<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 8, 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. 3
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
AMENDMENT NO. 4
------------------------
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 -- Prospectus
-- GT Global New Dimension Fund
-- Prospectus -- Advisor Class
-- GT Global New Dimension Fund
Part B -- Statement of Additional Information
-- GT Global New Dimension Fund
-- Statement of Additional Information -- Advisor Class
-- GT Global New Dimension Fund
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>
[LOGO]GT GLOBAL NEW DIMENSION FUND
PROSPECTUS -- JUNE 1, 1998
- --------------------------------------------------------------------------------
GT GLOBAL NEW DIMENSION FUND (the "Fund") seeks long-term growth of capital.
Unlike a typical mutual fund, which invests directly in portfolio securities,
the Fund invests 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").
There is no assurance that the Fund will achieve its investment objective.
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR GUARANTEED BY,
ANY BANK, NOR ARE THEY FEDERALLY INSURED OR OTHERWISE PROTECTED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
The Fund is managed by A I M Advisors, Inc. ("AIM") and is sub-advised and
sub-administered by [Chancellor GT Asset Management, Inc.] (the "Sub-adviser").
AIM and the Sub-adviser and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both
indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
This Prospectus sets forth concisely the information an investor should know
before investing and should be read carefully and retained for future reference.
A Statement of Additional Information, dated June 1, 1998, has been filed with
the Securities and Exchange Commission ("SEC") and, as supplemented or amended
from time to time, is incorporated by reference. The Statement of Additional
Information is available without charge by writing to the Fund at 50 California
Street, 27th Floor, San Francisco, CA 94111, or by calling [(800) 824-1580.] It
is also available, along with other related materials, on the SEC's Internet web
site (http://www.sec.gov).
FOR FURTHER INFORMATION, CALL
[(800) 824-1580] OR CONTACT YOUR FINANCIAL ADVISER.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus Page 1
<PAGE>
GT GLOBAL NEW DIMENSION FUND
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Prospectus Summary........................................................................ 3
Investment Objective and Policies......................................................... 8
Description of the Underlying Theme Funds................................................. 9
Risk Factors and Special Considerations................................................... 11
How to Invest............................................................................. 14
How to Make Exchanges..................................................................... 23
How to Redeem Shares...................................................................... 25
Shareholder Account Manual................................................................ 27
Calculation of Net Asset Value............................................................ 28
Dividends, Other Distributions and Federal Income Taxation................................ 28
Management................................................................................ 30
Other Information......................................................................... 33
Performance............................................................................... 36
Appendix.................................................................................. 38
</TABLE>
Prospectus Page 2
<PAGE>
GT GLOBAL NEW DIMENSION FUND
PROSPECTUS SUMMARY
- ------------------------------------------------------------
The following summary is qualified in its entirety by the more detailed
information appearing in the body of this Prospectus. Cross-references in the
summary are to headings in the body of this Prospectus.
<TABLE>
<S> <C> <C>
The Fund: The Fund is a diversified series of GT Global Series Trust ("the Trust").
Investment Objective: The Fund seeks long-term growth of capital.
Principal Investments: The Fund invests, under normal circumstances, substantially all of
its assets in shares of the following Underlying Theme Funds: GT
Global Consumer Products and Services Fund ("Consumer Products and
Services Fund"); GT Global Financial Services Fund ("Financial
Services Fund"); GT Global Health Care Fund ("Health Care Fund");
GT Global Infrastructure Fund ("Infrastructure Fund"); GT Global
Natural Resources Fund ("Natural Resources Fund"); and GT Global
Telecommunications Fund ("Telecommunications Fund"). The
allocation of the Fund's assets to the Underlying Theme Funds is
governed strictly by a formula described herein. See "Investment
Objective and Policies."
There is no assurance that the Fund will achieve its investment
objective. The Fund's net asset value will fluctuate, reflecting
fluctuations in the net asset value of the shares of the
Underlying Theme Funds. Investors should review the investment
objectives and policies of the Fund and the Underlying Theme Funds
carefully and consider their ability to assume these and other
risks involved in purchasing shares of the Fund. See "Investment
Objective and Policies," "Description of the Underlying Theme
Funds" and "Risk Factors and Special Considerations." As a
recently organized entity, the Fund has a limited operating
history.
AIM and the Sub-adviser and their worldwide asset management
Investment Managers: affiliates provide investment management and/or administrative
services to institutional, corporate and individual clients around
the world. AIM and the Sub-adviser are both indirect wholly owned
subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its subsidiaries
are an independent investment management group that has a
significant presence in the institutional and retail segment of
the investment management industry in North America and Europe,
and a growing presence in Asia. AIM was organized in 1976 and,
together with its affiliates, currently advises [over 50]
investment company portfolios. On , 1998, AMVESCAP
PLC acquired the Asset Management Division of Liechtenstein Global
Trust AG ("GT"), which included the Sub-adviser and certain other
affiliates.
Alternative Purchase Plan: Investors may select Class A, Class B or Class C shares, each
subject to different expenses and a different sales charge
structure. Each class has distinct advantages and disadvantages
for different investors, and investors should choose the class
that best suits their circumstances and objectives. See "How to
Invest."
Class A Shares: Offered at net asset value plus any applicable sales charge
(maximum is 4.75% of public offering price) and subject to 12b-1
service and distribution fees at the annualized rate of 0.50% of
the average daily net assets of Class A shares.
</TABLE>
Prospectus Page 3
<PAGE>
GT GLOBAL NEW DIMENSION FUND
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Offered at net asset value with no initial sales charge (a maximum
Class B Shares: contingent deferred sales charge of 5% of net asset value at time
of purchase or sale, whichever is less, is imposed on certain
redemptions made within six years of date of purchase) and subject
to 12b-1 service and distribution fees at the annualized rate of
1.00% of the average daily net assets of Class B shares. 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. Class B shares are subject to higher annual
expenses than Class A shares.
Class C Shares: Offered at net asset value with no initial sales charge (a
contingent deferred sales charge of 1% of net asset value at the
time of purchase or sale, whichever is less, is imposed on certain
redemptions made within one year of purchase) and subject to 12b-1
service and distribution fees at the annualized rate of 1.00% of
the average daily net assets of Class C shares.
Class A, Class B and Class C shares are available through
Shares Available Through: broker/dealers, bank and other financial service entities
("Financial Institutions") that have entered into agreements with
the Fund's distributor, A I M Distributors, Inc. ("AIM
Distributors"). Shares also may be acquired by sending an
application directly to GT Global Investor Services, Inc. (the
"Transfer Agent") or through exchanges of shares as described
below. See "How to Invest" and "Shareholder Account Manual."
Class A and Class B shares of the Fund may be exchanged without a
Exchange Privileges: sales charge for shares of the corresponding class of any other GT
Global Mutual Fund, which are open-end management investment
companies sub-advised by the Sub-adviser. In addition, Class A and
Class C shares may be exchanged for shares of the corresponding
class of some of the mutual funds that are advised by AIM,
distributed by AIM Distributors and are part of The AIM Family of
Funds -Registered Trademark- ("The AIM Family of Funds"). Class C
shares currently may not be exchanged for shares of any other GT
Global Mutual Fund. See "How to Make Exchanges" and "Shareholder
Account Manual."
Redemptions: Shares may be redeemed either through Financial Institutions that
sell shares of the Fund or the Fund's Transfer Agent ("Transfer
Agent"). See "How to Redeem Shares" and "Shareholder Account
Manual."
Dividends and Other Dividends and capital gain distributions, if any, are paid
Distributions: annually.
Reinvestment: Dividends and other distributions may be reinvested automatically
in Fund shares of the distributing class or in shares of the
corresponding class of other GT Global Mutual Funds without a
sales charge.
First Purchase: $500 minimum ($100 for individual retirement accounts ("IRAs") and
reduced amounts for certain other retirement plans).
Subsequent Purchases: $100 minimum ($25 for IRAs and reduced amounts for certain other
retirement plans).
Net Asset Values: Expected to be quoted daily for each class of shares in the
financial section of most newspapers.
</TABLE>
Prospectus Page 4
<PAGE>
GT GLOBAL NEW DIMENSION FUND
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Other Features:
Class A Shares: Letter of Intent Dollar Cost Averaging Program
Quantity Discounts Automatic Investment Plan
Right of Accumulation Systematic Withdrawal Plan
Reinstatement Privilege Portfolio Rebalancing Program
Class B Shares: Systematic Withdrawal Plan Automatic Investment Plan
Portfolio Rebalancing Program Dollar Cost Averaging Program
Conversion Feature
Class C Shares: Systematic Withdrawal Plan Automatic Investment Plan
Dollar Cost Averaging Program
</TABLE>
THE AIM FAMILY OF FUNDS, THE AIM FAMILY OF FUNDS AND DESIGN (I.E., THE AIM
LOGO), AIM AND DESIGN, AIM, AIM LINK, AIM INSTITUTIONAL FUNDS, AIMFUNDS.COM, LA
FAMILIA AIM DE FONDOS AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
Prospectus Page 5
<PAGE>
GT GLOBAL NEW DIMENSION FUND
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
SUMMARY OF INVESTOR COSTS. The expenses and maximum transaction costs associated
with investing in the Class A, Class B and Class C shares of the Fund are
reflected in the following tables.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
------- ------- -------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION COSTS *:
Maximum sales charge on purchases of shares (as a % of offering price).................. 4.75% None None
Sales charges on reinvested distributions to shareholders............................... None None None
Maximum deferred sales charge (as a % of net asset value at time of purchase or sale,
whichever is less)..................................................................... None 5.00% 1.00%
Redemption charges...................................................................... None None None
Exchange fees........................................................................... None None None
ANNUAL FUND OPERATING EXPENSES +:
(AS A % OF AVERAGE NET ASSETS)
Investment management fees.............................................................. None None None
12b-1 distribution and service fees..................................................... 0.50% 1.00% 1.00%
Other expenses.......................................................................... None None None
------- ------- -------
Total Fund Operating Expenses........................................................... 0.50% 1.00% 1.00%
------- ------- -------
------- ------- -------
</TABLE>
- ------------------
* Sales charge waivers are available for Class A, Class B and Class C shares,
and reduced sales charges are available for Class A shares. The maximum 5%
contingent deferred sales charge on Class B shares applies to redemptions
during the first year after purchase. The charge declines thereafter,
reaching zero after six years. The 1% contingent deferred sales charge on
Class C shares applies only to redemptions during the first year after
purchase. See "How to Invest."
+ The Annual Fund Operating Expenses are estimated for the Fund's initial
fiscal period. "Other expenses" (including transfer agency, legal and audit
fees and other operating expenses) initially will be borne by the
Sub-adviser. Subject to receipt of an order of the SEC pursuant to a pending
exemptive application and a private letter ruling issued by the Internal
Revenue Service, such expenses may be borne by the Sub-adviser and the
Underlying Theme Funds or the Underlying Theme Funds alone. See "Other
Information -- Special Servicing Agreement." Long-term shareholders may pay
more than the economic equivalent of the maximum front-end sales charge
permitted by the National Association of Securities Dealers, Inc. rules
regarding investment companies. See "Management" and the Statement of
Additional Information for more information. The Fund also offers Advisor
Class shares, which are not subject to 12b-1 distribution and service fees,
to certain categories of investors. See "How to Invest."
In addition to the Annual Fund Operating Expenses shown above, the Fund, as a
shareholder in the Underlying Theme Funds, indirectly bears its pro rata share
of the fees and expenses incurred by the Underlying Theme Funds. As a result,
the investment returns of the Fund reflect the expenses of the Underlying Theme
Funds in which it holds shares. Because the Fund invests only in Advisor Class
shares of the Underlying Theme Funds, it pays no sales charge or 12b-1
distribution or service fees in connection with these investments. The following
table shows the expense ratios applicable to Advisor Class shares of the
Underlying Theme Funds for their fiscal years ended October 31, 1997.
<TABLE>
<CAPTION>
EXPENSE RATIO OF
ADVISOR CLASS
UNDERLYING THEME FUND SHARES (1)
- ------------------------------------------------------------------------------------- -------------------
<S> <C>
Consumer Products and Services Fund.................................................. 1.34%
Financial Services Fund.............................................................. 1.50%
Health Care Fund..................................................................... 1.27%
Infrastructure Fund.................................................................. 1.50%
Natural Resources Fund............................................................... 1.50%
Telecommunications Fund.............................................................. 1.29%
</TABLE>
- ------------------
(1) AIM has undertaken to limit each Underlying Theme Fund's expenses (exclusive
of brokerage commissions, taxes, interest and extraordinary expenses) to a
maximum level of 1.50% of the average daily net assets of such fund's
Advisor Class shares.
Prospectus Page 6
<PAGE>
GT GLOBAL NEW DIMENSION FUND
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
The following table shows the aggregate expense ratio of each class of the Fund
based on a weighted average of the expense ratios of Advisor Class shares of the
Underlying Theme Funds in which the Fund was invested as of October 31, 1997,
plus the Fund's total operating expenses. (1)
<TABLE>
<CAPTION>
GT GLOBAL NEW DIMENSION FUND
(INCLUDING THE FUND'S INDIRECT PRO RATA SHARE OF THE EXPENSES OF THE UNDERLYING THEME ESTIMATED AGGREGATE
FUNDS) EXPENSE RATIO (2)
- ------------------------------------------------------------------------------------------ ---------------------------------
<S> <C>
Class A................................................................................... %
Class B................................................................................... %
Class C................................................................................... %
</TABLE>
- ------------------
(1) These percentages do not necessarily reflect the current allocation of the
Fund's assets to the Underlying Theme Funds or the allocation of the Fund's
assets on any other date.
(2) Because of AIM's undertaking to limit each Underlying Theme Fund's expenses
as described above, the Fund's aggregate expense ratio will not exceed
2.00%, 2.50% and 2.50% for Class A, Class B and Class C Shares,
respectively.
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES:
An investor would have directly or indirectly paid the following expenses of the
Fund based upon the Fund's estimated aggregate expense ratio at the end of the
periods shown on a $1,000 investment in the Fund, assuming a 5% annual return:
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS
------------- ---------------
<S> <C> <C>
Class A shares (1)............................................................................. $ $
Class B shares:
Assuming a complete redemption at end of period (2).......................................... $ $
Assuming no redemption....................................................................... $ $
Class C shares:
Assuming a complete redemption at end of period (2).......................................... $ $
Assuming no redemption....................................................................... $ $
</TABLE>
- ------------------
(1) Assumes payment of maximum sales charge by the investor.
(2) Assumes deduction of the applicable contingent deferred sales charge.
THE FOREGOING TABLES ARE INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUND. THE
"HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF FUTURE EXPENSES. THE FUND'S
ACTUAL DIRECT AND INDIRECT EXPENSES, AND AN INVESTOR'S DIRECT AND INDIRECT
EXPENSES, MAY BE MORE OR LESS THAN THOSE SHOWN. The example assumes payment by
the Fund of operating expenses at the level set forth under "Annual Fund
Operating Expenses" above and of its indirect pro rata share of the Advisor
Class share expenses of the Underlying Theme Funds, as described above.
The tables and the assumption in the Hypothetical Example of a 5% annual return
are required by regulations of the SEC applicable to all mutual funds. The 5%
annual return is not a prediction of and does not represent the Fund's or any
Underlying Theme Fund's projected or actual performance.
Prospectus Page 7
<PAGE>
GT GLOBAL NEW DIMENSION FUND
INVESTMENT OBJECTIVE AND
POLICIES
- --------------------------------------------------------------------------------
The Fund seeks long-term growth of capital. Unlike a typical mutual fund, which
invests directly in securities, the Fund invests, under normal circumstances,
substantially all of its assets in the following Underlying Theme Funds:
/ / Consumer Products and Services Fund
/ / Financial Services Fund
/ / Health Care Fund
/ / Infrastructure Fund
/ / Natural Resources Fund
/ / Telecommunications Fund
The Sub-adviser exercises no discretion in investing the Fund's assets. Rather,
the Sub-adviser periodically determines the allocation of the Fund's assets to
the Underlying Theme Funds according to the industry weightings of the companies
composing the Morgan Stanley Capital International All Country (AC) World Index
("MSCI"). (The MSCI is a broad unmanaged index of global stock prices,
comprising approximately 2,480 different issuers, located in 47 countries
including both developed and developing countries as of November 30, 1997. Each
of the 2,480 stocks is placed into one of 38 MSCI industry sectors.) The
Sub-adviser assesses which of the Underlying Theme Funds can invest, as part of
its primary focus, in each of these industries. For example, industries in the
MSCI in which the Financial Services Fund invests include the Banking, Financial
Services, Insurance and Real Estate industries. The percentage that those
industries compose in the MSCI is the initial weighting assigned to the
Financial Services Fund. Where two or more Underlying Theme Funds can invest in
an industry, the weighting of that industry in the MSCI is split equally among
each qualifying Underlying Theme Fund. See the Appendix for the allocation of
the 38 industries to the Underlying Theme Funds. Of course, the Underlying Theme
Funds do not invest necessarily in the same industries or the same companies
that compose the MSCI. Because the percentage weight assigned to each industry
in the MSCI changes over time and because the percentage of the Fund's assets
invested in each Underlying Theme Fund will change over time, the Sub-adviser
will rebalance the Fund's assets among the Underlying Theme Funds at least
semi-annually. In addition, the Sub-adviser will invest incoming money in, and
satisfy redemption requests by redeeming shares of, each Underlying Theme Fund
according to the MSCI weighting as of the last business day of the preceding
month.
As of October 31, 1997, the allocation of the Fund's assets to the Underlying
Theme Funds was as follows:
<TABLE>
<S> <C>
Consumer Products and Services Fund..... 28.69%
Financial Services Fund................. 19.16%
Health Care Fund........................ 8.80%
Infrastructure Fund..................... 11.89%
Natural Resources Fund.................. 15.85%
Telecommunications Fund................. 8.02%
</TABLE>
These percentages do not include cash or money market instruments held by the
Fund and do not necessarily reflect the current allocation of the Fund's assets
to the Underlying Theme Funds or the allocation of the Fund's assets on any
other date.
The Fund is a more diversified investment than any single Underlying Theme Fund.
However, because the Underlying Theme Funds are actively managed without any
attempt to reflect the country, industry or company weightings of the MSCI, the
Underlying Theme Funds will perform differently than the corresponding industry
components of the MSCI, and the Underlying Theme Funds will perform differently
than the overall MSCI. While the Fund does not therefore represent the
performance of the MSCI, it does represent a globally diversified portfolio,
with allocations among developed and emerging countries, industries and
companies intended to achieve long-term growth of capital.
The Fund is designed to meet the needs of investors who seek professional money
management services and who appreciate the advantages of diversification. The
Fund by itself should not be considered a complete investment program. As a
recently organized entity, the Fund has a limited operating history.
OTHER INFORMATION. The investment objective of the Fund may not be changed
without the approval
Prospectus Page 8
<PAGE>
GT GLOBAL NEW DIMENSION FUND
of a majority of its outstanding voting securities. As defined in the Investment
Company Act of 1940, as amended ("1940 Act"), and as used in this Prospectus, a
"majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the Fund's shares represented at a meeting at which more than 50% of the
outstanding shares are represented, or (ii) more than 50% of the outstanding
shares. In addition, the Fund has adopted certain investment limitations as
fundamental policies that also may not be changed without shareholder approval.
See "Investment Limitations" in the Statement of Additional Information. Unless
specifically noted, the Fund's investment policies described in this Prospectus,
and in the Statement of Additional Information, are not fundamental policies and
may be changed by the Trust's Board of Trustees without shareholder approval.
- --------------------------------------------------------------------------------
DESCRIPTION OF THE
UNDERLYING THEME FUNDS
- --------------------------------------------------------------------------------
The following descriptions summarize the investment objectives and policies of
the Underlying Theme Funds. There is no assurance that any Underlying Theme Fund
will achieve its investment objective. The Statement of Additional Information
includes more information about the investment policies of the Underlying Theme
Funds. Investors desiring more information on an Underlying Theme Fund should
call [(800) 824-1580] or contact their financial adviser for the Underlying
Theme Fund's prospectus.
CONSUMER PRODUCTS AND SERVICES FUND. The Consumer Products and Services Fund's
investment objective is long-term capital growth. It seeks its objective by
investing all of its investable assets in the Consumer Products and Services
Portfolio, that, in turn, invests primarily in equity securities of companies
throughout the world that manufacture, market, retail or distribute consumer
products and services. The Consumer Products and Services Portfolio's investment
objective is identical to that of the Consumer Products and Services Fund.
At least 65% of the Consumer Products and Services Portfolio's total assets
normally will be invested in common and preferred stocks and warrants to acquire
such securities issued by consumer products and services companies. A "consumer
products or services" company is an entity in which (i) at least 50% of either
the revenues or earnings was derived from activities relating to consumer
products or services, or (ii) at least 50% of the assets was devoted to such
activities, based on the company's most recent fiscal year. The remainder of the
Consumer Products and Services Portfolio's assets may be invested in debt
securities issued by consumer products or services companies and/or equity and
debt securities of companies outside the consumer products or services
industries, which, in the opinion of the Sub-adviser, stand to benefit from
developments in such industries.
FINANCIAL SERVICES FUND. The Financial Services Fund's investment objective is
long-term capital growth. It seeks its objective by investing all of its
investable assets in the Financial Services Portfolio, that, in turn, invests
primarily in equity securities of companies throughout the world that operate in
the financial services industries. The Financial Services Portfolio's investment
objective is identical to that of the Financial Services Fund.
At least 65% of the Financial Services Portfolio's total assets normally will be
invested in common and preferred stocks and warrants to acquire such securities
issued by financial services companies. A "financial services" company is an
entity in which (i) at least 50% of either the revenues or earnings was derived
from financial services activities, or (ii) at least 50% of the assets was
devoted to such activities, based on the company's most recent fiscal year. The
remainder of the Financial Services Portfolio's assets may be invested in debt
securities issued by financial services companies and/or equity and debt
securities of companies outside of the financial services industries, which, in
the opinion of the Sub-adviser, stand to benefit from developments in the
financial services industries.
HEALTH CARE FUND. The Health Care Fund's investment objective is long-term
capital appreciation. It seeks its objective by investing primarily in equity
securities of health care companies throughout the world.
At least 65% of the Health Care Fund's total assets normally will be invested in
common and preferred stocks and warrants to acquire such securities issued by
health care companies. A "health care"
Prospectus Page 9
<PAGE>
GT GLOBAL NEW DIMENSION FUND
company is an entity in which (i) at least 50% of either the revenues or
earnings was derived from health care activities, or (ii) at least 50% of the
assets was devoted to such activities, based on the company's most recent fiscal
year. The remainder of the Health Care Fund's assets may be invested in debt
securities issued by health care companies and/or equity and debt securities of
companies outside of the health care industry, which, in the opinion of the
Sub-adviser, stand to benefit from developments in the health care industries.
INFRASTRUCTURE FUND. The Infrastructure Fund's investment objective is long-term
capital growth. It seeks its objective by investing all of its investable assets
in the Infrastructure Portfolio, that, in turn, invests primarily in equity
securities of companies throughout the world that design, develop or provide
products and services significant to a country's infrastructure. The
Infrastructure Portfolio's investment objective is identical to that of the
Infrastructure Fund.
At least 65% of the Infrastructure Portfolio's total assets normally will be
invested in common and preferred stocks and warrants to acquire such securities
issued by infrastructure companies. An "infrastructure" company is an entity in
which (i) at least 50% of either the revenues or earnings was derived from
infrastructure activities, or (ii) at least 50% of the assets was devoted to
such activities, based on the company's most recent fiscal year. The remainder
of the Infrastructure Portfolio's assets may be invested in debt securities
issued by infrastructure companies and/or equity and debt securities of
companies outside of the infrastructure industries, which, in the opinion of the
Sub-adviser, stand to benefit from developments in the infrastructure
industries.
NATURAL RESOURCES FUND. The Natural Resources Fund's investment objective is
long-term capital growth. It seeks its objective by investing all of its
investable assets in the Natural Resources Portfolio, that, in turn, invests
primarily in equity securities of companies throughout the world that own,
explore or develop natural resources and other basic commodities, or supply
goods and services to such companies. The Natural Resources Portfolio's
investment objective is identical to that of the Natural Resources Fund.
At least 65% of the Natural Resources Portfolio's total assets will normally be
invested in common and preferred stocks and warrants to acquire such securities
issued by natural resource companies. A "natural resource" company is an entity
in which (i) at least 50% of either the revenues or earnings was derived from
natural resource activities, or (ii) at least 50% of the assets was devoted to
such activities, based upon the company's most recent fiscal year. The remainder
of the Natural Resources Portfolio's assets may be invested in debt securities
issued by natural resource companies and/or equity and debt securities of
companies outside of the natural resource industries, which, in the opinion of
the Sub-adviser, stand to benefit from developments in the natural resource
industries.
TELECOMMUNICATIONS FUND. The Telecommunications Fund's investment objective is
long-term growth of capital. It seeks its objective by investing primarily in
equity securities of companies throughout the world engaged in the development,
manufacture or sale of telecommunications services or equipment.
At least 65% of the Telecommunications Fund's total assets normally will be
invested in common and preferred stocks and warrants to acquire such securities
issued by telecommunications companies. A "telecommunications" company is an
entity in which (i) at least 50% of either its revenues or earnings was derived
from telecommunications activities, or (ii) at least 50% of its assets was
devoted to telecommunications activities, based on the company's most recent
fiscal year. The remainder of the assets of the Telecommunications Fund may be
invested in debt securities issued by telecommunications companies and/or equity
and debt securities of companies outside of the telecommunications industry
which, in the opinion of the Sub-adviser, stand to benefit from developments in
the telecommunications industries.
Prospectus Page 10
<PAGE>
GT GLOBAL NEW DIMENSION FUND
RISK FACTORS AND
SPECIAL CONSIDERATIONS
- --------------------------------------------------------------------------------
INVESTING IN THE UNDERLYING THEME FUNDS. The investments of the Fund are
concentrated in the Underlying Theme Funds, so the Fund's investment performance
is directly related to the investment performance of the Underlying Theme Funds.
The ability of the Fund to meet its investment objective is directly related to
the allocation among those Underlying Theme Funds as well as the ability of the
Underlying Theme Funds to meet their objectives. There is no assurance that the
investment objective of the Fund or any Underlying Theme Fund will be achieved.
The value of the Underlying Theme Funds' domestic and foreign investments varies
in response to many factors. The value of equity securities held by an
Underlying Theme Fund will fluctuate in response to general market and economic
developments, as well as developments affecting the particular issuers of such
securities. In addition, the value of debt securities held by an Underlying
Theme Fund generally will fluctuate with changes in the perceived
creditworthiness of the issuers of such securities and interest rates.
Because each Underlying Theme Fund focuses its investments on particular
industries, an investment in each may be more volatile than that of other
investment companies that do not concentrate their investments in such a manner.
The value of the shares of each Underlying Theme Fund will be especially
susceptible to factors affecting the industries in which it focuses. In
particular, each of the industries is subject to governmental regulation that
may have a material effect on the products and services offered by companies in
these industries.
UNDERLYING THEME FUNDS' INVESTMENT ALLOCATION. The Sub-adviser allocates each
Underlying Theme Fund's (or its corresponding Portfolio's) assets among
securities of countries and in currency denominations where opportunities for
meeting each Underlying Theme Fund's investment objective are expected to be the
most attractive. Each Underlying Theme Fund may invest substantially in
securities denominated in foreign currencies. Under normal conditions, each
Underlying Theme Fund invests in the securities of issuers located in at least
three countries, including the United States; investments in securities of
issuers in any one country, other than the United States, will represent no more
than 40% of the Financial Services Portfolio's and the Telecommunication Fund's
total assets, and no more than 50% of the Infrastructure Portfolio's, the
Natural Resources Portfolio's, the Health Care Fund's and the Consumer Products
and Services Portfolio's total assets.
In analyzing specific companies for possible investment the Sub-adviser, on
behalf of the Underlying Theme Funds, ordinarily looks for several of the
following characteristics: above-average per share earnings growth; high return
on invested capital; a healthy balance sheet; sound financial and accounting
policies and overall financial strength; strong competitive advantages;
effective research and product development and marketing; development of new
technologies; efficient service; pricing flexibility; strong management; and
general operating characteristics that will enable the companies to compete
successfully in their respective markets. In assessing companies for the Natural
Resources Portfolio, the Sub-adviser will also evaluate, among other factors,
their capabilities for expanded exploration and production, superior exploration
programs and production techniques and facilities, current inventories, expected
production and demand levels and the potential to accumulate new resources.
FOREIGN INVESTMENTS. The Underlying Theme Funds' investments in foreign
securities may involve risks in addition to those of U.S. investments, including
increased political and economic risk, as well as exposure to currency
fluctuations. By investing in foreign securities, the Underlying Theme Funds
also have increased economic and political risks as they are exposed to events
and factors in the various world markets. This is especially true of an
Underlying Theme Fund that invests in emerging markets. Many investments in
emerging markets are considered speculative and therefore may offer greater
return potential, but have significantly greater risk. Also, to the extent that
an Underlying Theme Fund's investments are denominated in foreign currencies,
changes in the value of foreign currencies can significantly affect the Fund's
share price.
Prospectus Page 11
<PAGE>
GT GLOBAL NEW DIMENSION FUND
LOWER QUALITY DEBT SECURITIES. The Fund may invest in an Underlying Theme Fund
that invests in high yield, high risk securities, commonly known as "junk
bonds." As a result, the Fund may be subject to some of the risks resulting from
high yield investing. The Fund also may invest in Underlying Theme Funds that
invest in medium grade bonds. Lower quality debt instruments generally offer a
higher current yield than that available from higher grade issues, but typically
involve greater risk. Lower rated and comparable unrated securities are
especially subject to adverse changes in general economic conditions, to changes
in the financial condition of their issuers, and to price fluctuation in
response to changes in interest rates. During periods of economic downturn or
rising interest rates, issuers of these instruments may experience financial
stress that could adversely affect their ability to make payments of principal
and interest and increase the possibility of default.
ILLIQUID SECURITIES. The Underlying Theme Funds may invest in securities for
which no readily available market exists, so-called "illiquid securities."
Illiquid securities may be more difficult to value than liquid securities and
the sale of illiquid securities generally will require more time and result in
higher brokerage charges or dealer discounts and other selling expenses than the
sale of liquid securities. Moreover, illiquid securities often sell at prices
lower than similar securities that are liquid.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. Each Underlying Theme Fund
is authorized to enter into options, futures and forward currency transactions,
although they might not enter into such transactions. Options, futures and
forward currency transactions involve certain risks, which include: (1)
dependence on the Sub-adviser's ability to predict movements in the prices of
individual securities, fluctuations in the general securities markets or in the
appropriate market sector and movements in interest rates and currency markets;
(2) imperfect correlation, or even no correlation, between movements in the
price of options, forward contracts, futures contracts or options thereon and
movements in the price of the currency or security hedged or used for cover; (3)
the fact that skills and techniques needed to trade options, futures contracts
and options thereon or to use forward currency contracts are different from
those needed to select the securities in which an Underlying Theme Fund invests;
(4) lack of assurance that a liquid secondary market will exist for any
particular option, futures contract or option thereon at any particular time;
(5) the possible loss of principal under certain conditions; and (6) the
possible inability of an Underlying Theme Fund to purchase or sell a portfolio
security at a time when it would otherwise be favorable for it to do so, or the
possible need for an Underlying Theme Fund to sell a security at a
disadvantageous time, due to the need for the Underlying Theme Fund to maintain
"cover" or to set aside securities in connection with hedging transactions.
INVESTING IN SMALLER COMPANIES. Each Underlying Theme Fund may invest in smaller
companies that may present greater opportunities for capital appreciation, but
may also involve greater risks than large, established issuers. Such smaller
companies may have limited resources, and their securities may trade less
frequently and in more limited volume than the securities of larger, more
established companies. As a result, the prices of the securities of such smaller
companies may fluctuate to a greater degree than the prices of the securities of
other issuers.
