<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 14, 1997
SECURITIES ACT FILE NO. 33-
INVESTMENT COMPANY ACT FILE NO. 811-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM N-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
PRE-EFFECTIVE AMENDMENT NO. / /
POST-EFFECTIVE AMENDMENT NO. / /
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
AMENDMENT NO. / /
(CHECK APPROPRIATE BOX OR BOXES)
------------------------
GT GLOBAL SELECT
FLOATING RATE FUND
(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. MICHAEL A. SILVER, ESQ.
R. CHARLES MILLER, 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>
Shares of Beneficial Interest
($.001 par value)........... 1,000,000 $10.00 $10,000,000 $3,030.30
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS
EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH
SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME
EFFECTIVE IN ACCORDANCE WITH THE PROVISIONS OF SECTION 8(A) OF THE SECURITIES
ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH
DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL SELECT FLOATING RATE FUND
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 Shares
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 Shares
9 Management.................. Management; Description of Shares; 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 Shares
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 SELECT FLOATING RATE FUND
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 Shares
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>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
GT GLOBAL SELECT FLOATING RATE FUND
COMMON STOCK
- --------------------------------------------------------------------------------
GT Global Select Floating Rate Fund (the "Fund") is a newly organized,
continuously offered, non-diversified, closed-end investment company. 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 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 beneficial interest ("Shares") of the Fund are continuously offered at
a price equal to the next determined net asset value per share without a
front-end sales charge. The minimum initial purchase is $5,000, and the minimum
subsequent purchase is $500.
No market presently exists for the Fund's Shares and it is not currently
expected that a secondary market will develop. Since the Fund's Shares may not
be considered readily marketable, the Fund has adopted a fundamental policy that
requires it to make quarterly repurchase offers to purchase a specified
percentage (between 5% and 25%) of the Fund's Shares at the then-current net
asset value. The initial repurchase offer will be made in , 1998.
See "Repurchase Offers." Shares that have been held for less than one year and
that are repurchased by the Fund will be subject to an "Early Withdrawal Charge"
of 1.0% of the original purchase amount for such Shares, subject to certain
waivers described herein. See "Early Withdrawal Charge."
The Shares of the Fund involve 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 Shares, including the risk of
higher volatility of the net asset value of the Shares. See "Special
Considerations and Risk Factors -- Effects of Leverage."
The Fund's Shares do not represent a deposit or obligation of, and are not
guaranteed or endorsed by, any bank or other insured depository institution, and
are 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.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO SALES LOAD PROCEEDS TO
PUBLIC (1) (2) FUND (3)
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
Per Share..................................................................... $10.00 None $10.00
Total......................................................................... None
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Shares are offered at a price equal to net asset value, which at the
date of this Prospectus initially is $10.00 per share.
(2) GT Global, Inc., the Fund's distributor, will pay all sales commissions to
selected dealers from its own assets.
(3) Before deduction of organizational and offering expenses payable by the
Fund, estimated at $ and $ , respectively. 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.
Offering expenses will be deducted from net proceeds upon the completion of
the offering.
[LOGO]
, 1998
Prospectus Page 1
<PAGE>
GT GLOBAL SELECT FLOATING RATE FUND, INC.
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
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
Repurchase Offers......................................................................... 28
Early Withdrawal Charge................................................................... 30
Management................................................................................ 31
Trustees and Executive Officers........................................................... 33
Portfolio Transactions.................................................................... 35
Dividends and Other Distributions......................................................... 36
Taxes..................................................................................... 36
Dividend Reinvestment Plan................................................................ 39
Automatic Investment Plan................................................................. 40
Exchanges................................................................................. 41
Net Asset Value........................................................................... 41
Description of Shares..................................................................... 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 SELECT 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 Select Floating Rate Fund (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 non-diversified,
closed-end management investment company. See "Special
Considerations and Risk Factors -- Fund/Portfolio Investment
Structure."
The Offering: The Fund continuously offers its shares of beneficial interest
("Shares") at a price equal to the next determined net asset
value per share without a front-end sales charge. The minimum
initial purchase is $5,000, and the minimum subsequent purchase
is $500, 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 common shares. Although
the Fund has no present intention to do so, it may in the future
offer preferred shares, 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 invests
primarily in Corporate Loans and Corporate Debt Securities made
to or issued by U.S. or non-U.S. companies ("Borrowers"),
including those 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 invests 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
</TABLE>
Prospectus Page 3
<PAGE>
GT GLOBAL SELECT FLOATING RATE FUND, INC.
