<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 24, 1997
SECURITIES ACT FILE NO. 333-17425
INVESTMENT COMPANY ACT FILE NO. 811-07957
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM N-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
PRE-EFFECTIVE AMENDMENT NO. 2 /X/
POST-EFFECTIVE AMENDMENT NO. / /
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
AMENDMENT NO. 2 /X/
(CHECK APPROPRIATE BOX OR BOXES)
------------------------
GT GLOBAL FLOATING RATE FUND, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
50 CALIFORNIA STREET, 27TH FLOOR
SAN FRANCISCO, CA 94111
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(415) 392-6181
------------------------
COPIES TO:
<TABLE>
<S> <C>
ARTHUR J. BROWN, ESQ. DAVID J. THELANDER, ESQ.
DANIEL T. STEINER, ESQ. CHANCELLOR LGT ASSET MANAGEMENT, INC.
KIRKPATRICK & LOCKHART LLP 50 CALIFORNIA STREET, 27TH FLOOR
1800 MASSACHUSETTS AVENUE, N.W. SAN FRANCISCO, CA 94111
WASHINGTON, D.C. 20036 (NAME AND ADDRESS OF AGENT FOR SERVICE)
</TABLE>
------------------------
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
------------------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: /X/
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF AMOUNT BEING OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES BEING REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE
<S> <C> <C> <C> <C>
Common Stock ($.001 par
value)...................... 20,000,000 $10.00 $200,000,000 $60,606.06*
* 3,030.30 of which was
previously paid.
</TABLE>
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<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
FORM N-2 CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
PART A
ITEM NUMBER CAPTION PROSPECTUS CAPTION
- ------------- ---------------------------- --------------------------------------------------------
<C> <S> <C>
1 Outside Front Cover......... Outside Front Cover of Prospectus
2 Inside Front and Outside
Back Cover Page............ Inside Front and Outside Back Cover Page of Prospectus
3 Fee Table and Synopsis...... Prospectus Summary; Fund Expenses
4 Financial Highlights........ Not Applicable
5 Plan of Distribution........ Outside Front Cover; Prospectus Summary; Purchase of
Shares; Description of Capital Stock
6 Selling Shareholders........ Not Applicable
7 Use of Proceeds............. Use of Proceeds; Investment Objective and Policies
8 General Description of
Registrant................. Prospectus Summary; The Fund; Investment Objective and
Policies; Investment Restrictions; Special
Considerations and Risk Factors; Description of Capital
Stock
9 Management.................. Management; Description of Capital Stock; Custodian,
Transfer and Dividend Disbursing Agent and Registrar
10 Capital Stock, Long-Term
Debt and Other
Securities................. Dividends and Other Distributions; Dividend Reinvestment
Plan; Taxes; Description of Capital Stock
11 Defaults and Arrears on
Senior Securities.......... Not Applicable
12 Legal Proceedings........... Not Applicable
13 Table of Contents of the
Statement of Additional
Information................ Not Applicable
</TABLE>
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
FORM N-2 CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
PART B
ITEM NUMBER CAPTION
- ------------- ----------------------------
<C> <S> <C>
14 Cover Page.................. Not Applicable
15 Table of Contents........... Not Applicable
16 General Information and
History.................... Not Applicable
17 Investment Objective and
Policies................... Investment Objective and Policies; Investment
Restrictions; Portfolio Transactions
18 Management.................. Management
19 Control Persons and
Principal Holders of
Securities................. Description of Capital Stock
20 Investment Advisory and
Other Services............. Management; Custodian, Transfer and Dividend Disbursing
Agent and Registrar
21 Brokerage Allocation and
Other Practices............ Portfolio Transactions
22 Tax Status.................. Taxes
23 Financial Statements........ Financial Statements
</TABLE>
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
COMMON STOCK
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GT Global Floating Rate Fund, Inc. (the "Fund") is a newly organized,
continuously offered, non-diversified, closed-end fund. The Fund is managed by a
subsidiary of Chancellor LGT Asset Management, Inc., Chancellor LGT Senior
Secured Management, Inc. (the "Manager"). The Fund's investment objective is to
provide as high a level of current income and preservation of capital as is
consistent with investment in senior secured corporate loans ("Corporate Loans")
and senior secured debt securities ("Corporate Debt Securities") that meet
credit standards established by the Manager. The Fund seeks to achieve its
objective by investing all of its investable assets in Floating Rate Portfolio
(the "Portfolio"), a separate, non-diversified, closed-end investment company
that has the same investment objective as the Fund. The Portfolio's investments
will primarily take the form of assignments of, or participations in, Corporate
Loans made by banks and other financial institutions and Corporate Debt
Securities. It is anticipated that the Corporate Loans and Corporate Debt
Securities will pay interest at rates that float or reset at a margin above a
generally recognized base lending rate such as the London InterBank Offered Rate
("LIBOR") or the prime rate of a designated U.S. bank. There can be no assurance
that the investment objective of the Fund will be achieved.
Shares of Common Stock of the Fund will be offered at $10 per share without a
front-end sales charge during an initial subscription offering period. On the
third business day after the conclusion of this subscription offering period,
the subscriptions will be payable, the Common Stock will be issued and the Fund
will commence operations. After the completion of the subscription offering
period, the Fund expects to engage in a continuous offering of its Common Stock
at a price equal to the next determined net asset value per share without a
front-end sales charge. The minimum initial purchase during the subscription and
continuous offering is $1,000, and the minimum subsequent purchase in the
continuous offering is $100.
No market presently exists for the Fund's Common Stock and it is not currently
expected that a secondary market will develop. Since the Fund's Common Stock may
not be considered readily marketable, the Board of Directors of the Fund
currently intends to consider the making of tender offers on a quarterly basis,
commencing in the third quarter of 1997, to repurchase all or a portion of the
Common Stock of the Fund from stockholders at the net asset value per share. See
"Tender Offers." Shares of Common Stock that have been held for less than four
years and that are repurchased by the Fund pursuant to tender offers will be
subject to an "Early Withdrawal Charge" that will not exceed 3.0% of the
original purchase amount for such Common Stock. See "Early Withdrawal Charge."
The Common Stock of the Fund involves investment risks, including fluctuations
in value and the possible loss of some or all of the principal investment. The
Portfolio may invest all or substantially all of its assets in Corporate Loans,
Corporate Debt Securities or other securities that are rated below investment
grade by a nationally recognized statistical rating organization, or in
comparable unrated securities. The Fund is authorized to borrow money to finance
tender offers, for temporary, extraordinary or emergency purposes, or, while it
has no current intention of doing so, for the purpose of financing additional
investments. Such leverage creates certain risks for holders of Common Stock,
including the risk of higher volatility of the net asset value of the Common
Stock. See "Special Considerations and Risk Factors -- Effects of Leveraging."
The Fund's Common Stock does not represent a deposit or obligation of, and is
not guaranteed or endorsed by, any bank or other insured depository institution,
and is not federally insured by the Federal Deposit Insurance Corporation, the
Federal Reserve Board or any other government agency.
This Prospectus sets forth information about the Fund that an investor should
know before investing. It should be read and retained for future reference.
Additional information concerning the Fund may be obtained by writing to the
Fund at 50 California Street, 27th Floor, San Francisco, California 94111, or by
calling (800) 824-1580.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRE-
SENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
PRICE TO SALES LOAD PROCEEDS TO
PUBLIC (1) (2) FUND (3)
<S> <C> <C> <C>
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Per Share..................................................................... $ 10 None $ 10
Total......................................................................... $ 200,000,000 None $ 200,000,000
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</TABLE>
(1) The Common Stock is offered on a best efforts basis at a price equal to net
asset value, which initially is $10 per share.
(2) GT Global, Inc., the Fund's distributor, will pay all sales commissions to
selected dealers from its own assets.
(3) Assuming the sale of all shares of Common Stock registered hereby and
exclusion of $116,345 in organizational expenses payable by the Fund.
Organizational expenses will be amortized over a period not to exceed 60
months from the date the Fund invests in the Portfolio and thus commences
investment operations.
[LOGO]
March 24, 1997
Prospectus Page 1
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
TABLE OF CONTENTS
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<TABLE>
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Page
---------
<S> <C>
Prospectus Summary........................................................................ 3
Fund Expenses............................................................................. 11
The Fund.................................................................................. 12
Use of Proceeds........................................................................... 12
Investment Objective and Policies......................................................... 12
Investment Restrictions................................................................... 21
Special Considerations and Risk Factors................................................... 22
Purchase of Shares........................................................................ 27
Tender Offers............................................................................. 28
Early Withdrawal Charge................................................................... 30
Management................................................................................ 31
Directors and Executive Officers.......................................................... 33
Portfolio Transactions.................................................................... 35
Dividends and Other Distributions......................................................... 36
Taxes..................................................................................... 36
Dividend Reinvestment Plan................................................................ 39
Automatic Investment Plan................................................................. 40
Exchanges................................................................................. 40
Net Asset Value........................................................................... 41
Description of Capital Stock.............................................................. 42
Yield Information......................................................................... 43
Custodian, Transfer and Dividend Disbursing Agent and Registrar........................... 44
Additional Information.................................................................... 44
Financial Statements...................................................................... 45
Appendix: Ratings of Securities........................................................... 48
</TABLE>
Prospectus Page 2
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
PROSPECTUS SUMMARY
- ------------------------------------------------------------
The following summary is qualified in its entirety by reference to the more
detailed information included elsewhere in this Prospectus. Investors should
carefully consider information set forth under the heading "Special
Considerations and Risk Factors."
<TABLE>
<S> <C>
The Fund: GT Global Floating Rate Fund, Inc. (the "Fund") is a newly
organized, continuously offered, non-diversified, closed-end
management investment company. See "The Fund."
The Portfolio: Floating Rate Portfolio (the "Portfolio") is a newly organized,
non-diversified, closed-end management investment company. See
"Special Considerations and Risk Factors -- Fund/Portfolio
Investment Structure."
The Offering: GT Global, Inc. ("GT Global" or the "Distributor") and other
securities dealers that have entered into selected dealer
agreements with the Distributor will solicit subscriptions for
Common Stock of the Fund during a subscription period that is
scheduled to conclude on April 25, 1997, or on such earlier date
as the Distributor, in its sole discretion, shall determine. On
the third business day after the conclusion of this subscription
period, the subscriptions will be payable, the Common Stock will
be issued and the Fund will commence operations. The public of-
fering price of the Common Stock during the subscription offering
will be $10 per share without a front-end sales charge.
After the completion of the initial subscription offering, the
Fund will engage in a continuous offering of its Common Stock at
a price equal to the next determined net asset value per share
without a front-end sales charge. The minimum initial purchase
during the subscription and continuous offering periods is
$1,000, and the minimum subsequent purchase in the continuous
offering is $100, except that with respect to certain retirement
accounts, the minimum initial purchase is $250. The Fund reserves
the right to waive or modify the initial and subsequent minimum
investment requirements at any time.
The Fund currently intends to offer only shares of Common Stock.
Although the Fund has no present intention to do so, it may in
the future offer shares of preferred stock, subject to the
requirements of the Investment Company Act of 1940, as amended
(the "1940 Act").
Investment Objective and
Policies: The investment objective of the Fund and the Portfolio is to
provide as high a level of current income and preservation of
capital as is consistent with investment in senior secured
corporate loans ("Corporate Loans") and senior secured debt
securities ("Corporate Debt Securities") that meet credit
standards established by the Portfolio's investment manager,
Chancellor LGT Senior Secured Management, Inc. (the "Manager"), a
subsidiary of Chancellor LGT Asset Management, Inc. ("Chancellor
LGT").
The Fund invests all of its investable assets in the Portfolio.
Under normal market conditions, the Portfolio in turn will invest
primarily in Corporate Loans and Corporate Debt Securities made
to or issued by U.S. or non-U.S. companies ("Borrowers"),
including those
</TABLE>
Prospectus Page 3
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
PROSPECTUS SUMMARY
(Continued)
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<TABLE>
<S> <C>
that: (i) have variable rates which adjust to a base rate, such
as the London InterBank Offered Rate ("LIBOR") on set dates,
typically every 30 days but not to exceed one year; and/or (ii)
have interest rates that float at a margin above a generally
recognized base lending rate such as the prime rate ("Prime
Rate") of a designated U.S. bank.
Except during periods pending investment of the net proceeds of
the public offering of the Fund's securities and during temporary
defensive periods when, in the opinion of the Manager, suitable
Corporate Loans and Corporate Debt Securities are not available
for investment by the Portfolio or prevailing market or economic
conditions warrant, the Portfolio will invest at least 80% of its
total assets in Corporate Loans and Corporate Debt Securities.
Under normal conditions, the Portfolio may invest up to 20% of
its total assets in (i) floating rate senior loans made and notes
issued on an unsecured basis to Borrowers that meet the credit
standards established by the Manager ("Unsecured Corporate Loans
and Unsecured Corporate Debt Securities"), (ii) secured or un-
secured short-term debt obligations rated within the four highest
rating categories assigned by a nationally recognized statistical
rating organization ("NRSRO"), or determined to be of comparable
quality by Chancellor LGT, (iii) fixed rate obligations of U.S.
or non-U.S. companies that meet the credit standards established
by Chancellor LGT and that the Portfolio expects to swap to a
floating rate structure, or (iv) cash or cash equivalents.
Obligations rated in the fourth highest rating category assigned
by a NRSRO or determined to be of comparable quality by the
Manager, may include obligations considered to have certain
speculative characteristics.
The Portfolio has no restrictions on portfolio maturity, but it
is anticipated that a majority of the Corporate Loans and
Corporate Debt Securities in which it will invest will have
stated maturities ranging from three to ten years. However,
Corporate Loans and Corporate Debt Securities often require
prepayments from excess cash flow or permit the Borrower to
prepay at its election. The degree to which Borrowers repay
Corporate Loans and Corporate Debt Securities, whether as a con-
tractual requirement or at their election, cannot be predicted
with accuracy. However, it is anticipated that the Portfolio's
Corporate Loans and Corporate Debt Securities will have an
expected average life of three to five years.
In general, the net asset value of the shares of an investment
company that invests primarily in fixed-income securities changes
as the general level of interest rates fluctuates. The Manager
expects the Fund's net asset value to be relatively stable during
normal market conditions because the Portfolio will consist
primarily of floating and variable rate Corporate Loans and
Corporate Debt Securities and to a lesser extent short-term
instruments. For this reason, the Manager expects the value of
the Portfolio to fluctuate less as a result of interest rate
changes than
</TABLE>
Prospectus Page 4
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
PROSPECTUS SUMMARY
(Continued)
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<TABLE>
<S> <C>
would a portfolio of fixed-rate obligations. However, because the
Portfolio's policy is to invest primarily in floating and
variable rate obligations and variable interest rates only reset
periodically, and because the prevailing spreads between LIBOR,
the Prime Rate and other market rates at which Borrowers may
borrow are constantly changing, the Portfolio's, and thus the
Fund's, net asset value may fluctuate from time to time in the
event of an imperfect correlation between the interest rates on
variable rate loans held by the Portfolio and prevailing interest
rates. Also, defaults on Corporate Loans and Corporate Debt
Securities could cause a decline in the Portfolio's and the
Fund's net asset value. The Fund's net asset value also may be
affected by changes in the creditworthiness of Borrowers, and, in
the case of Corporate Loans, in the creditworthiness of Lenders
or Participants interposed between the Portfolio and the
Borrowers. In the event such institutions were to default on
their obligations, the Portfolio might experience a reduction of
both income and the value of its assets.
The Portfolio will invest in a Corporate Loan or Corporate Debt
Security only if, in the Manager's judgment, the Borrower can
meet debt service on such Corporate Loan or Corporate Debt
Security. The Manager will perform its own credit analysis of the
Borrower. The Portfolio will invest only in Unsecured Corporate
Loans and Unsecured Corporate Debt Securities made to Borrowers
that meet the credit standards established by the Manager for
Corporate Loans and Corporate Debt Securities.
A Corporate Loan in which the Portfolio may invest typically is
negotiated and structured by a syndicate of lenders ("Lenders")
consisting of commercial banks, thrift institutions, insurance
companies, finance companies or other financial institutions, one
or more of which administers the Loan on behalf of all the
Lenders (the "Agent Bank"). The investment of the Portfolio in a
Corporate Loan may take the form of participation interests in a
Corporate Loan ("Participation Interests") or assignments of a
Corporate Loan ("Assignments"). Participation Interests may be
acquired from a Lender or other holders of Participation
Interests ("Participants"). If the Portfolio purchases an
Assignment from a Lender, the Portfolio will generally become a
"Lender" for purposes of the relevant loan agreement, with direct
contractual rights thereunder and under any related collateral
security documents in favor of the Lenders. On the other hand, if
the Portfolio purchases a Participation Interest either from a
Lender or a Participant, the Portfolio will not have established
any direct contractual relationship with the Borrower. The
Portfolio would be required to rely on the Lender or the Partici-
pant that sold the Participation Interest not only for the
enforcement of the Portfolio's rights against the Borrower but
also for the receipt and processing of payments due to the
Portfolio under the Corporate Loans. The Portfolio is thus
subject to the credit risk of both the Borrower and a Lender or
Participant who sold the Participation Interest. The Portfolio
will invest in Loans through the purchase of Participation
</TABLE>
Prospectus Page 5
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
PROSPECTUS SUMMARY
(Continued)
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<TABLE>
<S> <C>
Interests only if at the time of investment, the outstanding debt
obligations of the Agent Bank and any Lenders and Participants
interposed between the Portfolio and a Borrower are investment
grade; i.e., rated BBB, A-3 or higher by Standard & Poor's, a
division of The McGraw Hill Companies, Inc. ("Standard &
Poor's"), or Baa, P-3 or higher by Moody's Investors Service,
Inc. ("Moody's"), or, if unrated, deemed by the Manager to be of
equivalent quality. See "Investment Objective and Policies."
Corporate Debt Securities typically are in the form of notes or
bonds issued in a public or private placement in the securities
markets. Corporate Debt Securities will typically have
substantially similar terms to Corporate Loans, but will not be
in the form of Participations or Assignments.
The Corporate Loans and Corporate Debt Securities in which the
Portfolio will invest primarily consist of direct obligations of
a Borrower undertaken to finance the growth of the Borrower's
business internally or externally or to finance a capital
restructuring. It is anticipated that a significant portion of
such Corporate Loans and Corporate Debt Securities may be issued
in highly leveraged transactions such as leveraged buy-out loans,
leveraged recapitalization loans and other types of acquisition
financing. As noted above, the Portfolio may invest in Corporate
Loans and Corporate Debt Securities that are made to non-U.S.
Borrowers, provided that any such Borrower meets the credit
standards established by the Manager for U.S. Borrowers. The
Portfolio similarly may invest in loans to and securities issued
by U.S. Borrowers with significant non-dollar-denominated
revenues, provided that the loans are U.S. dollar-denominated or
otherwise provide for payment in U.S. dollars. In all cases where
the Corporate Loans or Corporate Debt Securities are not
denominated in U.S. dollars, provision will be made for payments
to the Lenders, including the Portfolio, in U.S. dollars pursu-
ant to foreign currency swap arrangements. See "Investment
Objective and Policies." Loans to such non-U.S. Borrowers or U.S.
Borrowers may involve risks not typically involved in domestic
investment, including fluctuation in foreign exchange rates,
future foreign political and economic developments, and the
possible imposition of exchange controls or other foreign or U.S.
governmental laws or restrictions applicable to such loans.
Leverage: Each of the Fund and the Portfolio may borrow money in amounts up
to 33 1/3% of the value of its total assets to finance tender
offers, for temporary, extraordinary or emergency purposes, or,
while neither the Fund nor the Portfolio has any current
intention of doing so, for the purpose of financing additional
investments. See "Tender Offers." The Fund also may issue one or
more series of preferred shares, although it has no present
intention to do so. The Portfolio or Fund, as the case may be,
may borrow to finance additional investments or issue a class of
preferred shares only when it believes that the return that may
be earned on investments purchased with the proceeds of such
borrowings
</TABLE>
Prospectus Page 6
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
PROSPECTUS SUMMARY
(Continued)
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<TABLE>
<S> <C>
or offerings will exceed the costs, including debt service and
dividend obligations, associated therewith. However, to the
extent such costs exceed the return on the additional
investments, the return realized by the Fund's Common
Stockholders will be adversely affected. Leverage also creates
other risks for holders of Common Stock, including the risk of
higher volatility of the net asset value of the Common Stock.
Any issuance of preferred shares by the Fund or any bank
borrowings by the Fund or Portfolio are subject to and will
comply with the requirements of the 1940 Act. Pursuant to the
1940 Act, among other things, the Fund may not issue preferred
shares unless immediately after their issuance the Fund is able
to maintain asset coverage of at least 200%. In the case of bank
borrowings, asset coverage of at least 300% must be maintained.
Investment Manager: Chancellor LGT Senior Secured Management, Inc., a subsidiary of
Chancellor LGT, is the Portfolio's Manager. The Manager is part
of Liechtenstein Global Trust, a provider of global asset
management and private banking products and services to
individual and institutional investors, entrusted as of December
31, 1996, with approximately $84 billion in total assets.
The Manager will determine the investment composition of the
Portfolio, place all orders for the purchase and sale of
securities and for other transactions, and oversee the settlement
of the Portfolio's securities and other transactions. The
Portfolio will pay the Manager monthly investment management and
administrative fees at the annual rate of 0.95% of the
Portfolio's average net assets. See "Management."
The Manager has appointed Chancellor LGT as the investment
sub-adviser with respect to certain of the assets of the
Portfolio. The Manager will pay Chancellor LGT monthly investment
sub-advisory and sub-administrative fees at the annual rate of
0.95% of the Portfolio's average assets delegated to it for
sub-advisory services. See "Management."
Administrator: Chancellor LGT will provide administrative services to the Fund
and the Portfolio. These will include, among other things,
furnishing officers and office space, preparing or assisting in
preparing materials for stockholders and regulatory bodies and
overseeing the provision of accounting services. The Fund will
pay administration fees at the annual rate of 0.25% of the Fund's
average net assets.
Distributions: The Fund intends to distribute substantially all of its net
investment income to holders of Common Stock by declaring
dividends daily and paying them monthly. Substantially all net
capital gains, if any, will be distributed at least annually to
holders of Common Stock. See "Dividends and Other Distributions."
Pursuant to the Fund's Dividend Reinvestment Plan (the "Plan"),
each stockholder will be deemed to have elected, unless the
stockholder instructs otherwise in writing, to have all dividends
and other distributions, net of any applicable withholding taxes,
automatically reinvested in additional shares of Common Stock.
See "Dividend Reinvestment Plan."
</TABLE>
Prospectus Page 7
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
PROSPECTUS SUMMARY
(Continued)
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<TABLE>
<S> <C>
Tender Offers: The Fund's Common Stock will not be listed on any exchange and it
is not currently anticipated that a secondary market will
develop. In view of this, the Board of Directors of the Fund
intends to consider each quarter the making of tender offers
(each, a "Tender Offer") to repurchase all or a portion of the
Common Stock of the Fund from stockholders at a price per share
equal to the net asset value per share of the Common Stock
determined at the close of business on the day an offer
terminates. The Board is under no obligation to authorize the
making of a Tender Offer and no assurance can be given that in
any particular quarter a Tender Offer will be made. Further, the
Fund will not conduct a Tender Offer for Fund shares unless the
Portfolio simultaneously conducts a tender offer for Portfolio
interests. If a Tender Offer is not made, stockholders may be
unable to sell their shares. Shares of Common Stock that have
been held for less than four years and which are repurchased by
the Fund pursuant to Tender Offers will be subject to an early
withdrawal charge of up to 3% of the lesser of the then current
net asset value or the original purchase price of the Common
Stock being tendered. See "Tender Offers" and "Early Withdrawal
Charge."
Special Considerations and
Risk Factors: As a newly organized entity, the Fund has no operating history.
The Fund expects that there will be no secondary market for its
Common Stock. Moreover, GT Global and other selected dealers are
prohibited under applicable law from making a market in the
Fund's Common Stock while the Fund is making either a public
offering of or a tender offer to repurchase its Common Stock. To
the extent a secondary market does develop, however, investors
should be aware that shares of closed-end funds frequently trade
in the secondary market at a discount from their net asset
values. Should there be a secondary market for the Fund's shares
of Common Stock, the market price of the shares may vary from net
asset value from time to time.
Because of the lack of a secondary market and the early
withdrawal charge, the Fund is designed primarily for long-term
investors and should not be considered a vehicle for trading
purposes.
The Fund seeks to achieve its objective by investing all of its
investable assets in the Portfolio, a separate, non-diversified,
closed-end investment company that has the same investment
objective as the Fund. As this structure is different from many
other investment companies that directly acquire and manage their
own portfolios, investors should carefully consider this
investment approach.
Each of the Fund and the Portfolio has registered as a
"non-diversified" investment company so that it will be able to
invest more than 5% of its assets in the obligations of any
single issuer, subject to the diversification requirements of
Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"), applicable to the Fund. Since the Portfolio may
invest a relatively high percentage of its assets in the obliga-
tions of a limited number of issuers, the Fund may be more
susceptible
</TABLE>
Prospectus Page 8
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
than a more widely diversified fund to any single economic,
political or regulatory occurrence. However, the Portfolio has no
current intention of investing more than 15% of its assets in the
obligations of any single Borrower.
Although the Portfolio may, consistent with its fundamental
limitations, invest up to 25% of its total assets in the
obligations of Borrowers in any single industry, the Manager has
no current intention of investing more than 20% of the
Portfolio's assets in the obligations of Borrowers in any single
industry. However, because the Fund and the Portfolio will regard
the issuer of a Corporate Loan as including the Agent Bank and
any Intermediate Participant as well as the Borrower, the
Portfolio may be deemed to be concentrated in securities of
issuers in the industry group consisting of financial
institutions and their holding companies, including commercial
banks, thrift institutions, insurance companies and finance
companies. As a result, the Portfolio is subject to certain risks
associated with such institutions, including, among other things,
changes in governmental regulation, interest rate levels and
general economic conditions. See "Investment Objective and
Policies -- Description of Participation Interests and
Assignments" and "Investment Restrictions."
The Portfolio may invest all or substantially all of its assets
in Corporate Loans, Corporate Debt Securities or other securities
that are rated below investment grade by Moody's, comparably
rated by another NRSRO, or, if unrated, deemed by the Manager to
be of equivalent quality. However, the Manager does not expect to
invest in any securities rated lower than B3 at the time of
investment. Instruments rated below investment grade by Moody's
are regarded as predominantly speculative with respect to the
issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligation. Lower quality
instruments are also generally considered to be subject to
greater risk than higher quality instruments with regard to a
deterioration of general economic conditions.
The Corporate Loans, Corporate Debt Securities and other debt
obligations in which the Portfolio may invest are subject to the
risk of nonpayment of scheduled interest or principal payments.
In the event that a nonpayment occurs, the Portfolio may
experience a decline in the value of the debt obligations,
resulting in a decline in the net asset value of the Fund's
shares of Common Stock. There is no assurance that the
liquidation of collateral underlying Corporate Loans and Cor-
porate Debt Securities will satisfy the related Borrowers'
obligations in the event of nonpayment of scheduled interest or
principal, or that the collateral could be readily resold.
Corporate Loans and Corporate Debt Securities made in connection
with highly leveraged transactions are subject to greater credit
risks than other Corporate Loans and Corporate Debt Securities in
which the Portfolio may invest. These credit risks include a
greater possibility of default or bankruptcy of the Borrower and
the assertion that the
</TABLE>
Prospectus Page 9
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
pledging of collateral to secure the loan constituted a
fraudulent conveyance or preferential transfer that can be
nullified or subordinated to the rights of other creditors of the
Borrower under applicable law. Highly leveraged Corporate Loans
and Corporate Debt Securities also may be less liquid than other
Corporate Loans and Corporate Debt Securities.
Generally, changes in interest rates may affect the market value
of debt investments, resulting in changes in the net asset value
of the shares of funds investing in such investments. It is
expected, however, that a portfolio consisting primarily of
floating and variable rate Corporate Loans, Corporate Debt
Securities, Unsecured Corporate Loans, Unsecured Corporate Debt
Securities, and short-term instruments will experience less
significant fluctuations in value as a result of interest rate
changes than would a portfolio of fixed rate obligations.
However, prepayments of principal by Borrowers (whether as a
result of a decline in interest rates or excess cash flow) may
require that the Portfolio replace its Corporate Loan, Corporate
Debt Security or other investment with a lower yielding security,
which may adversely affect the net asset value of the Portfolio.
Some or all of the Corporate Loans and Corporate Debt Securities
in which the Portfolio may invest will be considered to be
illiquid, which may impair the Portfolio's ability to realize the
full value of its assets in the event of a voluntary or
involuntary liquidation of such assets. To the extent that such
investments are illiquid, the Portfolio may have difficulty
disposing of portfolio securities and the Fund may in turn have
difficulty repurchasing shares of its Common Stock pursuant to
Tender Offers, if any. The Board of Directors of the Fund will
consider the liquidity of the Portfolio's securities in
determining whether a Tender Offer should be made by the Fund
and, if so, for what percentage of the Fund's outstanding shares
the Tender Offer should be made. See "Net Asset Value" for
information with respect to the valuation of illiquid Corporate
Loans.
The Fund's Articles of Incorporation include provisions that
could have the effect of limiting the ability of other entities
or persons to acquire control of the Fund or to change the
composition of its Board of Directors and could have the effect
of depriving holders of Common Stock of an opportunity to sell
their shares at a premium over prevailing market prices by
discouraging a third party from seeking to obtain control of the
Fund. See "Description of Capital Stock -- Certain Anti-Takeover
Provisions of the Articles of Incorporation."
</TABLE>
Prospectus Page 10
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
FUND EXPENSES
- --------------------------------------------------------------------------------
The following tables are intended to assist investors in understanding the
various costs and expenses that an investor in the Fund will bear, directly or
indirectly.
<TABLE>
<CAPTION>
STOCKHOLDER TRANSACTION EXPENSES
<S> <C>
Sales Load (as a percentage of offering price)................................................................. None
Dividend Reinvestment Plan Fees................................................................................ None
Maximum Early Withdrawal Charge (1)............................................................................ 3%
ANNUAL FUND AND ALLOCATED PORTFOLIO OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS ATTRIBUTABLE TO COMMON STOCK) (2)
Investment Management and Administrative Fee................................................................... 0.95%
Administrative Fee (3)......................................................................................... 0.25%
Other Expenses (after reimbursement) (4)....................................................................... 0.30%
---------
Total Annual Operating Expenses (after reimbursement).......................................................... 1.50%
---------
---------
</TABLE>
- --------------
(1) Calculated based on the lesser of the then current net asset value or the
original price of the shares being tendered. The maximum early withdrawal
charge applies to shares sold to the Fund pursuant to a Tender Offer during
the first year after purchase; the early withdrawal charge declines annually
thereafter, reaching zero after four years. See "Early Withdrawal Charge."
(2) See "Management" for additional information. "Other Expenses" have been
estimated for the current fiscal year.
(3) See "Management" for additional information.
(4) Because the Fund has no operating history, "Other Expenses," which include
transfer agency, custodial, audit and legal fees, are estimated, and reflect
the commitment of the Manager and Chancellor LGT during the first year of
operations to reimburse Fund expenses over 1.50% annually. Without such
reimbursement, "Other Expenses" and "Total Annual Operating Expenses" would
be estimated to be 0.45% and 1.65%, respectively, for the first year of
operations. See "Management."
EXAMPLE
The following Example demonstrates the projected dollar amount of total
cumulative expense that would be incurred over various periods with respect to a
hypothetical investment in the Fund. These amounts are based upon payment by the
Fund and the Portfolio of operating expenses at the levels set forth in the
above table.
An investor would directly or indirectly pay the following expenses of a $1,000
investment in the Fund, assuming (i) a 5% annual return and (ii) reinvestment of
all dividends and other distributions at net asset value:
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
------------- --------------- ------------- -----------
<S> <C> <C> <C> <C>
Assuming no tender of Common Stock.................................... $ 16 $ 50 $ 87 $ 198
Assuming tender and repurchase of Common Stock on last day of period
and imposition of maximum applicable Early Withdrawal Charge......... $ 47 $ 73 $ 100 $ 198
</TABLE>
This Example assumes that the percentage amounts listed under Total Annual
Operating Expenses remain the same in the years shown, except, as to "Ten
Years," for the completion of organizational expense amortization over a five
year period. The above tables and the assumption in the Example of a 5% annual
return and reinvestment at net asset value are required by regulation of the
Securities and Exchange Commission applicable to all closed-end investment
companies; the assumed 5% annual return is not a prediction of, and does not
represent, the projected or actual performance of the Common Stock. Actual
expenses and annual rates of return may be more or less than those assumed for
purposes of the Example. In addition, although the Example assumes reinvestment
of all dividends and other distributions at net asset value, participants in the
Plan may receive shares of the Common Stock obtained at or based on the market
price in effect at the time, which may be at, above or below net asset value.
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES, AND
THE FUND'S AND THE PORTFOLIO'S ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE
SHOWN.
Prospectus Page 11
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
THE FUND
- --------------------------------------------------------------------------------
The Fund is a newly organized, continuously offered, non-diversified, closed-end
management investment company. The Fund was incorporated under the laws of the
State of Maryland on December 4, 1996 and has registered under the 1940 Act. The
Fund's principal office is located at 50 California Street, 27th Floor, San
Francisco, California 94111, and its telephone number is (415) 392-6181.
- --------------------------------------------------------------------------------
USE OF PROCEEDS
- --------------------------------------------------------------------------------
The net proceeds from the sale of the Common Stock offered hereby will be
invested in the Portfolio, a separate closed-end, non-diversified management
investment company with the same investment objective as the Fund. The Portfolio
will invest the Fund's net proceeds in accordance with the Fund's and the
Portfolio's investment objective and policies within approximately six months
after completion of the offering of Common Stock, depending on the availability
of Corporate Loans and Corporate Debt Securities and other relevant conditions.
Pending such investment, it is anticipated that the proceeds will be invested in
short-term debt obligations or instruments. See "Investment Objective and
Policies."
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------
The Fund's and the Portfolio's investment objective is to provide as high a
level of current income and preservation of capital as is consistent with
investment in senior secured Corporate Loans and Corporate Debt Securities that
meet credit standards established by the Manager. This is a fundamental policy
of the Fund and may not be changed without a vote of a majority of the
outstanding shares of the Fund. There can be no assurance that the investment
objective of the Fund will be achieved.
All of the Fund's assets will be invested in the Portfolio. Under normal market
conditions, the Portfolio will invest at least 80% of its total assets in
interests in Corporate Loans and Corporate Debt Securities made to or issued by
Borrowers (which may include U.S. and non-U.S. companies), including those that:
(i) have variable rates which adjust to a base rate, such as the LIBOR on set
dates, typically every 30 days but not to exceed one year; and/or (ii) have
interest rates that float at a margin above a generally recognized base lending
rate such as the Prime Rate of a designated U.S. bank. The Portfolio may invest
up to 20% of its total assets in any of the following: (a) floating rate senior
loans made and notes issued on an unsecured basis to Borrowers that meet the
credit standards established by the Manager ("Unsecured Corporate Loans" and
"Unsecured Corporate Debt Securities"); (b) secured or unsecured short-term debt
obligations including, but not limited to, U.S. Government and Government agency
securities (some of which may not be backed by the full faith and credit of the
United States), money market instruments (such as certificates of deposit and
bankers' acceptances), corporate and commercial obligations (such as commercial
paper and medium-term notes) and
Prospectus Page 12
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
repurchase agreements, none of which are required to be secured but all of which
will be (or counterparties associated therewith will be) investment grade (i.e.,
rated Baa, P-3 or higher by Moody's or BBB, A-3 or higher by Standard & Poor's
or, if unrated, determined to be of comparable quality in the judgment of
Chancellor LGT); (c) fixed rate obligations of U.S. or non-U.S. companies that
meet the credit standards established by Chancellor LGT and that the Portfolio
expects to swap for a floating rate structure; or (d) cash or cash equivalents.
Securities rated Baa, BBB, P-3 or A-3 are considered to have adequate capacity
for payment of principal and interest, but are more susceptible to adverse
economic conditions and, in the case of securities rated BBB or Baa (or
comparable unrated securities), have speculative characteristics. Such
securities or cash will not exceed 20% of the Portfolio's total assets except
(i) during interim periods pending investment of the net proceeds of public
offerings of the Fund's securities, (ii) pending reinvestment of proceeds of the
sale of a security, and (iii) during temporary defensive periods when, in the
opinion of the Manager, suitable Corporate Loans and Corporate Debt Securities
are not available for investment by the Portfolio or prevailing market or
economic conditions warrant. Investments in Unsecured Corporate Loans and
Unsecured Corporate Debt Securities will be made on the same basis as
investments in Corporate Loans and Corporate Debt Securities as described
herein, except with respect to collateral requirements. To a limited extent,
incidental to and in connection with its lending activities, the Portfolio also
may acquire warrants and other equity securities.
The Portfolio has no restrictions on portfolio maturity, but it is anticipated
that a majority of the Corporate Loans and Corporate Debt Securities in which it
will invest will have stated maturities ranging from three to ten years.
However, Corporate Loans usually will require, in addition to scheduled payments
of interest and principal, the prepayment of the Corporate Loan from excess cash
flow, as discussed above, and may permit the Borrower to prepay at its election.
The degree to which Borrowers prepay Corporate Loans, whether as a contractual
requirement or at their election, cannot be predicted with accuracy, and may be
affected by general business conditions, the financial condition of the Borrower
and competitive conditions among lenders, among other factors. However, it is
anticipated that the Portfolio's Corporate Loans and Corporate Debt Securities
will have an expected average life of three to five years. See "Description of
Corporate Loans and Corporate Debt Securities."
Investment in shares of Common Stock of the Fund offers several benefits. The
Fund offers investors the opportunity to receive a high level of current income
by investing in a professionally managed portfolio comprised primarily of
Corporate Loans, a type of investment typically not available directly to
individual investors. In managing the Portfolio, the Manager provides the
Portfolio, the Fund and its stockholders with professional credit analysis and
portfolio diversification. The Fund also relieves the investor of the burdensome
administrative details involved in managing a portfolio of such investments, if
available to individual investors. The benefits are at least partially offset by
the expenses involved in operating an investment company. Such expenses
primarily consist of the management and administrative fees and operations
costs.
Generally, the net asset value of the shares of an investment company which
invests primarily in fixed-income securities changes as the general levels of
interest rates fluctuate. When interest rates decline, the value of a
fixed-income portfolio can be expected to decline. The Manager expects the
Fund's net asset value to be relatively stable during normal market conditions,
because the Portfolio in which the Fund's assets are invested will consist
primarily of floating and variable rate Corporate Loans and Corporate Debt
Securities, of fixed rate Corporate Loans and Corporate Debt Securities hedged
by interest rate swap transactions and of short-term instruments. For these
reasons, the Manager expects the value of the Portfolio to fluctuate
significantly less as a result of interest rate changes than would a portfolio
of fixed-rate obligations. However, because variable interest rates only reset
periodically, the Fund's net asset value may fluctuate from time to time in the
event of an imperfect correlation between either the interest rates on variable
rate loans in the Portfolio or the variable interest rates on nominal amounts in
the Portfolio's interest rate swap transactions, and prevailing interest rates.
Also, a default on a Corporate Loan or Corporate Security in which the Portfolio
has invested or a sudden and extreme increase in prevailing interest rates may
cause a decline in the Fund's net asset value. Conversely, a sudden and extreme
decline in interest rates could result in an increase in the Fund's net asset
value.
Each of the Fund and the Portfolio is classified as non-diversified within the
meaning of the 1940
Prospectus Page 13
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
Act, which means that neither the Fund nor the Portfolio is limited by such Act
in the proportion of its assets that it may invest in securities of a single
issuer. However, the Portfolio's investments will be limited so as to enable the
Fund to qualify as a "regulated investment company" ("RIC") for purposes of the
Code. Accordingly, the Portfolio will limit its investments so that, at the
close of each quarter of its taxable year, (i) not more than 25% of the value of
its total assets will be invested in the securities (including Corporate Loans
but excluding Government securities) of a single issuer and (ii) with respect to
50% of the value of its total assets, its investments will consist of cash, U.S.
Government securities and securities of other issuers limited, in respect of any
one issuer to not more than 5% of the value of its total assets and not more
than 10% of the issuer's outstanding voting securities. To the extent the
Portfolio assumes large positions in the securities of a small number of
issuers, the Fund's yield may fluctuate to a greater extent than that of a
diversified company as a result of changes in the financial condition or in the
market's assessment of the issuers. However, the Portfolio has no current
intention of investing more than 15% of its assets in the obligations of any
single Borrower.
DESCRIPTION OF CORPORATE LOANS AND
CORPORATE DEBT SECURITIES
The Corporate Loans and Corporate Debt Securities in which the Portfolio invests
primarily consist of obligations of a Borrower undertaken to finance the growth
of the Borrower's business internally or externally, or to finance a capital
restructuring. Corporate Loan and Corporate Debt Securities may also include
senior obligations of a Borrower issued in connection with a restructuring
pursuant to Chapter 11 of the United States Bankruptcy Code provided that such
senior obligations meet the credit standards established by the Manager. It is
anticipated that a significant portion of such Corporate Loans and Corporate
Debt Securities may be issued in highly leveraged transactions such as leveraged
buy-out loans, leveraged recapitalization loans and other types of acquisition
financing. Such Corporate Loans and Corporate Debt Securities present special
risks. See "Special Considerations and Risk Factors." Such Corporate Loans may
be structured to include both term loans, which are generally fully funded at
the time of the Portfolio's investment, and revolving credit facilities, which
would require the Portfolio to make additional investments in the Corporate
Loans as required under the terms of the credit facility. Such Corporate Loans
may also include receivables purchase facilities, which are similar to revolving
credit facilities secured by a Borrower's receivables.
The Portfolio may invest in Corporate Loans and Corporate Debt Securities which
are made to non-U.S. Borrowers, provided that the loans are U.S.
dollar-denominated or otherwise provide for payment in U.S. dollars, and any
such Borrower meets the credit standards established by the Manager for U.S.
Borrowers. The Portfolio similarly may invest in Corporate Loans and Corporate
Debt Securities made to U.S. Borrowers with significant non-U.S.
dollar-denominated revenues, provided that the loans are U.S. dollar-denominated
or otherwise provide for payment to the Portfolio in U.S. dollars. In all cases
where the Corporate Loans or Corporate Debt Securities are not denominated in
U.S. dollars, provision will be made for payments to the Lenders, including the
Portfolio, in U.S. dollars pursuant to foreign currency swap arrangements. Loans
to such non-U.S. Borrowers or U.S. Borrowers may involve risks not typically
involved in domestic investment, including fluctuation in foreign exchange
rates, future foreign political and economic developments, and the possible
imposition of exchange controls or other foreign or U.S. governmental laws or
restrictions applicable to such loans. With respect to certain foreign
countries, there is the possibility of expropriation or confiscatory taxation,
political or social instability, or diplomatic developments which could affect
the Portfolio's investments in those countries. Moreover, individual foreign
economies may differ favorably or unfavorably from the U.S. economy in such
respects as growth of gross domestic product, rate of inflation, capital
reinvestment, resource self-sufficiency and balance of payment position. In
addition, information with respect to non-U.S. Borrowers may differ from that
available with respect to U.S. Borrowers, since foreign companies are not
generally subject to uniform accounting, auditing and financial reporting
standards, practices and requirements comparable to those applicable to U.S.
Borrowers.
The Corporate Loans and Corporate Debt Securities in which the Portfolio invests
will, in most instances, hold the most senior position in the capitalization
structure of the Borrower, and in any case will, in the judgment of the Manager,
be in the category of senior debt of the Borrower. Each Corporate Loan and
Corporate Debt Security will generally be secured by collateral the value of
which
Prospectus Page 14
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
generally will be determined by reference to financial statements of the
Borrower, by an independent appraisal, by obtaining the market value of such
collateral (e.g., cash or securities) if it is readily ascertainable and/or by
other customary valuation techniques considered appropriate in the judgment of
the Manager. The Manager generally expects the value of the collateral securing
a Corporate Loan or Corporate Debt Security to be greater than the value of such
Corporate Loan or Corporate Debt Security. However, the value of such collateral
may be equal to or less than the value of the Corporate Loan or Corporate Debt
Security that it secures. Accordingly, in the event of a default, the Fund may
incur a loss. The ability of the Lender to have access to the collateral may be
limited by bankruptcy and other insolvency laws. Under certain circumstances,
the collateral may be released with the consent of the Agent Bank and Lenders or
pursuant to the terms of the underlying credit agreement with the Borrower or
bond indenture. There is no assurance that the liquidation of the collateral
would satisfy the Borrower's obligation in the event of nonpayment of scheduled
interest or principal, or that the collateral could be readily liquidated. As a
result, the Portfolio might not receive payments to which it is entitled and
thereby may experience a decline in the value of the investment and, possibly,
its net asset value.
In the case of highly leveraged loans, a Borrower generally is required to
pledge collateral which may include (i) working capital assets, such as accounts
receivable or inventory, (ii) tangible fixed assets, such as real property,
buildings and equipment, (iii) intangible assets, such as trademarks, copyrights
and patent rights and (iv) security interests in securities of subsidiaries or
affiliates. In the case of Corporate Loans to or Corporate Debt Securities of
privately held companies, the companies' owners may pledge additional security
in the form of guarantees and/or other securities that they own. There may be
temporary periods in the course of providing financing to a Borrower where the
collateral for the loan consists of common stock having a value not less than
200% of the value of the loan on the date the loan is made. Under such
circumstances, the Borrower generally proceeds with a subsequent transaction
which will permit it to pledge assets of a company as collateral for the loan,
although there can be no assurance that the Borrower will be able to effect such
transaction.
