plan, Reinstatement
Privilege, Portfolio Rebalancing Program
Class B Shares Reinstatement Privilege, Automatic
Investment Plan, Systematic Withdrawal Plan,
Dollar Cost Averaging Program, Portfolio
Rebalancing Program
SUMMARY OF INVESTOR COSTS. The expenses and maximum transaction costs associated
with investing in the Class A and Class B shares of the Fund are reflected in
the following tables.
<TABLE>
<CAPTION>
CLASS A CLASS B
------- -------
<S> <C> <C>
SHAREHOLDER TRANSACTIONS COSTS*:
Maximum sales charge on purchases of shares (as a % of offering price) 4.75% None
Sales charges on reinvested distributions to shareholders............
None None
Maximum deferred sales charge (as a % of net asset value at time of None 5.00%
purchase or sale, whichever is less..............................
Redemption charges................................................... None None
Exchange fees
-- On first four exchanges each year....................... None None
-- On each additional exchange............................. $7.50 $7.50
ANNUAL FUND OPERATING EXPENSES+:
(AS A % OF AVERAGE NET ASSETS)
Investment management fees........................................... None None
12b-1 distribution and service fees.................................. 0.50% 1.00%
Other expenses....................................................... NONE NONE
---- ----
Total Fund Operating Expenses........................................ 0.50% 1.00%
===== =====
</TABLE>
- ---------------------
* Sales charge waivers are available for Class A and Class B shares, and
reduced sales charge purchase plans are available for Class A shares. The
maximum 5% contingent deferred sales charge on Class B shares applies to
redemptions during the first year after purchase. The charge declines
thereafter, reaching zero after six years. See "How to Invest."
+ The Annual Fund Operating Expenses are estimated for the Fund's initial
fiscal period. "Other expenses" (including transfer agency, legal and audit
fees and other operating expenses) initially will be borne by the Manager.
Subject to receipt of an order of the SEC pursuant to a pending exemptive
application and a private letter ruling issued by the Internal Revenue
Service, such expenses may be shared by the Manager and the Underlying
Theme Funds. See "Other Information - Special Servicing Agreement."
Long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales charge permitted by the National Association of
Securities Dealers, Inc. rules regarding investment companies. See
"Management" and the Statement of Additional Information for more
information. The Fund also offers Advisor Class shares to certain
Prospectus Page 5
<PAGE>
GT GLOBAL NEW DIMENSION FUND
PROSPECTUS SUMMARY
- -----------------------------------------------------------------------------
categories of investors. See "Alternative Purchase Plan." Advisor Class
shares are not subject to 12b-1 distribution and service fees.
In addition to the Annual Fund Operating Expenses shown above, the Fund, as a
shareholder in the Underlying Theme Funds, will indirectly bear its pro rata
share of the fees and expenses incurred by the Underlying Theme Funds. As a
result, the investment returns of the Fund will reflect the expenses of the
Underlying Theme Funds in which it holds shares. Because the Fund invests only
in Advisor Class shares of the Underlying Theme Funds, it pays no sales charge
or 12b-1 distribution or service fees in connection with these investments. The
following table shows the expense ratios applicable to Advisor Class shares of
the Underlying Theme Funds for the semi-annual period ended April 30, 1997.
----------------------------------------------------------------------------
EXPENSE RATIO OF
ADVISOR CLASS
UNDERLYING THEME FUND SHARES 1/
----------------------------------------------------------------------------
Consumer Products and Services Fund 1.49%
Financial Services Fund 1.90% 2/
Health Care Fund 1.31%
Infrastructure Fund 1.61%
Natural Resources Fund 1.68%
Telecommunications Fund 1.39%
----------------------------------------------------------------------------
1/ Effective _____________, the Manager will limit each Underlying Theme
Fund's expenses to a maximum level of 1.50% of the average daily net assets of
such Fund's Advisor Class shares.
2/ Without reimbursement by the Manager, the expense ratio would have been
2.35%.
The following table shows the estimated aggregate expense ratio of the Fund
based on a weighted average of the expense ratios of the Underlying Theme Funds
in which the Fund would have invested as of July 30, 1997, plus the Fund's
expense ratio. For this purpose, (as set forth in the preceding table) the
expense ratios of the Underlying Theme Funds are for the semi-annual period
ended April 30, 1997.
----------------------------------------- -------------------------------------
ESTIMATED AGGREGATE EXPENSE
GT GLOBAL NEW DIMENSION FUND RATIO1
----------------------------------------- -------------------------------------
Class A 2.08%
Class B 2.58%
----------------------------------------- -------------------------------------
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES:
An investor would have directly or indirectly paid the following expenses of the
Fund and, by extension, of the Underlying Theme Funds at the end of the periods
shown on a $1,000 investment in the Fund, assuming a 5% annual return:
Prospectus Page 6
<PAGE>
GT GLOBAL NEW DIMENSION FUND
PROSPECTUS SUMMARY
- -----------------------------------------------------------------------------
ONE THREE
YEAR YEARS
---- -----
Class A shares(1)......................................... 67 110
Class B shares
Assuming a complete redemption at end of period(2)...... 76 111
Assuming no redemption................................ 26 81
- -------------------------
(1) Assumes payment of maximum sales charge by the investor.
(2) Assumes deduction of the applicable contingent deferred sales charge.
THE FOREGOING TABLES ARE INTENDED TO ASSIST INVESTORS IN UNDERSTANDING
THE VARIOUS COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUND. THE
"HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF FUTURE EXPENSES. THE
FUND'S ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN. The example
assumes payment by the Fund of operating expenses at the level set forth
under "Annual Fund Operating Expenses" above and of its pro rata share of
the Advisor Class share expenses of the Underlying Theme Funds.
The tables and the assumption in the Hypothetical Example of a 5% annual
return are required by regulations of the SEC applicable to all mutual
funds. The 5% annual return is not a prediction of and does not represent
the Fund's or any Underlying Theme Fund's projected or actual
performance.
Prospectus Page 7
<PAGE>
GT GLOBAL NEW DIMENSION FUND
- -----------------------------------------------------------------------------
ALTERNATIVE PURCHASE PLAN
DIFFERENCES BETWEEN THE CLASSES. The primary difference between the two classes
of the Fund's shares offered through this Prospectus lies in their sales charge
structures and ongoing expenses, as summarized below. Class A and Class B shares
represent the same interests in the Fund and have the same rights, except that
each class bears the separate expenses of its 12b-1 distribution plan and has
exclusive voting rights with respect to such plan, and each class has a separate
exchange privilege. See "Management" and "How to Make Exchanges." Each class has
distinct advantages and disadvantages for different investors, and investors
should choose the class that better suits their circumstances and objectives.
CLASS A SHARES. Class A shares are sold at net asset value plus an initial sales
charge of up to 4.75% of the public offering price imposed at the time of
purchase. This initial sales charge is reduced or waived for certain purchases.
Purchases of $500,000 or more must be for Class A shares. Class A shares also
bear annual 12b-1 service and distribution fees of up to 0.50% of the average
daily net assets of that class.
CLASS B SHARES. Class B shares are sold at net asset value with no initial sales
charge at the time of purchase. Therefore, the entire amount of an investor's
purchase payment is invested in the Fund. Class B shares bear annual service and
distribution fees of up to 1.00% of the average daily net assets of that class,
and Class B shareholders pay a contingent deferred sales charge of up to 5.00%
of the lesser of the original purchase price or the net asset value of such
shares at the time of redemption. The higher service and distribution fees paid
by the Class B shares should cause that class to have a higher expense ratio and
to pay lower dividends per share than Class A shares.
FACTORS TO CONSIDER IN CHOOSING A CLASS OF SHARES. In deciding which class of
shares of the Fund to purchase, investors should consider the foregoing factors
as well as the following:
INTENDED HOLDING PERIOD. Over time, the cumulative expense of the 1.00% service
and distribution fees on the Class B shares will approximate or exceed the
expense of the applicable 4.75% maximum initial sales charge plus the 0.50%
service and distribution fees on the Class A shares. For example, if net asset
value remains constant, the Class B shares' aggregate service and distribution
fees would be equal to the Class A shares' initial maximum sales charge and
service and distribution fees approximately nine years after purchase.
Thereafter, Class B shares would experience higher cumulative expenses.
Investors who expect to maintain their investment in the Fund over the long-term
but do not qualify for a reduced initial sales charge might elect the Class A
initial sales charge alternative because the indirect expense to the shareholder
of the accumulated service and distribution fees on the Class B shares
eventually will exceed the initial sales charge paid by the shareholder plus the
indirect expense to the shareholder of the accumulated service and distribution
fees of Class A shares. Investors in Class B shares, however, enjoy the benefit
of permitting all their dollars to work from the time an investment is made. Any
positive investment return on this additional invested amount would partially or
wholly offset the higher annual expenses borne by Class B shares. Because the
Fund's future returns cannot be predicted, however, there can be no assurance
that such a positive return will be achieved.
Prospectus Page 8
<PAGE>
GT GLOBAL NEW DIMENSION FUND
- -----------------------------------------------------------------------------
Finally, Class B shareholders pay a contingent deferred sales charge if they
redeem during the first six years after purchase, unless a sales charge waiver
applies. Investors expecting to redeem during this period should consider the
cost of the applicable contingent deferred sales charge in addition to the
annual Class B service and distribution fees, as compared with the cost of the
applicable initial sales charge and annual service and distribution fees
applicable to the Class A shares.
REDUCED SALES CHARGES. Class A share purchases of $50,000 or more and Class A
share purchases made under the Fund's reduced sales charge plans may be made at
a reduced initial sales charge. See "How to Invest" for a complete list of
reduced sales charges applicable to Class A share purchases.
WAIVER OF SALES CHARGES. The entire initial sales charge on Class A shares is
waived for certain eligible purchasers, and these purchasers' entire purchase
price would be immediately invested in the Fund. Investors eligible for complete
initial sales charge waivers should purchase Class A shares. The contingent
deferred sales charge is waived for certain redemptions of Class B shares. A 1%
contingent deferred sales charge is imposed on certain redemptions of Class A
shares on which no initial sales charge was assessed.
Investors should understand that the contingent deferred sales charge on the
Class B shares and the initial sales charge on the Class A shares are both
intended to compensate GT Global and selling broker/dealers for their
distribution services. Broker/dealers may receive different levels of
compensation for selling a particular class of shares of the Fund.
See "How to Invest," "How to Redeem Shares" and "Management" for a more complete
description of the initial and contingent deferred sales charges, service and
distribution fees for Class A and Class B shares and "Dividends, Other
Distributions and Federal Income Taxation" and "Calculation of Net Asset Value"
for other differences between these two classes.
ADVISOR CLASS SHARES. Advisor Class shares are offered through a separate
prospectus to (a) trustees or other fiduciaries purchasing shares for employee
benefit plans that are sponsored by organizations that have at least 1,000
employees; (b) any account with assets of at least $10,000 if (i) a financial
planner, trust company, bank trust department or registered investment adviser
has investment discretion over the account, and (ii) the account holder pays
such person as compensation for its advice and other services an annual fee of
at least .50% on the assets in the account; (c) any account with assets of at
least $10,000 if (i) the account is established under a "wrap fee" program, and
(ii) the account holder pays the sponsor of the program an annual fee of at
least .50% on the assets in the account; (d) accounts advised by one of the
companies composing or affiliated with Liechtenstein Global Trust; and (e) any
of the companies composing or affiliated with Liechtenstein Global Trust.
Prospectus Page 9
<PAGE>
GT GLOBAL NEW DIMENSION FUND
- -----------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES
The Fund seeks long-term growth of capital. Unlike a typical mutual fund, which
invests directly in portfolio securities, the Fund invests in shares of the GT
Global theme mutual funds. The Fund seeks its investment objective by investing,
under normal circumstances, substantially all of its assets in the following
Underlying Theme Funds:
. Consumer Products and Services Fund
. Financial Services Fund
. Health Care Fund
. Infrastructure Fund
. Natural Resources Fund
. Telecommunications Fund
The Consumer Products and Services Fund, Financial Services Fund, Infrastructure
Fund and Natural Resources Fund, in turn, each seeks its investment objective by
investing all of its investable assets in the corresponding series of another
open-end investment company. See "Risk Factors and Special Considerations."
The Manager exercises no discretion in investing the Fund's assets. Rather, the
Manager periodically determines the allocation of assets to the Underlying Theme
Funds according to the industry weightings of the companies comprising the
Morgan Stanley Capital International All Country (AC) World Index ("MSCI"). (The
MSCI is a broad unmanaged index of global stock prices, currently comprising
2500 different issuers, located in 44 countries and grouped in 38 separate
industries.) The Manager assesses which of the Underlying Theme Funds can
invest, as part of their primary focus, in each of these industries. For
example, industries in the MSCI in which the Financial Services Fund invests
include the Banking, Financial Services, Insurance and Real Estate industries.
The percentage that those industries comprise in the MSCI is then used by the
Manager as the percentage of new money in the Fund that will be invested in the
Financial Services Fund. Where two or more Underlying Theme Funds can invest in
an industry, the weighting of that industry in the MSCI is split equally among
each qualifying Underlying Theme Fund. See the Appendix for the allocation of
the 38 industries to the Underlying Theme Funds. Of course, the Underlying Theme
Funds do not invest necessarily in the same industries or the same companies
that comprise the MSCI. Because the percentage weight assigned to each industry
in the MSCI changes over time and because the percentage of the Fund's assets
invested in each Underlying Theme Fund will change over time, the Manager will
rebalance the Fund's assets among the Underlying Theme Funds at least
semi-annually. In addition, the Manager will invest new money in each Underlying
Theme Fund according to the MSCI weighting as of the last business day of the
preceding month. As of July 30, 1997, the weight assigned to each Underlying
Theme Fund, using the above methodology, would have been as follows:
Consumer Products and Services Fund 30.5%
Financial Services Fund 20.8%
Health Care Fund 9.4%
Infrastructure Fund 16.9%
Natural Resources Fund 13.2%
Telecommunications Fund 9.2%
Prospectus Page 10
<PAGE>
GT GLOBAL NEW DIMENSION FUND
- -----------------------------------------------------------------------------
The Fund is a more diversified investment than would be achieved by investing in
any single Underlying Theme Fund. However, because the Underlying Theme Funds
are actively managed without any attempt to reflect the country, industry or
company weightings of the MSCI, the Underlying Theme Funds will perform
differently than the corresponding industry components of the MSCI, and the
Underlying Theme Funds will perform differently than the overall MSCI. While the
Fund does not therefore represent the performance of the MSCI, it does represent
a globally diversified portfolio, with allocations among developed and emerging
countries, industries and companies intended to achieve long-term growth of
capital.
The Fund is designed to meet the needs of investors who seek professional money
management services and who appreciate the advantages of diversification. The
Fund by itself should not be considered a complete investment program. As a
newly organized entity, the Fund has no operating history.
OTHER INFORMATION. The investment objective of the Fund may not be changed
without the approval of a majority of its outstanding voting securities. As
defined in the Investment Company Act of 1940, as amended ("1940 Act"), and as
used in this Prospectus, a "majority of the Fund's outstanding voting
securities" means the lesser of (i) 67% of the Fund's shares represented at a
meeting at which more than 50% of the outstanding shares are represented, or
(ii) more than 50% of the outstanding shares. In addition, the Fund has adopted
certain investment limitations as fundamental policies that also may not be
changed without shareholder approval. See "Investment Limitations" in the
Statement of Additional Information. Unless specifically noted, the Fund's
investment policies described in this Prospectus, and in the Statement of
Additional Information, are not fundamental policies and may be changed by vote
of the Trust's Board of Trustees without shareholder approval.
DESCRIPTION OF THE UNDERLYING THEME FUNDS
The following descriptions summarize the investment objectives and policies of
the Underlying Theme Funds. There is no assurance that any Underlying Theme Fund
will achieve its investment objective. The Statement of Additional Information
includes more information about the investment policies of the Underlying Theme
Funds. Investors desiring more information on an Underlying Theme Fund should
call (800) 824-1580 or contact their financial adviser for the Underlying Theme
Funds' prospectus.
CONSUMER PRODUCTS AND SERVICES FUND. The Consumer Products and Services Fund's
investment objective is long-term capital growth. The Consumer Products and
Services Fund seeks its objective by investing all of its investable assets in
the Consumer Products and Services Portfolio, that, in turn, invests primarily
in equity securities of companies throughout the world that manufacture, market,
retail or distribute consumer products and services. The Consumer Products and
Services Portfolio's investment objective is identical to that of the Consumer
Products and Services Fund. The Consumer Products and Services Portfolio invests
in consumer products and services companies which, in the opinion of the
Manager, have potential for above average, long-term growth in sales and
earnings.
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At least 65% of the Consumer Products and Services Portfolio's total assets
normally will be invested in common and preferred stocks and warrants to acquire
such securities issued by consumer products and services companies. A "consumer
products or services" company is an entity in which (i) at least 50% of either
the revenues or earnings was derived from activities relating to consumer
products or services, or (ii) at least 50% of the assets was devoted to such
activities, based on the company's most recent fiscal year. The remainder of the
Consumer Products and Services Portfolio's assets may be invested in debt
securities issued by consumer products or services companies and/or equity and
debt securities of companies outside the consumer products or services
industries, which, in the opinion of the Manager, stand to benefit from
developments in such industries.
FINANCIAL SERVICES FUND. The Financial Services Fund's investment objective is
long-term capital growth. The Financial Services Fund seeks its objective by
investing all of its investable assets in the Financial Services Portfolio,
that, in turn, invests primarily in equity securities of companies throughout
the world that operate in the financial services industries. The Financial
Services Portfolio's investment objective is identical to that of the Financial
Services Fund. The Financial Services Portfolio invests in financial services
companies which, in the opinion of the Manager, have potential for above
average, long-term growth in sales and earnings.
At least 65% of the Financial Services Portfolio's total assets normally will be
invested in common and preferred stocks and warrants to acquire such securities
issued by financial services companies. A "financial services" company is an
entity in which (i) at least 50% of either the revenues or earnings was derived
from financial services activities, or (ii) at least 50% of the assets was
devoted to such activities, based on the company's most recent fiscal year. The
remainder of the Financial Services Portfolio's assets may be invested in debt
securities issued by financial services companies and/or equity and debt
securities of companies outside of the financial services industries, which, in
the opinion of the Manager, stand to benefit from developments in the financial
services industries.
HEALTH CARE FUND. The Health Care Fund's investment objective is long-term
capital appreciation. The Health Care Fund seeks its objective by investing
primarily in equity securities of health care companies throughout the world.
The Health Care Fund invests in health care companies, which, in the opinion of
the Manager, have potential for above average, long-term growth in sales and
earnings.
At least 65% of the Health Care Fund's total assets normally will be invested in
common and preferred stocks, and warrants to acquire such securities, issued by
health care companies. A "health care" company is an entity in which (i) at
least 50% of either the revenues or earnings was derived from health care
activities, or (ii) at least 50% of the assets was devoted to such activities,
based on the company's most recent fiscal year. The remainder of the Health Care
Fund's assets may be invested in debt securities issued by health care companies
and/or equity and debt securities of companies outside of the health care
industry, which, in the opinion of the Manager, stand to benefit from
developments in the health care industries.
Prospectus Page 12
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INFRASTRUCTURE FUND. The Infrastructure Fund's investment objective is long-term
capital growth. The Infrastructure Fund seeks its objective by investing all of
its investable assets in the Infrastructure Portfolio, that, in turn, invests
primarily in equity securities of companies throughout the world that design,
develop or provide products and services significant to a country's
infrastructure. The Infrastructure Portfolio's investment objective is identical
to that of the Infrastructure Fund. The Infrastructure Portfolio invests in
infrastructure companies which, in the opinion of the Manager, have potential
for above average, long-term growth in sales and earnings.
At least 65% of the Infrastructure Portfolio's total assets normally will be
invested in common and preferred stocks and warrants to acquire such securities
issued by infrastructure companies. An "infrastructure" company is an entity in
which (i) at least 50% of either the revenues or earnings was derived from
infrastructure activities, or (ii) at least 50% of the assets was devoted to
such activities, based on the company's most recent fiscal year. The remainder
of the Infrastructure Portfolio's assets may be invested in debt securities
issued by infrastructure companies and/or equity and debt securities of
companies outside of the infrastructure industries, which, in the opinion of the
Manager, stand to benefit from developments in the infrastructure industries.
NATURAL RESOURCES FUND. The Natural Resources Fund's investment objective is
long-term capital growth. The Natural Resources Fund seeks its objective by
investing all of its investable assets in the Natural Resources Portfolio, that,
in turn, invests primarily in equity securities of companies throughout the
world that own, explore or develop natural resources and other basic
commodities, or supply goods and services to such companies. The Natural
Resources Portfolio's investment objective is identical to that of the Natural
Resources Fund. The Natural Resources Portfolio invests in natural resource
companies which, in the opinion of the Manager, have potential for above
average, long-term growth in sales and earnings.
At least 65% of the Natural Resources Portfolio's total assets will normally be
invested in common stock and preferred stock, and warrants to acquire such
securities, issued by natural resource companies. A "natural resource" company
is an entity in which (i) at least 50% of either the revenues or earnings was
derived from natural resource activities, or (ii) at least 50% of the assets was
devoted to such activities, based upon the company's most recent fiscal year.
The remainder of the Natural Resources Portfolio's assets may be invested in
debt securities issued by natural resource companies and/or equity and debt
securities of companies outside of the natural resource industries, which, in
the opinion of the Manager, stand to benefit from developments in the natural
resource industries.
TELECOMMUNICATIONS FUND. The Telecommunications Fund's investment objective is
long-term growth of capital. The Telecommunications Fund seeks its objective by
investing primarily in equity securities of companies throughout the world
engaged in the development, manufacture or sale of telecommunications services
or equipment. The Telecommunications Fund invests in telecommunications
companies which, in the opinion of the Manager, have potential for above
average, long-term growth in sales and earnings on a sustained basis.
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At least 65% of the Telecommunications Fund's total assets normally will be
invested in common and preferred stocks and warrants to acquire such securities
issued by telecommunications companies. A "telecommunications" company is an
entity in which (i) at least 50% of either its revenues or earnings was derived
from telecommunications activities, or (ii) at least 50% of its assets was
devoted to telecommunications activities, based on the company's most recent
fiscal year. The remainder of the assets of the Telecommunications Fund may be
invested in debt securities issued by telecommunications companies and/or equity
and debt securities of companies outside of the telecommunications industry
which, in the opinion of the Manager, stand to benefit from developments in the
telecommunications industry.
RISK FACTORS AND SPECIAL CONSIDERATIONS
INVESTING IN THE UNDERLYING THEME FUNDS. The investments of the Fund are
concentrated in the Underlying Theme Funds, so the Fund's investment performance
is directly related to the investment performance of the Underlying Theme Funds.
The ability of the Fund to meet its investment objective is directly related to
the allocation among those Underlying Theme Funds as well as the ability of the
Underlying Theme Funds to meet their objectives. There can be no assurance that
the investment objective of the Fund or any Underlying Theme Fund will be
achieved. The value of the Underlying Theme Funds' domestic and foreign
investments varies in response to many factors. Stock values fluctuate in
response to the activities of individual companies and economic conditions.
Because each Underlying Theme Fund focuses its investments on particular
industries, an investment in each may be more volatile than that of other
investment companies that do not concentrate their investments in such a manner.
Moreover, the value of the shares of each Underlying Theme Fund will be
especially susceptible to factors affecting the industries in which it focuses.
UNDERLYING THEME FUNDS' INVESTMENT ALLOCATION. The Manager allocates each
Underlying Theme Fund's (or its corresponding Portfolio's) assets among
securities of countries and in currency denominations where opportunities for
meeting each Underlying Theme Fund's investment objective are expected to be the
most attractive. Each Underlying Theme Fund may invest substantially in
securities denominated in one or more currencies. Under normal conditions, each
Underlying Theme Fund invests in the securities of issuers located in at least
three countries, including the United States; investments in securities of
issuers in any one country, other than the United States, will represent no more
than 40% of the Financial Services Portfolio's and the Telecommunication Fund's
total assets, and no more than 50% of the Infrastructure Portfolio's, the
Natural Resources Portfolio's, the Health Care Fund's and the Consumer Products
and Services Portfolio's total assets.
In analyzing specific companies for possible investment, the Manager ordinarily
looks for several of the following characteristics: above-average per share
earnings growth; high return on invested capital; a healthy balance sheet; sound
financial and accounting policies and overall financial strength; strong
competitive advantages; effective research and product development and
marketing; development of new technologies; efficient service; pricing
flexibility; strong management; and general operating characteristics that will
Prospectus Page 14
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GT GLOBAL NEW DIMENSION FUND
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enable the companies to compete successfully in their respective markets. In
assessing companies for the Natural Resources Portfolio, the Manager will also
evaluate, among other factors, their capabilities for expanded exploration and
production, superior exploration programs and production techniques and
facilities, current inventories, expected production and demand levels and the
potential to accumulate new resources.
FOREIGN INVESTMENTS. The Underlying Theme Funds' investments in foreign
securities may involve risks in addition to those of U.S. investments, including
increased political and economic risk, as well as exposure to currency
fluctuations. By investing in foreign securities, the Underlying Theme Funds
also have increased economic and political risks as they are exposed to events
and factors in the various world markets. This is especially true of an
Underlying Theme Fund that invests in emerging markets. Many investments in
emerging markets are considered speculative and therefore may offer higher
income and total return potential, but have significantly greater risk. Also, to
the extent that an Underlying Theme Fund's investments are denominated in
foreign currencies, changes in the value of foreign currencies can significantly
affect the Fund's share price.
INVESTMENT PRACTICES OF THE UNDERLYING THEME FUNDS. In addition to their
principal investments, certain Underlying Theme Funds may enter into forward
currency transactions; lend their portfolio securities; enter into stock index,
interest rate and currency futures contracts, and options on such contracts;
engage in options transactions; purchase restricted and illiquid securities;
purchase securities on a when-issued or delayed delivery basis; enter into
repurchase or reverse repurchase agreements; borrow money and engage in various
other investment practices. See the Fund's Statement of Additional Information.
LOWER QUALITY DEBT SECURITIES. The Fund may invest in an Underlying Theme Fund
that invests in high yield, high risk securities, commonly known as "junk
bonds." As a result, the Fund may be subject to some of the risks resulting from
high yield investing. The Fund also may invest in Underlying Theme Funds that
invest in medium grade bonds. Lower quality debt instruments generally offer a
higher current yield than that available from higher grade issues, but typically
involve greater risk. Lower rated and comparable unrated securities are
especially subject to adverse changes in general economic conditions, to changes
in the financial condition of their issuers, and to price fluctuation in
response to changes in interest rates. During periods of economic downturn or
rising interest rates, issuers of these instruments may experience financial
stress that could adversely affect their ability to make payments of principal
and interest and increase the possibility of default.
ILLIQUID SECURITIES. The Underlying Theme Funds may invest in securities for
which no readily available market exists, so-called "illiquid securities."
Illiquid securities may be more difficult to value than liquid securities and
the sale of illiquid securities generally will require more time and result in
higher brokerage charges or dealer discounts and other selling expenses than the
sale of liquid securities. Moreover, illiquid securities often sell at a price
lower than similar securities that are not subject to restrictions on resale.
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OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. Each Underlying Theme Fund
is authorized to enter into options, futures and forward currency transactions,
although they might not enter into such transactions. Options, futures and
forward currency transactions involve certain risks, which include: (1)
dependence on the Manager's ability to predict movements in the prices of
individual securities, fluctuations in the general securities markets or in the
appropriate market sector and movements in interest rates and currency markets;
(2) imperfect correlation, or even no correlation, between movements in the
price of options, forward contracts, futures contracts or options thereon and
movements in the price of the currency or security hedged or used for cover; (3)
the fact that skills and techniques needed to trade options, futures contracts
and options thereon or to use forward currency contracts are different from
those needed to select the securities in which an Underlying Theme Fund invests;
(4) lack of assurance that a liquid secondary market will exist for any
particular option, futures contract or option thereon at any particular time;
(5) the possible loss of principal under certain conditions; (6) the possible
inability of an Underlying Theme Fund to purchase or sell a portfolio security
at a time when it would otherwise be favorable for it to do so, or the possible
need for an Underlying Theme Fund to sell a security at a disadvantageous time,
due to the need for the Underlying Theme Fund to maintain "cover" or to set
aside securities in connection with hedging transactions; and (7) through the
end of 1997, the possible need to defer closing out certain options, futures
contracts, forward currency contracts and/or foreign currency positions in order
to continue to qualify for the beneficial tax treatment afforded regulated
investment companies under the Internal Revenue Code of 1986, as amended
("Code").
INVESTING IN SMALLER COMPANIES. While each Underlying Theme Fund's portfolio
normally will include securities of established suppliers of traditional
products and services, each Underlying Theme Fund may invest in smaller
companies that can benefit from the development of new products and services.
These smaller companies may present greater opportunities for capital
appreciation, but may also involve greaer risks than large, established issuers.
Such smaller companies may have limited resources, and their securities may
trade less frequently and in more limited volume than the securities of larger,
more established companies. As a result, the prices of the securities of such
smaller companies may fluctuate to a greater degree than the prices of the
securities of other issuers.
PURCHASES AND REDEMPTIONS. From time to time, the Underlying Theme Funds may
experience relatively large purchases or redemptions due to rebalancing of the
Fund by the Manager. This may have a material effect on the Underlying Theme
Funds, since Underlying Theme Funds that experience redemptions as a result of
the rebalancing may have to sell portfolio securities and because Underlying
Theme Funds that receive additional cash will have to invest it. While it is
impossible to predict the overall impact of these transactions over time, there
could be adverse effects on portfolio management to the extent that Underlying
Theme Funds may be required to sell securities at times when they would not
otherwise do so, or receive cash that cannot be invested in an expeditious
manner. There may be tax consequences associated with purchases and sales of
securities, and such sales also may increase transaction costs.
MASTER-FEEDER STRUCTURE OF CERTAIN UNDERLYING THEME FUNDS. The Financial
Services Fund, Infrastructure Fund, Natural Resources Fund and Consumer Products
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and Services Fund, unlike mutual funds that directly acquire and manage their
own portfolios of securities, each seeks its investment objective by investing
all of its investable assets in the Financial Services Portfolio, Infrastructure
Portfolio, Natural Resources Portfolio and Consumer Products and Services
Portfolio (each a "Portfolio"), respectively. Each Portfolio is a separate
investment company. Because each such Underlying Theme Fund will invest only in
its corresponding Portfolio, that Underlying Theme Fund's shareholders will
acquire only an indirect interest in the investments of that Portfolio.
TEMPORARY DEFENSIVE STRATEGIES. The Underlying Theme Funds retain the
flexibility to respond promptly to changes in market and economic conditions.
Accordingly, in the interest of preserving shareholders' capital the Manager may
employ a temporary defensive investment strategy if it determines such a
strategy to be warranted due to market, economic or political conditions. Under
a defensive strategy, the Underlying Theme Funds may invest up to 100% of their
total assets in cash and/or high quality debt securities and money market
instruments. To the extent an Underlying Theme Fund adopts a temporary defensive
posture, it will not be invested so as to achieve directly its investment
objective.
In addition, pending investment of proceeds from new sales of the shares or to
meet its ordinary daily cash needs, the Underlying Theme Funds may hold cash
and/or may invest in high quality debt instruments and money market instruments.
The Fund may hold cash and/or may invest in money market instruments under
similar circumstances. Money market instruments in which the Underlying Theme
Funds and the Fund may invest include, but are not limited to, United States
government securities; high-grade commercial paper; bank certificates of
deposit; bankers' acceptances and repurchase agreements related to any of the
foregoing. "High-grade commercial paper" refers to commercial paper rated A-l by
Standard & Poor's, a division of The McGraw-Hill Companies, Inc., or P-l by
Moody's Investors Service, Inc. or, if not rated, determined by the Manager to
be of comparable quality.
PORTFOLIO TURNOVER. The Fund's portfolio turnover rate is expected to be low and
is not anticipated to exceed 20% annually. The portfolio turnover rates of the
Underlying Theme Funds and their corresponding Portfolios have ranged from 37%
to 169% during their most recent fiscal years. There can be no assurance that
the turnover rates of the Underlying Theme Funds and their corresponding
Portfolios will remain within this range during subsequent fiscal years. Higher
turnover rates may result in higher expenses being incurred by the Underlying
Theme Funds.
AFFILIATED PERSONS. The officers and trustees of the Trust currently serve as
officers and trustees of the Underlying Theme Funds. The Manager also serves as
investment adviser and/or administrator to the Underlying Theme Funds.
Therefore, conflicts may arise as these persons fulfill their fiduciary
responsibilities to the Fund and the Underlying Theme Funds.
Further information on the investment policies, practices and risks of the
Underlying Theme Funds can be found in the Statement of Additional Information
as well as the Underlying Theme Funds' prospectus and Statement of Additional
Information.
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HOW TO INVEST
GENERAL. All purchase orders will be executed at the public offering price next
determined after the purchase order is received, which includes any applicable
sales charge for Class A shares. Orders received before the close of regular
trading on the New York Stock Exchange ("NYSE") (currently 4:00 p.m. Eastern
Time, unless weather, equipment failure or other factors contribute to an
earlier closing time) on any Business Day will be executed at the public
offering price for the applicable class of shares determined that day. A
"Business Day" is any day Monday through Friday on which the NYSE is open for
business. The minimum initial investment is $500 ($100 for IRAs and $25 for
custodial accounts under Section 403(b)(7) of the Code, and other tax-qualified
employer-sponsored retirement accounts, if made under a systematic investment
plan providing for monthly payments of at least that amount), and the minimum
for additional purchases is $100 ($25 for IRAs, Code Section 403 (b)(7)
custodial accounts and other tax-qualified employer-sponsored retirement
accounts, as mentioned above). THE FUND AND GT GLOBAL RESERVE THE RIGHT TO
REJECT ANY PURCHASE ORDER AND TO SUSPEND THE OFFERING OF SHARES FOR A PERIOD OF
TIME. In particular, the Fund and GT Global may reject purchase orders or
exchanges by investors who appear to follow, in the Manager's judgment, a
market-timing strategy or otherwise engage in excessive trading. See "How To
Make Exchanges -- Limitations on Purchase Orders and Exchanges."
WHEN PLACING PURCHASE ORDERS, INVESTORS SHOULD SPECIFY WHETHER THE ORDER IS FOR
CLASS A OR CLASS B SHARES OF THE FUND. ALL PURCHASE ORDERS THAT FAIL TO SPECIFY
A CLASS WILL AUTOMATICALLY BE INVESTED IN CLASS A SHARES.
PURCHASES OF $500,000 OR MORE MUST BE FOR CLASS A SHARES.
PURCHASES THROUGH BROKER/DEALERS. Shares of the Fund may be purchased through
broker/dealers with which GT Global has entered into dealer agreements. Orders
received by such broker/dealers before the close of regular trading on the NYSE
on a Business Day will be effected that day, provided that such order is
transmitted to the Transfer Agent prior to its close of business on such day.
The broker/dealer will be responsible for forwarding the investor's order to the
Transfer Agent so that it will be received prior to such time. After an initial
investment is made and a shareholder account is established through a
broker/dealer, at the investor's option subsequent purchases may be made
directly through GT Global. See "Shareholder Account Manual."
Broker/dealers that do not have dealer agreements with GT Global also may offer
to place orders for the purchase of shares. Purchases made through such
broker/dealers will be effected at the public offering price next determined
after the order is received by the Transfer Agent. Such a broker/dealer may
charge the investor a transaction fee as determined by the broker/dealer. That
fee will be in addition to the sales charge payable by the investor, with
respect to Class A shares, and may be avoided if shares are purchased through a
broker/dealer that has a dealer agreement with GT Global or directly through GT
Global.
PURCHASES THROUGH GT GLOBAL. Investors may purchase shares and open an account
directly through GT Global, the Fund's distributor, by completing and signing an
Account Application accompanying this Prospectus. Investors should mail to the
Transfer Agent the completed Application together with a check to cover the
purchase in accordance with the instructions provided in the Shareholder Account
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Manual. Purchases will be executed at the public offering price next determined
after the Transfer Agent has received the Account Application and check.
Subsequent investments do not need to be accompanied by an application.
Investors also may purchase shares of the Fund through GT Global by bank wire.
Bank wire purchases will be effected at the next determined public offering
price after the bank wire is received. A wire investment is considered received
when the Transfer Agent is notified that the bank wire has been credited to the
Fund. The investor is responsible for providing prior telephonic or facsimile
notice to the Transfer Agent that a bank wire is being sent. An investor's bank
may charge a service fee for wiring money to the Fund. The Transfer Agent
currently does not charge a service fee for facilitating wire purchases, but
reserves the right to do so in the future. Investors desiring to open an account
by bank wire should call the Transfer Agent at the appropriate toll-free number
provided in the Shareholder Account Manual to obtain an account number and
detailed instructions.
CERTIFICATES. Physical certificates representing the Fund's shares will not be
issued unless a written request is submitted to the Transfer Agent. Shares of
the Fund are recorded on a register by the Transfer Agent, and shareholders who
do not elect to receive certificates have the same rights of ownership as if
certificates had been issued to them. Redemptions and exchanges by shareholders
who hold certificates may take longer to effect than similar transactions
involving non-certificated shares because the physical delivery and processing
of properly executed certificates is required. ACCORDINGLY, THE FUND AND GT
GLOBAL RECOMMEND THAT SHAREHOLDERS DO NOT REQUEST ISSUANCE OF CERTIFICATES.
PURCHASING CLASS A SHARES
The Fund's public offering price for Class A shares is the next determined net
asset value per share (see "Calculation of Net Asset Value") plus a sales charge
determined in accordance with the following schedule:
Dealer
Sales Charge as Percentage oF Reallowance
AMOUNT OF PURCHASE AT THE Offering Net Percentage of the
PUBLIC OFFERING PRICE Price Investment Offering Price
--------------------- ----- ---------- -----------------
Less than $50,000............. 4.75% 4.99% 4.25%
$50,000 but less than $100,000 4.00% 4.17% 3.50%
$100,000 but less than $250,000 3.00% 3.09% 2.75%
$250,000 but less than $500,000 2.00% 2.04% 1.75%
$500,000 or more.............. 0.00% 0.00% *
* GT Global will pay the following commissions to broker/dealers that initiate
and are responsible for purchases by any single purchaser of Class A shares
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of $500,000 or more in the aggregate: 1.00% of the purchase amount up to $3
million, plus 0.50% on the excess over $3 million. For purposes of
determining the appropriate commission to be paid in connection with the
transaction, GT Global will combine purchases made by a broker/dealer on
behalf of a single client so that the broker/dealer's commission, as
outlined above, will be based on the aggregate amount of such client's share
purchases over a rolling twelve month period from the date of the
transaction.
All shares purchased without a sales charge based on the aggregate purchase
amount equalling at least $500,000 will be subject to a contingent deferred
sales charge for the first year after their purchase, equal to 1% of the lower
of the original purchase price or the net asset value of such shares at the time
of redemption. See "Contingent Deferred Sales Charge - Class A Shares."
From time to time, GT Global may reallow to broker/dealers the full amount of
the sales charge or may pay out additional amounts to broker/dealers who sell
Class A shares. In some instances, GT Global may offer these reallowances or
additional payments only to broker/dealers that have sold or may sell
significant amounts of Class A shares. To the extent that GT Global reallows the
full amount of the sales charge to broker/dealers, such broker/dealers may be
deemed to be underwriters under the Securities Act of 1933, as amended.
Commissions also may be paid to broker/dealers and other financial institutions
that initiate purchases of at least $500,000 made pursuant to sales charge
waivers (i) and (vii) described below under "Sales Charge Waivers--Class A
Shares."
The following purchases may be aggregated for purposes of determining the
"Amount of Purchase":
(a) Individual purchases on behalf of a single purchaser, the purchaser's spouse
and their children under the age of 21 years, including purchases in connection
with an employee benefit plan or plans exclusively for the benefit of such
individual(s), such as an IRA, individual Code Section 403(b) plan or
single-participant self-employed individual retirement plan ("Keogh Plan") and
purchases made by a company controlled by such individual(s);
(b) Individual purchases by a trustee or other fiduciary purchasing shares for a
single trust estate or a single fiduciary account, including an employee benefit
plan (such as employer-sponsored pension, profit-sharing and stock bonus plans,
including Code Section 401(k) plans, and medical, life and disability insurance
trusts) other than a plan described in "(a)" above; and
(c) Individual purchases by a trustee or other fiduciary purchasing shares
concurrently for two or more employee benefit plans of a single employer or of
employers affiliated with each other (again excluding an employee benefit plan
described in "(a)" above).
SALES CHARGE WAIVERS--CLASS A SHARES. Class A shares are sold at net asset value
without imposition of sales charges when investments are made by the following
classes of investors:
(i) Trustees or other fiduciaries purchasing shares for employee benefit plans
which are sponsored by organizations which have at least 100 but less than 1,000
employees, and trustees or other fiduciaries purchasing shares for employee
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GT GLOBAL NEW DIMENSION FUND
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benefit plans which are sponsored by organizations with collective retirement
plan assets of $500,000 or more and have less than 100 employees, and purchases
of at least $500,000 by trustees or other fiduciaries of employee benefit plans
with collective retirement plan assets of $100 million or more.
(ii) Current or retired Trustees, Directors and officers of the investment
companies for which the Manager serves as investment manager and/or
administrator; employees or retired employees of the companies composing
Liechtenstein Global Trust or affiliated companies of Liechtenstein Global
Trust; the children, siblings and parents of the persons in the foregoing
categories; and trusts primarily for the benefit of such persons.
(iii) Registered representatives or full-time employees of broker/dealers which
have entered into dealer agreements with GT Global, and the children, siblings
and parents of such persons, and employees of financial institutions that
directly, or through their affiliates, have entered into dealer agreements with
GT Global (or that otherwise have an arrangement with respect to sales of Fund
shares with a broker/dealer that has entered into a dealer agreement with GT
Global) and the children, siblings and parents of such employees.
(iv) Companies exchanging shares with or selling assets to one or more of the GT
Global Mutual Funds pursuant to a merger, acquisition or exchange offer.
(v) Shareholders of any of the GT Global Mutual Funds as of April 30, 1987 who
since that date continually have owned shares of one or more of the GT Global
Mutual Funds.
(vi) Purchases made through the automatic investment of dividends and other
distributions paid by any of the other GT Global Mutual Funds.
(vii) Registered investment advisers, trust companies and bank trust departments
exercising DISCRETIONARY investment authority with respect to the money to be
invested in the GT Global Mutual Funds provided that the aggregate amount
invested pursuant to this sales charge waiver is at least $500,000, and further
provided that such money is not eligible to be invested in the Advisor Class.
(viii) Clients of administrators of tax-qualified employee benefit plans which
have entered into agreements with GT Global.
(ix) Retirement plan participants who borrow from their retirement accounts by
redeeming GT Global Mutual Fund shares and subsequently repay such loans via a
purchase of the Fund's shares.
(x) Retirement plan participants who receive distributions from a tax-qualified
employer-sponsored retirement plan, which is invested in GT Global Mutual Funds,
the proceeds of which are reinvested in the Fund's shares.
(xi) Accounts not eligible for the Advisor Class as to which a financial
institution or broker/dealer charges an account management fee, provided the
financial institution or broker/dealer has entered into an agreement with GT
Global regarding such accounts.
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GT GLOBAL NEW DIMENSION FUND
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(xii) Certain former AMA Investment Advisers' shareholders who became
shareholders of the GT Global Health Care Fund in October, 1989, and who have
continuously held shares in the GT Global Mutual Funds since that time.
REINSTATEMENT PRIVILEGE. Shareholders who redeem their Class A shares in the
Fund have a onetime privilege of reinstating their investment by investing the
proceeds of the redemption at net asset value without a sales charge in Class A
shares of the Fund and/or one or more of the other GT Global Mutual Funds. The
Transfer Agent must receive from the investor or the investor's broker/dealer
within 180 days after the date of the redemption both a written request for
reinvestment and a check not exceeding the amount of the redemption proceeds.
The reinstatement purchase will be effected at the net asset value per share
next determined after such receipt. Gain on the redemption is taxable
notwithstanding exercise of the reinvestment privilege. See "Dividends, Other
Distributions and Federal Income Taxation."
REDUCED SALES CHARGE PLANS--CLASS A SHARES. Class A shares may be purchased at
reduced sales charges either through the Right of Accumulation or under a Letter
of Intent. For more details on these plans, investors should contact their
broker/dealers or the Transfer Agent.
RIGHT OF ACCUMULATION. Pursuant to the Right of Accumulation, investors are
permitted to purchase shares of the Fund at the sales charge applicable to the
total of (a) the dollar amount then being purchased plus (b) the dollar amount
of the investor's concurrent purchases of other GT Global Mutual Funds (other
than GT Global Dollar Fund) plus (c) the price of all shares of GT Global Mutual
Funds (other than shares of GT Global Dollar Fund not acquired by exchange)
already held by the investor. To receive the Right of Accumulation, at the time
of purchase investors must give their broker/dealer, the Transfer Agent or GT
Global sufficient information to permit confirmation of qualification. THE
FOREGOING RIGHT OF ACCUMULATION APPLIES ONLY TO CLASS A SHARES OF THE FUND AND
OTHER GT GLOBAL MUTUAL FUNDS (OTHER THAN GT GLOBAL DOLLAR FUND).
LETTER OF INTENT. In executing a Letter of Intent ("LOI"), an investor indicates
an aggregate investment amount he or she intends to invest in the Class A shares
of the Fund and the Class A shares of other GT Global Mutual Funds (other than
GT Global Dollar Fund) in the following thirteen months. The LOI is included as
part of the Account Application located at the end of this Prospectus. The sales
charge applicable to that aggregate amount then becomes the applicable sales
charge on all purchases made concurrently with the execution of the LOI and in
the thirteen months following that execution. If an investor executes an LOI
within 90 days of a prior purchase of GT Global Mutual Fund Class A shares
(other than shares of GT Global Dollar Fund), the prior purchase may be included
under the LOI and an appropriate adjustment, if any, with respect to the sales
charges paid by the investor in connection with the prior purchase will be made,
based on the then-current net asset value(s) of the pertinent Fund(s).
If at the end of the thirteen month period covered by the LOI the total amount
of purchases does not equal the amount indicated, the investor will be required
to pay the difference between the sales charges paid at the reduced rate and the
sales charges applicable to the purchases actually made. Shares having a value
equal to 5% of the amount specified in the LOI will be held in escrow during the
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GT GLOBAL NEW DIMENSION FUND
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thirteen month period (while remaining registered in the investor's name) and
are subject to redemption to assure any necessary payment to GT Global of a
higher applicable sales charge.
For purposes of an LOI, any registered investment adviser, trust company or bank
trust department which exercises investment discretion and which intends within
thirteen months to invest $500,000 or more can be treated as a single purchaser,
provided further that such entity places all purchase and redemption orders.
Such entities should be prepared to establish their qualifications for such
treatment. THE FOREGOING LOI APPLIES ONLY TO CLASS A SHARES OF THE FUND AND
OTHER GT GLOBAL MUTUAL FUNDS (OTHER THAN GT GLOBAL DOLLAR FUND).
CONTINGENT DEFERRED SALES CHARGE--CLASS A SHARES. Purchases of Class A shares of
$500,000 or more may be made without an initial sales charge. If a shareholder
within one year after the date of purchase redeems any Class A shares that were
purchased without a sales charge by reason of a purchase of $500,000 or more, a
contingent deferred sales charge of 1% of the lower of the original purchase
price or the net asset value of such shares at the time of redemption will be
charged. Class A shares will not be subject to the contingent deferred sales
charge to the extent that the value of such shares represents: (1) reinvestment
of dividends or other distributions or (2) shares redeemed more than one year
after their purchase. Such shares purchased without a sales charge may be
exchanged for Class A shares of another GT Global Mutual Fund (other than GT
Global Dollar Fund) without the imposition of a contingent deferred sales
charge, although the contingent deferred sales charge described above will apply
to the redemption of the shares acquired through an exchange. The waivers set
forth under "Contingent Deferred Sales Charge Waivers" below apply to
redemptions of Class A shares upon which a contingent deferred sales charge
would otherwise be imposed. For federal income tax purposes, the amount of the
contingent deferred sales charge will reduce the gain or increase the loss, as
the case may be, on the amount realized on redemption. The amount of any
contingent deferred sales charge will be paid to GT Global.
PURCHASING CLASS B SHARES
The public offering price of the Class B shares of the Fund is the next
determined net asset value per share. See "Calculation of Net Asset Value." No
initial sales charge is imposed. A contingent deferred sales charge, however, is
imposed on certain redemptions of Class B shares. Because the Class B shares are
sold without an initial sales charge, the Fund receives the full amount of the
investor's purchase payment. Class B shares of the Fund may not be purchased for
a Savings Incentive Match Plan for Employees of Small Employers Individual
Retirement Accounts ("SIMPLE IRAs") for which a designated financial institution
was selected by the employer on Form 5305-SIMPLE. Class B shares of the Fund may
still be purchased for SIMPLE IRAs using Form 5304-SIMPLE. In addition, Class A
shares of the Fund may still be purchased for all SIMPLE IRAs.
Class B shares will not be subject to a contingent deferred sales charge to the
extent that the value of such shares represents: (1) reinvestment of dividends
or capital gain distributions or (2) shares redeemed more than six years after
their purchase. Redemptions of most other Class B shares will be subject to a
Prospectus Page 23
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GT GLOBAL NEW DIMENSION FUND
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contingent deferred sales charge. See "Contingent Deferred Sales Charge
Waivers." The amount of any applicable contingent deferred sales charge will be
calculated by multiplying the lesser of the original purchase price or the net
asset value of such shares at the time of redemption by the applicable
percentage shown in the table below.
CONTINGENT DEFERRED SALES
CHARGE AS A PERCENTAGE OF THE
LESSER OF NET ASSET VALUE
AT REDEMPTION OR THE
REDEMPTION DURING ORIGINAL PURCHASE PRICE
----------------- ---------------------------
1st Year Since Purchase 5%
2nd Year Since Purchase 4%
3rd Year Since Purchase 3%
4th Year Since Purchase 3%
5th Year Since Purchase 2%
6th Year Since Purchase 1%
Thereafter 0%
In determining whether a contingent deferred sales charge is applicable, it will
be assumed that the redemption is made first of shares acquired pursuant to the
reinvestment of dividends and other distributions; then of shares purchased
seven years or more prior to the redemption; and finally, of shares held for the
longest period of time within the applicable six-year period. For shares
acquired in an exchange, the length of the holding period will be measured from
the date of original purchase.
For example, assume an investor purchased 100 shares at $10 per share for a cost
of $1,000. Subsequently, the shareholder acquired 15 additional shares through
dividend reinvestment. During the second year after the purchase the investor
decided to redeem $500 of his or her investment. Assuming at the time of the
redemption a net asset value of $11 per share, the value of the investor's
shares would be $1,265 (115 shares at $11 per share). The contingent deferred
sales charge would not be applied to the value of the reinvested dividend
shares. Therefore, the 15 shares currently valued at $165.00 would be redeemed
without a contingent deferred sales charge. The number of shares needed to fund
the remaining $335 of the redemption would equal 30.455. Using the lower of cost
or market price to determine the contingent deferred sales charge, the original
purchase price of $10.00 per share would be used. The contingent deferred sales
charge calculation would therefore be 30.455 shares times $10.00 per share at
the contingent deferred sales charge rate of 4% (the applicable rate in the
second year after purchase) for a total contingent deferred sales charge of
$12.18.
Class B shares of the Fund that are acquired as a result of an exchange of
shares of GT Global Floating Rate Fund ("Floating Rate Fund") will be subject,
in lieu of the contingent deferred sales charge described above, to a contingent
deferred sales charge equivalent to the early withdrawal charge on the common
stock of the Floating Rate Fund as set forth in the current prospectus of the
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GT GLOBAL NEW DIMENSION FUND
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the Floating Rate Fund. The purchase of shares of the Fund will be deemed to
have occurred at the time of the initial purchase of the Floating Rate Fund's
common stock.
For federal income tax purposes, the amount of the contingent deferred sales
charge will reduce the gain or increase the loss, as the case may be, on the
amount realized on the redemption. See "Purchasing Class A Shares--Reinstatement
Privilege." The amount of any contingent deferred sales charge will be paid to
GT Global.
CONTINGENT DEFERRED SALES
CHARGE WAIVERS
The contingent deferred sales charge will be waived for (1) exchanges, as
described below; (2) redemptions in connection with the Fund's systematic
withdrawal plan not in excess of 12% of the value of the account annually; (3)
total or partial redemptions made within one year following the death or
disability of a shareholder; (4) minimum required distributions made in
connection with a GT Global IRA, Keogh Plan or custodial account under Section
403(b) of the Code or other retirement plan following attainment of age 70-1/2;
(5) total or partial redemptions resulting from a distribution following
retirement in the case of a tax-qualified employer-sponsored retirement plan;
(6) when a redemption results from a tax-free return of an excess contribution
pursuant to Section 408(d)(4) or (5) of the Code or from the death or disability
of the employee; (7) a one-time reinvestment in Class B shares of the Fund
within 180 days of a prior redemption; (8) redemptions pursuant to the Fund's
right to liquidate a shareholder's account involuntarily; (9) redemptions
pursuant to distributions from a tax-qualified employer-sponsored retirement
plan, which is invested in GT Global Mutual Funds, which are permitted to be
made without penalty pursuant to the Code, other than tax-free rollovers or
transfers of assets, and the proceeds of which are reinvested in GT Global
Mutual Funds; (10) redemptions made in connection with participant-directed
exchanges between options in an employer-sponsored benefit plan; (11)
redemptions made for the purpose of providing cash to fund a loan to a
participant in a tax-qualified retirement plan; (12) redemptions made in
connection with a distribution from any retirement plan or account that is
permitted in accordance with the provisions of Section 72(t)(2) of the Code, and
the regulations promulgated thereunder; (13) redemptions made in connection with
a distribution from any retirement plan or account that involves the return of
an excess deferral amount pursuant to Section 401(k)(8) or Section 402(g)(2) of
the Code or the return of excess aggregate contributions pursuant to Section
401(m)(6) of the Code; (14) redemptions made in connection with a distribution
from a qualified profit-sharing or stock bonus plan described in Section 401(k)
of the Code to a participant or beneficiary under Section 401(k)(2)(B)(IV) of
the Code upon hardship of the covered employee (determined pursuant to Treasury
Regulation Section 1.401(k)-1(d)(2)); and (15) redemptions made by or for the
benefit of certain states, counties or cities, or any instrumentalities,
departments or authorities thereof where such entities are prohibited or limited
by applicable law from paying a sales charge or commission.
Prospectus Page 25
<PAGE>
GT GLOBAL NEW DIMENSION FUND
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PROGRAMS APPLICABLE TO CLASS A
SHARES AND CLASS B SHARES
AUTOMATIC INVESTMENT PLAN. Investors may purchase either Class A or Class B
shares of the Fund through the GT Global Automatic Investment Plan. Under this
Plan, an amount specified by the shareholder of $100 or more ($25 or more for
IRAs, Code Section 403(b)(7) custodial accounts and other tax-qualified
employer-sponsored retirement accounts) on a monthly or quarterly basis will be
sent to the Transfer Agent from the investor's bank for investment in the Fund.
Participants in the Automatic Investment Plan should not elect to receive
dividends or other distributions from the Fund in cash. A sales charge will be
applied to each automatic monthly purchase of Class A shares in an amount
determined in accordance with the Right of Accumulation privilege described
above. To participate in the Automatic Investment Plan, investors should
complete the appropriate portion of the Supplemental Application provided at the
end of this Prospectus. Investors should contact their brokers or GT Global for
more information.
DOLLAR COST AVERAGING PROGRAM. Investors may purchase either Class A or Class B
shares of the Fund through the GT Global Dollar Cost Averaging Program whereby a
shareholder invests the same dollar amount each month. Accordingly, the investor
purchases more shares when the Fund's net asset value is relatively low and
fewer shares when the Fund's net asset value is relatively high. This can result
in a lower average cost-per-share than if the shareholder followed a less
systematic approach. Dollar cost averaging does not assure a profit and does not
protect against loss in declining markets. Because such a program involves
continuous investment in securities regardless of fluctuating price levels of
such securities, investors should consider their financial ability to continue
purchases when prices are declining.
A participant in the GT Global Dollar Cost Averaging Program first designates
the size of his or her monthly investment in the Fund ("Monthly Investment")
after participation in the Program begins. The Monthly Investment must be at
least $1,000. The investor then will make an initial investment of at least
$10,000 in the GT Global Dollar Fund. Thereafter, each month an amount equal to
the specified Monthly Investment automatically will be redeemed from the GT
Global Dollar Fund and invested in Fund shares. A sales charge will be applied
to each automatic monthly purchase of Class A shares of the Fund in an amount
determined in accordance with the Right of Accumulation privilege described
above. Investors should contact their brokers or GT Global for more information.
PORTFOLIO REBALANCING PROGRAM. The GT Global Portfolio Rebalancing Program
("Program") permits eligible shareholders to establish and maintain an
allocation across a range of GT Global Mutual Funds. The Program automatically
rebalances holdings of GT Global Mutual Funds to the established allocation on a
periodic basis. Under the Program, a shareholder may predesignate, on a
percentage basis, how the total value of his or her holdings in a minimum of
two, and a maximum of ten, GT Global Mutual Funds ("Personal Portfolio") is to
be rebalanced on a monthly, quarterly, semiannual, or annual basis.
Rebalancing under the Program will be effected through the exchange of shares of
one or more GT Global Mutual Funds in the shareholder's Personal Portfolio for
shares of the same class(es) of one or more other GT Global Mutual Funds in the
Prospectus Page 26
<PAGE>
GT GLOBAL NEW DIMENSION FUND
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shareholder's Personal Portfolio. See "How to Make Exchanges." If shares of the
GT Global Mutual Funds in a shareholder's Personal Portfolio have appreciated
during a rebalancing period, the Program will result in shares of GT Global
Mutual Fund(s) that have appreciated most during the period being exchanged for
shares of GT Global Mutual Fund(s) that have appreciated least. SUCH EXCHANGES
ARE NOT TAX-FREE AND MAY RESULT IN A SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS
THE CASE MAY BE, FOR FEDERAL INCOME TAX PURPOSES. See "Dividends, Other
Distributions and Federal Income Taxation." Participation in the Program does
not assure that a shareholder will profit from purchases under the Program, nor
does it prevent or lessen losses in a declining market.
The Program will automatically rebalance the shareholder's Personal Portfolio on
the 28th day of the last month of the period chosen (or the immediately
preceding business day if the 28th is not a business day), subject to any
limitations below. The Program will not execute an exchange if the variance in a
shareholder's Personal Portfolio for a particular Fund would be 2% or less. In
predesignating percentages, shareholders must use whole percentages and totals
must equal 100%. Shareholders participating in the Program may not request
issuance of physical certificates representing a Fund's shares. Exchanges made
under the Program are not subject to the four free exchanges per year
limitation. The Funds and GT Global reserve the right to modify, suspend, or
terminate the Program at any time on 60 days' prior written notice to
shareholders. A request to participate in the Program must be received in good
order at least five business days prior to the next rebalancing date. Once a
shareholder establishes the Program for his or her Personal Portfolio, a
shareholder cannot cancel or change which rebalancing frequency, which Funds or
what allocation percentages are assigned to the Program, unless canceled or
changed in writing and received by the Transfer Agent in good order at least
five business days prior to the rebalancing date. Shareholders participating in
the Program may also participate in the Right of Accumulation, Letter of Intent,
and Dollar Cost Averaging programs. Certain broker/dealers may charge a fee for
establishing accounts relating to the Program. Investors should contact their
broker/dealers or GT Global for more information.
HOW TO MAKE EXCHANGES
Shares of the Fund may be exchanged for shares of the same class of any other GT
Global Mutual Fund based on their respective net asset values without imposition
of any sales charges, provided that the registration remains identical.
EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A SHAREHOLDER'S REALIZING A GAIN OR
LOSS, AS THE CASE MAY BE, FOR FEDERAL INCOME TAX PURPOSES. See "Dividends, Other
Distributions and Federal Income Taxation." The exchange of Class B shares will
not be subject to a contingent deferred sales charge. For purposes of computing
the contingent deferred sales charge, the length of time of ownership of Class B
shares will be measured from the date of original purchase and will not be
affected by the exchange. In addition to the Fund, the GT Global Mutual Funds
currently include:
- GT GLOBAL WORLDWIDE GROWTH FUND
- GT GLOBAL INTERNATIONAL GROWTH FUND
- GT GLOBAL EMERGING MARKETS FUND
- GT GLOBAL NEW PACIFIC GROWTH FUND
- GT GLOBAL EUROPE GROWTH FUND
Prospectus Page 27
<PAGE>
GT GLOBAL NEW DIMENSION FUND
- -----------------------------------------------------------------------------
- GT GLOBAL LATIN AMERICA GROWTH FUND
- GT GLOBAL AMERICA SMALL CAP GROWTH FUND
- GT GLOBAL AMERICA MID CAP GROWTH FUND
- GT GLOBAL AMERICA VALUE FUND
- GT GLOBAL JAPAN GROWTH FUND
- GT GLOBAL GROWTH & INCOME FUND
- GT GLOBAL GOVERNMENT INCOME FUND
- GT GLOBAL STRATEGIC INCOME FUND
- GT GLOBAL HIGH INCOME FUND
- GT GLOBAL DOLLAR FUND
- GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
- GT GLOBAL FINANCIAL SERVICES FUND
- GT GLOBAL HEALTH CARE FUND
- GT GLOBAL INFRASTRUCTURE FUND
- GT GLOBAL NATURAL RESOURCES FUND
- GT GLOBAL TELECOMMUNICATIONS FUND
Up to four exchanges each year may be made without charge. A $7.50 service
charge will be imposed on each subsequent exchange. If an investor does not
surrender all of his or her shares in an exchange, the remaining balance in the
investor's account after the exchange must be at least $500. Exchange requests
received in good order by the Transfer Agent before the close of regular trading
on the NYSE on any Business Day will be processed at the net asset value
calculated on that day. The terms of the exchange offer may be modified at any
time, on 60 days' prior written notice.
An investor interested in making an exchange should write or call his or her
broker/dealer or the Transfer Agent to request the prospectus of the other GT
Global Mutual Fund(s) being considered. Certain broker/dealers may charge a fee
for handling exchanges.
EXCHANGES BY TELEPHONE. A shareholder may give exchange instructions to the
shareholder's broker/dealer or the Transfer Agent by telephone at the
appropriate toll-free number provided in the Shareholder Account Manual.
Exchange orders will be accepted by telephone provided that the exchange
involves only uncertificated shares on deposit in the shareholder's account or
for which certificates have previously been deposited. Shareholders
automatically have telephone privileges to authorize exchanges. The Fund, GT
Global and the Transfer Agent will not be liable for any loss or damage for
acting in good faith upon instructions received by telephone and reasonably
believed to be genuine. The Fund employs reasonable procedures to confirm that
instructions communicated by telephone are genuine prior to acting upon
instructions received by telephone, including requiring some form of personal
identification, providing written confirmation of such transactions, and/or tape
recording of telephone instructions.
EXCHANGES BY MAIL. Exchange orders should be sent by mail to the investor's
broker/dealer or to the Transfer Agent at the address set forth in the
Shareholder Account Manual.
LIMITATIONS ON PURCHASE ORDERS AND EXCHANGES. The GT Global Mutual Funds are not
intended to serve as vehicles for frequent trading in response to short-term
fluctuations in the market. Due to the disruptive effect that market-timing
investment strategies and excessive trading can have on efficient portfolio
management, each GT Global Mutual Fund and GT Global reserve the right to refuse
Prospectus Page 28
<PAGE>
purchase orders and exchanges by any person or group, if, in the Manager's
judgment, such person or group was following a market-timing strategy or was
otherwise engaging in excessive trading.
In addition, each GT Global Mutual Fund and GT Global reserve the right to
refuse purchase orders and exchanges by any person or group if, in the Manager's
judgment, the Fund would not be able to invest the money effectively in
accordance with that Fund's investment objective and policies or would otherwise
potentially be adversely affected. Although a GT Global Mutual Fund will attempt
to give investors prior notice whenever it is reasonably able to do so, it may
impose the above restrictions at any time.
Finally, as described above, each GT Global Mutual Fund and GT Global reserve
the right to reject any purchase order.
HOW TO REDEEM SHARES
Fund shares may be redeemed at their net asset value (subject to any applicable
contingent deferred sales charge for Class B shares or, in limited
circumstances, Class A shares) and redemption proceeds will be sent within seven
days of the execution of a redemption request. If a redeeming shareholder owns
both Class A and Class B shares of the Fund, the Class A shares will be redeemed
first unless the shareholder specifically requests otherwise.
REDEMPTIONS THROUGH BROKER/DEALERS. Shareholders with accounts at broker/dealers
who sell shares of the Fund may submit redemption requests to such
broker/dealers. If the shares are held in the broker/dealer's "street name," the
redemption must be made through the broker/dealer. Broker/dealers may honor a
redemption request either by repurchasing shares from a redeeming shareholder at
the Fund's shares' net asset value next determined after the broker/dealer
receives the request or, as described below, by forwarding such requests to the
Transfer Agent (see "How to Redeem Shares--Redemptions Through the Transfer
Agent"). Redemption proceeds normally will be paid by check or, if offered by
the broker/dealer, credited to the shareholder's brokerage account at the
election of the shareholder. Broker/dealers may impose a service charge for
handling redemption transactions placed through them and may have other
requirements concerning redemptions. Accordingly, shareholders should contact
their broker/dealers for more details.
REDEMPTIONS THROUGH THE TRANSFER AGENT. Redemption requests may be transmitted
to the Transfer Agent by telephone or by mail, in accordance with the
instructions provided in the Shareholder Account Manual. Redemptions will be
effected at the net asset value next determined after the Transfer Agent has
received the request in good order and any required supporting documentation
(less any applicable contingent deferred sales charge for Class B shares or, in
limited circumstances, Class A shares). Redemption requests will not require a
signature guarantee if the redemption proceeds are to be sent either: (i) to the
redeeming shareholder at the shareholder's address of record as maintained by
the Transfer Agent, provided the shareholder's address of record has not been
changed within the preceding thirty days; or (ii) directly to a pre-designated
bank, savings and loan or credit union account ("Pre-Designated Account"). ALL
OTHER REDEMPTION REQUESTS MUST BE ACCOMPANIED BY A SIGNATURE GUARANTEE OF THE
Prospectus Page 29
<PAGE>
REDEEMING SHAREHOLDER'S SIGNATURE. A signature guarantee can be obtained from
any bank, U.S. trust company, a member firm of a U.S. stock exchange or a
foreign branch of any of the foregoing or other eligible guarantor institution.
A notary public is not an acceptable guarantor. A shareholder with questions
concerning the Fund's signature guarantee requirement should contact the
Transfer Agent.
Shareholders may qualify to have redemption proceeds sent to a Pre-Designated
Account by completing the appropriate section of the Account Application at the
end of this Prospectus. Shareholders with Pre-Designated Accounts should request
that redemption proceeds be sent either by bank wire or by check. The minimum
redemption amount for a bank wire is $1,000. Shareholders requesting a bank wire
should allow two business days from the time the redemption request is effected
for the proceeds to be deposited in the shareholder's Pre-Designated Account.
See "How to Redeem Shares--Other Important Redemption Information." Shareholders
may change their Pre-Designated Accounts only by a letter of instruction to the
Transfer Agent containing all account signatures, each of which must be
guaranteed. The Transfer Agent currently does not charge a bank wire service fee
for each wire redemption sent, but reserves the right to do so in the future.
The shareholder's bank may charge a bank wire service fee.
REDEMPTIONS BY TELEPHONE. Redemption requests may be made by telephone by
calling the Transfer Agent at the appropriate toll-free number provided in the
Shareholder Account Manual. Shareholders who hold certificates for shares may
not redeem by telephone. REDEMPTION REQUESTS MAY NOT BE MADE BY TELEPHONE FOR
THIRTY DAYS FOLLOWING ANY CHANGE OF THE SHAREHOLDER'S ADDRESS OF RECORD.
Shareholders automatically have telephone privileges to authorize redemptions.
The Fund, GT Global and the Transfer Agent will not be liable for any loss or
damage for acting in good faith upon instructions received by telephone and
reasonably believed to be genuine. The Fund employs reasonable procedures to
confirm that instructions communicated by telephone are genuine prior to acting
upon instructions received by telephone, including requiring some form of
personal identification providing written confirmation of such transactions,
and/or tape recording of telephone instructions.
REDEMPTIONS BY MAIL. Redemption requests should be mailed directly to the
Transfer Agent at the appropriate address provided in the Shareholder Account
Manual. As discussed above, requests for payment of redemption proceeds to a
party other than the shareholder of record and/or requests that redemption
proceeds be mailed to an address other than the shareholder's address of record
require a signature guarantee. In addition, if the shareholder's address of
record has been changed within the preceding thirty days, a signature guarantee
is required. Redemptions of shares for which certificates have been issued must
be accompanied by properly endorsed share certificates.
SYSTEMATIC WITHDRAWAL PLAN. Shareholders owning shares with a value of $10,000
or more may participate in the GT Global Systematic Withdrawal Plan. A
participating shareholder will receive proceeds from monthly, quarterly or
annual redemptions of Fund shares with respect to either Class A or Class B
shares. No contingent deferred sales charge will be imposed on redemptions made
under the Systematic Withdrawal Plan. The minimum withdrawal amount is $100. The
Prospectus Page 30
<PAGE>
GT GLOBAL NEW DIMENSION FUND
- -----------------------------------------------------------------------------
amount or percentage a participating shareholder specifies to be redeemed may
not, on an annualized basis, exceed 12% of the value of the account, as of the
time the shareholder elects to participate in the Systematic Withdrawal Plan. To
participate in the Systematic Withdrawal Plan, investors should complete the
appropriate portion of the Supplemental Application provided at the end of this
Prospectus. Investors should contact their broker/dealers or the Transfer Agent
for more information. With respect to Class A shares, participation in the
Systematic Withdrawal Plan concurrent with purchases of Class A shares may be
disadvantageous to investors because of the sales charges involved and possible
tax implications, and therefore is discouraged. In addition, shareholders who
participate in the Systematic Withdrawal Plan should not elect to reinvest
dividends or other distributions in additional Fund shares.
OTHER IMPORTANT REDEMPTION INFORMATION. A request for redemption will not be
processed until all of the necessary documentation has been received in good
order. A shareholder in doubt as to what documents are required should contact
his or her broker/dealer or the Transfer Agent.
Except in extraordinary circumstances and as permitted under the 1940 Act,
payment for shares redeemed by telephone or by mail will be made promptly after
receipt of a redemption request, if in good order, but not later than seven days
after the date the request is executed. Requests for redemption which are
subject to any special conditions or which specify a future or past effective
date cannot be accepted.
If the Transfer Agent is requested to redeem shares for which the Fund has not
yet received good payment, the Fund may delay payment of redemption proceeds
until the Transfer Agent has assured itself that good payment has been collected
for the purchase of the shares. In the case of purchases by check it can take up
to 10 business days to confirm that the check has cleared and good payment has
been received. Redemption proceeds will not be delayed when shares have been
paid for by wire or when the investor's account holds a sufficient number of
shares for which funds already have been collected.
The Fund may redeem the shares of any shareholder whose account is reduced to
less than $500 in value through redemptions or other action by the shareholder.
Written notice will be given to the shareholder at least 60 days prior to the
date fixed for such redemption, during which time the shareholder may increase
his or her holdings to an aggregate amount of $500 or more (with a minimum
purchase of $100).
SHAREHOLDER ACCOUNT MANUAL
Shareholders are encouraged to place purchase, exchange and redemption orders
through their broker/dealers. Shareholders also may place such orders directly
through the Transfer Agent in accordance with this Manual. See "How to Invest"
"How to Make Exchanges" "How to Redeem Shares" and "Dividends, Other
Distributions and Federal Income Taxation" for more information.
The Fund's Transfer Agent is GT GLOBAL INVESTOR SERVICES, INC.
Prospectus Page 31
<PAGE>
GT GLOBAL NEW DIMENSION FUND
- -----------------------------------------------------------------------------
INVESTMENTS BY MAIL
Send the completed Account Application (if initial purchase) or letter stating
Fund name, class of shares, shareholder's registered name and account number (if
subsequent purchase) with a check to:
GT Global Mutual Funds
P.O. Box 7345
San Francisco, California 94120-7345
INVESTMENTS BY BANK WIRE
An investor opening a new account should call 1-800-223-2138 to obtain an
account number. WITHIN SEVEN DAYS OF PURCHASE SUCH AN INVESTOR MUST SEND A
COMPLETED ACCOUNT APPLICATION CONTAINING THE INVESTOR'S CERTIFIED TAXPAYER
IDENTIFICATION NUMBER TO GT GLOBAL AT THE ADDRESS PROVIDED ABOVE UNDER
"INVESTMENTS BY MAIL." Wire instructions must state Fund name, class of shares,
shareholder's registered name and account number. Bank wires should be sent
through the Federal Reserve Bank Wire System to:
WELLS FARGO BANK N.A.
ABA 121000248
Attn: GT GLOBAL
ACCOUNT NO. 4023-050701
EXCHANGES BY TELEPHONE
Call GT Global Investor Services at 1-800-223-2138.
EXCHANGES BY MAIL
Send complete instructions, including name of Fund exchanging from, class of
shares, amount of exchange, name of the GT Global Mutual Fund exchanging into,
shareholder's registered name and account number, to:
GT Global Mutual Funds
P.O. Box 7893
San Francisco, CA 94120-7893
REDEMPTIONS BY TELEPHONE
Call GT Global Investor Services at 1-800-223-2138.
REDEMPTIONS BY MAIL
Send complete instructions, including name of Fund, class of shares, amount of
redemption, shareholder's registered name and account number, to:
GT Global Investor Services
P.O. Box 7893
San Francisco, CA 94120-7893
Prospectus Page 32
<PAGE>
GT GLOBAL NEW DIMENSION FUND
- -----------------------------------------------------------------------------
OVERNIGHT MAIL
Overnight mail services do not deliver to post office boxes. To send purchase,
exchange or redemption orders by overnight mail, follow the above instructions
but send the instructions to the following address:
GT Global Investor Services, Inc.
California Plaza
2121 N. California Boulevard
Suite 450
Walnut Creek, CA 94596
ADDITIONAL QUESTIONS
Shareholders with additional questions regarding purchase, exchange and
redemption procedures should call GT Global Investor Services at 1-800-223-2138.
CALCULATION OF NET ASSET VALUE
The Fund calculates its net asset value as of the close of regular trading on
the NYSE (currently 4:00 p.m. Eastern Time, unless weather, equipment failure or
other factors contribute to an earlier closing time) each Business Day. The
Fund's net asset value per share is computed by dividing the value of the Fund's
net assets by the total number of Fund shares outstanding. Net asset value is
determined separately for each class of shares of the Fund. The assets of the
Fund consist primarily of shares of the Underlying Theme Funds, which are valued
daily at their respective net asset values at the time of computation. Other
Fund assets are valued at current market price or, if unavailable, at fair value
determined in good faith by or under the direction of the Trust's Board of
Trustees.
The different service and distribution fees borne by each class of shares of the
Fund will result in different net asset values and dividends. The per share net
asset value of the Class B shares generally will be lower than that of the Class
A shares because of the higher service and distribution fees borne by the Class
B shares. The per share net asset value of the Advisor Class shares generally
will be higher than that of the Class A and Class B shares because of the
absence of any service and distribution fees applicable to the Advisor Class
shares. It is expected, however, that the net asset value per share of the
classes will tend to converge immediately after the payment of dividends, which
will differ by approximately the amount of the service and distribution fee
accrual differential between the classes.
Prospectus Page 33
<PAGE>
GT GLOBAL NEW DIMENSION FUND
- -----------------------------------------------------------------------------
DIVIDENDS, OTHER DISTRIBUTIONS
AND FEDERAL INCOME TAXATION
DIVIDENDS AND OTHER DISTRIBUTIONS. The Fund annually declares and pays as a
dividend all of its net investment income, if any, which includes dividends paid
to it from each Underlying Theme Fund's net investment income (if any) less
applicable expenses. The Fund also annually distributes substantially all of its
realized net capital gains, if any, which consist of (1) distributions to it
from each Underlying Theme Fund's realized net capital gains, if any, and (2)
net gains realized from the Fund's disposition of shares of the Underlying Theme
Funds (which dispositions generally are occasioned by reallocating the Fund's
assets among the Underlying Theme Funds to reflect the MCSI weightings (see
"Investment Objective and Policies") or by the need to make distributions and/or
payments of redemption proceeds in excess of available cash). The Fund may make
an additional dividend or other distribution if necessary to avoid a 4% excise
tax on certain undistributed income and gain.
Dividends and other distributions paid by the Fund with respect to all classes
of its shares are calculated in the same manner and at the same time. The per
share income dividends on Class B shares will be lower than the per share income
dividends on Class A shares as a result of the higher service and distribution
fees applicable to Class B shares; and the per share income dividends on both
such classes of shares will be lower than the per share income dividends on the
Advisor Class shares of the Fund as a result of the absence of any service and
distribution fees applicable to Advisor Class shares. SHAREHOLDERS MAY ELECT:
. to have all dividends and other distributions automatically reinvested in
additional Fund shares of the distributing class (or in shares of the
corresponding class of other GT Global Mutual Funds); or
. to receive dividends in cash and have other distributions automatically
reinvested in additional Fund shares of the distributing class (or in shares
of the corresponding class of other GT Global Mutual Funds); or
. to receive other distributions in cash and have dividends automatically
reinvested in additional Fund shares of the distributing class (or in shares
of the corresponding class of other GT Global Mutual Funds); or
. to receive dividends and other distributions in cash.
Automatic reinvestments in additional shares are made at net asset value without
imposition of a sales charge. IF NO ELECTION IS MADE BY A SHAREHOLDER, ALL
DIVIDENDS AND OTHER DISTRIBUTIONS WILL BE AUTOMATICALLY REINVESTED IN ADDITIONAL
FUND SHARES OF THE DISTRIBUTING CLASS. Reinvestments in another GT Global Mutual
Fund may only be directed to an account with the identical shareholder
registration and account number. These elections may be changed by a shareholder
at any time; to be effective with respect to a distribution, the shareholder or
the shareholder's broker must contact the Transfer Agent by mail or telephone at
least 15 Business Days prior to the payment date. THE FEDERAL INCOME TAX
CONSEQUENCES OF DIVIDENDS AND OTHER DISTRIBUTIONS ARE THE SAME WHETHER THEY ARE
RECEIVED IN CASH OR REINVESTED IN ADDITIONAL SHARES.
Prospectus Page 34
<PAGE>
GT GLOBAL NEW DIMENSION FUND
- -----------------------------------------------------------------------------
Any dividend or other distribution paid by the Fund has the effect of reducing
the net asset value per share on the ex-distribution date by the amount thereof.
Therefore, a dividend or other distribution paid shortly after a purchase of
shares would represent, in substance, a return of capital to the shareholder (to
the extent the distribution is paid on the shares so purchased) even though
subject to income tax, as discussed below.
TAXES. The Fund intends to qualify for treatment as a regulated investment
company under the Code. In each taxable year that the Fund so qualifies, the
Fund (but not its shareholders) will be relieved of federal income tax on that
part of its investment company taxable income, consisting generally of net
investment income and net short-term capital gain ("taxable income"), and net
capital gain (I.E., the excess of net long-term capital gain over net short-term
capital loss) that is distributed to its shareholders.
Dividends paid to the Fund from an Underlying Theme Fund's taxable income (which
may include net gains from certain foreign currency transactions) are included
in the Fund's taxable income, and dividends from the latter (whether paid in
cash or reinvested in additional shares) are taxable to the Fund's shareholders
as ordinary income to the extent of its earnings and profits. Distributions of
the Fund's net capital gain (consisting of (1) distributions to it from each
Underlying Theme Fund's net capital gain, when designated as such, and (2) net
gains realized from the Fund's disposition of an Underlying Theme Fund's shares
held for more than twelve months), when designated as such, are taxable to its
shareholders as long-term capital gains, regardless of how long they have held
their Fund shares and whether the distributions are paid in cash or reinvested
in additional shares. The Taxpayer Relief Act of 1997 ("Act"), enacted in August
1997, dramatically changes the taxation of net capital gain, by applying
different rates thereto depending on the taxpayer's holding period and marginal
rate of federal income tax. The Act, however, does not address the application
of these rules to distributions by regulated investment companies and instead
authorizes the issuance of regulations to do so. Accordingly, shareholders
should consult their tax advisers as to the effect of the Act on distributions
by the Fund to them of net capital gain.
The Fund provides federal tax information to its shareholders annually,
including information about dividends and other distributions paid during the
preceding year.
The Fund must withhold 31% from dividends, capital gain distributions and
redemption proceeds payable to any individuals and certain other noncorporate
shareholders who have not furnished to the Fund a correct taxpayer
identification number or a properly completed claim for exemption on Form W-8 or
W-9. Withholding at that rate also is required from dividends and capital gain
distributions payable to such shareholders who otherwise are subject to backup
withholding. Fund accounts opened via a bank wire purchase (see "How to Invest -
Purchases Through the Distributor") are considered to have uncertified taxpayer
identification numbers unless a completed Form W-8 or W-9 or Account Application
is received by the Transfer Agent within seven days after the purchase. A
shareholder should contact the Transfer Agent if the shareholder is uncertain
whether a proper taxpayer identification number is on file with the Fund.
Prospectus Page 35
<PAGE>
GT GLOBAL NEW DIMENSION FUND
- -----------------------------------------------------------------------------
A redemption of Fund shares may result in taxable gain or loss to the redeeming
shareholder, depending upon whether the redemption proceeds are more or less
than the shareholder's adjusted basis for the redeemed shares (which normally
includes any initial sales charge paid on Class A shares). An exchange of Fund
shares for shares of another GT Global Mutual Fund generally will have similar
tax consequences. However, special tax rules apply when a shareholder (1)
disposes of Class A shares of the Fund through a redemption or exchange within
90 days after purchase and (2) subsequently acquires Class A shares of the Fund
or of any other GT Global Mutual Fund on which an initial sales charge normally
is imposed without paying that sales charge due to the reinstatement privilege
or exchange privilege. In these cases, any gain on the disposition of the
original Class A shares will be increased, or loss decreased, by the amount of
the sales charge paid when those shares were acquired, and that amount will
increase the adjusted basis of the shares subsequently acquired. In addition, if
Fund shares are purchased within 30 days before or after redeeming other Fund
shares (regardless of class) at a loss, all or a part of the loss will not be
deductible and instead will increase the basis of the newly purchased shares.
The foregoing is only a summary of some of the important federal tax
considerations generally affecting the Fund and its shareholders. See "Taxes" in
the Statement of Additional Information for a further discussion. There may be
other federal, state, local or foreign tax considerations applicable to a
particular investor. Prospective investors therefore are urged to consult their
tax advisers.
MANAGEMENT
The Trust's Board of Trustees has overall responsibility for the operation of
the Fund and has approved contracts with various financial organizations to
provide certain services required by the Fund. See "Trustees and Executive
Officers" in the Statement of Additional Information for a complete description
of the Trustees of the Trust.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Subject to the supervision and
direction of the Trust's Board of Trustees, the Manager will ensure that the
Fund's assets are invested in the Underlying Theme Funds according to the
formula and pre-determined percentages described in the "Investment Objective
and Policies" section of this Prospectus. The Manager will determine how the
Fund's assets will be invested in short-term investments and place all purchase
and sale orders for such instruments and for the Underlying Theme Funds. The
Manager provides the following administration services to the Fund: furnishing
corporate officers and clerical staff; providing office space, services and
equipment; and supervising all matters relating to the Fund's operation. The
Manager also serves as the Fund's pricing and accounting agent. Finally, the
Manager will initially assume all costs of the Fund's operation, except for
service and distribution fees described below and non-recurring and
extraordinary expenses. The Fund, as a shareholder in the Underlying Theme
Funds, indirectly will bear its proportionate share of any investment management
fees and other expenses paid by the Underlying Theme Funds.
The Manager provides investment management and/or administration services to the
GT Global Mutual Funds. The Manager and its worldwide asset management
Prospectus Page 36
<PAGE>
GT GLOBAL NEW DIMENSION FUND
- -----------------------------------------------------------------------------
affiliates have provided investment management and/or administration services to
institutional, corporate and individual clients around the world since 1969. The
U.S. offices of the Manager are located at 50 California street, 27th Floor, San
Francisco, CA 94111 and 1166 Avenue of the Americas, New York, NY 10036.
The Manager and its worldwide affiliates, including LGT Bank in Liechtenstein,
formerly Bank in Liechtenstein, compose Liechtenstein Global Trust, formerly BIL
GT Group Limited. Liechtenstein Global Trust is a provider of global asset
management and private banking products and services to individual and
institutional investors. Liechtenstein Global Trust is controlled by the Prince
of Liechtenstein Foundation, which serves as the parent organization for the
various business enterprises of the Princely Family of Liechtenstein. The
principal business address of the Prince of Liechtenstein Foundation is
Herrengasse 12, FL-9490, Vaduz, Liechtenstein.
As of June 30, 1997, the Manager and its worldwide affiliates managed
approximately $63 billion in assets. In the United States, as of June 30, 1997,
the Manager managed or administered approximately $9 billion of assets of the GT
Global Mutual Funds. As of June 30, 1997, assets entrusted to Liechtenstein
Global Trust total approximately $87 billion.
In addition to the investment resources of its San Francisco and New York
offices, the Manager draws upon the expertise, personnel, data and systems of
other offices of Liechtenstein Global Trust, including investment offices in
Frankfurt, Hong Kong, London, Singapore, Sydney, Tokyo and Toronto. In managing
the GT Global Mutual Funds, the Manager employs a team approach, taking
advantage of its investment resources around the world in seeking to achieve
each Fund's investment objective. Many of the GT Global Mutual Funds' portfolio
managers are natives of the countries in which they invest, speak local
languages and/or live or work in the markets they follow.
While the Fund will not be actively managed or have a portfolio manager, the
Underlying Theme Funds are actively managed by teams of investment
professionals. At least semi-annually the Fund will rebalance the percentages of
its assets in each Underlying Theme Fund according to the total industry
weighting of the securities held by the Underlying Theme Funds as represented in
the MSCI.
DISTRIBUTION OF FUND SHARES. GT Global is the distributor of the Fund's Class A
and Class B shares. Like the Manager, GT Global is a subsidiary of Liechtenstein
Global Trust with offices at 50 California Street, 27th Floor, San Francisco, CA
94111. As distributor, GT Global collects the sales charges imposed on purchases
of Class A shares and any contingent deferred sales charges that may be imposed
on certain redemptions of Class A and Class B shares. GT Global reallows a
portion of the sales charge on Class A shares to broker/dealers that have sold
such shares in accordance with the schedule set forth above under "How to
Invest." In addition, GT Global pays a commission equal to 4.00% of the amount
invested to broker/dealers who sell Class B shares. A commission with respect to
Class B shares is not paid on exchanges or certain reinvestments in Class B
shares.
