<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 4, 1998
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/
POST-EFFECTIVE AMENDMENT NO. 2
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
AMENDMENT NO. 3
------------------------
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
------------------------
MICHAEL A. SILVER, 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
(202) 778-9000
------------------------
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE:
/ / IMMEDIATELY UPON FILING PURSUANT TO PARAGRAPH (B) OF RULE 485.
/ / ON PURSUANT TO PARAGRAPH (B) OF RULE 485.
/X/ 60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (A)(1) OF RULE 485 OR SUCH
OTHER DATE AS IT MAY BE DECLARED EFFECTIVE BY THE SECURITIES AND
EXCHANGE COMMISSION.
/ / ON , 1998 PURSUANT TO PARAGRAPH (A)(1) OF RULE 485.
/ / 75 DAYS AFTER FILING PURSUANT TO PARAGRAPH (A)(2) OF RULE 485.
/ / ON PURSUANT TO PARAGRAPH (A)(2) OF RULE 485.
/ / THIS POST-EFFECTIVE AMENDMENT DESIGNATES A NEW EFFECTIVE DATE FOR A
PREVIOUSLY FILED POST-EFFECTIVE AMENDMENT.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL SERIES TRUST
CONTENTS OF REGISTRATION STATEMENT
THIS REGISTRATION STATEMENT CONSISTS OF THE FOLLOWING PAPERS AND DOCUMENTS:
<TABLE>
<S> <C> <C>
Cover Sheet
Contents of Registration Statement
Cross Reference Sheet
Part A -- Supplements to Prospectuses
Prospectuses for GT Global New Dimension Fund dated January 1, 1998 incorporated by
reference to Post-Effective Amendment No. 1 to Registrant's Registration Statement on Form
N-1A filed October 30, 1997, File Nos. 333-30551, 811-7787, EDGAR Accession No.
0001047469-97-002174.
Part B -- Statements of Additional Information
Statements of Additional Information for GT Global New Dimension Fund dated January 1, 1998,
as revised March 3, 1998.
Part C -- Other Information
Signature Pages
Exhibits
</TABLE>
<PAGE>
GT GLOBAL SERIES TRUST
FORM N-1A CROSS-REFERENCE SHEET
PROSPECTUS -- CLASS A, CLASS B AND CLASS C
<TABLE>
<CAPTION>
ITEM NO. OF
PART A OF FORM N-1A PROSPECTUS CAPTION
- ------------------------------------------- ---------------------------------------------------------------
<S> <C> <C>
1. Cover Page...................... Cover Page
2. Synopsis........................ Prospectus Summary
3. Condensed Financial
Information..................... Prospectus Supplement; 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 Fund
Performance..................... Not Applicable
6. Capital Stock and Other
Securities...................... Dividends, Other Distributions and Federal Income Taxation;
Other Information
7. Purchase of Securities Being
Offered......................... How to Invest; How to Make 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
<CAPTION>
PROSPECTUS -- ADVISOR CLASS
ITEM NO. OF
PART A OF FORM N-1A PROSPECTUS CAPTION
- ------------------------------------------- ---------------------------------------------------------------
<S> <C> <C>
1. Cover Page...................... Cover Page
2. Synopsis........................ Prospectus Summary
3. Condensed Financial
Information..................... Prospectus Supplement; 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 Fund
Performance..................... Not Applicable
6. Capital Stock and Other
Securities...................... Dividends, Other Distributions and Federal Income Taxation;
Other Information
7. Purchase of Securities Being
Offered......................... How to Invest; How to Make 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
</TABLE>
<PAGE>
GT GLOBAL SERIES TRUST
FORM N-1A CROSS-REFERENCE SHEET
<TABLE>
<CAPTION>
STATEMENT OF ADDITIONAL INFORMATION -- CLASS A, CLASS B AND CLASS C
ITEM NO. OF
PART B OF FORM N-1A STATEMENT OF ADDITIONAL INFORMATION CAPTION
- ------------------------------------------- ---------------------------------------------------------------
<S> <C> <C>
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
Holders of Securities........... Trustees and Executive Officers; Management
17. Brokerage Allocation and Other
Practices....................... Execution of Portfolio Transactions
18. Capital Stock and Other
Securities...................... Not Applicable
19. Purchase, Redemption and Pricing
of Securities Being Offered..... Valuation of Fund Shares; Information Relating to Sales and
Redemptions
20. Tax Status...................... Taxes
21. Underwriters.................... Management
22. Calculation of Performance
Data............................ Investment Results
23. Financial Statements............ Financial Statements
</TABLE>
<PAGE>
GT GLOBAL SERIES TRUST
FORM N-1A CROSS-REFERENCE SHEET
<TABLE>
<CAPTION>
STATEMENT OF ADDITIONAL INFORMATION -- ADVISOR CLASS
<S> <C> <C>
ITEM NO. OF
PART B OF FORM N-1A STATEMENT OF ADDITIONAL INFORMATION 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 Holders of
Securities................ Trustees and Executive Officers; Management
16. Investment Advisory and
Other Services............ Management; Additional Information
17. Brokerage Allocation and
Other Practices........... Execution of Portfolio Transactions
18. Capital Stock and Other
Securities................ Not Applicable
19. Purchase, Redemption, and
Pricing of Securities
Being Offered............. Valuation of Fund Shares; Information Relating to
Sales and Redemptions
20. Tax Status................ Taxes
21. Underwriters.............. Management
22. Calculation of Performance
Data...................... Investment Results
23. Financial Statements...... Financial Statements
</TABLE>
PART C -- OTHER INFORMATION
Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C of this Registration Statement.
<PAGE>
PART A
Prospectuses for GT Global New Dimension Fund dated January 1, 1998
incorporated by reference to Post-Effective Amendment No. 1 to Registrant's
Registration Statement on Form N-1A filed October 30, 1997, File Nos. 333-30551,
811-7787, EDGAR Accession No. 0001047469-97-002174.
<PAGE>
GT GLOBAL NEW DIMENSION FUND
SUPPLEMENT TO THE PROSPECTUS DATED JANUARY 1, 1998
- --------------------------------------------------------------------------------
THE FOLLOWING SUPPLEMENTS THE DISCLOSURE FOR GT GLOBAL NEW DIMENSION FUND (THE
"FUND") AND IS TO BE INSERTED FOLLOWING THE SECTION ENTITLED "PROSPECTUS
SUMMARY:"
FINANCIAL HIGHLIGHTS
The table below provides condensed financial information concerning income and
capital changes for one Class A and Class B share of the Fund for the period
shown. This information is supplemented by the financial statements and
accompanying notes appearing in the Statement of Additional Information. The
financial statements and notes, for the period September 15, 1997 (commencement
of operations) to December 31, 1997, have been audited by Coopers & Lybrand
L.L.P., independent accountants, whose report thereon also is included in the
Statement of Additional Information. Information is not provided with respect to
Class C shares because the Fund only began offering Class C shares on January 1,
1998.
<TABLE>
<CAPTION>
SEPTEMBER 15, 1997
(COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1997
---------------------------------
CLASS A (d) CLASS B (d)
------------ ------------
<S> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 11.43 $ 11.43
------------ ------------
Income from investment operations:
Net investment income (loss).......... (0.01) (0.02)
Net realized and unrealized loss on
investments.......................... (0.31) (0.32)
------------ ------------
Net decrease from investment
operations......................... (0.32) (0.34)
------------ ------------
Distributions to shareholders:
In excess of net investment income.... (0.48) (0.47)
------------ ------------
Total distributions................. (0.48) (0.47)
------------ ------------
Net asset value, end of period.......... $ 10.63 $ 10.62
------------ ------------
------------ ------------
Total investment return (c)............. (2.68)%(b) (2.83)%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 15,145 $ 19,184
Ratio of net investment income (loss) to
average net assets...................... (0.35)%(a) (0.85)%(a)
Ratio of expenses to average net
assets.................................. 0.50%(a) 1.00%(a)
Portfolio turnover rate+................ 1%(b) 1%(b)
</TABLE>
- --------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average shares
outstanding during the period.
+ Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
[LOGO]
<PAGE>
THE FOLLOWING SUPPLEMENTS THE DISCUSSION UNDER "MANAGEMENT" WITH RESPECT TO GT
GLOBAL SERIES TRUST (THE "COMPANY"):
On January 30, 1998, Liechtenstein Global Trust ("LGT"), the indirect parent
organization of Chancellor LGT Asset Management, Inc. (the "Manager"), entered
into an agreement with AMVESCAP PLC ("AMVESCAP") pursuant to which AMVESCAP will
acquire LGT's Asset Management Division, which includes the Manager. AMVESCAP is
a holding company formed in 1997 by the merger of INVESCO PLC and A I M
Management Group Inc. Consummation of the transaction is subject to a number of
contingencies, including regulatory approvals. Because the transaction would
constitute an assignment of the Company's management agreement under the
Investment Company Act of 1940 (and, therefore, a termination of such
agreement), it is anticipated that the approval of the Company's Board of
Trustees and the Company's shareholders of a new management arrangement will be
sought. The Manager anticipates that the new management arrangement will be
presented for shareholder approval, and anticipates that the transaction will
close, on or about May 31, 1998.
DIMST803M March 3, 1998
<PAGE>
GT GLOBAL NEW DIMENSION FUND
ADVISOR CLASS PROSPECTUS
SUPPLEMENT TO THE PROSPECTUS DATED JANUARY 1, 1998
- --------------------------------------------------------------------------------
THE FOLLOWING SUPPLEMENTS THE DISCLOSURE FOR GT GLOBAL NEW DIMENSION FUND (THE
"FUND") AND IS TO BE INSERTED FOLLOWING THE SECTION ENTITLED "PROSPECTUS
SUMMARY:"
FINANCIAL HIGHLIGHTS
The table below provides condensed financial information concerning income and
capital changes for one Advisor Class share of the Fund for the period shown.
This information is supplemented by the financial statements and accompanying
notes appearing in the Statement of Additional Information. The financial
statements and notes, for the period September 15, 1997 (commencement of
operations) to December 31, 1997, have been audited by Coopers & Lybrand L.L.P.,
independent accountants, whose report thereon also is included in the Statement
of Additional Information.
<TABLE>
<CAPTION>
SEPTEMBER 15, 1997
(COMMENCEMENT OF
OPERATIONS) TO
DECEMBER 31, 1997
-------------------
ADVISOR CLASS (C)
-------------------
<S> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 11.43
-------
Income from investment operations:
Net investment income................. 0.01
Net realized and unrealized loss on
investments.......................... (0.31)
-------
Net decrease from investment
operations......................... (0.30)
-------
Distributions to shareholders:
In excess of net investment income.... (0.49)
-------
Total distributions................. (0.49)
-------
Net asset value, end of period.......... $ 10.64
-------
-------
Total investment return................. (2.51)%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 1,241
Ratio of net investment income to
average net assets...................... 0.15 %(a)
Ratio of expenses to average net
assets.................................. 0.00 %(a)
Portfolio turnover rate+................ 1 %(b)
</TABLE>
- --------------
(a) Annualized
(b) Not annualized
(c) These selected per share data were calculated based upon average shares
outstanding during the period.
+ Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
[LOGO]
<PAGE>
THE FOLLOWING SUPPLEMENTS THE DISCUSSION UNDER "MANAGEMENT" WITH RESPECT TO GT
GLOBAL SERIES TRUST (THE "COMPANY"):
On January 30, 1998, Liechtenstein Global Trust ("LGT"), the indirect parent
organization of Chancellor LGT Asset Management, Inc. (the "Manager"), entered
into an agreement with AMVESCAP PLC ("AMVESCAP") pursuant to which AMVESCAP will
acquire LGT's Asset Management Division, which includes the Manager. AMVESCAP is
a holding company formed in 1997 by the merger of INVESCO PLC and A I M
Management Group Inc. Consummation of the transaction is subject to a number of
contingencies, including regulatory approvals. Because the transaction would
constitute an assignment of the Company's management agreement under the
Investment Company Act of 1940 (and, therefore, a termination of such
agreement), it is anticipated that the approval of the Company's Board of
Trustees and the Company's shareholders of a new management arrangement will be
sought. The Manager anticipates that the new management arrangement will be
presented for shareholder approval, and anticipates that the transaction will
close, on or about May 31, 1998.
DIMSX803M March 3, 1998
<PAGE>
PART B
<PAGE>
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
January 1, 1998, as revised March 3, 1998
- --------------------------------------------------------------------------------
This Statement of Additional Information relates to Class A, Class B and Class C
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 substantially all of its assets 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").
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
January 1, 1998, 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.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Investment Objective and Policies........................................................................................ 2
Options, Futures and Currency Strategies................................................................................. 6
Risk Factors of the Underlying Theme Portfolios.......................................................................... 15
Investment Limitations................................................................................................... 21
Execution of Portfolio Transactions...................................................................................... 26
Trustees and Executive Officers.......................................................................................... 28
Management............................................................................................................... 30
Valuation of Fund Shares................................................................................................. 31
Information Relating to Sales and Redemptions............................................................................ 31
Taxes.................................................................................................................... 35
Additional Information................................................................................................... 36
Investment Results....................................................................................................... 37
Description of Debt Ratings.............................................................................................. 46
Financial Statements..................................................................................................... 48
</TABLE>
[LOGO]
Statement of Additional Information Page 1
<PAGE>
GT GLOBAL NEW DIMENSION FUND
INVESTMENT OBJECTIVE AND
POLICIES
- --------------------------------------------------------------------------------
INVESTMENT POLICIES OF THE FUND
The following supplements the information contained in the Prospectus concerning
the investment policies of the Fund.
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.
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 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 invests 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.
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."
Statement of Additional Information Page 2
<PAGE>
GT GLOBAL NEW DIMENSION FUND
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
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,
Statement of Additional Information Page 3
<PAGE>
GT GLOBAL NEW DIMENSION FUND
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
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 loan
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 within
the stated settlement period. 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
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.
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REPURCHASE AGREEMENTS. A repurchase agreement is a transaction in which an
Underlying Theme Portfolio 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. 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 a "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,
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
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. If 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 securities to another party, such as a
bank or broker/dealer, in return for cash, and agrees to repurchase the
securities 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) may
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
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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
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.
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OPTIONS, FUTURES AND CURRENCY
STRATEGIES
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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 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
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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, an 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
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.
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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.
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. 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.
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.
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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 to avoid realizing losses that would result in
a reduction of its 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 the 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
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 of the Securities and Exchange Commission ("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
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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.
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
limitation on the ability of index call writers to cover their risk exposure by
holding securities positions.
If an Underlying Theme Portfolio purchases 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
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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, an Underlying Theme
Portfolio 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
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 only; 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.
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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
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
Contracts 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
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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 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 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.
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-
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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 entering into a second contract, if its contra party agrees,
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
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.
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COVER
Transactions using Forward Contracts, Futures Contracts and options (other than
options purchased by an Underlying Theme Portfolio) 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
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.
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RISK FACTORS OF THE
UNDERLYING THEME PORTFOLIOS
- --------------------------------------------------------------------------------
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 Global Consumer Products and Services Portfolio, Global Infrastructure
Portfolio and Global 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
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
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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.
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-
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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.
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
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 foreign 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
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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. 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 and its corresponding Feeder Fund's net
asset value (as applicable) 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
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. See "Taxes."
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.
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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.
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 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 factors which 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.
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, the Underlying Theme Portfolios may 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
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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
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.
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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").