The rate of interest payable on floating or variable rate Corporate Loans or
Corporate Debt Securities is established as the sum of a base lending rate plus
a specified margin. These base lending rates generally are LIBOR, the Prime Rate
of a designated U.S. bank, or another base lending rate used by commercial
lenders. The interest rate on Prime Rate-based Corporate Loans and Corporate
Debt Securities floats daily as the Prime Rate changes, while the interest rate
on LIBOR-based Corporate Loans and Corporate Debt Securities is reset
periodically, typically every 30 days to one year. Certain of the floating or
variable rate Corporate Loans and Corporate Debt Securities in which the
Portfolio will invest may permit the Borrower to select an interest rate reset
period of up to one year. A portion of the Portfolio's investments may consist
of Corporate Loans with interest rates that are fixed for the term of the loan.
Investment in Corporate Loans and Corporate Debt Securities with longer interest
rate reset periods or fixed interest rates may increase fluctuations in the
Fund's net asset value as a result of changes in interest rates. However the
Fund will attempt to hedge all of its fixed-rate Corporate Loans and Corporate
Debt Securities against fluctuations in interest rates by entering into interest
rate swap transactions. The Portfolio also will attempt to maintain a portfolio
of Corporate Loans and Corporate Debt Securities that will have a dollar
weighted average period to the next interest rate adjustment of no more than 90
days.
Corporate Loans and Corporate Debt Securities traditionally have been structured
so that Borrowers pay higher margins when they elect LIBOR, in order to permit
lenders to obtain generally consistent yields on Corporate Loans and Corporate
Debt Securities, regardless of whether Borrowers select the LIBOR option, or the
Prime-based option. In recent years, however, the differential between the lower
LIBOR base rates and the higher Prime Rate base rates prevailing in the
commercial bank markets has widened to the point where the higher margins paid
by Borrowers for LIBOR pricing options do not currently compensate for the
differential between the Prime Rate and the LIBOR rates. Consequently, Borrowers
have increasingly selected the LIBOR-based pricing option, resulting in a yield
on Corporate Loans and Corporate Debt Securities that is consistently lower than
the yield would be if Borrowers selected the Prime Rate-based pricing option.
This trend will significantly limit the ability of the Fund to achieve a net
return to stockholders that consistently approximates the average published
prime rate of leading U.S. banks. At the date of this Prospectus, the Manager
cannot predict any significant change in this market trend.
Prospectus Page 15
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
The Portfolio may receive and/or pay certain fees in connection with its lending
activities. These fees are in addition to interest payments received and may
include facility fees, commitment fees, commissions and prepayment penalty fees.
When the Portfolio buys a Corporate Loan or Corporate Debt Security it may
receive a facility fee and when it sells a Corporate Loan or Corporate Debt
Security may pay a facility fee. In certain circumstances, the Portfolio may
receive a prepayment penalty fee on the prepayment of a Corporate Loan or
Corporate Debt Security by a Borrower. In connection with the acquisition of
Corporate Loans or Corporate Debt Securities, the Portfolio may also acquire
warrants and other equity securities of the Borrower or its affiliates. The
acquisition of such equity securities will only be incidental to the Portfolio's
purchase of a Corporate Debt Security or an interest in a Corporate Loan.
The Portfolio will invest in a Corporate Loan or Corporate Debt Security only
if, in the Manager's judgment, the Borrower can meet debt service on such loan
or security. In addition, the Manager will consider other factors deemed by it
to be appropriate to the analysis of the Borrower and the Corporate Loan or
Corporate Debt Security. Such factors include financial ratios of the Borrower
such as interest coverage, fixed charge coverage and leverage ratios. In its
analysis of these factors, the Manager also will be influenced by the nature of
the industry in which the Borrower is engaged, the nature of the Borrower's
assets and the Manager's assessment of the general quality of the Borrower. The
factors utilized have been reviewed by the Portfolio's Board of Trustees.
The primary consideration in selecting such Corporate Loans and Corporate Debt
Securities for investment by the Portfolio is the creditworthiness of the
Borrower. In evaluating Corporate Loans and Corporate Debt Securities, the
quality ratings assigned to other debt obligations of a Borrower may not be a
determining factor, since they will often be subordinated to the Corporate Loans
or Corporate Debt Securities. Instead, the Manager will perform its own
independent credit analysis of the Borrower, and of the collateral structure for
the loan or security. In making this analysis, the Manager will utilize any
offering materials and in the case of Corporate Loans, information prepared and
supplied by the Agent Bank, Lender or Participant from whom the Portfolio
purchases its Participation Interest in a Corporate Loan. The Manager's analysis
will continue on an ongoing basis for any Corporate Loans and Corporate Debt
Securities in which the Portfolio has invested. Although the Manager will use
due care in making such analysis, there can be no assurance that such analysis
will disclose factors which may impair the value of the Corporate Loan or
Corporate Debt Security.
Corporate Loans and Corporate Debt Securities made in connection with highly
leveraged transactions are subject to greater credit risks than other Corporate
Loans and Corporate Debt Securities in which the Portfolio may invest. These
credit risks include a greater possibility of default or bankruptcy of the
Borrower and the assertion that the pledging of collateral to secure the loan
constituted a fraudulent conveyance or preferential transfer which can be
nullified or subordinated to the rights of other creditors of the Borrower under
applicable law. Highly leveraged Corporate Loans and Corporate Debt Securities
also may be less liquid than other Corporate Loans and Corporate Debt
Securities.
A Borrower also must comply with various restrictive covenants contained in any
Corporate Loan agreement between the Borrower and the lending syndicate
("Corporate Loan Agreement") or in any trust indenture or comparable document in
connection with a Corporate Debt Security ("Corporate Debt Security Document").
Such covenants, in addition to requiring the scheduled payment of interest and
principal, may include restrictions on dividend payments and other distributions
to stockholders, provisions requiring the Borrower to maintain specific
financial ratios or relationships and limits on total debt. In addition, the
Corporate Loan Agreement or Corporate Debt Security Document may contain a
covenant requiring the Borrower to prepay the Corporate Loan or Corporate Debt
Security with any excess cash flow. Excess cash flow generally includes net cash
flow after scheduled debt service payments and permitted capital expenditures,
among other things, as well as the proceeds from asset dispositions or sales of
securities. A breach of a covenant (after giving effect to any cure period) in a
Corporate Loan Agreement which is not waived by the Agent Bank and the lending
syndicate normally is an event of acceleration; i.e., the Agent Bank has the
right to demand immediate repayment in full of the outstanding Corporate Loan.
Acceleration may also occur in the case of the breach of a covenant in a
Corporate Debt Security Document.
Prospectus Page 16
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
It is expected that a majority of the Corporate Loans and Corporate Debt
Securities held by the Portfolio will have stated maturities ranging from three
to ten years. However, such Corporate Loans and Corporate Debt Securities
usually will require, in addition to scheduled payments of interest and
principal, the prepayment of the Corporate Loan or Corporate Debt Security from
excess cash flow, as discussed above, and may permit the Borrower to prepay at
its election. The degree to which Borrowers prepay Corporate Loans and Corporate
Debt Securities, whether as a contractual requirement or at their election, may
be affected by general business conditions, the financial condition of the
Borrower and competitive conditions among lenders, among other factors.
Accordingly, prepayments cannot be predicted with accuracy. Upon a prepayment,
the Portfolio may receive both a prepayment penalty fee from the prepaying
Borrower and a facility fee on the purchase of a new Corporate Loan or Corporate
Debt Security with the proceeds from the prepayment of the former. Such fees may
help mitigate any adverse impact on the yield on the Portfolio's investments
which may arise as a result of prepayments and the reinvestment of such proceeds
in Corporate Loans or Corporate Debt Securities bearing lower interest rates.
Loans to non-U.S. Borrowers and to U.S. Borrowers with significant non-U.S.
dollar-denominated revenues may provide for conversion of all or part of the
loan from a U.S. dollar-denominated obligation into a foreign currency
obligation at the option of the Borrower. The Portfolio may invest in Corporate
Loans and Corporate Debt Securities which have been converted into non-U.S.
dollar-denominated obligations only when provision is made for payments to the
lenders in U.S. dollars pursuant to foreign currency swap arrangements. Foreign
currency swaps involve the exchange by the lenders, including the Portfolio,
with another party (the "counterparty") of the right to receive the currency in
which the loans are denominated for the right to receive U.S. dollars. The
Portfolio will enter into a transaction subject to a foreign currency swap only
if, at the time of entering into such swap, the outstanding debt obligations of
the counterparty are investment grade, i.e., rated BBB or A-3 or higher by
Standard & Poor's or Baa or P-3 or higher by Moody's or determined to be of
comparable quality in the judgment of the Manager. The amounts of U.S. dollar
payments to be received by the lenders and the foreign currency payments to be
received by the counterparty are fixed at the time the swap arrangement is
entered into. Accordingly, the swap protects the Portfolio from the fluctuations
in exchange rates and locks in the right to receive payments under the loan in a
predetermined amount of U.S. dollars. If there is a default by the counterparty,
the Portfolio will have contractual remedies pursuant to the swap arrangements;
however, the U.S. dollar value of the Portfolio's right to foreign currency
payments under the loan will be subject to fluctuations in the applicable
exchange rate to the extent that a replacement swap arrangement is unavailable
or the Portfolio is unable to recover damages from the defaulting counterparty.
If the Borrower defaults on or prepays the underlying Corporate Loan or
Corporate Debt Security, the Portfolio may be required pursuant to the swap
arrangements to compensate the counterparty to the extent of fluctuations in
exchange rates adverse to the counterparty. In the event of such a default or
prepayment, an amount of cash or high grade liquid debt securities having an
aggregate net asset value at least equal to the amount of compensation that must
be paid to the counterparty pursuant to the swap arrangements will be maintained
in a segregated account by the Portfolio's custodian.
DESCRIPTION OF PARTICIPATION INTERESTS AND ASSIGNMENTS
A Corporate Loan in which the Portfolio may invest typically is originated,
negotiated and structured by a syndicate of Lenders consisting of commercial
banks, thrift institutions, insurance companies, finance companies or other
financial institutions, which is administered on behalf of the syndicate by an
Agent Bank. The investment of the Portfolio in a Corporate Loan may take the
form of Participation Interests or Assignments. Participation Interests may be
acquired from a Lender or other Participants. If the Portfolio purchases a
Participation Interest either from a Lender or a Participant, the Portfolio will
not have established any direct contractual relationship with the Borrower. The
Portfolio would be required to rely on the Lender or the Participant that sold
the Participation Interest not only for the enforcement of the Portfolio's
rights against the Borrower but also for the receipt and processing of payments
due to the Portfolio under the Corporate Loans. The Portfolio is thus subject to
the credit risk of both the Borrower and a Participant. Lenders and Participants
interposed between the Portfolio and a Borrower, together with Agent Banks, are
referred to herein as "Intermediate Participants."
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GT GLOBAL FLOATING RATE FUND, INC.
On the other hand, if the Portfolio purchases an Assignment from a Lender, the
Portfolio will generally become a "Lender" for purposes of the relevant loan
agreement, with direct contractual rights thereunder and under any related
collateral security documents in favor of the Lenders. An Assignment from a
Lender gives the Portfolio the right to receive payments of principal and
interest and other amount directly from the Borrower and to enforce its rights
as a Lender directly against the Borrower. The Portfolio will not act as an
Agent Bank guarantor, sole negotiator or sole structuror with respect to a
Corporate Loan.
Because it may be necessary to assert through an Intermediate Participant such
rights as may exist against the Borrower, in the event the Borrower fails to pay
principal and interest when due, the Portfolio may be subject to delays,
expenses and risks that are greater than those that would be involved if the
Portfolio could enforce its rights directly against the Borrower. Moreover,
under the terms of a Participation, the Portfolio may be regarded as a creditor
of the Intermediate Participant (rather than of the Borrower), so that the
Portfolio may also be subject to the risk that the Intermediate Participant may
become insolvent. Similar risks may arise with respect to the Agent Bank, as
described below. Further, in the event of the bankruptcy or insolvency of the
Borrower, the obligation of the Borrower to repay the Corporate Loan may be
subject to certain defenses that can be asserted by such Borrower as a result of
improper conduct by the Agent Bank or Intermediate Participant. The Portfolio
will invest in Corporate Loans only if, at the time of investment, all
outstanding debt obligations of the Agent Bank and Intermediate Participants are
investment grade, i.e., rated BBB or A-3 or higher by Standard & Poor's or Baa
or P-3 or higher by Moody's or determined to be of comparable quality in the
judgment of the Manager.
The Portfolio has no current intention of investing more than 20% of its assets
in the obligations of Borrowers in any single industry. However, because the
Fund and the Portfolio will regard the issuer of a Corporate Loan as including
the Agent Bank and any Intermediate Participant as well as the Borrower, the
Portfolio may be deemed to be concentrated in securities of issuers in the
industry group consisting of financial institutions and their holding companies,
including commercial banks, thrift institutions, insurance companies and finance
companies. As a result, the Portfolio is subject to certain risks associated
with such institutions. Banking and thrift institutions are subject to extensive
governmental regulations which may limit both the amounts and types of loans and
other financial commitments which such institutions may make and the interest
rates and fees which such institutions may charge. The profitability of these
institutions is largely dependent on the availability and cost of capital funds,
and has shown significant recent fluctuation as a result of volatile interest
rate levels. In addition, general economic conditions are important to the
operations of these institutions, with exposure to credit losses resulting from
possible financial difficulties of borrowers potentially having an adverse
effect. Insurance companies are also affected by economic and financial
conditions and are subject to extensive government regulation, including rate
regulation. The property and casualty companies may be exposed to material
risks, including reserve inadequacy, latent health exposure and inability to
collect from their reinsurance carriers. The financial services area is
currently undergoing relatively rapid change as existing distinctions between
financial service segments become less clear. In this regard, recent business
combinations have included insurance, finance and securities brokerage under
single ownership. Moreover, the federal laws generally separating commercial and
investment banking are currently being studied by Congress.
In a typical Corporate Loan, the Agent Bank administers the terms of the
Corporate Loan Agreement and is responsible for the collection of principal and
interest and fee payments from the Borrower and the apportionment of these
payments to the credit of all lenders which are parties to the Corporate Loan
Agreement. The Portfolio generally will rely on the Agent Bank or an
Intermediate Participant to collect its portion of the payments on the Corporate
Loan. Furthermore, the Portfolio will rely on the Agent Bank to use appropriate
creditor remedies against the Borrower. Typically, under Corporate Loan
Agreements, the Agent Bank is given broad discretion in enforcing the Corporate
Loan Agreement, and is obligated to use only the same care it would use in the
management of its own property. The Borrower compensates the Agent Bank for
these services. Such compensation may include special fees paid on structuring
and funding the Corporate Loan and other fees paid on a continuing basis.
In the event that an Agent Bank becomes insolvent, or has a receiver,
conservator, or similar official
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GT GLOBAL FLOATING RATE FUND, INC.
appointed for it by the appropriate bank regulatory authority or becomes a
debtor in a bankruptcy proceeding, assets held by the Agent Bank under the
Corporate Loan Agreement should remain available to holders of Corporate Loans.
If, however, assets held by the Agent Bank for the benefit of the Portfolio were
determined by an appropriate regulatory authority or court to be subject to the
claims of the Agent Bank's general or secured creditors, the Portfolio might
incur certain costs and delays in realizing payment on a Corporate Loan or
suffer a loss of principal and/or interest. In situations involving Intermediate
Participants, similar risks may arise as described above.
Intermediate Participants may have certain obligations pursuant to a Corporate
Loan Agreement, which may include the obligation to make future advances to the
Borrower in connection with revolving credit facilities in certain
circumstances. The Portfolio currently intends to reserve against such
contingent obligations by segregating sufficient investments in high quality,
short-term, liquid instruments. The Portfolio will not invest in Corporate Loans
that would require the Portfolio to make any additional investments in
connection with such future advances if such commitments would exceed 20% of the
Portfolio's total assets or would cause the Portfolio to fail to meet the
diversification requirements described under "Investment Objective and
Policies."
ILLIQUID SECURITIES
Corporate Loans and Corporate Debt Securities are, at present, not readily
marketable and may be subject to restrictions on resale. Although Corporate
Loans and Corporate Debt Securities are transferred among certain financial
institutions, as described above, the Corporate Loans and Corporate Debt
Securities in which the Portfolio invests do not have the liquidity of
conventional investment grade debt securities traded in the secondary market and
may be considered illiquid. As the market for Corporate Loans and Corporate Debt
Securities matures, the Manager expects that liquidity will improve. The
Portfolio has no limitation on the amount of its investments which are not
readily marketable or are subject to restrictions on resale. Such investments,
which may be considered illiquid, may affect the Fund's ability to realize the
net asset value in the event of a voluntary or involuntary liquidation of its
assets. To the extent that such investments are illiquid, the Portfolio may have
difficulty disposing of securities in order to enable the Fund to repurchase
shares of its Common Stock pursuant to Tender Offers, if any. The Board of
Directors of the Fund will consider the liquidity of the Portfolio's investments
in determining whether a Tender Offer should be made by the Fund. See "Net Asset
Value" for information with respect to the valuation of illiquid Corporate Loans
and Corporate Debt Securities.
OTHER INVESTMENT POLICIES
The Fund and the Portfolio have adopted certain other policies as set forth
below:
LEVERAGE. Each of the Fund and the Portfolio is authorized to borrow money in
amounts of up to 33 1/3% of the value of its total assets at the time of such
borrowings. Borrowings by the Fund and the Portfolio (commonly known as
"leveraging") create an opportunity for greater total return but, at the same
time, increase exposure to capital risk. In addition, borrowed funds are subject
to interest costs that may offset or exceed the return earned on the borrowed
funds. Neither the Fund nor the Portfolio has any current intention of borrowing
to finance additional investments. See "Special Considerations and Risk Factors
- -- Effects of Leverage."
REPURCHASE AGREEMENTS. The Portfolio may enter into repurchase agreements with
respect to its permitted investments but currently intends to do so only with
member banks of the Federal Reserve System or with primary dealers in U.S.
Government securities. Under a repurchase agreement, the Portfolio buys a
security at one price and simultaneously promises to sell that same security
back to the seller at a higher price. The Portfolio's repurchase agreements will
provide that the value of the collateral underlying the repurchase agreement
will always be at least equal to the repurchase price, including any accrued
interest earned on the repurchase agreement, and will be marked to market daily.
The repurchase date usually is within seven days of the original purchase date.
Repurchase agreements are deemed to be loans under the 1940 Act. In all cases,
the Manager must be satisfied with the creditworthiness of the other party to
the agreement before entering into a repurchase agreement. In the event of the
bankruptcy (or other insolvency proceeding) of the other party to a repurchase
agreement, the Portfolio might experience delays in recovering its cash. To the
extent that, in the meantime, the value of the securities the Portfolio
purchases may have declined, the Portfolio could experience a loss.
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GT GLOBAL FLOATING RATE FUND, INC.
LENDING OF PORTFOLIO SECURITIES. The Portfolio may from time to time lend
securities from its portfolio with a value not exceeding 33 1/3% of its total
assets to banks, brokers and other financial institutions and receive collateral
in cash or securities issued or guaranteed by the U.S. Government. Such
collateral will be maintained at all times in an amount equal to at least 100%
of the current market value of the loaned securities. This limitation is a
fundamental policy, and it may not be changed without the approval of the
holders of a majority of the Portfolio's outstanding voting securities, as
defined in the 1940 Act. The purpose of such loans is to permit the borrower to
use such securities for delivery to purchasers when such borrower has sold
short. If cash collateral is received by the Portfolio, it is invested in
short-term money market securities, and a portion of the yield received in
respect of such investment is retained by the Portfolio. Alternatively, if
securities are delivered to the Portfolio as collateral, the Portfolio and the
borrower negotiate a rate for the loaned premium to be received by the Portfolio
for lending its portfolio securities. In either event, the total yield on the
Portfolio is increased by loans of its securities. The Portfolio will have the
right to regain record ownership of loaned securities to exercise beneficial
rights such as voting rights, subscription rights and rights to dividends,
interest or other distributions. Such loans are terminable at any time. The
Portfolio may pay reasonable finder's, administrative and custodial fees in
connection with such loans. In the event that the borrower defaults on its
obligation to return borrowed securities, because of insolvency or otherwise,
the Portfolio could experience delays and costs in gaining access to the
collateral and could suffer a loss to the extent that the value of the
collateral falls below the market value of the borrowed securities.
"WHEN ISSUED" AND "DELAYED DELIVERY" TRANSACTIONS. The Portfolio may also
purchase and sell interests in Corporate Loans and Corporate Debt Securities and
other portfolio securities on a "when issued" and "delayed delivery" basis. No
income accrues to the Portfolio on such interests or securities in connection
with such transactions prior to the date the Portfolio actually takes delivery
of such interests or securities. These transactions are subject to market
fluctuation; the value of the interests in Corporate Loans and Corporate Debt
Securities and other portfolio debt securities at delivery may be more or less
than their purchase price, and yield generally available on such interests or
securities when delivery occurs may be higher than yields on the interests or
securities obtained pursuant to such transactions. Because the Portfolio relies
on the buyer or seller, as the case may be, to consummate the transaction,
failure by the other party to complete the transaction may result in the
Portfolio missing the opportunity of obtaining a price or yield considered to be
advantageous. When the Portfolio is the buyer in such a transaction, however, it
will maintain, in a segregated account with its custodian, cash or other liquid
assets having an aggregate value equal to the amount of such purchase
commitments until payment is made. The Portfolio will make commitments to
purchase such interest or securities on such basis only with the intention of
actually acquiring these interests or securities, but the Portfolio may sell
such interests or securities prior to the settlement date if such sale is
considered to be advisable. To the extent the Portfolio engaged in "when issued"
and "delayed delivery" transactions, it will do so for the purpose of acquiring
interests or securities for the Portfolio consistent with the Fund's investment
objective and policies and not for the purpose of investment leverage. No
specific limitation exists as to the percentage of the Portfolio's assets which
may be used to acquire securities on a "when issued" or delayed delivery" basis.
INTEREST RATE HEDGING TRANSACTIONS. Certain federal income tax requirements may
limit the Portfolio's ability to engage in interest rate hedging transactions.
Gains from transactions in interest rate hedges distributed to stockholders will
be taxable as ordinary income or, in certain circumstances, as long-term capital
gains. See "Taxes."
The Portfolio will enter into interest rate swaps in order to hedge all of its
fixed rate Corporate Loans and Corporate Debt Securities against fluctuations in
interest rates. Interest rate swaps involve the exchange by the Portfolio with
another party of their respective commitments to pay or receive interest, such
as an exchange of fixed rate payments for floating rate payments. For example,
if the Portfolio holds a Corporate Loan or Corporate Security with an interest
rate that is reset only once each year, it may swap the right to receive
interest at this fixed rate for the right to receive interest at a rate that is
reset every week. This would enable the Portfolio to offset a decline in the
value of the Corporate Loan or Corporate Debt Security due to rising interest
rates, but would also limit its ability to benefit from falling interest rates.
Inasmuch as these interest rate hedging transactions are entered into for good
faith hedging purposes, the Manager believes that such obligations do not
constitute senior securities and, accordingly, will not
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<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
treat them as being subject to its borrowing restrictions. The Portfolio usually
will enter into interest rate swaps on a net basis, i.e., the two payment
streams are netted out, with the Portfolio receiving or paying, as the case may
be, only the net amount of the two payments. The net amount of the excess, if
any, of the Portfolio's obligations over its entitlements with respect to each
interest rate swap will be accrued on a daily basis, and an amount of cash or
other liquid assets having an aggregate net asset value at least equal to the
accrued excess will be maintained in a segregated accounted by the Portfolio's
custodian. If the interest rate swap transaction is entered into on other than a
net basis, the full amount of the Portfolio's obligations will be accrued on a
daily basis, and the full amount of the Portfolio's obligations will be
maintained in a segregated account by the Portfolio's custodian. The Portfolio
will not enter into any interest rate hedging transaction unless the Manager
considers the credit quality of the unsecured senior debt or the claims-paying
ability of the other party thereto to be investment grade. If there is a default
by the other party to such a transaction, the Portfolio will have contractual
remedies pursuant to the agreements related to the transaction but such remedies
may be subject to bankruptcy and insolvency laws which could affect the
Portfolio's rights as a creditor. The swap market has grown substantially in
recent years with a large number of banks and investment banking firms acting
both as principals and as agents utilizing standardized swap documentation. As a
result, many portions of the swap market have become relatively liquid in
comparison with other similar instruments traded in the interbank market. In
addition, although the terms of interest rate swaps may provide for termination,
there can be no assurance the Portfolio will be able to terminate an interest
rate swap or to sell or offset interest rate caps or floors that it has
purchased.
The use of interest rate hedges is a highly specialized activity which involves
investment techniques and risks different from those associated with ordinary
portfolio transactions. If the Manager is incorrect in its forecasts of market
values, interest rates and other applicable factors, the investment performance
of the Fund would diminish compared with what it would have been if these
investment techniques were not used.
Except as noted above, there is no limit on the amount of interest rate hedging
transactions that may be entered into by the Portfolio. These transactions do
not involve the delivery of securities or other underlying assets or principal.
Accordingly, the risk of loss with respect to interest rate hedges is limited to
the net amount of interest payments that the Portfolio is contractually
obligated to make. If the Corporate Loan underlying an interest rate swap is
prepaid and the Portfolio continues to be obligated to make payments to the
other party to the swap, the Portfolio would have to make such payments from
another source. If the other party to an interest rate swap defaults, the
Portfolio's risk of loss consists of the net amount of interest payments that
the Portfolio contractually is entitled to receive. Since interest rate
transactions are individually negotiated, the Manager expects to achieve an
acceptable degree of correlation between the Portfolio's rights to receive
interest on Participation Interests and its rights and obligations to receive
and pay interest pursuant to interest rate swaps.
- --------------------------------------------------------------------------------
INVESTMENT RESTRICTIONS
- --------------------------------------------------------------------------------
The following are fundamental investment restrictions of the Fund and the
Portfolio and, prior to issuance of any preferred stock, may not be changed
without the approval, respectively, of the holders of a majority of the Fund's
or the Portfolio's outstanding shares of Common Stock (which for this purpose
and under the 1940 Act means the lesser of (i) 67% of the shares of Common Stock
represented at a meeting at which more than 50% of the outstanding shares of
Common Stock are represented or (ii) more than 50% of the outstanding shares).
Subsequent to any issuance of a class of preferred stock, the following
investment restrictions could not be changed without the approval of a majority
of the outstanding shares of Common Stock and of the preferred stock, voting
together as a class, and the approval of a majority of the outstanding shares of
preferred stock, voting separately by class. The Fund and the Portfolio each may
not:
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GT GLOBAL FLOATING RATE FUND, INC.
1. Borrow money or issue senior securities, except as permitted by Section 18 of
the 1940 Act.
2. Purchase or sell real estate; provided that the Fund and the Portfolio may
invest in securities secured by real estate or interests therein or issued by
companies which invest in real estate or interests therein.
3. Underwrite securities of other issuers except insofar as the Fund or the
Portfolio may be deemed an underwriter under the Securities Act of 1933 in
selling portfolio securities.
4. Make loans to other persons, except that the Fund and the Portfolio may
invest in loans (including Assignments and Participations, and including secured
or unsecured Corporate Loans), purchase debt securities, enter into repurchase
agreements, and lend its portfolio securities.
5. Invest more than 25% of its total assets in the securities of issuers in any
one industry; provided that this limitation shall not apply with respect to
obligations issued or guaranteed by the U.S. Government or by its agencies or
instrumentalities; and provided further that the Fund and the Portfolio may each
invest more than 25% of its assets in securities of issuers in the industry
group consisting of financial institutions and their holding companies,
including commercial banks, thrift institutions, insurance companies and finance
companies. For purposes of this restriction, the term "issuer" includes the
Borrower, the Agent Bank and any Intermediate Participant (as defined under
"Investment Objective and Policies -- Description of Participation Interests and
Assignments").
6. Purchase any securities on margin, except that the Portfolio may obtain such
short-term credit as may be necessary for the clearance of purchases and sales
of portfolio securities. The purchase of Corporate Loans, Corporate Debt
Securities, and other investment assets with the proceeds of a permitted
borrowing or securities offering will not be deemed to be the purchase of
securities on margin.
7. Make short sales of securities or maintain a short position or invest in put,
call, straddle or spread options.
An additional investment restriction adopted by the Fund and the Portfolio,
which may be changed by their respective Board of Directors or Board of
Trustees, provides that neither the Fund nor the Portfolio may mortgage, pledge,
hypothecate or in any manner transfer, as security for indebtedness, any
securities owned or held by the Fund or the Portfolio except as may be necessary
in connection with hedging techniques involving interest rate transactions,
foreign currency swap transactions relating to non-U.S. dollar-denominated loans
and permitted borrowings by the Fund and the Portfolio.
If a percentage restriction on investment policies or the investment or use of
assets set forth above is adhered to at the time a transaction is effected,
later changes in percentage resulting from changing values will not be
considered a violation.
- --------------------------------------------------------------------------------
SPECIAL CONSIDERATIONS AND
RISK FACTORS
- --------------------------------------------------------------------------------
EFFECTS OF LEVERAGE. Each of the Fund and the Portfolio may borrow money in
amounts up to 33 1/3% of the value of its total assets to finance tender offers,
for temporary, extraordinary or emergency purposes, or, while neither the Fund
nor the Portfolio has any current intention of doing so, for the purpose of
financing additional investments. See "Tender Offers." The Fund also may issue
one or more series of preferred shares, although it has no present intention to
do so. The Portfolio or Fund, as the case may be, may borrow to finance
additional investments or issue a class of preferred shares only when it
believes that the return that may be earned on investments purchased with the
proceeds of such borrowings or offerings will exceed the costs, including debt
service and dividend obligations, associated therewith. However, to the extent
such costs exceed the return on the additional investments, the return realized
by the Fund's Common Stockholders will be adversely affected.
Capital raised through leverage will be subject to interest costs or dividend
payments which may or may not exceed the interest on the assets purchased. The
Fund and the Portfolio also may be required to maintain minimum average balances
in
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GT GLOBAL FLOATING RATE FUND, INC.
connection with borrowings or to pay a commitment or other fee to maintain a
line of credit; either of these requirements will increase the cost of borrowing
over the stated interest rate. The issuance of additional classes of preferred
shares involves offering expenses and other costs and may limit the Fund's
freedom to pay dividends on shares of Common Stock or to engage in other
activities. Borrowings and the issuance of a class of preferred stock having
priority over the Fund's Common Stock create an opportunity for greater income
per share of Common Stock, but at the same time such borrowing or issuance is a
speculative technique in that it will increase the Fund's exposure to capital
risk. Such risks may be reduced through the use of borrowings and preferred
stock that have floating rates of interest. Unless the income and appreciation,
if any, on assets acquired with borrowed funds or offering proceeds exceeds the
costs of borrowing or issuing additional classes of securities, the use of
leverage will diminish the investment performance of the Fund compared with what
it would have been without leverage.
The Fund intends to enter into an agreement with a financial institution
("Bank") providing for an unsecured, discretionary credit facility ("Facility"),
the proceeds of which may be used to finance, in part, the payment for shares
tendered in a Tender Offer by the Fund. The Facility will provide for the
borrowing by the Fund of up to the lesser of $100,000,000 or 33 1/3% of the
Fund's total assets, on an unsecured, uncommitted basis. Loans made under the
Facility will bear interest at one of three rates, to be selected at the option
of the Fund: (i) an Adjusted Eurodollar Rate, which is based on LIBOR plus a
reserve percentage established by the Federal Reserve; (ii) a Base Rate, which
is the greater of (a) the annual rate of interest announced from time to time by
the Bank and (b) the federal funds effective rate, as established by the Federal
Reserve, plus 1/2 of 1% per annum; and (iii) a Money Market Rate, which is
quoted by the Bank as the fixed rate of interest at which it is willing to make
a "money market" loan.
Under the 1940 Act, neither the Fund nor the Portfolio is permitted to incur
indebtedness unless immediately after such incurrence the Fund or the Portfolio,
as the case may be, has an asset coverage of 300% of the aggregate outstanding
principal balance of indebtedness. Additionally, under the 1940 Act the Fund may
not declare any dividend or other distribution upon any class of its capital
stock, or purchase any such capital stock, unless the aggregate indebtedness of
the Fund has at the time of the declaration of any such dividend or distribution
or at the time of any such purchase an asset coverage of at least 300% after
deducting the amount of such dividend, distribution, or purchase price, as the
case may be.
The Fund's and the Portfolio's willingness to borrow money for investment
purposes, and the amount each will borrow, will depend on many factors, the most
important of which are investment outlook, market conditions and interest rates.
Successful use of a leveraging strategy depends on the Manager's ability to
predict correctly interest rates and market movements, and there is no assurance
that a leveraging strategy will be successful during any period in which it is
employed.
CREDIT RISK. Corporate Loans and Corporate Debt Securities may constitute
substantially all of the Portfolio's investments. Corporate Loans and Corporate
Debt Securities are primarily dependent upon the creditworthiness of the
Borrower for payment of interest and principal. The nonreceipt of scheduled
interest or principal on a Corporate Loan or Corporate Debt Security may
adversely affect the income of the Portfolio or the value of its investments,
which may in turn reduce the amount of dividends or the net asset value of the
shares of the Fund. The Portfolio's ability to receive payment of principal of
and interest on a Corporate Loan or a Corporate Debt Security also depends upon
the creditworthiness of any institution interposed between the Portfolio and the
Borrower. To reduce credit risk, the Manager actively manages the Portfolio as
described above.
Corporate Loans and Corporate Debt Securities made in connection with leveraged
buy-outs, recapitalizations and other highly leveraged transactions are subject
to greater credit risks than many of the other Corporate Loans and Corporate
Debt Securities in which the Portfolio may invest. These credit risks include
the possibility of a default on the Corporate Loan or Corporate Debt Security or
bankruptcy of the Borrower. The value of such Corporate Loans and Corporate Debt
Securities are subject to a greater degree of volatility in response to interest
rate fluctuations and may be less liquid than other Corporate Loans and
Corporate Debt Securities.
Although Corporate Loans and Corporate Debt Securities in which the Portfolio
invests will generally hold the most senior position in the capitalization
structure of the Borrowers, the capitalization of many Borrowers will include
non-investment grade subordinated debt. During
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<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
periods of deteriorating economic conditions, a Borrower may experience
difficulty in meeting its payment obligations under such bonds and other
subordinated debt obligations. Such difficulties may detract from the Borrower's
perceived creditworthiness or its ability to obtain financing to cover
short-term cash flow needs and may force the Borrower into bankruptcy or other
forms of credit restructuring.
COLLATERAL IMPAIRMENT. Corporate Loans and Corporate Debt Securities (excluding
Unsecured Corporate Loans and Unsecured Corporate Debt Securities) will be
secured unless (i) the Portfolio's security interest in the collateral is
invalidated for any reason by a court or (ii) the collateral is fully released
under the terms of a loan agreement as the creditworthiness of the Borrower
improves. There is no assurance that the liquidation of collateral would satisfy
the Borrower's obligation in the event of nonpayment of scheduled interest or
principal, or that collateral could be readily liquidated. The value of
collateral generally will be determined by reference to financial statements of
the Borrower, an independent appraisal performed at the request of the Agent
Bank at the time the Corporate Loan was initially made, the market value of such
collateral (e.g., cash or securities) if it is readily ascertainable and/or by
other customary valuation techniques considered appropriate in the judgment of
the Manager. Collateral is generally valued on the basis of the Borrower's
status as a going concern and such valuation may exceed the immediate
liquidation value of the collateral.
Collateral may include (i) working capital assets, such as accounts receivable
and inventory; (ii) tangible fixed assets, such as real property, buildings and
equipment; (iii) intangible assets, such as trademarks and patent rights (but
excluding goodwill); and (iv) security interests in shares of stock of
subsidiaries or affiliates. To the extent that collateral consists of the stock
of the Borrower's subsidiaries or other affiliates, the Portfolio will be
subject to the risk that this stock will decline in value. Such a decline,
whether as a result of bankruptcy proceedings or otherwise, could cause the
Corporate Loan or Corporate Debt Security to be undercollateralized or
unsecured. In most credit agreements there is no formal requirement to pledge
additional collateral. In the case of Corporate Loans made to non-public
companies, the company's shareholders or owners may provide collateral in the
form of secured guarantees and/or security interests in assets that they own. In
addition, the Portfolio may invest in Corporate Loans guaranteed by, or fully
secured by assets of, such shareholders or owners, even if the Corporate Loans
are not otherwise collateralized by assets of the Borrower; provided, however,
that such guarantees are fully secured. There may be temporary periods when the
principal asset held by a Borrower is the stock of a related company, which may
not legally be pledged to secure a Corporate Loan or Corporate Debt Security. On
occasions when such stock cannot be pledged, the Corporate Loan or Corporate
Debt Security will be temporarily unsecured until the stock can be pledged or is
exchanged for or replaced by other assets, which will be pledged as security for
the Corporate Loan or Corporate Debt Security. However, the Borrower's ability
to dispose of such securities, other than in connection with such pledge or
replacement, will be strictly limited for the protection of the holders of
Corporate Loans.
If a Borrower becomes involved in bankruptcy proceedings, a court may invalidate
the Portfolio's security interest in the Corporate Loan or Corporate Debt
Security collateral or subordinate the Portfolio's rights under the Corporate
Loan or Corporate Debt Security to the interests of the Borrower's unsecured
creditors. Such action by a court could be based, for example, on a "fraudulent
conveyance" claim to the effect that the Borrower did not receive fair
consideration for granting the security interest in the Corporate Loan or
Corporate Debt Security collateral to the Portfolio. For Corporate Loans or
Corporate Debt Securities made in connection with a highly leveraged
transaction, consideration for granting a security interest may be deemed
inadequate if the proceeds of the Corporate Loan or Corporate Debt Security were
not received or retained by the Borrower, but were instead paid to other persons
(such as shareholders of the Borrower) in an amount which left the Borrower
insolvent or without sufficient working capital. There are also other events,
such as the failure to perfect a security interest due to faulty documentation
or faulty official filings, which could lead to the invalidation of the
Portfolio's security interest in Corporate Loan or Corporate Debt Security
collateral. If the Portfolio's security interest in Corporate Loan or Corporate
Debt Security collateral is invalidated or the Corporate Loan or Corporate Debt
Security is subordinated to other debt of a Borrower in bankruptcy or other
proceedings, it is unlikely that the Portfolio would be able to recover the full
amount of the principal
Prospectus Page 24
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
and interest due on the Corporate Loan or Corporate Debt Security.
INVESTMENTS IN LOWER QUALITY SECURITIES. The Portfolio may invest all or
substantially all of its assets in Corporate Loans, Corporate Debt Securities or
other securities that are rated below investment grade by Moody's, comparably
rated by another NRSRO, or, if unrated, deemed by the Manager to be of
equivalent quality. Debt rated Baa by Moody's is considered by Moody's to have
speculative characteristics. Debt rated Ba or B 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.
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. Securities rated Ba and lower are the
equivalent of high yield, high risk bonds, commonly known as "junk bonds," and
involve a high degree of risk. The Manager does not expect to invest in any
securities rated lower than B3 at the time of investment. In the event of a
downgrade in Corporate Loans or Corpoate Debt Securities, the Manager will
consider whether it will dispose of such Corporate Loan or Corporate Debt
Security.
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 quality in response to subsequent events, so that an issuer's
current financial condition may be better or worse than a rating indicates. See
"Appendix -- Ratings of Securities" for a full discussion of Moody's ratings.
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. During an economic downturn or a sustained period of
rising interest rates, issuers of lower quality debt securities 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.
PORTFOLIO MANAGEMENT AND OTHER CONSIDERATIONS. In the event of an increase in
short-term rates or other changed market conditions to the point where the
Fund's or the Portfolio's leverage could adversely affect holders of Common
Stock as noted above, or in anticipation of such changes, the Portfolio may
attempt to shorten the average maturity of its investment portfolio, which would
tend to offset the negative impact of leverage on holders of Common Stock.
FUND/PORTFOLIO INVESTMENT STRUCTURE. An investor should be aware that the Fund,
unlike other investment companies that directly acquire and manage their own
portfolios of securities, seeks to achieve its investment objective by investing
all of its investable assets in the Portfolio, which is a separate investment
company with an identical investment objective (although the Fund may
temporarily hold a DE MINIMIS amount of cash). Therefore, the Fund's interest in
the securities owned by the Portfolio is indirect. In addition to selling an
interest to the Fund, the Portfolio may sell interests to other affiliated and
non-affiliated investment companies or institutional investors. Such investors
will invest in the Portfolio on the same terms and conditions and will pay a
proportionate share of the Portfolio's expenses. However, other investors
investing in the Portfolio are not required to sell their shares at the same
public offering price as the Fund due to variations in sales commissions and
other operating expenses. Therefore, investors in the Fund should be aware that
these differences may result in differences in returns experienced by investors
in other funds that may invest in the Portfolio. Such differences in returns are
also present in other mutual fund structures, including funds that have multiple
classes of shares.
The Board of Directors of the Fund has considered the advantages and
disadvantages of investing the assets of the Fund in the Portfolio, as well as
the advantages and disadvantages of the two-tier format. The Directors believe
that the structure offers opportunities for substantial growth in the assets of
the Portfolio and affords the potential for economies of scale for the Fund.
The Fund may withdraw (redeem) all or any part of its interest in the Portfolio
only pursuant to tender offers by the Portfolio. The Portfolio's Board of
Trustees presently intends each quarter to consider the making of such tender
offers. However, there can be no assurance that the Portfolio's Board of
Prospectus Page 25
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
Trustees will, in fact, decide to undertake the making of such a tender offer.
See "Tender Offers." If the Fund withdraws all of its assets from the Portfolio,
or the Board of Directors of the Fund determines that the investment objective
of the Portfolio is no longer consistent with the investment objective of the
Fund, the Directors would consider what action might be taken, including
investing the assets of the Fund in another pooled investment entity or
retaining an investment adviser to manage the Fund's assets in accordance with
its investment objective. The Fund's investment performance may be affected by a
withdrawal of all of its assets from the Portfolio. Of course, a complete
withdrawal of Fund assets could be accomplished only pursuant to a Portfolio
tender offer.
Smaller investors in the Portfolio may be adversely affected by the actions of a
larger investor in the Portfolio. For example, if a large investor withdraws a
significant amount of assets from the Portfolio, the remaining investors may
experience higher pro rata operating expenses, thereby producing lower returns.
Additionally, the Portfolio may hold fewer securities, resulting in increased
portfolio risk, and experience decreasing economies of scale. However, this
possibility exists as well for historically structured mutual funds that have
large or institutional investors.
Funds that invest all their assets in interests in a separate investment company
are a relatively new development in the investment company industry and,
therefore, the Fund may be subject to additional regulations than historically
structured funds.
Whenever the Fund as an investor in the Portfolio is requested to vote on
matters pertaining to the Portfolio (other than the termination of the
Portfolio's business, which may be determined by the Trustees of the Portfolio
without investor approval), the Fund will hold a meeting of Fund stockholders
and will vote its interest in the Portfolio for or against such matters
proportionately to the instructions to vote for or against such matters received
from Fund stockholders. The Fund shall vote shares for which it receives no
voting instructions in the same proportion as the shares for which it receives
voting instructions. Other investors in the Portfolio may alone or collectively
acquire sufficient voting interests in the Portfolio to control matters relating
to the operation of the Portfolio or take other appropriate action. Any such
withdrawal could result in a distribution "in kind" of portfolio Loans and
noncash assets (as opposed to a cash distribution from the Portfolio). If Loans
and noncash assets are distributed, the Fund could incur brokerage, tax or other
charges in converting them to cash. In addition, the distribution in kind may
result in a less diversified portfolio of investments and will adversely affect
the liquidity of the Fund. Notwithstanding the above, there are other means for
meeting stockholder redemption requests, such as borrowing.
Prospectus Page 26
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
PURCHASE OF SHARES
- --------------------------------------------------------------------------------
SUBSCRIPTION OFFERING
GT Global, Inc. (the "Distributor") acts as the distributor of shares of Common
Stock of the Fund. The Distributor, and other securities dealers that have
entered into selected dealer agreements with the Distributor, will solicit
subscriptions for shares of the Fund for a subscription period that is scheduled
to conclude on April 25, 1997, or on such earlier date as the Distributor, in
its sole discretion, shall determine. The Distributor currently anticipates that
it will conclude the subscription period prior to April 25, 1997, if it believes
that in excess of 10 million Fund shares will be sold during the shortened
subscription period. On the third business day after the conclusion of the
subscription period, the subscriptions will be payable, the shares will be
issued and the Fund will commence operations. In addition, the subscription
offering may be terminated by the Fund or the Distributor at any time, at the
sole discretion of either, in which event no shares will be issued (and,
therefore, the Fund will not commence operations, no amounts will be payable by
subscribers, any payments by subscribers will be refunded in full without
interest, and no compensation will be paid or payable to selected dealers).
The public offering price of the shares during the subscription offering is $10
without a front-end sales charge. The proceeds per share to the Fund from the
sale of all shares sold during the subscription period will be $10 (minus
organizational expenses). As set forth below, the Distributor may make payments
to selected dealers from its own assets.
CONTINUOUS OFFERING
After completion of the subscription offering, the Fund will engage in a
continuous offering of its shares of Common Stock through the Distributor and
other securities dealers that have entered into selected dealer agreements with
the Distributor. During any continuous offering of the Fund's Common Stock,
shares of the Fund may be purchased from the Distributor or selected dealers, or
by mailing a purchase order directly to GT Global Investor Services, Inc. (the
"Transfer Agent").