GT Global, at its own expense, may provide additional promotional incentives to
broker/dealers that sell shares of the Fund and/or shares of the other GT Global
Prospectus Page 37
<PAGE>
GT GLOBAL NEW DIMENSION FUND
- -----------------------------------------------------------------------------
Mutual Funds. In some instances additional compensation or promotional
incentives may be offered to broker/dealers that have sold or may sell
significant amounts of shares during specified periods of time. Such
compensation and incentives may include, but are not limited to, cash,
merchandise, trips and financial assistance to broker/dealers in connection with
preapproved conferences or seminars, sales or training programs for invited
sales personnel, payment for travel expenses (including meals and lodging)
incurred by sales personnel and members of their families or other invited
guests to various locations for such seminars or training programs, seminars for
the public, advertising and sales campaigns regarding one or more of the GT
Global Mutual Funds, and/or other events sponsored by the broker/dealers. In
addition, GT Global makes ongoing payments to brokerage firms, financial
institutions (including banks) and others that facilitate the administration and
servicing of shareholder accounts.
Under a plan of distribution adopted by the Trust's Board of Trustees pursuant
to Rule 12b-1 under the 1940 Act, with respect to the Fund's Class A shares
("Class A Plan"), the Fund may pay GT Global a service fee at the annualized
rate of up to 0.25% of the average daily net assets of the Fund's Class A shares
for its expenditures incurred in servicing and maintaining shareholder accounts,
and may pay GT Global a distribution fee at the annualized rate of up to 0.50%
of the average daily net assets of the Fund's Class A shares, less any amounts
paid by the Fund as the aforementioned service fee for its expenditures incurred
in providing services as distributor. All expenses for which GT Global is
reimbursed under the Class A Plan will have been incurred within one year of
such reimbursement.
Pursuant to a separate plan of distribution adopted with respect to the Fund's
Class B shares ("Class B Plan"), the Fund may pay GT Global a service fee at the
annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.75% of the average daily net assets of the Fund's Class B shares
for its expenditures incurred in providing services as distributor. Expenses
incurred under the Class B Plan in excess of 1.00% annually may be carried
forward for reimbursement in subsequent years as long as such Plan continues in
effect.
GT Global's service and distribution expenses include the payment of ongoing
commissions; the cost of any additional compensation paid by GT Global to
broker/dealers; the costs of printing and mailing to prospective investors
prospectuses and other materials relating to the Funds; the costs of developing,
printing, distributing and publishing advertisements and other sales literature;
and allocated costs relating to GT Global's distribution activities, including,
among other things, employee salaries, bonuses and other overhead expenses. In
addition, its expenses under the Class B Plan include payment of initial sales
commissions to broker/dealers and interest on any unreimbursed amounts carried
forward thereunder.
The Glass-Steagall Act and other applicable laws, among other things, generally
prohibit federally chartered or supervised banks from engaging in the business
of underwriting or distributing securities. Accordingly, GT Global intends to
engage banks (if at all) only to perform administrative and shareholder
servicing functions. If a bank were prohibited from so acting, its shareholder
clients would be permitted to remain shareholders, and alternative means for
continuing the servicing of such shareholders would be sought. It is not
Prospectus Page 38
<PAGE>
GT GLOBAL NEW DIMENSION FUND
- -----------------------------------------------------------------------------
expected that shareholders would suffer any adverse financial consequences as a
result of any of these occurrences.
OTHER INFORMATION
SPECIAL SERVICING AGREEMENT. Until the Special Servicing Agreement described
below is entered into, the Manager will pay all the expenses of the Fund,
excluding service and distribution fees and certain non-recurring and
extraordinary expenses. Expenses initially paid by the Manager will include fees
and expenses incurred in connection with membership in investment company
organizations; fees and expenses of the Fund's accounting agent; legal, auditing
and accounting expenses; taxes; fees and expenses of the Transfer Agent; fees
and expenses of registering or qualifying the Fund's shares for sale; fees and
expenses of Trustees, officers and employees of the Trust who are not affiliated
with the Manager; and the cost of printing and distributing reports and notices
to existing shareholders.
An exemptive application has been filed with the SEC requesting relief from
certain provisions of the 1940 Act to permit the Fund, the Manager, the
Underlying Theme Funds and the Transfer Agent to enter into a Special Servicing
Agreement ("Agreement"). A private letter ruling has also been sought from the
Internal Revenue Service concerning this arrangement. If relief is obtained, all
the Fund's expenses except for service and distribution fees and certain
non-recurring and extraordinary expenses will be paid for in accordance with the
Agreement. Under the Agreement, to the extent that the aggregate expenses of the
Fund are less than the estimated savings to the Underlying Theme Funds from the
operation of the Fund, each Underlying Theme Fund will bear those expenses in
proportion to the average daily value of its shares owned by the Fund and/or the
number of shareholder accounts at the Fund. The estimated savings are expected
to result from the reduction of shareholder servicing costs due to the
elimination of separate shareholder accounts that either currently are or have
potential to be invested in the Underlying Theme Funds. The estimated savings
produced by the operation of the Fund may offset most, if not all, the expenses
incurred by the Fund other than service and distribution fees. To the extent
that the aggregate financial benefits to the Underlying Theme Funds do not
exceed the expenses of the Fund, the Manager will pay that portion of the Fund's
expenses.
CONFIRMATIONS AND REPORTS TO SHAREHOLDERS. Each time a transaction is made that
affects a shareholder's account in the Fund, the shareholder will receive from
the Transfer Agent a confirmation statement reflecting the transaction.
Confirmations for transactions effected pursuant to the Fund's Automatic
Investment Plan, Systematic Withdrawal Plan and automatic dividend reinvestment
program may be provided quarterly. Shortly after the end of the Fund's fiscal
year on December 31 and fiscal half-year on June 30 of each year, shareholders
receive an annual and semiannual report, respectively. In addition, the federal
income status of distributions made by the Fund to shareholders is reported
after the end of each calendar year on Form 1099-DIV. Under certain
circumstances, duplicate mailings of the foregoing reports to the same household
may be consolidated.
Prospectus Page 39
<PAGE>
GT GLOBAL NEW DIMENSION FUND
- -----------------------------------------------------------------------------
ORGANIZATION OF THE TRUST. The Trust was organized as a Massachusetts business
trust on August 26, 1996. The Trust currently consists of one series. From time
to time, the Trust may establish other series, each holding a distinct
investment portfolio and issuing a distinct series of the Trust's shares. Shares
of each series are entitled to one vote per share (with proportional voting for
fractional shares) and are transferable. Shareholders have no preemptive or
conversion rights. Until such time as the Fund commences the public offering of
its shares, LGT Asset Management, Inc. will own 100% of the issued and
outstanding shares of the Fund and will be deemed to control the Fund under the
1940 Act.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by its shareholders individually when the matter affects the specific
interest of the Fund only, such as approval of its investment management
arrangements. In addition, each class of shares of a series has exclusive voting
rights with respect to its distribution plan. The shares of each series and of
all the Trust's series will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection by the Board of
Trustees of the Trust's independent accountants.
Normally there will be no annual meeting of shareholders in any year, except as
required under the 1940 Act. The Fund would be required to hold a shareholders'
meeting if at any time less than a majority of the Trustees holding office had
been elected by shareholders. Trustees continue to hold office until their
successors are elected and have qualified. Fund shares do not have cumulative
voting rights, which means that the holders of a majority of the shares voting
for the election of Trustees can elect all the Trustees. A Trustee may be
removed upon a majority vote of the shareholders qualified to vote in the
election. Shareholders holding 10% of the Trust's outstanding voting shares may
call a meeting of shareholders for the purpose of voting upon the question of
removal of any Trustee or for any other purpose. The 1940 Act requires the Trust
to assist shareholders in calling such a meeting.
Pursuant to the Trust's Declaration of Trust, the Trust may issue an unlimited
number of shares. Each share of the Fund represents an equal proportionate
interest in the Fund with other Fund shares and is entitled to such dividends
and other distributions out of the income earned and gain realized on the assets
belonging to the Fund as may be declared at the discretion of the Board of
Trustees. Fund shares when issued, are fully paid and nonassessable.
SHAREHOLDER INQUIRIES. Shareholder inquiries may be made by calling the Fund
toll-free at (800) 223-2138 or by writing to the Fund at 50 California Street,
27th Floor, San Francisco, California 94111.
TRANSFER AGENT. Shareholder servicing, reporting and general transfer agent
functions for the Fund are performed by GT Global Investor Services, Inc. The
Transfer Agent is an affiliate of the Manager and GT Global, a subsidiary of
Liechtenstein Global Trust and maintains offices at California Plaza, 2121 N.
California Boulevard, Suite 450, Walnut Creek, CA 94596.
CUSTODIAN. State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, is custodian of the assets of the Fund.
Prospectus Page 40
<PAGE>
GT GLOBAL NEW DIMENSION FUND
- -----------------------------------------------------------------------------
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Trust and to the Fund.
Kirkpatrick & Lockhart LLP also acts as counsel to the Manager, GT Global and
the Transfer Agent in connection with other matters.
INDEPENDENT ACCOUNTANTS. The Fund's independent accountants are Coopers &
Lybrand L.L.P., One Post Office Square, Boston, Massachusetts 02109. Coopers &
Lybrand L.L.P. conducts an annual audit of the Fund, assists in the preparation
of the Fund's federal and state income tax returns, and consults with the Trust
and the Fund as to matters of accounting, regulatory filings, and federal and
state income taxation.
MULTIPLE TRANSLATIONS OF THE PROSPECTUS. This Prospectus may be translated into
other languages. In the event of any inconsistency or ambiguity as to the
meaning of any word or phrase contained in a translation, the English text shall
prevail.
PERFORMANCE
FUND PERFORMANCE INFORMATION. The Fund, from time to time, may include
information on its investment results and/or comparisons of its investment
results to various unmanaged indices or results of other mutual funds or groups
of mutual funds in advertisements, sales literature or reports furnished to
present or prospective shareholders.
In such materials, the Fund may quote its average annual total return
("Standardized Return"). Standardized Return is calculated separately for each
class of shares of the Fund. Standardized Return shows percentage rates
reflecting the average annual change in the value of an assumed investment in
the Fund at the end of a one-year period and at the end of five- and ten-year
periods, reduced by the maximum applicable sales charge imposed on sales of Fund
shares. If a one-, five- and/or ten-year period has not yet elapsed, data will
be provided as of the end of a shorter period corresponding to the life of the
Fund. Standardized Return assumes the reinvestment of all dividends and other
distributions.
In addition, in order to more completely represent the Fund's performance or
more accurately compare the performance to other measures of investment return,
the Fund also may include other total return performance data ("Non-Standardized
Return") in advertisements, sales literature and shareholder reports.
Non-Standardized Return reflects percentage rates of return encompassing all
elements of return (i.e., income and capital appreciation or depreciation) and
assumes reinvestment of all dividends and other distributions. Non-Standardized
Return may be quoted for the same or different periods as those for which
Standardized Return is quoted; it may consist of an aggregate or average annual
percentage rate of return, actual year-by-year rates or any combination thereof.
Non-Standardized Return may or may not take sales charges into account;
performance data calculated without taking the effect of sales charges into
account will be higher than data including the effect of such charges.
The Fund's performance data will reflect past performance and will not
necessarily be indicative of future results. The Fund's investment results will
vary from time to time depending upon market conditions and the composition of
Prospectus Page 41
<PAGE>
the Underlying Theme Funds' portfolios. These factors and possible differences
in calculation methods should be considered when comparing the Fund's investment
results with those published for other investment companies, other investment
vehicles and unmanaged indices. The Fund's results also should be considered
relative to the risks associated with its investment objective and policies. See
"Investment Results" in the Statement of Additional Information.
UNDERLYING THEME FUND PERFORMANCE. The Fund has no operating history as of the
date of this Prospectus and therefore no performance record. Thus, the
performance shown below is not the performance of the Fund, but instead reflects
the performance of the Underlying Theme Funds. The following table shows the
average annual total returns of Class A and Class B shares of each Underlying
Theme Fund for the most recent one- and five-year periods (or since inception if
shorter) and for the life of the Underlying Theme Funds. The performance
information reflects the maximum applicable sales charges and distribution and
service fees. Returns would be higher if these charges and fees were not
reflected. The Fund invests in the Advisor Class shares of the Underlying Theme
Funds, which are not subject to these sales charges and distribution and service
fees. However, Class A and Class B shares of the Fund are subject to their own
sales charges and distribution and service fees.
Prospectus Page 42
<PAGE>
GT GLOBAL NEW DIMENSION FUND
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average Annual Total Return Through 7/31/97
One Year Five Years Life of Fund
-------- ---------- ------------
UNDERLYING THEME FUND Class A Class B Class A Class B Class A Class B
- --------------------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Consumer Products and Services Fund 14.56% 14.65% n/a n/a 28.56% 1/ 29.60% 1/
Financial Services Fund 39.58% 40.78% n/a n/a 16.26% 2/ 16.83% 2/
Health Care Fund 26.43% 27.08% 12.26% n/a 14.44% 3/ 18.87% 4/
Infrastructure Fund 19.69% 20.05% n/a n/a 12.79% 5/ 13.25% 5/
Natural Resources Fund 14.50% 14.53% n/a n/a 13.95% 6/ 14.43% 6/
Telecommunications Fund 27.73% 28.49% 15.41% n/a 13.77% 7/ 15.12% 8/
</TABLE>
The past performances of the Underlying Theme Funds are not a guarantee of
future results for either the Underlying Theme Funds or the Fund. Further
information about each Underlying Theme Fund's performance is contained in its
Annual Report to Shareholders, which may be obtained without charge by calling
(800) 824-1580 or contacting your financial adviser.
- ------------------
1 The Consumer products and Services Fund commenced operations on December
30, 1994.
2 The Financial Services Fund commenced operations on May 31, 1994.
3 Class A shares of the Health Care Fund were initially offered on August
7, 1989.
4 Class B shares of the Health Care Fund were initially offered on April 1,
1993.
5 The Infrastructure Fund commenced operations on May 31, 1994.
6 The Natural Resources Fund commenced operations on May 31, 1994.
7 Class A shares of the Telecommunications Fund were initially offered on
January 27, 1992.
8 Class B shares of the Telecommunications Fund were initially offered on
April 1, 1993.
Prospectus Page 43
<PAGE>
GT GLOBAL NEW DIMENSION FUND
- -----------------------------------------------------------------------------
APPENDIX
The chart below shows the current allocation of the 38 industries comprising the
MSCI to the Underlying Theme Funds.
<TABLE>
<CAPTION>
Consumer
Products and Financial Health Infra- Natural Tele-
Services Services Care structure Resources communications
................. ------------- ----------- .............. ------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
MSCI AC World Index
Industry
...................................... ................. ------------- ----------- .............. ------------- -------------------
Aerospace and Military Tech. X
...................................... ................. ------------- ----------- .............. ------------- -------------------
Appliances & Household Dur x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Automobiles x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Banking x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Beverages & Tobacco x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Broadcasting & Publishing x x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Building Materials & Comp. X
...................................... ................. ------------- ----------- .............. ------------- -------------------
Business & Public Services x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Chemicals x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Construction & Housing x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Data Processing & Reprod. X
...................................... ................. ------------- ----------- .............. ------------- -------------------
Electrical Components, Instruments x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Electrical & Electronics x x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Energy Equipment & Service x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Energy Sources x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Financial Services x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Food & Household Products x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Forest Products & Paper x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Prospectus Page 45
<PAGE>
GT GLOBAL NEW DIMENSION FUND
- -----------------------------------------------------------------------------
Gold Mines x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Health & Personal Care x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Industrial Components x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Insurance x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Leisure & Tourism x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Machinery & Engineering x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Merchandising x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Metals - Non Ferrous x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Metals - Steel x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Misc. Materials & Commod. x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Multi-Industry x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Real Estate x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Recreation, Consumer Goods x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Telecommunications x x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Textiles & Apparel x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Transportation-Airlines x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Transportation-Road & Rail x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Transportation-Shipping x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Utilities Electrical & Gas x
- -------------------------------------- ----------------- ------------- ----------- -------------- ------------- -------------------
Wholesale & Int. Trade x
- -------------------------------------- ----------------- ------------- ----------- -------------- ------------- -------------------
</TABLE>
Prospectus Page 45
<PAGE>
GT GLOBAL NEW DIMENSION FUND:
ADVISOR CLASS
Prospectus -- ________ __, 1997
- --------------------------------------------------------------------------------
GT Global New Dimension Fund (the "Fund") is a diversified series of GT Global
Series Trust (the "Trust"), an open-end management investment company. The Fund
seeks long-term growth of capital. Unlike a typical mutual fund, which invests
directly in portfolio securities, the Fund invests primarily in shares of the GT
Global theme mutual funds: GT Global Consumer Products and Services Fund; GT
Global Financial Services Fund; GT Global Health Care Fund; GT Global
Infrastructure Fund; GT Global Natural Resources Fund; and GT Global
Telecommunications Fund (collectively, the "Underlying Theme Funds").
There is no assurance that the Fund will achieve its investment objective.
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR GUARANTEED BY,
ANY BANK, NOR ARE THEY FEDERALLY INSURED OR OTHERWISE PROTECTED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
The Fund is managed by Chancellor LGT Asset Management, Inc. (the "Manager").
The Manager and its worldwide affiliates are part of Liechtenstein Global Trust,
a provider of global asset management and private banking products and services
to individual and institutional investors.
Shares offered by this Prospectus are available for purchase only by certain
investors and are offered at net asset value without the imposition of a
front-end or contingent deferred sales charge or Rule 12b-1 fees.
This Prospectus sets forth concisely the information an investor should know
before investing and should be read carefully and retained for future reference.
A Statement of Additional Information, dated ________ __, 1997, has been filed
with the Securities and Exchange Commission ("SEC") and, as supplemented or
amended from time to time, is incorporated by reference. The Statement of
Additional Information is available without charge by writing to the Fund at 50
California Street, 27th Floor, San Francisco, California 94111, or by calling
(800) 824-1580. It is also available, along with other related materials, on the
SEC's Internet web site (http://www.sec.gov).
FOR FURTHER INFORMATION, CALL (800) 824-1580 OR CONTACT YOUR FINANCIAL ADVISER.
GT GLOBAL
A Member of Liechtenstein Global Trust
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED ON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE>
T A B L E O F C O N T E N T S
- --------------------------------------------------------------------------------
PAGE
----
PROSPECTUS SUMMARY...............................................3
INVESTMENT OBJECTIVE AND POLICIES................................8
DESCRIPTION OF THE UNDERLYING THEME FUNDS........................9
RISK FACTORS AND SPECIAL CONSIDERATIONS.........................12
HOW TO INVEST...................................................16
HOW TO MAKE EXCHANGES...........................................18
HOW TO REDEEM SHARES............................................19
SHAREHOLDER ACCOUNT MANUAL......................................21
CALCULATION OF NET ASSET VALUE..................................23
DIVIDENDS, OTHER DISTRIBUTIONS AND FEDERAL INCOME TAXATION......23
MANAGEMENT......................................................25
OTHER INFORMATION...............................................27
PERFORMANCE.....................................................30
APPENDIX .....................................................33
Prospectus Page 2
<PAGE>
GT GLOBAL NEW DIMENSION FUND: ADVISOR CLASS
PROSPECTUS SUMMARY
- -------------------------------------------------------------------------------
The following summary is qualified in its entirety by the more detailed
information appearing in the body of this Prospectus. Cross-references in the
summary are to headings in the body of this Prospectus.
Investment Objective: The Fund seeks long-term growth of capital.
Principal Investments: The Fund seeks its investment objective by
investing in the following global theme
mutual funds: GT Global Consumer Products and
Services Fund ("Consumer Products and
Services Fund"); GT Global Financial Services
Fund ("Financial Services Fund"); GT Global
Health Care Fund ("Health Care Fund"); GT
Global Infrastructure Fund ("Infrastructure
Fund"); GT Global Natural Resources Fund
("Natural Resources Fund"); and GT Global
Telecommunications Fund ("Telecommunications
Fund"). The allocation of the Fund's assets
among the Underlying Theme Funds is governed
strictly by a formula described herein. See
"Investment Objective and Policies."
There is no assurance that the Fund will
achieve its investment objective. The Fund's
net asset value will fluctuate, reflecting
fluctuations in the net asset value of the
shares of the Underlying Theme Funds.
Investors should review the investment
objectives and policies of the Fund and the
Underlying Theme Funds carefully and consider
their ability to assume these and other risks
involved in purchasing shares of the Fund.
See "Investment Objective and Policies,"
"Description of the Underlying Theme Funds"
and "Risk Factors and Special
Considerations." As a newly organized entity,
the Fund has no operating history.
Investment Manager: The Manager is part of Liechtenstein Global
Trust, a provider of global asset management
and private banking products and services to
individual and institutional investors,
entrusted with approximately $87 billion in
total assets as of June 30, 1997. The Manager
and its worldwide asset management affiliates
maintain investment offices in Frankfurt,
Hong Kong, London, New York, San Francisco,
Singapore, Sydney, Tokyo and Toronto. See
"Management."
Advisor Class Shares: Advisor Class shares are offered through this
Prospectus to (a) trustees or other
fiduciaries purchasing shares for employee
Prospectus Page 3
<PAGE>
GT GLOBAL NEW DIMENSION FUND: ADVISOR CLASS
PROSPECTUS SUMMARY
- -------------------------------------------------------------------------------
benefit plans which are sponsored by
organizations which have at least 1,000
employees; (b) any account with assets of at
least $10,000 if (i) a financial planner,
trust company, bank trust department or
registered investment adviser has investment
discretion over such account, and (ii) the
account holder pays such person as
compensation for its advice and other
services an annual fee of at least .50% on
the assets in the account; (c) any account
with assets of at least $10,000 if (i) such
account is established under a "wrap fee"
program, and (ii) the account holder pays the
sponsor of such program an annual fee of at
least .50% on the assets in the account; (d)
accounts advised by one of the companies
composing or affiliated with Liechtenstein
Global Trust; and (e) any of the companies
composing or affiliated with Liechtenstein
Global Trust.
Shares Available Through: Advisor Class shares are available through
Financial Advisors (as defined herein) who
have entered into agreements with the Fund's
distributor, GT Global, Inc. ("GT Global") or
certain of its affiliates. See "How to
Invest" and "Shareholder Account Manual."
Exchange Privileges: Advisor Class shares of the Fund may be
exchanged for Advisor Class shares of other
GT Global Mutual Funds, which are open-end
management investment companies advised
and/or administered by the Manager. See "How
to Make Exchanges" and "Shareholder Account
Manual."
Redemptions: Shares may be redeemed through the Fund's
transfer agent, GT Global Investors Services,
Inc. ("Transfer Agent"). See "How to Redeem
Shares" and "Shareholder Account Manual."
Dividends and Other
Distributions: Dividends and capital gain distributions, if
any, are paid annually.
Reinvestment: Dividends and other distributions may be
reinvested automatically in Advisor Class
shares of the Fund or in Advisor Class shares
of other GT Global Mutual Funds.
Net Asset Values: Advisor Class shares are expected to be
quoted daily in the financial section of most
newspapers.
Prospectus Page 4
<PAGE>
GT GLOBAL NEW DIMENSION FUND: ADVISOR CLASS
PROSPECTUS SUMMARY
- -------------------------------------------------------------------------------
SUMMARY OF INVESTOR COSTS. The expenses and maximum transaction costs associated
with investing in Advisor Class shares of the Fund are reflected in the
following tables.
<TABLE>
<CAPTION>
ADVISOR CLASS
-------------
<S> <C>
SHAREHOLDER TRANSACTIONS COSTS:
Maximum sales charge on purchase of shares (as a % of offering price) None
Sales charges on reinvested distributions to shareholders............
None
Maximum deferred sales charges (as a % of net asset value at time of None
purchase or sale, whichever is less).............................
Redemption charges................................................... None
Exchange fees:
-- On first four exchanges each year....................... None
-- On each additional exchange............................. $7.50
ANNUAL FUND OPERATING EXPENSES*:
(AS A % OF AVERAGE NET ASSETS)
Investment management fees........................................... None
12b-1 distribution and service fees.................................. None
Other expenses....................................................... NONE
----
Total Fund Operating Expenses........................................ 0.00%
=====
</TABLE>
- ---------------------
* "Other expenses" (including transfer agency, legal and audit fees and
other operating expenses) initially will be borne by the Manager.
Subject to receipt of an order of the SEC pursuant to a pending
exemptive application and a private letter ruling issued by the
Internal Revenue Service, such expenses may be shared by the Manager
and the Underlying Theme Funds. See "Other Information - Special
Servicing Agreement." Investors purchasing Advisor Class shares through
financial planners, trust companies, bank trust departments or
registered investment advisers, or under a "wrap fee" program, will be
subject to additional fees charged by such entities or by the sponsors
of such programs. Where any account advised by one of the companies
composing or affiliated with Liechtenstein Global Trust invests in
Advisor Class shares of the Fund, such account shall not be subject to
duplicative advisory fees.
In addition to the Annual Fund Operating Expenses shown above, the Fund, as a
shareholder in the Underlying Theme Funds, will indirectly bear its pro rata
share of the fees and expenses incurred by the Underlying Theme Funds. As a
result, the investment returns of the Fund will reflect the expenses of the
Underlying Theme Funds in which it holds shares. Because the Fund invests only
in Advisor Class shares of the Underlying Theme Funds it pays no sales charge or
12b-1 distribution or service fees in connection with these investments. The
following table shows the expense ratios applicable to Advisor Class shares of
the Underlying Theme Funds for the semi-annual period ended April 30, 1997.
Prospectus Page 5
<PAGE>
GT GLOBAL NEW DIMENSION FUND: ADVISOR CLASS
PROSPECTUS SUMMARY
- -------------------------------------------------------------------------------
------------------------------------------------ ------------------------------
UNDERLYING THEME FUND EXPENSE RATIO OF ADVISOR
CLASS SHARES 1/
------------------------------------------------ ------------------------------
Consumer Products and Services Fund 1.49%
Financial Services Fund 1.90% 2/
Health Care Fund 1.31%
Infrastructure Fund 1.61%
Natural Resources Fund 1.68%
Telecommunications Fund 1.39%
------------------------------------------------ ------------------------------
1/ Effective ____________, the Manager will limit each Underlying Theme
Fund's expenses to a maximum level of 1.50% of the average daily net assets of
such Fund's Advisor Class shares.
2/ Without reimbursement by the manager, the expense ratio would have been
2.35%.
The following table shows the estimated aggregate expense ratio of the Fund
based on a weighted average of the expense ratios of the Underlying Theme Funds
in which the Fund would have invested as of July 30, 1997, plus the Fund's
expense ratio. For this purpose, (as set forth in the preceding table) the
expense ratios of the Underlying Theme Funds are for the semi-annual period
ended April 30, 1997.
-----------------------------------------------------------------------------
GT GLOBAL NEW DIMENSION FUND ESTIMATED AGGREGATE EXPENSE RATIO 1/
-----------------------------------------------------------------------------
Advisor Class 1.58%
-----------------------------------------------------------------------------
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES:
An investor would have directly or indirectly paid the following expenses of the
Fund and, by extension, of the Underlying Theme Funds at the end of the periods
shown on a $1,000 investment in the Fund, assuming a 5% annual return:
ONE THREE
YEAR YEARS
---- -----
Advisor Class shares.......................... 16 50
- -------------------------
THE FOREGOING TABLES ARE INTENDED TO ASSIST INVESTORS IN UNDERSTANDING
THE VARIOUS COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUND. THE
"HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF FUTURE EXPENSES. THE
FUND'S ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN. The example
assumes payment by the Fund of operating expenses at the level set forth
under "Annual Fund Operating Expenses" above and of its pro rata share of
the Advisor Class share expenses of the Underlying Theme Funds.
Prospectus Page 6
<PAGE>
GT GLOBAL NEW DIMENSION FUND: ADVISOR CLASS
PROSPECTUS SUMMARY
- -------------------------------------------------------------------------------
The tables and the assumption in the Hypothetical Example of a 5% annual
return are required by regulation of the SEC applicable to all mutual
funds. The 5% annual return is not a prediction of and does not represent
the Fund's or any Underlying Theme Fund's projected or actual
performance.
Prospectus Page 7
<PAGE>
GT GLOBAL NEW DIMENSION FUND: ADVISOR CLASS
- -------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES
The Fund seeks long-term growth of capital. Unlike a typical mutual fund, which
invests directly in portfolio securities, the Fund invests in shares of the GT
Global theme mutual funds. The Fund seeks its investment objective by investing,
under normal circumstances, substantially all of its assets in the following
Underlying Theme Funds:
o Consumer Products and Services Fund
o Financial Services Fund
o Health Care Fund
o Infrastructure Fund
o Natural Resources Fund
o Telecommunications Fund
The Consumer Products and Services Fund, Financial Services Fund, Infrastructure
Fund and Natural Resources Fund, in turn, each seeks its investment objective by
investing all of its investable assets in the corresponding series of another
open-end investment company. See "Risk Factors and Special Considerations."
The Manager exercises no discretion in investing the Fund's assets. Rather, the
Manager periodically determines the allocation of assets to the Underlying Theme
Funds according to the industry weightings of the companies comprising the
Morgan Stanley Capital International All Country (AC) World Index ("MSCI"). (The
MSCI is a broad unmanaged index of global stock prices, currently comprising
2500 different issuers, located in 44 countries and grouped in 38 separate
industries.) The Manager assesses which of the Underlying Theme Funds can
invest, as part of their primary focus, in each of these industries. For
example, industries in the MSCI in which the Financial Services Fund invests
include the Banking, Financial Services, Insurance and Real Estate industries.
The percentage that those industries comprise in the MSCI is then used by the
Manager as the percentage of new money in the Fund that will be invested in the
Financial Services Fund. Where two or more Underlying Theme Funds can invest in
an industry, the weighting of that industry in the MSCI is split equally among
each qualifying Underlying Theme Fund. See the Appendix for the allocation of
the 38 industries to the Underlying Theme Funds. Of course, the Underlying Theme
Funds do not invest necessarily in the same industries or the same companies
that comprise the MSCI. Because the percentage weight assigned to each industry
in the MSCI changes over time and because the percentage of the Fund's assets
invested in each Underlying Theme Fund will change over time, the Manager will
rebalance the Fund's assets among the Underlying Theme Funds at least
semi-annually. In addition, the Manager will invest new money in each Underlying
Theme Fund according to the MSCI weighting as of the last business day of the
preceding month. As of July 30, 1997, the weight assigned to each Underlying
Theme Fund, using the above methodology, would have been as follows:
Consumer Products and Services Fund 30.5%
Financial Services Fund 20.8%
Health Care Fund 9.4%
Infrastructure Fund 16.9%
Natural Resources Fund 13.2%
Telecommunications Fund 9.2%
Prospectus Page 8
<PAGE>
GT GLOBAL NEW DIMENSION FUND: ADVISOR CLASS
- -------------------------------------------------------------------------------
The Fund is a more diversified investment than would be achieved by investing in
any single Underlying Theme Fund. However, because the Underlying Theme Funds
are actively managed without any attempt to reflect the country, industry or
company weightings of the MSCI, the Underlying Theme Funds will perform
differently than the corresponding industry components of the MSCI, and the
Underlying Theme Funds will perform differently than the overall MSCI. While the
Fund does not therefore represent the performance of the MSCI, it does represent
a globally diversified portfolio, with allocations among developed and emerging
countries, industries and companies intended to achieve long-term growth of
capital.
The Fund is designed to meet the needs of investors who seek professional money
management services and who appreciate the advantages of diversification. The
Fund by itself should not be considered a complete investment program. As a
newly organized entity, the Fund has no operating history.
OTHER INFORMATION. The investment objective of the Fund may not be changed
without the approval of a majority of its outstanding voting securities. As
defined in the Investment Company Act of 1940, as amended ("1940 Act"), and as
used in this Prospectus, a "majority of the Fund's outstanding voting
securities" means the lesser of (i) 67% of the Fund's shares represented at a
meeting at which more than 50% of the outstanding shares are represented, or
(ii) more than 50% of the outstanding shares. In addition, the Fund has adopted
certain investment limitations as fundamental policies that also may not be
changed without shareholder approval. See "Investment Limitations" in the
Statement of Additional Information. Unless specifically noted, the Fund's
investment policies described in this Prospectus, and in the Statement of
Additional Information are not fundamental policies and may be changed by vote
of the Trust's Board of Trustees without shareholder approval.
DESCRIPTION OF THE UNDERLYING THEME FUNDS
The following descriptions summarize the investment objectives and policies of
the Underlying Theme Funds. There is no assurance that any Underlying Theme Fund
will achieve its investment objective. The Statement of Additional Information
includes more information about the investment policies of the Underlying Theme
Funds. Investors desiring more information on an Underlying Theme Fund should
call (800) 824-1580 or contact their financial adviser for the Underlying Theme
Funds' prospectus.
CONSUMER PRODUCTS AND SERVICES FUND. The Consumer Products and Services Fund's
investment objective is long-term capital growth. The Consumer Products and
Services Fund seeks its objective by investing all of its investable assets in
the Consumer Products and Services Portfolio, that, in turn, invests primarily
in equity securities of companies throughout the world that manufacture, market,
retail or distribute consumer products and services. The Consumer Products and
Prospectus Page 9
<PAGE>
GT GLOBAL NEW DIMENSION FUND: ADVISOR CLASS
- -------------------------------------------------------------------------------
Services Portfolio's investment objective is identical to that of the Consumer
Products and Services Fund. The Consumer Products and Services Portfolio invests
in consumer products and services companies which, in the opinion of the
Manager, have potential for above average, long-term growth in sales and
earnings.
At least 65% of the Consumer Products and Services Portfolio's total assets
normally will be invested in common and preferred stocks and warrants to acquire
such securities issued by consumer products and services companies. A "consumer
products or services" company is an entity in which (i) at least 50% of either
the revenues or earnings was derived from activities relating to consumer
products or services, or (ii) at least 50% of the assets was devoted to such
activities, based on the company's most recent fiscal year. The remainder of the
Consumer Products and Services Portfolio's assets may be invested in debt
securities issued by consumer products or services companies and/or equity and
debt securities of companies outside the consumer products or services
industries, which, in the opinion of the Manager, stand to benefit from
developments in such industries.
FINANCIAL SERVICES FUND. The Financial Services Fund's investment objective is
long-term capital growth. The Financial Services Fund seeks its objective by
investing all of its investable assets in the Financial Services Portfolio,
that, in turn, invests primarily in equity securities of companies throughout
the world that operate in the financial services industries. The Financial
Services Portfolio's investment objective is identical to that of the Financial
Services Fund. The Financial Services Portfolio invests in financial services
companies which, in the opinion of the Manager, have potential for above
average, long-term growth in sales and earnings.
At least 65% of the Financial Services Portfolio's total assets normally will be
invested in common and preferred stocks and warrants to acquire such securities
issued by financial services companies. A "financial services" company is an
entity in which (i) at least 50% of either the revenues or earnings was derived
from financial services activities, or (ii) at least 50% of the assets was
devoted to such activities, based on the company's most recent fiscal year. The
remainder of the Financial Services Portfolio's assets may be invested in debt
securities issued by financial services companies and/or equity and debt
Prospectus Page 10
<PAGE>
GT GLOBAL NEW DIMENSION FUND: ADVISOR CLASS
- -------------------------------------------------------------------------------
securities of companies outside of the financial services industries, which, in
the opinion of the Manager, stand to benefit from developments in the financial
services industries.
HEALTH CARE FUND. The Health Care Fund's investment objective is long-term
capital appreciation. The Health Care Fund seeks its objective by investing
primarily in equity securities of health care companies throughout the world.
The Health Care Fund invests in health care companies, which, in the opinion of
the Manager, have potential for above average, long-term growth in sales and
earnings.
At least 65% of the Health Care Fund's total assets normally will be invested in
common and preferred stocks, and warrants to acquire such securities, issued by
health care companies. A "health care" company is an entity in which (i) at
least 50% of either the revenues or earnings was derived from health care
activities, or (ii) at least 50% of the assets was devoted to such activities,
based on the company's most recent fiscal year. The remainder of the Health Care
Fund's assets may be invested in debt securities issued by health care companies
and/or equity and debt securities of companies outside of the health care
industry, which, in the opinion of the Manager, stand to benefit from
developments in the health care industries.
INFRASTRUCTURE FUND. The Infrastructure Fund's investment objective is long-term
capital growth. The Infrastructure Fund seeks its objective by investing all of
its investable assets in the Infrastructure Portfolio, that, in turn, invests
primarily in equity securities of companies throughout the world that design,
develop or provide products and services significant to a country's
infrastructure. The Infrastructure Portfolio's investment objective is identical
to that of the Infrastructure Fund. The Infrastructure Portfolio invests in
infrastructure companies which, in the opinion of the Manager, have potential
for above average, long-term growth in sales and earnings.
At least 65% of the Infrastructure Portfolio's total assets normally will be
invested in common and preferred stocks and warrants to acquire such securities
issued by infrastructure companies. An "infrastructure" company is an entity in
which (i) at least 50% of either the revenues or earnings was derived from
infrastructure activities, or (ii) at least 50% of the assets was devoted to
such activities, based on the company's most recent fiscal year. The remainder
of the Infrastructure Portfolio's assets may be invested in debt securities
issued by infrastructure companies and/or equity and debt securities of
companies outside of the infrastructure industries, which, in the opinion of the
Manager, stand to benefit from developments in the infrastructure industries.
NATURAL RESOURCES FUND. The Natural Resources Fund's investment objective is
long-term capital growth. The Natural Resources Fund seeks its objective by
investing all of its investable assets in the Natural Resources Portfolio, that,
in turn, invests primarily in equity securities of companies throughout the
world that own, explore or develop natural resources and other basic
commodities, or supply goods and services to such companies. The Natural
Resources Portfolio's investment objective is identical to that of the Natural
Resources Fund. The Natural Resources Portfolio invests in natural resource
companies which, in the opinion of the Manager, have potential for above
average, long-term growth in sales and earnings.
At least 65% of the Natural Resources Portfolio's total assets will normally be
invested in common stock and preferred stock, and warrants to acquire such
securities, issued by natural resource companies. A "natural resource" company
is an entity in which (i) at least 50% of either the revenues or earnings was
derived from natural resource activities, or (ii) at least 50% of the assets was
devoted to such activities, based upon the company's most recent fiscal year.
The remainder of the Natural Resources Portfolio's assets may be invested in
debt securities issued by natural resource companies and/or equity and debt
securities of companies outside of the natural resource industries, which, in
the opinion of the Manager, stand to benefit from developments in the resource
industries.
TELECOMMUNICATIONS FUND. The Telecommunications Fund's investment objective is
long-term growth of capital. The Telecommunications Fund seeks its objective by
investing primarily in equity securities of companies throughout the world
engaged in the development, manufacture or sale of telecommunications services
or equipment. The Telecommunications Fund invests in telecommunications
Prospectus Page 11
<PAGE>
GT GLOBAL NEW DIMENSION FUND: ADVISOR CLASS
- -------------------------------------------------------------------------------
companies which, in the opinion of the Manager, have potential for above
average, long-term growth in sales and earnings on a sustained basis.
At least 65% of the Telecommunications Fund's total assets normally will be
invested in common and preferred stocks and warrants to acquire such securities
issued by telecommunications companies. A "telecommunications" company is an
entity in which (i) at least 50% of either its revenues or earnings was derived
from telecommunications activities, or (ii) at least 50% of its assets was
devoted to telecommunications activities, based on the company's most recent
fiscal year. The remainder of the assets of the Telecommunications Fund may be
invested in debt securities issued by telecommunications companies and/or equity
and debt securities of companies outside of the telecommunications industry
which, in the opinion of the Manager, stand to benefit from developments in the
telecommunications industry.
RISK FACTORS AND SPECIAL CONSIDERATIONS
INVESTING IN THE UNDERLYING THEME FUNDS. The investments of the Fund are
concentrated in the Underlying Theme Funds, so the Fund's investment performance
is directly related to the investment performance of the Underlying Theme Funds.
The ability of the Fund to meet its investment objective is directly related to
the allocation among those Underlying Theme Funds as well as the ability of the
Underlying Theme Funds to meet their objectives. There can be no assurance that
the investment objective of the Fund or any Underlying Theme Fund will be
achieved. The value of the Underlying Theme Funds' domestic and foreign
investments varies in response to many factors. Stock values fluctuate in
response to the activities of individual companies and economic conditions.
Because each Underlying Theme Fund focuses its investments on particular
industries, an investment in each may be more volatile than that of other
investment companies that do not concentrate their investments in such a manner.
Moreover, the value of the shares of each Underlying Theme Fund will be
especially susceptible to factors affecting the industries in which it focuses.
UNDERLYING THEME FUNDS' INVESTMENT ALLOCATION. The Manager allocates each
Underlying Theme Fund's (or its corresponding Portfolio's) assets among
securities of countries and in currency denominations where opportunities for
meeting each Underlying Theme Fund's investment objective are expected to be the
most attractive. Each Underlying Theme Fund may invest substantially in
securities denominated in one or more currencies. Under normal conditions, each
Underlying Theme Fund invests in the securities of issuers located in at least
three countries, including the United States; investments in securities of
issuers in any one country, other than the United States, will represent no more
than 40% of the Financial Services Portfolio's and the Telecommunication Fund's
total assets, and no more than 50% of the Infrastructure Portfolio's, the
Natural Resources Portfolio's, the Health Care Fund's and the Consumer Products
and Services Portfolio's total assets.
In analyzing specific companies for possible investment, the Manager ordinarily
looks for several of the following characteristics: above-average per share
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earnings growth; high return on invested capital; a healthy balance sheet; sound
financial and accounting policies and overall financial strength; strong
competitive advantages; effective research and product development and
marketing; development of new technologies; efficient service; pricing
flexibility; strong management; and general operating characteristics that will
enable the companies to compete successfully in their respective markets. In
assessing companies for the Natural Resources Portfolio, the Manager will also
evaluate, among other factors, their capabilities for expanded exploration and
production, superior exploration programs and production techniques and
facilities, current inventories, expected production and demand levels and the
potential to accumulate new resources.
FOREIGN INVESTMENTS. The Underlying Theme Funds' investments in foreign
securities may involve risks in addition to those of U.S. investments, including
increased political and economic risk, as well as exposure to currency
fluctuations. By investing in foreign securities, the Underlying Theme Funds
also have increased economic and political risks as they are exposed to events
and factors in the various world markets. This is especially true of an
Underlying Theme Fund that invests in emerging markets. Many investments in
emerging markets are considered speculative and therefore may offer higher
income and total return potential, but have significantly greater risk. Also, to
the extent that an Underlying Theme Fund's investments are denominated in
foreign currencies, changes in the value of foreign currencies can significantly
affect the fund's share price.
INVESTMENT PRACTICES OF THE UNDERLYING THEME FUNDS. In addition to their
principal investments, certain Underlying Theme Funds may enter into forward
currency transactions; lend their portfolio securities; enter into stock index,
interest rate and currency futures contracts, and options on such contracts;
engage in options transactions; purchase restricted and illiquid securities;
purchase securities on a when-issued or delayed delivery basis; enter into
repurchase or reverse repurchase agreements; borrow money and engage in various
other investment practices. See the Fund's Statement of Additional Information.
LOWER QUALITY DEBT SECURITIES. The Fund may invest in an Underlying Theme Fund
that invests in high yield, high risk securities, commonly known as "junk
bonds." As a result, the Fund may be subject to some of the risks resulting from
high yield investing. The Fund also may invest in Underlying Theme Funds that
invest in medium grade bonds. Lower quality debt instruments generally offer a
higher current yield than that available from higher grade issues, but typically
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GT GLOBAL NEW DIMENSION FUND: ADVISOR CLASS
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involve greater risk. Lower rated and comparable unrated securities are
especially subject to adverse changes in general economic conditions, to changes
in the financial condition of their issuers, and to price fluctuation in
response to changes in interest rates. During periods of economic downturn or
rising interest rates, issuers of these instruments may experience financial
stress that could adversely affect their ability to make payments of principal
and interest and increase the possibility of default.
ILLIQUID SECURITIES. The Underlying Theme Funds may invest in securities for
which no readily available market exists, so-called "illiquid securities."
Illiquid securities may be more difficult to value than liquid securities and
the sale of illiquid securities generally will require more time and result in
higher brokerage charges or dealer discounts and other selling expenses than the
sale of liquid securities. Moreover, illiquid securities often sell at a price
lower than similar securities that are not subject to restrictions on resale.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. Each Underlying Theme Fund
is authorized to enter into options, futures and forward currency transactions,
although they might not enter into such transactions. Options, futures and
forward currency transactions involve certain risks, which include: (1)
dependence on the Manager's ability to predict movements in the prices of
individual securities, fluctuations in the general securities markets or in the
appropriate market sector and movements in interest rates and currency markets;
(2) imperfect correlation, or even no correlation, between movements in the
price of options, forward contracts, futures contracts or options thereon and
movements in the price of the currency or security hedged or used for cover; (3)
the fact that skills and techniques needed to trade options, futures contracts
and options thereon or to use forward currency contracts are different from
those needed to select the securities in which an Underlying Theme Fund invests;
(4) lack of assurance that a liquid secondary market will exist for any
particular option, futures contract or option thereon at any particular time;
(5) the possible loss of principal under certain conditions; (6) the possible
inability of an Underlying Theme Fund to purchase or sell a portfolio security
at a time when it would otherwise be favorable for it to do so, or the possible
need for an Underlying Theme Fund to sell a security at a disadvantageous time,
due to the need for the Underlying Theme Fund to maintain "cover" or to set
aside securities in connection with hedging transactions; and (7) through the
end of 1997, the possible need to defer closing out certain options, futures
contracts, forward currency contracts and/or foreign currency positions in order
to continue to qualify for the beneficial tax treatment afforded regulated
investment companies under the Internal Revenue Code of 1986, as amended
("Code").
INVESTING IN SMALLER COMPANIES. While each Underlying Theme Fund's portfolio
normally will include securities of established suppliers of traditional
products and services, each Underlying Theme Fund may invest in smaller
companies that can benefit from the development of new products and services.
These smaller companies may present greater opportunities for capital
appreciation, but may also involve greater risks than large, established
issuers. Such smaller companies may have limited resources, and their securities
may trade less frequently and in more limited volume than the securities of
larger, more established companies. As a result, the prices of the securities of
such smaller companies may fluctuate to a greater degree than the prices of the
securities of other issuers.
PURCHASES AND REDEMPTIONS. From time to time, the Underlying Theme Funds may
experience relatively large purchases or redemptions due to rebalancing of the
Fund by the Manager. This may have a material effect on the Underlying Theme
Funds, since Underlying Theme Funds that experience redemptions as a result of
the rebalancing may have to sell portfolio securities and because Underlying
Theme Funds that receive additional cash will have to invest it. While it is
impossible to predict the overall impact of these transactions over time, there
could be adverse effects on portfolio management to the extent that Underlying
Theme Funds may be required to sell securities at times when they would not
otherwise do so, or receive cash that cannot be invested in an expeditious
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manner. There may be tax consequences associated with purchases and sales of
securities, and such sales also may increase transaction costs.
MASTER-FEEDER STRUCTURE OF CERTAIN UNDERLYING THEME FUNDS. The Financial
Services Fund, Infrastructure Fund, Natural Resources Fund and Consumer Products
and Services Fund, unlike mutual funds that directly acquire and manage their
own portfolios of securities, each seeks its investment objective by investing
all of its investable assets in the Financial Services Portfolio, Infrastructure
Portfolio, Natural Resources Portfolio and Consumer Products and Services
Portfolio (each a "Portfolio"), respectively. Each Portfolio is a separate
investment company. Because each such Underlying Theme Fund will invest only in
its corresponding Portfolio, that Underlying Theme Fund's shareholders will
acquire only an indirect interest in the investments of that Portfolio.
TEMPORARY DEFENSIVE STRATEGIES. The Underlying Theme Funds retain the
flexibility to respond promptly to changes in market and economic conditions.
Accordingly, in the interest of preserving shareholders' capital the Manager may
employ a temporary defensive investment strategy if it determines such a
strategy to be warranted due to market, economic or political conditions. Under
a defensive strategy, the Underlying Theme Funds may invest up to 100% of their
total assets in cash and/or high quality debt securities and money market
instruments. To the extent an Underlying Theme Fund adopts a temporary defensive
posture, it will not be invested so as to achieve directly its investment
objective.
In addition, pending investment of proceeds from new sales of the shares or to
meet its ordinary daily cash needs, the Underlying Theme Funds may hold cash
and/or may invest in high quality debt instruments and money market instruments.
The Fund may hold cash and/or may invest in money market instruments under
similar circumstances. Money market instruments in which the Underlying Theme
Funds and the Fund may invest include, but are not limited to, United States
government securities; high-grade commercial paper; bank certificates of
deposit; bankers' acceptances and repurchase agreements related to any of the
foregoing. "High-grade commercial paper" refers to commercial paper rated A-l by
Standard & Poor's, a division of The McGraw-Hill Companies, Inc., or P-l by
Moody's Investors Service, Inc. or, if not rated, determined by the Manager to
be of comparable quality.
PORTFOLIO TURNOVER. The Fund's portfolio turnover rate is expected to be low and
is not anticipated to exceed 20% annually. The portfolio turnover rates of the
Underlying Theme Funds and their corresponding Portfolios have ranged from 37%
to 169% during their most recent fiscal years. There can be no assurance that
the turnover rates of the Underlying Theme Funds and their corresponding
Portfolios will remain within this range during subsequent fiscal years. Higher
turnover rates may result in higher expenses being incurred by the Underlying
Theme Funds.
AFFILIATED PERSONS. The officers and trustees of the Trust currently serve as
officers and trustees of the Underlying Theme Funds. The Manager also serves as
investment adviser and/or administrator to the Underlying Theme Funds.
Therefore, conflicts may arise as these persons fulfill their fiduciary
responsibilities to the Fund and the Underlying Theme Funds.
Prospectus Page 15
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Further information on the investment policies, practices and risks of the
Underlying Theme Funds can be found in the Statement of Additional Information
as well as the Underlying Theme Fund's prospectus and Statement of Additional
Information.
HOW TO INVEST
GENERAL. Advisor Class shares are offered through this Prospectus to (a)
trustees or other fiduciaries purchasing shares for employee benefit plans which
are sponsored by organizations which have at least 1,000 employees; (b) any
account with assets of at least $10,000 if (i) a financial planner, trust
company, bank trust department or registered investment adviser has investment
discretion over such account, and (ii) the account holder pays such person as
compensation for its advice and other services an annual fee of at least .50% on
the assets in the account ("Advisory Account"); (c) any account with assets of
at least $10,000 if (i) such account is established under a "wrap fee" program,
and (ii) the account holder pays the sponsor of such program an annual fee of at
least .50% on the assets in the account ("Wrap Fee Account"); (d) accounts
advised by one of the companies composing or affiliated with Liechtenstein
Global Trust; and (e) any of the companies composing or affiliated with
Liechtenstein Global Trust. Financial planners, trust companies, bank trust
companies and registered investment advisers referenced in subpart (b) and
sponsors of "wrap fee" programs referenced in subpart (c) are collectively
referred to as "Financial Advisors." Fiduciaries and Financial Advisors may be
required to provide information satisfactory to GT Global concerning their
eligibility to purchase Advisor Class shares. Investors in Wrap Fee Accounts and
Advisory Accounts may only purchase Advisor Class shares through Financial
Advisors who have entered into agreements with GT Global or certain of its
affiliates. Investors may be charged a fee by their agents or brokers if they
effect transactions other than through a dealer.
All purchase orders will be executed at the public offering price next
determined after the purchase order is received. Orders received by GT Global
before the close of regular trading on the New York Stock Exchange ("NYSE")
(currently 4:00 p.m. Eastern time, unless weather, equipment failure or other
factors contribute to an earlier closing time) on any Business Day will be
executed at the public offering price for the applicable class of shares
determined that day. A "Business Day" is any day Monday through Friday on which
the NYSE is open for business. THE FUND AND GT GLOBAL RESERVE THE RIGHT TO
REJECT ANY PURCHASE ORDER AND TO SUSPEND THE OFFERING OF SHARES FOR A PERIOD OF
TIME. In particular, the Fund and GT Global may reject purchase orders or
exchanges by investors who appear to follow, in the Manager's judgment, a
market-timing strategy or otherwise engage in excessive trading. See "How to
Make Exchanges - Limitations on Purchase Orders and Exchanges."
Fiduciaries and Financial Advisors may be required to provide information
satisfactory to GT Global concerning their eligibility to purchase Advisor Class
shares. For specific information on opening an account, please contract your
Financial Advisor or GT Global.
PURCHASES BY BANK WIRE. Shares of the Fund may also be purchased through GT
Global by bank wire. Bank wire purchases will be effected at the next determined
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GT GLOBAL NEW DIMENSION FUND: ADVISOR CLASS
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public offering price after the bank wire is received. A wire investment is
considered received when the Transfer Agent is notified that the bank wire has
been credited to the Fund. Prior telephonic or facsimile notice must be provided
to the Transfer Agent that a bank wire is being sent. A bank may charge a
service fee for wiring money to the Fund. The Transfer Agent currently does not
charge a service fee for facilitating wire purchases, but reserves the right to
do so in the future. For more information, please refer to the Shareholder
Account Manual in this Prospectus.
CERTIFICATES. Physical certificates representing the Fund's shares will not be
issued unless a written request is submitted to the Transfer Agent. Shares of
the Fund are recorded on a register by the Transfer Agent, and shareholders who
do not elect to receive certificates have the same rights of ownership as if
certificates had been issued to them. Redemptions and exchanges by shareholders
who hold certificates may take longer to effect than similar transactions
involving non-certificated shares because the physical delivery and processing
of properly executed certificates is required. ACCORDINGLY, THE FUND AND GT
GLOBAL RECOMMEND THAT SHAREHOLDERS DO NOT REQUEST ISSUANCE OF CERTIFICATES.
PORTFOLIO REBALANCING PROGRAM. The GT Global Portfolio Rebalancing Program
("Program") permits eligible shareholders to establish and maintain an
allocation across a range of GT Global Mutual Funds. The Program automatically
rebalances holding of GT Global Mutual Funds to the established allocation on a
periodic basis. Under the Program, a shareholder may predesignate, on a
percentage basis, how the total value of his or her holdings in a minimum of
two, and a maximum of ten, GT Global Mutual Funds ("Personal Portfolio") is to
be rebalanced on a monthly quarterly, semiannual, or annual basis.
Rebalancing under the Program will be effected through the exchange of shares of
one or more GT Global Mutual Funds in the shareholder's Personal Portfolio for
shares of the same class of one or more other GT Global Mutual Funds in the
shareholder's Personal Portfolio. See "How to Make Exchanges." If shares of the
Funds in a shareholder's Personal Portfolio have appreciated most during a
rebalancing period, the Program will result in shares of GT Global Mutual
Fund(s) that have appreciated most during the period being exchanged for shares
of Fund(s) that have appreciated least. SUCH EXCHANGES ARE NOT TAX-FREE AND MAY
RESULT IN A SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE MAY BE, FOR
FEDERAL INCOME TAX PURPOSES. See "Dividends, Other Distributions and Federal
Income Taxation." Participation in the Program does not assure that a
shareholder will profit from purchases under the Program, nor does it prevent or
lessen losses in a declining market.
The Program will automatically rebalance the shareholder's Personal Portfolio on
the 28th day of the last month of the period chosen (or the immediately
preceding business day if the 28th is not a business day), subject to any
limitations below. The Program will not execute an exchange if the variance in a
shareholder's Personal Portfolio for a particular Fund would be 2% or less. In
predesignating percentages, shareholders must use whole percentages and totals
must equal 100%. Shareholders participating in the Program may not request
issuance of physical certificates representing a Fund's shares. Exchanges made
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GT GLOBAL NEW DIMENSION FUND: ADVISOR CLASS
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under the Program are not subject to the four free exchanges per year
limitation. The Fund and GT Global reserve the right to modify, suspend, or
terminate the program at any time on 60 days' prior written notice to
shareholders. A request to participate in the Program must be received in good
order at least five business days prior to the next rebalancing date. Once a
shareholder establishes the Program for his or her Personal Portfolio, a
shareholder cannot cancel or change which rebalancing frequency, which Funds or
what allocation percentages are assigned to the Program, unless canceled or
changed in writing and received by the Transfer Agent in good order at least
five business days prior to the rebalancing date. Certain broker/dealers may
charge a fee for establishing accounts relating to the Program. Investors should
contact their broker/dealers or GT Global for more information.
HOW TO MAKE EXCHANGES
Adviser Class shares of the Fund may be exchanged for Advisor Class shares of
any other GT Global Mutual Fund based on their respective net asset values,
provided that the registration remains identical. EXCHANGES ARE NOT TAX-FREE AND
MAY RESULT IN A SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE MAY BE, FOR
FEDERAL INCOME TAX PURPOSES. See "Dividends, other Distributions and Federal
Income Taxation." In addition to the Fund, the GT Global Mutual Theme Funds
currently include:
- GT GLOBAL WORLDWIDE GROWTH FUND
- GT GLOBAL INTERNATIONAL GROWTH FUND
- GT GLOBAL EMERGING MARKETS FUND
- GT GLOBAL NEW PACIFIC GROWTH FUND
- GT GLOBAL EUROPE GROWTH FUND
- GT GLOBAL LATIN AMERICA GROWTH FUND
- GT GLOBAL AMERICA SMALL CAP GROWTH FUND
- GT GLOBAL AMERICA MID CAP GROWTH FUND
- GT GLOBAL AMERICA VALUE FUND
- GT GLOBAL JAPAN GROWTH FUND
- GT GLOBAL GROWTH & INCOME FUND
- GT GLOBAL GOVERNMENT INCOME FUND
- GT GLOBAL STRATEGIC INCOME FUND
- GT GLOBAL HIGH INCOME FUND
- GT GLOBAL DOLLAR FUND
- GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
- GT GLOBAL FINANCIAL SERVICES FUND
- GT GLOBAL HEALTH CARE FUND
- GT GLOBAL INFRASTRUCTURE FUND
- GT GLOBAL NATURAL RESOURCES FUND
- GT GLOBAL TELECOMMUNICATIONS FUND
Up to four exchanges each year may be made without charge. A $7.50 service
charge will be imposed on each subsequent exchange. Exchange requests received
in good order by the Transfer Agent before the close of regular trading on the
NYSE on any Business Day will be processed at the net asset value calculated on
that day. The terms of the exchange offer may be modified at any time, on 60
days' prior written notice.
Prospectus Page 18
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EXCHANGES BY TELEPHONE. A shareholder may give exchange information to his or
her Financial Advisor. Exchange orders will be accepted by telephone provided
that the exchange involves only uncertificated shares on deposit in the
shareholder's account or for which certificates have previously been deposited.
Shareholders automatically have telephone privileges to authorize exchanges. The
Fund, GT Global and the Transfer Agent will not be liable for any loss or damage
for acting in good faith upon instructions received by telephone and reasonably
believed to be genuine. The Fund employs reasonable procedures to confirm that
instructions communicated by telephone are genuine prior to acting upon
instructions received by telephone, including requiring some form of personal
identification, providing written confirmation of such transactions, and/or tape
recording of telephone instructions.
Investors in Wrap Fee Accounts and Advisory Accounts interested in making an
exchange should contact their Financial Advisors to request the prospectus of
the other GT Global Mutual Fund(s) being considered. Other investors should
contact GT Global. See the Shareholder Account Manual in this Prospectus for
additional information.
LIMITATIONS ON PURCHASE ORDERS AND EXCHANGES. The GT Global Mutual Funds are not
intended to serve as vehicles for frequent trading in response to short-term
fluctuations in the market. Due to the disruptive effect that market-timing
investment strategies and excessive trading can have on efficient portfolio
management, each GT Global Mutual Fund and GT Global reserve the right to refuse
purchase orders and exchanges by any person or group, if, in the Manager's
judgment, such person or group was following a market-timing strategy or was
otherwise engaging in excessive trading.
In addition, each GT Global Mutual Fund and GT Global reserve the right to
refuse purchase orders and exchanges by any person or group if, in the Manager's
judgment, the Fund would not be able to invest the money effectively in
accordance with that Fund's investment objective and policies or would otherwise
potentially be adversely affected. Although a GT Global Mutual Fund will attempt
to give investors prior notice whenever it is reasonably able to do so, it may
impose the above restrictions at any time.
Finally, as described above, each GT Global Mutual Fund and GT Global reserve
the right to reject any purchase order.
HOW TO REDEEM SHARES
Fund shares may be redeemed at their net asset value and redemption proceeds
will be sent within seven days of the execution of a redemption request. Fund
shares may be redeemed at their net asset value and redemption proceeds will be
sent within seven days of the execution of a redemption request. Redemption
requests may be transmitted to the Transfer Agent by telephone or by mail, in
accordance with the instructions provided in the Shareholder Account Manual.
Redemptions will be effected at the net asset value next determined after the
Transfer Agent has received the request in good order and any required
supporting documentation. Redemption requests will not require a signature
guarantee if the redemption proceeds are to be sent either: (i) to the redeeming
shareholder at the shareholder's address of record as maintained by the Transfer
Agent, provided the shareholder's address of record has not been changed within
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GT GLOBAL NEW DIMENSION FUND: ADVISOR CLASS
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the preceding thirty days; or (ii) directly to a pre-designated bank, savings
and loan or credit union account ("Pre-Designated Account"). ALL OTHER
REDEMPTION REQUESTS MUST BE ACCOMPANIED BY A SIGNATURE GUARANTEE OF THE
REDEEMING SHAREHOLDER'S SIGNATURE. A signature guarantee can be obtained from
any bank, U.S. trust company, a member firm of a U.S. stock exchange or a
foreign branch of any of the foregoing or other eligible guarantor institution.
A notary public is not an acceptable guarantor.
Shareholders with Pre-Designated Accounts should request that redemption
proceeds be sent either by bank wire or by check. The minimum redemption amount
for a bank wire is $1,000. Shareholders requesting a bank wire should allow two
business days from the time the redemption request is effected for the proceeds
to be deposited in the shareholder's Pre-Designated Account. See "How to Redeem
Shares - Other Important Redemption Information." Shareholders may change their
Pre-Designated Accounts only by a letter of instruction to the Transfer Agent
containing all account signatures, each of which must be guaranteed. The
Transfer Agent currently does not charge a bank wire service fee for each wire
redemption sent, but reserves the right to do so in the future. The
shareholder's bank may charge a bank wire service fee.
Pre-Designated Account. See "How to Redeem Shares--Other Important Redemption
Information." Shareholders may change their Pre-Designated Accounts only by a
letter of instruction to the Transfer Agent containing all account signatures,
each of which must be guaranteed. The Transfer Agent currently does not charge a
bank wire service fee for each wire redemption sent, but reserves the right to
do so in the future. The shareholder's bank may charge a bank wire service fee.
REDEMPTIONS BY TELEPHONE. Redemption requests may be made by telephone by
calling the Transfer Agent at the appropriate toll-free number provided in the
Shareholder Account Manual. Shareholders who hold certificates for shares may
not redeem by telephone. REDEMPTION REQUESTS MAY NOT BE MADE BY TELEPHONE FOR
THIRTY DAYS FOLLOWING ANY CHANGE OF THE SHAREHOLDER'S ADDRESS OF RECORD.
Shareholders automatically have telephone privileges to authorize redemptions.
The Fund, GT Global and the Transfer Agent will not be liable for any loss or
damage for acting in good faith upon instructions received by telephone and
reasonably believed to be genuine. The Fund employs reasonable procedures to
confirm that instructions communicated by telephone are genuine prior to acting
upon instructions received by telephone, including requiring some form of
personal identification providing written confirmation of such transactions,
and/or tape recording of telephone instructions.
REDEMPTIONS BY MAIL. Redemption requests should be mailed directly to the
Transfer Agent at the appropriate address provided in the Shareholder Account
Manual. As discussed above, requests for payment of redemption proceeds to a
party other than the shareholder of record and/or requests that redemption
proceeds be mailed to an address other than the shareholder's address of record
require a signature guarantee. In addition, if the shareholder's address of
record has been changed within the preceding thirty days, a signature guarantee
is required. Redemptions of shares for which certificates have been issued must
be accompanied by properly endorsed share certificates.
Prospectus Page 20
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GT GLOBAL NEW DIMENSION FUND: ADVISOR CLASS
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OTHER IMPORTANT REDEMPTION INFORMATION. A request for redemption will not be
processed until all of the necessary documentation has been received in good
order. A shareholder in doubt as to what documents are required should contact
his or her Financial Advisor.
Except in extraordinary circumstances and as permitted under the 1940 Act,
payment for shares redeemed by telephone or by mail will be made promptly after
receipt of a redemption request, if in good order, but not later than seven days
after the date the request is executed. Requests for redemption which are
subject to any special conditions or which specify a future or past effective
date cannot be accepted.
If the Transfer Agent is requested to redeem shares for which the Fund has not
yet received good payment, the Fund may delay payment of redemption proceeds
until the Transfer Agent has assured itself that good payment has been collected
for the purchase of the shares. In the case of purchases by check it can take up
to 10 business days to confirm that the check has cleared and good payment has
been received. Redemption proceeds will not be delayed when shares have been
paid for by wire or when the investor's account holds a sufficient number of
shares for which funds already have been collected.
GT reserves the right to redeem the shares of any Advisory Account or Wrap Fee
Account if the amount invested in GT Global Mutual Funds through such account is
reduced to less than $500 through redemptions or other action by the
shareholder. Written notice will be given to the shareholder at least 60 days
prior to the date fixed for such redemption, during which time the shareholder
may increase the amount invested in GT Global Mutual Funds through such account
to an aggregate amount of $500 or more.
For additional information on how to redeem shares, see the Shareholder Account
Manual in this Prospectus, or contact your Financial Advisor.
SHAREHOLDER ACCOUNT MANUAL
Purchase, exchange and redemption orders should be placed in accordance with
this Manual. It is recommended that investors in Wrap Fee Accounts and Advisory
Accounts make such orders through their Financial Advisor. PLEASE BE CAREFUL TO
REFERENCE "ADVISOR CLASS" IN ALL INSTRUCTIONS PROVIDED. For more information,
see "How to Invest;" "How to Make Exchanges;" "How to Redeem Shares;" and
"Dividends, Other Distributions and Federal Income Taxation".
The Fund's Transfer Agent is GT GLOBAL INVESTOR SERVICES, INC.
INVESTMENTS BY MAIL
Send the completed Account Application (if initial purchase) or letter stating
Fund name, class of shares, shareholder's registered name and account number (if
subsequent purchase) with a check to:
GT Global Mutual Funds
P.O. Box 7345
San Francisco, California 94120-7345
Prospectus Page 21
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INVESTMENTS BY BANK WIRE
A new account may be opened by calling 1-800-223-2138 to obtain an account
number. WITHIN SEVEN DAYS OF PURCHASE A COMPLETED ACCOUNT APPLICATION CONTAINING
THE APPROPRIATE CERTIFIED TAXPAYER IDENTIFICATION NUMBER TO GT GLOBAL AT THE
ADDRESS PROVIDED ABOVE UNDER "INVESTMENTS BY MAIL." Wire instructions must state
Fund name, class of shares, shareholder's registered name and account number.
Bank wires should be sent through the Federal Reserve Bank Wire System to:
WELLS FARGO BANK N.A.
ABA 121000248
Attn: GT GLOBAL
ACCOUNT NO. 4023-050701
EXCHANGES BY TELEPHONE
Call GT Global Investor Services at 1-800-223-2138.
EXCHANGES BY MAIL
Send complete instructions, including name of Fund exchanging from, class of
shares, amount of exchange, name of the GT Global Mutual Fund exchanging into,
shareholder's registered name and account number, to:
GT Global Mutual Funds
P.O. Box 7893
San Francisco, CA 94120-7893
REDEMPTIONS BY TELEPHONE
Call GT Global Investor Services at 1-800-223-2138.
REDEMPTIONS BY MAIL
Send complete instructions, including name of Fund, class of shares, amount of
redemption, shareholder's registered name and account number, to:
GT Global Investor Services
P.O. Box 7893
San Francisco, CA 94120-7893
OVERNIGHT MAIL
Overnight mail services do not deliver to post office boxes. To send purchase,
exchange or redemption orders by overnight mail, follow the above instructions
but send the instructions to the following address:
GT Global Investor Services
California Plaza
2121 N. California Boulevard
Suite 450
Walnut Creek, CA 94596
Prospectus Page 22
<PAGE>
GT GLOBAL NEW DIMENSION FUND: ADVISOR CLASS
- -------------------------------------------------------------------------------
ADDITIONAL QUESTIONS
Shareholders with additional questions regarding purchase, exchange and
redemption procedures should call GT Global Investor Services at 1-800-223-2138.
CALCULATION OF NET ASSET VALUE
The Fund calculates its net asset value as of the close of regular trading on
the NYSE (currently 4:00 p.m. Eastern Time, unless weather, equipment failure or
other factors contribute to an earlier closing time) each Business Day. The
Fund's net asset value per share is computed by dividing the value of its assets
by the total number of Fund shares outstanding. Net asset value is determined
separately for each class of shares of the Fund. The assets of the Fund consist
primarily of the Underlying Theme Funds, which are valued at their respective
net asset values at the time of computation. Other Fund assets are valued at
current market price or, if unavailable, at fair value determined in good faith
by or under the direction of the Trust's Board of Trustees.
DIVIDENDS, OTHER DISTRIBUTIONS
AND FEDERAL INCOME TAXATION
DIVIDENDS AND OTHER DISTRIBUTIONS. The Fund annually declares and pays as a
dividend all of its net investment income, if any, which includes dividends paid
to it from each Underlying Theme Fund's net investment income (if any) less
applicable expenses. The Fund also annually distributes substantially all of its
realized net capital gains, if any, which consist of (1) distributions to it
from each Underlying Theme Fund's realized net capital gains, if any, and (2)
net gains realized from the Fund's disposition of shares of the Underlying Theme
Funds (which dispositions generally are occasioned by reallocating the Fund's
assets among the Underlying Theme Funds to reflect the MCSI weightings (see
"Investment Objective and Policies") or by the need to make distributions and/or
payments of redemption proceeds in excess of available cash). The Fund may make
an additional dividend or other distribution if necessary to avoid a 4% excise
tax on certain undistributed income and gain.
Dividends and other distributions paid by the Fund with respect to all classes
of its shares are calculated in the same manner and at the same time. The per
share income dividends on Advisor Class shares will be higher than the per share
income dividends on shares of other classes of the Fund as a result of the
service and distribution fees applicable to those other shares. SHAREHOLDERS MAY
ELECT:
. to have all dividends and other distributions automatically reinvested in
additional Advisor Class shares of the Fund (or other GT Global Mutual
Funds); or
Prospectus Page 23
<PAGE>
GT GLOBAL NEW DIMENSION FUND: ADVISOR CLASS
- -------------------------------------------------------------------------------
. to receive dividends in cash and have other distributions automatically
reinvested in additional Advisor Class shares of the Fund (or other GT
Global Mutual Funds); or
. to receive other distributions in cash and have dividends automatically
reinvested in additional Advisor Class shares of the Fund (or other GT
Global Mutual Funds); or
. to receive dividends and other distributions in cash.
Automatic reinvestments in additional Advisor Class shares are made at net asset
value without imposition of a sales charge. IF NO ELECTION IS MADE BY A
SHAREHOLDER, ALL DIVIDENDS AND OTHER DISTRIBUTIONS WILL BE AUTOMATICALLY
REINVESTED IN ADDITIONAL ADVISOR CLASS SHARES OF THE FUND. Reinvestments in
another GT Global Mutual Fund may only be directed to an account with the
identical shareholder registration and account number. These elections may be
changed by a shareholder at any time; to be effective with respect to a
distribution, the shareholder or the shareholder's broker must contact the
Transfer Agent by mail or telephone at least 15 Business Days prior to the
payment date. THE FEDERAL INCOME TAX CONSEQUENCES OF DIVIDENDS AND OTHER
DISTRIBUTIONS ARE THE SAME WHETHER THEY ARE RECEIVED IN CASH OR REINVESTED IN
ADDITIONAL SHARES.
Any dividend or other distribution paid by the Fund has the effect of reducing
the net asset value per share on the ex-distribution date by the amount thereof.
Therefore, a dividend or other distribution paid shortly after a purchase of
shares would represent, in substance, a return of capital to the shareholder (to
the extent the distribution it is paid on the shares so purchased) even though
subject to income tax, as discussed below.
TAXES. The Fund intends to qualify for treatment as a regulated investment
company under the Code. In each taxable year that the Fund so qualifies, the
Fund (but not its shareholders) will be relieved of federal income tax on that
part of its investment company taxable income, consisting generally of net
investment income and net short-term capital gain ("taxable income"), and net
capital gain (I.E., the excess of net long-term capital gain over net short-term
capital loss) that is distributed to its shareholders.
Dividends paid to the Fund from an Underlying Theme Fund's taxable income (which
may include net gains from certain foreign currency transactions) are included
in the Fund's taxable income, and dividends from the latter (whether paid in
cash or reinvested in additional shares) are taxable to the Fund's shareholders
as ordinary income to the extent of its earnings and profits. Distributions of
the Fund's net capital gain (consisting of (1) distributions to it from each
Underlying Theme Fund's net capital gain, when designated as such, and (2) net
gains realized from the Fund's disposition of an Underlying Theme Fund's shares
held for more than twelve months), when designated as such, are taxable to its
shareholders as long-term capital gains, regardless of how long they have held
their Fund shares and whether the distributions are paid in cash or reinvested
in additional shares. The Taxpayer Relief Act of 1997 ("Act"), enacted in August
1997, dramatically changes the taxation of net capital gain, by applying
different rates thereto depending on the taxpayer's holding period and marginal
rate of federal income tax. The Act, however, does not address the application
Prospectus Page 24
<PAGE>
GT GLOBAL NEW DIMENSION FUND: ADVISOR CLASS
- -------------------------------------------------------------------------------
of these rules to distributions by regulated investment companies and instead
authorizes the issuance of regulations to do so. Accordingly, shareholders
should consult their tax advisers as to the effect of the Act on distributions
by the Fund to them of net capital gain.
The Fund provides federal tax information to its shareholders annually,
including information about dividends and other distributions paid during the
preceding year.
The Fund must withhold 31% from dividends, capital gain distributions and
redemption proceeds payable to any individuals and certain other noncorporate
shareholders who have not furnished to the Fund a correct taxpayer
identification number or a properly completed claim for exemption on Form W-8 or
W-9. Withholding at that rate also is required from dividends and capital gain
distributions payable to such shareholders who otherwise are subject to backup
withholding. Fund accounts opened via a bank wire purchase (see "How to Invest -
Purchases Through the Distributor") are considered to have uncertified taxpayer
identification numbers unless a completed Form W-8 or W-9 or Account Application
is received by the Transfer Agent within seven days after the purchase. A
shareholder should contact the Transfer Agent if the shareholder is uncertain
whether a proper taxpayer identification number is on file with the Fund.
A redemption of Fund shares may result in taxable gain or loss to the redeeming
shareholder, depending upon whether the redemption proceeds are more or less
than the shareholder's adjusted basis for the redeemed shares. An exchange of
Fund shares for shares of another GT Global Mutual Fund generally will have
similar tax consequences. However, special tax rules apply when a shareholder
(1) disposes of Class A shares of the Fund through a redemption or exchange
within 90 days after purchase and (2) subsequently acquires Class A shares of
the Fund or of any other GT Global Mutual Fund on which an initial sales charge
normally is imposed without paying that sales charge due to the reinstatement
privilege or exchange privilege. In these cases, any gain on the disposition of
the original Class A shares will be increased, or loss decreased, by the amount
of the sales charge paid when those shares were acquired, and that amount will
increase the adjusted basis of the shares subsequently acquired. In addition, if
Fund shares are purchased within 30 days before or after redeeming other Fund
shares (regardless of class) at a loss, all or a part of the loss will not be
deductible and instead will increase the basis of the newly purchased shares.
The foregoing is only a summary of some of the important federal tax
considerations generally affecting the Fund and its shareholders. See "Taxes" in
the Statement of Additional Information for a further discussion. There may be
other federal, state, local or foreign tax considerations applicable to a
particular investor. Prospective investors therefore are urged to consult their
tax advisers.
MANAGEMENT
The Trust's Board of Trustees has overall responsibility for the operation of
the Fund and has approved contracts with various financial organizations to
provide certain services required by the Fund. See "Trustees and Executive
Officers" in the Statement of Additional Information for a complete description
of the Trustees of the Trust.
Prospectus Page 25
<PAGE>
GT GLOBAL NEW DIMENSION FUND: ADVISOR CLASS
- -------------------------------------------------------------------------------
INVESTMENT MANAGEMENT AND ADMINISTRATION. Subject to the supervision and
direction of the Trust's Board of Trustees, the Manager will ensure that the
Fund's assets are invested in the Underlying Theme Funds according to the
formula and pre-determined percentages described in the "Investment Objective
and Policies" section of this Prospectus. The Manager will determine how the
Fund's assets will be invested in short-term investments and place all purchase
and sale orders for such instruments and for the Underlying Theme Funds. The
Manager provides the following administration services to the Fund: furnishing
corporate officers and clerical staff; providing office space, services and
equipment; and supervising all matters relating to the Fund's operation. The
Manager also serves as the Fund's pricing and accounting agent. Finally, the
Manager will initially assume all costs of the Fund's operation, except for
service and distribution fees imposed on Class A and Class B shares and
non-recurring and extraordinary expenses. The Fund, as a shareholder in the
Underlying Theme Funds, indirectly will bear its proportionate share of any
investment management fees and other expenses paid by the Underlying Theme
Funds.
The Manager provides investment management and/or administration services to the
GT Global Mutual Funds. The Manager and its worldwide asset management
affiliates have provided investment management and/or administration services to
institutional, corporate and individual clients around the world since 1969. The
U.S. offices of the Manager are located at 50 California Street, 27th Floor, San
Francisco, CA 94111 and 1166 Avenue of the Americas, New York, NY 10036.
The Manager and its worldwide affiliates, including LGT Bank in Liechtenstein,
formerly Bank in Liechtenstein, compose Liechtenstein Global Trust, formerly BIL
GT Group Limited. Liechtenstein Global Trust is a provider of global asset
management and private banking products and services to individual and
institutional investors. Liechtenstein Global Trust is controlled by the Prince
of Liechtenstein Foundation, which serves as the parent organization for the
various business enterprises of the Princely Family of Liechtenstein. The
principal business address of the Prince of Liechtenstein Foundation is
Herrengasse 12, FL-9490, Vaduz, Liechtenstein.
As of June 30, 1997, the Manager and its worldwide affiliates managed
approximately $63 billion in assets. In the United States, as of June 30, 1997,
the Manager managed or administered approximately $9 billion of assets of the GT
Global Mutual Funds. As of June 30, 1997, assets entrusted to Liechtenstein
Global Trust total approximately $87 billion.
In addition to the investment resources of its San Francisco and New York
offices, the Manager draws upon the expertise, personnel, data and systems of
other offices of Liechtenstein Global Trust, including investment offices in
Frankfurt, Hong Kong, London, Singapore, Sydney, Tokyo and Toronto. In managing
Prospectus Page 26
<PAGE>
GT GLOBAL NEW DIMENSION FUND: ADVISOR CLASS
- -------------------------------------------------------------------------------
the GT Global Mutual Funds, the Manager employs a team approach, taking
advantage of its investment resources around the world in seeking to achieve
each Fund's investment objective. Many of the GT Global Mutual Funds' portfolio
managers are natives of the countries in which they invest, speak local
languages and/or live or work in the markets they follow.
While the Fund will not be actively managed or have a portfolio manager, the
Underlying Theme Funds are actively managed by teams of investment
professionals. At least semi-annually the Fund will rebalance the percentages of
its assets in each Underlying Theme Fund according to the total industry
weighting of the securities held by the Underlying Theme Funds as represented in
the MSCI.
DISTRIBUTION OF FUND SHARES. GT Global is the distributor of the Fund's Advisor
Class shares. Like the Manager, GT Global is a subsidiary of Liechtenstein
Global Trust with offices at 50 California Street, 27th Floor, San Francisco, CA
94111.
GT Global, at its own expense, may provide promotional incentives to
broker/dealers that sell shares of the Fund and/or shares of the other GT Global
Mutual Funds. In some instances additional compensation or promotional
incentives may be offered to broker/dealers that have sold or may sell
significant amounts of shares during specified periods of time. Such
compensation and incentives may include, but are not limited to, cash,
merchandise, trips and financial assistance to broker/dealers in connection with
preapproved conferences or seminars, sales or training programs for invited
sales personnel, payment for travel expenses (including meals and lodging)
incurred by sales personnel and members of their families or other invited
guests to various locations for such seminars or training programs, seminars for
the public, advertising and sales campaigns regarding one or more of the GT
Global Mutual Funds, and/or other events sponsored by the broker/dealers.
The Glass-Steagall Act and other applicable laws, among other things, generally
prohibit federally chartered or supervised banks from engaging in the business
of underwriting or distributing securities. Accordingly, GT Global intends to
engage banks (if at all) only to perform administrative and shareholder
servicing functions. If a bank were prohibited from so acting, its shareholder
clients would be permitted to remain shareholders, and alternative means for
continuing the servicing of such shareholders would be sought. It is not
expected that shareholders would suffer any adverse financial consequences as a
result of any of these occurrences.
OTHER INFORMATION
SPECIAL SERVICING AGREEMENT. Until the Special Servicing Agreement described
below is entered into, the Manager will pay all the expenses of the Fund,
excluding service and distribution fees imposed on Class A and Class B shares
and certain non-recurring and extraordinary expenses. Expenses initially paid by
the Manager will include fees and expenses incurred in connection with
membership in investment company organizations; fees and expenses of the Fund's
accounting agent; legal, auditing and accounting expenses; taxes; fees and
expenses of the Transfer Agent; fees and expenses of registering or qualifying
the Fund's shares for sale; fees and expenses of Trustees, officers and
Prospectus Page 27
<PAGE>
GT GLOBAL NEW DIMENSION FUND: ADVISOR CLASS
- -------------------------------------------------------------------------------
employees of the Trust who are not affiliated with the Manager; and the cost of
printing and distributing reports and notices to existing shareholders.
An exemptive application has been filed with the SEC requesting relief from
certain provisions of the 1940 Act to permit the Fund, the Manager, the
Underlying Theme Funds and the Transfer Agent to enter into a Special Servicing
Agreement ("Agreement"). A private letter ruling has also been sought from the
Internal Revenue Service concerning this arrangement. If relief is obtained, all
the Fund's expenses except for service and distribution fees imposed on Class A
and Class B shares and certain non-recurring and extraordinary expenses will be
paid for in accordance with the Agreement. Under the Agreement, to the extent
that the aggregate expenses of the Fund are less than the estimated savings to
the Underlying Theme Funds from the operation of the Fund, each Underlying Theme
Fund will bear those expenses in proportion to the average daily value of its
shares owned by the Fund and/or the number of shareholder accounts at the Fund.
The estimated savings are expected to result from the reduction of shareholder
servicing costs due to the elimination of separate shareholder accounts that
either currently are or have potential to be invested in the Underlying Theme
Funds. The estimated savings produced by the operation of the Fund may offset
most, if not all, the expenses incurred by the Fund other than service and
distribution fees. To the extent that the aggregate financial benefits to the
Underlying Theme Funds do not exceed the expenses of the Fund, the Manager will
pay that portion of the Fund's expenses.
CONFIRMATIONS AND REPORTS TO SHAREHOLDERS. Each time a transaction is made that
affects a shareholder's account in the Fund, the shareholder will receive from
the Transfer Agent a confirmation statement reflecting the transaction.
Confirmations for transactions effected pursuant to the Fund's Automatic
Investment Plan, Systematic Withdrawal Plan and automatic dividend reinvestment
program may be provided quarterly. Shortly after the end of the Fund's fiscal
year on December 31 and fiscal half-year on June 30 of each year, shareholders
receive an annual and semiannual report, respectively. In addition, the federal
income status of distributions made by the Fund to shareholders is reported
after the end of each calendar year on Form 1099-DIV. Under certain
circumstances, duplicate mailings of the foregoing reports to the same household
may be consolidated.
ORGANIZATION OF THE TRUST. The Trust was organized as a Massachusetts business
trust on August 26, 1996. The Trust currently consists of one series. From time
to time, the Trust may establish other series, each holding a distinct
investment portfolio and issuing a distinct series of the Trust's shares. Shares
of each series are entitled to one vote per share (with proportional voting for
fractional shares) and are transferable. Shareholders have no preemptive or
conversion rights. Until such time as the Fund commences the public offering of
its shares, LGT Asset Management, Inc. will own 100% of the issued and
outstanding shares of the Fund and will be deemed to control the Fund under the
1940 Act.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by its shareholders individually when the matter affects the specific
interest of the Fund only, such as approval of its investment management
arrangements. In addition, each class of shares of the Fund has exclusive voting
rights with respect to its distribution plan. The shares of all the Trust's fund
Prospectus Page 28
<PAGE>
GT GLOBAL NEW DIMENSION FUND: ADVISOR CLASS
- -------------------------------------------------------------------------------
will be voted in the aggregate on other matters, such as the election of
Trustees and ratification of the selection by the Board of Trustees of the
Trust's independent accountants.
Normally there will be no annual meeting of shareholders in any year, except as
required under the 1940 Act. The Fund would be required to hold a shareholders'
meeting if at any time less than a majority of the Trustees holding office had
been elected by shareholders. Trustees continue to hold office until their
successors are elected and have qualified. Fund shares do not have cumulative
voting rights, which means that the holders of a majority of the shares voting
for the election of Trustees can elect all the Trustees. A Trustee may be
removed upon a majority vote of the shareholders qualified to vote in the
election. Shareholders holding 10% of the Trust's outstanding voting shares may
call a meeting of shareholders for the purpose of voting upon the question of
removal of any Trustee or for any other purpose. The 1940 Act requires the Trust
to assist shareholders in calling such a meeting.
The Fund offers Advisor Class shares through this Prospectus to certain
investors. The Fund also offers Class A and Class B shares to investors through
a separate prospectus. Each class of shares will experience different net asset
values and dividends as a result of different expenses borne by each class of
shares. The per share net asset value and dividends of the Advisor Class shares
of the Fund generally will be higher than that of the Class A and Class B shares
of the Fund because of the higher expenses borne by the Class A and Class B
shares. Consequently, during comparable periods, the Fund expects that the total
return on an investment in shares of the Advisor Class will be higher than the
total return on Class A or Class B shares.
Pursuant to the Trust's Declaration of Trust, the Trust may issue an unlimited
number of shares of the Fund, including an unlimited number of Class A, Class B
and Advisor Class shares of the Fund. Each share of the Fund has no par value,
represents an equal proportionate interest in the Fund with other Fund shares
and is entitled to such dividends and other distributions out of the income
earned and gain realized on the assets belonging to the Fund as may be declared
at the discretion of the Board of Trustees. Each Class A, Class B and Advisor
Class share of the Fund is equal in earnings, assets and voting privileges to
each other share in the Fund, except as noted above, and each class bears the
expenses, if any, related to the distribution of its Shares. Fund shares, when
issued, are fully paid and nonassessable.