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 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. 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;
(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;
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(4) Engage in short sales of securities or maintain a short position,
except that the Fund may 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.
If a percentage restriction on investment or utilization of assets is adhered to
at the time of an investment or transaction, 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
Fund's policies or restrictions.
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.
Pursuant to 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 Global Consumer Products and Services
Portfolio, Global Financial Services Portfolio, Global Infrastructure Portfolio
and Global 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.
No Portfolio may:
(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;
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(6) Borrow money except from banks not in excess of 33 1/3% 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 its prospectus and Statement of Additional Information, and
reflected in the Fund's 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" fund 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.
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 33 1/3% of the value of the Portfolio's total
assets (while borrowings exceed 5% of the Global Infrastructure Portfolio's
or the Global 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.
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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;
(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
may not be changed without 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;
Statement of Additional Information Page 24
<PAGE>
GT GLOBAL NEW DIMENSION FUND
(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 its prospectus and Statement of Additional
Information, and reflected in the Fund's 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
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.
Statement of Additional Information Page 25
<PAGE>
GT GLOBAL NEW DIMENSION FUND
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
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 are in addition to, and not in lieu of, the services
required to be performed by the Manager under investment management and
administration contracts. 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.
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.
Statement of Additional Information Page 26
<PAGE>
GT GLOBAL NEW DIMENSION FUND
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.
Statement of Additional Information Page 27
<PAGE>
GT GLOBAL NEW DIMENSION FUND
TRUSTEES AND EXECUTIVE
OFFICERS
- --------------------------------------------------------------------------------
The Company's Directors and Executive Officers are listed below.
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
William J. Guilfoyle*, 39 Mr. Guilfoyle is President, GT Global, Inc. since 1995; Director, GT Global since 1991;
Trustee, Chairman of the Board and Senior Vice President and Director of Sales and Marketing, GT Global from May 1992 to
President April 1995; Vice President and Director of Marketing, GT Global from 1987 to 1992;
50 California Street Director, Liechtenstein Global Trust AG (holding company of the various international LGT
San Francisco, CA 94111 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 Investment Company Act of 1940, as amended (the "1940
Act"), that is managed or administered by Chancellor LGT.
C. Derek Anderson, 56 Mr. Anderson is President, Plantagenet Capital Management, LLC (an investment
Trustee partnership); Chief Executive Officer, Plantagenet Holdings, Ltd. (an investment banking
220 Sansome Street firm); Director, Anderson Capital Management, Inc. since 1988; Director, PremiumWear, Inc.
Suite 400 (formerly Munsingwear, Inc.) (a casual apparel company) and Director, "R" Homes, Inc. and
San Francisco, CA 94104 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 Mr. Bayley is a partner of the law firm of Baker & McKenzie, and serves as a Director and
Trustee Chairman of C.D. Stimson Company (a private investment company). Mr. Bayley is also a
Two Embarcadero Center director or trustee of each of the other investment companies registered under the 1940
Suite 2400 Act that is managed or administered by Chancellor LGT.
San Francisco, CA 94111
Arthur C. Patterson, 54 Mr. Patterson is Managing Partner of Accel Partners (a venture capital firm). He also
Trustee serves as a director of Viasoft and PageMart, Inc. (both public software companies), as
428 University Avenue well as several other privately held software and communications companies. Mr. Patterson
Palo Alto, CA 94301 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.
Ruth H. Quigley, 62 Miss Quigley is a private investor. From 1984 to 1986, she was President of Quigley
Trustee Friedlander & Co., Inc. (a financial advisory services firm). Miss Quigley is also a
1055 California Street director or trustee of each of the other investment companies registered under the 1940
San Francisco, CA 94108 Act that is managed or administered by Chancellor LGT.
Robert G. Wade, Jr.,* 70 Mr. Wade is Consultant to Chancellor LGT; Chairman of the Board of Chancellor Capital
Trustee Management, Inc. from January 1995 to October 1996; President, Chief Executive Officer and
1166 Avenue of the Americas Chairman of the Board of Chancellor Capital Management, Inc. from 1988 to January 1995.
New York, NY 10036 Mr. Wade 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.
</TABLE>
- --------------
* 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.
Statement of Additional Information Page 28
<PAGE>
GT GLOBAL NEW DIMENSION FUND
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
Kenneth W. Chancey, 52 Vice President -- Mutual Fund Accounting, Chancellor LGT since 1992; and Vice President,
Vice President and Putnam Fiduciary Trust Company from 1989 to 1992.
Principal Accounting Officer
50 California Street
San Francisco, CA 94111
Helge K. Lee, 51 Chief Legal and Compliance Officer -- North America, Chancellor LGT since October 1997;
Vice President Executive Vice President of the Asset Management Division of Liechtenstein Global Trust
50 California Street since October 1996; Senior Vice President, General Counsel and Secretary of Chancellor
San Francisco, CA 94111 LGT, GT Global, GT Services and G.T. Insurance from February 1996 to October 1996; Vice
President, General Counsel and Secretary of LGT Asset Management, Inc., Chancellor LGT, GT
Global, GT Services and G.T. Insurance from May 1994 to February 1996; Senior Vice
President, General Counsel and Secretary of Strong/Corneliuson Management, Inc. and
Secretary of each of the Strong Funds from October 1991 through May 1994.
</TABLE>
------------------------------
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. Investment Funds, 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 Growth Series, G.T. Global Eastern Europe Fund, G.T.
Global Variable Investment Trust, G.T. Global Variable Investment Series, Global
Investment Portfolio, Growth Portfolio, Floating Rate 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 13 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. As of December 19, 1997, the Trustees and Officers of
the Trust own less than 1% of the shares of the Fund.
Statement of Additional Information Page 29
<PAGE>
GT GLOBAL NEW DIMENSION 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.
DISTRIBUTION SERVICES RELATING TO THE FUND
The Fund's Class A, Class B and Class C 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, Class B and Class C shares of the Fund in
accordance with Rule 12b-1 under the 1940 Act (each a "Class A Plan," "Class B
Plan," and "Class C 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, Class C 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. See "Additional
Information -- Special Servicing Agreement."
Statement of Additional Information Page 30
<PAGE>
GT GLOBAL NEW DIMENSION FUND
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 Class A, Class B or Class C 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 for Fund shares, 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 Class A, Class B or
Class C 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, CLASS B AND CLASS C 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, Class B or Class C 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
Statement of Additional Information Page 31
<PAGE>
GT GLOBAL NEW DIMENSION FUND
Fund by reason of such cancellation. Investors should allow one 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.
CONVERSION OF CLASS B SHARES
Class B shares of the Fund automatically will convert to Class A shares as of
the close of business on the last business day of the month in which the seventh
anniversary of the initial issuance of such Class B shares occurs. For the
purpose of calculating the holding period required for conversion of Class B
shares, the initial issuance of Class B shares shall mean (i) the date on which
such Class B shares were issued, or (ii) for Class B shares obtained through an
exchange, or a series of exchanges, the date on which the original Class B
shares were issued. For purposes of conversion to Class A, Class B shares
purchased through the reinvestment of dividends and other distributions paid in
respect of Class B shares will be held in a separate sub-account. Each time any
Class B shares in the shareholder's regular account (other than those in the
sub-account) convert to Class A, a pro rata portion of the Class B shares in the
sub-account will also convert to Class A. The portion will be determined by the
ratio that the shareholder's Class B shares converting to Class A bears to the
shareholder's total Class B shares not acquired through dividends and other
distributions.
The availability of the conversion feature is subject to the continuing
availability of an opinion of counsel to the effect that the dividends and other
distributions paid on Class A and Class B shares will not result in
"preferential dividends" under the Internal Revenue Code and the conversion of
shares does not constitute a taxable event. If the conversion feature ceased to
be available, the Class B shares would not be converted and would continue to be
subject to the higher ongoing expenses of the Class B shares beyond the seventh
anniversary of the initial issuance of such Class B shares. The Manager has no
reason to believe that this condition for the availability of the conversion
feature will not be met.
INDIVIDUAL RETIREMENT ACCOUNTS ("IRAS") AND OTHER TAX-DEFERRED PLANS
Class A, Class B or Class C shares of the Fund may be purchased as the
underlying investment for an IRA meeting the requirements of sections 408(a),
408A or 530 of the Internal Revenue Code of 1986, as amended (the "Code"), as
well as for qualified retirement plans described in Code Section 401 and
custodial accounts complying with Code Section 403(b)(7).
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. 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. IRA
applications are available from brokers or GT Global.
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
Statement of Additional Information Page 32
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GT GLOBAL NEW DIMENSION FUND
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 plans (i.e., self-employed individual retirement plans) or Code Section
401(k) plans, but with fewer administrative requirements and therefore
potentially 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 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.
EXCHANGES
Class A and Class B 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. Exchange privileges for
Class C shares will not be available until other GT Global Mutual Funds commence
offering Class C shares. 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.
SYSTEMATIC WITHDRAWAL PLAN
Shareholders owning Class A, Class B or Class C 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.
Statement of Additional Information Page 33
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GT GLOBAL NEW DIMENSION FUND
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 the realization of 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 the 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 their 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.
Statement of Additional Information Page 34
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GT GLOBAL NEW DIMENSION FUND
TAXES
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TAXATION OF THE FUND
To continue 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; (2) 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 (3) 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. If
shares of an Underlying Theme Fund are purchased within 30 days before or after
redeeming at a loss, other shares of that Underlying Theme Fund (whether
pursuant to a rebalancing of the Fund's portfolio or otherwise) all or a part of
the loss will not be deductible by the Fund and instead will increase its basis
for the newly purchased 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, 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 total of 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
Statement of Additional Information Page 35
<PAGE>
GT GLOBAL NEW DIMENSION FUND
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, however, to a dividend paid by the Fund to a foreign
shareholder that 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 resident
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 order pursuant to a pending exemptive application
with the Securities and Exchange Commission and a private letter ruling pursuant
to a pending request therefor with the Internal Revenue Service, 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. 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 and/or the number of shareholder accounts at 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. If the Fund's costs exceed the aggregate estimated savings to the
Underlying Theme Funds, the Manager will pay the excess on behalf of the Fund.
Rule 12b-1 distribution and service fees will not be paid in accordance with the
Service Agreement. Nor will certain non-recurring and extraordinary expenses be
payable in accordance therewith 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 income and gains, its
failure to qualify as a RIC under the Code, or failure to timely file any
required tax returns or other filings. Amounts not payable pursuant to the
Service Agreement will be paid by the Fund.
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.
Statement of Additional Information Page 36
<PAGE>
GT GLOBAL NEW DIMENSION FUND
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, 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, Class B and Class C 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) 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, Class B and Class C shares of the Fund and
may be calculated according to several different formulas.
Statement of Additional Information Page 37
<PAGE>
GT GLOBAL NEW DIMENSION FUND
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 MARKETS
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., Micropal, 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 the 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
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) Ibbotson 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 47 countries, and
grouped in 38 separate industries.
Statement of Additional Information Page 38
<PAGE>
GT GLOBAL NEW DIMENSION FUND
(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, 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 Ibbotson 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.
Statement of Additional Information Page 39
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GT GLOBAL NEW DIMENSION FUND
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.
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 describe in its sales material and advertisements how an investor
may invest in GT Global Mutual Funds through various retirement plans or other
programs that offer deferral of income taxes on investment earnings and to which
an investor may make deductible contributions. Because of their advantages,
these retirement plans and programs may produce returns superior to comparable
non-retirement investments. 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. In sales material and
advertisements, the Fund may also discuss these plans and programs. See
"Information Relating to Sales and Redemptions -- Individual Retirement Accounts
("IRAs") and Other Tax-Deferred 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 financial organizations, such 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.
Statement of Additional Information Page 40
<PAGE>
GT GLOBAL NEW DIMENSION FUND
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.
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.
Statement of Additional Information Page 41
<PAGE>
GT GLOBAL NEW DIMENSION FUND
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.
GT Global describes the major stages of economic development as revolving in a
"virtuous cycle." From time to time, each Fund and GT Global may discuss the
virtuous cycle in its sales literature and advertising. This cycle operates
worldwide, forcing companies to become increasingly competitive in an
ever-expanding global marketplace. GT Global has identified the following
sequential stages within the virtuous cycle:
FALLING BORDERS AND TRADE BARRIERS: Barriers between countries diminish,
increasing the potential for world trade and promoting global competition.
CAPITAL FLOWS FROM DEVELOPED MARKETS TO EMERGING MARKETS: As barriers fall,
restrictions on the free movement of capital in and out of a country are often
reduced or removed. The flow of money from developed to developing markets gains
momentum.
INDUSTRIALIZATION OF EMERGING MARKETS: With capital flowing across borders, many
developing nations are able to quickly begin their process of industrialization.
INCREASED DEMAND FOR GLOBAL CONSUMER PRODUCTS: As people in emerging markets
experience rising standards of living due to increased industrialization, they
demand more consumer products which can help spur global trade flows.
GT Global believes that we increasingly live in a world without boundaries in
terms of trade, competition and investment opportunities. Therefore, GT Global
believes it's becoming more relevant to look at investing in terms of industrial
groupings, or themes, as an alternative to the traditional, primary focus on
regions. GT Global believes such themes make movement possible between stages in
the virtuous cycle of economic progress.
GENERAL INFORMATION ABOUT THE UNDERLYING THEME PORTFOLIOS
Each Underlying Theme Portfolio may invest worldwide across industries within
the Portfolio's area of concentration without national or regional restrictions.
The ability of each Underlying Theme Portfolio to invest worldwide may allow the
portfolio managers to select industries in different economic cycles and varying
stages of development, though there is no assurance that the managers will be
successful in this selection.
Each Underlying Theme Portfolio's area of concentration reflects the underlying
theme of the Portfolio. GT Global believes that there are certain social,
political and economic trends that may benefit one or more industries within an
Underlying Theme Portfolio's area of concentration. Of course, there is no
assurance that any of the Funds will benefit as a result.
HEALTH CARE FUND
From time to time the Fund and GT Global will quote information including data
regarding:
/ / Trading volume, number of listed companies and the largest companies of
the global health care industry
/ / Expenditures by various countries, regions and age groups on health care
/ / Population of countries, regions and age groups
/ / Natality and mortality rates in various regions, countries and age
groups
/ / Life expectancy rates in various regions, countries and age groups
/ / New health care products and products seeking approval
/ / Health maintenance organizations (HMOs) and their enrollment growth
/ / Studies from, but not limited to, the American Medical Association
showing the effectiveness of using drugs to cure illness
/ / Medical technology and devices in use or in development
/ / Regulatory environment of health care industries
/ / Consolidation in the health care industries
Statement of Additional Information Page 42
<PAGE>
GT GLOBAL NEW DIMENSION FUND
The information quoted has not been independently verified by the Fund or GT
Global and will be based on data provided that is believed to be reliable and
accurate from sources including the following:
/ / Research firms such as Mehta and Isaly which publishes PHARMACEUTICAL
PORTFOLIO RECOMMENDATIONS
/ / OECD and its publications such as the OECD HEALTH DATA, as supplemented
annually
/ / Morgan Stanley Capital International stock market industry indices such
as Health & Personal Care
/ / The World Bank and its publications such as THE WORLD DEVELOPMENT
REPORT, as supplemented annually
/ / IFC and publications such as the EMERGING STOCK MARKETS FACTBOOK
INFORMATION ABOUT THE GLOBAL HEALTH CARE INDUSTRIES
The Fund and the Manager believe that certain market and demographic factors
merit an investor's consideration when making a health care investment.