The Fund will offer its shares at a price equal to the next determined net asset
value per share without a front-end sales charge. The applicable offering price
for purchase orders is based on the net asset value of the Fund next determined
after receipt of the purchase order by the Distributor. As to purchase orders
received by securities dealers prior to the close of business on the New York
Stock Exchange (the "NYSE") (generally, 4:00 p.m., New York time), which
includes orders received after the close of business on the previous day, the
applicable offering price will be based on the net asset value determined as of
15 minutes after the close of business on the NYSE on that day provided the
Distributor in turn receives the order from the securities dealer prior to 30
minutes after the close of business on the NYSE on that day. If the purchase
orders are not received by the Distributor prior to 30 minutes after the close
of business on the NYSE, such orders shall be deemed received on the next
business day. Any order may be rejected by the Distributor or the Fund. The Fund
or the Distributor may suspend the continuous offering of the Fund's shares at
any time in response to conditions in the securities markets or otherwise and
may thereafter resume such offering from time to time. Neither the Distributor
nor the dealers are permitted to withhold placing orders to benefit themselves
by a price change. The Distributor is required to advise the Fund promptly of
all purchase orders and cause payments for shares of Common Stock to be
delivered promptly to the Fund.
Due to the administrative complexities associated with a continuous offering,
administrative errors may result in the Distributor or an affiliate
inadvertently acquiring nominal numbers (in no event in excess of 5% of the
shares of Common Stock) of shares of Common Stock which it may wish to resell.
Such shares of Common Stock will not be subject to any investment restriction
and may be resold pursuant to this Prospectus.
The Distributor compensates selected dealers at a rate of 3.0% of amounts sold,
except that, during the subscription period, the Distributor will compensate
selected dealers at a rate of 4.0% of amounts purchased. If the shares remain
Prospectus Page 27
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
outstanding after thirteen months from the date of their original purchase, the
Distributor will additionally compensate such dealers quarterly at an annual
rate based on a percentage of the value of such shares sold by such dealers and
remaining outstanding, in accordance with the following schedule:
<TABLE>
<CAPTION>
ANNUAL COMPENSATION AS A
YEAR AFTER DATE PERCENTAGE OF VALUE OF
OF ORIGINAL PURCHASE SHARES OUTSTANDING
- ------------------------------- ---------------------------
<S> <C>
First.......................... 0.00%
Second......................... 0.10%
Third.......................... 0.15%
Fourth......................... 0.20%
Fifth and following............ 0.25%
</TABLE>
The compensation paid to selected dealers and the Distributor, including the
compensation paid at the time of purchase, the quarterly payments mentioned
above and the early withdrawal charge, if any, will not in the aggregate exceed
the applicable limit, as determined from time to time by the National
Association of Securities Dealers, Inc. ("NASD").
- --------------------------------------------------------------------------------
TENDER OFFERS
- --------------------------------------------------------------------------------
In recognition of the possibility that a secondary market for the Fund's shares
will not exist, the Fund may take actions that will provide liquidity to
stockholders. The Fund may from time to time make Tender Offers, i.e., offers to
repurchase all or a portion of its shares of Common Stock from stockholders at a
price per share equal to the net asset value per share of the Common Stock
determined at the close of business on the day an offer terminates. Commencing
in the third quarter of 1997, the Board of Directors will consider each quarter
the making of Tender Offers. There can be no assurance that the Board will
decide to undertake the making of a Tender Offer in any particular quarter. In
addition, any partial Tender Offer by the Fund may result in a proration of the
shares repurchased from the Fund's Common Stockholders who participate in the
Tender Offer. Subject to the Fund's investment restriction with respect to
borrowings, the Fund may borrow money to finance the repurchase of shares
pursuant to any Tender Offers. See "Special Considerations and Risk Factors --
Effects of Leverage" and "Investment Restrictions."
The Fund's assets consist primarily of its interest in the Portfolio. Therefore,
in order to finance the repurchase of Fund shares pursuant to Tender Offers, the
Fund will find it necessary to liquidate all or a portion of its interest in the
Portfolio. Because interests in the Portfolio may not be transferred, the Fund
may withdraw a portion of its interest only pursuant to tender offers by the
Portfolio. The Fund will not conduct a Tender Offer for Fund shares unless the
Portfolio simultaneously conducts a tender offer for Portfolio interests. The
Portfolio's Trustees presently intend each quarter to consider the making of
such tender offers. However, there are no assurances that the Portfolio's Board
of Trustees will, in fact, decide to undertake the making of such a tender
offer. The Fund cannot make a Tender Offer larger than a tender offer made by
the Portfolio. The Portfolio will make tender offers, if any, to all of its
investors, including the Fund, on the same terms, which practice may affect the
size of the Portfolio's offers. Subject to the Portfolio's investment
restriction with respect to borrowings, the Portfolio may borrow money or issue
debt obligations to finance its repurchase obligations pursuant to any such
tender offer.
The Fund expects that ordinarily there will be no secondary market for the
Fund's Common Stock and that periodic Tender Offers will be the only source of
liquidity for Fund stockholders. Nevertheless, if a secondary market develops
for the Common Stock of the Fund, the market price of the shares may vary from
net asset value from time to time. Such variance may be affected by, among other
factors, relative demand and supply of shares and the performance of the Fund,
especially as it affects the yield on and net asset value of the Common Stock of
the Fund. A Tender Offer for shares of Common Stock of the Fund at net asset
value is expected to reduce any spread between net asset value and market price
that may otherwise develop. However, there can be no assurance that such action
would result in the Fund's Common
Prospectus Page 28
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
Stock trading at a price that equals or approximates net asset value.
Although the Board of Directors believes that the Tender Offers generally would
be beneficial to holders of the Fund's Common Stock, the acquisition of shares
of Common Stock by the Fund will decrease the total assets of the Fund and
therefore have the likely effect of increasing the Fund's expense ratio
(assuming such acquisition is not offset by the issuance of additional shares of
Common Stock). Furthermore, to the extent the Fund borrows to finance the making
of Tender Offers, interest on such borrowings reduce the Fund's net investment
income.
It is the Board of Directors' announced policy, which may be changed by the
Board, not to repurchase shares pursuant to a Tender Offer if (1) such
repurchases would terminate the Fund's status as a RIC under the Code (which
would make the Fund a taxable entity, causing its income to be taxed at the
corporate level in addition to the taxation of stockholders who receive
dividends from the Fund); (2) the Portfolio would not be able to liquidate
portfolio securities in a manner that is orderly and consistent with the Fund's
investment objective and policies in order to repurchase Common Stock tendered
pursuant to the Tender Offer; or (3) there is, in the Board's judgment, any (a)
legal action or proceeding instituted or threatened challenging the Tender Offer
or otherwise materially adversely affecting the Fund, (b) declaration of a
banking moratorium by federal or state authorities or any suspension of payment
by banks in the United States or New York State, which is material to the Fund,
(c) limitation imposed by federal or state authorities on the extension of
credit by lending institutions, (d) commencement of war, armed hostilities or
other international or national calamity directly or indirectly involving the
United States which is material to the Fund, or (e) other event or condition
which would have a material adverse effect on the Fund or its stockholders if
shares of Common Stock tendered pursuant to the Tender Offer were purchased.
Thus, there can be no assurance that the Board will proceed with any Tender
Offer. The Board of Directors may modify these conditions in light of
circumstances existing at the time. If the Board of Directors determines to
repurchase the shares of Common Stock pursuant to a Tender Offer, such
repurchases could significantly reduce the asset coverage of any borrowing or
outstanding senior securities. The Fund may not repurchase shares of Common
Stock to the extent such repurchases would result in the asset coverage with
respect to such borrowing or senior securities being reduced below the asset
coverage requirement set forth in the 1940 Act. Accordingly, in order to
repurchase all shares of Common Stock tendered, the Fund may have to repay all
or part of any then outstanding borrowing or redeem all or part of any then
outstanding senior securities to maintain the required asset coverage. See
"Special Considerations and Risk Factors -- Effects of Leverage." In addition,
the amount of shares of Common Stock for which the Fund makes any particular
Tender Offer may be limited for the reasons set forth above or in respect of
other concerns related to liquidity of the Portfolio.
In conducting any Tender Offers, the Fund expects to rely on a rule promulgated
by the Securities and Exchange Commission that requires, among other things,
that there not be a widely available secondary market for the Fund's Common
Stock. In the event that circumstances arise under which the Fund does not
conduct the Tender Offers regularly, the Board of Directors would consider
alternative means of providing liquidity for holders of Common Stock. Such
action would include an evaluation of any secondary market that then existed and
a determination of whether such market provided liquidity for holders of Common
Stock. If the Board of Directors determines that such market, if any, fails to
provide liquidity for the holders of Common Stock, the Board expects that it
will consider all then available alternatives to provide such liquidity. Among
the alternatives that the Board of Directors may consider is the listing of the
Fund's Common Stock on a major domestic stock exchange or on the Nasdaq Stock
Market in order to provide such liquidity. The Board of Directors also may
consider causing the Fund to repurchase its shares from time to time in open-
market or private transactions when it can do so on terms that represent a
favorable investment opportunity. In any event, the Board of Directors expects
that it will cause the Fund to take whatever action it deems necessary or
appropriate to provide liquidity for the holders of Common Stock in light of the
facts and circumstances existing at such time.
To consummate a tender offer for the repurchase of interests in the Portfolio
(which is necessary for the Fund to complete a Tender Offer), the Portfolio may
be required to liquidate portfolio securities, and realize gains or losses, at a
time when the Manager would otherwise consider it disadvantageous to do so. In
such event gains may be realized on securities held for less than three months.
In
Prospectus Page 29
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
order for the Fund to qualify as a RIC under the Code, the Portfolio must limit
such gains; and, accordingly, the amount of gain that the Portfolio could
realize in the ordinary course of its portfolio management from sales of other
securities held for less than three months would be reduced. This may adversely
affect the Fund's yield. See "Taxes."
Each Tender Offer will be made and stockholders notified in accordance with the
requirements of the Securities Exchange Act of 1934 and the 1940 Act, either by
publication or mailing or both. The offering documents will contain such
information as is prescribed by such laws and the rules and regulations
promulgated thereunder. The repurchase of tendered shares by the Fund is a
taxable event. See "Taxes." The Fund will pay all costs and expenses associated
with the making of any Tender Offer. An Early Withdrawal Charge will be imposed
on most shares accepted for tender that have been held for less than four years.
See "Early Withdrawal Charge."
- --------------------------------------------------------------------------------
EARLY WITHDRAWAL CHARGE
- --------------------------------------------------------------------------------
An Early Withdrawal Charge to recover distribution expenses incurred by the
Distributor will be charged against the stockholder's investment account and
paid to the Distributor in connection with most shares of Common Stock held for
less than four years which are accepted by the Fund for repurchase pursuant to a
Tender Offer in the manner described below. The Early Withdrawal Charge will be
imposed on those shares of Common Stock accepted for tender based on an amount
equal to the lesser of the then current net asset value of the shares of Common
Stock or the original purchase price of the shares of Common Stock being
tendered. Accordingly, the Early Withdrawal Charge is not imposed on increases
in the net asset value above the initial purchase price. In addition, the Early
Withdrawal Charge is not imposed on shares derived from reinvestments of
dividends or capital gains distributions. In determining whether an Early
Withdrawal Charge is payable, it is assumed that the acceptance of an offer to
repurchase pursuant to a Tender Offer would be made from the earliest purchase
of shares of Common Stock. The Early Withdrawal Charge imposed will vary
depending on the length of time the Common Stock has been owned since purchase
(separate purchases shall not be aggregated for these purposes), as set forth in
the following table:
<TABLE>
<CAPTION>
EARLY
YEAR OF REPURCHASE WITHDRAWAL
AFTER PURCHASE CHARGE
---------------------- ---------------
<S> <C>
First....................................... 3.0%
Second...................................... 2.5%
Third....................................... 2.0%
Fourth...................................... 1.0%
Fifth and following......................... 0.0%
</TABLE>
In determining whether an Early Withdrawal Charge is applicable to a tender of
shares of Common Stock, the calculation will be determined in the manner that
results in the lowest possible amount being charged. Therefore, it will be
assumed that the tender is first of shares of Common Stock held for over four
years and shares of Common Stock acquired pursuant to reinvestment of dividends
or distributions and then of shares of Common Stock held longest during the
three-year period. The Early Withdrawal Charge will not be applied to dollar
amounts representing an increase in the net asset value since the time of
purchase.
EXAMPLE:
Assume an investor purchased 1,000 shares of Common Stock (at a cost of $10,000)
and in the second year after purchase, the net asset value per share is $10.15
and, during such time, the investor has acquired 100 additional shares of Common
Stock upon dividend reinvestment. If at such time the investor makes his first
redemption of 500 shares of Common Stock (proceeds of $5,075), 100 shares will
not be subject to the Early Withdrawal Charge because of dividend reinvestment.
With respect to the remaining 400 shares of Common Stock, the Early Withdrawal
Charge is applied only to the original cost of $10 per share and not to the
increase in net asset value of $0.15 per share. Therefore, $4,000 of the $5,075
redemption proceeds will be charged at a rate of 2.5% (the applicable rate in
the second year after purchase).
Prospectus Page 30
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
MANAGEMENT
- --------------------------------------------------------------------------------
Each of the Fund's Board of Directors and the Portfolio's Board of Trustees has
overall responsibility for the operation of the Fund and the Portfolio,
respectively. Pursuant to such responsibility, each Board has approved contracts
with various financial organizations to provide, among other things, day-to-day
management services required by the Fund and the Portfolio.
INVESTMENT MANAGEMENT
The Investment Management and Administration Contract provides that, subject to
the direction of the Board of Trustees of the Portfolio, the Manager is
responsible for the management and administration of the Portfolio. The
responsibility for making decisions to buy, sell or hold a particular security
rests with the Manager, subject to review by the Board of Trustees of the
Portfolio.
In providing investment management for the Portfolio, the Manager will consider
analyses from various sources, make the necessary investment decisions, and
place orders for transactions accordingly. For the services provided by the
Manager under the Investment Management and Administration Contract, the
Portfolio pays a monthly fee at an annual rate of 0.95% of the Portfolio's
average daily net assets (i.e., the average daily value of the total assets of
the Portfolio, minus the sum of accrued liabilities of the Portfolio). For
purposes of this calculation, average daily net assets is determined at the end
of each month on the basis of the average net assets of the Portfolio for each
day during the month.
The Portfolio will be managed by the following investment professionals who
comprise the Manager's Senior Secured team. While Stephen Alfieri will have
primary responsibility for the day-to-day management of the Portfolio, all of
the individuals listed below will have significant input into the Portfolio's
investments.
<TABLE>
<CAPTION>
NAME TITLE BUSINESS EXPERIENCE
- --------------------------- ---------------------- ------------------------------------------------------------------
<S> <C> <C>
Stephen M. Alfieri Managing Director Portfolio Manager and Research Analyst for the Manager since 1992.
Mr. Alfieri was associated with Manufacturers Hanover Trust
Company (now Chase Manhattan Bank) from 1986 to 1992, where he
served in a variety of capacities in the Acquisition Finance
Group.
Christopher E. Jansen Managing Director Portfolio Manager and Research Analyst for the Manager since 1990.
From 1983 to 1990, Mr. Jansen worked in the Acquisition Finance
Group at Manufacturers Hanover Trust Company (now Chase Manhattan
Bank), where he specialized in the structuring and negotiation of
highly leveraged financings.
Christopher A. Bondy Vice President Senior Secured Loan Research Analyst for the Manager since 1993.
From 1988 to 1993, Mr. Bondy held a variety of positions with The
Bank of Tokyo Trust Company. From 1986 to 1988, Mr. Bondy was a
Statistical Analyst with Moody's Investors Service, Inc.
Gregory L. Smith Vice President Senior Secured Loan Research Analyst for the Manager since 1995.
Mr. Smith was a Vice President for Continental Bank/Bank of
America from 1993 to 1995 and he held a variety of positions with
Chemical Bank (now Chase Manhattan Bank) from 1986 to 1993.
</TABLE>
Pursuant to a Sub-Advisory and Sub-Administration Agreement between the Manager
and Chancellor LGT, the latter acts as the investment sub-adviser and
administrator of the Portfolio. Chancellor LGT, located at 50 California Street,
San Francisco, CA 94111 and 1166 Avenue of the Americas, New York, NY 10036, is
the investment sub-adviser with respect to certain of the Portfolio's assets, as
determined by the Manager (the "Sub-Advised Assets"). It is anticipated that the
Sub-Advised Assets will consist of the Portfolio's cash and cash equivalents and
short-term investment grade debt obligations, but may also include other asset
classes. With respect to the Sub-Advised Assets, Chancellor LGT
Prospectus Page 31
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
has responsibility for making decisions to buy, sell or hold a particular
security, subject to review by the Board of Trustees of the Portfolio. In
providing investment sub-advisory services for the Portfolio, Chancellor LGT
will consider analyses from various sources, make the necessary investment
decisions, and place orders for transactions accordingly. Chancellor LGT will
also provide all administrative services to the Portfolio, including assistance
in the preparation of filings with the SEC and other regulatory bodies and
supervision of custodial, accounting and other services by third party service
providers. The Manager (and not the Fund or the Portfolio) pays Chancellor LGT a
monthly fee for investment sub-advisory and sub-administration services at the
annual rate of 0.95% of the Portfolio's average daily net assets delegated to
it.
Daniel S. Baldwin, Jr. will provide day-to-day management of the Sub-Advised
Assets of the Portfolio. Mr. Baldwin has been a Managing Director of Chancellor
LGT since November 1, 1996, and was a Managing Director of Chancellor Capital
Management, Inc. from 1985 through October 31, 1996. From 1982 to 1984, Mr.
Baldwin was Chief Investment Officer at First Pyramid Life. Prior thereto, Mr.
Baldwin was a Portfolio Manager at First Variable Life from 1977 to 1982, and a
Portfolio Manager with Union Planters National Bank from 1974 to 1977. Mr.
Baldwin is also a member of the board of directors of the Manager.
The Manager is a subsidiary of Chancellor LGT. As of December 31, 1996, the
Manager had assets under management totaling approximately $3.3 billion and the
Manager ranked as the largest institutional investment manager of the senior
secured asset class. Chancellor LGT and its worldwide asset management
affiliates have provided investment management and/or administration services to
institutional, corporate and individual clients around the world since 1969. The
U.S. offices of the Manager are located at 1166 Avenue of the Americas, New
York, NY 10036.
Chancellor LGT and its worldwide affiliates, including LGT Bank in
Liechtenstein, formerly Bank in Liechtenstein, comprise Liechtenstein Global
Trust, formerly BIL GT Group Limited. Liechtenstein Global Trust is a provider
of global asset management and private banking products and services to
institutional and individual investors. Liechtenstein Global Trust in controlled
by the Prince of Liechtenstein Foundation, which serves as a parent organization
for the various business enterprises of the Princely Family of Liechtenstein.
The principal business address of the Prince of Liechtenstein Foundation is
Herrengasse 12, FL-9490, Vaduz, Liechtenstein.
As of December 31, 1996, Chancellor LGT and its worldwide asset management
affiliates managed approximately $62.8 billion. In the United States, as of
December 31, 1996, Chancellor LGT managed or administered approximately $9.7
billion of GT Global Mutual Funds. As of December 31, 1996, assets entrusted to
Liechtenstein Global Trust totaled approximately $84 billion.
On October 31, 1996, Chancellor Capital Management, Inc. ("Chancellor Capital")
merged with LGT Asset Management, Inc. to form Chancellor LGT. As of September
30, 1996, Chancellor Capital and its affiliates, including the Manager, were the
15th largest independent investment manager in the United States with
approximately $33 billion in assets under management. Chancellor Capital
specialized in public and private U.S. equity and fixed income portfolio
management for over 300 U.S. institutional clients.
The Administration Agreement provides that, subject to the direction of the
Board of Directors of the Fund, Chancellor LGT will perform certain
administrative services for the Fund. Chancellor LGT will furnish corporate
officers and clerical staff, provide office space, services and equipment,
prepare or assist in the preparation of reports and proxy materials to
stockholders and filings with the SEC and other regulatory bodies, and supervise
the provision of custodial, accounting and other services by third party service
providers. The Fund will pay administration fees at the annualized rate of 0.25%
of the Fund's average daily net assets.
Unless earlier terminated as described below, the Portfolio's Investment
Management and Administration Contract, the Portfolio's Sub-Advisory and
Sub-Administration Agreement, and the Fund's Administration Agreement will
remain in effect for two years from the date of this Prospectus and from year to
year thereafter if approved annually (a) by the Board of Directors/Trustees of
the Fund and the Portfolio or by a majority of the outstanding shares of the
Fund and the Portfolio, and (b) by a majority of the Directors/Trustees who are
not parties to such contract or interested persons (as defined in the 1940 Act)
of any such party. Such contracts are not assignable and may be terminated
without penalty on 60 days' written notice at the option of either party thereto
or by the vote of the stockholders of the Fund.
Chancellor LGT also serves as the Fund's and the Portfolio's pricing and
accounting agent. Each of the Fund and the Portfolio will pay a monthly fee to
Chancellor LGT for these services at the annualized rate, respectively, of .02%
and .01% of their average daily net assets.
Prospectus Page 32
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
DIRECTORS AND EXECUTIVE OFFICERS
- --------------------------------------------------------------------------------
The Directors and executive officers of the Fund, their ages and their principal
occupations during the last five years are set forth below.
<TABLE>
<CAPTION>
NAMES, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
FUND AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------
<S> <C>
William J. Guilfoyle*, 38 Director, LGT Asset Management, Inc. since 1996; Director, G.T. Insurance
Director, Chairman of the Board and Agency ("G.T. Insurance") since 1996; Member, Liechtenstein Global Trust AG
President (holding company of the various international LGT companies) Advisory Board
50 California Street since January 1996; President, GT Global since 1995; President and Chief
San Francisco, CA 94111 Executive Officer, G.T. Insurance since 1995; Senior Vice President and
Director, Sales and Marketing, G.T. Insurance from April 1995 to November
1995; Vice President and Director of Marketing, GT Global from 1987 to 1995;
Senior Vice President, Retail Marketing, G.T. Insurance from 1993 to 1995; and
Vice President, G.T. Insurance from 1992 to 1993. Mr. Guilfoyle also is a
director or trustee of each of the other investment companies registered under
the 1940 Act that is managed or administered by Chancellor LGT.
C. Derek Anderson, 55 Chief Executive Officer, Anderson Capital Management, Inc.; Chairman and Chief
Director Executive Officer, Plantagenet Holdings, Ltd. from 1991 to present; Director,
220 Sansome Street Munsingwear, Inc.; and Director, American Heritage Group Inc. and various
Suite 400 other companies. Mr. Anderson also is a director or trustee of each of the
San Francisco, CA 94104 other investment companies registered under the 1940 Act that is managed or
administered by Chancellor LGT.
Frank S. Bayley, 57 Partner with Baker & McKenzie (a law firm); Director and Chairman, C.D.
Director Stimson Company (a private investment company); and Trustee, Seattle Art
Two Embarcadero Center Museum. Mr. Bayley also is a director or trustee or each of the other
Suite 2400 investment companies registered under the 1940 Act that is managed or
San Francisco, CA 94111 administered by Chancellor LGT.
Arthur C. Patterson, 53 Managing Partner, Accel Partners (a venture capital firm). He also serves as a
Director director of various computing and software companies. Mr. Patterson also is a
One Embarcadero Center director or trustee of each of the other investment companies registered under
Suite 3820 the 1940 Act that is managed or administered by Chancellor LGT.
San Francisco, CA 94111
Ruth H. Quigley, 61 Private investor; and President, Quigley Friedlander & Co., Inc. (a financial
Director advisory services firm) from 1984 to 1986. Ms. Quigley also is a director or
1055 California Street trustee or each of the other investment companies registered under the 1940
San Francisco, CA 94108 Act that is managed or administered by Chancellor LGT.
Robert G. Wade, Jr.*, 69 Consultant to Chancellor LGT; Chairman of the Board of Chancellor Capital
Director Management, Inc. from January 1995 to October 1996; President, Chief Executive
1166 Avenue of the Americas Officer and Chairman of the Board of Chancellor Capital Management, Inc. from
New York, NY 10036 1988 to January 1995. Mr. Wade also is a director or trustee of each of the
other investment companies registered under the 1940 Act that is managed or
administered by Chancellor LGT.
</TABLE>
- --------------
* Mr. Guilfoyle and Mr. Wade are "interested persons" of the Fund as defined by
the 1940 Act due to their affiliation with the LGT companies.
Prospectus Page 33
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
<TABLE>
<CAPTION>
NAMES, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
FUND AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------
<S> <C>
James R. Tufts, 38 Chief Information Officer for Chancellor LGT since October
Vice President and Chief 1996; President, GT Services since 1995; Senior Vice President
Financial Officer -- Finance and Administration, GT Global, GT Services and G.T.
50 California Street Insurance, from 1994 to 1995; Senior Vice President -- Finance
San Francisco, CA 94111 and Administration, LGT Asset Management from 1994 to October
1996; Vice President -- Finance, LGT Asset Management, GT
Global and GT Services from 1990 to 1994; Vice President --
Finance, G.T. Insurance from 1992 to 1994; and Director of LGT
Asset Management, GT Global and GT Services since 1991.
Kenneth W. Chancey, 51 Vice President -- Mutual Fund Accounting, Chancellor LGT since
Vice President and 1992; and Vice President, Putnam Fiduciary Trust Company from
Principal Accounting Officer 1989 to 1992.
50 California Street
San Francisco, CA 94111
Helge K. Lee, 50 Executive Vice President, Asset Management Division,
Vice President Liechtenstein Global Trust since October 1996; Senior Vice
1166 Avenue of the Americas President, LGT Asset Management, GT Global, GT Services and
New York, NY 10036 G.T. Insurance from February 1996 to October 1996; Vice
President, LGT Asset Management, GT Global, GT Services and
G.T. Insurance from May 1994 to February 1996; General Counsel,
LGT Asset Management, GT Global, GT Services and G.T. Insurance
from May 1994 to October 1996; Secretary, LGT Asset Management,
GT Global, GT Services and G.T. Insurance from May 1994 to
October 1996; Senior Vice President, General Counsel and
Secretary, Strong/Corneliuson Management, Inc.; and Secretary,
each of the Strong Funds from October 1991 to May 1994.
David J. Thelander, 41 Vice President and Assistant General Counsel, Chancellor LGT
Secretary since February 1996; Assistant General Counsel, LGT Asset
50 California Street Management, Inc. from December 1994 through February 1996;
San Francisco, CA 94111 Associate, Kirkpatrick & Lockhart LLP from September 1993
through December 1994; Attorney Adviser and Senior Counsel,
Securities and Exchange Commission, September 1989 through
September 1993.
Daniel R. Waltcher, 33 Vice President and Senior Counsel, Chancellor LGT since July
Assistant Secretary 1995; Associate, Simpson Thacher & Bartlett from September 1989
1166 Avenue of the Americas through June 1995.
New York, NY 10036
</TABLE>
------------------------------
The Board of Directors of the Fund has an Audit Committee, comprised of Miss
Quigley, and Messrs. Anderson, Bayley and Patterson, which is responsible for
reviewing and evaluating the audit function, including recommending firms to
serve as independent auditors of the Fund. Each of the officers of the Fund is
also an officer of each of the other investment companies registered under the
1940 Act that are managed or administered by Chancellor LGT. The Fund pays each
Director who is not a director, officer or employee of the Manager or any
affiliated company $5,000 a year, plus $300 for each meeting of the Board
attended by the Director, and reimburses travel and other expenses incurred in
connection with attending Board meetings. Other Directors and officers receive
no compensation or expense reimbursement from the Fund. Because the Fund has not
yet commenced operations, no Director or officer of the Fund owns any shares of
the Fund. The Fund requires no employees since the Manager and other third-party
service providers perform substantially all of the services necessary for the
Fund's operations.
Prospectus Page 34
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
PORTFOLIO TRANSACTIONS
- --------------------------------------------------------------------------------
Subject to policies established by the Portfolio's Board of Trustees, the
Manager is responsible for the execution of the Portfolio's transactions and the
selection of brokers and dealers who execute such transactions on behalf of the
Fund. In executing transactions for the Portfolio, the Manager seeks the best
net results for the 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 reasonable competitive commission rates and
spreads, payment of the lowest commission or spread is not necessarily
consistent with the best net results. The Portfolio has no obligation to deal
with any broker or dealer or group of brokers in the execution of portfolio
transactions.
Consistent with the interests of the Portfolio, the Manager may select brokers
to execute the Portfolio's portfolio transactions on the basis of the research
and brokerage services they provide to the Manager for its use in managing the
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 brokers are in addition to, and not in
lieu of, the services required to be performed by the Manager under the
Investment Management Contract (defined above). A commission paid to such
brokers 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
Portfolio and its other clients and that the total commissions paid by the
Portfolio will be reasonable in relation to the benefits received by the
Portfolio over the long term.
Investment decisions for the 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 the Portfolio. In such cases, purchases
or sales are 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 the
Portfolio is concerned, in other cases the Manager believes that coordination
and the ability to participate in volume transactions will be beneficial to the
Portfolio.
The Portfolio contemplates that, consistent with the policy of obtaining the
best net results, brokerage transactions may be conducted through certain
companies that are members of Liechtenstein Global Trust. The Portfolio's Board
of Trustees has adopted procedures in conformity with Rule 17e-1 under the 1940
Act to ensure that all brokerage commissions paid to such affiliates are
reasonable and fair in the context of the market in which they are operating.
Any such transactions will be effected and related compensation paid only in
accordance with applicable SEC regulations.
The Portfolio engages in trading when the Manager has concluded that the sale of
a security owned by the Portfolio and/or the purchase of another security can
enhance principal and/or increase income. A security may be sold to avoid any
prospective decline in market value, or a security may be purchased in
anticipation of a market rise. Consistent with the Portfolio's investment
objective, a security also may be sold and a comparable security purchased
coincidentally in order to take advantage of what is believed to be a disparity
in the normal yield and price relationship between the two securities.
The Portfolio's portfolio turnover rate is not expected to exceed 100%, but may
vary greatly from year to year and will not be a limiting factor when the
Manager deems portfolio changes appropriate. Although the Portfolio generally
does not intend to trade for short-term profits, the securities held by the
Portfolio will be sold whenever
Prospectus Page 35
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
the Manager believes it is appropriate to do so, without regard to the length of
time a particular security may have been held. A 100% portfolio turnover rate
would occur if the lesser of the value of purchases or sales of the Portfolio's
securities for a year (excluding purchases of U.S. Treasury and other securities
with a maturity at the date of purchase of one year or less) were equal to 100%
of the average monthly value of the securities, excluding short-term
investments, held by the Portfolio during such year. Higher portfolio turnover
involves correspondingly greater brokerage commissions and other transaction
costs that the Portfolio will bear directly.
- --------------------------------------------------------------------------------
DIVIDENDS AND OTHER DISTRIBUTIONS
- --------------------------------------------------------------------------------
The Fund intends to distribute substantially all of its net investment income,
which consists generally of its share of the Portfolio's net investment income,
reduced by interest on the Fund's borrowings and dividends or interest on its
senior securities, if any. Dividends from such income are declared daily and
paid monthly to holders of Common Stock. The Fund anticipates that it will begin
paying dividends approximately 45 days after the conclusion of the subscription
period. Substantially all of the Fund's share of the Portfolio's net realized
long-and short-term capital gains, if any, are distributed at least annually to
Common Stockholders. Shares of Common Stock accrue dividends as long as they are
issued and outstanding (i.e., from the settlement date of a purchase order to
the settlement date of a Tender Offer).
Under the 1940 Act, the Fund is not permitted to incur indebtedness unless
immediately after such incurrence it has an asset coverage of at least 300% of
the aggregate outstanding principal balance of the indebtedness. Additionally,
under the 1940 Act, the Fund may not declare any dividend or other distribution
on any class of its capital stock or purchase any such capital stock unless it
has, at the time of the declaration of any such distribution or at the time of
any such purchase, asset coverage of at least 300% of the aggregate indebtedness
after deducting the amount of such distribution, or purchase price, as the case
may be. This latter limitation -- and a limitation on the Fund's ability to
declare any cash dividends or other distributions on the Common Stock while any
shares of preferred stock are outstanding -- could under certain circumstances
impair its ability to maintain its qualification for taxation as a RIC. See
"Special Considerations and Risk Factors -- Effects of Leverage" and "Taxes."
Dividends and other distributions to Common Stockholders may be automatically
reinvested in shares of Common Stock pursuant to the Fund's Dividend
Reinvestment Plan. See "Dividend Reinvestment Plan." Dividends and other
distributions will be taxable to stockholders whether they are so reinvested in
shares of the Fund or received in cash. See "Taxes."
- --------------------------------------------------------------------------------
TAXES
- --------------------------------------------------------------------------------
TAXATION OF THE FUND
The Fund intends to qualify for the special tax treatment afforded RICs under
Subchapter M of the Code. To qualify for that treatment, the Fund must
distribute to its stockholders for each taxable year at least 90% of its
investment company taxable income (consisting generally of net investment
income, net short-term capital gains, and net gains from certain foreign
currency transactions) and must meet several additional requirements. Among
these requirements are 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 foreign currencies, or other income derived with respect to its
business of investing in securities or those currencies; (2) the Fund must
derive less than 30% of
Prospectus Page 36
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
its gross income each taxable year from the sale or other disposition of
securities, or foreign currencies that are not directly related to its principal
business of investing in securities, held for less than three months; and (3) at
the close of each quarter of the Fund's taxable year, (i) at least 50% of the
value of its total assets must be represented by cash and cash items, U.S.
Government securities, and 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 voting
securities, and (ii) not more than 25% of the value of its total assets may be
invested in securities (other than U.S. Government securities) of any one
issuer.
The Fund, as an investor in the Portfolio, will be deemed to own a proportionate
share of the Portfolio's assets, and to earn a proportionate share of the
Portfolio's income, for purposes of determining whether the Fund satisfies all
the requirements described above to qualify as a RIC. In each taxable year that
it so qualifies, the Fund (but not its stockholders) will not be subject to
federal income tax on that part of its investment company taxable income and net
capital gain (the excess of net long-term capital gain over net short-term
capital loss derived from the sale of securities or from certain transactions in
interest rate swaps) that it distributes to its stockholders.
The Fund will be subject to a nondeductible 4% excise tax ("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.
See the next section for a discussion of the tax consequences to the Fund of
certain transactions engaged in by the Portfolio.
TAXATION OF THE PORTFOLIO
The Portfolio will be treated as a partnership for federal income tax purposes
and will not be a "publicly traded partnership." As a result, the Portfolio will
not be subject to federal income tax; instead, the Fund, as an investor in the
Portfolio, will be required to take into account in determining its federal
income tax liability its share of the Portfolio's income, gains, losses,
deductions, and credits, without regard to whether it has received any cash
distributions from the Portfolio. The Portfolio also will not be subject to
state income or franchise tax.
Because, as noted above, the Fund will be deemed to own a proportionate share of
the Portfolio's assets, and to earn a proportionate share of the Portfolio's
income, for purposes of determining whether the Fund satisfies the requirements
to qualify as a RIC, the Portfolio intends to conduct its operations so that the
Fund will be able to satisfy all those requirements.
Distributions to the Fund from the Portfolio (whether pursuant to a partial or
complete withdrawal in connection with a tender offer by the Portfolio or
otherwise) will not result in the Fund's recognition of any gain or loss for
federal income tax purposes, except that (1) gain will be recognized to the
extent any cash that is distributed exceeds the Fund's basis for its interest in
the Portfolio before the distribution, (2) income or gain will be recognized if
the distribution is in liquidation of the Fund's entire interest in the
Portfolio and includes a disproportionate share of any unrealized receivables
held by the Portfolio, and (3) loss will be recognized if a liquidation
distribution consists solely of cash and/or unrealized receivables. The Fund's
basis for its interest in the Portfolio generally will equal the amount of cash
the Fund invests in the Portfolio, increased by the Fund's share of the
Portfolio's net income and gains and decreased by (a) the amount of cash and the
basis of any property the Portfolio distributes to the Fund and (b) the Fund's
share of the Portfolio's losses.
Interest received by the Portfolio may be subject to income, withholding, or
other taxes imposed by foreign countries and U.S. possessions that would reduce
the yield on its securities. Tax conventions between certain countries and the
United States may reduce or eliminate these foreign taxes, however, and many
foreign countries do not impose taxes on capital gains in respect of investments
by foreign investors.
Gains or losses (1) from the disposition of foreign currencies, (2) on the
disposition of a debt security denominated in a foreign currency that are
attributable to fluctuations in the value of the foreign currency between the
date of acquisition of the security and the date of disposition, and (3) that
are attributable to fluctuations in exchange rates that occur between the time
the Portfolio accrues interest or other receivables or expenses or other
liabilities denominated in a foreign currency and the time it actually collects
the receivables or pays the liabilities, generally are treated as ordinary
income or loss. These gains or losses, referred to under the Code as "section
988" gains or losses, may increase or decrease the amount of investment
Prospectus Page 37
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
company taxable income available to the Fund for distribution to its
stockholders.
The federal income tax rules governing the taxation of interest rate swaps are
not entirely clear and may require the Portfolio to treat payments received
under such arrangements as ordinary income and to amortize payments under
certain circumstances. The Portfolio will limit its activity in this regard in
order to enable the Fund to maintain its qualification as a RIC.
TAXATION OF THE STOCKHOLDERS
Dividends paid by the Fund from its investment company taxable income, whether
received in cash or reinvested in Fund shares pursuant to the Plan, are taxable
to its stockholders as ordinary income to the extent of its earnings and
profits. (Any distributions in excess of the Fund's earnings and profits first
will reduce the adjusted tax basis of a holder's Common Stock and, after that
basis is reduced to zero, will constitute capital gains to the stockholder,
assuming the Common Stock is held as a capital asset.) Distributions, if any,
from the Fund's net capital gain, when designated as such, are taxable to its
stockholders as long-term capital gains, regardless of the length of time they
have owned their Fund shares and whether received by them in cash or reinvested
in Fund shares pursuant to the Plan. The Fund annually will provide its
stockholders with a written notice designating the amounts of any capital gain
distributions.
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. Distributions
by the Fund generally will not be eligible for the dividends-received deduction
allowed to corporations. Dividends and other distributions declared by the Fund
in, and payable to stockholders 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 stockholders 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 stockholders for the year in which that December 31 falls.
The Fund must withhold 31% from dividends, capital gain distributions, and
proceeds from sales of Common Stock pursuant to a Tender Offer, if any, payable
to any individuals and certain other noncorporate stockholders who have not
furnished to the Fund a correct taxpayer identification number ("TIN") or a
properly completed claim for exemption on Form W-8 or W-9 ("backup
withholding"). Withholding at that rate also is required from dividends and
capital gain distributions payable to such stockholders who otherwise are
subject to backup withholding. When establishing an account, an investor must
certify under penalty of perjury that the investor's TIN is correct and that the
investor is not otherwise subject to backup withholding.
A loss realized on a sale or exchange of shares of the Fund will be disallowed
if other Fund shares are acquired (whether through the reinvestment of
distributions under the Plan or otherwise) within a 61-day period beginning 30
days before and ending 30 days after the date that the shares are disposed of.
In such a case, the basis of the shares acquired will be adjusted to reflect the
disallowed loss.
Dividends paid by the Fund to a stockholder 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 stockholder") will
be subject to U.S. withholding tax (at a rate of 30% or lower treaty rate).
Withholding will not apply if a dividend paid by the Fund to a foreign
stockholder is "effectively connected with the conduct of a U.S. trade or
business," in which case the reporting and withholding requirements applicable
to domestic stockholders will apply. Distributions of net capital gain are not
subject to withholding, but in the case of a foreign stockholder who is a
nonresident alien individual, those distributions ordinarily will be subject to
U.S. income tax at a rate of 30% (or lower treaty rate) if the individual is
physically present in the United States for more than 182 days during the
taxable year and the distributions are attributable to a fixed place of business
maintained by the individual in the United States. Foreign stockholders are
urged to consult their own tax advisers concerning the applicability of this
withholding tax.
TENDER OFFERS
A holder of Common Stock who, pursuant to any Tender Offer, tenders all shares
of Common Stock owned by such stockholder and any shares considered owned
thereby under attribution rules contained in the Code will realize a taxable
gain or loss depending upon such stockholder's basis for the shares. Such gain
or loss will be treated as capital gain or loss if the shares are held as
capital assets and will be long-term or short-term depending on the
stockholder's holding period for the shares.
Prospectus Page 38
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
Different tax consequences may apply to tendering and non-tendering holders of
Common Stock in connection with a Tender Offer, and these consequences will be
disclosed in the related offering documents. For example, if a tendering holder
of Common Stock tenders less than all shares owned by or attributed to such
stockholder, and if the payment to such stockholder does not otherwise qualify
as a sale or exchange, the proceeds received will be treated as a taxable
dividend, a return of capital, or capital gain depending on the Fund's earnings
and profits and the stockholder's basis for the tendered shares. Also, there is
a risk that non-tendering holders of Common Stock may be considered to have
received a deemed distribution that may be a taxable dividend in whole or in
part. Holders of Common Stock may wish to consult their tax advisers prior to
tendering.
* * * * *
The foregoing is a general and abbreviated summary of certain federal tax
considerations affecting the Fund and its stockholders. For further information,
reference should be made to the pertinent Code sections and the regulations
promulgated thereunder, which are subject to change by legislative, judicial, or
administrative action either prospectively or retroactively. Investors are urged
to consult their tax advisers regarding specific questions as to federal, state,
local, or foreign taxes. Foreign investors should consider applicable foreign
taxes in their evaluation of an investment in the Fund.
- --------------------------------------------------------------------------------
DIVIDEND REINVESTMENT PLAN
- --------------------------------------------------------------------------------
Pursuant to the Plan, each stockholder will be deemed to have elected to have
all dividends and other distributions, net of any applicable withholding taxes,
automatically reinvested in additional shares of Common Stock, newly issued by
the Fund, unless GT Global Investor Services, Inc., the Fund's transfer agent,
as the Plan Agent (the "Plan Agent"), is otherwise instructed by the stockholder
in writing. Such dividends and distributions will be reinvested in shares of
Common Stock at the net asset value per share next determined on the payable
date of such dividend or distribution. Stockholders who do not participate in
the Plan will receive all dividends and other distributions in cash, net of any
applicable withholding taxes, paid in U.S. dollars by check mailed directly to
the stockholder by GT Global Investor Services, Inc., as dividend-paying agent.
Stockholders who do not wish to have dividends and other distributions
automatically reinvested should notify the Plan Agent at California Plaza, 2121
N. California Boulevard, Suite 450, Walnut Creek, California 94596. Dividends
and other distributions with respect to shares of Common Stock registered in the
name of a broker-dealer or other nominee (i.e., in "street name") will be
reinvested under the Plan unless such service is not provided by the
broker-dealer or nominee or the stockholder elects to receive dividends and
other distributions in cash. A stockholder whose shares of Common Stock are held
by a broker-dealer or nominee that does not provide a dividend reinvestment
service may be required to have his shares of Common Stock registered in his own
name to participate in the Plan. Similarly, a stockholder may be unable to
transfer his account to certain broker-dealers and continue to participate in
the Plan. Investors who own shares of Common Stock registered in street name
should contact the broker or nominee for details concerning participation in the
Plan.
The Plan Agent will maintain all participant accounts in the Plan and furnish
written confirmations of all transactions in the accounts, including information
needed by participants for personal and tax records. Shares of Common Stock in
the account of each participant may be held by the Plan Agent in
non-certificated form in the name of the Plan Agent or the Plan Agent's nominee,
and each stockholder's proxy will include those shares of Common Stock purchased
pursuant to the Plan. Participants in the Plan may withdraw from the Plan upon
written notice to the Plan Agent.
In the case of a stockholder of record, such as a bank, broker-dealer or
nominee, that holds shares of Common Stock for others who are the beneficial
owners, the Plan Agent will administer the Plan on the basis of the number of
shares of Common
Prospectus Page 39
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
Stock certified from time to time by the record stockholder as representing the
total amount registered in the stockholder's name and held for the account of
beneficial owners who participate in the Plan.
There will be no charge to participants for reinvesting dividends or other
distributions. The Plan Agent's fees for the handling of reinvestment of
distributions will be paid by the Fund.
All registered holders of shares of Common Stock (other than brokers and
nominees) will be mailed information regarding the Plan, including a form with
which they may elect to terminate a participation in the Plan and receive
further dividends and other distributions in cash. An election to terminate
participation in the Plan must be made in writing to the Plan Agent and should
include the stockholder's name and address as they appear on the share
certificate. An election to terminate, until such election is changed, will be
deemed to be an election by a stockholder to take all subsequent distributions
in cash. An election will be effective only for distributions declared and
having a record date at least ten days after the date on which the election is
received.
The receipt of dividends and other distributions in shares of Common Stock under
the Plan will not relieve participants of any income tax (including withholding
taxes) that may be payable on such distributions. See "Taxes."
Experience under the Plan may indicate that changes in the Plan are desirable.
Accordingly, the Fund and the Plan Agent reserve the right to terminate the Plan
as applied to any dividend or other distribution paid subsequent to notice of
the termination sent to the participants in the Plan at least 30 days before the
record date for the distribution. The Plan also may be amended by the Fund or
the Plan Agent, but (except when necessary or appropriate to comply with
applicable law, rules or policies of a regulatory authority) only by at least 30
days' written notice to participants in the Plan. All correspondence concerning
the Plan should be directed to the Plan Agent, California Plaza, 2121 N.
California Boulevard, Suite 450, Walnut Creek, California 94596.
- --------------------------------------------------------------------------------
AUTOMATIC INVESTMENT PLAN
- --------------------------------------------------------------------------------
Investors may purchase shares of the Fund's Common Stock through the GT Global
Automatic Investment Plan. Under this Plan, an amount specified by the
stockholder of $100 or more (or $25 for Individual Retirement Accounts, 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 GT Global
Investor Services, Inc. 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. Investors should contact
their brokers or GT Global Investor Services, Inc. for more information.