SHAREHOLDER INQUIRIES. Shareholder inquiries may be made by calling the Fund
toll-free at (800) 223-2138 or by writing to the Fund at 50 California Street,
27th Floor, San Francisco, California 94111.
TRANSFER AGENT. Shareholder servicing, reporting and general transfer agent
functions for the Fund are performed by GT Global Investor Services, Inc. The
Transfer Agent is an affiliate of the Manager and GT Global, a subsidiary of
Liechtenstein Global Trust and maintains offices at California Plaza, 2121 N.
California Boulevard, Suite 450, Walnut Creek, CA 94596.
CUSTODIAN. State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, is custodian of the assets of the Fund.
Prospectus Page 29
<PAGE>
GT GLOBAL NEW DIMENSION FUND: ADVISOR CLASS
- -------------------------------------------------------------------------------
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Trust and to the Fund.
Kirkpatrick & Lockhart LLP also acts as counsel to the Manager, GT Global and
the Transfer Agent in connection with other matters.
INDEPENDENT ACCOUNTANTS. The Fund's independent accountants are Coopers &
Lybrand L.L.P., One Post Office Square, Boston, Massachusetts 02109. Coopers &
Lybrand L.L.P. conducts an annual audit of the Fund, assists in the preparation
of the Fund's federal and state income tax returns, and consults with the Trust
and the Fund as to matters of accounting, regulatory filings, and federal and
state income taxation.
MULTIPLE TRANSLATIONS OF THE PROSPECTUS. This Prospectus may be translated into
other languages. In the event of any inconsistency or ambiguity as to the
meaning of any word or phrase contained in a translation, the English text shall
prevail.
PERFORMANCE
FUND PERFORMANCE INFORMATION. The Fund, from time to time, may include
information on its investment results and/or comparisons of its investment
results to various unmanaged indices or results of other mutual funds or groups
of mutual funds in advertisements, sales literature or reports furnished to
present or prospective shareholders.
In such materials, the Fund may quote its average annual total return
("Standardized Return"). Standardized Return is calculated separately for each
class of shares of the Fund. Standardized Return shows percentage rates
reflecting the average annual change in the value of an assumed investment in
the Fund at the end of a one-year period and at the end of five- and ten-year
periods, reduced by the maximum applicable sales charge imposed on sales of Fund
shares. If a one-, five- and/or ten-year period has not yet elapsed, data will
be provided as of the end of a shorter period corresponding to the life of the
Fund. Standardized Return assumes the reinvestment of all dividends and other
distributions.
In addition, in order to more completely represent the Fund's performance or
more accurately compare the performance to other measures of investment return,
the Fund also may include other total return performance data ("Non-Standardized
Return") in advertisements, sales literature and shareholder reports.
Non-Standardized Return reflects percentage rates of return encompassing all
elements of return (i.e., income and capital appreciation or depreciation) and
assumes reinvestment of all dividends and other distributions. Non-Standardized
Return may be quoted for the same or different periods as those for which
Standardized Return is quoted; it may consist of an aggregate or average annual
percentage rate of return, actual year-by-year rates or any combination thereof.
Non-Standardized Return may or may not take sales charges into account;
performance data calculated without taking the effect of sales charges into
account will be higher than data including the effect of such charges.
The Fund's performance data will reflect past performance and will not
necessarily be indicative of future results. The Fund's investment results will
vary from time to time depending upon market conditions, and the composition of
Prospectus Page 30
<PAGE>
GT GLOBAL NEW DIMENSION FUND: ADVISOR CLASS
- -------------------------------------------------------------------------------
the Underlying Theme Funds' portfolios. These factors and possible differences
in calculation methods should be considered when comparing the Fund's investment
results with those published for other investment companies, other investment
vehicles and unmanaged indices. The Fund's results also should be considered
relative to the risks associated with its investment objective and policies. See
"Investment Results" in the Statement of Additional Information.
UNDERLYING THEME FUND PERFORMANCE. The Fund has no operating history as of the
date of this Prospectus and therefore no performance record. Thus, the
performance shown below is not the performance of the Fund, but instead reflects
the performance of the Underlying Theme Funds. The following table shows the
average annual total returns of Class A and Class B shares of each Underlying
Theme Fund for the most recent one- and five-year periods (or since inception if
shorter) and for the life of the Underlying Theme Funds. The performance
information reflects the maximum applicable sales charges and distribution and
service fees. Returns would be higher if these charges and fees were not
reflected. The Fund invests in the Advisor Class shares of the Underlying Theme
Funds, which are not subject to these sales charges and distribution and service
fees.
<TABLE>
<CAPTION>
Average Annual Total Return Through 7/31/97
ONE YEAR FIVE YEARS LIFE OF FUND
-------- ---------- ------------
UNDERLYING THEME FUND CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B
- --------------------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Consumer Products and Services Fund 14.56% 14.65% n/a n/a 28.56% 1/ 29.60% 1/
Financial 39.58% 40.78% n/a n/a 16.26% 2/ 16.83% 2/
Services Fund
Health Care Fund 26.43% 27.08% 12.26% n/a 14.44% 3/ 18.87% 4/
Infrastructure Fund 19.69% 20.05% n/a n/a 12.79% 5/ 13.25% 5/
Natural Resources Fund 14.50% 14.53% n/a n/a 13.95% 6/ 14.43% 6/
Telecommunications Fund 27.73% 28.49% 15.41% n/a 13.77% 7/ 15.12% 8/
</TABLE>
1/ The Consumer products and Services Fund commenced operations on December
30, 1994.
2/ The Financial Services Fund commenced operations on May 31, 1994.
3/ Class A shares of the Health Care Fund were initially offered on August 7,
1989.
4/ Class B shares of the Health Care Fund were initially offered on April 1,
1993.
5/ The Infrastructure Fund commenced operations on May 31, 1994.
6/ The Natural Resources Fund commenced operations on May 31, 1994.
7/ Class A shares of the Telecommunications Fund were initially offered on
January 27, 1992.
8/ Class B shares of the Telecommunications Fund were initially offered on
April 1, 1993.
Prospectus Page 31
<PAGE>
GT GLOBAL NEW DIMENSION FUND: ADVISOR CLASS
- -------------------------------------------------------------------------------
The past performances of the Underlying Theme Funds are not guarantees of future
results for either the Underlying Theme Funds or the Fund. Further information
about each Underlying Theme Fund's performance is contained in its Annual Report
to Shareholders, which may be obtained without charge by calling (800) 824-1580
or contacting your financial adviser.
Prospectus Page 32
<PAGE>
GT GLOBAL NEW DIMENSION FUND
- ------------------------------------------------------------------------------
APPENDIX
The chart below shows the current allocation of the 38 industries comprising the
MSCI to the Underlying Theme Funds.
<TABLE>
<CAPTION>
Consumer
Products and Financial Health Infra- Natural Tele-
Services Services Care structure Resources communications
-------- -------- ---- --------- --------- --------------
<S> <C> <C> <C> <C> <C> <C>
MSCI AC World Index
Industry
...................................... .................
Aerospace and Military Tech. X
...................................... ................. ------------- ----------- .............. ------------- -------------------
Appliances & Household Dur x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Automobiles x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Banking x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Beverages & Tobacco x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Broadcasting & Publishing x x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Building Materials & Comp. X
...................................... ................. ------------- ----------- .............. ------------- -------------------
Business & Public Services x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Chemicals x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Construction & Housing x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Data Processing & Reprod. X
...................................... ................. ------------- ----------- .............. ------------- -------------------
Electrical Components, Instruments x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Electrical & Electronics x x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Energy Equipment & Service x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Energy Sources x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Financial Services x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Food & Household Products x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Forest Products & Paper x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Gold Mines x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Health & Personal Care x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Industrial Components x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Insurance x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Leisure & Tourism x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Machinery & Engineering x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Merchandising x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Metals - Non Ferrous x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Metals - Steel x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Misc. Materials & Commod. x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Multi-Industry x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Real Estate x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Recreation, Consumer Goods x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Telecommunications x x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Textiles & Apparel x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Transportation-Airlines x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Transportation-Road & Rail x
...................................... ................. ------------- ----------- .............. ------------- -------------------
Transportation-Shipping x
...................................... ----------------- ------------- ----------- .............. ------------- -------------------
Utilities Electrical & Gas x
- -------------------------------------- ----------------- ------------- ----------- -------------- ------------- -------------------
Wholesale & Int. Trade x
- -------------------------------------- ----------------- ------------- ----------- -------------- ------------- -------------------
</TABLE>
Prospectus Page 33
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GT Global New Dimension Fund
50 California Street, 27th Floor
San Francisco, California 94111
(415) 392-6181
Toll Free: (800) 824-1580
Statement of Additional Information
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________, 1997
This Statement of Additional Information relates to Class A and Class B shares
of GT Global New Dimension Fund (the "Fund"), a diversified series of GT Global
Series Trust (the "Trust"), an open-end management investment company organized
as a Massachusetts business trust. The Fund seeks its investment objective by
investing in the following GT Global theme mutual funds: GT Global Consumer
Products and Services Fund; GT Global Financial Services Fund; GT Global Health
Care Fund; GT Global Infrastructure Fund; GT Global Natural Resources Fund; and
GT Global Telecommunications Fund (collectively, the "Underlying Theme Funds").
Chancellor LGT Asset Management, Inc. (the "Manager") serves as the Fund's
manager. The distributor of the Fund's shares is GT Global, Inc. ("GT Global").
The Fund's transfer agent is GT Global Investor Services, Inc. ("GT Services" or
the "Transfer Agent").
This Statement of Additional Information, which is not a prospectus, supplements
and should be read in conjunction with the Fund's current Prospectus dated
_______, 1997, a copy of which is available without charge by writing to the
above address or calling the Fund at the toll-free telephone number printed
above.
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PAGE
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Investment Objective and Policies..............................................3
Options, Futures and Currency Strategies......................................10
Risk Factors of the Underlying Theme Portfolios...............................23
Investment limitations........................................................29
Execution of Portfolio Transactions...........................................37
Trustees and Executive Officers...............................................39
Management....................................................................41
Valuation of Fund Shares......................................................42
Information Relating to Sales and Redemptions.................................43
Taxes .....................................................................46
Additional Information........................................................47
Investment Results............................................................49
Description of Debt Ratings...................................................57
Financial Statements..........................................................60
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INVESTMENT OBJECTIVE
AND POLICIES
INVESTMENT OBJECTIVE AND POLICIES OF THE FUND
The following supplements the information contained in the Prospectus concerning
the investment policies of the Fund. As stated in the Prospectus, in addition to
investing in the Underlying Theme Funds, the Fund may invest directly in cash
and/or money market instruments, including U.S. government securities and
repurchase agreements.
U.S. GOVERNMENT SECURITIES. The Fund may invest in various direct obligations of
the U.S. Treasury and obligations issued or guaranteed by the U.S. government or
one of its agencies or instrumentalities (collectively, "U.S. government
securities"). Among the U.S. government securities that may be held by the Fund
are securities that are supported by the full faith and credit of the United
States; securities that are supported by the right of the issuer to borrow from
the U.S. Treasury; and securities that are supported solely by the credit of the
instrumentality. U.S. government securities are described in detail in the
following section.
REPURCHASE AGREEMENTS. The Fund may invest in repurchase agreements. A
repurchase agreement is a transaction in which the Fund purchases securities
from a bank or recognized securities dealer and simultaneously commits to resell
the securities to the bank or dealer on an agreed-upon date or upon demand and
at a price reflecting a market rate of interest unrelated to the coupon rate or
maturity of the purchased securities. The Fund maintains custody of the
underlying securities prior to their repurchase; thus, the obligation of the
bank or dealer to pay the repurchase price on the date agreed to is, in effect,
secured by such securities. If the value of these securities is less than the
repurchase price, plus any agreed-upon additional amount, the other party to the
agreement must provide additional collateral so that at all times the collateral
is at least equal to the repurchase price, plus any agreed-upon additional
amount. The difference between the total amount to be received upon repurchase
of the securities and the price that was paid by the Fund upon acquisition is
accrued as interest and included in its net investment income. Repurchase
agreements carry certain risks not associated with direct investments in
securities, including possible declines in the market value of the underlying
securities and delays and costs to the Fund if the other party to a repurchase
agreement becomes insolvent.
INVESTMENT OBJECTIVES AND POLICIES OF THE UNDERLYING THEME FUNDS
The following supplements the information contained in the Prospectus concerning
the investment policies and limitations of the Underlying Theme Funds. More
information about the investment policies and restrictions and the investment
limitations of each Underlying Theme Fund is set forth in the Underlying Theme
Funds' prospectus and statement of additional information.
The Underlying Theme Funds are diversified series of G.T. Investment Funds, Inc.
(the "Company"), a registered open-end management investment company. The GT
Global Consumer Products and Services Fund ("Consumer Products and Services
Fund"), GT Global Financial Services Fund ("Financial Services Fund"), GT Global
Infrastructure Fund ("Infrastructure Fund"), and GT Global Natural Resources
Fund ("Natural Resources Fund") (each, a "Feeder Fund," and, collectively, the
"Feeder Funds") invest all of their investable assets in the Global Consumer
Products and Services Portfolio, Global Financial Services Portfolio, Global
Infrastructure Portfolio, and Global Natural Resources Portfolio (each, a
"Portfolio," and, collectively, the "Portfolios"), respectively.
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Each Portfolio is a subtrust (a "series") of Global Investment Portfolio (an
open-end management investment company) with an investment objective that is
identical to that of its corresponding Underlying Theme Fund. Whenever the
phrase "all of the Underlying Theme Fund's investable assets" is used herein, it
means that the only investment securities held by a Feeder Fund will be its
interest in its corresponding Portfolio. A Feeder Fund may withdraw its
investment in its corresponding Portfolio at any time, if the Company's Board of
Directors determines that it is in the best interests of the Feeder Fund and its
shareholders to do so. Upon any such withdrawal, a Feeder Fund's assets would be
invested in accordance with the investment policies of its corresponding
Portfolio described below and in the Underlying Theme Funds' prospectus.
The investment objective of each Feeder Fund is long-term capital growth. The
investment objectives of the GT Global Health Care Fund ("Health Care Fund") and
the GT Global Telecommunications Fund ("Telecommunications Fund") are long-term
capital appreciation and long-term capital growth, respectively. The Portfolios
and the Health Care Fund and the Telecommunications Fund, together, are referred
to herein as the "Underlying Theme Portfolios."
SELECTION OF EQUITY INVESTMENTS. With respect to the Global Natural Resources
Portfolio, the Manager has identified four areas that it expects will create
investment opportunities: (i) improving supply/demand fundamentals, which may
result in higher commodity prices; (ii) privatization of state-owned natural
resource businesses; (iii) management which can improve production efficiencies
without correspondingly increasing commodity prices; and (iv) service companies
with emerging technologies that can enhance productivity or reduce production
costs. Of course, there is no certainty that these factors will produce the
anticipated results.
With respect to the Telecommunications Fund, the Manager has identified four
areas that it expects will create investment opportunities: (i) deregulation of
companies in the industry, which will allow competition to promote greater
efficiencies; (ii) privatization of state-owned telecommunications businesses;
(iii) development of infrastructure in underdeveloped countries and upgrading of
services in other countries; and (iv) emerging technologies that will enhance
productivity and reduce costs in the telecommunications industry. Of course,
there is no certainty that these factors will produce the anticipated results.
There may be times when, in the opinion of the Manager, prevailing market,
economic or political conditions warrant reducing the proportion of the
Underlying Theme Portfolios' assets invested in equity securities and increasing
the proportion held in cash (U.S. dollars, foreign currencies or multinational
currency units) or invested in debt securities or high quality money market
instruments issued by corporations, or the United States, or a foreign
government. A portion of each Underlying Theme Portfolio's assets normally will
be held in cash (U.S. dollars, foreign currencies or multinational currency
units) or invested in foreign or domestic high quality money market instruments
pending investment of proceeds from new sales of Underlying Theme Fund shares to
provide for ongoing expenses and to satisfy redemptions.
For each Underlying Theme Portfolio's investment purposes, an issuer is
typically considered as located in a particular country if it (a) is organized
under the laws of or has its principal office in a particular country, or (b)
normally derives 50% or more of its total revenues from business in that
country, provided that, in the Manager's view, the value of such issuer's
securities will tend to reflect such country's development to a greater extent
than developments elsewhere. However, these are not absolute requirements, and
certain companies incorporated in a particular country and considered by the
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Manager to be located in that country may have substantial foreign operations or
subsidiaries and/or export sales exceeding in size the assets or sales in that
country.
In certain countries, governmental restrictions and other limitations on
investment may affect a Underlying Theme Portfolio's ability to invest in such
countries. In addition, in some instances only special classes of securities may
be purchased by foreigners and the market prices, liquidity and rights with
respect to those securities may vary from shares owned by nationals. The Manager
is not aware at this time of the existence of any investment or exchange control
regulations which might substantially impair the operations of the Underlying
Theme Portfolios as described in the Underlying Theme Funds' prospectus and
statement of additional information. Restrictions may in the future, however,
make it undesirable to invest in certain countries. None of the Underlying Theme
Portfolios has a present intention of making any significant investment in any
country or stock market in which the Manager considers the political or economic
situation to threaten a Underlying Theme Portfolio with substantial or total
loss of its investment in such country or market.
INVESTMENTS IN OTHER INVESTMENT COMPANIES. Each Underlying Theme Portfolio may
invest in the securities of investment companies within the limitations of the
Investment Company Act of 1940, as amended (the "1940 Act"). These limitations
currently provide that, in general, an Underlying Theme Portfolio may purchase
shares of an investment company unless (a) such a purchase would cause an
Underlying Theme Portfolio to own in the aggregate more than 3% of the total
outstanding voting stock of the investment company or (b) such a purchase would
cause the Underlying Theme Portfolio to have more than 5% of its assets invested
in the investment company or more than 10% of its assets invested in an
aggregate of all such investment companies. The foregoing restrictions do not
apply to the investment of the Feeder Funds in their corresponding Portfolios.
Investment in closed-end investment companies may involve the payment of
substantial premiums above the value of such companies' portfolio securities.
Each Underlying Theme Portfolio does not intend to invest in such investment
companies unless, in the judgment of the Manager, the potential benefits of such
investments justify the payment of any applicable premiums. The return on such
securities will be reduced by operating expenses of such companies, including
payments to the investment managers of those investment companies.
DEPOSITORY RECEIPTS. An Underlying Theme Portfolio may hold securities of
foreign issuers in the form of American Depository Receipts ("ADRs"), American
Depository Shares ("ADSs") and European Depository Receipts ("EDRs") or other
securities convertible into securities of eligible foreign issuers. These
securities may not necessarily be denominated in the same currency as the
securities for which they may be exchanged. ADRs and ADSs are typically issued
by an American bank or trust company and evidence ownership of underlying
securities issued by a foreign corporation. EDRs, which are sometimes referred
to as Continental Depository Receipts ("CDRs"), are issued in Europe typically
by foreign banks and trust companies and evidence ownership of either foreign or
domestic securities. Generally, ADRs and ADSs in registered form are designed
for use in U.S. securities markets and EDRs in bearer form are designed for use
in European securities markets. For purposes of each Underlying Theme
Portfolio's investment policies, an Underlying Theme Portfolio's investments in
ADRs, ADSs and EDRs will be deemed to be investments in the equity securities
representing securities of foreign issuers into which they may be converted.
ADR facilities may be established as either "unsponsored" or "sponsored." While
ADRs issued under these two types of facilities are in some respects similar,
there are distinctions between them relating to the rights and obligations of
ADR holders and the practices of market participants. A depository may establish
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an unsponsored facility without participation by (or even necessarily the
acquiescence of) the issuer of the deposited securities, although typically the
depository requests a letter of non-objection from such issuer prior to the
establishment of the facility. Holders of unsponsored ADRs generally bear all
the costs of such facilities. The depository usually charges fees upon the
deposit and withdrawal of the deposited securities, the conversion of dividends
into U.S. dollars, the disposition of non-cash distributions, and the
performance of other services. The depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited securities or to pass-through voting
rights to ADR holders in respect of the deposited securities. Sponsored ADR
facilities are created in generally the same manner as unsponsored facilities,
except that the issuer of the deposited securities enters into a deposit
agreement with the depository. The deposit agreement sets out the rights and
responsibilities of the issuer, the depository and the ADR holders. With
sponsored facilities, the issuer of the deposited securities generally will bear
some of the costs relating to the facility (such as dividend payment fees of the
depository), although ADR holders continue to bear certain other costs (such as
deposit and withdrawal fees). Under the terms of most sponsored arrangements,
depositories agree to distribute notices of shareholder meetings and voting
instructions, and to provide shareholder communications and other information to
the ADR holders at the request of the issuer of the deposited securities. The
Underlying Theme Portfolios may invest in both sponsored and unsponsored ADRs.
WARRANTS OR RIGHTS. Warrants or rights may be acquired by an Underlying Theme
Portfolio in connection with other securities or separately and provide the
Underlying Theme Portfolio with the right to purchase at a later date other
securities of the issuer.
LENDING OF PORTFOLIO SECURITIES. For the purpose of realizing additional income,
each Underlying Theme Portfolio may make secured loans of its securities
holdings amounting to not more than 30% of its total assets. Securities loans
are made to broker/dealers or institutional investors pursuant to agreements
requiring that the loans be continuously secured by collateral at least equal at
all times to the value of the securities lent plus any accrued interest, "marked
to market" on a daily basis. The Underlying Theme Portfolios may pay reasonable
administrative and custodial fees in connection with the loans of their
securities. While the securities loan is outstanding, an Underlying Theme
Portfolio will continue to receive the equivalent of the interest or dividends
paid by the issuer on the securities, as well as interest on the investment of
the collateral or a fee from the borrower. An Underlying Theme Portfolio will
have a right to call each loan and obtain the securities on five business days'
notice. An Underlying Theme Portfolio will not have the right to vote equity
securities while they are being lent, but it may call in a loan in anticipation
of any important vote. Loans will only be made to firms deemed by the Manager to
be of good standing and will not be made unless, in the judgment of the Manager,
the consideration to be earned from such loans would justify the risk. The risks
in lending Underlying Theme Portfolio securities, as with other extensions of
secured credit, consist of possible delays in receiving additional collateral or
in recovery of the securities and possible loss of rights in the collateral
should the borrower fail financially.
COMMERCIAL BANK OBLIGATIONS. For the purposes of each Underlying Theme
Portfolio's investment policies with respect to bank obligations, obligations of
foreign branches of U.S. banks and of foreign banks are obligations of the
issuing bank and may be general obligations of the parent bank. Such obligations
may, however, be limited by the terms of a specific obligation and by government
regulation. As with investments in non-U.S. securities in general, investments
in the obligations of foreign branches of U.S. banks and of foreign banks may
subject each Underlying Theme Portfolio to investment risks that are different
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in some respects from those of investments in obligations of U.S. issuers.
Although each Underlying Theme Portfolio will typically acquire obligations
issued and supported by the credit of U.S. or foreign banks having total assets
at the time of purchase of $1 billion or more, this $1 billion figure is not an
investment policy or restriction of each Underlying Theme Portfolio. For the
purposes of calculation with respect to the $1 billion figure, the assets of a
bank will be deemed to include the assets of its U.S. and non-U.S. branches.
REPURCHASE AGREEMENTS. A repurchase agreement is a transaction in which an
Underlying Theme Portfolio purchases a security from a bank or recognized
securities dealer and simultaneously commits to resell that security to the bank
or dealer on an agreed-upon date or upon demand and at a price reflecting a
market rate of interest unrelated to the coupon rate or maturity of the
purchased security. Although repurchase agreements carry certain risks not
associated with direct investments in securities, including possible decline in
the market value of the underlying securities and delays and costs to the
Underlying Theme Portfolio if the other party to the repurchase agreement
becomes bankrupt, the Underlying Theme Portfolios intend to enter into
repurchase agreements only with banks and dealers believed by the Manager to
present minimal credit risks in accordance with guidelines established by the
Company's Board of Directors or Global Investment Portfolio's Board of Trustees
(each "Board" and, collectively, the "Boards"), as applicable. The Manager will
review and monitor the creditworthiness of such institutions under the
applicable Board's general supervision.
Each Underlying Theme Portfolio will invest only in repurchase agreements
collateralized at all times in an amount at least equal to the repurchase price
plus accrued interest. To the extent that the proceeds from any sale of such
collateral upon a default in the obligation to repurchase were less than the
repurchase price, an Underlying Theme Portfolio would suffer a loss. If the
financial institution that is party to the repurchase agreement petitions for
bankruptcy or otherwise becomes subject to bankruptcy or other liquidation
proceedings, there may be restrictions on an Underlying Theme Portfolio's
ability to sell the collateral and it could suffer a loss. However, with respect
to financial institutions whose bankruptcy or liquidation proceedings are
subject to the U.S. Bankruptcy Code, each Underlying Theme Portfolio intends to
comply with provisions under such code that would allow the immediate resale of
such collateral. Each Underlying Theme Portfolio will not enter into a
repurchase agreement with a maturity of more than seven days if, as a result,
more than 15% of the value of its net assets (except for the Health Care Fund,
which may invest more than 10% of the value of its total assets) would be
invested in such repurchase agreements and other illiquid investments.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS. Each
Underlying Theme Portfolio's borrowings will not exceed 33-1/3% of its total
assets, i.e., the Underlying Theme Portfolio's total assets at all times will
equal at least 300% of the amount of outstanding borrowings. If market
fluctuations in the value of an Underlying Theme Portfolio's securities holdings
or other factors cause the ratio of its total assets to outstanding borrowings
to fall below 300%, within three days (excluding Sundays and holidays) of such
event that Underlying Theme Portfolio may be required to sell portfolio
securities to restore the 300% asset coverage, even though from an investment
standpoint such sales might be disadvantageous. Each Underlying Theme Portfolio
may also borrow up to 5% of its total assets for temporary or emergency purposes
other than to meet redemptions. Any borrowing by an Underlying Theme Portfolio
may cause greater fluctuation in the value of its shares than would be the case
if it did not borrow.
Each Underlying Theme Portfolio's fundamental investment limitations permit it
to borrow money for leveraging purposes. However, each Underlying Theme
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Portfolio (except the Health Care Fund) is currently prohibited, pursuant to a
non-fundamental investment policy, from borrowing money in order to purchase
securities. Nevertheless, this policy may be changed in the future by the
applicable Board. In the event that an Underlying Theme Portfolio employs
leverage in the future, it would be subject to certain additional risks. Use of
leverage creates an opportunity for greater growth of capital but would
exaggerate any increases or decreases in the net asset value of a Feeder Fund,
or an Underlying Theme Portfolio. When the income and gains on securities
purchased with the proceeds of borrowings exceed the costs of such borrowings,
an Underlying Theme Portfolio's earnings or a Feeder Fund's net asset value will
increase faster than otherwise would be the case; conversely, if such income and
gains fail to exceed such costs, an Underlying Theme Portfolio's earnings or a
Feeder Fund's net asset value would decline faster than would otherwise be the
case.
Each Underlying Theme Portfolio may enter into reverse repurchase agreements. A
reverse repurchase agreement is a borrowing transaction in which the Underlying
Theme Portfolio transfers possession of a security to another party, such as a
bank or broker/dealer, in return for cash, and agrees to repurchase the security
in the future at an agreed upon price, which includes an interest component.
Each Underlying Theme Portfolio may also engage in "roll" borrowing
transactions, which involve the sale of Government National Mortgage Association
certificates or other securities together with a commitment (for which the
Underlying Theme Portfolio may receive a fee) to purchase similar, but not
identical, securities at a future date. Each Underlying Theme Portfolio will
maintain, in a segregated account with a custodian, cash or liquid securities in
an amount sufficient to cover its obligations under "roll" transactions and
reverse repurchase agreements with broker/dealers. No segregation is required
for reverse repurchase agreements with banks.
SHORT SALES. Each Underlying Theme Portfolio (except the Health Care Fund) is
authorized to make short sales of securities. A short sale is a transaction in
which an Underlying Theme Portfolio sells a security in anticipation that the
market price of that security will decline. An Underlying Theme Portfolio may
make short sales (i) as a form of hedging to offset potential declines in long
positions in securities it owns, or anticipates acquiring, or in similar
securities, and (ii) in order to maintain flexibility in its securities
holdings.
When an Underlying Theme Portfolio makes a short sale of a security it does not
own, it must borrow the security sold short and deliver it to the broker/dealer
or other intermediary through which it made the short sale. The Underlying Theme
Portfolio may have to pay a fee to borrow particular securities and will often
be obligated to pay over any payments received on such borrowed securities.
An Underlying Theme Portfolio's obligation to replace the borrowed security when
the borrowing is called or expires will be secured by collateral deposited with
the intermediary. The Underlying Theme Portfolio will also be required to
deposit collateral with its custodian to the extent, if any, necessary so that
the value of both collateral deposits in the aggregate is at all times equal to
at least 100% of the current market value of the security sold short. Depending
on arrangements made with the intermediary from which it borrowed the security
regarding payment of any amounts received by it on such security, an Underlying
Theme Portfolio may not receive any payments (including interest) on its
collateral deposited with such intermediary.
If the price of the security sold short increases between the time of the short
sale and the time an Underlying Theme Portfolio replaces the borrowed security,
it will incur a loss; conversely, if the price declines, the Underlying Theme
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Portfolio will realize a gain. Any gain will be decreased, and any loss
increased, by the transaction costs associated with the transaction. Although an
Underlying Theme Portfolio's gain is limited by the price at which it sold the
security short, its potential loss theoretically is unlimited.
No Underlying Theme Portfolio will make a short sale if, after giving effect to
the sale, the market value of the securities sold short exceeds 25% of the value
of its total assets or its aggregate short sales of the securities of any one
issuer exceed the lesser of 2% of its net assets or 2% of the securities of any
class of the issuer. Moreover, an Underlying Theme Portfolio may engage in short
sales only with respect to securities listed on a national securities exchange.
An Underlying Theme Portfolio may make short sales "against the box" without
respect to such limitations. In this type of short sale, at the time of the sale
the Underlying Theme Portfolio owns the security it has sold short or has the
immediate and unconditional right to acquire at no additional cost the identical
security.
RISKS ASSOCIATED WITH DEBT SECURITIES. The value of the debt securities held by
each Underlying Theme Portfolio generally will vary conversely with market
interest rates. If interest rates in a market fall, the value of the debt
securities held by each Underlying Theme Portfolio ordinarily will rise. If
market interest rates increase, however, the debt securities owned by each
Underlying Theme Portfolio in that market will be likely to decrease in value.
The Consumer Products and Services Portfolio, Infrastructure Portfolio, and
Natural Resources Portfolio may each invest up to 20% of its total assets in
debt securities rated below investment grade. Such investments involve a high
degree of risk. However, those Portfolios will not invest in debt securities
that are in default as to payment of principal and interest.
Debt rated Baa by Moody's Investors Service, Inc. ("Moody") is considered by
Moody's to have speculative characteristics. Debt rated BB, B, CCC, CC or C by
Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"), and
debt rated Ba, B, Caa, Ca or C by Moody's is regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation. For S&P, BB
indicates the lowest degree of speculation for such lower quality debt and C the
highest degree of speculation. For Moody's, Baa indicates the lowest degree of
speculation for such lower quality debt and C the highest degree of speculation.
While such lower quality debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions. Debt rated C by Moody's or S&P is the lowest
rated debt that is not in default as to principal or interest, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing. Lower quality debt securities also are generally
considered to be subject to greater risk than securities with higher ratings
with regard to a deterioration of general economic conditions. These lower
quality debt securities are the equivalent of high yield, high risk bonds,
commonly known as "junk bonds."
Ratings of debt securities represent the rating agency's opinion regarding their
quality and are not a guarantee of quality. Rating agencies attempt to evaluate
the safety of principal and interest payments and do not evaluate the risks of
fluctuations in market value. Also, rating agencies may fail to make timely
changes in credit ratings in response to subsequent events, so that an issuer's
current financial condition may be better or worse than a rating indicates.
The market values of lower quality debt securities tend to reflect individual
developments of the issuer to a greater extent than do higher quality
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securities, which react primarily to fluctuations in the general level of
interest rates. In addition, lower quality debt securities tend to be more
sensitive to economic conditions and generally have more volatile prices than
higher quality securities. Issuers of lower quality securities are often highly
leveraged and may not have available to them more traditional methods of
financing. For example, during an economic downturn or a sustained period of
rising interest rates, highly leveraged issuers of lower quality securities may
experience financial stress. During such periods, such issuers may not have
sufficient revenues to meet their interest payment obligations. The issuer's
ability to service its debt obligations may also be adversely affected by
specific developments affecting the issuer, such as the issuer's inability to
meet specific projected business forecasts or the unavailability of additional
financing. The risk of loss due to default by the issuer is significantly
greater for the holders of lower quality securities because such securities are
generally unsecured and may be subordinated to the claims of other creditors of
the issuer.
Lower quality debt securities of corporate issuers frequently have call or
buy-back features that permit the issuer to call or repurchase the security from
an Underlying Theme Portfolio. If an issuer exercises these provisions in a
declining interest rate market, the Underlying Theme Portfolio may have to
replace the security with a lower yielding security, resulting in a decreased
return for investors. In addition, the Underlying Theme Portfolios may have
difficulty disposing of lower quality securities because they may have a thin
trading market. There may be no established retail secondary market for many of
these securities, and each Underlying Theme Portfolio anticipates that such
securities could be sold only to a limited number of dealers or institutional
investors. The lack of a liquid secondary market also may have an adverse impact
on market prices of such instruments and may make it more difficult for the
Underlying Theme Portfolios to obtain accurate market quotations for purposes of
valuing their portfolio investments. The Underlying Theme Portfolios may also
acquire lower quality debt securities during an initial underwriting or which
are sold without registration under applicable securities laws. Such securities
involve special considerations and risks.
In addition to the foregoing, factors that could have an adverse effect on the
market value of lower quality debt securities in which the Underlying Theme
Portfolios may invest include: (i) potential adverse publicity; (ii) heightened
sensitivity to general economic or political conditions; and (iii) the likely
adverse impact of a major economic recession. An Underlying Theme Portfolio may
also incur additional expenses to the extent it is required to seek recovery
upon a default in the payment of principal or interest on portfolio holdings,
and the Underlying Theme Portfolio may have limited legal recourse in the event
of a default.
The Manager attempts to minimize the speculative risks associated with
investments in lower quality securities through credit analysis and by carefully
monitoring current trends in interest rates, political developments and other
factors.
OPTIONS, FUTURES AND CURRENCY STRATEGIES
SPECIAL RISKS OF OPTIONS, FUTURES AND CURRENCY STRATEGIES
The use by the Underlying Theme Portfolios of options, futures contracts and
forward currency contracts ("Forward Contracts") involves special considerations
and risks, as described below. Risks pertaining to particular instruments are
described in the sections that follow.
(1) Successful use of most of these instruments depends upon
the Manager's ability to predict movements of the overall securities
and currency markets, which requires different skills than predicting
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changes in the prices of individual securities. While the Manager is
experienced in the use of these instruments, there can be no assurance
that any particular strategy adopted will succeed.
(2) There might be imperfect correlation, or even no
correlation, between price movements of an instrument and price
movements of the investments being hedged. For example, if the value of
an instrument used in a short hedge increased by less than the decline
in value of the hedged investment, the hedge would not be fully
successful. Such a lack of correlation might occur due to factors
unrelated to the value of the investments being hedged, such as
speculative or other pressures on the markets in which the hedging
instrument is traded. The effectiveness of hedges using hedging
instruments on indices will depend on the degree of correlation between
price movements in the index and price movements in the investments
being hedged.
(3) Hedging strategies, if successful, can reduce risk of loss
by wholly or partially offsetting the negative effect of unfavorable
price movements in the investments being hedged. However, hedging
strategies can also reduce opportunity for gain by offsetting the
positive effect of favorable price movements in the hedged investments.
For example, if an Underlying Theme Portfolio entered into a short
hedge because the Manager projected a decline in the price of a
security in the Underlying Theme Portfolio's portfolio, and the price
of that security increased instead, the gain from that increase might
be wholly or partially offset by a decline in the price of the hedging
instrument. Moreover, if the price of the hedging instrument declined
by more than the increase in the price of the security, the Underlying
Theme Portfolio could suffer a loss. In either such case, the
Underlying Theme Portfolio would have been in a better position had it
not hedged at all.
(4) As described below, the Underlying Theme Portfolio might
be required to maintain assets as "cover," maintain segregated accounts
or make margin payments when it takes positions in instruments
involving obligations to third parties (I.E., instruments other than
purchased options). If the Underlying Theme Portfolio were unable to
close out its positions in such instruments, it might be required to
continue to maintain such assets or accounts or make such payments
until the position expired or matured. The requirements might impair
the Underlying Theme Portfolio's ability to sell a portfolio security
or make an investment at a time when it would otherwise be favorable to
do so, or require that the Underlying Theme Portfolio sell a portfolio
security at a disadvantageous time. The Underlying Theme Portfolio's
ability to close out a position in an instrument prior to expiration or
maturity depends on the existence of a liquid secondary market or, in
the absence of such a market, the ability and willingness of the other
party to the transaction ("contra party") to enter into a transaction
closing out the position. Therefore, there is no assurance that any
position can be closed out at a time and price that is favorable to the
Underlying Theme Portfolio.
WRITING CALL OPTIONS
Each Underlying Theme Portfolio may write (sell) call options on securities,
indices and currencies. Call options generally will be written on securities and
currencies that, in the opinion of the Manager, are not expected to make any
major price moves in the near future but that, over the long term, are deemed to
be attractive investments for the Underlying Theme Portfolios.
A call option gives the holder (buyer) the right to purchase a security or
currency at a specified price (the exercise price) at any time until (American
style) or on (European style) a certain date (the expiration date). So long as
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the obligation of the writer of a call option continues, he or she may be
assigned an exercise notice, requiring him or her to deliver the underlying
security or currency against payment of the exercise price. This obligation
terminates upon the expiration of the call option, or such earlier time at which
the writer effects a closing purchase transaction by purchasing an option
identical to that previously sold.
Portfolio securities or currencies on which call options may be written will be
purchased solely on the basis of investment considerations consistent with each
Underlying Theme Portfolio's investment objective. When writing a call option,
an Underlying Theme Portfolio, in return for the premium, gives up the
opportunity for profit from a price increase in the underlying security or
currency above the exercise price, and retains the risk of loss should the price
of the security or currency decline. Unlike one who owns securities or
currencies not subject to an option, an Underlying Theme Portfolio has no
control over when it may be required to sell the underlying securities or
currencies, since most options may be exercised at any time prior to the
option's expiration. If a call option that an Underlying Theme Portfolio has
written expires, it will realize a gain in the amount of the premium; however,
such gain may be offset by a decline in the market value of the underlying
security or currency during the option period. If the call option is exercised,
the Underlying Theme Portfolio will realize a gain or loss from the sale of the
underlying security or currency, which will be increased or offset by the
premium received. The Underlying Theme Portfolios do not consider a security or
currency covered by a call option to be "pledged" as that term is used in their
policies that limit the pledging or mortgaging of their assets.
Writing call options can serve as a limited short hedge because declines in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
appreciates to a price higher than the exercise price of the call option, it can
be expected that the option will be exercised and an Underlying Theme Portfolio
will be obligated to sell the security or currency at less than its market
value.
The premium that an Underlying Theme Portfolio receives for writing a call
option is deemed to constitute the market value of an option. The premium the
Underlying Theme Portfolio will receive from writing a call option will reflect,
among other things, the current market price of the underlying investment, the
relationship of the exercise price to such market price, the historical price
volatility of the underlying investment, and the length of the option period. In
determining whether a particular call option should be written, the Manager will
consider the reasonableness of the anticipated premium and the likelihood that a
liquid secondary market will exist for those options.
Closing transactions will be effected in order to realize a profit on an
outstanding call option, to prevent an underlying security or currency from
being called or to permit the sale of the underlying security or currency.
Furthermore, effecting a closing transaction will permit an Underlying Theme
Portfolio to write another call option on the underlying security or currency
with either a different exercise price or expiration date, or both.
Each Underlying Theme Portfolio will pay transaction costs in connection with
the writing of options and in entering into closing purchase contracts.
Transaction costs relating to options activity are normally higher than those
applicable to purchases and sales of portfolio securities.
The exercise price of the options may be below, equal to or above the current
market values of the underlying securities, indices or currencies at the time
the options are written. From time to time, an Underlying Theme Portfolio may
purchase an underlying security or currency for delivery in accordance with the
exercise of an option, rather than delivering such security or currency from its
portfolio. In such cases, additional costs will be incurred.
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An Underlying Theme Portfolio will realize a profit or loss from a closing
purchase transaction if the cost of the transaction is less or more,
respectively, than the premium received from writing the option. Because
increases in the market price of a call option generally will reflect increases
in the market price of the underlying security or currency, any loss resulting
from the repurchase of a call option is likely to be offset in whole or in part
by appreciation of the underlying security or currency owned by an Underlying
Theme Portfolio.
WRITING PUT OPTIONS
Each Underlying Theme Portfolio may write put options on securities, indices and
currencies. A put option gives the purchaser of the option the right to sell,
and the writer (seller) the obligation to buy, the underlying security or
currency at the exercise price at any time until (American style) or on
(European style) the expiration date. The operation of put options in other
respects, including their related risks and rewards, is substantially identical
to that of call options.
An Underlying Theme Portfolio generally would write put options in circumstances
where the Manager wishes to purchase the underlying security or currency for the
Underlying Theme Portfolio's holdings at a price lower than the current market
price of the security or currency. In such event, an Underlying Theme Portfolio
would write a put option at an exercise price that, reduced by the premium
received on the option, reflects the lower price it is willing to pay. Since the
Underlying Theme Portfolio would also receive interest on debt securities or
currencies maintained to cover the exercise price of the option, this technique
could be used to enhance current return during periods of market uncertainty.
The risk in such a transaction would be that the market price of the underlying
security or currency would decline below the exercise price less the premium
received.
Writing put options can serve as a limited long hedge because increases in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
depreciates to a price lower than the exercise price of the put option, it can
be expected that the put option will be exercised and an Underlying Theme
Portfolio will be obligated to purchase the security or currency at greater than
its market value.
PURCHASING PUT OPTIONS
Each Underlying Theme Portfolio may purchase put options on securities, indices
and currencies. As the holder of a put option, an Underlying Theme Portfolio
would have the right to sell the underlying security or currency at the exercise
price at any time until (American style) or on (European style) the expiration
date. An Underlying Theme Portfolio may enter into closing sale transactions
with respect to such options, exercise such option or permit such option to
expire.
Each Underlying Theme Portfolio may purchase a put option on an underlying
security or currency ("protective put") owned by the Underlying Theme Portfolio
in order to protect against an anticipated decline in the value of the security
or currency. Such hedge protection is provided only during the life of the put
option when the Underlying Theme Portfolio, as the holder of the put option, is
able to sell the underlying security or currency at the put exercise price
regardless of any decline in the underlying security's market price or
currency's exchange value. For example, a put option may be purchased in order
to protect unrealized appreciation of a security or currency when the Manager
deems it desirable to continue to hold the security or currency because of tax
considerations. The premium paid for the put option and any transaction costs
would reduce any profit otherwise available for distribution when the security
or currency is eventually sold.
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An Underlying Theme Portfolio may also purchase put options at a time when it
does not own the underlying security or currency. By purchasing put options on a
security or currency it does not own, that Underlying Theme Portfolio seeks to
benefit from a decline in the market price of the underlying security or
currency. If the put option is not sold when it has remaining value, and if the
market price of the underlying security or currency remains equal to or greater
than the exercise price during the life of the put option, the Underlying Theme
Portfolio will lose its entire investment in the put option. In order for the
purchase of a put option to be profitable, the market price of the underlying
security or currency must decline sufficiently below the exercise price to cover
the premium and transaction costs, unless the put option is sold in a closing
sale transaction.
PURCHASING CALL OPTIONS
Each Underlying Theme Portfolio may purchase call options on securities, indices
and currencies. As the holder of a call option, an Underlying Theme Portfolio
would have the right to purchase the underlying security or currency at the
exercise price at any time until (American style) or on (European style) the
expiration date. An Underlying Theme Portfolio may enter into closing sale
transactions with respect to such options, exercise such options or permit such
options to expire.
Call options may be purchased by an Underlying Theme Portfolio for the purpose
of acquiring the underlying security or currency for its portfolio. Utilized in
this fashion, the purchase of call options would enable an Underlying Theme
Portfolio to acquire the security or currency at the exercise price of the call
option plus the premium paid. At times, the net cost of acquiring the security
or currency in this manner may be less than the cost of acquiring the security
or currency directly. This technique may also be useful to an Underlying Theme
Portfolio in purchasing a large block of securities that would be more difficult
to acquire by direct market purchases. So long as it holds such a call option,
rather than the underlying security or currency itself, the Underlying Theme
Portfolio is partially protected from any unexpected decline in the market price
of the underlying security or currency and, in such event, could allow the call
option to expire, incurring a loss only to the extent of the premium paid for
the option.
An Underlying Theme Portfolio may also purchase call options on underlying
securities or currencies it owns in order to protect unrealized gains on call
options previously written by it. A call option could be purchased for this
purpose where tax considerations make it inadvisable to realize such gains
through a closing purchase transaction. Call options may also be purchased at
times to avoid realizing losses that would result in a reduction of the
Underlying Theme Portfolio's current return. For example, where an Underlying
Theme Portfolio has written a call option on an underlying security or currency
having a current market value below the price at which it purchased such
security or currency, an increase in the market price could result in the
exercise of the call option written by the Underlying Theme Portfolio and the
realization of a loss on the underlying security or currency. Accordingly, the
Underlying Theme Portfolio could purchase a call option on the same underlying
security or currency, which could be exercised to fulfill its delivery
obligations under its written call (if it is exercised). This strategy could
allow the Underlying Theme Portfolio to avoid selling the portfolio security or
currency at a time when it has an unrealized loss; however, the Underlying Theme
Portfolio would have to pay a premium to purchase the call option plus
transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of each
Underlying Theme Portfolio's total assets at the time of each purchase.
An Underlying Theme Portfolio may attempt to accomplish objectives similar to
those involved in using Forward Contracts by purchasing put or call options on
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currencies. A put option gives an Underlying Theme Portfolio as purchaser the
right (but not the obligation) to sell a specified amount of currency at the
exercise price at any time until (American style) or on (European style) the
expiration date of the option. A call option gives an Underlying Theme Portfolio
as purchaser the right (but not the obligation) to purchase a specified amount
of currency at the exercise price at any time until (American style) or on
(European style) the expiration date of the option. An Underlying Theme
Portfolio might purchase a currency put option, for example, to protect itself
against a decline in the dollar value of a currency in which it holds or
anticipates holding securities. If the currency's value should decline against
the dollar, the loss in currency value should be offset, in whole or in part, by
an increase in the value of the put. If the value of the currency instead should
rise against the dollar, any gain to an Underlying Theme Portfolio would be
reduced by the premium it had paid for the put option. A currency call option
might be purchased, for example, in anticipation of, or to protect against, a
rise in the value against the dollar of a currency in which an Underlying Theme
Portfolio anticipates purchasing securities.
Options may be either listed on an exchange or traded in over-the-counter
("OTC") markets. Listed options are third-party contracts (I.E., performance of
the obligations of the purchaser and seller is guaranteed by the exchange or
clearing corporation) and have standardized strike prices and expiration dates.
OTC options are two-party contracts with negotiated strike prices and expiration
dates. An Underlying Theme Portfolio will not purchase an OTC option unless it
believes that daily valuations for such options are readily obtainable. OTC
options differ from exchange-traded options in that OTC options are transacted
with dealers directly and not through a clearing corporation (which guarantees
performance). Consequently, there is a risk of non-performance by the dealer.
Since no exchange is involved, OTC options are valued on the basis of an average
of the last bid prices obtained from dealers, unless a quotation from only one
dealer is available, in which case only that dealer's price will be used. In the
case of OTC options, there can be no assurance that a liquid secondary market
will exist for any particular option at any specific time.
The staff SEC considers purchased OTC options to be illiquid securities. An
Underlying Theme Portfolio may also sell OTC options and, in connection
therewith, segregate assets or cover its obligations with respect to OTC options
written by it. The assets used as cover for OTC options written by an Underlying
Theme Portfolio will be considered illiquid unless the OTC options are sold to
qualified dealers who agree that the Underlying Theme Portfolio may repurchase
any OTC option it writes at a maximum price to be calculated by a formula set
forth in the option agreement. The cover for an OTC option written subject to
this procedure would be considered illiquid only to the extent that the maximum
repurchase price under the formula exceeds the intrinsic value of the option.
An Underlying Theme Portfolio's ability to establish and close out positions in
exchange-listed options depends on the existence of a liquid market. Each
Underlying Theme Portfolio intends to purchase or write only those
exchange-traded options for which there appears to be a liquid secondary market.
However, there can be no assurance that such a market will exist at any
particular time. Closing transactions can be made for OTC options only by
negotiating directly with the contra party or by a transaction in the secondary
market if any such market exists. Although an Underlying Theme Portfolio will
enter into OTC options only with contra parties that are expected to be capable
of entering into closing transactions with it, there is no assurance that the
Underlying Theme Portfolio will in fact be able to close out an OTC option
position at a favorable price prior to expiration. In the event of insolvency of
the contra party, the Underlying Theme Portfolio might be unable to close out an
OTC option position at any time prior to its expiration.
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INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or loss depends on
changes in the index in question (and thus on price movements in the securities
market or a particular market sector generally) rather than on price movements
in individual securities or futures contracts. When an Underlying Theme
Portfolio writes a call on an index, it receives a premium and agrees that,
prior to the expiration date, the purchaser of the call, upon exercise of the
call, will receive from the Underlying Theme Portfolio an amount of cash if the
closing level of the index upon which the call is based is greater than the
exercise price of the call. The amount of cash is equal to the difference
between the closing price of the index and the exercise price of the call times
a specified multiple (the "multiplier"), which determines the total dollar value
for each point of such difference. When an Underlying Theme Portfolio buys a
call on an index, it pays a premium and has the same rights as to such call as
are indicated above. When an Underlying Theme Portfolio buys a put on an index,
it pays a premium and has the right, prior to the expiration date, to require
the seller of the put, upon the Underlying Theme Portfolio's exercise of the
put, to deliver to the Underlying Theme Portfolio an amount of cash if the
closing level of the index upon which the put is based is less than the exercise
price of the put, which amount of cash is determined by the multiplier, as
described above for calls. When the Underlying Theme Portfolio writes a put on
an index, it receives a premium and the purchaser has the right, prior to the
expiration date, to require the Underlying Theme Portfolio to deliver to it an
amount of cash equal to the difference between the closing level of the index
and the exercise price times the multiplier, if the closing level is less than
the exercise price.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when an Underlying Theme
Portfolio writes a call on an index it cannot provide in advance for its
potential settlement obligations by acquiring and holding the underlying
securities. An Underlying Theme Portfolio can offset some of the risk of writing
a call index option position by holding a diversified portfolio of securities
similar to those on which the underlying index is based. However, an Underlying
Theme Portfolio cannot, as a practical matter, acquire and hold a portfolio
containing exactly the same securities as underlie the index and, as a result,
bears a risk that the value of the securities held will vary from the value of
the index.
Even if an Underlying Theme Portfolio could assemble a securities portfolio that
exactly reproduced the composition of the underlying index, it still would not
be fully covered from a risk standpoint because of the "timing risk" inherent in
writing index options. When an index option is exercised, the amount of cash
that the holder is entitled to receive is determined by the difference between
the exercise price and the closing index level on the date when the option is
exercised. As with other kinds of options, the Underlying Theme Portfolio, as
the call writer, will not know that it has been assigned until the next business
day at the earliest. The time lag between exercise and notice of assignment
poses no risk for the writer of a covered call on a specific underlying
security, such as common stock, because there the writer's obligation is to
deliver the underlying security, not to pay its value as of a fixed time in the
past. So long as the writer already owns the underlying security, it can satisfy
its settlement obligations by simply delivering it, and the risk that its value
may have declined since the exercise date is borne by the exercising holder. In
contrast, even if the writer of an index call holds securities that exactly
match the composition of the underlying index, it will not be able to satisfy
its assignment obligations by delivering those securities against payment of the
exercise price. Instead, it will be required to pay cash in an amount based on
the closing index value on the exercise date; and by the time it learns that it
has been assigned, the index may have declined, with a corresponding decline in
the value of its securities portfolio. This "timing risk" is an inherent
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limitation on the ability of index call writers to cover their risk exposure by
holding securities positions.
If an Underlying Theme Portfolio has purchased an index option and exercises it
before the closing index value for that day is available, it runs the risk that
the level of the underlying index may subsequently change. If such a change
causes the exercised option to fall out-of-the-money, the Underlying Theme
Portfolio will be required to pay the difference between the closing index value
and the exercise price of the option (times the applicable multiplier) to the
assigned writer.
INTEREST RATE, CURRENCY AND STOCK INDEX FUTURES CONTRACTS
Each Underlying Theme Portfolio may enter into interest rate, currency or stock
index futures contracts (collectively, "Futures" or "Futures Contracts") as a
hedge against changes in prevailing levels of interest rates, currency exchange
rates or stock price levels, respectively, in order to establish more definitely
the effective return on securities or currencies held or intended to be acquired
by it. An Underlying Theme Portfolio's hedging may include sales of Futures as
an offset against the effect of expected increases in interest rates, and
decreases in currency exchange rates and stock prices, and purchases of Futures
as an offset against the effect of expected declines in interest rates, and
increases in currency exchange rates or stock prices.
Each Underlying Theme Portfolio only will enter into Futures Contracts that are
traded on futures exchanges and are standardized as to maturity date and
underlying financial instrument. Futures exchanges and trading thereon in the
United States are regulated under the Commodity Exchange Act by the Commodity
Futures Trading Commission ("CFTC"). Futures are exchanged in London at the
London International Financial Futures Exchange.
Although techniques other than sales and purchases of Futures Contracts could be
used to reduce an Underlying Theme Portfolio's exposure to interest rate,
currency exchange rate and stock market fluctuations, it may be able to hedge
its exposure more effectively and at a lower cost through using Futures
Contracts.
A Futures Contract provides for the future sale by one party and purchase by
another party of a specified amount of a specific financial instrument (security
or currency) for a specified price at a designated date, time and place. A stock
index Futures Contract provides for the delivery, at a designated date, time and
place, of an amount of cash equal to a specified dollar amount times the
difference between the stock index value at the close of trading on the contract
and the price at which the Futures Contract is originally struck; no physical
delivery of stocks comprising the index is made. Brokerage fees are incurred
when a Futures Contract is bought or sold, and margin deposits must be
maintained at all times the Futures Contract is outstanding.
Although Futures Contracts typically require future delivery of and payment for
financial instruments or currencies, Futures Contracts usually are closed out
before the delivery date. Closing out an open Futures Contract sale or purchase
is effected by entering into an offsetting Futures Contract purchase or sale,
respectively, for the same aggregate amount of the identical financial
instrument or currency and the same delivery date. If the offsetting purchase
price is less than the original sale price, the Underlying Theme Portfolio
realizes a gain; if it is more, the Underlying Theme Portfolio realizes a loss.
Conversely, if the offsetting sale price is more than the original purchase
price, the Underlying Theme Portfolio realizes a gain; if it is less, the
Underlying Theme Portfolio realizes a loss. The transaction costs must also be
included in these calculations. There can be no assurance, however, that an
Underlying Theme Portfolio will be able to enter into an offsetting transaction
with respect to a particular Futures Contract at a particular time. If an
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Underlying Theme Portfolio is not able to enter into an offsetting transaction,
it will continue to be required to maintain the margin deposits on the Futures
Contract.
As an example of an offsetting transaction, the contractual obligations arising
from the sale of one Futures Contract of September Deutschemarks on an exchange
may be fulfilled at any time before delivery under the Futures Contract is
required (I.E., on a specified date in September, the "delivery month") by the
purchase of another Futures Contract of September Deutschemarks on the same
exchange. In such instance, the difference between the price at which the
Futures Contract was sold and the price paid for the offsetting purchase, after
allowance for transaction costs, represents the profit or loss to the Underlying
Theme Portfolio.
Each Underlying Theme Portfolio's Futures transactions will be entered into for
hedging purposes; that is, Futures Contracts will be sold to protect against a
decline in the price of securities or currencies that an Underlying Theme
Portfolio owns, or Futures Contracts will be purchased to protect an Underlying
Theme Portfolio against an increase in the price of securities or currencies it
has committed to purchase or expects to purchase.
"Margin" with respect to Futures Contracts is the amount of funds that must be
deposited by an Underlying Theme Portfolio in order to initiate Futures trading
and maintain its open positions in Futures Contracts. A margin deposit made when
the Futures Contract is entered into ("initial margin") is intended to ensure
the Underlying Theme Portfolio's performance under the Futures Contract. The
margin required for a particular Futures Contract is set by the exchange on
which the Futures Contract is traded and may be significantly modified from time
to time by the exchange during the term of the Futures Contract.
Subsequent payments, called "variation margin," to and from the futures
commission merchant through which the Underlying Theme Portfolio entered into
the Futures Contract will be made on a daily basis as the price of the
underlying security, currency or index fluctuates making the Futures Contract
more or less valuable, a process known as marking-to-market.
RISKS OF USING FUTURES CONTRACTS. The prices of Futures Contracts are volatile
and are influenced by, among other things, actual and anticipated changes in
interest rates and currency exchange rates, and in stock market movements, which
in turn are affected by fiscal and monetary policies and national and
international political and economic events.
There is a risk of imperfect correlation between changes in prices of Futures
Contracts and prices of the securities or currencies in an Underlying Theme
Portfolio's portfolio being hedged. The degree of imperfection of correlation
depends upon circumstances such as variations in speculative market demand for
Futures and for securities or currencies, including technical influences in
Futures trading; and differences between the financial instruments being hedged
and the instruments underlying the standard Futures Contracts available for
trading. A decision of whether, when and how to hedge involves skill and
judgment, and even a well-conceived hedge may be unsuccessful to some degree
because of unexpected market behavior or interest or currency rate trends.
Because of the low margin deposits required, Futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a Futures Contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the Futures Contract is deposited as margin, a subsequent 10%
decrease in the value of the Futures Contract would result in a total loss of
the margin deposit, before any deduction for the transaction costs, if the
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account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit, if the Futures Contract were closed out.
Thus, a purchase or sale of a Futures Contract may result in losses in excess of
the amount invested in the Futures Contract.
Most U.S. Futures exchanges limit the amount of fluctuation permitted in Futures
Contract and options on Futures Contracts prices during a single trading day.
The daily limit establishes the maximum amount that the price of a Futures
Contract or option may vary either up or down from the previous day's settlement
price at the end of a trading session. Once the daily limit has been reached in
a particular type of Futures Contract or option, no trades may be made on that
day at a price beyond that limit. The daily limit governs only price movement
during a particular trading day and therefore does not limit potential losses,
because the limit may prevent the liquidation of unfavorable positions. Futures
Contract and option prices have occasionally moved to the daily limit for
several consecutive trading days with little or no trading, thereby preventing
prompt liquidation of positions and subjecting some traders to substantial
losses.
If an Underlying Theme Portfolio were unable to liquidate a Futures or option on
Futures position due to the absence of a liquid secondary market or the
imposition of price limits, it could incur substantial losses. The Underlying
Theme Portfolio would continue to be subject to market risk with respect to the
position. In addition, except in the case of purchased options, the Underlying
Theme Portfolio would continue to be required to make daily variation margin
payments and might be required to maintain the position being hedged by the
Future or option or to maintain cash or securities in a segregated account.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
increased participation by speculators in the Futures markets. This
participation also might cause temporary price distortions. In addition,
activities of large traders in both the Futures and securities markets involving
arbitrage, "program trading" and other investment strategies might result in
temporary price distortions.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or currencies
except that options on Futures Contracts give the purchaser the right, in return
for the premium paid, to assume a position in a Futures Contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the period of the option. Upon
exercise of the option, the delivery of the Futures position by the writer of
the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's Futures margin account, which represents the
amount by which the market price of the Futures Contract, at exercise, exceeds
(in the case of a call) or is less than (in the case of a put) the exercise
price of the option on the Futures Contract. If an option is exercised on the
last trading day prior to the expiration date of the option, the settlement will
be made entirely in cash equal to the difference between the exercise price of
the option and the closing level of the securities, currencies or index upon
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which the Futures Contract is based on the expiration date. Purchasers of
options who fail to exercise their options prior to the exercise date suffer a
loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and the
purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities, foreign currencies or indices.
If an Underlying Theme Portfolio writes an option on a Futures Contract, it will
be required to deposit initial and variation margin pursuant to requirements
similar to those applicable to Futures Contracts. Premiums received from the
writing of an option on a Futures Contract are included in the initial margin
deposit.
An Underlying Theme Portfolio may seek to close out an option position by
selling an option covering the same Futures Contract and having the same
exercise price and expiration date. The ability to establish and close out
positions on such options is subject to the maintenance of a liquid secondary
market.
LIMITATIONS ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON
CURRENCIES
To the extent that an Underlying Theme Portfolio enters into Futures
Contracts, options on Futures Contracts and options on foreign currencies traded
on a CFTC-regulated exchange, in each case other than for BONA FIDE hedging
purposes (as defined by the CFTC), the aggregate initial margin and premiums
required to establish those positions (excluding the amount by which options are
"in-the-money") will not exceed 5% of the liquidation value of the Underlying
Theme Portfolio, after taking into account unrealized profits and unrealized
losses on any contracts it has entered into. In general, a call option on a
Futures Contract is "in-the-money" if the value of the underlying Futures
Contract exceeds the strike, I.E., exercise, price of the call; a put option on
a Futures Contract is "in-the-money" if the value of the underlying Futures
Contract is exceeded by the strike price of the put. This guideline may be
modified by the applicable Board, without a shareholder vote. This limitation
does not limit the percentage of an Underlying Theme Portfolio's assets at risk
to 5%.
FORWARD CURRENCY CONTRACTS
A Forward Contract is an obligation, usually arranged with a commercial bank or
other currency dealer, to purchase or sell a currency against another currency
at a future date and price as agreed upon by the parties. An Underlying Theme
Portfolio either may accept or make delivery of the currency at the maturity of
the Forward Contract. An Underlying Theme Portfolio may also, if its contra
party agrees prior to maturity, enter into a closing transaction involving the
purchase or sale of an offsetting contract.
An Underlying Theme Portfolio engages in forward currency transactions in
anticipation of, or to protect itself against, fluctuations in exchange rates.
An Underlying Theme Portfolio might sell a particular foreign currency forward,
for example, when it holds bonds denominated in a foreign currency but
anticipates, and seeks to be protected against, a decline in the currency
against the U.S. dollar. Similarly, an Underlying Theme Portfolio might sell the
U.S. dollar forward when it holds bonds denominated in U.S. dollars but
anticipates, and seeks to be protected against, a decline in the U.S. dollar
relative to other currencies. Further, an Underlying Theme Portfolio might
purchase a currency forward to "lock in" the price of securities denominated in
that currency that it anticipates purchasing.
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Forward Contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A Forward
Contract generally has no deposit requirement, and no commissions are charged at
any stage for trades. Each Underlying Theme Portfolio will enter into such
Forward Contracts with major U.S. or foreign banks and securities or currency
dealers in accordance with guidelines approved by the applicable Board.
An Underlying Theme Portfolio may enter into Forward Contracts either with
respect to specific transactions or with respect to overall investments of that
Underlying Theme Portfolio. The precise matching of the Forward Contract amounts
and the value of specific securities generally will not be possible because the
future value of such securities in foreign currencies will change as a
consequence of market movements in the value of those securities between the
date the Forward Contract is entered into and the date it matures. Accordingly,
it may be necessary for that Underlying Theme Portfolio to purchase additional
foreign currency on the spot (I.E., cash) market (and bear the expense of such
purchase) if the market value of the security is less than the amount of foreign
currency the Underlying Theme Portfolio is obligated to deliver and if a
decision is made to sell the security and make delivery of the foreign currency.
Conversely, it may be necessary to sell on the spot market some of the foreign
currency the Underlying Theme Portfolio is obligated to deliver. The projection
of short-term currency market movements is extremely difficult, and the
successful execution of a short-term hedging strategy is highly uncertain.
Forward Contracts involve the risk that anticipated currency movements will not
be predicted accurately, causing an Underlying Theme Portfolio to sustain losses
on these contracts and transaction costs.
At or before the maturity of a Forward Contract requiring an Underlying Theme
Portfolio to sell a currency, it either may sell a security and use the sale
proceeds to make delivery of the currency or retain the security and offset its
contractual obligation to deliver the currency by purchasing a second contract
pursuant to which it will obtain, on the same maturity date, the same amount of
the currency that it is obligated to deliver. Similarly, an Underlying Theme
Portfolio may close out a Forward Contract requiring it to purchase a specified
currency by, if its contra party agrees, entering into a second contract
entitling it to sell the same amount of the same currency on the maturity date
of the first contract. An Underlying Theme Portfolio would realize a gain or
loss as a result of entering into such an offsetting Forward Contract under
either circumstance to the extent the exchange rate or rates between the
currencies involved moved between the execution dates of the first contract and
the offsetting contract.
The cost to an Underlying Theme Portfolio of engaging in Forward Contracts
varies with factors such as the currencies involved, the length of the contract
period and the market conditions then prevailing. Because Forward Contracts are
usually entered into on a principal basis, no fees or commissions are involved.
The use of Forward Contracts does not eliminate fluctuations in the prices of
the underlying securities an Underlying Theme Portfolio owns or intends to
acquire, but it does establish a rate of exchange in advance. In addition, while
Forward Contract sales limit the risk of loss due to a decline in the value of
the hedged currencies, they also limit any potential gain that might result
should the value of the currencies increase.
FOREIGN CURRENCY STRATEGIES -- SPECIAL CONSIDERATIONS
An Underlying Theme Portfolio may use options on foreign currencies, Futures on
foreign currencies, options on Futures on foreign currencies and Forward
Contracts to hedge against movements in the values of the foreign currencies in
which the Underlying Theme Portfolio's securities are denominated. Such currency
hedges can protect against price movements in a security that the Underlying
Theme Portfolio owns or intends to acquire that are attributable to changes in
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the value of the currency in which it is denominated. Such hedges do not,
however, protect against price movements in the securities that are attributable
to other causes.
An Underlying Theme Portfolio might seek to hedge against changes in the value
of a particular currency when no Futures Contract, Forward Contract or option
involving that currency is available or one of such contracts is more expensive
than certain other contracts. In such cases, the Underlying Theme Portfolio may
hedge against price movements in that currency by entering into a contract on
another currency or basket of currencies, the values of which the Manager
believes will have a positive correlation to the value of the currency being
hedged. The risk that movements in the price of the contract will not correlate
perfectly with movements in the price of the currency being hedged is magnified
when this strategy is used.
The value of Futures Contracts, options on Futures Contracts, Forward Contracts
and options on foreign currencies depends on the value of the underlying
currency relative to the U.S. dollar. Because foreign currency transactions
occurring in the interbank market might involve substantially larger amounts
than those involved in the use of Futures Contracts, Forward Contracts or
options, the Underlying Theme Portfolio could be disadvantaged by dealing in the
odd lot market (generally consisting of transactions of less than $1 million)
for the underlying foreign currencies at prices that are less favorable than for
round lots.
There is no systematic reporting of last sale information for foreign currencies
or any regulatory requirements that quotations available through dealers or
other market sources be firm or revised on a timely basis. Quotation information
generally is representative of very large transactions in the interbank market
and thus might not reflect odd-lot transactions where rates might be less
favorable. The interbank market in foreign currencies is a global,
round-the-clock market. To the extent the U.S. options or Futures markets are
closed while the markets for the underlying currencies remain open, significant
price and rate movements might take place in the underlying markets that cannot
be reflected in the markets for the Futures contracts or options until they
reopen.
Settlement of Futures Contracts, Forward Contracts and options involving foreign
currencies might be required to take place within the country issuing the
underlying currency. Thus, an Underlying Theme Portfolio might be required to
accept or make delivery of the underlying foreign currency in accordance with
any U.S. or foreign regulations regarding the maintenance of foreign banking
arrangements by U.S. residents and might be required to pay any fees, taxes and
charges associated with such delivery assessed in the issuing country.
COVER
Transactions using Forward Contracts, Futures Contracts and options (other than
options that an Underlying Theme Portfolio has purchased) expose the Underlying
Theme Portfolio to an obligation to another party. An Underlying Theme Portfolio
will not enter into any such transactions unless it owns either (1) an
offsetting ("covered") position in securities, currencies, or other options,
Forward Contracts or Futures Contracts or (2) cash, receivables and short-term
debt securities with a value sufficient at all times to cover its potential
obligations not covered as provided in (1) above. Each Underlying Theme
Portfolio will comply with SEC guidelines regarding cover for these instruments
and, if the guidelines so require, set aside cash or liquid securities.
Assets used as cover or held in a segregated account cannot be sold while the
position in the corresponding Forward Contract, Futures Contract or option is
open, unless they are replaced with other appropriate assets. If a large portion
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of an Underlying Theme Portfolio's assets is used for cover or otherwise set
aside, it could affect portfolio management or the Underlying Theme Portfolio's
ability to meet redemption requests or other current obligations.
RISK FACTORS OF THE UNDERLYING THEME PORTFOLIOS
ILLIQUID SECURITIES
Each Underlying Theme Portfolio may invest up to 15% of its net assets (except
for the Health Care Fund, which may invest up to 10% of its total assets) in
illiquid securities. Securities may be considered illiquid if an Underlying
Theme Portfolio cannot reasonably expect within seven days to sell the
securities for approximately the amount at which it values such securities. See
"Investment Limitations of the Underlying Theme Funds and Portfolios." The sale
of illiquid securities, if they can be sold at all, generally will require more
time and result in higher brokerage charges or dealer discounts and other
selling expenses than will the sale of liquid securities such as securities
eligible for trading on U.S. securities exchanges or in OTC markets. Moreover,
restricted securities, which may be illiquid for purposes of this limitation,
often sell, if at all, at a price lower than similar securities that are not
subject to restrictions on resale.
Illiquid securities include those that are subject to restrictions contained in
the securities laws of other countries. However, securities that are freely
marketable in the country where they are principally traded, but would not be
freely marketable in the United States, will not be considered illiquid. Where
registration is required, an Underlying Theme Portfolio may be obligated to pay
all or part of the registration expenses and a considerable period may elapse
between the time of the decision to sell and the time the Underlying Theme
Portfolio may be permitted to sell a security under an effective registration
statement. If, during such a period, adverse market conditions were to develop,
the Underlying Theme Portfolio might obtain a less favorable price than
prevailed when it decided to sell.
Not all restricted securities are illiquid. In recent years a large
institutional market has developed for certain securities that are not
registered under the Securities Act of 1933, as amended (the "1933 Act"),
including private placements, repurchase agreements, commercial paper, foreign
securities and corporate bonds and notes. These instruments are often restricted
securities because the securities are sold in transactions not requiring
registration. Institutional investors generally will not seek to sell these
instruments to the general public, but instead will often depend either on an
efficient institutional market in which such unregistered securities can be
readily resold or on an issuer's ability to honor a demand for repayment.
Therefore, the fact that there are contractual or legal restrictions on resale
to the general public or certain institutions is not dispositive of the
liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the registration
requirements of the 1933 Act for resales of certain securities to qualified
institutional buyers. Institutional markets for restricted securities have
developed as a result of Rule 144A, providing both readily ascertainable values
for restricted securities and the ability to liquidate an investment to satisfy
share redemption orders. Such markets include automated systems for the trading,
clearance and settlement of unregistered securities of domestic and foreign
issuers, such as the PORTAL System sponsored by the National Association of
Securities Dealers, Inc. An insufficient number of qualified institutional
buyers interested in purchasing Rule 144A-eligible restricted securities held by
an Underlying Theme Portfolio, however, could affect adversely the marketability
of such portfolio securities, and the Underlying Theme Portfolio might be unable
to dispose of such securities promptly or at favorable prices.
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With respect to liquidity determinations generally, the applicable Board has the
ultimate responsibility for determining whether specific securities, including
restricted securities pursuant to Rule 144A under the 1933 Act, are liquid or
illiquid. Each Board has delegated the function of making day-to-day
determinations of liquidity to the Manager, in accordance with procedures
approved by that Board. The Manager takes into account a number of factors in
reaching liquidity decisions, including (i) the frequency of trading in the
security, (ii) the number of dealers that make quotes for the security, (iii)
the number of dealers that have undertaken to make a market in the security,
(iv) the number of other potential purchasers and (v) the nature of the security
and how trading is effected (e.g., the time needed to sell the security, how
offers are solicited and the mechanics of transfer). The Manager monitors the
liquidity of securities held by each Underlying Theme Portfolio and periodically
reports such determinations to the applicable Board. The Manager believes that
carefully selected investments in joint ventures, cooperatives, partnerships and
state enterprises that are illiquid (collectively, "Special Situations") could
enable an Underlying Theme Portfolio to achieve capital appreciation
substantially exceeding the appreciation it would realize if it did not make
such investments. However, in order to attempt to limit investment risk, each
Underlying Theme Portfolio will invest no more than 5% of its total assets in
Special Situations.
FOREIGN SECURITIES
POLITICAL, SOCIAL AND ECONOMIC RISKS. Investing in securities of non-U.S.
companies may entail additional risks due to the potential political, social and
economic instability of certain countries and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment convertibility of currencies into U.S. dollars and on repatriation of
capital invested. In the event of such expropriation, nationalization or other
confiscation by any country, an Underlying Theme Portfolio could lose its entire
investment in any such country.
RELIGIOUS, POLITICAL AND ETHNIC INSTABILITY. Certain countries in which an
Underlying Theme Portfolio may invest may have groups that advocate radical
religious or revolutionary philosophies or support ethnic independence. Any
disturbance on the part of such individuals could carry the potential for
widespread destruction or confiscation of property owned by individuals and
entities foreign to such country and could cause the loss of an Underlying Theme
Portfolio's investment in those countries. Instability may also result from,
among other things, (i) authoritarian governments or military involvement in
political and economic decision-making, including changes in government through
extra-constitutional means, (ii) popular unrest associated with demands for
improved political, economic and social conditions; and (iii) hostile relations
with neighboring or other countries. Such political, social and economic
instability could disrupt the principal financial markets in which an Underlying
Theme Portfolio invests and adversely affect the value of its assets.
FOREIGN INVESTMENT RESTRICTIONS. Certain countries prohibit or impose
substantial restrictions on investments in their capital markets, particularly
their equity markets, by foreign entities such as an Underlying Theme Portfolio.
These restrictions or controls may at times limit or preclude investments in
certain securities and may increase the cost and expenses of an Underlying Theme
Portfolio. For example, certain countries require prior governmental approval
before investments by foreign persons may be made or may limit the amount of
investment by foreign persons in a particular company or limit the investment by
foreign persons to only a specific class of securities of a company that may
have less advantageous terms than securities of the company available for
purchase by nationals. Moreover, the national policies of certain countries may
restrict investment opportunities in issuers or industries deemed sensitive to
national interests. In addition, some countries require governmental approval
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for the repatriation of investment income, capital or the proceeds of securities
sales by foreign investors. In addition, if there is a deterioration in a
country's balance of payments or for other reasons, a country may impose
restrictions on foreign capital remittances abroad. An Underlying Theme
Portfolio could be adversely affected by delays in, or a refusal to grant, any
required governmental approval for repatriation, as well as by the application
to it of other restrictions on investments.
NON-UNIFORM CORPORATE DISCLOSURE STANDARDS AND GOVERNMENTAL REGULATION. Foreign
companies are subject to accounting, auditing and financial standards and
requirements that differ, in some cases significantly, from those applicable to
U.S. companies. In particular, the assets, liabilities and profits appearing on
the financial statements of such a company may not reflect its financial
position or results of operations in the way they would be reflected had such
financial statements been prepared in accordance with U.S. generally accepted
accounting principles. Most of the securities held by an Underlying Theme
Portfolio will not be registered with the SEC or regulators of any foreign
country, nor will the issuers thereof be subject to the SEC's reporting
requirements. Thus, there will be less available information concerning most
foreign issuers of securities held by an Underlying Theme Portfolio than is
available concerning U.S. issuers. In instances where the financial statements
of an issuer are not deemed to reflect accurately the financial situation of the
issuer, the Manager will take appropriate steps to evaluate the proposed
investment, which may include on-site inspection of the issuer, interviews with
its management and consultations with accountants, bankers and other
specialists. There is substantially less publicly available information about
foreign companies than there are reports and ratings published about U.S.
companies and the U.S. government. In addition, where public information is
available, it may be less reliable than such information regarding U.S. issuers.
Issuers of securities in foreign jurisdictions are generally not subject to the
same degree of regulation as are U.S. issuers with respect to such matters as
restrictions on market manipulation, insider trading rules, shareholder proxy
requirements and timely disclosure of information.
CURRENCY FLUCTUATIONS. Because each Underlying Theme Portfolio, under normal
circumstances, will invest a substantial portion of its total assets in the
securities of foreign issuers that are denominated in foreign currencies, the
strength or weakness of the U.S. dollar against such foreign currencies will
account for part of an Underlying Theme Portfolio's investment performance. A
decline in the value of any particular currency against the U.S. dollar will
cause a decline in the U.S. dollar value of an Underlying Theme Portfolio's
holdings of securities and cash denominated in that currency and, therefore,
will cause an overall decline in its or its corresponding Feeder Fund's net
asset value and any net investment income and capital gains derived from such
securities to be distributed in U.S. dollars to the shareholders thereof.
Moreover, if the value of the foreign currencies in which an Underlying Theme
Portfolio receives its income falls relative to the U.S. dollar between receipt
of the income and the making of distributions, the Underlying Theme Portfolio
may be required to liquidate securities if it has insufficient cash in U.S.
dollars to meet distribution requirements.
The rate of exchange between the U.S. dollar and other currencies is determined
by several factors, including the supply and demand for particular currencies,
central bank efforts to support particular currencies, the relative movement of
interest rates, and pace of business activity in the other countries and the
United States, and other economic and financial conditions affecting the world
economy.
Although each Underlying Theme Portfolio values its assets daily in terms of
U.S. dollars, the Underlying Theme Portfolios do not intend to convert their
holdings of foreign currencies into U.S. dollars on a daily basis. Each
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Underlying Theme Portfolio will do so, from time to time, and investors should
be aware of the costs of currency conversion. Although foreign exchange dealers
do not charge a fee for conversion, they do realize a profit based on the
difference ("spread") between the prices at which they buy and sell various
currencies. Thus, a dealer may offer to sell a foreign currency to an Underlying
Theme Portfolio at one rate, while offering a lesser rate of exchange should an
Underlying Theme Portfolio desire to sell that currency to the dealer.
ADVERSE MARKET CHARACTERISTICS. Securities of many foreign issuers may be less
liquid and their prices more volatile than securities of comparable U.S.
issuers. In addition, foreign securities markets and brokers generally are
subject to less governmental supervision and regulation than in the United
States, and foreign securities transactions usually are subject to fixed
commissions, which generally are higher than negotiated commissions on U.S.
transactions. In addition, foreign securities transactions may be subject to
difficulties associated with the settlement of such transactions. Delays in
settlement could result in temporary periods when assets of an Underlying Theme
Portfolio are uninvested and no return is earned thereon. The inability of an
Underlying Theme Portfolio to make intended security purchases due to settlement
problems could cause it to miss attractive investment opportunities. Inability
to dispose of a portfolio security due to settlement problems either could
result in losses to an Underlying Theme Portfolio due to subsequent declines in
value of the portfolio security or, if that Underlying Theme Portfolio has
entered into a contract to sell the security, could result in possible liability
to the purchaser. The Manager will consider such difficulties when determining
the allocation of an Underlying Theme Portfolio's assets, although the Manager
does not believe that such difficulties will have a material adverse effect on
an Underlying Theme Portfolio's portfolio trading activities.
Each Underlying Theme Portfolio may use foreign custodians, which may involve
risks in addition to those related to its use of U.S. custodians. Such risks
include uncertainties relating to (1) determining and monitoring the foreign
custodian's financial strength, reputation and standing, (2) maintaining
appropriate safeguards concerning an Underlying Theme Portfolio's investments,
and (3) possible difficulties in obtaining and enforcing judgments against such
custodians.
WITHHOLDING TAXES. Each Underlying Theme Portfolio's net investment income from
securities of foreign issuers may be subject to withholding taxes by the foreign
issuer's country, thereby reducing that income or delaying the receipt of income
when those taxes may be recaptured.
CONCENTRATION. To the extent an Underlying Theme Portfolio invests a significant
portion of its assets in securities of issuers located in a particular country
or region of the world, it may be subject to greater risks and may experience
greater volatility than a fund that is more broadly diversified geographically.
SPECIAL CONSIDERATIONS AFFECTING WESTERN EUROPEAN COUNTRIES. The countries that
are members of the European Economic Community ("Common Market") (Belgium,
Denmark, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands,
Portugal, Spain, and the United Kingdom) eliminated certain import tariffs and
quotas and other trade barriers with respect to one another over the past
several years. The Manager believes that this deregulation should improve the
prospects for economic growth in many Western European countries. Among other
things, the deregulation could enable companies domiciled in one country to
avail themselves of lower labor costs existing in other countries. In addition,
this deregulation could benefit companies domiciled in one country by opening
additional markets for their goods and services in other countries. Since,
however, it is not clear what the exact form or effect of these Common Market
reforms will be on business in Western Europe, it is impossible to predict the
long-term impact of the implementation of these programs on the securities owned
by an Underlying Theme Portfolio.
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SPECIAL CONSIDERATIONS AFFECTING RUSSIA AND EASTERN EUROPEAN COUNTRIES.
Investing in Russia and Eastern European countries involves a high degree of
risk and special considerations not typically associated with investing in the
U.S. securities markets and should be considered highly speculative. Such risks
include the following: (1) delays in settling portfolio transactions and risk of
loss arising out of the system of share registration and custody; (2) the risk
that it may be impossible or more difficult than in other countries to obtain
and/or enforce a judgment; (3) pervasiveness of corruption and crime in the
economic system; (4) currency exchange rate volatility and the lack of available
currency hedging instruments; (5) higher rates of inflation (including the risk
of social unrest associated with periods of hyper-inflation) and high
unemployment; (6) controls on foreign investment and local practices disfavoring
foreign investors and limitations on repatriation of invested capital, profits
and dividends, and on a fund's ability to exchange local currencies for U.S.
dollars; (7) political instability and social unrest and violence; (8) the risk
that the governments of Russia and Eastern European countries may decide not to
continue to support the economic reform programs implemented recently and could
follow radically different political and/or economic policies to the detriment
of investors, including non-market-oriented policies such as the support of
certain industries at the expense of other sectors or investors, or a return to
the centrally planned economy that existed when such countries had a communist
form of government; (9) the financial condition of companies in these countries,
including large amounts of inter-company debt which may create a payments crisis
on a national scale; (10) dependency on exports and the corresponding importance
of international trade; (11) the risk that the tax system in these countries
will not be reformed to prevent inconsistent, retroactive and/or exorbitant
taxation; and (12) the underdeveloped nature of the securities markets.
SPECIAL CONSIDERATIONS AFFECTING JAPAN. Japan's economic growth has declined
significantly since 1990. The general government position has deteriorated as a
result of weakening economic growth and stimulative measures taken to support
economic activity and to restore financial stability. Although the decline in
interest rates and fiscal stimulation packages have helped to contain
recessionary forces, uncertainties remain. Japan is also heavily dependent upon
international trade, so its economy is especially sensitive to trade barriers
and disputes. Japan has had difficult relations with its trading partners,
particularly the United States, where the trade imbalance is the greatest. It is
possible that trade sanctions and other protectionist measures could impact
Japan adversely in both the short and the long term.
The common stocks of many Japanese companies trade at high price-earnings
ratios. Differences in accounting methods make it difficult to compare the
earnings of Japanese companies with those of companies in other countries,
especially the United States. In general, however, reported net income in Japan
is understated relative to U.S. accounting standards and this is one reason why
price-earnings ratios of the stocks of Japanese companies have tended
historically to be higher than those for U.S. stocks. In addition, Japanese
companies have tended to have higher growth rates than U.S. companies and
Japanese interest rates have generally been lower than in the United States,
both of which factors tend to result in lower discount rates and higher
price-earnings ratios in Japan than in the United States.
The Japanese securities markets are less regulated than those in the United
States. Evidence has emerged from time to time of distortion of market prices to
serve political or other purposes. Shareholders' rights are not always equally
enforced. In addition, Japan's banking industry is undergoing problems related
to bad loans and declining values in real estate.
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SPECIAL CONSIDERATIONS AFFECTING PACIFIC REGION COUNTRIES. Certain of the risks
associated with international investments are heightened for investments in
Pacific region countries. For example, some of the currencies of Pacific region
countries have experienced steady devaluations relative to the U.S. dollar, and
major adjustments have been made periodically in certain of such currencies.
Certain countries, such as India, face serious exchange constraints.
Jurisdictional disputes also exist between South Korea and North Korea. In
addition, some Underlying Theme Portfolios intend to invest in Hong Kong, which
reverted to Chinese administration on July 1, 1997. Investments in Hong Kong may
be subject to expropriation, nationalization or confiscation, in which case an
Underlying Theme Portfolio could lose its entire investment in Hong Kong. In
addition, the reversion of Hong Kong also presents a risk that the Hong Kong
dollar will be devalued and a risk of possible loss of investor confidence in
Hong Kong's currency, stock market and assets.
SPECIAL CONSIDERATIONS AFFECTING LATIN AMERICAN COUNTRIES. Most Latin American
countries have experienced substantial, and in some periods extremely high,
rates of inflation for many years. Inflation and rapid fluctuations in inflation
rates have had and may continue to have very negative effects on the economies
and securities markets of certain Latin American countries. Certain Latin
American countries are also among the largest debtors to commercial banks and
foreign governments. At times certain Latin American countries have declared
moratoria on the payment of principal and/or interest on external debt. In
addition, certain Latin American securities markets have experienced high
volatility in recent years.
Latin American countries may also close certain sectors of their economies to
equity investments by foreigners. Further due to the absence of securities
markets and publicly owned corporations and due to restrictions on direct
investment by foreign entities, investments may only be made in certain Latin
American countries solely or primarily through governmentally approved
investment vehicles or companies.
Certain Latin American countries may have managed currencies that are maintained
at artificial levels to the U.S. dollar rather than at levels determined by the
market. This type of system can lead to sudden and large adjustments in the
currency which, in turn, can have a disruptive and negative effect on foreign
investors. For example, in late 1994, the value of the Mexican peso lost more
than one-third of its value relative to the U.S.
dollar.
SPECIAL CONSIDERATIONS AFFECTING EMERGING MARKETS. Investing in the securities
of companies in emerging markets may entail special risks relating to potential
political and economic instability and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment, convertibility of currencies into U.S. dollars and on repatriation
of capital invested. In the event of such expropriation, nationalization or
other confiscation by any country, an Underlying Theme Portfolio could lose its
entire investment in any such country.