OTHER INVESTMENT PRACTICES OF THE UNDERLYING THEME FUNDS. In addition to the
investment practices described in this Prospectus, the Underlying Theme Funds
may engage in certain other investment practices, including lending their
portfolio securities; purchasing securities on a when-issued or delayed delivery
basis; entering into repurchase or reverse repurchase agreements; and borrowing
money. Further information on the investment policies, practices and risks of
the Underlying Theme Funds can be found in the Statement of Additional
Information as well as the Underlying Theme Funds' prospectus and statement of
additional information.
PURCHASES AND REDEMPTIONS. From time to time, the Underlying Theme Funds may
experience relatively large purchases or redemptions due to rebalancing of the
Fund by the Sub-adviser. This may have a material effect on the Underlying Theme
Funds, because Underlying Theme Funds that experience redemptions as a result of
the rebalancing may have to sell portfolio securities and because Underlying
Theme Funds that receive additional cash will have to invest it. While it is
impossible to predict the overall impact of these transactions over time, there
could be adverse effects on portfolio management to the extent that Underlying
Theme Funds may be required to sell securities at times when they would not
otherwise do so, or receive cash that cannot be invested in an expeditious
manner. There may be tax consequences associated with purchases and sales of
Prospectus Page 12
<PAGE>
GT GLOBAL NEW DIMENSION FUND
securities, and such sales also may increase transaction costs.
MASTER-FEEDER STRUCTURE OF CERTAIN UNDERLYING THEME FUNDS. The Financial
Services Fund, Infrastructure Fund, Natural Resources Fund and Consumer Products
and Services Fund, unlike mutual funds that directly acquire and manage their
own portfolios of securities, each seeks its investment objective by investing
all of its investable assets in the Financial Services Portfolio, Infrastructure
Portfolio, Natural Resources Portfolio and Consumer Products and Services
Portfolio (each a "Portfolio"), respectively. Each Portfolio is a separate
investment company. Because each such Underlying Theme Fund will invest only in
its corresponding Portfolio, that Underlying Theme Fund's shareholders will
acquire only an indirect interest in the investments of that Portfolio.
TEMPORARY DEFENSIVE STRATEGIES. The Underlying Theme Funds retain the
flexibility to respond promptly to changes in market and economic conditions.
Accordingly, in the interest of preserving shareholders' capital the Sub-adviser
may employ a temporary defensive investment strategy if it determines such a
strategy to be warranted due to market, economic or political conditions. Under
a defensive strategy, the Underlying Theme Funds may invest up to 100% of their
total assets in cash and/or high quality debt securities and money market
instruments. To the extent an Underlying Theme Fund adopts a temporary defensive
posture, it will not be invested so as to achieve directly its investment
objective.
In addition, pending investment of proceeds from new sales of the shares or to
meet its ordinary daily cash needs, the Underlying Theme Funds may hold cash
and/or may invest in high quality debt instruments and money market instruments.
The Fund may hold cash and/or may invest in money market instruments under
similar circumstances. Money market instruments in which the Underlying Theme
Funds and the Fund may invest include, but are not limited to, United States
government securities; high-grade commercial paper; bank certificates of
deposit; bankers' acceptances and repurchase agreements related to any of the
foregoing. "High-grade commercial paper" refers to commercial paper rated A-1 by
Standard & Poor's, a division of The McGraw-Hill Companies, Inc., or P-1 by
Moody's Investors Service, Inc. or, if not rated, determined by the Sub-adviser
to be of comparable quality.
PORTFOLIO TURNOVER. The Fund's portfolio turnover rate is expected to be low and
is not anticipated to exceed 20% annually. The portfolio turnover rates of the
Underlying Theme Funds and their corresponding Portfolios have ranged from 35%
to 392% during their most recent fiscal years. There is no assurance that the
turnover rates of the Underlying Theme Funds and their corresponding Portfolios
will remain within this range during subsequent fiscal years. Higher turnover
rates may result in higher expenses being incurred by the Underlying Theme
Funds.
AFFILIATED PERSONS. The officers and trustees of the Trust currently serve as
officers and trustees of the Underlying Theme Funds. The Sub-adviser also serves
as investment adviser and/or administrator to the Underlying Theme Funds.
Therefore, conflicts may arise as these persons fulfill their fiduciary
responsibilities to the Fund and the Underlying Theme Funds.
Prospectus Page 13
<PAGE>
GT GLOBAL NEW DIMENSION FUND
HOW TO INVEST
- --------------------------------------------------------------------------------
GENERAL. Shares of the Fund may be purchased through Financial Institutions,
some of which may charge the investor a transaction fee. That fee will be in
addition to the sales charge payable by the investor, with respect to Class A
shares. Some of these Financial Institutions (or their designees) may be
authorized to accept purchase orders on behalf of the Fund. All purchase orders
will be executed at the public offering price next determined after the purchase
order is received, which includes any applicable sales charge for Class A
shares. Orders received by the Transfer Agent before the close of regular
trading on the New York Stock Exchange ("NYSE") (currently 4:00 p.m. Eastern
Time, unless weather, equipment failure or other factors contribute to an
earlier closing time) on any Business Day will be executed at the public
offering price for the applicable class of shares determined that day. Orders
received by authorized institutions (or their designees) before the close of
regular trading on the NYSE on a Business Day will be deemed to have been
received by the Fund on such day and will be effected that day, provided that
such orders are transmitted to the Transfer Agent prior to the time set for the
receipt of such orders. A "Business Day" is any day Monday through Friday on
which the NYSE is open for business. The authorized institution (or its
designee) will be responsible for forwarding the investor's order to the
Transfer Agent so that it will be received prior to such time.
The minimum initial investment is $500 ($100 for IRAs and $25 for custodial
accounts under Section 403(b)(7) of the Internal Revenue Code of 1986, as
amended (the "Code"), and other tax-qualified employer-sponsored retirement
accounts, if made under a systematic investment plan providing for monthly
payments of at least that amount). The minimum for additional purchases is $100
($25 for IRAs, Code Section 403 (b)(7) custodial accounts and other
tax-qualified employer-sponsored retirement accounts, as mentioned above). THE
FUND AND AIM DISTRIBUTORS RESERVE THE RIGHT TO REJECT ANY PURCHASE ORDER AND TO
SUSPEND THE OFFERING OF SHARES FOR A PERIOD OF TIME. In particular, the Fund and
AIM Distributors may reject purchase orders or exchanges by investors who appear
to follow, in the Sub-adviser's judgment, a market-timing strategy or otherwise
engage in excessive trading. See "How To Make Exchanges -- Limitations on
Purchase Orders and Exchanges."
WHEN PLACING PURCHASE ORDERS, INVESTORS SHOULD SPECIFY WHETHER THE ORDER IS FOR
CLASS A, CLASS B OR CLASS C SHARES OF THE FUND. ALL PURCHASE ORDERS THAT FAIL TO
SPECIFY A CLASS WILL AUTOMATICALLY BE INVESTED IN CLASS A SHARES. AIM
DISTRIBUTORS WILL REJECT ANY ORDER FOR PURCHASE OF MORE THAN 250,000 FOR CLASS B
SHARES.
PURCHASES THROUGH THE TRANSFER AGENT. After an initial investment is made and a
shareholder account is established through a Financial Institution, at the
investor's option subsequent purchases may be made directly through the Transfer
Agent. See "Shareholder Account Manual." Investors may also make an initial
investment in the Fund and establish a shareholder account directly through the
Transfer Agent by completing and signing an Account Application accompanying
this Prospectus. Investors should mail to the Transfer Agent the completed
Application together with a check to cover the purchase in accordance with the
instructions provided in the Shareholder Account Manual. Purchases will be
executed at the public offering price next determined after the Transfer Agent
has received the Account Application and check. Subsequent investments do not
need to be accompanied by an application.
Investors also may purchase shares of the Fund by bank wire. Bank wire purchases
will be effected at the next determined public offering price after the bank
wire is received. A wire investment is considered received when the Transfer
Agent is notified that the bank wire has been credited to the Fund. The investor
is responsible for providing prior telephonic or facsimile notice to the
Transfer Agent that a bank wire is being sent. An investor's bank may charge a
service fee for wiring money to the Fund. The Transfer Agent currently does not
charge a service fee for facilitating wire purchases, but reserves the right to
do so in the future. Investors desiring to open an account by bank wire should
call the Transfer Agent at the
Prospectus Page 14
<PAGE>
GT GLOBAL NEW DIMENSION FUND
appropriate toll-free number provided in the Shareholder Account Manual to
obtain an account number and detailed instructions.
CERTIFICATES. Physical certificates representing the Fund's shares will not be
issued unless a written request is submitted to the Transfer Agent. Shares of
the Fund are recorded on a register by the Transfer Agent, and shareholders who
do not elect to receive certificates have the same rights of ownership as if
certificates had been issued to them. Redemptions and exchanges by shareholders
who hold certificates may take longer to effect than similar transactions
involving non-certificated shares because the physical delivery and processing
of properly executed certificates is required. ACCORDINGLY, THE FUND RECOMMENDS
THAT SHAREHOLDERS DO NOT REQUEST ISSUANCE OF CERTIFICATES.
DIFFERENCES AMONG THE CLASSES. The primary difference among the three classes of
the Fund's shares offered through this Prospectus lies in their sales charge
structures and ongoing expenses, as summarized below. Class A, Class B and Class
C shares represent the same interests in the Fund and have the same rights,
except that each class bears the separate expenses of its 12b-1 distribution
plan and has exclusive voting rights with respect to such plan, each class can
experience other minor expense differences and, in addition to different sales
charges, each class has a separate exchange privilege.
The decision as to which class of shares is more beneficial to an investor
depends on the amount invested, the intended length of time the investment is
held and the investor's personal situation. Large investments may qualify for a
reduced Class A sales charge. Investors in Class B shares and Class C shares
have 100% of the purchase invested immediately. Investors intending to invest
for a relatively short period might consider Class C shares. Consult your
financial adviser. Financial Institutions may receive different levels of
compensation for selling a particular class of shares.
[ADVISOR CLASS SHARES. Advisor Class shares are offered through a separate
prospectus to (a) trustees or other fiduciaries purchasing shares for employee
benefit plans that are sponsored by organizations that have at least 1,000
employees; (b) any account with assets of at least $10,000 if (i) a financial
planner, trust company, bank trust department or registered investment adviser
has investment discretion over the account and (ii) the account holder pays such
person as compensation for its advice and other services an annual fee of at
least .50% of the assets in the account; (c) any account with assets of at least
$10,000 if (i) the account is established under a "wrap fee" program and (ii)
the account holder pays the sponsor of the program an annual fee of at least
.50% of the assets in the account; (d) accounts advised by one of the companies
composing or affiliated with AMVESCAP PLC; and (e) any of those companies.]
PURCHASING CLASS A SHARES
The Fund's public offering price for Class A shares is the next determined net
asset value per share (see "Calculation of Net Asset Value") plus a sales charge
determined in accordance with the following schedule:
<TABLE>
<CAPTION>
DEALER
INVESTOR'S SALES CHARGE CONCESSION
-------------------------------- ---------------
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
AMOUNT OF OF THE OF THE OF THE
INVESTMENT PUBLIC NET PUBLIC
IN SINGLE OFFERING AMOUNT OFFERING
TRANSACTION PRICE INVESTED PRICE
- ------------------ --------------- --------------- ---------------
<S> <C> <C> <C>
Less than
$50,000......... 4.75% 4.99% 4.00%
$50,000 but less
than $100,000... 4.00 4.17 3.25
$100,000 but less
than $250,000... 3.75 3.90 3.00
$250,000 but less
than $500,000... 2.50 2.56 2.00
$500,000 but less
than
$1,000,000...... 2.00 2.04 1.60
</TABLE>
PURCHASES OF $1,000,000 OR MORE ARE AT NET ASSET VALUE, SUBJECT TO A CONTINGENT
DEFERRED SALES CHARGE OF 1% IF SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE
DATE SUCH SHARES WERE PURCHASED. AIM Distributors may pay a dealer concession
and/or advance a service fee on such transactions. Shares purchased prior to
June 1, 1998 without a sales charge based on the aggregate purchase amount equal
to at least $500,000 are subject to a contingent deferred sales charge for the
first year after their purchase equal to 1% of the lower of the original
purchase price or the net asset value of such shares at the time of redemption.
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of Class A shares of the GT Global
Mutual Funds that are otherwise subject to an initial sales charge, provided
that such purchases are made by a "purchaser" as hereinafter defined.
Prospectus Page 15
<PAGE>
GT GLOBAL NEW DIMENSION FUND
Purchases of Class B shares of the GT Global Mutual Funds and The AIM Family of
Funds will not be taken into account in determining whether a purchase qualifies
for a reduction in initial sales charges.
The term "purchaser" means:
/ / an individual and his or her spouse and children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the
benefit of any such person, such as an IRA, Roth IRA, a single-participant
money-purchase/profit-sharing plan or an individual participant in a 403(b)
Plan (unless such 403(b) plan qualifies as the purchaser as defined below);
/ / a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Code, provided that:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the funds will not
accept contributions submitted with respect to individual participants);
b. each transmittal must be accompanied by a single check or wire transfer;
and
c. all new participants must be added to the 403(b) plan by submitting an
application on behalf of each new participant with the contribution
transmittal;
/ / a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code) and 457 plans, although more than one beneficiary or participant is
involved;
/ / a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective
Simplified Employee Pension account ("SARSEP"), a Savings Incentive Match
Plans for Employees IRA ("SIMPLE IRA") where the employer has notified AIM
Distributors in writing that all of its related employee SEP, SARSEP or
SIMPLE IRA accounts should be linked;
/ / any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase at a discount of redeemable securities of a
registered investment company; or
/ / the discretionary advised accounts of AIM or A I M Capital Management, Inc.
("AIM Capital").
SALES CHARGE WAIVERS -- CLASS A SHARES. The following persons may purchase Class
A shares of the Fund through AIM Distributors without payment of an initial
sales charge: (a) AIM Management Group Inc. ("AIM Management") and its
affiliated companies; (b) any current or retired officer, director, trustee or
employee, or any member of the immediate family (including spouse, children,
parents and parents of spouse) of any such person, of AIM Management or its
affiliates or of certain mutual funds which are advised or managed by AIM; or
any trust established exclusively for the benefit of such persons; (c) any
employee benefit plan established for employees of AIM Management or its
affiliates; (d) any current or retired officer, director, trustee or employee,
or any member of the immediate family (including spouse, children, parents and
parents of spouse) of any such person, or of CIGNA Corporation or of any of its
affiliated companies, or of First Data Investor Services Group (formerly The
Shareholders Services Group, Inc.); (e) any investment company sponsored by
CIGNA Investments, Inc. or any of its affiliated companies for the benefit of
its directors' deferred compensation plans; (f) discretionary advised clients of
AIM or AIM Capital; (g) registered representatives and employees of dealers who
have entered into agreements with AIM Distributors (or financial institutions
that have arrangements with such dealers with respect to the sale of shares of
the GT Global Mutual Funds or funds of The AIM Family of Funds) and any member
of the immediate family (including spouse, children, parents and parents of
spouse) of any such person, provided that purchases at net asset value are
permitted by the policies of such person's employer; (h) certain broker-dealers,
investment advisers or bank trust departments that provide asset allocation,
similar specialized investment services or investment company transaction
services for their customers, that charge a minimum annual fee for such
services, and that have entered into an agreement with AIM Distributors with
respect to their use of the GT Global Mutual Funds or funds of The AIM Family of
Funds in connection with such services; (i) employees of Triformis Inc.; (j)
shareholders of any of the GT Global Mutual Funds as of April 30, 1987 who since
that date continually have owned shares of one or more of the GT Global Mutual
Funds; and (k) certain former AMA Investment Advisers' shareholders who became
shareholders of the GT Global Health Care Fund in October 1989,
Prospectus Page 16
<PAGE>
GT GLOBAL NEW DIMENSION FUND
and who have continuously held shares in the GT Global Mutual Funds since that
time.
In addition, shares of any GT Global Mutual Fund may be purchased at net asset
value, without payment of a sales charge, by pension, profit-sharing or other
employee benefit plans created pursuant to a plan qualified under Section 401 of
the Code or plans under Section 457 of the Code, or employee benefit plans
created pursuant to Section 403(b) of the Code and sponsored by nonprofit
organizations defined under Section 501(c)(3) of the Code. Such plans will
qualify for purchases at net asset value provided that (1) the total amount
invested in the plan is at least $1,000,000, (2) the sponsor signs a $1,000,000
Letter of Intent, (3) such shares are purchased by an employer-sponsored plan
with at least 100 eligible employees, or (4) all of the plan's transactions are
executed through a single financial institution or service organization who has
entered into an agreement with AIM Distributors with respect to their use of the
GT Global Mutual Funds in connection with such accounts. Section 403(b) plans
sponsored by public educational institutions will not be eligible for net asset
value purchases based on the aggregate investment made by the plan or the number
of eligible employees. Participants in such plans will be eligible for reduced
sales charges based solely on the aggregate value of their individual
investments in the applicable GT Global Mutual Fund. AIM Distributors may pay
investment dealers or other financial service firms for share purchases of the
GT Global Mutual Funds sold at net asset value to an employee benefit plan in
accordance with this paragraph as follows: 1% of the first $2 million of such
purchases, plus 0.80% of the next $1 million of such purchases, plus 0.50% of
the next $17 million of such purchases, and plus 0.25% of amounts in excess of
$20 million of such purchases.
AIM DISTRIBUTORS AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW
ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY
PURCHASE OR EXCHANGE ORDER OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE
PURCHASE PRICE; (3) TO INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT
REQUIREMENTS; OR (4) TO MODIFY ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF
SHARES OF THE FUND. AIM Distributors and its agents will use their best efforts
to provide notice of any such actions through correspondence with broker-dealers
and existing shareholders, supplements to the GT Global Mutual Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "How to Make Exchanges."
REINSTATEMENT PRIVILEGE. Shareholders who redeem their Class A shares in the
Fund have a one time privilege of reinstating their investment by investing the
proceeds of the redemption at net asset value without a sales charge in Class A
shares of the Fund and/or one or more of the other GT Global Mutual Funds. The
Transfer Agent must receive from the investor or the investor's broker/dealer
within 180 days after the date of the redemption both a written request for
reinvestment and a check not exceeding the amount of the redemption proceeds.
The reinstatement purchase will be effected at the net asset value per share
next determined after such receipt. Gain on the redemption is taxable
notwithstanding exercise of the reinvestment privilege (although loss thereon
might not be deductible as a result of such exercise). See "Dividends, Other
Distributions and Federal Income Taxation."
REDUCED SALES CHARGE PLANS. Class A shares may be purchased at reduced sales
charges either through the Right of Accumulation or under a Letter of Intent.
Investors should contact Financial Institution or the Transfer Agent for more
information.
RIGHT OF ACCUMULATION. Pursuant to the Right of Accumulation, investors are
permitted to purchase shares of the Fund at the sales charge applicable to the
total of (a) the dollar amount then being purchased plus (b) the dollar amount
of the investor's concurrent purchases of other GT Global Mutual Funds (other
than GT Global Dollar Fund) and funds of The AIM Family of Funds plus (c) the
price of all shares of GT Global Mutual Funds (other than shares of GT Global
Dollar Fund not acquired by exchange) and funds of The AIM Family of Funds
already held by the investor. To receive the Right of Accumulation, at the time
of purchase investors must give their Financial Institution, the Transfer Agent
or AIM Distributors sufficient information to permit confirmation of
qualification. THE FOREGOING RIGHT OF ACCUMULATION APPLIES ONLY TO CLASS A
SHARES OF THE FUND AND OTHER GT GLOBAL MUTUAL FUNDS (OTHER THAN GT GLOBAL DOLLAR
FUND).
Prospectus Page 17
<PAGE>
GT GLOBAL NEW DIMENSION FUND
LETTER OF INTENT. In executing a Letter of Intent ("LOI"), an investor indicates
an aggregate investment amount he or she intends to invest in the Class A shares
of the Fund and the Class A shares of other GT Global Mutual Funds (other than
shares of GT Global Dollar Fund) in the following thirteen months. The LOI is
included as part of the Account Application located at the end of this
Prospectus. The sales charge applicable to that aggregate amount then becomes
the applicable sales charge on all purchases made concurrently with the
execution of the LOI and in the thirteen months following that execution. If an
investor executes an LOI within 90 days of a prior purchase of GT Global Mutual
Fund Class A shares (other than shares of GT Global Dollar Fund), the prior
purchase may be included under the LOI and an appropriate adjustment, if any,
with respect to the sales charges paid by the investor in connection with the
prior purchase will be made, based on the then-current net asset value(s) of the
pertinent Fund(s).
If at the end of the thirteen month period covered by the LOI the total amount
of purchases does not equal the amount indicated, the investor will be required
to pay the difference between the sales charges paid at the reduced rate and the
sales charges applicable to the purchases actually made. Shares having a value
equal to 5% of the amount specified in the LOI will be held in escrow during the
thirteen month period (while remaining registered in the investor's name) and
are subject to redemption to assure any necessary payment to AIM Distributors of
a higher applicable sales charge.
For purposes of an LOI, any registered investment adviser, trust company or bank
trust department which exercises investment discretion and which intends within
thirteen months to invest $500,000 or more can be treated as a single purchaser,
provided further that such entity places all purchase and redemption orders.
Such entities should be prepared to establish their qualifications for such
treatment. THE FOREGOING LOI APPLIES ONLY TO CLASS A SHARES OF THE FUND AND
OTHER GT GLOBAL MUTUAL FUNDS (OTHER THAN GT GLOBAL DOLLAR FUND).
CONTINGENT DEFERRED SALES CHARGE. A CONTINGENT DEFERRED SALES CHARGE OF 1%
APPLIES TO PURCHASES OF CLASS A SHARES OF $1,000,000 OR MORE THAT ARE REDEEMED
WITHIN 18 MONTHS OF THE DATE OF PURCHASE. This charge will be 1% of the lesser
of the value of the shares redeemed (excluding reinvested dividends and capital
gain distributions) or the total original cost of such shares. In determining
whether a contingent deferred sales charge is payable, and the amount of any
such charge, shares not subject to the contingent deferred sales charge are
redeemed first (including shares purchased by reinvested dividends and capital
gains distributions and amounts representing increases from capital
appreciation), and then other shares are redeemed in the order of purchase. No
such charge will be imposed upon exchanges unless the shares acquired by
exchange are redeemed within 18 months of the date the shares were originally
purchased. For purposes of computing this 18 MONTH PERIOD, shares of any GT
Global Mutual Fund which were acquired through an exchange of shares which
previously were subject to the 1% contingent deferred sales charge will be
credited with the period of time such exchanged shares were held. The charge
will be waived in the following circumstances: (l) redemptions of shares by
employee benefit plans ("Plans") qualified under Sections 401 or 457 of the
Code, or Plans created under Section 403(b) of the Code and sponsored by
nonprofit organizations as defined under Section 501(c)(3) of the Code, where
shares are being redeemed in connection with employee terminations or
withdrawals, and (a) the total amount invested in a Plan is at least $1,000,000,
(b) the sponsor of a Plan signs a letter of intent to invest at least $1,000,000
in one or more of the GT Global Mutual Funds and AIM Funds, or (c) the shares
being redeemed were purchased by an employer-sponsored Plan with at least 100
eligible employees; provided, however, that Plans created under Section 403(b)
of the Code which are sponsored by public educational institutions shall qualify
under (a), (b) or (c) above on the basis of the value of each Plan participant's
aggregate investment in the GT Global Mutual Funds and AIM Funds, and not on the
aggregate investment made by the Plan or on the number of eligible employees;
(2) redemptions of shares following the death or post-purchase disability, as
defined in Section 72(m)(7) of the Code, of a shareholder or a settlor of a
living trust; (3) redemptions of shares purchased at net asset value by private
foundations or endowment funds where the initial amount invested was at least
$1,000,000; (4) redemptions of shares purchased by an investor in amounts of
$1,000,000 or more where such investor's dealer of record, due to the nature of
the investor's account, notifies AIM Distributors prior to the time of
investment that the dealer waives the payments otherwise payable to the dealer
by AIM Distributors;
Prospectus Page 18
<PAGE>
GT GLOBAL NEW DIMENSION FUND
and (5) pursuant to a Systematic Withdrawal Plan, provided that amounts
withdrawn under such plan do not exceed on an annual basis 12% of the value of
the shareholder's investment in Class A shares at the time the shareholder
elects to participate in the Systematic Withdrawal Plan. Shareholders who
purchased $500,000 or more of Class A shares prior to June 1, 1998 are entitled
to certain waivers of the contingent deferred sales charge on those shares as
described in the Statement of Additional Information under "Information Relating
to Sales and Redemptions -- Sales Charge Waivers for Shares Purchased Prior to
June 1, 1998".
PURCHASING CLASS B SHARES
The public offering price of the Class B shares is the next determined net asset
value per share. See "Calculation of Net Asset Value." No initial sales charge
is imposed. A contingent deferred sales charge, however, is imposed on certain
redemptions of Class B shares. Because the Class B shares are sold without an
initial sales charge, the Fund receives the full amount of the investor's
purchase payment. Class B shares may not be purchased for a Savings Incentive
Match Plan for Employees IRA ("SIMPLE IRA") for which a designated financial
institution was selected by the employer on Form 5305-SIMPLE. However, Class B
shares may be purchased for SIMPLE IRAs using Form 5304-SIMPLE. In addition,
Class A shares may be purchased for all SIMPLE IRAs.
Class B shares may be redeemed on any business day at the net asset value per
share next determined following receipt of the redemption order, less the
applicable contingent deferred sales charge shown in the table below. No
deferred sales charge will be imposed (i) on redemptions of Class B shares
following six years from the date such shares were purchased, (ii) on Class B
shares acquired through reinvestments of dividends and distributions
attributable to Class B shares or (iii) on amounts that represent capital
appreciation in the shareholder's account above the purchase price of the Class
B shares.
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES
CHARGE AS % OF DOLLAR
YEARS SINCE PURCHASE MADE AMOUNT SUBJECT TO CHARGE
- --------------------------- ---------------------------
<S> <C>
First...................... 5%
Second..................... 4%
Third...................... 3%
Fourth..................... 3%
Fifth...................... 2%
Sixth...................... 1%
Seventh and Following...... None
</TABLE>
In determining whether a contingent deferred sales charge is applicable, it will
be assumed that a redemption is made first, of any shares held in the
shareholder's account that are not subject to such charge; second, of shares
derived from reinvestment of dividends and distributions; third, of shares held
for more than six years from the date such shares were purchased; and fourth, of
shares held less than six years from the date such shares were purchased. The
applicable sales charge will be applied against the lesser of the current market
value of shares redeemed or their original cost.
For example, assume an investor purchased 100 shares at $10 per share for a cost
of $1,000. Subsequently, the shareholder acquired 15 additional shares through
dividend reinvestment. During the second year after the purchase the investor
decided to redeem $500 of his or her investment. Assuming at the time of the
redemption a net asset value of $11 per share, the value of the investor's
shares would be $1,265 (115 shares at $11 per share). The contingent deferred
sales charge would not be applied to the value of the reinvested dividend
shares. Therefore, the 15 shares currently valued at $165.00 would be redeemed
without a contingent deferred sales charge. The number of shares needed to fund
the remaining $335 of the redemption would equal 30.455. Using the lower of cost
or market price to determine the contingent deferred sales charge, the original
purchase price of $10.00 per share would be used. The contingent deferred sales
charge calculation would therefore be 30.455 shares times $10.00 per share at
the contingent deferred sales charge rate of 4% (the applicable rate in the
second year after purchase) for a total contingent deferred sales charge of
$12.18.
Class B shares that are acquired pursuant to the exchange privilege during a
tender offer by GT Global Floating Rate Fund, Inc. ("Floating Rate Fund") will
be subject, in lieu of the contingent deferred sales charge described above, to
a contingent deferred sales charge equivalent to the early withdrawal charge on
the common stock of the Floating Rate Fund. The purchase of Class B shares of
the Fund will be deemed to have occurred at the time of the initial purchase of
the Floating Rate Fund's common stock.
For federal income tax purposes, the amount of the contingent deferred sales
charge will reduce the gain or increase the loss, as the case may be, realized
on a redemption. The amount of any contingent deferred sales charge will be
payable to AIM Distributors.
Prospectus Page 19
<PAGE>
GT GLOBAL NEW DIMENSION FUND
CONVERSION OF CLASS B SHARES
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. The conversion will be
affected at the relative net asset value per share of each class. At the time of
conversion, a portion of Class B shares purchased through reinvestment of
dividends or other distributions ("Dividend Shares") also will convert to Class
A shares. The portion of Dividend Shares that will convert is determined by the
ratio of converting Class B non-Dividend Shares to the total Class B
non-Dividend Shares held by the shareholder. Following such conversion of Class
B shares, investors will be relieved of the higher Rule 12b-1 plan payments
associated with Class B shares. Class B shares of the other GT Global Mutual
Funds have a conversion feature that is one year longer than the Fund's Class B
conversion feature. If a shareholder exchanges Class B shares of the Fund for
Class B shares of any other GT Global Mutual Fund, he or she will be subject to
the longer conversion feature of the other GT Global Mutual Fund. See "How to
Make Exchanges."
PURCHASING CLASS C SHARES
The public offering price of the Class C shares of the Fund is the next
determined net asset value per share. See "Calculation of Net Asset Value." No
initial sales charge is imposed. A contingent deferred sales charge of 1% of the
net asset value at the time of purchase or sale, whichever is less, however, is
charged on shares sold within one year of purchase. Because the Class C shares
are sold without an initial sales charge, the Fund receives the full amount of
the investor's purchase payment. Class C shares of the Fund may not be purchased
for a SIMPLE IRA for which a designated financial institution was selected by
the employer on Form 5305-SIMPLE. However, Class C shares of the Fund may be
purchased for SIMPLE IRAs using Form 5304-SIMPLE. In addition, Class A shares
may be purchased for all SIMPLE IRAs.
Class C shares will not be subject to the contingent deferred sales charge to
the extent that the value of such shares represents: (1) reinvestment of
dividends or other distributions or (2) shares redeemed more than one year after
their purchase. Redemptions of most other Class C shares will be subject to a
contingent deferred sales charge. See "Contingent Deferred Sales Charge
Waivers." For federal income tax purposes, the amount of the contingent deferred
sales charge will reduce the gain or increase the loss, as the case may be,
realized on a redemption. The amount of any contingent deferred sales charge
will be payable to AIM Distributors.
CONTINGENT DEFERRED
SALES CHARGE WAIVERS
Contingent deferred sales charges on Class B and Class C shares will be waived
on redemptions (1) following the death or post-purchase disability, as defined
in Section 72(m)(7) of the Code, of a shareholder or a settlor of a living trust
(provided AIM Distributors is notified of such death or post-purchase disability
at the time of the redemption request and is provided with satisfactory evidence
of such death or post-purchase disability), (2) in connection with certain
distributions from individual retirement accounts, custodial accounts maintained
pursuant to Code Section 403(b), deferred compensation plans qualified under
Code Section 457 and plans qualified under Code Section 401 (collectively,
"Retirement Plans'), (3) pursuant to a Systematic Withdrawal Plan, provided that
amounts withdrawn under such plan do not exceed on an annual basis 12% of the
value of the shareholder's investment in Class B shares at the time the
shareholder elects to participate in the Systematic Withdrawal Plan, (4)
effected pursuant to the right of a GT Global Mutual Fund to liquidate a
shareholder's account if the aggregate net asset value of shares held in the
account is less than the designated minimum account size described in this
Prospectus of such GT Global Mutual Fund, and (5) effected by AIM of its
investment in Class B shares.