- --------------------------------------------------------------------------------
EXCHANGES
- --------------------------------------------------------------------------------
The Fund may make available to stockholders who tender shares of the Fund's
Common Stock pursuant to a Tender Offer the privilege of exchanging Fund shares
at net asset value for Class B shares of certain open-end investment companies
managed by Chancellor LGT ("GT Global Funds") that are subject to a contingent
deferred sales charge. Any such exchange must be effected in connection with a
stockholder's tender of Fund shares in a Tender Offer. No Early Withdrawal
Charge will be imposed on stockholders choosing to exchange their Fund shares
for shares of any such GT Global Fund; however, the exchanging stockholders will
be subject to a contingent deferred
Prospectus Page 40
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
sales charge on any such GT Global Fund equivalent to the Early Withdrawal
Charge on Common Stock of the Fund. Thus, shares of such GT Global Fund may be
subject to a contingent deferred sales charge upon a subsequent redemption from
the GT Global Fund. The purchase of shares of such GT Global Fund will be deemed
to have occurred at the time of the initial purchase of the Fund's Common Stock.
Holders of Class B GT Global Fund shares will not be permitted to exchange those
shares for shares of the Fund's Common Stock.
The prospectus for each GT Global Fund describes its investment objectives and
policies. Shareholders can obtain, without charge, a prospectus by calling (800)
824-1580 and should consider these objectives and policies carefully before
requesting an exchange. Each exchange must involve proceeds from Common Stock of
the Fund that have a net asset value of at least $500. An exchange is a taxable
event and may result in a taxable gain or loss.
- --------------------------------------------------------------------------------
NET ASSET VALUE
- --------------------------------------------------------------------------------
The net asset value per share of Common Stock is determined Monday through
Friday as of 15 minutes after the close of regular trading on the NYSE
(generally, 4:00 p.m., New York time), on each day during which the NYSE is
open. The NYSE is not open on New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
For purposes of determining the net asset value of a share of Common Stock, the
Fund's uninvested assets plus its share of the value of the securities and any
cash or other assets (including interest accumulated but not yet received) held
by the Portfolio minus all liabilities (including accrued expenses) of the Fund
and its share of all liabilities (including accrued expenses) of the Portfolio
is divided by the total number of shares of Common Stock outstanding at such
time. Expenses, including the fees payable to the Manager, are accrued daily.
The Manager, subject to guidelines adopted and periodically reviewed by the
Portfolio's Board of Trustees, values the Corporate Loans and Corporate Debt
Securities at fair value, which approximates market value. In valuing a
Corporate Loan or Corporate Debt Security, the Manager considers, among other
factors, (i) the creditworthiness of the Borrower and any Intermediate
Participants, (ii) the current interest rate, period until next interest rate
reset and maturity of the Corporate Loan or Corporate Debt Security, (iii)
recent prices in the market for instruments of similar quality, rate, period
until next prices in the market for instruments of similar quality, rate, period
until next interest rate reset and maturity. The Manager believes that
Intermediate Participants selling Corporate Loans or otherwise involved in a
Corporate Loan transaction may tend, in valuing Corporate Loans for their own
accounts, to be less sensitive to interest rate and credit quality changes and,
accordingly, the Manager may not rely solely on such valuations in valuing the
Corporate Loans for the Fund's account. In addition, because a secondary trading
market in Corporate Loans and Corporate Debt Securities has not yet fully
developed, in valuing Corporate Loans and Corporate Debt Securities, the Manager
may not rely solely on but may consider prices or quotations provided by banks,
dealers or pricing services with respect to secondary market transactions in
Corporate Loans and Corporate Debt Securities. To the extent that an active
secondary market in Corporate Loans and Corporate Debt Securities develops to a
reliable degree, or exists in respect of other loans or instruments deemed to be
similar to Corporate Loans and Corporate Debt Securities, the Manager may rely
to an increasing extent on such market prices and quotations in valuing the
Corporate Loans and Corporate Debt Securities held by the Portfolio.
Other portfolio securities (other than short-term obligations but including
listed issues) may be valued on the basis of prices furnished by one or more
pricing services which determine prices for normal, institutional-size trading
units of such securities using market information, transactions for comparable
securities and various relationships between securities which are generally
recognized by institutional traders. In certain circumstances, portfolio
securities are valued at the last sale price
Prospectus Page 41
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
on the exchange that is the primary market for such securities, or the last
quoted bid price for those securities for which the over-the-counter market is
the primary market or for listed securities in which there were no sales during
the day. The value of interest rate swaps, caps and floors is determined in
accordance with a formula and then confirmed periodically by obtaining a bank
quotation. Positions in options are valued at the last sale price on the market
where any such option is principally traded. Obligations with remaining
maturities of 60 days or less are valued at amortized cost unless this method no
longer produces fair valuations. Repurchase agreements are valued at cost plus
accrued interest. Rights or warrants to acquire stock or stock acquired pursuant
to the exercise of a right or warrant, may be valued taking into account various
factors such as original cost to the Portfolio, earnings and net worth of the
issuer, market prices for securities of similar issuers, assessment of the
issuer's future prosperity, liquidation value or third party transactions
involving the issuer's securities. Securities for which there exist no price
quotations or valuations and all other assets are valued at fair value as
determined in good faith by or on behalf of the Board of Trustees of the
Portfolio.
- --------------------------------------------------------------------------------
DESCRIPTION OF CAPITAL STOCK
- --------------------------------------------------------------------------------
The Fund is authorized to issue 1 billion shares of capital stock, $.001 par
value, all of which is classified as Common Stock. Although it has no current
intention of doing so, the Board of Directors of the Fund is authorized to
classify and reclassify any unissued shares of capital stock from time to time
by setting or changing the preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends or terms and conditions of
redemption of such shares by the Fund. The description of the capital stock and
the description under "Description of Capital Stock -- Certain Anti-Takeover
Provisions of the Articles of Incorporation" are subject to the provisions
contained in the Fund's Articles of Incorporation and Bylaws.
COMMON STOCK
Shares of the Common Stock have no preemptive, conversion, exchange or
redemption rights. Each share has equal voting, dividend, distribution and
liquidation rights. The outstanding shares of Common Stock are, and those
offered hereby, when issued, will be, fully paid and nonassessable. Stockholders
are entitled to one vote per share. All voting rights for the election of
directors are noncumulative, which means that the holders of more than 50% of
the shares can elect 100% of the directors then nominated for election if they
choose to do so and, in such event, the holders of the remaining shares will not
be able to elect any directors.
As of the date of this Prospectus, LGT Asset Management, Inc. ("LGT AM") owns
100% of the issued and outstanding shares of Common Stock of the Fund and, until
such time as the Fund completes the public offering of its Common Stock, LGT AM
will be deemed to control the Fund under the 1940 Act.
Shares of the Common Stock will be held in book-entry form unless physical
certificates are requested in writing by a Common Stockholder.
CERTAIN ANTI-TAKEOVER PROVISIONS OF THE ARTICLES OF INCORPORATION
The Fund presently has provisions in its Articles of Incorporation that have the
effect of limiting (i) the ability of other entities or persons to acquire
control of the Fund, (ii) the Fund's freedom to engage in certain transactions,
and (iii) the ability of the Fund's directors or stockholders to amend the
Articles of Incorporation. These provisions of the Articles of Incorporation may
be regarded as "anti-takeover" provisions. Under Maryland law and the Fund's
Articles of Incorporation, the affirmative vote of the holders of at least a
majority of the votes entitled to be cast is required for the consolidation of
the Fund with another corporation, a merger of the Fund with or into another
corporation (except for certain mergers in which the Fund is the successor), a
statutory share exchange in which the Fund is not the successor, a sale or
transfer of all or substantially all of the Fund's assets, the dissolution of
the Fund and any amendment to the Fund's Articles of Incorporation. In addition,
the
Prospectus Page 42
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
affirmative vote of the holders of at least 66 2/3% (which is higher than that
required under Maryland law or the 1940 Act) of the outstanding shares of the
Fund's capital stock is required generally to authorize any of the following
transactions or to amend the provisions of the Articles of Incorporation
relating to such transactions:
(i) merger, consolidation or statutory share exchange of the Fund with or into
any other corporation;
(ii) issuance of any securities of the Fund to any person or entity for cash;
(iii) sale, lease or exchange of all or any substantial part of the assets of
the Fund to any entity or person (except assets having an aggregate market value
of less than $1,000,000); or
(iv) sale, lease or exchange to the Fund, in exchange for securities of the
Fund, of any assets of any entity or person (except assets having an aggregate
fair market value of less than $1,000,000).
A similar vote also would be required for any amendment of the Articles of
Incorporation to convert the Fund to an open-end investment company by making
any class of the Fund's capital stock a "redeemable security," as that term is
defined in the 1940 Act. Such vote would not be required with respect to any of
the foregoing transactions, however, when, under certain conditions, the Board
of Directors approves the transaction, although in certain cases involving
merger, consolidation or statutory share exchange or sale of all or
substantially all of the Fund's assets or the conversion of the Fund to an
open-end investment company, the affirmative vote of the holders of a majority
of the outstanding shares of the Fund's capital stock would nevertheless be
required. Reference is made to the Articles of Incorporation of the Fund, on
file with the SEC, for the full text of these provisions.
The provisions of the Articles of Incorporation described above and the Fund's
right to make a tender offer for its shares could have the effect of depriving
the stockholders of opportunities to sell their shares at a premium over net
asset value by discouraging a third party from seeking to obtain control of the
Fund in a tender offer or similar transaction. The overall effect of these
provisions is to render more difficult the accomplishment of a merger or the
assumption of control by a Principal Stockholder. They provide, however, the
advantage of potentially requiring persons seeking control of the Fund to
negotiate with its management regarding the price to be paid and facilitating
the continuity of the Fund's management, investment objectives and policies. The
Board of Directors of the Fund has considered the foregoing anti-takeover
provisions and concluded that they are in the best interest of the Fund and its
stockholders.
- --------------------------------------------------------------------------------
YIELD INFORMATION
- --------------------------------------------------------------------------------
From time to time the Fund may include its yield and/or total return for various
specified time periods in advertisements or information furnished to present or
prospective stockholders.
The yield of the Fund refers to the income generated by an investment in the
Fund over a stated period. Yield is calculated by annualizing the most recent
monthly distribution and dividing the product by the average maximum offering
price.
The Fund also may quote annual total return and aggregate total return
performance data. Total return quotations for the specified periods will be
computed by finding the rate of return (based on net investment income and any
capital gains or losses on portfolio investments over such periods) that would
equate the initial amount invested to the redeemable value of such investment at
the end of the period.
The calculation of yield and total return does not reflect the imposition of any
Early Withdrawal Charges or the amount of any stockholder's tax liability.
Yield and total return figures are based on the Fund's historical performance
and are not intended to indicate future performance. The Fund's yield is
expected to fluctuate, and its total return will vary depending on market
conditions, the Corporate Loans, Corporate Debt Securities and other securities
comprising the Portfolio's investments, the Fund's and the Portfolio's operating
expenses and the amount of net realized and unrealized capital gains or losses
during the period.
Prospectus Page 43
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
On occasion, the Fund may compare its yield to (1) LIBOR, quoted daily in The
Wall Street Journal, (2) the Prime Rate, quoted daily in The Wall Street Journal
as the base rate on corporate loans at large U.S. money center commercial banks,
(3) one or more averages compiled by Donoghue's Money Fund Report, a widely
recognized independent publication that monitors the performance of money market
mutual funds, (4) the average yield reported by the Bank Rate Monitor National
Index-TM- for money market deposit accounts offered by the 100 leading banks and
thrift institutions in the ten largest standard metropolitan statistical areas,
(5) yield data published by Lipper Analytical Services, Inc., or (6) the yield
on an investment in 90-day Treasury bills on a rolling basis, assuming quarterly
compounding. In addition, the Fund may compare the Prime Rate, the Donoghue's
averages and the other yield data described above to each other. As with yield
quotations, yield comparisons should not be considered indicative of the Fund's
yield or relative performance for any future period.
- --------------------------------------------------------------------------------
CUSTODIAN, TRANSFER AND DIVIDEND
DISBURSING AGENT AND REGISTRAR
- --------------------------------------------------------------------------------
State Street Bank and Trust Company, 1776 Heritage Drive, North Quincy,
Massachusetts 02171, will serve as custodian of the Fund's assets held in the
United States. Rules adopted under the 1940 Act permit the Fund to maintain its
securities and cash in the custody of certain eligible banks and securities
depositories. GT Global Investor Services, Inc. will serve as the Fund's
transfer and dividend disbursing agent and registrar.
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
LEGAL MATTERS
Certain legal matters in connection with the Common Stock offered hereby will be
passed on for the Fund by Kirkpatrick & Lockhart LLP, Washington, D.C.
INDEPENDENT ACCOUNTANTS
The Fund's independent accountants are Coopers & Lybrand L.L.P., One Post Office
Square, Boston, Massachusetts 02109. Coopers & Lybrand L.L.P. will conduct an
annual audit of the Fund, assist in the preparation of the Fund's federal and
state income tax returns and consult with the Fund as to matters of accounting,
regulatory filings, and federal and state income taxation.
FURTHER INFORMATION
Further information concerning the Common Stock and the Fund may be found in the
Registration Statement, on file with the SEC.
Prospectus Page 44
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The Fund will send unaudited semiannual and audited annual financial statements
of the Fund to stockholders, including a list of the portfolio of investments
held by the Fund.
The financial statement included in this Prospectus has been included in
reliance on the report of Coopers & Lybrand L.L.P., independent accountants,
given on the authority of that firm as experts in auditing and accounting.
The audited Statement of Assets and Liabilities of the Fund as of March 14, 1997
appears on the following pages.
Prospectus Page 45
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
REPORT OF INDEPENDENT ACCOUNTANT
- --------------------------------------------------------------------------------
To the Board of Directors and Stockholders of
GT Global Floating Rate Fund, Inc.:
We have audited the accompanying statement of assets and liabilities of GT
Global Floating Rate Fund, Inc. (the "Fund") as of March 14, 1997. This
financial statement is the responsibility of the Fund's management. Our
responsibility is to express an opinion on this financial statement based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. Our procedures included
confirmation of cash held by the custodian as of March 14, 1997. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the net assets of the Fund as of March 14, 1997, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
MARCH 21, 1997
Prospectus Page 46
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
MARCH 14, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Cash.............................................................................. $ 100,000
----------
Deferred organization expenses (Note 2)........................................... $ 116,345
----------
LIABILITIES
Payable for deferred organization expenses (Note 2)............................... $ 116,345
----------
Commitments (Notes 2 and 3)....................................................... $ 0
----------
NET ASSETS, applicable to 10,000 shares of Common Stock, $.001 par value, issued and
outstanding; 1,000,000,000 shares authorized....................................... $ 100,000
----------
NET ASSET VALUE PER SHARE........................................................... $ 10.00
----------
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO STATEMENT OF
ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
NOTE 1
GT Global Floating Rate Fund, Inc. (the "Fund") was incorporated under the laws
of the State of Maryland on December 4, 1996, and is registered under the
Investment Company Act of 1940, as amended, as a closed-end, non-diversified
management investment company. The Fund has had no operations to date other than
those relating to organization and registration.
NOTE 2
Costs incurred by the Fund in connection with its organization, estimated at
$116,345, will be deferred and amortized on a straight-line basis for a
five-year period beginning at the commencement of operations of the Fund.
Chancellor LGT Asset Management, Inc. ("Chancellor LGT"), the Fund's
administrator, has advanced certain of the Fund's organization costs incurred to
date; the Fund will reimburse Chancellor LGT for the amount of these advances at
the conclusion of the public offering.
NOTE 3
Chancellor LGT serves as the Fund's administrator under an Administration
Contract between the Fund and Chancellor LGT ("Administration Contract"). The
Administration Contract has an initial two-year term from the date of the
commencement of Fund operations and provides for administrative fees to be paid
to Chancellor LGT at the annualized rate of .25% of the Fund's average net
assets.
The Fund will invest all of its investable assets in Floating Rate Portfolio
(the "Portfolio"), a separate, non-diversified, closed-end investment company
that has the same investment objective as the Fund. Chancellor LGT Senior
Secured Management, Inc. (the "Manager") serves as the Portfolio's investment
manager and administrator under an Investment Management and Administration
Contract between the Manager and the Portfolio ("Management and Administration
Contract"). The Management and Administration Contract has an initial two-year
term from the date of commencement of Fund and Portfolio operations and provides
for investment management fees to be paid to the Manager at the annualized rate
of 0.95% of the Portfolio's average net assets.
NOTE 4
The Fund intends to meet the requirements for qualification as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended
("Code"). It is also the intention of the Fund to make distributions sufficient
to avoid imposition of any excise tax under Section 4982 of the Code.
Prospectus Page 47
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
APPENDIX: RATINGS OF SECURITIES
- --------------------------------------------------------------------------------
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S
("MOODY'S") SECURITIES RATINGS
AAA -- Securities which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." 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 -- Securities which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade securities. They are rated lower than the best securities 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 risks appear somewhat larger than in Aaa
securities.
A -- Securities which are rated A possess many favorable investment attributes
and are to be considered as 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 -- Securities which are rated Baa are considered as 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 securities lack outstanding
investment characteristics and in fact have speculative characteristics as well.
BA -- Securities which are rated Ba are judged to have speculative elements;
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 securities in this class.
B -- Securities which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payment or of
maintenance of other terms of the contract over any long period of time may be
small.
CAA -- Securities which are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to principal
or interest.
CA -- Securities which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C -- Securities which are rated C are the lowest rated class of securities, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Note: Those securities in the Aa, A, Baa, Ba and B groups which Moody's believes
possess the strongest investment attributes are designated by the symbols Aa1,
A1, Baa1, Ba1 and B1.
Prospectus Page 48
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT GLOBAL MUTUAL FUNDS
P.O. Box 7345 FLOATING RATE FUND
SAN FRANCISCO, CA 94120-7345 ACCOUNT APPLICATION
800/223-2138
</TABLE>
<TABLE>
<S> <C> <C>
/ / INDIVIDUAL / / JOINT TENANT / / GIFT/TRANSFER FOR MINOR / / TRUST / / CORP.
ACCOUNT REGISTRATION / / NEW ACCOUNT / / ACCOUNT REVISION (Account No.: ------------------------------)
</TABLE>
NOTE:
------- Trust registrations should specify name of trustee(s),
beneficiary(ies) and date of trust instrument. Registration for Uniform
Gifts/Transfers to Minors accounts should be in the name of one custodian and
one minor and include the state under which the custodianship is created.
<TABLE>
<S> <C> <C> <C>
-------------------------------------- ------------------------------------------------------------------
Owner Social Security Number / / or Tax I.D. Number / / (Check applicable box)
-------------------------------------- If more than one owner, social security number or taxpayer identification number
Co-owner 1 should be provided for first owner listed. If a purchase is made under Uniform
- -------------------------------------- Gift/Transfer to Minors Act, social security number of the minor must be provided.
Co-owner 2 Resident of / / U.S. / / Other (specify)-------------------------------
( )
----------------------------------------------------------------------- ----------------------------------
Street Address Home Telephone
( )
----------------------------------------------------------------------- ----------------------------------
City, State, Zip Code Business Telephone
</TABLE>
FUND SELECTION $1,000 minimum initial investment required for each Fund
selected. Checks should be made payable to "GT GLOBAL."
CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS TOTAL INITIAL INVESTMENT:
$
------------------------------------------------------------------------------
All capital gains and dividend distributions will be reinvested in additional
shares of the same class unless appropriate boxes below are checked:
/ / Pay capital gain distributions only in cash / / Pay dividends only in
cash / / Pay capital gain distributions AND dividends in cash.
AGREEMENTS & SIGNATURES
By the execution of this Account Application, I/we represent and warrant that
I/we have full right, power and authority and am/are of legal age in my/our
state of residence to make the investment applied for pursuant to this
Application. The person(s), if any, signing on behalf of the investor
represent and warrant that they are duly authorized to sign this Application
and to purchase, redeem or exchange shares of the Fund(s) on behalf of the
investor. I/WE HEREBY AFFIRM THAT I/WE HAVE RECEIVED A CURRENT PROSPECTUS OF
THE GT GLOBAL MUTUAL FUND(S) IN WHICH I/WE AM/ARE INVESTING AND I/WE AGREE TO
ITS TERMS AND CONDITIONS.
I/WE AND MY/OUR ASSIGNS AND SUCCESSORS UNDERSTAND AND AGREE THAT THE ACCOUNT
WILL BE SUBJECT TO THE TELEPHONE EXCHANGE AND TELEPHONE REDEMPTION PRIVILEGES
DESCRIBED IN THE CURRENT PROSPECTUS TO WHICH THIS APPLICATION IS ATTACHED AND
AGREE THAT GT GLOBAL, INC., G.T. GLOBAL GROWTH SERIES, G.T. INVESTMENT FUNDS,
INC., G.T. INVESTMENT PORTFOLIOS, INC. AND THE FUNDS' TRANSFER AGENT, THEIR
OFFICERS AND EMPLOYEES, WILL NOT BE LIABLE FOR ANY LOSS OR DAMAGES ARISING OUT
OF ANY SUCH TELEPHONE, TELEX OR TELEGRAPHIC INSTRUCTIONS REASONABLY BELIEVED
TO BE GENUINE, INCLUDING ANY SUCH LOSS OR DAMAGES DUE TO NEGLIGENCE ON THE
PART OF SUCH ENTITIES. THE INVESTOR(S) CERTIFIES(Y) AND AGREE(S) THAT THE
CERTIFICATIONS, AUTHORIZATIONS, DIRECTIONS AND RESTRICTIONS CONTAINED HEREIN
WILL CONTINUE UNTIL GT GLOBAL, INC., G.T. GLOBAL GROWTH SERIES, G.T.
INVESTMENT FUNDS, INC., G.T. INVESTMENT PORTFOLIOS, INC. OR THE FUNDS'
TRANSFER AGENT RECEIVES WRITTEN NOTICE OF ANY CHANGE OR REVOCATION. ANY CHANGE
IN THESE INSTRUCTIONS MUST BE IN WRITING AND IN SOME CASES, AS DESCRIBED IN
THE PROSPECTUS, REQUIRES THAT ALL SIGNATURES BE GUARANTEED.
PLEASE INDICATE THE NUMBER OF SIGNATURES REQUIRED TO PROCESS CHECKS OR
WRITTEN REDEMPTION REQUESTS: / / ONE / / TWO / / THREE / / FOUR.
(If you do not indicate the number of required signatures, ALL account
owners must sign checks and/or written redemption requests.)
UNDER PENALTIES OF PERJURY, I CERTIFY THAT THE TAXPAYER IDENTIFICATION
NUMBER ("NUMBER") PROVIDED ON THIS FORM IS MY (OR MY EMPLOYER'S, TRUST'S,
MINOR'S OR OTHER PAYEE'S) TRUE, CORRECT AND COMPLETE NUMBER AND MAY BE
ASSIGNED TO ANY NEW ACCOUNT OPENED UNDER THE EXCHANGE PRIVILEGE. I FURTHER
CERTIFY THAT I AM (OR THE PAYEE WHOSE NUMBER IS GIVEN IS) NOT SUBJECT TO
BACKUP WITHHOLDING BECAUSE: (A) I AM (OR THE PAYEE IS) EXEMPT FROM BACKUP
WITHHOLDING; (B) THE INTERNAL REVENUE SERVICE (THE "I.R.S.") HAS NOT NOTIFIED
ME THAT I AM (OR THE PAYEE IS) SUBJECT TO BACKUP WITHHOLDING AS A RESULT OF A
FAILURE TO REPORT ALL INTEREST OR DIVIDENDS; OR (C) THE I.R.S. HAS NOTIFIED ME
THAT I AM (THE PAYEE IS) NO LONGER SUBJECT TO BACKUP WITHHOLDING;
OR, / / I AM (THE PAYEE IS) SUBJECT TO BACKUP WITHHOLDING.
ALL ACCOUNT OWNERS MUST SIGN BELOW (Minors are not authorized signers)
Account revisions may require that signatures be guaranteed. Please see the
Prospectus.
THE I.R.S. DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT
OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING.
<TABLE>
<S> <C>
-----------------------------------------------------------
Date
X X
--------------------------------------------------------- ----------------------------------------------------------
X X
--------------------------------------------------------- ----------------------------------------------------------
</TABLE>
<PAGE>
ACCOUNT PRIVILEGES
SPECIAL PURCHASE
/ / I have completed and attached the Supplemental Application
for: / / AUTOMATIC INVESTMENT PLAN
AUTHORITY TO TRANSMIT REDEMPTION PROCEEDS TO PRE-DESIGNATED ACCOUNT
By completing the following section, redemptions which exceed $1,000 may be
wired or mailed to a Pre-Designated Account at your bank. (Wiring instructions
may be obtained from your bank.) A bank wire service fee may be charged.
------------------------------------------------------------------------------
Name of Bank
------------------------------------------------------------------------------
Bank Address
------------------------------------------------------------------------------
Bank A.B.A. Number Account Number
------------------------------------------------------------------------------
Names(s) in which Bank Account is Established
A corporation (or partnership) must also submit a "Corporate Resolution" (or
"Certificate of Partnership") indicating the names and titles of Officers
authorized to act on its behalf.
FOR USE BY AUTHORIZED AGENT (BROKER/DEALER) ONLY
We hereby submit this Account Application for the purchase of Class A shares
including such shares purchased under a Right of Accumulation or Letter of
Intent or for the purchase of Class B shares in accordance with the terms of
our Dealer Agreement with GT Global, Inc. and with the Prospectus and
Statement of Additional Information of each Fund purchased. We agree to notify
GT Global, Inc. of any purchases properly made under a Letter of Intent or
Right of Accumulation.
<TABLE>
<CAPTION>
<S> <C>
---------------------------------------------------------------------------------------------------------------------------------
Investment Dealer Name
---------------------------------------------------------------------------------------------------------------------------------
Main Office Address Branch Number Representative's Number Representative's Name
( )
- ---------------------------------------------------------------------------------------------------------------------------------
Branch Address Telephone
X
- -----------------------------------------------------------------------------------------------------------------------
Investment Dealer's Authorized Signature Title
</TABLE>
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT GLOBAL MUTUAL FUNDS FLOATING RATE FUND
P.O. Box 7345 SUPPLEMENTAL APPLICATION
SAN FRANCISCO, CA 94120-7345 SPECIAL INVESTMENT AND
800/223-2138 WITHDRAWAL OPTIONS
</TABLE>
<TABLE>
<S> <C> <C>
ACCOUNT REGISTRATION
Please supply the following information exactly as it appears on the
Fund's records.
- ----------------------------------- -----------------------------------
Fund Name Account Number
- ----------------------------------- -----------------------------------
Owner's Name Co-Owner 1
- ----------------------------------- -----------------------------------
Co-Owner 2 Telephone Number
- ----------------------------------- -----------------------------------
Street Address Social Security or Tax I.D. Number
- -----------------------------------
City, State, Zip Code
Resident of / / U.S. / / Other ----------------
AUTOMATIC INVESTMENT PLAN / / YES / / NO
I/We hereby authorize the Transfer Agent of the GT Global Mutual Funds
to debit my/our personal checking account on the designated dates in
order to purchase Floating Rate Fund at the applicable public offering
price determined on that day.
/ / Monthly on the 25th day / / Quarterly beginning on the 25th
day of the month you first select
(The request for participation in the Plan must be received by the 1st
day of the month in which you wish investments to begin.)
Amount of each debit (minimum $100) $
- -----------------------------------------------
NOTE: A Bank Authorization Form (below) and a voided personal check must
accompany the Automatic Investment Plan Application.
</TABLE>
- --------------------------------------------------------------------------------
[LOGO]
<PAGE>
<TABLE>
<S> <C>
GT GLOBAL MUTUAL FUNDS AUTOMATIC INVESTMENT PLAN
</TABLE>
<TABLE>
<S> <C> <C> <C>
BANK AUTHORIZATION
- ------------------------- ------------------------------ ------------
Bank Name Bank Address Bank Account Number
I/We authorize you, the above named bank, to debit my/our account for amounts drawn by the Transfer Agent of
the GT Global Mutual Funds, acting as my agent. I/We agree that your rights in respect to each withdrawal
shall be the same as if it were a check drawn upon you and signed by me/us. This authority shall remain in
effect until I/we revoke it in writing and you receive it. I/We agree that you shall incur no liability when
honoring any such debit.
I/We further agree that you will incur no liability to me if you dishonor any such withdrawal. This will be
so even though such dishonor results in the forfeiture of investment.
- ---------------------------------------------------- ----------------------------------------------------
Account Holder's Name Joint Account Holder's Name
X X
- ------------------------------------ -------------- ------------------------------------ --------------
Account Holder's Signature Date Joint Account Holder's Signature Date
</TABLE>
(OVER)
<PAGE>
<TABLE>
<S> <C> <C> <C>
AGREEMENT AND SIGNATURES
The investor(s) certifies(y) and agree(s) that the certifications, authorizations, directions and
restrictions contained herein will continue until the Transfer Agent of the GT Global Mutual Funds receives
written notice of any change or revocation. Any change in these instructions must be in writing with all
signatures guaranteed (if applicable).
- --------------------------------------------------------
Date
X X
- -------------------------------------------------------- ------------------------------------------------
Signature Signature
- -------------------------------------------------------- -------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
X X
- -------------------------------------------------------- ------------------------------------------------
Signature Signature
- -------------------------------------------------------- -------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
*Acceptable signature guarantors: (1) a commercial bank; (2) a U.S. trust company; (3) a member firm of a
U.S. stock exchange; (4) a foreign branch of any of the foregoing; or (5) any other eligible guarantor
institution. A notary public is NOT an acceptable guarantor. An investor with questions concerning the GT
Global Mutual Funds signature guarantee requirement should contact the Transfer Agent.
</TABLE>
- --------------------------------------------------------------------------------
INDEMNIFICATION AGREEMENT
To: Bank Named on the Reverse
In consideration of your compliance with the request and authorization of the
depositor(s) named on the reverse, the Transfer Agent of the GT Global Mutual
Funds hereby agrees:
1. To indemnify and hold you harmless from any loss you may incur because of the
payment by you and of any debit by the Transfer Agent to its own order on the
account of such depositor(s) and received by you in the regular course of
business for payment, or arising out of the dishonor by you of any debit,
provided there are sufficient funds in such account to pay the same upon
presentation.
2. To defend at its own expense any action which might be brought by any
depositor or any other persons because of your actions taken pursuant to the
above mentioned request or in any manner arising by reason of your participation
in connection with such request.
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT Global Mutual Funds FLOATING RATE FUND
P.O. Box 7345, San Francisco, CA 94120-7345 IRA APPLICATION
800/223-2138
</TABLE>
<TABLE>
<S> <C>
Account Registration / / NEW ACCOUNT / / ACCOUNT REVISION (Account No. ---------------------------------)
TYPE OF ACCOUNT: / / CONTRIBUTORY / / ROLLOVER / / SIMPLIFIED EMPLOYEE PENSION-IRA (SEP-IRA)
/ / THIS IS A TRANSFER. I HAVE ATTACHED A COMPLETED IRA TRANSFER AUTHORIZATION.
Name ---------------------------------------------- Telephone Number ( )
----------------------------------------------------
Address --------------------------------------------- -----------------------------------------------------
Street Social Security Number / / or Tax I.D. Number / / (Check
- ---------------------------------------------------------------- applicable box)
City State Zip Code If more than one owner, social security number or taxpayer
identification number should be provided for first owner listed.
Date of Birth
------------------------------------------------------
Fund Selection & Initial Contribution
Enclosed is a check for $ -------------- made payable to GT Global (as agent for the Custodian) to be invested in the Fund.
NOTE: Minimum Initial Contribution -- $100 per Fund
Maximum Annual Individual Contribution (except for rollovers and transfers) -- $2,000
Maximum Annual Individual and Spousal Contribution (except for rollovers and transfers) -- $4,000 ($2,250 for
years prior to 1997, in any combination, provided no more than $2,000 is invested in any one account)
Maximum Annual SEP-IRA Contribution -- See Disclosure Statement
</TABLE>
<TABLE>
<S> <C> <C>
For Use by Authorized Agent (Broker/Dealer or Advisor) Only
We hereby submit this IRA Application for the purchase of shares including shares purchased under a Right of Accumulation or
Letter of Intent in accordance with the terms of our Selling Agreement with GT Global, Inc. and with the Prospectus(es) for the GT
Global Mutual Fund(s). We agree to notify GT Global, Inc. of any purchases properly made under a Letter of Intent or Right of
Accumulation.
Investment Dealer or Advisor Name ----------------------------------------------------------------------------
Main Office Address -------------------------------------------------------------------------------------------
Branch Number --------------- Representative's Number --------------- Representative's Name ----------------
</TABLE>
<TABLE>
<S> <C>
Branch Address ------------------------------------------------ Telephone Number --------------------------
For Class A and B shares only:
Investment Dealer's Authorized Signature X Title
--------------------------
--------------------------------------
For Advisor Class shares only:
We hereby submit this IRA Application for the purchase of Advisor Class shares in accordance with the terms of our Advisor Class
Agreement with GT Global, Inc. and with the Prospectus and Statement of Additional Information of each Fund purchased.
Advisor's Authorized Signature X Title
------------------------------------
--------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Designation of Beneficiary(ies)
If you require more room to name additional beneficiaries, please provide the necessary information on a separate sheet,
and indicate next to each name whether beneficiary is primary or contingent.
PRIMARY BENEFICIARY(IES)
I hereby designate the following person(s) to receive any interest remaining in my IRA upon my death:
</TABLE>
<TABLE>
<C> <C> <C>
1. Name Address
------------------------------------------- ----------------------------------------------------------------------
Relationship --------------- Date of Birth Social Security Number Share of Account %
--------- ----------------------------
-------------------------
2. Name Address
------------------------------------------- ----------------------------------------------------------------------
Relationship ---------------------- DOB Social Security Number Share of Account %
--------- ----------------------------
-------------------------
CONTINGENT BENEFICIARY(IES)
I hereby designate the following person(s) to receive any interest remaining in my IRA upon my death:
1. Name Address
------------------------------------------- ----------------------------------------------------------------------
Relationship ---------------------- DOB Social Security Number Share of Account %
--------- ----------------------------
-------------------------
2. Name Address
------------------------------------------- ----------------------------------------------------------------------
Relationship ---------------------- DOB Social Security Number Share of Account %
--------- ----------------------------
-------------------------
Unless otherwise indicated above, the benefit payable hereunder shall be paid in equal shares to the Primary Beneficiaries who
survive the Participant. If no Primary Beneficiary(ies) survives the Participant, the payment shall be made in equal shares (or as
otherwise indicated above) to the Contingent Beneficiary(ies) who survive the Participant. The Participant reserves the right to
change the above beneficiary by filing a new Beneficiary Designations Form with the Custodian. Should no named beneficiary survive
the date of distribution, the account shall be distributed to my surviving spouse, or if there is no surviving spouse, in a single
payment to my estate. ONLY THE MOST RECENT EXECUTED DESIGNATION OF BENEFICIARY(IES) ON FILE WITH GT GLOBAL INVESTOR SERVICES, INC.
(AS AGENT FOR THE CUSTODIAN) WILL BE HONORED.
Consent of Spouse
I consent to the above Beneficiary Designation.
Signature of Spouse: --------------------------------------------------------- Date: --------------
(Note: May be required in community property states if any person other than or in addition to Participant's Spouse is designated
as Beneficiary.)
Agreement and Signature
I acknowledge receipt of the Disclosure Statement and IRA Agreement (IRS Form 5305-A) for the GT Global IRA. I acknowledge receipt
of the current Prospectus(es) of the Fund(s) in which I have directed GT Global Investor Services, Inc. (as agent for the
Custodian) to invest my contribution(s). I agree to the terms and provisions set forth in this IRA Application including those
contained in the Telephone Exchange section, the Disclosure Statement, the Individual Retirement Custodial Account Agreement (IRS
Form 5305-A) and the Prospectus(es). AS REQUIRED BY THE INTERNAL REVENUE SERVICE, I CERTIFY, UNDER PENALTIES OF PERJURY, THAT THE
TAXPAYER IDENTIFICATION NUMBER GIVEN ON THE FACE OF THIS IRA APPLICATION IS CORRECT AND THAT I AM NOT SUBJECT TO BACKUP
WITHHOLDING IN MY IRA(S). THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT OTHER THAN
THE CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING.
Signature X Date
------------------------------------------------ ----------------------------------------------
Individual
</TABLE>
<PAGE>
<TABLE>
<S> <C>
[LOGO] FLOATING RATE FUND
GT Global Mutual Funds IRA TRANSFER AUTHORIZATION
P.O. Box 7345, San Francisco, CA 94120-7345
800/223-2138
Please complete a separate Transfer Authorization for each Account to be transferred.
To Existing Custodian:
Name of Existing Custodian ------------------------------------------ Telephone ( )
------------------------------
Address
----------------------------------- ----------------------------------- -------------------- --------------------
Street City State Zip Code
Individual Policy or Account: --------------------------------------------- in the name of ----------------------
Account Name Account Number Your Name
Please liquidate/transfer in kind* $ or % of my IRA identified above and transfer those funds
--------------------------------------------
by a check, made payable to:
GT Global, for ------------------------, IRA Account # ---------------------------------------------------------
Investor's Name Existing GT Global Account Number, if applicable
Age 70 1/2 Restrictions
(Please complete this section if you will be age 70 1/2 or older in the transfer year.)
The following transfer restrictions apply to this transaction:
</TABLE>
<TABLE>
<C> <C> <C> <C> <C> <C> <C>
1. Required Minimum Distribution. I authorize the Custodian or Trustee named above (select one):
/ / to distribute my required minimum distribution to me prior to transferring my IRA assets.
/ / to segregate and retain minimum distribution amount. Distribute on ------------, 19 --.
2. Required Elections. (Complete only if you have reached your required beginning date, i.e., April 1, following the year in
which you attain age 70 1/2.)
a. My oldest primary beneficiary with respect to the transferring IRA is:
Name Birthdate Relationship
----------------------------------- ---------- -----------------------------------
b. My life expectancy / / was / / was not being recalculated.
c. The life expectancy of my spouse beneficiary / / was / / was not being recalculated / / Not Applicable. I am aware that
the elections indicated above became irrevocable as of my required beginning date and will apply to the IRA with the new
Custodian indicated below.
This form, along with all check(s) should be mailed to:
GT Global (as agent for the Custodian), P.O. Box 7345, San Francisco, CA 94120-7345.
X
- ------------------------- -------------------------- -------------------------
Investor's Signature Date Signature Guarantee
(if required by current
Custodian)
* If this IRA currently holds shares of a GT Global Mutual Fund, you may request a direct transfer of
shares.
For GT Global Use Only
GT Global Investor Services, Inc. (as agent for the GT Global IRA Custodian) agrees to accept the
transfer described above and upon written receipt will apply the proceeds to investments as designated
by the Investor.
X
- ------------------------------------------------------------ ------------------------------------------------------------
Signature of Custodian or its Agent Date
</TABLE>
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT Global Mutual Funds FLOATING RATE FUND
P.O. Box 7345, San Francisco, CA 94120-7345 IRA DIRECT ROLLOVER AUTHORIZATION
800/223-2138
TO CURRENT PLAN ADMINISTRATOR OR 403(B) CUSTODIAN:
Name of Current Plan Administrator or 403(b) Custodian: -------------------------------- Telephone ( )
--------------------------
Address:
----------------------------------- ----------------------------------- -------------------- --------------------
Street City State Zip Code
Plan Account: -------------------------------------------------------------------------------------------------------------
Plan Account Name Plan Account Number Name of Plan Participant
Please pay my entire eligible rollover distribution from the plan identified above directly to my GT Global IRA Custodian, for
- ------------------------------------------------------------------------, IRA Account # ----------------------------------
Participant Name (GT Global Account #, if known)
I. Rollover/Direct Rollover from an Employer Plan
A. I certify that my employer's qualified plan, qualified annuity, or 403(b) plan has made or will make an
Eligible Rollover Distribution which is being paid in a Direct Rollover to the Custodian of my IRA; or
B. This Direct Rollover is not part of a series of payments over my life expectancy(ies ) or over a period of 10
years or more.
C. This Direct Rollover does not include any "after tax" employee contributions made by me to the employer's
plan.
D. This Direct Rollover does not include any required minimum distributions with respect to the employer's plan.
E. I certify that I am eligible to establish an IRA with this Direct Rollover of an Eligible Rollover
Distribution, and that I am:
/ / 1. the plan participant;
/ / 2. the surviving spouse of the deceased plan participant; or
/ / 3. the spouse or former spouse of the plan participant under a Qualified Domestic Relations Order.
II. Additional Information for Rollovers Beginning at age 70 1/2
(Complete the following only if the direct rollover is being made after the Participant's required beginning date,
the April 1st following the calendar year during which the Participant attained age 70 1/2):
1. My oldest primary beneficiary under the distribution plan is:
--------------------------------------------------
Birthdate --------------------- Relationship ---------------------
2. My life expectancy / / was / / was not being recalculated. The life expectancy of my spouse beneficiary / / was / / was
not being recalculated.
III. Commingling Authorization
(Check if applicable):
/ / I authorize the Custodian to commingle this direct rollover with my regular IRA contributions. I understand that
commingling regular IRA contributions with direct rollover contributions from employer plans may preclude me from
rolling over funds in my rollover IRA into another qualified plan or 403(b) plan. With such knowledge, I authorize and
direct the Custodian to place regular IRA contributions in my rollover IRA or vice versa.
Please make this direct payment either in the form of a check made payable, or by wire, to GT Global, for the benefit of
my IRA. All checks should be mailed to GT Global (as agent for the Custodian), P.O. Box 7345, San Francisco, CA
94120-7345.
Signature of Participant
I hereby irrevocably elect, pursuant to IRS Regulation 1.402(a)(5)-1T to treat this contribution as a rollover
contribution. I understand that this will not be a valid IRA rollover unless PART I and PART II (and, if applicable, PART
III) are correct statements. I acknowledge that, due to the complexities involved in the tax treatment of eligible
rollover distributions from qualified plans, qualified annuities, or 403(b) plans and direct rollovers to IRAs, the
Custodian has recommended that I consult with my tax advisor or the Internal Revenue Service before completing this
transaction to make certain that this transaction qualifies as a rollover and is appropriate in my individual
circumstances. I hereby release the Custodian from any claim for damages on account of the failure of this transaction to
qualify as a valid rollover.
X
- -------------------------------------------------- -------------------- --------------------------------------------------
Participant's Signature Date Signature Guarantee (if required by current plan)
For GT Global Use Only
GT Global Investor Services, Inc., (as agent for the GT Global IRA Custodian) agrees to accept the direct rollover described
above and upon receipt of such rollover funds will apply those funds to investments as designated by the Participant.
X
- ------------------------------------------------------------ ------------------------------------------------------------
Signature of Custodian or its Agent Date
</TABLE>
<PAGE>
IRA DIRECT ROLLOVER INSTRUCTIONS
Since the eligible rollover distributions(1) that you take from an
employer-sponsored qualified plan(2) are subject to 20% federal income tax
withholding unless you roll over these assets directly to an IRA or other
eligible retirement plan, you may wish to arrange for a direct rollover to a GT
Global IRA.
TO FACILITATE A DIRECT ROLLOVER TO A GT GLOBAL IRA, PLEASE FOLLOW THESE STEPS:
1. Complete the front portion of this form;
2. Complete the GT Global IRA Application; and
3. Return them to GT Global at P.O. Box 7345, San Francisco, CA 94120-7345.
GT Global will establish an IRA in your name, and provide you and your current
plan administrator or 403(b) custodian with your GT Global IRA account number.
Your current plan administrator or 403(b) custodian can then send the assets
directly to your GT Global IRA (by check or wire), or give you a check made
payable to your GT Global IRA.
(1) An "eligible rollover distribution" subject to 20% withholding is generally
any partial or total distribution, except: (a) substantially equal periodic
payments made for life or joint lives (or life expectancy or joint life
expectancies) or for a specified period of 10 years or more; (b) required
minimum distributions; (c) non-taxable distributions (e.g., after-tax
contributions); and (d) certain DE MINIMIS distributions, corrective
distributions, loans and other distributions specified in the Internal
Revenue Code and applicable regulations. You should verify with the
distributing employer and your tax adviser whether a distribution is an
"eligible rollover distribution."
(2) "Qualified" plans include 401(k), 403(b) and other pension and
profit-sharing plans. Section 457 deferred compensation plans for
government and tax-exempt entity employees are not "qualified." An IRA is
not considered a "qualified" plan, even if the assets held in the IRA
originated from a qualified plan. You may use the IRA Transfer
Authorization to transfer your IRA assets to a GT Global IRA. If you
receive a distribution from another IRA, you may be eligible to roll it
over to a GT Global IRA.
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT Global Mutual Funds FLOATING RATE FUND
P.O. Box 7345, San Francisco, CA 94120-7345 SUPPLEMENTAL APPLICATION
800/223-2138 FOR AUTOMATIC INVESTMENT PLAN
Account Registration
PLEASE NOTE: Automatic Investment Plan may ONLY be used for current year IRA contributions.
Please supply the following information exactly as it appears on the Fund's records.
- ------------------------------------------------------ ------------------------------------------------------
Name Account Number
- ------------------------------------------------------------------- -------------------------------------------------------
Address Telephone Number
- ------------------------------------------------------------------- -------------------------------------------------------
City State Zip Code Social Security Number
------------------------------------
Automatic Investment Plan Date of Birth
I hereby authorize the Transfer Agent of the GT Global Mutual Funds to debit my personal checking account on the designated
dates in order to purchase shares in the Fund(s) indicated at the applicable public offering price determined on that day.
Please indicate if your purchase is for Class B shares / /. If the Class B share box is not checked, your purchase will be made
in Class A shares.