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
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
unsecured 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 invests 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 contractual 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 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
</TABLE>
Prospectus Page 4
<PAGE>
GT GLOBAL SELECT FLOATING RATE FUND, INC.
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
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 invests 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 performs its own credit analysis of the
Borrower. The Portfolio invests 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
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.
</TABLE>
Prospectus Page 5
<PAGE>
GT GLOBAL SELECT FLOATING RATE FUND, INC.
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
The Corporate Loans and Corporate Debt Securities in which the
Portfolio invests 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. 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 pursuant 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 "Repurchase 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 holders of the Shares
("Shareholders") will be adversely affected. Leverage also
creates other risks for Shareholders, including the risk of
higher volatility of the net asset value of the Shares.
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.
</TABLE>
Prospectus Page 6
<PAGE>
GT GLOBAL SELECT FLOATING RATE FUND, INC.
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
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 September
30, 1997 with approximately $86 billion in total assets.
The Manager determines the investment composition of the
Portfolio, places all orders for the purchase and sale of
securities and for other transactions, and oversees the
settlement of the Portfolio's securities and other transactions.
The Portfolio pays 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 pays 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 provides administrative services to the Fund and
the Portfolio. These 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 pays
administration fees at the annual rate of 0.25% of the Fund's
average net assets.
Distributions: The Fund distributes substantially all of its net investment
income to Shareholders by declaring dividends daily and paying
them monthly. Substantially all net capital gains, if any, are
distributed at least annually to Shareholders. See "Dividends and
Other Distributions." Pursuant to the Fund's Dividend
Reinvestment Plan (the "Plan"), each Shareholder 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. See "Dividend Reinvestment Plan."
Repurchase Offers: The Fund's Shares are not listed on any exchange, and it is not
anticipated that a secondary market will develop. In view of
this, the Fund will, as a fundamental policy, offer each calendar
quarter to repurchase a portion of the Shares from shareholders
that tender such shares to the Fund. These offers (each, a
"Repurchase Offer") will constitute an offer by the Fund to
repurchase a portion of its Shares from shareholders at a price
per share equal to the net asset value per share determined at
the close of business on the day the Repurchase Offer termi-
nates. Shares that have been held for less than one year and that
are repurchased by the Fund pursuant to a Repurchase Offer will
be subject to an early withdrawal charge of up to 1% of the
lesser of the then current net asset value or the original
purchase price of the Shares being tendered, subject to certain
waivers for certain categories of Shareholders. See "Repurchase
Offers" and "Early Withdrawal Charge."
</TABLE>
Prospectus Page 7
<PAGE>
GT GLOBAL SELECT FLOATING RATE FUND, INC.
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Special Considerations and
Risk Factors: As a newly organized entity, the Fund has no operating history.
There is no secondary market for the Fund's Shares, and the Fund
does not expect a secondary market to develop. Moreover, GT
Global, Inc. ("GT Global" or the "Distributor") and other
selected dealers are prohibited under applicable law from making
a market in the Fund's Shares while the Fund is making either a
public offering of or a tender offer to repurchase its Shares. 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,
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 (and which the Portfolio
intends to satisfy). Since the Portfolio may invest a relatively
high percentage of its assets in the obligations of a limited
number of issuers, the Fund may be more susceptible 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 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,
</TABLE>
Prospectus Page 8
<PAGE>
GT GLOBAL SELECT FLOATING RATE FUND, INC.
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
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 by Moody's 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 de-
terioration 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 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
</TABLE>
Prospectus Page 9
<PAGE>
GT GLOBAL SELECT FLOATING RATE FUND, INC.
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
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 its Shares pursuant to Repurchase Offers.
The Board of Directors of the Fund will consider the liquidity of
the Portfolio's securities in determining the percentage of the
Fund's outstanding Shares for which the Repurchase Offer should
be made. See "Net Asset Value" for information with respect to
the valuation of illiquid Corporate Loans.
The Fund's Declaration of Trust includes 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 Trustees and could have the effect of
depriving Shareholders 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 Shares -- Certain Anti-Takeover Provisions of the
Declaration of Trust."