Waiver category (1) above applies only to redemptions of Class B or Class C
shares held at the time of death or initial determination of post-purchase
disability. Waiver category (2) above applies only to redemptions resulting
from:
(i) required minimum distributions to plan participants or beneficiaries who
are age 70 1/2 or older, and only with respect to that portion of such
distributions which does not exceed 12% annually of the participant's or
beneficiary's account value in a particular GT Global Mutual Fund;
(ii) in-kind transfers of assets where the participant or beneficiary notifies
AIM Distributors of such transfer no later than the time such transfer
occurs;
(iii) tax-free rollovers or transfers of assets to another Retirement Plan
invested in Class B or
Prospectus Page 20
<PAGE>
GT GLOBAL NEW DIMENSION FUND
Class C shares of one or more GT Global Mutual Funds;
(iv) tax-free returns of excess contributions or returns of excess deferral
amounts; and
(v) distributions upon the death or disability (as defined in the Code) of the
participant or beneficiary.
Shareholders who purchased Class B or Class C shares prior to June 1, 1998 are
entitled to certain waivers of the contingent deferred sales charge on those
shares as described in the Statement of Additional Information under
"Information Relating to Sales and Redemptions -- Sales Charge Waivers for
Shares Purchased Prior to June 1, 1998."
PROGRAMS APPLICABLE TO CLASS A, CLASS B AND CLASS C SHARES
AUTOMATIC INVESTMENT PLAN. Investors may purchase either Class A, Class B or
Class C shares of the Fund through the GT Global Automatic Investment Plan.
Under this Plan, an amount specified by the shareholder of $100 or more ($25 or
more for IRAs, Code Section 403(b)(7) custodial accounts and other tax-qualified
employer-sponsored retirement accounts) on a monthly or quarterly basis will be
sent to the Transfer Agent from the investor's bank for investment in the Fund.
Participants in the Automatic Investment Plan should not elect to receive
dividends or other distributions from the Fund in cash. A sales charge will be
applied to each automatic monthly purchase of Class A shares in an amount
determined in accordance with the Right of Accumulation privilege described
above. To participate in the Automatic Investment Plan, investors should
complete the appropriate portion of the Supplemental Application provided at the
end of this Prospectus. Investors should contact their Financial Institution or
AIM Distributors for more information.
[DOLLAR COST AVERAGING PROGRAM. Investors may purchase either Class A, Class B
or Class C shares of the Fund through the GT Global Dollar Cost Averaging
Program whereby a shareholder invests the same dollar amount each month.
Accordingly, the investor purchases more shares when the Fund's net asset value
is relatively low and fewer shares when the Fund's net asset value is relatively
high. This can result in a lower average cost-per-share than if the shareholder
followed a less systematic approach. Dollar cost averaging does not assure a
profit and does not protect against loss in declining markets. Because such a
program involves continuous investment in securities regardless of fluctuating
price levels of such securities, investors should consider their financial
ability to continue purchases when prices are declining.
A participant in the GT Global Dollar Cost Averaging Program first designates
the size of his or her monthly investment in the Fund ("Monthly Investment")
after participation in the Program begins. The Monthly Investment must be at
least $1,000. The investor then will make an initial investment of at least
$10,000 in the GT Global Dollar Fund. Thereafter, each month an amount equal to
the specified Monthly Investment automatically will be redeemed from the GT
Global Dollar Fund and invested in Fund shares. A sales charge will be applied
to each automatic monthly purchase of Class A shares of the Fund in an amount
determined in accordance with the Right of Accumulation privilege described
above. Investors should contact their Financial Institution or AIM Distributors
for more information.]
PORTFOLIO REBALANCING PROGRAM. The GT Global Portfolio Rebalancing Program
permits eligible shareholders to establish and maintain an allocation across a
range of GT Global Mutual Funds. The Program is not available for Class C
shares. This Program automatically rebalances holdings of GT Global Mutual Funds
to the established allocation on a periodic basis. Under this Program, a
shareholder may predesignate, on a percentage basis, how the total value of his
or her holdings in a minimum of two, and a maximum of ten, GT Global Mutual
Funds ("Personal Portfolio") is to be rebalanced on a monthly, quarterly,
semiannual, or annual basis.
Rebalancing under this Program will be effected through the exchange of shares
of one or more GT Global Mutual Funds in the shareholder's Personal Portfolio
for shares of the same class(es) of one or more other GT Global Mutual Funds in
the shareholder's Personal Portfolio. See "How to Make Exchanges." If shares of
the GT Global Mutual Funds in a shareholder's Personal Portfolio have
appreciated during a rebalancing period, the Program will result in shares of GT
Global Mutual Fund(s) that have appreciated most during the period being
exchanged for shares of GT Global Mutual Fund(s) that have appreciated least.
SUCH EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A SHAREHOLDER'S REALIZING A
GAIN OR LOSS, AS THE CASE MAY BE, FOR FEDERAL INCOME TAX PURPOSES. See
"Dividends, Other Distributions and Federal Income Taxation." Participation in
this Program
Prospectus Page 21
<PAGE>
GT GLOBAL NEW DIMENSION FUND
does not assure that a shareholder will profit from purchases under the Program,
nor does it prevent or lessen losses in a declining market.
The Program will automatically rebalance the shareholder's Personal Portfolio on
the 28th day of the last month of the period chosen (or the immediately
preceding business day if the 28th is not a business day), subject to any
limitations below. The Program will not execute an exchange if the variance in a
shareholder's Personal Portfolio for a particular Fund would be 2% or less. In
predesignating percentages, shareholders must use whole percentages and totals
must equal 100%. Shareholders participating in the Program may not request
issuance of physical certificates representing a Fund's shares. The Funds and
AIM Distributors reserve the right to modify, suspend, or terminate the Program
at any time on 60 days' prior written notice to shareholders. A request to
participate in the Program must be received in good order at least five business
days prior to the next rebalancing date. Once a shareholder establishes the
Program for his or her Personal Portfolio, a shareholder cannot cancel or change
which rebalancing frequency, which Funds or what allocation percentages are
assigned to the Program, unless canceled or changed in writing and received by
the Transfer Agent in good order at least five business days prior to the
rebalancing date. Shareholders participating in the Program may also participate
in the Right of Accumulation, Letter of Intent, and Dollar Cost Averaging
programs. Certain Financial Institutions may charge a fee for establishing
accounts relating to the Program. Investors should contact their Financial
Institution or AIM Distributors for more information.
Prospectus Page 22
<PAGE>
GT GLOBAL NEW DIMENSION FUND
HOW TO MAKE EXCHANGES
- --------------------------------------------------------------------------------
Class A and Class B shares of the Fund may be exchanged for shares of the same
class of any other GT Global Mutual Fund, based on their respective net asset
values without imposition of any sales charges, provided that the registration
remains identical. Class A shares of the Fund also may be exchanged for Class A
shares of funds of The AIM Family of Funds and for AIM Cash Reserve Shares of
the AIM Money Market Fund. However, purchases of Class A shares of GT Global
Mutual Funds of $1,000,000 or more that are subject to a contingent deferred
sales charge may not be exchanged for Class A shares of AIM Limited Maturity
Treasury Fund, AIM Tax-Free Intermediate Fund, or AIM Tax-Exempt Cash Fund.
Exchanges into The AIM Family of Funds will be based on their respective net
asset values without imposition of any sales charges, provided that the
registration remains identical. Class C shares may be exchanged for Class C
shares of funds of The AIM Family of Funds but currently may not be exchanged
for shares of any GT Global Mutual Fund. The exchange of Class B shares will not
be subject to a contingent deferred sales charge. For purposes of computing the
contingent deferred sales charge, the length of time of ownership of Class B
shares will be measured from the date of original purchase and will not be
affected by the exchange.
EXCHANGES OF CLASS B SHARES. Although currently no exchanges are permitted
between the Fund and funds of The AIM Family of Funds with respect to Class B
shares, the Board of Trustees anticipates that such exchanges will be offered on
or about October 1, 1998. If Class B shares of the Fund are exchanged for Class
B shares of any other GT Global Mutual Fund, the acquired shares will be subject
to an eight year, rather than a seven year, conversion feature. Thus, the
acquired shares will convert to Class A shares eight years following the end of
the calendar month in which the original Class B shares were issued. This eight
year conversion feature will apply regardless of whether an investor
subsequently exchanges back into Class B shares of the Fund.
EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A SHAREHOLDER REALIZING A GAIN OR
LOSS, AS THE CASE MAY BE, FOR FEDERAL INCOME TAX PURPOSES. See "Dividends, Other
Distributions and Federal Income Taxation." The GT Global Mutual Funds and The
AIM Family of Funds include the following:
- AIM ADVISOR FLEX FUND
- AIM ADVISOR INTERNATIONAL VALUE FUND
- AIM ADVISOR LARGE CAP VALUE FUND
- AIM ADVISOR MULTIFLEX FUND
- AIM ADVISOR REAL ESTATE FUND
- AIM AGGRESSIVE GROWTH FUND
- AIM ASIAN GROWTH FUND
- AIM BALANCED FUND
- AIM BLUE CHIP FUND
- AIM CAPITAL DEVELOPMENT FUND
- AIM CHARTER FUND
- AIM CONSTELLATION FUND
- AIM EUROPEAN DEVELOPMENT FUND
- AIM GLOBAL AGGRESSIVE GROWTH FUND
- AIM GLOBAL GROWTH FUND
- AIM GLOBAL INCOME FUND
- AIM GLOBAL UTILITIES FUND
- AIM HIGH INCOME MUNICIPAL FUND
- AIM HIGH YIELD FUND
- AIM INCOME FUND
- AIM INTERMEDIATE GOVERNMENT FUND
- AIM INTERNATIONAL EQUITY FUND
- AIM LIMITED MATURITY TREASURY FUND
- AIM MONEY MARKET FUND
- AIM MUNICIPAL BOND FUND
- AIM SELECT GROWTH FUND
- AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
- AIM TAX-EXEMPT CASH FUND
- AIM TAX-FREE INTERMEDIATE FUND
- AIM VALUE FUND
- AIM WEINGARTEN FUND
- GT GLOBAL AMERICA SMALL CAP GROWTH FUND
- GT GLOBAL AMERICA MID CAP GROWTH FUND
- GT GLOBAL AMERICA VALUE FUND
- GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
- GT GLOBAL DEVELOPING MARKETS FUND
- GT GLOBAL DOLLAR FUND
- GT GLOBAL EMERGING MARKETS FUND
- GT GLOBAL EUROPE GROWTH FUND
- GT GLOBAL FINANCIAL SERVICES FUND
- GT GLOBAL GOVERNMENT INCOME FUND
- GT GLOBAL GROWTH & INCOME FUND
- GT GLOBAL HEALTH CARE FUND
Prospectus Page 23
<PAGE>
GT GLOBAL NEW DIMENSION FUND
- GT GLOBAL HIGH INCOME FUND
- GT GLOBAL INFRASTRUCTURE FUND
- GT GLOBAL INTERNATIONAL GROWTH FUND
- GT GLOBAL JAPAN GROWTH FUND
- GT GLOBAL LATIN AMERICA GROWTH FUND
- GT GLOBAL NATURAL RESOURCES FUND
- GT GLOBAL NEW DIMENSION FUND
- GT GLOBAL NEW PACIFIC GROWTH FUND
- GT GLOBAL STRATEGIC INCOME FUND
- GT GLOBAL TELECOMMUNICATIONS FUND
- GT GLOBAL WORLDWIDE GROWTH FUND
If an investor does not surrender all of his or her shares in an exchange, the
remaining balance in the investor's account after the exchange must be at least
$500. Exchange requests received in good order by the Transfer Agent before the
close of regular trading on the NYSE on any Business Day will be processed at
the net asset value calculated on that day. The terms of the exchange offer may
be modified at any time, on 60 days' prior written notice.
An investor interested in making an exchange should contact his or her Financial
Institution or the Transfer Agent to request the prospectus of the other GT
Global Mutual Fund(s) being considered. Certain Financial Institutions may
charge a fee for handling exchanges.
EXCHANGES BY TELEPHONE. A shareholder may give exchange instructions to the
shareholder's Financial Institution or the Transfer Agent by telephone at the
appropriate toll-free number provided in the Shareholder Account Manual.
Exchange orders will be accepted by telephone provided that the exchange
involves only uncertificated shares on deposit in the shareholder's account or
for which certificates have previously been deposited. Shareholders
automatically have telephone privileges to authorize exchanges. The Fund, AIM
Distributors and the Transfer Agent will not be liable for any loss or damage
for acting in good faith upon instructions received by telephone and reasonably
believed to be genuine. The Fund employs reasonable procedures to confirm that
instructions communicated by telephone are genuine prior to acting upon
instructions received by telephone, including requiring some form of personal
identification, providing written confirmation of such transactions, and/or tape
recording of telephone instructions.
EXCHANGES BY MAIL. Exchange orders should be sent by mail to the shareholder's
Financial Institution or to the Transfer Agent at the address set forth in the
Shareholder Account Manual.
LIMITATIONS ON PURCHASE ORDERS AND EXCHANGES. The GT Global Mutual Funds are not
intended to serve as vehicles for frequent trading in response to short-term
fluctuations in the market. Due to the disruptive effect that market-timing
investment strategies and excessive trading can have on efficient portfolio
management, each GT Global Mutual Fund and AIM Distributors reserve the right to
refuse purchase orders and exchanges by any person or group, if, in the
Sub-adviser's judgment, such person or group was following a market-timing
strategy or was otherwise engaging in excessive trading.
In addition, each GT Global Mutual Fund and GT Global reserve the right to
refuse purchase orders and exchanges by any person or group if, in the
Sub-adviser's judgment, the Fund would not be able to invest the money
effectively in accordance with that Fund's investment objective and policies or
would otherwise potentially be adversely affected. Although a GT Global Mutual
Fund will attempt to give investors prior notice whenever it is reasonably able
to do so, it may impose the above restrictions at any time.
Finally, as described above, each GT Global Mutual Fund and AIM Distributors
reserve the right to reject any purchase order.
Prospectus Page 24
<PAGE>
GT GLOBAL NEW DIMENSION FUND
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
Fund shares may be redeemed at their net asset value (subject to any applicable
contingent deferred sales charge for Class B or Class C shares or, in limited
circumstances, Class A shares), and redemption proceeds will be sent within
seven days of the execution of a redemption request. If a redeeming shareholder
owns more than one class of shares, the shareholder must specify the class of
shares to be redeemed.
REDEMPTIONS THROUGH FINANCIAL INSTITUTIONS. Shareholders with accounts at
Financial Institutions who sell shares of the Fund may submit redemption
requests to such Financial Institutions. If the shares are held in the name of
the Financial Institution, the redemption must be made through the Financial
Institution. Financial Institutions may honor a redemption request either by
repurchasing shares from a redeeming shareholder at the Fund's shares' net asset
value next determined after the Financial Institution receives the request or,
as described below, by forwarding such requests to the Transfer Agent (see "How
to Redeem Shares -- Redemptions Through the Transfer Agent"). Redemption
proceeds normally will be paid by check or, if offered by the Financial
Institution, credited to the shareholder's account at the Financial Institution
at the election of the shareholder. Financial Institutions may impose a service
charge for handling redemption transactions placed through them and may have
other requirements concerning redemptions. Accordingly, shareholders should
contact their Financial Institution for more details.
REDEMPTIONS THROUGH THE TRANSFER AGENT. Redemption requests may be transmitted
to the Transfer Agent by telephone or by mail, in accordance with the
instructions provided in the Shareholder Account Manual. Redemptions will be
effected at the net asset value next determined after the Transfer Agent has
received the request in good order and any required supporting documentation
(less any applicable contingent deferred sales charge for Class B or Class C
shares or, in limited circumstances, Class A shares) or after an authorized
institution (or its designee) has received orders, provided such orders are
transmitted to the Transfer Agent prior to the time set for receipt of such
orders. Redemption requests will not require a signature guarantee if the
redemption proceeds are to be sent either: (i) to the redeeming shareholder at
the shareholder's address of record as maintained by the Transfer Agent,
provided the shareholder's address of record has not been changed within the
preceding thirty days; or (ii) directly to a pre-designated bank, savings and
loan or credit union account ("Pre-Designated Account"). ALL OTHER REDEMPTION
REQUESTS MUST BE ACCOMPANIED BY A SIGNATURE GUARANTEE OF THE REDEEMING
SHAREHOLDER'S SIGNATURE. A signature guarantee can be obtained from any bank,
U.S. trust company, a member firm of a U.S. stock exchange or a foreign branch
of any of the foregoing or other eligible guarantor institution. A notary public
is not an acceptable guarantor. A shareholder with questions concerning the
Fund's signature guarantee requirement should contact the Transfer Agent.
Shareholders may qualify to have redemption proceeds sent to a Pre-Designated
Account by completing the appropriate section of the Account Application at the
end of this Prospectus. Shareholders with Pre-Designated Accounts should request
that redemption proceeds be sent either by bank wire or by check. The minimum
redemption amount for a bank wire is $1,000. Shareholders requesting a bank wire
should allow two business days from the time the redemption request is effected
for the proceeds to be deposited in the shareholder's Pre-Designated Account.
See "How to Redeem Shares -- Other Important Redemption Information."
Shareholders may change their Pre-Designated Accounts only by a letter of
instruction to the Transfer Agent containing all account signatures, each of
which must be guaranteed. The Transfer Agent currently does not charge a bank
wire service fee for each wire redemption sent, but reserves the right to do so
in the future. The shareholder's bank may charge a bank wire service fee.
REDEMPTIONS BY TELEPHONE. Redemption requests may be made by telephone by
calling the Transfer Agent at the appropriate toll-free number provided in the
Shareholder Account Manual. Shareholders who hold certificates for shares may
Prospectus Page 25
<PAGE>
GT GLOBAL NEW DIMENSION FUND
not redeem by telephone. REDEMPTION REQUESTS MAY NOT BE MADE BY TELEPHONE FOR
THIRTY DAYS FOLLOWING ANY CHANGE OF THE SHAREHOLDER'S ADDRESS OF RECORD.
Shareholders automatically have telephone privileges to authorize redemptions.
The Fund, AIM Distributors and the Transfer Agent will not be liable for any
loss or damage for acting in good faith upon instructions received by telephone
and reasonably believed to be genuine. The Fund employs reasonable procedures to
confirm that instructions communicated by telephone are genuine prior to acting
upon instructions received by telephone, including requiring some form of
personal identification, providing written confirmation of such transactions,
and/or tape recording of telephone instructions.
REDEMPTIONS BY MAIL. Redemption requests should be mailed directly to the
Transfer Agent at the appropriate address provided in the Shareholder Account
Manual. As discussed above, requests for payment of redemption proceeds to a
party other than the shareholder of record and/or requests that redemption
proceeds be mailed to an address other than the shareholder's address of record
require a signature guarantee. In addition, if the shareholder's address of
record has been changed within the preceding thirty days, a signature guarantee
is required. Redemptions of shares for which certificates have been issued must
be accompanied by properly endorsed share certificates.
SYSTEMATIC WITHDRAWAL PLAN. Shareholders owning shares with a value of $10,000
or more may participate in the GT Global Systematic Withdrawal Plan. A
participating shareholder will receive proceeds from monthly, quarterly or
annual redemptions of Fund shares with respect to either Class A, Class B or
Class C shares. No contingent deferred sales charge will be imposed on
redemptions made under the Systematic Withdrawal Plan. The minimum withdrawal
amount is $100. The amount or percentage a participating shareholder specifies
to be redeemed may not, on an annualized basis, exceed 12% of the value of the
account, as of the time the shareholder elects to participate in the Systematic
Withdrawal Plan. To participate in the Systematic Withdrawal Plan, investors
should complete the appropriate portion of the Supplemental Application provided
at the end of this Prospectus. Investors should contact their Financial
Institution or the Transfer Agent for more information. With respect to Class A
shares, participation in the Systematic Withdrawal Plan concurrent with
purchases of Class A shares may be disadvantageous to investors because of the
sales charges involved and possible tax implications, and therefore is
discouraged. In addition, shareholders who participate in the Systematic
Withdrawal Plan should not elect to reinvest dividends or other distributions in
additional Fund shares. Systematic withdrawal plans offered by Financial
Institutions may have different features. Accordingly, shareholders should
contact their Financial Institution for more details.
OTHER IMPORTANT REDEMPTION INFORMATION. A request for redemption will not be
processed until all of the necessary documentation has been received in good
order. A shareholder in doubt as to what documents are required should contact
his or her Financial Institution or the Transfer Agent.
Except in extraordinary circumstances and as permitted under the 1940 Act,
payment for shares redeemed by telephone or by mail will be made promptly after
receipt of a redemption request, if in good order, but not later than seven days
after the date the request is executed. Requests for redemption which are
subject to any special conditions or which specify a future or past effective
date cannot be accepted.
If the Transfer Agent is requested to redeem shares for which the Fund has not
yet received good payment, the Fund may delay payment of redemption proceeds
until the Transfer Agent has assured itself that good payment has been collected
for the purchase of the shares. In the case of purchases by check it can take up
to 10 business days to confirm that the check has cleared and good payment has
been received. Redemption proceeds will not be delayed when shares have been
paid for by wire or when the investor's account holds a sufficient number of
shares for which funds already have been collected.
The Fund may redeem the shares of any shareholder whose account is reduced to
less than $500 in value through redemptions or other action by the shareholder.
Written notice will be given to the shareholder at least 60 days prior to the
date fixed for such redemption, during which time the shareholder may increase
his or her holdings to an aggregate amount of $500 or more (with a minimum
purchase of $100).
Prospectus Page 26
<PAGE>
GT GLOBAL NEW DIMENSION FUND
SHAREHOLDER ACCOUNT MANUAL
- --------------------------------------------------------------------------------
Shareholders are encouraged to place purchase, exchange and redemption orders
through their Financial Institutions. Shareholders also may place such orders
directly through the Transfer Agent in accordance with this Manual. See "How to
Invest," "How to Make Exchanges," "How to Redeem Shares" and "Dividends, Other
Distributions and Federal Income Taxation" for more information.
The Fund's Transfer Agent is GT GLOBAL INVESTOR SERVICES, INC.
INVESTMENTS BY MAIL
Send the completed Account Application (if initial purchase) or letter stating
Fund name, class of shares, shareholder's registered name and account number (if
subsequent purchase) with a check to:
GT Global Mutual Funds
P.O. Box 7345
San Francisco, CA 94120-7345
INVESTMENTS BY BANK WIRE
An investor opening a new account should call 1-800-223-2138 to obtain an
account number. WITHIN SEVEN DAYS OF PURCHASE A COMPLETED ACCOUNT APPLICATION
CONTAINING THE INVESTOR'S CERTIFIED TAXPAYER IDENTIFICATION NUMBER MUST BE SENT
TO THE ADDRESS PROVIDED ABOVE UNDER "INVESTMENTS BY MAIL." Wire instructions
must state Fund name, class of shares, shareholder's registered name and account
number. Bank wires should be sent through the Federal Reserve Bank Wire System
to:
WELLS FARGO BANK N.A.
ABA 121000248
Attn: GT GLOBAL
Account No. 4023-050701
EXCHANGES BY TELEPHONE
Call the Transfer Agent at 1-800-223-2138.
EXCHANGES BY MAIL
Send complete instructions, including name of Fund exchanging from, class of
shares, amount of exchange, name of the GT Global Mutual Fund exchanging into,
shareholder's registered name and account number, to:
GT Global Mutual Funds
P.O. Box 7893
San Francisco, CA 94120-7893
REDEMPTIONS BY TELEPHONE
Call the Transfer Agent at 1-800-223-2138.
REDEMPTIONS BY MAIL
Send complete instructions, including name of Fund, class of shares, amount of
redemption, shareholder's registered name and account number, to:
GT Global Mutual Funds
P.O. Box 7893
San Francisco, CA 94120-7893
OVERNIGHT MAIL
Overnight mail services do not deliver to post office boxes. To send purchase,
exchange or redemption orders by overnight mail, follow the above instructions
but send to the following address:
GT Global Investor Services, Inc.
California Plaza
2121 N. California Boulevard
Suite 450
Walnut Creek, CA 94596
ADDITIONAL QUESTIONS
Shareholders with additional questions regarding purchase, exchange and
redemption procedures should call the Transfer Agent at 1-800-223-2138.
Prospectus Page 27
<PAGE>
GT GLOBAL NEW DIMENSION FUND
CALCULATION OF NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund calculates its net asset value as of the close of regular trading on
the NYSE (currently 4:00 p.m. Eastern Time, unless weather, equipment failure or
other factors contribute to an earlier closing time) each Business Day. The
Fund's net asset value per share is computed by dividing the value of the Fund's
net assets by the total number of Fund shares outstanding. Net asset value is
determined separately for each class of shares of the Fund. The assets of the
Fund consist primarily of shares of the Underlying Theme Funds, which are valued
daily at their respective net asset values at the time of computation. Other
Fund assets are valued at current market price or, if unavailable, at fair value
determined in good faith by or under the direction of the Trust's Board of
Trustees.
The different service and distribution fees borne by each class of shares of the
Fund will result in different net asset values. The per share net asset value of
the Class B and Class C shares generally will be lower than that of the Class A
shares because of the higher service and distribution fees borne by the Class B
and Class C shares. The per share net asset value of the Advisor Class shares
generally will be higher than that of the Class A, Class B and Class C shares
because of the absence of any service and distribution fees applicable to the
Advisor Class shares. It is expected, however, that the net asset value per
share of the classes will tend to converge immediately after the payment of
dividends, which will differ by approximately the amount of the service and
distribution fee accrual differential among the classes.
- --------------------------------------------------------------------------------
DIVIDENDS, OTHER DISTRIBUTIONS
AND FEDERAL INCOME TAXATION
- --------------------------------------------------------------------------------
DIVIDENDS AND OTHER DISTRIBUTIONS. The Fund annually declares and pays as a
dividend all of its net investment income, if any, which includes dividends paid
to it from each Underlying Theme Fund's net investment income (if any) less
applicable expenses. The Fund also annually distributes substantially all of its
realized net capital gains, if any, which consist of (1) distributions to it
from each Underlying Theme Fund's realized net capital gains, if any, and (2)
net gains realized from the Fund's disposition of shares of the Underlying Theme
Funds (which dispositions generally are occasioned by reallocating the Fund's
assets among the Underlying Theme Funds to reflect the MCSI weightings (see
"Investment Objective and Policies") or by the need to make distributions and/
or payments of redemption proceeds in excess of available cash). The Fund may
make an additional dividend or other distribution each year if necessary to
avoid a 4% excise tax on certain undistributed income and gain.
Dividends and other distributions paid by the Fund with respect to all classes
of its shares are calculated in the same manner and at the same time. The per
share income dividends on Class B and Class C shares will be lower than the per
share income dividends on Class A shares as a result of the higher service and
distribution fees applicable to Class B and Class C shares; and the per share
income dividends on all such classes of shares will be lower than the per share
income dividends on the Advisor Class shares of the Fund as a result of the
absence of any service and distribution fees applicable to Advisor Class shares.
SHAREHOLDERS MAY ELECT:
/ / to have all dividends and other distributions automatically reinvested in
additional Fund shares of the distributing class (or, with respect to Class
A and Class B shares, in shares of the corresponding class of other GT
Global Mutual Funds); or
/ / to receive dividends in cash and have other distributions automatically
reinvested in additional Fund shares of the distributing class (or, with
respect to Class A and Class B shares, in shares
Prospectus Page 28
<PAGE>
GT GLOBAL NEW DIMENSION FUND
of the corresponding class of other GT Global Mutual Funds); or
/ / to receive other distributions in cash and have dividends automatically
reinvested in additional Fund shares of the distributing class (or, with
respect to Class A and Class B shares, in shares of the corresponding class
of other GT Global Mutual Funds); or
/ / to receive dividends and other distributions in cash.
Automatic reinvestments in additional shares are made at net asset value without
imposition of a sales charge. IF NO ELECTION IS MADE BY A SHAREHOLDER, ALL
DIVIDENDS AND OTHER DISTRIBUTIONS WILL BE AUTOMATICALLY REINVESTED IN ADDITIONAL
FUND SHARES OF THE DISTRIBUTING CLASS. Reinvestments in another GT Global Mutual
Fund may only be directed to an account with the identical shareholder
registration and account number. These elections may be changed by a shareholder
at any time; to be effective with respect to a distribution, the shareholder or
the shareholder's broker must contact the Transfer Agent by mail or telephone at
least 15 Business Days prior to the payment date. THE FEDERAL INCOME TAX
CONSEQUENCES OF DIVIDENDS AND OTHER DISTRIBUTIONS ARE THE SAME WHETHER THEY ARE
RECEIVED IN CASH OR REINVESTED IN ADDITIONAL SHARES.
Any dividend or other distribution paid by the Fund has the effect of reducing
the net asset value per share on the ex-distribution date by the amount thereof.
Therefore, a dividend or other distribution paid shortly after a purchase of
shares would represent, in substance, a return of capital to the shareholder (to
the extent the distribution is paid on the shares so purchased) even though
subject to income tax, as discussed below.
TAXES. The Fund intends to continue to qualify for treatment as a regulated
investment company under the Code. In each taxable year that the Fund so
qualifies, the Fund (but not its shareholders) will be relieved of federal
income tax on that part of its investment company taxable income, consisting
generally of net investment income and net short-term capital gain ("taxable
income"), and net capital gain (i.e., the excess of net long-term capital gain
over net short-term capital loss) that is distributed to its shareholders.
Dividends paid to the Fund from an Underlying Theme Fund's taxable income (which
may include net gains from certain foreign currency transactions) are included
in the Fund's taxable income, and dividends from the latter (whether paid in
cash or reinvested in additional shares) are taxable to the Fund's shareholders
as ordinary income to the extent of its earnings and profits. Distributions of
the Fund's net capital gain (consisting of (1) distributions to it from each
Underlying Theme Fund's net capital gain, when designated as such, and (2) net
gains realized from the Fund's disposition of an Underlying Theme Fund's shares
held for more than twelve months), when designated as such, are taxable to its
shareholders as long-term capital gains, regardless of how long they have held
their Fund shares and whether the distributions are paid in cash or reinvested
in additional shares.
Under the Taxpayer Relief Act of 1997, different maximum tax rates apply to a
noncorporate taxpayer's net capital gain depending on the taxpayer's holding
period and marginal rate of federal income tax -- generally, 28% for gain
recognized on securities held for more than one year but not more than 18 months
and 20% (10% for taxpayers in the 15% marginal tax bracket) for gain recognized
on securities held for more than 18 months. A notice issued by the Internal
Revenue Service in November 1997 permits the Fund to divide each net capital
gain distribution into a 28% rate gain distribution and a 20% rate gain
distribution (in accordance with the Fund's holding periods for the securities
it sold that generated the distributed gain) and requires its shareholders to
treat those portions accordingly.
The Fund provides federal tax information to its shareholders annually,
including information about dividends and capital gain distributions paid during
the preceding year. The information regarding capital gain distributions
designates the portions of those distributions that are subject to the different
maximum rates of tax applicable to noncorporate taxpayers' net capital gain
indicated above.
The Fund must withhold 31% from dividends, capital gain distributions and
redemption proceeds payable to any individuals and certain other noncorporate
shareholders who have not furnished to the Fund a correct taxpayer
identification number or a properly completed claim for exemption on Form W-8 or
W-9. Withholding at that rate also is required from dividends and capital gain
distributions payable to such shareholders who otherwise are subject to backup
withholding. Fund accounts opened via a bank wire purchase (see "How to Invest
- -- Purchases Through the Distributor") are considered to have uncertified
taxpayer identification numbers unless a completed Form W-8 or W-9 or Account
Application is received by the Transfer Agent within seven days
Prospectus Page 29
<PAGE>
GT GLOBAL NEW DIMENSION FUND
after the purchase. A shareholder should contact the Transfer Agent if the
shareholder is uncertain whether a proper taxpayer identification number is on
file with the Fund.