Fund: $ or % Fund: $ or %
------------------------------ ---------- ----- ------------------------------ ---------- -----
Fund: $ or % Fund: $ or %
------------------------------ ---------- ----- ------------------------------ ---------- -----
Fund: $ or % Fund: $ or %
------------------------------ ---------- ----- ------------------------------ ---------- -----
/ / Monthly on the 25th day / / Quarterly beginning on the 25th day of the month you first select: ------------
(Month)
(The request for participation in the Plan must be received by the 1st day of the month in which you wish investments to
begin.)
Amount of each debit (minimum $100) $
---------------------------------------------------------------
NOTE: A Bank Authorization Form (below) and a voided personal check must accompany the Automatic Investment Plan
Application.
</TABLE>
<TABLE>
<S> <C>
[LOGO]
GT Global Mutual Funds
P.O. Box 7345, San Francisco, CA 94120-7345
800/223-2138 AUTOMATIC INVESTMENT PLAN
Bank Authorization
- ------------------------ ------------------------------------ ------------
Bank Name Bank Address Bank Account Number
I/we authorize you, the above named bank, to debit my/our account for amounts drawn by the Transfer Agent of the GT Global
Mutual Funds, acting as my agent. I/we agree that your rights in respect to each withdrawal shall be the same as if it
were a check drawn upon you and signed by me/us. This authority shall remain in effect until I/we revoke it in writing and
you receive it. I/we agree that you shall incur no liability when honoring any such debit.
I/we further agree that you will incur no liability to me/us if you dishonor any such withdrawal. This will be so even
though such dishonor results in the forfeiture of investment.
- ------------------------------------------------------ ------------------------------------------------------
Account Holder's Name Joint Account Holder's Name
X X
- ---------------------------------------- -------------------- ---------------------------------------- --------------------
Account Holder's Signature Date Joint Account Holder's Signature Date
</TABLE>
(OVER)
<PAGE>
<TABLE>
<S> <C> <C>
Agreement and Signatures
The investor certifies and agrees that the certifications, authorizations, directions and restrictions contained
herein will continue until the Transfer Agent of the GT Global Mutual Funds receives written notice of any change or
revocation. Any change in these instructions must be in writing with all signatures guaranteed (if applicable).
- ------------------------------------------------------
Date
X
- ------------------------------------------------------
- ------------------------------------------------------
Signature Guarantee* (if applicable)
*Acceptable signature guarantors: (1) any U.S. bank; (2) U.S. trust company; (3) a member firm of a U.S. stock
exchange; (4) a foreign branch of any of the foregoing; or (5) any other eligible guarantor institution. A notary
public is not an acceptable guarantor. An investor uncertain about the GT Global Mutual Funds signature guarantee
requirement should contact the Transfer Agent.
</TABLE>
Indemnification Agreement
To: Bank Named on the Reverse
In consideration of your compliance with the request and authorization of the
depositor(s) named on the reverse, the Transfer Agent of the GT Global Mutual
Funds hereby agrees:
1. To indemnify and hold you harmless from any loss you may incur because of the
payment by you and of any debit by the Transfer Agent to its own order on the
account of such depositor(s) and received by you in the regular course of
business for payment, or arising out of the dishonor by you of any debit,
provided there are sufficient funds in such account to pay the same upon
presentation.
2. To defend at its own expense any action which might be brought by any
depositor or any other persons because of your actions taken pursuant to the
above mentioned request or in any manner arising by reason of your participation
in connection with such request.
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
PART C -- OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(1) FINANCIAL STATEMENTS:
Report of Independent Accountants [filed herewith]
Statement of Assets and Liabilities [filed herewith]
(2) EXHIBITS:
<TABLE>
<S> <C>
(a) Articles of Incorporation [previously filed]
(b) Bylaws [previously filed]
(c) None
(d) Instruments Defining Rights of Shareholders [filed herewith]
(e) Dividend Reinvestment Plan [filed herewith]
(f) None
(g)(1) Form of Investment Management and Administration Contract [filed herewith]
(2) Form of Administration Contract [filed herewith]
(3) Form of Sub-Advisory and Sub-Administration Contract [filed herewith]
(h)(1) Form of Distribution Agreement [filed herewith]
(2) Selected Dealer Agreement [filed herewith]
(i) None
(j) Form of Custodian Agreement [filed herewith]
(k)(1) Form of Transfer Agency Agreement [filed herewith]
(2) Form of Fund Accounting and Pricing Agent Agreement [filed herewith]
(l) Opinion and Consent of Counsel [filed herewith]
(m) None
(n) Consent of Independent Accountants [filed herewith]
(o) None
(p) None
(q) None
</TABLE>
ITEM 25. MARKETING ARRANGEMENTS
See the Distribution Agreement filed as Exhibit (h)(1) to this Registration
Statement.
ITEM 26. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses to be incurred in connection
with the offering described in this Registration Statement:
<TABLE>
<S> <C>
Securities and Exchange Commission Fees............................. $ 60,606.06
National Association of Securities Dealers, Inc. Fees............... 20,500.00
Printing and Engraving Expenses..................................... 78,900.00
Legal Fees.......................................................... 132,000.00
Accounting Expenses................................................. 63,000.00
Blue Sky Filing Fees and Expenses................................... 28,000.00
Miscellaneous Expenses.............................................. 20,000.00
-------------
Total........................................................... $ 403,006.06
-------------
-------------
</TABLE>
II-1
<PAGE>
ITEM 27. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL
Until such time as the Registrant completes the public offering of its
Shares, LGT Asset Management, Inc. ("LGT AM") will be a control person of the
Registrant. LGT AM is an indirect parent of Chancellor LGT Senior Secured
Management, Inc. ("Chancellor LGT Senior Secured"), and is a subsidiary of
Liechtenstein Global Trust, a financial services holding company. Liechtenstein
Global Trust in turn is controlled by the Prince of Liechtenstein Foundation,
which serves as the parent organization for the various business enterprises of
the Princely Family of Liechtenstein. Information as to LGT AM, and affiliated
companies in the LGT Group, is included in Chancellor LGT Asset Management,
Inc.'s Form ADV filed on November 1, 1996 with the SEC (Registration number
801-10254) and is incorporated herein by reference.
ITEM 28. NUMBER OF HOLDERS OF SECURITIES
<TABLE>
<CAPTION>
NUMBER OF RECORD
SHAREHOLDERS AS OF
TITLE OF CLASS MARCH 21, 1997
- --------------------------------------------------------------------------------------------- -------------------
<S> <C>
Shares of Common Stock, par value $0.001 per share........................................... 1
</TABLE>
ITEM 29. INDEMNIFICATION
Article Twelfth of the Fund's Articles of Incorporation, filed as Exhibit 1
to this Registration Statement, and Article IX of the Fund's Bylaws, filed as
Exhibit 2, provide that the Fund shall indemnify its present and past directors,
officers, employees and agents, and persons who are serving or have served at
the Fund's request in similar capacities for other entities to the maximum
extent permitted by applicable law (including Maryland law and the 1940 Act).
Section 2-418(b) of the Maryland General Corporation Law ("Maryland Code")
permits the Fund to indemnify its directors unless it is established that the
act or omission of the director was material to the matter giving rise to the
proceeding, and (a) the act or omission was committed in bad faith or was the
result of active and deliberate dishonesty; or (b) the director actually
received an improper personal benefit in money, property or services or (c) in
the case of any criminal proceeding, the director had reasonable cause to
believe the act or omission was unlawful. Indemnification may be made against
judgments, penalties, fines, settlements and reasonable expenses incurred by the
director in connection with a proceeding, in accordance with the Maryland Code.
Pursuant to Section 2-418(j)(1) and Section 2-418(j)(2) of the Maryland Code,
the Fund is permitted to indemnify its officers, employees and agents to the
same extent as its directors. The provisions set forth above apply insofar as
consistent with Section 17(h) of the 1940 Act, which prohibits indemnification
of any director or officer of the Fund against any liability to the Fund or its
shareholders to which such director or officer otherwise would be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office.
Insofar as indemnification for liability arising under the Securities Act of
1933 ("1933 Act") may be permitted to directors, officers and controlling
persons of the Fund, pursuant to the foregoing provisions, or otherwise, the
Fund has been advised that in the opinion of the SEC such indemnification is
against public policy as expressed in the 1933 Act and is, therefore,
unenforceable. In the event that a claim for a director, officer or controlling
person of the Fund in the successful defense of any action, suit or proceeding
or payment pursuant to any insurance policy) is asserted against the Fund by
such director, officer or controlling person in connection with the securities
being registered, the Fund will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a 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 issue.
II-2
<PAGE>
ITEM 30. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
See "Management".
Chancellor LGT Senior Secured, a New York corporation, is a registered
investment adviser and is a subsidiary of Chancellor LGT. Chancellor LGT, a
California corporation, is a registered investment adviser and is a subsidiary
of Liechtenstein Global Trust, a financial services holding company.
Liechtenstein Global Trust in turn is controlled by the Prince of Liechtenstein
Foundation, which serves as the parent organization for the various business
enterprises of the Princely Family of Liechtenstein. Chancellor LGT and
Chancellor LGT Senior Secured are primarily engaged in the investment advisory
business. Information as to officers and directors of Chancellor LGT Senior
Secured and Chancellor LGT is included in Chancellor LGT's Form ADV filed on
November 1, 1996 with the SEC (Registration number 801-10254) and is
incorporated herein by reference.
ITEM 31. LOCATION OF ACCOUNTS AND RECORDS
The accounts and records of the Fund will be maintained at the office of the
Fund's custodian at 1776 Heritage Drive, North Quincy, Massachusetts 02171,
except that the Fund's corporate records (its articles of incorporation, by-laws
and minutes of the meetings of its Board of Directors and shareholders) will be
maintained at the offices of Chancellor LGT at 50 California Street, 27th Floor,
San Francisco, California 94111.
ITEM 32. MANAGEMENT SERVICES
None.
ITEM 33. UNDERTAKINGS
(1) Registrant undertakes to suspend the offering of its shares until it
amends its Prospectus if:
(a) subsequent to the effective date of this Registration Statement, the
net asset value per share declines more than 10% from its net asset value
per share as of the effective date of the Registration Statement; or
(b) The net asset value increases to an amount greater than its net
proceeds as stated in the Prospectus.
(2) Registrant hereby undertakes:
(a) to file, during any period in which offers or sales are being made,
a post-effective amendment to the registration statement: (i) to include any
prospectus required by Section 10(a)(3) of the 1933 Act; (ii) to reflect in
the prospectus any facts or events after the effective date of the
registration statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental change in
the information set forth in the registration statement; and (iii) to
include any material information with respect to the plan of distribution
not previously disclosed in the registration statement or any material
change to such information in the registration statement;
(b) that, for the purposes of determining any liability under the 1933
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of those securities at that time shall be deemed to be the initial
bona fide offering thereof; and
(c) to remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-3
<PAGE>
(3) Registrant hereby undertakes that:
(a) For the purpose of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this Registration Statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the Registrant under Rule 497(h) under the
Securities Act of 1933 shall be deemed to be part of this Registration
Statement as of the time it was declared effective; and
(b) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or the
Investment Company Act of 1940, the Registrant has duly caused this
Pre-Effective Amendment No. 2 to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of San
Francisco, and the State of California, on this 21st day of March, 1997.
GT GLOBAL FLOATING RATE FUND, INC.
By /s/ DAVID J. THELANDER
------------------------------------
David J. Thelander
Secretary
Each of the undersigned directors and officers of GT Global Floating Rate
Fund, Inc. ("Fund") hereby severally constitutes and appoints David J. Thelander
and Arthur J. Brown, and each of them singly, our true and lawful attorneys,
with full power to them to sign for each of us, and in each of our names and in
the capacities indicated below, any and all amendments to the Registration
Statement of the Fund, and all instruments necessary or desirable in connection
therewith, filed with the Securities and Exchange Commission, hereby ratifying
and confirming our signatures as they may be signed by said attorney to any and
all amendments to said Registration Statement.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ -------------------------------------------- -----------------------
<S> <C> <C>
/s/ WILLIAM J. GUILFOYLE Director, Chairman of the Board of Directors March 21, 1997
- --------------------------------- and President (Chief Executive Officer)
William J. Guilfoyle
/s/ C. DEREK ANDERSON Director March 21, 1997
- ---------------------------------
C. Derek Anderson
/s/ FRANK S. BAYLEY Director March 21, 1997
- ---------------------------------
Frank S. Bayley
/s/ ARTHUR C. PATTERSON Director March 21, 1997
- ---------------------------------
Arthur C. Patterson
/s/ RUTH H. QUIGLEY Director March 21, 1997
- ---------------------------------
Ruth H. Quigley
/s/ ROBERT G. WADE, JR. Director March 21, 1997
- ---------------------------------
Robert G. Wade, Jr.
/s/ JAMES R. TUFTS Vice President (Chief Financial Officer) March 21, 1997
- ---------------------------------
James R. Tufts
/s/ KENNETH W. CHANCEY Vice President (Principal Accounting March 21, 1997
- --------------------------------- Officer)
Kenneth W. Chancey
</TABLE>
II-5
<PAGE>
SIGNATURES
Floating Rate Portfolio has duly caused this Pre-Effective Amendment No. 2
to the Registration Statement of GT Global Floating Rate Fund, Inc. to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of San
Francisco, and the State of California, on this 21st day of March, 1997.
FLOATING RATE PORTFOLIO
By /s/ DAVID J. THELANDER
------------------------------------
David J. Thelander
Secretary
Each of the undersigned directors and officers of Floating Rate Portfolio
("Portfolio") hereby severally constitutes and appoints David J. Thelander and
Arthur J. Brown, and each of them singly, our true and lawful attorneys, with
full power to them to sign for each of us, and in each of our names and in the
capacities indicated below, any and all amendments to the Registration Statement
of GT Global Floating Rate Fund, Inc., and all instruments necessary or
desirable in connection therewith, filed with the Securities and Exchange
Commission, hereby ratifying and confirming our signatures as they may be signed
by said attorney to any and all amendments to said Registration Statement.
This Pre-Effective Amendment to the Registration Statement of GT Global
Floating Rate Fund, Inc. has been signed below by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ -------------------------------------------- -----------------------
<S> <C> <C>
/s/ WILLIAM J. GUILFOYLE Trustee, Chairman of the Board of Trustees
- --------------------------------- and President (Chief Executive Officer)
William J. Guilfoyle March 21, 1997
/s/ C. DEREK ANDERSON Trustee
- ---------------------------------
C. Derek Anderson March 21, 1997
/s/ FRANK S. BAYLEY Trustee
- ---------------------------------
Frank S. Bayley March 21, 1997
/s/ ARTHUR C. PATTERSON Trustee
- ---------------------------------
Arthur C. Patterson March 21, 1997
/s/ RUTH H. QUIGLEY Trustee
- ---------------------------------
Ruth H. Quigley March 21, 1997
/s/ ROBERT G. WADE, JR. Trustee
- ---------------------------------
Robert G. Wade, Jr. March 21, 1997
/s/ JAMES R. TUFTS Vice President (Chief Financial Officer)
- ---------------------------------
James R. Tufts March 21, 1997
/s/ KENNETH W. CHANCEY Vice President (Principal Accounting
- --------------------------------- Officer)
Kenneth W. Chancey March 21, 1997
</TABLE>
II-6
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL PAGE
NUMBER DOCUMENT DESCRIPTION NUMBER
- ----------- ------------------------------------------------------------------------------------- -------------------
<S> <C> <C>
(a) Articles of Incorporation (previously filed).........................................
(b) Bylaws (previously filed)............................................................
(c) None.................................................................................
(d) Instruments Defining Rights of Shareholders [filed herewith].........................
(e) Dividend Reinvestment Plan [filed herewith]..........................................
(f) None.................................................................................
(g)(1) Form of Investment Management and Administration Contract [filed herewith]...........
(2) Form of Administration Contract [filed herewith].....................................
(3) Form of Sub-Advisory and Sub-Administration Contract [filed herewith]................
(h)(1) Form of Distribution Agreement [filed herewith]......................................
(2) Master Selected Dealer Agreement [filed herewith]....................................
(i) None.................................................................................
(j) Form of Custodian Agreement [filed herewith].........................................
(k)(1) Form of Transfer Agency Agreement [filed herewith]...................................
(2) Form of Fund Accounting and Pricing Agent Agreement [filed herewith].................
(l) Opinion and consent of counsel [filed herewith]......................................
(m) None.................................................................................
(n) Consent of Independent Accountants [filed herewith]..................................
(o) None.................................................................................
(p) None.................................................................................
(q) None.................................................................................
</TABLE>
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC. (THE "REGISTRANT")
The Registrant's Articles of Incorporation provides as follows:
SIXTH: CAPITAL STOCK.
B. Stockholders shall not have preemptive or preferential rights to
acquire any shares of the capital stock of the Corporation, and any or all of
such shares, whenever authorized, may be issued, or may be reissued and
transferred if such shares have been reacquired and have treasury status, to
any person, firm, corporation, trust, partnership, or association or other
entity for such lawful consideration and on such terms as the Board of
Directors determines in its discretion without first offering the shares to
any such holder.
C. All shares of the Corporation's authorized capital stock, when
issued for such consideration as the Board of Directors may determine, shall
be fully paid and nonassessable.
D. The Board of Directors of the Corporation may, by articles
supplementary to these Articles adopted pursuant to Section 2-208 of the
Maryland General Corporation Law or a successor provision thereto, classify
or reclassify any unissued capital stock from time to time by setting or
changing any preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications, or (subject to the
purposes of the Corporation) terms or conditions of redemption of the stock
by the Corporation.
E. No shares of the Corporation's capital stock shall have any
conversion or exchange rights or privileges or have cumulative voting rights.
F. Voting power for the election of directors and for all other
purposes shall be vested exclusively in the holders of the Common Stock.
Each holder of a share of Common Stock shall be entitled to one vote for each
share registered in such holder's name on the books of the Corporation.
G. In the event of the liquidation or dissolution of the Corporation,
the holders of the Common Stock shall be entitled to receive all the net
assets of the Corporation. The assets so distributed to the stockholders
shall be distributed among such stockholders in proportion to the number of
shares of the class held by them and recorded on the books of the Corporation.
<PAGE>
The Registrant's Bylaws provide as follows:
ARTICLE II
STOCKHOLDERS
SECTION 5. VOTING AND INSPECTORS. Except as otherwise provided in the
Articles of Incorporation or by applicable law, at each stockholders'
meeting, each stockholder shall be entitled to one vote for each share of
stock of the Corporation validly issued and outstanding and registered in his
or her name on the books of the Corporation on the record date fixed in
accordance with Article VI, Section 5 of the Bylaws, either in person or by
proxy appointed by instrument in writing subscribed by such stockholder or
his or her duly authorized attorney, except that no shares held by the
Corporation shall be entitled to a vote. If no record date has been fixed,
the record date for the determination of stockholders entitled to notice of
or to vote at a meeting of stockholders shall be the later of the close of
business on the day on which notice of the meeting is mailed or the thirtieth
day before the meeting, or, if notice is waived by all stockholders, at the
close of business on the tenth day next preceding the day on which the
meeting is held.
Except as otherwise provided in the Articles of Incorporation or these
Bylaws or as required by provisions of the 1940 Act, all matters shall be
decided by a vote of the majority of the votes validly cast. The vote upon
any question shall be by ballot whenever requested by any person entitled to
vote, but, unless such a request is made, voting may be conducted in any way
approved by the meeting.
At any meeting at which there is an election of Directors, the chairman
of the meeting may, and upon the request of the holders of ten percent of the
shares entitled to vote at such election shall, appoint two inspectors of
election who shall first subscribe an oath or affirmation to execute
faithfully the duties of inspectors at such election with strict impartiality
and according to the best of their ability, and shall, after the election,
make a certificate of the result of the vote taken. No candidate for the
office of Director shall be appointed as an inspector.
ARTICLE VI
CAPITAL STOCK
SECTION 1. CERTIFICATES OF STOCK. The interest of each stockholder of the
Corporation shall be evidenced by certificates for shares of stock in such
form as the Board of Directors may from time to time authorize, provided,
however, the Board of Directors may, in its discretion, authorize the
issuance of non-certificated shares. No certificate shall be valid unless it
is signed by the President or a Vice President and countersigned by the
Secretary or an Assistant Secretary or the Treasurer or an Assistant
Treasurer of the Corporation and sealed with the seal of the Corporation, or
bears the facsimile signatures of such officers and a facsimile of such seal.
In case any officer who shall have signed any such certificate, or whose
facsimile signature has been placed thereon,
2
<PAGE>
shall cease to be such an officer (because of death, resignation or
otherwise) before such certificate is issued, such certificate may be issued
and delivered by the Corporation with the same effect as if he or she were
such officer at the date of issue.
In the event the Board of Directors authorizes the issuance of
non-certificated shares of stock, the Board of Directors may, in its
discretion and at any time, discontinue the issuance of share certificates
and may, by written notice to the registered owners of each certificated
share, require the surrender of share certificates to the Corporation for
cancellation. Such surrender and cancellation shall not affect the ownership
of shares of the Corporation.
SECTION 2. TRANSFER OF SHARES. Shares of the Corporation shall be
transferable on the books of the Corporation by the holder of record thereof
in person or by his or her duly authorized attorney or legal representative
(i) upon surrender and cancellation of a certificate or certificates for the
same number of shares of the same class, duly endorsed or accompanied by
proper instruments of assignment and transfer, with such proof of the
authenticity of the signature as the Corporation or its agents may reasonably
require, or (ii) as otherwise prescribed by the Board of Directors. The
shares of stock of the Corporation may be freely transferred, and the Board
of Directors may, from time to time, adopt rules and regulations with
reference to the method of transfer of the shares of stock of the
Corporation. The Corporation shall be entitled to treat the holder of record
of any share of stock as the absolute owner thereof for all purposes, and
accordingly shall not be bound to recognize any legal, equitable or other
claim or interest in such share on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise
expressly provided by law or the statutes of the State of Maryland.
SECTION 5. FIXING OF RECORD DATE. The Board of Directors may fix in advance
a date as a record date for the determination of the stockholders entitled to
notice of or to vote at any stockholders' meeting or any adjournment thereof,
or to express consent to corporate action in writing without a meeting, or to
receive payment of any dividend or other distribution or allotment of any
rights, or to exercise any rights with respect to any change, conversion or
exchange of stock, or for the purpose of any other lawful action, provided
that (1) such record date shall be within ninety days prior to the date on
which the particular action requiring such determination will be taken; (2)
the transfer books shall not be closed for a period longer than twenty days;
and (3) in the case of a meeting of stockholders, the record date shall be at
least ten days before the date of the meeting.
3
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
TERMS AND CONDITIONS OF DIVIDEND REINVESTMENT PLAN
1
GT Global Investor Services, Inc. ("Plan Agent") will act as agent for each
shareholder participating in the Dividend Reinvestment Plan (each such
participating shareholder hereinafter referred to as a "Participant" and the
Dividend Reinvestment Plan hereinafter referred to as the "Plan"), and will
open an account for each Participant under the Plan in the same name in which
the Participant's shares of common stock, par value $.001 per share (the
"Shares") of GT Global Floating Rate Fund, Inc. (the "Fund") are registered.
The Plan will be effective for each such Participant as of the first record
date for an income dividend, net capital gain distribution or distribution
due to net realized gains from foreign currency transactions (each singly
hereinafter referred to as a "Distribution" and collectively as
"Distributions"). Each shareholder in the Fund shall be deemed to be a
Participant in the Plan unless he or she elects not to participate; the terms
of paragraph 11 below, regarding termination, shall apply to such election.
2
Under the Plan, whenever the Board of Directors of the Fund declares a
Distribution payable in cash or Shares at the option of the shareholder, each
Participant will automatically receive his or her Distribution in newly
issued Shares, including fractional Shares, if the market price per Share at
the close of business on the Distribution payment date, or if such payment
date is not a trading day, at the close of business on the next preceding
trading day ("Valuation Date") is at or above the then net asset value
("NAV") per Share. The number of Shares to be issued to each Participant by
the Fund will be determined by dividing the amount of the cash value of the
Distribution to which such Participant is entitled (net of any applicable
withholding taxes) by the greater of the NAV per Share on such date or 95% of
the market price per Share on such date.
3
For U.S. federal income tax purposes, Shareholders receiving newly issued
Shares pursuant to the Plan will be treated as having received income or
capital gains in an amount equal to the fair market value (determined as of
the Valuation Date but in no event less than 95% of the fair market value on
the payment date) of the Shares received and will have a cost basis equal to
such fair market value.
<PAGE>
4
There will be no brokerage charge to Participants for Shares issued directly
by the Fund under the Plan. The Fund will pay the fees of the Plan Agent for
handling the Plan.
5
If banks, brokerage firms, or other nominees hold Shares for beneficial
owners, the Plan Agent will administer the Plan on the basis of the number of
Shares certified by the nominee as being registered in the nominee's name and
held for the account of the beneficial owners who are participating in the
Plan.
6
The Plan Agent may hold Shares acquired pursuant to the Plan in
non-certificated form in the Plan Agent's name or that of the Plan Agent's
nominee. The Plan Agent will forward to each Participant any proxy
solicitation material and will vote any Shares so held for such Participant
only in accordance with the proxy returned by such Participant to the Fund.
Upon a Participant's written request, the Plan Agent will deliver to such
Participant, without charge, a certificate or certificates for the full
Shares held in the Plan.
7
Each acquisition made for a Participant's account will be confirmed as soon
as practicable, but not later than 60 days after the date thereof. Although
a Participant may from time to time have an undivided fractional interest
(computed to three decimal places) in a Share of the Fund, no certificates
for fractional Shares will be issued. However, Distributions on fractional
Shares will be credited to a Participant's account. In the event of
termination of a Participant's account under the Plan, the Plan Agent will
adjust for any such undivided fractional interest in cash at the market value
per Share at the time of termination, less the pro rata expense of any sale
required to make such an adjustment.
8
For purposes of the Plan the NAV per Share on a particular date will be as
determined by or on behalf of the Fund.
- 2 -
<PAGE>
9
Any stock dividends distributed by the Fund on Shares the Plan Agent holds
for a Participant will be credited to such Participant's account. In the
event that the Fund makes available to its shareholders rights to purchase
additional Shares or other securities, the Shares held for a Participant
under the Plan will be added to other Shares held by such Participant in
calculating the number of rights to be issued to such Participant.
10
A Participant may terminate his or her account under the Plan at any time by
notifying the Plan Agent in writing. Termination of such Plan will be
effective only for Distributions declared and having a record date at least
ten days after the date on which such notice is received by the Plan Agent.
The Plan may be terminated by the Plan Agent or the Fund upon notice in
writing mailed to Participants at least 30 days prior to any record date for
the payment of any Distribution by the Fund. Upon any termination, the Plan
Agent will deliver without charge to each Participant whose participation has
terminated a certificate or certificates for the full Shares held for such
Participant under the Plan and a cash adjustment for any fractional Shares
(or if the Shares are not then in certificated form, will cause such Shares
to be transferred to such Participant).
11
The terms and conditions of this Plan may be amended or supplemented by the
Plan Agent or the Fund at any time. Participants will be notified in
writing at least 30 days prior to the effective date of any such amendments
or supplements except when necessary or appropriate to comply with applicable
law or the rules or policies of the Securities and Exchange Commission or any
other regulatory authority. Any amendment or supplement will be deemed to be
accepted by a Participant unless, prior to the effective date thereof, the
Plan Agent receives written notice of the termination of such Participant's
account under the Plan. Any such amendment may include the Plan Agent's
appointment of a successor plan agent under the terms and conditions of this
Plan, with full power and authority to perform all or any of the acts to be
performed by the Plan Agent under the terms and conditions of this Plan.
Upon any such appointment of any successor plan agent for the purpose of
receiving Distributions, the Fund will be authorized to pay to such successor
plan agent, for each Participant's account, all Distributions payable on
Shares held in such Participant's name or under the Plan for retention or
application by such successor plan agent as provided in the terms and
conditions of this Plan.
- 3 -
<PAGE>
12
The Plan Agent shall at all times act in good faith and agrees to use its
best efforts within reasonable limits to insure the accuracy of all services
performed under the terms and conditions of this Plan and to comply with
applicable law, but assumes no responsibility and will not be liable for loss
or damage due to errors unless such error is caused by its negligence, bad
faith, or willful misconduct or that of its employees.
13
The Plan Agent will maintain all Participant accounts and furnish written
confirmations of all transactions, including information needed by
Participants for personal and tax records.
14
All correspondence concerning the Plan should be directed to GT Global
Investor Services, Inc., the Plan Agent for GT Global Floating Rate Fund,
Inc. at California Plaza, 2121 N. California Boulevard, Suite 450, Walnut
Creek, California 94596.
15
These terms and conditions shall be governed by the laws of Maryland.
- 4 -
<PAGE>
<PAGE>
INVESTMENT MANAGEMENT AND ADMINISTRATION CONTRACT
BETWEEN
FLOATING RATE PORTFOLIO
AND
CHANCELLOR LGT SENIOR SECURED MANAGEMENT, INC.
Contract made as of ________, 1997, between Floating Rate Portfolio, a
Delaware business trust ("Portfolio"), and Chancellor LGT Senior Secured
Management, Inc., a New York corporation ("Chancellor SSM").
WHEREAS the Portfolio is registered under the Investment Company Act of
1940, as amended ("1940 Act"), as a closed-end management investment company;
and
WHEREAS the Portfolio desires to retain Chancellor SSM as investment
manager to furnish certain investment advisory and portfolio management
services to the Portfolio, and Chancellor SSM is willing to furnish such
services;
NOW THEREFORE, in consideration of the promises and the mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Portfolio hereby appoints Chancellor SSM as
investment manager of the Portfolio for the period and on the terms set forth
in this Contract. Chancellor SSM accepts such appointment and agrees to
render the services herein set forth, for the compensation herein provided.
2. DUTIES AS INVESTMENT MANAGER.
(a) Subject to the supervision of the Portfolio's Board of
Trustees ("Board"), Chancellor SSM will provide a continuous investment
program for the Portfolio, including investment research and management with
respect to all securities and investments and cash equivalents of the
Portfolio. Chancellor SSM will determine from time to time what securities
and other investments will be purchased, retained or sold by the Portfolio
and the brokers and dealers through whom trades will be executed.
(b) Chancellor SSM agrees that in placing orders with brokers and
dealers it will attempt to obtain the best net results in terms of price and
execution. Consistent with this obligation, Chancellor SSM may, in its
discretion, purchase and sell portfolio securities to and from brokers and
dealers who
<PAGE>
sell shares of the Common Stock of the Portfolio or who provide the Portfolio
or Chancellor SSM's other clients with research, analysis, advice and similar
services. Chancellor SSM may pay to brokers and dealers, in return for
research and analysis, a higher commission or spread than may be charged by
other brokers and dealers, subject to Chancellor SSM's determining in good
faith that such commission or spread is reasonable in terms either of the
particular transaction or of the overall responsibility of Chancellor SSM to
the Portfolio and its other clients, and that the total commissions or
spreads paid by the Portfolio will be reasonable in relation to the benefits
to the Portfolio over the long term. In no instance will portfolio
securities be purchased from or sold to Chancellor SSM or any affiliated
person thereof except in accordance with the federal securities laws and the
rules and regulations thereunder. Whenever Chancellor SSM simultaneously
places orders to purchase or sell the same security on behalf of the
Portfolio and one or more other accounts advised by Chancellor SSM, such
orders will be allocated as to price and amount among all such accounts in a
manner believed to be equitable to each account. The Portfolio recognizes
that in some cases this procedure may adversely affect the results obtained
for the Portfolio.
(c) Chancellor SSM will oversee the maintenance of all books and
records with respect to the securities transactions of the Portfolio and will
furnish the Board with such periodic and special reports as the Board
reasonably may request. In compliance with the requirements of Rule 31a-3
under the 1940 Act, Chancellor SSM hereby agrees that all records which it
maintains for the Portfolio are the property of the Portfolio, agrees to
preserve for the periods prescribed by Rule 31a-2 under the 1940 Act any
records which it maintains for the Portfolio and which are required to be
maintained by Rule 31a-1 under the 1940 Act, and further agrees to surrender
promptly to the Portfolio any records which it maintains for the Portfolio
upon request by the Portfolio.
(d) Chancellor SSM will oversee the computation of the net asset
value and the net income of the Portfolio as described in the currently
effective registration statement of the Portfolio under the Securities Act of
1933, as amended, and the 1940 Act and any supplements thereto ("Registration
Statement") or as more frequently requested by the Board.
3. DUTIES AS ADMINISTRATOR. Chancellor SSM will administer the
affairs of the Portfolio subject to the supervision of the Portfolio's Board
of Trustees ("Board") and the following understandings:
(a) Chancellor SSM will supervise all aspects of the
non-investment operations of the Portfolio, including the oversight of
transfer agency, custodial, pricing and accounting services, except as
hereinafter set forth; provided, however, that nothing herein contained shall
be deemed to relieve or
- 2 -
<PAGE>
deprive the Board of its responsibility for control of the conduct of the
affairs of the Portfolio.
(b) At Chancellor SSM's expense, Chancellor SSM will provide the
Portfolio with such corporate, administrative and clerical personnel
(including officers of the Portfolio) and services as are reasonably deemed
necessary or advisable by the Board.
(c) Chancellor SSM will arrange, but not pay, for the periodic
preparation, updating, filing and dissemination (as applicable) of the
Portfolio's prospectus, proxy material, tax returns and required reports with
or to the Portfolio's shareholders, the Securities and Exchange Commission
and other appropriate federal or state regulatory authorities.
(d) Chancellor SSM will provide the Portfolio with, or obtain for
it, adequate office space and all necessary office equipment and services,
including telephone service, heat, utilities, stationery supplies and similar
items.
4. FURTHER DUTIES. In all matters relating to the performance of this
Contract, Chancellor SSM will act in conformity with the Instrument of Trust,
Bylaws and Registration Statement of the Portfolio and with the instructions
and directions of the Board, and will comply with the requirements of the
1940 Act, the rules thereunder, and all other applicable federal and state
laws and regulations.
5. DELEGATION OF CHANCELLOR SSM'S DUTIES AS INVESTMENT MANAGER. With
respect to the Portfolio, Chancellor SSM may enter into contracts with a
sub-adviser ("Sub-Advisory Contract") in which Chancellor SSM delegates to
such sub-adviser the performance of any or all of the services specified in
Paragraph 2 of this Contract, provided that (i) each Sub-Advisory Contract
imposes on the sub-adviser bound thereby, all the duties and conditions to
which Chancellor SSM is subject with respect to the delegated services under
Paragraphs 2 and 3 of this Contract; (ii) each Sub-Advisory Contract meets
all requirements of the 1940 Act and rules thereunder; and (iii) Chancellor
SSM shall not enter into a Sub-Advisory Contract unless it is approved by the
Board prior to implementation.
6. DELEGATION OF CHANCELLOR SSM'S DUTIES AS ADMINISTRATOR. With
respect to the Portfolio, Chancellor SSM may enter into one or more contracts
("Sub-Administration Contract") with a sub-administrator in which Chancellor
SSM delegates to such sub-administrator the performance of any or all of the
services specified in Paragraph 3 of this Contract, provided that (i) each
Sub-Administration Contract imposes on the sub-administrator
- 3 -
<PAGE>
bound thereby all the duties and conditions to which Chancellor SSM is
subject with respect to the delegated services under Paragraph 3 of this
Contract; (ii) each Sub-Administration Contract meets all requirements of the
1940 Act and rules thereunder; and (iii) Chancellor SSM shall not enter into
a Sub-Administration Contract unless it is approved by the Board prior to
implementation.
7. SERVICES NOT EXCLUSIVE. The services furnished by Chancellor SSM
hereunder are not to be deemed exclusive and Chancellor SSM shall be free to
furnish similar services to others so long as its services under this
Contract are not impaired thereby. Nothing in this Contract shall limit or
restrict the right of any director, officer or employee of Chancellor SSM,
who may also be a Trustee, officer or employee of the Portfolio, to engage in
any other business or to devote his or her time and attention in part to the
management or other aspects of any other business, whether of a similar
nature or a dissimilar nature.
8. EXPENSES.
(a) During the term of this Contract, the Portfolio will bear all
expenses incurred in its operations which are not specifically assumed by
Chancellor SSM.
(b) Expenses borne by the Portfolio will include but not be
limited to the following: (i) the cost (including brokerage commissions, if
any) of securities purchased or sold by the Portfolio and any losses incurred
in connection therewith; (ii) fees payable to and expenses incurred on behalf
of the Portfolio by Chancellor SSM under this Contract; (iii) expenses of
organizing the Portfolio; (iv) filing fees and expenses relating to the
registration and qualification of the Portfolio's shares and the Portfolio
under federal and/or state securities law and maintaining such registrations
and qualifications; (v) fees and salaries payable to the Portfolio's Trustees
who are not parties to this Contract or interested persons of any such party
("Independent Trustees"); (vi) all expenses incurred in connection with the
Independent Trustees' services, including travel expenses; (vii) taxes
(including any income or franchise taxes) and governmental fees; (viii) costs
of any liability, uncollectible items of deposit and other insurance and
fidelity bonds; (ix) any costs, expenses or losses arising out of a liability
or claim for damages or other relief asserted against the Portfolio for
violation of any law; (x) legal, accounting and auditing expenses, including
legal fees of special counsel for the Independent Trustees; (xi) charges of
custodians, transfer agents, pricing agents and other agents; (xii) costs of
preparing share certificates; (xiii) expenses of setting in type, printing
- 4 -
<PAGE>
and mailing prospectuses and supplements thereto, statements of additional
information, reports and proxy materials for existing shareholders; (xiv) any
extraordinary expenses (including fees and disbursements of counsel, costs of
actions, suits or proceedings to which the Portfolio is a party and the
expenses the Portfolio may incur as a result of its legal obligation to
provide indemnification to its Trustees, officers, employees and agents)
incurred by the Portfolio; (xv) fees, voluntary assessments and other
expenses incurred in connection with membership in investment company
organizations; (xvi) costs of mailing and tabulating proxies and costs of
meetings of shareholders, the Board and any committees thereof; (xvii) the
cost of investment company literature and other publications provided by the
Portfolio to its Trustees and officers; and (xviii) costs of mailing,
stationery and communications equipment.
(c) Chancellor SSM will assume the cost of any compensation for
services provided to the Portfolio received by the officers of the Portfolio
and by the Trustees of the Portfolio who are not Independent Trustees.
(d) The payment or assumption by Chancellor SSM of any expense of
the Portfolio that Chancellor SSM is not required by this Contract to pay or
assume shall not obligate Chancellor SSM to pay or assume the same or any
similar expense of the Portfolio on any subsequent occasion.
9. COMPENSATION.
(a) For the services provided under this Contract, the Portfolio
will pay Chancellor SSM a fee, computed weekly and paid monthly, at the
annualized rate of 0.95% of the Portfolio's average daily net assets.
(b) The fee shall be computed weekly and paid monthly to
Chancellor SSM on or before the last business day of the next succeeding
calendar month.
(c) If this Contract becomes effective or terminates before the
end of any month, the fee for the period from the effective date to the end
of the month or from the beginning of such month to the date of termination,
as the case may be, shall be prorated according to the proportion which such
period bears to the full month in which such effectiveness or termination
occurs.
10. LIMITATION OF LIABILITY OF CHANCELLOR SSM AND INDEMNIFICATION.
Chancellor SSM shall not be liable, and the Portfolio shall indemnify
Chancellor SSM and its directors,
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<PAGE>
officers and employees, for any costs or liabilities arising from any error
of judgment or mistake of law or any loss suffered by the Portfolio in
connection with the matters to which this Contract relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part
of Chancellor SSM in the performance by Chancellor SSM of its duties or from
reckless disregard by Chancellor SSM of its obligations and duties under this
Contract. Any person, even though also an officer, partner, employee, or
agent of Chancellor SSM, who may be or become a Trustee, officer, employee or
agent of the Portfolio, shall be deemed, when rendering services to the
Portfolio or acting with respect to any business of the Portfolio, to be
rendering such service to or acting solely for the Portfolio and not as an
officer, partner, employee, or agent or one under the control or direction of
Chancellor SSM even though paid by it.
11. DURATION AND TERMINATION.
(a) This Contract shall become effective upon the date written
above, provided that this Contract shall not take effect with respect to the
Portfolio unless it has first been approved (i) by a vote of a majority of
the Independent Trustees, cast in person at a meeting called for the purpose
of voting on such approval, and (ii) by vote of a majority of the Portfolio's
outstanding voting securities.
(b) Unless sooner terminated as provided herein, this Contract
shall continue in effect for two years from the above written date.
Thereafter, if not terminated, with respect to the Portfolio, this Contract
shall continue automatically for successive periods not to exceed twelve
months each, provided that such continuance is specifically approved at least
annually (i) by a vote of a majority of the Independent Trustees, cast in
person at a meeting called for the purpose of voting on such approval, and
(ii) by the Board or by vote of a majority of the outstanding voting
securities of the Portfolio.
(c) Notwithstanding the foregoing, with respect to the Portfolio
this Contract may be terminated at any time, without the payment of any
penalty, by vote of the Board or by a vote of a majority of the outstanding
voting securities of the Portfolio on sixty days' written notice to
Chancellor SSM or by Chancellor SSM at any time, without the payment of any
penalty, on sixty days' written notice to the Portfolio. This Contract will
automatically terminate in the event of its assignment.
12. AMENDMENT. No provision of this Contract may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed
by the party against which
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<PAGE>
enforcement of the change, waiver, discharge or termination is sought, and no
amendment of this Contract shall be effective until approved by vote of a
majority of the Portfolio's outstanding voting securities.
13. GOVERNING LAW. This Contract shall be construed in accordance with
the laws of the State of California and the 1940 Act. To the extent that the
applicable laws of the State of California conflict with the applicable
provisions of the 1940 Act, the latter shall control.
14. MISCELLANEOUS. The captions in this Contract are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Contract shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Contract shall not be
affected thereby. This Contract shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors. As used in
this Contract, the terms "majority of the outstanding voting securities,"
"interested person," "assignment," "broker," "dealer," "investment adviser,"
"national securities exchange," "net assets," "prospectus," "sale," "sell"
and "security" shall have the same meaning as such terms have in the 1940
Act, subject to such exemption as may be granted by the Securities and
Exchange Commission by any rule, regulation or order. Where the effect of a
requirement of the 1940 Act reflected in any provision of this Contract is
made less restrictive by a rule, regulation or order of the Securities and
Exchange Commission, whether of special or general application, such
provision shall be deemed to incorporate the effect of such rule, regulation
or order.
- 7 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated as of the day and year first above
written.
Attest: FLOATING RATE PORTFOLIO
By:
- --------------------------- ------------------------------------
Attest: CHANCELLOR LGT SENIOR SECURED
MANAGEMENT, INC.
By:
- --------------------------- ------------------------------------
- 8 -
<PAGE>
ADMINISTRATION CONTRACT
BETWEEN
GT GLOBAL FLOATING RATE FUND, INC.
AND
CHANCELLOR LGT ASSET MANAGEMENT, INC.
Contract made as of ________, 1997, between GT Global Floating Rate
Fund, Inc., a Maryland corporation ("Fund"), and Chancellor LGT Asset
Management, Inc., a [New York] corporation ("Chancellor LGT").
WHEREAS the Fund is registered under the Investment Company Act of 1940,
as amended ("1940 Act"), as a closed-end management investment company, and
intends to offer for public sale shares of its Common Stock; and
WHEREAS the Fund desires to retain Chancellor LGT as administrator to
furnish certain administrative services to the Fund, and Chancellor LGT is
willing to furnish such services;
NOW THEREFORE, in consideration of the premises and the mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Fund hereby appoints Chancellor LGT as
administrator of the Fund for the period and on the terms set forth in this
Contract. Chancellor LGT accepts such appointment and agrees to render the
services herein set forth, for the compensation herein provided.
2. DUTIES AS ADMINISTRATOR. Chancellor LGT will administer the
affairs of the Fund subject to the supervision of the Fund's Board of
Directors ("Board") and the following understandings:
(a) Chancellor LGT will supervise all aspects of the
non-investment operations of the Fund, including the oversight of transfer
agency, custodial, pricing and accounting services, except as hereinafter set
forth; provided, however, that nothing herein contained shall be deemed to
relieve or deprive the Board of its responsibility for control of the conduct
of the affairs of the Fund.
(b) At Chancellor LGT's expense, Chancellor LGT will provide the
Fund with such corporate, administrative and clerical personnel (including
officers of the Fund) and services as are reasonably deemed necessary or
advisable by the Board.
<PAGE>
(c) Chancellor LGT will arrange, but not pay, for the periodic
preparation, updating, filing and dissemination (as applicable) of the Fund's
prospectus, proxy material, tax returns and required reports with or to the
Fund's shareholders, the Securities and Exchange Commission and other
appropriate federal or state regulatory authorities.
(d) Chancellor LGT will provide the Fund with, or obtain for it,
adequate office space and all necessary office equipment and services,
including telephone service, heat, utilities, stationery supplies and similar
items.
3. FURTHER DUTIES. In all matters relating to the performance of this
Contract, Chancellor LGT will act in conformity with the Articles of
Incorporation, Bylaws and Registration Statement of the Fund and with the
instructions and directions of the Board and will comply with the
requirements of the 1940 Act, the rules thereunder, and all other applicable
federal and state laws and regulations.
4. DELEGATION OF CHANCELLOR LGT'S DUTIES AS ADMINISTRATOR. With
respect to the Fund, Chancellor LGT may enter into one or more contracts
("Sub-Administration Contract") with a sub-administrator in which Chancellor
LGT delegates to such sub-administrator the performance of any or all of the
services specified in Paragraphs 2 and 3 of this Contract, provided that (i)
each Sub-Administration Contract imposes on the sub-administrator bound
thereby all the duties and conditions to which Chancellor LGT is subject with
respect to the delegated services under Paragraphs 2 and 3 of this Contract;
(ii) each Sub-Administration Contract meets all requirements of the 1940 Act
and rules thereunder; and (iii) Chancellor LGT shall not enter into a
Sub-Administration Contract unless it is approved by the Board of Directors
of the Fund prior to implementation.