Emerging securities markets are substantially smaller, less developed, less
liquid and more volatile than the major securities markets. The limited size of
emerging securities markets and limited trading value in issuers compared to the
volume of trading in U.S. securities could cause prices to be erratic for
reasons apart from factors that affect the quality of the securities. For
example, limited market size may cause prices to be unduly influenced by traders
who control large positions. Adverse publicity and investors' perceptions,
whether or not based on fundamental analysis, may decrease the value and
liquidity of portfolio securities, especially in these markets. In addition,
securities traded in certain emerging markets may be subject to risks due to the
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inexperience of financial intermediaries, a lack of modern technology, the lack
of a sufficient capital base to expand business operations, and the possibility
of permanent or temporary termination of trading.
Settlement mechanisms in emerging securities markets may be less efficient and
reliable than in more developed markets. In such emerging securities there may
be share registration and delivery delays or failures.
Many emerging market countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates and corresponding currency devaluations have had
and may continue to have negative effects on the economies and securities
markets of certain emerging market countries.
PRIVATIZATIONS. The governments of some foreign countries have been engaged in
programs of selling part or all of their stakes in government owned or
controlled enterprises ("privatizations"). The Manager believes that
privatizations may offer opportunities for significant capital appreciation and
intends to invest assets of the Underlying Theme Portfolios in privatizations in
appropriate circumstances. In certain foreign countries, the ability of foreign
entities such as the Underlying Theme Portfolios to participate in
privatizations may be limited by local law, or the terms on which the Underlying
Theme Portfolios may be permitted to participate may be less advantageous than
those for local investors. There can be no assurance that foreign governments
will continue to sell companies currently owned or controlled by them or that
privatization programs will be successful.
ADDITIONAL INFORMATION
The prospectus and the statement of additional information of the Underlying
Theme Funds contains more detailed information about this organizational
structure of the Feeder Funds and their corresponding Portfolios, including
information related to the following: (i) the investment objective, policies and
restrictions of the Underlying Theme Funds and the Portfolios; (ii) the
Directors and officers of the Company, the Trustees and officers of Global
Investment Portfolio, the administrator of the Underlying Theme Funds and the
investment manager and administrator of the Portfolios; (iii) portfolio
transactions and brokerage commissions; (iv) the Underlying Theme Funds' shares,
including the rights and liabilities of their shareholders; (v) additional
performance information, including the method used to calculate yield and total
return; and (vi) the determination of the value of the shares of such Funds.
INVESTMENT LIMITATIONS
INVESTMENT LIMITATIONS OF THE FUND
FUNDAMENTAL LIMITATIONS. The following fundamental limitations of the Fund
cannot be changed without the affirmative vote of the lesser of (i) 67% of the
Fund's shares represented at a meeting at which more than 50% of the outstanding
shares are represented or (ii) more than 50% of the outstanding shares
("Required Vote"). If a percentage restriction is adhered to at the time of an
investment or transaction, a later increase or decrease in percentage resulting
from a change in values or Underlying Theme Fund securities or amount of total
assets will not be considered a violation of any of the following limitations.
The Fund will not:
(1) issue senior securities or borrow money, except as permitted under the 1940
Act and then not in excess of 33 1/3% of the Fund's total assets (including
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the amount of the senior securities issued but reduced by any liabilities
not constituting senior securities) at the time of the issuance or
borrowing, except that the Fund may borrow up to an additional 5% of its
total assets (not including the amount borrowed) for temporary or emergency
purposes;
(2) make loans, except through loans of portfolio securities or through
repurchase agreements, provided that for purposes of this restriction, the
acquisition of bonds, debentures, other debt securities or instruments, or
participations or other interests therein and investments in government
obligations, commercial paper, certificates of deposit, bankers'
acceptances or similar instruments will not be considered the making of a
loan;
(3) engage in the business of underwriting securities of other issuers, except
to the extent that the Fund might be considered an underwriter under the
federal securities laws in connection with its disposition of portfolio
securities;
(4) purchase or sell real estate, except that investments in securities of
issuers that invest in real estate and investments in mortgage-backed
securities, mortgage participations or other instruments supported by
interests in real estate are not subject to this limitation, and except
that the Fund may exercise rights under agreements relating to such
securities, including the right to enforce security interests and to hold
real estate acquired by reason of such enforcement until that real estate
can be liquidated in an orderly manner; or
(5) purchase or sell physical commodities unless acquired as a result of owning
securities or other instruments, but the Fund may purchase, sell or enter
into financial options and futures, forward and spot currency contracts,
swap transactions and other financial contracts or derivative instruments.
Because of its investment objective and policies, the Fund will concentrate more
than 25% of its assets in the mutual fund industry. In accordance with the
Fund's investment program set forth in the Prospectus, the Fund may invest more
than 25% of its assets in the Underlying Theme Funds. However, each Underlying
Theme Portfolio will not concentrate more than 25% of its total assets in any
one industry. In addition, the Fund has adopted as a fundamental investment
policy the classification as a "diversified" fund under the 1940 Act, which
means that, with respect to 75% of its total assets, it will invest no more than
5% of its assets in the securities of any one issuer, and it will purchase no
more than 10% of the outstanding voting securities of any one issuer. The
foregoing limitations, however, shall not apply to U.S. government securities
and to securities issued by open-end investment companies.
NON-FUNDAMENTAL LIMITATIONS. The following investment limitations of the Fund
are non-fundamental and may be changed by the vote of the Trust's Board of
Trustees without shareholder approval.
The Fund will not:
(1) invest more than 15% of its net assets in illiquid securities, a term which
means securities that cannot be disposed of within seven days in the
ordinary course of business at approximately the amount at which the Fund
has valued the securities and includes, among other things, repurchase
agreements maturing in more than seven days;
(2) purchase portfolio securities while borrowings in excess of 5% of its total
assets are outstanding;
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(3) purchase securities on margin, except for short-term credit necessary for
clearance of portfolio transactions and except that the Fund may make
margin deposits in connection with its use of financial options and
futures, forward and spot currency contracts, swap transactions and other
financial contract or derivative instruments;
(4) engage in short sales of securities or maintain a short position, except
that the Fund may (a) sell short "against the box" and (b) maintain short
positions in connection with its use of financial options an futures,
forward and spot currency contracts, swap transactions and other financial
contracts or derivative instruments; or
(5) purchase securities of other investment companies, except to the extent
permitted by the 1940 Act or under the terms of any exemptive order granted
by the SEC and except that this limitation does not apply to securities
received or acquired as dividends, through offers of exchange, or as a
result of reorganization, consolidation, or merger.
Notwithstanding the forgoing investment limitations, the Fund may invest in
Underlying Theme Funds that have adopted investment limitations that may be more
or less restrictive than those listed above. As a result, the Fund may engage
indirectly in investment strategies that are prohibited under the investment
limitations listed above. The investment limitations and other investment
policies and restrictions of each Underlying Theme Fund are described in its
prospectus and statement of additional information.
Under Section 12(d)(1)(G) of the 1940 Act, the Fund may invest substantially all
of its assets in the Underlying Theme Funds.
INVESTMENT LIMITATIONS OF THE UNDERLYING THEME FUNDS AND PORTFOLIOS
FEEDER FUNDS
The Consumer Products and Services Fund, Financial Services Fund, Infrastructure
Fund and Natural Resources Fund each has the following fundamental investment
policy to enable it to invest in the Consumer Products and Services Portfolio,
Financial Services Portfolio, Infrastructure Portfolio and Natural Resources
Portfolio, respectively:
Notwithstanding any other investment policy of the Fund, the Fund may
invest all of its investable assets (cash, securities and receivables
related to securities) in an open-end management investment company
having substantially the same investment objective, policies and
limitations as the Fund.
All other fundamental investment policies, and the non-fundamental investment
policies, of each Feeder Fund and its corresponding Portfolio are identical.
Therefore, although the following discusses the investment policies of each
Portfolio and Global Investment Portfolio's Board of Trustees, it applies
equally to each Feeder Fund and the Company's Board of Directors.
Each Portfolio has adopted the following investment limitations as fundamental
policies that (unless otherwise noted) may not be changed without a Required
Vote. Whenever a Feeder Fund is requested to vote on a change in the investment
limitations of its corresponding Portfolio, that Feeder Fund will hold a meeting
of its shareholders and will cast its votes as instructed by its shareholders.
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Each Portfolio may not:
(1) Buy or sell real estate (including real estate limited partnerships);
however, each Portfolio may invest in debt securities secured by real
estate or interests therein or issued by companies which invest in real
estate or interests therein, including real estate investment trusts;
(2) Buy or sell commodities or commodity contracts, except that each Portfolio
may purchase and sell financial and currency futures contracts and options
thereon, and may purchase and sell currency forward contracts, options on
foreign currencies and may otherwise engage in other transactions in
foreign currencies;
(3) Underwrite securities of other issuers, except to the extent that the
disposition of an investment position may technically cause it to be
considered an underwriter as that term is defined under the 1933 Act;
(4) Make loans, except that each Portfolio may purchase debt securities and
enter into repurchase agreements and may make loans of portfolio
securities;
(5) Purchase securities on margin, provided that each Portfolio may obtain such
short-term credits as may be necessary for the clearance of purchases and
sales of securities; except that it may make margin deposits in connection
with futures contracts;
(6) Borrow money except from banks not in excess of 331/3% of the value of each
Portfolio's total assets, (including the amount borrowed), less all
liabilities and indebtedness (other than the borrowing). This restriction
shall not prevent any Portfolio from entering into reverse repurchase
agreements, provided that reverse repurchase agreements, and any other
transactions constituting borrowing by a Portfolio may not exceed one-third
of that Portfolio's total assets. Transactions involving options, futures
contracts, options on futures contracts and forward currency contracts, as
described in the Prospectus and this Statement of Additional Information,
and collateral arrangements relating thereto will not be deemed to be
borrowings;
(7) Mortgage, pledge, or hypothecate any of its assets, provided that this
restriction shall not apply to the transfer of securities in connection
with any permissible borrowing or to collateral arrangements in connection
with permissible activities; or
(8) Invest in direct interests or leases in oil, gas, or other mineral
exploration or development programs; however, each Portfolio may invest in
the securities of companies that engage in these activities.
In addition, each Portfolio has adopted as a fundamental investment policy a
classification as a "diversified" portfolio under the 1940 Act. This means that,
with respect to 75% of a Portfolio's total assets, no more than 5% will be
invested in the securities of any one issuer, and the Portfolio will purchase no
more than 10% of the outstanding voting securities of any one issuer. This
policy cannot be changed without a Required Vote.
The following investment policies of each Portfolio are not fundamental policies
and may be changed by vote of Global Investment Portfolio's Board of Trustees
without shareholder approval.
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No Portfolio may:
(1) Invest in securities of an issuer if the investment would cause the
Portfolio to own more than 10% of any class of securities of any one
issuer;
(2) Invest in companies for the purpose of exercising control or management;
(3) Invest more than 15% of its net assets in illiquid securities, including
securities that are illiquid by virtue of the absence of a readily
available market;
(4) Invest more than 5% of its total assets in securities of companies having,
together with their predecessors, a record of less than three years of
continuous operation;
(5) Purchase or retain the securities of any issuer, if those individual
officers and Trustees of the Portfolio, the Portfolio's investment adviser,
or distributor, each owning beneficially more than 1/2 of 1% of the
securities of such issuer, together own more than 5% of the securities of
such issuer;
(6) Enter into a futures contract, an option on a futures contract, or an
option on foreign currency traded on a CFTC-regulated exchange, in each
case other than for BONA FIDE hedging purposes (as defined by the CFTC), if
the aggregate initial margin and premiums required to establish all of
those positions (excluding the amount by which options are "in-the-money")
exceeds 5% of the liquidation value of the Portfolio's portfolio, after
taking into account unrealized profits and unrealized losses on any
contracts the Portfolio has entered into;
(7) Borrow money except for temporary or emergency purposes (not for
leveraging) in excess of 331/3% of the value of the Portfolio's total
assets (while borrowings exceed 5% of the Infrastructure Portfolio's and
Natural Resources Portfolio's total assets, such Portfolio will not make
any additional investments); and
(8) Invest more than 10% of its total assets in shares of other investment
companies and may not invest more than 5% of its total assets in any one
investment company or acquire more than 3% of the outstanding voting
securities of any one investment company.
Investors should refer to the Underlying Theme Funds' prospectus for further
information with respect to the investment objective of each Feeder Fund, which
may not be changed without the approval of its shareholders, and its
corresponding Portfolio's investment objective, which may be changed without the
approval of its interestholders, and other investment policies, techniques and
limitations, which may or may not be changed without interestholder approval.
HEALTH CARE FUND
The Health Care Fund has adopted the following investment limitations as
fundamental policies, which (unless otherwise noted) may not be changed without
a Required Vote.
The Health Care Fund may not:
(1) Invest more than 10% of its total assets in securities which cannot be
readily resold to the public because of legal or contractual restrictions
or for which no readily available market exists, which for this purpose
includes repurchase agreements maturing in more than seven days;
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(2) Invest in companies for the purpose of exercising control or management;
(3) Purchase or sell real estate; provided that the Health Care Fund may invest
in securities secured by real estate or interests therein or issued by
companies that invest in real estate or interests therein;
(4) Purchase securities on margin or make short sales, except for short-term
credits necessary for clearance of portfolio transactions, and except that
the Health Care Fund may make short sales and maintain short positions and
may make margin deposits in connection with its use of options, futures
contracts and options on futures contracts;
(5) Underwrite securities of other issuers, except to the extent that, in
connection with the disposition of portfolio securities, the Health Care
Fund may be deemed to be an underwriter under federal securities laws;
(6) Make loans, except through loans of portfolio securities as authorized by
the Health Care Fund's prospectus and except through repurchase agreements,
provided that for purposes of this limitation the acquisition of portfolio
securities consistent with the Health Care Fund's investment objective and
policies shall not be deemed to be the making of a loan;
(7) Purchase or sell commodities or commodity contracts, except that consistent
with the Health Care Fund's investment objective and policies it may use
financial and currency futures instruments and options thereon for hedging
purposes;
(8) Issue senior securities, except that for purposes of this limitation the
Health Care Fund may borrow money in such amounts and in such fashion as is
permitted under the 1940 Act and the rules thereunder;
(9) Mortgage, pledge or hypothecate or in any manner transfer, as security for
indebtedness, any securities owned or held by the Health Care Fund, except
as may be necessary in connection with permitted borrowings; provided,
however, that this does not prohibit escrow, collateral or margin
arrangements in connection with its use of options, futures contracts and
options on futures contracts;
(10) Invest in oil, gas or mineral-related programs or leases; or
(11) Purchase any security if as a result more than 5% of the Health Care Fund's
total assets would be invested in securities of companies which together
with any predecessors have been in operation for less than three years.
In addition, the Health Care Fund has adopted as a fundamental investment policy
the classification as a "diversified" fund under the 1940 Act, which means that,
with respect to 75% of its total assets, no more than 5% will be invested in the
securities of any one issuer, and it will purchase no more than 10% of the
outstanding voting securities of any one issuer. This policy cannot be changed
without a Required Vote.
Investors should refer to the Underlying Theme Funds' prospectus for further
information with respect to the Health Care Fund's investment objective, which
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may not be changed without the a Required Vote, and other investment policies,
techniques and limitations, which may be changed without shareholder approval.
TELECOMMUNICATIONS FUND
The Telecommunications Fund has adopted the following investment limitations as
fundamental policies, which (unless otherwise noted) may not be changed without
a Required Vote.
The Telecommunications Fund may not:
(1) Buy or sell real estate (including real estate limited partnerships);
however, the Telecommunications Fund may invest in debt securities secured
by real estate or interests therein or issued by companies which invest in
real estate or interests therein, including real estate investment trusts;
(2) Purchase or sell commodities or commodity contracts, except that the
Telecommunications Fund may purchase and sell financial and currency
futures contracts and options thereon, and may purchase and sell currency
forward contracts, options on foreign currencies and may otherwise engage
in other transactions in foreign currencies;
(3) Engage in the business of underwriting securities of other issuers, except
to the extent that the disposition of an investment position may
technically cause it to be considered an underwriter as that term is
defined under the 1933 Act;
(4) Make loans, except that the Telecommunications Fund may purchase debt
securities and enter into repurchase agreements and may make loans of
portfolio securities;
(5) Purchase securities on margin, provided that the Telecommunications Fund
may obtain such short-term credits as may be necessary for the clearance of
purchases and sales of securities; except that it may make margin deposits
in connection with futures contracts;
(6) Borrow money except from banks not in excess of 33-1/3% of the value of the
Telecommunications Fund's total assets, including the amount borrowed, less
all liabilities and indebtedness (other than the borrowing). This
restriction shall not prevent the Telecommunications Fund from entering
into reverse repurchase agreements, provided that reverse repurchase
agreements, and any other transactions constituting borrowing by it may not
exceed one-third of its total assets. Transactions involving options,
futures contracts, options on futures contracts and forward currency
contracts, as described in the Prospectus and this Statement of Additional
Information, and collateral arrangements relating thereto will not be
deemed to be borrowings;
(7) Mortgage, pledge, or hypothecate any of its assets, provided that this
restriction shall not apply to the transfer of securities in connection
with any permissible borrowing or to collateral arrangements in connection
with permissible activities; or
(8) Invest in direct interests or leases in oil, gas, or other mineral
exploration or development programs; however, the Telecommunications Fund
may invest in the securities of companies that engage in these activities.
In addition, the Telecommunications Fund has adopted as a fundamental investment
policy the classification as a "diversified" fund under the 1940 Act, which
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means that, with respect to 75% of its total assets, no more than 5% will be
invested in the securities of any one issuer, and it will purchase no more than
10% of the outstanding voting securities of any one issuer. This policy cannot
be changed without a Required Vote.
The following operating policies of the Telecommunications Fund are not
fundamental policies and may be changed by vote of the Company's Board of
Directors without shareholder approval.
The Telecommunications Fund may not:
(1) Invest in securities of an issuer if the investment would cause the
Telecommunications Fund to own more than 10% of any class of securities of
any one issuer;
(2) Invest in companies for the purpose of exercising control or management;
(3) Invest more than 15% of its net assets in illiquid securities, including
securities that are illiquid by virtue of the absence of a readily
available market;
(4) Invest more than 5% of its total assets in securities of companies having,
together with their predecessors, a record of less than three years of
continuous operation;
(5) Purchase or retain the securities of any issuer, if those individual
officers and Directors of the Company, the Telecommunications Fund's
investment adviser, or distributor, each owning beneficially more than 1/2
of 1% of the securities of such issuer, together own more than 5% of the
securities of such issuer;
(6) Enter into a futures contract, an option on a futures contract, or an
option on foreign currency traded on a CFTC-regulated exchange, in each
case other than for BONA FIDE hedging purposes (as defined by the CFTC), if
the aggregate initial margin and premiums required to establish all of
those positions (excluding the amount by which options are "in-the-money")
exceeds 5% of the liquidation value of the Telecommunications Fund's
portfolio, after taking into account unrealized profits and unrealized
losses on any contracts the Telecommunications Fund has entered into; or
(7) Borrow money except for temporary or emergency purposes (not for
leveraging) not in excess of 33 1/3% of the value of the Telecommunications
Fund's total assets. While borrowings exceed 5% of the Telecommunications
Fund's total assets, the Telecommunications Fund will not make any
additional investments.
The Telecommunications Fund has the authority to invest up to 10% of its total
assets in shares of other investment companies and in real estate investment
trusts. The Telecommunications Fund may not invest more than 5% of its total
assets in any one investment company or acquire more than 3% of the outstanding
voting securities of any one investment company.
Investors should refer to the Underlying Theme Funds' prospectus for further
information with respect to the Telecommunications Fund's investment objective,
which may not be changed without a Required Vote, and other investment policies,
techniques and limitations, which may be changed without shareholder approval.
If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
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considered a violation of the Underlying Theme Portfolio's investment policies
or restrictions. An Underlying Theme Portfolio may exchange securities, exercise
conversion or subscription rights, warrants or other rights to purchase common
stock or other equity securities and may hold, except to the extent limited by
the 1940 Act, any such securities so acquired without regard to the Underlying
Theme Portfolio's investment policies and restrictions. The original cost of the
securities so acquired will be included in any subsequent determination of the
Underlying Theme Portfolio's compliance with the investment percentage
limitations referred to above and in the Prospectus.
EXECUTION OF PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities for the Fund
(normally shares of the Underlying Theme Funds) are placed on behalf of the Fund
by the Manager. As stated in the Prospectus, the Manager will exercise no
discretion in investing the assets of the Fund other than to make investments in
money market instruments and to rebalance the percentage of the Fund's assets in
each Underlying Theme Fund.
Subject to policies established by the applicable Board, the Manager is
responsible for the execution of each Underlying Theme Portfolio's securities
transactions and the selection of broker/dealers who execute such transactions
on behalf of each Underlying Theme Portfolio. In executing transactions, the
Manager seeks the best net results for each Underlying Theme Portfolio, taking
into account such factors as the price (including the applicable brokerage
commission or dealer spread), size of the order, difficulty of execution and
operational facilities of the firm involved. Although the Manager generally
seeks reasonably competitive commission rates and spreads, payment of the lowest
commission or spread is not necessarily consistent with the best net results.
While each Underlying Theme Portfolio may engage in soft dollar arrangements for
research services, as described below, it has no obligation to deal with any
broker/dealer or group of broker/dealers in the execution of portfolio
transactions.
Consistent with the interests of each Underlying Theme Portfolio, the Manager
may select broker/dealers to execute that Underlying Theme Portfolio's portfolio
transaction on the basis of the research and brokerage services they provide to
the Manager for its use in managing that Underlying Theme Portfolio and its
other advisory accounts. Such services may include furnishing analyses, reports
and information concerning issuers, industries, securities, geographic regions,
economic factors and trends, portfolio strategy, and performance of accounts;
and effecting securities transactions and performing functions incidental
thereto (such as clearance and settlement). Research and brokerage services
received from such broker is in addition to, and not in lieu of, the services
required to be performed by the Manager under the applicable Investment
Management and Administration Contract (defined below). A commission paid to
such broker may be higher than that which another qualified broker would have
charged for effecting the same transaction, provided that the Manager determines
in good faith that such commission is reasonable in terms either of that
particular transaction or the overall responsibility of the Manager to the
Underlying Theme Portfolio and its other clients and that the total commissions
paid by that Underlying Theme Portfolio will be reasonable in relation to the
benefits it receive over the long term. Research services may also be received
from dealers who execute portfolio transactions in OTC markets.
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The Manager may allocate brokerage transactions to broker/dealers who have
entered into arrangements under which the broker/dealer allocates a portion of
the commissions paid by an Underlying Theme Portfolio toward payment of its
expenses, such as custodian fees.
Investment decisions for an Underlying Theme Portfolio and for other investment
accounts managed by the Manager are made independently of each other in light of
differing conditions. However, the same investment decision occasionally may be
made for two or more of such accounts, including an Underlying Theme Portfolio.
In such cases, simultaneous transactions may occur. Purchases or sales are then
allocated as to price or amount in a manner deemed fair and equitable to all
accounts involved. While in some cases this practice could have a detrimental
effect upon the price or value of the security as far as an Underlying Theme
Portfolio is concerned, in other cases the Manager believes that coordination
and the ability to participate in volume transactions will be beneficial to that
Underlying Theme Portfolio.
Under a policy adopted by the applicable Board, and subject to the policy of
obtaining the best net results, the Manager may consider a broker/dealer's sale
of the shares of the Underlying Theme Funds and the other portfolios for which
the Manager serves as investment manager or administrator in selecting
broker/dealers for the execution of portfolio transactions. This policy does not
imply a commitment to execute portfolio transactions through all broker/dealers
that sell shares of the Underlying Theme Funds and such other portfolios.
Each Underlying Theme Portfolio contemplates purchasing most foreign equity
securities in OTC markets or stock exchanges located in the countries in which
the respective principal offices of the issuers of the various securities are
located, if that is the best available market. The fixed commissions paid in
connection with most such foreign stock transactions generally are higher than
negotiated commissions on U.S. transactions. There generally is less government
supervision and regulation of foreign stock exchanges and brokers than in the
United States. Foreign security settlements may in some instances be subject to
delays and related administrative uncertainties.
Foreign equity securities may be held by an Underlying Theme Portfolio in the
form of ADRs, ADSs, EDRs, CDRs or securities convertible into foreign equity
securities. ADRs, ADSs, EDRs and CDRs may be listed on stock exchanges, or
traded in the OTC markets in the United States or Europe, as the case may be.
ADRs, like other securities traded in the United States, will be subject to
negotiated commission rates. The foreign and domestic debt securities and money
market instruments in which an Underlying Theme Portfolio may invest are
generally traded in the OTC markets.
An Underlying Theme Portfolio does not have any obligation to deal with any
broker/dealer or group of broker/dealers in the execution of securities
transactions. Each Underlying Theme Portfolio contemplates that, consistent with
the policy of obtaining the best net results, brokerage transactions may be
conducted through certain companies that are members of Liechtenstein Global
Trust. Both Boards have adopted procedures in conformity with Rule 17e-1 under
the 1940 Act to ensure that all brokerage commissions paid to such affiliates
are reasonable and fair in the context of the market in which they are
operating. Any such transactions will be effected and related compensation paid
only in accordance with applicable SEC regulations.
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PORTFOLIO TRADING AND TURNOVER
The Fund's portfolio turnover rate is expected to be low, since the Fund will
only periodically rebalance its portfolio. The Fund's annual portfolio turnover
rate is not expected to exceed 20% annually.
The portfolio turnover rates of the Underlying Theme Portfolios have ranged from
37% to 169% during their most recent fiscal years. There can be no assurance
that the portfolio turnover rates of the Underlying Theme Portfolios will remain
within this range during subsequent fiscal years. Higher portfolio turnover
rates may result in higher expenses being incurred by the Underlying Theme
Portfolios.
TRUSTEES AND EXECUTIVE OFFICERS
The Trust's Trustees and Executive Officers are listed below.
Name, Position(s) with the Principal Occupations and Business
Trust and Address Experience for the Past 5 Years
----------------- -------------------------------
William J. Guilfoyle*, 39 President, GT Global since 1995; Director GT
Trustee, Chairman of the Global since 1991; Senior Vice and Director
Board and President of Sales and Marketing, GT Global from May
50 California Street President 1992 to April 1995; Vice President
San Francisco, CA 94111 and Director of Marketing, GT Global from
1987 to 1992; Director, Liechtenstein Global
Trust AG (holding company of the various
international LGT companies) Advisory Board
since January 1996; Director, G.T. Global
Insurance Agency ("G.T. Insurance") since
1996; President and Chief Executive Officer,
G.T. Insurance since 1995; Senior Vice
President and Director, Sales and Marketing,
G.T. Insurance from April 1995 to November
1995; Senior Vice President, Retail
Marketing, G.T. Insurance from 1992 to 1993.
Mr. Guilfoyle is also a director or trustee
of each of the other investment companies
registered under the 1940 Act that is managed
or administered by Chancellor LGT Asset
Management, Inc. ("Chancellor LGT").
- -----------------
* Mr. Guilfoyle and Mr. Wade are "interested persons" of the Trust as defined
by the 1940 Act due to their affiliation with the LGT companies.
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C. Derek Anderson, 56 President, Plantagenet Capital Management,
Trustee LLC (an investment partnership); Chief
220 Sansome Street Executive Officer, Plantagenet Holdings, Ltd.
Suite 400 (an investment banking firm); Director,
San Francisco, CA 94104 Anderson Capital Management, Inc., since
1988; Chief Executive Officer, Anderson
Capital Management, Inc., from 1991 to July
1997; Director, Premium Wear, Inc. (formerly
Munsingwear, Inc.) (a casual apparel
company), and Director, "R" Homes, Inc. and
various other companies. Mr. Anderson is also
a director or trustee of each of the other
investment companies registered under the
1940 Act that is managed or administered by
Chancellor LGT.
Frank S. Bayley, 58 Partner with Baker & McKenzie (a law firm);
Trustee Director and Chairman, C.D. Stimson Company
Two Embarcadero Center (a private investment company). Mr. Bayley
Suite 2400 also is director or trustee of each of the
San Francisco, CA 94111 other investment companies registered under
the 1940 Act that is managed or administered
by the Manager.
Arthur C. Patterson, 54 Managing Partner, Accel Partners (a venture
Trustee capital firm). He also serves as a director
One Embarcadero Center of various computing and software companies.
Suite 3820 Mr. Patterson also is director or trustee of
San Francisco, CA 94111 each of the other investment companies
registered under the 1940 Act that is managed
or administered by the Manager.
Ruth H. Quigley, 62 Private investor, and President, Quigley
Trustee Friedlander & Co., Inc. (a financial advisory
1055 California Street services firm) from 1984 to 1986. Miss
San Francisco, CA 94108 Quigley also is director or trustee of each
of the other investment companies registered
under the 1940 Act that is managed or
administered by the Manager.
Robert G. Wade, Jr., 70 Consultant to the Manager; Chairman of the
Trustee Board of Chancellor Capital Management, Inc.
1166 Avenue of the Americas from January 1995 to October 1996; President,
New York, NY 10036 Chief Executive Officer and Chairman of the
Board of Chancellor Capital Management, Inc.
from 1988 to January 1995.
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Helge K. Lee, 51 Executive Vice President, Asset management
Vice President and Secretary Division, Liechtenstein Global Trust since
1166 Avenue of the Americas October 1996; Senior Vice President, LGT
New York, NY 10036 Asset Management, GT Global, GT Services and
G.T. Insurance from February 1996 to October
1996; Vice President, the Manager, LGT Asset
Management, GT Global, GT Services and G.T.
Insurance from May 1994 to February 1996;
General Counsel, the Manager, LGT Asset
Management, GT Global, GT Services and G.T.
Insurance from May 1994 to October 1996;
Secretary, the Manager, LGT Asset Management,
GT Global, GT Services and G.T. Insurance
from May 1994 to October 1996; Senior Vice
President, General Counsel and Secretary,
Strong/Corneliuson Management, Inc.; and
Secretary, each of the Strong Funds from
October 1991 to May 1994.
Kenneth W. Chancey, 52 Vice President -- Mutual Fund Accounting, the
Vice President and Principal Manager since 1992; and Vice President,
Accounting Officer Putnam Fiduciary Trust Company from 1989 to
50 California Street 1992.
San Francisco, CA 94111
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The Board of Trustees has a Nominating and Audit Committee, comprised of Miss
Quigley and Messrs. Anderson, Bayley and Patterson, which is responsible for
nominating persons to serve as Trustees, reviewing audits of the Trust and its
funds and recommending firms to serve as independent auditors of the Trust. Each
of the Trustees and officers of the Trust is also a Director and Officer of G.T.
Investment Portfolios, Inc., G.T. Global Developing Markets Fund, Inc. and G.T.
Global Floating Rate Fund, Inc., and a Trustee and Officer of G.T. Global
Series, G.T. Global Eastern Europe Fund, G.T. Global Variable Investment Trust,
G.T. Global Variable Investment Series, Global Investment Portfolio, Growth
Portfolio and Global High Income Portfolio, which also are registered investment
companies managed by the Manager. Each Trustee and Officer serves in total as a
Director and/or Trustee and officer, respectively of 12 registered investment
companies with 42 series managed or administrated by the Manager. The Trust pays
each Trustee who is not a director, officer or employee of the Manager or any
affiliated company $5,000 a year, plus $300 per Fund for each meeting of the
Board attended by the Trustee, and reimburses travel and other expenses incurred
in connection with attending Board meetings. Because the Fund has not yet
commenced operations, no Trustee or Officer of the Trust owns any shares of the
Fund.
MANAGEMENT
MANAGEMENT SERVICES RELATING TO THE FUND
The Manager acts as the manager for the Fund pursuant to a contract with the
Trust. The Manager receives no fees for providing management services to the
Fund.
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DISTRIBUTION SERVICES RELATING TO THE FUND
The Fund's Class A and Class B shares are offered continuously through the
Fund's principal underwriter and distributor, GT Global, on a "best efforts"
basis pursuant to separate Distribution Contracts between the Trust and GT
Global.
As described in the Prospectus, the Trust has adopted a separate Distribution
Plan with respect to the Class A and Class B shares of the Fund in accordance
with Rule 12b-1 under the 1940 Act (each a "Class A Plan" and "Class B Plan,"
respectively, and collectively, "Plans"). The rate of payments by the Fund under
the Plans, as described in the Prospectus, may not be increased without the
approval of the majority of the outstanding voting securities of the affected
class. All expenses for which GT Global is reimbursed under a Class A Plan will
have been incurred within one year of such reimbursement.
In approving the Plans, the Trustees determined that the adoption of the Plans
was in the best interests of the shareholders of the Fund. Agreements related to
the Plans must also be approved by such vote of the Trustees, including a
majority of Trustees who are not "interested persons" of the Trust (as defined
in the 1940 Act) and who have no direct or indirect financial interests in the
operation of the Plans, or in any agreement related thereto.
Each Plan requires that, at least quarterly, the Trustees review the amounts
expended thereunder and the purposes for which such expenditures were made. Each
Plan requires that so long as it is in effect the selection and nomination of
Trustees who are not "interested persons" of the Trust will be committed to the
discretion of the Trustees who are not "interested persons" of the Trust, as
defined in the 1940 Act.
As discussed in the Prospectus, GT Global collects sales charges on sales of
Class A shares of the Fund, retains certain amounts of such charges and reallows
other amounts of such charges to broker/dealers that sell shares.
GT Global receives any contingent deferred sales charges ("CDSCs") payable with
respect to redemptions of Class B shares and certain Class A shares.
TRANSFER AGENCY AND ACCOUNTING AGENCY SERVICES
The Transfer Agent has been retained by the Fund to perform shareholder
servicing, reporting and general transfer agent functions for it. For these
services, the Transfer Agent receives an annual maintenance fee of $17.50 per
account, a new account fee of $4.00 per account, a per transaction fee of $1.75
for all transactions other than exchanges and a per exchange fee of $2.25. The
Transfer Agent is also reimbursed for its out-of-pocket expenses for such items
as postage, forms, telephone charges, stationery and office supplies. The
Manager also serves as the Fund's pricing and accounting agent.
VALUATION OF FUND SHARES
As described in the Prospectus, the Fund's net asset value per share for each
class of shares is determined each day on which the New York Stock Exchange
("NYSE") is open for business ("Business Day") as of the close of regular
trading on the NYSE (currently 4:00 p.m. Eastern Time, unless weather, equipment
failure or other factors contribute to an earlier closing time). Currently, the
NYSE is closed on weekends and on certain days relating to the following
holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day, July 4th,
Labor Day, Thanksgiving Day and Christmas Day.
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The value of the shares of the Underlying Theme Funds will be their net asset
value at the time the net asset value of the Fund is determined.
INFORMATION RELATING TO SALES
AND REDEMPTIONS
PAYMENT AND TERMS OF OFFERING
Payment for Class A or Class B shares of the Fund purchased should accompany the
purchase order, or funds should be wired to the Transfer Agent as described in
the Prospectus. Payment, other than by wire transfer, must be made by check or
money order drawn on a U.S. bank. Checks or money orders must be payable in U.S.
dollars.
As a condition of this offering, if an order to purchase either class of shares
is canceled due to nonpayment (for example, on account of a check returned for
"not sufficient funds"), the person who made the order will be responsible for
any loss incurred by the Underlying Theme Fund by reason of such cancellation,
and if such purchaser is a shareholder, the Fund shall have the authority as
agent of the shareholder to redeem shares in his or her account at their
then-current net asset value per share to reimburse the Fund for the loss
incurred. Investors whose purchase orders have been canceled due to nonpayment
may be prohibited from placing future orders.
The Fund reserves the right at any time to waive or increase the minimum
requirements applicable to initial or subsequent investments with respect to any
person or class of persons. An order to purchase shares is not binding on the
Fund until it has been confirmed in writing by the Transfer Agent (or other
arrangements made with the Fund, in the case of orders utilizing wire transfer
of funds, as described above) and payment has been received. To protect existing
shareholders, the Fund reserves the right to reject any offer for a purchase of
shares by any individual.
SALES OUTSIDE THE UNITED STATES
Sales of Fund shares made through brokers outside the United States will be at
net asset value plus a sales commission, if any, established by that broker or
by local law. Such a commission, if any, may be more or less than the sales
charges listed in the sales charge table included in the Prospectus.
AUTOMATIC INVESTMENT PLAN -- CLASS A SHARES AND CLASS B SHARES
To establish participation in the Fund's Automatic Investment Plan ("AIP"),
investors or their broker/dealers should specify whether investment will be in
Class A shares or Class B shares and should send the following documents to the
Transfer Agent: (1) an AIP Application; (2) a Bank Authorization Form; and (3) a
voided personal check from the pertinent bank account. The necessary forms are
provided at the back of the Prospectus. Provided that an investor's bank accepts
the Bank Authorization Form, investment amounts will be drawn on the designated
dates (monthly on the 25th day or beginning quarterly on the 25th day of the
month the investor first selects) in order to purchase full and fractional
shares of the Fund at the public offering price determined on that day. In the
event that the 25th day falls on a Saturday, Sunday or holiday, shares will be
purchased on the next business day. If an investor's check is returned because
of insufficient funds or a stop payment order or if the account is closed, the
AIP may be discontinued, and any share purchase made upon deposit of such check
may be canceled. Furthermore, the shareholder will be liable for any loss
incurred by the Fund by reason of such cancellation. Investors should allow one
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month for the establishment of an AIP. An AIP may be terminated by the Transfer
Agent or the Fund upon thirty days' written notice or by the participant at any
time without penalty, upon written notice to the Fund or the Transfer Agent.
LETTER OF INTENT -- CLASS A SHARES
The Letter of Intent ("LOI") is not a binding obligation to purchase the
indicated amount. During such time as Class A shares are held in escrow under an
LOI to ensure payment of applicable sales charges if the indicated amount is not
met, all dividends and capital gain distributions on escrowed shares will be
reinvested in additional Class A shares or paid in cash, as specified by the
shareholder. If the intended investment is not completed within the specified
thirteen-month period, the purchaser must remit to GT Global the difference
between the sales charge actually paid and the sales charge which would have
been applicable if the total Class A purchases had been made at a single time.
If this amount is not paid to GT Global within twenty days after written
request, the appropriate number of escrowed shares will be redeemed and the
proceeds paid to GT Global.
A registered investment adviser, trust company or trust department seeking to
execute an LOI as a single purchaser with respect to accounts over which it
exercises investment discretion is required to provide the Transfer Agent with
information establishing that it has discretionary authority with respect to the
money invested (e.g., by providing a copy of the pertinent investment advisory
agreement). Class A shares purchased in this manner must be registered with the
Transfer Agent so that only the investment adviser, trust company or trust
department, and not the beneficial owner, will be able to place purchase,
redemption and exchange orders.
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS)
Class A or Class B shares of the Fund may be purchased as the underlying
investment for an IRA meeting the requirements of section 408(a) of the Internal
Revenue Code of 1986, as amended (the "Code"). IRA applications are available
from brokers or GT Global.
EXCHANGES
Shares of the Fund may be exchanged for shares of other GT Global Mutual Funds,
based on their respective net asset values without imposition of any sales
charges provided that the registration remains identical. Class A shares of the
Fund may be exchanged only for Class A shares of other GT Global Mutual Funds.
Class B shares of the Fund may be exchanged only for Class B shares of other GT
Global Mutual Funds. The exchange privilege is not an option or right to
purchase shares but is permitted under the current policies of the respective GT
Global Mutual Funds. The privilege may be discontinued or changed at any time by
any of the funds upon sixty days prior written notice to the shareholders of
such fund and is available only in states where the exchange may be made
legally. Before purchasing shares through the exercise of the exchange
privilege, a shareholder should obtain and read a copy of the prospectus of the
fund to be purchased and should consider the investment objective(s) of the
fund.
TELEPHONE REDEMPTIONS
A corporation or partnership wishing to utilize telephone redemption services
must submit a "Corporate Resolution" or "Certificate of Partnership" indicating
the names, titles and the required number of signatures of persons authorized to
act on its behalf. The certificate must be signed by a duly authorized
officer(s), and, in the case of a corporation, the corporate seal must be
affixed. All shareholders may request that redemption proceeds be transmitted by
bank wire upon request directly to the shareholder's predesignated account at a
domestic bank or savings institution if the proceeds are at least $1,000. Costs
in connection with the administration of this service, including wire charges,
currently are borne by the Fund. Proceeds of less than $1,000 will be mailed to
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the shareholder's registered address of record. The Fund and the Transfer Agent
reserve the right to refuse any telephone instructions and may discontinue the
aforementioned redemption options upon thirty days' written notice.
SYSTEMATIC WITHDRAWAL PLAN
Shareholders owning Class A or Class B shares of the Fund with a value of
$10,000 or more may establish a Systematic Withdrawal Plan ("SWP"). Under an
SWP, a shareholder will receive monthly or quarterly payments, in amounts of not
less than $100 per payment, through the automatic redemption of the necessary
number of shares on the designated dates (monthly on the 25th day or quarterly
on the 25th day of January, April, July and October). In the event that the 25th
day falls on a Saturday, Sunday or holiday, the redemption will take place on
the prior business day. Certificates, if any, for the shares being redeemed must
be held by the Transfer Agent. Checks will be made payable to the designated
recipient and mailed within seven days. If the recipient is other than the
registered shareholder, the signature of each shareholder must be guaranteed on
the SWP application (see "How to Redeem Shares" in the Prospectus). A
corporation (or partnership) must also submit a "Corporation Resolution" (or
"Certificate of Partnership") indicating the names, titles, and signatures of
the individuals authorized to act on its behalf, and the SWP application must be
signed by a duly authorized officer(s) and the corporate seal affixed.
With respect to a SWP, the maximum annual SWP withdrawal is 12% of the initial
account value. Withdrawals in excess of 12% of the initial account value
annually may result in assessment of a contingent deferred sales charge. See
"How to Invest" in the Prospectus.
Shareholders should be aware that such systematic withdrawals may deplete or use
up entirely the initial investment and result in realized long-term or
short-term capital gains or losses. The SWP may be terminated at any time by the
Transfer Agent or the Fund upon thirty days' written notice or by a shareholder
upon written notice to the Fund or its Transfer Agent. Applications and further
details regarding establishment of an SWP are provided at the back of the
Prospectus.
SUSPENSION OF REDEMPTION PRIVILEGES
The Fund may suspend redemption privileges or postpone the date of payment for
more than seven days after a redemption order is received during any period (1)
when the NYSE is closed other than customary weekend and holiday closings, or
trading on the NYSE is restricted as directed by the SEC, (2) when an emergency
exists, as defined by the SEC, which would prohibit the Fund or the Underlying
Theme Portfolios from disposing of portfolio securities owned by them or in
fairly determining the value of its assets, or (3) as the SEC may otherwise
permit.
REDEMPTIONS IN KIND
It is possible that conditions may arise in the future that would, in the
opinion of the Trust's Board of Trustees, make it undesirable for the Fund to
pay for all redemptions in cash. In such cases, the Board may authorize payment
to be made in portfolio securities or other property of the Fund, so-called
"redemptions in kind." Payment of redemptions in kind will be made in readily
marketable securities. Such securities would be valued at the same value
assigned to them in computing the net asset value per share. Shareholders
receiving such securities would incur brokerage costs in selling any such
securities so received. However, despite the foregoing, the Trust has filed with
the SEC an election pursuant to Rule 18f-1 under the 1940 Act. This means that
the Fund will pay in cash all requests for redemption made by any shareholder of
record, limited in amount with respect to each shareholder during any ninety-day
period to the lesser of $250,000 or 1% of the net asset value of the Fund at the
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beginning of such period. This election will be irrevocable so long as Rule
18f-1 remains in effect, unless the SEC by order upon application permits the
withdrawal of such election.
TAXES
TAXATION OF THE FUND
To qualify for treatment as a regulated investment company ("RIC") under the
Code, the Fund must distribute to its shareholders for each taxable year at
least 90% of its investment company taxable income (consisting generally of net
investment income and net short-term capital gain) ("Distribution Requirement")
and must meet several additional requirements. These requirements include the
following: (1) the Fund must derive at least 90% of its gross income each
taxable year from dividends, interest, payments with respect to securities loans
and gains from the sale or other disposition of securities, or other income
derived with respect to its business of investing in securities ("Income
Requirement"); (2) the Fund must derive less than 30% of its gross income for
its taxable year ending December 31, 1997, from the sale or other disposition of
securities held for less than three months ("Short-Short Limitation"); (3) at
the close of each quarter of the Fund's taxable year, at least 50% of the value
of its total assets must be represented by cash and cash items, U.S. government
securities, securities of other RICs (including the Underlying Theme Funds) and
other securities, with these other securities limited, in respect of any one
issuer, to an amount that does not exceed 5% of the value of the Fund's total
assets and that does not represent more than 10% of the issuer's outstanding
voting securities; and (4) at the close of each quarter of the Fund's taxable
year, not more than 25% of the value of its total assets may be invested in
securities (other than U.S. government securities or the securities of other
RICs, including the Underlying Theme Funds) of any one issuer.
The Fund will invest its assets in shares of the Underlying Theme Funds, cash,
and money market instruments. Accordingly, the Fund's income will consist of
distributions from the Underlying Theme Funds, net gains realized from the
disposition of Underlying Theme Fund shares and interest. If an Underlying Theme
Fund qualifies for treatment as a RIC under the Code -- each has done so for its
past taxable years and intends to continue to do so for its current and future
taxable years -- (1) dividends paid to the Fund from the Underlying Theme Fund's
investment company taxable income (which may include net gains from certain
foreign currency transactions) will be taxable to the Fund as ordinary income to
the extent of the Underlying Theme Fund's earnings and profits and (2)
distributions paid to the Fund from the Underlying Theme Fund's net capital gain
(the excess of net long-term capital gain over net short-term capital loss),
when designated as such, will be taxable to the Fund as long-term capital gains,
regardless of how long the Fund has held the Underlying Theme Fund's shares.
Although an Underlying Theme Fund will be eligible to elect to "pass-through" to
its shareholders (including the Fund) the benefit of the foreign tax credit with
respect to any foreign and U.S. possessions income taxes it pays if more than
50% in the value of its total assets at the close of any taxable year consists
of securities of foreign corporations, the Fund will not qualify to pass that
benefit through to its shareholders because of its inability to satisfy that
asset test. .
The Fund will be subject to a nondeductible 4% excise tax to the extent it fails
to distribute by the end of any calendar year substantially all of its ordinary
income for that year and capital gain net income for the one-year period ending
on October 31 of that year, plus certain other amounts.
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TAXATION OF THE FUND'S SHAREHOLDERS
Dividends and other distributions declared by the Fund in, and payable to
shareholders of record as of a date in, October, November or December of any
year will be deemed to have been paid by the Fund and received by the
shareholders on December 31 of that year if the distributions are paid by the
Fund during the following January. Accordingly, those distributions will be
taxed to shareholders for the year in which that December 31 falls.
A portion of the dividends from the Fund's investment company taxable income
(whether paid in cash or reinvested in additional shares) may be eligible for
the dividends-received deduction allowed to corporations. The eligible portion
may not exceed the Fund's share of the aggregate dividends received by each
Underlying Theme Fund from U.S. corporations. However, dividends received by a
corporate shareholder and deducted by it pursuant to the dividends-received
deduction may be subject indirectly to the alternative minimum tax.
If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares. Investors
also should be aware that if shares are purchased shortly before the record date
for any dividend or other distribution, the shareholder will pay full price for
the shares and receive some portion of the price back as a taxable distribution.
Dividends paid by the Fund to a shareholder who, as to the United States, is a
nonresident alien individual, nonresident alien fiduciary of a trust or estate,
foreign corporation or foreign partnership ("foreign shareholder") generally
will be subject to U.S. withholding tax (at a rate of 30% or lower treaty rate).
Withholding will not apply if a dividend paid by the Fund to a foreign
shareholder is "effectively connected with the conduct of a U.S. trade or
business," in which case the reporting and withholding requirements applicable
to domestic shareholders will apply. A distribution of net capital gain by the
Fund to a foreign shareholder generally will be subject to U.S. federal income
tax (at the rates applicable to domestic persons) only if the distribution is
"effectively connected" or the foreign shareholder is treated as a nonresident
alien individual for federal income tax purposes.
The foregoing is a general and abbreviated summary of certain federal tax
considerations affecting the Fund and its shareholders. Investors are urged to
consult their own tax advisers for more detailed information and for information
regarding any foreign, state and local taxes applicable to distributions
received from the Fund.
ADDITIONAL INFORMATION
SPECIAL SERVICING AGREEMENT
Subject to the receipt of an exemptive application pending with the Securities
and Exchange Commission, a Special Servicing Agreement (the "Service Agreement")
will be entered into among the Manager, the Underlying Theme Funds, GT Global
Investor Services, Inc., and the Trust. Under the Service Agreement, the Manager
will arrange for all services pertaining to the operation of the Trust including
the services of GT Global Investor Services, Inc. and the Manager to act as
Shareholder Servicing Agent and Fund Accounting Agent, respectively, for the
Fund. In addition, the Service Agreement will provide that, if the officers of
any Underlying Theme Fund, at the direction of the Board of Directors, determine
that the aggregate expenses of the Fund are less than the estimated savings to
the Underlying Theme Fund from the operation of the Fund, the Underlying Theme
Fund will bear those expenses in proportion to the average daily value of its
shares owned by the Fund. No Underlying Theme Fund will bear such expenses in
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excess of the estimated savings to it. Such savings are expected to result
primarily from the elimination of numerous separate shareholder accounts which
are or would have been invested directly in the Underlying Theme Funds and the
resulting reduction in shareholder servicing costs. In this regard, the
shareholder servicing costs to any Underlying Theme Fund for servicing one
account registered to the Trust would be significantly less than the cost to
that same Underlying Theme Fund of servicing the same pool of assets contributed
in the typical fashion by a large group of individual shareholders owning small
accounts in each Underlying Theme Fund.
Based on actual expense data from the Underlying Theme Funds and certain very
conservative assumptions with respect to the Trust, the Manager, the Underlying
Theme Funds, GT Global Investor Services, Inc., and the Trust anticipate that
the aggregate financial benefits to the Underlying Theme Funds from these
arrangements will exceed the costs of operating the Fund. If such turns out to
be the case, there will be no charge to the Trust for the services under the
Service Agreement. Rather, in accordance with the Service Agreement, such
expenses will be passed through to the Underlying Theme Funds in proportion to
the value of each Underlying Theme Fund's shares held by the Fund or,
alternatively, will be paid by the Manager.
In the event that the aggregate financial benefits to the Underlying Theme Funds
do not exceed the costs of the Fund, the Manager will pay, on behalf of the
Fund, that portion of costs, as set forth herein, determined to be greater than
the benefits. The determination of whether and the extent to which the benefits
to the Underlying Theme Funds from the organization of the Trust will exceed the
costs to such funds will be made based upon the analysis criteria set forth in
the pending exemptive application. This cost-benefit analysis was initially
reviewed by the Directors of the Underlying Theme Funds before approving the
Service Agreement. For future years, there will be an annual review of the
Service Agreement to determine its continued appropriateness for each Underlying
Theme Fund.
Certain non-recurring and extraordinary expenses will not be paid in accordance
with the Service Agreement including: the fees and costs of actions, suits or
proceedings and any penalties or damages in connection therewith, to which the
Trust and/or the Fund may incur directly, or may incur as a result of its legal
obligation to provide indemnification to its officers, trustees and agents; the
fees and costs of any governmental investigation and any fines or penalties in
connection therewith; and any federal, state or local tax, or related interest
penalties or additions to tax, incurred, for example, as a result of the Trust's
failure to distribute all of its earnings, failure to qualify under subchapter M
of the Internal Revenue Code, or failure to timely file any required tax returns
or other filings. Under unusual circumstances, the parties to the Service
Agreement may agree to exclude certain other expenses.
LIECHTENSTEIN GLOBAL TRUST
Liechtenstein Global Trust AG, formerly BIL GT Group, is composed of the Manager
and its worldwide affiliates. Other worldwide affiliates of Liechtenstein Global
Trust include LGT Bank in Liechtenstein, formerly Bank in Liechtenstein, an
international financial services institution founded in 1920. LGT Bank in
Liechtenstein has principal offices in Vaduz, Liechtenstein. Its subsidiaries
currently include LGT Bank in Liechtenstein (Deutschland) GmbH, formerly Bank in
Liechtenstein (Frankfurt) GmbH, and LGT Asset Management AG, formerly Bilfinanz
und Verwaltung AG, in Zurich, Switzerland.
Worldwide asset management affiliates also currently include LGT Asset
Management PLC, formerly G.T. Management PLC, in London, England; LGT Asset
Management Ltd., formerly G.T. Management (Asia) Ltd., in Hong Kong; LGT Asset
Management Ltd., formerly G.T. Management (Japan) Ltd., in Tokyo; LGT Asset
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Management Pte. Ltd., formerly G.T. Management (Singapore) PTE Ltd., in
Singapore; LGT Asset Management Ltd., formerly G.T. Management (Australia) Ltd.,
in Sydney; and LGT Asset Management GmbH, formerly BIL Asset Management GmbH, in
Frankfurt.
CUSTODIAN
State Street Bank and Trust Company ("State Street"), 225 Franklin Street,
Boston, Massachusetts 02110, acts as custodian of the Fund's and the Underlying
Theme Portfolios' assets.
INDEPENDENT ACCOUNTANTS
The Trust's independent accountants are Coopers & Lybrand L.L.P., One Post
Office Square, Boston, Massachusetts 02109. Coopers & Lybrand L.L.P. conducts
annual audits of the Fund's financial statements, assists in the preparation of
the Fund's federal and state income tax returns and consults with the Trust as
to matters of accounting, regulatory filings, and federal and state income
taxation.
The audited financial statements of the Trust included in this Statement of
Additional Information have been examined by Coopers & Lybrand L.L.P., as stated
in their opinion appearing herein, and are included in reliance upon such
opinion given upon the authority of that firm as experts in accounting and
auditing.
USE OF NAME
The Manager has granted the Trust the right to use the "GT" and "GT Global"
names and has reserved the right to withdraw its consent to the use of such
names by the Trust at any time or to grant the use of such names to any other
company.
SHAREHOLDER LIABILITY
Under certain circumstances, shareholders of the Fund may be held personally
liable for the obligations of the Fund. The Trust's Declaration of Trust
provides that shareholders shall not be subject to any personal liability for
the acts or obligations of the Fund or the Trust and that every written
agreement, obligation or other undertaking made or issued by the Fund or the
Trust shall contain a provision to the effect that shareholders are not
personally liable thereunder. The Declaration of Trust provides for
indemnification out of the Trust's assets under certain circumstances, and
further provides that the Trust shall, upon request, assume the defense of any
act or obligation of the Fund or the Trust and that the Fund will indemnify the
shareholder for all legal and other expenses incurred therewith. Thus, the risk
of any shareholder's incurring financial loss beyond his or her investment,
because of this theoretical shareholder liability, is limited to circumstances
in which the Fund or the Trust itself would be unable to meet its obligations.
INVESTMENT RESULTS
STANDARDIZED RETURNS
The Fund's "Standardized Returns," as referred to in the Prospectus (see "Other
Information -- Performance Information" in the Prospectus), is calculated
separately for Class A and Class B shares of the Fund, as follows: Standardized
Return (average annual total return ("T")) is computed by using the ending
redeeming value ("ERV") of a hypothetical initial investment of $1,000 ("P")
over a period of years ("n") according to the following formula as required by
the SEC: P(1+T) = ERV. The following assumptions will be reflected in
computations made in accordance with this formula: (1) for Class A shares,
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deduction of the maximum sales charge of 4.75% from the $1,000 initial
investment; (2) for Class B shares, deduction of the applicable contingent
deferred sales charge imposed on a redemption of Class B shares held for the
period; (3) reinvestment of dividends and other distributions at net asset value
on the reinvestment date determined by the Trust's Board of Trustees; and (4) a
complete redemption at the end of any period illustrated.
NON-STANDARDIZED RETURNS
In addition to Standardized Returns, the Fund also may include in
advertisements, sales literature and shareholder reports other total return
performance data ("Non-Standardized Return"). Non-Standardized Return is
calculated separately for Class A and Class B shares of the Fund and may be
calculated according to several different formulas. Non-Standardized Returns may
be quoted for the same or different time periods for which Standardized Returns
are quoted. Non-Standardized Returns may or may not take sales charges into
account; performance data calculated without taking the effect of sales charges
into account will be higher than data including the effect of such charges.
Average annual Non-Standardized Return ("T") is computed by using the ending
redeeming value ("ERV") of a hypothetical initial investment of $1,000 ("P")
over a period of years ("n") according to the following formula as required by
the SEC: P(1+T) = ERV. The following assumptions will be reflected in
computations made in accordance with this formula: (1) no deduction of sales
charges; (2) reinvestment of dividends and other distributions at net asset
value on the reinvestment date determined by the Board; and (3) a complete
redemption at the end of any period illustrated.
The Fund's investment results will vary from time to time depending upon market
conditions, the composition of each Underlying Theme Portfolio's portfolio, and
operating expenses of the Fund, so that current or past yield or total return
should not be considered representative of what an investment in the Fund may
earn in any future period. These factors and possible differences in the methods
used in calculating investment results should be considered when comparing the
Fund's investment results with those published for other investment companies
and other investment vehicles. The Fund's results also should be considered
relative to the risks associated with the Fund's investment objective and
policies.
IMPORTANT POINTS TO NOTE ABOUT DATA RELATING TO WORLD EQUITY AND BOND MARKET
The Fund and GT Global may from time to time in advertisements, sales literature
and reports furnished to present or prospective shareholders compare the Fund
with the following, among others:
(1) The Consumer Price Index ("CPI"), which is a measure of
the average change in prices over time in a fixed market basket of
goods and services (e.g., food, clothing, shelter, fuels,
transportation fares, charges for doctors' and dentists' services,
prescription medicines, and other goods and services that people buy
for day-to-day living). There is inflation risk which does not affect a
security's value but its purchasing power i.e. the risk of changing
price levels in the economy that affects security prices or the price
of goods and services.
(2) Data and mutual fund rankings published or prepared by
Lipper Analytical Data Services, Inc. ("Lipper"), CDA/Wiesenberger
Investment Companies Service ("CDA/Wiesenberger"), Morningstar, Inc.
and/or other companies that rank and/or compare mutual funds by overall
performance, investment objectives, assets, expense levels, periods of
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existence and/or other factors. In this regard each Underlying Theme
Fund may be compared to its "peer group" as defined by Lipper,
CDA/Wiesenberger, Morningstar and/or other firms, as applicable, or to
specific funds or groups of funds within or outside of such peer group.
Lipper generally ranks funds on the basis of total return, assuming
reinvestment of distributions, but does not take sales charges or
redemption fees into consideration, and is prepared without regard to
tax consequences. In addition to the mutual fund rankings, the
Underlying Theme Fund's performance may be compared to mutual fund
performance indices prepared by Lipper. Morningstar is a mutual fund
rating service that also rates mutual funds on the basis of
risk-adjusted performance. Morningstar ratings are calculated from a
fund's three, five and ten year average annual returns with appropriate
fee adjustments and a risk factor that reflects fund performance
relative to the three-month U.S. Treasury bill monthly returns. Ten
percent of the funds in an investment category receive five stars and
22.5% receive four stars. The ratings are subject to change each month.
(3) Bear Stearns Foreign Bond Index, which provides simple
average returns for individual countries and gross national product
("GNP") weighted index, beginning in 1975. The returns are broken down
by local market and currency.
(4) Ibbottson Associates International Bond Index, which
provides a detailed breakdown of local market and currency returns
since 1960.
(5) Standard & Poor's 500 Composite Stock Price Index, which
is a widely recognized index composed of the capitalization-weighted
average of the price of 500 of the largest publicly traded stocks in
the United States.
(6) Dow Jones Industrial Average.
(7) CNBC/Financial News Composite Index.
(8) Morgan Stanley Capital International World Indices,
including, among others, the Morgan Stanley Capital International
Europe, Australia, Far East Index ("EAFE Index"). The EAFE index is an
unmanaged index of more than 1,000 companies in Europe, Australia and
the Far East.
(9) Morgan Stanley capital International All Country (AC)
World Index ("MSCI"). The MSCI is a broad, unmanaged index of global
stock prices, currently comprising 2500 different issuers, located in
44 countries, and grouped in 38 separate industries.
(10) Salomon Brothers World Government Bond Index and Salomon
Brothers World Government Bond Index-Non-U.S., each of which is a
widely used index composed of world government bonds.
(11) The World Bank Publication of Trends in Developing
Countries (TIDE), which provides brief reports on most of the World
Bank's borrowing members. The World Development Report is published
annually and looks at global and regional economic trends and their
implications for the developing economies.
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(12) Salomon Brothers Global Telecommunications Index which is
composed of telecommunications companies in the developing and emerging
countries.
(13) Datastream and Worldscope, each of which is an on-line
database retrieval service for information including international
financial and economic data.
(14) International Financial Statistics, which is produced by
the International Monetary Fund.
(15) Various publications and annual reports, produced by the
World Bank and its affiliates.
(16) Various publications from the International Bank for
Reconstruction and Development.
(17) Various publications produced by ratings agencies such as
Moody's, S&P and Fitch.
(18) Wilshire Associates, which is an on-line database for
international financial and economic data including performance measure
for a wide range of securities.
(19) Bank Rate National Monitor Index, which an average of the
quoted rates for 100 leading banks and thrifts in ten U.S. cities.
(20) International Finance Corporation ("IFC") Emerging
Markets Data Base, which provides detailed statistics on stock and bond
markets in developing countries.
(21) Various publications from the Organization for Economic
Cooperation and Development ("OECD").
(22) Average of savings accounts, which is a measure of all
kinds of savings deposits, including longer-term certificates. Savings
accounts offer a guaranteed rate of return on principal, but no
opportunity for capital growth. During a portion of the period, the
maximum rates paid on some savings deposits were fixed by law.
Indices, economic and financial data prepared by the research departments of
various financial organizations, such as Salomon Brothers, Inc., Lehman
Brothers, Merrill Lynch, Pierce, Fenner & Smith, Inc., Financial Research
Corporation, J.P. Morgan, Morgan Stanley, Smith Barney Shearson, S.G. Warburg,
Jardine Flemming, The Bank for International Settlements, Asian Development
Bank, Bloomberg, L.P., and Ibbottson Associates, may be used, as well as
information reported by the Federal Reserve and the respective central banks of
various nations. In addition, GT Global may use performance rankings, ratings
and commentary reported periodically in national financial publications,
including Money Magazine, Mutual Fund Magazine, Smart Money, Global Finance,
EuroMoney, Financial World, Forbes, Fortune, Business Week, Latin Finance, the
Wall Street Journal, Emerging Markets Weekly, Kiplinger's Guide To Personal
Finance, Barron's, The Financial Times, USA Today, The New York Times, Far
Eastern Economic Review, The Economist and Investors Business Digest. The Fund
may compare its performance to that of other compilations or indices of
comparable quality to those listed above and other indices that may be developed
and made available in the future.
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Information relating to foreign market performance, capitalization and
diversification is based on sources believed to be reliable but may be subject
to revision and has not been independently verified by the Fund or GT Global.
The authors and publishers of such material are not to be considered as
"experts" under the 1933 Act, on account of the inclusion of such information
herein.
A portion of the performance figures for each market includes the positive or
negative effects of the currency exchange rates effective at December 31 of each
year between the U.S. dollar and currency of the foreign market (e.g., Japanese
Yen, German Deutschemark, and Hong Kong Dollar). A foreign currency that has
strengthened or weakened against the U.S. dollar will positively or negatively
affect the reported returns, as the case may be.
GT Global believes that this information may be useful to investors considering
whether and to what extent to diversify their investments through the purchase
of mutual funds investing in securities on a global basis. However, this data is
not a representation of the past performance of the Fund, nor is it a prediction
of such performance. The performance of the Fund will differ from the historical
performance of relevant indices. The performance of indices does not take
expenses into account, while the Fund incurs expenses in its operations, which
will reduce performance. Each of these factors will cause the performance of the
Fund to differ from relevant indices.
From time to time, the Fund and GT Global may refer to the number of
shareholders in the Fund or the aggregate number of shareholders in all GT
Global Mutual Funds or the dollar amount of the Fund's assets under management
or rankings by DALBAR Surveys, Inc. in advertising materials.
GT Global believes the Fund is an appropriate investment for long-term
investment goals including funding retirement, paying for education or
purchasing a house. GT Global may provide information designed to help
individuals understand their investment goals and explore various financial
strategies. For example, GT Global may describe general principles of investing,
such as asset allocation, diversification and risk tolerance. The Fund does not
represent a complete investment program, and investors should consider the Fund
as appropriate for a portion of their overall investment portfolio with regard
to their long-term investment goals. There is no assurance that any such
information will lead to achieving these goals or guarantee future results.
From time to time, GT Global may refer to or advertise the names of U.S. and
non-U.S. companies and their products, although there can be no assurance that
any GT Global Mutual Fund may own the securities of these companies.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical returns
of the capital markets in the United States, including common stocks, small
capitalization stocks, long-term corporate bonds, intermediate-term government
bonds, long-term government bonds, Treasury bills, the U.S. rate of inflation
(based on the CPI), and combinations of various capital markets. The performance
of these capital markets are based on the returns of different indices.
GT Global Mutual Funds may use the performance of these capital markets in order
to demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any of
these capital markets. The risks associated with the security types in any
capital market may or may not correspond directly to those of the funds.
Ibbotson calculates total returns in the same method as the funds.
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The Fund may quote various measures of volatility and benchmark correlation such
as beta, standard deviation and R in advertising. In addition, the Fund may
compare these measures to those of other funds. Measures of volatility seek to
compare the Fund's historical share price fluctuations or total returns compared
to those of a benchmark. All measures of volatility and correlation are
calculated using averages of historical data.
The Fund may advertise examples of the effects of periodic investment plans,
including the principle of dollar cost averaging programs. In such a program, an
investor invests a fixed dollar amount in a fund at periodic intervals, thereby
purchasing fewer shares when prices are high and more shares when prices are
low. While such a strategy does not assure a profit or guard against loss in a
declining market, the investor's average cost per share can be lower than if
fixed numbers of shares are purchased at the same intervals. In evaluating such
a plan, investors should consider their ability to continue purchasing shares
through periods of low price levels.
The Fund may be available for purchase through retirement plans or other
programs offering deferral of or exemption from income taxes, which may produce
superior after-tax returns over time. For example, a $10,000 investment earning
a taxable return of 10% annually would have an after-tax value of $17,976 after
ten years, assuming tax was deducted from the return each year at a 39.6% rate.
An equivalent tax-deferred investment would have an after-tax value of $19,626
after ten years, assuming tax was deducted at a 39.6% rate from the deferred
earnings at the end of the ten-year period.
The Fund may describe in its sales material and advertisements how an investor
may invest in GT Global Mutual Funds through various retirement plans that offer
deferral of income taxes on investment earnings and may also enable an investor
to make deductible contributions. Because of their advantages, these retirement
accounts and plans may produce returns superior to comparable non-retirement
investments. In sales material and advertisements, the Fund may also discuss
these accounts and plans, which include:
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS): If you have earned income from
employment (including self-employment), you can contribute each year to an IRA
up to the lesser of (1) $2,000 for yourself or $4,000 for you and your spouse,
regardless of whether your spouse is employed, or (2) 100% of compensation. Some
individuals may be able to take an income tax deduction for the contribution.
Regular contributions may not be made for the year you become 70 1/2 or
thereafter. Effective for taxable years beginning after 1997, unless your and
your spouse's earnings exceed a certain level, you also may establish an
"education IRA" and/or a "Roth IRA." Although contributions to these new types
of IRAs are nondeductible, withdrawals from them will be tax-free under certain
circumstances. Please consult your tax advisor for more information.
ROLLOVER IRAS: Individuals who receive distributions from qualified retirement
plans (other than required distributions) and who wish to keep their savings
growing tax-deferred can roll over (or make a direct transfer of) their
distribution to a Rollover IRA. These accounts can also receive rollovers or
transfers from an existing IRA. If an "eligible rollover distribution" from a
qualified employer-sponsored retirement plan is not directly rolled over to an
IRA (or certain qualified plans), withholding at the rate of 20% will be
required for federal income tax purposes. A distribution from a qualified plan
that is not an "eligible rollover distribution," including a distribution that
is one of a series of substantially equal periodic payments, generally is
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subject to regular wage withholding or withholding at the rate of 10% (depending
on the type and amount of the distribution), unless you elect not to have any
withholding apply. Please consult your tax advisor for more information.
SEP-IRAS: Simplified employee pension plans ("SEPs" or "SEP-IRAs") provide
self-employed individuals (and any eligible employees) with benefits similar to
Keogh-type plans or Code Section 401(k) plans, but with fewer administrative
requirements and therefore potential lower annual administration expenses.
CODE SECTION 403(B)(7) CUSTODIAL ACCOUNTS: Employees of public schools and most
other tax-exempt organizations can make pre-tax salary reduction contributions
to these accounts.
PROFIT-SHARING (INCLUDING SECTION 401(K)) AND MONEY PURCHASE PENSION PLANS:
Corporations and other employers can sponsor these qualified defined
contribution plans for their employees. A Section 401(k) plan, a type of
profit-sharing plan, additionally permits the eligible, participating employees
to make pre-tax salary reduction contributions to the plan (up to certain
limits).
SIMPLE RETIREMENT PLANS: Employers with no more than 100 employees that do not
maintain another retirement plan may establish a Savings Incentive Match Plan
for Employees ("SIMPLE") either as separate IRAs or as part of a Section 401(k)
plan. SIMPLEs are not subject to the complicated nondiscrimination rules that
generally apply to qualified retirement plans.
GT Global may from time to time in its sales materials and advertising discuss
the risks inherent in investing. The major types of investment risk are market
risk, industry risk, credit risk, interest rate risk, liquidity risk and
inflation risk. Risk represents the possibility that you may lose some or all of
your investment over a period of time. A basic tenet of investing is the greater
the potential reward, the greater the risk.
From time to time, the Fund and GT Global will quote data regarding industries,
companies, individual countries, regions, world stock exchanges, and economic
and demographic statistics from sources GT Global deems reliable, including the
economic and financial data of such financial organizations as:
1) Stock market capitalization: Morgan Stanley Capital International World
Indices, IFC and Datastream.
2) Stock market trading volume: Morgan Stanley Capital International Industry
Indices and IFC.
3) The number of listed companies: IFC, GT Guide to World Equity Markets,
Salomon Brothers, Inc., and S.G. Warburg.
4) Wage rates: U.S. Department of Labor Statistics and Morgan Stanley Capital
International World.
5) International industry performance: Morgan Stanley Capital International
World Indices, Wilshire Associates and Salomon Brothers, Inc.
6) Stock market performance: Morgan Stanley Capital International World
Indices, IFC and Datastream.
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7) The Consumer Price Index and inflation rate: The World Bank, Datastream
and IFC.
8) Gross Domestic Product ("GDP"): Datastream and The World Bank.
9) GDP growth rate: IFC, The World Bank and Datastream.
10) Population: The World Bank, Datastream and United Nations.
11) Average annual growth rate (%) of population: The World Bank, Datastream
and United Nations.
12) Age distribution within populations: OECD and United Nations.
13) Total exports and imports by year: IFC, The World Bank and Datastream.
14) Top three companies by country, industry or market: IFC, GT Guide to World
Equity Markets, Salomon Brothers Inc., and S.G. Warburg.
15) Foreign direct investments to developing countries: The World Bank and
Datastream.
16) Supply, consumption, demand and growth in demand of certain products,
services and industries, including, but not limited to electricity, water,
transportation, construction materials, natural resources, technology, other
basic infrastructure, financial services, health care services and supplies,
consumer products and services and telecommunications equipment and services
(sources of such information may include, but would not be limited to, The World
Bank, OECD, IMF, Bloomberg and Datastream).
17) Standard deviation and performance returns for U.S. and non-U.S. equity and
bond markets: Morgan Stanley Capital International.
18) Countries restructuring their debt, including those under the Brady Plan:
the Manager.
19) Political and economic structure of countries: Economist Intelligence Unit.
20) Government and corporate bonds -- credit ratings, yield to maturity and
performance returns: Salomon Brothers, Inc.
21) Dividend yields for U.S. and non-U.S. companies: Bloomberg.
From time to time, GT Global may include in its advertisement and sales
material, information about privatization which is an economic process involving
the sale of state-owned companies to the private sector.
In advertising and sales materials, GT Global may make reference to or discuss
its products, services and accomplishments. Among these accomplishments are that
in 1983 the Manager provided assistance to the government of Hong Kong in
linking its currency to the U.S. dollar, and that in 1987 Japan's Ministry of
Finance licensed LGT Asset Management Ltd. as one of the first foreign
discretionary investment managers for Japanese investors. Such accomplishments,
however, should not be viewed as an endorsement of the Manager by the government
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<PAGE>
of Hong Kong, Japan's Ministry of Finance or any other government or government
agency. Nor do any such accomplishments of the Manager provide any assurance
that the GT Global Mutual Funds' investment objectives will be achieved.
GT GLOBAL ADVANTAGE
As part of Liechtenstein Global Trust, GT Global continues a 75-year tradition
of service to individuals and institutions. Today we bring investors a
combination of experience, worldwide resources, a global perspective, investment
talent and a time tested investment discipline. With investment professionals in
nine offices worldwide, we witness world events and economic developments
firsthand.
The key to achieving consistent results is following a disciplined investment
process. Our approach to asset allocation takes advantage of GT Global's
worldwide presence and global perspective. Our "macroeconomic" worldview
determines our overall strategy of regional, country and sector allocations. Our
bottom up process of security selection combines fundamental research with
quantitative analysis through our proprietary models.
Built in checks and balances strengthen the process, enhancing professional
experience and judgment with an objective assessment of risk. Ultimately, each
security we select has passed a ranking system that helps our portfolio teams
determine when to buy and when to sell.
DESCRIPTION OF DEBT RATINGS
DESCRIPTION OF COMMERCIAL PAPER RATINGS
Moody's employs the designations "Prime-1" and "Prime-2" to indicate commercial
paper having the highest capacity for timely repayment. Issuers rated Prime-1
(or supporting institutions) have a superior ability for repayment of senior
short-term debt obligations. Prime-1 repayment ability will often be evidenced
by many of the following characteristics: leading market positions in
well-established industries; high rates of return on funds employed;
conservative capitalization structure with moderate reliance on debt and ample
asset protection; broad margins in earnings coverage of fixed financial charges
and high internal cash generation; and well-established access to a range of
financial markets and assured sources of alternate liquidity. Issuers rated
Prime-2 (or supporting institutions) have a strong ability for repayment of
senior short-term debt obligations. This normally will be evidenced by many of
the characteristics cited above but to a lesser degree. Earnings trends and
coverage ratios, while sound may be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
S&P rates commercial paper in four categories ranging from "A-1" for the highest
quality obligations to "D" for the lowest. A-1 -- This highest category
indicates that the degree of safety regarding timely payment is strong. Those
issues determined to possess extremely strong safety characteristics will be
denoted with a plus sign (+) designation. A-2 -- Capacity for timely payment on
issues with this designation is satisfactory. However, the relative degree of
safety is not as high as for issues designated "A-1." A-3 -- Issues carrying
this designation have adequate capacity for timely payment. They are, however,
more vulnerable to the adverse effects of changes in circumstances than
obligations carrying the higher designations. B -- Issues rated "B" are regarded
as having only speculative capacity for timely payment. C -- This rating is
assigned to short-term debt obligations with a doubtful capacity for payment. D
- -- Debt rated "D" is in payment default. The "D" rating category is used when
interest payments or principal payments are not made on the date due, even if
the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period.
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DESCRIPTION OF BOND RATINGS
Moody's rates the long-term debt securities issued by various entities from
"Aaa" to "C." Investment Grade Ratings are the first four categories:
Aaa -- Best quality. These securities carry the smallest degree of
investment risk and are generally referred to as "gilt edged." Interest
payments are protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- High quality by all standards. Together with the Aaa group they
comprise what are generally known as high grade bonds. They are rated lower
than the best bonds because margins of protection may not be as large as in
Aaa securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-term
risk appear somewhat larger than the Aaa securities.
A -- Upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa -- Medium-grade obligations (i.e., they are neither highly
protected nor poorly secured). Interest payments and principal security
appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of
time. Such bonds lack outstanding investment characteristics and in fact
have speculative characteristics as well.
Ba -- Have speculative elements and their future cannot be considered
as well-assured. Often the protection of interest and principal payments
may be very moderate, and thereby not well safeguarded during both good and
bad times over the future. Uncertainty of position characterizes bonds in
this class.
B -- Generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of other
terms of the contract over any long period of time may be small.
Caa -- Poor standing. Such issues may be in default or there may be
present elements of danger with respect to principal or interest.
Ca -- Speculative in a high degree. Such issues are often in default or
have other marked shortcomings.
C -- Lowest rated class of bonds. Issues so rated can be regarded as
having extremely poor prospects of ever attaining any real investment
standing.
ABSENCE OF RATING: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
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2. The issue or issuer belongs to a group of securities or companies
that are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is
not published in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa to B in its corporate bond rating system. The modifier 1
indicates that the company ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issue ranks in the lower end of its generic rating category.
S&P rates the securities debt of various entities in categories ranging from
"AAA" to "D" according to quality. Investment grade ratings are the first four
categories:
AAA -- Highest rating. Capacity to pay interest and repay principal is
extremely strong.
AA -- Very strong capacity to pay interest and repay principal and
differs from the higher rated issues only in a small degree.
A -- Has a strong capacity to pay interest and repay principal although
it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB -- Regarded as having adequate capacity to pay interest and repay
principal. Whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal for debt in
this category than in higher rated categories.
BB, B, CCC, CC, C -- Debt rated "BB," "B," "CCC," "CC," and "C" is
regarded, on balance, as predominantly speculative with respect to capacity
to pay interest and repay principal in accordance with the terms of the
obligation. "BB" indicates the lowest degree of speculation and "C" the
highest degree of speculation. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
BB -- Has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
The "BB" rating category is also used for debt subordinated to senior debt
that is assigned an actual or implied "BBB-" rating.
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B -- Has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The "B" rating category is
also used for debt subordinated to senior debt that is assigned an actual
or implied "BB" or "BB-" rating.
CCC -- Has a currently identifiable vulnerability to default, and is
dependent upon favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial, or economic conditions, it is not likely to
have the capacity to pay interest and repay principal. The "CCC" rating
category is also used for debt subordinated to senior debt that is assigned
an actual or implied "B" or "B-" rating.
CC -- Typically applied to debt subordinated to senior debt that is
assigned an actual or implied "CCC" rating.
C -- Typically applied to debt subordinated to senior debt that is
assigned an actual or implied "CCC-" debt rating. The "C" rating may be
used to cover a situation where a bankruptcy petition has been filed, but
debt service payments are continued.
C1 -- Reserved for income bonds on which no interest is being paid.
D -- In payment default. The "D" category is used when interest
payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period. This rating will also be
used upon the filing of a bankruptcy petition if debt service payments are
jeopardized.
PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NR: Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
FINANCIAL STATEMENTS
The audited Statement of Assets and Liabilities of the Fund appears on
the following pages.
<PAGE>
Coopers & Lybrand L.L.P
A professional services firm
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of GT Global New Dimension Fund and Board of Trustees of GT
Global Series Trust:
We have audited the accompanying statement of assets and liabilities of GT
Global New Dimension Fund (the "Fund") as of August 18, 1997. This financial
statement is the responsibility of the Fund's management. Our responsibility is
to express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. Our procedures included
confirmation of cash held by the custodian as of August 18, 1997. 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 audit provides a reasonable basis for our
opinion.
In or opinion, the financial statement referred to above presents fairly, in all
material respects, the financial position of the Fund as of August 18, 1997, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
August 18, 1997
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
GT GLOBAL NEW DIMENSION FUND
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 18, 1997
ASSETS
- ------
Cash....................................................................$100,000
--------
LIABILITIES
- -----------
Expense Payable................................................................0
NET ASSETS..............................................................$100,000
- ----------
CLASS A
- -------
NET ASSET VALUE PER SHARE (33.333/2,916.302 SHARES OUTSTANDING)........11.43
CLASS B
- -------
NET ASSET VALUE PER SHARE (33.333/2,916.302 SHARES OUTSTANDING)........11.43
ADVISOR
- -------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SHARE (33.334/2,916.303 SHARES OUTSTANDING)........................11.43
NOTE 1
GT Global New Dimension Fund ("The Fund") was incorporated under the laws of the
State of Massachusetts on August 26, 1996, and is registered under the
Investment company act of 1940, as amended, as a diversified series of GT Global
Series Trust ("The Trust"), an open-end investment company. The Fund has had no
operations to date other than those relating to organization and registration.
NOTE 2
All costs incurred in connection with the Fund's organization have been assumed
by Chancellor LGT Asset Management, Inc. ("Chancellor LGT"), the Fund's
administrator.
NOTE 3
Chancellor LGT serves as the Fund's administrator under an Administration
contract between the Fund and Chancellor LGT ("Administration Contract").
Chancellor LGT will not charge a fee for this service. Chancellor LGT is
currently committed to assuming the Fund's expenses.
The Fund will seek to invest substantially all of its assets in the following
mutual funds: GT Global Consumer Products and Services Fund, GT Global Financial
Services Fund; GT Global Health Care Fund; GT Global Infrastructure Fund, GT
Global Natural Resources Fund; and GT Global Telecommunications Fund;
collectively, the "Underlying Theme Funds", all of which are managed by
Chancellor LGT.
NOTE 4
The Fund intends to meet the requirements for qualification as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended
("Code"). It is also the intention of the Fund to make distributions sufficient
to avoid imposition of any excise tax under Section 4982 of the Code.
<PAGE>
GT Global New Dimension Fund: Advisor Class
50 California Street, 27th Floor
San Francisco, California 94111
(415) 392-6181
Toll Free: (800) 824-1580
Statement of Additional Information
- ------------------------------------------------------------------------------
________, 1997
This Statement of Additional Information relates to the Advisor Class shares of
GT Global New Dimension Fund (the "Fund"), a diversified series of GT Global
Series Trust (the "Trust"), an open-end management investment company organized
as a Massachusetts business trust. The Fund seeks its investment objective by
investing in the following GT Global theme mutual funds: GT Global Consumer
Products and Services Fund; GT Global Financial Services Fund; GT Global Health
Care Fund; GT Global Infrastructure Fund; GT Global Natural Resources Fund; and
GT Global Telecommunications Fund (collectively, the "Underlying Theme Funds").
Chancellor LGT Asset Management, Inc. (the "Manager") serves as the Fund's
manager. The distributor of the Fund's shares is GT Global, Inc. ("GT Global").
The Fund's transfer agent is GT Global Investor Services, Inc. ("GT Services" or
the "Transfer Agent").
This Statement of Additional Information, which is not a prospectus, supplements
and should be read in conjunction with the Fund's current Advisor Class
Prospectus dated _______, 1997, a copy of which is available without charge by
writing to the above address or calling the Fund at the toll-free telephone
number printed above.
<PAGE>
Table of Contents
Page No.
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Investment Objective And Policies.............................................3
Options, Futures And Currency Strategies.....................................10
Risk Factors Of The Underlying Theme Funds...................................23
Investment Limitations.......................................................29
Execution Of Portfolio Transactions..........................................37
Trustees And Executive Officers..............................................40
Management...................................................................42
Valuation Of Fund Shares.....................................................42
Information Relating To Sales And Redemptions................................42
Taxes ....................................................................44
Additional Information.......................................................46
Investment Results...........................................................48
Description Of Debt Ratings..................................................55
Financial Statements.........................................................60
2
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INVESTMENT OBJECTIVE
AND POLICIES
INVESTMENT OBJECTIVE AND POLICIES OF THE FUND
The following supplements the information contained in the Prospectus concerning
the investment policies of the Fund. As stated in the Prospectus, in addition to
investing in the Underlying Theme Funds, the Fund may invest directly in cash
and/or money market instruments, including U.S. government securities and
repurchase agreements.
U.S. GOVERNMENT SECURITIES. The Fund may invest in various direct obligations of
the U.S. Treasury and obligations issued or guaranteed by the U.S. government or
one of its agencies or instrumentalities (collectively, "U.S. government
securities"). Among the U.S. government securities that may be held by the Fund
are securities that are supported by the full faith and credit of the United
States; securities that are supported by the right of the issuer to borrow from
the U.S. Treasury; and securities that are supported solely by the credit of the
instrumentality. U.S. government securities are described in detail in the
following section.
REPURCHASE AGREEMENTS. The Fund may invest in repurchase agreements. A
repurchase agreement is a transaction in which the Fund purchases securities
from a bank or recognized securities dealer and simultaneously commits to resell
the securities to the bank or dealer on an agreed-upon date or upon demand and
at a price reflecting a market rate of interest unrelated to the coupon rate or
maturity of the purchased securities. The Fund maintains custody of the
underlying securities prior to their repurchase; thus, the obligation of the
bank or dealer to pay the repurchase price on the date agreed to is, in effect,
secured by such securities. If the value of these securities is less than the
repurchase price, plus any agreed-upon additional amount, the other party to the
agreement must provide additional collateral so that at all times the collateral
is at least equal to the repurchase price, plus any agreed-upon additional
amount. The difference between the total amount to be received upon repurchase
of the securities and the price that was paid by the Fund upon acquisition is
accrued as interest and included in its net investment income. Repurchase
agreements carry certain risks not associated with direct investments in
securities, including possible declines in the market value of the underlying
securities and delays and costs to the Fund if the other party to a repurchase
agreement becomes insolvent.
INVESTMENT OBJECTIVES AND POLICIES OF THE UNDERLYING THEME FUNDS
The following supplements the information contained in the Prospectus concerning
the investment policies and limitations of the Underlying Theme Funds. More
information about the investment policies and restrictions and the investment
limitations of each Underlying Theme Fund is set forth in the Underlying Theme
Funds' prospectus and statement of additional information.
The Underlying Theme Funds are diversified series of G.T. Investment Funds, Inc.
(the "Company"), a registered open-end management investment company. The GT
Global Consumer Products and Services Fund ("Consumer Products and Services
Fund"), GT Global Financial Services Fund ("Financial Services Fund"), GT Global
Infrastructure Fund ("Infrastructure Fund"), and GT Global Natural Resources
Fund ("Natural Resources Fund") (each, a "Feeder Fund," and, collectively, the
"Feeder Funds") each seeks to achieve its investment objective by investing all
of its investable assets in the Global Consumer Products and Services Portfolio,
Global Financial Services Portfolio, Global Infrastructure Portfolio and Global
Natural Resources Portfolio (each, a "Portfolio," and, collectively, the
"Portfolios"), respectively.
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Each Portfolio is a subtrust (a "series") of Global Investment Portfolio (an
open-end management investment company) with an investment objective that is
identical to that of its corresponding Underlying Theme Fund. Whenever the
phrase "all of the Underlying Theme Fund's investable assets" is used herein, it
means that the only investment securities held by a Feeder Fund will be its
interest in its corresponding Portfolio. A Feeder Fund may withdraw its
investment in its corresponding Portfolio at any time, if the Company's Board of
Directors of the Company determines that it is in the best interests of the
Feeder Fund and its shareholders to do so. Upon any such withdrawal, a Feeder
Fund's assets would be invested in accordance with the investment policies of
its corresponding Portfolio described below and in the Underlying Theme Funds'
prospectus.