A redemption of Fund shares may result in taxable gain or loss to the redeeming
shareholder, depending upon whether the redemption proceeds are more or less
than the shareholder's adjusted basis for the redeemed shares (which normally
includes any initial sales charge paid on Class A shares). An exchange of Fund
shares for shares of another GT Global Mutual Fund or a fund of The AIM Family
of Funds generally will have similar tax consequences. However, special tax
rules apply when a shareholder (1) disposes of Class A shares of the Fund
through a redemption or exchange within 90 days after purchase and (2)
subsequently acquires Class A shares of the Fund or of any other GT Global
Mutual Fund or a fund of The AIM Family of Funds on which an initial sales
charge normally is imposed without paying that sales charge due to the
reinstatement privilege or exchange privilege. In these cases, any gain on the
disposition of the original Class A shares will be increased, or loss decreased,
by the amount of the sales charge paid when those shares were acquired, and that
amount will increase the adjusted basis of the shares subsequently acquired. In
addition, if Fund shares are purchased within 30 days before or after redeeming
other Fund shares (regardless of class) at a loss, all or a part of the loss
will not be deductible and instead will increase the basis of the newly
purchased shares.
The foregoing is only a summary of some of the important federal tax
considerations generally affecting the Fund and its shareholders. See "Taxes" in
the Statement of Additional Information for a further discussion. There may be
other federal, state, local or foreign tax considerations applicable to a
particular investor. Prospective investors therefore are urged to consult their
tax advisers.
- --------------------------------------------------------------------------------
MANAGEMENT
- --------------------------------------------------------------------------------
The Trust's Board of Trustees has overall responsibility for the operation of
the Fund. The Trust's Board of Trustees has approved all significant agreements
between the Trust on the one side and persons or companies furnishing services
to the Fund on the other, including the investment advisory and administrative
services agreement with AIM, the investment sub-advisory and sub-administration
agreement with the Sub-adviser, the agreements with AIM Distributors regarding
distribution of the Fund's shares, the agreement with State Street Bank and
Trust Company as the custodian and the transfer agency agreement with GT Global
Investors Services, Inc., an affiliate of the Sub-adviser. The day-to-day
operations of the Fund are delegated to the officers of the Trust, subject
always to the objective and policies of the Fund and to the general supervision
of the Trust's Board of Trustees. See "Trustees and Executive Officers" in the
Statement of Additional Information for information on the Trustees.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Subject to the supervision and
direction of the Trust's Board of Trustees, the Sub-adviser will ensure that the
Fund's assets are invested in the Underlying Theme Funds according to the
formula and pre-determined percentages described in the "Investment Objective
and Policies" section of this Prospectus. The Sub-adviser will determine how the
Fund's assets will be invested in short-term investments and place all purchase
and sale orders for such instruments and for the Underlying Theme Funds. The
Sub-adviser provides the following administration services to the Fund:
furnishing corporate officers and clerical staff; providing office space,
services and equipment; and supervising all matters relating to the Fund's
operation. The Sub-adviser also serves as the Fund's pricing and accounting
agent. Finally, the Sub-adviser will initially assume all costs of the Fund's
operation, except for service and distribution fees described below and
non-recurring and extraordinary expenses. The Fund, as a shareholder in the
Underlying Theme Funds, indirectly will bear its proportionate share of any
investment management fees and other expenses paid by the Underlying Theme
Funds.
AIM and the Sub-adviser provide investment management and/or administration
services to the
Prospectus Page 30
<PAGE>
GT GLOBAL NEW DIMENSION FUND
GT Global Mutual Funds. The Sub-adviser and its worldwide asset management
affiliates have provided investment management and/or administration services to
institutional, corporate and individual clients around the world since 1969. The
U.S. offices of the Sub-adviser are located at 50 California street, 27th Floor,
San Francisco, CA 94111 and 1166 Avenue of the Americas, New York, NY 10036.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment adviser to the Fund pursuant to a master investment advisory
agreement, dated as of , 1998 (the "Advisory Agreement"). AIM was
organized in 1976 and, together with its subsidiaries, manages or advises [over
50] investment company portfolios encompassing a broad range of investment
objectives. The Sub-adviser 50 California Street, 27th Floor, San Francisco,
California 94111, and 1166 Avenue of the Americas, New York, New York 10036,
serves as the sub-adviser to the Fund pursuant to an investment sub-advisory
agreement dated as of , 1998. On May , 1998, Liechtenstein
Global Trust AG ("GT"), the former indirect parent organization of the Sub-
adviser, consummated a purchase agreement with AMVESCAP PLC pursuant to which
AMVESCAP PLC acquired GT's Asset Management Division, which includes the
Sub-adviser and certain other affiliates. As a result of this transaction, the
Sub-adviser is now an indirect wholly owned subsidiary of AMVESCAP PLC. Prior to
the sale, the Sub-adviser and its worldwide asset management affiliates provided
investment management and/or administrative services to institutional, corporate
and individual clients around the world since 1969.
AIM and the Sub-adviser and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both
indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
In addition to the investment resources of their Houston, San Francisco and New
York offices, AIM and the Sub-adviser draw upon the expertise, personnel, data
and systems of other offices including investment offices in Atlanta, Boston,
Dallas, Denver, Louisville, Miami, Portland (Oregon), Frankfurt, Hong Kong,
London, Singapore, Sydney, Tokyo and Toronto. In managing the GT Global Mutual
Funds, the Sub-adviser employs a team approach, taking advantage of its
investment resources around the world in seeking each Fund's investment
objective.
While the Fund will not be actively managed or have a portfolio manager, the
Underlying Theme Funds are actively managed by teams of investment
professionals. At least semi-annually the Fund will rebalance the Fund's assets
among the Underlying Theme Funds according to the MSCI weighting as of the last
business day of the preceding month.
DISTRIBUTION OF FUND SHARES. The Trust has entered into master distribution
agreements relating to the Fund (the "Distribution Agreements"), dated
, 1998, with AIM Distributors, a registered broker/dealer and a
wholly owned subsidiary of AIM. The address of AIM Distributors is P.O. Box
4739, Houston, Texas 77210-4739. The Distribution Agreements provide AIM
Distributors with the exclusive rights to distribute shares of the Fund directly
and through institutions with whom AIM Distributors has entered into selected
dealer agreements. Under the Distribution Agreements, AIM Distributors acts as
the distributor of Class A, Class B and Class C shares of the Fund. As
distributor, AIM Distributors collects the sales charges imposed on purchases of
Class A shares and any contingent deferred sales charges that may be imposed on
certain redemptions of Class A, Class B and Class C shares. AIM Distributors
reallows a portion of the sales charge on Class A shares to broker/dealers that
have sold such shares in accordance with the schedule set forth above under "How
to Invest." AIM Distributors also pays a commission equal to 4.00% of the amount
invested to broker/dealers who sell Class B shares and pays a commission equal
to 1.00% of the amount invested to broker/dealers who sell Class C shares. From
time to time, AIM Distributors may pay commissions in excess of these amounts.
Commissions are not paid on exchanges or certain reinvestments in Class B or
Class C shares. In addition, with respect to all three classes of shares, AIM
Distributors makes ongoing payments to broker/ dealers for distribution and
service activities in accordance with the Rule 12b-1 plans described below.
AIM Distributors, at its own expense, may provide additional promotional
incentives to broker/ dealers that sell shares of the Fund and/or shares of the
other GT Global Mutual Funds. In some instances additional compensation or
promotional
Prospectus Page 31
<PAGE>
GT GLOBAL NEW DIMENSION FUND
incentives may be offered to broker/dealers that have sold or may sell
significant amounts of shares during specified periods of time. Such
compensation and incentives may include, but are not limited to, cash,
merchandise, trips and financial assistance to broker/dealers in connection with
preapproved conferences or seminars, sales or training programs for invited
sales personnel, payment for travel expenses (including meals and lodging)
incurred by sales personnel and members of their families or other invited
guests to various locations for such seminars or training programs, seminars for
the public, advertising and sales campaigns regarding one or more of GT Global
Mutual Funds, and/or other events sponsored by the broker/dealers. In addition,
AIM Distributors makes ongoing payments to brokerage firms, financial
institutions (including banks) and others that facilitate the administration and
servicing of shareholder accounts. AIM Distributors may elect to re-allow the
entire initial sales charge to dealers for all sales with respect to which
orders are placed with AIM Distributors during a particular period. Dealers to
whom substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession out of the initial
sales charge paid by investors, AIM Distributors may, from time to time, at its
expense or as an expense for which it may be compensated under a distribution
plan, if applicable, pay a bonus or other consideration or incentive to dealers
who sell a minimum dollar amount of the shares of the GT Global Mutual Funds
during a specified period of time. In some instances, these incentives may be
offered only to certain dealers who have sold or may sell significant amounts of
shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable GT Global
Mutual Fund's shares or the amount that any particular GT Global Mutual Fund
will receive as proceeds from such sales. Dealers may not use sales of the GT
Global Mutual Funds' shares to qualify for any incentives to the extent that
such incentives may be prohibited by the laws of any state.
AIM Distributors may make payments to dealers and institutions who are dealers
of record for purchases of $1 million or more of Class A shares (or shares which
normally involve payment of initial sales charges), which are sold at net asset
value and are subject to a contingent deferred sales charge as follows: 1% of
the first $2 million of such purchases, plus 0.80% of the next $1 million of
such purchases, plus 0.50% of the next $l7 million of such purchases, plus 0.25%
of amounts in excess of $20 million of such purchases.
AIM Distributors may pay sales commissions to dealers and institutions who sell
Class B shares of the GT Global Mutual Funds at the time of such sales. Payments
with respect to Class B shares will equal 4.00% of the purchase price of the
Class B shares sold by the dealer or institution and will consist of a sales
commission equal to 3.75% of the purchase price of the Class B shares sold plus
an advance of the first year service fee of 0.25% with respect to such shares.
The portion of the payments to AIM Distributors under the Class B Plan which
constitutes an asset-based sales charge (0.75%) is intended in part to permit
AIM Distributors to recoup a portion of such sales commissions plus financing
costs.
The Trust has adopted a Master Distribution Plan applicable to Class A and Class
C shares of the Fund (the "Class A and C Plan") pursuant to Rule 12b-1 under the
1940 Act, to compensate AIM Distributors for the purpose of financing any
activity that is intended to result in the sale of Class A or Class C shares of
the Fund. Under the Class A and C Plan, the Trust may compensate AIM
Distributors an aggregate amount of 0.50% of the average daily net assets of
Class A shares of the Fund and an aggreagate amount of 1.00% of the average
daily net assets of Class C shares of the Fund.
The Trust also has adopted a Master Distribution Plan applicable to Class B
shares of the Fund (the "Class B Plan"). Under the Class B Plan, the Fund pays
compensation to AIM Distributors at an annual rate of 1.00% of the average daily
net assets of Class B shares of the Fund.
The Class A and C Plan and the Class B Plan (together, the "Plans") are designed
to compensate AIM Distributors for certain promotional and other sales-related
costs, and to implement a dealer incentive program that provides for periodic
payments to selected dealers who furnish continuing personal shareholder
services to their customers who purchase and own Class A, Class B and Class C
Prospectus Page 32
<PAGE>
GT GLOBAL NEW DIMENSION FUND
shares of the Fund. Payments also can be directed by AIM Distributors to
selected dealers and financial institutions who have entered into service
agreements with respect to Class A, Class B and Class C shares of the Fund and
who provide continuing personal services to their customers who own Class A,
Class B and Class C shares of the Fund. The service fees payable to selected
dealers and financial institutions are calculated at the annual rate of 0.25% of
the average daily net asset value of those Fund shares that are held in such
institution's or dealer's customers' accounts that were purchased on or after a
prescribed date set forth in the Plans. Any amounts not payable as a service fee
would constitute an asset-based sales charge. Payments under the Plans are
subject to any applicable limitations imposed by the rules of the National
Association of Securities Dealers, Inc.
The Plans do not obligate the Fund to reimburse AIM Distributors for the actual
expenses AIM Distributors may incur in fulfilling its obligations under the
Plans. Thus, even if AIM Distributors' actual expenses exceed the fee payable to
AIM Distributors thereunder at any time, the Fund will not be obligated to pay
more than that fee. If AIM Distributors' expenses are less than the fee it
receives, AIM Distributors will retain the full amount of the fee.
Under the Plans, AIM Distributors may in its discretion from time to time agree
to waive voluntarily all or any portion of its fee that has not been assigned or
transferred, while retaining its ability to be reimbursed for such fee prior to
the end of each fiscal year.
Under the Plans, certain financial institutions which have entered into service
agreements and which sell shares of the Fund on an agency basis, may receive
payments from the Fund pursuant to the respective Plans. AIM Distributors does
not act as principal, but rather as agent for the Fund, in making such payments.
For additional information concerning the operation of the Plans see the
Statement of Additional Information.
The Glass-Steagall Act and other applicable laws, among other things, generally
prohibit federally chartered or supervised banks from engaging in the business
of underwriting or distributing securities. Accordingly, AIM Distributors
intends to engage banks (if at all) only to perform administrative and
shareholder servicing functions. If a bank were prohibited from so acting, its
shareholder clients would be permitted to remain shareholders, and alternative
means for continuing the servicing of such shareholders would be sought. It is
not expected that shareholders would suffer any adverse financial consequences
as a result of any of these occurrences.
- --------------------------------------------------------------------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
SPECIAL SERVICING AGREEMENT. Until the Special Servicing Agreement described
below is entered into, AIM and the Sub-adviser will pay all the expenses of the
Fund, excluding service and distribution fees and certain non-recurring and
extraordinary expenses. Expenses initially paid by AIM and the Sub-adviser will
include fees and expenses of the Fund's accounting agent; legal, auditing and
accounting expenses; taxes; fees and expenses of the Transfer Agent; fees and
expenses of registering or qualifying the Fund's shares for sale; fees and
expenses of Trustees, officers and employees of the Trust who are not affiliated
with AIM or the Sub-adviser; the cost of printing and distributing reports and
notices to existing shareholders; and fees and expenses incurred in connection
with membership in investment company organizations.
An exemptive application has been filed with the SEC requesting relief from
certain provisions of the 1940 Act to permit the Fund, AIM, the Sub-adviser, the
Underlying Theme Funds and the Transfer Agent to enter into a Special Servicing
Agreement ("Agreement"). A private letter ruling has also been requested from
the Internal Revenue Service concerning this arrangement. If relief is obtained,
all the Fund's expenses except for service and distribution fees and certain
non-recurring and extraordinary expenses will be paid for in accordance with the
Agreement. Under the Agreement, to the extent that the aggregate expenses of the
Fund are less than the estimated savings to the
Prospectus Page 33
<PAGE>
GT GLOBAL NEW DIMENSION FUND
Underlying Theme Funds from the operation of the Fund, each Underlying Theme
Fund will bear those expenses in proportion to the average daily value of its
shares owned by the Fund and/or the number of shareholder accounts at the Fund.
The estimated savings are expected to result from the reduction of the
Underlying Theme Funds' shareholder servicing costs due to the elimination of
separate shareholder accounts that either currently are or have potential to be
invested in the Underlying Theme Funds. The estimated savings produced by the
operation of the Fund may offset most, if not all, the expenses incurred by the
Fund other than service and distribution fees. To the extent that the Fund's
expenses exceed the aggregate financial benefits to the Underlying Theme Funds,
the Sub-adviser will pay that excess.
CONFIRMATIONS AND REPORTS TO SHAREHOLDERS. Each time a transaction is made that
affects a shareholder's account in the Fund, the shareholder will receive from
the Transfer Agent a confirmation statement reflecting the transaction.
Confirmations for transactions effected pursuant to the Fund's Automatic
Investment Plan, Systematic Withdrawal Plan and automatic dividend reinvestment
program may be provided quarterly. Shortly after the end of the Fund's fiscal
year on December 31 and fiscal half-year on June 30 of each year, shareholders
receive an annual and semiannual report, respectively. In addition, the federal
income status of distributions made by the Fund to shareholders is reported
after the end of each calendar year on Form 1099-DIV. Under certain
circumstances, duplicate mailings of the foregoing reports to the same household
may be consolidated.
ORGANIZATION OF THE TRUST. The Trust was organized as a Delaware business trust
on May , 1998. Prior to June 1, 1998, the Trust operated under the name "GT
Global Series Trust," a Massachusetts business trust organized on August 26,
1996. The Trust currently consists of one series. From time to time, the Trust
may establish other series, each holding a distinct investment portfolio and
issuing a distinct series of the Trust's shares. Shares of each series are
entitled to one vote per share (with proportional voting for fractional shares)
and are transferable. Shareholders have no preemptive or conversion rights.
If any additional series of the Trust are established, on any matter submitted
to a vote of shareholders, shares of each series will be voted by its
shareholders individually when the matter affects the specific interest of that
series only, such as approval of its investment management arrangements. The
shares of the Trust's series would be voted in the aggregate on other matters,
such as the election of Trustees and ratification of the selection by the Board
of Trustees of the Trust's independent accountants.
Normally there will be no annual meeting of shareholders in any year, except as
required under the 1940 Act. The Fund would be required to hold a shareholders'
meeting if at any time less than a majority of the Trustees holding office had
been elected by shareholders. Trustees continue to hold office until their
successors are elected and have qualified. Fund shares do not have cumulative
voting rights, which means that the holders of a majority of the shares voting
for the election of Trustees can elect all the Trustees. A Trustee may be
removed upon a majority vote of the shareholders qualified to vote in the
election. Shareholders holding 10% of the Trust's outstanding voting shares may
call a meeting of shareholders for the purpose of voting upon the question of
removal of any Trustee or for any other purpose. The 1940 Act requires the Trust
to assist shareholders in calling such a meeting.
Pursuant to the Trust's Declaration of Trust, the Trust may issue an unlimited
number of shares of the Fund. Each share of the Fund represents an interest in
the Fund only, has a par value of $0.01 per share, represents an equal
proportionate interest in the Fund with other Fund shares and is entitled to
such dividends and other distributions out of the income earned and gain
realized on the assets belonging to the Fund as may be declared at the
discretion of the Board of Trustees. Each share of the Fund is equal in
earnings, assets and voting privileges, except that each class has exclusive
voting rights with respect to its distribution plan and bears the expenses, if
any, related to the distribution of its shares. Fund shares, when issued, are
fully paid and nonassessable.
YEAR 2000 COMPLIANCE PROJECT. In providing services to the GT Global Mutual
Funds, AIM, AIM Distributors, the Transfer Agent and the Sub-adviser rely on
internal computer systems as well as external computer systems provided by third
parties. Some of these systems were not originally designed to distinguish
between the year 1900 and the year 2000. This inability, if not corrected, could
adversely affect the services AIM Distributors, the Transfer Agent and the
Sub-adviser and others provide the GT Global Mutual Funds and their
shareholders.
Prospectus Page 34
<PAGE>
GT GLOBAL NEW DIMENSION FUND
To address this important issue, AIM, AIM Distributors, the Transfer Agent and
the Sub-adviser have undertaken a comprehensive Year 2000 Compliance Project
(the "Project"). The Project consists of four phases: (i) inventorying every
software and hardware system in use at AIM, AIM Distributors, the Transfer Agent
and the Sub-adviser, as well as remote, third-party systems on which AIM, AIM
Distributors, the Transfer Agent and the Sub-adviser rely; (ii) identifying
those systems that may not function properly after December 31, 1999; (iii)
correcting or replacing those systems that have been so identified; and (iv)
testing the processing of GT Global Mutual Fund data in all systems. Phase (i)
has been completed; phase (ii) is substantially completed; phase (iii) has
commenced; and phase (iv) is expected to commence during the third quarter of
1998. The Project is scheduled to be completed by December 31, 1998. Following
completion of the Project, AIM, AIM Distributors and the Sub-adviser will ensure
that any systems subsequently acquired are Year 2000 compliant.
SHAREHOLDER INQUIRIES. Shareholder inquiries may be made by calling the Fund
toll-free at (800) 223-2138 or by writing to the Fund at 50 California Street,
27th Floor, San Francisco, CA 94111.
TRANSFER AGENT. Shareholder servicing, reporting and general transfer agent
functions for the Fund are performed by GT Global Investor Services, Inc. The
Transfer Agent is an affiliate of the Sub-adviser and AIM, and maintains offices
at California Plaza, 2121 N. California Boulevard, Suite 450, Walnut Creek, CA
94596.
CUSTODIAN. State Street Bank and Trust Company, 225 Franklin Street, Boston, MA
02110, is custodian of the assets of the Fund.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Trust and to the Fund.
Kirkpatrick & Lockhart LLP also acts as counsel to the Sub-adviser, GT Global
and the Transfer Agent in connection with other matters.
INDEPENDENT ACCOUNTANTS. The Fund's independent accountants are
, One Post Office Square, Boston, MA 02109.
conducts an annual audit of the Fund, assists in the
preparation of the Fund's federal and state income tax returns, and consults
with the Trust and the Fund as to matters of accounting, regulatory filings, and
federal and state income taxation.
MULTIPLE TRANSLATIONS OF THE PROSPECTUS. This Prospectus may be translated into
other languages. In the event of any inconsistency or ambiguity as to the
meaning of any word or phrase contained in a translation, the English text shall
prevail.
Prospectus Page 35
<PAGE>
GT GLOBAL NEW DIMENSION FUND
PERFORMANCE
- --------------------------------------------------------------------------------
FUND PERFORMANCE INFORMATION. The Fund, from time to time, may include
information on its investment results and/or comparisons of its investment
results to various unmanaged indices or results of other mutual funds or groups
of mutual funds in advertisements, sales literature or reports furnished to
present or prospective shareholders.
In such materials, the Fund may quote its average annual total return
("Standardized Return"). Standardized Return is calculated separately for each
class of shares of the Fund. Standardized Return shows percentage rates
reflecting the average annual change in the value of an assumed investment in
the Fund at the end of a one-year period and at the end of five- and ten-year
periods, reduced by the maximum applicable sales charge imposed on sales of Fund
shares. If a one-, five- and/or ten-year period has not yet elapsed, data will
be provided as of the end of a shorter period corresponding to the life of the
Fund. Standardized Return assumes the reinvestment of all dividends and other
distributions.
In addition, in order to more completely represent the Fund's performance or
more accurately compare the performance to other measures of investment return,
the Fund also may include other total return performance data ("Non-Standardized
Return") in advertisements, sales literature and shareholder reports.
Non-Standardized Return reflects percentage rates of return encompassing all
elements of return (i.e., income and capital appreciation or depreciation) and
assumes reinvestment of all dividends and other distributions. Non-Standardized
Return may be quoted for the same or different periods as those for which
Standardized Return is quoted; it may consist of an aggregate or average annual
percentage rate of return, actual year-by-year rates or any combination thereof.
Non-Standardized Return may or may not take sales charges into account;
performance data calculated without taking the effect of sales charges into
account will be higher than data including the effect of such charges.
The Fund's performance data will reflect past performance and will not
necessarily be indicative of future results. The Fund's investment results will
vary from time to time depending upon market conditions and the composition of
the Underlying Theme Funds' portfolios. These factors and possible differences
in calculation methods should be considered when comparing the Fund's investment
results with those published for other investment companies, other investment
vehicles and unmanaged indices. The Fund's results also should be considered
relative to the risks associated with its investment objective and policies. See
"Investment Results" in the Statement of Additional Information.
UNDERLYING THEME FUND PERFORMANCE. The Fund has a limited history and therefore
a limited performance record. Thus, the performance shown below is not the
performance of the Fund, but instead reflects the performance of the Underlying
Theme Funds. The following table shows the average annual total returns of Class
A and Class B shares of each Underlying Theme Fund for the most recent one- and
five-year periods (as applicable) and for the life of the Underlying Theme
Funds. The performance information reflects deduction of the maximum applicable
sales charges. Returns would be higher if these charges were not reflected. The
Fund invests in the Advisor Class shares of the Underlying Theme Funds, which
are not subject to sales charges and distribution and service fees. However,
Class A and Class B shares of the Fund are subject to their own sales charges
and distribution and service fees.
Prospectus Page 36
<PAGE>
GT GLOBAL NEW DIMENSION FUND
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN THROUGH 10/31/97
---------------------------------------------------------
ONE YEAR FIVE YEARS LIFE OF FUND
----------------- ----------------- -----------------
UNDERLYING THEME FUND CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B
- ----------------------------------------------------------------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Consumer Products and Services Fund.............................. 5.30% 4.95% n/a n/a 27.70%(1) 28.59%(1)
Financial Services Fund.......................................... 23.74% 24.13% n/a n/a 13.70%(2) 14.13%(2)
Health Care Fund................................................. 22.27% 22.75% 15.24% n/a 15.23%(3) 20.09%(4)
Infrastructure Fund.............................................. 4.18% 3.83% n/a n/a 8.30%(5) 8.60%(5)
Natural Resources Fund........................................... 16.81% 16.99% n/a n/a 18.64%(6) 19.17%(6)
Telecommunications Fund.......................................... 12.11% 12.15% 13.88% n/a 11.48%(7) 12.09%(8)
</TABLE>
Past performance of the Underlying Theme Funds is not a guarantee of future
results for either the Underlying Theme Funds or the Fund. Further information
about each Underlying Theme Fund's performance is contained in its Annual Report
to Shareholders, which may be obtained without charge by calling [(800)
824-1580] or contacting your financial adviser.
- ------------------
(1) The Consumer Products and Services Fund commenced operations on December 30,
1994.
(2) The Financial Services Fund commenced operations on May 31, 1994.
(3) Class A shares of the Health Care Fund were initially offered on August 7,
1989.
(4) Class B shares of the Health Care Fund were initially offered on April 1,
1993.
(5) The Infrastructure Fund commenced operations on May 31, 1994.
(6) The Natural Resources Fund commenced operations on May 31, 1994.
(7) Class A Shares of the Telecommunications Fund were initially offered on
January 27, 1992.
(8) Class B shares of the Telecommunications Fund were initially offered on
April 1, 1993.
Prospectus Page 37
<PAGE>
GT GLOBAL NEW DIMENSION FUND
APPENDIX
- --------------------------------------------------------------------------------
The chart below shows the allocation of the 38 industries comprising the MSCI to
the Underlying Theme Funds as of November 30, 1997.
<TABLE>
<CAPTION>
CONSUMER
PRODUCTS AND FINANCIAL HEALTH INFRA- NATURAL TELECOM-
MSCI AC WORLD INDEX INDUSTRY SERVICES SERVICES CARE STRUCTURE RESOURCES MUNICATIONS
- ---------------------------------------- ------------- ---------- ------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Aerospace and Military Technology....... X
Appliances & Household Durables......... X
Automobiles............................. X
Banking................................. X
Beverages & Tobacco..................... X
Broadcasting & Publishing............... X X
Building Materials & Components......... X
Business & Public Services.............. X
Chemicals............................... X
Construction & Housing.................. X
Data Processing & Reproduction.......... X
Electrical Components, Instruments...... X
Electrical & Electronics................ X X
Energy Equipment & Service.............. X
Energy Sources.......................... X
Financial Services...................... X
Food & Household Products............... X
Forest Products & Paper................. X
Gold Mines.............................. X
Health & Personal Care.................. X
Industrial Components................... X
Insurance............................... X
Leisure & Tourism....................... X
Machinery & Engineering................. X
Merchandising........................... X
Metals - Non Ferrous.................... X
Metals - Steel.......................... X
Misc. Materials & Commodities........... X
Multi-Industry.......................... X
Real Estate............................. X
Recreation, Consumer Goods.............. X
Telecommunications...................... X X
Textiles & Apparel...................... X
Transportation - Airlines............... X
Transportation - Road & Rail............ X
Transportation - Shipping............... X
Utilities Electrical & Gas.............. X
Wholesale & International Trade......... X
</TABLE>
Prospectus Page 38
<PAGE>
GT GLOBAL NEW DIMENSION FUND
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL NEW DIMENSION FUND
GT GLOBAL FUNDS
AIM DISTRIBUTORS 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 AIM DISTRIBUTORS 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
Provides 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
NO DEALER, SALES REPRESENTATIVE OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS 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, A I M ADVISORS, INC., [CHANCELLOR GT ASSET
MANAGEMENT, INC.] OR A I M DISTRIBUTORS, 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.
DIMPR801040M.726
<PAGE>
[LOGO]GT GLOBAL NEW DIMENSION FUND:
ADVISOR CLASS
PROSPECTUS -- JUNE 1, 1998
- --------------------------------------------------------------------------------
GT GLOBAL NEW DIMENSION FUND (the "Fund") seeks long-term growth of capital.
Unlike a typical mutual fund, which invests directly in portfolio securities,
the Fund invests 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").
There is no assurance that the Fund will achieve its investment objective.
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR GUARANTEED BY,
ANY BANK, NOR ARE THEY FEDERALLY INSURED OR OTHERWISE PROTECTED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
The Fund is managed by A I M Advisors, Inc. ("AIM") and is sub-advised and
sub-administered by [Chancellor GT Asset Management, Inc.] (the "Sub-adviser").
AIM and the Sub-adviser and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both
indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
Shares offered by this Prospectus are available for purchase only by certain
investors and are offered at net asset value without the imposition of a front-
end or contingent deferred sales charge or Rule 12b-1 fees.
This Prospectus sets forth concisely the information an investor should know
before investing and should be read carefully and retained for future reference.
A Statement of Additional Information, dated June 1, 1998, has been filed with
the Securities and Exchange Commission ("SEC") and, as supplemented or amended
from time to time, is incorporated by reference. The Statement of Additional
Information is available without charge by writing to the Fund at 50 California
Street, 27th Floor, San Francisco, CA 94111, or by calling [(800) 824-1580]. It
is also available, along with other related materials, on the SEC's Internet web
site (http://www.sec.gov).
FOR FURTHER INFORMATION, CALL [(800) 824-1580] OR CONTACT YOUR FINANCIAL
ADVISER.
- ---------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus Page 1
<PAGE>
GT GLOBAL NEW DIMENSION FUND
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Prospectus Summary........................................................................ 3
Investment Objective and Policies......................................................... 7
Description of the Underlying Theme Funds................................................. 8
Risk Factors and Special Considerations................................................... 10
How to Invest............................................................................. 13
How to Make Exchanges..................................................................... 15
How to Redeem Shares...................................................................... 16
Shareholder Account Manual................................................................ 18
Calculation of Net Asset Value............................................................ 19
Dividends, Other Distributions and Federal Income Taxation................................ 19
Management................................................................................ 21
Other Information......................................................................... 22
Performance............................................................................... 25
Appendix.................................................................................. 27
</TABLE>
Prospectus Page 2
<PAGE>
GT GLOBAL NEW DIMENSION FUND
PROSPECTUS SUMMARY
- ------------------------------------------------------------
The following summary is qualified in its entirety by the more detailed
information appearing in the body of this Prospectus. Cross-references in the
summary are to headings in the body of this Prospectus.
<TABLE>
<S> <C> <C>
The Fund: The Fund is a diversified series of GT Global Series Trust (the "Trust").
Investment Objective: The Fund seeks long-term growth of capital.
Principal Investments: The Fund invests, under normal circumstances, substantially all of
its assets in shares of the following Underlying Theme Funds: GT
Global Consumer Products and Services Fund ("Consumer Products and
Services Fund"); GT Global Financial Services Fund ("Financial
Services Fund"); GT Global Health Care Fund ("Health Care Fund");
GT Global Infrastructure Fund ("Infrastructure Fund"); GT Global
Natural Resources Fund ("Natural Resources Fund"); and GT Global
Telecommunications Fund ("Telecommunications Fund"). The
allocation of the Fund's assets to the Underlying Theme Funds is
governed strictly by a formula described herein. See "Investment
Objective and Policies."