5. SERVICES NOT EXCLUSIVE. The services furnished by Chancellor LGT
hereunder are not to be deemed exclusive and Chancellor LGT shall be free to
furnish similar services to others so long as its services under this
Contract are not impaired thereby. Nothing in this Contract shall limit or
restrict the right of any director, officer or employee of Chancellor LGT,
who may also be a Director, officer or employee of the Fund, to engage in any
other business or to devote his or her time and attention in part to the
management or other aspects of any other business, whether of a similar
nature or a dissimilar nature.
6. EXPENSES.
(a) During the term of this Contract, the Fund will bear all
expenses incurred in its operations which are not specifically assumed by
Chancellor LGT.
- 2 -
<PAGE>
(b) Expenses borne by the Fund will include but not be limited to
the following: (i) the cost (including brokerage commissions, if any) of
securities purchased or sold by the Fund and any losses incurred in
connection therewith; (ii) fees payable to and expenses incurred on behalf of
the Fund by Chancellor LGT under this Contract; (iii) expenses of organizing
the Fund; (iv) filing fees and expenses relating to the registration and
qualification of the Fund's shares under federal and/or state securities laws
and maintaining such registrations and qualifications; (v) fees and salaries
payable to the Fund's Directors who are not parties to this Contract or
interested persons of any such party ("Independent Directors"); (vi) all
expenses incurred in connection with the Independent Directors' services,
including travel expenses; (vii) taxes (including any income or franchise
taxes) and governmental fees; (viii) costs of any liability, uncollectible
items of deposit and other insurance and fidelity bonds; (ix) any costs,
expenses or losses arising out of a liability of or claim for damages or
other relief asserted against the Fund for violation of any law; (x) legal,
accounting and auditing expenses, including legal fees of special counsel for
the Independent Directors; (xi) charges of custodians, transfer agents,
pricing agents and other agents; (xii) costs of preparing share certificates;
(xiii) expenses of setting in type, printing and mailing prospectuses and
supplements thereto, statements of additional information, reports and proxy
materials for existing shareholders; (xiv) any extraordinary expenses
(including fees and disbursements of counsel, costs of actions, suits or
proceedings to which the Fund is a party and the expenses the Fund may incur
as a result of its legal obligation to provide indemnification to its
officers, Directors, employees and agents) incurred by the Fund; (xv) fees,
voluntary assessments and other expenses incurred in connection with
membership in investment company organizations; (xvi) costs of mailing and
tabulating proxies and costs of meetings of shareholders, the Board and any
committees thereof; (xvii) the cost of investment company literature and
other publications provided by the Fund to its Directors and officers; and
(xviii) costs of mailing, stationery and communications equipment.
(c) Chancellor LGT will assume the cost of any compensation for
services provided to the Fund received by the officers and by the Directors
of the Fund who are not Independent Directors.
(d) The payment or assumption by Chancellor LGT of any expense of
the Fund that Chancellor LGT is not required by this Contract to pay or
assume shall not obligate Chancellor LGT to pay or assume the same or any
similar expense of the Fund on any subsequent occasion.
- 3 -
<PAGE>
7. COMPENSATION.
(a) For the services provided under this Contract, the Fund will
pay Chancellor LGT a fee, computed weekly and paid monthly, at the annualized
rate of 0.25% of the Fund's average weekly net assets.
(b) The fee shall be computed weekly and paid monthly to
Chancellor LGT on or before the last business day of the next succeeding
calendar month.
(c) If this Contract becomes effective or terminates before the
end of any month, the fee for the period from the effective date to the end
of the month or from the beginning of such month to the date of termination,
as the case may be, shall be prorated according to the proportion which such
period bears to the full month in which such effectiveness or termination
occurs.
8. LIMITATION OF LIABILITY OF CHANCELLOR LGT AND INDEMNIFICATION.
Chancellor LGT shall not be liable, and the Fund shall indemnify Chancellor
LGT and its directors, officers and employees, for any costs or liabilities
arising from any error of judgment or mistake of law or any loss suffered by
the Fund in connection with the matters to which this Contract relates except
a loss resulting from willful misfeasance, bad faith or gross negligence on
the part of Chancellor LGT in the performance by Chancellor LGT of its duties
or from reckless disregard by Chancellor LGT of its obligations and duties
under this Contract. Any person, even though also an officer, partner,
employee, or agent of Chancellor LGT, who may be or become a Director,
officer, employee or agent of the Fund, shall be deemed, when rendering
services to the Fund or acting with respect to any business of the Fund to be
rendering such service to or acting solely for the Fund and not as an
officer, partner, employee, or agent or one under the control or direction of
Chancellor LGT even though paid by it.
9. DURATION AND TERMINATION.
(a) This Contract shall become effective upon the date hereabove
written, provided that this Contract shall not take effect with respect to
the Fund unless it has first been approved (i) by a vote of a majority of the
Independent Directors, cast in person at a meeting called for the purpose of
voting on such approval, and (ii) by vote of a majority of the Fund's
outstanding voting securities.
(b) Unless sooner terminated as provided herein, this Contract shall
continue in effect for two years from the above
- 4 -
<PAGE>
written date. Thereafter, if not terminated, with respect to the Fund, this
Contract shall continue automatically for successive periods not to exceed
twelve months each, provided that such continuance is specifically approved
at least annually (i) by a vote of a majority of the Independent Directors,
cast in person at a meeting called for the purpose of voting on such
approval, and (ii) by the Board or by vote of a majority of the outstanding
voting securities of the Fund.
(c) Notwithstanding the foregoing, with respect to the Fund this
Contract may be terminated at any time, without the payment of any penalty,
by vote of the Board or by a vote of a majority of the outstanding voting
securities of the Fund on sixty days' written notice to Chancellor LGT or by
Chancellor LGT at any time, without the payment of any penalty, on sixty
days' written notice to the Fund. This Contract will automatically terminate
in the event of its assignment.
10. AMENDMENT. No provision of this Contract may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed
by the party against which enforcement of the change, waiver, discharge or
termination is sought, and no amendment of this Contract shall be effective
until approved by vote of a majority of the Fund's outstanding voting
securities.
11. GOVERNING LAW. This Contract shall be construed in accordance with
the laws of the State of California and the 1940 Act. To the extent that the
applicable laws of the State of California conflict with the applicable
provisions of the 1940 Act, the latter shall control.
12. MISCELLANEOUS. The captions in this Contract are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Contract shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Contract shall not be
affected thereby. This Contract shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors. As used in
this Contract, the terms "majority of the outstanding voting securities,"
"interested person," "assignment," "broker," "dealer," "investment adviser,"
"national securities exchange," "net assets," "prospectus," "sale," "sell"
and "security" shall have the same meaning as such terms have in the 1940
Act, subject to such exemption as may be granted by the Securities and
- 5 -
<PAGE>
Exchange Commission by any rule, regulation or order. Where the effect of a
requirement of the 1940 Act reflected in any provision of this Contract is
made less restrictive by a rule, regulation or order of the Securities and
Exchange Commission, whether of special or general application, such
provision shall be deemed to incorporate the effect of such rule, regulation
or order.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated as of the day and year first above
written.
Attest: GT GLOBAL FLOATING RATE
FUND, INC.
By:
- ------------------------------ --------------------------------
Attest: CHANCELLOR LGT ASSET
MANAGEMENT, INC.
By:
- ------------------------------ --------------------------------
- 6 -
<PAGE>
SUB-ADVISORY AND SUB-ADMINISTRATION CONTRACT
BETWEEN
CHANCELLOR LGT SENIOR SECURED MANAGEMENT, INC.
AND
CHANCELLOR LGT ASSET MANAGEMENT, INC.
Contract made as of _________, 1997, between Chancellor LGT Senior
Secured Management, Inc., a New York corporation ("Chancellor SSM"), and
Chancellor LGT Asset Management, Inc., a California corporation ("Chancellor
LGT").
WHEREAS Chancellor SSM has entered into an Investment Management and
Administration Contract with Floating Rate Portfolio (the "Portfolio"), a
closed-end management investment company registered under the Investment
Company Act of 1940, as amended ("1940 Act"); and
WHEREAS Chancellor SSM desires to retain Chancellor LGT as sub-adviser
and sub-administrator to furnish certain advisory and administrative services
to the Portfolio, and Chancellor LGT is willing to furnish such services;
NOW THEREFORE, in consideration of the promises and the mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. Chancellor SSM hereby appoints Chancellor LGT as
sub-adviser and sub-administrator of the Portfolio for the period and on the
terms set forth in this Contract. Chancellor LGT accepts such appointment
and agrees to render the services herein set forth, for the compensation
herein provided.
2. DUTIES AS SUB-ADVISER.
(a) Subject to the supervision of the Portfolio's Board of Trustees
("Board") and Chancellor SSM, the Sub-Adviser will provide a continuous
investment program, including investment research and management, for a
portion of the investments of the Portfolio to be determined by the Manager
(the "Sub-Advised Assets"). The Sub-Adviser will determine from time to time
investments to be purchased, retained or sold with respect to the Sub-Advised
Assets of the Portfolio. The Sub-Adviser will be responsible for placing
purchase and sell orders for such investments and for other related
transactions. The Sub-Adviser will provide services under this Agreement in
accordance with the Portfolio's investment objectives, policies and
restrictions as stated in the Portfolio's registration statement.
<PAGE>
(b) The Sub-Adviser agrees that, in placing orders with brokers, it
will attempt to obtain the best net result in terms of price and execution;
provided that, on behalf of the Portfolio, the Sub-Adviser may, in its
discretion, purchase portfolio securities from and sell portfolio securities
to brokers who provide the Portfolio with research, analysis, advice and
similar services, and the Sub-Adviser may pay to those brokers, in return for
such services, a higher commission than may be charged by other brokers,
subject to the Sub-Adviser determining in good faith that such commission is
reasonable in terms either of the particular transaction or of the overall
responsibility of the Sub-Adviser to the Portfolio and its other clients and
that the total commissions paid by the Portfolio will be reasonable in
relation to the benefits to the Portfolio over the long term. In no instance
will portfolio securities be purchased from or sold to the Sub-Adviser, or
any affiliated person thereof, except in accordance with the federal
securities laws and the rules and regulations thereunder. Whenever the
Sub-Adviser simultaneously places orders to purchase or sell the same
security on behalf of the Portfolio and one or more other accounts advised by
the Sub-Adviser, such orders will be allocated as to price and amount among
all such accounts in a manner believed to be equitable to each account.
(c) The Sub-Adviser will maintain all books and records required to be
maintained by the Sub-Adviser pursuant to the 1940 Act and the rules and
regulations promulgated thereunder with respect to transactions on behalf of
the Portfolio, and will furnish the Board and Chancellor SSM with such
periodic and special reports as the Board or Chancellor SSM reasonable may
request. In compliance with the requirements of Rule 31a-3 under the 1940
Act, the Sub-Adviser hereby agrees that all records which it maintains for
the Portfolio are property of the Portfolio, agrees to preserve for the
periods prescribed by Rule 31a-2 under the 1940 Act any records which it
maintains for the Portfolio and which are required to be maintained by Rule
31a-1 under the 1940 Act, and further agrees to surrender promptly to the
Portfolio any records which it maintains for the Portfolio upon request by
the Portfolio.
(d) The Sub-Adviser will provide the Board and Chancellor SSM on a
regular basis with economic and investment analyses and reports and make
available to the Board and Chancellor SSM upon request any economic,
statistical and investment services normally available to institutional or
other customers of the Sub-Adviser.
- 2 -
<PAGE>
3. DUTIES AS SUB-ADMINISTRATOR. Chancellor LGT will administer the
affairs of the Portfolio subject to the supervision of the Portfolio's Board
of Trustees ("Board") and the following understandings:
(a) Chancellor LGT will supervise all aspects of the
non-investment operations of the Portfolio, including the oversight of
transfer agency, custodial, pricing and accounting services, except as
hereinafter set forth; provided, however, that nothing herein contained shall
be deemed to relieve or deprive the Board of its responsibility for control
of the conduct of the affairs of the Portfolio.
(b) At Chancellor LGT's expense, Chancellor LGT will provide the
Portfolio with such corporate, administrative and clerical personnel
(including officers of the Portfolio) and services as are reasonably deemed
necessary or advisable by the Board.
(c) Chancellor LGT will arrange, but not pay, for the periodic
preparation, updating, filing and dissemination (as applicable) of the
Portfolio's prospectus, proxy material, tax returns and required reports with
or to the Portfolio's shareholders, the Securities and Exchange Commission
and other appropriate federal or state regulatory authorities.
(d) Chancellor LGT will provide the Portfolio with, or obtain for
it, adequate office space and all necessary office equipment and services,
including telephone service, heat, utilities, stationery supplies and similar
items.
4. FURTHER DUTIES. In all matters relating to the performance of this
Contract, Chancellor LGT will act in conformity with the Instrument of Trust,
Bylaws and Registration Statement of the Portfolio and with the instructions
and directions of the Board and will comply with the requirements of the 1940
Act, the rules thereunder, and all other applicable federal and state laws
and regulations.
5. SERVICES NOT EXCLUSIVE. The services furnished by Chancellor LGT
hereunder are not to be deemed exclusive and Chancellor LGT shall be free to
furnish similar services to others so long as its services under this
Contract are not impaired thereby. Nothing in this Contract shall limit or
restrict the right of any director, officer or employee of Chancellor LGT,
who may also be a Director, officer or employee of the Portfolio, to engage
in any other business or to devote his or her time and attention in part to
the management or other aspects of any other business, whether of a similar
nature or a dissimilar nature.
- 3 -
<PAGE>
6. EXPENSES.
(a) During the term of this Contract, the Portfolio will bear all
expenses incurred in its operations which are not specifically assumed by
Chancellor LGT.
(b) Expenses borne by the Portfolio will include but not be
limited to the following: (i) the cost (including brokerage commissions, if
any) of securities purchased or sold by the Portfolio and any losses incurred
in connection therewith; (ii) fees payable to and expenses incurred on behalf
of the Portfolio by Chancellor LGT under this Contract; (iii) expenses of
organizing the Portfolio; (iv) filing fees and expenses relating to the
registration and qualification of the Portfolio's shares under federal and/or
state securities laws and maintaining such registrations and qualifications;
(v) fees and salaries payable to the Portfolio's Trustees who are not parties
to this Contract or interested persons of any such party ("Independent
Trustees"); (vi) all expenses incurred in connection with the Independent
Trustees' services, including travel expenses; (vii) taxes (including any
income or franchise taxes) and governmental fees; (viii) costs of any
liability, uncollectible items of deposit and other insurance and fidelity
bonds; (ix) any costs, expenses or losses arising out of a liability of or
claim for damages or other relief asserted against the Portfolio for
violation of any law; (x) legal, accounting and auditing expenses, including
legal fees of special counsel for the Independent Trustees; (xi) charges of
custodians, transfer agents, pricing agents and other agents; (xii) costs of
preparing share certificates; (xiii) expenses of setting in type, printing
and mailing prospectuses and supplements thereto, statements of additional
information, reports and proxy materials for existing shareholders; (xiv) any
extraordinary expenses (including fees and disbursements of counsel, costs of
actions, suits or proceedings to which the Portfolio is a party and the
expenses the Portfolio may incur as a result of its legal obligation to
provide indemnification to its officers, Trustees, employees and agents)
incurred by the Portfolio; (xv) fees, voluntary assessments and other
expenses incurred in connection with membership in investment company
organizations; (xvi) costs of mailing and tabulating proxies and costs of
meetings of shareholders, the Board and any committees thereof; (xvii) the
cost of investment company literature and other publications provided by the
Portfolio to its Trustees and officers; and (xviii) costs of mailing,
stationery and communications equipment.
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<PAGE>
(c) Chancellor LGT will assume the cost of any compensation for
services provided to the Portfolio received by the officers and by the
Trustees of the Portfolio who are not Independent Trustees.
(d) The payment or assumption by Chancellor LGT of any expense of
the Portfolio that Chancellor LGT is not required by this Contract to pay or
assume shall not obligate Chancellor LGT to pay or assume the same or any
similar expense of the Portfolio on any subsequent occasion.
7. COMPENSATION.
(a) For the services provided under this Contract, Chancellor SSM
will pay Chancellor LGT a fee, computed weekly and paid monthly, at the
annualized rate of 0.95% of the average daily net value of the Portfolio's
Sub-Advised Assets.
(b) The fee shall be computed weekly and paid monthly to
Chancellor LGT on or before the last business day of the next succeeding
calendar month.
(c) If this Contract becomes effective or terminates before the
end of any month, the fee for the period from the effective date to the end
of the month or from the beginning of such month to the date of termination,
as the case may be, shall be prorated according to the proportion which such
period bears to the full month in which such effectiveness or termination
occurs.
8. LIMITATION OF LIABILITY OF CHANCELLOR LGT AND INDEMNIFICATION.
Chancellor LGT shall not be liable for any costs or liabilities arising from
any error of judgment or mistake of law or any loss suffered by the Portfolio
in connection with the matters to which this Contract relates except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part
of Chancellor LGT in the performance by Chancellor LGT of its duties or from
reckless disregard by Chancellor LGT of its obligations and duties under this
Contract. Any person, even though also an officer, partner, employee, or
agent of Chancellor LGT, who may be or become a Trustee, officer, employee or
agent of the Portfolio, shall be deemed, when rendering services to the
Portfolio or acting with respect to any business of the Portfolio to be
rendering such service to or acting solely for the Portfolio and not as an
officer, partner, employee, or agent or one under the control or direction of
Chancellor LGT even though paid by it.
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<PAGE>
9. DURATION AND TERMINATION.
(a) This Contract shall become effective upon the date hereabove
written, provided that this Contract shall not take effect with respect to
the Portfolio unless it has first been approved (i) by a vote of a majority
of the Independent Trustees, cast in person at a meeting called for the
purpose of voting on such approval, and (ii) by vote of a majority of the
Portfolio's outstanding voting securities.
(b) Unless sooner terminated as provided herein, this Contract
shall continue in effect for two years from the above written date.
Thereafter, if not terminated, with respect to the Portfolio, this Contract
shall continue automatically for successive periods not to exceed twelve
months each, provided that such continuance is specifically approved at least
annually (i) by a vote of a majority of the Independent Trustees, cast in
person at a meeting called for the purpose of voting on such approval, and
(ii) by the Board or by vote of a majority of the outstanding voting
securities of the Portfolio.
(c) Notwithstanding the foregoing, with respect to the Portfolio
this Contract may be terminated at any time, without the payment of any
penalty, by vote of the Board or by a vote of a majority of the outstanding
voting securities of the Portfolio on sixty days' written notice to
Chancellor LGT or by Chancellor LGT at any time, without the payment of any
penalty, on sixty days' written notice to the Portfolio. This Contract will
automatically terminate in the event of its assignment.
10. AMENDMENT. No provision of this Contract may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed
by the party against which enforcement of the change, waiver, discharge or
termination is sought, and no amendment of this Contract shall be effective
until approved by vote of a majority of the Portfolio's outstanding voting
securities.
11. GOVERNING LAW. This Contract shall be construed in accordance with
the laws of the State of California and the 1940 Act. To the extent that the
applicable laws of the State of California conflict with the applicable
provisions of the 1940 Act, the latter shall control.
12. MISCELLANEOUS. The captions in this Contract are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Contract shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Contract shall not be affected
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<PAGE>
thereby. This Contract shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors. As used in
this Contract, the terms "majority of the outstanding voting securities,"
"interested person," "assignment," "broker," "dealer," "investment adviser,"
"national securities exchange," "net assets," "prospectus," "sale," "sell"
and "security" shall have the same meaning as such terms have in the 1940
Act, subject to such exemption as may be granted by the Securities and
Exchange Commission by any rule, regulation or order. Where the effect of a
requirement of the 1940 Act reflected in any provision of this Contract is
made less restrictive by a rule, regulation or order of the Securities and
Exchange Commission, whether of special or general application, such
provision shall be deemed to incorporate the effect of such rule, regulation
or order.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated as of the day and year first above
written.
Attest: CHANCELLOR LGT SENIOR SECURED
MANAGEMENT, INC.
By:
- ----------------------------- ------------------------------------
Attest: CHANCELLOR LGT ASSET
MANAGEMENT, INC.
By:
- ----------------------------- ------------------------------------
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<PAGE>
EXHIBIT 99(H-1)
DISTRIBUTION CONTRACT BETWEEN
GT GLOBAL FLOATING RATE FUND, INC.
AND GT GLOBAL, INC.
THIS DISTRIBUTION CONTRACT, dated as of _________________, 1997 between GT
GLOBAL FLOATING RATE FUND, INC., a Maryland corporation ("Fund"), and GT GLOBAL,
INC., a California corporation ("G.T. Global"), is made with reference to the
following facts:
A. The Fund is a closed-end management investment company.
B. Following an initial subscription period, the Fund's Board of
Directors ("Board") has authorized the continuous offering of the Fund's shares.
C. G.T. Global has the facilities to sell and distribute the shares of
common stock of the Fund.
D. The Fund and G.T. Global desire to enter into a distribution contract
with respect to the shares of the Fund.
NOW, THEREFORE, the parties agree as follows:
1. G.T. Global shall be the exclusive principal underwriter for the sale
of shares of the Fund, except as otherwise provided pursuant to paragraph 20
hereof. The terms "shares of the Fund" or "shares" as used herein shall mean
shares of common stock issued by the Fund.
2. In the sale of shares of the Fund, G.T. Global shall act as agent of
the Fund except in any transaction in which G.T. Global sells such shares as a
dealer to the public, in which event G.T. Global shall act as principal for its
own account.
3. The Fund shall sell shares only through G.T. Global except that the
Fund may at any time:
(a) Issue shares to any corporation, association, trust, partnership,
or other organization, or its, or their, security holders,
beneficiaries, or members, in connection with a merger,
consolidation, or reorganization to which the Fund is a party, or
in connection with the acquisition of all or substantially all
the property and assets of such corporation, association, trust,
partnership, or other organization;
(b) Issue shares at net asset value to the Fund's shareholders in
connection with the reinvestment
<PAGE>
of dividends and other
distributions paid by the Fund;
(c) Issue shares of the Fund at net asset value to Directors,
officers, and employees of the Fund, its investment manager, any
principal underwriter of the Company, and their affiliates,
including any trust, pension, profit-sharing, or other benefit
plan established for such persons, registered representatives and
other employees of dealers having Dealer Agreements with G.T.
Global and with respect to all such persons listed, their
respective spouse, siblings, parents and children, and to other
persons as permitted by applicable rules adopted by the
Securities and Exchange Commission under the Investment Company
Act of 1940 ("1940 Act"), as in effect from time to time and as
described in the current Prospectus of the Fund;
(d) Issue shares of a Fund at net asset value to the sponsor
organization, custodian or depository of a periodic or single
payment plan, or similar plan for the purchase of shares of the
Fund, purchasing for such plan;
(e) Issue shares of a Fund in the course of any other transaction
specifically provided for in the Prospectus of the Fund, or upon
obtaining the written consent of G.T. Global thereto; or
(f) Sell shares outside of the North American continent, Hawaii and
Puerto Rico through such other principal underwriter or principal
underwriters as may be designated from time to time by the Fund,
pursuant to paragraph 20 hereof.
4. G.T. Global shall devote its best efforts to the sale of shares of the
Fund. G.T. Global shall maintain a sales organization suited to the sale of
shares of the Fund and shall use its best efforts to effect such sales in
countries as to which the Fund shall have expressly waived in writing its right
to designate another principal underwriter pursuant to paragraph 20 hereof, and
shall effect and maintain appropriate qualification to do so in all those
jurisdictions in which it sells or offers shares for sale and in which
qualifications is required.
5. Within the United States of America, G.T. Global shall offer and sell
shares only to our through such dealers as are members in good standing of the
National Association of Securities Dealers, Inc. ("NASD"), or to persons legally
engaged
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<PAGE>
in dealer activities who are exempt from NASD membership in accord with
applicable law. Shares of a Fund sold to dealers shall be for resale by such
dealers only at the public offering price set forth in the effective Prospectus
relating to the Fund which is part of the Fund's Registration Statement in
effect under the Securities Act of 1933, as amended ("1933 Act"), at the time of
such offer or sale (herein, the "Prospectus"). G.T. Global may sell the shares
of a Fund to dealers at such discounts from said public offering price and with
such commissions as are set forth in the Prospectus, and/or in a Dealer
Agreement between G.T. Global and the Dealer, but neither such discounts nor
commissions shall exceed the sales charge or discounts referred to in the
Prospectus.
6. In its sales to dealers, G.T. Global shall use its best efforts to
determine that such dealers are appropriately qualified to transact business in
securities under applicable laws, rules and regulations promulgated by such
national, state, local or other governmental or quasi-governmental authorities
as may in a particular instance have jurisdiction.
7. The applicable public offering price of the shares of the Fund shall
be the price which is equal to the net asset value per share plus such sales
charge as may be provided for in the Prospectus. Net asset value per share
shall be determined for the Fund in the manner and at the time or times set
forth in and subject to the provisions of its Prospectus.
8. All orders for shares received by G.T. Global shall, unless rejected
by G.T. Global or the Fund, be accepted by G.T. Global immediately upon receipt
and confirmed at an offering price determined in accordance with the provisions
of the Prospectus and the 1940 Act, and applicable rules in effect thereunder.
G.T. Global shall not hold orders subject to acceptance nor otherwise delay
their execution. In conformity with the rules of the NASD, G.T. Global shall
not accept conditional orders. The provisions of this paragraph shall not be
construed to restrict the right of the Fund to withhold shares of the Funds from
sale under paragraph 16 hereof.
9. The Fund or its transfer agent shall be promptly advised of all orders
received, and shall cause shares of the Fund to be issued upon payment received
in accord with policies established by the Fund and G.T. Global.
10. G.T. Global shall adopt and follow procedures as approved by the
officers of the Fund for the confirmation of sales to dealers, the collection of
amounts payable by dealers on such sales, and the cancellation of unsettled
transactions, as may be necessary to comply with the requirements of the NASD
and the 1940 Act, as such requirements may from time to time exist.
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<PAGE>
11. The compensation for the services of G.T. Global as a principal
underwriter under this Contract shall be the Early Withdrawal Charges, if any,
which are collected on the shares as set forth in the Fund's Prospectus.
12. The Fund agrees to use its best efforts to maintain its registration
as a closed-end management investment company under the 1940 Act.
13. The Fund agrees to use its best efforts to maintain an effective
prospectus under the 1933 Act, and warrants that such prospectus will contain
all statements required by and will conform with the requirements of the 1933
Act and the rules and regulations thereunder, and that no part of any such
prospectus, at the time the Registration Statement of which it is a part is
ordered effective, will contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein, or necessary to make the
statements therein not misleading. G.T. Global agrees and warrants that it will
not in the sale of shares of the Fund use any prospectus, advertising or sales
literature not approved by the Fund or its officers nor make any untrue
statement of a material fact nor omit the stating of a material fact necessary
in order to make the statements made, in the light of the circumstances under
which they are made, not misleading. G.T. Global agrees to indemnify and hold
the Fund harmless from any and all loss, expense, damage and liability resulting
from a breach by G.T. Global of the agreements and warranties in this paragraph,
or from the use of any sales literature, information, statistics or other aid or
device employed in connection with the sale of shares not approved by the Fund
and its officers.
14. The expense of each printing of each Prospectus and each revisions
thereof or addition thereto deemed necessary by the Fund's officers to meet the
requirements of applicable laws shall be divided between the Fund, G.T. Global
and any other principal underwriter of the shares of the Fund as they may from
time to time agree.
15. The Fund agrees to use its best efforts to qualify and maintain the
qualification of an appropriate number of the shares of the Fund for sale under
the securities laws of such states as G.T. Global and the Fund may approve. Any
such qualification may be withheld, terminated or withdrawn by the Fund at any
time in its discretion. The expense of qualification and maintenance of
qualification shall be borne by the Fund, but G.T. Global shall furnish such
information and other materials relating to its affairs and activities as may be
required by the Fund or its counsel in connection with such qualification.
16. The Fund and G.T. Global acknowledge that each has the right to reject
any order for the purchase of shares for any
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<PAGE>
reason. In addition, the Fund may
withhold shares from sale in any state or country temporarily or permanently if,
in the opinion of its counsel, such offer or sale would be contrary to law or if
the Board of Directors or the President or any Vice President of the Fund
determines that such offer or sale is not in the best interest of the Fund. The
Fund will give prompt notice to G.T. Global of any withholding and will
indemnify it against any loss suffered by G.T. Global as a result of such
withholding by reason of non-delivery of Fund shares after a good faith
confirmation by G.T. Global of sales thereof prior to receipt of notice of such
withholding.
17. (a) This Contract may be terminated at any time, without payment of
any penalty, by vote of a majority of the members of the Board of
Directors of the Fund who are not interested persons of the Fund
or by vote of a majority of the outstanding voting securities of
the Fund on thirty (30) days' written notice to G.T. Global, or
by G.T. Global on like notice to the Fund.
(b) This Contract may be terminated by either party upon five (5)
days' written notice to the other party in the event that the
Securities and Exchange Commission has issued an order or
obtained in injunction or other court order suspending
effectiveness of the Registration Statement covering the shares
of the Fund.
(c) This Contract may also be terminated by the Fund upon five (5)
days' written notice to G.T. Global, should the NASD expel G.T.
Global or suspend its membership in that organization.
18. G.T. Global shall inform the Fund promptly of the institution of any
proceedings against it by the Securities and Exchange Commission, the NASD or
any state regulatory authority.
19. This Agreement shall automatically terminate in the event of its
assignment. The term "assignment" shall have the meaning defined in the 1940
Act.
20. Upon sixty (60) days' written notice to G.T. Global, the Fund may from
time to time designate other principal underwriters with respect to areas other
than the North American continent, Hawaii, Puerto Rico and such countries as to
which the Fund may have expressly waived in writing its right to make such
designation. In the event of such designation, the right of G.T. Global under
this Contract to sell shares in the areas so designated shall terminate, but
this Contract shall remain otherwise in full effect until terminated in
accordance with the provisions of paragraphs 17, 18 and 19 hereof.
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<PAGE>
21. No provision of this Contract shall protect or purport to protect G.T.
Global against any liability to the Fund or holders of shares of the Fund for
which G.T. Global would otherwise be liable by reason of willful misfeasance,
bad faith or negligence.
22. Unless sooner terminated in accordance with the provisions of
paragraphs 17, 18 or 19 hereof, this Contract shall continue in effect for
periods of up to one year, but only so long as such continuance is specifically
approved at least annually by (i) vote of a majority of the Directors of the
Fund who are not interested persons of the Fund and who are not parties to this
Contract or interested persons of any such party as defined by the 1940 Act,
cast in person at a meeting called for the purpose of voting on such approval;
and (ii) either the Board of Directors of the Fund or a vote of a majority of
the outstanding shares of the Fund as defined by the 1940 Act.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed in duplicate original by their officers thereunder duly authorized as
of the day and year first written above.
Attest: GT GLOBAL FLOATING RATE FUND, INC.
___________________ By: _______________________________
Attest: GT GLOBAL, INC.
____________________ By:_______________________________
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<PAGE>
GT Global, Inc.
General Distributor and Principal Underwriter of the GT Global Mutual Funds
50 California Street
27th Floor
San Francisco, CA 94111-4624
415-392-6181
To: ____________________________________
____________________________________
____________________________________
Re: DEALER AGREEMENT-CLASS A AND CLASS B SHARES
Financial Adviser:
GT Global, Inc. ("Us" or "We"), as general distributor and principal
underwriter, as such term is defined in the Investment Company Act of 1940
("1940 Act"), of the shares of the mutual funds that now or hereafter may be
included in the GT Global Mutual Funds ("Funds;" each individually a "Fund"),
agrees to sell to you, as dealer for your account, Class A shares and Class B
shares issued by the Funds, subject to any limitations imposed by any of the
Funds and subject to confirmation by Us in each instance. In addition, you are
authorized to tender Class A shares and Class B shares directly to the Funds or
their agent for redemption subject to the applicable terms set forth in the
respective Class A and Class B distribution agreements between Us and the Funds.
1. (a) You are authorized to offer and sell Class A shares only at the public
offering price next determined after the order is received, in accordance with
the terms of the then current Prospectuses of the respective Funds. We shall
provide you with appropriate compensation for selling such shares, in accordance
with the current schedule of dealer compensation which may be obtained from us
upon request. For the Class A shares, to the extent We reallow the full amount
or substantially all of the initial sales charge to you, you may be deemed to be
an underwriter of the Class A shares under the Securities Act of 1933. We will
consider any order you place for Class A shares to be the total holdings of
Class A shares by the investor, and We will treat all orders as not entitled to
any reduced sales charge beyond that accorded to the amount of the purchase
order as determined by the schedule set forth in the applicable Fund's then
current Prospectus, unless you advise Us otherwise when you place the order.
(b) You are to offer and sell Class B shares only at the public offering price,
which is the next determined net asset value per share after the order is
received, in accordance with the terms of the then current Prospectuses of the
respective Funds. We shall provide you with appropriate compensation for selling
such shares, in accordance with the current schedule of dealer compensation
which may be obtained from Us at any time upon request.
(c) With respect to Paragraphs 1(a) and 1(b) above as applicable, You agree to
apply any scheduled variation in or waiver of sales charges uniformly to your
customers meeting the qualifications specified in the applicable Fund's then
current Prospectus.
2. You agree to provide personal service and/or maintain shareholder accounts,
in accordance with the National Association of Securities Dealers, Inc. ("NASD")
Rules of Fair Practice, as those terms are used thereunder. For these services,
in addition to the compensation, if any, provided for in Paragraph I (a) or I
(b) of this Agreement, as applicable, We agree to pay you a quarterly fee, based
on the average total value of shares held during the quarter in accounts on
which you are identified on each Fund's records as the broker/dealer of record,
as set forth in the schedule referred to in Paragraph I (a) or I (b) above, as
applicable. This quarterly fee shall be payable with respect to Class A shares
or Class B shares of a Fund only for so long as the respective plans of
distribution adopted pursuant to Rule 12b- 1 under the 1940 Act, as described in
the applicable Fund's then current Prospectus, remain in effect. In addition,
(i) you understand and agree that you shall not be paid such quarterly fee until
We are in receipt of the service and distribution fees described in the
applicable Fund's then current Prospectus for the period in which you provide
the services described above, and (ii) our liability to you for the payment of
such quarterly fee is limited solely to the portion of that Fund's service and
distribution fees equal to the percentage of the Fund's assets represented by
your customer accounts. You agree to provide to Us
1
<PAGE>
at least annually a description of the services provided by You pursuant to
this paragraph. We reserve the right at any time to impose minimum fee
payment thresholds before any quarterly fees will be paid to you hereunder
and to cease payment of quarterly fees upon notice to you.
3. We reserve the right to cancel this Agreement at any time without notice if
any Class A shares or Class B shares are offered for sale by you at other than
the then current public offering price determined by or for the respective
Funds, according to Paragraphs I (a) or I (b) above, as applicable. We reserve
the right to suspend sales or withdraw the offering of Class A shares or Class B
shares, without notice and at our sole discretion. We reserve the right to
reject any purchase order at our sole discretion.
4. (a) Any repurchases of Class A shares will be made at the net asset
value of such shares in accordance with the then current Prospectus of the
applicable Fund. Any such Class A shares presented to Us for redemption will be
redeemed at the net asset value of such shares in accordance with the then
current Prospectus of the applicable Fund; provided that redemptions of certain
Class A shares may be subject to the imposition of a contingent deferred sales
charge ("CDSC Class A shares") as set forth in the then current Prospectuses or
the respective Funds. Repurchases of CDSC Class A shares will be made at the net
asset value of such shares, less any applicable contingent deferred sales
charges, as set forth in the then current Prospectus of the applicable Fund. You
agree to immediately present to Us the amount of the contingent deferred sales
charge to which such repurchases are subject. Any CDSC Class A shares presented
to Us for redemption will be redeemed at the net asset value of such shares,
less any applicable contingent deferred sales charge, as set forth in the then
current Prospectus of the applicable Fund.
(b) Any repurchases of Class B shares will be made at the net asset value of
such shares, less any applicable contingent deferred sales charges, as set forth
in the then current Prospectus of the applicable Fund. You agree to present
immediately to Us the amount of the contingent deferred sales charge to which
such repurchases are subject. Any Class B shares presented to Us for redemption
will be redeemed at the net asset value of such shares, less any applicable
contingent deferred sales charges, as set forth in the then current Prospectus
of the applicable Fund.
5. (a) No person is authorized to make any representations concerning Class
A shares or Class B shares of the Funds except those contained in the then
current Prospectuses, Statements of Additional Information, Rule 482
advertisements ("Omitting Prospectuses"), and other printed sales literature
authorized and issued by Us or the Funds' investment manager and administrator,
Chancellor LGT Management, Inc. ("Chancellor LGT") for public use. You agree to
indemnify the Funds, Us, Chancellor LGT and the Funds' transfer agent, GT Global
Investor Services, Inc. ("Transfer Agent"), and all directors, trustees,
officers and employee of each of them, for any loss, injury, damage, expense or
liability arising from or based upon any alleged or untrue statements or
representations made by you, other than statements contained in the
Prospectuses, Statements of Additional Information, Omitting Prospectuses or
authorized printed sales literature.
(b) We will furnish you, without charge and upon request, reasonable quantities
of the Funds' Prospectuses, Statements of Additional Information, periodic
shareholder reports and printed sales literature authorized by Us for public
use, for your use in accordance with the legends thereon.
(c) You agree to distribute Prospectuses and Statements of Additional
Information and shareholder reports to your customers in compliance with
applicable regulatory requirements, except to the extent that We or our
affiliates expressly undertake to do so on your behalf.
(d) You agree not to use other advertising and sales material relating to the
Funds, unless you have applied for and obtained pre-clearance of such
advertisements from the NASD and such material has also been approved in writing
by Us in advance of such use.
(e) In the event that We make a referral to you of a potential investor and
such referral results in a sale of Class A shares or Class B shares of the
Funds, You shall be obligated to forward such communications from Us to such
shareholder as We shall request, at no cost or charge to Us.
(f) Any printed information furnished by Us other than the current Prospectuses
and Statements of Additional Information of the Funds, periodic shareholder
reports and proxy solicitation materials are our sole responsibility and not the
responsibility of the Fund, and you agree that the Fund shall have no liability
or responsibility to you regarding such printed information unless expressly
assumed in connection therewith. You agree not to distribute any Fund's periodic
shareholder report without first or concurrently delivering to the investor a
then current Prospectus of such Fund.
6. Upon request, We will furnish you with public offering prices for the Class
A shares and the Class B shares in accordance with the then current Prospectuses
of the respective Funds, and you agree to quote such prices subject to
confirmation by Us on any Class A shares or Class B shares offered by you for
sale. Your attention is called specifically to
2
<PAGE>
the fact that each price is always subject to confirmation, and will be the
price next determined after receipt of an order.
7. Under this Agreement you agree to act only as a principal in all
transactions with respect to Class A or Class B shares between Us and you. You
are not authorized to act as agent for the Funds, Us or any other dealer in any
respect. In purchasing of selling Class A shares or Class B shares hereunder you
agree to rely only upon the applicable then current Prospectuses and Statements
of Additional Information and upon such written representations as may hereafter
be made by us to you over our signature. You also agree that every effort shall
be made by you to place Class A shares or Class B shares on an investment basis.
8. (a) Each party hereto represents that it is a member of the NASD and agrees
to notify the other party should it cease to be a member of the NASD. Each party
further agrees to abide by all of the NASD Rules of Fair Practice, including,
without limitation, the following provisions:
(i) You shall not withhold placing customers' orders for any Class A
shares or Class B shares so as to profit yourself as a result of such
withholding. You shall not purchase any Class A shares or Class B shares
from the Funds except for the purpose of covering purchase orders already
received by you, and you shall not purchase any Class A shares or Class B
shares from Us other than for bona fide investment, or for the purpose of
covering purchase orders already received.
(ii) If any Class A shares or Class B shares purchased by you are
repurchased by the Fund which issued such shares or by Us for the account
of that Fund, or are tendered for redemption, within seven (7) business
days after confirmation by Us of the original purchase order for such Class
A shares or Class B shares, no quarterly fees, or other compensation will
be payable to you with respect to such shares, as set forth under
Paragraphs 1 and 2 above, as applicable, and you shall forthwith refund to
Us the full amount of such fees and compensation, if any, allowed to you on
the original sale. Notice will be given to you of any such repurchase or
redemption within ten (10) business days of the date on which the
redemption is requested or share certificates are tendered to Us or to such
Fund. Termination or cancellation of this Agreement does not relieve you
from the requirements of this subparagraph.
(iii) Neither party to this Agreement shall, as principal, purchase any
Class A shares or Class B shares from a record holder at a price lower than
the net asset value next determined by or for the issuer thereof. Nothing
in this subparagraph shall prevent you from selling Class A shares for the
account of a record holder to Us or to the Fund which issued such Class A
shares at the net asset value then quoted by or for such Fund and charging
the investor a fair commission or service charge for handling the
transaction. For those Class A shares or Class B shares, upon which a
contingent deferred sales charge has been imposed, nothing in this
subparagraph shall prevent you from selling such Class A shares or Class B
shares for the account of a record holder to Us or to the Fund which issued
such shares at the net asset value then quoted by or for such Fund, less
any applicable contingent deferred sales charges, and charging the investor
a fair commission or service charges for handling the transaction.
(iv) You shall purchase Class A shares or Class B shares only from Us or
from your customers.
(b) You agree that you will have the responsibility to supervise all sales
representatives appointed by you under this Agreement.
9. We shall not accept from you any conditional orders for Class A shares or
Class B shares. Delivery of share certificates, if any, for Class A shares or
Class B shares purchased shall be made by the Funds only against receipt of the
purchase price. If payment for the Class A shares or Class B shares purchased is
not received within seven (7) days, the sale may be canceled forthwith without
any responsibility or liability on our part or on the part of the Fund (in which
case you will be responsible for any loss, including loss of profit, suffered by
the Fund resulting from your failure to make payment as aforesaid), or, at our
option, We may sell the Class A shares or Class B shares ordered back to the
Fund (in which case We may hold you responsible for any loss, including loss of
profit suffered by Us resulting from your failure to make payment as aforesaid).
10. You will not offer or sell any of the Class A shares or Class B shares
except under circumstances that will result in compliance with the applicable
federal and state securities laws. In connection with sales and offers to sell
Class A shares or Class B shares of a Fund, you will furnish each person to whom
any such sale or offer is made with a copy of the applicable then current Fund
Prospectus, prior to or concurrently with the receipt of any order. We shall be
under no liability to you except for lack of good faith and for obligations
expressly assumed by Us herein. Nothing herein, however, shall be deemed to be a
condition, stipulation or provision permitting any person acquiring any security
to waive compliance with any provision of the Securities Act of 1933, or the
rules and regulations of the Securities and Exchange Commission, or relieving
the parties hereto from any liability arising under the Securities Act of 1933.
11. If you use telephonic, telex or telegraphic means to transmit orders,
exchanges or redemptions on behalf of your customers for Class A shares or Class
B shares, you hereby agree to indemnify the Funds, Us, Chancellor LGT, the
Transfer Agent and all directors, trustees, officers, and employees of each, for
any loss, injury, damage, expense or liability (including reasonable attorney
fees) as a result of our actions based on such telephonic, telex or telegraphic
order,
3
<PAGE>
exchange or redemption request if your order, exchange or redemption request
is erroneous or not authentic but We, in good faith act on such request, or
if We have refused to execute such request for any reason.
12. You will not knowingly sell Class A shares or Class B shares of any Fund
to any investment company, whether or not registered with the Securities and
Exchange Commission, if after such sale, such investment company and its
controlled companies would own more than three (3) percent of the total
outstanding shares of the Fund, or if after such sale, such investment
company and other investment companies directly or indirectly will own more
than ten (10) percent of the total outstanding shares of the Fund.
13. Either party hereto may cancel this Agreement upon ten (10) days'
written notice to the other party. This Agreement may be amended by Us at any
time upon written notice to you, and your placing of any order after the
effective date of any such amendment shall constitute your acceptance thereof.
14. You agree to comply with, and adopt as part of your internal guidelines
for sales compliance, our policies regarding the sale of Class A shares and
Class B shares of the Funds, as provided to you from time to time.
15. All communications to Us should be sent to the address written above.
Any notices to you shall be duly given if mailed, taxed or telegraphed to you
at the address specified below. This Agreement shall be binding upon receipt
by Us in San Francisco, California, of a counterpart hereof duly accepted and
signed by you, and shall be construed in accordance with the laws of the
State of California. This Agreement shall replace any prior agreement between
Us and shall constitute the entire agreement between the parties with respect
to the matters addressed.
GT GLOBAL, INC.
By: /s/ WILLIAM J. GUILFOYLE
-------------------------------
William J. Guilfoyle, President
Accepted:
-------------------------------------------------------------------
Company Name
-------------------------------------------------------------------
Address
-------------------------------------------------------------------
City State Zip Code
By:
-------------------------------------------------------------------
Signature Print Name and Title
-------------------------------------------------------------------
Date
4
<PAGE>
GT Global, Inc.
Fifty California Street
27th Floor
San Francisco, CA 94111-4624
415-392-6181
To: _________________________________________________________
_________________________________________________________
_________________________________________________________
RE: SUPPLEMENTARY DEALER AGREEMENT -- GT GLOBAL FLOATING RATE FUND, INC.