The investment objective of each Feeder Fund is long-term capital growth. The
investment objectives of the GT Global Health Care Fund ("Health Care Fund") and
the GT Global Telecommunications Fund ("Telecommunications Fund") are long-term
capital appreciation and long-term capital growth, respectively. The Portfolios
and the Health Care Fund and the Telecommunications Fund, together, are referred
to herein as the "Underlying Theme Portfolios."
SELECTION OF EQUITY INVESTMENTS. With respect to the Global Natural Resources
Portfolio, the Manager has identified four areas that it expects will create
investment opportunities: (i) improving supply/demand fundamentals, which may
result in higher commodity prices; (ii) privatization of state-owned natural
resource businesses; (iii) management which can improve production efficiencies
without correspondingly increasing commodity prices; and (iv) service companies
with emerging technologies that can enhance productivity or reduce production
costs. Of course, there is no certainty that these factors will produce the
anticipated results.
With respect to the Telecommunications Fund, the Manager has identified four
areas that it expects will create investment opportunities: (i) deregulation of
companies in the industry, which will allow competition to promote greater
efficiencies; (ii) privatization of state-owned telecommunications businesses;
(iii) development of infrastructure in underdeveloped countries and upgrading of
services in other countries; and (iv) emerging technologies that will enhance
productivity and reduce costs in the telecommunications industry. Of course,
there is no certainty that these factors will produce the anticipated results.
There may be times when, in the opinion of the Manager, prevailing market,
economic or political conditions warrant reducing the proportion of the
Underlying Theme Portfolios' assets invested in equity securities and increasing
the proportion held in cash (U.S. dollars, foreign currencies or multinational
currency units) or invested in debt securities or high quality money market
instruments issued by corporations, or the United States, or a foreign
government. A portion of each Underlying Theme Portfolio's assets normally will
be held in cash (U.S. dollars, foreign currencies or multinational currency
units) or invested in foreign or domestic high quality money market instruments
pending investment of proceeds from new sales of Underlying Theme Fund shares,
to provide for ongoing expenses and to satisfy redemptions.
For each Underlying Theme Portfolio's investment purposes, an issuer is
typically considered as located in a particular country if it (a) is organized
under the laws of or has its principal office in a particular country, or (b)
normally derives 50% or more of its total revenues from business in that
country, provided that, in the Manager's view, the value of such issuer's
securities will tend to reflect such country's development to a greater extent
than developments elsewhere. However, these are not absolute requirements, and
certain companies incorporated in a particular country and considered by the
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<PAGE>
Manager to be located in that country may have substantial foreign operations or
subsidiaries and/or export sales exceeding in size the assets or sales in that
country.
In certain countries, governmental restrictions and other limitations on
investment may affect an Underlying Theme Portfolio's ability to invest in such
countries. In addition, in some instances only special classes of securities may
be purchased by foreigners and the market prices, liquidity and rights with
respect to those securities may vary from shares owned by nationals. The Manager
is not aware at this time of the existence of any investment or exchange control
regulations which might substantially impair the operations of the Underlying
Theme Portfolios as described in the Underlying Theme Funds' prospectus and
statement of additional information. Restrictions may in the future, however,
make it undesirable to invest in certain countries. None of the Underlying Theme
Portfolios has a present intention of making any significant investment in any
country or stock market in which the Manager considers the political or economic
situation to threaten an Underlying Theme Portfolio with substantial or total
loss of its investment in such country or market.
INVESTMENTS IN OTHER INVESTMENT COMPANIES. Each Underlying Theme Portfolio may
invest in the securities of investment companies within the limitations of the
Investment Company Act of 1940, as amended (the "1940 Act"). These limitations
currently provide that, in general, an Underlying Theme Portfolio may purchase
shares of an investment company unless (a) such a purchase would cause an
Underlying Theme Portfolio to own in the aggregate more than 3% of the total
outstanding voting stock of the investment company or (b) such a purchase would
cause the Underlying Theme Portfolio to have more than 5% of its assets invested
in the investment company or more than 10% of its assets invested in an
aggregate of all such investment companies. The foregoing restrictions do not
apply to the investment of the Feeder Funds in their corresponding Portfolios.
Investment in closed-end investment companies may involve the payment of
substantial premiums above the value of such companies' portfolio securities.
Each Underlying Theme Portfolio does not intend to invest in such investment
companies unless, in the judgment of the Manager, the potential benefits of such
investments justify the payment of any applicable premiums. The return on such
securities will be reduced by operating expenses of such companies, including
payments to the investment managers of those investment companies.
DEPOSITORY RECEIPTS. An Underlying Theme Portfolio may hold securities of
foreign issuers in the form of American Depository Receipts ("ADRs"), American
Depository Shares ("ADSs") and European Depository Receipts ("EDRs") or other
securities convertible into securities of eligible foreign issuers. These
securities may not necessarily be denominated in the same currency as the
securities for which they may be exchanged. ADRs and ADSs are typically issued
by an American bank or trust company and evidence ownership of underlying
securities issued by a foreign corporation. EDRs, which are sometimes referred
to as Continental Depository Receipts ("CDRs"), are issued in Europe typically
by foreign banks and trust companies and evidence ownership of either foreign or
domestic securities. Generally, ADRs and ADSs in registered form are designed
for use in U.S. securities markets and EDRs in bearer form are designed for use
in European securities markets. For purposes of each Underlying Theme
Portfolio's investment policies, an Underlying Theme Portfolio's investments in
ADRs, ADSs and EDRs will be deemed to be investments in the equity securities
representing securities of foreign issuers into which they may be converted.
ADR facilities may be established as either "unsponsored" or "sponsored." While
ADRs issued under these two types of facilities are in some respects similar,
5
<PAGE>
there are distinctions between them relating to the rights and obligations of
ADR holders and the practices of market participants. A depository may establish
an unsponsored facility without participation by (or even necessarily the
acquiescence of) the issuer of the deposited securities, although typically the
depository requests a letter of non-objection from such issuer prior to the
establishment of the facility. Holders of unsponsored ADRs generally bear all
the costs of such facilities. The depository usually charges fees upon the
deposit and withdrawal of the deposited securities, the conversion of dividends
into U.S. dollars, the disposition of non-cash distributions, and the
performance of other services. The depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited securities or to pass-through voting
rights to ADR holders in respect of the deposited securities. Sponsored ADR
facilities are created in generally the same manner as unsponsored facilities,
except that the issuer of the deposited securities enters into a deposit
agreement with the depository. The deposit agreement sets out the rights and
responsibilities of the issuer, the depository and the ADR holders. With
sponsored facilities, the issuer of the deposited securities generally will bear
some of the costs relating to the facility (such as dividend payment fees of the
depository), although ADR holders continue to bear certain other costs (such as
deposit and withdrawal fees). Under the terms of most sponsored arrangements,
depositories agree to distribute notices of shareholder meetings and voting
instructions, and to provide shareholder communications and other information to
the ADR holders at the request of the issuer of the deposited securities. The
Underlying Theme Portfolios may invest in both sponsored and unsponsored ADRs.
WARRANTS OR RIGHTS. Warrants or rights may be acquired by an Underlying Theme
Portfolio in connection with other securities or separately and provide the
Underlying Theme Portfolio with the right to purchase at a later date other
securities of the issuer.
LENDING OF UNDERLYING THEME PORTFOLIO SECURITIES. For the purpose of realizing
additional income, each Underlying Theme Portfolio may make secured loans of its
securities holdings amounting to not more than 30% of its total assets.
Securities loans are made to broker/dealers or institutional investors pursuant
to agreements requiring that the loans be continuously secured by collateral at
least equal at all times to the value of the securities lent plus any accrued
interest, "marked to market" on a daily basis. The Underlying Theme Portfolios
may pay reasonable administrative and custodial fees in connection with the
loans of their securities. While the securities loan is outstanding, an
Underlying Theme Portfolio will continue to receive the equivalent of the
interest or dividends paid by the issuer on the securities, as well as interest
on the investment of the collateral or a fee from the borrower. An Underlying
Theme Portfolio will have a right to call each loan and obtain the securities on
five business days' notice. An Underlying Theme Portfolio will not have the
right to vote equity securities while they are being lent, but it may call in a
loan in anticipation of any important vote. Loans will only be made to firms
deemed by the Manager to be of good standing and will not be made unless, in the
judgment of the Manager, the consideration to be earned from such loans would
justify the risk. The risks in lending portfolio securities, as with other
extensions of secured credit, consist of possible delays in receiving additional
collateral or in recovery of the securities and possible loss of rights in the
collateral should the borrower fail financially.
COMMERCIAL BANK OBLIGATIONS. For the purposes of each Underlying Theme
Portfolio's investment policies with respect to bank obligations, obligations of
foreign branches of U.S. banks and of foreign banks are obligations of the
issuing bank and may be general obligations of the parent bank. Such obligations
may, however, be limited by the terms of a specific obligation and by government
regulation. As with investments in non-U.S. securities in general, investments
in the obligations of foreign branches of U.S. banks and of foreign banks may
subject each Underlying Theme Portfolio to investment risks that are different
in some respects from those of investments in obligations of U.S. issuers.
Although each Underlying Theme Portfolio will typically acquire obligations
6
<PAGE>
issued and supported by the credit of U.S. or foreign banks having total assets
at the time of purchase of $1 billion or more, this $1 billion figure is not an
investment policy or restriction of each Underlying Theme Portfolio. For the
purposes of calculation with respect to the $1 billion figure, the assets of a
bank will be deemed to include the assets of its U.S. and non-U.S. branches.
REPURCHASE AGREEMENTS. A repurchase agreement is a transaction in which an
Underlying Theme Portfolio purchases a security from a bank or recognized
securities dealer and simultaneously commits to resell that security to the bank
or dealer on an agreed-upon date or upon demand and at a price reflecting a
market rate of interest unrelated to the coupon rate or maturity of the
purchased security. Although repurchase agreements carry certain risks not
associated with direct investments in securities, including possible decline in
the market value of the underlying securities and delays and costs to the
Underlying Theme Portfolio if the other party to the repurchase agreement
becomes bankrupt, the Underlying Theme Portfolios intend to enter into
repurchase agreements only with banks and dealers believed by the Manager to
present minimal credit risks in accordance with guidelines established by the
Company's Board of Directors or Global Investment Portfolio's Board of Trustees
(each "Board" and, collectively, the "Boards"), as applicable. The Manager will
review and monitor the creditworthiness of such institutions under the
applicable Board's general supervision.
Each Underlying Theme Portfolio will invest only in repurchase agreements
collateralized at all times in an amount at least equal to the repurchase price
plus accrued interest. To the extent that the proceeds from any sale of such
collateral upon a default in the obligation to repurchase were less than the
repurchase price, an Underlying Theme Portfolio would suffer a loss. If the
financial institution that is party to the repurchase agreement petitions for
bankruptcy or otherwise becomes subject to bankruptcy or other liquidation
proceedings, there may be restrictions on an Underlying Theme Portfolio's
ability to sell the collateral and it could suffer a loss. However, with respect
to financial institutions whose bankruptcy or liquidation proceedings are
subject to the U.S. Bankruptcy Code, each Underlying Theme Portfolio intends to
comply with provisions under such code that would allow the immediate resale of
such collateral. Each Underlying Theme Portfolio will not enter into a
repurchase agreement with a maturity of more than seven days if, as a result,
more than 15% of the value of its net assets (except for the Health Care Fund,
which may invest more than 10% of the value of its total assets) would be
invested in such repurchase agreements and other illiquid investments.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS. Each
Underlying Theme Portfolio's borrowings will not exceed 33-1/3% of its total
assets, i.e., the Underlying Theme Portfolio's total assets at all times will
equal at least 300% of the amount of outstanding borrowings. If market
fluctuations in the value of an Underlying Theme Portfolio's securities holdings
or other factors cause the ratio of its total assets to outstanding borrowings
to fall below 300%, within three days (excluding Sundays and holidays) of such
event that Underlying Theme Portfolio may be required to sell portfolio
securities to restore the 300% asset coverage, even though from an investment
standpoint such sales might be disadvantageous. Each Underlying Theme Portfolio
may also borrow up to 5% of its total assets for temporary or emergency purposes
other than to meet redemptions. Any borrowing by an Underlying Theme Portfolio
may cause greater fluctuation in the value of its shares than would be the case
if it did not borrow.
Each Underlying Theme Portfolio's fundamental investment limitations permit it
to borrow money for leveraging purposes. However, each Underlying Theme
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Portfolio (except the Health Care Fund) is currently prohibited, pursuant to a
non-fundamental investment policy, from borrowing money in order to purchase
securities. Nevertheless, this policy may be changed in the future by the
applicable Board. In the event that an Underlying Theme Portfolio employs
leverage in the future, it would be subject to certain additional risks. Use of
leverage creates an opportunity for greater growth of capital but would
exaggerate any increases or decreases in the net asset value of a Feeder Fund,
or an Underlying Theme Portfolio. When the income and gains on securities
purchased with the proceeds of borrowings exceed the costs of such borrowings,
an Underlying Theme Portfolio's earnings or a Feeder Fund's net asset value will
increase faster than otherwise would be the case; conversely, if such income and
gains fail to exceed such costs, an Underlying Theme Portfolio's earnings or a
Feeder Fund's net asset value would decline faster than would otherwise be the
case.
Each Underlying Theme Portfolio may enter into reverse repurchase agreements. A
reverse repurchase agreement is a borrowing transaction in which the Underlying
Theme Portfolio transfers possession of a security to another party, such as a
bank or broker/dealer, in return for cash, and agrees to repurchase the security
in the future at an agreed upon price, which includes an interest component.
Each Underlying Theme Portfolio may also engage in "roll" borrowing
transactions, which involve the sale of Government National Mortgage Association
certificates or other securities together with a commitment (for which the
Underlying Theme Portfolio may receive a fee) to purchase similar, but not
identical, securities at a future date. Each Underlying Theme Portfolio will
maintain, in a segregated account with a custodian, cash or liquid securities in
an amount sufficient to cover its obligations under "roll" transactions and
reverse repurchase agreements with broker/dealers. No segregation is required
for reverse repurchase agreements with banks.
SHORT SALES. Each Underlying Theme Portfolio (except the Health Care Fund) is
authorized to make short sales of securities. A short sale is a transaction in
which an Underlying Theme Portfolio sells a security in anticipation that the
market price of that security will decline. An Underlying Theme Portfolio may
make short sales (i) as a form of hedging to offset potential declines in long
positions in securities it owns, or anticipates acquiring, or in similar
securities, and (ii) in order to maintain flexibility in its securities
holdings.
When an Underlying Theme Portfolio makes a short sale of a security it does not
own, it must borrow the security sold short and deliver it to the broker/dealer
or other intermediary through which it made the short sale. The Underlying Theme
Portfolio may have to pay a fee to borrow particular securities and will often
be obligated to pay over any payments received on such borrowed securities.
An Underlying Theme Portfolio's obligation to replace the borrowed security when
the borrowing is called or expires will be secured by collateral deposited with
the intermediary. The Underlying Theme Portfolio will also be required to
deposit collateral with its custodian to the extent, if any, necessary so that
the value of both collateral deposits in the aggregate is at all times equal to
at least 100% of the current market value of the security sold short. Depending
on arrangements made with the intermediary from which it borrowed the security
regarding payment of any amounts received by it on such security, an Underlying
Theme Portfolio may not receive any payments (including interest) on its
collateral deposited with such intermediary.
If the price of the security sold short increases between the time of the short
sale and the time an Underlying Theme Portfolio replaces the borrowed security,
it will incur a loss; conversely, if the price declines, the Underlying Theme
Portfolio will realize a gain. Any gain will be decreased, and any loss
increased, by the transaction costs associated with the transaction. Although an
Underlying Theme Portfolio's gain is limited by the price at which it sold the
security short, its potential loss theoretically is unlimited.
No Underlying Theme Portfolio will make a short sale if, after giving effect to
the sale, the market value of the securities sold short exceeds 25% of the value
of its total assets or its aggregate short sales of the securities of any one
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issuer exceed the lesser of 2% of its net assets or 2% of the securities of any
class of the issuer. Moreover, an Underlying Theme Portfolio may engage in short
sales only with respect to securities listed on a national securities exchange.
An Underlying Theme Portfolio may make short sales "against the box" without
respect to such limitations. In this type of short sale, at the time of the sale
the Underlying Theme Portfolio owns the security it has sold short or has the
immediate and unconditional right to acquire at no additional cost the identical
security.
RISKS ASSOCIATED WITH DEBT SECURITIES. The value of the debt securities held by
each Underlying Theme Portfolio generally will vary conversely with market
interest rates. If interest rates in a market fall, the value of the debt
securities held by each Underlying Theme Portfolio ordinarily will rise. If
market interest rates increase, however, the debt securities owned by each
Underlying Theme Portfolio in that market will be likely to decrease in value.
The Consumer Products and Services Portfolio, Infrastructure Portfolio, and
Natural Resources Portfolio may each invest up to 20% of its total assets in
debt securities rated below investment grade. Such investments involve a high
degree of risk. However, those Portfolios will not invest in debt securities
that are in default as to payment of principal and interest.
Debt rated Baa by Moody's Investors Service, Inc. ("Moody") is considered by
Moody's to have speculative characteristics. Debt rated BB, B, CCC, CC or C by
Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"), and
debt rated Ba, B, Caa, Ca or C by Moody's is regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation. For S&P, BB
indicates the lowest degree of speculation for such lower quality debt and C the
highest degree of speculation. For Moody's, Baa indicates the lowest degree of
speculation for such lower quality debt and C the highest degree of speculation.
While such lower quality debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions. Debt rated C by Moody's or S&P is the lowest
rated debt that is not in default as to principal or interest, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing. Lower quality debt securities also are generally
considered to be subject to greater risk than securities with higher ratings
with regard to a deterioration of general economic conditions. These lower
quality debt securities are the equivalent of high yield, high risk bonds,
commonly known as "junk bonds."
Ratings of debt securities represent the rating agency's opinion regarding their
quality and are not a guarantee of quality. Rating agencies attempt to evaluate
the safety of principal and interest payments and do not evaluate the risks of
fluctuations in market value. Also, rating agencies may fail to make timely
changes in credit ratings in response to subsequent events, so that an issuer's
current financial condition may be better or worse than a rating indicates.
The market values of lower quality debt securities tend to reflect individual
developments of the issuer to a greater extent than do higher quality
securities, which react primarily to fluctuations in the general level of
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interest rates. In addition, lower quality debt securities tend to be more
sensitive to economic conditions and generally have more volatile prices than
higher quality securities. Issuers of lower quality securities are often highly
leveraged and may not have available to them more traditional methods of
financing. For example, during an economic downturn or a sustained period of
rising interest rates, highly leveraged issuers of lower quality securities may
experience financial stress. During such periods, such issuers may not have
sufficient revenues to meet their interest payment obligations. The issuer's
ability to service its debt obligations may also be adversely affected by
specific developments affecting the issuer, such as the issuer's inability to
meet specific projected business forecasts or the unavailability of additional
financing. The risk of loss due to default by the issuer is significantly
greater for the holders of lower quality securities because such securities are
generally unsecured and may be subordinated to the claims of other creditors of
the issuer.
Lower quality debt securities of corporate issuers frequently have call or
buy-back features that permit the issuer to call or repurchase the security from
an Underlying Theme Portfolio. If an issuer exercises these provisions in a
declining interest rate market, the Underlying Theme Portfolio may have to
replace the security with a lower yielding security, resulting in a decreased
return for investors. In addition, the Underlying Theme Portfolios may have
difficulty disposing of lower quality securities because they may have a thin
trading market. There may be no established retail secondary market for many of
these securities, and each Underlying Theme Portfolio anticipates that such
securities could be sold only to a limited number of dealers or institutional
investors. The lack of a liquid secondary market also may have an adverse impact
on market prices of such instruments and may make it more difficult for the
Underlying Theme Portfolios to obtain accurate market quotations for purposes of
valuing their portfolio investments. The Underlying Theme Portfolios may also
acquire lower quality debt securities during an initial underwriting or which
are sold without registration under applicable securities laws. Such securities
involve special considerations and risks.
In addition to the foregoing, factors that could have an adverse effect on the
market value of lower quality debt securities in which the Underlying Theme
Portfolios may invest include: (i) potential adverse publicity; (ii) heightened
sensitivity to general economic or political conditions; and (iii) the likely
adverse impact of a major economic recession. An Underlying Theme Portfolio may
also incur additional expenses to the extent it is required to seek recovery
upon a default in the payment of principal or interest on portfolio holdings,
and the Underlying Theme Portfolio may have limited legal recourse in the event
of a default.
The Manager attempts to minimize the speculative risks associated with
investments in lower quality securities through credit analysis and by carefully
monitoring current trends in interest rates, political developments and other
factors.
OPTIONS, FUTURES AND CURRENCY STRATEGIES
SPECIAL RISKS OF OPTIONS, FUTURES AND CURRENCY STRATEGIES
The use by the Underlying Theme Portfolios of options, futures contracts and
forward currency contracts ("Forward Contracts") involves special considerations
and risks, as described below. Risks pertaining to particular instruments are
described in the sections that follow.
(1) Successful use of most of these instruments depends
upon the Manager's ability to predict movements of the overall
securities and currency markets, which requires different skills than
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predicting changes in the prices of individual securities. While the
Manager is experienced in the use of these instruments, there can be no
assurance that any particular strategy adopted will succeed.
(2) There might be imperfect correlation, or even no
correlation, between price movements of an instrument and price
movements of the investments being hedged. For example, if the value of
an instrument used in a short hedge increased by less than the decline
in value of the hedged investment, the hedge would not be fully
successful. Such a lack of correlation might occur due to factors
unrelated to the value of the investments being hedged, such as
speculative or other pressures on the markets in which the hedging
instrument is traded. The effectiveness of hedges using hedging
instruments on indices will depend on the degree of correlation between
price movements in the index and price movements in the investments
being hedged.
(3) Hedging strategies, if successful, can reduce risk
of loss by wholly or partially offsetting the negative effect of
unfavorable price movements in the investments being hedged. However,
hedging strategies can also reduce opportunity for gain by offsetting
the positive effect of favorable price movements in the hedged
investments. For example, if an Underlying Theme Portfolio entered into
a short hedge because the Manager projected a decline in the price of a
security in the Underlying Theme Portfolio's portfolio, and the price
of that security increased instead, the gain from that increase might
be wholly or partially offset by a decline in the price of the hedging
instrument. Moreover, if the price of the hedging instrument declined
by more than the increase in the price of the security, the Underlying
Theme Portfolio could suffer a loss. In either such case, the
Underlying Theme Portfolio would have been in a better position had it
not hedged at all.
(4) As described below, the Underlying Theme Portfolio
might be required to maintain assets as "cover," maintain segregated
accounts or make margin payments when it takes positions in instruments
involving obligations to third parties (I.E., instruments other than
purchased options). If the Underlying Theme Portfolio were unable to
close out its positions in such instruments, it might be required to
continue to maintain such assets or accounts or make such payments
until the position expired or matured. The requirements might impair
the Underlying Theme Portfolio's ability to sell a portfolio security
or make an investment at a time when it would otherwise be favorable to
do so, or require that the Underlying Theme Portfolio sell a portfolio
security at a disadvantageous time. The Underlying Theme Portfolio's
ability to close out a position in an instrument prior to expiration or
maturity depends on the existence of a liquid secondary market or, in
the absence of such a market, the ability and willingness of the other
party to the transaction ("contra party") to enter into a transaction
closing out the position. Therefore, there is no assurance that any
position can be closed out at a time and price that is favorable to the
Underlying Theme Portfolio.
WRITING CALL OPTIONS
Each Underlying Theme Portfolio may write (sell) call options on securities,
indices and currencies. Call options generally will be written on securities and
currencies that, in the opinion of the Manager, are not expected to make any
major price moves in the near future but that, over the long term, deemed to be
attractive investments for the Underlying Theme Portfolios.
A call option gives the holder (buyer) the right to purchase a security or
currency at a specified price (the exercise price) at any time until (American
style) or on (European style) a certain date (the expiration date). So long as
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the obligation of the writer of a call option continues, he or she may be
assigned an exercise notice, requiring him or her to deliver the underlying
security or currency against payment of the exercise price. This obligation
terminates upon the expiration of the call option, or such earlier time at which
the writer effects a closing purchase transaction by purchasing an option
identical to that previously sold.
Portfolio securities or currencies on which call options may be written will be
purchased solely on the basis of investment considerations consistent with each
Underlying Theme Portfolio's investment objective. When writing a call option,
an Underlying Theme Portfolio, in return for the premium, gives up the
opportunity for profit from a price increase in the underlying security or
currency above the exercise price, and retains the risk of loss should the price
of the security or currency decline. Unlike one who owns securities or
currencies not subject to an option, an Underlying Theme Portfolio has no
control over when it may be required to sell the underlying securities or
currencies, since most options may be exercised at any time prior to the
option's expiration. If a call option that an Underlying Theme Portfolio has
written expires, it will realize a gain in the amount of the premium; however,
such gain may be offset by a decline in the market value of the underlying
security or currency during the option period. If the call option is exercised,
the Underlying Theme Portfolio will realize a gain or loss from the sale of the
underlying security or currency, which will be increased or offset by the
premium received. The Underlying Theme Portfolios do not consider a security or
currency covered by a call option to be "pledged" as that term is used in their
policies that limit the pledging or mortgaging of their assets.
Writing call options can serve as a limited short hedge because declines in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
appreciates to a price higher than the exercise price of the call option, it can
be expected that the option will be exercised and an Underlying Theme Portfolio
will be obligated to sell the security or currency at less than its market
value.
The premium that an Underlying Theme Portfolio receives for writing a call
option is deemed to constitute the market value of an option. The premium the
Underlying Theme Portfolio will receive from writing a call option will reflect,
among other things, the current market price of the underlying investment, the
relationship of the exercise price to such market price, the historical price
volatility of the underlying investment, and the length of the option period. In
determining whether a particular call option should be written, the Manager will
consider the reasonableness of the anticipated premium and the likelihood that a
liquid secondary market will exist for those options.
Closing transactions will be effected in order to realize a profit on an
outstanding call option, to prevent an underlying security or currency from
being called or to permit the sale of the underlying security or currency.
Furthermore, effecting a closing transaction will permit an Underlying Theme
Portfolio to write another call option on the underlying security or currency
with either a different exercise price or expiration date, or both.
Each Underlying Theme Portfolio will pay transaction costs in connection with
the writing of options and in entering into closing purchase contracts.
Transaction costs relating to options activity are normally higher than those
applicable to purchases and sales of portfolio securities.
The exercise price of the options may be below, equal to or above the current
market values of the underlying securities, indices or currencies at the time
the options are written. From time to time, an Underlying Theme Portfolio may
purchase an underlying security or currency for delivery in accordance with the
exercise of an option, rather than delivering such security or currency from its
portfolio. In such cases, additional costs will be incurred.
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An Underlying Theme Portfolio will realize a profit or loss from a closing
purchase transaction if the cost of the transaction is less or more,
respectively, than the premium received from writing the option. Because
increases in the market price of a call option generally will reflect increases
in the market price of the underlying security or currency, any loss resulting
from the repurchase of a call option is likely to be offset in whole or in part
by appreciation of the underlying security or currency owned by an Underlying
Theme Portfolio.
WRITING PUT OPTIONS
Each Underlying Theme Portfolio may write put options on securities, indices and
currencies. A put option gives the purchaser of the option the right to sell,
and the writer (seller) the obligation to buy, the underlying security or
currency at the exercise price at any time until (American style) or on
(European style) the expiration date. The operation of put options in other
respects, including their related risks and rewards, is substantially identical
to that of call options.
An Underlying Theme Portfolio generally would write put options in circumstances
where the Manager wishes to purchase the underlying security or currency for the
Underlying Theme Portfolio's holdings at a price lower than the current market
price of the security or currency. In such event, an Underlying Theme Portfolio
would write a put option at an exercise price that, reduced by the premium
received on the option, reflects the lower price it is willing to pay. Since the
Underlying Theme Portfolio would also receive interest on debt securities or
currencies maintained to cover the exercise price of the option, this technique
could be used to enhance current return during periods of market uncertainty.
The risk in such a transaction would be that the market price of the underlying
security or currency would decline below the exercise price less the premium
received.
Writing put options can serve as a limited long hedge because increases in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
depreciates to a price lower than the exercise price of the put option, it can
be expected that the put option will be exercised and an Underlying Theme
Portfolio will be obligated to purchase the security or currency at greater than
its market value.
PURCHASING PUT OPTIONS
Each Underlying Theme Portfolio may purchase put options on securities, indices
and currencies. As the holder of a put option, an Underlying Theme Portfolio
would have the right to sell the underlying security or currency at the exercise
price at any time until (American style) or on (European style) the expiration
date. An Underlying Theme Portfolio may enter into closing sale transactions
with respect to such options, exercise such option or permit such option to
expire.
Each Underlying Theme Portfolio may purchase a put option on an underlying
security or currency ("protective put") owned by the Underlying Theme Portfolio
in order to protect against an anticipated decline in the value of the security
or currency. Such hedge protection is provided only during the life of the put
option when the Underlying Theme Portfolio, as the holder of the put option, is
able to sell the underlying security or currency at the put exercise price
regardless of any decline in the underlying security's market price or
currency's exchange value. For example, a put option may be purchased in order
to protect unrealized appreciation of a security or currency when the Manager
deems it desirable to continue to hold the security or currency because of tax
considerations. The premium paid for the put option and any transaction costs
would reduce any profit otherwise available for distribution when the security
or currency is eventually sold.
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An Underlying Theme Portfolio may also purchase put options at a time when it
does not own the underlying security or currency. By purchasing put options on a
security or currency it does not own, that Underlying Theme Portfolio seeks to
benefit from a decline in the market price of the underlying security or
currency. If the put option is not sold when it has remaining value, and if the
market price of the underlying security or currency remains equal to or greater
than the exercise price during the life of the put option, the Underlying Theme
Portfolio will lose its entire investment in the put option. In order for the
purchase of a put option to be profitable, the market price of the underlying
security or currency must decline sufficiently below the exercise price to cover
the premium and transaction costs, unless the put option is sold in a closing
sale transaction.
PURCHASING CALL OPTIONS
Each Underlying Theme Portfolio may purchase call options on securities, indices
and currencies. As the holder of a call option, an Underlying Theme Portfolio
would have the right to purchase the underlying security or currency at the
exercise price at any time until (American style) or on (European style) the
expiration date. An Underlying Theme Portfolio may enter into closing sale
transactions with respect to such options, exercise such options or permit such
options to expire.
Call options may be purchased by an Underlying Theme Portfolio for the purpose
of acquiring the underlying security or currency for its portfolio. Utilized in
this fashion, the purchase of call options would enable an Underlying Theme
Portfolio to acquire the security or currency at the exercise price of the call
option plus the premium paid. At times, the net cost of acquiring the security
or currency in this manner may be less than the cost of acquiring the security
or currency directly. This technique may also be useful to an Underlying Theme
Portfolio in purchasing a large block of securities that would be more difficult
to acquire by direct market purchases. So long as it holds such a call option,
rather than the underlying security or currency itself, the Underlying Theme
Portfolio is partially protected from any unexpected decline in the market price
of the underlying security or currency and, in such event, could allow the call
option to expire, incurring a loss only to the extent of the premium paid for
the option.
An Underlying Theme Portfolio may also purchase call options on underlying
securities or currencies it owns in order to protect unrealized gains on call
options previously written by it. A call option could be purchased for this
purpose where tax considerations make it inadvisable to realize such gains
through a closing purchase transaction. Call options may also be purchased at
times to avoid realizing losses that would result in a reduction of the
Underlying Theme Portfolio's current return. For example, where an Underlying
Theme Portfolio has written a call option on an underlying security or currency
having a current market value below the price at which it purchased such
security or currency, an increase in the market price could result in the
exercise of the call option written by the Underlying Theme Portfolio and the
realization of a loss on the underlying security or currency. Accordingly, the
Underlying Theme Portfolio could purchase a call option on the same underlying
security or currency, which could be exercised to fulfill its delivery
obligations under its written call (if it is exercised). This strategy could
allow the Underlying Theme Portfolio to avoid selling the portfolio security or
currency at a time when it has an unrealized loss; however, the Underlying Theme
Portfolio would have to pay a premium to purchase the call option plus
transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of each
Underlying Theme Portfolio's total assets at the time of each purchase.
An Underlying Theme Portfolio may attempt to accomplish objectives similar to
those involved in using Forward Contracts by purchasing put or call options on
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currencies. A put option gives an Underlying Theme Portfolio as purchaser the
right (but not the obligation) to sell a specified amount of currency at the
exercise price at any time until (American style) or on (European style) the
expiration date of the option. A call option gives an Underlying Theme Portfolio
as purchaser the right (but not the obligation) to purchase a specified amount
of currency at the exercise price at any time until (American style) or on
(European style) the expiration date of the option. An Underlying Theme
Portfolio might purchase a currency put option, for example, to protect itself
against a decline in the dollar value of a currency in which it holds or
anticipates holding securities. If the currency's value should decline against
the dollar, the loss in currency value should be offset, in whole or in part, by
an increase in the value of the put. If the value of the currency instead should
rise against the dollar, any gain to an Underlying Theme Portfolio would be
reduced by the premium it had paid for the put option. A currency call option
might be purchased, for example, in anticipation of, or to protect against, a
rise in the value against the dollar of a currency in which an Underlying Theme
Portfolio anticipates purchasing securities.
Options may be either listed on an exchange or traded in over-the-counter
("OTC") markets. Listed options are third-party contracts (I.E., performance of
the obligations of the purchaser and seller is guaranteed by the exchange or
clearing corporation) and have standardized strike prices and expiration dates.
OTC options are two-party contracts with negotiated strike prices and expiration
dates. An Underlying Theme Portfolio will not purchase an OTC option unless it
believes that daily valuations for such options are readily obtainable. OTC
options differ from exchange-traded options in that OTC options are transacted
with dealers directly and not through a clearing corporation (which guarantees
performance). Consequently, there is a risk of non-performance by the dealer.
Since no exchange is involved, OTC options are valued on the basis of an average
of the last bid prices obtained from dealers, unless a quotation from only one
dealer is available, in which case only that dealer's price will be used. In the
case of OTC options, there can be no assurance that a liquid secondary market
will exist for any particular option at any specific time.
The staff SEC considers purchased OTC options to be illiquid securities. An
Underlying Theme Portfolio may also sell OTC options and, in connection
therewith, segregate assets or cover its obligations with respect to OTC options
written by it. The assets used as cover for OTC options written by an Underlying
Theme Portfolio will be considered illiquid unless the OTC options are sold to
qualified dealers who agree that the Underlying Theme Portfolio may repurchase
any OTC option it writes at a maximum price to be calculated by a formula set
forth in the option agreement. The cover for an OTC option written subject to
this procedure would be considered illiquid only to the extent that the maximum
repurchase price under the formula exceeds the intrinsic value of the option.
An Underlying Theme Portfolio's ability to establish and close out positions in
exchange-listed options depends on the existence of a liquid market. Each
Underlying Theme Portfolio intends to purchase or write only those
exchange-traded options for which there appears to be a liquid secondary market.
However, there can be no assurance that such a market will exist at any
particular time. Closing transactions can be made for OTC options only by
negotiating directly with the contra party or by a transaction in the secondary
market if any such market exists. Although an Underlying Theme Portfolio will
enter into OTC options only with contra parties that are expected to be capable
of entering into closing transactions with it, there is no assurance that the
Underlying Theme Portfolio will in fact be able to close out an OTC option
position at a favorable price prior to expiration. In the event of insolvency of
the contra party, the Underlying Theme Portfolio might be unable to close out an
OTC option position at any time prior to its expiration.
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INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or loss depends on
changes in the index in question (and thus on price movements in the securities
market or a particular market sector generally) rather than on price movements
in individual securities or futures contracts. When an Underlying Theme
Portfolio writes a call on an index, it receives a premium and agrees that,
prior to the expiration date, the purchaser of the call, upon exercise of the
call, will receive from the Underlying Theme Portfolio an amount of cash if the
closing level of the index upon which the call is based is greater than the
exercise price of the call. The amount of cash is equal to the difference
between the closing price of the index and the exercise price of the call times
a specified multiple (the "multiplier"), which determines the total dollar value
for each point of such difference. When an Underlying Theme Portfolio buys a
call on an index, it pays a premium and has the same rights as to such call as
are indicated above. When an Underlying Theme Portfolio buys a put on an index,
it pays a premium and has the right, prior to the expiration date, to require
the seller of the put, upon the Underlying Theme Portfolio's exercise of the
put, to deliver to the Underlying Theme Portfolio an amount of cash if the
closing level of the index upon which the put is based is less than the exercise
price of the put, which amount of cash is determined by the multiplier, as
described above for calls. When the Underlying Theme Portfolio writes a put on
an index, it receives a premium and the purchaser has the right, prior to the
expiration date, to require the Underlying Theme Portfolio to deliver to it an
amount of cash equal to the difference between the closing level of the index
and the exercise price times the multiplier, if the closing level is less than
the exercise price.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when an Underlying Theme
Portfolio writes a call on an index it cannot provide in advance for its
potential settlement obligations by acquiring and holding the underlying
securities. An Underlying Theme Portfolio can offset some of the risk of writing
a call index option position by holding a diversified portfolio of securities
similar to those on which the underlying index is based. However, an Underlying
Theme Portfolio cannot, as a practical matter, acquire and hold a portfolio
containing exactly the same securities as underlie the index and, as a result,
bears a risk that the value of the securities held will vary from the value of
the index.
Even if an Underlying Theme Portfolio could assemble a securities portfolio that
exactly reproduced the composition of the underlying index, it still would not
be fully covered from a risk standpoint because of the "timing risk" inherent in
writing index options. When an index option is exercised, the amount of cash
that the holder is entitled to receive is determined by the difference between
the exercise price and the closing index level on the date when the option is
exercised. As with other kinds of options, the Underlying Theme Portfolio, as
the call writer, will not know that it has been assigned until the next business
day at the earliest. The time lag between exercise and notice of assignment
poses no risk for the writer of a covered call on a specific underlying
security, such as common stock, because there the writer's obligation is to
deliver the underlying security, not to pay its value as of a fixed time in the
past. So long as the writer already owns the underlying security, it can satisfy
its settlement obligations by simply delivering it, and the risk that its value
may have declined since the exercise date is borne by the exercising holder. In
contrast, even if the writer of an index call holds securities that exactly
match the composition of the underlying index, it will not be able to satisfy
its assignment obligations by delivering those securities against payment of the
exercise price. Instead, it will be required to pay cash in an amount based on
the closing index value on the exercise date; and by the time it learns that it
has been assigned, the index may have declined, with a corresponding decline in
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the value of its securities portfolio. This "timing risk" is an inherent
limitation on the ability of index call writers to cover their risk exposure by
holding securities positions.
If an Underlying Theme Portfolio has purchased an index option and exercises it
before the closing index value for that day is available, it runs the risk that
the level of the underlying index may subsequently change. If such a change
causes the exercised option to fall out-of-the-money, the Underlying Theme
Portfolio will be required to pay the difference between the closing index value
and the exercise price of the option (times the applicable multiplier) to the
assigned writer.
INTEREST RATE, CURRENCY AND STOCK INDEX FUTURES CONTRACTS
Each Underlying Theme Portfolio may enter into interest rate, currency or stock
index futures contracts (collectively, "Futures" or "Futures Contracts") as a
hedge against changes in prevailing levels of interest rates, currency exchange
rates or stock price levels, respectively, in order to establish more definitely
the effective return on securities or currencies held or intended to be acquired
by it. An Underlying Theme Portfolio's hedging may include sales of Futures as
an offset against the effect of expected increases in interest rates, and
decreases in currency exchange rates and stock prices, and purchases of Futures
as an offset against the effect of expected declines in interest rates, and
increases in currency exchange rates or stock prices.
Each Underlying Theme Portfolio only will enter into Futures Contracts that are
traded on futures exchanges and are standardized as to maturity date and
underlying financial instrument. Futures exchanges and trading thereon in the
United States are regulated under the Commodity Exchange Act by the Commodity
Futures Trading Commission ("CFTC"). Futures are exchanged in London at the
London International Financial Futures Exchange.
Although techniques other than sales and purchases of Futures Contracts could be
used to reduce an Underlying Theme Portfolio's exposure to interest rate,
currency exchange rate and stock market fluctuations, it may be able to hedge
its exposure more effectively and at a lower cost through using Futures
Contracts.
A Futures Contract provides for the future sale by one party and purchase by
another party of a specified amount of a specific financial instrument (security
or currency) for a specified price at a designated date, time and place. A stock
index Futures Contract provides for the delivery, at a designated date, time and
place, of an amount of cash equal to a specified dollar amount times the
difference between the stock index value at the close of trading on the contract
and the price at which the Futures Contract is originally struck; no physical
delivery of stocks comprising the index is made. Brokerage fees are incurred
when a Futures Contract is bought or sold, and margin deposits must be
maintained at all times the Futures Contract is outstanding.
Although Futures Contracts typically require future delivery of and payment for
financial instruments or currencies, Futures Contracts usually are closed out
before the delivery date. Closing out an open Futures Contract sale or purchase
is effected by entering into an offsetting Futures Contract purchase or sale,
respectively, for the same aggregate amount of the identical financial
instrument or currency and the same delivery date. If the offsetting purchase
price is less than the original sale price, the Underlying Theme Portfolio
realizes a gain; if it is more, the Underlying Theme Portfolio realizes a loss.
Conversely, if the offsetting sale price is more than the original purchase
price, the Underlying Theme Portfolio realizes a gain; if it is less, the
Underlying Theme Portfolio realizes a loss. The transaction costs must also be
included in these calculations. There can be no assurance, however, that an
Underlying Theme Portfolio will be able to enter into an offsetting transaction
with respect to a particular Futures Contract at a particular time. If an
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Underlying Theme Portfolio is not able to enter into an offsetting transaction,
it will continue to be required to maintain the margin deposits on the Futures
Contract.
As an example of an offsetting transaction, the contractual obligations arising
from the sale of one Futures Contract of September Deutschemarks on an exchange
may be fulfilled at any time before delivery under the Futures Contract is
required (I.E., on a specified date in September, the "delivery month") by the
purchase of another Futures Contract of September Deutschemarks on the same
exchange. In such instance, the difference between the price at which the
Futures Contract was sold and the price paid for the offsetting purchase, after
allowance for transaction costs, represents the profit or loss to the Underlying
Theme Portfolio.
Each Underlying Theme Portfolio's Futures transactions will be entered into for
hedging purposes; that is, Futures Contracts will be sold to protect against a
decline in the price of securities or currencies that an Underlying Theme
Portfolio owns, or Futures Contracts will be purchased to protect the Underlying
Theme Portfolio against an increase in the price of securities or currencies it
has committed to purchase or expects to purchase.
"Margin" with respect to Futures Contracts is the amount of funds that must be
deposited by an Underlying Theme Portfolio in order to initiate Futures trading
and maintain its open positions in Futures Contracts. A margin deposit made when
the Futures Contract is entered into ("initial margin") is intended to ensure
the Underlying Theme Portfolio's performance under the Futures Contract. The
margin required for a particular Futures Contract is set by the exchange on
which the Futures Contract is traded and may be significantly modified from time
to time by the exchange during the term of the Futures Contract.
Subsequent payments, called "variation margin," to and from the futures
commission merchant through which the Underlying Theme Portfolio entered into
the Futures Contract will be made on a daily basis as the price of the
underlying security, currency or index fluctuates making the Futures Contract
more or less valuable, a process known as marking-to-market.
RISKS OF USING FUTURES CONTRACTS. The prices of Futures Contracts are volatile
and are influenced by, among other things, actual and anticipated changes in
interest rates and currency exchange rates, and in stock market movements, which
in turn are affected by fiscal and monetary policies and national and
international political and economic events.
There is a risk of imperfect correlation between changes in prices of Futures
Contracts and prices of the securities or currencies in an Underlying Theme
Portfolio's portfolio being hedged. The degree of imperfection of correlation
depends upon circumstances such as variations in speculative market demand for
Futures and for securities or currencies, including technical influences in
Futures trading; and differences between the financial instruments being hedged
and the instruments underlying the standard Futures Contracts available for
trading. A decision of whether, when and how to hedge involves skill and
judgment, and even a well-conceived hedge may be unsuccessful to some degree
because of unexpected market behavior or interest or currency rate trends.
Because of the low margin deposits required, Futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a Futures Contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the Futures Contract is deposited as margin, a subsequent 10%
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decrease in the value of the Futures Contract would result in a total loss of
the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit, if the Futures Contract were closed out.
Thus, a purchase or sale of a Futures Contract may result in losses in excess of
the amount invested in the Futures Contract.
Most U.S. Futures exchanges limit the amount of fluctuation permitted in Futures
Contract and options on Futures Contracts prices during a single trading day.
The daily limit establishes the maximum amount that the price of a Futures
Contract or option may vary either up or down from the previous day's settlement
price at the end of a trading session. Once the daily limit has been reached in
a particular type of Futures Contract or option, no trades may be made on that
day at a price beyond that limit. The daily limit governs only price movement
during a particular trading day and therefore does not limit potential losses,
because the limit may prevent the liquidation of unfavorable positions. Futures
Contract and option prices have occasionally moved to the daily limit for
several consecutive trading days with little or no trading, thereby preventing
prompt liquidation of positions and subjecting some traders to substantial
losses.
If an Underlying Theme Portfolio were unable to liquidate a Futures or option on
Futures position due to the absence of a liquid secondary market or the
imposition of price limits, it could incur substantial losses. The Underlying
Theme Portfolio would continue to be subject to market risk with respect to the
position. In addition, except in the case of purchased options, the Underlying
Theme Portfolio would continue to be required to make daily variation margin
payments and might be required to maintain the position being hedged by the
Future or option or to maintain cash or securities in a segregated account.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
increased participation by speculators in the Futures markets. This
participation also might cause temporary price distortions. In addition,
activities of large traders in both the Futures and securities markets involving
arbitrage, "program trading" and other investment strategies might result in
temporary price distortions.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or currencies
except that options on Futures Contracts give the purchaser the right, in return
for the premium paid, to assume a position in a Futures Contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the period of the option. Upon
exercise of the option, the delivery of the Futures position by the writer of
the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's Futures margin account, which represents the
amount by which the market price of the Futures Contract, at exercise, exceeds
(in the case of a call) or is less than (in the case of a put) the exercise
price of the option on the Futures Contract. If an option is exercised on the
last trading day prior to the expiration date of the option, the settlement will
be made entirely in cash equal to the difference between the exercise price of
the option and the closing level of the securities, currencies or index upon
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which the Futures Contract is based on the expiration date. Purchasers of
options who fail to exercise their options prior to the exercise date suffer a
loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and the
purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities, foreign currencies or indices.
If an Underlying Theme Portfolio writes an option on a Futures Contract, it will
be required to deposit initial and variation margin pursuant to requirements
similar to those applicable to Futures Contracts. Premiums received from the
writing of an option on a Futures Contract are included in the initial margin
deposit.
An Underlying Theme Portfolio may seek to close out an option position by
selling an option covering the same Futures Contract and having the same
exercise price and expiration date. The ability to establish and close out
positions on such options is subject to the maintenance of a liquid secondary
market.
LIMITATIONS ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON
CURRENCIES To the extent that an Underlying Theme Portfolio enters into Futures
Contracts, options on Futures Contracts and options on foreign currencies traded
on a CFTC-regulated exchange, in each case other than for BONA FIDE hedging
purposes (as defined by the CFTC), the aggregate initial margin and premiums
required to establish those positions (excluding the amount by which options are
"in-the-money") will not exceed 5% of the liquidation value of the Underlying
Theme Portfolio, after taking into account unrealized profits and unrealized
losses on any contracts it has entered into. In general, a call option on a
Futures Contract is "in-the-money" if the value of the underlying Futures
Contract exceeds the strike, I.E., exercise, price of the call; a put option on
a Futures Contract is "in-the-money" if the value of the underlying Futures
Contract is exceeded by the strike price of the put. This guideline may be
modified by the applicable Board, without a shareholder vote. This limitation
does not limit the percentage of an Underlying Theme Portfolio's assets at risk
to 5%.
FORWARD CURRENCY CONTRACTS
A Forward Contract is an obligation, usually arranged with a commercial bank or
other currency dealer, to purchase or sell a currency against another currency
at a future date and price as agreed upon by the parties. An Underlying Theme
Portfolio either may accept or make delivery of the currency at the maturity of
the Forward Contract. An Underlying Theme Portfolio may also, if its contra
party agrees prior to maturity, enter into a closing transaction involving the
purchase or sale of an offsetting contract.
An Underlying Theme Portfolio engages in forward currency transactions in
anticipation of, or to protect itself against, fluctuations in exchange rates.
An Underlying Theme Portfolio might sell a particular foreign currency forward,
for example, when it holds bonds denominated in a foreign currency but
anticipates, and seeks to be protected against, a decline in the currency
against the U.S. dollar. Similarly, an Underlying Theme Portfolio might sell the
U.S. dollar forward when it holds bonds denominated in U.S. dollars but
anticipates, and seeks to be protected against, a decline in the U.S. dollar
relative to other currencies. Further, an Underlying Theme Portfolio might
purchase a currency forward to "lock in" the price of securities denominated in
that currency that it anticipates purchasing.
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Forward Contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A Forward
Contract generally has no deposit requirement, and no commissions are charged at
any stage for trades. Each Underlying Theme Portfolio will enter into such
Forward Contracts with major U.S. or foreign banks and securities or currency
dealers in accordance with guidelines approved by the applicable Board.
An Underlying Theme Portfolio may enter into Forward Contracts either with
respect to specific transactions or with respect to overall investments of that
Underlying Theme Portfolio. The precise matching of the Forward Contract amounts
and the value of specific securities generally will not be possible because the
future value of such securities in foreign currencies will change as a
consequence of market movements in the value of those securities between the
date the Forward Contract is entered into and the date it matures. Accordingly,
it may be necessary for that Underlying Theme Portfolio to purchase additional
foreign currency on the spot (I.E., cash) market (and bear the expense of such
purchase) if the market value of the security is less than the amount of foreign
currency the Underlying Theme Portfolio is obligated to deliver and if a
decision is made to sell the security and make delivery of the foreign currency.
Conversely, it may be necessary to sell on the spot market some of the foreign
currency the Underlying Theme Portfolio is obligated to deliver. The projection
of short-term currency market movements is extremely difficult, and the
successful execution of a short-term hedging strategy is highly uncertain.
Forward Contracts involve the risk that anticipated currency movements will not
be predicted accurately, causing an Underlying Theme Portfolio to sustain losses
on these contracts and transaction costs.
At or before the maturity of a Forward Contract requiring an Underlying Theme
Portfolio to sell a currency, it either may sell a security and use the sale
proceeds to make delivery of the currency or retain the security and offset its
contractual obligation to deliver the currency by purchasing a second contract
pursuant to which it will obtain, on the same maturity date, the same amount of
the currency that it is obligated to deliver. Similarly, an Underlying Theme
Portfolio may close out a Forward Contract requiring it to purchase a specified
currency by, if its contra party agrees, entering into a second contract
entitling it to sell the same amount of the same currency on the maturity date
of the first contract. An Underlying Theme Portfolio would realize a gain or
loss as a result of entering into such an offsetting Forward Contract under
either circumstance to the extent the exchange rate or rates between the
currencies involved moved between the execution dates of the first contract and
the offsetting contract.
The cost to an Underlying Theme Portfolio of engaging in Forward Contracts
varies with factors such as the currencies involved, the length of the contract
period and the market conditions then prevailing. Because Forward Contracts are
usually entered into on a principal basis, no fees or commissions are involved.
The use of Forward Contracts does not eliminate fluctuations in the prices of
the underlying securities an Underlying Theme Portfolio owns or intends to
acquire, but it does establish a rate of exchange in advance. In addition, while
Forward Contract sales limit the risk of loss due to a decline in the value of
the hedged currencies, they also limit any potential gain that might result
should the value of the currencies increase.
FOREIGN CURRENCY STRATEGIES -- SPECIAL CONSIDERATIONS
An Underlying Theme Portfolio may use options on foreign currencies, Futures on
foreign currencies, options on Futures on foreign currencies and Forward
Contracts to hedge against movements in the values of the foreign currencies in
which the Underlying Theme Portfolio's securities are denominated. Such currency
hedges can protect against price movements in a security that the Underlying
Theme Portfolio owns or intends to acquire that are attributable to changes in
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the value of the currency in which it is denominated. Such hedges do not,
however, protect against price movements in the securities that are attributable
to other causes.
An Underlying Theme Portfolio might seek to hedge against changes in the value
of a particular currency when no Futures Contract, Forward Contract or option
involving that currency is available or one of such contracts is more expensive
than certain other contracts. In such cases, the Underlying Theme Portfolio may
hedge against price movements in that currency by entering into a contract on
another currency or basket of currencies, the values of which the Manager
believes will have a positive correlation to the value of the currency being
hedged. The risk that movements in the price of the contract will not correlate
perfectly with movements in the price of the currency being hedged is magnified
when this strategy is used.
The value of Futures Contracts, options on Futures Contracts, Forward Contracts
and options on foreign currencies depends on the value of the underlying
currency relative to the U.S. dollar. Because foreign currency transactions
occurring in the interbank market might involve substantially larger amounts
than those involved in the use of Futures Contracts, Forward Contracts or
options, the Underlying Theme Portfolio could be disadvantaged by dealing in the
odd lot market (generally consisting of transactions of less than $1 million)
for the underlying foreign currencies at prices that are less favorable than for
round lots.
There is no systematic reporting of last sale information for foreign currencies
or any regulatory requirements that quotations available through dealers or
other market sources be firm or revised on a timely basis. Quotation information
generally is representative of very large transactions in the interbank market
and thus might not reflect odd-lot transactions where rates might be less
favorable. The interbank market in foreign currencies is a global,
round-the-clock market. To the extent the U.S. options or Futures markets are
closed while the markets for the underlying currencies remain open, significant
price and rate movements might take place in the underlying markets that cannot
be reflected in the markets for the Futures contracts or options until they
reopen.
Settlement of Futures Contracts, Forward Contracts and options involving foreign
currencies might be required to take place within the country issuing the
underlying currency. Thus, an Underlying Theme Portfolio might be required to
accept or make delivery of the underlying foreign currency in accordance with
any U.S. or foreign regulations regarding the maintenance of foreign banking
arrangements by U.S. residents and might be required to pay any fees, taxes and
charges associated with such delivery assessed in the issuing country.
COVER
Transactions using Forward Contracts, Futures Contracts and options (other than
options that an Underlying Theme Portfolio has purchased) expose the Underlying
Theme Portfolio to an obligation to another party. An Underlying Theme Portfolio
will not enter into any such transactions unless it owns either (1) an
offsetting ("covered") position in securities, currencies, or other options,
Forward Contracts or Futures Contracts or (2) cash, receivables and short-term
debt securities with a value sufficient at all times to cover its potential
obligations not covered as provided in (1) above. Each Underlying Theme
Portfolio will comply with SEC guidelines regarding cover for these instruments
and, if the guidelines so require, set aside cash or liquid securities.
Assets used as cover or held in a segregated account cannot be sold while the
position in the corresponding Forward Contract, Futures Contract or option is
open, unless they are replaced with other appropriate assets. If a large portion
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of an Underlying Theme Portfolio's assets is used for cover or otherwise set
aside, it could affect portfolio management or the Underlying Theme Portfolio's
ability to meet redemption requests or other current obligations.
RISK FACTORS OF THE UNDERLYING THEME FUNDS
ILLIQUID SECURITIES
Each Underlying Theme Portfolio may invest up to 15% of its net assets (except
for the Health Care Fund, which may invest up to 10% of its total assets) in
illiquid securities. Securities may be considered illiquid if an Underlying
Theme Portfolio cannot reasonably expect within seven days to sell the
securities for approximately the amount at which it values such securities. See
"Investment Limitations of the Underlying Theme Funds and Portfolios." The sale
of illiquid securities, if they can be sold at all, generally will require more
time and result in higher brokerage charges or dealer discounts and other
selling expenses than will the sale of liquid securities such as securities
eligible for trading on U.S. securities exchanges or in OTC markets. Moreover,
restricted securities, which may be illiquid for purposes of this limitation,
often sell, if at all, at a price lower than similar securities that are not
subject to restrictions on resale.
Illiquid securities include those that are subject to restrictions contained in
the securities laws of other countries. However, securities that are freely
marketable in the country where they are principally traded, but would not be
freely marketable in the United States, will not be considered illiquid. Where
registration is required, an Underlying Theme Portfolio may be obligated to pay
all or part of the registration expenses and a considerable period may elapse
between the time of the decision to sell and the time the Underlying Theme
Portfolio may be permitted to sell a security under an effective registration
statement. If, during such a period, adverse market conditions were to develop,
the Underlying Theme Portfolio might obtain a less favorable price than
prevailed when it decided to sell.
Not all restricted securities are illiquid. In recent years a large
institutional market has developed for certain securities that are not
registered under the Securities Act of 1933, as amended (the "1933 Act"),
including private placements, repurchase agreements, commercial paper, foreign
securities and corporate bonds and notes. These instruments are often restricted
securities because the securities are sold in transactions not requiring
registration. Institutional investors generally will not seek to sell these
instruments to the general public, but instead will often depend either on an
efficient institutional market in which such unregistered securities can be
readily resold or on an issuer's ability to honor a demand for repayment.
Therefore, the fact that there are contractual or legal restrictions on resale
to the general public or certain institutions is not dispositive of the
liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the registration
requirements of the 1933 Act for resales of certain securities to qualified
institutional buyers. Institutional markets for restricted securities have
developed as a result of Rule 144A, providing both readily ascertainable values
for restricted securities and the ability to liquidate an investment to satisfy
share redemption orders. Such markets include automated systems for the trading,
clearance and settlement of unregistered securities of domestic and foreign
issuers, such as the PORTAL System sponsored by the National Association of
Securities Dealers, Inc. An insufficient number of qualified institutional
buyers interested in purchasing Rule 144A-eligible restricted securities held by
an Underlying Theme Portfolio, however, could affect adversely the marketability
of such portfolio securities, and the Underlying Theme Portfolio might be unable
to dispose of such securities promptly or at favorable prices.
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With respect to liquidity determinations generally, the applicable Board has the
ultimate responsibility for determining whether specific securities, including
restricted securities pursuant to Rule 144A under the 1933 Act, are liquid or
illiquid. Each Board has delegated the function of making day-to-day
determinations of liquidity to the Manager, in accordance with procedures
approved by that Board. The Manager takes into account a number of factors in
reaching liquidity decisions, including (i) the frequency of trading in the
security, (ii) the number of dealers that make quotes for the security, (iii)
the number of dealers that have undertaken to make a market in the security,
(iv) the number of other potential purchasers and (v) the nature of the security
and how trading is effected (e.g., the time needed to sell the security, how
offers are solicited and the mechanics of transfer). The Manager monitors the
liquidity of securities held by each Underlying Theme Portfolio and periodically
reports such determinations to the applicable Board. The Manager believes that
carefully selected investments in joint ventures, cooperatives, partnerships and
state enterprises that are illiquid (collectively, "Special Situations") could
enable an Underlying Theme Portfolio to achieve capital appreciation
substantially exceeding the appreciation it would realize if it did not make
such investments. However, in order to attempt to limit investment risk, each
Underlying Theme Portfolio will invest no more than 5% of its total assets in
Special Situations.
FOREIGN SECURITIES
POLITICAL, SOCIAL AND ECONOMIC RISKS. Investing in securities of non-U.S.
companies may entail additional risks due to the potential political, social and
economic instability of certain countries and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment convertibility of currencies into U.S. dollars and on repatriation of
capital invested. In the event of such expropriation, nationalization or other
confiscation by any country, an Underlying Theme Portfolio could lose its entire
investment in any such country.
RELIGIOUS, POLITICAL AND ETHNIC INSTABILITY. Certain countries in which an
Underlying Theme Portfolio may invest may have groups that advocate radical
religious or revolutionary philosophies or support ethnic independence. Any
disturbance on the part of such individuals could carry the potential for
widespread destruction or confiscation of property owned by individuals and
entities foreign to such country and could cause the loss of an Underlying Theme
Portfolio's investment in those countries. Instability may also result from,
among other things, (i) authoritarian governments or military involvement in
political and economic decision-making, including changes in government through
extra-constitutional means, (ii) popular unrest associated with demands for
improved political, economic and social conditions, and (iii) hostile relations
with neighboring or other countries. Such political, social and economic
instability could disrupt the principal financial markets in which an Underlying
Theme Portfolio invests and adversely affect the value of its assets.
FOREIGN INVESTMENT RESTRICTIONS. Certain countries prohibit or impose
substantial restrictions on investments in their capital markets, particularly
their equity markets, by foreign entities such as an Underlying Theme Portfolio.
These restrictions or controls may at times limit or preclude investments in
certain securities and may increase the cost and expenses of an Underlying Theme
Portfolio. For example, certain countries require prior governmental approval
before investments by foreign persons may be made or may limit the amount of
investment by foreign persons in a particular company or limit the investment by
foreign persons to only a specific class of securities of a company that may
have less advantageous terms than securities of the company available for
purchase by nationals. Moreover, the national policies of certain countries may
restrict investment opportunities in issuers or industries deemed sensitive to
national interests. In addition, some countries require governmental approval
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for the repatriation of investment income, capital or the proceeds of securities
sales by foreign investors. In addition, if there is a deterioration in a
country's balance of payments or for other reasons, a country may impose
restrictions on foreign capital remittances abroad. An Underlying Theme
Portfolio could be adversely affected by delays in, or a refusal to grant, any
required governmental approval for repatriation, as well as by the application
to it of other restrictions on investments.
NON-UNIFORM CORPORATE DISCLOSURE STANDARDS AND GOVERNMENTAL REGULATION. Foreign
companies are subject to accounting, auditing and financial standards and
requirements that differ, in some cases significantly, from those applicable to
U.S. companies. In particular, the assets, liabilities and profits appearing on
the financial statements of such a company may not reflect its financial
position or results of operations in the way they would be reflected had such
financial statements been prepared in accordance with U.S. generally accepted
accounting principles. Most of the securities held by an Underlying Theme
Portfolio will not be registered with the SEC or regulators of any foreign
country, nor will the issuers thereof be subject to the SEC's reporting
requirements. Thus, there will be less available information concerning most
foreign issuers of securities held by an Underlying Theme Portfolio than is
available concerning U.S. issuers. In instances where the financial statements
of an issuer are not deemed to reflect accurately the financial situation of the
issuer, the Manager will take appropriate steps to evaluate the proposed
investment, which may include on-site inspection of the issuer, interviews with
its management and consultations with accountants, bankers and other
specialists. There is substantially less publicly available information about
foreign companies than there are reports and ratings published about U.S.
companies and the U.S. government. In addition, where public information is
available, it may be less reliable than such information regarding U.S. issuers.
Issuers of securities in foreign jurisdictions are generally not subject to the
same degree of regulation as are U.S. issuers with respect to such matters as
restrictions on market manipulation, insider trading rules, shareholder proxy
requirements and timely disclosure of information.
CURRENCY FLUCTUATIONS. Because each Underlying Theme Portfolio, under normal
circumstances, will invest a substantial portion of its total assets in the
securities of foreign issuers that are denominated in foreign currencies, the
strength or weakness of the U.S. dollar against such foreign currencies will
account for part of an Underlying Theme Portfolio's investment performance. A
decline in the value of any particular currency against the U.S. dollar will
cause a decline in the U.S. dollar value of an Underlying Theme Portfolio's
holdings of securities and cash denominated in that currency and, therefore,
will cause an overall decline in its or its corresponding Feeder Fund's net
asset value and any net investment income and capital gains derived from such
securities to be distributed in U.S. dollars to the shareholders thereof.
Moreover, if the value of the foreign currencies in which an Underlying Theme
Portfolio receives its income falls relative to the U.S. dollar between receipt
of the income and the making of distributions, the Underlying Theme Portfolio
may be required to liquidate securities if it has insufficient cash in U.S.
dollars to meet distribution requirements.
The rate of exchange between the U.S. dollar and other currencies is determined
by several factors, including the supply and demand for particular currencies,
central bank efforts to support particular currencies, the relative movement of
interest rates, and pace of business activity in the other countries and the
United States, and other economic and financial conditions affecting the world
economy.
Although each Underlying Theme Portfolio values its assets daily in terms of
U.S. dollars, the Underlying Theme Portfolios do not intend to convert their
holdings of foreign currencies into U.S. dollars on a daily basis. Each
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Underlying Theme Portfolio will do so, from time to time, and investors should
be aware of the costs of currency conversion. Although foreign exchange dealers
do not charge a fee for conversion, they do realize a profit based on the
difference ("spread") between the prices at which they buy and sell various
currencies. Thus, a dealer may offer to sell a foreign currency to an Underlying
Theme Portfolio at one rate, while offering a lesser rate of exchange should an
Underlying Theme Portfolio desire to sell that currency to the dealer.
ADVERSE MARKET CHARACTERISTICS. Securities of many foreign issuers may be less
liquid and their prices more volatile than securities of comparable U.S.
issuers. In addition, foreign securities markets and brokers generally are
subject to less governmental supervision and regulation than in the United
States, and foreign securities transactions usually are subject to fixed
commissions, which generally are higher than negotiated commissions on U.S.
transactions. In addition, foreign securities transactions may be subject to
difficulties associated with the settlement of such transactions. Delays in
settlement could result in temporary periods when assets of an Underlying Theme
Portfolio are uninvested and no return is earned thereon. The inability of an
Underlying Theme Portfolio to make intended security purchases due to settlement
problems could cause it to miss attractive investment opportunities. Inability
to dispose of a portfolio security due to settlement problems either could
result in losses to an Underlying Theme Portfolio due to subsequent declines in
value of the portfolio security or, if that Underlying Theme Portfolio has
entered into a contract to sell the security, could result in possible liability
to the purchaser. The Manager will consider such difficulties when determining
the allocation of an Underlying Theme Portfolio's assets, although the Manager
does not believe that such difficulties will have a material adverse effect on
an Underlying Theme Portfolio's portfolio trading activities.
Each Underlying Theme Portfolio may use foreign custodians, which may involve
risks in addition to those related to its use of U.S. custodians. Such risks
include uncertainties relating to (1) determining and monitoring the foreign
custodian's financial strength, reputation and standing, (2) maintaining
appropriate safeguards concerning an Underlying Theme Portfolio's investments,
and (3) possible difficulties in obtaining and enforcing judgments against such
custodians.
WITHHOLDING TAXES. Each Underlying Theme Portfolio's net investment income from
securities of its foreign issuers may be subject to withholding taxes by the
foreign issuer's country, thereby reducing that income or delaying the receipt
of income when those taxes may be recaptured.
CONCENTRATION. To the extent an Underlying Theme Portfolio invests a
significant portion of its assets in securities of issuers located in a
particular country or region of the world, it may be subject to greater risks
and may experience greater volatility than a fund that is more broadly
diversified geographically.
SPECIAL CONSIDERATIONS AFFECTING WESTERN EUROPEAN COUNTRIES. The countries that
are members of the European Economic Community ("Common Market") (Belgium,
Denmark, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands,
Portugal, Spain, and the United Kingdom) eliminated certain import tariffs and
quotas and other trade barriers with respect to one another over the past
several years. The Manager believes that this deregulation should improve the
prospects for economic growth in many Western European countries. Among other
things, the deregulation could enable companies domiciled in one country to
avail themselves of lower labor costs existing in other countries. In addition,
this deregulation could benefit companies domiciled in one country by opening
additional markets for their goods and services in other countries. Since,
however, it is not clear what the exact form or effect of these Common Market
reforms will be on business in Western Europe, it is impossible to predict the
long-term impact of the implementation of these programs on the securities owned
by an Underlying Theme Portfolio.
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SPECIAL CONSIDERATIONS AFFECTING RUSSIA AND EASTERN EUROPEAN COUNTRIES.
Investing in Russia and Eastern European countries involves a high degree of
risk and special considerations not typically associated with investing in the
U.S. securities markets and should be considered highly speculative. Such risks
include the following: (1) delays in settling portfolio transactions and risk of
loss arising out of the system of share registration and custody; (2) the risk
that it may be impossible or more difficult than in other countries to obtain
and/or enforce a judgement; (3) pervasiveness of corruption and crime in the
economic system; (4) currency exchange rate volatility and the lack of available
currency hedging instruments; (5) higher rates of inflation (including the risk
of social unrest associated with periods of hyper-inflation) and high
unemployment; (6) controls on foreign investment and local practices disfavoring
foreign investors and limitations on repatriation of invested capital, profits
and dividends, and on a fund's ability to exchange local currencies for U.S.
dollars; (7) political instability and social unrest and violence; (8) the risk
that the governments of Russia and Eastern European countries may decide not to
continue to support the economic reform programs implemented recently and could
follow radically different political and/or economic policies to the detriment
of investors, including non-market-oriented policies such as the support of
certain industries at the expense of other sectors or investors, or a return to
the centrally planned economy that existed when such countries had a communist
form of government; (9) the financial condition of companies in these countries,
including large amounts of inter-company debt which may create a payments crisis
on a national scale; (10) dependency on exports and the corresponding importance
of international trade; (11) the risk that the tax system in these countries
will not be reformed to prevent inconsistent, retroactive and/or exorbitant
taxation; and (12) the underdeveloped nature of the securities markets.
SPECIAL CONSIDERATIONS AFFECTING JAPAN. Japan's economic growth has declined
significantly since 1990. The general government position has deteriorated as a
result of weakening economic growth and stimulative measures taken to support
economic activity and to restore financial stability. Although the decline in
interest rates and fiscal stimulation packages have helped to contain
recessionary forces, uncertainties remain. Japan is also heavily dependent upon
international trade, so its economy is especially sensitive to trade barriers
and disputes. Japan has had difficult relations with its trading partners,
particularly the United States, where the trade imbalance is the greatest. It is
possible that trade sanctions and other protectionist measures could impact
Japan adversely in both the short and the long term.
The common stocks of many Japanese companies trade at high price-earnings
ratios. Differences in accounting methods make it difficult to compare the
earnings of Japanese companies with those of companies in other countries,
especially in the United States. In general, however, reported net income in
Japan is understated relative to U.S. accounting standards and this is one
reason why price-earnings ratios of the stocks of Japanese companies have tended
historically to be higher than those for U.S. stocks. In addition, Japanese
companies have tended to have higher growth rates than U.S. companies and
Japanese interest rates have generally been lower than in the United States,
both of which factors tend to result in lower discount rates and higher
price-earnings ratios in Japan than in the United States.
The Japanese securities markets are less regulated than those in the United
States. Evidence has emerged from time to time of distortion of market prices to
serve political or other purposes. Shareholders' rights are not always equally
enforced. In addition, Japan's banking industry is undergoing problems related
to bad loans and declining values in real estate.
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SPECIAL CONSIDERATIONS AFFECTING PACIFIC REGION COUNTRIES. Certain of the risks
associated with international investments are heightened for investments in
Pacific region countries. For example, some of the currencies of Pacific region
countries have experienced steady devaluations relative to the U.S. dollar, and
major adjustments have been made periodically in certain of such currencies.
Certain countries, such as India, face serious exchange constraints.
Jurisdictional disputes also exist between South Korea and North Korea. In
addition, some Underlying Theme Portfolios intend to invest in Hong Kong, which
reverted to Chinese administration on July 1, 1997. Investments in Hong Kong may
be subject to expropriation, nationalization or confiscation, in which case an
Underlying Theme Portfolio could lose its entire investment in Hong Kong. In
addition, the reversion of Hong Kong also presents a risk that the Hong Kong
dollar will be devalued and a risk of possible loss of investor confidence in
Hong Kong's currency, stock market and assets.
SPECIAL CONSIDERATIONS AFFECTING LATIN AMERICAN COUNTRIES. Most Latin American
countries have experienced substantial, and in some periods extremely high,
rates of inflation for many years. Inflation and rapid fluctuations in inflation
rates have had and may continue to have very negative effects on the economies
and securities markets of certain Latin American countries. Certain Latin
American countries are also among the largest debtors to commercial banks and
foreign governments. At times certain Latin American countries have declared
moratoria on the payment of principal and/or interest on external debt. In
addition, certain Latin American securities markets have experienced high
volatility in recent years.
Latin American countries may also close certain sectors of their economies to
equity investments by foreigners. Further due to the absence of securities
markets and publicly owned corporations and due to restrictions on direct
investment by foreign entities, investments may only be made in certain Latin
American countries solely or primarily through governmentally approved
investment vehicles or companies.
Certain Latin American countries may have managed currencies that are maintained
at artificial levels to the U.S. dollar rather than at levels determined by the
market. This type of system can lead to sudden and large adjustments in the
currency which, in turn, can have a disruptive and negative effect on foreign
investors. For example, in late 1994, the value of the Mexican peso lost more
than one-third of its value relative to the U.S.
dollar.
SPECIAL CONSIDERATIONS AFFECTING EMERGING MARKETS. Investing in the securities
of companies in emerging markets may entail special risks relating to potential
political and economic instability and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment, convertibility of currencies into U.S. dollars and on repatriation
of capital invested. In the event of such expropriation, nationalization or
other confiscation by any country, an Underlying Theme Portfolio could lose its
entire investment in any such country.
Emerging securities markets are substantially smaller, less developed, less
liquid and more volatile than the major securities markets. The limited size of
emerging securities markets and limited trading value in issuers compared to the
volume of trading in U.S. securities could cause prices to be erratic for
reasons apart from factors that affect the quality of the securities. For
example, limited market size may cause prices to be unduly influenced by traders
who control large positions. Adverse publicity and investors' perceptions,
whether or not based on fundamental analysis, may decrease the value and
liquidity of portfolio securities, especially in these markets. In addition,
securities traded in certain emerging markets may be subject to risks due to the
inexperience of financial intermediaries, a lack of modern technology, the lack
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of a sufficient capital base to expand business operations, and the possibility
of permanent or temporary termination of trading.
Settlement mechanisms in emerging securities markets may be less efficient and
reliable than in more developed markets. In such emerging securities there may
be share registration and delivery delays or failures.
Many emerging market countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates and corresponding currency devaluations have had
and may continue to have negative effects on the economies and securities
markets of certain emerging market countries.
PRIVATIZATIONS. The governments of some foreign countries have been engaged in
programs of selling part or all of their stakes in government owned or
controlled enterprises ("privatizations"). The Manager believes that
privatizations may offer opportunities for significant capital appreciation and
intends to invest assets of the Underlying Theme Portfolios in privatizations in
appropriate circumstances. In certain foreign countries, the ability of foreign
entities such as the Underlying Theme Portfolios to participate in
privatizations may be limited by local law, or the terms on which the Underlying
Theme Portfolios may be permitted to participate may be less advantageous than
those for local investors. There can be no assurance that foreign governments
will continue to sell companies currently owned or controlled by them or that
privatization programs will be successful.
ADDITIONAL INFORMATION
The prospectus and the statement of additional information of the Underlying
Theme Funds contains more detailed information about this organizational
structure of the Feeder Funds and their corresponding Portfolios, including
information related to the following: (i) the investment objective, policies and
restrictions of the Underlying Theme Funds and the Portfolios; (ii) the
Directors and officers of the Company, the Trustees and officers of Global
Investment Portfolio, the administrator of the Underlying Theme Funds and the
investment manager and administrator of the Portfolios; (iii) portfolio
transactions and brokerage commissions; (iv) the Underlying Theme Funds' shares,
including the rights and liabilities of their shareholders; (v) additional
performance information, including the method used to calculate yield and total
return; and (vi) the determination of the value of the shares of such Funds.
INVESTMENT LIMITATIONS
INVESTMENT LIMITATIONS OF THE FUND
FUNDAMENTAL LIMITATIONS. The following fundamental limitations of the Fund
cannot be changed without the affirmative vote of the lesser of (i) 67% of the
Fund's shares represented at a meeting at which more than 50% of the outstanding
shares are represented or (ii) more than 50% of the outstanding shares
("Required Vote"). If a percentage restriction is adhered to at the time of an
investment or transaction, a later increase or decrease in percentage resulting
from a change in values or Underlying Theme Fund securities or amount of total
assets will not be considered a violation of any of the following limitations.
The Fund will not:
(1) issue senior securities or borrow money , except as permitted under
the Investment Company Act of 1940 ("1940 Act") and then not in excess of
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33 1/3% of the Fund's total assets (including the amount of the senior
securities issued but reduced by any liabilities not constituting senior
securities) at the time of the issuance or borrowing, except that the Fund
may borrow up to an additional 5% of its total assets (not including the
amount borrowed) for temporary or emergency purposes;
(2) make loans, except through loans of portfolio securities or through
repurchase agreements, provided that for purposes of this restriction, the
acquisition of bonds, debentures, other debt securities or instruments, or
participations or other interests therein and investments in government
obligations, commercial paper, certificates of deposit, bankers'
acceptances or similar instruments will not be considered the making of a
loan;
(3) engage in the business of underwriting securities of other issuers,
except to the extent that the Fund might be considered an underwriter under
the federal securities laws in connection with its disposition of portfolio
securities;
(4) purchase or sell real estate, except that investments in securities
of issuers that invest in real estate and investments in mortgage-backed
securities, mortgage participations or other instruments supported by
interests in real estate are not subject to this limitation, and except
that the Fund may exercise rights under agreements relating to such
securities, including the right to enforce security interests and to hold
real estate acquired by reason of such enforcement until that real estate
can be liquidated in an orderly manner; or
(5) purchase or sell physical commodities unless acquired as a result of
owning securities or other instruments, but the Fund may purchase, sell or
enter into financial options and futures, forward and spot currency
contracts, swap transactions and other financial contracts or derivative
instruments;
Because of its investment objective and policies, the Fund will concentrate more
than 25% of its assets in the mutual fund industry. In accordance with the
Fund's investment program set forth in the Prospectus, the Fund may invest more
than 25% of its assets in the Underlying Theme Funds. However, each Underlying
Theme Portfolio will not concentrate more than 25% of its total assets in any
one industry. In addition, the Fund has adopted as a fundamental investment
policy the classification as a "diversified" fund under the 1940 Act, which
means that, with respect to 75% of its total assets, it will invest no more than
5% of its assets in the securities of any one issuer, and it will purchase no
more than 10% of the outstanding voting securities of any one issuer. The
foregoing limitations, however, shall not apply to U.S. government securities
and to securities issued by open-end investment companies.
NON-FUNDAMENTAL LIMITATIONS. The following investment limitations of the Fund
are non-fundamental and may be changed by the vote of the Trust's Board of
Trustees without shareholder approval.
The Fund will not:
(1) invest more than 15% of its net assets in illiquid securities, a
term which means securities that cannot be disposed of within seven days in
the ordinary course of business at approximately the amount at which the
Fund has valued the securities and includes, among other things, repurchase
agreements maturing in more than seven days;
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(2) purchase portfolio securities while borrowings in excess of 5% of its total
assets are outstanding;
(3) purchase securities on margin, except for short-term credit
necessary for clearance of portfolio transactions and except that the Fund
may make margin deposits in connection with its use of financial options
and futures, forward and spot currency contracts, swap transactions and
other financial contract or derivative instruments;
(4) engage in short sales of securities or maintain a short position,
except that the Fund may (a) sell short "against the box" and (b) maintain
short positions in connection with its use of financial options an futures,
forward and spot currency contracts, swap transactions and other financial
contracts or derivative instruments; or
(5) purchase securities of other investment companies, except to the
extent permitted by the 1940 Act or under the terms of any exemptive order
granted by the SEC and except that this limitation does not apply to
securities received or acquired as dividends, through offers of exchange,
or as a result of reorganization, consolidation, or merger.
Notwithstanding the forgoing investment limitations, the Fund may invest in
Underlying Theme Funds that have adopted investment limitations that may be more
or less restrictive than those listed above. As a result, the Fund may engage
indirectly in investment strategies that are prohibited under the investment
limitations listed above. The investment limitations and other investment
policies and restrictions of each Underlying Theme Fund are described in its
prospectus and statement of additional information.
Under Section 12(d)(1)(G) of the 1940 Act, the Fund may invest substantially all
of its assets in the Underlying Theme Funds.
INVESTMENT LIMITATIONS OF THE UNDERLYING THEME FUNDS AND PORTFOLIOS
FEEDER FUNDS
The Consumer Products and Services Fund, Financial Services Fund, Infrastructure
Fund, and Natural Resources Fund each has the following fundamental investment
policy to enable it to invest in the Consumer Products and Services Portfolio,
Financial Services Portfolio, Infrastructure Portfolio and Natural Resources
Portfolio respectively:
Notwithstanding any other investment policy of the Fund, the Fund may
invest all of its investable assets (cash, securities and receivables
related to securities) in an open-end management investment company
having substantially the same investment objective, policies and
limitations as the Fund.
All other fundamental investment policies, and the non-fundamental investment
policies, of each Feeder Fund and its corresponding Portfolio are identical.
Therefore, although the following discusses the investment policies of each
Portfolio and Global Investment Portfolio's Board of Trustees, it applies
equally to each Feeder Fund and the Company's Board of Directors.
Each Portfolio has adopted the following investment limitations as fundamental
policies that (unless otherwise noted) may not be changed without a Required
Vote. Whenever a Feeder Fund is requested to vote on a change in the investment
31
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limitations of its corresponding Portfolio, that Feeder Fund will hold a meeting
of its shareholders and will cast its votes as instructed by its shareholders.
Each Portfolio may not:
(1) Buy or sell real estate (including real estate limited partnerships);
however, each Portfolio may invest in debt securities secured by real
estate or interests therein or issued by companies which invest in real
estate or interests therein, including real estate investment trusts;
(2) Buy or sell commodities or commodity contracts, except that each Portfolio
may purchase and sell financial and currency futures contracts and options
thereon, and may purchase and sell currency forward contracts, options on
foreign currencies and may otherwise engage in other transactions in
foreign currencies;
(3) Underwrite securities of other issuers, except to the extent that the
disposition of an investment position may technically cause it to be
considered an underwriter as that term is defined under the 1933 Act;
(4) Make loans, except that each Portfolio may purchase debt securities and
enter into repurchase agreements and may make loans of portfolio
securities;
(5) Purchase securities on margin, provided that each Portfolio may obtain such
short-term credits as may be necessary for the clearance of purchases and
sales of securities; except that it may make margin deposits in connection
with futures contracts;
(6) Borrow money except from banks not in excess of 331/3% of the value of each
Portfolio's total assets, (including the amount borrowed), less all
liabilities and indebtedness (other than the borrowing). This restriction
shall not prevent any Portfolio from entering into reverse repurchase
agreements, provided that reverse repurchase agreements, and any other
transactions constituting borrowing by a Portfolio may not exceed one-third
of that Portfolio's total assets. Transactions involving options, futures
contracts, options on futures contracts and forward currency contracts, as
described in the Prospectus and this Statement of Additional Information,
and collateral arrangements relating thereto will not be deemed to be
borrowings;
(7) Mortgage, pledge, or hypothecate any of its assets, provided that this
restriction shall not apply to the transfer of securities in connection
with any permissible borrowing or to collateral arrangements in connection
with permissible activities; or
(8) Invest in direct interests or leases in oil, gas, or other mineral
exploration or development programs; however, each Portfolio may invest in
the securities of companies that engage in these activities.
In addition, each Portfolio has adopted as a fundamental investment policy a
classification as a "diversified" portfolio under the 1940 Act. This means that,
with respect to 75% of a Portfolio's total assets, no more than 5% will be
invested in the securities of any one issuer, and the Portfolio will purchase no
more than 10% of the outstanding voting securities of any one issuer. This
policy cannot be changed without a Required Vote.
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The following investment policies of each Portfolio are not fundamental policies
and may be changed by vote of the Portfolios' Board of Trustees without
shareholder approval.
No Portfolio may:
(1) Invest in securities of an issuer if the investment would cause the
Portfolio to own more than 10% of any class of securities of any one
issuer;
(2) Invest in companies for the purpose of exercising control or management;
(3) Invest more than 15% of its net assets in illiquid securities, including
securities that are illiquid by virtue of the absence of a readily
available market;
(4) Invest more than 5% of its total assets in securities of companies having,
together with their predecessors, a record of less than three years of
continuous operation;
(5) Purchase or retain the securities of any issuer, if those individual
officers and Trustees of the Portfolio, the Portfolio's investment adviser,
or distributor, each owning beneficially more than 1/2 of 1% of the
securities of such issuer, together own more than 5% of the securities of
such issuer;
(6) Enter into a futures contract, an option on a futures contract, or an
option on foreign currency traded on a CFTC-regulated exchange, in each
case other than for BONA FIDE hedging purposes (as defined by the CFTC), if
the aggregate initial margin and premiums required to establish all of
those positions (excluding the amount by which options are "in-the-money")
exceeds 5% of the liquidation value of the Portfolio's portfolio, after
taking into account unrealized profits and unrealized losses on any
contracts the Portfolio has entered into;
(7) Borrow money except for temporary or emergency purposes (not for
leveraging) in excess of 331/3% of the value of the Portfolio's total
assets (while borrowings exceed 5% of the Infrastructure Portfolio's and
Natural Resources Portfolio's total assets, such Portfolio will not make
any additional investments); and
Invest more than 10% of its total assets in shares of other investment
companies and may not invest more than 5% of its total assets in any
one investment company or acquire more than 3% of the outstanding
voting securities of any one investment company.
Investors should refer to the Underlying Theme Funds' prospectus for further
information with respect to the investment objective of each Feeder Fund, which
may not be changed without the approval of its shareholders, and its
corresponding Portfolio's investment objective, which may be changed without the
approval of its interestholders, and other investment policies, techniques and
limitations, which may or may not be changed without interestholder approval.
HEALTH CARE FUND
The Health Care Fund has adopted the following investment limitations as
fundamental policies, which (unless otherwise noted) may not be changed without
a Required Vote.