Worldwide standards of living and life expectancy have increased at a
substantial rate. Chancellor LGT Asset Management, Inc. (the "Manager"), the
investment adviser to the GT Global Mutual Funds, expects this growth, which
works to the general benefit of the global health care industry, to continue at
a roughly comparable rate in the future, although no assurances can be given in
this regard. Moreover, according to the Manager, the health care industry
historically has proven to be a relatively non-cyclical industry that continues
to provide goods and services to the public in periods of economic weakness as
well as economic strength.
The Manager believes that the anticipated increase in the world's elderly
population could increase demand for health care products and services. For
example, according to data compiled by the Manager, in Japan the number of
people age 65 and older is expected to grow over 100% by the year 2025; in
Germany, France and the U.S., the same age group should grow 40%. Similarly, the
U.S. Census Bureau predicts the number of Americans 85 and older to double in
the next 30 years. From time to time, the Fund and GT Global will quote
information including, but not limited to, international data regarding
populations, birth rates, mortality rates, life expectancy, health care
expenditures, and gross domestic product vs. life expectancy. The information
quoted has not been independently verified by the Fund or GT Global and will be
based on data that is believed to be reliable and accurate.
TELECOMMUNICATIONS FUND
From time to time the Fund and GT Global will quote information including data
regarding:
/ / Increased usage of new technologies such as, but not limited to,
cellular and wireless communications in emerging and established
countries around the world
/ / Supply and demand of telephone equipment and services
/ / Regulatory environment of telecommunications industries
/ / Revenue, price and usage of telecommunications products and services
/ / Privatization and/or deregulation of telecommunications companies
The information quoted has not been independently verified by the Fund or GT
Global and will be based on data provided that is believed to be reliable and
accurate from sources including the following:
/ / Salomon Brothers World Equity Telecommunications Index, which includes
stock market data about the telecommunications industry in established
and developing markets
/ / OECD and other publications from its subsidiaries such as the
International Telecommunications Union
/ / Morgan Stanley Capital International stock market industry indices such
as Telecommunications, Broadcasting & Publishing and Data Processing &
Reproduction
/ / International Technology Consultants, a Washington D.C. based firm which
publishes reports such as EASTERN EUROPEAN & SOVIET TELECOM REPORT and
LATIN AMERICAN TELECOM REPORT
/ / Telegeography and other publications
DEREGULATION IN THE UNITED STATES
The United States has been the bellwether for deregulation of the telephone
industry. The divestiture of the Bell System from American Telephone and
Telegraph has produced competing companies in the United States. Such U.S.
market-driven competition has, for example, led to lower costs for consumers
which in turn led to greater consumer usage and to higher industrywide revenues.
The Manager expects this scenario to continue to benefit such companies in the
U.S. and
Statement of Additional Information Page 43
<PAGE>
GT GLOBAL NEW DIMENSION FUND
similarly to be realized by the established telecommunications companies in
established economies, although no assurances can be made in this regard.
CONSUMER PRODUCTS AND SERVICES FUND
From time to time the Fund and GT Global will quote information including data
regarding:
/ / Trading volume, number of listed companies and the largest companies
located around the world in the consumer products and services
industries
/ / Expenditures, demand and consumption by various countries, regions,
income classes and age groups of consumer products and services
/ / Population of countries, regions and age groups
/ / Life expectancy rates in various regions, countries and age groups
/ / New consumer products and services in the development or manufacturing
stages
/ / Income of various regions, countries and age groups
/ / Sales and sales growth of consumer products and services companies in
their own country and abroad
/ / Sales, supply and demand of consumer products and services
/ / Parent companies and the products and services they distribute
/ / Regulatory environment of consumer products industries
The information quoted will not be independently verified by the Fund or GT
Global and will be based on data provided that is believed to be reliable and
accurate from sources including, but not limited to, the following:
/ / Consumer and trade groups
/ / Fortune magazine and other periodicals
/ / The World Bank and its publications
/ / The International Monetary Fund (IMF) and its publications
/ / IFC and its publications
/ / OECD and its publications
INFRASTRUCTURE FUND
From time to time the Fund and GT Global may quote information including:
/ / Supply and demand of telephone equipment and services, electricity,
water, transportation, construction materials and other infrastructure
related products and services
/ / Regulatory environment of infrastructure industries
/ / Quantity and costs of current and projected infrastructure projects
/ / Privatization of industries and companies
/ / New technologies, products and services used in infrastructure
industries
/ / Infrastructure Finance Magazine and other periodicals
FINANCIAL SERVICES FUND
From time to time the Fund and GT Global may quote information including:
/ / Supply and demand of financial services
/ / Regulatory environment of financial service industries
/ / Credit ratings of U.S. and non-U.S. banks
/ / New technologies, products and services used in the financial services
industries
/ / Consolidation in the financial services industries
Statement of Additional Information Page 44
<PAGE>
GT GLOBAL NEW DIMENSION FUND
NATURAL RESOURCES FUND
From time to time the Fund and GT Global may quote information including:
/ / Supply, demand and prices of natural resources
/ / Regulatory environment of natural resources
/ / Supply, demand and prices of products manufactured from natural
resources
/ / New technologies, products and services used in the natural resources
industries
Statement of Additional Information Page 45
<PAGE>
GT GLOBAL NEW DIMENSION FUND
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.
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.
Statement of Additional Information Page 46
<PAGE>
GT GLOBAL NEW DIMENSION FUND
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.
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.
Statement of Additional Information Page 47
<PAGE>
GT GLOBAL NEW DIMENSION FUND
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 Financial Statements of the Fund for the period September 15, 1997
(commencement of operations) to December 31, 1997 appear on the following pages.
Statement of Additional Information Page 48
<PAGE>
GT GLOBAL NEW DIMENSION FUND
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"), including the portfolio of investments,
as of December 31, 1997, the related statement of operations, the statement of
changes in net assets, and the financial highlights for the period from
September 15, 1997 (commencement of operations) to December 31, 1997. These
financial statements and the financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and the financial highlights based on our audits.
We conducted our audits 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 statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1997, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of GT
Global New Dimension Fund as of December 31, 1997, the results of its
operations, the changes in its net assets, and the financial highlights for the
period from September 15, 1997 (commencement of operations) to December 31,
1997, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
FEBRUARY 17, 1998
F1
<PAGE>
GT GLOBAL NEW DIMENSION FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ADVISOR
CLASS VALUE % OF NET
GT GLOBAL THEME FUNDS SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
GT Global Consumer Products and Services Fund ............. 515,881 $ 11,204,937 31.5
GT Global Financial Services Fund ......................... 426,322 7,499,007 21.1
GT Global Infrastructure Fund ............................. 388,281 5,886,334 16.6
GT Global Natural Resources Fund .......................... 240,790 4,054,907 11.4
GT Global Health Care Fund ................................ 162,161 3,278,897 9.2
GT Global Telecommunications Fund ......................... 185,442 3,089,470 8.7
------------ -----
TOTAL THEME FUND INVESTMENTS (cost $37,807,948) ............. 35,013,552 98.5
------------ -----
<CAPTION>
REPURCHASE AGREEMENT
- -------------------------------------------------------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust
Co., due January 2, 1998, for an effective yield of 5.80%,
collateralized by $445,000 U.S. Treasury Notes, 5.75% due
12/31/98 (market value of collateral is $445,417,
including accrued interest). (cost $432,000) ............ 432,000 1.2
------------ -----
TOTAL INVESTMENTS (cost $38,239,948) * ..................... 35,445,552 99.7
Other Assets and Liabilities ................................ 123,462 0.3
------------ -----
NET ASSETS .................................................. $ 35,569,014 100.0
------------ -----
------------ -----
</TABLE>
- --------------
* For Federal income tax purposes, cost is $38,277,690 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ --
Unrealized depreciation: (2,832,138)
-------------
Net unrealized depreciation: $ (2,832,138)
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F2
<PAGE>
GT GLOBAL NEW DIMENSION FUND
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments at value (cost $38,239,948) (Note 1).................................................. $35,445,552
U.S. currency..................................................................................... 113
Receivable for Fund shares sold................................................................... 929,466
Interest receivable............................................................................... 70
----------
Total assets.................................................................................... 36,375,201
----------
Liabilities:
Payable for investments purchased................................................................. 432,113
Payable for Fund shares repurchased............................................................... 352,532
Payable for service and distribution expenses (Note 2)............................................ 21,542
----------
Total liabilities............................................................................... 806,187
----------
Net assets.......................................................................................... $35,569,014
----------
----------
Class A:
Net asset value and redemption price per share ($15,144,662 DIVIDED BY 1,424,148 shares
outstanding)....................................................................................... $ 10.63
----------
----------
Maximum offering price per share (100/95.25 of $10.63) *............................................ $ 11.16
----------
----------
Class B:+
Net asset value and offering price per share ($19,183,648 DIVIDED BY 1,805,781 shares
outstanding)....................................................................................... $ 10.62
----------
----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($1,240,704 DIVIDED BY
116,587 shares outstanding)........................................................................ $ 10.64
----------
----------
Net assets consist of:
Paid in capital (Note 4).......................................................................... $37,829,140
Undistributed net investment income............................................................... 28,710
Accumulated net undistributed gain................................................................ 505,560
Net unrealized depreciation of investments........................................................ (2,794,396)
----------
Total -- representing net assets applicable to capital shares outstanding........................... $35,569,014
----------
----------
<FN>
- --------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
F3
<PAGE>
GT GLOBAL NEW DIMENSION FUND
STATEMENT OF OPERATIONS
September 15, 1997 (commencement of operations) to December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Interest income............................................................................ $ 8,216
----------
Total investment income.................................................................. 8,216
----------
Expenses:
Service and distribution expenses: (Note 2)
Class A...................................................................... $ 11,800
Class B...................................................................... 27,856
----------
Total expenses............................................................................. 39,656
----------
Net investment loss.......................................................................... (31,440)
----------
Net realized and unrealized gain (loss) on investments: (Note 1)
Net realized loss on investments............................................... (37,742)
Capital gain distributions received............................................ 2,021,395
----------
Net realized gain during the period...................................................... 1,983,653
Net change in unrealized depreciation during the period.................................. (2,794,396)
----------
Net realized and unrealized loss on investments.............................................. (810,743)
----------
Net decrease in net assets resulting from operations......................................... $ (842,183)
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F4
<PAGE>
GT GLOBAL NEW DIMENSION FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SEPTEMBER 15,
1997
(COMMENCEMENT
OF OPERATIONS)
TO
DECEMBER 31,
1997
--------------
<S> <C>
Increase in net assets
Operations:
Net investment loss..................................................................... $ (31,440)
Net realized gain on investments........................................................ 1,983,653
Net change in unrealized depreciation of investments.................................... (2,794,396)
--------------
Net decrease in net assets resulting from operations.................................. (842,183)
--------------
Class A:
Distributions to shareholders: (Note 1)
In excess of net investment income...................................................... (583,714)
Class B:
Distributions to shareholders: (Note 1)
In excess of net investment income...................................................... (781,183)
Advisor Class:
Distributions to shareholders: (Note 1)
In excess of net investment income...................................................... (53,046)
--------------
Total distributions................................................................... (1,417,943)
--------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested........................................ 41,029,628
Decrease from capital shares repurchased................................................ (3,300,488)
--------------
Net increase from capital share transactions.......................................... 37,729,140
--------------
Total increase in net assets.............................................................. 35,469,014
Net assets:
Beginning of period..................................................................... 100,000
--------------
End of period *......................................................................... $ 35,569,014
--------------
--------------
* Includes undistributed net investment income of........................................ $ 28,710
--------------
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F5
<PAGE>
GT GLOBAL NEW DIMENSION FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements and market price
data for the shares.
<TABLE>
<CAPTION>
SEPTEMBER 15, 1997
(COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1997
--------------------------------------------
ADVISOR
CLASS A (D) CLASS B (D) CLASS (D)
------------ ------------ --------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 11.43 $ 11.43 $11.43
------------ ------------ --------------
Income from investment operations:
Net investment income (loss).......... (0.01) (0.02) 0.01
Net realized and unrealized loss on
investments.......................... (0.31) (0.32) (0.31)
------------ ------------ --------------
Net decrease from investment
operations......................... (0.32) (0.34) (0.30)
------------ ------------ --------------
Distributions to shareholders:
In excess of net investment income.... (0.48) (0.47) (0.49)
------------ ------------ --------------
Total distributions................. (0.48) (0.47) (0.49)
------------ ------------ --------------
Net asset value, end of period.......... $ 10.63 $ 10.62 $10.64
------------ ------------ --------------
------------ ------------ --------------
Total investment return (c)............. (2.68)% (b) (2.83)% (b) (2.51)% (b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $15,145 $19,184 $1,241
Ratio of net investment income (loss) to
average net assets..................... (0.35)% (a) (0.85)% (a) 0.15% (a)
Ratio of expenses to average net assets
(Notes 1 & 5).......................... 0.50% (a) 1.00% (a) 0.00% (a)
Portfolio turnover rate+................ 1% (b) 1% (b) 1% (b)
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
+ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
The accompanying notes are an integral part of the financial statements.
F6
<PAGE>
GT GLOBAL NEW DIMENSION FUND
NOTES TO
FINANCIAL STATEMENTS
December 31, 1997
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
GT Global New Dimension Fund ("Fund") is a diversified series of GT Global
Series Trust (the "Trust"). The Trust is organized as a Massachusetts business
trust and is registered under the Investment Company Act of 1940, as amended
("1940 Act"), as an open-end management investment company. The Fund invests
substantially all of its assets in Advisor Class 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").
The Fund offers Class A, Class B and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses of the Fund are
allocated on a pro rata basis to each Class based on the relative net assets of
each Class to the total net assets of the Fund. Each Class of shares differs in
its respective service and distribution expenses. Beginning January 1, 1998, the
Fund will also offer Class C shares.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Funds in the preparation of the
financial statements.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Investments in the Underlying Funds are valued at the closing net asset value
per Advisor Class share of each Underlying Fund on the day of valuation.
Short-term investments with a maturity of 60 days or less are valued at
amortized cost.
(B) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, United States government securities or
other high quality debt securities of which the value, including accrued
interest, is at least equal to the amount to be repaid to the Fund under each
agreement at its maturity.
(C) TAXES
It is the policy of the Fund 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.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, and excise tax on income
and capital gains.
(D) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(E) LINE OF CREDIT
The Fund, along with certain other funds ("GT Funds") advised and/ or
administered by the Manager, has a line of credit with BankBoston and State
Street Bank & Trust Company. The arrangements with the banks allow the Fund and
the GT Funds to borrow an aggregate maximum amount of $250,000,000. The Fund is
limited to borrowing up to 33 1/3% of the value of the Fund's total assets. For
the period ended December 31, 1997, the Fund had no outstanding loan balance.
2. RELATED PARTIES
Chancellor LGT Asset Management, Inc. is the Fund's investment manager and
administrator. The Manager is also the pricing and accounting agent for the
Fund. The Manager will initially assume all costs of the Fund's operation,
except for service and distribution fees as 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. Subject to receipt
of a pending exemptive order from the Securities and Exchange Commission, the
Trust, on behalf of the Fund, will enter into a Special Servicing Agreement
("Agreement") with the Underlying Theme Funds, the Manager and GT Global
Investor Services, Inc., the transfer agent. If the Board of Trustees of the
Underlying Theme Funds makes certain findings, each Underlying Theme Fund will
pay certain nondistribution-related expenses of the Fund to the extent such
expenses are less than the estimated savings to the Underlying Theme Funds from
the operation of the Fund. The Manager and GT Global also voluntarily have
undertaken to limit the Underlying Theme Fund's expenses (exclusive of brokerage
commissions, taxes, interest, and extraordinary expenses) to the maximum annual
rate of 1.50% of the average daily net assets of the Underlying Theme Fund's
Advisor Class shares.