Reference is made to the Dealer Agreement ("Dealer Agreement") previously
entered into between you and G.T. Global Financial Services, Inc. (now named
GT Global, Inc.) ("Us" or "We"), as general distributor and principal
underwriter, as such term is defined in the Investment Company Act of 1940,
as amended ("1940 Act"), of the shares of the mutual funds that now or
hereafter may be included in the GT Global Group of Funds, including to
Paragraph 13 of such Dealer Agreement relating to notice of amendments and
amendments thereto.
This Supplementary Dealer Agreement ("Supplementary Agreement") relates
solely to shares of the common stock of GT Global Floating Rate Fund, Inc.
("Floating Rate Fund"), a closed-end investment company registered under the
1940 Act. Shares of the Floating Rate Fund being offered to the public will
be registered under the Securities Act of 1933, as amended. Shares of the
Floating Rate Fund are expected to be offered during an initial subscription
period ("Subscription Period"), and thereafter during an offering period that
may continue indefinitely ("Continuous Offering Period"). The Subscription
Period, the Continuous Offering Period, shares of the Floating Rate Fund and
certain of the terms on which such shares are being offered are more fully
described in the enclosed prospectus of the Floating Rate Fund
("Prospectus").
Subject to the foregoing, We offer to sell to you, as dealer for your
account, shares of common stock issued by the Floating Rate Fund, subject to
any limitations imposed by the Floating Rate Fund and subject to confirmation
by Us in each instance.
1. You are to offer and sell shares of the Floating Rate Fund only at the
public offering price, which, (a) during the Subscription Period, shall be
$10 per share, and (b) during the Continuous Offering Period, shall be the
next determined net asset value per share after the order is received, in
accordance with the terms of the then current Prospectus. We shall provide
you with appropriate compensation for selling such shares, as set forth in
the then current Prospectus. You expressly acknowledge and understand that
there is no Rule 12b-1 Plan for the Floating Rate Fund, and that in no event
will the Floating Rate Fund pay, or have any obligation to pay, any
compensation directly to you.
2. You agree that with respect to orders for shares of the Floating Rate Fund,
you will transmit such orders received during the Subscription Period to Us
within the time period as specified in the Prospectus (or in the time period
as extended by Us in writing). You also agree to transmit any customer order
received during the Continuous Offering Period to Us prior to the time that
the public offering price for shares of the Floating Rate Fund is next
determined after your receipt of such order as set forth in the Prospectus.
There is no assurance that the Floating Rate Fund will engage in a continuous
offering of shares.
3. Paragraphs 3, 5, 6, 7, 8(a)(i), 8(b), 9, 10, 11, 12, 13, and 15 of the
Dealer Agreement shall apply to this Supplementary Dealer Agreement as though
the Floating Rate Fund were a "Fund," and shares of the Floating Rate Fund
were "Class B shares," as described in these referenced paragraphs of the
Dealer Agreement, except that, with respect to Paragraphs 3, and 6, the
public offering price during the Subscription Period of the shares of the
Floating Rate Fund shall be $10 per share.
4. You expressly acknowledge and understand that:
(a) Shares of the Floating Rate Fund will not be repurchased by either the
Floating Rate Fund (other than through tender offers from time to time,
if any) or by Us and that no secondary market for such shares exists
currently, or is expected to develop. Any representation as to a tender
offer by the Floating Rate Fund, other than that which is set forth in
the Floating Rate Fund's then current Prospectus, is expressly
prohibited.
(b) An early withdrawal charge payable to Us will be imposed on shares
accepted for tender by the Floating Rate Fund which have been held for
less than four full years, as set forth in the Prospectus.
<PAGE>
(c) In the event your customer cancels his or her order for shares after
confirmation, such shares may not be repurchased, remarketed or otherwise
disposed of by or through Us.
5. You agree that if any shares purchased by you are tendered for repurchase,
pursuant to a tender offer by the Floating Rate Fund, within __________ (__)
business days after confirmation by Us of the original purchase order for
such shares, no compensation will be payable to you with respect to such
shares, as set forth under Paragraph 1 above, and you shall forthwith refund
to Us the full amount of such compensation, if any, allowed to you on the
original sale. Termination or cancellation of this Supplementary Agreement
does not relieve you from the requirements of this paragraph.
6. You hereby covenant that, unless and until otherwise notified by Us:
(a) You will not make a secondary market in any shares of the Floating
Rate Fund;
(b) You will not purchase or hold shares of the Floating Rate Fund in
inventory for the purpose of resale in the open market or to your
customers; or
(c) Without consent by Us, you will not repurchase shares of the Floating
Rate Fund in the open market or from your customers for any account in
which you have a beneficial interest.
7. This Supplementary Agreement shall be construed in accordance with the
laws of the State of California, and shall replace any prior agreement
between Us and you regarding the offer and sale of shares of common stock of
the Floating Rate Fund, and shall constitute the entire agreement between the
parties with respect to the matters addressed.
8. Either your acceptance below, or your first order placed pursuant to this
Supplementary Agreement for purchase of shares of the Floating Rate Fund,
shall represent your acceptance of this Supplementary Agreement.
GT GLOBAL, INC.
By: _________________________________________________________
[Authorized Signatory]
Please return one signed copy of this Supplementary Agreement to:
GT Global, Inc.
Fifty California Street 27th Floor
San Francisco, CA 94111-4624
ACCEPTED
Firm Name:_________________________________________________________
By: _________________________________________________________
Address: _________________________________________________________
Date: _________________________________________________________
<PAGE>
CUSTODIAN CONTRACT
Between
GT GLOBAL FLOATING RATE FUND, INC.
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
CUSTODIAN CONTRACT
------------------
This Contract between GT Global Floating Rate Fund, Inc., a corporation
organized and existing under the laws of Maryland, having its principal place
of business at 50 California Street, San Francisco, California 94111
hereinafter called the "Fund", and State Street Bank and Trust Company, a
Massachusetts trust company, having its principal place of business at 225
Franklin Street, Boston, Massachusetts, 02110, hereinafter called the
"Custodian",
WITNESSETH: That in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT
-----------------------------------------------------
The Fund hereby employs the Custodian as the custodian of its assets,
including securities which it desires to be held in places within the United
States ("domestic securities") and securities it desires to be held outside
the United States ("foreign securities") pursuant to the provisions of the
Articles of Incorporation. The Fund agrees to deliver to the Custodian all
securities and cash owned by it, and all payments of income, payments of
principal or capital distributions received by it with respect to all
securities owned by the Fund from time to time, and the cash consideration
received by it for such new or shares of beneficial interest $.001 par value,
("Shares") of the Fund as may be issued or sold from time to time. The
Custodian shall not be responsible for any property of the Fund held or
received by the Fund and not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article 4),
the Custodian shall from time to time employ one or more sub-custodians
located in the United States, but only in accordance with an applicable vote
by the Board of Directors of the Fund, and provided that the Custodian shall
have no more or less responsibility or liability to the Fund on account of
any actions or omissions of any sub-custodian so employed than any such
sub-custodian has to the Custodian. The Custodian may employ as sub-custodian
for the Fund's foreign securities and other assets the foreign banking
institutions and foreign securities depositories designated in Schedule A
hereto but only in accordance with the provisions of Article 3.
2. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD BY THE
------------------------------------------------------------------------
CUSTODIAN IN THE UNITED STATES.
-------------------------------
2.1 HOLDING SECURITIES. The Custodian shall hold and physically segregate for
------------------
the account of the Fund all non-cash property, to be held by it in the
United States including all domestic securities owned by the Fund, other
than (a) securities which are maintained pursuant to Section 2.10 in a
clearing agency which acts as a securities depository or in a book-entry
system authorized by the U.S. Department of the Treasury, collectively
referred to herein as "Securities Systems" and (b) commercial paper of an
issuer for which State Street Bank and Trust Company acts as issuing and
paying agent ("Direct
<PAGE>
Paper") which is deposited and/or maintained in the Direct Paper
System of the Custodian pursuant to Section 2.11.
2.2 DELIVERY OF SECURITIES. The Custodian shall release and deliver domestic
----------------------
securities owned by the Fund held by the Custodian or in a Securities
System account of the Custodian or in the Custodian's Direct Paper book
entry system account ("Direct Paper System Account") only upon receipt of
Proper Instructions, which may be continuing instructions when deemed
appropriate by the parties, and only in the following cases:
1) Upon sale of such securities for the account of the Fund and receipt
of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Fund;
3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.10 hereof;
4) To the depository agent in connection with tender or other similar
offers for securities of the Fund;
5) To the issuer thereof or its agent when such securities are called,
redeemed, repurchased, retired or otherwise become payable; provided
that, in any such case, the cash or other consideration is to be
delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer into the name of the
Fund or into the name of any nominee or nominees of the Custodian or
into the name or nominee name of any agent appointed pursuant to
Section 2.9 or into the name or nominee name of any sub-custodian
appointed pursuant to Article 1; or for exchange for a different
number of bonds, certificates or other evidence representing the same
aggregate face amount or number of units; provided that, in any such
case, the new securities are to be deliveries to the Custodian.
7) Upon the sale of such securities for the account of the Fund, to the
broker or its clearing agent, against a receipt, for examination in
accordance with "street delivery" custom; provided that in any such
case, the Custodian shall have no responsibility or liability for any
loss arising from the delivery of such securities prior to receiving
payment for such securities except as may arise from the Custodian's
own negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the
securities of the issuer of such securities, or pursuant to provisions
for conversion contained in such securities, or pursuant to any
deposit agreement; provided that, in any such case, the new securities
and cash, if any, are to be delivered to the Custodian;
<PAGE>
9) In the case of warrants, rights or similar securities, the surrender
thereof in the exercise of such warrants, rights or similar securities
or the surrender of interim receipts or temporary securities for
definitive securities; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the Custodian;
10) For delivery in connection with any loans of securities made by the
Fund, but only against receipt of adequate collateral as agreed upon
from time to time by the Custodian and the Fund, which may be in the
form of cash or obligations issued by the United States government,
its agencies or instrumentalities, except that in connection with any
loans for which collateral is to be credited to the Custodian's
account in the book-entry system authorized by the U.S. Department of
the Treasury, the Custodian will not be held liable or responsible for
the delivery of securities owned by the Fund prior to the receipt of
such collateral;
11) For delivery as security in connection with any borrowings by the Fund
requiring a pledge of assets by the Fund, but only against receipt of
amounts borrowed;
12) For delivery in accordance with the provisions of any agreement among
the Fund, the Custodian and a broker-dealer registered under the
Securities Exchange Act of 1934 (the "Exchange Act") and a member of
The National Association of Securities Dealers, Inc. ("NASD"),
relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange, or of
any similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Fund;
13) For delivery in accordance with the provisions of any agreement among
the Fund, the Custodian, and a Futures Commission Merchant registered
under the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission and/or any Contract
Market, or any similar organization or organizations, regarding
account deposits in connection with transactions by the Fund;
14) For any other proper corporate purpose, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution of
the Board of Directors or of the Executive Committee signed by an
officer and certified by the Secretary or an Assistant Secretary,
specifying the securities of the Fund to be delivered, setting forth
the purpose for which such delivery is to be made, declaring such
purpose to be a proper corporate purpose, and naming the person or
persons to whom delivery of such securities shall be made.
2.3 REGISTRATION OF SECURITIES. Domestic securities held by the Custodian
--------------------------
(other than bearer securities) shall be registered in the name of the Fund
or in the name of any nominee of the Fund or of any nominee of the
Custodian which nominee shall be assigned exclusively to the Fund, unless
the Fund has authorized in writing the appointment of a nominee to be used
in common with other registered investment companies having the same
investment adviser as the Fund, or in the name or nominee name of any agent
<PAGE>
appointed pursuant to Section 2.9 or in the name or nominee name of any
sub-custodian appointed pursuant to Article 1. All securities accepted by
the Custodian on behalf of the Fund under the terms of this Contract shall
be in "street name" or other good delivery form. If, however, the Fund
directs the Custodian to maintain securities in "street name", the
Custodian shall utilize its best efforts only to timely collect income due
the Fund on such securities and to notify the Fund on a best efforts basis
only of relevant corporate actions including, without limitation, pendency
of calls, maturities, tender or exchange offers.
2.4 BANK ACCOUNTS. The Custodian shall open and maintain a separate bank
-------------
account or accounts in the United States in the name of the Fund which
shall contain only property held by the Custodian as Custodian for the
Fund, subject only to draft or order by the Custodian acting pursuant to
the terms of this Contract, and shall hold in such account or accounts,
subject to the provisions hereof, all cash received by it from or for the
account of the Fund, other than cash maintained by the Fund in a bank
account established and used in accordance with Rule 17f-3 under the
Investment Company Act of 1940. Funds held by the Custodian for the Fund
may be deposited by it to its credit as Custodian in the Banking Department
of the Custodian or in such other banks or trust companies as it may in its
discretion deem necessary or desirable; PROVIDED, however, that every such
bank or trust company shall be qualified to act as a custodian under the
Investment Company Act of 1940 and that each such bank or trust company and
the funds to be deposited with each such bank or trust company shall be
approved by vote of a majority of the Board of Directors of the Fund. Such
funds shall be deposited by the Custodian in its capacity as Custodian and
shall be withdrawable by the Custodian only in that capacity.
2.5 AVAILABILITY OF FEDERAL FUNDS. Upon mutual agreement between the Fund and
-----------------------------
the Custodian, the Custodian shall, upon the receipt of Proper
Instructions, make federal funds available to the Fund as of specified
times agreed upon from time to time by the Fund and the Custodian in the
amount of checks received in payment for Shares of the Fund which are
deposited into the Fund's account.
2.6 COLLECTION OF INCOME. Subject to the provisions of Section 2.3, the
--------------------
Custodian shall collect on a timely basis all income and other payments
with respect to United States registered securities held hereunder to which
the Fund shall be entitled either by law or pursuant to custom in the
securities business, and shall collect on a timely basis all income and
other payments with respect to United States bearer domestic securities if,
on the date of payment by the issuer, such securities are held by the
Custodian or its agent thereof and shall credit such income, as collected,
to the Fund's custodian account. Without limiting the generality of the
foregoing, the Custodian shall detach and present for payment all coupons
and other income items requiring presentation as and when they become due
and shall collect interest when due on securities held hereunder. Income
due the Fund on United States securities loaned pursuant to the provisions
of Section 2.2 (10) shall be the responsibility of the Fund. The Custodian
will have no duty or responsibility in connection therewith, other than to
provide the Fund with such information or data as
<PAGE>
may be necessary to assist the Fund in arranging for the timely delivery to
the Custodian of the income to which the Fund is properly entitled.
2.7 PAYMENT OF FUND MONIES. Upon receipt of Proper Instructions, which may be
----------------------
continuing instructions when deemed appropriate by the parties, the
Custodian shall pay out monies of the Fund in the following cases only:
1) Upon the purchase of domestic securities, options, futures contracts
or options on futures contracts for the account of the Fund but only
(a) against the delivery of such securities or evidence of title to
such options, futures contracts or options on futures contracts to the
Custodian (or any bank, banking firm or trust company doing business
in the United States or abroad which is qualified under the Investment
Company Act of 1940, as amended, to act as a custodian and has been
designated by the Custodian as its agent for this purpose) registered
in the name of the Fund or in the name of a nominee of the Custodian
referred to in Section 2.3 hereof or in proper form for transfer;
(b) in the case of a purchase effected through a Securities System, in
accordance with the conditions set forth in Section 2.10 hereof;
(c) in the case of a purchase involving the Direct Paper System, in
accordance with the conditions set forth in Section 2.11; (d) in the
case of repurchase agreements entered into between the Fund and the
Custodian, or another bank, or a broker-dealer which is a member of
NASD, (i) against delivery of the securities either in certificate
form or through an entry crediting the Custodian's account at the
Federal Reserve Bank with such securities or (ii) against delivery of
the receipt evidencing purchase by the Fund of securities owned by the
Custodian along with written evidence of the agreement by the
Custodian to repurchase such securities from the Fund or (e) for
transfer to a time deposit account of the Fund in any bank, whether
domestic or foreign; such transfer may be effected prior to receipt of
a confirmation from a broker and/or the applicable bank pursuant to
Proper Instructions as defined in Article 4;
2) In connection with conversion, exchange or surrender of securities
owned by the Fund as set forth in Section 2.2 hereof;
3) For the payment of any expense or liability incurred by the Fund,
including but not limited to the following payments for the account of
the Fund: interest, taxes, management, accounting, transfer agent and
legal fees, and operating expenses of the Fund whether or not such
expenses are to be in whole or part capitalized or treated as deferred
expenses;
4) For the payment of any dividends declared pursuant to the governing
documents of the Fund;
5) For payment of the amount of dividends received in respect of
securities sold short;
<PAGE>
6) For any other proper purpose, but only upon receipt of, in addition to
Proper Instructions, a certified copy of a resolution of the Board of
Directors or of the Executive Committee of the Fund signed by an
officer of the Fund and certified by its Secretary or an Assistant
Secretary, specifying the amount of such payment, setting forth the
purpose for which such payment is to be made, declaring such purpose
to be a proper purpose, and naming the Person or persons to whom such
payment is to be made.
2.8 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES PURCHASED.
-------------------------------------------------------------------
Except as specifically stated otherwise in this Contract, in any and every
case where payment for purchase of domestic securities for the account of
the Fund is made by the Custodian in advance of receipt of the securities
purchased in the absence of specific written instructions from the Fund to
so pay in advance, the Custodian shall be absolutely liable to the Fund for
such securities to the same extent as if the securities had been received
by the Custodian.
2.9 APPOINTMENT OF AGENTS. The Custodian may at any time or times in its
---------------------
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company Act of 1940,
as amended, and its rules or regulations, to act as a custodian, as its
agent to carry out such of the provisions of this Article 2 as the
Custodian may from time to time direct; PROVIDED, however, that the
appointment of any agent shall not relieve the Custodian (as distinguished
from a sub-custodian appointed pursuant to Section 3) of its
responsibilities or liabilities hereunder. In the event of any loss,
damage or expense suffered or incurred by the Fund caused by or resulting
from the negligence or willful misconduct of any agent appointed by the
Custodian pursuant to this paragraph 2.9, the Custodian shall promptly
reimburse the Fund in the amount of such loss, damage, or expense.
2.10 DEPOSIT OF FUND ASSETS IN SECURITIES SYSTEMS. The Custodian may deposit
--------------------------------------------
and/or maintain domestic securities owned by the Fund in a clearing agency
registered with the Securities and Exchange Commission under Section 17A of
the Securities Exchange Act of 1934, which acts as a securities depository,
or in the book-entry system authorized by the U.S. Department of the
Treasury and certain federal agencies, collectively referred to herein as
"Securities Systems" in accordance with applicable Federal Reserve Board
and Securities and Exchange Commission rules and regulations, if any, and
subject to the following provisions:
1) The custodian may deposit and/or maintain domestic securities of the
Fund in a Securities System provided that such securities are
represented in an account ("Account") of the Custodian in the
Securities System which shall not include any assets of the Custodian
other than assets held as a fiduciary, custodian or otherwise for
customers;
<PAGE>
2) The records of the Custodian with respect to domestic securities of
the Fund which are maintained in a Securities System shall identify by
book-entry those securities belonging to the Fund;
3) The Custodian shall pay for domestic securities purchased for the
account of the Fund upon (i) receipt of advice from the Securities
System that such securities have been transferred to the Account, and
(ii) the making of an entry on the records of the Custodian to reflect
such payment and transfer for the account of the Fund. The Custodian
shall transfer domestic securities sold for the account of the Fund
upon (i) receipt of advice from the Securities System that payment for
such securities has been transferred to the Account, and (ii) the
making of an entry on the records of the Custodian to reflect such
transfer and payment for the account of the Fund. Copies of all
advices from the Securities System of transfers of domestic securities
for the account of the Fund shall identify the Fund, be maintained for
the Fund by the Custodian and be provided to the Fund at its request.
The Custodian shall furnish the Fund confirmation of each transfer to
or from the account of the Fund in the form of a written advice or
notice and shall furnish to the Fund copies of daily transaction
sheets reflecting each day's transactions in the Securities System for
the account of the Fund on the next business day;
4) The Custodian shall provide the Fund with any report obtained by the
Custodian (or by any agent appointed by the custodian pursuant to
Section and furnished to the custodian) on the Securities Systems
accounting system, internal accounting control and procedures for
safeguarding securities deposited in the Securities System;
5) The Custodian shall have received the initial certificate required by
Article 12 hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for any loss, damage or expense
to the Fund resulting from use of the Securities System by reason of
any negligence, misfeasance or misconduct of the Custodian or any of
its agents or of any of its or their employees or from failure of the
Custodian or any such agent to enforce effectively such rights as it
may have against the Securities System; at the election of the Fund,
it shall be entitled to be subrogated to the rights of the Custodian
with respect to any claim against the Securities System or any other
person which the Custodian may have as a consequence of any such loss,
damage or expense if and to the extent that the Fund has not been made
whole for any such loss, damage or expense. The Custodian agrees to
cooperate with the Fund in connection with the enforcement of the
Fund's subrogation rights.
<PAGE>
2.11 FUND ASSETS HELD IN THE CUSTODIAN'S DIRECT PAPER SYSTEM. The Custodian may
-------------------------------------------------------
deposit and/or maintain securities owned by the Fund in the Direct Paper
System of the Custodian subject to the following provisions:
1) No transaction relating to securities in the Direct Paper System will
be effected in the absence of Proper Instructions;
2) The Custodian may keep securities of the Fund in the Direct Paper
System only if such securities are represented in an account
("Account") of the Custodian in the Direct Paper System which shall
not include any assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
3) The records of the Custodian with respect to securities of the Fund
which are maintained in the Direct Paper System shall identify by
book-entry those securities belonging to the Fund; the Custodian shall
pay for securities purchases for the account the Fund upon the making
of an entry on the records of the custodian to reflect such payment
and transfer of securities to the account of the Fund. The Custodian
shall transfer securities sold for the account of the Fund upon the
making of an entry on the records of the Custodian to reflect such
transfer and receipt of payment for the account of the Fund;
5) The Custodian shall furnish the Fund confirmation of each transfer to
or from the account of the Fund, in the form of a written advice or
notice, of Direct Paper on the next business day following such
transfer and shall furnish to the Fund copies of daily transaction
sheets reflecting each day's transaction in the Securities System for
the account of the Fund;
6) The Custodian and any agent appointed pursuant to paragraph 2.9 shall
provide the Fund with any report on their respective systems of
internal accounting control as the Fund may reasonably request from
time to time.
2.12 SEGREGATED ACCOUNT. The Custodian shall upon receipt of Proper Instructions
------------------
establish and maintain a segregated account or accounts for and on behalf
of the Fund, into which account or accounts may be transferred cash and/or
securities, including securities maintained in an account by the Custodian
pursuant to Section 2.10 hereof, (i) in accordance with the provisions of
any agreement among the Fund, the Custodian and a broker-dealer registered
under the Exchange Act and a member of the NASD (or any futures commission
merchant registered under the Commodity Exchange Act), relating to
compliance with the rules of The Options Clearing Corporation and of any
registered national securities exchange (or the Commodity Futures Trading
Commission or any registered contract market), or of any similar
organization or organizations, regarding escrow or other arrangements in
connection with transactions by the Fund, (ii) for purposes of segregating
cash or government securities in connection with options purchased, sold or
written by the Fund or commodity futures contracts or options thereon
purchased or sold by the Fund, (iii) for the purposes of compliance by the
Fund with the procedures required by Investment Company Act Release
No. 10666, or any subsequent
<PAGE>
release or releases of the Securities and Exchange Commission relating to
the maintenance of segregated accounts by registered investment companies
and (iv) as mutually agreed upon from time to time in writing by the
Custodian and the Fund.
2.13 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Custodian shall execute
---------------------------------------
ownership and other certificates and affidavits for all federal and state
tax purposes in connection with receipt of income or other payments with
respect to domestic securities of the Fund held by it and in connection
with transfers of securities.
2.14 PROXIES. The Custodian shall, with respect to the domestic securities held
-------
hereunder, cause to be promptly executed by the registered holder of such
securities, if the securities are registered otherwise than in the name of
the Fund or a nominee of the Fund, all proxies, without indication of the
manner in which such proxies are to be voted, and shall promptly deliver to
the Fund such proxies, all proxy soliciting materials and all notices
relating to such securities.
2.15 COMMUNICATIONS RELATING TO FUND PORTFOLIO SECURITIES. Subject to the
----------------------------------------------------
provisions of Section 2.3, the Custodian shall transmit promptly to the
Fund all written information (including, without limitation, pendency of
calls and maturities of domestic securities and expirations of rights in
connection therewith and notices of exercise of call and put options
written by the Fund and the maturity of futures contracts purchased or sold
by the Fund) received by the Custodian from issuers of the domestic
securities being held for the Fund. With respect to tender or exchange
offers, the Custodian shall transmit promptly to the Fund all written
information received by the Custodian from issuers of the domestic
securities whose tender or exchange is sought and from the party (or his
Agents) making the tender or exchange offer. If the Fund desires to take
action with respect to any tender offer, exchange offer or any other
similar transaction, the Fund shall notify the Custodian at least three
business days prior to the date on which the Custodian is to take such
action.
2.16 REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS
-------------------------------------------------
The Custodian shall provide the Fund, at such times as the Fund may
reasonably require, with reports by independent public accountants on the
accounting system, internal accounting control and procedures for
safeguarding securities, futures contracts and options on futures contracts,
including domestic securities deposited and/or maintained in a Securities
System, relating to the services provided by the Custodian under this
Contract; such reports, shall be of sufficient scope and in sufficient
detail, as may reasonably be required by the Fund to provide reasonable
assurance that any material inadequacies would be disclosed by such
examination, and, there are no such inadequacies, the reports shall so state.
3. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD OUTSIDE
-------------------------------------------------------------------------
OF THE UNITED STATES.
---------------------
3.1 APPOINTMENT OF FOREIGN SUB-CUSTODIANS. The Fund hereby authorizes and
-------------------------------------
instructs the Custodian to employ as sub-custodians for the Fund's
securities and other assets maintained outside the United States the
foreign banking institutions and foreign
<PAGE>
securities depositories designated on Schedule A hereto ("foreign sub-
custodians"). Upon receipt of "Proper Instructions", as defined in
Section 4 of this Contract, together with a certified resolution of the
Fund's Board of Directors, the Custodian and the Fund may agree to amend
Schedule A hereto from time to time to designate additional foreign banking
institutions and foreign securities depositories to act as sub-custodian.
Upon receipt of Proper Instructions, the Fund may instruct the Custodian to
cease the employment of any one or more such sub-custodians for maintaining
custody of the Fund's assets.
3.2 ASSETS TO BE HELD. The Custodian shall limit the securities and other
-----------------
assets maintained in the custody of the foreign sub-custodians to: (a)
"foreign securities, as defined in paragraph (c)(l) of Rule 17f-5 under the
Investment Company Act of 1940, and (b) cash and cash equivalents in such
amounts as the Custodian or the Fund may determine to be reasonably
necessary to effect the Fund's foreign securities transactions. The
Custodian shall identify on its books as belonging to the Fund, the foreign
securities of the Fund held by each foreign sub-custodian.
3.3 FOREIGN SECURITIES DEPOSITORIES. Except as may otherwise be agreed upon in
-------------------------------
writing by the Custodian and the Fund, assets of the Funds shall be
maintained in foreign securities depositories only through arrangements
implemented by the foreign banking institutions serving as sub-custodians
pursuant to the terms hereof. Where possible, such arrangements shall
include entry into agreements containing the provisions set forth in
Section 3.4 hereof.
3.4 AGREEMENTS WITH FOREIGN BANKING INSTITUTIONS. Each agreement with a
--------------------------------------------
foreign banking institution shall be substantially in the form set forth in
Exhibit 1 hereto and shall provide that: (a) the Fund's assets will not be
subject to any right, charge, security interest, lien or claim of any kind
in favor of the foreign banking institution or its creditors or agent,
except a claim of payment for their safe custody or administration;
(b)beneficial ownership of the Fund's assets will be freely transferable
without the payment of money or value other than for custody or
administration; (c) adequate records will be maintained identifying the
assets as belonging to the Fund; (d) officers of or auditors employed by,
or other representatives of the Custodian, including to the extent
permitted under applicable law the independent public accountants for the
Fund, will be given access to the books and records or the foreign banking
institution relating to its actions under its agreement with the Custodian;
and (e) assets of the Fund held by the foreign sub-custodian will be
subject only to the instructions of the Custodian or its agents.
3.5 ACCESS OF INDEPENDENT ACCOUNTANTS OF THE FUND. Upon request of the Fund,
---------------------------------------------
the Custodian will use its best efforts to arrange for the independent
accountants of the Fund to be afforded access to the books and records of
any foreign banking institution employed as a foreign sub-custodian insofar
as such books and records relate to the performance of such foreign banking
institution under its agreement with the Custodian.
<PAGE>
3.6 REPORTS BY CUSTODIAN. The Custodian will supply to the Fund from time to
--------------------
time, as mutually agreed upon, statements in respect of the securities and
other assets of the Fund held by foreign sub-custodians, including but not
limited to an identification of entities having possession of the Fund's
securities and other assets and advices or notifications of any transfers
of securities to or from each custodial account maintained by a foreign
banking institution for the Custodian on behalf or the Fund indicating, as
to securities acquired for the Fund, the identity of the entity having
physical possession of such securities.
3.7 TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT. (a) Except as otherwise provided
---------------------------------------
in paragraph (b) of this Section 3.7, the provision of Sections 2.2 and 2.7
of this Contract shall apply, MUTATIS MUTANDIS to the foreign securities of
the Fund held outside the United States by foreign sub-custodians.
(b) Notwithstanding any provision of this Contract to the contrary,
settlement and payment for securities received for the account of the
Fund and delivery of securities maintained for the account of the Fund
may be effected in accordance with the customary established
securities trading or securities processing practices and procedures
in the jurisdiction or market in which the transaction occurs,
including, without limitation, delivering securities to the purchaser
thereof or to a dealer therefor (or an agent for such purchaser or
dealer) against a receipt with the expectation of receiving later
payment for such securities from such purchaser or dealer.
c) Securities maintained in the custody of a foreign sub-custodian may be
maintained in the name of such entity's nominee to the same extent as
set forth in Section 2.3 of this Contract, and the Fund agrees to hold
any such nominee harmless from any liability as a holder of record of
such securities.
3.8 LIABILITY OF FOREIGN SUB-CUSTODIANS. Each agreement pursuant to which the
-----------------------------------
Custodian employs a foreign banking institution as a foreign sub-custodian
shall require the institution to exercise reasonable care in the
performance of its duties and to indemnify, and hold harmless, the
Custodian and the Fund from and against any loss, damage, cost, expense,
liability or claim arising out of or in connection with the institutions
performance of such obligations. At the election of the Fund, it shall be
entitled to be subrogated to the rights of the Custodian with respect to
any claims against a foreign banking institution as a consequence of any
such loss, damage, cost, expense, liability or claim if and to the extent
that the Fund has not been made whole for any such loss, damage, cost,
expense, liability or claim.
3.9 LIABILITY OF CUSTODIAN. The Custodian shall be liable for the acts or
----------------------
omissions of a foreign banking institution to the same extent as set forth
with respect to sub-custodians generally in this Contract and, regardless
of whether assets are maintained in the custody of a foreign banking
institution, a foreign securities depository or a branch of a U.S. bank as
contemplated by paragraph 3.12 hereof, the Custodian shall not be liable
for any loss,
<PAGE>
damage, cost, expense, liability or claim resulting from nationalization,
expropriation, currency restrictions, or acts of war or terrorism or any
loss where the sub-custodian has otherwise exercised reasonable care.
3.10 REIMBURSEMENT OR ADVANCES. If the Fund requires the Custodian to advance
-------------------------
cash or securities for any purpose including the purchase or sale of
foreign exchange or of contracts for foreign exchange, or in the event that
the Custodian or its nominee shall incur or be assessed any taxes, charges,
expenses, assessments, claims or liabilities in connection with the
performance of this Contract, except such as may arise from its or its
nominee's own negligent action, negligent failure to act or willful
misconduct, any property at any time held for the account of the Fund shall
be security therefor and should the Fund fail to repay the Custodian
promptly, the Custodian shall be entitled to utilize available cash and to
dispose of Fund assets to the extent necessary to obtain reimbursement.
3.11 MONITORING RESPONSIBILITIES. The Custodian shall furnish annually to the
---------------------------
Fund, during the month of June, information concerning the foreign sub-
custodians employed by the Custodian. Such information shall be similar in
kind and scope to that furnished to the Fund in connection with the initial
approval of this Contract. In addition, the Custodian will promptly inform
the Fund in the event that the Custodian learns of a material adverse
change in the financial condition of a foreign sub-custodian or any
material loss of the assets of the Fund or in the case of any foreign sub-
custodian not the subject of an exemptive order from the Securities and
Exchange Commission is notified by such foreign sub-custodian that there
appears to be a substantial likelihood that its shareholders' equity will
decline below $200 million (U.S. dollars or the equivalent thereof) or that
its shareholders' equity has declined below S200 million (in each case
computed in accordance with generally accepted U.S. accounting principles).
3.12 BRANCHES OF U.S. BANKS. (a) Except as otherwise set forth in this
----------------------
Contract, the provisions hereof shall not apply where the custody of the
Funds assets are maintained in a foreign branch of a banking institution
which is a "bank" as defined by Section 2(a)(5) of the Investment Company
Act of 1940 meeting the qualification set forth in Section 26(a) of said
Act. The appointment of any such branch as a sub-custodian shall be
governed by paragraph 1 of this Contract.
(b) Cash held for the Fund in the United Kingdom shall be maintained in an
interest bearing account established for the Fund with the Custodian's
London branch, which account shall be subject to the direction of the
Custodian, State Street London Ltd. or both.
3.13 TAX LAW. The Custodian shall have no responsible or liability for any
--------
obligations now or hereafter imposed on the Fund or the Custodian as
custodian of the Fund by the tax law of the United States of America or any
state or political subdivision whereof. It shall be the responsibility of
the Custodian to use reasonable efforts and due care (a) to perform such
ministerial steps as are required to collect any tax refund, (b) to
ascertain the
<PAGE>
appropriate rate of tax withholding and (c) to provide such documents as
may be required to enable the Fund to receive appropriate tax treatment
under applicable tax laws and any applicable treaty provisions. Unless
otherwise informed by the Fund, the Custodian, in performance of its duties
under this Section, shall be entitled to apply categorical treatment of the
Fund according to the nationality of the Fund, the particulars of its
organization and other relevant details that shall be supplied by the Fund.
The Custodian shall be entitled to rely on any information supplied by the
Fund. The Custodian may engage reasonable professional advisors disclosed
to the Fund by the Custodian, which may include attorneys, accountants or
financial institutions in the regular business of investment administration
and may rely upon advice received therefrom. It shall be the duty of the
Fund to inform the Custodian of any change in the organization, domicile or
other relevant fact concerning tax treatment of the Fund and further to
inform the Custodian if the Fund is or becomes the beneficiary of any
special ruling or treatment not applicable to the general nationality and
category or entity of which the Fund is a part under general laws and
treaty provisions.
4. PROPER INSTRUCTIONS
-------------------
Proper Instructions as used herein means a writing or tested telex signed
or initialed by one or more person or persons as the Board of Directors shall
have from time to time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested, and may be in the
form of standing instructions. Oral instructions will be considered Proper
Instructions if the Custodian reasonably believes them to have been given by a
person authorized to give such instructions with respect to the transaction
involved. The Fund shall cause all oral instructions to be confirmed in writing.
Upon receipt of a certificate of the Secretary or an Assistant Secretary as to
the authorization by the Board of Directors of the Fund accompanied by a
detailed description of procedures approved by the Board of Directors, Proper
Instructions may include communications effected directly between electro-
mechanical or electronic devices provided; the Board of Directors and the
Custodian are satisfied that such procedures afford adequate safeguards for the
Funds assets. For purposes of this Section, Proper Instructions shall include
instructions received by the Custodian pursuant to any three party agreement
which requires a segregated asset account in accordance with Section 2.12.
5. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY
-------------------------------------------
The Custodian may in its discretion, without express authority from the
Fund:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this
Contract, provided that all such payments shall be accounted for to
the Fund;
2) surrender securities in temporary form for securities in definitive
form;
3) endorse for collection, in the name of the Fund, checks, in general,
attend to all non-discretionary details in connection with the sale,
exchange, substitution,
<PAGE>
purchase, transfer and other dealings with the securities and property
of the Fund except as otherwise directed by the Board of Directors of
the Fund.
6. EVIDENCE OF AUTHORITY
---------------------
The Custodian shall be protected in acting upon any instructions, notice,
request, consent, certificate or other instrument or paper believed by it to be
genuine and to have been properly executed by or on behalf of the Fund. The
Custodian may receive and accept a certified copy of a vote of the Board of
Directors of the Fund as conclusive evidence (a) of the authority of any person
to act in accordance with such vote or (b) of any determination or of any action
by the Board of Directors pursuant to the Articles of Incorporation as described
in such vote, and such vote may be considered as in full force and effect until
receipt by the Custodian of written notice to the contrary.
7. DUTIES OF CUSTODIAN WITH RESPECT TO THE BOOKS OF ACCOUNT AND CALCULATION OF
---------------------------------------------------------------------------
NET ASSET VALUE AND NET INCOME
------------------------------
The Custodian shall cooperate with and supply necessary information to the
entity or entities appointed by the Board of Directors of the Fund to keep the
books of account of the Fund and/or compute the net asset value per share of the
outstanding shares of the Fund or, if directed in writing to do so by the Fund
pursuant to Proper Instructions, shall itself keep such books of account and/or
compute such net asset value per share. The net asset value of the Fund's shares
will be determined weekly as determined by the Fund's Board of Directors and
will also be determined monthly as of the close of regular trading on the New
York Stock Exchange, Inc. The net asset value per share will be computed by
dividing the value of the securities held by the Fund plus any cash or other
assets (including interest and dividends accrued but not yet received and earned
discount) minus all liabilities (including accrued expenses) by the total number
of shares outstanding at such time. If so directed, the Custodian shall also
calculate weekly the net income of the Fund as described in the Fund's currently
effective prospectus related to the Fund and shall advise the Fund and the
Transfer Agent weekly of the total amounts of such net income and, if instructed
in writing by an officer of the Fund to do so, shall advise the Transfer Agent
periodically of the division of such net income among its various components.
The calculations of the net asset value per share and the weekly income of the
Fund shall be made at the time or times described from time to time in the
Fund's currently effective prospectus.
8. MITIGATION BY CUSTODIAN
-----------------------
Upon the occurrence of any event connected with the duties of the Custodian
under this Contract which causes or may cause any loss, damage or expense to the
Fund, (i) the Custodian shall, and (ii) shall exercise reasonable efforts to
cause any subcustodian to, use reasonable efforts and take all reasonable steps
under the circumstances to mitigate the effects of such event and to avoid
continuing harm to the Fund.
9. NOTIFICATION OF LITIGATION; RIGHT TO PROCEED
--------------------------------------------
<PAGE>
The Fund shall not be liable for indemnification under this Contract to the
extent that the Fund's ability to defend against any litigation or proceeding
brought against the Custodian in respect of which indemnity may be sought under
this Contract is prejudiced by the Custodian's failure to give prompt notice of
the Commencement or any such litigation or proceeding with respect to claims in
such litigation or proceedings for which indemnity by the Fund may be sought and
subject to applicable law and the ruling of any court of competent jurisdiction,
the Fund shall be entitled to participate in any such litigation or proceeding
and, after written notice from the Fund to the Custodian, the Fund may assume
the defense of such litigation or proceeding with counsel of its choice at its
own expense in respect of that portion of the litigation for which the Fund may
be subject to an indemnification obligation; provided, however, that the
Custodian shall be entitled to participate in the defense of any such litigation
or proceeding. If the Fund has acknowledged in writing its obligation to
indemnify the Custodian with respect to such litigation or proceeding, the
Custodian's participation shall be at its own expense and the Fund shall control
the defense of the litigation or proceeding. If the Fund is not permitted to
participate in or control such litigation or proceeding under applicable law or
by a ruling of a court of competent jurisdiction, the Custodian shall reasonably
prosecute such litigation or proceeding. The Custodian shall not consent to the
entry of any judgment or enter into any settlement in any such litigation or
proceeding without providing the Fund with adequate notice of any such
settlement or judgment, and without the Fund's prior written consent. The
Custodian shall submit written evidence to the Fund with respect to any cost or
expense for which it is seeking indemnification in such form and detail as the
Fund may reasonably request.
10. RECORDS
-------
The Custodian shall create and maintain and retain all records relating to
its activities and obligations under this Contract in such manner as will meet
the obligations of the Fund under the Investment Company Act of 1940 and the
rules and regulations thereunder, with particular attention to Section 31
thereof and Rules 31a-1 and 31a-2 thereunder. All such records shall be the
property of the Fund and in the event of termination of this Contract shall be
delivered to the Fund or a successor custodian as instructed by the Fund. All
such records shall at all times during the regular business hours of the
Custodian be open for inspection and audit by duly authorized officers,
employees or agents of, attorneys for and auditors employed by the Fund and
employees and agents of the Securities and Exchange Commission. The Custodian
shall, at the Fund's request, supply the Fund with a tabulation of securities
owned by the Fund and held by the Custodian and shall, when requested to do so
by the Fund and for such compensation as shall be agreed upon between the Fund
and the Custodian, include certificate numbers in such tabulations.
11. OPINION OF FUND'S INDEPENDENT ACCOUNTANT
----------------------------------------
The Custodian shall take all reasonable action, as the Fund may from time
to time request, to obtain from year to year favorable opinions from the Fund's
independent accountants with respect to its activities hereunder in connection
with the preparation of the Fund's Form N-2, and Form N-SAR or other annual
reports to the Securities and Exchange Commission and with respect to any other
requirements of such Commission.
<PAGE>
12. COMPENSATION OF CUSTODIAN
-------------------------
The Custodian shall be entitled to reasonable compensation for its services
and expenses as Custodian, as agreed upon from time to time between the Fund and
the Custodian.
13. RESPONSIBILITY OF CUSTODIAN
---------------------------
So long as and to the extent that it is in the exercise of reasonable care,
the Custodian shall not be responsible for the title, validity or genuineness of
any property or evidence of title thereto received by it or delivered by it
pursuant to this Contract and shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably believed by it to
be genuine and to be signed by the proper party or parties, including any
futures commission merchant acting pursuant to the terms of a three-party
futures or options agreement. The Custodian shall be held to the exercise of
reasonable care and diligence in carrying out the provisions of this Contract
and shall be liable to the Fund for all losses, damages and expenses suffered or
incurred by the Fund resulting from the failure of the Custodian to exercise
such reasonable care and diligence. The Fund agrees that the Custodian shall be
indemnified by and shall be without liability to the Fund for any action taken
or omitted by it in good faith without negligence. It shall be entitled to rely
on and may act upon advice of counsel (who may be counsel for the Funds on all
matters, and shall be without liability for any action reasonably taken or
omitted pursuant to such advice.
The Custodian shall be liable for the acts or omissions of a foreign
banking institution appointed pursuant to the provisions of Article 3 to the
same extent as set forth in Article 1 hereof with respect to subcustodians
located in the United States (except as specifically provided in Article 3.9)
and, regardless of whether assets are maintained in the custody of a foreign
banking institution, a foreign securities depository, or a branch of a U.S. bank
as contemplated by paragraph 3.12 hereof, the Custodian shall not be liable for
any loss, damage, cost, expense, liability or claim resulting from, or caused
by, the direction of or authorization by the Fund to maintain custody or any
securities or cash of the Fund in a foreign country including, but not limited
to, losses resulting from nationalization, expropriation, currency restrictions
or acts of war or terrorism.
If the Fund requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action may, in
the opinion of the Custodian, result in the custodian or its nominee assigned to
the Fund being liable for the payment of money or incurring liability of some
other form, the Fund, as a prerequisite to requiring the Custodian to take such
action, shall provide indemnity to the Custodian in an amount equal to the
Custodian's reasonable estimate of the amount to be paid or for which the
Custodian may potentially be liable and in a form satisfactory to the Custodian.
If the Fund requires the Custodian, its affiliates, subsidiaries or agents,
to advance cash or securities for any purpose (including but not limited to
securities settlements, foreign exchange contracts and assumed settlement) or in
the event that the Custodian or its nominee shall incur or be assessed any
taxes, charges, expenses, assessments, claims or liabilities in connection with
the performance of this Contract, except such as may arise from its or its
nominee's own negligent
<PAGE>
action, negligent failure to act or willful misconduct, any property at any
time held for the account of the Fund shall be security therefor and should
the Fund fail to repay the Custodian promptly, the Custodian shall be
entitled to utilize available cash and to dispose of the Fund's assets to the
extent necessary to obtain reimbursement.
14. EFFECTIVE PERIOD; TERMINATION AND AMENDMENT
-------------------------------------------
This Contract shall become effective as of its execution, shall continue
in full force and effect until terminated as hereinafter provided, may be
amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not
sooner than thirty (30) days after the date of such delivery or mailing;
provided, however that the Custodian shall not act under Section 2.10 hereof
in the absence of receipt of an initial certificate of the Secretary or an
Assistant Secretary that the Board of Directors of the Fund has approved the
initial use of a particular Securities System, as required by Rule 17f-4
under the Investment Company Act of 1940, as amended and that the Custodian
shall not act under Section 2.11 hereof in the absence of receipt or an
initial certificate of the Secretary or an Assistant Secretary that the Board
of Directors has approved the initial use of the Direct Paper System;
provided further, however, that the Fund shall not amend or terminate this
Contract in contravention of any applicable federal or state regulations, or
any provision of the Articles of Incorporation, and further provided, that
the Fund may at any time by action of its Board of Directors (i) substitute
another bank or trust company for the Custodian by giving notice as described
above to the Custodian, or (ii) immediately terminate this Contract in the
event of the appointment of a conservator or receiver for the Custodian by
the Comptroller of the Currency or upon the happening of a like event at the
direction of an appropriate regulatory agency or court of competent
jurisdiction.