</TABLE>
Prospectus Page 10
<PAGE>
GT GLOBAL SELECT 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>
SHAREHOLDER TRANSACTION EXPENSES
<S> <C>
Sales Load (as a percentage of offering price)................................................................. None
Dividend Reinvestment Plan Fees................................................................................ None
Early Withdrawal Charge (1).................................................................................... 1%
ANNUAL FUND AND ALLOCATED PORTFOLIO OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS ATTRIBUTABLE TO SHARES) (2)
Investment Management and Administrative Fee................................................................... 0.95%
Administrative Fee (3)......................................................................................... 0.25%
Other Expenses (4)............................................................................................. 0.40%
---------
Total Annual Operating Expenses (after reimbursement).......................................................... 1.60%
---------
---------
</TABLE>
- --------------
(1) Calculated based on the lesser of the then current net asset value or the
original price of the shares being tendered. The early withdrawal charge
applies to shares sold to the Fund pursuant to a Repurchase Offer during the
first year after purchase. 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 (exclusive of brokerage commissions,
taxes, interest, and extraordinary expenses) over 1.60% annually. Without
such reimbursement, "Other Expenses" and "Total Annual Operating Expenses"
would be estimated to be % and %, 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 $ 51 $ 88 $ 191
Assuming tender and repurchase of Common Stock on last day of period
and imposition of maximum applicable Early Withdrawal Charge......... $ 27 $ 51 $ 88 $ 191
</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 SELECT FLOATING RATE FUND, INC.
THE FUND
- --------------------------------------------------------------------------------
The Fund is a newly organized, continuously offered, non-diversified, closed-end
management investment company. The Fund was organized as a Massachusetts
business trust on November 13, 1997 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 Shares offered hereby will be invested on
an ongoing basis 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 on an ongoing basis,
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 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
Prospectus Page 12
<PAGE>
GT GLOBAL SELECT FLOATING RATE FUND, INC.
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
invests 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 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
Prospectus Page 13
<PAGE>
GT GLOBAL SELECT FLOATING RATE FUND, INC.
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 U.S. 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 generally will be determined by reference to financial statements of the
Borrower, by an independent appraisal, by obtaining the market
Prospectus Page 14
<PAGE>
GT GLOBAL SELECT FLOATING RATE FUND, INC.
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.
The Portfolio may receive and/or pay certain fees in connection with its lending
activities. These fees
Prospectus Page 15
<PAGE>
GT GLOBAL SELECT FLOATING RATE FUND, INC.
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 invests 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 considers 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 performs its own independent
credit analysis of the Borrower, and of the collateral structure for the loan or
security. In making this analysis, the Manager utilizes 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 SELECT 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 SELECT 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 SELECT 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 SELECT 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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GT GLOBAL SELECT 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 (which for this purpose and under the 1940
Act means the lesser of (i) 67% of the Shares represented at a meeting at which
more than 50% of the outstanding Shares are represented or (ii) more than 50% of
the outstanding Shares). Subsequent to any issuance of a class of preferred
shares, the following investment restrictions could not be changed without the
approval of a majority of the outstanding Shares and of the preferred shares,
voting together as a class, and the approval of a majority of the outstanding
preferred shares, voting separately by class. The Fund and the Portfolio each
may not:
1. Borrow money or issue senior securities, except as permitted by Section 18 of
the 1940 Act.
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GT GLOBAL SELECT FLOATING RATE FUND, INC.
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 Boards 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 Repurchase
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 "Repurchase 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 Shareholders 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 connection with borrowings or to pay a commitment
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GT GLOBAL SELECT FLOATING RATE FUND, INC.
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 or to engage
in other activities. Borrowings and the issuance of a class of preferred shares
having priority over the Fund's Shares create an opportunity for greater income
per Share, 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 shares 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 will 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 periods of deteriorating economic
conditions, a Borrower may experience difficulty in meeting its
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GT GLOBAL SELECT FLOATING RATE FUND, INC.
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 and interest due on the Corporate Loan or Corporate Debt
Security.
Prospectus Page 24
<PAGE>
GT GLOBAL SELECT FLOATING RATE FUND, INC.