F7
<PAGE>
GT GLOBAL NEW DIMENSION FUND
GT Global, Inc. ("GT Global"), an affiliate of the Manager, serves as the Fund's
distributor. The Fund offers Class A, Class B and Advisor Class shares for
purchase and will offer Class C shares for purchase beginning January 1, 1998.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. GT Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the period from September 15, 1997 (commencement of
operations) to December 31, 1997, GT Global retained $6,174 of such sales
charges. Purchases of Class A shares exceeding $500,000 may be subject to a
contingent deferred sales charge ("CDSC") upon redemption, in accordance with
the Fund's current prospectus. GT Global collected no CDSCs for the period from
September 15, 1997 (commencement of operations) to December 31, 1997. GT Global
also makes ongoing shareholder servicing and trail commission payments to
dealers whose clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSCs, in accordance with the Fund's current
prospectus. For the period from September 15, 1997 (commencement of operations)
to December 31, 1997, GT Global collected CDSCs in the amount of $1,902. In
addition, GT Global makes ongoing shareholder servicing and trail commission
payments to dealers whose clients hold Class B shares.
Class C shares will not be subject to initial sales charges. However, certain
redemptions of Class C shares made within one year of purchase will be subject
to CDSCs. In addition, GT Global will make ongoing shareholder servicing and
trail commission payments to dealers whose clients hold Class C shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Trust's Board of Trustees has
adopted separate distribution plans with respect to the Fund's Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which the Fund
reimburses GT Global for a portion of its shareholder servicing and distribution
expenses. Under the 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 GT Global's 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 GT Global's 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 the Fund's 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 GT Global's 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 GT Global's 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
that Plan continues in effect. Class C shares will also be subject to a separate
distribution plan adopted by the Trust's Board of Trustees pursuant to Rule
12b-1 under the 1940 Act.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and GT Global, is the transfer agent of the Fund. For performing shareholder
servicing, reporting, and general transfer agent services, GT Services 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. GT Services is also reimbursed for
its out-of-pocket expenses for such items as postage, forms, telephone charges,
stationery and office supplies.
The Trust pays each of its Trustees who is not an employee, officer or director
of the Manager, GT Global or GT Services $5,000 per year plus $300 for each
meeting of the board or any committee thereof attended by the Trustee.
3. PURCHASES AND SALES
For the period from September 15, 1997 (commencement of operations) to December
31, 1997, purchases and sales, other than short-term investments, of the
Underlying Theme Funds by the Fund, are as follows:
<TABLE>
<CAPTION>
GT GLOBAL PURCHASES SALES
- -------------------------------------------------------------------------------- --------------- ----------
<S> <C> <C>
Consumer Products and Services Fund............................................. $ 11,777,579 $ 80,882
Telecommunications Fund......................................................... 3,462,408 23,798
Financial Services Fund......................................................... 7,690,319 53,175
Natural Resources Fund.......................................................... 4,847,276 32,530
Health Care Fund................................................................ 4,192,022 26,247
Infrastructure Fund............................................................. 6,136,745 44,025
</TABLE>
F8
<PAGE>
GT GLOBAL NEW DIMENSION FUND
4. CAPITAL SHARES
At December 31, 1997, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
SEPTEMBER 15, 1997
(COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1997
-----------------------------------
CLASS A SHARES AMOUNT
- ---------------------------------------- --------------- ------------------
<S> <C> <C>
Shares sold............................. 1,560,835 $ 17,768,084
Shares issued in connection with
reinvestment of distributions......... 54,891 563,181
--------------- ------------------
1,615,726 18,331,265
Shares repurchased...................... (194,494) (2,190,806)
--------------- ------------------
Net increase............................ 1,421,232 $ 16,140,459
--------------- ------------------
--------------- ------------------
<CAPTION>
SEPTEMBER 15, 1997
(COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1997
-----------------------------------
CLASS B SHARES AMOUNT
- ---------------------------------------- --------------- ------------------
<S> <C> <C>
Shares sold............................. 1,832,668 $ 20,681,472
Shares issued in connection with
reinvestment of distributions......... 67,039 687,825
--------------- ------------------
1,899,707 21,369,297
Shares repurchased...................... (96,841) (1,061,266)
--------------- ------------------
Net increase............................ 1,802,866 $ 20,308,031
--------------- ------------------
--------------- ------------------
<CAPTION>
SEPTEMBER 15, 1997
(COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1997
-----------------------------------
ADVISOR CLASS SHARES AMOUNT
- ---------------------------------------- --------------- ------------------
<S> <C> <C>
Shares sold............................. 113,102 $ 1,276,664
Shares issued in connection with
reinvestment of distributions......... 5,102 52,402
--------------- ------------------
118,204 1,329,066
Shares repurchased...................... (4,533) (48,416)
--------------- ------------------
Net increase............................ 113,671 $ 1,280,650
--------------- ------------------
--------------- ------------------
</TABLE>
5. SUBSEQUENT EVENT
On January 30, 1998, Liechtenstein Global Trust ("LGT") and AMVESCAP PLC
("AMVESCAP") entered into an agreement by which AMVESCAP will acquire LGT's
Asset Management Division, including Chancellor LGT Asset Management, Inc.
AMVESCAP is the holding company of the AIM and INVESCO asset management
businesses.
F9
<PAGE>
GT GLOBAL NEW DIMENSION FUND
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL NEW DIMENSION FUND
GT GLOBAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY GT GLOBAL FUND,
INCLUDING FEES, EXPENSES AND THE RISKS OF GLOBAL AND EMERGING MARKET
INVESTING AND THE RISKS OF INVESTING IN RELATED INDUSTRIES, PLEASE CONTACT
YOUR FINANCIAL ADVISER OR CALL GT GLOBAL DIRECTLY AT 1-800-824-1580.
GROWTH FUNDS
/ / GLOBALLY DIVERSIFIED FUNDS
GT GLOBAL NEW DIMENSION FUND
Captures global growth opportunities by investing directly in the six GT Global
Theme Funds
GT GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity by investing outside
the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
GT GLOBAL DEVELOPING MARKETS FUND
Invests in debt and equity securities of developing market issuers
/ / GLOBAL THEME FUNDS
GT GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL HEALTH CARE FUND
Invests in growing health care industries worldwide
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA MID CAP GROWTH FUND
Concentrates on medium-sized companies in the U.S.
GT GLOBAL AMERICA VALUE FUND
Concentrates on equity securities of large cap U.S. companies believed to be
undervalued
GT GLOBAL JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUND
GT GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government bonds from around the world
INCOME FUNDS
GT GLOBAL GOVERNMENT INCOME FUND
Earns monthly income from global government securities
GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
GT GLOBAL HIGH INCOME FUND
Invests in debt securities in emerging markets
GT GLOBAL FLOATING RATE FUND
Invests primarily in senior secured floating rate loans that have the potential
to achieve a high level of current income
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[LOGO]
NO DEALER, SALES REPRESENTATIVE OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
STATEMENT OF ADDITIONAL INFORMATION AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY GT
GLOBAL SERIES TRUST, GT GLOBAL NEW DIMENSION FUND, CHANCELLOR LGT ASSET
MANAGEMENT, INC. OR GT GLOBAL, INC. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR SOLICITATION OF ANY OFFER TO BUY ANY OF THE SECURITIES
OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER IN SUCH JURISDICTION.
DIMSA709.GT
<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
January 1, 1998, as revised March 3, 1998
- --------------------------------------------------------------------------------
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 substantially all of its assets 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").
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 January 1, 1998, 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.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Investment Objective and Policies........................................................................................ 2
Options, Futures and Currency Strategies................................................................................. 6
Risk Factors of the Underlying Theme Funds............................................................................... 15
Investment Limitations................................................................................................... 21
Execution of Portfolio Transactions...................................................................................... 26
Trustees and Executive Officers.......................................................................................... 28
Management............................................................................................................... 30
Valuation of Fund Shares................................................................................................. 30
Information Relating to Sales and Redemptions............................................................................ 30
Taxes.................................................................................................................... 32
Additional Information................................................................................................... 34
Investment Results....................................................................................................... 36
Description of Debt Ratings.............................................................................................. 44
Financial Statements..................................................................................................... 46
</TABLE>
[LOGO]
Statement of Additional Information Page 1
<PAGE>
GT GLOBAL NEW DIMENSION FUND
INVESTMENT OBJECTIVE AND
POLICIES
- --------------------------------------------------------------------------------
INVESTMENT POLICIES OF THE FUND
The following supplements the information contained in the Prospectus concerning
the investment policies of the Fund.
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.
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 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 invests all of its 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.
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."
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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
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,
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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
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 loan
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 within
the stated settlement period. 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
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 securities from a bank or recognized
securities dealer and simultaneously commits to resell the securities to the
bank or
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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. 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 a "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,
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
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. If 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 securities to another party, such as a
bank or broker/dealer, in return for cash, and agrees to repurchase the
securities 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) may
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.
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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
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.
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OPTIONS, FUTURES AND CURRENCY
STRATEGIES
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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 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.
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(4) As described below, an 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
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.
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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.
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. 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.
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.
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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 to avoid realizing losses that would result in
a reduction of its 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 the 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
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 of the Securities and Exchange Commission ("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
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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.
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
limitation on the ability of index call writers to cover their risk exposure by
holding securities positions.
If an Underlying Theme Portfolio purchases 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
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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, an Underlying Theme
Portfolio 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
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 only, 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.
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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
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
Contracts 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
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
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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 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.
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
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out a Forward Contract requiring it to purchase a specified currency by entering
into a second contract, if its contra party agrees, 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
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 purchased by an Underlying Theme Portfolio) 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.
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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
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.
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RISK FACTORS OF THE
UNDERLYING THEME FUNDS
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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 Global Consumer Products and Services Portfolio, Global Infrastructure
Portfolio and Global 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
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
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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.
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.
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,
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(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 STABILITY. 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
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 foreign 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. 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.
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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 and its corresponding Feeder Fund's net
asset value (as applicable) 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
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. See "Taxes."
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
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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.
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 factors which 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.
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, the Underlying Theme Portfolios may 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
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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
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.
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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").
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 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. 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;
(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;
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(4) Engage in short sales of securities or maintain a short position,
except that the Fund may 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.
If a percentage restriction on investment or utilization of assets is adhered to
at the time of an investment or transaction, 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
Fund's policies or restrictions.
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.
Pursuant to 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 Global Consumer Products and Services
Portfolio, Global Financial Services Portfolio, Global Infrastructure Portfolio
and Global 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.
No Portfolio may:
(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;
Statement of Additional Information Page 22
<PAGE>
GT GLOBAL NEW DIMENSION FUND
(6) Borrow money except from banks not in excess of 33 1/3% 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 its prospectus and Statement of Additional Information, and
reflected in the Fund's 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" fund 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.
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 33 1/3% of the value of the Portfolio's total
assets (while borrowings exceed 5% of the Global Infrastructure Portfolio's
or the Global 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.
Statement of Additional Information Page 23
<PAGE>
GT GLOBAL NEW DIMENSION FUND
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;
(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
may not be changed without 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;
Statement of Additional Information Page 24
<PAGE>
GT GLOBAL NEW DIMENSION FUND
(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 its prospectus and Statement of Additional
Information, and reflected in the Fund's 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
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.
Statement of Additional Information Page 25
<PAGE>
GT GLOBAL NEW DIMENSION FUND
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
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 are in addition to, and not in lieu of, the services
required to be performed by the Manager under investment management and
administration contracts. 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.
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.
Statement of Additional Information Page 26
<PAGE>
GT GLOBAL NEW DIMENSION FUND
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 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.
Statement of Additional Information Page 27
<PAGE>
GT GLOBAL NEW DIMENSION FUND
TRUSTEES AND EXECUTIVE
OFFICERS
- --------------------------------------------------------------------------------
The Company's Directors and Executive Officers are listed below.
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
William J. Guilfoyle*, 39 Mr. Guilfoyle is President, GT Global, Inc. since 1995; Director, GT Global since 1991;
Trustee, Chairman of the Board and Senior Vice President and Director of Sales and Marketing, GT Global from May 1992 to
President April 1995; Vice President and Director of Marketing, GT Global from 1987 to 1992;
50 California Street Director, Liechtenstein Global Trust AG (holding company of the various international LGT
San Francisco, CA 94111 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 Investment Company Act of 1940, as amended (the "1940
Act"), that is managed or administered by Chancellor LGT.
C. Derek Anderson, 56 Mr. Anderson is President, Plantagenet Capital Management, LLC (an investment
Trustee partnership); Chief Executive Officer, Plantagenet Holdings, Ltd. (an investment banking
220 Sansome Street firm); Director, Anderson Capital Management, Inc. since 1988; Director, PremiumWear, Inc.
Suite 400 (formerly Munsingwear, Inc.) (a casual apparel company) and Director, "R" Homes, Inc. and
San Francisco, CA 94104 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 Mr. Bayley is a partner of the law firm of Baker & McKenzie, and serves as a Director and
Trustee Chairman of C.D. Stimson Company (a private investment company). Mr. Bayley is also a
Two Embarcadero Center director or trustee of each of the other investment companies registered under the 1940
Suite 2400 Act that is managed or administered by Chancellor LGT.
San Francisco, CA 94111
Arthur C. Patterson, 54 Mr. Patterson is Managing Partner of Accel Partners (a venture capital firm). He also
Trustee serves as a director of Viasoft and PageMart, Inc. (both public software companies), as
428 University Avenue well as several other privately held software and communications companies. Mr. Patterson
Palo Alto, CA 94301 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.
Ruth H. Quigley, 62 Miss Quigley is a private investor. From 1984 to 1986, she was President of Quigley
Trustee Friedlander & Co., Inc. (a financial advisory services firm). Miss Quigley is also a
1055 California Street director or trustee of each of the other investment companies registered under the 1940
San Francisco, CA 94108 Act that is managed or administered by Chancellor LGT.
Robert G. Wade, Jr.,* 70 Mr. Wade is Consultant to Chancellor LGT; Chairman of the Board of Chancellor Capital
Trustee Management, Inc. from January 1995 to October 1996; President, Chief Executive Officer and
1166 Avenue of the Americas Chairman of the Board of Chancellor Capital Management, Inc. from 1988 to January 1995.
New York, NY 10036 Mr. Wade 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.
</TABLE>
- --------------
* 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.
Statement of Additional Information Page 28
<PAGE>
GT GLOBAL NEW DIMENSION FUND
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
Kenneth W. Chancey, 52 Vice President -- Mutual Fund Accounting, Chancellor LGT since 1992; and Vice President,
Vice President and Putnam Fiduciary Trust Company from 1989 to 1992.