Upon termination of the Contract, the Fund shall pay to the Custodian
such compensation as may be due as of the date of such termination and shall
likewise reimburse the Custodian for its costs, expenses and disbursements.
15. SUCCESSOR CUSTODIAN
-------------------
If a successor custodian shall be appointed by the Board of Directors of
the Fund, the Custodian shall, upon termination, deliver to such successor
custodian at the office of the Custodian, duly endorsed and in the form for
transfer, all securities then held by it hereunder and shall transfer to an
account of the successor custodian all of the Fund's securities held in a
Securities System unless otherwise instructed by the Fund.
If no such successor custodian shall be appointed, the Custodian shall,
in like manner, upon receipt of a certified copy of a vote of the Board of
Directors of the Fund, delivered at the office of the Custodian, transfer
such securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Directors shall have been delivered
to the Custodian on or before the date
<PAGE>
when such termination shall become effective, then the Custodian shall have
the right to deliver to a bank or trust company, which is a "bank" as defined
in the Investment Company Act of 1940, doing business in Boston,
Massachusetts, of its own selection, having an aggregate capital, surplus,
and undivided profits, as shown by its last published report, of not less
than $25,000,000, all securities, funds and other properties held by the
Custodian and all instruments held by the Custodian relative thereto and all
other property held by it under this Contract and to transfer to an account
of such successor custodian all of the Fund's securities held in any
Securities System. Thereafter, such bank or Trust Company shall be the
successor of the Custodian under this contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or
of the Board of Directors to appoint a successor custodian, the Custodian
shall be entitled to fair compensation for its services during such period as
the Custodian retains possession of such securities, funds and other
properties and the provisions of this Contract relating to the duties and
obligations of the Custodian shall remain in full force and effect. The
Custodian agrees to cooperate with the successor custodian and the Fund in
execution of documents and performance of other action necessary or desirable
in order to substitute the successor custodian for the Custodian.
16. INTERPRETIVE AND ADDITIONAL PROVISIONS
--------------------------------------
In connection with the operation of this Contract, the custodian and the
Fund may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall
be annexed hereto, PROVIDED that no such interpretive or additional
provisions shall contravene any applicable federal or state regulations or
any provision of the Articles of Incorporation of the Fund. No interpretive
or additional provisions made as provided in the preceding sentence shall be
deemed to be an amendment of this Contract.
17. MASSACHUSETTS LAW TO APPLY
--------------------------
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
18. PRIOR CONTRACTS
---------------
This Contract supersedes and terminates, as of the date hereof, all
prior contracts between the Fund and the Custodian relating to the custody of
the Fund's assets.
19. SHAREHOLDER COMMUNICATIONS ELECTION
-----------------------------------
Securities and Exchange Commission Rule 14b-2 requires banks which hold
securities for the account of customers to respond to requests by issuers of
securities for the names, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless
<PAGE>
the beneficial owner has expressly objected to disclosure of this
information. In order to comply with the rule, the Custodian needs the Fund
to indicate whether it authorizes the Custodian to provide the Fund's name,
address, and share position to requesting companies whose securities the Fund
owns. If the Fund tells the Custodian "no", the Custodian will not provide
this information to requesting companies. If the Fund tells the custodian
"yes" or does not check either "yes" or "no" below, the custodian is required
by the rule to treat the Fund as consenting to disclosure of this information
for all securities owned by the Fund or any funds or accounts established by
the Fund. For the Fund's protection, the Rule prohibits the requesting
company from using the Fund's name and address for any purpose other than
corporate communications. Please indicate below whether the Fund consents or
objects by checking one of the alternatives below.
YES [ ] The Custodian is authorized to release the Fund's name, address,
and share positions.
N0 [ ] The Custodian is not authorized to release the Fund's name,
address, and share positions.
20. ASSIGNMENT
----------
Neither the Fund nor the Custodian shall have the right to assign any of
its rights or obligations under this Contract without the prior written consent
of the other party.
21. SEVERABILITY
------------
If any provision of this Contract is held to be unenforceable as a matter
of law, the other terms and provisions hereof shall not be affected thereby and
shall remain in full force and effect.
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the ______ day of _______, 1997.
ATTEST GT GLOBAL FLOATING RATE FUND, INC.
_________________________ By________________________________
ATTEST STATE STREET BANK AND TRUST COMPANY
_________________________ By_________________________________
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the ______ day of _______, 1997.
ATTEST GT GLOBAL FLOATING RATE FUND, INC.
_________________________ By__________________________________
ATTEST STATE STREET BANK AND TRUST COMPANY
_________________________ By__________________________________
Executive Vice President
<PAGE>
SCHEDULE A
The following foreign bank institutions and foreign securities
depositories have been approved by the Board of Directors of GT Global
Floating Rate Fund, Inc. for use as sub-custodians for the Fund's Securities
and other assets:
(Insert banks and securities depositories)
Certified:
_____________________________
Fund's Authorized Officer
Date:________________________
<PAGE>
EXHIBIT 99(K-1)
TRANSFER AGENCY CONTRACT BETWEEN
GT GLOBAL FLOATING RATE FUND, INC.
AND
GT GLOBAL INVESTOR SERVICES, INC.
This Transfer Agency Contract ("Contract") is made as of ____________,
1997 between GT Global Floating Rate Fund, Inc. (the "Fund"), a Maryland
Corporation, and GT Global Investor Services, Inc. ("GT"), a California
corporation.
WHEREAS, the Fund is registered under the Investment Company Act of 1940,
as amended ("1940 Act"), as a closed-end management investment company; and
WHEREAS, the Fund may from time-to-time in the future establish one or
more additional separate and distinct series of common stock of the Fund; and
WHEREAS, the Fund desires to retain GT to act as transfer agent and
dividend disbursing agent to the Fund, and GT is willing to act in such
capacities;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
I. APPOINTMENT
The Fund hereby appoints GT to act as transfer agent and dividend
disbursing agent of the Fund for the period and on the terms set forth in this
Contract. GT accepts such appointment and agrees to render the services herein
set forth for the compensation herein provided.
II. DEFINITIONS
As used in this Contract, the following terms shall have the definition
ascribed to them in this Paragraph.
(A) "Agent" means a broker, dealer or other agent authorized to act on
behalf of a Shareholder in transactions involving Shares.
(B) "Agent Firm" means an investment, stock brokerage or other business
firm employing an Agent.
(C) "Authorized Person" means any officer of the Fund and any other
person, whether or not any such person is an officer or employee of the Fund,
duly authorized by the Board of Directors, the President or any Vice President
of the Fund to give Oral and Written Instructions on behalf of the Fund. The
Fund will provide to GT and keep current a written list of all Authorized
Persons.
(D) "Custodian" means the custodian or custodians employed by the Fund
to maintain custody of the Fund's assets.
<PAGE>
(E) "Distributor" means the principal underwriter of the Shares of the
Fund.
(F) "Governing Corporate Documents" means the Articles of Incorporation,
By-Laws and other applicable governing corporate documents of the Fund all as
may be amended from time to-time.
(G) "Oral Instructions" means oral instructions actually received by GT
from an Authorized Person or from a person reasonably believed by GT to be an
Authorized Person.
(H) "Prospectus" means the prospectus included in the current N-2 of the
Fund.
(I) "Shares" means shares of common stock of the Fund.
(J) "Shareholder" means the owner of Shares.
(K) "Written Instructions" means written instructions delivered by hand,
mail, tested telegram or telex, cable, or facsimile sending device, received by
GT and signed by an Authorized Person.
III. AUTHORIZED AND REGISTERED SHARES
(A) As of the date if this Contract, the Fund represents that one billion
Shares are authorized for issuance under the Fund's Articles of Incorporation.
The Fund agrees to keep GT apprised, to the extent necessary for GT to
adequately perform its duties hereunder, of the number of shares of the Fund
authorized for issuance.
IV. COMPLIANCE BY GT WITH GOVERNING CORPORATE DOCUMENTS, PROSPECTUS AND
APPLICABLE LAW AND REGULATION
All of GT's actions in fulfilling its responsibilities under this Contract
shall be made in accordance with the Prospectus, the Governing Corporate
Documents, the rules and regulations of the Securities and Exchange Commission
and the laws and regulations of the State of Maryland relating to the issuance
and transfer of securities such as the Shares.
V. RECORDS
(A) GT shall maintain records of the accounts for each Shareholder which
include the following information with respect to the Fund:
(1) name, address and United States Taxpayer Identification Number;
(2) number of Shares held and number of Shares for which
certificates, if any, have been issued, including certificate numbers and
denominations;
(3) historical information regarding the account of each
Shareholder, including dividends and distributions paid and the date and
price of all transactions in a Shareholder's account;
(4) any stop or restraining order placed against a Shareholder's
account;
-2-
<PAGE>
(5) any correspondence relating to the current maintenance of
shareholder's account;
(6) information with respect to all tax withholdings;
(7) any information required to enable GT to perform any
calculations contemplated or required by this Agreement or that may
reasonably be requested by the Fund.
(B) The books and records pertaining to the Fund which are in the
possession of GT shall be the property of the Fund. Such books and records
shall be prepared and maintained as required by the 1940 Act and other
applicable laws, rules and regulations. The Fund or its authorized
representatives shall have access to such books and records at all times
during GT's normal business hours. Upon the reasonable request of the Fund,
copies of any such books and records shall be provided by GT to the Fund or
its authorized representatives, at the Fund's expense.
VI. TRANSACTIONS NOT REQUIRING INSTRUCTIONS
In the absence of contrary Written Instructions, GT is authorized to take
the following actions in providing services under this Contract, all in
accordance with the provisions of the Prospectus:
(A) SHARE TRANSACTIONS -- UNCERTIFICATED SHARES
(1) ISSUANCE OF SHARES. Upon receipt by GT of a purchase order for
Shares from the Distributor or directly from an investor or an investor's
Agent, upon the further receipt by GT of sufficient information necessary to
enable GT to establish an account, and after confirmation of receipt of
payment for such Shares, GT shall create an account and issue and credit
Shares to such account.
-3-
(2) TRANSFERS OF SHARES. When the Distributor, a Shareholder or a
Shareholder's Agent provides GT with instructions to transfer Shares on the
books of the Fund, and GT further receives such documentation as is necessary
to process the transfer, GT shall transfer the registration of such Shares
and if necessary deliver them pursuant to such instructions.
(3) TENDER OFFERS. Upon receipt of acceptance of a tender offer
from the Distributor, a Shareholder or a Shareholder's Agent, GT shall
repurchase the number of Shares indicated thereon from the tendering
Shareholder's account and disburse to the tendering Shareholder or the
Shareholder's Agent, if so instructed, the proceeds of the repurchase.
(B) SHARE TRANSACTIONS - CERTIFICATED SHARES
(1) The Fund shall supply GT with a sufficient supply of
certificates representing Shares, in the form approved from time to time by
the Board of Directors or officers of the Fund, and, from time-to-time, shall
replenish such supply upon the request of GT Certificates shall be property
executed, manually or by facsimile signature, by the duly authorized officers
of the Fund. Notwithstanding the death, resignation or removal of any officer
of the Fund, such executed certificates bearing the manual or facsimile
signature of such officer shall remain valid and may be issued to
Shareholders until GT is otherwise directed.
(2) In the case of the loss or destruction of any certificate
representing Shares, no new certificate shall be issued in lieu thereof,
unless there shall first have been furnished an appropriate bond of indemnity
issued by a surety company approved by GT.
(3) Upon receipt of written instructions from a Shareholder or a
Shareholder's Agent of uncertificated Shares for a certificate in the number of
shares in the Shareholder's account, GT shall issue the requested certificate
and deliver it to the Shareholder in accordance with the Shareholder's
instructions.
(4) GT shall process all orders for the purchase, transfer,
redemption and exchange of certificated Shares in the same fashion as it
processes such orders for uncertificated Shares, as specified in subparagraph
VI(A) of this Contract, provided that, as specified in the Prospectus, GT
receives properly executed and completed certificates and stock power transfers
or similar documents necessary to effectuate the contemplated transaction.
(5) Upon receipt of certificates, which shall be in proper form
for transfer, together with Shareholder's instructions to hold such
certificates for safekeeping, GT shall reduce such Shares to uncertificated
status, while retaining the appropriate registration in the name of the
Shareholder upon the transfer books.
(C) SPECIAL INVESTMENT AND WITHDRAWAL PLANS. GT shall process
transactions of Shareholders participating in any special investment and/or
withdrawal plans or programs established by the Fund or the Distributor with
respect to Shares, such as automatic investment plans, systematic withdrawal
plans and dollar cost averaging investing programs, in accordance with the
terms of such plans or programs as provided to GT the Fund or the Distributor.
VII. RELIANCE BY GT ON INSTRUCTIONS
Unless otherwise provided in this Contract, GT shall act only upon Oral or
Written Instructions (collectively, "Instructions"). GT shall be entitled to
rely upon any Instructions actually received by it under this Contract. The
Fund agrees that GT shall incur no liability to the Fund in acting upon
Instructions given to GT hereunder, provided that such Instructions reasonably
appear to have been received from an Authorized Person.
VIII. DIVIDENDS AND DISTRIBUTION
(A) The Fund shall furnish GT with appropriate evidence of action by
the Fund's board of directors declaring dividends and distributions and
authorizing their payment as described in the Prospectus. After deducting any
amount required to be withheld by any applicable tax laws, rules and
regulations or other applicable laws, rules and regulations, in accordance
with the instructions in proper form from a Shareholder and the provisions of
the Governing Corporate Documents and Prospectus, GT shall issue and credit
the account of the Shareholder with Shares or pay such dividends for
distributions to the Shareholder in cash, upon the election of the
Shareholder as provided for in the Prospectus. In lieu of receiving from the
Custodian and paying to Shareholders cash dividends or distributions, GT may
arrange for the direct payment of cash dividends and distributions to
Shareholders by the Custodian, in accordance with such procedures and
controls as are mutually agreed upon from time to time by
-4-
<PAGE>
and among the Fund, GT and the Custodian.
(B) GT shall prepare and file with the Internal Revenue Service and
other appropriate taxing authorities, and address and mail to Shareholders,
such returns and information relating to dividends and distributions paid by
the Fund as are required to be so prepared, filed and mailed by applicable
laws, rules and regulations, or such substitute form of notice as may from
time to time be permitted or required by the Internal Revenue Service. On
behalf of the Fund, GT shall mail certain requests for Shareholders'
certifications under penalties of perjury of taxpayer identification numbers
and/or other information and pay on a timely basis to the appropriate Federal
authorities any taxes withheld on dividends and distributions paid by the
Fund, all as required by applicable Federal tax laws and regulations.
IX. COMMUNICATIONS WITH SHAREHOLDERS
(A) COMMUNICATIONS TO SHAREHOLDERS. GT will address and mail all
communications by the Fund to the shareholders of the Fund, including reports
to Shareholders, confirmations of purchases and sales of Shares, periodic
account statements, dividend and distribution notices and proxy materials for
meetings of shareholders. GT will receive and tabulate the proxy cards for
meetings of Shareholders, and if requested by the Fund, attend meetings of
Shareholders for purposes of reporting on and certifying such tabulations.
(B) CORRESPONDENCE. GT will answer such correspondence from
Shareholders, Agents and others relating to its duties hereunder and such
other correspondence as may from time to time be mutually agreed upon by GT
and the Fund.
X. OTHER ONGOING SERVICES
As requested by the Fund, GT shall also provide the following services on
an ongoing basis:
(A) Furnish to the Fund or its designated agent such state-by-state
registration reports reasonably necessary to enable the Fund to keep current
the registration of its shares with state securities authorities.
(B) Provide toll free phone lines for direct Shareholder use, plus
customer liaison staff with on-line inquiry capacity.
(C) File with the Internal Revenue Service such information on behalf of
each Shareholder as is required by law.
(D) Provide the Fund with Shareholder lists and such statistical
information as the Fund reasonably may request.
(E) Provide the Custodian with such information as the Fund or the
Custodian reasonably may request.
(F) Mail duplicate confirmations and/or statements to Agents with
respect to their clients' accounts and transactions in Shares, whether such
transactions were executed through such Agents or directly through GT.
-5-
<PAGE>
(G) Provide detail for confirmations and/or statements to be provided to
Shareholders by Agent Firms, and provide such other Shareholder accounting
information to Agent Firms as may be agreed upon between the Fund and GT.
(H) Provide to the custodian timely notification of Share transactions
and such other information as may be agreed upon from time to time by the
Fund, GT and the Custodian.
XI. COOPERATION WITH ACCOUNTANTS
GT shall cooperate with the Fund's independent public accountants and
shall take all reasonable action in the performance of its obligations under
this Contract to assure that all necessary information is made available to
such accountants for the timely expression of their opinion with respect to
the financial statements of the Fund.
XII. CONFIDENTIALITY
GT agrees on behalf of itself and its employees to treat confidentially
all records and other information relative to the Fund and their prior,
present or potential Shareholders, except, after prior notification to and
approval in writing by the Fund, which approval shall not be unreasonably
withheld and may not be withheld when GT may be exposed to civil or criminal
contempt proceedings for failure to comply, when requested do divulge such
information by duly constituted authorities, or when so requested by the Fund.
XIII. COMPENSATION
As compensation for the services rendered by GT during the term of this
Contract, the Fund will pay to GT monthly fees that shall be agreed to from
time to time by the Fund and GT. In addition, as may be agreed to from time
to time by the Fund and GT, the Fund shall reimburse GT for certain expenses
incurred by GT in rendering services with respect to that Fund under this
Contract.
XIV. STANDARD OF CARE
(A) In the performance of its duties hereunder, GT shall be obligated
to exercise care and diligence and to act in good faith and to use its best
efforts within reasonable limits to ensure the accuracy and completeness of
all services provided under this Contract.
(B) GT shall be under no duty to take any action on behalf of the Fund
except as specifically set forth herein or as may be specifically agreed to by
GT in writing.
(C) GT shall be responsible and liable for all losses, damages and
costs (including reasonable attorneys fees) incurred by the Fund which is due
to or caused by GT's negligence in the performance of its duties under this
contract or for GT's negligent failure to perform such duties as are
specifically ascribed to GT in this Contract; provided that, to the extent
that duties, obligations and responsibilities are not expressly set forth in
this Contract, GT shall not be liable for any act or omission which does not
constitute willful misfeasance, bad faith or gross negligence on the part of
GT, or reckless disregard by GT of such duties, obligations and
responsibilities.
-6-
<PAGE>
(D) Without limiting the generality of the foregoing subparagraphs of
this Paragraph XIV or of any other provision of this Contract, in connection
with GT's duties under this Contract, GT shall not be under any duty or
obligation to inquire into and shall not be liable for or in respect of:
(1) the validity or invalidity or authority or lack thereof of any
Oral or Written Instruction, notice or other instrument which conforms to the
applicable requirements of this Contract, if any, and which GT reasonably
believes to be genuine; or
(2) delays or errors or loss of data occurring by reason of
circumstances beyond GT's control, including acts of civil or military
authority, national emergencies, labor difficulties, fire, mechanical
breakdown, earthquake, flood or catastrophe, acts of God, insurrection, war,
riots or failure of the mails, transportation, communication or power supply.
XV. RECEIPT OF ADVICE
(A) ADVICE OF INVESTMENT FUNDS. If GT is in doubt as to any action to be
taken or omitted by it, GT may request and shall receive from the Fund
directions or advice including Oral or Written Instructions where appropriate.
(B) ADVICE OF COUNSEL. If GT is in doubt as to any question of law
involved in any action to be taken or omitted by it, GT may request advice from
counsel of its own choosing (who may also be counsel for the Fund, the
Distributor and/or the investment adviser of the Fund).
(C) CONFLICTING ADVICE. In case of conflict between directions, advice
or Oral or Written Instructions received by GT pursuant to subparagraph (A)
of this Paragraph and advice received by GT pursuant to subparagraph (b) of
this Paragraph, GT shall be entitled to rely on and follow the advice
received Pursuant to subparagraph (8) alone.
(D) PROTECTION OF GT
(1) GT shall be protected in any action or inaction which it takes
in reliance on any directions, advice or Oral or Written Instructions
received pursuant to subparagraphs (A) or (B) of this Paragraph which GT,
after receipt of any such directions, advice or Oral or Written Instructions,
in good faith believes to be consistent with such directions, advice or Oral
or Written Instructions, as the case may be.
(2) Notwithstanding the foregoing, nothing in this Paragraph shall
be construed as imposing upon GT any obligation (a) to seek such directions,
advice or Oral or Written Instructions, or (b) to act in accordance with such
directions advice or Oral or Written Instructions when received, unless,
under the terms of another provision of this Contract, the same is a
condition to GT's properly taking or omitting to take such actions.
XVI. INDEMNIFICATION OF GT
The Fund agrees to indemnify and hold harmless GT and its nominees and
sub contractors, if any, from all taxes, charges, expenses, assessments,
claims and liabilities (including, without limitation, liabilities arising
under the 1933 Act, the 1940 Act, the Securities Exchange Act of 1934, the
Commodities Exchange Act, and any state and foreign securities and
-7-
<PAGE>
blue sky laws, all as or to be amended from time to time) and expenses,
including (without limitation) reasonable attorneys' fees and disbursements,
arising directly or indirectly from any action or thing which GT takes or
does or omits to take or do:
(A) at the request or on the direction of or in reliance upon the advice
of the Fund;
(B) upon Oral or Written Instructions; or
(C) in the performance by GT of its responsibilities under this Contract;
PROVIDED that GT shall not be indemnified against any liability to the Fund or
the Shareholders (or any expenses incident to such liability) arising out of
GT's own willful misfeasance, bad faith or negligence or reckless disregard of
its duties in connection with the performance of its duties and obligations
specifically described in this Contract.
XVII. INDEMNIFICATION OF THE FUND
GT agrees to indemnify and hold harmless the Fund from all taxes, charges,
expenses, assessments, claims and liabilities (including, without limitation,
liabilities arising under the 1933 Act, the 1940 Act, the Securities Exchange
Act of 1934, the Commodities Exchange Act, and any state and foreign securities
and blue sky laws, all as or to be amended from time to time) and expenses,
including (without limitation) reasonable attorneys' fees and disbursements,
arising directly or indirectly from any action or omission of GT that does not
meet the standard of care to which GT is subject under Paragraph XIV of this
Contract.
XVIII. DURATION AND TERMINATION
This Contract shall continue with respect to the Fund until termination
with respect to that Fund by the Fund or GT on sixty (60) days' prior written
notice.
XIX. REGISTRATION AS A TRANSFER AGENT
GT represents that it is currently registered as a transfer agent with
the Securities and Exchange Commission, and that it will remain so registered
for the duration of this Contract. GT agrees that it will promptly notify the
Fund in the event of any material change in its status as a registered
transfer agent. Should GT fail to be registered with the Securities and
Exchange Commission as a transfer agent at any time during the term of this
Contract, the Fund may immediately terminate this Contract, upon written
notice to GT.
XX. NOTICES
All notices and other communications hereunder, including Written
Instructions, shall be in writing or by confirming telegram, cable, telex or
facsimile sending device. Notices with respect to a party shall be directed to
such address as may from time to time be designated by that party to the other.
XXI. FURTHER ACTIONS
Each party agrees to perform such further acts and execute such further
documents as are necessary to effect the purposes of this Contract.
-8-
<PAGE>
XXII. AMENDMENTS
This Contract or any part hereof may be amended only by an instrument in
writing signed by both parties hereto.
XXIII. COUNTERPARTS
This Contract may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
XXIV. MISCELLANEOUS
This Contract embodies the entire agreement and understanding between the
parties hereto, and supersedes all prior agreements and understandings relating
to the subject matter hereof, provided that the parties may embody in one or
more separate documents their agreement or agreements with respect to such
matters that this Contract provides may be later agreed to by and between the
parties from time to time. The captions in this Contract are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
Contract shall be governed by and construed in accordance with California law.
If any provision of this Contract shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Contract shall not
be affected thereby. This Contract shall be binding and shall inure to the
benefit of the parties hereto and their respective successors.
IN WITNESS WHEREOF, the parties hereto have caused this Contract to be
executed by their officers designated below on the day and year first written
above.
-9-
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC.
___________________ ___________________________
Attest: /S/ By: /S/ David R. Thelander
GT GLOBAL INVESTOR SERVICES, INC.
___________________ ___________________________
Attest: By: /S/ James R. Tufts
President
-10-
<PAGE>
FUND ACCOUNTING AND PRICING AGENT AGREEMENT
This Fund Accounting and Pricing Agent Agreement (the "Agreement") is
made as of __________, 1997, by and among GT Global Floating Rate Fund, Inc.
(the "Fund"), Floating Rate Portfolio (the "Portfolio"), and Chancellor LGT
Asset Management, Inc. ("Chancellor LGT").
WHEREAS, each of the Fund and the Portfolio is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as a closed-end
management investment company;
WHEREAS, the Fund and the Portfolio are part of a complex of investment
companies that are managed and/or administered by Chancellor LGT (the "GT
Global Group of Funds");
WHEREAS, the Fund and the Portfolio desire to retain Chancellor LGT to
act as their accounting and pricing agent, and Chancellor LGT is willing to
act in such capacities.
NOW, THEREFORE, in consideration of the foregoing and the terms and
conditions hereinafter set forth, the Fund, the Portfolio and Chancellor LGT
hereby agree as follows:
SECTION 1. APPOINTMENT. The Fund and the Portfolio hereby appoint
Chancellor LGT to act as the accounting and pricing agent for the period and
on the terms and conditions set forth in this Agreement. Chancellor LGT
hereby accepts such appointment and agrees to render the services set forth
for the compensation herein provided.
SECTION 2. DEFINITIONS. As used in this Agreement and in addition
to the terms defined elsewhere herein, the following terms shall have the
meanings assigned to them in this Section:
(a) "Authorized Person" means any officer of the Fund or the
Portfolio and any other person, whether or not any such person is an
officer or employee of the Fund or the Portfolio, duly authorized by the
Board of Directors or Trustees, the President or any Vice President of the
Fund or the Portfolio to give Oral and/or Written Instructions on behalf of
the Fund or the Portfolio.
(b) "Commission" means the Securities and Exchange Commission.
(c) "Custodian" means the custodian or custodians employed by
the Fund and the Portfolio to maintain custody of the Fund's and the
Portfolio's assets.
<PAGE>
(d) "Governing Documents" means the Articles of Incorporation,
Declaration of Trust, By-Laws and other applicable charter documents of the
Fund and the Portfolio, all as they may be amended from time to time.
(e) "Oral Instruction" means oral instructions actually received
by Chancellor LGT from an Authorized Person or from a person reasonably
believed by Chancellor LGT to be an Authorized Person, provided that, any
Oral Instruction shall be promptly confirmed by Written Instructions.
(f) "Prospectus" means the current prospectus of the Fund.
(g) "Shares" means shares of beneficial interest of the Fund and
of the Portfolio.
(h) "Shareholder" means any owner of Shares.
(i) "Written Instructions" means written instructions delivered
by hand, mail, tested telegram or telex, cable or facsimile sending device
received by Chancellor LGT and signed by an Authorized Person.
SECTION 3. COMPLIANCE WITH LAWS, ETC. In performing its
responsibilities hereunder, Chancellor LGT shall comply with all terms and
provisions of the Governing Documents, the Prospectus and all applicable state
and federal laws including, without limitation, the 1940 Act and the rules and
regulations promulgated by the Commission thereunder.
SECTION 4. SERVICES. In consideration of the compensation payable
hereunder and subject to the supervision and control of the Fund's and the
Portfolio's Boards, Chancellor LGT shall provide the following services to the
Fund and the Portfolio:
(a) PRICING AGENT. As pricing agent, Chancellor LGT shall:
(1) Obtain security market quotes from services approved by the
investment manager of the Portfolio or, if such quotes are
unavailable, then obtain such prices from the investment manager of
the Portfolio or from such sources as the investment manager may
direct, and, in either case, calculate the market value of the
Portfolio's investments; and
(2) Value the assets of the Portfolio and compute the net asset
value per Share of the Portfolio at such dates and times and in the
manner specified in the then
- 2 -
<PAGE>
currently effective Prospectus and transmit to the
Portfolio's investment manager.
(b) ACCOUNTING AGENT. As fund accounting agent, Chancellor LGT
shall:
(1) Calculate the net income of the Fund;
(2) Calculate capital gains or losses for the Fund from the sale
or disposition of assets, if any;
(3) Maintain the general ledger and other accounts, books and
financial records of the Fund and the Portfolio, as required under
Section 31(a) of the 1940 Act and the rules promulgated by the
Commission thereunder in connection with the services provided by
Chancellor LGT;
(4) Perform the following functions on a daily basis:
(A) journalize the Fund's and the Portfolio's
investment, capital share and income and expense activities;
(B) reconcile cash and investment balances of the Fund and
the Portfolio with the Custodian and provide the Portfolio's
investment manager with the beginning cash balance available for
investment purposes and update the cash availability throughout
the day as required by the investment manager;
(C) verify investment buy/sell trade tickets received from
the Fund's investment manager and transmit trades to the Fund's
Custodian for proper settlement;
(D) maintain individual ledgers for investment securities;
(E) maintain historical tax lots for investment securities;
(F) calculate various contractual expenses (e.g., advisory
and custody fees);
(G) post to and prepare the Fund's and the Portfolio's
statement of assets and liabilities and statement of operations;
and
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(H) monitor expense accruals and notify an Authorized
Person of any proposed adjustments;
(5) Receive and act upon notices, Oral and Written Instructions,
certificates, instruments or other communications from the Fund's and
the Portfolio's shareholder servicing and transfer agent;
(6) Assist in the preparation of financial statements
semiannually which will include the following items:
(A) schedule of investments;
(B) statement of assets and liabilities;
(C) statement of operations;
(D) changes in net assets;
(E) cash statement; and
(F) schedule of capital gains and losses;
(7) Prepare monthly security transaction listings;
(8) Prepare quarterly broker security transactions summaries;
and
(9) At the reasonable request of the Fund or the Portfolio,
assist in the preparation of various reports or other financial
documents required by federal, state and other appropriate laws and
regulations.
SECTION 5. COMPENSATION. As compensation for the services rendered
by Chancellor LGT hereunder during the term of the Agreement, the Fund and the
Portfolio shall pay to Chancellor LGT monthly such fees as shall be agreed to
from time to time by the Fund, the Portfolio and Chancellor LGT, in writing and
attached hereto as Schedule A. In addition, as may be agreed to from time to
time in writing by the Fund, the Portfolio and Chancellor LGT, the Fund and the
Portfolio shall reimburse Chancellor LGT for certain expenses that it incurs in
rendering services under this Agreement.
SECTION 6. RELIANCE BY CHANCELLOR LGT ON INSTRUCTIONS. Unless
otherwise provided in this Agreement, Chancellor LGT shall act only upon Oral or
Written Instructions. Chancellor LGT shall be entitled to rely upon any such
Instructions actually received by it under this Agreement. The Fund and the
Portfolio agree that Chancellor LGT shall incur no liability to the Fund or the
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Portfolio in acting upon Oral or Written Instructions given to Chancellor LGT
hereunder, provided that, such Instructions reasonably appear to have been
received from an Authorized Person.
SECTION 7. COOPERATION WITH AGENTS OF THE FUND AND THE PORTFOLIO.
Chancellor LGT shall cooperate with the Fund's and the Portfolio's agents and
employees, including, without limitation, their independent accountants, and
shall take all reasonable action in the performance of its obligations under
this Agreement to assure that all necessary information is made available to
such agents to the extent necessary in the performance of their duties to the
Fund and the Portfolio.
SECTION 8. CONFIDENTIALITY. Chancellor LGT, on behalf of itself and
its employees, agrees to treat confidentially all records and other information
relating to the Fund and the Portfolio except when requested to divulge such
information by duly constituted authorities provided that notification and prior
approval is obtained from the Fund or the Portfolio, which approval shall not be
unreasonably withheld and may not be withheld if Chancellor LGT, in its
judgment, may be subject to civil or criminal contempt proceedings for failure
to comply.
SECTION 9. STANDARD OF CARE. In the performance of its
responsibilities hereunder, Chancellor LGT shall exercise care and diligence in
the performance of its duties and act in good faith and use its best efforts to
ensure the accuracy and completeness of all services under this Agreement. In
performing services hereunder, Chancellor LGT:
(a) shall be under no duty to take any action on behalf of the
Fund or the Portfolio except as specifically set forth herein or as may be
specifically agreed to by Chancellor LGT in writing, and in computing the
net asset value per Share of the Fund or the Portfolio, Chancellor LGT may
rely upon any information furnished to it including, without limitation,
information (1) as to the accrual of liabilities of the Fund or the
Portfolio and as to liabilities of the Fund or the Portfolio not appearing
on the books of account kept by Chancellor LGT, (2) as to the existence,
status and proper treatment of reserves, if any, authorized by the Fund or
the Portfolio, (3) as to the sources of quotations to be used in computing
net asset value, (4) as to the fair value to be assigned to any securities
or other property for which price quotations are not readily available and
(5) as to the sources of information with respect to "corporate actions"
affecting portfolio securities of the Portfolio (information as to
"corporate actions" shall include information as to dividends,
distributions, interest payments, prepayments, stock splits, stock
dividends, rights offerings,
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conversions, exchanges, recapitalizations, mergers, redemptions,
calls, maturity dates and similar actions, including ex-dividend and
record dates and the amounts and terms thereof);
(b) shall be responsible and liable for all losses, damages and
costs (including reasonable attorneys' fees) incurred by the Fund or the
Portfolio which is due to or caused by Chancellor LGT's negligence in the
performance of its duties under this Agreement or for Chancellor LGT's
negligent failure to perform such duties as are specifically assumed by
Chancellor LGT in this Agreement, provided that, to the extend that duties,
obligations and responsibilities are not expressly set forth in this
Agreement, Chancellor LGT shall not be liable for any act or omission that
does not constitute willful misfeasance, bad faith or negligence on the
part of Chancellor LGT or reckless disregard by Chancellor LGT of such
duties, obligations and responsibilities; and
(c) without limiting the generality of the foregoing, Chancellor
LGT shall not, in connection with Chancellor LGT's duties under this
Agreement, be under any duty or obligation to inquire into and shall
not be liable for or in respect of:
(1) the validity or invalidity or authority or lack of
authority of any Oral or Written Instruction, notice or other
instrument which conforms to the applicable requirements of this
Agreement, if any and that Chancellor LGT reasonably believes to
be genuine; and
(2) delays or errors or loss of data occurring by reason of
circumstances beyond Chancellor LGT's control including, without
limitation, acts of civil or military authorities, national
emergencies, labor difficulties, fire, mechanical breakdown,
denial of access, earthquake, flood or catastrophe, acts of God,
insurrection, war, riots, or failure of the mails,
transportation, communication or power supply.
Notwithstanding any other provisions of this Agreement, the following provisions
shall apply with respect to Chancellor LGT's computation of the Fund's and the
Portfolio's net asset value: Chancellor LGT shall be held to the exercise of
reasonable care in computing and determining net asset value as provided in
Section 4(a), above, but shall not be held accountable or liable for any losses,
damages or expenses of the Fund, the Portfolio or any Shareholder or former
Shareholder may incur arising from or based upon errors or delays in the
determination of such net asset value unless such error or delay was due to
Chancellor LGT's negligence or willful misfeasance in the computation and
determination of such net
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<PAGE>
asset value. The parties hereto acknowledge, however, that Chancellor LGT
causing an error or delay in the determination of net asset value may, but
does not in an of itself, constitute negligence or willful misfeasance. In
no event shall Chancellor LGT be liable or responsible to the Fund or the
Portfolio or any other party for any error or delay which continued or was
undetected after the date of an audit of the Fund or the Portfolio performed
by the certified public accountants employed by the Fund or the Portfolio if,
in the exercise of reasonable care in accordance with generally accepted
accounting principles, such accountants should have become aware of such
error or delay in the course of performing such audit. Chancellor LGT's
liability for any such negligence or willful misfeasance which results in an
error in determination of such net asset value be limited to the direct
out-of-pocket loss the Fund, the Portfolio and/or any Shareholder or former
Shareholder shall actually incur.
Without limiting the generality of the foregoing, Chancellor LGT shall
not be held accountable or liable to the Fund, the Portfolio, a Shareholder or
former Shareholder or any other person for any delays or losses, damages or
expenses any of them may suffer or incur resulting from (1) Chancellor LGT's
failure to receive timely and suitable notification concerning quotations,
corporate actions or similar matters relating to or affecting portfolio
securities of the Fund or the Portfolio or (2) any errors in the computation of
a net asset value based upon or arising out of quotations or information as to
corporate actions if received by Chancellor LGT from a source that Chancellor
LGT was authorized to rely upon. Nevertheless, Chancellor LGT will use its best
judgment in determining whether to verify through other sources any information
that it has received as to quotations or corporate actions if Chancellor LGT has
reason to believe that any such information is incorrect.
SECTION 10. RECEIPT OF ADVICE. If Chancellor LGT is in doubt as to
any action to be taken or omitted by it, Chancellor LGT may request, and shall
be entitled to rely upon, directions and advice from the Fund or the Portfolio,
including Oral or Written Instructions where appropriate, or from counsel of its
own choosing (who may also be counsel for the Fund or the Portfolio), with
respect to any question of law. In case of conflict between directions, advice
or Oral and Written Instructions received by Chancellor LGT pursuant to this
Section, Chancellor LGT shall be entitled to rely on and follow the advice
received from counsel as described above. Chancellor LGT shall be protected in
any action or in action that it takes in reliance on any directions, advice or
Oral or Written Instructions received pursuant to this Section that Chancellor
LGT, after the receipt of the same, in good faith believes to be consistent with
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<PAGE>
such directions, advice or Oral or Written Instructions, as the case may be.
Notwithstanding the foregoing, nothing in this Section shall be construed as
imposing on Chancellor LGT any obligation to seek such directions, advice or
Oral or Written Instruction, or to act in accordance with them when received,
unless the same is a condition to Chancellor LGT's properly taking or omitting
to take such action under the terms of this Agreement.
SECTION 11. INDEMNIFICATION OF CHANCELLOR LGT. The Fund and the
Portfolio agree, separately and not jointly, to indemnify and hold harmless
Chancellor LGT and its officers, directors, employees, nominees and
subcontractors, if any, from all taxes, charges, expenses, assessments, claims
and liabilities, including, without limitation, liabilities arising under the
1940 Act, the Securities Act of 1933, as amended, the Securities Exchange Act of
1934, as amended, the Commodities Exchange Act and any state or foreign
securities or blue sky laws, and expenses, including, without limitation,
reasonable attorneys' fees and disbursements, arising directly or indirectly
from any action or thing that Chancellor LGT takes or omits to take or do:
(a) at the request or on the direction of or in reliance upon
the advice of the Fund or the Portfolio;
(b) upon Oral or Written Instructions; or
(c) in the performance by Chancellor LGT of its responsibilities
under this Agreement;
provided that, Chancellor LGT shall not be indemnified against any liability to
the Fund or the Portfolio, or any expenses incident thereto, arising out of
Chancellor LGT's own willful misfeasance, bad faith or negligence or reckless
disregard of its duties in connection with the performance of its duties and
obligations specifically described in this Agreement.
SECTION 12. INDEMNIFICATION OF THE FUND AND THE PORTFOLIO.
Chancellor LGT agrees to indemnify and hold harmless each of the Fund and the
Portfolio and their officers, trustees, directors and employees, from all taxes,
charges, expenses, assessments, claims and liabilities, including, without
limitation, liabilities arising under the 1940 Act, the Securities Act of 1933,
as amended, the Securities Exchange Act of 1934, as amended, the Commodities
Exchange Act and any state or foreign securities or blue sky laws, and expenses,
including, without limitation, reasonable attorneys' fees and disbursements,
arising directly or indirectly from any action or omission of Chancellor LGT
that does not meet the standard of care to which Chancellor LGT is subject under
Section 9, above.
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<PAGE>
SECTION 13. LIMITATION OF LIABILITY OF SHAREHOLDERS AND TRUSTEES OF
THE FUND AND THE PORTFOLIO. It is expressly agreed that the obligations of the
Fund and the Portfolio hereunder shall not be binding upon any of the
shareholders, trustees, directors, officers, nominees, agents or employees of
the Fund or the Portfolio personally, but shall only bind the assets and
property of the Fund or the Portfolio, respectively, as provided in the
Governing Documents. The execution and delivery of this Agreement has been
authorized by the Boards of the Fund and the Portfolio, and this Agreement has
been executed and delivered by an authorized officer of each of the Fund and the
Portfolio acting as such, and neither such authorization by the Boards nor such
execution and delivery by such officer shall be deemed to have been made by any
of them individually or to impose any liability on any of them personally, but
shall bind only the assets and property of the Fund or the Portfolio as provided
in the Governing Documents.
SECTION 14. DURATION AND TERMINATION. This Agreement shall continue
with respect to the Fund and the Portfolio until termination with respect to the
Fund or the Portfolio is effected by the Fund, the Portfolio, or Chancellor LGT
upon sixty days' prior written notice to the other. In the event of the
"assignment" of this Agreement within the meaning of the 1940 Act, this
Agreement shall terminate automatically.
SECTION 15. NOTICES. All notices and other communications hereunder,
including Written Instructions, shall be in writing or by confirming telegram,
cable, telex or facsimile sending device. Notices with respect to a party shall
be directed to such address as may from time to time be designated by that party
to the other.
SECTION 16. FURTHER ACTIONS. The Fund, the Portfolio and Chancellor
LGT agree to perform such further acts and to execute such further documents as
may be necessary or appropriate to effect the purposes of this Agreement.
SECTION 17. AMENDMENTS. This Agreement, or any part thereof, may be
amended only by an instrument in writing signed by the Fund, the Portfolio and
Chancellor LGT.
SECTION 18. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together constitute one and the same instrument.
SECTION 19. MISCELLANEOUS. This Agreement embodies the entire
agreement and understanding between the Fund, the Portfolio and Chancellor LGT
and supersedes all prior agreements and understandings relating to the subject
matter hereof, provided that the Fund, the Portfolio and Chancellor LGT may
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<PAGE>
embody in one or more separate documents their agreement or agreements with
respect to such matters that this Agreement provides may be later agreed to by
and among the Fund, the Portfolio and Chancellor LGT from time to time. The
captions in this Agreement are included for convenience of reference only and in
no way define or delimit any of the provisions hereof or otherwise affect their
construction or effect. This Agreement shall be governed by and construed in
accordance with California law. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby. This Agreement shall
be binding upon and shall inure to the benefit of the Fund, the Portfolio and
Chancellor LGT and their respective successors.
IN WITNESS WHEREOF, the Fund, the Portfolio and Chancellor LGT have
caused this Agreement to be executed by their officers designated below as of
this day, month and year first above written.
GT GLOBAL FLOATING RATE FUND, INC.
By: ____________________________
Attest: _______________________
FLOATING RATE PORTFOLIO
By: ____________________________
Attest: _______________________
CHANCELLOR LGT ASSET MANAGEMENT, INC.
By: ____________________________
Attest: _______________________
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<PAGE>
SCHEDULE A
FUND ACCOUNTING AND PRICING AGENT FEES
Annual Fee payable based on aggregate net assets of the GT Global Group of
Funds:
First $5 billion in net assets .02% (2 basis points) of the
of the GT Global Group of Fund's average daily net
Funds: assets
.01% (1 basis point) of the
Portfolio's average daily net
assets
In excess of $5 billion in net .01% (1 basis point) of the
assets of the GT Global Group Fund's average daily net
of Funds: assets
.01% (1 basis point) of the
Portfolio's average daily net
assets
<PAGE>
KIRKPATRICK & LOCKHART LLP
1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036
March 21, 1997
GT Global Floating Rate Fund, Inc.
50 California Street, 27th Floor
San Francisco, California 94111
Dear Sir or Madam:
You have requested our opinion regarding certain matters in connection with
the issuance by GT Global Floating Rate Fund, Inc. ("Fund") of shares of the
Fund's common stock. We have examined the Fund's Articles of Incorporation and
other corporate documents relating to the authorization and issuance of the
common stock of the Fund. Based upon this examination, we are of the opinion
that:
1. All legal requirements for the organization of the Fund under the laws
of the State of Maryland have been satisfied, and the Fund is now a
validly existing corporation in good standing under the laws of the
State of Maryland.
2. The authorized capitalization of the Fund consists of 1,000,000,000
shares of common stock having a par value of $.001 each.
3. The issuance of those shares of the Fund's common stock, which
currently are being registered under the Securities Act of 1933, has
been duly authorized by the Fund, subject to compliance with the
Securities Act of 1933 and the Investment Company Act of 1940.
4. When so issued, the Fund's shares will be legally issued, fully paid
and nonassessable.
<PAGE>
GT Global Floating Rate Fund, Inc.
March 21, 1997
Page 2
We hereby consent to the filing of this opinion in connection with Pre-
Effective Amendment No. 2 to the Registration Statement on Form N-2 (File No.
333-17425) which you are about to file with the Securities and Exchange
Commission. We also consent to the reference to our firm under the caption
"Additional Information - Legal Matters" in the Registration Statement.
Very truly yours,
KIRKPATRICK & LOCKHART LLP
By: /s/ Daniel T. Steiner
------------------------------
Daniel T. Steiner
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of
GT Global Floating Rate Fund, Inc.
We consent to the inclusion in the Registration Statement on Form N-2 of our
report dated March 21, 1997 on our audit of the statement of assets and
liabilities of GT Global Floating Rate Fund, Inc. as of March 14, 1997. We
also consent to the references to our firm under the captions "Independent
Accountants" and as "Experts" under the caption "Financial Statements."
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
March 21, 1997