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 may not be 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 Trustees 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 Trustees 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. If the Fund withdraws all of
its assets from the Portfolio, or the Board of Trustees 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
Prospectus Page 25
<PAGE>
GT GLOBAL SELECT FLOATING RATE FUND, INC.
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. 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 Shareholders
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 Shareholders. 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 Shareholder redemption requests, such as borrowing.
Prospectus Page 26
<PAGE>
GT GLOBAL SELECT FLOATING RATE FUND, INC.
PURCHASE OF SHARES
- --------------------------------------------------------------------------------
The Fund continuously offers its Shares 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 Shares, 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 offers 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 regular trading on the New
York Stock Exchange (the "NYSE") (generally, 4:00 p.m., New York time), which
includes orders received after the close of regular trading 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 regular trading 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 regular trading on the NYSE on that day.
If the purchase orders are not received by the Distributor prior to 30 minutes
after the close of regular trading 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 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 Shares which it may wish to resell. Such Shares 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 1.0% of amounts sold.
If the Shares remain outstanding after thirteen months from the date of their
original purchase, the Distributor will additionally compensate such dealers
quarterly at an annual rate equal to .50% of the value of such Shares sold by
such dealers and remaining outstanding.
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").
- --------------------------------------------------------------------------------
REPURCHASE OFFERS
- --------------------------------------------------------------------------------
In recognition of the likelihood that a secondary market for the Fund's Shares
will not exist, the Fund has taken actions that will provide some liquidity to
Shareholders. The Fund has adopted certain share repurchase policies as
fundamental policies that may not be changed without the vote of the holders of
a majority of the Fund's outstanding voting securities (as determined under the
1940 Act). Each calendar quarter the Fund will make Repurchase Offers, i.e.,
offers to repurchase a portion of the Common Stock from Shareholders at a price
per Share equal to the net asset value per Share determined at the close of
business on the day the Repurchase Offer terminates.
Prospectus Page 27
<PAGE>
GT GLOBAL SELECT FLOATING RATE FUND, INC.
REPURCHASE PROCEDURES
The Fund will establish a maximum of fourteen days as the period between
repurchase requests and the applicable repurchase date. The Board is authorized
to establish other policies relating to repurchases of Shares that are
consistent with the 1940 Act. Additional dates for repurchases of Shares may be
established by the Board in its sole discretion, not more frequently than once
every two years. Shares tendered by Shareholders on any repurchase date will be
repurchased, subject to the aggregate repurchase amounts established for any
such dates, at the then current net asset value per share, less any applicable
Early Withdrawal Charge. Repurchase proceeds will be paid, in cash, within seven
days after each repurchase date (each, a "Repurchase Payment Deadline").
REPURCHASE AMOUNTS
The number of Shares that the Fund will offer to repurchase on any repurchase
date (the "Repurchase Offer Amount") will be determined by the Board, in its
sole discretion, but will be at least 5% and no more than 25% of the total
number of Shares outstanding on any such date. Currently, the Board has
determined that the initial repurchase offer will be set at [ %;] however, this
may change prior to the date of that initial repurchase offer at the sole
discretion of the Board of Trustees.
If Shareholders tender more than the repurchase offer amount, the Fund may
repurchase an additional number of Shares, not to exceed two percent (2%) of the
shares outstanding on the repurchase request deadline. The Fund will repurchase
Shares tendered on a pro rata basis. The Fund may, however, accept all tenders
of Shareholders who own less than one hundred Shares and who tender all their
Shares, before prorating other repurchases. If Shareholders who tender all their
Shares elect to have either all or none or at least a minimum amount or none
accepted, the Fund may first accept all Shares tendered by Shareholders who do
not so elect. After accepting all such Shares, the Fund may accept by lot Shares
tendered by Shareholders who make such an election.