Principal Accounting Officer
50 California Street
San Francisco, CA 94111
Helge K. Lee, 51 Chief Legal and Compliance Officer -- North America, Chancellor LGT since October 1997;
Vice President Executive Vice President of the Asset Management Division of Liechtenstein Global Trust
50 California Street since October 1996; Senior Vice President, General Counsel and Secretary of Chancellor
San Francisco, CA 94111 LGT, GT Global, GT Services and G.T. Insurance from February 1996 to October 1996; Vice
President, General Counsel and Secretary of LGT Asset Management, Inc., Chancellor LGT, GT
Global, GT Services and G.T. Insurance from May 1994 to February 1996; Senior Vice
President, General Counsel and Secretary of Strong/Corneliuson Management, Inc. and
Secretary of each of the Strong Funds from October 1991 through May 1994.
</TABLE>
------------------------------
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. Investment Funds, 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 Growth Series, G.T. Global Eastern Europe Fund, G.T.
Global Variable Investment Trust, G.T. Global Variable Investment Series, Global
Investment Portfolio, Growth Portfolio, Floating Rate 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 13 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 expense incurred in connection with
attending Board meetings. As of December 19, 1997, the Trustees and Officers of
the Trust own less than 1% of the shares of the Fund.
Statement of Additional Information Page 29
<PAGE>
GT GLOBAL NEW DIMENSION 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. See "Additional
Information -- Special Servicing Agreement."
- --------------------------------------------------------------------------------
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 for Fund shares, 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 Advisor Class 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
Statement of Additional Information Page 30
<PAGE>
GT GLOBAL NEW DIMENSION FUND
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.
INDIVIDUAL RETIREMENT ACCOUNTS ("IRAs") AND OTHER TAX-DEFERRED PLANS
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. 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. IRA
applications are available from brokers or GT Global.
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 plans (i.e., self-employed individual retirement 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 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.
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.
Statement of Additional Information Page 31
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GT GLOBAL NEW DIMENSION 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
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.
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TAXES
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TAXATION OF THE FUND
To continue 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; (2) 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 (3) 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
Statement of Additional Information Page 32
<PAGE>
GT GLOBAL NEW DIMENSION FUND
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. If
shares of an Underlying Theme Fund are purchased within 30 days before or after
redeeming at a loss, other shares of that Underlying Theme Fund (whether
pursuant to a rebalancing of the Fund's portfolio or otherwise) all or a part of
the loss will not be deductible by the Fund and instead will increase its basis
for the newly purchased 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, 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 total of 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, however, to a dividend paid by the
Fund to a foreign shareholder that 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 resident 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.
Statement of Additional Information Page 33
<PAGE>
GT GLOBAL NEW DIMENSION FUND
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
SPECIAL SERVICING AGREEMENT
Subject to the receipt of an order pursuant to a pending exemptive application
with the Securities and Exchange Commission and a private letter ruling pursuant
to a pending request therefor with the Internal Revenue Service, 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. 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 and/or the number of shareholder accounts at 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. If the Fund's costs exceed the aggregate estimated savings to the
Underlying Theme Funds, the Manager will pay the excess on behalf of the Fund.
Rule 12b-1 distribution and service fees will not be paid in accordance with the
Service Agreement. Nor will certain non-recurring and extraordinary expenses be
payable in accordance therewith 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 income and gains, its
failure to qualify as a RIC under the Code, or failure to timely file any
required tax returns or other filings. Amounts not payable pursuant to the
Service Agreement will be paid by the Fund.
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, 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.
Statement of Additional Information Page 34
<PAGE>
GT GLOBAL NEW DIMENSION FUND
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
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.
Statement of Additional Information Page 35
<PAGE>
GT GLOBAL NEW DIMENSION FUND
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, Class C 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) to the (n)th power = ERV. The following
assumptions will be reflected in computations made in accordance with this
formula: (1) reinvestment of dividends and other distributions at net asset
value on the reinvestment date determined by the Trust's Board of Trustees; and
(2) 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, Class C 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.
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) reinvestment of dividends
and other distributions at net asset value on the reinvestment date determined
by the Board; and (2) 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 MARKETS
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., Micropal, 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 the 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
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
Statement of Additional Information Page 36
<PAGE>
GT GLOBAL NEW DIMENSION FUND
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) Ibbotson 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 47 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, 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 Ibbotson 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
Statement of Additional Information Page 37
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GT GLOBAL NEW DIMENSION FUND
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
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.
Statement of Additional Information Page 38
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GT GLOBAL NEW DIMENSION FUND
The Fund may describe in its sales material and advertisements how an investor
may invest in GT Global Mutual Funds through various retirement plans or other
programs that offer deferral of income taxes on investment earnings and to which
an investor may make deductible contributions. Because of their advantages,
these retirement accounts and plans and programs may produce returns superior to
comparable non-retirement investments. 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. In sales material and
advertisements, the Fund may also discuss these plans and programs. See
"Information relating to Sales and Redemptions -- Individual Retirement Accounts
("IRAs") and Other Tax Deferred 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 financial organizations, such 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.
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.
Statement of Additional Information Page 39
<PAGE>
GT GLOBAL NEW DIMENSION FUND
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.
GT Global describes the major stages of economic development as revolving in a
"virtuous cycle." From time to time, each Fund and GT Global may discuss the
virtuous cycle in its sales literature and advertising. This cycle operates
worldwide, forcing companies to become increasingly competitive in an
ever-expanding global marketplace. GT Global has identified the following
sequential stages within the virtuous cycle:
FALLING BORDERS AND TRADE BARRIERS: Barriers between countries diminish,
increasing the potential for world trade and promoting global competition.
CAPITAL FLOWS FROM DEVELOPED MARKETS TO EMERGING MARKETS: As barriers fall,
restrictions on the free movement of capital in and out of a country are often
reduced or removed. The flow of money from developed to developing markets gains
momentum.
INDUSTRIALIZATION OF EMERGING MARKETS: With capital flowing across borders, many
developing nations are able to quickly begin their process of industrialization.
INCREASED DEMAND FOR GLOBAL CONSUMER PRODUCTS: As people in emerging markets
experience rising standards of living due to increased industrialization, they
demand more consumer products which can help spur global trade flows.
GT Global believes that we increasingly live in a world without boundaries in
terms of trade, competition and investment opportunities. Therefore, GT Global
believes it's becoming more relevant to look at investing in terms of industrial
groupings, or themes, as an alternative to the traditional, primary focus on
regions. GT Global believes such themes make movement possible between stages in
the virtuous cycle of economic progress.
GENERAL INFORMATION ABOUT THE UNDERLYING THEME PORTFOLIOS
Each Underlying Theme Portfolio may invest worldwide across industries within
the Portfolio's area of concentration without national or regional restrictions.
The ability of each Underlying Theme Portfolio to invest worldwide may allow the
portfolio managers to select industries in different economic cycles and varying
stages of development, though there is no assurance that the managers will be
successful in this selection.
Each Underlying Theme Portfolio's area of concentration reflects the underlying
theme of the Portfolio. GT Global believes that there are certain social,
political and economic trends that may benefit one or more industries within an
Underlying Theme Portfolio's area of concentration. Of course, there is no
assurance that any of the Funds will benefit as a result.
HEALTH CARE FUND
From time to time the Fund and GT Global will quote information including data
regarding:
/ / Trading volume, number of listed companies and the largest companies of
the global health care industry
/ / Expenditures by various countries, regions and age groups on health care
Statement of Additional Information Page 40
<PAGE>
GT GLOBAL NEW DIMENSION FUND
/ / Population of countries, regions and age groups
/ / Natality and mortality rates in various regions, countries and age
groups
/ / Life expectancy rates in various regions, countries and age groups
/ / New health care products and products seeking approval
/ / Health maintenance organizations (HMOs) and their enrollment growth
/ / Studies from, but not limited to, the American Medical Association
showing the effectiveness of using drugs to cure illness
/ / Medical technology and devices in use or in development
/ / Regulatory environment of health care industries
/ / Consolidation in the health care industries
The information quoted has not been independently verified by the Fund or GT
Global and will be based on data provided that is believed to be reliable and
accurate from sources including the following:
/ / Research firms such as Mehta and Isaly which publishes PHARMACEUTICAL
PORTFOLIO RECOMMENDATIONS
/ / OECD and its publications such as the OECD HEALTH DATA, as supplemented
annually
/ / Morgan Stanley Capital International stock market industry indices such
as Health & Personal Care
/ / The World Bank and its publications such as THE WORLD DEVELOPMENT
REPORT, as supplemented annually
/ / IFC and publications such as the EMERGING STOCK MARKETS FACTBOOK
INFORMATION ABOUT THE GLOBAL HEALTH CARE INDUSTRIES
The Fund and the Manager believe that certain market and demographic factors
merit an investor's consideration when making a health care investment.
Worldwide standards of living and life expectancy have increased at a
substantial rate. Chancellor LGT Asset Management, Inc. (the "Manager"), the
investment adviser to the GT Global Mutual Funds, expects this growth, which
works to the general benefit of the global health care industry, to continue at
a roughly comparable rate in the future, although no assurances can be given in
this regard. Moreover, according to the Manager, the health care industry
historically has proven to be a relatively non-cyclical industry that continues
to provide goods and services to the public in periods of economic weakness as
well as economic strength.
The Manager believes that the anticipated increase in the world's elderly
population could increase demand for health care products and services. For
example, according to data compiled by the Manager, in Japan the number of
people age 65 and older is expected to grow over 100% by the year 2025; in
Germany, France and the U.S., the same age group should grow 40%. Similarly, the
U.S. Census Bureau predicts the number of Americans 85 and older to double in
the next 30 years. From time to time, the Fund and GT Global will quote
information including, but not limited to, international data regarding
populations, birth rates, mortality rates, life expectancy, health care
expenditures, and gross domestic product vs. life expectancy. The information
quoted has not been independently verified by the Fund or GT Global and will be
based on data that is believed to be reliable and accurate.
TELECOMMUNICATIONS FUND
From time to time the Fund and GT Global will quote information including data
regarding:
/ / Increased usage of new technologies such as, but not limited to,
cellular and wireless communications in emerging and established
countries around the world
/ / Supply and demand of telephone equipment and services
/ / Regulatory environment of telecommunications industries
/ / Revenue, price and usage of telecommunications products and services
/ / Privatization and/or deregulation of telecommunications companies
Statement of Additional Information Page 41
<PAGE>
GT GLOBAL NEW DIMENSION FUND
The information quoted has not been independently verified by the Fund or GT
Global and will be based on data provided that is believed to be reliable and
accurate from sources including the following:
/ / Salomon Brothers World Equity Telecommunications Index, which includes
stock market data about the telecommunications industry in established
and developing markets
/ / OECD and other publications from its subsidiaries such as the
International Telecommunications Union
/ / Morgan Stanley Capital International stock market industry indices such
as Telecommunications, Broadcasting & Publishing and Data Processing &
Reproduction
/ / International Technology Consultants, a Washington D.C. based firm which
publishes reports such as EASTERN EUROPEAN & SOVIET TELECOM REPORT and
LATIN AMERICAN TELECOM REPORT
/ / Telegeography and other publications
DEREGULATION IN THE UNITED STATES
The United States has been the bellwether for deregulation of the telephone
industry. The divestiture of the Bell System from American Telephone and
Telegraph has produced competing companies in the United States. Such U.S.
market-driven competition has, for example, led to lower costs for consumers
which in turn led to greater consumer usage and to higher industrywide revenues.
The Manager expects this scenario to continue to benefit such companies in the
U.S. and similarly to be realized by the established telecommunications
companies in established economies, although no assurances can be made in this
regard.
CONSUMER PRODUCTS AND SERVICES FUND
From time to time the Fund and GT Global will quote information including data
regarding:
/ / Trading volume, number of listed companies and the largest companies
located around the world in the consumer products and services
industries
/ / Expenditures, demand and consumption by various countries, regions,
income classes and age groups of consumer products and services
/ / Population of countries, regions and age groups
/ / Life expectancy rates in various regions, countries and age groups
/ / New consumer products and services in the development or manufacturing
stages
/ / Income of various regions, countries and age groups
/ / Sales and sales growth of consumer products and services companies in
their own country and abroad
/ / Sales, supply and demand of consumer products and services
/ / Parent companies and the products and services they distribute
/ / Regulatory environment of consumer products industries
The information quoted will not be independently verified by the Fund or GT
Global and will be based on data provided that is believed to be reliable and
accurate from sources including, but not limited to, the following:
/ / Consumer and trade groups
/ / Fortune magazine and other periodicals
/ / The World Bank and its publications
/ / The International Monetary Fund (IMF) and its publications
/ / IFC and its publications
/ / OECD and its publications
INFRASTRUCTURE FUND
From time to time the Fund and GT Global may quote information including:
/ / Supply and demand of telephone equipment and services, electricity,
water, transportation, construction materials and other infrastructure
related products and services
Statement of Additional Information Page 42
<PAGE>
GT GLOBAL NEW DIMENSION FUND
/ / Regulatory environment of infrastructure industries
/ / Quantity and costs of current and projected infrastructure projects
/ / Privatization of industries and companies
/ / New technologies, products and services used in infrastructure
industries
/ / Infrastructure Finance Magazine and other periodicals
FINANCIAL SERVICES FUND
From time to time the Fund and GT Global may quote information including:
/ / Supply and demand of financial services
/ / Regulatory environment of financial service industries
/ / Credit ratings of U.S. and non-U.S. banks
/ / New technologies, products and services used in the financial services
industries
/ / Consolidation in the financial services industries
NATURAL RESOURCES FUND
From time to time the Fund and GT Global may quote information including:
/ / Supply, demand and prices of natural resources
/ / Regulatory environment of natural resources
/ / Supply, demand and prices of products manufactured from natural
resources
/ / New technologies, products and services used in the natural resources
industries
Statement of Additional Information Page 43
<PAGE>
GT GLOBAL NEW DIMENSION FUND
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.
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.
Statement of Additional Information Page 44
<PAGE>
GT GLOBAL NEW DIMENSION FUND
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.
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.
Statement of Additional Information Page 45
<PAGE>
GT GLOBAL NEW DIMENSION FUND
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 Financial Statements of the Fund for the period September 15, 1997
(commencement of operations) to December 31, 1997 appear on the following pages.
Statement of Additional Information Page 46
<PAGE>
GT GLOBAL NEW DIMENSION FUND
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"), including the portfolio of investments,
as of December 31, 1997, the related statement of operations, the statement of
changes in net assets, and the financial highlights for the period from
September 15, 1997 (commencement of operations) to December 31, 1997. These
financial statements and the financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and the financial highlights based on our audits.