There is no assurance that the Fund will achieve its investment
objective. The Fund's net asset value will fluctuate, reflecting
fluctuations in the net asset value of the shares of the
Underlying Theme Funds. Investors should review the investment
objectives and policies of the Fund and the Underlying Theme Funds
carefully and consider their ability to assume these and other
risks involved in purchasing shares of the Fund. See "Investment
Objective and Policies," "Description of the Underlying Theme
Funds" and "Risk Factors and Special Considerations." As a
recently organized entity, the Fund has a limited operating
history.
AIM and the Sub-adviser and their worldwide asset management
Investment Managers: affiliates provide investment management and/or administrative
services to institutional, corporate and individual clients around
the world. AIM and the Sub-adviser are both indirect wholly owned
subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its subsidiaries
are an independent investment management group that has a
significant presence in the institutional and retail segment of
the investment management industry in North America and Europe,
and a growing presence in Asia. AIM was organized in 1976 and,
together with its affiliates, currently advises [over 50]
investment company portfolios. On , 1998, AMVESCAP
PLC acquired the Asset Management Division of Liechtenstein Global
Trust AG ("GT"), which included the Sub-adviser and certain other
affiliates.
</TABLE>
Prospectus Page 3
<PAGE>
GT GLOBAL NEW DIMENSION FUND
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Advisor Class shares are offered through this Prospectus to [(a)
Advisor Class Shares: trustees or other fiduciaries purchasing shares for employee
benefit plans which are sponsored by organizations which have at
least 1,000 employees; (b) any account with assets of at least
$10,000 if (i) a financial planner, trust company, bank trust
department or registered investment adviser has investment
discretion over such account, and (ii) the account holder pays
such person as compensation for its advice and other services an
annual fee of at least .50% on the assets in the account; (c) any
account with assets of at least $10,000 if (i) such account is
established under a "wrap fee" program, and (ii) the account
holder pays the sponsor of such program an annual fee of at least
.50% on the assets in the account; (d) accounts advised by one of
the companies composing or affiliated with AMVESCAP PLC; and (e)
any of the companies composing or affiliated with AMVESCAP PLC.]
Shares Available Through: Advisor Class shares are available through Financial Advisors (as
defined herein) who have entered into agreements with the Fund's
distributor, A I M Distributors, Inc. ("AIM Distributors") or
certain of its affiliates. See "How to Invest" and "Shareholder
Account Manual."
Exchange Privileges: Advisor Class shares may only be exchanged for Advisor Class
shares of the other GT Global Mutual Funds, which are open-end
management investment companies sub-advised by the Sub-adviser.
See "How to Make Exchanges" and "Shareholder Account Manual."
Redemptions: Shares may be redeemed through the Fund's Transfer Agent. See "How
to Redeem Shares" and "Shareholder Account Manual."
Dividends and Other Dividends and capital gain distributions, if any, are paid
Distributions: annually.
Reinvestment: Dividends and other distributions may be reinvested automatically
in Advisor Class shares of the Fund or in Advisor Class shares of
other GT Global Mutual Funds.
Net Asset Value: Expected to be quoted daily in the financial section of most
newspapers.
</TABLE>
Prospectus Page 4
<PAGE>
GT GLOBAL NEW DIMENSION FUND
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
SUMMARY OF INVESTOR COSTS. The expenses and maximum transaction costs associated
with investing in Advisor Class shares of the Fund are reflected in the
following tables.
<TABLE>
<CAPTION>
ADVISOR
CLASS
-------
<S> <C>
SHAREHOLDER TRANSACTIONS COSTS:
Maximum sales charge on purchase of shares (as a % of offering price)................... None
Sales charges on reinvested distributions to shareholders............................... None
Maximum deferred sales charges (as a % of net asset value at time of purchase or sale,
whichever is less)..................................................................... None
Redemption charges...................................................................... None
Exchange fees........................................................................... None
ANNUAL FUND OPERATING EXPENSES*:
(AS A % OF AVERAGE NET ASSETS)
Investment management fees.............................................................. None
12b-1 distribution and service fees..................................................... None
Other expenses.......................................................................... None
-------
Total Fund Operating Expenses........................................................... 0.00%
-------
-------
</TABLE>
- ------------------
* The Annual Fund Operating Expenses are estimated for the Fund's initial
fiscal period. "Other expenses" (including transfer agency, legal and audit
fees and other operating expenses) initially will be borne by the
Sub-adviser. Subject to receipt of an order of the SEC pursuant to a pending
exemptive application and a private letter ruling issued by the Internal
Revenue Service, such expenses may be shared by the Sub-adviser and the
Underlying Theme Funds or the Underlying Theme Funds alone. See "Other
Information -- Special Servicing Agreement." Investors purchasing Advisor
Class shares through financial planners, trust companies, bank trust
departments or registered investment advisers, or under a "wrap fee"
program, will be subject to additional fees charged by such entities or by
the sponsors of such programs. Where any account advised by one of the
companies composing or affiliated with Liechtenstein Global Trust invests in
Advisor Class shares of the Fund, such account shall not be subject to
duplicative advisory fees.
In addition to the Annual Fund Operating Expenses shown above, the Fund, as a
shareholder in the Underlying Theme Funds, indirectly bears its pro rata share
of the fees and expenses incurred by the Underlying Theme Funds. As a result,
the investment returns of the Fund reflect the expenses of the Underlying Theme
Funds in which it holds shares. Because the Fund invests only in Advisor Class
shares of the Underlying Theme Funds it pays no sales charge or 12b-1
distribution or service fees in connection with these investments. The following
table shows the expense ratios applicable to Advisor Class shares of the
Underlying Theme Funds for their fiscal years ended October 31, 1997.
<TABLE>
<CAPTION>
EXPENSE RATIO OF ADVISOR CLASS SHARES
UNDERLYING THEME FUND (1)
- ------------------------------------------------------------------------------------- ------------------
<S> <C>
Consumer Products and Services Fund.................................................. 1.34%
Financial Services Fund.............................................................. 1.50%
Health Care Fund..................................................................... 1.27%
Infrastructure Fund.................................................................. 1.50%
Natural Resources Fund............................................................... 1.50%
Telecommunications Fund.............................................................. 1.29%
</TABLE>
- ------------------
(1) AIM has undertaken to limit each Underlying Theme Fund's expenses (exclusive
of brokerage commissions, taxes, interest and extraordinary expenses) to a
maximum level of 1.50% of the average daily net assets of such fund's
Advisor Class shares.
Prospectus Page 5
<PAGE>
GT GLOBAL NEW DIMENSION FUND
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
The following table shows the aggregate expense ratio of each class of the Fund
based on a weighted average of the expense ratios of Advisor Class shares of the
Underlying Theme Funds in which the Fund was invested as of October 31, 1997,
plus the Fund's total operating expenses. (1)
<TABLE>
<CAPTION>
GT GLOBAL NEW DIMENSION FUND
(INCLUDING THE FUND'S INDIRECT PRO RATA SHARE OF THE EXPENSES OF THE UNDERLYING THEME ESTIMATED AGGREGATE EXPENSE RATIO
FUNDS) (2)
- ------------------------------------------------------------------------------------------ ---------------------------------
<S> <C>
Advisor Class............................................................................. %
</TABLE>
- ------------------
(1) These percentages do not necessarily reflect the current allocation of the
Fund's assets to the Underlying Theme Funds or the allocation of the Fund's
assets on any other date.
(2) Because of AIM's undertaking to limit each Underlying Theme Fund's expenses
as described above, the Fund's aggregate expense ratio will not exceed 1.50%
for Advisor Class shares.
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES:
An investor would have directly or indirectly paid the following expenses of the
Fund based upon the Fund's estimated aggregate expense ratio at the end of the
periods shown on a $1,000 investment in the Fund, assuming a 5% annual return:
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS
------------- ---------------
<S> <C> <C>
Advisor Class shares........................................................................... $ $
</TABLE>
THE FOREGOING TABLES ARE INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUND. THE
"HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF FUTURE EXPENSES. THE FUND'S
ACTUAL DIRECT AND INDIRECT EXPENSES, AND AN INVESTOR'S DIRECT AND INDIRECT
EXPENSES, MAY BE MORE OR LESS THAN THOSE SHOWN. The example assumes payment by
the Fund of operating expenses at the level set forth under "Annual Fund
Operating Expenses" above and of its indirect pro rata share of the Advisor
Class share expenses of the Underlying Theme Funds, as described above.
The tables and the assumption in the Hypothetical Example of a 5% annual return
are required by regulation of the SEC applicable to all mutual funds. The 5%
annual return is not a prediction of and does not represent the Fund's or any
Underlying Theme Fund's projected or actual performance.
Prospectus Page 6
<PAGE>
GT GLOBAL NEW DIMENSION FUND
INVESTMENT OBJECTIVE AND
POLICIES
- --------------------------------------------------------------------------------
The Fund seeks long-term growth of capital. Unlike a typical mutual fund, which
invests directly in securities, the Fund invests, under normal circumstances,
substantially all of its assets in the following Underlying Theme Funds:
/ / Consumer Products and Services Fund
/ / Financial Services Fund
/ / Health Care Fund
/ / Infrastructure Fund
/ / Natural Resources Fund
/ / Telecommunications Fund
The Sub-adviser exercises no discretion in investing the Fund's assets. Rather,
the Sub-adviser periodically determines the allocation of the Fund's assets to
the Underlying Theme Funds according to the industry weightings of the companies
composing the Morgan Stanley Capital International All Country (AC) World Index
("MSCI"). (The MSCI is a broad unmanaged index of global stock prices,
comprising approximately 2,480 different issuers, located in 47 countries
including both developed and developing countries as of November 30, 1997. Each
of the 2,480 stocks is placed into one of 38 MSCI industry sectors.) The
Sub-adviser assesses which of the Underlying Theme Funds can invest, as part of
its primary focus, in each of these industries. For example, industries in the
MSCI in which the Financial Services Fund invests include the Banking, Financial
Services, Insurance and Real Estate industries. The percentage that those
industries compose in the MSCI is the initial weighting assigned to the
Financial Services Fund. Where two or more Underlying Theme Funds can invest in
an industry, the weighting of that industry in the MSCI is split equally among
each qualifying Underlying Theme Fund. See the Appendix for the allocation of
the 38 industries to the Underlying Theme Funds. Of course, the Underlying Theme
Funds do not invest necessarily in the same industries or the same companies
that compose the MSCI. Because the percentage weight assigned to each industry
in the MSCI changes over time and because the percentage of the Fund's assets
invested in each Underlying Theme Fund will change over time, the Sub-adviser
will rebalance the Fund's assets among the Underlying Theme Funds at least
semi-annually. In addition, the Sub-adviser will invest incoming money in, and
satisfy redemption requests by redeeming shares of, each Underlying Theme Fund
according to the MSCI weighting as of the last business day of the preceding
month.
As of October 31, 1997, the allocation of the Fund's assets to the Underlying
Theme Funds was as follows:
<TABLE>
<S> <C>
Consumer Products and Services Fund..... 28.69%
Financial Services Fund................. 19.16%
Health Care Fund........................ 8.80%
Infrastructure Fund..................... 11.89%
Natural Resources Fund.................. 15.85%
Telecommunications Fund................. 8.02%
</TABLE>
These percentages do not include cash or money market instruments held by the
Fund and do not necessarily reflect the current allocation of the Fund's assets
to the Underlying Theme Funds or the allocation of the Fund's assets on any
other date.
The Fund is a more diversified investment than any single Underlying Theme Fund.
However, because the Underlying Theme Funds are actively managed without any
attempt to reflect the country, industry or company weightings of the MSCI, the
Underlying Theme Funds will perform differently than the corresponding industry
components of the MSCI, and the Underlying Theme Funds will perform differently
than the overall MSCI. While the Fund does not therefore represent the
performance of the MSCI, it does represent a globally diversified portfolio,
with allocations among developed and emerging countries, industries and
companies intended to achieve long-term growth of capital.
The Fund is designed to meet the needs of investors who seek professional money
management services and who appreciate the advantages of diversification. The
Fund by itself should not be considered a complete investment program. As a
recently organized entity, the Fund has a limited operating history.
OTHER INFORMATION. The investment objective of the Fund may not be changed
without the approval
Prospectus Page 7
<PAGE>
GT GLOBAL NEW DIMENSION FUND
of a majority of its outstanding voting securities. As defined in the Investment
Company Act of 1940, as amended ("1940 Act"), and as used in this Prospectus, a
"majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the Fund's shares represented at a meeting at which more than 50% of the
outstanding shares are represented, or (ii) more than 50% of the outstanding
shares. In addition, the Fund has adopted certain investment limitations as
fundamental policies that also may not be changed without shareholder approval.
See "Investment Limitations" in the Statement of Additional Information. Unless
specifically noted, the Fund's investment policies described in this Prospectus,
and in the Statement of Additional Information are not fundamental policies and
may be changed by the Trust's Board of Trustees without shareholder approval.
- --------------------------------------------------------------------------------
DESCRIPTION OF THE
UNDERLYING THEME FUNDS
- --------------------------------------------------------------------------------
The following descriptions summarize the investment objectives and policies of
the Underlying Theme Funds. There is no assurance that any Underlying Theme Fund
will achieve its investment objective. The Statement of Additional Information
includes more information about the investment policies of the Underlying Theme
Funds. Investors desiring more information on an Underlying Theme Fund should
call [(800) 824-1580] or contact their financial adviser for the Underlying
Theme Funds' prospectus.
CONSUMER PRODUCTS AND SERVICES FUND. The Consumer Products and Services Fund's
investment objective is long-term capital growth. It seeks its objective by
investing all of its investable assets in the Consumer Products and Services
Portfolio, that, in turn, invests primarily in equity securities of companies
throughout the world that manufacture, market, retail or distribute consumer
products and services. The Consumer Products and Services Portfolio's investment
objective is identical to that of the Consumer Products and Services Fund. The
Consumer Products and Services Portfolio invests in consumer products and
services companies which, in the opinion of the Sub-adviser, have potential for
above average, long-term growth in sales and earnings.
At least 65% of the Consumer Products and Services Portfolio's total assets
normally will be invested in common and preferred stocks and warrants to acquire
such securities issued by consumer products and services companies. A "consumer
products or services" company is an entity in which (i) at least 50% of either
the revenues or earnings was derived from activities relating to consumer
products or services, or (ii) at least 50% of the assets was devoted to such
activities, based on the company's most recent fiscal year. The remainder of the
Consumer Products and Services Portfolio's assets may be invested in debt
securities issued by consumer products or services companies and/or equity and
debt securities of companies outside the consumer products or services
industries, which, in the opinion of the Sub-adviser, stand to benefit from
developments in such industries.
FINANCIAL SERVICES FUND. The Financial Services Fund's investment objective is
long-term capital growth. It seeks its objective by investing all of its
investable assets in the Financial Services Portfolio, that, in turn, invests
primarily in equity securities of companies throughout the world that operate in
the financial services industries. The Financial Services Portfolio's investment
objective is identical to that of the Financial Services Fund.
At least 65% of the Financial Services Portfolio's total assets normally will be
invested in common and preferred stocks and warrants to acquire such securities
issued by financial services companies. A "financial services" company is an
entity in which (i) at least 50% of either the revenues or earnings was derived
from financial services activities, or (ii) at least 50% of the assets was
devoted to such activities, based on the company's most recent fiscal year. The
remainder of the Financial Services Portfolio's assets may be invested in debt
securities issued by financial services companies and/or equity and debt
securities of companies outside of the financial services industries, which, in
the opinion of the Sub-adviser, stand to benefit from developments in the
financial services industries.
HEALTH CARE FUND. The Health Care Fund's investment objective is long-term
capital appreciation. It
Prospectus Page 8
<PAGE>
GT GLOBAL NEW DIMENSION FUND
seeks its objective by investing primarily in equity securities of health care
companies throughout the world.
At least 65% of the Health Care Fund's total assets normally will be invested in
common and preferred stocks and warrants to acquire such securities issued by
health care companies. A "health care" company is an entity in which (i) at
least 50% of either the revenues or earnings was derived from health care
activities, or (ii) at least 50% of the assets was devoted to such activities,
based on the company's most recent fiscal year. The remainder of the Health Care
Fund's assets may be invested in debt securities issued by health care companies
and/or equity and debt securities of companies outside of the health care
industry, which, in the opinion of the Sub-adviser, stand to benefit from
developments in the health care industries.
INFRASTRUCTURE FUND. The Infrastructure Fund's investment objective is long-term
capital growth. It seeks its objective by investing all of its investable assets
in the Infrastructure Portfolio, that, in turn, invests primarily in equity
securities of companies throughout the world that design, develop or provide
products and services significant to a country's infrastructure. The
Infrastructure Portfolio's investment objective is identical to that of the
Infrastructure Fund.
At least 65% of the Infrastructure Portfolio's total assets normally will be
invested in common and preferred stocks and warrants to acquire such securities
issued by infrastructure companies. An "infrastructure" company is an entity in
which (i) at least 50% of either the revenues or earnings was derived from
infrastructure activities, or (ii) at least 50% of the assets was devoted to
such activities, based on the company's most recent fiscal year. The remainder
of the Infrastructure Portfolio's assets may be invested in debt securities
issued by infrastructure companies and/or equity and debt securities of
companies outside of the infrastructure industries, which, in the opinion of the
Sub-adviser, stand to benefit from developments in the infrastructure
industries.
NATURAL RESOURCES FUND. The Natural Resources Fund's investment objective is
long-term capital growth. It seeks its objective by investing all of its
investable assets in the Natural Resources Portfolio, that, in turn, invests
primarily in equity securities of companies throughout the world that own,
explore or develop natural resources and other basic commodities, or supply
goods and services to such companies. The Natural Resources Portfolio's
investment objective is identical to that of the Natural Resources Fund.
At least 65% of the Natural Resources Portfolio's total assets will normally be
invested in common and preferred stocks and warrants to acquire such securities
issued by natural resource companies. A "natural resource" company is an entity
in which (i) at least 50% of either the revenues or earnings was derived from
natural resource activities, or (ii) at least 50% of the assets was devoted to
such activities, based upon the company's most recent fiscal year. The remainder
of the Natural Resources Portfolio's assets may be invested in debt securities
issued by natural resource companies and/or equity and debt securities of
companies outside of the natural resource industries, which, in the opinion of
the Sub-adviser, stand to benefit from developments in the natural resource
industries.
TELECOMMUNICATIONS FUND. The Telecommunications Fund's investment objective is
long-term growth of capital. It seeks its objective by investing primarily in
equity securities of companies throughout the world engaged in the development,
manufacture or sale of telecommunications services or equipment.
At least 65% of the Telecommunications Fund's total assets normally will be
invested in common and preferred stocks and warrants to acquire such securities
issued by telecommunications companies. A "telecommunications" company is an
entity in which (i) at least 50% of either its revenues or earnings was derived
from telecommunications activities, or (ii) at least 50% of its assets was
devoted to telecommunications activities, based on the company's most recent
fiscal year. The remainder of the assets of the Telecommunications Fund may be
invested in debt securities issued by telecommunications companies and/or equity
and debt securities of companies outside of the telecommunications industry
which, in the opinion of the Sub-adviser, stand to benefit from developments in
the telecommunications industries.
Prospectus Page 9
<PAGE>
GT GLOBAL NEW DIMENSION FUND
RISK FACTORS AND
SPECIAL CONSIDERATIONS
- --------------------------------------------------------------------------------
INVESTING IN THE UNDERLYING THEME FUNDS. The investments of the Fund are
concentrated in the Underlying Theme Funds, so the Fund's investment performance
is directly related to the investment performance of the Underlying Theme Funds.
The ability of the Fund to meet its investment objective is directly related to
the allocation among those Underlying Theme Funds as well as the ability of the
Underlying Theme Funds to meet their objectives. There is no assurance that the
investment objective of the Fund or any Underlying Theme Fund will be achieved.
The value of the Underlying Theme Funds' domestic and foreign investments varies
in response to many factors. The value of equity securities held by an
Underlying Theme Fund will fluctuate in response to general market and economic
developments, as well as developments affecting the particular issuers of such
securities. In addition, the value of debt securities held by an Underlying
Theme Fund generally will fluctuate with changes in the perceived
creditworthiness of the issuers of such securities and interest rates.
Because each Underlying Theme Fund focuses its investments on particular
industries, an investment in each may be more volatile than that of other
investment companies that do not concentrate their investments in such a manner.
The value of the shares of each Underlying Theme Fund will be especially
susceptible to factors affecting the industries in which it focuses. In
particular, each of the industries is subject to governmental regulation that
may have a material effect on the products and services offered by companies in
these industries.
UNDERLYING THEME FUNDS' INVESTMENT ALLOCATION. The Sub-adviser allocates each
Underlying Theme Fund's (or its corresponding Portfolio's) assets among
securities of countries and in currency denominations where opportunities for
meeting each Underlying Theme Fund's investment objective are expected to be the
most attractive. Each Underlying Theme Fund may invest substantially in
securities denominated in foreign currencies. Under normal conditions, each
Underlying Theme Fund invests in the securities of issuers located in at least
three countries, including the United States; investments in securities of
issuers in any one country, other than the United States, will represent no more
than 40% of the Financial Services Portfolio's and the Telecommunication Fund's
total assets, and no more than 50% of the Infrastructure Portfolio's, the
Natural Resources Portfolio's, the Health Care Fund's and the Consumer Products
and Services Portfolio's total assets.
In analyzing specific companies for possible investment the Sub-adviser, on
behalf of the Underlying Theme Funds, ordinarily looks for several of the
following characteristics: above-average per share earnings growth; high return
on invested capital; a healthy balance sheet; sound financial and accounting
policies and overall financial strength; strong competitive advantages;
effective research and product development and marketing; development of new
technologies; efficient service; pricing flexibility; strong management; and
general operating characteristics that will enable the companies to compete
successfully in their respective markets. In assessing companies for the Natural
Resources Portfolio, the Sub-adviser will also evaluate, among other factors,
their capabilities for expanded exploration and production, superior exploration
programs and production techniques and facilities, current inventories, expected
production and demand levels and the potential to accumulate new resources.
FOREIGN INVESTMENTS. The Underlying Theme Funds' investments in foreign
securities may involve risks in addition to those of U.S. investments, including
increased political and economic risk, as well as exposure to currency
fluctuations. By investing in foreign securities, the Underlying Theme Funds
also have increased economic and political risks as they are exposed to events
and factors in the various world markets. This is especially true of an
Underlying Theme Fund that invests in emerging markets. Many investments in
emerging markets are considered speculative and therefore may offer greater
return potential, but have significantly greater risk. Also, to the extent that
an Underlying Theme Fund's investments are denominated in foreign currencies,
changes in the value of foreign currencies can significantly affect the fund's
share price.
Prospectus Page 10
<PAGE>
GT GLOBAL NEW DIMENSION FUND
LOWER QUALITY DEBT SECURITIES. The Fund may invest in an Underlying Theme Fund
that invests in high yield, high risk securities, commonly known as "junk
bonds." As a result, the Fund may be subject to some of the risks resulting from
high yield investing. The Fund also may invest in Underlying Theme Funds that
invest in medium grade bonds. Lower quality debt instruments generally offer a
higher current yield than that available from higher grade issues, but typically
involve greater risk. Lower rated and comparable unrated securities are
especially subject to adverse changes in general economic conditions, to changes
in the financial condition of their issuers, and to price fluctuation in
response to changes in interest rates. During periods of economic downturn or
rising interest rates, issuers of these instruments may experience financial
stress that could adversely affect their ability to make payments of principal
and interest and increase the possibility of default.
ILLIQUID SECURITIES. The Underlying Theme Funds may invest in securities for
which no readily available market exists, so-called "illiquid securities."
Illiquid securities may be more difficult to value than liquid securities and
the sale of illiquid securities generally will require more time and result in
higher brokerage charges or dealer discounts and other selling expenses than the
sale of liquid securities. Moreover, illiquid securities often sell at prices
lower than similar securities that are liquid.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. Each Underlying Theme Fund
is authorized to enter into options, futures and forward currency transactions,
although they might not enter into such transactions. Options, futures and
forward currency transactions involve certain risks, which include: (1)
dependence on the Sub-adviser's ability to predict movements in the prices of
individual securities, fluctuations in the general securities markets or in the
appropriate market sector and movements in interest rates and currency markets;
(2) imperfect correlation, or even no correlation, between movements in the
price of options, forward contracts, futures contracts or options thereon and
movements in the price of the currency or security hedged or used for cover; (3)
the fact that skills and techniques needed to trade options, futures contracts
and options thereon or to use forward currency contracts are different from
those needed to select the securities in which an Underlying Theme Fund invests;
(4) lack of assurance that a liquid secondary market will exist for any
particular option, futures contract or option thereon at any particular time;
(5) the possible loss of principal under certain conditions; and (6) the
possible inability of an Underlying Theme Fund to purchase or sell a portfolio
security at a time when it would otherwise be favorable for it to do so, or the
possible need for an Underlying Theme Fund to sell a security at a
disadvantageous time, due to the need for the Underlying Theme Fund to maintain
"cover" or to set aside securities in connection with hedging transactions.
INVESTING IN SMALLER COMPANIES. Each Underlying Theme Fund may invest in smaller
companies that may present greater opportunities for capital appreciation, but
may also involve greater risks than large, established issuers. Such smaller
companies may have limited resources, and their securities may trade less
frequently and in more limited volume than the securities of larger, more
established companies. As a result, the prices of the securities of such smaller
companies may fluctuate to a greater degree than the prices of the securities of
other issuers.
OTHER INVESTMENT PRACTICES OF THE UNDERLYING THEME FUNDS. In addition to the
investment practices described in this Prospectus, the Underlying Theme Funds
may engage in certain other investment practices, including lending their
portfolio securities; purchasing securities on a when-issued or delayed delivery
basis; entering into repurchase or reverse repurchase agreements; and borrowing
money. Further information on the investment policies, practices and risks of
the Underlying Theme Funds can be found in the Statement of Additional
Information as well as the Underlying Theme Fund's prospectus and statement of
additional information.
PURCHASES AND REDEMPTIONS. From time to time, the Underlying Theme Funds may
experience relatively large purchases or redemptions due to rebalancing of the
Fund by the Sub-adviser. This may have a material effect on the Underlying Theme
Funds, because Underlying Theme Funds that experience redemptions as a result of
the rebalancing may have to sell portfolio securities and because Underlying
Theme Funds that receive additional cash will have to invest it. While it is
impossible to predict the overall impact of these transactions over time, there
could be adverse effects on portfolio management to the extent that Underlying
Theme Funds may be required to sell securities at times when they would not
otherwise do so, or receive cash that cannot be invested in an expeditious
manner. There may be tax consequences associated with purchases and sales of
Prospectus Page 11
<PAGE>
GT GLOBAL NEW DIMENSION FUND
securities, and such sales also may increase transaction costs.
MASTER-FEEDER STRUCTURE OF CERTAIN UNDERLYING THEME FUNDS. The Financial
Services Fund, Infrastructure Fund, Natural Resources Fund and Consumer Products
and Services Fund, unlike mutual funds that directly acquire and manage their
own portfolios of securities, each seeks its investment objective by investing
all of its investable assets in the Financial Services Portfolio, Infrastructure
Portfolio, Natural Resources Portfolio and Consumer Products and Services
Portfolio (each a "Portfolio"), respectively. Each Portfolio is a separate
investment company. Because each such Underlying Theme Fund will invest only in
its corresponding Portfolio, that Underlying Theme Fund's shareholders will
acquire only an indirect interest in the investments of that Portfolio.
TEMPORARY DEFENSIVE STRATEGIES. The Underlying Theme Funds retain the
flexibility to respond promptly to changes in market and economic conditions.
Accordingly, in the interest of preserving shareholders' capital the Sub-adviser
may employ a temporary defensive investment strategy if it determines such a
strategy to be warranted due to market, economic or political conditions. Under
a defensive strategy, the Underlying Theme Funds may invest up to 100% of their
total assets in cash and/or high quality debt securities and money market
instruments. To the extent an Underlying Theme Fund adopts a temporary defensive
posture, it will not be invested so as to achieve directly its investment
objective.
In addition, pending investment of proceeds from new sales of the shares or to
meet its ordinary daily cash needs, the Underlying Theme Funds may hold cash
and/or may invest in high quality debt instruments and money market instruments.
The Fund may hold cash and/or may invest in money market instruments under
similar circumstances. Money market instruments in which the Underlying Theme
Funds and the Fund may invest include, but are not limited to, United States
government securities; high-grade commercial paper; bank certificates of
deposit; bankers' acceptances and repurchase agreements related to any of the
foregoing. "High-grade commercial paper" refers to commercial paper rated A-1 by
Standard & Poor's, a division of The McGraw-Hill Companies, Inc., or P-1 by
Moody's Investors Service, Inc. or, if not rated, determined by the Sub-adviser
to be of comparable quality.
PORTFOLIO TURNOVER. The Fund's portfolio turnover rate is expected to be low and
is not anticipated to exceed 20% annually. The portfolio turnover rates of the
Underlying Theme Funds and their corresponding Portfolios have ranged from 35%
to 392% during their most recent fiscal years. There is no assurance that the
turnover rates of the Underlying Theme Funds and their corresponding Portfolios
will remain within this range during subsequent fiscal years. Higher turnover
rates may result in higher expenses being incurred by the Underlying Theme
Funds.
AFFILIATED PERSONS. The officers and trustees of the Trust currently serve as
officers and trustees of the Underlying Theme Funds. The Sub-adviser also serves
as investment adviser and/or administrator to the Underlying Theme Funds.
Therefore, conflicts may arise as these persons fulfill their fiduciary
responsibilities to the Fund and the Underlying Theme Funds.
Prospectus Page 12
<PAGE>
GT GLOBAL NEW DIMENSION FUND
HOW TO INVEST
- --------------------------------------------------------------------------------
GENERAL. Advisor Class shares are offered through this Prospectus to [(a)
trustees or other fiduciaries purchasing shares for employee benefit plans which
are sponsored by organizations which have at least 1,000 employees; (b) any
account with assets of at least $10,000 if (i) a financial planner, trust
company, bank trust department or registered investment adviser has investment
discretion over such account, and (ii) the account holder pays such person as
compensation for its advice and other services an annual fee of at least .50% on
the assets in the account ("Advisory Account"); (c) any account with assets of
at least $10,000 if (i) such account is established under a "wrap fee" program,
and (ii) the account holder pays the sponsor of such program an annual fee of at
least .50% on the assets in the account ("Wrap Fee Account"); (d) accounts
advised by one of the companies composing or affiliated with AMVESCAP PLC; and
(e) any of the companies composing or affiliated with AMVESCAP PLC.] Financial
planners, trust companies, bank trust companies and registered investment
advisers referenced in subpart (b) and sponsors of "wrap fee" programs
referenced in subpart (c) are collectively referred to as "Financial Advisers."
Investors in Wrap Fee Accounts and Advisory Accounts may only purchase Advisor
Class shares through Financial Advisers who have entered into agreements with
AIM Distributors or certain of its affiliates. Some of these institutions (or
their designees) may be authorized to accept purchase orders on behalf of the
Fund. Investors may be charged a fee by their agents or brokers if they effect
transactions other than through a dealer.
All purchase orders will be executed at the public offering price next
determined after the purchase order is received. Orders received by authorized
institutions (or their designees) before the close of regular trading on the New
York Stock Exchange ("NYSE") (currently 4:00 p.m. Eastern Time, unless weather,
equipment failure or other factors contribute to an earlier closing time) on any
Business Day will be executed at the public offering price for the applicable
class of shares determined that day. Orders received by authorized institutions
(or their designees) before the close of regular trading on the NYSE on a
Business Day will be deemed to have been received by the Fund on such day and
will be effected that day, provided that such order is transmitted to the
Transfer Agent prior to the time set for the receipt of such orders. A "Business
Day" is any day Monday through Friday on which the NYSE is open for business.