NOTICES TO SHAREHOLDERS
Notice of both the quarterly repurchase offers and any additional discretionary
repurchase offers will be given to each Shareholder of record between twenty-one
(21) and forty-two (42) days before each repurchase request deadline. Such
notice will contain information that the Shareholder should consider in deciding
whether or not to tender Shares and detailed instructions on how to tender such
Shares. Such notice will state the Repurchase Offer Amount and any fees
applicable to such repurchase, the dates of the repurchase request deadline,
repurchase pricing date, and Repurchase Payment Deadline. Shareholders will be
advised of the risk of fluctuation in the net asset value between the repurchase
request deadline and the repurchase pricing date, and the possibility that the
Fund may use an earlier repurchase pricing date under certain circumstances,
such as customary national holidays described in the Prospectus. Procedures by
which stockholders may tender their Shares, the procedures by which the Fund may
repurchase such Shares on a pro rata basis, and the circumstances in which the
Fund may suspend or postpone a repurchase offer will be set forth in the notice
to Shareholders. Procedures by which Shareholders may withdraw or modify their
tenders until the repurchase request deadline will also be set forth in the
notice. Finally, the notice will set forth the net asset value of the Shares to
be repurchased no more than seven days before the date of notification and the
means by which Shareholders may ascertain the net asset value thereafter, as
well as the market price of such Shares, if any, on the date on which the net
asset value was computed, and the means to determine the market price
thereafter.
REPURCHASE PRICE
The current net asset value of the Shares will be computed daily on the five
business days before a repurchase request deadline, at such times to be
determined by the Board. Shareholders may readily ascertain the net asset value
per Share during an open Repurchase Offer period, and on any day the Exchange is
open for business, by calling [the Fund] [GT Global] at 1-800- . During
the period from notification to Shareholders of a repurchase pricing date to the
repurchase request deadline, the Fund will maintain liquid assets in an amount
equal to 100 percent of the repurchase offer amount.
SUSPENSION OR POSTPONEMENT OF REPURCHASE OFFER
The Fund will not suspend or postpone a Repurchase Offer except pursuant to a
vote of a majority of the Fund's Trustees, including a majority of the Trustees
who are not "interested persons" of the Fund, as defined in the 1940 Act (the
"Independent Trustees"). Furthermore, the Fund will suspend or postpone a
Repurchase Offer only if certain regulatory requirements are met. The Fund will
give Shareholders notice of any such suspension or postponement, and likewise
will give notice of a renewed Repurchase Offer.
Prospectus Page 28
<PAGE>
GT GLOBAL SELECT FLOATING RATE FUND, INC.
SPECIAL CONSIDERATIONS OF REPURCHASES
In compliance with the 1940 Act requirements for periodic repurchase offers, a
majority of the Fund's Trustees are Independent Trustees and the selection and
nomination of additional Independent Trustees are within the discretion of the
Independent Trustees.
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
Repurchase Offers. See "Special Considerations and Risk Factors -- Effects of
Leverage" and "Investment Restrictions."
The Fund expects that ordinarily there will be no secondary market for its
Shares and that periodic Repurchase Offers will be the only source of liquidity
for Fund Shareholders. Nevertheless, if a secondary market develops for Shares
of the Fund, the market price per share of the Shares may vary from the net
asset value per Share 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 such factors affect the yield on and net asset value per
Share of the Fund. The Repurchase Offers for Shares at net asset value are
expected to reduce any spread between net asset value and market price that may
otherwise develop. There can be no assurance, however, that such action would
result in Shares trading at a price that equals or approximates its net asset
value per Share.
Although the Board of Trustees believes that the Repurchase Offers generally
will be beneficial to Shareholders, the acquisition of Shares 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). Furthermore, if the Fund should in the
future borrow to finance the making of Repurchase Offers, interest on such
borrowings would reduce the Fund's net investment income. It is the Board of
Trustees' announced policy, which may be changed by the Board, not to repurchase
Shares pursuant to a Repurchase Offer over the minimum amount required by the
Fund's fundamental policies regarding Repurchase Offers if the Board determines
that such a repurchase is not in the Fund's best interest.
Repurchases pursuant to Repurchase Offers could significantly reduce the asset
coverage of any borrowing or outstanding senior securities. The Fund may not
repurchase Shares 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 requirements set forth in the 1940 Act. Accordingly, in order
to repurchase all Shares 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 for
which the Fund makes any particular Repurchase Offer may be limited for the
reasons set forth above or in respect of other concerns to liquidity of the
Fund.
To consummate a Repurchase Offer for the repurchase of Shares, the Fund 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.
The repurchase of tendered Shares by the Fund is a taxable event. See
"Taxation." The Fund will pay all costs and expenses associated with the making
of any Repurchase Offer. An Early Withdrawal Charge will be imposed on certain
Shares that have been held for less than twelve months and are accepted for
repurchase pursuant to a Repurchase Offer, subject to certain waivers of such
charge described in the Prospectus. See "Early Withdrawal Charge" below.