We conducted our audits 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 statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1997, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of GT
Global New Dimension Fund as of December 31, 1997, the results of its
operations, the changes in its net assets, and the financial highlights for the
period from September 15, 1997 (commencement of operations) to December 31,
1997, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
FEBRUARY 17, 1998
F1
<PAGE>
GT GLOBAL NEW DIMENSION FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ADVISOR
CLASS VALUE % OF NET
GT GLOBAL THEME FUNDS SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
GT Global Consumer Products and Services Fund ............. 515,881 $ 11,204,937 31.5
GT Global Financial Services Fund ......................... 426,322 7,499,007 21.1
GT Global Infrastructure Fund ............................. 388,281 5,886,334 16.6
GT Global Natural Resources Fund .......................... 240,790 4,054,907 11.4
GT Global Health Care Fund ................................ 162,161 3,278,897 9.2
GT Global Telecommunications Fund ......................... 185,442 3,089,470 8.7
------------ -----
TOTAL THEME FUND INVESTMENTS (cost $37,807,948) ............. 35,013,552 98.5
------------ -----
<CAPTION>
REPURCHASE AGREEMENT
- -------------------------------------------------------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust
Co., due January 2, 1998, for an effective yield of 5.80%,
collateralized by $445,000 U.S. Treasury Notes, 5.75% due
12/31/98 (market value of collateral is $445,417,
including accrued interest). (cost $432,000) ............ 432,000 1.2
------------ -----
TOTAL INVESTMENTS (cost $38,239,948) * ..................... 35,445,552 99.7
Other Assets and Liabilities ................................ 123,462 0.3
------------ -----
NET ASSETS .................................................. $ 35,569,014 100.0
------------ -----
------------ -----
</TABLE>
- --------------
* For Federal income tax purposes, cost is $38,277,690 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ --
Unrealized depreciation: (2,832,138)
-------------
Net unrealized depreciation: $ (2,832,138)
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F2
<PAGE>
GT GLOBAL NEW DIMENSION FUND
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments at value (cost $38,239,948) (Note 1).................................................. $35,445,552
U.S. currency..................................................................................... 113
Receivable for Fund shares sold................................................................... 929,466
Interest receivable............................................................................... 70
----------
Total assets.................................................................................... 36,375,201
----------
Liabilities:
Payable for investments purchased................................................................. 432,113
Payable for Fund shares repurchased............................................................... 352,532
Payable for service and distribution expenses (Note 2)............................................ 21,542
----------
Total liabilities............................................................................... 806,187
----------
Net assets.......................................................................................... $35,569,014
----------
----------
Class A:
Net asset value and redemption price per share ($15,144,662 DIVIDED BY 1,424,148 shares
outstanding)....................................................................................... $ 10.63
----------
----------
Maximum offering price per share (100/95.25 of $10.63) *............................................ $ 11.16
----------
----------
Class B:+
Net asset value and offering price per share ($19,183,648 DIVIDED BY 1,805,781 shares
outstanding)....................................................................................... $ 10.62
----------
----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($1,240,704 DIVIDED BY
116,587 shares outstanding)........................................................................ $ 10.64
----------
----------
Net assets consist of:
Paid in capital (Note 4).......................................................................... $37,829,140
Undistributed net investment income............................................................... 28,710
Accumulated net undistributed gain................................................................ 505,560
Net unrealized depreciation of investments........................................................ (2,794,396)
----------
Total -- representing net assets applicable to capital shares outstanding........................... $35,569,014
----------
----------
<FN>
- --------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
F3
<PAGE>
GT GLOBAL NEW DIMENSION FUND
STATEMENT OF OPERATIONS
September 15, 1997 (commencement of operations) to December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Interest income............................................................................ $ 8,216
----------
Total investment income.................................................................. 8,216
----------
Expenses:
Service and distribution expenses: (Note 2)
Class A...................................................................... $ 11,800
Class B...................................................................... 27,856
----------
Total expenses............................................................................. 39,656
----------
Net investment loss.......................................................................... (31,440)
----------
Net realized and unrealized gain (loss) on investments: (Note 1)
Net realized loss on investments............................................... (37,742)
Capital gain distributions received............................................ 2,021,395
----------
Net realized gain during the period...................................................... 1,983,653
Net change in unrealized depreciation during the period.................................. (2,794,396)
----------
Net realized and unrealized loss on investments.............................................. (810,743)
----------
Net decrease in net assets resulting from operations......................................... $ (842,183)
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F4
<PAGE>
GT GLOBAL NEW DIMENSION FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
SEPTEMBER 15,
1997
(COMMENCEMENT
OF OPERATIONS)
TO
DECEMBER 31,
1997
--------------
Increase in net assets
Operations:
Net investment loss..................................................................... $ (31,440)
Net realized gain on investments........................................................ 1,983,653
Net change in unrealized depreciation of investments.................................... (2,794,396)
--------------
Net decrease in net assets resulting from operations.................................. (842,183)
--------------
Class A:
Distributions to shareholders: (Note 1)
In excess of net investment income...................................................... (583,714)
Class B:
Distributions to shareholders: (Note 1)
In excess of net investment income...................................................... (781,183)
Advisor Class:
Distributions to shareholders: (Note 1)
In excess of net investment income...................................................... (53,046)
--------------
Total distributions................................................................... (1,417,943)
--------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested........................................ 41,029,628
Decrease from capital shares repurchased................................................ (3,300,488)
--------------
Net increase from capital share transactions.......................................... 37,729,140
--------------
Total increase in net assets.............................................................. 35,469,014
Net assets:
Beginning of period..................................................................... 100,000
--------------
End of period *......................................................................... $ 35,569,014
--------------
--------------
* Includes undistributed net investment income of........................................ $ 28,710
--------------
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F5
<PAGE>
GT GLOBAL NEW DIMENSION FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements and market price
data for the shares.
<TABLE>
<CAPTION>
SEPTEMBER 15, 1997
(COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1997
-----------------------------------------
ADVISOR
CLASS A (D) CLASS B (D) CLASS (D)
----------- ----------- -----------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period................... $ 11.43 $ 11.43 $ 11.43
----------- ----------- -----------
Income from investment operations:
Net investment income (loss)......................... (0.01) (0.02) 0.01
Net realized and unrealized loss on investments...... (0.31) (0.32) (0.31)
----------- ----------- -----------
Net decrease from investment operations............ (0.32) (0.34) (0.30)
----------- ----------- -----------
Distributions to shareholders:
In excess of net investment income................... (0.48) (0.47) (0.49)
----------- ----------- -----------
Total distributions................................ (0.48) (0.47) (0.49)
----------- ----------- -----------
Net asset value, end of period......................... $ 10.63 $ 10.62 $ 10.64
----------- ----------- -----------
----------- ----------- -----------
Total investment return (c)............................ (2.68)% (b) (2.83)% (b) (2.51)% (b)
Ratios and supplemental data:
Net assets, end of period (in 000's)................... $15,145 $19,184 $ 1,241
Ratio of net investment income (loss) to average net
assets................................................ (0.35)% (a) (0.85)% (a) 0.15% (a)
Ratio of expenses to average net assets (Notes 1 &
5).................................................... 0.50% (a) 1.00% (a) 0.00% (a)
Portfolio turnover rate+............................... 1% (b) 1% (b) 1% (b)
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
+ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
The accompanying notes are an integral part of the financial statements.
F6
<PAGE>
GT GLOBAL NEW DIMENSION FUND
NOTES TO
FINANCIAL STATEMENTS
December 31, 1997
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
GT Global New Dimension Fund ("Fund") is a diversified series of GT Global
Series Trust (the "Trust"). The Trust is organized as a Massachusetts business
trust and is registered under the Investment Company Act of 1940, as amended
("1940 Act"), as an open-end management investment company. The Fund invests
substantially all of its assets in Advisor Class 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").
The Fund offers Class A, Class B and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses of the Fund are
allocated on a pro rata basis to each Class based on the relative net assets of
each Class to the total net assets of the Fund. Each Class of shares differs in
its respective service and distribution expenses. Beginning January 1, 1998, the
Fund will also offer Class C shares.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Funds in the preparation of the
financial statements.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Investments in the Underlying Funds are valued at the closing net asset value
per Advisor Class share of each Underlying Fund on the day of valuation.
Short-term investments with a maturity of 60 days or less are valued at
amortized cost.
(B) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, United States government securities or
other high quality debt securities of which the value, including accrued
interest, is at least equal to the amount to be repaid to the Fund under each
agreement at its maturity.
(C) TAXES
It is the policy of the Fund 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.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, and excise tax on income
and capital gains.
(D) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(E) LINE OF CREDIT
The Fund, along with certain other funds ("GT Funds") advised and/ or
administered by the Manager, has a line of credit with BankBoston and State
Street Bank & Trust Company. The arrangements with the banks allow the Fund and
the GT Funds to borrow an aggregate maximum amount of $250,000,000. The Fund is
limited to borrowing up to 33 1/3% of the value of the Fund's total assets. For
the period ended December 31, 1997, the Fund had no outstanding loan balance.
2. RELATED PARTIES
Chancellor LGT Asset Management, Inc. is the Fund's investment manager and
administrator. The Manager is also the pricing and accounting agent for the
Fund. The Manager will initially assume all costs of the Fund's operation,
except for service and distribution fees as 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. Subject to receipt
of a pending exemptive order from the Securities and Exchange Commission, the
Trust, on behalf of the Fund, will enter into a Special Servicing Agreement
("Agreement") with the Underlying Theme Funds, the Manager and GT Global
Investor Services, Inc., the transfer agent. If the Board of Trustees of the
Underlying Theme Funds makes certain findings, each Underlying Theme Fund will
pay certain nondistribution-related expenses of the Fund to the extent such
expenses are less than the estimated savings to the Underlying Theme Funds from
the operation of the Fund. The Manager and GT Global also voluntarily have
undertaken to limit the Underlying Theme Fund's expenses (exclusive of brokerage
commissions, taxes, interest, and extraordinary expenses) to the maximum annual
rate of 1.50% of the average daily net assets of the Underlying Theme Fund's
Advisor Class shares.
F7
<PAGE>
GT GLOBAL NEW DIMENSION FUND
GT Global, Inc. ("GT Global"), an affiliate of the Manager, serves as the Fund's
distributor. The Fund offers Class A, Class B and Advisor Class shares for
purchase and will offer Class C shares for purchase beginning January 1, 1998.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. GT Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the period from September 15, 1997 (commencement of
operations) to December 31, 1997, GT Global retained $6,174 of such sales
charges. Purchases of Class A shares exceeding $500,000 may be subject to a
contingent deferred sales charge ("CDSC") upon redemption, in accordance with
the Fund's current prospectus. GT Global collected no CDSCs for the period from
September 15, 1997 (commencement of operations) to December 31, 1997. GT Global
also makes ongoing shareholder servicing and trail commission payments to
dealers whose clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSCs, in accordance with the Fund's current
prospectus. For the period from September 15, 1997 (commencement of operations)
to December 31, 1997, GT Global collected CDSCs in the amount of $1,902. In
addition, GT Global makes ongoing shareholder servicing and trail commission
payments to dealers whose clients hold Class B shares.
Class C shares will not be subject to initial sales charges. However, certain
redemptions of Class C shares made within one year of purchase will be subject
to CDSCs. In addition, GT Global will make ongoing shareholder servicing and
trail commission payments to dealers whose clients hold Class C shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Trust's Board of Trustees has
adopted separate distribution plans with respect to the Fund's Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which the Fund
reimburses GT Global for a portion of its shareholder servicing and distribution
expenses. Under the 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 GT Global's 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 GT Global's 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 the Fund's 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 GT Global's 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 GT Global's 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
that Plan continues in effect. Class C shares will also be subject to a separate
distribution plan adopted by the Trust's Board of Trustees pursuant to Rule
12b-1 under the 1940 Act.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and GT Global, is the transfer agent of the Fund. For performing shareholder
servicing, reporting, and general transfer agent services, GT Services 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. GT Services is also reimbursed for
its out-of-pocket expenses for such items as postage, forms, telephone charges,
stationery and office supplies.
The Trust pays each of its Trustees who is not an employee, officer or director
of the Manager, GT Global or GT Services $5,000 per year plus $300 for each
meeting of the board or any committee thereof attended by the Trustee.
3. PURCHASES AND SALES
For the period from September 15, 1997 (commencement of operations) to December
31, 1997, purchases and sales, other than short-term investments, of the
Underlying Theme Funds by the Fund, are as follows:
<TABLE>
<CAPTION>
GT GLOBAL PURCHASES SALES
- -------------------------------------------------------------------------------- --------------- ----------
<S> <C> <C>
Consumer Products and Services Fund............................................. $ 11,777,579 $ 80,882
Telecommunications Fund......................................................... 3,462,408 23,798
Financial Services Fund......................................................... 7,690,319 53,175
Natural Resources Fund.......................................................... 4,847,276 32,530
Health Care Fund................................................................ 4,192,022 26,247
Infrastructure Fund............................................................. 6,136,745 44,025
</TABLE>
F8
<PAGE>
GT GLOBAL NEW DIMENSION FUND
4. CAPITAL SHARES
At December 31, 1997, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
SEPTEMBER 15, 1997
(COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1997
-----------------------------------
CLASS A SHARES AMOUNT
- ---------------------------------------- --------------- ------------------
<S> <C> <C>
Shares sold............................. 1,560,835 $ 17,768,084
Shares issued in connection with
reinvestment of distributions......... 54,891 563,181
--------------- ------------------
1,615,726 18,331,265
Shares repurchased...................... (194,494) (2,190,806)
--------------- ------------------
Net increase............................ 1,421,232 $ 16,140,459
--------------- ------------------
--------------- ------------------
<CAPTION>
SEPTEMBER 15, 1997
(COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1997
-----------------------------------
CLASS B SHARES AMOUNT
- ---------------------------------------- --------------- ------------------
<S> <C> <C>
Shares sold............................. 1,832,668 $ 20,681,472
Shares issued in connection with
reinvestment of distributions......... 67,039 687,825
--------------- ------------------
1,899,707 21,369,297
Shares repurchased...................... (96,841) (1,061,266)
--------------- ------------------
Net increase............................ 1,802,866 $ 20,308,031
--------------- ------------------
--------------- ------------------
<CAPTION>
SEPTEMBER 15, 1997
(COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1997
-----------------------------------
ADVISOR CLASS SHARES AMOUNT
- ---------------------------------------- --------------- ------------------
<S> <C> <C>
Shares sold............................. 113,102 $ 1,276,664
Shares issued in connection with
reinvestment of distributions......... 5,102 52,402
--------------- ------------------
118,204 1,329,066
Shares repurchased...................... (4,533) (48,416)
--------------- ------------------
Net increase............................ 113,671 $ 1,280,650
--------------- ------------------
--------------- ------------------
</TABLE>
5. SUBSEQUENT EVENT
On January 30, 1998, Liechtenstein Global Trust ("LGT") and AMVESCAP PLC
("AMVESCAP") entered into an agreement by which AMVESCAP will acquire LGT's
Asset Management Division, including Chancellor LGT Asset Management, Inc.
AMVESCAP is the holding company of the AIM and INVESCO asset management
businesses.
F9
<PAGE>
GT GLOBAL NEW DIMENSION FUND
GT GLOBAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY GT GLOBAL FUND,
INCLUDING FEES, EXPENSES AND THE RISKS OF GLOBAL AND EMERGING MARKET
INVESTING AND THE RISKS OF INVESTING IN RELATED INDUSTRIES, PLEASE CONTACT
YOUR FINANCIAL ADVISER OR CALL GT GLOBAL DIRECTLY AT 1-800-824-1580.
GROWTH FUNDS
/ / GLOBALLY DIVERSIFIED FUNDS
GT GLOBAL NEW DIMENSION FUND
Captures global growth opportunities by investing directly in the six GT Global
Theme Funds
GT GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity by investing outside
the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
GT GLOBAL DEVELOPING MARKETS FUND
Invests in debt and equity securities of developing market issuers
/ / GLOBAL THEME FUNDS
GT GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL HEALTH CARE FUND
Invests in growing health care industries worldwide
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA MID CAP GROWTH FUND
Concentrates on medium-sized companies in the U.S.