The authorized institution (or its designee) will be responsible for forwarding
the investor's order to the Transfer Agent so that it will be received prior to
the required time.
THE FUND AND AIM DISTRIBUTORS RESERVE THE RIGHT TO REJECT ANY PURCHASE ORDER AND
TO SUSPEND THE OFFERING OF SHARES FOR A PERIOD OF TIME. In particular, the Fund
and AIM Distributors may reject purchase orders or exchanges by investors who
appear to follow, in the Sub-adviser's judgment, a market-timing strategy or
otherwise engage in excessive trading. See "How to Make Exchanges -- Limitations
on Purchase Orders and Exchanges."
Fiduciaries and Financial Advisers may be required to provide information
satisfactory to AIM Distributors concerning their eligibility to purchase
Advisor Class shares. For specific information on opening an account, please
contact your Financial Adviser or AIM Distributors.
PURCHASES BY BANK WIRE. Shares of the Fund may also be purchased by bank wire.
Bank wire purchases will be effected at the next determined public offering
price after the bank wire is received. A wire investment is considered received
when the Transfer Agent is notified that the bank wire has been credited to the
Fund. Prior telephonic or facsimile notice must be provided to the Transfer
Agent that a bank wire is being sent. A bank may charge a service fee for wiring
money to the Fund. The Transfer Agent currently does not charge a service fee
for facilitating wire purchases, but reserves the right to do so in the future.
For more information, please refer to the Shareholder Account Manual in this
Prospectus.
CERTIFICATES. Physical certificates representing the Fund's shares will not be
issued unless a written request is submitted to the Transfer Agent. Shares of
the Fund are recorded on a register by the Transfer Agent, and shareholders who
do not elect to receive certificates have the same rights of ownership as if
certificates had been issued to them. Redemptions and exchanges by shareholders
who
Prospectus Page 13
<PAGE>
GT GLOBAL NEW DIMENSION FUND
hold certificates may take longer to effect than similar transactions involving
non-certificated shares because the physical delivery and processing of properly
executed certificates is required. ACCORDINGLY, THE FUND RECOMMENDS THAT
SHAREHOLDERS DO NOT REQUEST ISSUANCE OF CERTIFICATES.
PORTFOLIO REBALANCING PROGRAM. The GT Global Portfolio Rebalancing Program
permits eligible shareholders to establish and maintain an allocation across a
range of GT Global Mutual Funds. This Program automatically rebalances holdings
of GT Global Mutual Funds to the established allocation on a periodic basis.
Under this Program, a shareholder may predesignate, on a percentage basis, how
the total value of his or her holdings in a minimum of two, and a maximum of
ten, GT Global Mutual Funds ("Personal Portfolio") is to be rebalanced on a
monthly, quarterly, semiannual, or annual basis.
Rebalancing under this Program will be effected through the exchange of shares
of one or more GT Global Mutual Funds in the shareholder's Personal Portfolio
for shares of the same class of one or more other GT Global Mutual Funds in the
shareholder's Personal Portfolio. See "How to Make Exchanges." If shares of the
GT Global Mutual Fund(s) in a shareholder's Personal Portfolio have appreciated
during a rebalancing period, the Program will result in shares of GT Global
Mutual Fund(s) that have appreciated most during the period being exchanged for
shares of GT Global Mutual Fund(s) that have appreciated least. SUCH EXCHANGES
ARE NOT TAX-FREE AND MAY RESULT IN A SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS
THE CASE MAY BE, FOR FEDERAL INCOME TAX PURPOSES. See "Dividends, Other
Distributions and Federal Income Taxation." Participation in this Program does
not assure that a shareholder will profit from purchases under the Program, nor
does it prevent or lessen losses in a declining market.
The Program will automatically rebalance the shareholder's Personal Portfolio on
the 28th day of the last month of the period chosen (or the immediately
preceding business day if the 28th is not a business day), subject to any
limitations below. The Program will not execute an exchange if the variance in a
shareholder's Personal Portfolio for a particular Fund would be 2% or less. In
predesignating percentages, shareholders must use whole percentages and totals
must equal 100%. Shareholders participating in the Program may not request
issuance of physical certificates representing a Fund's shares. The Fund and AIM
Distributors reserve the right to modify, suspend, or terminate the Program at
any time on 60 days' prior written notice to shareholders. A request to
participate in the Program must be received in good order at least five business
days prior to the next rebalancing date. Once a shareholder establishes the
Program for his or her Personal Portfolio, a shareholder cannot cancel or change
which rebalancing frequency, which Funds or what allocation percentages are
assigned to the Program, unless canceled or changed in writing and received by
the Transfer Agent in good order at least five business days prior to the
rebalancing date. Certain Financial Institutions may charge a fee for
establishing accounts relating to the Program. Investors should contact their
Financial Institution or AIM Distributors for more information.
Prospectus Page 14
<PAGE>
GT GLOBAL NEW DIMENSION FUND
HOW TO MAKE EXCHANGES
- --------------------------------------------------------------------------------
Advisor Class shares of the Fund may be exchanged for Advisor Class shares of
any other GT Global Mutual Fund, based on their respective net asset values
without imposition of any sales charges, provided that the registration remains
identical.
EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A SHAREHOLDER'S REALIZING A GAIN OR
LOSS, AS THE CASE MAY BE, FOR FEDERAL INCOME TAX PURPOSES. See "Dividends, Other
Distributions and Federal Income Taxation." In addition to the Fund, the GT
Global Mutual Funds currently include:
-- GT GLOBAL AMERICA MID CAP GROWTH FUND
-- GT GLOBAL AMERICA SMALL CAP GROWTH FUND
-- GT GLOBAL AMERICA VALUE FUND
-- GT GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND
-- GT GLOBAL DEVELOPING MARKETS FUND
-- GT GLOBAL DOLLAR FUND
-- GT GLOBAL EMERGING MARKETS FUND
-- GT GLOBAL EUROPE GROWTH FUND
-- GT GLOBAL FINANCIAL SERVICES FUND
-- GT GLOBAL GOVERNMENT INCOME FUND
-- GT GLOBAL GROWTH & INCOME FUND
-- GT GLOBAL HEALTH CARE FUND
-- GT GLOBAL HIGH INCOME FUND
-- GT GLOBAL INFRASTRUCTURE FUND
-- GT GLOBAL INTERNATIONAL GROWTH FUND
-- GT GLOBAL JAPAN GROWTH FUND
-- GT GLOBAL LATIN AMERICA GROWTH FUND
-- GT GLOBAL NATURAL RESOURCES FUND
-- GT GLOBAL NEW PACIFIC GROWTH FUND
-- GT GLOBAL STRATEGIC INCOME FUND
-- GT GLOBAL TELECOMMUNICATIONS FUND
-- GT GLOBAL WORLDWIDE GROWTH FUND
Exchange requests received in good order by the Transfer Agent before the close
of regular trading on the NYSE on any Business Day will be processed at the net
asset value calculated on that day. The terms of the exchange offer may be
modified at any time, on 60 days' prior written notice.
Investors in Wrap Fee Accounts and Advisory Accounts interested in making an
exchange should contact their Financial Advisers to request the prospectus of
the other GT Global Mutual Fund(s) being considered. Other investors should
contact AIM Distributors.
EXCHANGES BY TELEPHONE. A shareholder may give exchange information to his or
her Financial Adviser. Exchange orders will be accepted by telephone provided
that the exchange involves only uncertificated shares on deposit in the
shareholder's account or for which certificates have previously been deposited.
Shareholders automatically have telephone privileges to authorize exchanges. The
Fund, AIM Distributors and the Transfer Agent will not be liable for any loss or
damage for acting in good faith upon instructions received by telephone and
reasonably believed to be genuine. The Fund employs reasonable procedures to
confirm that instructions communicated by telephone are genuine prior to acting
upon instructions received by telephone, including requiring some form of
personal identification, providing written confirmation of such transactions,
and/or tape recording of telephone instructions.
LIMITATIONS ON PURCHASE ORDERS AND EXCHANGES. The GT Global Mutual Funds are not
intended to serve as vehicles for frequent trading in response to short-term
fluctuations in the market. Due to the disruptive effect that market-timing
investment strategies and excessive trading can have on efficient portfolio
management, each GT Global Mutual Fund and AIM Distributors reserve the right to
refuse purchase orders and exchanges by any person or group, if, in the
Sub-adviser's judgment, such person or group was following a market-timing
strategy or was otherwise engaging in excessive trading.
In addition, each GT Global Mutual Fund and AIM Distributors reserve the right
to refuse purchase orders and exchanges by any person or group if, in the
Sub-adviser's judgment, the Fund would not be able to invest the money
effectively in accordance with that Fund's investment objective and policies or
would otherwise potentially be adversely affected. Although a GT Global Mutual
Fund will attempt to give investors prior notice whenever it is reasonably able
to do so, it may impose the above restrictions at any time.
Finally, as described above, each GT Global Mutual Fund and AIM Distributors
reserve the right to reject any purchase order.
Prospectus Page 15
<PAGE>
GT GLOBAL NEW DIMENSION FUND
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
Fund shares may be redeemed at their net asset value and redemption proceeds
will be sent within seven days of the execution of a redemption request. Fund
shares may be redeemed at their net asset value and redemption proceeds will be
sent within seven days of the execution of a redemption request.
Redemption requests may be transmitted to the Transfer Agent by telephone or by
mail, in accordance with the instructions provided in the Shareholder Account
Manual. Redemptions will be effected at the net asset value next determined
after the Transfer Agent or an authorized institution (or its designees) has
received the request in good order and any required supporting documentation
provided that orders received by an authorized institution (or its designees)
are transmitted to the Transfer Agent prior to the time set for receipt of such
orders. Redemption requests will not require a signature guarantee if the
redemption proceeds are to be sent either: (i) to the redeeming shareholder at
the shareholder's address of record as maintained by the Transfer Agent,
provided the shareholder's address of record has not been changed within the
preceding thirty days; or (ii) directly to a pre-designated bank, savings and
loan or credit union account ("Pre-Designated Account"). ALL OTHER REDEMPTION
REQUESTS MUST BE ACCOMPANIED BY A SIGNATURE GUARANTEE OF THE REDEEMING
SHAREHOLDER'S SIGNATURE. A signature guarantee can be obtained from any bank,
U.S. trust company, a member firm of a U.S. stock exchange or a foreign branch
of any of the foregoing or other eligible guarantor institution. A notary public
is not an acceptable guarantor.
Shareholders with Pre-Designated Accounts should request that redemption
proceeds be sent either by bank wire or by check. The minimum redemption amount
for a bank wire is $1,000. Shareholders requesting a bank wire should allow two
business days from the time the redemption request is effected for the proceeds
to be deposited in the shareholder's Pre-Designated Account. See "How to Redeem
Shares -- Other Important Redemption Information." Shareholders may change their
Pre-Designated Accounts only by a letter of instruction to the Transfer Agent
containing all account signatures, each of which must be guaranteed. The
Transfer Agent currently does not charge a bank wire service fee for each wire
redemption sent, but reserves the right to do so in the future. The
shareholder's bank may charge a bank wire service fee.
REDEMPTIONS BY TELEPHONE. Redemption requests may be made by telephone by
calling the Transfer Agent at the appropriate toll-free number provided in the
Shareholder Account Manual. Shareholders who hold certificates for shares may
not redeem by telephone. REDEMPTION REQUESTS MAY NOT BE MADE BY TELEPHONE FOR
THIRTY DAYS FOLLOWING ANY CHANGE OF THE SHAREHOLDER'S ADDRESS OF RECORD.
Shareholders automatically have telephone privileges to authorize redemptions.
The Fund, AIM Distributors and the Transfer Agent will not be liable for any
loss or damage for acting in good faith upon instructions received by telephone
and reasonably believed to be genuine. The Fund employs reasonable procedures to
confirm that instructions communicated by telephone are genuine prior to acting
upon instructions received by telephone, including requiring some form of
personal identification, providing written confirmation of such transactions,
and/or tape recording of telephone instructions.
REDEMPTIONS BY MAIL. Redemption requests should be mailed directly to the
Transfer Agent at the appropriate address provided in the Shareholder Account
Manual. As discussed above, requests for payment of redemption proceeds to a
party other than the shareholder of record and/or requests that redemption
proceeds be mailed to an address other than the shareholder's address of record
require a signature guarantee. In addition, if the shareholder's address of
record has been changed within the preceding thirty days, a signature guarantee
is required. Redemptions of shares for which certificates have been issued must
be accompanied by properly endorsed share certificates.
OTHER IMPORTANT REDEMPTION INFORMATION. A request for redemption will not be
processed until all of the necessary documentation has been received
Prospectus Page 16
<PAGE>
GT GLOBAL NEW DIMENSION FUND
in good order. A shareholder in doubt as to what documents are required should
contact his or her Financial Adviser or the Transfer Agent.
Except in extraordinary circumstances and as permitted under the 1940 Act,
payment for shares redeemed by telephone or by mail will be made promptly after
receipt of a redemption request, if in good order, but not later than seven days
after the date the request is executed. Requests for redemption which are
subject to any special conditions or which specify a future or past effective
date cannot be accepted.
If the Transfer Agent is requested to redeem shares for which the Fund has not
yet received good payment, the Fund may delay payment of redemption proceeds
until the Transfer Agent has assured itself that good payment has been collected
for the purchase of the shares. In the case of purchases by check it can take up
to 10 business days to confirm that the check has cleared and good payment has
been received. Redemption proceeds will not be delayed when shares have been
paid for by wire or when the investor's account holds a sufficient number of
shares for which funds already have been collected.
AIM Distributors reserves the right to redeem the shares of any Advisory Account
or Wrap Fee Account if the amount invested in GT Global Mutual Funds through
such account is reduced to less than $500 through redemptions or other action by
the shareholder. Written notice will be given to the shareholder at least 60
days prior to the date fixed for such redemption, during which time the
shareholder may increase the amount invested in GT Global Mutual Funds through
such account to an aggregate amount of $500 or more.
For additional information on how to redeem shares, see the Shareholder Account
Manual in this Prospectus, or contact your Financial Adviser.
Prospectus Page 17
<PAGE>
GT GLOBAL NEW DIMENSION FUND
SHAREHOLDER ACCOUNT MANUAL
- --------------------------------------------------------------------------------
Purchase, exchange and redemption orders should be placed in accordance with
this Manual. It is recommended that investors in Wrap Fee Accounts and Advisory
Accounts make such orders through their Financial Advisor. PLEASE BE CAREFUL TO
REFERENCE "ADVISOR CLASS" IN ALL INSTRUCTIONS PROVIDED. For more information,
see "How to Invest," "How to Make Exchanges," "How to Redeem Shares" and
"Dividends, Other Distributions and Federal Income Taxation."
The Fund's Transfer Agent is GT GLOBAL INVESTOR SERVICES, INC.
INVESTMENTS BY MAIL
Send the completed Account Application (if initial purchase) or letter stating
Fund name, class of shares, shareholder's registered name and account number (if
subsequent purchase) with a check to:
GT Global Mutual Funds
P.O. Box 7345
San Francisco, CA 94120-7345
INVESTMENTS BY BANK WIRE
A new account may be opened by calling 1-800-223-2138 to obtain an account
number. WITHIN SEVEN DAYS OF PURCHASE A COMPLETED ACCOUNT APPLICATION CONTAINING
THE APPROPRIATE CERTIFIED TAXPAYER IDENTIFICATION NUMBER MUST BE SENT TO THE
ADDRESS PROVIDED ABOVE UNDER "INVESTMENTS BY MAIL." Wire instructions must state
Fund name, class of shares, shareholder's registered name and account number.
Bank wires should be sent through the Federal Reserve Bank Wire System to:
WELLS FARGO BANK N.A.
ABA 121000248
Attn: GT GLOBAL
Account No. 4023-050701
EXCHANGES BY TELEPHONE
Call the Transfer Agent at 1-800-223-2138.
EXCHANGES BY MAIL
Send complete instructions, including name of Fund exchanging from, class of
shares, amount of exchange, name of the GT Global Mutual Fund exchanging into,
shareholder's registered name and account number, to:
GT Global Mutual Funds
P.O. Box 7893
San Francisco, CA 94120-7893
REDEMPTIONS BY TELEPHONE
Call the Transfer Agent at 1-800-223-2138.
REDEMPTIONS BY MAIL
Send complete instructions, including name of Fund, class of shares, amount of
redemption, shareholder's registered name and account number, to:
GT Global Mutual Funds
P.O. Box 7893
San Francisco, CA 94120-7893
OVERNIGHT MAIL
Overnight mail services do not deliver to post office boxes. To send purchase,
exchange or redemption orders by overnight mail, follow the above instructions
but send to the following address:
GT Global Investor Services, Inc.
California Plaza
2121 N. California Boulevard
Suite 450
Walnut Creek, CA 94596
ADDITIONAL QUESTIONS
Shareholders with additional questions regarding purchase, exchange and
redemption procedures should call the Transfer Agent at 1-800-223-2138.
Prospectus Page 18
<PAGE>
GT GLOBAL NEW DIMENSION FUND
CALCULATION OF NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund calculates its net asset value as of the close of regular trading on
the NYSE (currently 4:00 p.m. Eastern Time, unless weather, equipment failure or
other factors contribute to an earlier closing time) each Business Day. The
Fund's net asset value per share is computed by dividing the value of its assets
by the total number of Fund shares outstanding. Net asset value is determined
separately for each class of shares of the Fund. The assets of the Fund consist
primarily of the Underlying Theme Funds, which are valued at their respective
net asset values at the time of computation. Other Fund assets are valued at
current market price or, if unavailable, at fair value determined in good faith
by or under the direction of the Trust's Board of Trustees.
- --------------------------------------------------------------------------------
DIVIDENDS, OTHER DISTRIBUTIONS
AND FEDERAL INCOME TAXATION
- --------------------------------------------------------------------------------
DIVIDENDS AND OTHER DISTRIBUTIONS. The Fund annually declares and pays as a
dividend all of its net investment income, if any, which includes dividends paid
to it from each Underlying Theme Fund's net investment income (if any) less
applicable expenses. The Fund also annually distributes substantially all of its
realized net capital gains, if any, which consist of (1) distributions to it
from each Underlying Theme Fund's realized net capital gains, if any, and (2)
net gains realized from the Fund's disposition of shares of the Underlying Theme
Funds (which dispositions generally are occasioned by reallocating the Fund's
assets among the Underlying Theme Funds to reflect the MCSI weightings (see
"Investment Objective and Policies") or by the need to make distributions and/or
payments of redemption proceeds in excess of available cash). The Fund may make
an additional dividend or other distribution each year if necessary to avoid a
4% excise tax on certain undistributed income and gain.
Dividends and other distributions paid by the Fund with respect to all classes
of its shares are calculated in the same manner and at the same time. The per
share income dividends on Advisor Class shares will be higher than the per share
income dividends on shares of other classes of the Fund as a result of the
service and distribution fees applicable to those other shares. SHAREHOLDERS MAY
ELECT:
/ / to have all dividends and other distributions automatically reinvested in
additional Advisor Class shares of the Fund (or other GT Global Mutual
Funds); or
/ / to receive dividends in cash and have other distributions automatically
reinvested in additional Advisor Class shares of the Fund (or other GT
Global Mutual Funds); or
/ / to receive other distributions in cash and have dividends automatically
reinvested in additional Advisor Class shares of the Fund (or other GT
Global Mutual Funds); or
/ / to receive dividends and other distributions in cash.
Automatic reinvestments in additional Advisor Class shares are made at net asset
value without imposition of a sales charge. IF NO ELECTION IS MADE BY A
SHAREHOLDER, ALL DIVIDENDS AND OTHER DISTRIBUTIONS WILL BE AUTOMATICALLY
REINVESTED IN ADDITIONAL ADVISOR CLASS SHARES OF THE FUND. Reinvestments in
another GT Global Mutual Fund may only be directed to an account with the
identical shareholder registration and account number. These elections may be
changed by a shareholder at any time; to be effective with respect to a
distribution, the shareholder or the shareholder's broker must contact the
Transfer Agent by mail or telephone at least 15 Business Days prior to the
payment date. THE FEDERAL INCOME TAX CONSEQUENCES OF DIVIDENDS AND OTHER
DISTRIBUTIONS ARE THE SAME WHETHER THEY ARE RECEIVED IN CASH OR REINVESTED IN
ADDITIONAL SHARES.
Prospectus Page 19
<PAGE>
GT GLOBAL NEW DIMENSION FUND
Any dividend or other distribution paid by the Fund has the effect of reducing
the net asset value per share on the ex-distribution date by the amount thereof.
Therefore, a dividend or other distribution paid shortly after a purchase of
shares would represent, in substance, a return of capital to the shareholder (to
the extent the distribution is paid on the shares so purchased) even though
subject to income tax, as discussed below.
TAXES. The Fund intends to continue to qualify for treatment as a regulated
investment company under the Internal Revenue Code of 1986, as amended (the
"Code"). In each taxable year that the Fund so qualifies, the Fund (but not its
shareholders) will be relieved of federal income tax on that part of its
investment company taxable income, consisting generally of net investment income
and net short-term capital gain ("taxable income"), and net capital gain (i.e.,
the excess of net long-term capital gain over net short-term capital loss) that
is distributed to its shareholders.
Dividends paid to the Fund from an Underlying Theme Fund's taxable income (which
may include net gains from certain foreign currency transactions) are included
in the Fund's taxable income, and dividends from the latter (whether paid in
cash or reinvested in additional shares) are taxable to the Fund's shareholders
as ordinary income to the extent of its earnings and profits. Distributions of
the Fund's net capital gain (consisting of (1) distributions to it from each
Underlying Theme Fund's net capital gain, when designated as such, and (2) net
gains realized from the Fund's disposition of an Underlying Theme Fund's shares
held for more than twelve months), when designated as such, are taxable to its
shareholders as long-term capital gains, regardless of how long they have held
their Fund shares and whether the distributions are paid in cash or reinvested
in additional shares.
Under the Taxpayer Relief Act of 1997, different maximum tax rates apply to a
noncorporate taxpayer's net capital gain depending on the taxpayer's holding
period and marginal rate of federal income tax -- generally, 28% for gain
recognized on securities held for more than one year but not more than 18 months
and 20% (10% for taxpayers in the 15% marginal tax bracket) for gain recognized
on securities held for more than 18 months. A notice issued by the Internal
Revenue Service in November 1997 permits the Fund to divide each net capital
gain distribution into a 28% rate gain distribution and a 20% rate gain
distribution (in accordance with the Fund's holding periods for the securities
it sold that generated the distributed gain) and requires its shareholders to
treat those portions accordingly.
The Fund provides federal tax information to its shareholders annually,
including information about dividends and capital gain distributions paid during
the preceding year. The information regarding capital gain distributions
designates the portions of those distributions that are subject to the different
maximum rates of tax applicable to noncorporate taxpayers' net capital gain
indicated above.
The Fund must withhold 31% from dividends, capital gain distributions and
redemption proceeds payable to any individuals and certain other noncorporate
shareholders who have not furnished to the Fund a correct taxpayer
identification number or a properly completed claim for exemption on Form W-8 or
W-9. Withholding at that rate also is required from dividends and capital gain
distributions payable to such shareholders who otherwise are subject to backup
withholding. Fund accounts opened via a bank wire purchase (see "How to Invest
- -- Purchases Through the Distributor") are considered to have uncertified
taxpayer identification numbers unless a completed Form W-8 or W-9 or Account
Application is received by the Transfer Agent within seven days after the
purchase. A shareholder should contact the Transfer Agent if the shareholder is
uncertain whether a proper taxpayer identification number is on file with the
Fund.
A redemption of Fund shares may result in taxable gain or loss to the redeeming
shareholder, depending upon whether the redemption proceeds are more or less
than the shareholder's adjusted basis for the redeemed shares. An exchange of
Fund shares for shares of another GT Global Mutual Fund generally will have
similar tax consequences. In addition, if Fund shares are purchased within 30
days before or after redeeming other Fund shares at a loss, all or a part of the
loss will not be deductible and instead will increase the basis of the newly
purchased shares.
The foregoing is only a summary of some of the important federal tax
considerations generally affecting the Fund and its shareholders. See "Taxes" in
the Statement of Additional Information for a further discussion. There may be
other federal, state, local or foreign tax considerations applicable to a
particular investor. Prospective investors therefore are urged to consult their
tax advisers.
Prospectus Page 20
<PAGE>
GT GLOBAL NEW DIMENSION FUND
MANAGEMENT
- --------------------------------------------------------------------------------
The Trust's Board of Trustees has overall responsibility for the operation of
the Fund. The Trust's Board of Trustees has approved all significant agreements
between the Trust on the one side and persons or companies furnishing services
to the Fund on the other, including the investment advisory and administrative
services agreement with AIM, the investment sub-advisory and sub-administration
agreement with the Sub-adviser, the agreements with AIM Distributors regarding
distribution of the Fund's shares, the agreement with State Street Bank and
Trust Company as the custodian and the transfer agency agreement with GT Global
Investors Services, Inc., an affiliate of the Sub-adviser. The day-to-day
operations of the Fund are delegated to the officers of the Trust, subject
always to the objective and policies of the Fund and to the general supervision
of the Trust's Board of Trustees. See "Trustees and Executive Officers" in the
Statement of Additional Information for information on the Trustees.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Subject to the supervision and
direction of the Trust's Board of Trustees, the Sub-adviser will ensure that the
Fund's assets are invested in the Underlying Theme Funds according to the
formula and pre-determined percentages described in the "Investment Objective
and Policies" section of this Prospectus. The Sub-adviser will determine how the
Fund's assets will be invested in short-term investments and place all purchase
and sale orders for such instruments and for the Underlying Theme Funds. The
Sub-adviser provides the following administration services to the Fund:
furnishing corporate officers and clerical staff; providing office space,
services and equipment; and supervising all matters relating to the Fund's
operation. The Sub-adviser also serves as the Fund's pricing and accounting
agent. Finally, the Sub-adviser will initially assume all costs of the Fund's
operation, except for service and distribution fees imposed on Class A, Class B
and Class C shares and non-recurring and extraordinary expenses. The Fund, as a
shareholder in the Underlying Theme Funds, indirectly will bear its
proportionate share of any investment management fees and other expenses paid by
the Underlying Theme Funds.
AIM and the Sub-adviser provide investment management and/or administration
services to the GT Global Mutual Funds. The Sub-adviser and its worldwide asset
management affiliates have provided investment management and/or administration
services to institutional, corporate and individual clients around the world
since 1969. The U.S. offices of the Sub-adviser are located at 50 California
Street, 27th Floor, San Francisco, CA 94111 and 1166 Avenue of the Americas, New
York, NY 10036.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment adviser to the Fund pursuant to a master investment advisory
agreement, dated as of , 1998 (the "Advisory Agreement"). AIM was
organized in 1976 and, together with its subsidiaries, manages or advises [over
50] investment company portfolios encompassing a broad range of investment
objectives. The Sub-adviser, 50 California Street, 27th Floor, San Francisco,
California 94111, and 1166 Avenue of the Americas, New York, New York 10036,
serves as the sub-adviser to the Fund pursuant to an investment sub-advisory
agreement dated as of , 1998. On May , 1998, Liechtenstein
Global Trust AG ("GT"), the former indirect parent organization of the Sub-
adviser, consummated a purchase agreement with AMVESCAP PLC pursuant to which
AMVESCAP PLC acquired GT's Asset Management Division, which includes the
Sub-adviser and certain other affiliates. As a result of this transaction, the
Sub-adviser is now an indirect wholly owned subsidiary of AMVESCAP PLC. Prior to
the sale, the Sub-adviser and its worldwide asset management affiliates provided
investment management and/or administrative services to institutional, corporate
and individual clients around the world since 1969.
AIM and the Sub-adviser and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both
indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and
Prospectus Page 21
<PAGE>
GT GLOBAL NEW DIMENSION FUND
retail segment of the investment management industry in North America and
Europe, and a growing presence in Asia.
In addition to the investment resources of their Houston, San Francisco and New
York offices, AIM and the Sub-adviser draw upon the expertise, personnel, data
and systems of other offices, including investment offices in Atlanta, Boston,
Dallas, Denver, Louisville, Miami, Portland (Oregon), Frankfurt, Hong Kong,
London, Singapore, Sydney, Tokyo and Toronto. In managing the GT Global Mutual
Funds, the Sub-adviser employs a team approach, taking advantage of its
investment resources around the world in seeking each Fund's investment
objective.
While the Fund will not be actively managed or have a portfolio manager, the
Underlying Theme Funds are actively managed by teams of investment
professionals. At least semi-annually the Fund will rebalance the Fund's assets
among the Underlying Theme Funds according to the MSCI weighting as of the last
business day of the preceding month.
DISTRIBUTION OF FUND SHARES. AIM Distributors, a registered broker/dealer and a
wholly owned subsidiary of AIM is the distributor of the Fund's Advisor Class
shares. The address of AIM Distributors is P.O. Box 4739, Houston, Texas
77210-4739. AIM, the Sub-adviser, or their affiliates may make ongoing payments
to Financial Advisors and others that facilitate the administration and
servicing of Advisor Class Shareholder accounts.
AIM Distributors, at its own expense, may provide promotional incentives to
broker/dealers that sell shares of the Fund and/or shares of the other GT Global
Mutual Funds. In some instances additional compensation or promotional
incentives may be offered to broker/dealers that have sold or may sell
significant amounts of shares during specified periods of time. Such
compensation and incentives may include, but are not limited to, cash,
merchandise, trips and financial assistance to broker/dealers in connection with
preapproved conferences or seminars, sales or training programs for invited
sales personnel, payment for travel expenses (including meals and lodging)
incurred by sales personnel and members of their families or other invited
guests to various locations for such seminars or training programs, seminars for
the public, advertising and sales campaigns regarding one or more of the GT
Global Mutual Funds, and/ or other events sponsored by the broker/dealers.
The Glass-Steagall Act and other applicable laws, among other things, generally
prohibit federally chartered or supervised banks from engaging in the business
of underwriting or distributing securities. Accordingly, AIM Distributors
intends to engage banks (if at all) only to perform administrative and
shareholder servicing functions. If a bank were prohibited from so acting, its
shareholder clients would be permitted to remain shareholders, and alternative
means for continuing the servicing of such shareholders would be sought. It is
not expected that shareholders would suffer any adverse financial consequences
as a result of any of these occurrences.
- --------------------------------------------------------------------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
SPECIAL SERVICING AGREEMENT. Until the Special Servicing Agreement described
below is entered into, AIM and the Sub-adviser will pay all the expenses of the
Fund, excluding service and distribution fees imposed on Class A, Class B and
Class C shares and certain non-recurring and extraordinary expenses. Expenses
initially paid by AIM and the Sub-adviser will include fees and expenses of the
Fund's accounting agent; legal, auditing and accounting expenses; taxes; fees
and expenses of the Transfer Agent; fees and expenses of registering or
qualifying the Fund's shares for sale; fees and expenses of Trustees, officers
and employees of the Trust who are not affiliated with AIM or the Sub-adviser;
the cost of printing and distributing reports and notices to existing
shareholders; and fees and expenses incurred in connection with membership in
investment company organizations.
An exemptive application has been filed with the SEC requesting relief from
certain provisions of the 1940 Act to permit the Fund, AIM, the Sub-
Prospectus Page 22
<PAGE>
GT GLOBAL NEW DIMENSION FUND
adviser, the Underlying Theme Funds and the Transfer Agent to enter into a
Special Servicing Agreement ("Agreement"). A private letter ruling has also been
requested from the Internal Revenue Service concerning this arrangement. If
relief is obtained, all the Fund's expenses except for service and distribution
fees imposed on Class A, Class B and Class C shares and certain non-recurring
and extraordinary expenses will be paid for in accordance with the Agreement.