The Fund may also make offers to repurchase Shares of which it is the issuer
pursuant to any other applicable rules of the SEC in effect at the time of the
offer.
Prospectus Page 29
<PAGE>
GT GLOBAL SELECT FLOATING RATE FUND, INC.
EARLY WITHDRAWAL CHARGE
- --------------------------------------------------------------------------------
An Early Withdrawal Charge to recover distribution expenses incurred by the
Distributor will be charged against the Shareholder's investment account and
paid to the Distributor in connection with most Shares held for less than one
year that are accepted by the Fund for repurchase pursuant to a Repurchase Offer
in the manner described below. The Early Withdrawal Charge of 1% will be imposed
on those Shares accepted for repurchase based on an amount equal to the lesser
of the then current net asset value of the Shares or the original purchase price
of the Shares 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 applicable to a tender of
Shares, 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 held for over one year and Shares acquired pursuant to
reinvestment of dividends or other distributions. The Early Withdrawal Charge
will not be applied to dollar amounts representing an increase in the net asset
value since the time of purchase.
WAIVERS OF EARLY WITHDRAWAL CHARGE
The Early Withdrawal Charge will be waived in the following circumstances: (1)
following the death of the Shareholder or beneficial owner; (2) to meet
distributions from individual retirement plan accounts due to death or
disability or upon period distributions based on life expectancy; (3) to pay
tax-free returns of excess contributions from employee benefit plans; (4) to pay
distributions by certain eligible employee benefit plans or employee benefit
plans serviced by certain specified servicing companies or systems; (5) to
provide eligible participant initiated distributions from employee benefit
plans; (6) for shares that were purchased by employees or retired employees of
Chancellor LGT, GT Global or their affiliates; (7) for shares that were
purchased by directors, trustees, officers or advisory board members or persons
retired from such positions, of any investment company for which Chancellor LGT
or its affiliates serves as investment adviser; (8) for shares that were
purchased by certain retirement plans where there was no broker of record and no
sales commission or service fee was paid to the broker upon purchase; or (9) for
shares that were held for six months or more and were purchased by any of such
retirement plans where there was a broker of record and a sales commission or
service fee was paid to the broker upon purchase.
Prospectus Page 30
<PAGE>
GT GLOBAL SELECT FLOATING RATE FUND, INC.
MANAGEMENT
- --------------------------------------------------------------------------------
Each of the Fund's Board of Trustees 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"). The Sub-Advised Assets
consist of the Portfolio's
Prospectus Page 31
<PAGE>
GT GLOBAL SELECT FLOATING RATE FUND, INC.
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 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 September 30, 1997, the
Manager had assets under management totaling approximately $3.2 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, compose Liechtenstein Global Trust. Liechtenstein Global Trust is
a provider of global asset management and private banking products and services
to individual and institutional investors. Liechtenstein Global Trust is
controlled by the Prince of Liechtenstein Foundation, which serves as the parent
organization for the various business enterprises of the Princely Family of
Liechtenstein. The principal business address of the Prince of Liechtenstein
Foundation is Herrengasse 12, FL-9490, Vaduz, Liechtenstein. As of September 30,
1997, Chancellor LGT and its worldwide asset management affiliates managed or
administered approximately $62 billion worldwide. In addition to the investment
resources of its San Francisco and New York offices, Chancellor LGT draws upon
the expertise, personnel, data and systems of Liechtenstein Global Trust
including investment offices in London, Hong Kong, Tokyo, Singapore, Toronto,
Sydney and Frankfurt.
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.
GT Global Investor Services, Inc. ("Investor Services") will act as the Fund's
transfer agent and dividend disbursing agent. Investor Services is compensated
at the annual rate of .10% 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 Boards of 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 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 SELECT FLOATING RATE FUND, INC.