(1) Invest more than 10% of its total assets in securities which cannot be
readily resold to the public because of legal or contractual restrictions
33
<PAGE>
or for which no readily available market exists, which for this purpose
includes repurchase agreements maturing in more than seven days;
(2) Invest in companies for the purpose of exercising control or management;
(3) Purchase or sell real estate; provided that the Health Care Fund may invest
in securities secured by real estate or interests therein or issued by
companies that invest in real estate or interests therein;
(4) Purchase securities on margin or make short sales, except for short-term
credits necessary for clearance of portfolio transactions, and except that
the Health Care Fund may make short sales and maintain short positions and
may make margin deposits in connection with its use of options, futures
contracts and options on futures contracts;
(5) Underwrite securities of other issuers, except to the extent that, in
connection with the disposition of portfolio securities, the Health Care
Fund may be deemed to be an underwriter under federal securities laws;
(6) Make loans, except through loans of portfolio securities as authorized by
the Health Care Fund's prospectus and except through repurchase agreements,
provided that for purposes of this limitation the acquisition of portfolio
securities consistent with the Health Care Fund's investment objective and
policies shall not be deemed to be the making of a loan;
(7) Purchase or sell commodities or commodity contracts, except that consistent
with the Health Care Fund's investment objective and policies it may use
financial and currency futures instruments and options thereon for hedging
purposes;
(8) Issue senior securities, except that for purposes of this limitation the
Health Care Fund may borrow money in such amounts and in such fashion as is
permitted under the 1940 Act and the rules thereunder;
(9) Mortgage, pledge or hypothecate or in any manner transfer, as security for
indebtedness, any securities owned or held by the Health Care Fund, except
as may be necessary in connection with permitted borrowings; provided,
however, that this does not prohibit escrow, collateral or margin
arrangements in connection with its use of options, futures contracts and
options on futures contracts;
(10) Invest in oil, gas or mineral-related programs or leases; or
(11) Purchase any security if as a result more than 5% of the Health Care Fund's
total assets would be invested in securities of companies which together
with any predecessors have been in operation for less than three years.
In addition, the Health Care Fund has adopted as a fundamental investment policy
the classification as a "diversified" fund under the 1940 Act, which means that,
with respect to 75% of its total assets, no more than 5% will be invested in the
securities of any one issuer, and it will purchase no more than 10% of the
outstanding voting securities of any one issuer. This policy cannot be changed
without a Required Vote.
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<PAGE>
Investors should refer to the Underlying Theme Funds' prospectus for further
information with respect to the Health Care Fund's investment objective, which
may not be changed without the a Required Vote, and other investment policies,
techniques and limitations, which may be changed without shareholder approval.
TELECOMMUNICATIONS FUND
The Telecommunications Fund has adopted the following investment limitations as
fundamental policies, which (unless otherwise noted) may not be changed without
a Required Vote.
The Telecommunications Fund may not:
(1) Buy or sell real estate (including real estate limited partnerships);
however, the Telecommunications Fund may invest in debt securities secured
by real estate or interests therein or issued by companies which invest in
real estate or interests therein, including real estate investment trusts;
(2) Purchase or sell commodities or commodity contracts, except that the
Telecommunications Fund may purchase and sell financial and currency
futures contracts and options thereon, and may purchase and sell currency
forward contracts, options on foreign currencies and may otherwise engage
in other transactions in foreign currencies;
(3) Engage in the business of underwriting securities of other issuers, except
to the extent that the disposition of an investment position may
technically cause it to be considered an underwriter as that term is
defined under the 1933 Act;
(4) Make loans, except that the Telecommunications Fund may purchase debt
securities and enter into repurchase agreements and may make loans of
portfolio securities;
(5) Purchase securities on margin, provided that the Telecommunications Fund
may obtain such short-term credits as may be necessary for the clearance of
purchases and sales of securities; except that it may make margin deposits
in connection with futures contracts;
(6) Borrow money except from banks not in excess of 33-1/3% of the value of the
Telecommunications Fund's total assets, including the amount borrowed, less
all liabilities and indebtedness (other than the borrowing). This
restriction shall not prevent the Telecommunications Fund from entering
into reverse repurchase agreements, provided that reverse repurchase
agreements, and any other transactions constituting borrowing by it may not
exceed one-third of its total assets. Transactions involving options,
futures contracts, options on futures contracts and forward currency
contracts, as described in the Prospectus and this Statement of Additional
Information, and collateral arrangements relating thereto will not be
deemed to be borrowings;
(7) Mortgage, pledge, or hypothecate any of its assets, provided that this
restriction shall not apply to the transfer of securities in connection
with any permissible borrowing or to collateral arrangements in connection
with permissible activities; or
(8) Invest in direct interests or leases in oil, gas, or other mineral
exploration or development programs; however, the Telecommunications Fund
may invest in the securities of companies that engage in these activities.
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In addition, the Telecommunications Fund has adopted as a fundamental investment
policy the classification as a "diversified" fund under the 1940 Act, which
means that, with respect to 75% of its total assets, no more than 5% will be
invested in the securities of any one issuer, and it will purchase no more than
10% of the outstanding voting securities of any one issuer. This policy cannot
be changed without a Required Vote.
The following operating policies of the Telecommunications Fund are not
fundamental policies and may be changed by vote of the Company's Board of
Directors without shareholder approval.
The Telecommunications Fund may not:
(1) Invest in securities of an issuer if the investment would cause the
Telecommunications Fund to own more than 10% of any class of securities of
any one issuer;
(2) Invest in companies for the purpose of exercising control or management;
(3) Invest more than 15% of its net assets in illiquid securities, including
securities that are illiquid by virtue of the absence of a readily
available market;
(4) Invest more than 5% of its total assets in securities of companies having,
together with their predecessors, a record of less than three years of
continuous operation;
(5) Purchase or retain the securities of any issuer, if those individual
officers and Directors of the Company, the Telecommunications Fund's
investment adviser, or distributor, each owning beneficially more than 1/2
of 1% of the securities of such issuer, together own more than 5% of the
securities of such issuer;
(6) Enter into a futures contract, an option on a futures contract, or an
option on foreign currency traded on a CFTC-regulated exchange, in each
case other than for BONA FIDE hedging purposes (as defined by the CFTC), if
the aggregate initial margin and premiums required to establish all of
those positions (excluding the amount by which options are "in-the-money")
exceeds 5% of the liquidation value of the Telecommunications Fund's
portfolio, after taking into account unrealized profits and unrealized
losses on any contracts the Telecommunications Fund has entered into; or
(7) Borrow money except for temporary or emergency purposes (not for
leveraging) not in excess of 33 1/3% of the value of the Telecommunications
Fund's total assets. While borrowings exceed 5% of the Telecommunications
Fund's total assets, the Telecommunications Fund will not make any
additional investments.
The Telecommunications Fund has the authority to invest up to 10% of its total
assets in shares of other investment companies and in real estate investment
trusts. The Telecommunications Fund may not invest more than 5% of its total
assets in any one investment company or acquire more than 3% of the outstanding
voting securities of any one investment company.
Investors should refer to the Underlying Theme Funds' prospectus for further
information with respect to the Telecommunications Fund's investment objective,
which may not be changed without a Required Vote, and other investment policies,
techniques and limitations, which may be changed without shareholder approval.
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If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of the Underlying Theme Portfolio's investment policies
or restrictions. An Underlying Theme Portfolio may exchange securities, exercise
conversion or subscription rights, warrants or other rights to purchase common
stock or other equity securities and may hold, except to the extent limited by
the 1940 Act, any such securities so acquired without regard to the Underlying
Theme Portfolio's investment policies and restrictions. The original cost of the
securities so acquired will be included in any subsequent determination of the
Underlying Theme Portfolio's compliance with the investment percentage
limitations referred to above and in the Prospectus.
EXECUTION OF PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities for the Fund
(normally shares of the Underlying Theme Funds) are placed on behalf of the Fund
by the Manager. As stated in the Prospectus, the Manager will exercise no
discretion in investing the assets of the Fund other than to make investments in
money market instruments and to rebalance the percentage of the Fund's assets in
each Underlying Theme Fund.
Subject to policies established by the applicable Board, the Manager is
responsible for the execution of each Underlying Theme Portfolio's securities
transactions and the selection of broker/dealers who execute such transactions
on behalf of each Underlying Theme Portfolio. In executing transactions, the
Manager seeks the best net results for each Underlying Theme Portfolio, taking
into account such factors as the price (including the applicable brokerage
commission or dealer spread), size of the order, difficulty of execution and
operational facilities of the firm involved. Although the Manager generally
seeks reasonably competitive commission rates and spreads, payment of the lowest
commission or spread is not necessarily consistent with the best net results.
While each Underlying Theme Portfolio may engage in soft dollar arrangements for
research services, as described below, it has no obligation to deal with any
broker/dealer or group of broker/dealers in the execution of portfolio
transactions.
Consistent with the interests of each Underlying Theme Portfolio, the Manager
may select broker/dealers to execute that Underlying Theme Portfolio's portfolio
transaction on the basis of the research and brokerage services they provide to
the Manager for its use in managing that Underlying Theme Portfolio and its
other advisory accounts. Such services may include furnishing analyses, reports
and information concerning issuers, industries, securities, geographic regions,
economic factors and trends, portfolio strategy, and performance of accounts;
and effecting securities transactions and performing functions incidental
thereto (such as clearance and settlement). Research and brokerage services
received from such broker is in addition to, and not in lieu of, the services
required to be performed by the Manager under the applicable Investment
Management and Administration Contract (defined below). A commission paid to
such broker may be higher than that which another qualified broker would have
charged for effecting the same transaction, provided that the Manager determines
in good faith that such commission is reasonable in terms either of that
particular transaction or the overall responsibility of the Manager to the
Underlying Theme Portfolio and its other clients and that the total commissions
paid by that Underlying Theme Portfolio will be reasonable in relation to the
benefits it receive over the long term. Research services may also be received
from dealers who execute portfolio transactions in OTC markets.
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The Manager may allocate brokerage transactions to broker/dealers who have
entered into arrangements under which the broker/dealer allocates a portion of
the commissions paid by an Underlying Theme Portfolio toward payment of its
expenses, such as custodian fees.
Investment decisions for an Underlying Theme Portfolio and for other investment
accounts managed by the Manager are made independently of each other in light of
differing conditions. However, the same investment decision occasionally may be
made for two or more of such accounts, including an Underlying Theme Portfolio.
In such cases, simultaneous transactions may occur. Purchases or sales are then
allocated as to price or amount in a manner deemed fair and equitable to all
accounts involved. While in some cases this practice could have a detrimental
effect upon the price or value of the security as far as an Underlying Theme
Portfolio is concerned, in other cases the Manager believes that coordination
and the ability to participate in volume transactions will be beneficial to that
Portfolio.
Under a policy adopted by the Trust's Board of Directors and the Underlying
Theme Portfolios' Board of Trustees or Board of Directors, as the case may be,
and subject to the policy of obtaining the best net results, the Manager may
consider a broker/dealer's sale of the shares of the Underlying Theme Funds and
the other portfolios for which the Manager serves as investment manager or
administrator in selecting broker/dealers for the execution of portfolio
transactions. This policy does not imply a commitment to execute portfolio
transactions through all broker/dealers that sell shares of the Underlying Theme
Funds and such other portfolios.
Each Underlying Theme Portfolio contemplates purchasing most foreign equity
securities in OTC markets or stock exchanges located in the countries in which
the respective principal offices of the issuers of the various securities are
located, if that is the best available market. The fixed commissions paid in
connection with most such foreign stock transactions generally are higher than
negotiated commissions on U.S. transactions. There generally is less government
supervision and regulation of foreign stock exchanges and brokers than in the
United States. Foreign security settlements may in some instances be subject to
delays and related administrative uncertainties.
Foreign equity securities may be held by an Underlying Theme Portfolio in the
form of ADRs, ADSs, EDRs, CDRs or securities convertible into foreign equity
securities. ADRs, ADSs, EDRs and CDRs may be listed on stock exchanges, or
traded in the OTC markets in the United States or Europe, as the case may be.
ADRs, like other securities traded in the United States, will be subject to
negotiated commission rates. The foreign and domestic debt securities and money
market instruments in which an Underlying Theme Portfolio may invest are
generally traded in the OTC markets.
An Underlying Theme Portfolio does not have any obligation to deal with any
broker/dealer or group of broker/dealers in the execution of securities
transactions. Each Underlying Theme Portfolio contemplates that, consistent with
the policy of obtaining the best net results, brokerage transactions may be
conducted through certain companies that are members of Liechtenstein Global
Trust. The Company's Board of Directors or the Underlying Theme Portfolios'
Board of Trustees, as applicable, has adopted procedures in conformity with Rule
17e-1 under the 1940 Act to ensure that all brokerage commissions paid to such
affiliates are reasonable and fair in the context of the market in which they
are operating. Any such transactions will be effected and related compensation
paid only in accordance with applicable SEC regulations.
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PORTFOLIO TRADING AND TURNOVER
The Fund's portfolio turnover rate is expected to be low, since the Fund will
only periodically rebalance its portfolio. The Fund's annual portfolio turnover
rate is not expected to exceed 20% annually.
The portfolio turnover rates of the Underlying Theme Portfolios have ranged from
37% to 169% during their most recent fiscal years. There can be no assurance
that the portfolio turnover rates of the Underlying Theme Portfolios will remain
within this range during subsequent fiscal years. Higher portfolio turnover
rates may result in higher expenses being incurred by the Underlying Theme
Portfolios.
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TRUSTEES AND EXECUTIVE OFFICERS
The Trust's Trustees and Executive Officers are listed below.
Name, Position(s) with the Principal Occupations and Business
TRUST AND ADDRESS EXPERIENCE FOR THE PAST 5 YEARS
----------------- -------------------------------
William J. Guilfoyle*, 39 President, GT Global since 1995;
Trustee, Chairman of Director GT Global since 1991; Senior
the Board and President Vice President and Director of Sales
50 California Street and Marketing, GT Global from May
San Francisco, CA 94111 1992 to April 1995; Vice President and
Director of Marketing, GT Global from
1987 to 1992; Director, Liechtenstein
Global Trust AG (holding company of the
various international LGT companies)
Advisory Board since January 1996;
Director, G.T. Global Insurance Agency
("G.T. Insurance") since 1996;
President and Chief Executive Officer,
G.T. Insurance since 1995; Senior Vice
President and Director, Sales and
Marketing, G.T. Insurance from April
1995 to November 1995; Senior Vice
President, Retail Marketing, G.T.
Insurance from 1992 to 1993. Mr.
Guilfoyle is also a director or trustee
of each of the other investment
companies registered under the 1940 Act
that is managed or administered by
Chancellor LGT Asset Management, Inc.
("Chancellor LGT").
C. Derek Anderson, 56 President, Plantagenet Capital
Trustee Management, LLC (an investment
220 Sansome Street partnership); Chief Executive Officer,
Suite 400 Plantagenet Holdings, Ltd. (an
San Francisco, CA 94104 investment banking firm); Director,
Anderson Capital Management, Inc.,
since 1988; Chief Executive Officer,
Anderson Capital Management, Inc., from
1991 to July 1997; Director, Premium
Wear, Inc. (formerly Munsingwear, Inc.)
(a casual apparel company), and
Director, "R" Homes, Inc. and various
other companies. Mr. Anderson is also a
director or trustee of each of the
other investment companies registered
under the 1940 Act that is managed or
administered by Chancellor LGT.
Frank S. Bayley, 58 Partner with Baker & McKenzie (a law
Trustee firm); Director and Chairman, C.D.
Two Embarcadero Center Stimson Company (a private investment
Suite 2400 company). Mr. Bayley also is director
San Francisco, CA 94111 or trustee of each of the other
investment companies registered under
the 1940 Act that is managed or
administered by the Manager.
* Mr. Guilfoyle and Mr. Wade are "interested persons" of the Trust as defined by
the 1940 Act due to their affiliation with the LGT companies.
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Arthur C. Patterson, 54 Managing Partner, Accel Partners (a
Trustee venture capital firm). He also serves
One Embarcadero Center as a director of various computing and
Suite 3820 software companies. Mr. Patterson also
San Francisco, CA 94111 is director or trustee of each of the
other investment companies registered
under the 1940 Act that is managed or
administered by the Manager.
Ruth H. Quigley, 62 Private investor, and President, Quigley
Trustee Friedlander & Co., Inc. (a financial
1055 California Street advisory services firm) from 1984 to
San Francisco, CA 94108 1986. Miss Quigley also is director or
trustee of each of the other investment
companies registered under the 1940 Act
that is managed or administered by the
Manager.
Robert G. Wade, Jr., 70 Consultant to the Manager; Chairman of
Trustee the Board of Chancellor Capital
1166 Avenue of the Americas Management, Inc. from January 1995 to
New York, NY 10036 October 1996; President, Chief Executive
Officer and Chairman of the Board of
Chancellor Capital Management, Inc. from
1988 to January 1995.
Helge K. Lee, 51 Executive Vice President, Asset
Vice President and Secretary management Division, Liechtenstein
1166 Avenue of the Americas Global Trust since October 1996; Senior
New York, NY 10036 Vice President, LGT Asset Management, GT
Global, GT Services and G.T. Insurance
from February 1996 to October 1996; Vice
President, the Manager, LGT Asset
Management, GT Global, GT Services and
G.T. Insurance from May 1994 to February
1996; General Counsel, the Manager, LGT
Asset Management, GT Global, GT Services
and G.T. Insurance from May 1994 to
October 1996; Secretary, the Manager,
LGT Asset Management, GT Global, GT
Services and G.T. Insurance from May
1994 to October 1996; Senior Vice
President, General Counsel and
Secretary, Strong/Corneliuson
Management, Inc.; and Secretary, each of
the Strong Funds from October 1991 to
May 1994.
Kenneth W. Chancey, 52 Vice President -- Mutual Fund
Vice President and Principal Accounting, the Manager since 1992; and
Accounting Officer Vice President, Putnam Fiduciary Trust
50 California Street Company from 1989 to 1992.
San Francisco, CA 94111
The Board of Trustees has a Nominating and Audit Committee, comprised of Miss
Quigley and Messrs. Anderson, Bayley and Patterson, which is responsible for
nominating persons to serve as Trustees, reviewing audits of the Trust and its
funds and recommending firms to serve as independent auditors of the Trust. Each
of the Trustees and officers of the Trust is also a Director and Officer of G.T.
Investment Portfolios, Inc., G.T. Global Developing Markets Fund, Inc. and G.T.
Global Floating Rate Fund, Inc., and a Trustee and Officer of G.T. Global
Series, G.T. Global Eastern Europe Fund, G.T. Global Variable Investment Trust,
G.T. Global Variable Investment Series, Global Investment Portfolio, Growth
Portfolio and Global High Income Portfolio, which also are registered investment
companies managed by the Manager. Each Trustee and Officer serves in total as a
Director and/or Trustee and officer, respectively of 12 registered investment
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companies with 42 series managed or administrated by the Manager. The Trust pays
each Trustee who is not a director, officer or employee of the Manager or any
affiliated company $5,000 a year, plus $300 per Fund for each meeting of the
Board attended by the Trustee, and reimburses travel and other expense incurred
in connection with attending Board meetings. Because the Fund has not yet
commenced operations, no Trustee or Officer of the Trust owns any shares of the
Fund.
MANAGEMENT
MANAGEMENT SERVICES RELATING TO THE FUND
The Manager acts as the manager for the Fund pursuant to a contract with the
Trust. The Manager receives no fee for providing management services to the
Fund.
DISTRIBUTION SERVICES RELATING TO THE FUND
The Fund's Advisor Class shares are offered continuously through the Fund's
principal underwriter and distributor, GT Global, on a "best efforts" basis
without a sales charge or contingent deferred sales charge.
TRANSFER AGENCY AND ACCOUNTING AGENCY SERVICES
The Transfer Agent has been retained by the Fund to perform shareholder
servicing, reporting and general transfer agent functions for it. For these
services, the Transfer Agent receives an annual maintenance fee of $17.50 per
account, a new account fee of $4.00 per account, a per transaction fee of $1.75
for all transactions other than exchanges and a per exchange fee of $2.25. The
Transfer Agent is also reimbursed for its out-of-pocket expenses for such items
as postage, forms, telephone charges, stationery and office supplies. The
Manager also serves as the Fund's pricing and accounting agent.
VALUATION OF FUND SHARES
As described in the Prospectus, the Fund's net asset value per share for each
class of shares is determined each day on which the New York Stock Exchange
("NYSE") is open for business ("Business Day") as of the close of regular
trading on the NYSE (currently 4:00 p.m. Eastern Time, unless weather, equipment
failure or other factors contribute to an earlier closing time). Currently, the
NYSE is closed on weekends and on certain days relating to the following
holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day, July 4th,
Labor Day, Thanksgiving Day and Christmas Day.
The value of the shares of the Underlying Theme Funds will be their net asset
value at the time the net asset value of the Fund is determined.
INFORMATION RELATING TO SALES
AND REDEMPTIONS
PAYMENT AND TERMS OF OFFERING
Payment for Advisor Class shares of the Fund purchased should accompany the
purchase order, or funds should be wired to the Transfer Agent as described in
the Prospectus. Payment, other than by wire transfer, must be made by check or
money order drawn on An U.S. bank. Checks or money orders must be payable in
U.S. dollars.
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As a condition of this offering, if an order to purchase either class of shares
is canceled due to nonpayment (for example, on account of a check returned for
"not sufficient funds"), the person who made the order will be responsible for
any loss incurred by the Underlying Theme Fund by reason of such cancellation,
and if such purchaser is a shareholder, the Fund shall have the authority as
agent of the shareholder to redeem shares in his or her account at their
then-current net asset value per share to reimburse the Fund for the loss
incurred. Investors whose purchase orders have been canceled due to nonpayment
may be prohibited from placing future orders.
The Fund reserves the right at any time to waive or increase the minimum
requirements applicable to initial or subsequent investments with respect to any
person or class of persons. An order to purchase shares is not binding on the
Fund until it has been confirmed in writing by the Transfer Agent (or other
arrangements made with the Fund, in the case of orders utilizing wire transfer
of funds, as described above) and payment has been received. To protect existing
shareholders, the Fund reserves the right to reject any offer for a purchase of
shares by any individual.
SALES OUTSIDE THE UNITED STATES
Sales of Fund shares made through brokers outside the United States will be at
net asset value plus a sales commission, if any, established by that broker or
by local law.
EXCHANGES
Shares of the Fund may be exchanged for shares of other GT Global Mutual Funds,
based on their respective net asset values without imposition of any sales
charges provided that the registration remains identical. Advisor Class shares
of the Fund may be exchanged only for Advisor Class shares of other GT Global
Mutual Funds. The exchange privilege is not an option or right to purchase
shares but is permitted under the current policies of the respective GT Global
Mutual Funds. The privilege may be discontinued or changed at any time by any of
the funds upon sixty days prior written notice to the shareholders of such fund
and is available only in states where the exchange may be made legally. Before
purchasing shares through the exercise of the exchange privilege, a shareholder
should obtain and read a copy of the prospectus of the fund to be purchased and
should consider the investment objective(s) of the fund.
TELEPHONE REDEMPTIONS
A corporation or partnership wishing to utilize telephone redemption services
must submit a "Corporate Resolution" or "Certificate of Partnership" indicating
the names, titles and the required number of signatures of persons authorized to
act on its behalf. The certificate must be signed by a duly authorized
officer(s), and, in the case of a corporation, the corporate seal must be
affixed. All shareholders may request that redemption proceeds be transmitted by
bank wire upon request directly to the shareholder's predesignated account at a
domestic bank or savings institution if the proceeds are at least $1,000. Costs
in connection with the administration of this service, including wire charges,
currently are borne by the Fund. Proceeds of less than $1,000 will be mailed to
the shareholder's registered address of record. The Fund and the Transfer Agent
reserve the right to refuse any telephone instructions and may discontinue the
aforementioned redemption options upon thirty days' written notice.
SUSPENSION OF REDEMPTION PRIVILEGES
The Fund may suspend redemption privileges or postpone the date of payment for
more than seven days after a redemption order is received during any period (1)
when the NYSE is closed other than customary weekend and holiday closings, or
trading on the NYSE is restricted as directed by the SEC, (2) when an emergency
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exists, as defined by the SEC, which would prohibit the Fund or the Underlying
Theme Portfolios from disposing of portfolio securities owned by them or in
fairly determining the value of its assets, or (3) as the SEC may otherwise
permit.
REDEMPTIONS IN KIND
It is possible that conditions may arise in the future that would, in the
opinion of the Trust's Board of Trustees, make it undesirable for the Fund to
pay for all redemptions in cash. In such cases, the Board may authorize payment
to be made in portfolio securities or other property of the Fund, so-called
"redemptions in kind." Payment of redemptions in kind will be made in readily
marketable securities. Such securities would be valued at the same value
assigned to them in computing the net asset value per share. Shareholders
receiving such securities would incur brokerage costs in selling any such
securities so received. However, despite the foregoing, the Trust has filed with
the SEC an election pursuant to Rule 18f-1 under the 1940 Act. This means that
the Fund will pay in cash all requests for redemption made by any shareholder of
record, limited in amount with respect to each shareholder during any ninety-day
period to the lesser of $250,000 or 1% of the net asset value of the Fund at the
beginning of such period. This election will be irrevocable so long as Rule
18f-1 remains in effect, unless the SEC by order upon application permits the
withdrawal of such election.
TAXES
TAXATION OF THE FUND
To qualify for treatment as a regulated investment company ("RIC") under the
Code, the Fund must distribute to its shareholders for each taxable year at
least 90% of its investment company taxable income (consisting generally of net
investment income and net short-term capital gain) ("Distribution Requirement")
and must meet several additional requirements. These requirements include the
following: (1) the Fund must derive at least 90% of its gross income each
taxable year from dividends, interest, payments with respect to securities loans
and gains from the sale or other disposition of securities, or other income
derived with respect to its business of investing in securities ("Income
Requirement"); (2) the Fund must derive less than 30% of its gross income for
its taxable year ending December 31, 1997, from the sale or other disposition of
securities held for less than three months ("Short-Short Limitation"); (3) at
the close of each quarter of the Fund's taxable year, at least 50% of the value
of its total assets must be represented by cash and cash items, U.S. government
securities, securities of other RICs (including the Underlying Theme Funds) and
other securities, with these other securities limited, in respect of any one
issuer, to an amount that does not exceed 5% of the value of the Fund's total
assets and that does not represent more than 10% of the issuer's outstanding
voting securities; and (4) at the close of each quarter of the Fund's taxable
year, not more than 25% of the value of its total assets may be invested in
securities (other than U.S. government securities or the securities of other
RICs, including the Underlying Theme Funds) of any one issuer.
The Fund will invest its assets in shares of the Underlying Theme Funds, cash,
and money market instruments. Accordingly, the Fund's income will consist of
distributions from the Underlying Theme Funds, net gains realized from the
disposition of Underlying Theme Fund shares and interest. If an Underlying Theme
Fund qualifies for treatment as a RIC under the Code -- each has done so for its
past taxable years and intends to continue to do so for its current and future
taxable years -- (1) dividends paid to the Fund from the Underlying Theme Fund's
investment company taxable income (which may include net gains from certain
foreign currency transactions) will be taxable to the Fund as ordinary income to
the extent of the Underlying Theme Fund's earnings and profits and (2)
distributions paid to the Fund from the Underlying Theme Fund's net capital gain
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(the excess of net long-term capital gain over net short-term capital loss),
when designated as such, will be taxable to the Fund as long-term capital gains,
regardless of how long the Fund has held the Underlying Theme Fund's shares.
Although an Underlying Theme Fund will be eligible to elect to "pass-through" to
its shareholders (including the Fund) the benefit of the foreign tax credit with
respect to any foreign and U.S. possessions income taxes it pays if more than
50% in the value of its total assets at the close of any taxable year consists
of securities of foreign corporations, the Fund will not qualify to pass that
benefit through to its shareholders because of its inability to satisfy that
asset test.
The Fund will be subject to a nondeductible 4% excise tax to the extent it fails
to distribute by the end of any calendar year substantially all of its ordinary
income for that year and capital gain net income for the one-year period ending
on October 31 of that year, plus certain other amounts.
TAXATION OF THE FUND'S SHAREHOLDERS
Dividends and other distributions declared by the Fund in, and payable to
shareholders of record as of a date in, October, November or December of any
year will be deemed to have been paid by the Fund and received by the
shareholders on December 31 of that year if the distributions are paid by the
Fund during the following January. Accordingly, those distributions will be
taxed to shareholders for the year in which that December 31 falls.
A portion of the dividends from the Fund's investment company taxable income
(whether paid in cash or reinvested in additional shares) may be eligible for
the dividends-received deduction allowed to corporations. The eligible portion
may not exceed the Fund's share of the aggregate dividends received by each
Underlying Theme Fund) from U.S. corporations. However, dividends received by a
corporate shareholder and deducted by it pursuant to the dividends-received
deduction may be subject indirectly to the alternative minimum tax.
If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares. Investors
also should be aware that if shares are purchased shortly before the record date
for any dividend or other distribution, the shareholder will pay full price for
the shares and receive some portion of the price back as a taxable distribution.
Dividends paid by the Fund to a shareholder who, as to the United States, is a
nonresident alien individual, or nonresident alien fiduciary of a trust or
estate, foreign corporation or foreign partnership ("foreign shareholder")
generally will be subject to U.S. withholding tax (at a rate of 30% or lower
treaty rate). Withholding will not apply if a dividend paid by the Fund to a
foreign shareholder is "effectively connected with the conduct of An U.S. trade
or business," in which case the reporting and withholding requirements
applicable to domestic shareholders will apply. A distribution of net capital
gain by the Fund to a foreign shareholder generally will be subject to U.S.
federal income tax (at the rates applicable to domestic persons) only if the
distribution is "effectively connected" or the foreign shareholder is treated as
a nonresident alien individual for federal income tax purposes.
The foregoing is a general and abbreviated summary of certain federal tax
considerations affecting the Fund and its shareholders. Investors are urged to
consult their own tax advisers for more detailed information and for information
regarding any foreign, state and local taxes applicable to distributions
received from the Fund.
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ADDITIONAL INFORMATION
SPECIAL SERVICING AGREEMENT
Subject to the receipt of an exemptive application pending with the Securities
and Exchange Commission, a Special Servicing Agreement (the "Service Agreement")
will be entered into among the Manager, the Underlying Theme Funds, GT Global
Investor Services, Inc., and the Trust. Under the Service Agreement, the Manager
will arrange for all services pertaining to the operation of the Trust including
the services of GT Global Investor Services, Inc. and the Manager to act as
Shareholder Servicing Agent and Fund Accounting Agent, respectively, for the
Fund. In addition, the Service Agreement will provide that, if the officers of
any Underlying Theme Fund, at the direction of the Board of Directors, determine
that the aggregate expenses of the Fund are less than the estimated savings to
the Underlying Theme Fund from the operation of the Fund, the Underlying Theme
Fund will bear those expenses in proportion to the average daily value of its
shares owned by the Fund. No Underlying Theme Fund will bear such expenses in
excess of the estimated savings to it. Such savings are expected to result
primarily from the elimination of numerous separate shareholder accounts which
are or would have been invested directly in the Underlying Theme Funds and the
resulting reduction in shareholder servicing costs. In this regard, the
shareholder servicing costs to any Underlying Theme Fund for servicing one
account registered to the Trust would be significantly less than the cost to
that same Underlying Theme Fund of servicing the same pool of assets contributed
in the typical fashion by a large group of individual shareholders owning small
accounts in each Underlying Theme Fund.
Based on actual expense data from the Underlying Theme Funds and certain very
conservative assumptions with respect to the Trust, the Manager, the Underlying
Theme Funds, GT Global Investor Services, Inc., and the Trust anticipate that
the aggregate financial benefits to the Underlying Theme Funds from these
arrangements will exceed the costs of operating the Fund. If such turns out to
be the case, there will be no charge to the Trust for the services under the
Service Agreement. Rather, in accordance with the Service Agreement, such
expenses will be passed through to the Underlying Theme Funds in proportion to
the value of each Underlying Theme Fund's shares held by the Fund or,
alternatively, will be paid by the Manager.
In the event that the aggregate financial benefits to the Underlying Theme Funds
do not exceed the costs of the Fund, the Manager will pay, on behalf of the
Fund, that portion of costs, as set forth herein, determined to be greater than
the benefits. The determination of whether and the extent to which the benefits
to the Underlying Theme Funds from the organization of the Trust will exceed the
costs to such funds will be made based upon the analysis criteria set forth in
the pending exemptive application. This cost-benefit analysis was initially
reviewed by the Directors of the Underlying Theme Funds before approving the
Service Agreement. For future years, there will be an annual review of the
Service Agreement to determine its continued appropriateness for each Underlying
Theme Fund.
Certain non-recurring and extraordinary expenses will not be paid in accordance
with the Service Agreement including: the fees and costs of actions, suits or
proceedings and any penalties or damages in connection therewith, to which the
Trust and/or the Fund may incur directly, or may incur as a result of its legal
obligation to provide indemnification to its officers, trustees and agents; the
fees and costs of any governmental investigation and any fines or penalties in
connection therewith; and any federal, state or local tax, or related interest
penalties or additions to tax, incurred, for example, as a result of the Trust's
failure to distribute all of its earnings, failure to qualify under subchapter M
of the Internal Revenue Code, or failure to timely file any required tax returns
46
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or other filings. Under unusual circumstances, the parties to the Service
Agreement may agree to exclude certain other expenses.
LIECHTENSTEIN GLOBAL TRUST
Liechtenstein Global Trust AG, formerly BIL GT Group, is composed of the Manager
and its worldwide affiliates. Other worldwide affiliates of Liechtenstein Global
Trust include LGT Bank in Liechtenstein, formerly Bank in Liechtenstein, an
international financial services institution founded in 1920. LGT Bank in
Liechtenstein has principal offices in Vaduz, Liechtenstein. Its subsidiaries
currently include LGT Bank in Liechtenstein (Deutschland) GmbH, formerly Bank in
Liechtenstein (Frankfurt) GmbH, and LGT Asset Management AG, formerly Bilfinanz
und Verwaltung AG, in Zurich, Switzerland.
Worldwide asset management affiliates also currently include LGT Asset
Management PLC, formerly G.T. Management PLC, in London, England; LGT Asset
Management Ltd., formerly G.T. Management (Asia) Ltd., in Hong Kong; LGT Asset
Management Ltd., formerly G.T. Management (Japan) Ltd., in Tokyo; LGT Asset
Management Pte. Ltd., formerly G.T. Management (Singapore) PTE Ltd., in
Singapore; LGT Asset Management Ltd., formerly G.T. Management (Australia) Ltd.,
in Sydney; and LGT Asset Management GmbH, formerly BIL Asset Management GmbH, in
Frankfurt.
CUSTODIAN
State Street Bank and Trust Company ("State Street"), 225 Franklin Street,
Boston, Massachusetts 02110, acts as custodian of the Fund's and the Underlying
Theme Portfolios' assets.
INDEPENDENT ACCOUNTANTS
The Trust's independent accountants are Coopers & Lybrand L.L.P., One Post
Office Square, Boston, Massachusetts 02109. Coopers & Lybrand L.L.P. conducts
annual audits of the Fund's financial statements, assists in the preparation of
the Fund's federal and state income tax returns and consults with the Trust as
to matters of accounting, regulatory filings, and federal and state income
taxation.
The audited financial statements of the Trust included in this Statement of
Additional Information have been examined by Coopers & Lybrand L.L.P., as stated
in their opinion appearing herein, and are included in reliance upon such
opinion given upon the authority of that firm as experts in accounting and
auditing.
USE OF NAME
The Manager has granted the Trust the right to use the "GT" and "GT Global"
names and has reserved the right to withdraw its consent to the use of such
names by the Trust at any time or to grant the use of such names to any other
company.
SHAREHOLDER LIABILITY
Under certain circumstances, shareholders of the Fund may be held personally
liable for the obligations of the Fund. The Trust's Declaration of Trust
provides that shareholders shall not be subject to any personal liability for
the acts or obligations of a Fund or the Trust and that every written agreement,
obligation or other undertaking made or issued by the Fund or the Trust shall
contain a provision to the effect that shareholders are not personally liable
thereunder. The Declaration of Trust provides for indemnification out of the
Trust's assets under certain circumstances, and further provides that the Trust
shall, upon request, assume the defense of any act or obligation of the Fund or
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the Trust and that the Fund will indemnify the shareholder for all legal and
other expenses incurred therewith. Thus, the risk of any shareholder's incurring
financial loss beyond his or her investment, because of this theoretical
shareholder liability, is limited to circumstances in which the Fund or the
Trust itself would be unable to meet its obligations.
INVESTMENT RESULTS
STANDARDIZED RETURNS
The Fund's "Standardized Returns," as referred to in the Prospectus (see "Other
Information -- Performance Information" in the Prospectus), is calculated
separately for Class A, Class B and Advisor Class shares of the Fund, as
follows: Standardized Return (average annual total return ("T")) is computed by
using the ending redeeming value ("ERV") of a hypothetical initial investment of
$1,000 ("P") over a period of years ("n") according to the following formula as
required by the SEC: P(1+T) = ERV. The following assumptions will be reflected
in computations made in accordance with this formula: (1) for Class A shares,
deduction of the maximum sales charge of 4.75% from the $1,000 initial
investment; (2) for Class B shares, deduction of the applicable contingent
deferred sales charge imposed on a redemption of Class B shares held for the
period; (3) for Advisor Class shares, deduction of a sales charge is not
applicable; (4) reinvestment of dividends and other distributions at net asset
value on the reinvestment date determined by the Trust's Board of Trustees; and
(5) a complete redemption at the end of any period illustrated.
NON-STANDARDIZED RETURNS
In addition to Standardized Returns, the Fund also may include in
advertisements, sales literature and shareholder reports other total return
performance data ("Non-Standardized Return"). Non-Standardized Return is
calculated separately for Class A, Class B and Advisor Class shares of the Fund
and may be calculated according to several different formulas. Non-Standardized
Returns may be quoted for the same or different time periods for which
Standardized Returns are quoted. Non-Standardized Returns for Class A and Class
B shares may or may not take sales charges into account; performance data
calculated without taking the effect of sales charges into account will be
higher than data including the effect of such charges. Advisor Class shares are
not subject to sales charges.
Average annual Non-Standardized Return ("T") is computed by using the ending
redeeming value ("ERV") of a hypothetical initial investment of $1,000 ("P")
over a period of years ("n") according to the following formula as required by
the SEC: P(1+T) = ERV. The following assumptions will be reflected in
computations made in accordance with this formula: (1) no deduction of sales
charges; (2) reinvestment of dividends and other distributions at net asset
value on the reinvestment date determined by the Board; and (3) a complete
redemption at the end of any period illustrated.
The Fund's investment results will vary from time to time depending upon market
conditions, the composition of each Underlying Theme Portfolio's portfolio, and
operating expenses of the Fund, so that current or past yield or total return
should not be considered representative of what an investment in the Fund may
earn in any future period. These factors and possible differences in the methods
used in calculating investment results should be considered when comparing the
Fund's investment results with those published for other investment companies
and other investment vehicles. The Fund's results also should be considered
relative to the risks associated with the Fund's investment objective and
policies.
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IMPORTANT POINTS TO NOTE ABOUT DATA RELATING TO WORLD EQUITY AND BOND MARKET
The Fund and GT Global may from time to time in advertisements, sales literature
and reports furnished to present or prospective shareholders compare the Fund
with the following, among others:
(1) The Consumer Price Index, which is a measure of the
average change in prices over time in a fixed market basket of goods
and services (e.g., food, clothing, shelter, fuels, transportation
fares, charges for doctors' and dentists' services, prescription
medicines, and other goods and services that people buy for day-to-day
living). There is inflation risk which does not affect a security's
value but its purchasing power i.e. the risk of changing price levels
in the economy that affects security prices or the price of goods and
services.
(2) Data and mutual fund rankings published or prepared
by Lipper Analytical Data Services, Inc. ("Lipper"), CDA/Wiesenberger
Investment Companies Service ("CDA/Wiesenberger"), Morningstar, Inc.
and/or other companies that rank and/or compare mutual funds by overall
performance, investment objectives, assets, expense levels, periods of
existence and/or other factors. In this regard each Underlying Theme
Fund may be compared to its "peer group" as defined by Lipper,
CDA/Wiesenberger, Morningstar and/or other firms, as applicable, or to
specific funds or groups of funds within or outside of such peer group.
Lipper generally ranks funds on the basis of total return, assuming
reinvestment of distributions, but does not take sales charges or
redemption fees into consideration, and is prepared without regard to
tax consequences. In addition to the mutual fund rankings, the
Underlying Theme Fund's performance may be compared to mutual fund
performance indices prepared by Lipper. Morningstar is a mutual fund
rating service that also rates mutual funds on the basis of
risk-adjusted performance. Morningstar ratings are calculated from a
fund's three, five and ten year average annual returns with appropriate
fee adjustments and a risk factor that reflects fund performance
relative to the three-month U.S. Treasury bill monthly returns. Ten
percent of the funds in an investment category receive five stars and
22.5% receive four stars. The ratings are subject to change each month.
(3) Bear Stearns Foreign Bond Index, which provides
simple average returns for individual countries and gross national
product ("GNP") weighted index, beginning in 1975. The returns are
broken down by local market and currency.
(4) Ibbottson Associates International Bond Index,
which provides a detailed breakdown of local market and currency
returns since 1960.
(5) Standard & Poor's 500 Composite Stock Price Index,
which is a widely recognized index composed of the
capitalization-weighted average of the price of 500 of the largest
publicly traded stocks in the United States.
(6) Dow Jones Industrial Average.
(7) CNBC/Financial News Composite Index.
(8) Morgan Stanley Capital International World Indices,
including, among others, the Morgan Stanley Capital International
Europe, Australia, Far East Index ("EAFE Index"). The EAFE index is an
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unmanaged index of more than 1,000 companies in Europe, Australia and
the Far East.
(9) Morgan Stanley capital International All Country
(AC) World Index ("MSCI"). The MSCI is a broad, unmanaged index of
global stock prices, currently comprising 2500 different issuers,
located in 44 countries, and grouped in 38 separate industries.
(10) Salomon Brothers World Government Bond Index and
Salomon Brothers World Government Bond Index-Non-U.S., each of which is
a widely used index composed of world government bonds.
(11) The World Bank Publication of Trends in Developing
Countries (TIDE), which provides brief reports on most of the World
Bank's borrowing members. The World Development Report is published
annually and looks at global and regional economic trends and their
implications for the developing economies.
(12) Salomon Brothers Global Telecommunications Index is
composed of telecommunications companies in the developing and emerging
countries.
(13) Datastream and Worldscope, each of which is an on-line
database retrieval service for information including international
financial and economic data.
(14) International Financial Statistics, which is produced by
the International Monetary Fund.
(15) Various publications and annual reports, produced by the
World Bank and its affiliates.
(16) Various publications from the International Bank for
Reconstruction and Development.
(17) Various publications produced by ratings agencies such as
Moody's, S&P and Fitch.
(18) Wilshire Associates, which is an on-line database for
international financial and economic data including performance measure
for a wide range of securities.
(19) Bank Rate National Monitor Index, which an average of the
quoted rates for 100 leading banks and thrifts in ten U.S. cities.
(20) International Finance Corporation ("IFC") Emerging
Markets Data Base, which provides detailed statistics on stock and bond
markets in developing countries.
(21) Various publications from the Organization for Economic
Cooperation and Development ("OECD").
(22) Average of savings accounts, which is a measure of all
kinds of savings deposits, including longer-term certificates. Savings
accounts offer a guaranteed rate of return on principal, but no
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opportunity for capital growth. During a portion of the period, the
maximum rates paid on some savings deposits were fixed by law.
Indices, economic and financial data prepared by the research departments of
various financial organizations, such as Salomon Brothers, Inc., Lehman
Brothers, Merrill Lynch, Pierce, Fenner & Smith, Inc., Financial Research
Corporation, J.P. Morgan, Morgan Stanley, Smith Barney Shearson, S.G. Warburg,
Jardine Flemming, The Bank for International Settlements, Asian Development
Bank, Bloomberg, L.P., and Ibbottson Associates, may be used, as well as
information reported by the Federal Reserve and the respective central banks of
various nations. In addition, GT Global may use performance rankings, ratings
and commentary reported periodically in national financial publications,
including Money Magazine, Mutual Fund Magazine, Smart Money, Global Finance,
EuroMoney, Financial World, Forbes, Fortune, Business Week, Latin Finance, the
Wall Street Journal, Emerging Markets Weekly, Kiplinger's Guide To Personal
Finance, Barron's, The Financial Times, USA Today, The New York Times, Far
Eastern Economic Review, The Economist and Investors Business Digest. The Fund
may compare its performance to that of other compilations or indices of
comparable quality to those listed above and other indices that may be developed
and made available in the future.
Information relating to foreign market performance, capitalization and
diversification is based on sources believed to be reliable but may be subject
to revision and has not been independently verified by the Fund or GT Global.
The authors and publishers of such material are not to be considered as
"experts" under the 1933 Act, on account of the inclusion of such information
herein.
A portion of the performance figures for each market includes the positive or
negative effects of the currency exchange rates effective at December 31 of each
year between the U.S. dollar and currency of the foreign market (e.g., Japanese
Yen, German Deutschemark, and Hong Kong Dollar). A foreign currency that has
strengthened or weakened against the U.S. dollar will positively or negatively
affect the reported returns, as the case may be.
GT Global believes that this information may be useful to investors considering
whether and to what extent to diversify their investments through the purchase
of mutual funds investing in securities on a global basis. However, this data is
not a representation of the past performance of the Fund, nor is it a prediction
of such performance. The performance of the Fund will differ from the historical
performance of relevant indices. The performance of indices does not take
expenses into account, while the Fund incurs expenses in its operations, which
will reduce performance. Each of these factors will cause the performance of the
Fund to differ from relevant indices.
From time to time, the Fund and GT Global may refer to the number of
shareholders in the Fund or the aggregate number of shareholders in all GT
Global Mutual Funds or the dollar amount of the Fund's assets under management
or rankings by DALBAR Surveys, Inc. in advertising materials.
GT Global believes the Fund is an appropriate investment for long-term
investment goals including funding retirement, paying for education or
purchasing a house. GT Global may provide information designed to help
individuals understand their investment goals and explore various financial
strategies. For example, GT Global may describe general principles of investing,
such as asset allocation, diversification and risk tolerance. The Fund does not
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represent a complete investment program, and investors should consider the Fund
as appropriate for a portion of their overall investment portfolio with regard
to their long-term investment goals. There is no assurance that any such
information will lead to achieving these goals or guarantee future results.
From time to time, GT Global may refer to or advertise the names of U.S. and
non-U.S. companies and their products, although there can be no assurance that
any GT Global Mutual Fund may own the securities of these companies.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical returns
of the capital markets in the United States, including common stocks, small
capitalization stocks, long-term corporate bonds, intermediate-term government
bonds, long-term government bonds, Treasury bills, the U.S. rate of inflation
(based on the CPI), and combinations of various capital markets. The performance
of these capital markets are based on the returns of different indices.
GT Global Mutual Funds may use the performance of these capital markets in order
to demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any of
these capital markets. The risks associated with the security types in any
capital market may or may not correspond directly to those of the funds.
Ibbotson calculates total returns in the same method as the funds.
The Fund may quote various measures of volatility and benchmark correlation such
as beta, standard deviation and R in advertising. In addition, the Fund may
compare these measures to those of other funds. Measures of volatility seek to
compare the Fund's historical share price fluctuations or total returns compared
to those of a benchmark. All measures of volatility and correlation are
calculated using averages of historical data.
The Fund may advertise examples of the effects of periodic investment plans,
including the principle of dollar cost averaging programs. In such a program, an
investor invests a fixed dollar amount in a fund at periodic intervals, thereby
purchasing fewer shares when prices are high and more shares when prices are
low. While such a strategy does not assure a profit or guard against loss in a
declining market, the investor's average cost per share can be lower than if
fixed numbers of shares are purchased at the same intervals. In evaluating such
a plan, investors should consider their ability to continue purchasing shares
through periods of low price levels.
The Fund may be available for purchase through retirement plans or other
programs offering deferral of or exemption from income taxes, which may produce
superior after-tax returns over time. For example, a $10,000 investment earning
a taxable return of 10% annually would have an after-tax value of $17,976 after
ten years, assuming tax was deducted from the return each year at a 39.6% rate.
An equivalent tax-deferred investment would have an after-tax value of $19,626
after ten years, assuming tax was deducted at a 39.6% rate from the deferred
earnings at the end of the ten-year period.
The Fund may describe in its sales material and advertisements how an investor
may invest in GT Global Mutual Funds through various retirement plans that offer
deferral of income taxes on investment earnings and may also enable an investor
to make deductible contributions. Because of their advantages, these retirement
accounts and plans may produce returns superior to comparable non-retirement
investments. In sales material and advertisements, the Fund may also discuss
these accounts and plans, which include:
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS): If you have earned income from
employment (including self-employment), you can contribute each year to an IRA
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up to the lesser of (1) $2,000 for yourself or $4,000 for you and your spouse,
regardless of whether your spouse is employed, or (2) 100% of compensation. Some
individuals may be able to take an income tax deduction for the contribution.
Regular contributions may not be made for the year you become 70 1/2 or
thereafter. Effective for taxable years beginning after 1997, unless your and
your spouse's earnings exceed a certain level, you also may establish an
"education IRA" and/or a "Roth IRA." Although contributions to these new types
of IRAs are nondeductible, withdrawals from them will be tax-free under certain
circumstances. Please consult your tax advisor for more information.
ROLLOVER IRAS: Individuals who receive distributions from qualified retirement
plans (other than required distributions) and who wish to keep their savings
growing tax-deferred can roll over (or make a direct transfer of) their
distribution to a Rollover IRA. These accounts can also receive rollovers or
transfers from an existing IRA. If an "eligible rollover distribution" from a
qualified employer-sponsored retirement plan is not directly rolled over to an
IRA (or certain qualified plans), withholding at the rate of 20% will be
required for federal income tax purposes. A distribution from a qualified plan
that is not an "eligible rollover distribution," including a distribution that
is one of a series of substantially equal periodic payments, generally is
subject to regular wage withholding or withholding at the rate of 10% (depending
on the type and amount of the distribution), unless you elect not to have any
withholding apply. Please consult your tax advisor for more information.
SEP-IRAS: Simplified employee pension plans ("SEPs" or "SEP-IRAs") provide
self-employed individuals (and any eligible employees) with benefits similar to
Keogh-type plans or Code Section 401(k) plans, but with fewer administrative
requirements and therefore potential lower annual administration expenses.
CODE SECTION 403(B)(7) CUSTODIAL ACCOUNTS: Employees of public schools and most
other tax-exempt organizations can make pre-tax salary reduction contributions
to these accounts.
PROFIT-SHARING (INCLUDING SECTION 401(K)) AND MONEY PURCHASE PENSION PLANS:
Corporations and other employers can sponsor these qualified defined
contribution plans for their employees. A Section 401(k) plan, a type of
profit-sharing plan, additionally permits the eligible, participating employees
to make pre-tax salary reduction contributions to the plan (up to certain
limits).
SIMPLE RETIREMENT PLANS: Employers with no more than 100 employees that do not
maintain another retirement plan may establish a Savings Incentive Match Plan
for Employees ("SIMPLE") either as separate IRAs or as part of a Section 401(k)
plan. SIMPLEs are not subject to the complicated nondiscrimination rules that
generally apply to qualified retirement plans.
GT Global may from time to time in its sales materials and advertising discuss
the risks inherent in investing. The major types of investment risk are market
risk, industry risk, credit risk, interest rate risk, liquidity risk and
inflation risk. Risk represents the possibility that you may lose some or all of
your investment over a period of time. A basic tenet of investing is the greater
the potential reward, the greater the risk.
From time to time, the Fund and GT Global will quote data regarding industries,
companies, individual countries, regions, world stock exchanges, and economic
and demographic statistics from sources GT Global deems reliable, including the
economic and financial data of such financial organizations as:
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1) Stock market capitalization: Morgan Stanley Capital International World
Indices, IFC and Datastream.
2) Stock market trading volume: Morgan Stanley Capital International Industry
Indices and IFC.
3) The number of listed companies: IFC, GT Guide to World Equity Markets,
Salomon Brothers, Inc., and S.G. Warburg.
4) Wage rates: U.S. Department of Labor Statistics and Morgan Stanley Capital
International World.
5) International industry performance: Morgan Stanley Capital International
World Indices, Wilshire Associates and Salomon Brothers, Inc.
6) Stock market performance: Morgan Stanley Capital International World Indices,
IFC and Datastream.
7) The Consumer Price Index and inflation rate: The World Bank, Datastream and
IFC.
8) Gross Domestic Product ("GDP"): Datastream and The World Bank.
9) GDP growth rate: IFC, The World Bank and Datastream.
10) Population: The World Bank, Datastream and United Nations.
11) Average annual growth rate (%) of population: The World Bank, Datastream and
United Nations.
12) Age distribution within populations: OECD and United Nations.
13) Total exports and imports by year: IFC, The World Bank and Datastream.
14) Top three companies by country, industry or market: IFC, GT Guide to World
Equity Markets, Salomon Brothers Inc., and S.G. Warburg.
15) Foreign direct investments to developing countries: The World Bank and
Datastream.
16) Supply, consumption, demand and growth in demand of certain products,
services and industries, including, but not limited to electricity, water,
transportation, construction materials, natural resources, technology, other
basic infrastructure, financial services, health care services and supplies,
consumer products and services and telecommunications equipment and services
(sources of such information may include, but would not be limited to, The World
Bank, OECD, IMF, Bloomberg and Datastream).
17) Standard deviation and performance returns for U.S. and non-U.S. equity and
bond markets: Morgan Stanley Capital International.
18) Countries restructuring their debt, including those under the Brady Plan:
the Manager.
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19) Political and economic structure of countries: Economist Intelligence Unit.
20) Government and corporate bonds -- credit ratings, yield to maturity and
performance returns: Salomon Brothers, Inc.
21) Dividend yields for U.S. and non-U.S. companies: Bloomberg.
From time to time, GT Global may include in its advertisement and sales
material, information about privatization which is an economic process involving
the sale of state-owned companies to the private sector.
In advertising and sales materials, GT Global may make reference to or discuss
its products, services and accomplishments. Among these accomplishments are that
in 1983 the Manager provided assistance to the government of Hong Kong in
linking its currency to the U.S. dollar, and that in 1987 Japan's Ministry of
Finance licensed LGT Asset Management Ltd. as one of the first foreign
discretionary investment managers for Japanese investors. Such accomplishments,
however, should not be viewed as an endorsement of the Manager by the government
of Hong Kong, Japan's Ministry of Finance or any other government or government
agency. Nor do any such accomplishments of the Manager provide any assurance
that the GT Global Mutual Funds' investment objectives will be achieved.
GT GLOBAL ADVANTAGE
As part of Liechtenstein Global Trust, GT Global continues a 75-year tradition
of service to individuals and institutions. Today we bring investors a
combination of experience, worldwide resources, a global perspective, investment
talent and a time tested investment discipline. With investment professionals in
nine offices worldwide, we witness world events and economic developments
firsthand.
The key to achieving consistent results is following a disciplined investment
process. Our approach to asset allocation takes advantage of GT Global's
worldwide presence and global perspective. Our "macroeconomic" worldview
determines our overall strategy of regional, country and sector allocations. Our
bottom up process of security selection combines fundamental research with
quantitative analysis through our proprietary models.
Built in checks and balances strengthen the process, enhancing professional
experience and judgment with an objective assessment of risk. Ultimately, each
security we select has passed a ranking system that helps our portfolio teams
determine when to buy and when to sell.
DESCRIPTION OF DEBT RATINGS
DESCRIPTION OF COMMERCIAL PAPER RATINGS
Moody's employs the designations "Prime-1" and "Prime-2" to indicate commercial
paper having the highest capacity for timely repayment. Issuers rated Prime-1
(or supporting institutions) have a superior ability for repayment of senior
short-term debt obligations. Prime-1 repayment ability will often be evidenced
by many of the following characteristics: leading market positions in
well-established industries; high rates of return on funds employed;
conservative capitalization structure with moderate reliance on debt and ample
asset protection; broad margins in earnings coverage of fixed financial charges
and high internal cash generation; and well-established access to a range of
financial markets and assured sources of alternate liquidity. Issuers rated
Prime-2 (or supporting institutions) have a strong ability for repayment of
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senior short-term debt obligations. This normally will be evidenced by many of
the characteristics cited above but to a lesser degree. Earnings trends and
coverage ratios, while sound may be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
S&P rates commercial paper in four categories ranging from "A-1" for the highest
quality obligations to "D" for the lowest. A-1 -- This highest category
indicates that the degree of safety regarding timely payment is strong. Those
issues determined to possess extremely strong safety characteristics will be
denoted with a plus sign (+) designation. A-2 -- Capacity for timely payment on
issues with this designation is satisfactory. However, the relative degree of
safety is not as high as for issues designated "A-1." A-3 -- Issues carrying
this designation have adequate capacity for timely payment. They are, however,
more vulnerable to the adverse effects of changes in circumstances than
obligations carrying the higher designations. B -- Issues rated "B" are regarded
as having only speculative capacity for timely payment. C -- This rating is
assigned to short-term debt obligations with a doubtful capacity for payment. D
- -- Debt rated "D" is in payment default. The "D" rating category is used when
interest payments or principal payments are not made on the date due, even if
the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period.
DESCRIPTION OF BOND RATINGS
Moody's rates the long-term debt securities issued by various entities from
"Aaa" to "C." Investment Grade Ratings are the first four categories:
Aaa -- Best quality. These securities carry the smallest degree of
investment risk and are generally referred to as "gilt edged." Interest
payments are protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- High quality by all standards. Together with the Aaa group they
comprise what are generally known as high grade bonds. They are rated lower
than the best bonds because margins of protection may not be as large as in
Aaa securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-term
risk appear somewhat larger than the Aaa securities.
A -- Upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa -- Medium-grade obligations (i.e., they are neither highly
protected nor poorly secured). Interest payments and principal security
appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of
time. Such bonds lack outstanding investment characteristics and in fact
have speculative characteristics as well.
Ba -- Have speculative elements and their future cannot be considered
as well-assured. Often the protection of interest and principal payments
may be very moderate, and thereby not well safeguarded during both good and
bad times over the future. Uncertainty of position characterizes bonds in
this class.
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B -- Generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of other
terms of the contract over any long period of time may be small.
Caa -- Poor standing. Such issues may be in default or there may be
present elements of danger with respect to principal or interest.
Ca -- Speculative in a high degree. Such issues are often in default or
have other marked shortcomings.
C -- Lowest rated class of bonds. Issues so rated can be regarded as
having extremely poor prospects of ever attaining any real investment
standing.
ABSENCE OF RATING: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or
companies that are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or
issuer.
4. The issue was privately placed, in which case the rating is
not published in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa to B in its corporate bond rating system. The modifier 1
indicates that the company ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issue ranks in the lower end of its generic rating category.
S&P rates the securities debt of various entities in categories ranging from
"AAA" to "D" according to quality. Investment grade ratings are the first four
categories:
AAA -- Highest rating. Capacity to pay interest and repay principal is
extremely strong.
AA -- Very strong capacity to pay interest and repay principal and
differs from the higher rated issues only in a small degree.
A -- Has a strong capacity to pay interest and repay principal although
it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
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BBB -- Regarded as having adequate capacity to pay interest and repay
principal. Whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal for debt in
this category than in higher rated categories.
BB, B, CCC, CC, C -- Debt rated "BB," "B," "CCC," "CC," and "C" is
regarded, on balance, as predominantly speculative with respect to capacity
to pay interest and repay principal in accordance with the terms of the
obligation. "BB" indicates the lowest degree of speculation and "C" the
highest degree of speculation. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
BB -- Has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
The "BB" rating category is also used for debt subordinated to senior debt
that is assigned an actual or implied "BBB-" rating.
B -- Has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The "B" rating category is
also used for debt subordinated to senior debt that is assigned an actual
or implied "BB" or "BB-" rating.
CCC -- Has a currently identifiable vulnerability to default, and is
dependent upon favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial, or economic conditions, it is not likely to
have the capacity to pay interest and repay principal. The "CCC" rating
category is also used for debt subordinated to senior debt that is assigned
an actual or implied "B" or "B-" rating.
CC -- Typically applied to debt subordinated to senior debt that is
assigned an actual or implied "CCC" rating.
C -- Typically applied to debt subordinated to senior debt that is
assigned an actual or implied "CCC-" debt rating. The "C" rating may be
used to cover a situation where a bankruptcy petition has been filed, but
debt service payments are continued.
C1 -- Reserved for income bonds on which no interest is being paid.
D -- In payment default. The "D" category is used when interest
payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period. This rating will also be
used upon the filing of a bankruptcy petition if debt service payments are
jeopardized.
PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
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NR: Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
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FINANCIAL STATEMENTS
The audited Statement of Assets and Liabilities of the Fund appears on
the following pages.
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Coopers & Lybrand L.L.P
A professional services firm
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of GT Global New Dimension Fund and Board of Trustees of GT
Global Series Trust:
We have audited the accompanying statement of assets and liabilities of GT
Global New Dimension Fund (the "Fund") as of August 18, 1997. This financial
statement is the responsibility of the Fund's management. Our responsibility is
to express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. Our procedures included
confirmation of cash held by the custodian as of August 18, 1997. 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 audit provides a reasonable basis for our
opinion.
In or opinion, the financial statement referred to above presents fairly, in all
material respects, the financial position of the Fund as of August 18, 1997, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
August 18, 1997
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STATEMENT OF ASSETS AND LIABILITIES
===============================================================================
GT GLOBAL NEW DIMENSION FUND
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 18, 1997
ASSETS
Cash..................................................................$100,000
LIABILITIES
Expense Payable..............................................................0
NET ASSETS............................................................$100,000
CLASS A
NET ASSET VALUE PER SHARE (33.333/2,916.302 SHARES OUTSTANDING)......11.43
CLASS B
NET ASSET VALUE PER SHARE (33.333/2,916.302 SHARES OUTSTANDING)......11.43
ADVISOR
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SHARE (33.334/2,916.303 SHARES OUTSTANDING.......................11.43
NOTE 1
GT Global New Dimension Fund ("The Fund") was incorporated under the laws of the
State of Massachusetts on August 26, 1996, and is registered under the
Investment company act of 1940, as amended, as a diversified series of GT Global
Series Trust ("The Trust"), an open-end investment company. The Fund has had no
operations to date other than those relating to organization and registration.
NOTE 2
All costs incurred in connection with the Fund's organization have been assumed
by Chancellor LGT Asset Management, Inc. ("Chancellor LGT"), the Fund's
administrator.
NOTE 3 Chancellor LGT serves as the Fund's administrator under an Administration
contract between the Fund and Chancellor LGT ("Administration Contract").
Chancellor LGT will not charge a fee for this service. Chancellor LGT is
currently committed to assuming the Fund's expenses.
The Fund will seek to invest substantially all of its assets in the following
mutual funds: GT Global Consumer Products and Services Fund, GT Global Financial
Services Fund; GT Global Health Care Fund; GT Global Infrastructure Fund, GT
Global Natural Resources Fund; and GT Global Telecommunications Fund;
collectively, the "Underlying Theme Funds", all of which are managed by
Chancellor LGT.
NOTE 4
The Fund intends to meet the requirements for qualification as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended
("Code"). It is also the intention of the Fund to make distributions sufficient
to avoid imposition of any excise tax under Section 4982 of the Code.
<PAGE>
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements - Filed herewith.
(b) Exhibits:
(1) (a) Declaration of Trust - Incorporated by Reference to Registrant's
Registration Statement, File Nos. 333-30551
and 811-7787, Edgar Accession No.
0000898432-97-000341.
(b) Amendment to Declaration of Trust dated July 25, 1997 - Filed
herewith.
(2) By-Laws - Incorporated by Reference to Registrant's Registration
Statement, File Nos. 333-30551 and 811-7787, Edgar
Accession No. 0000898432-97-000341.
(3) Voting Trust Agreement - None.
(4) Instruments defining the rights of holders of Registrant's shares of
beneficial interest - Incorporated by Reference from Articles III,
VIII, IX, and X of Registrant's Trust Instrument and from Articles II,
VII, and X of Registrant's By-Laws.
(5) Management Agreement - Filed herewith.
(6) (a) Distribution Contract with respect to Class A Shares - Filed herewith.
(b) Distribution Contract with respect to Class B Shares - Filed herewith.
(c) Distribution Contract with respect to Advisor Class Shares - Filed
herewith.
(7) Bonus, profit sharing or pension plans - None.
(8) Custodian Agreement - To be filed.
(9) (a) Transfer Agency Agreement - Filed herewith.
(b) Other material contracts:
(i) Broker-dealer sales contract - Filed herewith
(ii) Administration Agreement - Filed herewith.
(iii) Registered Investment Adviser Administration Agreement
(Advisor Class) - Filed herewith.
(iv) Registered Investment Adviser Participation Agreement (Advisor
Class) - Filed herewith.
(v) Bank sales contract - Filed herewith.
(vi) Agent sales contract - Filed herewith.
(vii) Foreign sales contract - Filed herewith.
(viii) Fund Accounting and Pricing Agreement - Filed herewith.
(10) Opinion of Counsel - Filed herewith.
(11) Other opinions, appraisals, rulings and consents:
Accountants' consent - Filed herewith.
(12) Financial Statements omitted from Part B - None.
(13) Letter of Investment Intent - Filed herewith.
(14) Model Retirement Plan - Incorporated by Reference from Post-Effective
Amendment No. 40 to the Registration Statement of
GT Global Growth Series (File No. 2-57526) filed
with the Securities and Exchange Commission
April 29, 1997.
(15) Rule 12b-1 Plans
(a) Plan of Distribution pursuant to Rule 12b-1 with respect to Class A
Shares - Filed herewith.
(b) Plan of Distribution pursuant to Rule 12b-1 with respect to Class B
Shares - Filed herewith.
(16) Schedule for Computation of Performance Quotations - None.
(17) Financial Data Schedule - Not Applicable.
(18) Plan Pursuant to Rule 18f-3 - Filed herewith.
<PAGE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
Number of Record
Holders As of
Title of Class August 18, 1997
- -------------- ----------------
Share of Beneficial Interest in:
GT Global New Dimension Fund-Class A 1
GT Global New Dimension Fund-Class B 1
GT Global New Dimension Fund-Advisor 1
Class
ITEM 27. INDEMNIFICATION
Article X of the Registrant's Declaration of Trust provides for
indemnification of certain persons acting on behalf of the Trust.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended ("1933 Act"), may be permitted to Trustees, officers,
and controlling persons by the Registrant's Declaration of Trust, By-Laws, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission ("Commission") such indemnification is against public
policy as expressed in the 1933 Act, and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a Trustee, officer, or
controlling person of the 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, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to the court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the 1933 Act
and will be governed by the final adjudication of such issues.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
See the material under the heading "Management" included in Part A
(Prospectus) of this Registration Statement and the material appearing under the
headings "Trustees and Executive Officers" and "Management" included in Part B
(Statement of Additional Information) of this Registration Statement.
Information as to the Directors and Officers of the Adviser is included in Form
ADV (File No. 801-10254), filed with the Securities and Exchange Commission,
which is incorporated herein by reference thereto.
ITEM 29. PRINCIPAL UNDERWRITERS
a) GT Global, Inc. is also the principal underwriter for the following
other investment companies: G.T. Global Growth Series (which includes the
following funds: GT Global America Value Fund, GT Global America Small Cap
C-2
<PAGE>
Growth Fund, GT Global America Mid Cap Growth Fund, GT Global Europe Growth
Fund, GT Global International Growth Fund, GT Global Japan Growth Fund, GT
Global New Pacific Growth Fund, and GT Global Worldwide Growth Fund); G.T.
Investment Funds, Inc. (which includes twelve funds currently in operation: GT
Global Strategic Income Fund, GT Global Government Income Fund, GT Global High
Income Fund, GT Global Growth & Income Fund, GT Global Latin America Growth
Fund, GT Global Telecommunications Fund, GT Global Health Care Fund, GT Global
Financial Services Fund, GT Global Infrastructure Fund, GT Global Consumer
Products and Services Fund, GT Global Natural Resources Fund and GT Global
Emerging Markets Fund); GT Investment Portfolios, Inc. (which includes one fund:
GT Global Dollar Fund); GT Global Variable Investment Series (which includes
five funds in operation: GT Global Variable New Pacific Fund, GT Global Variable
Europe Fund, GT Global Variable America Fund, GT Global Variable International
Fund, GT Global Money Market Fund); GT Global Variable Investment Trust (which
includes seven funds in operation: GT Global Variable Latin America Fund, GT
Global Variable Telecommunications Fund, GT Global Variable Growth & Income
Fund, GT Global Variable Strategic Income Fund, GT Global Variable Emerging
Markets Fund, GT Global Variable Global Government Income Fund and GT Global
Variable U.S. Government Income Fund); and GT Global Floating Rate Fund, Inc.
b) Directors and Officers of GT Global, Inc.
Unless otherwise indicated, the business address of each person listed
is is 50 California Street, San Francisco, California, CA 94111.
Positions and Offices Positions and Offices
Name With Underwriter With Registration
- ---- --------------------- -----------------
William J. Guilfoyle President and Chairman President and Chairman
of the Board of the Board
Raymond R. Cunningham Senior Vice President- None
Director of Sales and
Director
Richard W. Healey Senior Vice President- None
Director of Marketing and
Director
Helge K. Lee Secretary Secretary
Phillip S. Gillespie Assistant Secretary Assistant Secretary
David P. Hess Assistant Secretary Assistant Secretary
Daniel T. Phillips Vice President - None
Retirement Product
Marketing
Philip D. Edelstein Senior Vice President- None
9 Huntly Circle Regional Sales Manager
Palm Beach Gardens, FL
33418
Stephen A. Maginn Senior Vice President- None
519 S. Juanita Regional Sales Manager
Redondo Beach, CA 90277
Peter J. Wolfert Senior Vice President- None
Information Technology
Christine M. Pallatto Senior Vice President- None
Human Resources
Margo A. Tammen Vice President-Finance None
& Administration
C-3
<PAGE>
Positions and Offices Positions and Offices
Name With Underwriter With Registration
- ---- --------------------- -----------------
Gary M. Castro Assistant Treasurer & None
Controller
Dennis W. Reichert Assistant Treasurer &
Budget Director None
Jon Burke Vice President None
31 Darlene Drive
Southboro, MA 01772
Phil Christopher Vice President None
3621 59th Avenue, SW
Seattle, WA 98116
Anthony DiBacco Vice President None
30585 Via Lindosa Way Laguna
Niguel, CA 92677
Stephen Duffy Vice President None
1120 Gables Drive
Atlanta GA, 30319
Ned E. Hammond Vice President None
5901 McFarland Ct.
Plano, TX 75093
Campbell Judge Vice President None
4312 Linden Hills Blvd., #202
Minneapolis, MN 55410
Richard Kashnowski Vice President None
1368 South Ridge Drive
Mandeville, LA 70448
Robin Kraebel Vice President None
49 Bergin Avenue
Waldwick, NJ 07463
Allen M. Kuhn Vice President None
19655 Red Maple Lane
Jupiter, FL 33458
Jeffrey S. Kulik Vice President None
6540 Autumn Wind Circle
Clarksville, MD 21029
Steven C. Manns Vice President None
3025 Caswell Drive
Troy, MI 48084
Wayne F. Meyer Vice President None
2617 Sun Meadow Drive
Chesterfield, MO 63005
Dean Phillips Vice President None
3406 Bishop Park Drive, #428
Winter Park, FL 32792
C-4
<PAGE>
Positions and Offices Positions and Offices
Name With Underwriter With Registration
- ---- --------------------- -----------------
Anthony Rogers Vice President None
100 SouthBank Drive
Cary, NC 27511
Philip Schertz Vice President None
25 Ivy Place
Wayne, NJ 07470
Peter Sykes Vice President None
1655 E. Sherman Ave.
Salt Lake City, UT 84105
Lance Vetter Vice President None
10915 La Salinas Circle
Boca Raton, FL 33428
Tommy D. Wells Vice President None
25 Crane Drive
San Anselmo, CA 94960
Todd H. Westby Vice President None
3405 Goshen Road
Newtown Square, PA 19073
Eric T. Zeigler Vice President None
3100 The Strand
Manhattan Beach, CA 90266
c) None.
C-5
<PAGE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
Accounts, books, and other records required by Rules 31a-1 and 31a-2
under the Investment Company Act of 1940, as amended, are maintained and held in
the offices of the Registrant and its Investment Manager, Chancellor LGT Asset
Management, Inc., 50 California Street, 27th Floor, San Francisco, California
94111.
Records covering stockholder accounts and portfolio transactions are
also maintained and kept by Registrant's Transfer Agent, GT Global Investor
Services, Inc., 2121 N. California Boulevard, Suite 450, Walnut Creek,
California 94596, and by the Registrant's Custodian, State Bank and Trust
Company, 225 Franklin Street, Boston, Massachusetts 02110.
ITEM 31. MANAGEMENT SERVICES
None.
ITEM 32. UNDERTAKINGS
Registrant hereby undertakes to file a Post-Effective Amendment to this
Registration Statement, containing financial statements that need not be
certified, within four to six months from the effective date of this
Registration Statement.
Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest annual report to
shareholders upon request and without charge.
C-6
<PAGE>
GT GLOBAL SERIES TRUST
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, as amended, the Registrant has duly
caused this Pre-Effective Amendment to this Registration Statement to be signed
on its behalf by the undersigned, thereto duly authorized, in the City of San
Francisco, and the State of California, on the ____ day of August, 1997.
GT GLOBAL SERIES TRUST
By: WILLIAM J. GUILFOYLE*
---------------------------
William J. Guilfoyle
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement of GT Global Series Trust has been signed below by the
following person in the capacities indicated on the ____ day of August, 1997.
WILLIAM J. GUILFOYLE* President and Trustee
- ---------------------------- (Principal Executive Officer)
William J. Guilfoyle
/S/ KENNETH W. CHANCEY Vice President and
- ---------------------------- Principal Accounting Officer
Kenneth W. Chancey
C. Derek Anderson* Trustee
Arthur C. Patterson Trustee
Frank S. Bayley* Trustee
Ruth H. Quigley* Trustee
Robert G. Wade, Jr.* Trustee
- ---------------------
*By: /S/ PHILLIP S. GILLEPSIE
------------------------
Phillip S. Gillepsie
Attorney-in-Fact, pursuant to
Power of Attorney filed herewith.
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints Helge K. Lee and Phillip S. Gillespie, and each of them, with full
power to act without the other, his or her true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for him or her and in
his or her name, place and stead, in any and all capacities (until revoked in
writing) to sign the Registration Statement and any and all Amendments to the
Registration Statement (including Pre-Effective and Post-Effective Amendments),
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing ratifying and confirming all that
said attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
GT GLOBAL SERIES TRUST
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ William J. Guilfoyle
____________________________ Trustee, Chairman of August 12, 1997
William J. Guilfoyle the Board and President
/s/ C. Derek Anderson
____________________________ Trustee August 12, 1997
C. Derek Anderson
/s/ Frank S. Bayley
____________________________ Trustee August 12, 1997
Frank S. Bayley
____________________________ Trustee August 12, 1997
Arthur C. Patterson
/s/ Ruth H. Quigley
____________________________ Trustee August 12, 1997
Ruth H. Quigley
/s/ Robert G. Wade, Jr.
____________________________ Trustee August 12, 1997
Robert G. Wade, Jr.
</TABLE>
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
------ -----------
(1) (a) Declaration of Trust. 1/
(b) Amendment to Declaration of Trust dated July 25, 1997 -
Filed herewith.
(2) By-Laws.2/
(3) Voting Trust Agreement - None.
(4) Instruments defining the rights of holders of Registrant's shares of
beneficial interest.3/
(5) Management Agreement - Filed herewith.
(6) (a) Distribution Contract with respect to Class A Shares - Filed
herewith.
(b) Distribution Contract with respect to Class B Shares - Filed
herewith.
(c) Distribution Contract with respect to Advisor Class Shares -
Filed herewith.
(7 Bonus, profit sharing or pension plans -None.
(8) Custodian Agreement - To be filed.
(9) (a) Transfer Agency Agreement - Filed herewith.
(b) Other material contracts:
(i) Broker-dealer sales contract - Filed herewith
(ii) Administration Agreement - Filed herewith.
(iii) Registered Investment Adviser Administration Agreement
(Advisor Class) - Filed herewith.
(iv) Registered Investment Adviser Participation Agreement
(Advisor Class) - Filed herewith.
(v) Bank sales contract - Filed herewith.
(vi) Agent sales contract - Filed herewith.
(vii) Foreign sales contract - Filed herewith.
(viii) Fund Accounting and Pricing Agreement - Filed
herewith.
(10) Opinion of Counsel - Filed herewith.
(11) Other opinions, appraisals, rulings, and consents: Accountants'
consent - Filed herewith.
(12) Financial Statements omitted from Part B - None.
(13) Letter of Investment Intent - Filed herewith.
(14) Model Retirement Plan. 4/
1 Incorporated by Reference to Registrant's Registration Statement, File
Nos. 333-30551 and 811-7787, Edgar Accession No.0000898432-97-000341.
2 Incorporated by Reference to Registrant's Registration Statement, File
Nos. 333-30551 and 811-7787, Edgar Accession No. 0000898432-97-000341.
3 Incorporated by Reference to Articles III, VIII, IX, and X of Registrant's
Trust Instrument and from Articles II, VII, and X of Registrant's By-Laws.
4 Incorporated by Reference from Post-Effective Amendment No. 40 to the
Registration Statement of GT Global Growth Series (File No. 2-57526) filed
with the Securities and Exchange Commission April 29, 1997.
<PAGE>
(15) Rule 12b-1 Plans
(a) Plan of Distribution pursuant to Rule 12b-1 with respect to
Class A Shares Filed herewith.
(b) Plan of Distribution pursuant to Rule 12b-1 with respect to
Class B Shares Filed herewith.
(16) Schedule for Computation of Performance Quotations - None.
(17) Financial Data Schedule - Not Applicable.
(18) Plan Pursuant to Rule 18f-3 - Filed herewith.
- --------------------------------------------------------------------------------
Statement of GT Global Growth Series (File No. 2-57526) filed with the
Securities and Exchange Commission April 29, 1997.
CERTIFICATE OF AMENDMENT
TO THE
DECLARATION OF TRUST
OF
GT GLOBAL ASSET ALLOCATION TRUST
The undersigned, being the Secretary of GT Global Asset Allocation
Trust ("Trust"), hereby certifies that the Board of Trustees of the Trust duly
adopted the following resolution, which amended the Declaration of Trust in the
manner provided in such Declaration of Trust, by written consent on July 25,
1997, and that the amendment was effective on that date.
RESOLVED, that the Declaration of Trust dated August 26, 1996 be, and
it hereby is, amended to change the name of the Trust from "GT GLOBAL
ASSET ALLOCATION TRUST" to "GT GLOBAL SERIES TRUST" in the following
manner:
Section 1 and Section 2 (b) of Article I of
the Declaration of Trust are hereby amended by
replacing the first sentence of each section as
follows:
Section 1. This Trust shall be known as "GT
Global Series Trust."
Section 2 (b). The "Trust" refers to GT
Global Series Trust and reference to the Trust, when
applicable to one or more Series of the Trust, shall
refer to any such Series.
/s/ Phillips Gillespie
Dated: July 25, 1997 _______________________________
Phillip S. Gillespie, Secretary
San Francisco, California
On this 25th day of July, 1997, before me personally appeared Phillip S.
Gillespie, to me personally known, who, being by me duly sworn, did say that he
is Secretary of the above-referenced Trust and acknowledged that he executed the
foregoing instrument as his free act and deed.
/s/
_______________________________
Notary Public
MANAGEMENT AGREEMENT
BETWEEN
GT GLOBAL SERIES TRUST
AND
CHANCELLOR LGT ASSET MANAGEMENT, INC.
Agreement made as of ________, 1997, between GT Global Series Trust, a
Massachusetts business trust ("Trust"), on behalf of GT Global New Dimension
Fund ("Fund"), and Chancellor LGT Asset Management, Inc.
("Chancellor LGT"), a California corporation.
WHEREAS the Trust is registered under the Investment Company Act of
1940, as amended ("1940 Act"), as an open-end management investment company; and
WHEREAS the Trust desires to retain Chancellor LGT as manager to
furnish certain management services to the Fund, and Chancellor LGT is willing
to furnish such services;
NOW THEREFORE, in consideration of the promises and the mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Trust hereby appoints Chancellor LGT as manager of
the Fund for the period and on the terms set forth in this Agreement. Chancellor
LGT accepts such appointment and agrees to render the services herein set forth,
for the compensation herein referenced and provided.
2. DUTIES AS MANAGER. Chancellor LGT will manage the affairs of the
Fund subject to the supervision of the Trust's Board of Trustees ("Board") and
the following understandings:
(a) Chancellor LGT will be responsible for the daily
allocation and periodic rebalancing of the Fund's assets among the investment
companies in which the Fund invests ("Underlying Funds"). Such allocation and
rebalancing shall be made in accordance with the Trust's Registration Statement.
Chancellor LGT will be responsible for placing all trades on behalf of the Fund.
Chancellor LGT also will determine from time to time what other securities, if
any, will be purchased, retained or sold by the Fund and what cash, if any, will
be retained by the Fund.
<PAGE>
(b) Chancellor LGT will oversee the maintenance of all books
and records with respect to the securities transactions of the Fund and will
furnish the Board with such periodic and special reports as the Board reasonably
may request. In compliance with the requirements of Rule 31a-3 under the 1940
Act, Chancellor LGT hereby agrees that all records which it maintains for the
Fund are the property of the Fund, agrees to preserve for the periods prescribed
by Rule 31a-2 under the 1940 Act any records which it maintains for the Fund and
which are required to be maintained by Rule 31a-1 under the 1940 Act, and
further agrees to surrender promptly to the Fund any records which it maintains
for the Fund upon request by the Fund.
(c) Chancellor LGT will supervise all aspects of the
operations of the Fund, including the oversight of transfer agency, custodial,
pricing and accounting services, except as hereinafter set forth; provided,
however, that nothing herein contained shall be deemed to relieve or deprive the
Board of its responsibility for control of the conduct of the affairs of the
Fund.
(d) At Chancellor LGT's expense, Chancellor LGT will provide
the Fund with such corporate, administrative and clerical personnel (including
officers of the Trust) and services as are reasonably deemed necessary or
advisable by the Board.
(e) Chancellor LGT will arrange for, but not pay for (except
as may be provided for under Section 6 of this Agreement) the periodic
preparation, updating, filing and dissemination (as applicable) of the Fund's
prospectus, proxy material, tax returns and required reports with or to the
Fund's shareholders, the Securities and Exchange Commission and other
appropriate federal or state regulatory authorities.
(f) Chancellor LGT will provide the Fund with, or obtain for
it, adequate office space and all necessary office equipment and services,
including telephone service, heat, utilities and similar items.
3. FURTHER DUTIES. In all matters relating to the performance of this
Agreement, Chancellor LGT will act in conformity with the Declaration of Trust,
By-laws and Registration Statement of the Trust and with the instructions and
2
<PAGE>
directions of the Board, and will comply with the requirements of the 1940 Act,
the rules thereunder, and all other applicable federal and state laws and
regulations.
4. DELEGATION OF CHANCELLOR LGT'S DUTIES AS MANAGER. With respect to
the Fund, Chancellor LGT may enter into one or more Agreements ("Sub-Management
Agreement") with a sub-manager in which Chancellor LGT delegates to such
sub-manager the performance of any or all of the services specified in Paragraph
2 of this Agreement, provided that (i) each Sub-Management Agreement imposes on
the sub-manager bound thereby all the duties and conditions to which Chancellor
LGT is subject with respect to the delegated services under Paragraph 2 of this
Agreement; (ii) each Sub-Management Agreement meets all requirements of the 1940
Act and rules thereunder; and (iii) Chancellor LGT shall not enter into a
Sub-Management Agreement unless it is approved by the Board prior to
implementation.
5. SERVICES NOT EXCLUSIVE. The services furnished by Chancellor LGT
hereunder are not to be deemed exclusive and Chancellor LGT shall be free to
furnish similar services to others so long as its services under this Agreement
are not impaired thereby. Nothing in this Agreement shall limit or restrict the
right of any director, officer or employee of Chancellor LGT, who may also be a
trustee, officer or employee of the Trust, to engage in any other business or to
devote his or her time and attention in part to the management or other aspects
of any other business, whether of a similar nature or a dissimilar nature.
6. EXPENSES.
(a) During the term of this Agreement, Chancellor LGT shall
bear all expenses of the Fund (other than expenses reimbursed pursuant to the
Fund's Rule 12b-1 Plans of distribution and non-recurring and extraordinary
expenses of the Fund) until such time as the Fund enters into a special
servicing or similar agreement among the Trust, Chancellor LGT, G.T. Investment
Funds, Inc. and GT Investor Services, Inc. ("Special Servicing Agreement"). Once
the Trust enters into the Special Servicing Agreement, all expenses of the Fund
(other than expenses reimbursed pursuant to the Fund's Rule 12b-1 plans of
distribution and non-recurring and extraordinary expenses) shall be paid for
3
<PAGE>
pursuant to that agreement. Without limiting the generality of the foregoing,
such expenses include the following: (i) the cost (including brokerage
commissions, if any) of securities purchased or sold by the Fund and any losses
incurred in connection therewith; (ii) expenses of organizing the Trust; (iii)
filing fees and expenses relating to the registration and qualification of the
Fund's shares and the Trust under federal and/or state securities law and
maintaining such registrations and qualifications; (iv) fees and salaries
payable to the Trust's Trustees who are not parties to this Agreement or
interested persons of any such party ("Independent Trustees"); (v) all expenses
incurred in connection with the Independent Trustees' services, including travel
expenses; (vi) costs of any liability, uncollectible items of deposit and other
insurance and fidelity bonds; (vii) legal, accounting and auditing expenses,
including legal fees of special counsel for the Independent Trustees; (viii)
charges of custodians, transfer agents, pricing agents and other agents; (ix)
costs of preparing share certificates; (x) expenses of setting in type, printing
and mailing prospectuses and supplements thereto, statements of additional
information, reports and proxy materials for existing shareholders; (xi) fees,
voluntary assessments and other expenses incurred in connection with membership
in investment company organizations; (xii) costs of mailing and tabulating
proxies and costs of meetings of shareholders, the Board and any committees
thereof; (xiii) the cost of investment company literature and other publications
provided by the Fund to its Trustees and officers; and (xiv) costs of mailing,
stationery and communications equipment.
(c) During the term of this Agreement, the Fund shall bear any
non-recurring and extraordinary expenses incurred in its operations. Such
non-recurring and extraordinary expenses include: (i) the fees and costs of
actions, suits or proceedings, and any penalties, damages or payments in
settlement in connection therewith, for which the Trust and/or the Fund may be
liable directly, or which they may incur as a result of their legal obligation
to provide indemnification to their officers, trustees and agents; (ii) the fees
and costs of any governmental investigation and any fines or penalties in
connection therewith; (iii) and any federal, state or local tax, or related
interest, penalties or additions to tax for which the Trust or the Fund may be
liable.
4
<PAGE>
(d) The payment or assumption by Chancellor LGT of any expense
of the Fund prior to the effective date of the Special Servicing Agreement shall
not obligate Chancellor LGT to pay or assume the same or any similar expense of
the Fund after the effective date of the Special Servicing Agreement.
7. COMPENSATION. Chancellor LGT will not be paid any special
compensation for the services provided by it hereunder. However, Chancellor LGT
may receive fees for performing investment management and other services on
behalf of the Underlying Funds and may receive further fees from the Underlying
Funds pursuant to the Special Servicing Agreement.