Under the Agreement, to the extent that the aggregate expenses of the Fund are
less than the estimated savings to the Underlying Theme Funds from the operation
of the Fund, each Underlying Theme Fund will bear those expenses in proportion
to the average daily value of its shares owned by the Fund and/or the number of
shareholder accounts at the Fund. The estimated savings are expected to result
from the reduction of the Underlying Theme Funds' shareholder servicing costs
due to the elimination of separate shareholder accounts that either currently
are or have potential to be invested in the Underlying Theme Funds. The
estimated savings produced by the operation of the Fund may offset most, if not
all, the expenses incurred by the Fund other than service and distribution fees.
To the extent that the Fund's expenses exceed the aggregate financial benefits
to the Underlying Theme Funds, the Sub-adviser will pay that excess.
CONFIRMATIONS AND REPORTS TO SHAREHOLDERS. Each time a transaction is made that
affects a shareholder's account in the Fund, the shareholder will receive from
the Transfer Agent a confirmation statement reflecting the transaction.
Confirmations for transactions effected pursuant to the Fund's Automatic
Investment Plan, Systematic Withdrawal Plan and automatic dividend reinvestment
program may be provided quarterly. Shortly after the end of the Fund's fiscal
year on December 31 and fiscal half-year on June 30 of each year, shareholders
receive an annual and semiannual report, respectively. In addition, the federal
income status of distributions made by the Fund to shareholders is reported
after the end of each calendar year on Form 1099-DIV. Under certain
circumstances, duplicate mailings of the foregoing reports to the same household
may be consolidated.
ORGANIZATION OF THE TRUST. The Trust was organized as a Delaware business trust
on May , 1998. Prior to June 1, 1998, the Trust operated under the name "GT
Global Series Trust," a Massachusetts business trust organized on August 26,
1996. The Trust currently consists of one series. From time to time, the Trust
may establish other series, each holding a distinct investment portfolio and
issuing a distinct series of the Trust's shares. Shares of each series are
entitled to one vote per share (with proportional voting for fractional shares)
and are transferable. Shareholders have no preemptive or conversion rights.
If any additional series of the Trust are established, on any matter submitted
to a vote of shareholders, shares of each series will be voted by its
shareholders individually when the matter affects the specific interest of that
series only, such as approval of its investment management arrangements. The
shares of the Trust's series would be voted in the aggregate on other matters,
such as the election of Trustees and ratification of the selection by the Board
of Trustees of the Trust's independent accountants.
Normally there will be no annual meeting of shareholders in any year, except as
required under the 1940 Act. The Fund would be required to hold a shareholders'
meeting if at any time less than a majority of the Trustees holding office had
been elected by shareholders. Trustees continue to hold office until their
successors are elected and have qualified. Fund shares do not have cumulative
voting rights, which means that the holders of a majority of the shares voting
for the election of Trustees can elect all the Trustees. A Trustee may be
removed upon a majority vote of the shareholders qualified to vote in the
election. Shareholders holding 10% of the Trust's outstanding voting shares may
call a meeting of shareholders for the purpose of voting upon the question of
removal of any Trustee or for any other purpose. The 1940 Act requires the Trust
to assist shareholders in calling such a meeting.
The Fund offers Advisor Class shares through this Prospectus to certain
investors. The Fund also offers Class A, Class B and Class C shares to investors
through a separate prospectus. Each class of shares will experience different
net asset values and dividends as a result of different expenses borne by each
class of shares. The per share net asset value and dividends of the Advisor
Class shares of the Fund generally will be higher than that of the Class A,
Class B and Class C shares of the Fund because of the higher expenses borne by
the Class A, Class B and Class C shares. Consequently, during comparable
periods, the Fund expects that the total return on an investment in shares of
the Advisor Class will be higher than the total return on Class A, Class B or
Class C shares.
Prospectus Page 23
<PAGE>
GT GLOBAL NEW DIMENSION FUND
Pursuant to the Trust's Declaration of Trust, the Trust may issue an unlimited
number of shares of the Fund. Each share of the Fund represents an interest in
the Fund only, has a par value of $0.01 per share, represents an equal
proportionate interest in the Fund with other Fund shares and is entitled to
such dividends and other distributions out of the income earned and gain
realized on the assets belonging to the Fund as may be declared at the
discretion of the Board of Trustees. Each share of the Fund is equal in
earnings, assets and voting privileges, except that each class of shares of the
Fund has exclusive voting rights with respect to its distribution plan, and each
class bears the expenses, if any, related to the distribution of its shares.
Fund shares, when issued, are fully paid and nonassessable.
SHAREHOLDER INQUIRIES. Shareholder inquiries may be made by calling the Fund
toll-free at (800) 223-2138 or by writing to the Fund at 50 California Street,
27th Floor, San Francisco, CA 94111.
YEAR 2000 COMPLIANCE PROJECT. In providing services to the GT Global Mutual
Funds, AIM, AIM Distributors, the Transfer Agent and the Sub-adviser rely on
internal computer systems as well as external computer systems provided by third
parties. Some of these systems were not originally designed to distinguish
between the year 1900 and the year 2000. This inability, if not corrected, could
adversely affect the services AIM Distributors, the Transfer Agent and the
Sub-adviser and others provide the GT Global Mutual Funds and their
shareholders.
To address this important issue, AIM, AIM Distributors, the Transfer Agent and
the Sub-adviser have undertaken a comprehensive Year 2000 Compliance Project
(the "Project"). The Project consists of four phases: (i) inventorying every
software and hardware system in use at AIM, AIM Distributors, the Transfer Agent
and the Sub-adviser, as well as remote, third-party systems on which AIM, AIM
Distributors, the Transfer Agent and the Sub-adviser rely; (ii) identifying
those systems that may not function properly after December 31, 1999; (iii)
correcting or replacing those systems that have been so identified; and (iv)
testing the processing of GT Global Mutual Fund data in all systems. Phase (i)
has been completed; phase (ii) is substantially completed; phase (iii) has
commenced; and phase (iv) is expected to commence during the third quarter of
1998. The Project is scheduled to be completed by December 31, 1998. Following
completion of the Project, AIM, AIM Distributors and the Sub-adviser will ensure
that any systems subsequently acquired are year 2000 compliant.
TRANSFER AGENT. Shareholder servicing, reporting and general transfer agent
functions for the Fund are performed by GT Global Investor Services, Inc. The
Transfer Agent is an affiliate of the Sub-adviser and AIM maintains offices at
California Plaza, 2121 N. California Boulevard, Suite 450, Walnut Creek, CA
94596.
CUSTODIAN. State Street Bank and Trust Company, 225 Franklin Street, Boston, MA
02110, is custodian of the assets of the Fund.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Trust and to the Fund.
Kirkpatrick & Lockhart LLP also acts as counsel to the Sub-adviser, GT Global
and the Transfer Agent in connection with other matters.
INDEPENDENT ACCOUNTANTS. The Fund's independent accountants are ,
One Post Office Square, Boston, MA 02109. conducts an annual audit
of the Fund, assists in the preparation of the Fund's federal and state income
tax returns, and consults with the Trust and the Fund as to matters of
accounting, regulatory filings, and federal and state income taxation.
MULTIPLE TRANSLATIONS OF THE PROSPECTUS. This Prospectus may be translated into
other languages. In the event of any inconsistency or ambiguity as to the
meaning of any word or phrase contained in a translation, the English text shall
prevail.
Prospectus Page 24
<PAGE>
GT GLOBAL NEW DIMENSION FUND
PERFORMANCE
- --------------------------------------------------------------------------------
FUND PERFORMANCE INFORMATION. The Fund, from time to time, may include
information on its investment results and/or comparisons of its investment
results to various unmanaged indices or results of other mutual funds or groups
of mutual funds in advertisements, sales literature or reports furnished to
present or prospective shareholders.
In such materials, the Fund may quote its average annual total return
("Standardized Return"). Standardized Return is calculated separately for each
class of shares of the Fund. Standardized Return shows percentage rates
reflecting the average annual change in the value of an assumed investment in
the Fund at the end of a one-year period and at the end of five- and ten-year
periods, reduced by the maximum applicable sales charge imposed on sales of Fund
shares. If a one-, five- and/or ten-year period has not yet elapsed, data will
be provided as of the end of a shorter period corresponding to the life of the
Fund. Standardized Return assumes the reinvestment of all dividends and other
distributions.
In addition, in order to more completely represent the Fund's performance or
more accurately compare the performance to other measures of investment return,
the Fund also may include other total return performance data ("Non-Standardized
Return") in advertisements, sales literature and shareholder reports.
Non-Standardized Return reflects percentage rates of return encompassing all
elements of return (i.e., income and capital appreciation or depreciation) and
assumes reinvestment of all dividends and other distributions. Non-Standardized
Return may be quoted for the same or different periods as those for which
Standardized Return is quoted; it may consist of an aggregate or average annual
percentage rate of return, actual year-by-year rates or any combination thereof.
Non-Standardized Return may or may not take sales charges into account;
performance data calculated without taking the effect of sales charges into
account will be higher than data including the effect of such charges.
The Fund's performance data will reflect past performance and will not
necessarily be indicative of future results. The Fund's investment results will
vary from time to time depending upon market conditions, and the composition of
the Underlying Theme Funds' portfolios. These factors and possible differences
in calculation methods should be considered when comparing the Fund's investment
results with those published for other investment companies, other investment
vehicles and unmanaged indices. The Fund's results also should be considered
relative to the risks associated with its investment objective and policies. See
"Investment Results" in the Statement of Additional Information.
UNDERLYING THEME FUND PERFORMANCE. The Fund has a limited operating history and
therefore a limited performance record. Thus, the performance shown below is not
the performance of the Fund, but instead reflects the performance of the
Underlying Theme Funds. The following table shows the average annual total
returns of Class A and Class B shares of each Underlying Theme Fund for the most
recent one- and five-year periods (as applicable) and for the life of the
Underlying Theme Funds. The performance information reflects deduction of the
maximum applicable sales charges. Returns would be higher if these charges were
not reflected. The Fund invests in the Advisor Class shares of the Underlying
Theme Funds, which are not subject to sales charges and distribution and service
fees.
Prospectus Page 25
<PAGE>
GT GLOBAL NEW DIMENSION FUND
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN THROUGH 10/31/97
------------------------------------------------------------
ONE YEAR FIVE YEARS LIFE OF FUND
----------------- ----------------- --------------------
UNDERLYING THEME FUND CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B
- ----------------------------------------------------------------- ------- ------- ------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Consumer Products and Services Fund.............................. 5.30% 4.95% n/a n/a 27.70%(1) 28.59%(1)
Financial Services Fund.......................................... 23.74% 24.13% n/a n/a 13.70%(2) 14.13%(2)
Health Care Fund................................................. 22.27% 22.75% 15.24% n/a 15.23%(3) 20.09%(4)
Infrastructure Fund.............................................. 4.18% 3.83% n/a n/a 8.30%(5) 8.60%(5)
Natural Resources Fund........................................... 16.81% 16.99% n/a n/a 18.64%(6) 19.17%(6)
Telecommunications Fund.......................................... 12.11% 12.15% 13.88% n/a 11.48%(7) 12.09%(8)
</TABLE>
Past performance of the Underlying Theme Funds is not a guarantee of future
results for either the Underlying Theme Funds or the Fund. Further information
about each Underlying Theme Fund's performance is contained in its Annual Report
to Shareholders, which may be obtained without charge by calling [(800)
824-1580] or contacting your financial adviser. Performance information for
Advisor Class shares has not been included because of the limited period for
which Advisor Class shares have been offered.
- ------------------
(1) The Consumer Products and Services Fund commenced operations on December 30,
1994.
(2) The Financial Services Fund commenced operations on May 31, 1994.
(3) Class A shares of the Health Care Fund were initially offered on August 7,
1989.
(4) Class B shares of the Health Care Fund were initially offered on April 1,
1993.
(5) The Infrastructure Fund commenced operations on May 31, 1994.
(6) The Natural Resources Fund commenced operations on May 31, 1994.
(7) Class A shares of the Telecommunications Fund were initially offered on
January 27, 1992.
(8) Class B shares of the Telecommunications Fund were initially offered on
April 1, 1993.
Prospectus Page 26
<PAGE>
GT GLOBAL NEW DIMENSION FUND
APPENDIX
- --------------------------------------------------------------------------------
The chart below shows the allocation of the 38 industries comprising the MSCI to
the Underlying Theme Funds as of November 30, 1997.
<TABLE>
<CAPTION>
CONSUMER
PRODUCTS AND FINANCIAL HEALTH INFRA- NATURAL TELECOM-
MSCI AC WORLD INDEX INDUSTRY SERVICES SERVICES CARE STRUCTURE RESOURCES MUNICATIONS
- ---------------------------------------- ------------- ---------- ------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Aerospace and Military Technology....... X
Appliances & Household Durables......... X
Automobiles............................. X
Banking................................. X
Beverages & Tobacco..................... X
Broadcasting & Publishing............... X X
Building Materials & Components......... X
Business & Public Services.............. X
Chemicals............................... X
Construction & Housing.................. X
Data Processing & Reproduction.......... X
Electrical Components, Instruments...... X
Electrical & Electronics................ X X
Energy Equipment & Service.............. X
Energy Sources.......................... X
Financial Services...................... X
Food & Household Products............... X
Forest Products & Paper................. X
Gold Mines.............................. X
Health & Personal Care.................. X
Industrial Components................... X
Insurance............................... X
Leisure & Tourism....................... X
Machinery & Engineering................. X
Merchandising........................... X
Metals - Non Ferrous.................... X
Metals - Steel.......................... X
Misc. Materials & Commodities........... X
Multi-Industry.......................... X
Real Estate............................. X
Recreation, Consumer Goods.............. X
Telecommunications...................... X X
Textiles & Apparel...................... X
Transportation - Airlines............... X
Transportation - Road & Rail............ X
Transportation - Shipping............... X
Utilities Electrical & Gas.............. X
Wholesale & International Trade......... X
</TABLE>
Prospectus Page 27
<PAGE>
GT GLOBAL NEW DIMENSION FUND
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL NEW DIMENSION FUND
GT GLOBAL FUNDS
AIM DISTRIBUTORS 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 AIM DISTRIBUTORS 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
Provides 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
NO DEALER, SALES REPRESENTATIVE OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS 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, A I M ADVISORS, INC., [CHANCELLOR LGT ASSET
MANAGEMENT, INC.] OR A I M DISTRIBUTORS, 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.
DIMPV801005M.726
<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
June 1, 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 Delaware 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").
A I M Advisors, Inc. ("AIM") serves as the investment manager of and
administrator for, and [Chancellor LGT Asset Management, Inc.] (the
"Sub-adviser") serves as the investment sub-adviser of and sub-administrator
for, the Fund. The distributor of the Fund's shares is A I M Distributors, Inc.
("AIM Distributors"). 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 June
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............................................................................ 32
Taxes.................................................................................................................... 36
Additional Information................................................................................................... 38
Investment Results....................................................................................................... 39
Description of Debt Ratings.............................................................................................. 47
Financial Statements..................................................................................................... 49
</TABLE>
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 (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
Trustees 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 Sub-adviser 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 Sub-adviser 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 Sub-adviser, 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 Sub-adviser'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
Sub-adviser 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
Sub-adviser 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 Sub-adviser 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 Sub-adviser, 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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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 Sub-adviser to be of good standing and will not be made unless, in
the judgment of the Sub-adviser, 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 Sub-adviser to
present minimal credit risks in accordance with guidelines established by the
Company's or Global Investment Portfolio's Board of Trustees (each a "Board"
and, collectively, the "Boards"), as applicable. The Sub-adviser 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
segregate 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 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
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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
Sub-adviser'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 Sub-adviser 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 Sub-adviser 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 Sub-adviser, 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 Sub-adviser
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 Sub-adviser 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 Sub-adviser
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 Sub-adviser 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 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 liquid.
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
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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 Sub-adviser, in accordance with procedures
approved by that Board. The Sub-adviser 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 Sub-adviser monitors
the liquidity of securities held by each Underlying Theme Portfolio and
periodically reports such determinations to the applicable Board. If the
liquidity percentage restriction of a Theme Portfolio is satisfied at the time
of investment, a later increase in the percentage of illiquid securities held by
the Theme Portfolio resulting from a change in market value or assets will not
constitute a violation of that restriction. If as a result of a change in market
value or assets, the percentage of illiquid securities held by the Theme
Portfolio increases above the applicable limit, the Sub-adviser will take
appropriate steps to bring the aggregate amount of illiquid assets back within
the prescribed limitations as soon as reasonably practicable, taking into
account the effect of any disposition on the Theme Portfolio. The Sub-adviser
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
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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 Sub-adviser 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 Sub-adviser will consider such difficulties when
determining the allocation of an Underlying Theme Portfolio's assets, although
the Sub-adviser 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."
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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 Sub-adviser 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
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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 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 Sub-adviser 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
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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 borrowed but reduced by any liabilities not
constituting borrowings) at the time of the 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;
(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; or
(6) Purchase securities of any one issuer if, as a result, more than 5%
of the Fund's total assets would be invested in securities of that issuer or
the Fund would own or hold more than 10% of the outstanding voting
securities of that issuer, except that up to 25% of the Fund's total assets
may be invested without regard to this limitation, and except that this
limitation does not apply to securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities or to securities issued by
other investment companies.
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.
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;
Statement of Additional Information Page 21
<PAGE>
GT GLOBAL NEW DIMENSION FUND
(3) Purchase securities on margin, except for short-term credit
necessary for clearance of portfolio transactions and except that the Fund
may make margin deposits in connection with its use of financial options and
futures, forward and spot currency contracts, swap transactions and other
financial contract or derivative instruments;
(4) Engage in short sales of securities or maintain a short position,
except that the Fund may 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 Financial Services Fund, Infrastructure Fund, Natural Resources Fund and
Consumer Products and Services Fund (each, a "Feeder Fund," and collectively,
the "Feeder Funds") each has the following fundamental investment policy to
enable it to invest in the Financial Services Portfolio, Infrastructure
Portfolio, Natural Resources Portfolio and Consumer Products and Services
Portfolio (each a "Portfolio," and collectively, the "Portfolios"),
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 its Board of Trustees, it applies equally to each Feeder Fund and
its Board of Trustees.
Each Portfolio has adopted the following investment limitations as fundamental
policies that 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, the Fund will hold a meeting of its shareholders and
will cast its votes as instructed by its shareholders.
No Portfolio may:
(1) 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 Portfolio 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;
(2) Purchase or sell physical commodities, but the Portfolio may
purchase, sell or enter into financial options and futures, forward and spot
currency contracts, swap transactions and other financial contracts or
derivative instruments;
(3) Engage in the business of underwriting securities of other issuers,
except to the extent that the Portfolio might be considered an underwriter
under the federal securities laws in connection with its disposition of
portfolio securities;
Statement of Additional Information Page 22
<PAGE>
GT GLOBAL NEW DIMENSION FUND
(4) Make loans, except through loans of portfolio securities or through
repurchase agreements, provided that for purposes of this limitation, 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;
(5) Issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Portfolio's total
assets (including the amount borrowed but reduced by any liabilities not
constituting borrowings) at the time of the borrowing, except that the
Portfolio may borrow up to an additional 5% of its total assets (not
including the amount borrowed) for temporary or emergency purposes; or
(6) Purchase securities of any one issuer if, as a result, more than 5%
of the Portfolio's total assets would be invested in securities of that
issuer or the Portfolio would own or hold more than 10% of the outstanding
voting securities of that issuer, except that up to 25% of the Portfolio's
total assets may be invested without regard to this limitation, and except
that this limitation does not apply to securities issued or guaranteed by
the U.S. government, its agencies or instrumentalities or to securities
issued by other investment companies.
The following investment policies of each Portfolio are not fundamental policies
and may be changed by vote of the Portfolios' Board of Trustees without
shareholder approval. No Portfolio may:
(1) Invest in securities of an issuer if the investment would cause the
Portfolio to own more than 10% of any class of securities of any one issuer;
(2) Invest in companies for the purpose of exercising control or
management;
(3) Invest more than 15% of its net assets in illiquid securities,
including securities that are illiquid by virtue of the absence of a readily
available market;
(4) 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;
(5) Make any additional investments while borrowings exceed 5% of the
Portfolio's total assets;
(6) 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;
(7) Purchase securities on margin, provided that each Portfolio may
obtain short-term credits as may be necessary for the clearance of purchases
and sales of securities, and further provided that the Portfolio may make
margin deposits in connection with its use of financial options and futures,
forward and spot currency contracts, swap transactions and other financial
contracts or derivative instruments; or
(8) Mortgage, pledge, or hypothecate any of its assets, provided that
this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities.
Investors should refer to the Prospectus for further information with respect to
the investment objective of each Feeder Fund, which may not be changed without
the approval of Fund shareholders, and its corresponding Portfolio's investment
objective, which may be changed without the approval of its shareholders, and
other investment policies, techniques and limitations, which may or may not be
changed without shareholder approval.
HEALTH CARE FUND
The Health Care Fund has adopted the following investment limitations as
fundamental policies, which 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) 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 Health Care 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;
(2) Engage in the business of underwriting securities of other issuers,
except to the extent that the Health Care Fund might be considered an
underwriter under the federal securities laws in connection with its
disposition of portfolio securities;
(3) Make loans, except through loans of portfolio securities or through
repurchase agreements, provided that for purposes of this limitation, 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;
(4) Purchase or sell physical commodities, but the Health Care 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;
(5) Issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Health Care Fund's
total assets (including the amount borrowed but reduced by any liabilities
not constituting borrowings) at the time of the borrowing, except that the
Health Care Fund may borrow up to an additional 5% of its total assets (not
including the amount borrowed) for temporary or emergency purposes; or
(6) Purchase securities of any one issuer if, as a result, more than 5%
of the Health Care Fund's total assets would be invested in securities of
that issuer or the Health Care Fund would own or hold more than 10% of the
outstanding voting securities of that issuer, except that up to 25% of the
Health Care Fund's total assets may be invested without regard to this
limitation, and except that this limitation does not apply to securities
issued or guaranteed by the U.S. government, its agencies or
instrumentalities or to securities issued by other investment companies.
Notwithstanding any other investment policy of the Health Care Fund, the Health
Care 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.
The following investment policies of the Health Care Fund are not fundamental
policies and may be changed by vote of the Health Care Fund's Board of Trustees
without shareholder approval. The Health Care Fund will not:
(1) Purchase securities for which there is no readily available market,
or enter into repurchase agreements or purchase time deposits maturing in
more than seven days, or purchase OTC options or hold assets set aside to
cover OTC options written by the Health Care Fund, if immediately after and
as a result, the value of such securities would exceed, in the aggregate,
15% of the Health Care Fund's net assets;
(2) Purchase securities on margin, provided that the Health Care Fund
may obtain short-term credits as may be necessary for the clearance of
purchases and sales of securities, and further provided that the Health Care
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 contracts or derivative instruments; or
(3) Mortgage, pledge, or hypothecate any of its assets, provided that
this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activitie; or
(4) Make any additional investment while borrowings exceed 5% of the
Portfolio's total assets.
Investors should refer to the Prospectus for further information with respect to
the Health Care Fund's investment objective, which may not be changed without
the approval of its shareholders, 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 may not be changed without a Required Vote.
Statement of Additional Information Page 24
<PAGE>
GT GLOBAL NEW DIMENSION FUND
The Telecommunications Fund may not:
(1) 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 Telecommunications 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;
(2) Purchase or sell physical commodities, but the Telecommunications
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;
(3) Engage in the business of underwriting securities of other issuers,
except to the extent that the Telecommunications Fund might be considered an
underwriter under the federal securities laws in connection with its
disposition of portfolio securities;
(4) Make loans, except through loans of portfolio securities or through
repurchase agreements, provided that for purposes of this limitation, 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;
(5) Issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Telecommunications
Fund's total assets (including the amount borrowed but reduced by any
liabilities not constituting borrowings) at the time of the borrowing,
except that the Telecommunications Fund may borrow up to an additional 5% of
its total assets (not including the amount borrowed) for temporary or
emergency purposes; or
(6) Purchase securities of any one issuer if, as a result, more than 5%
of the Telecommunications Fund's total assets would be invested in
securities of that issuer or the Telecommunications Fund would own or hold
more than 10% of the outstanding voting securities of that issuer, except
that up to 25% of the Telecommunications Fund's total assets may be invested
without regard to this limitation, and except that this limitation does not
apply to securities issued or guaranteed by the U.S. government, its
agencies or instrumentalities or to securities issued by other investment
companies.
Notwithstanding any other investment policy of the Telecommunications Fund, the
Telecommunications 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.
The following investment policies of the Telecommunications Fund are not
fundamental policies and may be changed by vote of the Company's Board of
Trustees 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) 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 Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund
has entered into;
(5) Make any additional investments while borrowings exceed 5% of the
Telecommunications Fund's total assets;
(6) Purchase securities on margin, provided that the Telecommunications
Fund may obtain short-term credits as may be necessary for the clearance of
purchases and sales of securities, and further provided that the
Telecommunications 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 contracts or derivative instruments; or
Statement of Additional Information Page 25
<PAGE>
GT GLOBAL NEW DIMENSION FUND
(7) Mortgage, pledge, or hypothecate any of its assets, provided that
this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities.
Investors should refer to the Prospectus for further information with respect to
the Telecommunications Fund's investment objective, which may not be changed
without the approval of shareholders, 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 a Fund's or Portfolio's investment policies or
restrictions. A Fund or 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 Fund's or Portfolio's
investment policies and restrictions. The original cost of the securities so
acquired will be included in any subsequent determination of a Fund's or
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 affiliated with AIM or the
Sub-adviser. 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 GT
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 trustee of each of the other investment companies
registered under the Investment Company Act of 1940, as amended (the "1940 Act"), that is
sub-advised or sub-administered by the Sub-adviser.
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 trustee of each of the other investment
companies registered under the 1940 Act that is sub-advised or sub-administered by the
Sub-adviser.
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 trustee of each of the other investment companies registered under the 1940 Act that is
Suite 2400 sub-advised or sub- administered by the Sub-adviser.
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 trustee of each of the other investment companies registered under the 1940 Act
that is sub-advised or sub-administered by the Sub-adviser.
Ruth H. Quigley, 63 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 trustee of each of the other investment companies registered under the 1940 Act that is
San Francisco, CA 94108 sub-advised or sub-administered by the Sub-adviser.
</TABLE>
- --------------
* Mr. Guilfoyle is an "interested person" of the Trust as defined by the 1940
Act due to his affiliation with the Sub-adviser.
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, 52 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 LGT Asset
San Francisco, CA 94111 Management, Inc., Chancellor LGT, GT Global, GT Services and G.T. Insurance from May 1994
to October 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>
[THERE MAY BE ADDITIONAL OFFICERS DESIGNATED PRIOR TO THE EFFECTIVE DATE OF THE
REGISTRATION STATEMENT.]
------------------------
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 Trustee and Officer of G.T.
Investment Portfolios, G.T. Investment Funds, GT Global Floating Rate Fund, 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 advised or
administered by AIM and sub-advised or sub-administered by the Sub-adviser. Each
Trustee and Officer serves in total as a Trustee and Officer, respectively of 12
registered investment companies with 47 series managed or administrated by AIM
and sub-advised or sub-administered by the Sub-adviser. The Trust pays each
Trustee who is not a director, officer or employee of the Sub-adviser 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 attendance at such meetings. As of May , 1998, 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
AIM serves as the investment manager and administrator to the Fund under an
Investment Management and Administration Contract ("Management Contract")
between the Trust and AIM. The Sub-adviser serves as the sub-adviser and sub-
administrator to the Fund under a Sub-Advisory and Sub-Administration Contract
between AIM and the Sub-adviser ("Sub-Management Contract," and together with
the Management Contract, the "Management Contracts"). Neither AIM nor the
Sub-adviser receives a fee 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, AIM Distributors, on a "best
efforts" basis pursuant to separate Distribution Contracts between the Trust and
AIM Distributors.
As described in the Prospectus, on , 1998, the Trust adopted a Master
Distribution Plan pursuant to Rule 12b-1 under the 1940 Act relating to the
Class A and Class C shares of the Fund (the "Class A and C Plan"). At the same
time, the Trust also adopted a Master Distribution Plan pursuant to Rule 12b-1
under the 1940 Act relating to Class B shares of the Fund (the "Class B Plan"
and together with the Class A and C Plan, the "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.
THE PLANS. Pursuant to an incentive program, AIM Distributors may enter into
agreements ("Shareholder Service Agreements") with investment dealers selected
from time to time by AIM Distributors for the provision of distribution
assistance in connection with the sale of the Fund's shares to such dealers'
customers, and for the provision of continuing personal shareholder services to
customers who may from time to time directly or beneficially own shares of the
Fund. The distribution assistance and continuing personal shareholder services
to be rendered by dealers under the Shareholder Service Agreements may include,
but shall not be limited to, the following: distributing sales literature;
answering routine customer inquiries concerning the Fund; assisting customers in
changing dividend options, account designations and addresses, and in enrolling
in any of several special investment plans offered in connection with the
purchase of the Fund's shares; assisting in the establishment and maintenance of
customer accounts and records and in the processing of purchase and redemption
transactions; investing dividends and any capital gains distributions
automatically in the Fund's shares; and providing such other information and
services as the Fund or the customer may reasonably request.
Under the Plans, in addition to the Shareholder Service Agreements authorizing
payments to selected dealers, banks may enter into Shareholder Service
Agreements authorizing payments under the Plans to be made to banks that provide
services to their customers who have purchased shares. Services provided
pursuant to Shareholder Service Agreements with banks may include some or all of
the following: answering shareholder inquiries regarding the Fund and the Trust;
performing sub-accounting; establishing and maintaining shareholder accounts and
records; processing customer purchase and redemption transactions; providing
periodic statements showing a shareholder's account balance and the integration
of such statements with those of other transactions and balances in the
shareholder's other accounts serviced by the bank; forwarding applicable
prospectuses, proxy statements, reports and notices to bank clients who hold
Fund shares; and such other administrative services as the Fund reasonably may
request, to the extent permitted by applicable statute, rule or regulation.
Similar agreements may be permitted under the Plans for institutions that
provide recordkeeping for and administrative services to 401(k) plans.
Financial intermediaries and any other person entitled to receive compensation
for selling Fund shares may receive different compensation for selling shares of
one particular class over another.
Under a Shareholder Service Agreement, the Fund agrees to pay periodically fees
to selected dealers and other institutions who render the foregoing services to
their customers. The fees payable under a Shareholder Service Agreement will be
calculated at the end of each payment period for each business day of the Fund
during such period at the annual rate of 0.25% of the average daily net asset
value of the Fund's shares purchased or acquired through exchange. Fees
calculated in this manner shall be paid only to those selected dealers or other
institutions who are dealers or institutions of record at the
Statement of Additional Information Page 30
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GT GLOBAL NEW DIMENSION FUND
close of business on the last business day of the applicable payment period for
the account in which such Fund's shares are held.
Payments pursuant to the Plans are subject to any applicable limitations imposed
by rules of the National Association of Securities Dealers, Inc. ("NASD"). The
Plans conform to rules of the NASD by limiting payments made to dealers and
other financial institutions who provide continuing personal shareholder
services to their customers who purchase and own shares of the Fund to no more
than 0.25% per annum of the average daily net assets of the Fund attributable to
the customers of such dealers or financial institutions, and by imposing a cap
on the total sales charges, including asset-based sales charges, that may be
paid by the Fund and its respective classes.
AIM Distributors does not act as principal, but rather as agent for the Fund, in
making dealer incentive and shareholder servicing payments under the Plans.
These payments are an obligation of the Fund and not of AIM Distributors.
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, AIM Distributors 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.
AIM Distributors 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
Sub-adviser 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, Martin Luther King Day, President's 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.
Statement of Additional Information Page 31
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GT GLOBAL NEW DIMENSION FUND
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 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 AIM Distributors 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 AIM Distributors within twenty days
after written request, the appropriate number of escrowed shares will be
redeemed and the proceeds paid to AIM Distributors.