TRUSTEES AND EXECUTIVE OFFICERS
- --------------------------------------------------------------------------------
The Trustees 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*, 39 Mr. Guilfoyle is President, GT Global, Inc. since 1995; Director, GT Global
Trustee, Chairman of the Board and since 1991; Senior Vice President and Director of Sales and Marketing, GT
President Global from May 1992 to April 1995; Vice President and Director of Marketing,
50 California Street GT Global from 1987 to 1992; Director, Liechtenstein Global Trust AG (holding
San Francisco, CA 94111 company of the various international LGT companies) Advisory Board since
January 1996; Director, G.T. Global Insurance Agency ("G.T. Insurance") since
1996; President and Chief Executive Officer, G.T. Insurance since 1995; Senior
Vice President and Director, Sales and Marketing, G.T. Insurance from April
1995 to November 1995; Senior Vice President, Retail Marketing, GT Insurance
from 1992 to 1993. Mr. Guilfoyle is also a director or trustee of each of the
other investment companies registered under the 1940 Act that is managed or
administered by Chancellor LGT.
C. Derek Anderson, 56 Mr. Anderson is President, Plantagenet Capital Management, LLC (an investment
Trustee partnership); Chief Executive Officer, Plantagenet Holdings, Ltd. (an
220 Sansome Street investment banking firm); Director, Anderson Capital Management, Inc. since
Suite 400 1988; Director, PremiumWear, Inc. (formerly Munsingwear, Inc.)(a casual
San Francisco, CA 94104 apparel company) and Director, "R" Homes, Inc. and various other companies.
Mr. Anderson is also a director or trustee of each of the other investment
companies registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), that is managed or administered by Chancellor LGT.
Frank S. Bayley, 58 Mr. Bayley is a partner of the law firm of Baker & McKenzie, and serves as a
Trustee Director and Chairman of C.D. Stimson Company (a private investment company).
Two Embarcadero Center Mr. Bayley also is a director or trustee of each of the other investment
Suite 2400 companies registered under the 1940 Act that is managed or administered by
San Francisco, CA 94111 Chancellor LGT.
Arthur C. Patterson, 54 Mr. Patterson is Managing Partner of Accel Partners (a venture capital firm).
Trustee He also serves as a director of Viasoft and PageMart, Inc. (both public
One Embarcadero Center software companies), as well as several other privately held software and
Suite 3820 communications companies. Mr. Patterson also is a director or trustee of each
San Francisco, CA 94111 of the other investment companies registered under the 1940 Act that is
managed or administered by Chancellor LGT.
Ruth H. Quigley, 62 Miss Quigley is a private investor. From 1984 to 1986, she was President of
Trustee Quigley Friedlander & Co., Inc. (a financial advisory services firm). Miss
1055 California Street Quigley also is a director or trustee of each of the other investment
San Francisco, CA 94108 companies registered under the 1940 Act that is managed or administered by
Chancellor LGT.
</TABLE>
- --------------
* Mr. Guilfoyle is an "interested person" of the Fund as defined by the 1940 Act
due to his affiliation with the LGT companies.
Prospectus Page 33
<PAGE>
GT GLOBAL SELECT 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>
Robert G. Wade, Jr.*, 70 Mr. Wade is Consultant to Chancellor LGT; Chairman of the Board
Trustee of Chancellor Capital Management, Inc. from January 1995 to
1166 Avenue of the Americas October 1996; President, Chief Executive Officer and Chairman
New York, NY 10036 of the Board of Chancellor Capital Management, Inc. from 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.
Kenneth W. Chancey, 52 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, 51 Chief Legal and Compliance Officer -- North America, Chancellor
Vice President LGT since October 1997; Executive Vice President of the Asset
1166 Avenue of the Americas Management Division of Liechtenstein Global Trust since October
New York, NY 10036 1996; Senior Vice President, General Counsel and Secretary of
Chancellor LGT, GT Global, GT Services and G.T. Insurance from
February 1996 to October 1996; Vice President, General Counsel
and Secretary of LGT Asset Management, Inc., Chancellor LGT, GT
Global, GT Services and G.T. Insurance from May 1994 to
February 1996; Senior Vice President, General Counsel and
Secretary of Strong/Corneliuson Management, Inc. and Secretary
of each of the Strong Funds from October 1991 through May 1994.
</TABLE>
- ------------------
* Mr. Wade is an "interested person" of the Fund as defined by the 1940 Act due
to his affiliation with the LGT companies.