GT GLOBAL AMERICA VALUE FUND
Concentrates on equity securities of large cap U.S. companies believed to be
undervalued
GT GLOBAL JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUND
GT GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government bonds from around the world
INCOME FUNDS
GT GLOBAL GOVERNMENT INCOME FUND
Earns monthly income from global government securities
GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
GT GLOBAL HIGH INCOME FUND
Invests in debt securities in emerging markets
GT GLOBAL FLOATING RATE FUND
Invests primarily in senior secured floating rate loans that have the potential
to achieve a high level of current income
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[LOGO]
NO DEALER, SALES REPRESENTATIVE OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
STATEMENT OF ADDITIONAL INFORMATION AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY GT
GLOBAL SERIES TRUST, GT GLOBAL NEW DIMENSION FUND, CHANCELLOR LGT ASSET
MANAGEMENT, INC. OR GT GLOBAL, INC. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR SOLICITATION OF ANY OFFER TO BUY ANY OF THE SECURITIES
OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER IN SUCH JURISDICTION.
DIMSX709.GT
<PAGE>
GT GLOBAL SERIES TRUST
PART C: OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a)FINANCIAL STATEMENTS:
Included in Part A of this Registration Statement --
Supplement to the Class A, B and C Prospectus Containing Financial
Highlights for One Share of Class A and Class B of GT Global New Dimension
Fund.
Supplement to the Advisor Class Prospectus Containing Financial Highlights
for One Share of Advisor Class of GT Global New Dimension Fund.
Included in Part B of this Registration Statement --
Statements of Additional Information dated January 1, 1998, as revised
March 3, 1998, Containing the Audited Financial Statements for GT Global
New Dimension Fund for the Period September 15, 1997 (commencement of
operations) to December 31, 1997.
(b)EXHIBITS:
(1)(a) Declaration of Trust (1).
(1)(b) Amendment to Declaration of Trust dated July 25, 1997 (2).
(2) By-Laws (1).
(3) Voting Trust Agreement -- None.
(4) Instruments defining the rights of holders of Registrant's
shares of beneficial interest (3).
(5) Management Agreement (2).
(6)(a) Distribution Contract with respect to Class A Shares (2).
(6)(b) Distribution Contract with respect to Class B Shares (2).
(6)(c) Distribution Contract with respect to Class C Shares --
Filed herewith.
(6)(d) Distribution Contract with respect to Advisor Class Shares
(2).
(7) Bonus, profit sharing or pension plans --- None.
(8) Custodian Agreement (6).
(9)(a) Transfer Agency Agreement (2).
(9)(b) Other material contracts:
(i)(a) Broker Dealer sales contract -- Class A/B Shares (2).
(i)(b) Supplementary Dealer Agreement -- Class C Shares -- Form of
Filed herewith.
(ii) Administration Agreement (2).
(iii) Registered Investment Adviser Administration Agreement
(Advisor Class) (2).
(iv) Registered Investment Adviser Participation Agreement
(Advisor Class) (2).
(v) Bank sales contract (2).
(vi) Agent sales contract (2).
(vii) Foreign sales contract (2).
(viii) Fund Accounting and Pricing Agreement (2).
(10) Opinion of Counsel (2).
(11) Other opinions, appraisals, rulings and consents:
Accountants' consent -- Filed herewith.
(12) Financial Statements omitted from Part B -- None.
(13) Letter of Investment Intent (2).
C-1
<PAGE>
<TABLE>
<S> <C>
(14)(a) Model Retirement Plan -- GT Global Individual Retirement
Account Disclosure Statement and Application (5).
(14)(b) Model Retirement Plan -- GT Global Simplified Employee
Pension Individual Retirement Account Disclosure Statement
and Application (4).
(14)(c) Model Retirement Plan -- GT Global SIMPLE Individual
Retirement Account Disclosure Statement and Application (4).
(14)(d) Model Retirement Plan -- Roth IRA (4).
(14)(e) 403(b)(7) Custodial Agreement (4).
(15) Rule 12b-1 Plans
(15)(a) Plan of Distribution pursuant to Rule 12b-1 with respect to
Class A Shares (2).
(15)(b) Plan of Distribution pursuant to Rule 12b-1 with respect to
Class B Shares (2).
(15)(c) Plan of Distribution pursuant to Rule 12b-1 with respect to
Class C Shares -- Filed herewith.
(16) Schedule for Computation of Performance Quotations -- None.
(17) Financial Data Schedule -- Filed herewith.
(18) Amended Plan Pursuant to Rule 18f-3 -- Filed herewith.
</TABLE>
- ------------------------
(1) Incorporated by Reference to Registrant's Registration Statement on Form
N-1A filed July 1, 1997, File Nos. 333-30551 and 811-7787, Edgar Accession
No. 0000898432-97-000341.
(2) Incorporated by Reference to Pre-Effective Amendment No. 1 to Registrant's
Registration Statement on Form N-1A filed August 22, 1997, File Nos.
333-30551 and 811-7787, Edgar Accession No. 0000898432-97-000385.
(3) 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.
(4) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 51 to the Registration Statement of G.T.
Investment Funds, Inc. on Form N-1A filed on January 30, 1998.
(5) Incorporated by reference to the identically numerated Exhibit of
Post-Effective Amendment No. 22 to the Registration Statement of G.T. Global
Investment Portfolios, Inc. on Form N-1A filed on April 24, 1997.
(6) Incorporated by reference to Post-Effective Amendment No. 1 to the
Registrant's Registration Statement on Form N-1A filed on October 31, 1997,
File Nos. 333-30551 and 811-7787, Edgar Accession No. 0001047469-97-002174.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
<TABLE>
<CAPTION>
NUMBER OF RECORD
HOLDERS AS OF
TITLE OF CLASS FEBRUARY 26, 1998
- -------------------------------------------------------------------------------------------- --------------------
<S> <C>
Share of Beneficial Interest in:
GT Global New Dimension Fund -- Class A............................................... 1,829
GT Global New Dimension Fund -- Class B............................................... 2,124
GT Global New Dimension Fund -- Class C............................................... 35
GT Global New Dimension Fund -- Advisor Class......................................... 145
</TABLE>
C-2
<PAGE>
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
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 eight
funds currently in operation: GT Global America Value Fund, GT Global America
Small Cap 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 thirteen 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, GT Global Emerging
Markets Fund and GT Global Developing Markets Fund); GT Investment Portfolios,
Inc. (which includes one fund: GT Global Dollar Fund); GT Global Variable
Investment Series (which includes five funds currently 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 nine funds currently
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, GT Global Variable U.S.
Government Income Fund, GT Global Variable Infrastructure Fund and GT Global
Variable Natural Resources 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.
<TABLE>
<CAPTION>
POSITIONS AND OFFICES WITH GT POSITIONS AND OFFICES
NAME GLOBAL WITH THE REGISTRANT
- -------------------------------------------- ---------------------------------- ----------------------------------
<S> <C> <C>
William J. Guilfoyle President and Chairman of the Chairman of the Board of Directors
Board and President
</TABLE>
C-3
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND OFFICES WITH GT POSITIONS AND OFFICES
NAME GLOBAL WITH THE REGISTRANT
- -------------------------------------------- ---------------------------------- ----------------------------------
Raymond R. Cunningham Senior Vice President -- Director None
of Sales and Director
<S> <C> <C>
Richard W. Healey Senior Vice President -- Director None
of Marketing and Director
Helge K. Lee Secretary and Chief Legal and Vice President and Secretary
Compliance Officer
David P. Hess Assistant Secretary and Director Assistant Secretary
of Mutual Fund Compliance
Michael A. Silver Assistant Secretary and Assistant Assistant Secretary
General Counsel
Philip D. Edelstein Senior Vice President -- Regional None
9 Huntly Circle Sales Manager
Palm Beach Gardens, FL 33418
Stephen A. Maginn Senior Vice President -- Regional None
519 S. Juanita Sales Manager
Redondo Beach, CA 90277
Peter J. Wolfert Senior Vice President -- None
Information Technology
Christine M. Pallatto Senior Vice President -- Director None
of Human Resources
Earle A. Malm II Chief Operating Officer None
Margo A. Tammen Vice President -- Finance & None
Administration
Gary M. Castro Assistant Treasurer & Controller None
Dennis W. Reichert Assistant Treasurer & Budget Assistant Treasurer
Director
Kenneth W. Chancey Senior Vice President -- Fund Vice President, Principal
Accounting Accounting Officer and (Acting)
CFO
Hallie L. Baron Vice President -- Public Relations None
& Shareholder Communications
Claus te Wildt Vice President -- Director of None
Strategy and Business Planning
Pamela Ruddock Vice President -- Fund None
Administration
</TABLE>
C-4
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND OFFICES WITH GT POSITIONS AND OFFICES
NAME GLOBAL WITH THE REGISTRANT
- -------------------------------------------- ---------------------------------- ----------------------------------
Paul Wozniak Vice President -- Fund Accounting None
<S> <C> <C>
Christine C. Mangan Vice President -- Dealer Marketing None
Donna B. Abrahamson Vice President -- Account None
Management
Jon Burke Vice President None
31 Darlene Drive
Southboro, MA 01772
Phil Christopher Vice President None
3621 59th Ave. 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
Glenn R. Farinacci Vice President None
86 University Place
Staten Island, NY 10301
Ned E. Hammond Vice President None
5901 McFarland Ct.
Plano, TX 75093-4317
Richard Kashnowski Vice President None
1368 South Ridge Drive
Mandeville, LA 70448
Allen M. Kuhn Vice President None
19655 Red Maple Lane
Jupiter, FL 33458
Steven C. Manns Vice President None
1941 West Wolfram
Chicago, IL 60657
Wayne F. Meyer Vice President None
2617 Sun Meadow Drive
Chesterfield, MO 63005
Dean Philips Vice President None
3406 Bishop Park Drive, #428
Winter Park, FL 32792
Philip Schertz Vice President None
25 Ivy Place
Wayne, NJ 07470
</TABLE>
C-5
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND OFFICES WITH GT POSITIONS AND OFFICES
NAME GLOBAL WITH THE REGISTRANT
- -------------------------------------------- ---------------------------------- ----------------------------------
Peter Sykes Vice President None
1655 E. Sherman Ave.
Salt Lake City, UT 84105
<S> <C> <C>
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
437 30th Street
Manhattan Beach, CA 90266
</TABLE>
(c)None.
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
None.
C-6
<PAGE>
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 Post-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 2nd day of March, 1998.
GT GLOBAL SERIES TRUST
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 2nd day of March, 1998.
WILLIAM J. GUILFOYLE
- ---------------------------------------- President and Trustee
William J. Guilfoyle* (Principal Executive Officer)
/S/ KENNETH W. CHANCEY
- ---------------------------------------- Vice President and Principal
Kenneth W. Chancey Accounting Officer
C. Derek Anderson* Trustee
Arthur C. Patterson* Trustee
Frank S. Bayley* Trustee
Ruth H. Quigley* Trustee
Robert G. Wade, Jr.* Trustee
*By: /S/ MICHAEL A. SILVER
-----------------------------------
Michael A. Silver
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 Michael A. Silver, 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 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>
<S> <C> <C>
/s/ WILLIAM J. GUILFOYLE Trustee, Chairman of the
- ---------------------------------------- Board and President October 14, 1997
William J. Guilfoyle
/s/ C. DEREK ANDERSON
- ---------------------------------------- Trustee October 14, 1997
C. Derek Anderson
/s/ FRANK S. BAYLEY
- ---------------------------------------- Trustee October 14, 1997
Frank S. Bayley
/s/ ARTHUR C. PATTERSON
- ---------------------------------------- Trustee October 14, 1997
Arthur C. Patterson
/s/ RUTH H. QUIGLEY
- ---------------------------------------- Trustee October 14, 1997
Ruth H. Quigley
/s/ ROBERT G. WADE JR.
- ---------------------------------------- Trustee October 14, 1997
Robert G. Wade Jr.
</TABLE>
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
(1) (a) Declaration of Trust.(1)
(b) Amendment to Declaration of Trust dated July 25, 1997.(2)
(2) By-Laws.(1)
(3) Voting Trust Agreement -- None.
(4) Instruments defining the rights of holders of Registrant's shares of beneficial interest.(3)
(5) Management Agreement.(2)
(6) (a) Distribution Contract with respect to Class A Shares.(2)
(b) Distribution Contract with respect to Class B Shares.(2)
(c) Distribution Contract with respect to Class C Shares -- Filed herewith.
(d) Distribution Contract with respect to Advisor Class Shares.(2)
(7) Bonus, profit sharing or pension plans -- None.
(8) Custodian Agreement.(6)
(9) (a) Transfer Agency Agreement.(2)
(b) Other material contracts:
(i)(a) Broker Dealer sales contract -- Class A/B Shares.(2)
(i)(b) Supplementary Dealer Agreement -- Class C Shares -- Form of Filed herewith.
(ii) Administration Agreement.(2)
(iii) Registered Investment Adviser Administration Agreement (Advisor Class).(2)
(iv) Registered Investment Adviser Participation Agreement (Advisor Class).(2)
(v) Bank sales contract.(2)
(vi) Agent sales contract.(2)
(vii) Foreign sales contract.(2)
(viii) Fund Accounting and Pricing Agreement.(2)
(10) Opinion of Counsel.(2)
(11) Other opinions, appraisals, rulings and consents: Accountants' consent -- Filed herewith.
(12) Financial Statements omitted from Part B -- None.
(13) Letter of Investment Intent.(2)
(a) Model Retirement Plan -- GT Global Individual Retirement Account Disclosure Statement and
Application.(5)
(14)
(b) Model Retirement Plan -- GT Global Simplified Employee Pension Individual Retirement Account
Disclosure Statement and Application.(4)
(c) Model Retirement Plan -- GT Global SIMPLE Individual Retirement Account Disclosure Statement and
Application.(4)
(d) Model Retirement Plan -- Roth IRA.(4)
(e) 403(b)(7) Custodial Agreement.(4)
(15) Rule 12b-1 Plans
(a) Plan of Distribution pursuant to Rule 12b-1 with respect to Class A Shares.(2)
(b) Plan of Distribution pursuant to Rule 12b-1 with respect to Class B Shares.(2)
(c) Plan of Distribution pursuant to Rule 12b-1 with respect to Class C Shares -- Filed herewith.
(16) Schedule for Computation of Performance Quotations -- None.
(17) Financial Data Schedule -- Filed herewith.
(18) Amended Plan Pursuant to Rule 18f-3 -- Filed herewith.
</TABLE>
- ------------------------
(1) Incorporated by Reference to Registrant's Registration Statement on Form
N-1A filed July 1, 1997, File Nos. 333-30551 and 811-7787, Edgar Accession
No. 0000898432-97-000341.
(2) Incorporated by Reference to Pre-Effective Amendment No. 1 to Registrant's
Registration Statement on Form N-1A filed August 22, 1997, File Nos.
333-30551 and 811-7787, Edgar Accession No. 0000898432-97-000385.
<PAGE>
(3) 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.
(4) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 51 to the Registration Statement of G.T.
Investment Funds, Inc. on Form N-1A filed on January 30, 1998.
(5) Incorporated by reference to the identically numerated Exhibit of
Post-Effective Amendment No. 22 to the Registration Statement of G.T. Global
Investment Portfolios, Inc. on Form N-1A filed on April 24, 1997.
(6) Incorporated by reference to Post-Effective Amendment No. 1 to the
Registrant's Registration Statement on Form N-1A filed on October 31, 1997,
File Nos. 333-30551 and 811-7787, Edgar Accession No. 0001047469-97-002174.