Any investor that entered into a LOI prior to June 1, 1998, under which the
indicated amount is not met, will be subject to the sales charge schedule that
was in effect when the LOI was entered into.
Statement of Additional Information Page 32
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GT GLOBAL NEW DIMENSION FUND
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. Class B shareholders of the Fund who exchange into Class B shares
of another GT Global Mutual Fund will be subject to the conversion feature of
such other GT Global Mutual Fund, which is one year longer than the Fund's Class
B conversion feature.
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 Sub-adviser 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 AIM Distributors.
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
potentially lower annual administration expenses.
Statement of Additional Information Page 33
<PAGE>
GT GLOBAL NEW DIMENSION FUND
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 the
corresponding class 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 and Class C shares of the Fund also may
be exchanged for shares of the corresponding class of funds of The AIM Family of
Funds-Registered Trademark-. 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 be available only with funds of The AIM Family of Funds
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 and The AIM
Family of 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.
THE AIM FAMILY OF FUNDS, THE AIM FAMILY OF FUNDS AND DESIGN (I.E., THE AIM
LOGO), AIM AND DESIGN, AIM, AIM LINK, AIM INSTITUTIONAL FUNDS, AIMFUNDS.COM, LA
FAMILIA AIM DE FONDOS AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
SALES CHARGE WAIVERS FOR SHARES PURCHASED PRIOR TO JUNE 1, 1998
Class A shares that are subject to a contingent deferred sales charge and that
were purchased before June 1, 1998 are entitled to the following waivers from
the contingent deferred sales charge otherwise due upon redemption: (1) minimum
required distributions made in connection with a GT Global IRA, Keogh Plan or
custodial account under Section 403(b) of the Code or other retirement plan
following attainment of age 70 1/2; (2) total or partial redemptions resulting
from a distribution following retirement in the case of a tax-qualified
employer-sponsored retirement plan; (3) when a redemption results from a
tax-free return of an excess contribution pursuant to Section 408(d)(4) or (5)
of the Code or from the death or disability of the employee; (4) redemptions
pursuant to a Fund's right to liquidate a shareholder's account involuntarily;
(5) redemptions pursuant to distributions from a tax-qualified
employer-sponsored retirement plan, which is invested in GT Global Mutual Funds,
which are permitted to be made without penalty pursuant to the Code, other than
tax-free rollovers or transfers of assets, and the proceeds of which are
reinvested in GT Global Mutual Funds; (6) redemptions made in connection with
participant-directed exchanges between options in an employer-sponsored benefit
plan; (7) redemptions made for the purpose of providing cash to fund a loan to a
participant in a tax-qualified retirement plan; (8) redemptions made in
connection with a distribution from any retirement plan or account that is
permitted in accordance with the provisions of Section 72(t)(2) of the Code, and
the regulations promulgated thereunder; (9) redemptions made in connection with
a distribution from any retirement plan or account that involves the return of
an excess deferral amount pursuant to Section 401(k)(8) or Section 402(g)(2) of
the Code; (10) redemptions made in connection with a distribution from a
qualified profit-sharing or stock bonus plan described in Section 401(k) of the
Code to a participant or beneficiary under Section 401(k)(2)(B)(IV) of the Code
upon hardship of the covered employee (determined pursuant to Treasury
Regulation Section 1.401(k)-1(d)(2)); and (11) redemptions made by or for the
benefit of certain states, counties or cities, or any instrumentalities,
departments or authorities thereof where such entities are prohibited or limited
by applicable law from paying a sales charge or commission.
Class B and Class C shares purchased before June 1, 1998 are subject to the
following waivers from the contingent deferred sales charge otherwise due upon
redemption in addition to the waivers provided for redemptions of currently
issued Class B and Class C shares as described in the Prospectus: (1) total or
partial redemptions resulting from a distribution following retirement in the
case of a tax-qualified employer-sponsored retirement; (2) minimum required
distributions made in connection with a GT Global IRA, Keogh Plan or custodial
account under Section 403(b) of the Code or other retirement plan following
attainment of age 70 1/2; (3) a one-time reinvestment in Class B or Class C
shares of
Statement of Additional Information Page 34
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GT GLOBAL NEW DIMENSION FUND
a Fund within 180 days of a prior redemption; (4) redemptions pursuant to
distributions from a tax-qualified employer-sponsored retirement plan, which is
invested in GT Global Mutual Funds, which are permitted to be made without
penalty pursuant to the Code, other than tax-free rollovers or transfers of
assets, and the proceeds of which are reinvested in GT Global Mutual Funds; (5)
redemptions made in connection with participant-directed exchanges between
options in an employer-sponsored benefit plan; (6) redemptions made for the
purpose of providing cash to fund a loan to a participant in a tax-qualified
retirement plan; (7) redemptions made in connection with a distribution from any
retirement plan or account that is permitted in accordance with the provisions
of Section 72(t)(2) of the Code, and the regulations promulgated thereunder; (8)
redemptions made in connection with a distribution from a qualified
profit-sharing or stock bonus plan described in Section 401(k) of the Code to a
participant or beneficiary under Section 401(k)(2)(B)(IV) of the Code upon
hardship of the covered employee (determined pursuant to Treasury Regulation
Section 1.401(k)-1(d)(2)); and (9) redemptions made by or for the benefit of
certain states, counties or cities, or any instrumentalities, departments or
authorities thereof where such entities are prohibited or limited by applicable
law from paying a sales charge or commission.
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.
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
Statement of Additional Information Page 35
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GT GLOBAL NEW DIMENSION FUND
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
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.
Statement of Additional Information Page 36
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GT GLOBAL NEW DIMENSION FUND
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, 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.
Statement of Additional Information Page 37
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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 from the
Internal Revenue Service, a Special Servicing Agreement (the "Service
Agreement") will be entered into among AIM, the Sub-adviser, 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 Trustees, 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
Sub-adviser 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.
AIM was organized in 1976, and along with its subsidiaries, manages or advises
[over 50] investment company portfolios encompassing a broad range of investment
objectives. AIM is a direct, wholly owned subsidiary of A I M Management Group
Inc. ("AIM Management"), a holding company that has been engaged in the
financial services business since 1976. AIM is the sole shareholder of the
Funds' principal underwriter, AIM Distributors. AIM Management is an indirect
wholly owned subsidiary of AMVESCAP PLC, 11 Devonshire Square, London, EC2M 4YR,
England. AMVESCAP PLC and its subsidiaries are an independent investment
management group that has a significant presence in the institutional and retail
segment of the investment management industry in North America and Europe, and a
growing presence in Asia.
[Worldwide asset management affiliates also currently include GT Asset
Management Inc. in Toronto, Canada; LGT Asset Management PLC, formerly G.T.
Management PLC, in London, England; GT Asset Management Ltd., formerly G.T.
Management (Asia) Ltd., in Hong Kong; GT Asset Management Ltd., formerly G.T.
Management (Japan) Ltd., in Tokyo; GT Asset Management Pte. Ltd., formerly G.T.
Management (Singapore) PTE Ltd., in Singapore; GT Asset Management Ltd.,
formerly G.T. Management (Australia) Ltd., in Sydney; and GT 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 , One Post Office Square,
Boston, Massachusetts 02109. 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 38
<PAGE>
GT GLOBAL NEW DIMENSION FUND
The audited financial statements of the Trust included in this Statement of
Additional Information have been examined by , 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 Sub-adviser 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. 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.
Statement of Additional Information Page 39
<PAGE>
GT GLOBAL NEW DIMENSION FUND
IMPORTANT POINTS TO NOTE ABOUT DATA RELATING TO WORLD EQUITY AND BOND MARKETS
The Fund and AIM Distributors 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.
(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.
Statement of Additional Information Page 40
<PAGE>
GT GLOBAL NEW DIMENSION FUND
(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, AIM Distributors 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 AIM
Distributors. 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.
AIM Distributors 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 AIM Distributors 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.
AIM Distributors believes the Fund is an appropriate investment for long-term
investment goals including funding retirement, paying for education or
purchasing a house. AIM Distributors may provide information designed to help
individuals understand their investment goals and explore various financial
strategies. For example, AIM Distributors 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, AIM Distributors 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.
Statement of Additional Information Page 41
<PAGE>
GT GLOBAL NEW DIMENSION FUND
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."
AIM Distributors 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 AIM Distributors will quote data regarding
industries, companies, individual countries, regions, world stock exchanges, and
economic and demographic statistics from sources AIM Distributors 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.
Statement of Additional Information Page 42
<PAGE>
GT GLOBAL NEW DIMENSION FUND
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 Sub-adviser.
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, AIM Distributors 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, AIM Distributors may make reference to or
discuss its products, services and accomplishments. Among these accomplishments
are that in 1983 the Sub-adviser 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
Sub-adviser 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
Sub-adviser 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.
Statement of Additional Information Page 43
<PAGE>
GT GLOBAL NEW DIMENSION FUND
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. AIM Distributors 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 AIM Distributors 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
The information quoted has not been independently verified by the Fund or AIM
Distributors 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 Sub-adviser 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 "Sub-adviser"),
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 Sub-adviser,
Statement of Additional Information Page 44
<PAGE>
GT GLOBAL NEW DIMENSION FUND
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 Sub-adviser 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 Sub-adviser, 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 AIM Distributors 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 AIM Distributors and
will be based on data that is believed to be reliable and accurate.
TELECOMMUNICATIONS FUND
From time to time the Fund and AIM Distributors 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 AIM
Distributors 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 Sub-adviser 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 AIM Distributors 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
Statement of Additional Information Page 45
<PAGE>
GT GLOBAL NEW DIMENSION FUND
/ / 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 AIM
Distributors 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 AIM Distributors 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 AIM Distributors 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 AIM Distributors 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 46
<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 47
<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 48
<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
- --------------------------------------------------------------------------------
To be filed.
Statement of Additional Information Page 49
<PAGE>
GT GLOBAL NEW DIMENSION FUND
GT GLOBAL FUNDS
AIM DISTRIBUTORS 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 AIM DISTRIBUTORS 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
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, A I M ADVISORS, INC.,
[CHANCELLOR LGT ASSET MANAGEMENT, INC.] OR A I M DISTRIBUTORS, INC. THIS
STATEMENT OF ADDITIONAL INFORMATION 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
June 1, 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 Delaware 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").
A I M Advisors, Inc. ("AIM") serves as the investment manager of and
administrator for, and [Chancellor LGT Asset Management, Inc.] (the
"Sub-adviser") serves as the sub-adviser of and sub-administrator for, the Fund.
The distributor of the Fund's shares is A I M Distributors, Inc. ("AIM
Distributors"). 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 June 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>
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 (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
Trustees 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 Sub-adviser 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 Sub-adviser 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 Sub-adviser, 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 Sub-adviser'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
Sub-adviser 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
Sub-adviser 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 Sub-adviser 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 Sub-adviser, 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 Sub-adviser to be of good standing and will not be made unless, in
the judgment of the Sub-adviser, 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 Sub-adviser to present minimal credit risks in
accordance with guidelines established by the Company's or Global Investment
Portfolio's Board of Trustees (each a "Board" and, collectively, the "Boards"),
as applicable. The Sub-adviser 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
segregate 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 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
Sub-adviser'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 Sub-adviser 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 Sub-adviser 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 Sub-adviser, 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 Sub-adviser
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 Sub-adviser 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 Sub-adviser
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 Sub-adviser 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 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 liquid.
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 Sub-adviser, in accordance with procedures
approved by that Board. The Sub-adviser 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
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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 Sub-adviser monitors the liquidity of securities held by each
Underlying Theme Portfolio and periodically reports such determinations to the
applicable Board. The Sub-adviser 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. If the
liquidity percentage restriction of a Theme Portfolio is satisfied at the time
of investment, a later increase in the percentage of illiquid securities held by
the Theme Portfolio resulting from a change in market value or assets will not
constitute a violation of that restriction. If as a result of a change in market
value or assets, the percentage of illiquid securities held by the Theme
Portfolio increases above the applicable limit, the Sub-adviser will take
appropriate steps to bring the aggregate amount of illiquid assets back within
the prescribed limitations as soon as reasonably practicable, taking into
account the effect of any disposition on the Theme Portfolio.
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 Sub-adviser 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
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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 Sub-adviser will consider such difficulties when
determining the allocation of an Underlying Theme Portfolio's assets, although
the Sub-adviser 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 Sub-adviser believes that this deregulation should improve
the prospects for economic growth in many Western European countries. Among
other things, the deregulation could enable
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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 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
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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 Sub-adviser 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
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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 borrowed but reduced by any liabilities not
constituting borrowings) at the time of the 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;
(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; or
(6) Purchase securities of any one issuer if, as a result, more than 5%
of the Fund's total assets would be invested in securities of that issuer or
the Fund would own or hold more than 10% of the outstanding voting
securities of that issuer, except that up to 25% of the Fund's total assets
may be invested without regard to this limitation, and except that this
limitation does not apply to securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities or to securities issued by
other investment companies.
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.
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 Financial Services Fund, Infrastructure Fund, Natural Resources Fund and
Consumer Products and Services Fund (each, a "Feeder Fund," and collectively,
the "Feeder Funds") each has the following fundamental investment policy to
enable it to invest in the Financial Services Portfolio, Infrastructure
Portfolio, Natural Resources Portfolio and Consumer Products and Services
Portfolio (each a "Portfolio," and collectively, the "Portfolios"),
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 its Board of Trustees, it applies equally to each Feeder Fund and
its Board of Trustees.
Each Portfolio has adopted the following investment limitations as fundamental
policies that 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, the Fund will hold a meeting of its shareholders and
will cast its votes as instructed by its shareholders.
No Portfolio may:
(1) 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 Portfolio 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;
(2) Purchase or sell physical commodities, but the Portfolio may
purchase, sell or enter into financial options and futures, forward and spot
currency contracts, swap transactions and other financial contracts or
derivative instruments;
(3) Engage in the business of underwriting securities of other issuers,
except to the extent that the Portfolio might be considered an underwriter
under the federal securities laws in connection with its disposition of
portfolio securities;
(4) Make loans, except through loans of portfolio securities or through
repurchase agreements, provided that for purposes of this limitation, 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;
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(5) Issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Portfolio's total
assets (including the amount borrowed but reduced by any liabilities not
constituting borrowings) at the time of the borrowing, except that the
Portfolio may borrow up to an additional 5% of its total assets (not
including the amount borrowed) for temporary or emergency purposes; or
(6) Purchase securities of any one issuer if, as a result, more than 5%
of the Portfolio's total assets would be invested in securities of that
issuer or the Portfolio would own or hold more than 10% of the outstanding
voting securities of that issuer, except that up to 25% of the Portfolio's
total assets may be invested without regard to this limitation, and except
that this limitation does not apply to securities issued or guaranteed by
the U.S. government, its agencies or instrumentalities or to securities
issued by other investment companies.
The following investment policies of each Portfolio are not fundamental policies
and may be changed by vote of the Portfolios' Board of Trustees without
shareholder approval. No Portfolio may:
(1) Invest in securities of an issuer if the investment would cause the
Portfolio to own more than 10% of any class of securities of any one issuer;
(2) Invest in companies for the purpose of exercising control or
management;
(3) Invest more than 15% of its net assets in illiquid securities,
including securities that are illiquid by virtue of the absence of a readily
available market;
(4) 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;
(5) Make any additional investments while borrowings exceed 5% of the
Portfolio's total assets;
(6) 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;
(7) Purchase securities on margin, provided that each Portfolio may
obtain short-term credits as may be necessary for the clearance of purchases
and sales of securities, and further provided that the Portfolio may make
margin deposits in connection with its use of financial options and futures,
forward and spot currency contracts, swap transactions and other financial
contracts or derivative instruments; or
(8) Mortgage, pledge, or hypothecate any of its assets, provided that
this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities.
Investors should refer to the Prospectus for further information with respect to
the investment objective of each Feeder Fund, which may not be changed without
the approval of Fund shareholders, and its corresponding Portfolio's investment
objective, which may be changed without the approval of its shareholders, and
other investment policies, techniques and limitations, which may or may not be
changed without shareholder approval.
HEALTH CARE FUND
The Health Care Fund has adopted the following investment limitations as
fundamental policies, which may not be changed without a Required Vote.
The Health Care Fund may not:
(1) 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 Health Care 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;
(2) Engage in the business of underwriting securities of other issuers,
except to the extent that the Health Care Fund might be considered an
underwriter under the federal securities laws in connection with its
disposition of portfolio securities;
Statement of Additional Information Page 23
<PAGE>
GT GLOBAL NEW DIMENSION FUND
(3) Make loans, except through loans of portfolio securities or through
repurchase agreements, provided that for purposes of this limitation, 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;
(4) Purchase or sell physical commodities, but the Health Care 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;
(5) Issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Health Care Fund's
total assets (including the amount borrowed but reduced by any liabilities
not constituting borrowings) at the time of the borrowing, except that the
Health Care Fund may borrow up to an additional 5% of its total assets (not
including the amount borrowed) for temporary or emergency purposes; or
(6) Purchase securities of any one issuer if, as a result, more than 5%
of the Health Care Fund's total assets would be invested in securities of
that issuer or the Health Care Fund would own or hold more than 10% of the
outstanding voting securities of that issuer, except that up to 25% of the
Health Care Fund's total assets may be invested without regard to this
limitation, and except that this limitation does not apply to securities
issued or guaranteed by the U.S. government, its agencies or
instrumentalities or to securities issued by other investment companies.
Notwithstanding any other investment policy of the Health Care Fund, the Health
Care 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.
The following investment policies of the Health Care Fund are not fundamental
policies and may be changed by vote of the Health Care Fund's Board of Trustees
without shareholder approval. The Health Care Fund will not:
(1) Purchase securities for which there is no readily available market,
or enter into repurchase agreements or purchase time deposits maturing in
more than seven days, or purchase OTC options or hold assets set aside to
cover OTC options written by the Health Care Fund, if immediately after and
as a result, the value of such securities would exceed, in the aggregate,
15% of the Health Care Fund's net assets;
(2) Purchase securities on margin, provided that the Health Care Fund
may obtain short-term credits as may be necessary for the clearance of
purchases and sales of securities, and further provided that the Health Care
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 contracts or derivative instruments; or
(3) Mortgage, pledge, or hypothecate any of its assets, provided that
this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities; or
(4) Make any additional investment while borrowings exceed 5% of the
Portfolio's total assets.
Investors should refer to the Prospectus for further information with respect to
the Health Care Fund's investment objective, which may not be changed without
the approval of its shareholders, 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 may not be changed without a Required Vote.
The Telecommunications Fund may not:
(1) 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 Telecommunications 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;
(2) Purchase or sell physical commodities, but the Telecommunications
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;
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 Telecommunications Fund might be considered an
underwriter under the federal securities laws in connection with its
disposition of portfolio securities;
(4) Make loans, except through loans of portfolio securities or through
repurchase agreements, provided that for purposes of this limitation, 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;
(5) Issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Telecommunications
Fund's total assets (including the amount borrowed but reduced by any
liabilities not constituting borrowings) at the time of the borrowing,
except that the Telecommunications Fund may borrow up to an additional 5% of
its total assets (not including the amount borrowed) for temporary or
emergency purposes; or
(6) Purchase securities of any one issuer if, as a result, more than 5%
of the Telecommunications Fund's total assets would be invested in
securities of that issuer or the Telecommunications Fund would own or hold
more than 10% of the outstanding voting securities of that issuer, except
that up to 25% of the Telecommunications Fund's total assets may be invested
without regard to this limitation, and except that this limitation does not
apply to securities issued or guaranteed by the U.S. government, its
agencies or instrumentalities or to securities issued by other investment
companies.
Notwithstanding any other investment policy of the Telecommunications Fund, the
Telecommunications 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.
The following investment policies of the Telecommunications Fund are not
fundamental policies and may be changed by vote of the Company's Board of
Trustees 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) 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 Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund
has entered into;
(5) Make any additional investments while borrowings exceed 5% of the
Telecommunications Fund's total assets;
(6) Purchase securities on margin, provided that the Telecommunications
Fund may obtain short-term credits as may be necessary for the clearance of
purchases and sales of securities, and further provided that the
Telecommunications 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 contracts or derivative instruments; or
(7) Mortgage, pledge, or hypothecate any of its assets, provided that
this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities.
Investors should refer to the Prospectus for further information with respect to
the Telecommunications Fund's investment objective, which may not be changed
without the approval of shareholders, 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 a Fund's or Portfolio's investment policies or
restrictions. A Fund or 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
Statement of Additional Information Page 25
<PAGE>
GT GLOBAL NEW DIMENSION FUND
Act, any such securities so acquired without regard to the Fund's or Portfolio's
investment policies and restrictions. The original cost of the securities so
acquired will be included in any subsequent determination of a Fund's or
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 Sub-adviser. As stated in the Prospectus, the Sub-adviser 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 Sub-adviser 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
Sub-adviser 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 Sub-
adviser 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
Sub-adviser 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 Sub-adviser 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 Sub-adviser
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 Sub-adviser
determines in good faith that such commission is reasonable in terms either of
that particular transaction or the overall responsibility of the Sub-adviser 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 Sub-adviser may allocate brokerage transactions to broker/dealers who have
entered into arrangements under which the broker/dealer allocates a portion of
the commissions paid by an Underlying Theme Portfolio toward payment of its
expenses, such as custodian fees.
Investment decisions for an Underlying Theme Portfolio and for other investment
accounts managed by the Sub-adviser 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 Sub-adviser
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 Sub-adviser may consider a broker/dealer's
sale of the shares of the Underlying Theme Funds and the other portfolios for
which the Sub-adviser 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.
Statement of Additional Information Page 26
<PAGE>
GT GLOBAL NEW DIMENSION FUND
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 affiliated with AIM or the
Sub-adviser. 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 Trustees 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 GT
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 trustee of each of the other investment companies
registered under the Investment Company Act of 1940, as amended (the "1940 Act"), that is
sub-advised or sub-administered by the Sub-adviser.
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 trustee of each of the other investment
companies registered under the 1940 Act that is sub-advised or sub-administered by the
Sub-adviser.
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 trustee of each of the other investment companies registered under the 1940 Act that is
Suite 2400 sub-advised or sub- administered by the Sub-adviser.
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 trustee of each of the other investment companies registered under the 1940 Act
that is sub-advised or sub-administered by the Sub-adviser.
Ruth H. Quigley, 63 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 trustee of each of the other investment companies registered under the 1940 Act that is
San Francisco, CA 94108 sub-advised or sub-administered by the Sub-adviser.
</TABLE>
- --------------
* Mr. Guilfoyle is an "interested person" of the Trust as defined by the 1940
Act due to his affiliation with the Sub-adviser.
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, 52 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 LGT Asset
San Francisco, CA 94111 Management, Inc., Chancellor LGT, GT Global, GT Services and G.T. Insurance from May 1994
to October 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>
[THERE MAY BE ADDITIONAL OFFICERS DESIGNATED PRIOR TO THE EFFECTIVE DATE OF THE
REGISTRATION STATEMENT.]
------------------------
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 Trustee and Officer of G.T.
Investment Portfolios, G.T. Investment Funds, GT Global Floating Rate Fund, 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 advised or
administered by AIM and sub-advised or sub-administered by the Sub-adviser. Each
Trustee and Officer serves in total as a Trustee and Officer, respectively, of
12 registered investment companies with 47 series managed or administrated by
AIM and sub-advised or sub-administered by the Sub-adviser. The Trust pays each
Trustee who is not a director, officer or employee of the Sub-adviser 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 attendance at such meetings. As of May , 1998, 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
AIM serves as the investment manager and administrator to the Fund under an
Investment Management and Administration Contract ("Management Contract")
between the Trust and AIM. The Sub-adviser serves as the sub-adviser and sub-
administrator to the Fund under a Sub-Advisory and Sub-Administration Contract
between AIM and the Sub-adviser ("Sub-Management Contract," and together with
the Management Contract, the "Management Contracts"). Neither AIM nor the
Sub-adviser receives a 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, AIM Distributors, 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
Sub-adviser 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, Martin Luther King Day, President's 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.
Statement of Additional Information Page 30
<PAGE>
GT GLOBAL NEW DIMENSION FUND
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 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 AIM Distributors.
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.
Statement of Additional Information Page 31
<PAGE>
GT GLOBAL NEW DIMENSION FUND
The privilege may be discontinued or changed at any time by any of the funds
upon sixty days prior written notice to the shareholders of such fund and is
available only in states where the exchange may be made legally. Before
purchasing shares through the exercise of the exchange privilege, a shareholder
should obtain and read a copy of the prospectus of the fund to be purchased and
should consider the investment objective(s) of the fund.
TELEPHONE REDEMPTIONS
A corporation or partnership wishing to utilize telephone redemption services
must submit a "Corporate Resolution" or "Certificate of Partnership" indicating
the names, titles and the required number of signatures of persons authorized to
act on its behalf. The certificate must be signed by a duly authorized
officer(s), and, in the case of a corporation, the corporate seal must be
affixed. All shareholders may request that redemption proceeds be transmitted by
bank wire upon request directly to the shareholder's predesignated account at a
domestic bank or savings institution if the proceeds are at least $1,000. Costs
in connection with the administration of this service, including wire charges,
currently are borne by the Fund. Proceeds of less than $1,000 will be mailed to
the shareholder's registered address of record. The Fund and the Transfer Agent
reserve the right to refuse any telephone instructions and may discontinue the
aforementioned redemption options upon thirty days' written notice.
SUSPENSION OF REDEMPTION PRIVILEGES
The Fund may suspend redemption privileges or postpone the date of payment for
more than seven days after a redemption order is received during any period (1)
when the NYSE is closed other than customary weekend and holiday closings, or
trading on the NYSE is restricted as directed by the SEC, (2) when an emergency
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
- --------------------------------------------------------------------------------
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.
Statement of Additional Information Page 32
<PAGE>
GT GLOBAL NEW DIMENSION FUND
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 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 from the
Internal Revenue Service, a Special Servicing Agreement (the "Service
Agreement") will be entered into among AIM, 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 Trustees, 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.
AIM was organized in 1976, and along with its subsidiaries, manages or advises
[over 50] investment company portfolios encompassing a broad range of investment
objectives. AIM is a direct, wholly owned subsidiary of A I M Management Group
Inc. ("AIM Management"), a holding company that has been engaged in the
financial services business since 1976. AIM is the sole shareholder of the
Funds' principal underwriter, AIM Distributors. AIM Management is an indirect
wholly owned subsidiary of AMVESCAP PLC, 11 Devonshire Square, London, EC2M 4YR,
England. AMVESCAP PLC and its subsidiaries are an independent investment
management group that has a significant presence in the institutional and retail
segment of the investment management industry in North America and Europe, and a
growing presence in Asia.
[Worldwide asset management affiliates also currently include GT Asset
Management Inc. in Toronto, Canada; 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 , One Post Office Square,
Boston, Massachusetts 02109. 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 , 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 AIM Distributors 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, AIM Distributors may use
Statement of Additional Information Page 37
<PAGE>
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 AIM
Distributors. 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.
AIM Distributors 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 AIM Distributors 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.
AIM Distributors believes the Fund is an appropriate investment for long-term
investment goals including funding retirement, paying for education or
purchasing a house. AIM Distributors may provide information designed to help
individuals understand their investment goals and explore various financial
strategies. For example, AIM Distributors 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, AIM Distributors 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
<PAGE>
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."
AIM Distributors 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 AIM Distributors will quote data regarding
industries, companies, individual countries, regions, world stock exchanges, and
economic and demographic statistics from sources AIM Distributors 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 Sub-adviser.
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, AIM Distributors 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, AIM Distributors may make reference to or
discuss its products, services and accomplishments. Among these accomplishments
are that in 1983 the Sub-adviser 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
Sub-adviser 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
Sub-adviser 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. AIM Distributors 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 AIM Distributors 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 AIM
Distributors 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 Sub-adviser 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 "Sub-adviser"),
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 Sub-adviser, 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 Sub-adviser 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 Sub-adviser, 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 AIM Distributors 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 AIM Distributors and
will be based on data that is believed to be reliable and accurate.
TELECOMMUNICATIONS FUND
From time to time the Fund and AIM Distributors 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 AIM
Distributors 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 Sub-adviser 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 AIM Distributors 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 AIM
Distributors 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 AIM Distributors 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 AIM Distributors 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 AIM Distributors 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
- --------------------------------------------------------------------------------
To be filed.
Statement of Additional Information Page 46
<PAGE>
GT GLOBAL NEW DIMENSION FUND
GT GLOBAL FUNDS
AIM DISTRIBUTORS 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 AIM DISTRIBUTORS 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
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, A I M ADVISORS, INC.,
[CHANCELLOR LGT ASSET MANAGEMENT, INC.] OR A I M DISTRIBUTORS, INC. THIS
STATEMENT OF ADDITIONAL INFORMATION 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 -- To be Filed.
(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 (7).
(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 (7).
(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 -- To be Filed.
(12) Financial Statements omitted from Part B -- None.
(13) Letter of Investment Intent (2).
(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).
C-1
<PAGE>
<TABLE>
<S> <C>
(15)(c) Plan of Distribution pursuant to Rule 12b-1 with respect to
Class C Shares (7).
(16) Schedule for Computation of Performance Quotations -- None.
(17) Financial Data Schedule -- To be Filed.
(18) Amended Plan Pursuant to Rule 18f-3 (7).
</TABLE>
Other Exhibits:
(a) Power of Attorney for Helge K. Lee and Michael A. Silver for
GT Global Series Trust (6).
- ------------------------
(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 enumerated 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.
(7) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 2 to the Registration Statement on Form N-1A,
filed on March 4, 1998.
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 MARCH 30, 1998
- -------------------------------------------------------------------------------------------- --------------------
<S> <C>
Share of Beneficial Interest in:
GT Global New Dimension Fund -- Class A............................................... 1,938
GT Global New Dimension Fund -- Class B............................................... 2,302
GT Global New Dimension Fund -- Class C............................................... 48
GT Global New Dimension Fund -- Advisor Class......................................... 149
</TABLE>
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
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<PAGE>
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
Raymond R. Cunningham Senior Vice President -- Director None
of Sales and Director
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
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND OFFICES WITH GT POSITIONS AND OFFICES
NAME GLOBAL WITH THE REGISTRANT
- -------------------------------------------- ---------------------------------- ----------------------------------
<S> <C> <C>
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
Paul Wozniak Vice President -- Fund Accounting None
Christine C. Mangan Vice President -- Dealer Marketing None
Donna B. Abrahamson Vice President -- Account None
Management
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND OFFICES WITH GT POSITIONS AND OFFICES
NAME GLOBAL WITH THE REGISTRANT
- -------------------------------------------- ---------------------------------- ----------------------------------
<S> <C> <C>
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
Peter Sykes Vice President None
1655 E. Sherman Ave.
Salt Lake City, UT 84105
Lance Vetter Vice President None
10915 La Salinas Circle
Boca Raton, FL 33428
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND OFFICES WITH GT POSITIONS AND OFFICES
NAME GLOBAL WITH THE REGISTRANT
- -------------------------------------------- ---------------------------------- ----------------------------------
<S> <C> <C>
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, CA 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, CA 94596, and by
the Registrant's Custodian, State Bank and Trust Company, 225 Franklin Street,
Boston, MA 02110.
ITEM 31. MANAGEMENT SERVICES
None.
ITEM 32. UNDERTAKINGS
None.
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<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 31st 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 31st 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 previously
<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.(7)
(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.(7)
(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.(7)
(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.(7)
(16) Schedule for Computation of Performance Quotations -- None.
(17) Financial Data Schedule -- To be Filed.
(18) Amended Plan Pursuant to Rule 18f-3.(7)
</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.
<PAGE>
(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 enumerated 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.
(7) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 2 to the Registration Statement on Form N-1A,
filed on March 4, 1998.