8. LIMITATION OF LIABILITY OF CHANCELLOR LGT AND INDEMNIFICATION.
Chancellor LGT shall not be liable, and the Trust shall indemnify Chancellor LGT
and its directors, officers and employees, for any costs or liabilities arising
from any error of judgment or mistake of law or any loss suffered by the Trust
in connection with the matters to which this Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
Chancellor LGT in the performance by Chancellor LGT of its duties or from
reckless disregard by Chancellor LGT of its obligations and duties under this
Agreement. Any person, even though also an officer, partner, employee, or agent
of Chancellor LGT, who may be or become a Trustee, officer, employee or agent of
the Trust, shall be deemed, when rendering services to the Trust or acting with
respect to any business of the Fund, to be rendering such service to or acting
solely for the Fund and not as an officer, partner, employee, or agent or one
under the control or direction of Chancellor LGT even though paid by it.
9. LIMITATION OF LIABILITY OF SHAREHOLDERS AND TRUSTEES OF THE TRUST.
It is expressly agreed that the obligations of the Trust hereunder shall not be
binding upon any of the shareholders, trustees, officers, nominees, agents or
employees of the Trust personally, but shall only bind the assets and property
of the Trust, as provided in the Trust's Declaration of Trust. The execution and
delivery of this Agreement has been authorized by the Board of Trustees of the
Trust, and this Agreement has been executed and delivered by an authorized
officer of the Trust acting as such, and neither such authorization by the Board
5
<PAGE>
of Trustees nor such execution and delivery by such officer shall be deemed to
have been made by any of them individually or to impose any liability on any of
them personally, but shall bind only the assets and property of the Trust as
provided in the Trust's Declaration of Trust.
10. DURATION AND TERMINATION.
(a) This Agreement shall become effective upon the date
written above, provided that this Agreement shall not take effect with respect
to the Fund unless it has first been approved (i) by a vote of a majority of the
Independent Trustees, cast in person at a meeting called for the purpose of
voting on such approval, and (ii) by vote of a majority of the Fund's
outstanding voting securities.
(b) Unless sooner terminated as provided herein, this
Agreement shall continue in effect for two years from the above written date.
Thereafter, if not terminated, with respect to the Fund, this Agreement shall
continue automatically for successive periods not to exceed twelve months each,
provided that such continuance is specifically approved at least annually (i) by
a vote of a majority of the Independent Trustees, cast in person at a meeting
called for the purpose of voting on such approval, and (ii) by the Board or by
vote of a majority of the outstanding voting securities of the Fund.
(c) Notwithstanding the foregoing, with respect to the Fund
this Agreement may be terminated at any time, without the payment of any
penalty, by vote of the Board or by a vote of a majority of the outstanding
voting securities of the Fund on sixty days' written notice to Chancellor LGT,
or by Chancellor LGT at any time, without the payment of any penalty, on sixty
days' written notice to the Fund. This Agreement will automatically terminate in
the event of its assignment.
11. AMENDMENT. No provision of this Agreement may be changed, waived,
discharged or terminated orally, except by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought, and no amendment of this Agreement shall be effective
until approved by vote of a majority of the Fund's outstanding voting
securities.
6
<PAGE>
12. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of California and the 1940 Act. To the extent that the
applicable laws of the State of California conflict with the applicable
provisions of the 1940 Act, the latter shall control.
13. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors. As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"interested person," "assignment," "broker," "dealer," "investment adviser,"
"national securities exchange," "net assets," "prospectus," "sale," "sell" and
"security" shall have the same meaning as such terms have in the 1940 Act,
subject to such exemption as may be granted by the Securities and Exchange
Commission by any rule, regulation or order. Where the effect of a requirement
of the 1940 Act reflected in any provision of this Agreement is made less
restrictive by a rule, regulation or order of the Securities and Exchange
Commission, whether of special or general application, such provision shall be
deemed to incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated as of the day and year
first above written.
Attest: GT GLOBAL SERIES TRUST
____________________ By: ___________________________
Attest: CHANCELLOR LGT ASSET MANAGEMENT, INC.
____________________ By: ___________________________
7
DISTRIBUTION CONTRACT
CLASS A SHARES
BETWEEN GT GLOBAL SERIES TRUST
AND GT GLOBAL, INC.
THIS DISTRIBUTION CONTRACT, dated as of _______________, 1997, between
GT GLOBAL SERIES TRUST, a Massachusetts business trust ("Trust"), and GT GLOBAL,
INC., a California corporation ("GT Global").
WHEREAS, the Trust is an open-end management investment company;
WHEREAS, the Trust's Board of Trustees ("Board") has established Class
A, Class B, and an Advisor Class of shares of beneficial interest in each
Series;
WHEREAS, GT Global has the facilities to sell and distribute the Class
A shares of beneficial interest of the various series established from time to
time by the Trust ("Funds"); and
WHEREAS, the Trust and GT Global desire to enter into a distribution
contract with respect to the Class A shares of beneficial interest of the Funds;
NOW, THEREFORE, the parties agree as follows:
1. GT Global shall be the exclusive principal underwriter for the sale
of Class A shares of each Fund, except as otherwise provided pursuant to
paragraph 20 hereof. The terms "Class A shares of the Fund" or "Class A shares"
as used herein shall mean Class A shares of beneficial interest issued by the
Funds.
2. In the sale of Class A shares of each Fund, GT Global shall act as
agent of the Trust except in any transaction in which GT Global sells such Class
A shares as a dealer to the public, in which event GT Global shall act as
principal for its own account.
3. The Trust shall sell Class A shares only through GT Global except
that the Trust may at any time:
(a) Issue Class A shares to any corporation, association, trust,
partnership, or other organization, or its, or their, security
holders, beneficiaries, or members, in connection with a
merger, consolidation, or reorganization to which the Trust is
a party, or in connection with the acquisition of all or
<PAGE>
substantially all the property and assets of such corporation,
association, trust, partnership, or other organization;
(b) Issue Class A shares of a Fund at net asset value to the
holders of Class A shares of the other Funds or Class A shares
of other investment companies managed by Chancellor LGT Asset
Management, Inc., pursuant to any exchange or reinvestment
option made available as described in the current Prospectus
of the Fund;
(c) Issue Class A shares at net asset value to a Fund's
shareholders in connection with the reinvestment of dividends
and other distributions paid by the Fund;
(d) Issue Class A shares of a Fund at net asset value to Trustees,
officers, and employees of the Trust, its investment manager,
any principal underwriter of the Trust, and their affiliates,
including any trust, pension, profit-sharing, or other benefit
plan established for such persons, registered representatives
and other employees of dealers having Dealer Agreements with
GT Global and with respect to all such persons listed, their
respective spouse, siblings, parents and children, and to
other persons as permitted by applicable rules adopted by the
Securities and Exchange Commission under the Investment
Company Act of 1940 ("1940 Act"), as in effect from time to
time and as described in the current Prospectus of the Fund;
(e) Issue Class A shares of a Fund at net asset value to the
sponsor organization, custodian or depository of a periodic or
single payment plan, or similar plan for the purchase of Class
A shares of the Fund, purchasing for such plan;
(f) Issue Class A shares of a Fund in the course of any other
transaction specifically provided for in the Prospectus of the
Funds, or upon obtaining the written consent of GT Global
thereto; or
(g) Sell Class A shares outside of the North American continent,
Hawaii, and Puerto Rico through such other principal
underwriter or principal underwriters as may be designated
from time to time by the Trust, pursuant to paragraph 20
hereof.
2
<PAGE>
4. GT Global shall devote its best efforts to the sale of Class A
shares of the Funds. GT Global shall maintain a sales organization suited to the
sale of Class A shares of the Funds and shall use its best efforts to effect
such sales in countries as to which the Trust shall have expressly waived in
writing its right to designate another principal underwriter pursuant to
paragraph 20 hereof, and shall effect and maintain appropriate qualification to
do so in all those jurisdictions in which it sells or offers Class A shares for
sale and in which qualification is required.
5. Within the United States of America, GT Global shall offer and sell
Class A shares only to or through such dealers as are members in good standing
of the National Association of Securities Dealers, Inc. ("NASD"), or to persons
legally engaged in dealer activities who are exempt from NASD membership in
accord with applicable law. Class A shares of a Fund sold to dealers shall be
for resale by such dealers only at the public offering price set forth in the
effective Prospectus relating to the Fund which is part of the Trust's
Registration Statement in effect under the Securities Act of 1933, as amended
("1933 Act"), at the time of such offer or sale (herein, the "Prospectus"). GT
Global may sell Class A shares of a Fund to dealers at such discounts from said
public offering price as are set forth in the Prospectus, and/or in a Dealer
Agreement between GT Global and the dealer, but neither such discounts nor
commissions shall exceed the sales charge or discounts referred to in the
Prospectus.
6. In its sales to dealers, GT Global shall use its best efforts to
determine that such dealers are appropriately qualified to transact business in
securities under applicable laws, rules and regulations promulgated by such
national, state, local or other governmental or quasi-governmental authorities
as may in a particular instance have jurisdiction.
7. The applicable public offering price of Class A shares of a Fund
shall be the price which is equal to the net asset value per Class A share plus
such sales charge as may be provided for in the Prospectus. Net asset value per
Class A share shall be determined for each Fund in the manner and at the time or
times set forth in and subject to the provisions of its Prospectus.
8. All orders for Class A shares received by GT Global shall, unless
rejected by GT Global or the Trust, be accepted by GT Global immediately upon
receipt and confirmed at an offering price determined in accordance with the
provisions of the Prospectus and the 1940 Act, and applicable rules in effect
thereunder. GT Global shall not hold orders subject to acceptance nor otherwise
delay their execution. In conformity with the rules of the NASD, GT Global shall
not accept conditional orders. The provisions of this paragraph shall not be
3
<PAGE>
construed to restrict the right of the Trust to withhold Class A shares of the
Funds from sale under paragraph 16 hereof.
9. The Trust or its transfer agent shall be promptly advised of all
orders received, and shall cause Class A shares of Funds to be issued upon
payment received in accord with policies established by the Trust and GT Global.
10. GT Global shall adopt and follow procedures as approved by the
officers of the Trust for the confirmation of sales to dealers, the collection
of amounts payable by dealers on such sales, and the cancellation of unsettled
transactions, as may be necessary to comply with the requirements of the NASD
and the 1940 Act, as such requirements may from time to time exist.
11. The compensation for the services of GT Global as a principal
underwriter under this Contract shall be the sales charge, if any, which is
collected on sales of Class A shares. In addition, GT Global is entitled to
fees, if any, payable under the Trust's Plan of Distribution applicable to the
Class A shares of the Funds ("Class A Plan").
12. The Trust agrees to use its best efforts to maintain its
registration as an open-end management investment company under the 1940 Act.
13. The Trust agrees to use its best efforts to maintain an effective
prospectus relating to each Fund under the 1933 Act, and warrants that such
prospectus will contain all statements required by and will conform with the
requirements of the 1933 Act and the rules and regulations thereunder, and that
no part of any such prospectus, at the time the Registration Statement of which
it is a part is ordered effective, will contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein, or
necessary to make the statements therein not misleading. GT Global agrees and
warrants that it will not in the sale of Class A shares of the Funds use any
prospectus, advertising or sales literature not approved by the Trust or its
officers nor make any untrue statement of a material fact nor omit the stating
of a material fact necessary in order to make the statements made, in the light
of the circumstances under which they are made, not misleading. GT Global agrees
to indemnify and hold the Trust harmless from any and all loss, expense, damage
and liability resulting from a breach by GT Global of the agreements and
warranties in this paragraph, or from the use of any sales literature,
information, statistics or other aid or device employed in connection with the
sale of Class A shares.
14. The expense of each printing of each Prospectus and each revision
thereof or addition thereto deemed necessary by the Trust's officers to meet the
4
<PAGE>
requirements of applicable laws shall be divided between the Trust, GT Global
and any other principal underwriter of the Class A shares of the Funds as they
may from time to time agree.
15. The Trust agrees to use its best efforts to qualify and maintain
the qualification of an appropriate number of the Class A shares of each Fund
for sale under the securities laws of such states as GT Global and the Trust may
approve. Any such qualification may be withheld, terminated or withdrawn by the
Trust at any time in its discretion. The expense of qualification and
maintenance of qualification shall be borne by the Trust, but GT Global shall
furnish such information and other materials relating to its affairs and
activities as may be required by the Trust or its counsel in connection with
such qualification.
16. The Trust and GT Global acknowledge that each has the right to
reject any order for the purchase of Class A shares for any reason. In addition,
the Trust may withhold Class A shares from sale in any state or country
temporarily or permanently if, in the opinion of its counsel, such offer or sale
would be contrary to law or if the Board of Trustees or the President or any
Vice President of the Trust determines that such offer or sale is not in the
best interest of the Trust. The Trust will give prompt notice to GT Global of
any withholding and will indemnify it against any loss suffered by GT Global as
a result of such withholding by reason of non-delivery of Fund Class A shares
after a good faith confirmation by GT Global of sales thereof prior to receipt
of notice of such withholding.
17. Each Fund shall reimburse GT Global for a portion of its
expenditures incurred in providing services under this Contract at the rate and
under the terms specified with respect to such Fund in the Class A Plan, as such
Plan may be amended from time to time.
18. (a) With respect to any Fund, this Contract may be terminated at
any time, without payment of any penalty, by vote of a
majority of the members of the Board of Trustees of the Trust
who are not interested persons of the Trust and have no direct
or indirect financial interest in the operation of the Plan or
in any agreements related to the Plan or by vote of a majority
of the outstanding voting securities of the Trust on thirty
(30) days' written notice to GT Global, or by GT Global on
like notice to the Trust. Termination of this Contract with
respect to Class A shares of one Fund shall not affect its
continued effectiveness with respect to Class A shares of any
other Fund.
5
<PAGE>
(b) This Contract may be terminated by either party upon five (5)
days' written notice to the other party in the event that the
Securities and Exchange Commission has issued an order or
obtained an injunction or other court order suspending
effectiveness of the Registration Statement covering the Class
A shares of the Funds.
(c) This Contract may also be terminated by the Trust upon five
(5) days' written notice to GT Global, should the NASD expel
GT Global or suspend its membership in that organization.
(d) GT Global shall inform the Trust promptly of the institution
of any proceedings against it by the Securities and Exchange
Commission, the NASD or any state regulatory authority.
19. This Agreement shall automatically terminate in the event of its
assignment. The term "assignment" shall have the meaning defined in the 1940
Act.
20. With respect to any Fund, upon sixty (60) days' written notice to
GT Global, the Trust may from time to time designate other principal
underwriters of Class A shares with respect to areas other than the North
American continent, Hawaii, Puerto Rico and such countries as to which the Trust
may have expressly waived in writing its right to make such designation. In the
event of such designation, the right of GT Global under this Contract to sell
Class A shares in the areas so designated shall terminate, but this Contract
shall remain otherwise in full effect until terminated in accordance with the
provisions of paragraphs 18 and 19 hereof.
21. No provision of this Contract shall protect or purport to protect
GT Global against any liability to the Trust or holders of Class A shares of the
Funds for which GT Global would otherwise be liable by reason of willful
misfeasance, bad faith or negligence.
22. Unless sooner terminated in accordance with the provisions of
paragraphs 18 or 19 hereof, this Contract shall continue in effect with respect
to each Fund for periods of up to one year, but only so long as such continuance
is specifically approved at least annually (i) by vote of a majority of the
Trustees of the Trust who are not interested persons of the Trust and who have
no direct or indirect financial interest in the Plan or any agreements relating
to the Plan, and who are not parties to this Contract or interested persons of
any such party as defined by the 1940 Act, cast in person at a meeting called
for the purpose of voting on such approval; and (ii) by either the Board of
6
<PAGE>
Trustees of the Trust or a vote of a majority of the outstanding Class A shares
of the Trust as defined by the 1940 Act.
23. It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust personally, but shall only bind the assets and
property of the Funds, as provided in the Trust's Declaration of Trust. The
execution and delivery of this Contract have been authorized by the Trustees of
the Trust, and this Contract has been executed and delivered by an authorized
officer of the Trust acting as such; neither such authorization by such Trustees
nor such execution and delivery by such officer shall be deemed to have been
made by any of them individually or to impose any liability on any of them
personally, but shall bind only the assets and property of the Funds, as
provided in the Trust's Declaration of Trust.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed in duplicate original by their officers thereunder duly authorized
as of the day and year first written above.
Attest: GT GLOBAL SERIES TRUST
_________________________ By:________________________________
Attest: GT GLOBAL, INC.
_________________________ By:________________________________
DISTRIBUTION CONTRACT
CLASS B SHARES
BETWEEN GT GLOBAL SERIES TRUST
AND GT GLOBAL, INC.
THIS DISTRIBUTION CONTRACT, is made as of ________________, 1997
between GT GLOBAL SERIES TRUST, a Massachusetts business trust ("Trust"), and GT
GLOBAL, INC., a California corporation ("GT Global").
WHEREAS, the Trust is an open-end management investment company;
WHEREAS, the Trust's Board of Trustees ("Board") has established Class
A, Class B, and an Advisor Class of shares of beneficial interest in each
Series;
WHEREAS, GT Global has the facilities to sell and distribute the Class
B shares of beneficial interest of the various series established from time to
time by the Trust ("Funds"); and
WHEREAS, the Trust and GT Global desire to enter into a distribution
contract with respect to the Class B shares of the Funds.
NOW, THEREFORE, the parties agree as follows:
1. GT Global shall be the exclusive principal underwriter for the sale
of Class B shares of each Fund, except as otherwise provided pursuant to
paragraph 20 hereof. The terms "Class B shares of the Fund" or "Class B shares"
as used herein shall mean Class B shares of beneficial interest issued by the
Funds.
2. In the sale of Class B shares of each Fund, GT Global shall act as
agent of the Trust except in any transaction in which GT Global sells such Class
B shares as a dealer to the public, in which event GT Global shall act as
principal for its own account.
3. The Trust shall sell Class B shares only through GT Global except
that the Trust may at any time:
(a) Issue Class B shares to any corporation, association, trust,
partnership, or other organization, or its, or their,
security holders, beneficiaries, or members, in connection
with a merger, consolidation, or reorganization to which the
Trust is a party, or in connection with the acquisition of
<PAGE>
all or substantially all the property and assets of such
corporation, association, trust, partnership, or other
organization;
(b) Issue Class B shares of a Fund to the holders of Class B
shares of the other Funds or Class B shares of other
investment companies managed by Chancellor LGT Asset
Management, Inc., pursuant to any exchange or reinvestment
option made available as described in the current Prospectus
of the Fund;
(c) Issue Class B shares to a Fund's shareholders in connection
with the reinvestment of dividends and other distributions
paid by the Fund;
(d) Issue Class B shares of a Fund to Trustees, officers, and
employees of the Trust, its investment manager, any
principal underwriter of the Trust, and their affiliates,
including any trust, pension, profit-sharing, or other
benefit plan established for such persons, registered
representatives and other employees of dealers having Dealer
Agreements with GT Global and with respect to all such
persons listed, their respective spouse, siblings, parents
and children, and to other persons as permitted by
applicable rules adopted by the Securities and Exchange
Commission under the Investment Company Act of 1940 ("1940
Act"), as in effect from time to time and as described in
the current Prospectus of the Fund;
(e) Issue Class B shares of a Fund to the sponsor organization,
custodian or depository of a periodic or single payment
plan, or similar plan for the purchase of Class B shares of
the Fund, purchasing for such plan;
(f) Issue Class B shares of a Fund in the course of any other
transaction specifically provided for in the Prospectus of
the Funds, or upon obtaining the written consent of GT
Global thereto; or
(g) Sell Class B shares outside of the North American continent,
Hawaii and Puerto Rico through such other principal
underwriter or principal underwriters as may be designated
from time to time by the Trust, pursuant to paragraph 20
hereof.
4. GT Global shall devote its best efforts to the sale of Class B
shares of the Funds. GT Global shall maintain a sales organization suited to the
2
<PAGE>
sale of Class B shares of the Funds and shall use its best efforts to effect
such sales in countries as to which the Trust shall have expressly waived in
writing its right to designate another principal underwriter pursuant to
paragraph 20 hereof, and shall effect and maintain appropriate qualification to
do so in all those jurisdictions in which it sells or offers Class B shares for
sale and in which qualification is required.
5. Within the United States of America, GT Global shall offer and sell
Class B shares only to or through such dealers as are members in good standing
of the National Association of Securities Dealers, Inc. ("NASD"), or to persons
legally engaged in dealer activities who are exempt from NASD membership in
accord with applicable law. Class B shares of a Fund sold to dealers shall be
for resale by such dealers only at the public offering price set forth in the
effective Prospectus relating to the Fund which is part of the Trust's
Registration Statement in effect under the Securities Act of 1933, as amended
("1933 Act"), at the time of such offer or sale (herein, the "Prospectus").
6. In its sales to dealers, GT Global shall use its best efforts to
determine that such dealers are appropriately qualified to transact business in
securities under applicable laws, rules and regulations promulgated by such
national, state, local or other governmental or quasi-governmental authorities
as may in a particular instance have jurisdiction.
7. The applicable public offering price of Class B shares of a Fund
shall be the price which is equal to the net asset value per Class B share. Net
asset value per Class B share shall be determined for a Fund in the manner and
at the time or times set forth in and subject to the provisions of its
Prospectus.
8. All orders for Class B shares received by GT Global shall, unless
rejected by GT Global or the Trust, be accepted by GT Global immediately upon
receipt and confirmed at an offering price determined in accordance with the
provisions of the Prospectus and the 1940 Act, and applicable rules in effect
thereunder. GT Global shall not hold orders subject to acceptance nor otherwise
delay their execution. In conformity with the rules of the NASD, GT Global shall
not accept conditional orders. The provisions of this paragraph shall not be
construed to restrict the right of the Trust to withhold Class B shares of the
Funds from sale under paragraph 16 hereof.
9. The Trust or its transfer agent shall be promptly advised of all
orders received, and shall cause Class B shares of Funds to be issued upon
payment received in accord with policies established by the Trust and GT Global.
3
<PAGE>
10. GT Global shall adopt and follow procedures as approved by the
officers of the Trust for the confirmation of sales to dealers, the collection
of amounts payable by dealers on such sales, and the cancellation of unsettled
transactions, as may be necessary to comply with the requirements of the NASD
and the 1940 Act, as such requirements may from time to time exist.
11. The compensation for the services of GT Global as a principal
underwriter under this Contract shall be all contingent deferred sales charges
that may be imposed on redemptions of Class B shares. In addition, GT Global is
entitled to fees, if any, payable under the Trust's Plan of Distribution
applicable to the Class B shares of the Funds ("Class B Plan").
12. The Trust agrees to use its best efforts to maintain its
registration as an open-end management investment company under the 1940 Act.
13. The Trust agrees to use its best efforts to maintain an effective
prospectus relating to each Fund under the 1933 Act, and warrants that such
prospectus will contain all statements required by and will conform with the
requirements of the 1933 Act and the rules and regulations thereunder, and that
no part of any such prospectus, at the time the Registration Statement of which
it is a part is ordered effective, will contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein, or
necessary to make the statements therein not misleading. GT Global agrees and
warrants that it will not in the sale of Class B shares of the Funds use any
prospectus, advertising or sales literature not approved by the Trust or its
officers nor make any untrue statement of a material fact nor omit the stating
of a material fact necessary in order to make the statements made, in the light
of the circumstances under which they are made, not misleading. GT Global agrees
to indemnify and hold the Trust harmless from any and all loss, expense, damage
and liability resulting from a breach by GT Global of the agreements and
warranties in this paragraph, or from the use of any sales literature,
information, statistics or other aid or device employed in connection with the
sale of Class B shares.
14. The expense of each printing of each Prospectus and each revision
thereof or addition thereto deemed necessary by the Trust's officers to meet the
requirements of applicable laws shall be divided between the Trust, GT Global
and any other principal underwriter of the Class B shares of the Funds as they
may from time to time agree.
15. The Trust agrees to use its best efforts to qualify and maintain
the qualification of an appropriate number of the Class B shares of each Fund
for sale under the securities laws of such states as GT Global and the Trust may
approve. Any such qualification may be withheld, terminated or withdrawn by the
4
<PAGE>
Trust at any time in its discretion. The expense of qualification and
maintenance of qualification shall be borne by the Trust, but GT Global shall
furnish such information and other materials relating to its affairs and
activities as may be required by the Trust or its counsel in connection with
such qualification.
16. The Trust and GT Global acknowledge that each has the right to
reject any order for the purchase of Class B shares for any reason. In addition,
the Trust may withhold Class B shares from sale in any state or country
temporarily or permanently if, in the opinion of its counsel, such offer or sale
would be contrary to law or if the Board of Trustees or the President or any
Vice President of the Trust determines that such offer or sale is not in the
best interest of the Trust. The Trust will give prompt notice to GT Global of
any withholding and will indemnify it against any loss suffered by GT Global as
a result of such withholding by reason of non-delivery of Fund Class B shares
after a good faith confirmation by GT Global of sales thereof prior to receipt
of notice of such withholding.
17. Each Fund shall reimburse GT Global for a portion of its
expenditures incurred in providing services under this Contract at the rate and
under the terms specified with respect to such Fund in the Class B Plan, as such
Plan may be amended from time to time.
18. (a) With respect to any Fund, this Contract may be terminated at
any time, without payment of any penalty, by vote of a
majority of the members of the Board of Trustees of the Trust
who are not interested persons of the Trust and have no direct
or indirect financial interest in the operation of the Plan or
in any agreements related to the Plan or by vote of a majority
of the outstanding voting securities of the Fund on thirty
(30) days' written notice to GT Global, or by GT Global on
like notice to the Trust. Termination of this Contract with
respect to Class B shares of one Fund shall not affect its
continued effectiveness with respect to Class B shares of any
other Fund.
(b) This Contract may be terminated by either party upon five (5)
days' written notice to the other party in the event that the
Securities and Exchange Commission has issued an order or
obtained an injunction or other court order suspending
effectiveness of the Registration Statement covering the Class
B shares of the Funds.
5
<PAGE>
(c) This Contract may also be terminated by the Trust upon five
(5) days' written notice to GT Global, should the NASD expel
GT Global or suspend its membership in that organization.
(d) GT Global shall inform the Trust promptly of the institution
of any proceedings against it by the Securities and Exchange
Commission, the NASD or any state regulatory authority.
19. This Agreement shall automatically terminate in the event of its
assignment. The term "assignment" shall have the meaning defined in the 1940
Act.
20. With respect to any Fund, upon sixty (60) days' written notice to
GT Global, the Trust may from time to time designate other principal
underwriters of Class B shares with respect to areas other than the North
American continent, Hawaii, Puerto Rico and such countries as to which the Trust
may have expressly waived in writing its right to make such designation. In the
event of such designation, the right of GT Global under this Contract to sell
Class B shares in the areas so designated shall terminate, but this Contract
shall remain otherwise in full effect until terminated in accordance with the
provisions of paragraphs 18 and 19 hereof.
21. No provision of this Contract shall protect or purport to protect
GT Global against any liability to the Trust or holders of Class B shares of the
Funds for which GT Global would otherwise be liable by reason of willful
misfeasance, bad faith or negligence.
22. Unless sooner terminated in accordance with the provisions of
paragraphs 18 or 19 hereof, this Contract shall continue in effect with respect
to each Fund for periods of up to one year, but only so long as such continuance
is specifically approved at least annually (i) by vote of a majority of the
Trustees of the Trust who are not interested persons of the Trust and who have
no direct or indirect financial interest in the Plan or any agreements relating
to the Plan, and who are not parties to this Contract or interested persons of
any such party as defined by the 1940 Act, cast in person at a meeting called
for the purpose of voting on such approval; and (ii) by either the Board of
Trustees of the Trust or a vote of a majority of the outstanding Class B shares
of the Trust as defined by the 1940 Act.
23. It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust personally, but shall only bind the assets and
property of the Funds, as provided in the Trust's Declaration of Trust. The
6
<PAGE>
execution and delivery of this Contract have been authorized by the Trustees of
the Trust, and this Contract has been executed and delivered by an authorized
officer of the Trust acting as such; neither such authorization by such Trustees
nor such execution and delivery by such officer shall be deemed to have been
made by any of them individually or to impose any liability on any of them
personally, but shall bind only the assets and property of the Funds, as
provided in the Trust's Declaration of Trust.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed in duplicate original by their officers thereunder duly authorized
as of the day and year first written above.
Attest: GT GLOBAL SERIES TRUST
_________________________ By:________________________________
Attest: GT GLOBAL, INC.
_________________________ By:________________________________
7
DISTRIBUTION CONTRACT
Advisor Class Shares
between
GT GLOBAL SERIES TRUST
and
GT GLOBAL, INC.
This distribution contract, is made as of ______, 1997, between GT
GLOBAL SERIES TRUST, a Massachusetts business trust ("Trust"), and GT GLOBAL,
INC., a California corporation ("GT Global").
WHEREAS, the Trust is an open-end management investment company;
WHEREAS, GT Global has the facilities to sell and distribute the
Advisor Class shares of beneficial interest in the various series established
from time to time by the Trust ("Funds");
WHEREAS, the Trust's Board of Trustees ("Board") has established Class
A, Class B and Advisor Class shares of beneficial interest in each Fund;
WHEREAS, the Trust and GT Global have entered into a separate
distribution contract with respect to the Class A and Class B shares of
beneficial interest in the Funds; and
WHEREAS, the Trust and GT Global desire to enter into a distribution
contract with respect to the Advisor Class shares of the Funds;
NOW, THEREFORE, the parties agree as follows:
1. GT Global shall be the exclusive principal underwriter for the sale
of Advisor Class shares of each Fund, except as otherwise provided pursuant to
paragraph 19 hereof. The terms "Advisor Class shares of the Fund" or "Advisor
Class shares" as used herein shall mean Advisor Class shares of beneficial
interest issued by the Funds.
2. In the sale of Advisor Class shares of each Fund, GT Global shall
act as agent of the Trust except in any transaction in which GT Global sells
such Advisor Class shares as a dealer, in which event GT Global shall act as
principal for its own account.
3. The Trust shall sell Advisor Class shares only through GT Global
except that the Trust may at any time:
<PAGE>
(a) Issue Advisor Class shares to any corporation, association,
trust, partnership, or other organization, or its, or their,
security holders, beneficiaries, or members, in connection
with a merger, consolidation, or reorganization to which the
Trust is a party or in connection with the acquisition of all
or substantially all the property and assets of such
corporation, association, trust, partnership, or other
organization;
(b) Issue Advisor Class shares of a Fund at net asset value to the
holders of Advisor Class shares of the other Funds or Advisor
Class shares of other investment companies managed by
Chancellor LGT Asset Management, Inc., pursuant to any
exchange or reinvestment option made available as described in
the current Prospectus of the Fund;
(c) Issue Advisor Class shares at net asset value to a Fund's
shareholders in connection with the reinvestment of dividends
and other distributions paid by the Fund;
(d) Issue Advisor Class shares of a Fund at net asset value to the
sponsor organization, custodian or depository of a periodic or
single payment plan, or similar plan for the purchase of
Advisor Class shares of the Fund, purchasing for such plan;
(e) Issue Advisor Class shares of a Fund in the course of any
other transaction specifically provided for in the Prospectus
of the Fund, or upon obtaining the written consent of GT
Global thereto; or
(f) Sell Advisor Class shares outside of the North American
continent, Hawaii and Puerto Rico through such other principal
underwriter or principal underwriters as may be designated
from time to time by the Trust, pursuant to paragraph 19
hereof.
4. GT Global shall devote its best efforts to the sale of Advisor Class
shares of the Funds. GT Global shall maintain a sales organization suited to the
sale of Advisor Class shares of the Funds and shall use its best efforts to
effect such sales in countries as to which the Trust shall have expressly waived
in writing its right to designate another principal underwriter pursuant to
paragraph 19 hereof, and shall effect and maintain appropriate qualification to
do so in all those jurisdictions in which it sells or offers Advisor Class
2
<PAGE>
shares for sale and in which qualification is required. GT Global shall use its
best efforts to ensure that sales of Advisor Class shares are made to investors
eligible to invest in Advisor Class shares, as defined in the Prospectuses of
the Funds.
5. Advisor Class shares of a Fund sold to dealers shall be for resale
by such dealers only at the public offering price set forth in the effective
Prospectus relating to the Fund which is part of the Trust's Registration
Statement in effect under the Securities Act of 1933, as amended ("1933 Act"),
at the time of such offer or sale (herein, the "Prospectus").
6. In its sales to dealers, GT Global shall use its best efforts to
determine that such dealers are appropriately qualified to transact business in
securities under applicable laws, rules and regulations promulgated by such
national, state, local or other governmental or quasi-governmental authorities
as may in a particular instance have jurisdiction.
7. The applicable public offering price of Advisor Class shares of a
Fund shall be the Price which is equal to the net asset value per Advisor Class
share. Net asset value per Advisor Class share shall be determined for a Fund in
the manner and at the time or times set forth in and subject to the provisions
of its Prospectus.
8. All orders for Advisor Class shares received by GT Global shall,
unless rejected by GT Global or the Trust, be accepted by GT Global immediately
upon receipt and confirmed at an offering price determined in accordance with
the provisions of the Prospectus and the Investment Company Act of 1940, as
amended ("1940 Act"), and applicable rules in effect thereunder. GT Global shall
not hold orders subject to acceptance nor otherwise delay their execution. In
conformity with the rules of the NASD, GT Global shall not accept conditional
orders. The provisions of this paragraph shall not be construed to restrict the
right of the Trust to withhold Advisor Class shares of the Funds from sale under
paragraph 16 hereof.
9. The Trust or its transfer agent shall be promptly advised of all
orders received, and shall cause shares of Funds to be issued upon payment
received in accord with policies established by the Trust and GT Global.
10. GT Global shall adopt and follow procedures as approved by the
officers of the Trust for the confirmation of sales to dealers, the collection
of amounts payable by dealers on such sales, and the cancellation of unsettled
3
<PAGE>
transactions, as may be necessary to comply with the requirements of the NASD
and the 1940 Act, as such requirements may from time to time exist.
11. GT Global shall receive no compensation for its services as a
principal underwriter under this Contract.
12. The Trust agrees to use its best efforts to maintain its
registration as an open-end management investment company under the 1940 Act.
13. The Trust agrees to use its best efforts to maintain an effective
prospectus relating to each Fund under the 1933 Act, and warrants that such
prospectus will contain all statements required by and will conform with the
requirements of the 1933 Act and the rules and regulations thereunder, and that
no part of any such prospectus, at the time the Registration Statement of which
it is a part is ordered effective, will contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein, or
necessary to make the statements therein not misleading. GT Global agrees and
warrants that it will not in the sale of Advisor Class shares of the Funds use
any prospectus, advertising or sales literature not approved by the Trust or its
officers nor make any untrue statement of a material fact nor omit the stating
of a material fact necessary in order to make the statements made, in the light
of the circumstances under which they are made, not misleading. GT Global agrees
to indemnify and hold the Trust harmless from any and all loss, expense, damage
and liability resulting from a breach by GT Global of the agreements and
warranties in this paragraph, or from the use of any sales literature,
information, statistics or other aid or device employed in connection with the
sale of Advisor Class shares not approved by the Trust and its officers.
14. The expense of each printing of each Prospectus and each revision
thereof or addition thereto ("Printing Costs") deemed necessary by the Trust's
officers to meet the requirements of applicable laws shall be divided between
the Trust, GT Global and any other principal underwriter of the Advisor Class
shares of the Funds as set forth in this Paragraph 14. GT Global shall pay the
Printing Costs for each Prospectus of the Funds except that the Funds will be
responsible for the payment of the Printing Costs for each Prospectus provided
to existing shareholders of Advisor Class shares.
15. The Trust agrees to use its best efforts to qualify and maintain
the qualification of an appropriate number of the Advisor Class shares of each
Fund for sale under the securities laws of such states as GT Global and the
Trust may approve. Any such qualification may be withheld, terminated or
4
<PAGE>
withdrawn by the Trust at any time in its discretion. The expense of
qualification and maintenance of qualification shall be borne by the Trust, but
GT Global shall furnish such information and other materials relating to its
affairs and activities as may be required by the Trust or its counsel in
connection with such qualification.
16. The Trust and GT Global acknowledge that each has the right to
reject any order for the purchase of Advisor Class shares for any reason. In
addition, the Trust may withhold Advisor Class shares from sale in any state or
country temporarily or permanently if, in the opinion of its counsel, such offer
or sale would be contrary to law or if the Board of Trustees or the President or
any Vice President of the Trust determines that such offer or sale is not in the
best interest of the Trust. The Trust will give prompt notice to GT Global of
any withholding and will indemnify it against any loss suffered by GT Global as
a result of such withholding by reason of non-delivery of Fund Advisor Class
shares after a good faith confirmation by GT Global of sales thereof prior to
receipt of notice of such withholding.
17. (a) With respect to any Fund, this Contract may be terminated at
any time, without payment of any penalty, by the Trust on thirty (30) days'
written notice to GT Global, or by GT Global on like notice to the Trust.
Termination of this Contract with respect to Advisor Class shares of one Fund
shall not affect its continued effectiveness with respect to Advisor Class
shares of any other Fund.
(b) This Contract may be terminated by either party upon five (5)
days' written notice to the other party in the event that the
Securities and Exchange Commission has issued an order or
obtained an injunction or other court order suspending
effectiveness of the Registration Statement covering the
Advisor Class shares of the Funds.
(c) This Contract may also be terminated by the Trust upon five
(5) days' written notice to GT Global, should the NASD expel
GT Global or suspend its membership in that organization.
(d) GT Global shall inform the Trust promptly of the institution
of any proceedings against it by the Securities and Exchange
Commission, the NASD or any state regulatory authority.
5
<PAGE>
18. This Contract shall automatically terminate in the event of its
assignment. The term "assignment" shall have the meaning defined in the 1940
Act.
19. With respect to any Fund, upon sixty (60) days' written notice to
GT Global, the Trust may from time to time designate other principal
underwriters of Advisor Class shares with respect to areas other than the North
American continent, Hawaii, Puerto Rico and such countries as to which the Trust
may have expressly waived in writing its right to make such designation. In the
event of such designation, the right of GT Global under this Contract to sell
Advisor Class shares in the areas so designated shall terminate, but this
Contract shall remain otherwise in full effect until terminated in accordance
with the provisions of paragraphs 17 and 18 hereof.
20. No provision of this Contract shall protect or purport to protect
GT Global against any liability to the Trust or holders of Advisor Class shares
of the Funds for which GT Global would otherwise be liable by reason of willful
misfeasance, bad faith or negligence.
21. Unless sooner terminated in accordance with the provisions of
paragraphs 17 or 18 hereof, this Contract shall continue in effect with respect
to each Fund for periods of up to one year, but only so long as such continuance
is specifically approved at least annually (i) by vote of a majority of the
Trustees of the Trust who are not parties to this Contract or interested persons
of any such party as defined by the 1940 Act, cast in person at a meeting called
for the purpose of voting on such approval; and (ii) either the Board of
Trustees of the Trust or a vote of a majority of the outstanding voting
securities of the Advisor Class shares of the Trust as defined by the 1940 Act.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed in duplicate original by their officers thereunder duly authorized
as of the day and year first written above.
Attest: GT GLOBAL SERIES TRUST
_________________________ By:________________________________
Attest: GT GLOBAL, INC.
_________________________ By:________________________________
7
TRANSFER AGENCY CONTRACT
BETWEEN
GT GLOBAL SERIES TRUST
AND
GT GLOBAL INVESTOR SERVICES, INC.
This Transfer Agency Contract ("Contract") is made as of August ____,
1997 between GT Global Series Trust ("Trust"), a Massachusetts business trust,
and GT Global Investor Services, Inc. ("GT"), a California corporation.
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended ("1940 Act"), as an open-end management investment company;
WHEREAS, GT Global New Dimension Fund ("New Dimension Fund") has been
established as the initial series of the Trust;
WHEREAS, the Trust may from time to time in the future establish one or
more additional series, each organized as a separate and distinct series of
shares of beneficial interest in the Trust (the Trust's existing series and any
series as hereafter may be established are referred to in this Contract as the
"Funds," and may singly be referred to as the "Fund"); and
WHEREAS, the Trust desires to retain GT to act as transfer agent and
dividend disbursing agent to the Funds, and GT is willing to act in such
capacities;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
I. APPOINTMENT
-----------
The Trust hereby appoints GT to act as transfer agent and dividend
disbursing agent of the Funds for the period and on the terms set forth in this
Contract. GT accepts such appointment and agrees to render the services herein
set forth, for the compensation herein provided.
II. DEFINITIONS
-----------
As used in this Contract, the following terms shall have the definition
ascribed to them in this Paragraph.
(A) "Agent" means a broker, dealer or other agent authorized to act on
behalf of a Shareholder in transactions involving Shares.
(B) "Agent Firm" means an investment, stock brokerage or other business
firm employing an Agent.
<PAGE>
(C) "Authorized Person" means any officer of the Trust and any other
person, whether or not any such person is an officer or employee of the Trust,
duly authorized by the Board of Trustees, the President or any Vice President of
the Trust to give Oral and Written Instructions on behalf of the Trust. The
Trust will provide to GT and keep current a written list of all Authorized
Persons.
(D) "Custodian" means the custodian or custodians employed by the Trust
to maintain custody of the Funds' assets.
(E) "Distributor" means the principal underwriter of the Shares of the
Funds.
(F) "Governing Corporate Documents" means the Declaration of Trust,
By-laws and other applicable governing corporate documents of the Trust, all as
may be amended from time to time.
(G) "Oral Instructions" means oral instructions actually received by GT
from an Authorized Person or from a person reasonably believed by GT to be an
Authorized Person.
(H) "Prospectus" means the current prospectus and statement of
additional information of a Fund, taken together.
(I) "Shares" means shares of common stock of a Fund.
(J) "Shareholder" means the owner of Shares.
(K) "Written Instructions" means written instructions delivered by
hand, mail, tested telegram or telex, cable, or facsimile sending device,
received by GT and signed by an Authorized Person.
III. AUTHORIZED AND REGISTERED SHARES
--------------------------------
(A) As of the date of this Contract, the Trust represents that an
unlimited number of Shares of the Funds are authorized for issuance under the
Trust's Declaration of Trust, as amended. The Trust agrees to keep GT apprised,
to the extent necessary for GT to adequately perform its duties hereunder, of
the number of Shares of the Funds authorized for issuance.
IV. COMPLIANCE BY GT WITH GOVERNING CORPORATE DOCUMENTS,
PROSPECTUS AND APPLICABLE LAW AND REGULATION
--------------------------------------------------------------
All of GT's actions in fulfilling its responsibilities under this
Contract shall be made in accordance with the Prospectus, the Governing
Corporate Documents, the rules and regulations of the Securities and Exchange
Commission and the laws and regulations of the State of Massachusetts relating
to the issuance and transfer of securities such as the Shares.
2
<PAGE>
V. RECORDS
-------
(A) GT shall maintain records of the accounts for each Shareholder
which include the following information with respect to each Fund:
(1) name, address and United States Taxpayer Identification
Number;
(2) number of Shares held and number of Shares for which
certificates, if any, have been issued, including certificate numbers and
denominations;
(3) historical information regarding the account of each
Shareholder, including dividends and distributions paid and the date and price
of all transactions in a Shareholder's account;
(4) any stop or restraining order placed against a
Shareholder's account;
(5) any correspondence relating to the current maintenance of
a Shareholder's account;
(6) information with respect to all tax withholdings; and
(7) any information required to enable GT to perform any
calculations contemplated or required by this Agreement or that may reasonably
be requested by the Trust.
(B) The books and records pertaining to the Trust which are in the
possession of GT shall be the property of the Trust. GT shall prepare and
maintain in complete and accurate form all books and records necessary for it to
serve as transfer agent, dividend disbursing agent and shareholder servicing
agent to the Trust, including (a) all those records required to be prepared and
maintained by the Trust under the 1940 Act, by other applicable securities laws,
rules and regulations and by state laws and (b) such books and records as are
necessary for GT to perform all of the services it agrees to provide in this
Agreement. The Trust or its authorized representatives shall have access to such
books and records at all times during GT's normal business hours. Upon the
reasonable request of the Trust, copies of any such books and records shall be
provided by GT to the Trust or its authorized representatives, at the Trust's
expense.
VI. TRANSACTIONS NOT REQUIRING INSTRUCTIONS
---------------------------------------
In the absence of contrary Written Instructions, GT is authorized to
take the following actions in providing services under this Contract, all in
accordance with the provisions of the Prospectus:
(A) SHARE TRANSACTIONS -- UNCERTIFICATED SHARES
-------------------------------------------
(1) ISSUANCE OF SHARES. Upon receipt by GT of a purchase order
for Shares from the Distributor, upon the further receipt by GT of sufficient
3
<PAGE>
information necessary to enable GT to establish an account, and after
confirmation of receipt of payment for such Shares, GT shall create an account
and issue and credit Shares to such account.
(2) TRANSFERS OF SHARES. When the Distributor, a Shareholder
or a Shareholder's Agent provides GT with instructions to transfer Shares on the
books of a Fund, and GT further receives such documentation as is necessary to
process the transfer, GT shall transfer the registration of such Shares and if
necessary deliver them pursuant to such instructions.
(3) REDEMPTIONS. Upon receipt of a redemption order from the
Distributor, a Shareholder or a Shareholder's Agent, GT shall redeem the number
of Shares indicated thereon from the redeeming Shareholder's account and receive
from the pertinent Fund's custodian and disburse to the redeeming Shareholder or
the Shareholder's Agent, if so instructed, the redemption proceeds therefor.
(B) SHARE TRANSACTIONS -- CERTIFICATED SHARES
-----------------------------------------
(1) The Trust shall supply GT with a sufficient supply of
certificates representing Shares, in the form approved from time to time by the
Board of Trustees or officers of the Trust, and, from time to time, shall
replenish such supply upon the request of GT. Certificates shall be properly
executed, manually or by facsimile signature, by the duly authorized officers of
the Trust. Notwithstanding the death, resignation or removal of any officer of
the Trust, such executed certificates bearing the manual or facsimile signature
of such officer shall remain valid and may be issued to Shareholders until GT is
otherwise directed.
(2) In the case of the loss or destruction of any certificate
representing Shares, no new certificate shall be issued in lieu thereof, unless
there shall first have been furnished an appropriate bond of indemnity issued by
a surety company approved by GT.
(3) Upon receipt of written instructions from a Shareholder or
a Shareholder's Agent of uncertificated Shares for a certificate in the number
of shares in the Shareholder's account, GT shall issue the requested certificate
and deliver it to the Shareholder in accordance with the Shareholder's
instructions.
(4) GT shall process all orders for the purchase, transfer,
redemption and exchange of certificated Shares in the same fashion as it
processes such orders for uncertificated Shares, as specified in subparagraph
VI(A) of this Contract, provided that, as specified in the Prospectus, GT
receives properly executed and completed certificates and stock power transfers
or similar documents necessary to effectuate the contemplated transaction.
(5) Upon receipt of certificates, which shall be in proper
form for transfer, together with Shareholder's instructions to hold such
certificates for safekeeping, GT shall reduce such Shares to uncertificated
status, while retaining the appropriate registration in the name of the
Shareholder upon the transfer books.
4
<PAGE>
(C) SPECIAL INVESTMENT AND WITHDRAWAL PLANS. GT shall process
transactions of Shareholders participating in any special investment and/or
withdrawal plans or programs established by the Trust or the Distributor with
respect to Shares, such as automatic investment plans, systematic withdrawal
plans and dollar cost averaging investing programs, in accordance with the terms
of such plans or programs as provided to GT by the Trust or the Distributor.
VII. RELIANCE BY GT ON INSTRUCTIONS
------------------------------
Unless otherwise provided in this Contract, GT shall act only upon Oral
or Written Instructions (collectively, "Instructions"). GT shall be entitled to
rely upon any Instructions actually received by it under this Contract. The
Trust agrees that GT shall incur no liability to the Trust in acting upon
Instructions given to GT hereunder, provided that such Instructions reasonably
appear to have been received from an Authorized Person.
VIII. DIVIDENDS AND DISTRIBUTIONS
---------------------------
(A) The Trust shall furnish GT with appropriate evidence of action by
the Trust's Board of Trustees declaring dividends and distributions and
authorizing their payment as described in the Prospectus. After deducting any
amount required to be withheld by any applicable tax laws, rules and regulations
or other applicable laws, rules and regulations, in accordance with the
instructions in proper form from a Shareholder and the provisions of the
Governing Corporate Documents and Prospectus, GT shall issue and credit the
account of the Shareholder with Shares or pay such dividends or distributions to
the Shareholder in cash, upon the election of the Shareholder as provided for in
the Prospectus. In lieu of receiving from the Custodian and paying to
Shareholders cash dividends or distributions, GT may arrange for the direct
payment of cash dividends and distributions to Shareholders by the Custodian, in
accordance with such procedures and controls as are mutually agreed upon from
time to time by and among the Trust, GT and the Custodian.
(B) GT shall prepare and file with the Internal Revenue Service and
other appropriate taxing authorities, and address and mail to Shareholders, such
returns and information relating to dividends and distributions paid by the
Funds as are required to be so prepared, filed and mailed by applicable laws,
rules and regulations, or such substitute form of notice as may from time to
time be permitted or required by the Internal Revenue Service. On behalf of the
Trust, GT shall mail certain requests for Shareholders' certifications under
penalties of perjury of taxpayer identification numbers and/or other information
and pay on a timely basis to the appropriate Federal authorities any taxes
withheld on dividends and distributions paid by a Fund, all as required by
applicable Federal tax laws and regulations.
IX. COMMUNICATIONS WITH SHAREHOLDERS
--------------------------------
(A) COMMUNICATIONS TO SHAREHOLDERS. GT will address and mail all
communications by the Trust to the shareholders of the Funds, including reports
to Shareholders, confirmations of purchases and sales of Shares, periodic
account statements, dividend and distribution notices and proxy materials for
5
<PAGE>
meetings of shareholders. GT will receive and tabulate the proxy cards for
meetings of Shareholders, and, if requested by the Trust, attend meetings of
Shareholders for purposes of reporting on and certifying such tabulations.
(B) CORRESPONDENCE. GT will answer such correspondence from
Shareholders, Agents and others relating to its duties hereunder and such other
correspondence as may from time to time be mutually agreed upon by GT and the
Trust.
X. OTHER ONGOING SERVICES
----------------------
As requested by the Trust, GT shall also provide the following services
on an ongoing basis:
(A) Furnish to the Trust or its designated agent such state-by-state
registration reports reasonably necessary to enable the Trust to keep current
the registration of each class of shares with state securities authorities.
(B) Provide toll-free phone lines for direct Shareholder use, plus
customer liaison staff with on-line inquiry capacity.
(C) File with the Internal Revenue Service such information on behalf
of each Shareholder as is required by law.
(D) Provide the Trust with Shareholder lists and such statistical
information as the Trust reasonably may request.
(E) Provide the Custodian with such information as the Trust and the
Custodian reasonably may request.
(F) Mail duplicate confirmations and/or statements to Agents with
respect to their clients' accounts and transactions in Shares, whether such
transactions were executed through such Agents or directly through GT.
(G) Provide detail for confirmations and/or statements to be provided
to Shareholders by Agent Firms, and provide such other Shareholder accounting
information to Agent Firms as may be agreed upon between the Trust and GT.
(H) Provide to the Custodian timely notification of Share transactions
and such other information as may be agreed upon from time to time by the Trust,
GT and the Custodian.
XI. COOPERATION WITH ACCOUNTANTS
----------------------------
GT shall cooperate with the Trust's independent public accountants and
shall take all reasonable action in the performance of its obligations under
this Contract to assure that all necessary information is made available to such
accountants for the timely expression of their opinion with respect to the
financial statements of the Fund.
6
<PAGE>
XII. CONFIDENTIALITY
---------------
GT agrees on behalf of itself and its employees to treat confidentially
all records and other information relative to the Funds and their prior, present
or potential Shareholders, except, after prior notification to and approval in
writing by the Trust, which approval shall not be unreasonably withheld and may
not be withheld when GT may be exposed to civil or criminal contempt proceedings
for failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Fund.
XIII. COMPENSATION
------------
Fees payable under this Contract shall be set forth in writing and
attached hereto as Schedule A.
XIV. STANDARD OF CARE
----------------
(A) In the performance of its duties hereunder, GT shall be obligated
to exercise care and diligence and to act in good faith and to use its best
efforts within reasonable limits to ensure the accuracy and completeness of all
services provided under this Contract.
(B) GT shall be under no duty to take any action on behalf of the Trust
except as specifically set forth herein or as may be specifically agreed to by
GT in writing.
(C) GT shall be responsible and liable for all losses, damages and
costs (including reasonable attorneys fees) incurred by the Trust which is due
to or caused by GT's negligence in the performance of its duties under this
Contract or for GT's negligent failure to perform such duties as are
specifically ascribed to GT in this Contract; provided that, to the extent that
duties, obligations and responsibilities are not expressly set forth in this
Contract, GT shall not be liable for any act or omission which does not
constitute willful misfeasance, bad faith or gross negligence on the part of GT
or reckless disregard by GT of such duties, obligations and responsibilities.
(D) Without limiting the generality of the foregoing subparagraphs of
this Paragraph XIV or of any other provision of this Contract, in connection
with GT's duties under this Contract GT shall not be under any duty or
obligation to inquire into and shall not be liable for or in respect of:
(1) the validity or invalidity or authority or lack thereof of
any Oral or Written Instruction, notice or other instrument which conforms to
the applicable requirements of this Contract, if any, and which GT reasonably
believes to be genuine;
or
(2) delays or errors or loss of data occurring by reason of
circumstances beyond GT's control, including acts of civil or military
authority, national emergencies, labor difficulties, fire, mechanical breakdown,
7
<PAGE>
earthquake, flood or catastrophe, acts of God, insurrection, war, riots or
failure of the mails, transportation, communication or power supply.
XV. RECEIPTS OF ADVICE
------------------
(A) ADVICE OF THE TRUST. If GT is in doubt as to any action to be taken
or omitted by it, GT may request and shall receive from the Trust directions or
advice, including Oral or Written Instructions where appropriate.
(B) ADVICE OF COUNSEL. If GT is in doubt as to any question of law
involved in any action to be taken or omitted by it, GT may request advice from
counsel of its own choosing (who may also be counsel for the Trust, the
Distributor and/or the investment adviser of the Trust).
(C) CONFLICTING ADVICE. In case of conflict between directions, advice
or Oral or Written Instructions received by GT pursuant to subparagraph (A) of
this Paragraph and advice received by GT pursuant to subparagraph (b) of this
Paragraph, GT shall be entitled to rely on and follow the advice received
pursuant to subparagraph (B) alone.
(D) PROTECTION OF GT
----------------
(1) GT shall be protected in any action or inaction which it
takes in reliance on any directions, advice or Oral or Written Instructions
received pursuant to subparagraphs (A) or (B) of this Paragraph which GT, after
receipt of any such directions, advice or Oral or Written Instructions, in good
faith believes to be consistent with such directions, advice or Oral or Written
Instructions, as the case may be.
(2) Notwithstanding the foregoing, nothing in this Paragraph
shall be constructed as imposing upon GT any obligation (a) to seek such
directions, advice or Oral or Written Instructions, or (b) to act in accordance
with such directions, advice or Oral or Written Instructions when received,
unless, under the terms of another provision of this Contract, the same is a
condition to GT's properly taking or omitting to take such actions.
XVI. INDEMNIFICATION OF GT
---------------------
The Trust agrees to indemnify and hold harmless GT and its nominees and
sub-contractors, if any, from all taxes, charges, expenses, assessments, claims
and liabilities (including, without limitation, liabilities arising under the
1933 Act, the 1940 Act, the Securities Exchange Act of 1934, the Commodities
Exchange Act, and any state and foreign securities and blue sky laws, all as or
to be amended from time to time) and expenses, including (without limitation)
reasonable attorneys' fees and disbursements, arising directly or indirectly
from any action or thing which GT takes or does or omits to take or do:
(A) at the request or on the direction of or in reliance upon the
advice of the Trust;
(B) upon Oral or Written Instructions; or
8
<PAGE>
(C) in the performance by GT or its responsibilities under this
Contract;
PROVIDED that GT shall not be indemnified against any liability to the Trust or
the Shareholders (or any expenses incident to such liability) arising out of
GT's own willful misfeasance, bad faith or negligence or reckless disregard of
its duties in connection with the performance of its duties and obligations
specifically described in this Contract.
XVII. INDEMNIFICATION OF THE TRUST
----------------------------
GT agrees to indemnify and hold harmless the Trust from all taxes,
charges, expenses, assessments, claims and liabilities (including, without
limitation, liabilities arising under the 1933 Act, the 1940 Act, the Securities
Exchange Act of 1934, the Commodities Exchange Act, and any state and foreign
securities and blue sky laws, all as or to be amended from time to time) and
expenses, including (without limitation) reasonable attorneys' fees and
disbursements, arising directly or indirectly from any action or omission of GT
that does not meet the standard of care to which GT is subject under Paragraph
XIV of this Contract.
XVIII. LIMITATION OF LIABILITY OF SHAREHOLDERS AND
TRUSTEES OF THE TRUST
-------------------------------------------
It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the shareholders, Trustees, nominees, officers,
agents or employees of the Trust personally, but shall only bind the assets and
property of the pertinent Fund(s), as provided in the Trust's Declaration of
Trust, as amended. The execution and delivery of this Contract have been
authorized by the Trustees of the Trust, and this Contract has been executed and
delivered by an authorized officer of the Trust acting as such; neither such
authorization by such Trustees nor such execution and delivery by such officer
shall be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the assets and property
of the pertinent Fund(s), as provided in the Trust's Declaration of Trust, as
amended.
XIX. DURATION AND TERMINATION
------------------------
This Contract shall continue with respect to each Fund until
termination with respect to that Fund by the Trust or GT on sixty (60) days'
prior written notice.
XX. REGISTRATION AS A TRANSFER AGENT
GT represents that it is currently registered as a transfer agent with
the Securities and Exchange Commission, and that it will remain so registered
for the duration of this Contract. GT agrees that it will promptly notify the
Trust in the event of any material change in its status as a registered transfer
agent. Should GT fail to be registered with the Securities and Exchange
Commission as a transfer agent at any time during the term of this Contract, the
Trust may immediately terminate this Contract, upon written notice to GT.
9
<PAGE>
XXI. NOTICES
-------
All notices and other communications hereunder, including Written
Instructions, shall be in writing or by confirming telegram, cable, telex or
facsimile sending device. Notices with respect to a party shall be directed to
such address as may from time to time be designated by that party to the other.
XXII. FURTHER ACTIONS
---------------
Each party agrees to perform such further acts and execute such further
documents as are necessary to effect the purposes of this Contract.
XXIII. AMENDMENTS
----------
This Contract or any part hereof may be amended only by an instrument
in writing signed by both parties hereto.
XXIV. COUNTERPARTS
------------
This Contract may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
XXV. MISCELLANEOUS
-------------
This Contract embodies the entire agreement and understanding between
the parties hereto, and supersedes all prior agreements and understandings
relating to the subject matter hereof, provided that the parties may embody in
one or more separate documents their agreement or agreements with respect to
such matters that this Contract provides may be later agreed to by and between
the parties from time to time. The captions in this Contract are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
Contract shall be governed by and construed in accordance with California law.
If any provision of this Contract shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Contract shall not
be affected thereby. This Contract shall be binding and shall inure to the
benefit of the parties hereto and their respective successors.
10
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Contract to be
executed by their officers designated below on the day and year first written
above.
GT GLOBAL SERIES TRUST
Attest: ___________________ By: ______________________________
GT GLOBAL INVESTOR
SERVICES, INC.
Attest: __________________ By: ______________________________
11
[GRAPHIC OMITTED][GT GLOBAL LOGO]
GT Global, Inc. 415 392 6181
Fifty California Street
27th Floor
San Francisco, CA
94111-4624
- -----------------------------------
- -----------------------------------
- -----------------------------------
- -----------------------------------
Re: DEALER AGREEMENT-CLASS A AND CLASS B SHARES
Financial Adviser:
GT Global, Inc. ("Us" or "We"), as general distributor and principal
underwriter, as such term is defined in the Investment Company Act of 1940
("1940 Act"), of the shares of the mutual funds that now or hereafter may be
included in the GT Global Mutual Funds ("Funds" each individually a "Fund"),
agrees to sell to you, as dealer for your account, Class A shares and Class B
shares issued by the Funds, subject to any limitations imposed by any of the
Funds and subject to confirmation by Us in each instance. In addition, you are
authorized to tender Class A shares and Class B shares directly to the Funds or
their agent for redemption subject to the applicable terms set forth in the
respective Class A and Class B distribution agreements between Us and the Funds.
1. (a) You are authorized to offer and sell Class A shares only at the public
offering price next determined after the order is received, in accordance with
the terms of the then current Prospectuses of the respective Funds. We shall
provide you with appropriate compensation for selling such shares, in accordance
with the current schedule of dealer compensation which may be obtained from us
upon request. For the Class A shares, to the extent We reallow the full amount
or substantially all of the initial sales charge to you, you may be deemed to be
an underwriter of the Class A shares under the Securities Act of 1933. We will
consider any order you place for Class A shares to be the total holdings of
Class A shares by the investor, and We will treat all orders as not entitled to
any reduced sales charge beyond that accorded to the amount of the purchase
order as determined by the schedule set forth in the applicable Fund's then
current Prospectus, unless you advise Us otherwise when you place the order.
(b) You are to offer and sell Class B shares only at the public
offering price, which is the next determined net asset value per share after the
order is received, in accordance with the terms of the then current Prospectuses
of the respective Funds. We shall provide you with appropriate compensation for
selling such shares, in accordance with the current schedule of dealer
compensation which may be obtained from Us at any time upon request.
(c) With respect to Paragraphs 1(a) and 1(b) above as applicable, You
agree to apply any scheduled variation in or waiver of sales charges uniformly
to your customers meeting the qualifications specified in the applicable Fund's
then current Prospectus.
<PAGE>
2. You agree to provide personal service and/or maintain shareholder accounts,
in accordance with the National Association of Securities Dealers, Inc. ("NASD")
Rules of Fair Practice, as those terms are used thereunder. For these services,
in addition to the compensation, if any, provided for in Paragraph I(a) or I(b)
of this Agreement, as applicable, We agree to pay you a quarterly fee, based on
the average total value of shares held during the quarter in accounts on which
you are identified on each Fund's records as the broker/dealer of record, as set
forth in the schedule referred to in Paragraph I(a) or I(b) above, as
applicable. This quarterly fee shall be payable with respect to Class A shares
or Class B shares of a Fund only for so long as the respective plans of
distribution adopted pursuant to Rule 12b-1 under the 1940 Act, as described in
the applicable Fund's then current Prospectus, remain in effect. In addition,
(i) you understand and agree that you shall not be paid such quarterly fee until
We are in receipt of the service and distribution fees described in the
applicable Fund's then current Prospectus for the period in which you provide
the services described above, and (ii) our liability to you for the payment of
such quarterly fee is limited solely to the portion of that Fund's service and
distribution fees equal to the percentage of the Fund's assets represented by
your customer accounts. You agree to provide to Us at least annually a
description of the services provided by You pursuant to this paragraph. We
reserve the right at any time to impose minimum fee payment thresholds before
any quarterly fees will be paid to you hereunder and to cease payment of
quarterly fees upon notice to you.
3. We reserve the right to cancel this Agreement at any time without notice if
any Class A shares or Class B shares are offered for sale by you at other than
the then current public offering price determined by or for the respective
Funds, according to Paragraphs I(a) or I(b) above, as applicable. We reserve the
right to suspend sales or withdraw the offering of Class A shares or Class B
shares, without notice and at our sole discretion. We reserve the right to
reject any purchase order at our sole discretion.
4. (a) Any repurchases of Class A shares will be made at the net asset value of
such shares in accordance with the then current Prospectus of the applicable
Fund. Any such Class A shares presented to Us for redemption will be redeemed at
the net asset value of such shares in accordance with the then current
Prospectus of the applicable Fund; provided that redemptions of certain Class A
shares may be subject to the imposition of a contingent deferred sales charge
("CDSC Class A shares") as set forth in the then current Prospectuses or the
respective Funds. Repurchases of CDSC Class A shares will be made at the net
asset value of such shares, less any applicable contingent deferred sales
charges, as set forth in the then current Prospectus of the applicable Fund. You
agree to immediately present to Us the amount of the contingent deferred sales
charge to which such repurchases are subject. Any CDSC Class A shares presented
to Us for redemption will be redeemed at the net asset value of such shares,
less any applicable contingent deferred sales charge, as set forth in the then
current Prospectus of the applicable Fund.
(b) Any repurchases of Class B shares will be made at the net asset
value of such shares, less any applicable contingent deferred sales charges, as
set forth in the then current Prospectus of the applicable Fund. You agree to
present immediately to Us the amount of the contingent deferred sales charge to
which such repurchases are subject. Any Class B shares presented to Us for
redemption will be redeemed at the net asset value of such shares, less any
applicable contingent deferred sales charges, as set forth in the then current
Prospectus of the applicable Fund.
2
<PAGE>
5. (a) No person is authorized to make any representations concerning Class A
shares or Class B shares of the Funds except those contained in the then current
Prospectuses, Statements of Additional Information, Rule 482 advertisements
("Omitting Prospectuses"), and other printed sales literature authorized and
issued by Us or the Funds' investment manager and administrator, Chancellor LGT
Management, Inc. ("Chancellor LGT") for public use. You agree to indemnify the
Funds, Us, Chancellor LGT and the Funds' transfer agent, GT Global Investor
Services, Inc. ("Transfer Agent"), and all directors, trustees, officers and
employees of each of them, for any loss, injury, damage, expense or liability
arising from or based upon any alleged or untrue statements or representations
made by you, other than statements contained in the Prospectuses, Statements of
Additional Information, Omitting Prospectuses or authorized printed sales
literature.
(b) We will furnish you, without charge and upon request, reasonable
quantities of the Funds' Prospectuses, Statements of Additional Information,
periodic shareholder reports and printed sales literature authorized by Us for
public use, for your use in accordance with the legends thereon.
(c) You agree to distribute Prospectuses and Statements of Additional
Information and shareholder reports to your customers in compliance with
applicable regulatory requirements, except to the extent that We or our
affiliates expressly undertake to do so on your behalf.
(d) You agree not to use other advertising and sales material relating
to the Funds, unless you have applied for and obtained pre-clearance of such
advertisements from the NASD and such material has also been approved in writing
by Us in advance of such use.
(e) In the event that We make a referral to you of a potential investor
and such referral results in a sale of Class A shares or Class B shares of the
Funds, You shall be obligated to forward such communications from Us to such
shareholder as We shall request, at no cost or charge to Us.
(f) Any printed information furnished by Us other than the current
Prospectuses and Statements of Additional Information of the Funds, periodic
shareholder reports and proxy solicitation materials are our sole responsibility
and not the responsibility of the Fund, and you agree that the Fund shall have
no liability or responsibility to you regarding such printed information unless
expressly assumed in connection therewith. You agree not to distribute any
Fund's periodic shareholder report without first or concurrently delivering to
the investor a then current Prospectus of such Fund.
6. Upon request, We will furnish you with public offering prices for the Class A
shares and the Class B shares in accordance with the then current Prospectuses
of the respective Funds, and you agree to quote such prices subject to
confirmation by Us on any Class A shares or Class B shares offered by you for
sale. Your attention is called specifically to the fact that each price is
always subject to confirmation, and will be the price next determined after
receipt of an order.
3
<PAGE>
7. Under this Agreement you agree to act only as a principal in all transactions
with respect to Class A or Class B shares between Us and you. You are not
authorized to act as agent for the Funds, Us or any other dealer in any respect.
In purchasing of selling Class A shares or Class B shares hereunder you agree to
rely only upon the applicable then current Prospectuses and Statements of
Additional Information and upon such written representations as may hereafter be
made by us to you over our signature. You also agree that every effort shall be
made by you to place Class A shares or Class B shares on an investment basis.
8. (a) Each party hereto represents that it is a member of the NASD and agrees
to notify the other party should it cease to be a member of the NASD. Each party
further agrees to abide by all of the NASD Rules of Fair Practice, including,
without limitation, the following provisions:
(i) You shall not withhold placing customers' orders for any
Class A shares or Class B shares so as to profit yourself as a result of such
withholding. You shall not purchase any Class A shares or Class B shares from
the Funds except for the purpose of covering purchase orders already received by
you, and you shall not purchase any Class A shares or Class B shares from Us
other than for bona fide investment, or for the purpose of covering purchase
orders already received.
(ii) If any Class A shares or Class B shares purchased by you
are repurchased by the Fund which issued such shares or by Us for the account of
that Fund, or are tendered for redemption, within seven (7) business days after
confirmation by Us of the original purchase order for such Class A shares or
Class B shares, no quarterly fees, or other compensation will be payable to you
with respect to such shares, as set forth under Paragraphs 1 and 2 above, as
applicable, and you shall forthwith refund to Us the full amount of such fees
and compensation, if any, allowed to you on the original sale. Notice will be
given to you of any such repurchase or redemption within ten (10) business days
of the date on which the redemption is requested or share certificates are
tendered to Us or to such Fund. Termination or cancellation of this Agreement
does not relieve you from the requirements of this subparagraph.
(iii) Neither party to this Agreement shall, as principal,
purchase any Class A shares or Class B shares from a record holder at a price
lower than the net asset value next determined by or for the issuer thereof.
Nothing in this subparagraph shall prevent you from selling Class A shares for
the account of a record holder to Us or to the Fund which issued such Class A
shares at the net asset value then quoted by or for such Fund and charging the
investor a fair commission or service charge for handling the transaction. For
those Class A shares or Class B shares, upon which a contingent deferred sales
charge has been imposed, nothing in this subparagraph shall prevent you from
selling such Class A shares or Class B shares for the account of a record holder
to Us or to the Fund which issued such shares at the net asset value then quoted
by or for such Fund, less any applicable contingent deferred sales charges, and
charging the investor a fair commission or service charges for handling the
transaction.
(iv) You shall purchase Class A shares or Class B shares only
from Us or from your customers.
(b) You agree that you will have the responsibility to supervise all
sales representatives appointed by you under this Agreement.
4
<PAGE>
9. We shall not accept from you any conditional orders for Class A shares or
Class B shares. Delivery of share certificates, if any, for Class A shares or
Class B shares purchased shall be made by the Funds only against receipt of the
purchase price. If payment for the Class A shares or Class B shares purchased is
not received within seven (7) days, the sale may be canceled forthwith without
any responsibility or liability on our part or on the part of the Fund (in which
case you will be responsible for any loss, including loss of profit, suffered by
the Fund resulting from your failure to make payment as aforesaid), or, at our
option, We may sell the Class A shares or Class B shares ordered back to the
Fund (in which case We may hold you responsible for any loss, including loss of
profit suffered by Us resulting from your failure to make payment as aforesaid).
10. You will not offer or sell any of the Class A shares or Class B shares
except under circumstances that will result in compliance with the applicable
federal and state securities laws. In connection with sales and offers to sell
Class A shares or Class B shares of a Fund, you will furnish each person to whom
any such sale or offer is made with a copy of the applicable then current Fund
Prospectus, prior to or concurrently with the receipt of any order. We shall be
under no liability to you except for lack of good faith and for obligations
expressly assumed by Us herein. Nothing herein, however, shall be deemed to be a
condition, stipulation or provision permitting any person acquiring any security
to waive compliance with any provision of the Securities Act of 1933, or the
rules and regulations of the Securities and Exchange Commission, or relieving
the parties hereto from any liability arising under the Securities Act of 1933.
11. If you use telephonic, telex or telegraphic means to transmit orders,
exchanges or redemptions on behalf of your customers for Class A shares or Class
B shares, you hereby agree to indemnify the Funds, Us, Chancellor LGT, the
Transfer Agent and all directors, trustees, officers, and employees of each, for
any loss, injury, damage, expense or liability (including reasonable attorney
fees) as a result of our actions based on such telephonic, telex or telegraphic
order, exchange or redemption request if your order, exchange or redemption
request is erroneous or not authentic but We, in good faith act on such request,
or if We have refused to execute such request for any reason.
12. You will not knowingly sell Class A shares or Class B shares of any Fund to
any investment company, whether or not registered with the Securities and
Exchange Commission, if after such sale, such investment company and its
controlled companies would own more than three (3) percent of the total
outstanding shares of the Fund, or if after such sale, such investment company
and other investment companies directly or indirectly will own more than ten
(10) percent of the total outstanding shares of the Fund.
13. Either party hereto may cancel this Agreement upon ten (10) days' written
notice to the other party. This Agreement may be amended by Us at any time upon
written notice to you, and your placing of any order after the effective date of
any such amendment shall constitute your acceptance thereof.
14. You agree to comply with, and adopt as part of your internal guidelines for
sales compliance, our policies regarding the sale of Class A shares and Class B
shares of the Funds, as provided to you from time to time.
5
<PAGE>
15. All communications to Us should be sent to the address written above. Any
notices to you shall be duly given if mailed, faxed or telegraphed to you at the
address specified below. This Agreement shall be binding upon receipt by Us in
San Francisco, California, of a counterpart hereof duly accepted and signed by
you, and shall be construed in accordance with the laws of the State of
California. This Agreement shall replace any prior agreement between Us and
shall constitute the entire agreement between the parties with respect to the
matters addressed.
GT GLOBAL, INC.
By: ______________________________
Name
Title
Accepted:
------------------------------------------------------------------
Company Name
------------------------------------------------------------------
Address
------------------------------------------------------------------
City State Zip Code
By: ------------------------------------------------------------------
Signature Print Name and Title
------------------------------------------------------------------
Date
6
ADVISOR CLASS
ADMINISTRATION AGREEMENT
AGREEMENT made as of the ____ day of _______________, 199__ between GT
Global, Inc. ("Distributor"), Chancellor LGT Asset Management, Inc. ("Adviser"),
GT Global Investor Services, Inc. ("Transfer Agent") and
__________________________________ ("Administrator").
WHEREAS, each of the investment companies listed on Schedule A hereto,
as such Schedule may be amended from time to time, (each such investment company
being herein referred to individually as the "Fund" and collectively as the
"Funds") are registered with the Securities and Exchange Commission ("SEC")
under the Investment Company Act of 1940, as amended ("1940 Act"), as an
open-end investment company; and
WHEREAS, Advisor Class shares may be offered to (1) any account with
assets of at least $10,000 if (a) a financial planner, trust company, bank trust
department or registered investment adviser has investment discretion over such
account, and (b) the account holder pays such person as compensation for its
advice and other services an annual fee of at least .50% on the assets in the
account ("Advisory Account"); (2) any account with assets of at least $10,000 if
(i) such account is established under a "wrap fee" program, and (ii) the account
holder pays the sponsor of such program an annual fee of at least .50% on the
assets in the account ("Wrap Fee Account"); and (3) trustees or other
fiduciaries purchasing shares for employee benefit plans which are sponsored by
organizations which have at least 1,000 employees ("Benefit Plan Accounts"); and
WHEREAS, Distributor, Adviser and Transfer Agent (singly and
collectively, "GT Global") desire to retain the Administrator to furnish certain
administrative support services in connection with Advisor Class shares of the
Funds;
NOW THEREFORE, in consideration of the foregoing and the mutual
premises and covenants herein contained, GT Global and the Administrator
mutually agree as follows:
1. APPOINTMENT. GT Global hereby appoints the Administrator to render
or cause to be rendered the administrative support services set forth in
paragraph 2 with respect to its customers and clients ("Investors") that invest
in Advisor Class shares of the Funds. The Administrator's appointment hereunder
is non-exclusive, and the parties recognize and agree that, from time to time,
GT Global may enter into other administrative services agreements with other
entities.
2. SERVICES TO BE PERFORMED. The services to be provided under
paragraph 1 may include, but are not limited to, the following:
(a) performance of shareholder recordkeeping and subaccounting;
<PAGE>
(b) processing purchase and redemption transactions, including
disbursing or crediting to Investors all proceeds of redemptions of Advisor
Class shares of the Funds and all dividends and other distributions not
reinvested in shares of the Funds;
(c) electronically transferring and receiving funds for Fund share
purchases and redemptions, and confirming and reconciling all such transactions;
(d) reviewing the activity in Fund accounts;
(e) assisting shareholders in designating and changing dividend
options, account designations and addresses;
(f) maintaining and distributing current copies of the Funds'
prospectuses and semi-annual and annual reports;
(g) communicating, as to shares of each Fund, mergers, splits and other
reorganization activities;
(h) mailing statements to customers on a monthly basis showing, among
other things, the number of shares of each Fund owned by such customer and the
net asset value of such Fund as of a recent date;
(i) transmitting proxy statements on behalf of the Funds and receiving,
tabulating and transmitting to the Funds proxies executed by shareholders with
respect to meetings of shareholders of the Funds;
(j) advertising the availability of the Administrator's services and
products;
(k) providing assistance and review in designing materials to be sent
to Investors and potential Investors and developing methods of making such
materials accessible to Investors and potential investors;
(l) responding to Investors and potential Investors' questions about
the Funds;
(m) utilizing all reasonable efforts to ensure that taxpayer
identification numbers provided by Investors are correct;
(n) providing to Distributor, or the Funds, or any of the agents
designated by any of them, such periodic reports as Distributor shall reasonably
conclude is necessary to enable the Funds and Distributor to comply with State
Blue Sky requirements; and
(o) preparing and filing with the appropriate governmental agencies,
such information, returns and reports as are required to be so filed for
reporting (i) dividends and other distributions made, (ii) amounts withheld on
2
<PAGE>
dividends and other distributions and payments under applicable federal and
state laws, rules and regulations, and (iii) gross proceeds of sales
transactions as required.
The services listed above are illustrative. The Administrator is not required to
perform each service and may at any time perform either more or fewer services
than described above.
3. EXPENSES. During the term of this Agreement, the Administrator will
pay all expenses incurred by it in connection with its services under this
Agreement.
4. COMPENSATION. For the services provided and the expenses assumed by
the Administrator, GT Global will pay the Administrator compensation as set
forth in Schedule B attached hereto. GT Global's fee schedule for the
Administrator may be changed by GT Global sending a new fee schedule to the
Administrator pursuant to paragraph 12 of this Agreement. For the payment period
in which this Agreement becomes effective or terminates, there shall be an
appropriate proration of the fee on the basis of the number of days that this
Agreement is in effect during the period.
5. ADMINISTRATOR'S REPRESENTATIONS AND WARRANTIES.
(a) Administrator represents and warrants that it shall make
Advisor Class shares available, and shall provide services under this Agreement,
only to Wrap Fee Accounts, Advisory Fee Accounts or Benefit Plan Accounts;
(b) If Administrator makes available Advisor Class shares to
Advisory Fee Accounts, Administrator represents and warrants that (i) it is a
financial planner, trust company, bank trust department or registered investment
adviser, and (ii) each Investor investing in Advisor Class shares through an
Advisory Account made available by the Administrator shall invest at least
$10,000 through such Advisory Account;
(c) If Administrator makes available Advisor Class shares to
Wrap Fee Accounts, Administrator represents and warrants that (i) it is the
sponsor of such Wrap Fee Accounts, and (ii) each Investor investing in Advisor
Class shares through a Wrap Fee Account made available by the Administrator
shall invest at least $10,000 through such Wrap Fee Account; and
(d) If Administrator makes available Advisor Class shares to
Benefit Plan Accounts, Administrator represents and warrants that each employee
benefit plan for which a trustee or other fiduciary is purchasing shares is
sponsored by an organization which has at least 1,000 employees.
(e) Administrator represents and warrants that (i) it is duly
organized and validly existing in good standing under the laws of the
jurisdiction in which it is organized, (ii) it has all requisite authority under
applicable federal and state laws, and rules and regulations of any securities
exchange or regulatory authority to which it is subject, to enter into this
3
<PAGE>
Agreement and to perform the services to be provided hereunder, and (iii) if it
is a broker-dealer, that it is a member firm in good standing of the National
Association of Securities Dealers, Inc. and a broker-dealer registered with the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as
amended.
(f) Administrator represents and warrants that it has
disclosed to GT Global every potentially material action, suit, investigation,
inquiry, or proceeding (formal or informal) pending or threatened against or
affecting the Administrator, by or before any court or other tribunal, any
arbitrator, any governmental authority, or any self-regulatory organization to
whose authority it is subject. Administrator shall notify GT Global promptly,
but in any event within three business days, of the initiation of any such
action, suit, investigation, inquiry, or proceeding that potentially would have
a material impact on the Administrator.
(g) Administrator represents and warrants that (i) neither the
payment of compensation to the Administrator (as provided for in Section 4
hereof) nor the Administrator's receipt of any such compensation shall violate
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), any
regulation promulgated thereunder, or any other applicable federal or state
laws, or rules and regulations of any securities exchange or regulatory
authority, and (ii) it will make such disclosure to Investors or others
regarding this Agreement and the matters contemplated hereunder (including,
without limitation, the compensation provided for in Section 4) as may be
required by ERISA, any regulation promulgated thereunder, or any other
applicable federal or state laws, or rules and regulations of any securities
exchange or regulatory authority.
6. INVESTING IN THE FUNDS.
(a) Orders received from the Administrator for shares of the
Funds will be accepted by Distributor through Transfer Agent only at the public
offering price applicable to each order, as set forth in the prospectus and
statement of additional information of the Funds. The procedure relating to the
handling of orders shall be in accordance with oral or written instructions that
Distributor or the Funds shall forward to the Administrator from time to time.
Payment for shares ordered from Distributor must be received together with the
Administrator's order. All orders are subject to acceptance or rejection by
Distributor or the Funds in the sole discretion of either, or by Transfer Agent
acting on Distributor's and the Funds' behalf, and orders shall be effective
only upon receipt by Transfer Agent in proper form. Distributor reserves the
right in its discretion and without notice to the Administrator to suspend sales
or withdraw the offering of Advisor Class shares of the Funds.
(b) The Administrator agrees that it will not make shares
available to Investors except under circumstances that will result in compliance
with the applicable federal and state securities laws and that in connection
with sales and offers to sell such shares, the Administrator will furnish to
each Investor to whom any such sale or offer is made, at or prior to the time of
offering or sale, a copy of the prospectuses of the appropriate Funds and, if
requested, the statement of additional information (as then amended or
supplemented) of the Funds, and will not furnish to any Investor (or any other
person) any information relating to the Funds that is inconsistent in any
4
<PAGE>
respect with the information contained in the prospectuses and statements of
additional information (as then amended or supplemented) or cause any written
materials to be used in connection with sales of such shares or any
advertisement to be published in any newspaper, broadcast by television, radio
or other means or posted in any public place without the prior written consent
of Distributor.
(c) The Administrator will make shares of the Funds available
to its Investors as set forth on Schedule C attached hereto. The Administrator
agrees to provide GT Global and the Funds such information as they may
reasonably request concerning the location by state of such shares sold.
(d) Distributor agrees to keep the Administrator fully
informed regarding the states in which shares of the Funds are registered and
qualified for sale, but Distributor assumes no responsibility or obligation as
to the Administrator's right to make available such shares in any state or
jurisdiction. The Administrator agrees to indemnify Distributor, Adviser,
Transfer Agent and the Funds for any and all claims, liability, expense or loss
in any way arising out of a sale of shares in any state or jurisdiction in which
such shares are not so qualified or exempt.
(e) In the event that Administrator holds more than five
percent of the outstanding Fund shares, the Administrator agrees to confirm its
status as shareholder of record and to confirm whether any Investor beneficially
owns more than five percent of the outstanding Fund shares.
(f) Administrator agrees to provide to GT Global such
information concerning Investors, including information relating to Investors'
eligibility to be invested in Advisor Class shares, as GT Global may request.
(g) In the event that the amount invested by an Investor
through an Advisory Fee Account or Wrap Fee Account is reduced to less than
$10,000 through redemptions or other action by the Investor, the Administrator
agrees to notify the Distributor and to provide Distributor with such
information as Distributor may request with respect to such Investor.
7. INDEMNIFICATION. The Administrator agrees to indemnify and hold
harmless Distributor, Adviser, Transfer Agent and the Funds from any claims,
expenses, liabilities or loss incurred by Distributor, Adviser, Transfer Agent
or the Funds as a result of any act or omission of the Administrator.
8. RELATIONSHIP OF THE PARTIES.
(a) Nothing in this Agreement shall be deemed or construed to
make the Administrator an employee, agent, representative or partner of the
Adviser, Transfer Agent, Distributor or the Funds. The Administrator and its
officers, employees, representatives and agents are not authorized to act for or
make any representations on behalf of the Adviser, Transfer Agent, Distributor
or the Funds.
5
<PAGE>
(b) The Administrator and its officers, employees,
representatives and agents are not authorized to make any representations
concerning the Funds or the shares of the Funds except accurate communication of
factual information contained in the then current prospectuses and statements of
additional information of the Funds and in such printed information subsequently
issued by the Distributor or the Funds as information supplemental to the
prospectuses and statements of additional information.
(c) Without GT Global's prior written consent, the
Administrator shall not cause or permit the use, description, or reference to
the Adviser, Transfer Agent or Distributor or to the relationship contemplated
by this Agreement in any advertisement or promotional materials or activities.
(d) Investors will remain customers or clients of
Administrator, and Administrator will be responsible for obtaining all essential
facts relating to each Investor, and investments by such Investor. Administrator
will supervise its employees, registered representatives and agents who provide
services with respect to any Investor, and investments in Advisor Class shares.
As used herein, the term "supervise" includes, without limitation, determination
of the suitability of a transaction, investment strategy, or pattern of trading
activity for the particular Investor involved, determination of the authenticity
of all orders, certificates, papers, signatures and endorsements.
9. DURATION OF AGREEMENT. This Agreement shall continue in effect for
one year from the date of its execution and thereafter for successive periods of
one year unless terminated in accordance with paragraph 10.
10. TERMINATION. Notwithstanding paragraph 9, this Agreement may be
terminated as follows:
(a) at any time, without the payment of any penalty, by the
vote of a majority of the Trustees of the Funds or by a vote of a majority of
the outstanding voting securities of the Fund as defined in the 1940 Act on not
less than thirty (30) days' written notice to the parties to this Agreement;
(b) automatically in the event of the termination of the
Distribution Agreement between the Funds and Distributor;
(c) automatically in the event of the termination of the
Investment Adviser Agreement between the Funds and Adviser;
(d) immediately by GT Global, in the event of the assignment
by the Administrator of this Agreement as defined in the 1940 Act;
(e) immediately by GT Global, in the event that the
Administrator is enjoined, disabled, suspended, prohibited or unable to perform
its services under this Agreement as a result of an administrative or judicial
6
<PAGE>
proceeding or action by any federal or state regulatory body or any
self-regulatory organization; or
(f) by any party to the Agreement without cause by giving the
other parties at least sixty (60) days' written notice of its intention to
terminate.
11. NOTICES. Any notice under this Agreement shall be in writing and
shall be addressed and delivered, or mailed, postage prepaid to the other
party's principal place of business, or to such other place as shall have been
previously specified by written notice given to the other party.
12. AMENDMENTS. This Agreement may be amended by GT Global from time to
time by the following procedure. GT Global will mail a copy of the amendment to
the Administrator's address, as shown below. If the Administrator does not
object to the amendment within thirty (30) days after its receipt, the amendment
will become part of the Agreement. The Administrator's objection must be in
writing and be received by GT Global within such thirty days.