<PAGE>
EXHIBIT 6(c)
DISTRIBUTION CONTRACT
CLASS C SHARES
BETWEEN
GT GLOBAL SERIES TRUST
AND
GT GLOBAL, INC.
THIS DISTRIBUTION CONTRACT ("Contract"), is made as of December 10, 1997,
between GT GLOBAL SERIES TRUST, a Massachusetts business trust ("Trust"), and GT
GLOBAL, INC., a California corporation ("GT Global").
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'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 in the Trust (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 Board has established Class A, Class B, Class C, and Advisor
Class shares of beneficial interest in each such Fund; and
WHEREAS, the Trust desires to retain GT Global to act as the principal
underwriter of the Class C shares of the Funds, and GT Global is willing to act
in such capacity;
NOW, THEREFORE, the parties agree as follows:
1. GT Global shall be the exclusive principal underwriter for the sale of
Class C shares of each Fund, except as otherwise provided pursuant to paragraph
20 hereof. The terms "Class C shares of the Fund" or "Class C shares" as used
herein shall mean Class C shares of beneficial interest issued by the Funds.
2. In the sale of Class C shares of each Fund, GT Global shall act as
agent of the Trust except in any transaction in which GT Global sells such Class
C shares as a dealer to the public, in which event GT Global shall act as
principal for its own account.
<PAGE>
3. The Trust shall sell Class C shares only through GT Global except that
the Trust may at any time:
(a) Issue Class C 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 Class C shares of a Fund to the holders of Class C shares
of the other Funds or Class C 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 C shares to a Fund's shareholders in connection with
the reinvestment of dividends and other distributions paid by the
Fund;
(d) Issue Class C 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 1940 Act, as in effect from time to time and
as described in the current Prospectus of the Fund;
(e) Issue Class C 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 C shares of the Fund,
purchasing for such plan;
-2-
<PAGE>
(f) Issue Class C 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 C 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 C shares
of the Funds. GT Global shall maintain a sales organization suited to the sale
of Class C 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 C shares for sale and in
which qualification is required.
5. Within the United States of America, GT Global shall offer and sell
Class C 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 C 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 C shares of a Fund shall
be the price which is equal to the net asset value per Class C share. Net asset
value per Class C 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.
-3-
<PAGE>
8. All orders for Class C 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 C 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 C shares of the 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 all contingent deferred sales charges
that may be imposed on redemptions of Class C shares. In addition, GT Global is
entitled to fees, if any, payable under the Trust's Plan of Distribution
applicable to the Class C shares of the Funds ("Class C 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 C shares of the Funds use any
prospectus, advertising or sales literature not approved by
-4-
<PAGE>
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 C 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 C 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 C 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 C shares for any reason. In addition, the
Trust may withhold Class C 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 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 Class C 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
-5-
<PAGE>
to such Fund in the Class C 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 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 C shares of one Fund shall not affect its
continued effectiveness with respect to Class C 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 C
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 C 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
-6-
<PAGE>
Contract to sell Class C 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 C 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 or a
vote of a majority of the outstanding Class C 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
-7-
<PAGE>
/S/ MICHAEL SILVER /S/ KENNETH W. CHANCEY
_________________________ By:________________________________
Attest: GT GLOBAL, INC.
/S/ MICHAEL SILVER /S/ KENNETH W. CHANCEY
_________________________ By:________________________________
-8-
<PAGE>
Exhibit (9)(b)(i)(b)
GT GLOBAL, INC.
GT GLOBAL, INC.
50 CALIFORNIA STREET
27TH FLOOR
SAN FRANCISCO, CA 94111
To: _________________________
_________________________
_________________________
RE: SUPPLEMENTARY DEALER AGREEMENT - CLASS C SHARES
Reference is made to the Dealer Agreement ("Dealer Agreement") previously
entered into between You and GT Global, Inc. ("Us" or "We"), as general
distributor and principal underwriter, as such term is defined in the Investment
Company Act of 1940, as amended ("1940 Act"), of the shares of the mutual funds
that now or hereafter may be included in the GT Global Group of Funds ("Funds").
The Dealer Agreement is incorporated herein by reference and all the terms of
the Dealer Agreement shall continue in full force and effect.
This Supplementary Dealer Agreement ("Supplementary Agreement") relates solely
to Class C shares ("Class C Shares") of the Funds. Subject to the terms herein
and the terms of the Dealer Agreement, we offer to sell to you, as dealer for
your account, Class C Shares, subject to any limitations imposed by the Funds
and subject to confirmation by Us in each instance. All references to "Class A
shares and Class B shares" in the Dealer Agreement are hereby amended to include
"Class A shares, Class B shares and Class C shares," and all references to
"Class A or Class B shares" are hereby amended to include "Class A, Class B or
Class C shares."
1. You are to offer Class C 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.
2. With respect to paragraph 1 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.
3. Any repurchases of Class C Shares will be made at the net asset value of
such shares, less any applicable contingent 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 C 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.
4. As provided in paragraph 13 of the Dealer Agreement, either your acceptance
below or your first order placed pursuant to this Supplementary Agreement for
purchase of Class C Shares of any Fund shall represent your acceptance of this
Supplementary Agreement
<PAGE>
GT GLOBAL, INC.
By: ______________________________
Please return one signed copy of this Supplementary Agreement to:
GT Global, Inc.
50 California Street, 27th Floor
San Francisco, CA 94111-4624
ACCEPTED
Firm Name: _________________________________
By: _________________________________
Address: _________________________________
Date: _________________________________
<PAGE>
EXHIBIT 11
COOPERS COOPERS & LYBRAND L.L.P.
& LYBRAND A PROFESSIONAL SERVICES FIRM
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of GT Global Series Trust:
We hereby consent to the inclusion of our report dated February 17, 1998 on
our audit of the financial statements of the GT Global New Dimension Fund as of
December 31, 1997 in the Statement of Additional Information with respect to the
Post-Effective Amendment to the Registration Statement on Form N-1A under the
Securities Act of 1933, as amended, of the GT Global Series Trust. We further
consent to the reference to our Firm under the captions "Financial Highlights"
and "Other Information" in the Prospectus and "Independent Accountants" in the
Statement of Additional Information.
/S/ COOPERS & LYBRAND L.L.P.
------------------------------------------------------------------------------
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
March 2, 1998
<PAGE>
Exhibit (15)(c)
PLAN OF DISTRIBUTION OF
GT GLOBAL SERIES TRUST -- CLASS C 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 in the Trust (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 Board has established Class A, Class B, Class C, and Advisor
Class 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 C 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 C 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 C
shares;
NOW, THEREFORE, the Trust hereby adopts this Plan with respect to the Class
C 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
C shares at the annualized rate of up to 0.75% of the average
daily net assets of the Fund's Class C shares.
B. Each Fund is authorized to pay GT Global a service fee for the
Fund's Class C shares at the
<PAGE>
annualized rate of up to 0.25% of the average daily net assets of
the Fund's Class C 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 C 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 C 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 C 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 C 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 C shares and/or service Class C
shareholder accounts; compensation to employees of GT Global; compensation to
and
-2-
<PAGE>
expenses, including overhead and telephone expenses, of GT Global; the printing
of prospectuses, statements of additional information and reports for other than
existing Class C 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 C 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 C 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 C
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 C
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 C shares of that
-3-
<PAGE>
Fund. Termination of the Plan with respect to the Class C shares of one Fund
shall not affect the continued effectiveness of this Plan with respect to the
Class C 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 Class C shares of that 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 C 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 C shareholders, irrespective of whether such reports or notices
contain or are accompanied by material intended to result in the sale of Class C
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 C 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 C 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 C 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 C share transactions, preparing and mailing
confirmations of Class C shares sold or redeemed or share certificates, and
reports of Class C share balances; and (ix) all costs of responding to telephone
or mail inquiries of investors or prospective investors.
-4-
<PAGE>
11. It is recognized that the costs of distributing a Fund's Class C
shares may exceed the sum of the contingent deferred sales charges collected on
sales of Class C 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 C 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
securities" and "interested person" shall have the same meanings as those terms
have 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.
15. The Trustees of the Trust and the shareholders of each Fund shall not
be liable for any obligations of the Trust or any Fund under this Plan, and GT
Global or any other person, in asserting any rights or claims under this Plan,
shall look only to the assets and property of the Trust or such Fund in
settlement of such right or claim, and not to such Trustees or shareholders.
IN WITNESS WHEREOF, the Trust has executed this Plan of Distribution on
December 31, 1997.
Attest: GT GLOBAL SERIES TRUST
/s/ Helge K. Lee By: /s/ William J. Guilfoyle
- ------------------------- -----------------------------------
Helge K. Lee William J. Guilfoyle
Secretary President
-5-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS LEGEND CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATMENTS AND IS QUALFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001021453
<NAME> GT GLOBAL SERIES TRUST
<SERIES>
<NUMBER> 010
<NAME> GT GLOBAL NEW DIMENSION FUND - CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 38240
<INVESTMENTS-AT-VALUE> 35446
<RECEIVABLES> 930
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 36375
<PAYABLE-FOR-SECURITIES> 432
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 374
<TOTAL-LIABILITIES> 806
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 37829
<SHARES-COMMON-STOCK> 1424
<SHARES-COMMON-PRIOR> 3
<ACCUMULATED-NII-CURRENT> 29
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 506
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (2794)
<NET-ASSETS> 35569
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8
<OTHER-INCOME> 0
<EXPENSES-NET> 39
<NET-INVESTMENT-INCOME> (31)
<REALIZED-GAINS-CURRENT> 1984
<APPREC-INCREASE-CURRENT> (2794)
<NET-CHANGE-FROM-OPS> (842)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (584)
<NUMBER-OF-SHARES-SOLD> 1561
<NUMBER-OF-SHARES-REDEEMED> (194)
<SHARES-REINVESTED> 55
<NET-CHANGE-IN-ASSETS> 35469
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 39
<AVERAGE-NET-ASSETS> 11935
<PER-SHARE-NAV-BEGIN> 11.43
<PER-SHARE-NII> (0.01)
<PER-SHARE-GAIN-APPREC> (0.31)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (0.48)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.63
<EXPENSE-RATIO> 0.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS LEGEND CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATMENTS AND IS QUALFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001021453
<NAME> GT GLOBAL SERIES TRUST
<SERIES>
<NUMBER> 020
<NAME> GT GLOBAL NEW DIMENSION FUND - CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 38240
<INVESTMENTS-AT-VALUE> 35446
<RECEIVABLES> 930
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 36375
<PAYABLE-FOR-SECURITIES> 432
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 374
<TOTAL-LIABILITIES> 806
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 37829
<SHARES-COMMON-STOCK> 1806
<SHARES-COMMON-PRIOR> 3
<ACCUMULATED-NII-CURRENT> 29
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 506
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (2794)
<NET-ASSETS> 35569
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8
<OTHER-INCOME> 0
<EXPENSES-NET> 39
<NET-INVESTMENT-INCOME> (31)
<REALIZED-GAINS-CURRENT> 1984
<APPREC-INCREASE-CURRENT> (2794)
<NET-CHANGE-FROM-OPS> (842)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (781)
<NUMBER-OF-SHARES-SOLD> 1833
<NUMBER-OF-SHARES-REDEEMED> (97)
<SHARES-REINVESTED> 67
<NET-CHANGE-IN-ASSETS> 35469
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 39
<AVERAGE-NET-ASSETS> 11935
<PER-SHARE-NAV-BEGIN> 11.43
<PER-SHARE-NII> (0.02)
<PER-SHARE-GAIN-APPREC> (0.32)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (0.47)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.62
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS LEGEND CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATMENTS AND IS QUALFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001021453
<NAME> GT GLOBAL SERIES TRUST
<SERIES>
<NUMBER> 030
<NAME> GT GLOBAL NEW DIMENSION FUND - ADVISOR CLASS
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 38240
<INVESTMENTS-AT-VALUE> 35446
<RECEIVABLES> 930
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 36375
<PAYABLE-FOR-SECURITIES> 432
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 374
<TOTAL-LIABILITIES> 806
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 37829
<SHARES-COMMON-STOCK> 117
<SHARES-COMMON-PRIOR> 3
<ACCUMULATED-NII-CURRENT> 29
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 506
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (2794)
<NET-ASSETS> 35569
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8
<OTHER-INCOME> 0
<EXPENSES-NET> 39
<NET-INVESTMENT-INCOME> (31)
<REALIZED-GAINS-CURRENT> 1984
<APPREC-INCREASE-CURRENT> (2794)
<NET-CHANGE-FROM-OPS> (842)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (53)
<NUMBER-OF-SHARES-SOLD> 113
<NUMBER-OF-SHARES-REDEEMED> (5)
<SHARES-REINVESTED> 5
<NET-CHANGE-IN-ASSETS> 35469
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 39
<AVERAGE-NET-ASSETS> 11935
<PER-SHARE-NAV-BEGIN> 11.43
<PER-SHARE-NII> 0.01
<PER-SHARE-GAIN-APPREC> (0.31)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (0.49)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.64
<EXPENSE-RATIO> 0.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
GT GLOBAL SERIES TRUST
AMENDED MULTIPLE CLASS PLAN PURSUANT TO RULE 18f-3
GT Global Series Trust ("Trust") hereby adopts this Amended 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 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 up to 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, all as set forth in the
prospectus of the Trust.
Class A shares of the Fund are subject to 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 also are subject to 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 that are purchased without an initial sales
charge due to the sales charge waiver for purchases of $500,000 or more are
subject to a contingent deferred sales charge ("CDSC") on redemptions of shares
made within one year after the date of purchase. 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.
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.
<PAGE>
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.
Class B shares automatically will convert to Class A shares as of the close
of business on the last business day of the month in which the seventh
anniversary of the initial issuance of such Class B shares occurs. For purposes
of calculating the holding period required for conversion of Class B shares, the
initial issuance date is (i) the date on which such Class B shares were issued;
or (ii) for Class B shares obtained through an exchange, or a series of
exchanges, the date on which the original Class B shares were issued. The
conversion would be effected at the relative net asset value per share of each
class. At the time of conversion, a portion of Class B shares owned as a result
of reinvestment of dividends or other distributions ("Dividend Shares") also
would convert to Class A shares. The portion of Dividend Shares that would
convert would be determined by the ratio of converting Class B non-Dividend
Shares to the total Class B non-Dividend Shares held by the shareholder.
3. CLASS C SHARES. Class C shares of the Fund are sold to the general
public without imposition of an initial sales charge; however, a CDSC equal to
1% of the lesser of the original purchase price or the net asset value of the
shares at the time of redemption is imposed on certain redemptions of Class C
shares made within one year of purchase. Class C 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 one year after their purchase.
Class C 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 C 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 C shares. Such fees are paid pursuant to a plan of
distribution adopted in accordance with Rule 12b-1 under the 1940 Act.
4. 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 offered only to such
investors as are eligible to purchase Advisor Class shares as described in the
prospectuses of the Trust.
2
<PAGE>
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;
(2) stationery, 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 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. Class C shares of any Fund
may be exchanged only for Class C shares of other GT Global Mutual Funds, as
listed in the Fund's Prospectus. Advisor Class shares of any Fund may
3
<PAGE>
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.
D. ADDITIONAL INFORMATION
The prospectus for the Fund contains additional information about the
Classes and the Fund's multiple class structure. This Amended 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 Amended Multiple Class Plan will become effective on January 13, 1998.
Before any material amendment of this Amended 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.
4