13. MISCELLANEOUS. This Agreement constitutes the entire agreement
between the parties and no conditions or warranties shall be implied herefrom
unless expressly set forth herein. This Agreement and all the rights and
obligations of the parties hereunder shall be governed by and construed under
the laws of the State of California. To the extent that the applicable laws of
the State of California conflict with the applicable provisions of the federal
securities laws, the latter shall control. The captions in this Agreement are
included for convenience of reference only and in no way define or limit any of
the provisions hereof or otherwise affect their construction or affect.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below.
_______________________________________
Administrator Name
(Please Print or Type)
_______________________________________
Address
_______________________________________
City State Zip Code
Date _______________________ By:____________________________________
Authorized Signature
____________________________________
Title
____________________________________
Please Print or Type Name
GT GLOBAL, INC.
50 California Street, 27th Floor
San Francisco, California 94111
Date __________________ By: ______________________________
Raymond R. Cunningham
Senior Vice President
National Sales Manager
8
<PAGE>
CHANCELLOR LGT ASSET MANAGEMENT, INC.
50 California Street, 27th Floor
San Francisco, California 94111
Date ________________________ By: ___________________________________
Phillip S. Gillespie
Assistant General Counsel
GT GLOBAL INVESTOR SERVICES, INC.
50 California Street, 27th Floor
San Francisco, California 94111
Date _______________________ By: ___________________________________
Phillip S. Gillespie
Assistant General Counsel
9
<PAGE>
SCHEDULE A
GT INVESTMENT FUNDS, INC.
GT Global Consumer Products and Services Fund
GT Global Financial Services Fund
GT Global Health Care Fund
GT Global Infrastructure Fund
GT Global Natural Resources Fund
GT Global Telecommunications Fund
GT Global Emerging Markets Fund
GT Global Latin America Growth Fund
GT Global Growth & Income Fund
GT Global Government Income Fund
GT Global High Income Fund
GT Global Strategic Income Fund
GT GLOBAL GROWTH SERIES
GT Global America Mid Cap Growth Fund
GT Global America Small Cap Growth Fund
GT Global America Value Fund
GT Global Europe Growth Fund
GT Global International Growth Fund
GT Global Japan Growth Fund
GT Global New Pacific Growth Fund
GT Global Worldwide Growth Fund
GT INVESTMENT PORTFOLIOS, INC.
GT Global Dollar Fund
10
<PAGE>
SCHEDULE B
For the shareholder administrative services described in Paragraph 2 of the
Advisor Class Administration Agreement between the Administrator and GT Global,
GT Global will pay a fee computed monthly at the annualized rate of ____________
based on the value of the average monthly assets attributed to the
Administrator's clients and paid to the Administrator after the end of each
quarter. For the month and year in which this Schedule B becomes effective or
the Agreement terminates, there shall be an appropriate proration on the basis
of the number of days that the Agreement is in effect.
11
<PAGE>
SCHEDULE C
SELECT ONE:
____ The Administrator will make shares of the Funds available to its customers
on a fully disclosed basis, wherein Distributor will confirm purchases and
redemptions directly to Investors as recordholders of the shares and the Funds
will have GT Global Investor Services, Inc. maintain records for each such
customer. The Administrator will assist Distributor in obtaining all necessary
shareholder information.]
OR
____ The Administrator will make shares of the Funds available to its customers
on an "omnibus" basis, wherein the Administrator will be the recordholder of
such shares and will be responsible for subaccounting and the confirmation of
purchases and redemptions by its customers. The Funds, at the request of
regulatory authorities having jurisdiction over it, may request, and in such
event, the Administrator agrees to furnish to the Funds, a list of all Fund
shareholders accounts, maintained by the Administrator, showing each account
name, address and shareholding.
12
GT GLOBAL MUTUAL FUNDS - ADVISOR CLASS
REGISTERED INVESTMENT ADVISER ADMINISTRATION AGREEMENT
AGREEMENT made as of the _____ day of _______________, 1997 between GT
Global, Inc. ("Distributor") and ____________________________________________,
an investment adviser registered with the Securities and Exchange Commission
under the Investment Advisers Act of 1940, as amended ("Administrator").
WHEREAS, Administrator wishes to include Advisor Class shares of the
open-end GT Global Mutual Funds distributed by Distributor identified on
Schedule A (the "GT Funds") in fee-based programs sponsored by Administrator;
and
WHEREAS, Administrator wishes to afford its fee-based clients the
opportunity to qualify for the ability to purchase Advisor Class shares of the
GT Funds at net asset value; and
WHEREAS, Advisor Class shares may be offered to (1) any account with
assets of at least $10,000 if (a) a financial planner or registered investment
adviser has investment discretion over such account, and (b) the account holder
pays such person as compensation for its advice and other services an annual fee
of at least .50% on the assets in the account ("Advisory Account"); and (2) any
account with assets of at least $10,000 if (i) such account is established under
a "wrap fee" program, and (ii) the account holder pays the sponsor of such
program an annual fee of at least .50% on the assets in the account ("Wrap Fee
Account"); and
WHEREAS, Administrator and its fee-based clients have entered into an
accountholder agreement substantially in the form attached to and made part of
this Agreement establishing either an Advisory Account or Wrap Fee Account
(collectively, the "Accounts") pursuant to which Administrator provides its
advice and other services; and
WHEREAS, Distributor is willing to allow Administrator to purchase
Advisor Class shares of GT Funds for its clients in the Accounts subject to the
provisions of this Agreement;
NOW THEREFORE, in consideration of the foregoing and the mutual
premises and covenants herein contained, Distributor and the Administrator
mutually agree as follows:
In connection with the sale of Advisor Class shares to an Account,
Administrator represents and warrants that all investments made on behalf of the
Accounts in shares of the Advisor Class shall be eligible for such investment
under the requirements set forth above or under the requirements described in
the GT Funds' prospectus in effect on the date of such investments; and
The Distributor will accept orders for Advisor Class shares from the
Administrator for its clients in the Accounts subject to the requirements of
this Agreement and those set forth in the prospectus of the GT Funds in effect
on the date of acceptance of a purchase order. All orders are subject to
acceptance or rejection by the Distributor in its sole discretion.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed as of the date set forth above by their officers designated below.
ADMINISTRATOR GT GLOBAL, INC.
By: __________________________ By: _________________________________
Name: Raymond R. Cunningham
Title: Senior Vice President
National Sales Manager
PLEASE RETURN TO RAY CUNNINGHAM, GT GLOBAL, INC., 50 CALIFORNIA STREET, 27TH
FLOOR, SAN FRANCISCO, CA 9411
<PAGE>
SCHEDULE A
GT INVESTMENT FUNDS, INC.
GT Global Consumer Products and Services Fund
GT Global Financial Services Fund
GT Global Health Care Fund
GT Global Infrastructure Fund
GT Global Natural Resources Fund
GT Global Telecommunications Fund
GT Global Emerging Markets Fund
GT Global Latin America Growth Fund
GT Global Growth & Income Fund
GT Global Government Income Fund
GT Global High Income Fund
GT Global Strategic Income Fund
GT GLOBAL GROWTH SERIES
GT Global America Mid Cap Growth Fund
GT Global America Small Cap Growth Fund
GT Global America Value Fund
GT Global Europe Growth Fund
GT Global International Growth Fund
GT Global Japan Growth Fund
GT Global New Pacific Growth Fund
GT Global Worldwide Growth Fund
GT INVESTMENT PORTFOLIOS, INC.
GT Global Dollar Fund
REGISTERED INVESTMENT ADVISER
PARTICIPATION AGREEMENT
AGREEMENT made as of the _____ day of _______________, 1996 between GT
Global, Inc. ("Distributor") and ____________________________________________,
an investment adviser registered with the Securities and Exchange Commission
under the Investment Advisers Act of 1940, as amended ("Intermediary").
WHEREAS, Intermediary wishes to afford its fee-based clients
("Clients") the opportunity to qualify for the ability to purchase Advisor Class
shares of the GT Global Mutual Funds distributed by Distributor identified on
Schedule A (the "GT Global Funds") at net asset value; and
WHEREAS, Advisor Class shares may be offered to (1) any account with
assets of at least $10,000 if (a) a financial planner or registered investment
adviser has investment discretion over such account, and (b) the account holder
pays such person as compensation for its advice and other services an annual fee
of at least .50% on the assets in the account ("Advisory Fee Account"); and (2)
any account with assets of at least $10,000 if (i) such account is established
under a "wrap fee" program, and (ii) the account holder pays the sponsor of such
program an annual fee of at least .50% on the assets in the account ("Wrap Fee
Account"); and
WHEREAS, Administrator and its Clients have entered into an
accountholder agreement substantially in the form attached to and made part of
this Agreement establishing either an Advisory Fee Account or Wrap Fee Account
(collectively, the "Accounts") pursuant to which Intermediary provides its
advice and other services; and
WHEREAS, Distributor is willing to allow Intermediary to purchase
Advisor Class shares of GT Funds for its Clients in the Accounts subject to the
provisions of this Agreement;
NOW THEREFORE, in consideration of the foregoing and the mutual
premises and covenants herein contained, Distributor and the Intermediary
mutually agree as follows:
1. APPOINTMENT. GT Global appoints Intermediary to sell Advisor Class
shares of the GT Global Funds and to render services with respect to its Clients
that invest in such shares. Intermediary will receive no concession, discount,
sales incentives or commission on any sale of Advisor Class shares to its
Clients.
<PAGE>
2. SERVICES TO BE PERFORMED.
The services to be provided under Paragraph 1 by Intermediary
may include, but are not limited to, the following:
(a) reviewing the activity in Client accounts;
(b) assisting Investors in designating and changing dividend
options, account designations and addresses;
(c) advertising the availability of the Intermediary's
services and products as permitted under Paragraph 6;
(d) providing assistance and review in designing materials to
be sent to Clients and potential Clients and developing methods of making such
materials accessible to Clients and potential Investors;
(e) responding to Clients and potential Clients' questions
about the Funds;
3. INTERMEDIARY'S REPRESENTATIONS AND WARRANTIES.
(a) Intermediary represents and warrants that it shall make
Advisor Class shares available, and shall provide services under this Agreement,
only to Wrap Fee Accounts or Advisory Fee Accounts;
(b) If Intermediary makes available Advisor Class shares to
Advisory Fee Accounts, Intermediary represents and warrants that (i) it is a
financial planner or registered investment adviser, and (ii) each Investor
investing in Advisor Class shares through an Advisory Account made available by
the Intermediary shall invest at least $10,000 through such Advisory Account;
and
(c) If Intermediary makes available Advisor Class shares to
Wrap Fee Accounts, Intermediary represents and warrants that (i) it is the
sponsor of such Wrap Fee Accounts, and (ii) each Investor investing in Advisor
Class shares through a Wrap Fee Account made available by the Administrator
shall invest at least $10,000 through such Wrap Fee Account.
(e) Intermediary represents and warrants that (i) it is
registered as an investment adviser with the U.S. Securities and Exchange
Commission and will comply with all applicable state and federal securities laws
and regulations, (ii) it is duly organized and validly existing in good standing
under the laws of the jurisdiction in which it is organized, (iii) it has all
requisite authority under applicable federal and state laws, and rules and
regulations of any securities exchange or regulatory authority to which it is
subject, to enter into this Agreement and to perform the services to be provided
hereunder, and (iv) if it is a broker-dealer, that it is a member firm in good
standing of the National Association of Securities Dealers, Inc. and a
broker-dealer registered with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended.
2
<PAGE>
(f) Intermediary represents and warrants that it has disclosed
to GT Global every potentially material action, suit, investigation, inquiry, or
proceeding (formal or informal) pending or threatened against or affecting the
Intermediary, by or before any court or other tribunal, any arbitrator, any
governmental authority, or any self-regulatory organization to whose authority
it is subject. Intermediary shall notify GT Global promptly, but in any event
within three business days, of the initiation of any such action, suit,
investigation, inquiry, or proceeding that potentially would have a material
impact on the Intermediary.
(g) In connection with the sale of Advisor Class shares to an
Account, Intermediary represents and warrants that all investments made on
behalf of the Accounts in shares of the Advisor Class shall be eligible for such
investment under the requirements set forth above or under the requirements
described in the GT Global Funds' prospectus in effect on the date of such
investments; and
4. INDEMNIFICATION. To the greatest extent permitted by applicable law,
Intermediary indemnifies and holds harmless the Distributor and the GT Global
Funds and their officers, directors, employees agents, successor and assigns
from any and all liability, claims, actions, loss, cost or expenses (including
reasonable attorneys fees and amounts spared in settlement) which in any manner
arise, or are claimed to have arisen in connection with the transactions
contemplated by this Agreement and result from any breach of Intermediary's
representations, warranties, covenants or other obligations hereunder. Further,
the Intermediary agrees to indemnify the Distributor for any and all claims,
liability, expense or loss arising out of a sale of Advisor Class shares in any
state or jurisdiction in which such shares are not so qualified or exempt or in
a state or jurisdiction that is not indicated on Intermediary's Form ADV as
filed with the Securities and Exchange Commission.
5. ACCEPTANCE. The Distributor will accept orders for Advisor Class
shares from the Intermediary for its Clients in the Accounts subject to the
requirements of this Agreement and those set forth in the prospectus of the GT
Global Funds in effect on the date of acceptance of a purchase order. All orders
are subject to acceptance or rejection by the Distributor in its sole
discretion.
6. ADVERTISING. Intermediary will not, without the prior written
approval of GT Global, make any reference to the Funds or their availability at
net asset value. This prohibition shall not apply to Intermediary's brochures
distributed to the public which contain information about Intermediary's
advisory services but do not reference the GT Global Funds by name.
7. ASSIGNMENT. This Agreement is nonassignable, except that Distributor
may assign its rights and obligations to any subsidiary of or any company under
common control with it, provided that the assignee is duly licensed or
registered to perform all functions required of it under this Agreement and
undertakes in writing to perform those functions.
8. CONFIDENTIALITY. Each party to this Agreement shall maintain the
confidentiality of any proprietary information that it may acquire in the
3
<PAGE>
performance of this Agreement and shall not use such proprietary information
without the prior written consent of the other party.
9. MODIFICATION OF AGREEMENT.This Agreement supersedes all prior
agreements, either oral or written, between the parties relating to the Advisor
Class shares. Except for any amendment of Schedule A, this Agreement may not be
modified unless by written agreement signed by all of the parties.
10. MISCELLANEOUS. This Agreement constitutes the whole agreement
between the parties and supersedes all prior oral or written understandings
between the parties with respect to its subject matter. No waiver of any of the
provisions of this Agreement shall be deemed, or shall constitute, a waiver of
any other provisions, whether or not similar, nor shall any waiver constitute a
continuing waiver. This Agreement shall be construed and its provisions
interpreted under and in accordance with the laws of the State of California
without giving effect to principles of conflict of laws. The headings in this
Agreement are included for convenience of reference only and in no way define or
delineate any of its provisions or otherwise affect its construction or effect.
This Agreement may be executed in two or more counterparts, each of which taken
together shall constitute one and the same instrument. This is a severable
agreement and in the event that any part or parts of this Agreement shall be
held to be unenforceable to its or their full extent, such part or parts shall
be enforced to the extent permitted under the law, and all other parts of this
Agreement shall remain valid and duly enforceable as if the unenforceable part
or parts had never been a part hereof.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed as of the date set forth above by their officers designated below.
INTERMEDIARY GT GLOBAL, INC.
By: _________________________________ By:_______________________________
Name: Raymond R. Cunningham
Title: Senior Vice President
National Sales Manager
4
<PAGE>
SCHEDULE A
GT INVESTMENT FUNDS, INC.
GT Global Consumer Products and Services Fund
GT Global Financial Services Fund
GT Global Health Care Fund
GT Global Infrastructure Fund
GT Global Natural Resources Fund
GT Global Telecommunications Fund
GT Global Emerging Markets Fund
GT Global Latin America Growth Fund
GT Global Growth & Income Fund
GT Global Government Income Fund
GT Global High Income Fund
GT Global Strategic Income Fund
GT GLOBAL GROWTH SERIES
GT Global America Mid Cap Growth Fund
GT Global America Small Cap Growth Fund
GT Global America Value Fund
GT Global Europe Growth Fund
GT Global International Growth Fund
GT Global Japan Growth Fund
GT Global New Pacific Growth Fund
GT Global Worldwide Growth Fund
GT INVESTMENT PORTFOLIOS, INC.
GT Global Dollar Fund
[GRAPHIC OMITTED][GT GLOBAL LOGO]
GT Global, Inc. 415 392 6181
Fifty California Street
27th Floor
San Francisco, CA
94111-4624
- -------------------------------
- -------------------------------
- -------------------------------
- -------------------------------
Re: BANK AND BANK-AFFILIATED DEALER AGREEMENT-CLASS A AND CLASS B SHARES
Financial Adviser:
GT Global, Inc. ("Us" or "We"), as a general distributor and principal
underwriter, as such term is defined in the Investment Company Act of 1940
("1940 Act"), of the shares of the mutual funds that now or hereafter may be
included in the GT Global Mutual Funds ("Funds;" each individually a "Fund"),
agrees to sell to your customers, through you as their agent, Class A shares and
Class B shares issued by the Funds, subject to any limitations imposed by any of
the Funds and subject to confirmation by Us in each instance. In addition, you
are authorized to tender Class A shares and Class B shares directly to the Funds
or their agent for redemption subject to the applicable terms set forth in the
respective Class A and Class B distribution agreements between Us and the Funds.
You are either (i) a bank (as such term is defined in Section 3(a)(b) of the
Securities Exchange Act of 1934, as amended), or (ii) a broker-dealer that is
registered with the Securities and Exchange Commission ("SEC") under said Act
and is affiliated with a "bank" as so defined.
1. (a) All orders for the purchase of Class A shares of the funds shall be
executed only at the public offering price next determined after the order is
received, in accordance with the terms of the then current Prospectuses of the
respective Funds. We shall provide you with an appropriate agency commission for
selling such shares, determined on the same basis as the "dealer reallowance"
described in the then current Prospectus of the respective Funds. The current
schedule of dealer compensation may be obtained from us upon request. For the
Class A shares, to the extent We reallow the full amount or substantially all of
the initial sales charge to you, you may be deemed to be an underwriter of the
Class A shares under the Securities Act of 1933. We will consider any order you
execute for Class A shares to be the total holdings of Class A shares by the
investor, and We will treat all orders as not entitled to any reduced sales
charge beyond that accorded to the amount of the purchase order as determined by
the schedule set forth in the applicable Fund's then current Prospectus, unless
you advise Us otherwise when you execute the order,
(b) All orders for the purchase of Class B shares shall be executed
only at the public offering price, which is the next determined net asset value
<PAGE>
per share after the order is received, in accordance with the terms of the then
current Prospectus of the respective Funds. We shall provide you with an
appropriate agency commission for selling such shares, determined in accordance
with the current schedule of dealer compensation which may be obtained from Us
at any time upon request.
(c) With respect to Paragraphs 1(a) and 1(b) above as applicable, You
agree to apply any scheduled variation in or waiver of sales charges uniformly
to your customers meeting the qualifications specified in the applicable Fund's
then current Prospectus.
2. You agree to provide personal service and/or maintain shareholder accounts,
in accordance with the National Association of Securities Dealers, Inc. ("NASD")
Rules of Fair Practice, as those terms are used thereunder, or, if you are a
bank, the rules and regulations of the applicable bank regulators. For these
services, in addition to the compensation, if any, provided for in Paragraph
1(a) or 1(b) of this Agreement, as applicable, We agree to pay you a quarterly
fee, based on the average total value of shares held during the quarter in
accounts on which you are identified on each Fund's records as the broker/dealer
of record, as set forth in the schedule referred to in Paragraph 1(a) or 1(b)
above, as applicable. This quarterly fee shall be payable with respect to Class
A shares or Class B shares of a Fund only for so long as the respective plans of
distribution adopted pursuant to Rule 12b-1 under the 1940 Act, as described in
the applicable Fund's then current Prospectus, remain in effect. In addition,
(i) you understand and agree that you shall be paid such quarterly fee until We
are in receipt of the service and distribution fees described in the applicable
Fund's then current Prospectus for the period in which you provide the services
described above, and (ii) our liability to you for the payment of such quarterly
fee is limited solely to the portion of that Fund's service and distribution
fees equal to the percentage of the Fund's assets represented by your customer
accounts. You agree to provide to Us at least annually a description of the
services provided by You pursuant to this paragraph. We reserve the right at any
time to impose a minimum fee payment thresholds before any quarterly fees will
be paid to you hereunder and to cease payment of quarterly fees upon notice to
you.
3. We reserve the right to cancel this Agreement at any time without notice if
any orders for the purchase of Class A shares or Class B shares are executed by
you at other than current public offering price determined by or for the
respective Funds, according to Paragraphs 1(a) or 1(b) above, as applicable. We
reserve the right to suspend sales or withdraw the offering of Class A shares or
Class B shares, without notice and at our sole discretion. We reserve the right
to reject any purchase order at our sole discretion.
4. (a) All orders for redemption of Class A shares will be executed by you at
the net asset value of such shares in accordance with the then current
Prospectus of the applicable Fund. We shall redeem any Class A shares presented
to Us for redemption at the net asset value of such shares in accordance with
the then current Prospectus of the applicable Fund; provided that redemptions of
certain Class A shares may be subject to the imposition of a contingent deferred
sales charge ("CDSC Class A shares") as set forth in the then current
Prospectuses of the respective Funds. Repurchases of CDSC Class A shares will be
made at the net asset value of such shares, less any applicable contingent
2
<PAGE>
deferred sales charges, as set forth in the then current Prospectus of the
applicable Fund. You agree to immediately present to Us the amount of the
contingent deferred sales charge to which such redemptions are subject. Any CDSC
Class A shares presented to Us for redemption will be redeemed at the net asset
value of such shares, less any applicable contingent deferred sales charge, as
set forth in the then current Prospectus of the applicable Fund.
(b) A11 orders for redemption of Class B shares will be made at the net
asset value of such shares, less any applicable contingent deferred sales
charges, as set forth in the then current Prospectus of the applicable Fund. You
agree to present immediately to Us the amount of the contingent deferred sales
charge to which such redemptions are subject. Any Class B shares presented to Us
for redemption will be redeemed at the net asset value of such shares, less any
applicable contingent deferred sales charges, as set forth in the then current
Prospectus of the applicable Fund.
5. (a) No person is authorized to make any representations concerning Class A
shares or Class B shares of the Funds except those contained in the then current
Prospectuses, Statements of Additional Information, Rule 482 advertisements
("Omitting Prospectuses"), and other printed sales literature authorized and
issued by Us or the Funds' investment manager and administrator, Chancellor LGT
Asset Management, Inc. ("Chancellor LGT") for public use. You agree to indemnify
the Funds, Us, Chancellor LGT and the Funds' transfer agent, GT Global Investor
Services, Inc. ("Transfer Agent"), and all directors, trustees, officers and
employee of each of them, for any loss, injury, damage, expense or liability
arising from or based upon any alleged or untrue statements or representations
made by you, other than statements contained in the Prospectuses, Statements of
Additional Information, Omitting Prospectuses or authorized printed sales
literature.
(b) We will furnish you, without charge and upon request, reasonable quantities
of the Funds' Prospectuses, Statements of Additional Information, periodic
shareholder reports and printed sales literature authorized by Us for public
use, for your use in accordance with the legends thereon.
(c) You agree to distribute Prospectuses and Statements of Additional
Information and shareholder reports to your customers in compliance with
applicable regulatory requirements, except to the extent that We or our
affiliates expressly undertake to do so on your behalf.
(d) You agree not to use other advertising and sales material relating to the
Funds, unless you have applied for and obtained pre-clearance of such
advertisements from the NASD and such material has also been approved in writing
by Us in advance of such use.
(e) In the event that We make a referral to you of a potential investor and such
referral results in a sale of Class A shares or Class B shares of the Funds, You
shall be obligated to forward such communications from Us to such shareholder as
We shall request, at no cost or charge to Us.
(f) Any printed information furnished by Us other than the current Prospectuses
and Statements of Additional Information of the Funds, periodic shareholder
reports and proxy solicitation materials are our sole responsibility and not the
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<PAGE>
responsibility of the Fund, and you agree that the Fund shall have no liability
or responsibility to you regarding such printed information unless expressly
assumed in connection therewith. You agree not to distribute any Fund's periodic
shareholder report without first or concurrently delivering to the investor a
then current Prospectus of such Fund.
6. Upon request, We will furnish you with public offering prices for the Class A
shares and the Class B shares in accordance with then current Prospectuses of
the respective Funds, and you agree to quote such prices subject to confirmation
by Us. Your attention is called specifically to the fact that each price is
always subject to confirmation, and will be the price next determined after
receipt of an order,
7. With respect to any and all transactions in the Class A or Class B shares of
the Funds pursuant to this Agreement, it is understood and agreed in each that :
(a) you shall be acting solely as agent for the account of your customer; (b)
each transaction shall be executed by the Funds only upon receipt of
instructions from you acting as agent for your customer; and (c) each
transaction shall be for the account of your customers and not for your account.
You are not authorized to act as agent for the Funds, Us or any other dealer in
any respect. In purchasing or selling Class A shares or Class B shares hereunder
you agree to rely only upon the applicable then current Prospectuses and
Statements of Additional Information and upon such written representations as
may hereafter be made by Us to you over our signature.
8. (a) You agree to pay for purchase orders of any Class A or Class B shares of
the Funds as agent for your customers in accordance with the terms of the
Prospectus of the applicable Fund. On or before the settlement date of each
purchase order for Shares of any Fund, you shall remit to an account designated
by Us an amount either (i) equal to the then current public offering price per
share less your agency commission, if any, or (ii) the then current public
offering price of the Shares of such Fund being purchased without deduction for
your agency commission, if any.
(b) If any Class A shares of Class B shares sold by you as agent for your
customers under the terms of this Agreement are sold with a sales load and are
redeemed for the account of that Fund, or are tendered for redemption, within
seven (7) business days after confirmation by Us of the original purchase order
for such Class A shares or Class B shares, no quarterly fees, or other
compensation will be payable to you with respect to such shares, as set forth
under Paragraphs 1 and 2 above, as applicable, and you shall forth-with refund
to Us the full amount of such fees and compensation, if any, provided to you on
the original sale. We shall forthwith pay to the Fund our portion of the sales
load on the sale that had been retained by Us, if any, and shall also pay to the
Fund the amount refunded to you. Notice will be given to you of any such
redemption within ten (10) business days of the date on which the redemption is
requested or share certificates are tendered to Us or to such Fund. Termination
or cancellation of this Agreement does not relieve you from the requirements of
this subparagraph.
(c) You shall not withhold executing customers' orders for any Class A shares or
Class B shares so as to profit yourself as a result of such withholding. You
shall not purchase any Class A shares or Class B shares from Us other than for
bona fide investment.
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<PAGE>
(d) Neither party to this Agreement shall purchase any Class A shares or Class B
shares from a record holder at a price lower than the net asset value determined
by or for the issue thereof.
(e) You agree that you will have the responsibility to supervise all sales
representatives appointed by, and other persons employed by, you under this
Agreement.
9. We shall not accept from you any conditional orders for Class A shares or
Class B shares. Delivery of share certificates, if any, for Class A shares or
Class B shares purchased shall be made by the Funds only against receipt of the
purchase price. If payment for the Class A shares or Class B shares purchased is
not received by Us within seven (7) days, the sale may be canceled forthwith
without any responsibility or liability on our part or on the part of the Fund
(in which case you will be responsible for any loss, including loss of profit,
suffered by the Fund resulting from your failure to make payment as aforesaid)
or, at our option, We may sell the Class A shares or Class B shares ordered back
to the Fund (in which case We may hold you responsible for any loss, including
loss of profit suffered by Us resulting from your failure to make payment as
aforesaid). If payment for any purchase order is not received in accordance with
the terms of the applicable Fund Prospectus, We reserve the right, without
notice, to cancel the sale and you alone shall be responsible for any loss
sustained by your customer as a result thereof.
10. You will not execute orders purchase of any of the Class A shares or Class B
shares except under circumstances that will result in compliance with the
applicable federal and state securities laws, and any applicable federal and
state banking laws. In connection with orders to purchase Class A shares or
Class B shares of a Fund, you will furnish each person to whom any such sale is
made with a copy of the applicable then current Fund Prospectus, prior to or
concurrently with the receipt of any order. We shall be under no liability to
you except for lack of good faith and for obligations expressly assumed by Us
herein. Nothing herein, however, shall be deemed to be a condition, stipulation
or provision permitting any person acquiring any security to waive compliance
with any provision of the Securities Act of 1933, or the rules and regulations
of the Securities and Exchange Commission, or relieving the parties hereto from
any liability arising under the Securities Act of 1933.
11. (a) If you are a "bank" as defined in the first paragraph of this Agreement,
then you agree to give written notice to Us immediately in the event that you
cease to be a "bank" as so defined. In such event, this Agreement shall
automatically terminate upon such written notice.
(b) If you are a bank-affiliated broker-dealer as described in the
first paragraph of this Agreement, you represent and warrant that you are a
member of the NASD and, with respect to any sales in the United States, you
agree to abide by all of the rules and regulations of the NASD, including,
without limitation, its Rules of Fair Practice. You agree to notify Us
immediately in the event of your expulsion or suspension from the NASD. Your
expulsion from the NASD will automatically terminate this Agreement immediately
without notice. Your suspension from the NASD will terminate this Agreement
effective immediately upon our written notice of termination to you.
5
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12. If you use telephonic, telex or telegraphic means to transmit orders,
exchanges or redemptions on behalf of your customers for Class A shares of Class
B shares, you hereby agree to indemnify the Funds, Us, Chancellor LGT, the
Transfer Agent and all directors, trustees, officers, and employees of each, for
any loss, injury, damage, expense or liability (including reasonable attorneys'
fees) as a result of our actions based on such telephonic, telex or telegraphic
order, exchange or redemption request if your order, exchange or redemption
request is erroneous or not authentic but We, in good faith act on such request,
or if We have refused to execute such request for any reason.
13. You will not knowingly sell Class A shares or Class B shares of any Fund to
any investment company, whether or not registered with the Securities and
Exchange Commission, if after such sale, such investment company and its
controlled companies would own more than three (3) percent of the total
outstanding shares of the Fund, or if after such sale, such investment company
and other investment companies directly or indirectly will own more than ten
(10) percent of the total outstanding shares of the Fund.
14. Either party hereto may cancel this Agreement upon ten (10) days' written
notice to the other party. This Agreement may be amended by Us at any time upon
written notice to you, and your placing of any order after the effective date of
any such amendment shall constitute your acceptance thereof.
15. You agree to comply with, and adopt as part of your internal guidelines for
sales compliance, our policies regarding the sale of Class A shares and Class B
shares of the Funds, as provided to you from time to time.
16. All communications to Us should be sent to the address written above. Any
notices to you shall be duly given if mailed, taxed or telegraphed to you at the
address specified below. This Agreement shall be binding upon receipt by Us in
San Francisco, California, of a counterpart hereof duly accepted and signed by
you, and shall be construed in accordance with the laws of the State of
California. This Agreement shall replace any prior agreement between Us and
shall constitute the entire agreement between the parties with respect to the
matters addressed.
GT GLOBAL, INC.
By:______________________________
William J. Guifoyle, President
Accepted:
----------------------------------------------------------------------
Company Name
----------------------------------------------------------------------
Address
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City State Zip Code
By: ----------------------------------------------------------------------
Signature Print Name and Title
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Date
AGENT SALES CONTRACT
Between: GT GLOBAL, INC.
General Distributor of the
GT Global Group of Funds
50 California Street, 27th Floor
San Francisco, CA 94111
and: ________________________________
________________________________
________________________________
________________________________
(the "Agent")
Date: ___________________________
As a general distributor of the GT Global Group of Funds (the "Funds"),
we agree to sell to the Agent's customers, through the Agent as their agent,
subject to any limitations imposed by any of the Funds and subject to
confirmation by us in each instance, shares issued by the Funds ("Shares"). The
Fund shall also include any registered investment company with which we now have
or hereafter have signed a principal underwriter's agreement.
1. The Agent will receive an agency commission, consisting of a portion of
the public offering price on all Shares purchased by the Agent as agent
for its customers from us, determined on the same basis as the "dealer
discount" described in the then current Prospectus and Statement of
Additional Information of the Fund, and such other compensation to
dealers as may be described in such Prospectus and Statement of
Additional Information. The range of current dealer discounts and other
compensation may be obtained at any time upon request. On the
settlement date of each transaction, the Agent will remit the full
purchase price less an amount equal to its agency commission.
Remittance of the full purchase price less the Agent's agency
commission shall be made to, and receive by us within seven (7)
business days after acceptance of its order or such shorter time as may
be required by law or applicable rules of the National Association of
Securities Dealers ("NASD"). If such payment is not received by us
within such period, we reserve the right, with prior notice, forthwith
to cancel the sale, or, at our option, to sell the shares ordered by
the Agent back to the Fund, in which latter case we may hold the Agent
responsible for any loss suffered by us or by the Fund resulting from
<PAGE>
the Agent's failure to make payment aforesaid. On any order sent
directly to us by a customer of the Agent, we will remit the Agent's
agency commission on such transaction to the Agent.
2. We reserve the right to cancel this agreement at any time without
notice if any Shares shall be offered for sale by the Agent to its
customers at less than the then current public offering prices
determined by or for the respective Funds.
3. We will furnish the Agent, without charge and on request, reasonable
quantities of the Funds' Prospectuses, shareholder reports and sales
material.
4. We will furnish the Agent on request with public offering prices for
the Shares in accordance with the then current Prospectuses of the
respective Funds, and the Agent agrees to quote such prices subject to
confirmation by us on any Shares offered to the Agent for sale. The
Agent's attention is called specifically to the fact that each price is
always subject to confirmation, and will be the price next computed
after receipt of an order.
5. Under this agreement the Agent acts as agent for its customers and is
not employed by us as broker, agent or employee; the Agent is not
authorized to act for us nor to make any representation on our behalf;
and in purchasing or selling Shares hereunder the Agent relies only
upon the current Prospectus and Statement of Additional Information and
upon such written representations as may hereafter be made by us to the
Agent over our signature. The Agent also agrees that every effort shall
be made by the Agent to place Shares on an investment basis.
6. The Agent represents that it is member of the NASD and agrees to abide
by all of the Rules of Fair Practice of the NASD applicable to the sale
of investment company shares to its customers, including, without
limitation , the following provision:
(a) The Agent shall not withhold placing customers' orders for any
Shares so as to profit itself as a result of such withholding.
We shall not purchase any Shares from the Funds except for the
purpose of covering purchase orders already received, and the
Agent shall not purchase any Shares from us other than as
agent for the purpose of covering purchase orders already
received from its customers.
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(b) If any Shares purchased by the Agent as agent for its
customers are repurchased by the Fund which issued the same or
by us for the account of such Fund, or are tendered for
redemption, within seven business days after confirmation by
us of the original purchase order for such Shares (1) the
Agent agrees to forthwith refund to us the full agency
commission paid to the Agent on the original sale, such refund
to be paid by us to the Fund whose Shares have been so
repurchased upon receipt and (2) we shall forthwith pay to
such Fund that part of the discount retained by us on the
original sale. Notice will be given to the Agent of any such
repurchase or redemption within ten days of the date on which
the certificate is delivered to us or to such Fund.
(c) Neither party to this agreement shall purchase any Shares from
a record holder at a price lower than the net asset value next
computed by or for the issuer thereof. Nothing in this
subparagraph shall prevent the Agent from selling Shares for
the account of a record holder to us or to the issuer thereof
at the net asset value then quoted by or for such issuer and
charging the investor a fair commission for handling the
transaction.
7. Either party hereto may cancel this agreement upon ten days' written
notice. Furthermore, as a general distributor we reserve the privilege
of revising the commission or other compensation referred to herein,
which is the basis for determining the Agent's agency commission, upon
ten days' which notice, which notice will be deemed given by
supplementing or amending the Prospectus or Statement of Additional
Information of a Fund.
8. The customers in question are for all purposes the Agent's customers
and not our customers. We shall execute transactions for each of the
Agent's customers only upon its authorization it being understood in
all cases that (a) the Agent is acting as the agent for the customer;
(b) the transactions are without recourse against the Agent by the
customer; (c) as between the Agent and the customer, the customer will
have full beneficial ownership of the shares; and (d) each transaction
is initiated solely upon the order of the customer and not for the
Agent's account.
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<PAGE>
9. This agreement shall be binding upon receipt by us in San Francisco,
California, of a counterpart hereof duly accepted and signed by the
Agent, and shall be construed in accordance with the laws of
California.
Accepted:
____________________ GT GLOBAL, INC.
Agent Name
By: ____________________ By: ____________________
Signature
--------------------
Print Name and Date
4
NOT FOR USE BETWEEN MEMBERS OF
THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.
FOREIGN SALES CONTRACT
Between: GT GLOBAL, INC.
General Distributor of the
GT Global Group of Funds
50 California Street, 27th Floor
San Francisco, CA 94111
and: ________________________________
________________________________
________________________________
Phone __________________________
Date ___________________________
As a general distributor of the GT Global Group of Funds (the "Funds"),
we agree to sell you, subject to the terms and conditions of this Foreign Sales
Contract, to any limitations imposed by any of the Funds and to confirmation by
us in each instance, shares issued by the Funds ("Shares"). The Funds shall also
mean any registered investment company with which we have now or hereafter
signed an agreement.
1. YOU WARRANT AND REPRESENT TO US THAT SHARES OF THE FUNDS MAY, PURSUANT
TO ALL APPLICABLE LAWS AND GOVERNMENTAL RULES, REGULATIONS AND ORDERS,
BE OFFERED FOR SALE AND SOLD BY YOU IN THE COUNTRY OR COUNTRIES WHERE
YOU CONDUCT YOUR BUSINESS OPERATIONS, AND THAT YOU MAY LAWFULLY CONDUCT
SUCH BUSINESS OPERATIONS AND HAVE ALL REQUIRED LICENSES AND PERMITS TO
DO SO AS MAY BE REQUIRED BY SUCH LAWS AND GOVERNMENTAL RULES,
REGULATIONS AND ORDERS. YOU AGREE TO INDEMNIFY AND SAVE US AND THE
FUNDS HARMLESS FROM ALL LIABILITIES, LOSSES, DAMAGES, CLAIMS AND
EXPENSES, INCLUDING COUNSEL FEES, IN CONNECTION WITH THE FOREGOING
WARRANTIES AND REPRESENTATIONS.
2. We will furnish you, without charge and on request, reasonable
quantities of the Funds' Prospectuses, shareholder reports and sales
material, all in the English language. You are solely responsible for
providing accurate translations of such documents with such additional
information as may be necessary as required by applicable laws and
governmental rule, regulations and order.
3. The price of Shares to you will be the net asset value as next
determined after we receive your order, together with our underwriting
commission. Your attention is called specifically to the fact that each
<PAGE>
price is always subject to confirmation, and will be the price next
computed after an order and the payment therefore are received.
You will pay for Shares at the next quoted price in United States
dollars in New York Eastern Time Same Day Funds credited to our account
at the Connecticut Bank and Trust Co., N.A. during the hours that the
New York Stock Exchange is open (currently 8:30 a.m. to 4:00 p.m.
Eastern Time). We must receive payment before an order for Shares can
be confirmed, and the applicable price to you will be based upon the
net asset value of Shares next determined after we are advised that
Same Day Funds are available to us.
We will also furnish you on request with public offering prices for
Shares (including sales charges) determined in accordance with the
current Prospectus of each Fund. You will advise us of the appropriate
sales charge to be included in the price of Shares shown in our
confirmation to you or the absence of such sales charge if you propose
to sell such shares to your customer at net asset value. Such sales
charge must conform to one of the stated rates in the current
Prospectus of the Fund, but need not necessarily be the same as would
be charged to a U.S. investor for an order of like amount.
4. We reserve the right to cancel this agreement at any time without
notice if any Shares shall be offered for sale by you at less than the
then net asset value determined by or for the respective Funds.
5. Under this agreement you act as principal and are not employed by us as
broker, agent or employee; you are not authorized to act for us nor to
make any representations on our behalf; and in purchasing or selling
Shares hereunder you rely only upon the current Prospectus and
Statement of Additional Information and upon such written
representations as may hereafter be made by us to you over our
signature. You also agree that every effort shall be made by you to
place Shares on an investment basis.
6. You agree that although you are not a member of the National
Association of Securities Dealers, Inc., you will abide by the Rules of
Fair Practice of such Association, including, without limitation, the
following provision:
(a) You shall not withhold placing customers'; orders for any
Shares so as to profit yourself as a result of such respective
Funds except for the purpose of covering purchase orders
already received, and you shall not purchase any Shares from
2
<PAGE>
us other than for investment except for the purpose of
covering purchase orders already received; and
(b) Neither party to this agreement shall, as principal, purchase
any Shares from a record holder at a price lower than the net
asset value next computed by or for the issuer thereof.
Nothing in this subparagraph shall prevent you from selling
Shares for the account of a record holder to us or the issuer
thereof at the net asset value then quoted by or for such
issuer and charging the investor a fair commission for
handling the transaction.
You further agree that in selling Shares to a U.S. national,
you will not charge a sales charge in excess of that stated in
the Prospectus of the applicable Fund.
7. Either party hereto may cancel this agreement upon ten days' written
notice.
8. This agreement shall be binding upon receipt by us in San Francisco,
California, of a counterpart hereof duly accepted and signed by you,
and shall be construed in accordance with the laws of California.
Accepted:
____________________ GT GLOBAL, INC.
Company Name
By: ____________________ By: ____________________
Signature
____________________
Print Name and Date
3
FUND ACCOUNTING AND PRICING AGENT AGREEMENT
This Fund Accounting and Pricing Agent Agreement (the "Agreement"), a
Massachusetts business trust, is made as of __________, 1997, between GT Global
Series Trust (the "Trust"), on behalf of GT Global New Dimension Fund ("Fund"),
and Chancellor LGT Asset Management, Inc. ("Chancellor LGT").
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company;
WHEREAS, the Fund is a series of the Trust and is part of a complex of
investment companies that are managed and/or administered by Chancellor LGT (the
"GT Global Group of Funds"); and
WHEREAS, the Trust desires to retain Chancellor LGT to act as the
Fund's accounting and pricing agent, and Chancellor LGT is willing to act in
such capacities;
NOW, THEREFORE, in consideration of the foregoing and the terms and
conditions hereinafter set forth, the Trust and Chancellor LGT hereby agree as
follows:
SECTION 1. APPOINTMENT. The Trust hereby appoints Chancellor
LGT to act as the Fund's accounting and pricing agent for the period and on the
terms and conditions set forth in this Agreement. Chancellor LGT hereby accepts
such appointment and agrees to render the services set forth for the
compensation herein provided.
SECTION 2. DEFINITIONS. As used in this Agreement and in
addition to the terms defined elsewhere herein, the following terms shall have
the meanings assigned to them in this Section:
(a) "Authorized Person" means any officer of the Fund
and any other person, whether or not any such person is an officer or
employee of the Fund, duly authorized by the Board of Trustees, the
President or any Vice President of the Fund to give Oral and/or Written
Instructions on behalf of the Fund.
(b) "Commission" means the Securities and Exchange
Commission.
(c) "Custodian" means the custodian or custodians
employed by the Fund to maintain custody of the Fund's assets.
(d) "Governing Documents" means the Declaration of
Trust, By-Laws and other applicable charter documents of the Trust, all
as they may be amended from time to time.
<PAGE>
(e) "Oral Instruction" means oral instructions
actually received by Chancellor LGT from an Authorized Person or from a
person reasonably believed by Chancellor LGT to be an Authorized
Person, provided that, any Oral Instruction shall be promptly confirmed
by Written Instructions.
(f) "Prospectus" means the current prospectus of the
Fund.
(g) "Shares" means shares of beneficial interest of
the Fund.
(h) "Shareholder" means any owner of Shares.
(i) "Written Instructions" means written instructions
delivered by hand, mail, tested telegram or telex, cable or facsimile
sending device received by Chancellor LGT and signed by an Authorized
Person.
SECTION 3. COMPLIANCE WITH LAWS, ETC. In performing its
responsibilities hereunder, Chancellor LGT shall comply with all terms and
provisions of the Governing Documents, the Prospectus and all applicable state
and federal laws including, without limitation, the 1940 Act and the rules and
regulations promulgated by the Commission thereunder.
SECTION 4. SERVICES. Subject to the supervision and control of
the Trust's Board of Trustees, Chancellor LGT shall provide the following
services to the Fund:
(a) PRICING AGENT. As pricing agent, Chancellor LGT shall:
(1) Obtain security market quotes from services
approved by the investment manager of the Fund or, if such
quotes are unavailable, then obtain such prices from the
investment manager of the Fund or from such sources as the
investment manager may direct, and, in either case, calculate
the market value of the Fund's investments; and
(2) Value the assets of the Fund and compute the net
asset value per Share of the Fund at such dates and times and
in the manner specified in the then currently effective
Prospectus and transmit to the Fund's investment manager.
(b) ACCOUNTING AGENT. As fund accounting agent, Chancellor LGT
shall:
(1) Calculate the net income of the Fund;
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<PAGE>
(2) Calculate capital gains or losses for the Fund
from the sale or disposition of assets, if any;
(3) Maintain the general ledger and other accounts,
books and financial records of the Fund, as required under
Section 31(a) of the 1940 Act and the rules promulgated by the
Commission thereunder in connection with the services provided
by Chancellor LGT;
(4) Perform the following functions on a daily basis:
(A) journalize the Fund's investment,
capital share and income and expense activities;
(B) reconcile cash and investment balances
of the Fund with the Custodian and provide the Fund's
investment manager with the beginning cash balance
available for investment purposes and update the cash
availability throughout the day as required by the
investment manager;
(C) verify investment buy/sell trade tickets
received from the Fund's investment manager and
transmit trades to the Fund's Custodian for proper
settlement;
(D) maintain individual ledgers for
investment securities;
(E) maintain historical tax lots for
investment securities;
(F) calculate various contractual expenses
(e.g., advisory and custody fees);
(G) post to and prepare the Fund's statement
of assets and liabilities and statement of
operations; and
(H) monitor expense accruals and notify an
Authorized Person of any proposed adjustments;
(5) Receive and act upon notices, Oral and Written
Instructions, certificates, instruments or other
communications from the Fund's shareholder servicing and
transfer agent;
(6) Assist in the preparation of financial statements
semiannually, which will include the following items:
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<PAGE>
(A) schedule of investments;
(B) statement of assets and liabilities;
(C) statement of operations;
(D) changes in net assets;
(E) cash statement; and
(F) schedule of capital gains and losses;
(7) Prepare monthly security transaction listings;
(8) Prepare quarterly broker security transactions
summaries; and
(9) At the reasonable request of the Fund, assist in
the preparation of various reports or other financial
documents required by federal, state and other appropriate
laws and regulations.
SECTION 4A. CALCULATION OF FEES FOR OTHER SERVICE PROVIDERS.
When and if a special servicing agreement or similar agreement ("Special
Servicing Agreement") is entered into among the Trust, Chancellor LGT, GT Global
Investor Services, Inc. and G.T. Investment Funds, Inc. ("Investment Funds"),
Chancellor LGT shall (1) calculate the amount of the Fund's fees and expenses;
(2) calculate the estimated savings to the series of Investment Funds in which
the Fund invests ("Underlying Funds") as a result of the Fund's operations; and
(3) determine the level of excess savings with respect to each Underlying Fund.
When and if the Special Servicing Agreement is in effect, Chancellor LGT shall
deliver proper instructions to each of the Underlying Funds as to the amount of
payments to be made to the Fund's service providers or other persons pursuant to
the Special Servicing Agreement.
SECTION 5. COMPENSATION. Fees payable under this Agreement
shall be set forth in writing and attached hereto as Schedule A.
SECTION 6. RELIANCE BY CHANCELLOR LGT ON INSTRUCTIONS. Unless
otherwise provided in this Agreement, Chancellor LGT shall act only upon Oral or
Written Instructions. Chancellor LGT shall be entitled to rely upon any such
Instructions actually received by it under this Agreement. The Fund agrees that
Chancellor LGT shall incur no liability to the Fund in acting upon Oral or
Written Instructions given to Chancellor LGT hereunder, provided that, such
Instructions reasonably appear to have been received from an Authorized Person.
4
<PAGE>
SECTION 7. COOPERATION WITH AGENTS OF THE FUND. Chancellor LGT
shall cooperate with the Fund's agents and employees, including, without
limitation, their independent accountants, and shall take all reasonable action
in the performance of its obligations under this Agreement to assure that all
necessary information is made available to such agents to the extent necessary
in the performance of their duties to the Fund.
SECTION 8. CONFIDENTIALITY. Chancellor LGT, on behalf of
itself and its employees, agrees to treat confidentially all records and other
information relating to the Fund except when requested to divulge such
information by duly constituted authorities provided that notification and prior
approval is obtained from the Fund, which approval shall not be unreasonably
withheld and may not be withheld if Chancellor LGT, in its judgment, may be
subject to civil or criminal contempt proceedings for failure to comply.
SECTION 9. STANDARD OF CARE. In the performance of its
responsibilities hereunder, Chancellor LGT shall exercise care and diligence in
the performance of its duties and act in good faith and use its best efforts to
ensure the accuracy and completeness of all services under this Agreement. In
performing services hereunder, Chancellor LGT:
(a) shall be under no duty to take any action on
behalf of the Fund except as specifically set forth herein or as may be
specifically agreed to by Chancellor LGT in writing, and in computing
the net asset value per Share of the Fund, Chancellor LGT may rely upon
any information furnished to it including, without limitation,
information (1) as to the accrual of liabilities of the Fund and as to
liabilities of the Fund not appearing on the books of account kept by
Chancellor LGT, (2) as to the existence, status and proper treatment of
reserves, if any, authorized by the Fund, (3) as to the sources of
quotations to be used in computing net asset value, (4) as to the fair
value to be assigned to any securities or other property for which
price quotations are not readily available and (5) as to the sources of
information with respect to "corporate actions" affecting portfolio
securities of the Fund (information as to "corporate actions" shall
include information as to dividends, distributions, interest payments,
prepayments, stock splits, stock dividends, rights offerings,
conversions, exchanges, recapitalizations, mergers, redemptions, calls,
maturity dates and similar actions, including ex-dividend and record
dates and the amounts and terms thereof);
(b) shall be responsible and liable for all losses,
damages and costs (including reasonable attorneys' fees) incurred by
the Fund which is due to or caused by Chancellor LGT's negligence in
the performance of its duties under this Agreement or for Chancellor
5
<PAGE>
LGT's negligent failure to perform such duties as are specifically
assumed by Chancellor LGT in this Agreement, provided that, to the
extend that duties, obligations and responsibilities are not expressly
set forth in this Agreement, Chancellor LGT shall not be liable for any
act or omission that does not constitute willful misfeasance, bad faith
or negligence on the part of Chancellor LGT or reckless disregard by
Chancellor LGT of such duties, obligations and responsibilities; and
(c) without limiting the generality of the foregoing,
Chancellor LGT shall not, in connection with Chancellor LGT's
duties under this Agreement, be under any duty or obligation
to inquire into and shall not be liable for or in respect of:
(1) the validity or invalidity or authority
or lack of authority of any Oral or Written
Instruction, notice or other instrument which
conforms to the applicable requirements of this
Agreement, if any and that Chancellor LGT reasonably
believes to be genuine; and
(2) delays or errors or loss of data
occurring by reason of circumstances beyond
Chancellor LGT's control including, without
limitation, acts of civil or military authorities,
national emergencies, labor difficulties, fire,
mechanical breakdown, denial of access, earthquake,
flood or catastrophe, acts of God, insurrection, war,
riots, or failure of the mails, transportation,
communication or power supply.
Notwithstanding any other provisions of this Agreement, the following provisions
shall apply with respect to Chancellor LGT's computation of the Fund's net asset
value: Chancellor LGT shall be held to the exercise of reasonable care in
computing and determining net asset value as provided in Section 4(a), above,
but shall not be held accountable or liable for any losses, damages or expenses
of the Fund or any Shareholder or former Shareholder may incur arising from or
based upon errors or delays in the determination of such net asset value unless
such error or delay was due to Chancellor LGT's negligence or willful
misfeasance in the computation and determination of such net asset value. The
parties hereto acknowledge, however, that Chancellor LGT causing an error or
delay in the determination of net asset value may, but does not in an of itself,
constitute negligence or willful misfeasance. In no event shall Chancellor LGT
be liable or responsible to the Fund or any other party for any error or delay
which continued or was undetected after the date of an audit of the Fund
performed by the certified public accountants employed by the Fund if, in the
exercise of reasonable care in accordance with generally accepted accounting
6
<PAGE>
principles, such accountants should have become aware of such error or delay in
the course of performing such audit. Chancellor LGT's liability for any such
negligence or willful misfeasance which results in an error in determination of
such net asset value shall be limited to the direct out-of-pocket loss the Fund
and/or any Shareholder or former Shareholder shall actually incur.
Without limiting the generality of the foregoing, Chancellor
LGT shall not be held accountable or liable to the Fund, a Shareholder or former
Shareholder or any other person for any delays or losses, damages or expenses
any of them may suffer or incur resulting from (1) Chancellor LGT's failure to
receive timely and suitable notification concerning quotations, corporate
actions or similar matters relating to or affecting portfolio securities of the
Fund or (2) any errors in the computation of a net asset value based upon or
arising out of quotations or information as to corporate actions if received by
Chancellor LGT from a source that Chancellor LGT was authorized to rely upon.
Nevertheless, Chancellor LGT will use its best judgment in determining whether
to verify through other sources any information that it has received as to
quotations or corporate actions if Chancellor LGT has reason to believe that any
such information is incorrect.
SECTION 10. RECEIPT OF ADVICE. If Chancellor LGT is in doubt
as to any action to be taken or omitted by it, Chancellor LGT may request, and
shall be entitled to rely upon, directions and advice from the Fund, including
Oral or Written Instructions where appropriate, or from counsel of its own
choosing (who may also be counsel for the Fund), with respect to any question of
law. In case of conflict between directions, advice or Oral and Written
Instructions received by Chancellor LGT pursuant to this Section, Chancellor LGT
shall be entitled to rely on and follow the advice received from counsel as
described above. Chancellor LGT shall be protected in any action or in action
that it takes in reliance on any directions, advice or Oral or Written
Instructions received pursuant to this Section that Chancellor LGT, after the
receipt of the same, in good faith believes to be consistent with such
directions, advice or Oral or Written Instructions, as the case may be.
Notwithstanding the foregoing, nothing in this Section shall be construed as
imposing on Chancellor LGT any obligation to seek such directions, advice or
Oral or Written Instruction, or to act in accordance with them when received,
unless the same is a condition to Chancellor LGT's properly taking or omitting
to take such action under the terms of this Agreement.
SECTION 11. INDEMNIFICATION OF CHANCELLOR LGT. The Fund
agrees, separately and not jointly, to indemnify and hold harmless Chancellor
LGT and its officers, directors, employees, nominees and subcontractors, if any,
from all taxes, charges, expenses, assessments, claims and liabilities,
including, without limitation, liabilities arising under the 1940 Act, the
7
<PAGE>
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the Commodities Exchange Act and any state or foreign securities or
blue sky laws, and expenses, including, without limitation, reasonable
attorneys' fees and disbursements, arising directly or indirectly from any
action or thing that Chancellor LGT takes or omits to take or do:
(a) at the request or on the direction of or in reliance upon
the advice of the Fund;
(b) upon Oral or Written Instructions; or
(c) in the performance by Chancellor LGT of its
responsibilities under this Agreement;
provided that, Chancellor LGT shall not be indemnified against any liability to
the Fund, or any expenses incident thereto, arising out of Chancellor LGT's own
willful misfeasance, bad faith or negligence or reckless disregard of its duties
in connection with the performance of its duties and obligations specifically
described in this Agreement.
SECTION 12. INDEMNIFICATION OF THE FUND. Chancellor LGT agrees
to indemnify and hold harmless the Fund and its officers, trustees, and
employees, from all taxes, charges, expenses, assessments, claims and
liabilities, including, without limitation, liabilities arising under the 1940
Act, the Securities Act of 1933, as amended, the Securities Exchange Act of
1934, as amended, the Commodities Exchange Act and any state or foreign
securities or blue sky laws, and expenses, including, without limitation,
reasonable attorneys' fees and disbursements, arising directly or indirectly
from any action or omission of Chancellor LGT that does not meet the standard of
care to which Chancellor LGT is subject under Section 9, above.
SECTION 13. LIMITATION OF LIABILITY OF SHAREHOLDERS AND
TRUSTEES OF THE TRUST. It is expressly agreed that the obligations of the Trust
hereunder shall not be binding upon any of the shareholders, trustees, officers,
nominees, agents or employees of the Trust personally, but shall only bind the
assets and property of the Fund, as provided in the Governing Documents. The
execution and delivery of this Agreement has been authorized by the Board of
Trustees of the Trust, and this Agreement has been executed and delivered by an
authorized officer of the Trust acting as such, and neither such authorization
by the Board of Trustees nor such execution and delivery by such officer shall
be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the assets and property
of the Fund as provided in the Governing Documents.
SECTION 14. DURATION AND TERMINATION. This Agreement shall
continue until termination is effected by the Fund or Chancellor LGT upon sixty
days' prior written notice to the other. In the event of the "assignment" of
8
<PAGE>
this Agreement within the meaning of the 1940 Act, this Agreement shall
terminate automatically.
SECTION 15. NOTICES. All notices and other communications
hereunder, including Written Instructions, shall be in writing or by confirming
telegram, cable, telex or facsimile sending device. Notices with respect to a
party shall be directed to such address as may from time to time be designated
by that party to the other.
SECTION 16. FURTHER ACTIONS. The Trust and Chancellor LGT
agree to perform such further acts and to execute such further documents as may
be necessary or appropriate to effect the purposes of this Agreement.
SECTION 17. AMENDMENTS. This Agreement, or any part thereof,
may be amended only by an instrument in writing signed by the Trust and
Chancellor LGT.
SECTION 18. COUNTERPARTS. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together constitute one and the same instrument.
SECTION 19. MISCELLANEOUS. This Agreement embodies the entire
agreement and understanding between the Trust and Chancellor LGT and supersedes
all prior agreements and understandings relating to the subject matter hereof,
provided that the Trust and Chancellor LGT may embody in one or more separate
documents their agreement or agreements with respect to such matters that this
Agreement provides may be later agreed to by and among the Trust and Chancellor
LGT from time to time. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement shall be governed by and construed in accordance with California law.
If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the Trust and Chancellor LGT and their respective successors.
9
<PAGE>
IN WITNESS WHEREOF, the Trust and Chancellor LGT have caused
this Agreement to be executed by their officers designated below as of this day,
month and year first above written.
GT GLOBAL SERIES TRUST
Attest:____________________ By: ____________________________
CHANCELLOR LGT ASSET MANAGEMENT, INC.
Attest:____________________ By: ____________________________
KIRKPATRICK & LOCKHART
1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036
(202) 778-9000
August 22, 1997
GT Global Series Trust
50 California Street
San Francisco, California 94111
Ladies and Gentlemen:
GT Global Series Trust ("Trust") is an unincorporated voluntary
association organized under the laws of the Commonwealth of Massachusetts on
August 26, 1996. You have requested our opinion regarding certain matters in
connection with the issuance by the Trust of an indefinite number of Class A,
Class B and Advisor Class shares of beneficial interest ("Shares") in the series
designated GT Global New Dimension Fund ("Fund").
We have, as counsel, participated in various business and other matters
related to the Trust. We have examined copies, either certified or otherwise
proved to be genuine, of the Declaration of Trust and By-Laws of the Trust, the
minutes of the meetings of the trustees and other documents relating to the
organization and operation of the Trust, and we generally are familiar with its
business affairs.
Based on the foregoing, it is our opinion that the unlimited number of
Shares of the Fund which are currently being registered under the Securities Act
of 1933, may be legally and validly issued from time to time in accordance with
the Trust's Declaration of Trust and By-Laws and subject to compliance with the
Securities Act of 1933 and the Investment Company Act of 1940; and when so
issued, the Shares of the Fund will be fully paid and nonassessable.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Trust. The
Declaration of Trust states that all persons extending credit to, contracting
with or having any claim against the Trust or a particular series shall look
only to the assets of the Trust or such series, as the case may be, for payment
under such credit, contract or claim. It also states that every note, bond,
contract, instrument, certificate or undertaking made or issued by the Trustees
or by any officers or officer shall give notice that the same was executed or
made by them on behalf of the Trust or by them as Trustees or Trustee or as
<PAGE>
GT Global Series Trust
August 21, 1997
Page 2
officers or officer and not individually and that the obligations of such
instrument are not binding upon any of them or the shareholders individually but
are binding only upon the assets and property of the Trust or the particular
series in question. The Declaration of Trust further provides (i) for
indemnification from the assets of the appropriate series for all loss and
expense of any shareholder held personally liable for the obligations of the
Trust or any series by virtue of ownership of shares of such series and (ii) for
the appropriate series to assume the defense of any claim against the
shareholder for any act or obligation of the series. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the Trust of series would be unable to meet
its obligations.
We hereby consent to the filing of this opinion in connection with
Pre-Effective Amendment No. 1 to the Trust's Registration Statement on Form N-1A
(File No. 333-30551) to be filed with the Securities and Exchange Commission. We
also consent to the reference to our firm under the caption "Counsel" in the
Prospectuses filed as part of the Registration Statement.
Very truly yours,
KIRKPATRICK & LOCKHART LLP
/s/ R. Darrell Mounts
By:____________________________
R. Darrell Mounts
Coopers & Lybrand L.L.P.
================================================================================
A professional services firm
CONSENT OF INDEPENDENT ACCOUNTS
To the Board of Trustees of
GT Global Series Trust:
We consent to the inclusion in the Registration Statement on Form N-1A of our
report dated August 18, 1997 on our audit of the statement of assets and
liabilities of GT Global New Dimension Fund, a series of GT Global Series Trust
as of August 18, 1997. We also consent to the reference to our firm under the
caption "Independent Accountants"; and "Experts" under the caption financial
statement.
/s/ Coopers & Lybrand L.L.P.
------------------------------
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
August 18, 1997
August 18, 1997
GT Global Series Trust
50 California Street
San Francisco, California 94111
Ladies and Gentlemen:
Please be advised that the 2,916.302 Class A shares, 2,916.302 Class B
shares, and 2,916.303 Advisor Class shares of beneficial interest in the GT
Global New Dimension Fund, which we have today purchased from you in the
aggregate amount of $100,000, were purchased as an investment with no present
intention of redeeming or selling such shares, and we do not have any intention
of redeeming or selling such shares.
Very truly yours,
LGT ASSET
MANAGEMENT, INC.
/s/ Phillip S. Gillespie
By:________________________________
Phillip S. Gillespie
Assistant Secretary
PLAN OF DISTRIBUTION OF
GT GLOBAL SERIES TRUST -- CLASS A SHARES
WHEREAS, GT Global Series Trust ("Trust") is registered under the
Investment Company Act of 1940, as amended ("1940 Act"), as an open-end
management investment company, and offers for public sale distinct series of
shares of beneficial interest; and
WHEREAS, the Board has established GT Global New Dimension Fund ("New
Dimension Fund") as the initial series of shares of beneficial interest in the
Trust; and
WHEREAS, the Trust hereafter may establish additional series of shares
of beneficial interest (any such additional series together with the New
Dimension Fund collectively are referred to herein as the "Funds," and singly
may be referred to as a "Fund"); and
WHEREAS, the Trust's Board of Trustees ("Board") has established Class
A, Class B, and an Advisor Class of shares of each Fund; and
WHEREAS, the Trust desires to adopt a Plan pursuant to Rule 12b-1 under
the 1940 Act with respect to the Class A shares of each such Fund; and
WHEREAS, the Trust has entered into a Distribution Contract
("Distribution Contract") with GT Global, Inc. ("GT Global" or "Distributor")
pursuant to which GT Global serves as Distributor of the Class A shares of each
such Fund;
NOW, THEREFORE, the Trust hereby adopts this Plan with respect to the
Class A shares of each Fund in accordance with Rule 12b-1 under the 1940 Act.
1. A. Each Fund is authorized to pay GT Global a service fee for
the Fund's Class A shares at the annualized rate of up to
0.25% of the average daily net assets of the Fund's Class A
shares.
B. Each Fund is authorized to pay GT Global for its expenditures
incurred in providing services as Distributor of the Fund's
Class A shares at the annualized rate of up to 0.50%, less
any amounts paid as the aforementioned service fees, of the
average daily net assets of the Fund's Class A shares.
<PAGE>
C. If the Trust establishes additional Funds in the future and
the applicability of the Plan with respect to such Funds is
approved in the manner set forth in paragraph 4 of this Plan,
this Plan may be amended to provide that each such additional
Fund will pay GT Global at rates to be established by the
Board.
D. Reimbursement amounts under this Plan shall be calculated and
accrued daily by each Fund and paid monthly to GT Global or
at such other intervals as the Trust and GT Global shall
agree.
2. A Fund may reimburse GT Global at a lesser rate than the fee
specified in paragraph 1 of this Plan, as agreed upon by the Board and GT Global
and as approved in the manner specified in paragraph 4 of this Plan.
3. As Distributor of the Funds' Class A shares, GT Global may spend
such amounts as it deems appropriate on any activities or expenses primarily
intended to result in the sale of each Fund's Class A shares or the servicing
and maintenance of shareholder accounts, including, but not limited to, payment
of ongoing commissions and other payments to brokers, dealers, financial
institutions or others who sell Class A shares and/or service Class A
shareholder accounts; compensation to employees of GT Global; compensation to
and expenses, including overhead and telephone expenses, of GT Global; the
printing of prospectuses, statements of additional information and reports for
other than existing Class A shareholders; and the preparation, printing and
distribution of sales literature and advertising materials.
4. This Plan shall take effect with respect to the Class A shares of
any Fund, together with any related agreements, immediately after it has been
approved by votes of a majority of both (a) the Board and (b) those Trustees of
the Trust who are not interested persons of the Trust and have no direct or
indirect financial interest in the operation of this Plan or any agreements
related thereto ("Independent Trustees"), cast in person at a meeting (or
meetings) called for the purpose of voting on such approval; and after the
Trustees who approve the Plan with respect to such Fund's Class A shares have
reached the conclusion required by Rule 12b-1(e) under the 1940 Act.
2
<PAGE>
5. This Plan shall continue in effect for so long as such continuance
is specifically approved at least annually in the manner provided in paragraph
4.
6. GT Global shall provide to the Board and the Independent Trustees
shall review and approve, in exercise of their fiduciary duties, at least
quarterly, a written report of the amounts expended with respect to the Class A
shares of each Fund by GT Global under this Plan and the Distribution Contract
and the purposes for which such expenditures were made.
7. For purposes of this Plan, "distribution fees" shall mean any fees
for activities in connection with GT Global's performance of its obligations
under the Plan or the Distribution Contract that are not deemed "service fees."
"Service fees" shall mean fees for activities covered by the definition of
"service fee" contained in Conduct Rule 2830 of the National Association of
Securities Dealers, Inc.
8. This Plan may be terminated at any time with respect to the Class A
shares of any Fund by vote of the Board, by vote of a majority of the
Independent Trustees, or by vote of a majority of the outstanding voting
securities of the Class A shares of that Fund. Termination of the Plan with
respect to the Class A shares of one Fund shall not affect the continued
effectiveness of this Plan with respect to the Class A shares of any other Fund.
9. This Plan may not be amended to increase materially the amount of
reimbursement a Fund is authorized to make under paragraph 1 hereof unless such
amendment is approved in the manner provided for initial approval in paragraph 4
hereof, and such amendment is further approved by a majority of the outstanding
voting securities of the Fund, and no other material amendment to the Plan shall
be made unless approved in the manner provided for approval and annual renewal
in paragraph 5 hereof.
10. If and to the extent that any of the expenses of the Class A shares
of a Fund listed below in this paragraph are considered to be "primarily
intended to result in the sale of shares" issued by the Fund within the meaning
of Rule 12b-1 under that 1940 Act, the Fund's payment of such expenses is
authorized without limit under this Plan, without regard to reimbursements made
by the Fund pursuant to paragraph 1 of this Plan or the requirements for
approval of any increase in such fees under paragraph 9 of this Plan. These
expenses include: (i) the costs of preparing, printing and mailing all required
reports and notices to Class A shareholders, irrespective of whether such
3
<PAGE>
reports or notices contain or are accompanied by material intended to result in
the sale of Class A shares of the Fund or other funds or other investments; (ii)
the costs of preparing, printing and mailing all prospectuses; (iii) the costs
of preparing, printing and mailing any proxy statements and proxies,
irrespective of whether such proxy statements include any item relating to, or
directed toward, the sale of the Fund's Class A shares; (iv) all legal and
accounting fees relating to the preparation of any such reports, prospectuses,
proxies and proxy statements; (v) all fees and expenses relating to the
qualification of the Fund and/or its Class A shares under the securities or
"Blue Sky" laws of any jurisdiction; (vi) all fees under the 1940 Act and the
Securities Act of 1933, including fees in connection with any application for
exemption relating to or directed toward the sale of the Fund's Class A shares;
(vii) all fees and assessments of the Investment Company Institute or any
successor organization, irrespective of whether some of its activities are
designed to provide sales assistance; (viii) all costs of processing Class A
share transactions, preparing and mailing confirmations of Class A shares sold
or redeemed or share certificates, and reports of Class A share balances; and
(ix) all costs of responding to telephone or mail inquiries of investors or
prospective investors.
11. It is recognized that the costs of distributing a Fund's Class A
shares may exceed the sum of the sales charges collected on sales of Class A
shares of such Fund and reimbursements made by that Fund pursuant to paragraph 1
of this Plan. In view of this, if and to the extent that any investment
management and administration fees paid by a Fund might be considered as
indirectly financing any activity which is primarily intended to result in the
sale of that Fund's Class A shares, the payment by the Fund of such fees hereby
is authorized under this Plan.
12. While this Plan is in effect, the selection and nomination of
Trustees who are not interested persons of the Trust shall be committed to the
discretion of the Trustees who are not interested persons of the Trust.
13. As used in this Plan, the terms "majority of the outstanding voting
Class A shares" shall have the same meaning as the phrase "majority of the
outstanding voting securities" has in the 1940 Act, and the phrase "interested
person" shall have the same meaning as that term has in the 1940 Act.
14. The Trust shall preserve copies of this Plan (including any
amendments thereto) and any related agreements and all reports made pursuant to
4
<PAGE>
paragraph 6 thereof for a period of not less than six years from the date of
this Plan, the first two years in an easily accessible place.
IN WITNESS WHEREOF, the Trust has executed this Plan of Distribution on
___________________, 1997.
Attest: GT GLOBAL SERIES TRUST
_________________________ By: _______________________________
Phillip S. Gillespie William J. Guilfoyle
Assistant Secretary President
SEAL:
PLAN OF DISTRIBUTION OF
GT GLOBAL SERIES TRUST -- CLASS B SHARES
WHEREAS, GT Global Series Trust ("Trust") is registered under the
Investment Company Act of 1940, as amended ("1940 Act"), as an open-end
management investment company, and offers for public sale distinct series of
shares of beneficial interest; and
WHEREAS, the Trust's Board of Trustees ("Board") has established GT
Global New Dimension Fund ("New Dimension Fund") as the initial series of shares
of beneficial interest in the Trust; and
WHEREAS, the Trust hereafter may establish additional series of shares
of beneficial interest (any such additional series together with the New
Dimension Fund collectively are referred to herein as the "Funds," and singly
may be referred to as a "Fund"); and
WHEREAS, the Trust's Board of Trustees ("Board") has established Class
A, Class B, and an Advisor Class of shares of each Fund; and
WHEREAS, the Trust desires to adopt a Plan pursuant to Rule 12b-1 under
the 1940 Act with respect to the Class B shares of each such Fund; and
WHEREAS, the Trust has entered into a Distribution Contract
("Distribution Contract") with GT Global, Inc. ("GT Global" or "Distributor")
pursuant to which GT Global serves as Distributor of the Class B shares of each
such Fund and pursuant to which GT Global is entitled to receive payments of
contingent deferred sales charges imposed with respect to certain redemptions of
Class B shares;
NOW, THEREFORE, the Trust hereby adopts this Plan with respect to the
Class B shares of each Fund in accordance with Rule 12b-1 under the 1940 Act.
1. A. Each Fund is authorized to pay GT Global for its expenditures
incurred in providing services as Distributor of the Fund's
Class B shares at the annualized rate of up to 0.75% of the
average daily net assets of the Fund's Class B shares.
<PAGE>
B. Each Fund is authorized to pay GT Global a service fee for
the Fund's Class B shares at the annualized rate of up to
0.25% of the average daily net assets of the Fund's Class B
shares.
C. If the Trust establishes additional Funds in the future and
the applicability of the Plan with respect to such Funds is
approved in the manner set forth in paragraph 4 of this Plan,
this Plan may be amended to provide that each such additional
Fund will reimburse GT Global at rates to be established by
the Board.
D. Reimbursement amounts under this Plan shall be calculated and
accrued daily by each Fund and paid monthly to GT Global or
at such other intervals as the Trust and GT Global shall
agree.
E. Each Fund shall accrue and carry forward amounts reimbursable
that are not paid because they exceed the annualized rate of
0.75%, in the case of distribution fees, and 0.25%, in the
case of service fees, of the average daily net assets of such
Fund's Class B shares and shall pay such amounts within the
0.75% and 0.25% per annum payment rate limitations as long as
this Plan, including any amendments hereto, is in effect.
2. A Fund may reimburse GT Global at a lesser rate than the fee
specified in paragraph 1 of this Plan, as agreed upon by the Board and GT Global
and as approved in the manner specified in paragraph 4 of this Plan. The terms
of paragraph 1.E. of this Plan shall apply to such lesser agreed upon rate, if
any. Although a Fund is not liable for unreimbursed distribution expenses, in
the event of termination or discontinuation of the Plan, the Board may consider
the appropriateness of having the Class B shares of the Fund reimburse GT Global
for the then outstanding carry forward amounts plus interest thereon to the
extent permitted by applicable law from the effective date of the Plan.
3. As Distributor of the Funds' Class B shares, GT Global may spend
such amounts as it deems appropriate on any activities or expenses primarily
intended to result in the sale of each Fund's Class B shares and the servicing
and maintenance of shareholder accounts, including, but not limited to, payment
of sales commissions, ongoing commissions and other payments to brokers,
dealers, financial institutions or others who sell Class B shares and/or service
2
<PAGE>
Class B shareholder accounts; compensation to employees of GT Global;
compensation to and expenses, including overhead and telephone expenses, of GT
Global; the printing of prospectuses, statements of additional information and
reports for other than existing Class B shareholders; and the preparation,
printing and distribution of sales literature and advertising materials. In
addition, GT Global may be entitled, to the extent permitted by applicable law,
to interest on unreimbursed amounts carried forward pursuant to paragraph 1.E.
hereunder at a rate equal to that paid by GT Global for bank borrowings.
Proceeds from contingent deferred sales charges received by GT Global (in
connection with the redemption of Fund shares) will be applied to reduce the
costs incurred as described above.
4. This Plan shall take effect with respect to the Class B shares of
any Fund, together with any related agreements, immediately after it has been
approved, by votes of a majority of both (a) the Board and (b) those Trustees of
the Trust who are not interested persons of the Trust and have no direct or
indirect financial interest in the operation of this Plan or any agreements
related thereto ("Independent Trustees"), cast in person at a meeting (or
meetings) called for the purpose of voting on such approval; and until the
Trustees who approve the Plan with respect to such Fund's Class B shares have
reached the conclusion required by Rule 12b-1(e) under the 1940 Act.
5. The Plan shall continue in effect for so long as such continuance is
specifically approved at least annually in the manner provided in paragraph 4.
6. GT Global shall provide to the Board and the Independent Trustees
shall review and approve, in exercise of their fiduciary duties, at least
quarterly, a written report of the amounts expended with respect to the Class B
shares of each Fund by GT Global under this Plan and the Distribution Contract
and the purposes for which such expenditures were made.
7. For purposes of this Plan, "distribution fees" shall mean any fees
for activities in connection with GT Global's performance of its obligations
under the Plan or the Distribution Contract that are not deemed "service fees."
"Service fees" shall mean fees for activities covered by the definition of
"service fee" contained in Conduct Rule 2830 of the National Association of
Securities Dealers, Inc.
8. This Plan may be terminated at any time with respect to the Class B
shares of any Fund by vote of the Board, by vote of a majority of the
3
<PAGE>
Independent Trustees, or by vote of a majority of the outstanding voting
securities of the Class B shares of that Fund. Termination of the Plan with
respect to the Class B shares of one Fund shall not affect the continued
effectiveness of this Plan with respect to the Class B shares of any other Fund.
9. This Plan may not be amended to increase materially the amount of
reimbursement a Fund is authorized to make under paragraph 1 hereof unless such
amendment is approved in the manner provided for initial approval in paragraph 4
hereof, and such amendment is further approved by a majority of the outstanding
voting securities of the Fund, and no other material amendment to the Plan shall
be made unless approved in the manner provided for approval and annual renewal
in paragraph 5 hereof.
10. If and to the extent that any of the expenses of the Class B shares
of a Fund listed below in this paragraph are considered to be "primarily
intended to result in the sale of shares" issued by the Fund within the meaning
of Rule 12b-1 under the 1940 Act, the Fund's payment of such expenses is
authorized without limit under this Plan, without regard to reimbursements made
by the Fund pursuant to paragraph 1 of this Plan or the requirements for
approval of any increase in such fees under paragraph 9 of this Plan. These
expenses include: (i) the costs of preparing, printing and mailing all required
reports and notices to Class B shareholders, irrespective of whether such
reports or notices contain or are accompanied by material intended to result in
the sale of Class B shares of the Fund or other funds or other investments; (ii)
the costs of preparing, printing and mailing all prospectuses; (iii) the costs
of preparing, printing and mailing any proxy statements and proxies,
irrespective of whether such proxy statements include any item relating to, or
directed toward, the sale of the Fund's Class B shares; (iv) all legal and
accounting fees relating to the preparation of any such reports, prospectuses,
proxies and proxy statements; (v) all fees and expenses relating to the
qualification of the Fund and/or its Class B shares under the securities or
"Blue Sky" laws of any jurisdiction; (vi) all fees under the 1940 Act and the
Securities Act of 1933, including fees in connection with any application for
exemption relating to or directed toward the sale of the Fund's Class B shares;
(vii) all fees and assessments of the Investment Company Institute or any
successor organization, irrespective of whether some of its activities are
designed to provide sales assistance; (viii) all costs of processing Class B
share transactions, preparing and mailing confirmations of Class B shares sold
or redeemed or share certificates, and reports of Class B share balances; and
4
<PAGE>
(ix) all costs of responding to telephone or mail inquiries of investors or
prospective investors.
11. It is recognized that the costs of distributing a Fund's Class B
shares may exceed the sum of the contingent deferred sales charges collected on
sales of Class B shares of such Fund and reimbursements made by that Fund
pursuant to paragraph 1 of this Plan. In view of this, if and to the extent that
any investment management and administration fees paid by a Fund might be
considered as indirectly financing any activity which is primarily intended to
result in the sale of that Fund's Class B shares, the payment by that Fund of
such fees hereby is authorized under this Plan.
12. While this Plan is in effect, the selection and nomination of
Trustees who are not interested persons of the Trust shall be committed to the
discretion of the Trustees who are not interested persons of the Trust.
13. As used in this Plan, the terms "majority of the outstanding voting
Class B shares" shall have the same meaning as the phrase "majority of the
outstanding voting securities" has in the 1940 Act, and the phrase "interested
person" shall have the same meaning as that phrase has in the 1940 Act.
14. The Trust shall preserve copies of this Plan (including any
amendments thereto) and any related agreements and all reports made pursuant to
paragraph 6 thereof for a period of not less than six years from the date of
this Plan, the first two years in an easily accessible place.
IN WITNESS WHEREOF, the Trust has executed this Plan of Distribution on
_______________, 1997.
Attest: GT GLOBAL SERIES TRUST
_________________________ By: _______________________________
Phillip S. Gillespie William J. Guilfoyle
Assistant Secretary President
SEAL:
GT GLOBAL SERIES TRUST
MULTIPLE CLASS PLAN PURSUANT TO RULE 18F-3
GT Global Series Trust ("Trust") hereby adopts this Multiple Class Plan
pursuant to Rule 18f-3 under the Investment Company Act of 1940, as amended (the
"1940 Act") on behalf of its current operating series, GT Global New Dimension
Fund and any series that may commence operations in the future (referred to
hereinafter as the "Fund").
A. GENERAL DESCRIPTION OF CLASSES THAT ARE OFFERED
-----------------------------------------------
1. CLASS A SHARES. Class A shares of the Fund are sold to the general
public subject to an initial sales charge of 4.75% of the public offering price.
The initial sales charge is waived for certain eligible purchasers and reduced
or waived for certain large volume purchases.
Class A shares of the Fund may pay a service fee at the annualized rate
of up to 0.25% of the average daily net assets for the Fund's Class A shares.
Class A shares of the Fund may pay a distribution fee at the annualized rate of
up to 0.50% of the average daily net assets for the Fund's Class A shares, less
any amounts paid by the Fund as the aforementioned service fee. Such fees are
paid pursuant to a plan of distribution adopted in accordance with Rule 12b-1
under the 1940 Act.
Class A shares of the Fund are subject to a contingent deferred sales
charge ("CDSC") on redemptions of shares: (i) purchased without an initial sales
charge due to a sales charge waiver for purchases of $500,000 or more, and (ii)
redeemed within one year after the date of purchase. Purchases of Class A shares
of two or more GT Global Mutual Funds, which are open-end management investment
companies advised and/or administered by Chancellor LGT Asset Management, Inc.,
(other than GT Global Dollar Fund) may be combined for this purpose. The Class A
CDSC is equal to 1% of the lower of (i) the original purchase price, or (ii) the
net asset value of the shares at the time of redemption.
Class A shares that are redeemed will not be subject to a CDSC to the
extent that the value of such shares represents: (i) reinvestment of dividends
or other distributions, or (ii) Class A shares redeemed one year or more after
their purchase. Class A shares purchased in amounts of at least $500,000 without
a sales charge may be exchanged for Class A shares of another GT Global Mutual
Fund (other than GT Global Dollar Fund) without the imposition of a CDSC,
although the CDSC will apply to the redemption of the shares acquired through an
exchange.
2. CLASS B SHARES. Class B shares of the Fund are sold to the general
public without imposition of an initial sales charge; however, a CDSC is imposed
on certain redemptions of Class B shares. The maximum CDSC for Class B shares is
equal to 5% of the lesser of the original purchase price or the net asset value
of the shares at the time of redemption. The CDSC is waived for certain
exchanges and redemptions.
<PAGE>
GT Global Series Trust
Multiple Class Plan
Page 2
Class B shares that are redeemed will not be subject to a CDSC to the
extent that the value of such shares represents: (i) reinvestment of dividends
or other distributions, or (ii) shares redeemed more than six years after their
purchase.
Class B shares are subject to a service fee at the annualized rate of
up to 0.25% of the average daily net assets of the Class B shares of the Fund
and a distribution fee at the annualized rate of up to 0.75% of the average
daily net assets of the Fund's Class B shares. Such fees are paid pursuant to a
plan of distribution adopted in accordance with Rule 12b-1 under the 1940 Act.
3. ADVISOR CLASS SHARES. Advisor Class shares are sold without
imposition of an initial sales charge or CDSC and are not subject to any service
or distribution fees.
Advisor Class shares of the Fund are available for purchase only by:
(a) trustees or other fiduciaries purchasing shares for employee benefit plans
which are sponsored by organizations which have at least 1,000 employees; (b)
any account with assets of at least $10,000 if (i) a financial planner, trust
company, bank trust department or registered investment adviser has investment
discretion over such account, and (ii) the account holder pays such person as
compensation for its advice and other services an annual fee of at least 0.50%
on the assets in the account; (c) any account with assets of at least $10,000 if
(i) such account is established under a "wrap fee" program, and (ii) the account
holder pays the sponsor of such program an annual fee of at least 0.50% on the
assets in the account; (d) accounts advised by one of the companies composing or
affiliated with Liechtenstein Global Trust; and (e) any of the companies
composing or affiliated with Liechtenstein Global Trust.
B. EXPENSE ALLOCATIONS OF EACH CLASS
---------------------------------
Certain expenses may be attributable to a particular Class of shares
("Class Expenses"). Class Expenses are charged directly to the net assets of the
particular Class and, thus, are borne on a pro rata basis by the outstanding
shares of that Class.
In addition to the service and distribution fees described above, each
Class also could pay a different amount of the following other expenses:
(1) transfer agent fees identified as being attributable
to a specific Class of shares;
<PAGE>
GT Global Series Trust
Multiple Class Plan
Page 3
(2) stationary, printing, postage and delivery expenses
related to preparing and distributing materials such
as shareholder reports, prospectuses and proxy
statements to current shareholders of a specific
Class of shares;
(3) Blue Sky registration fees incurred by a specific
Class of shares;
(4) SEC registration fees incurred by a specific Class of
shares;
(5) expenses of administrative personnel and services as
required to support the shareholders of a specific
Class of shares;
(6) Trustees' fees or expenses incurred as a result of
issues relating to a specific Class of shares;
(7) accounting expenses relating solely to a specific
Class of shares;
(8) auditors' fees, litigation expenses and legal fees
and expenses relating to a specific Class of shares;
and
(9) expenses incurred in connection with shareholders
meetings as a result of issues relating to a specific
Class of shares.
C. EXCHANGE PRIVILEGES
-------------------
Class A shares of any Fund may be exchanged only for Class A shares of
other GT Global Mutual Funds, as listed in the Fund's Prospectus. Class B shares
of any Fund may be exchanged only for Class B shares of other GT Global Mutual
Funds, as listed in the Fund's Prospectus. Advisor Class shares of any Fund may
be exchanged only for Advisor Class shares of other GT Global Mutual Funds, as
listed in the Fund's Prospectus.
This exchange privilege is available only in those jurisdictions where
the sale of GT Global Mutual Fund shares to be acquired may be legally made. The
terms of the exchange privileges may be modified at any time, on sixty days'
prior written notice to shareholders.
<PAGE>
GT Global Series Trust
Multiple Class Plan
Page 4
D. ADDITIONAL INFORMATION
----------------------
The prospectus for the Fund contains additional information about the
Classes and the Fund's multiple class structure. This Multiple Class Plan is
subject to the terms of the then current prospectus for the applicable Classes;
provided, however, that none of the terms set forth in any such prospectus shall
be inconsistent with the terms of the Classes contained in this Plan.
E. DATE OF EFFECTIVENESS
--------------------
This Multiple Class Plan will become effective on August 13, 1997.
Before any material amendment of this Multiple Class Plan, a majority of the
Trustees of the Trust, and a majority of the Trustees who are not interested
persons of the Trust, shall find that the plan as proposed to be adopted or
amended, including the expense allocation, is in the best interests of each
class individually and the Trust as a whole.