------------------------------
The Board of Trustees 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
Trustee 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 Trustees and officers receive no
compensation or expense reimbursement from the Fund. Because the Fund has not
yet commenced operations, no Trustee 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 SELECT 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 SELECT 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 distributes 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 Shareholders. 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 Shareholders. Shares 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 Repurchase 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 Shares while any
preferred shares 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 Shareholders may be automatically
reinvested in Shares pursuant to the Fund's Dividend Reinvestment Plan. See
"Dividend Reinvestment Plan." Dividends and other distributions will be taxable
to Shareholders 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 Shareholders 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; and (2) 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
Prospectus Page 36
<PAGE>
GT GLOBAL SELECT FLOATING RATE FUND, INC.
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 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)
that it distributes to its Shareholders.
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 is treated as a partnership for federal income tax purposes and is
not a "publicly traded partnership." As a result, the Portfolio is not 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 is not 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 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, and gains realized thereby, may be subject
to income, withholding, or other taxes imposed by foreign countries and U.S.
possessions that would reduce the yield and/or total return 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 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.
Prospectus Page 37
<PAGE>
GT GLOBAL SELECT FLOATING RATE FUND, INC.
TAXATION OF THE SHAREHOLDERS
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 Shareholders 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 Shares and, after that basis is
reduced to zero, will constitute capital gains to the Shareholder, assuming the
Shares are held as a capital asset.) Distributions, if any, from the Fund's net
capital gain, when designated as such, are taxable to its Shareholders 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. Following the end of each calendar year, the Fund will
notify its Shareholders of the amounts of any dividends and capital gain
distributions paid (or deemed paid) by the Fund during that year. The
information regarding capital gain distributions will designate the portions of
those distributions that are subject to (1) the 20% maximum rate of tax (10% for
investors in the 15% marginal tax bracket) enacted by the Taxpayer Relief Act of
1997 ("Tax Act"), which applies to non-corporate taxpayers' net capital gain on
securities and other capital assets held for more than 18 months, and (2) the
28% maximum tax rate, applicable to such gain on capital assets held for more
than one year and up to 18 months (which, prior to enactment of the Tax Act,
applied to all such gain on capital assets held for more than one year).
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 Shareholders of record as of a date in, October, November, or
December of any year will be deemed to have been paid by the Fund and received
by the Shareholders on December 31 of that year if the distributions are paid by
the Fund during the following January. Accordingly, those distributions will be
taxed to Shareholders for the year in which that December 31 falls.
The Fund must withhold 31% from dividends, capital gain distributions, and
proceeds from sales of Shares pursuant to a Repurchase 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 Shareholder who, as to the United States, is a
nonresident alien individual or nonresident alien fiduciary of a trust or
estate, foreign corporation, or foreign partnership ("foreign Shareholder") will
be subject to U.S. withholding tax (at a rate of 30% or lower treaty rate).
Withholding will not apply if a dividend paid by the Fund to a foreign
Shareholder is "effectively connected with the conduct of a U.S. trade or
business," in which case the reporting and withholding requirements applicable
to domestic stockholders will apply. Distributions of net capital gain generally
are not subject to that withholding tax, except in the case of a foreign
Shareholder who is a nonresident alien individual physically present in the
United States for more than 182 days during the taxable year and with respect to
whom the distributions are "effectively connected." Foreign Shareholders are
urged to consult their own tax advisers concerning the applicability of this
withholding tax.
REPURCHASE OFFERS
A Shareholder who, pursuant to any Repurchase Offer, tenders all Shares owned by
such Shareholder 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 Shareholder's holding period for the shares; capital
gain on Shares held for
Prospectus Page 38
<PAGE>
GT GLOBAL SELECT FLOATING RATE FUND, INC.
more than one year will be subject to federal income tax at the rates indicated
above.
Different tax consequences may apply to tendering and non-tendering Shareholder
in connection with a Repurchase Offer, and these consequences will be disclosed
in the related offering documents. For example, if a tendering Shareholder
tenders less than all Shares owned by or attributed to such Shareholder, and if
the payment to such Shareholder 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
Shareholder's basis for the tendered shares. Also, there is a risk that
non-tendering Shareholders may be considered to have received a deemed
distribution that may be a taxable dividend in whole or in part. Shareholders
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 Shareholders. 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 Shareholder will be deemed to have elected to have
all dividends and other distributions, net of any applicable withholding taxes,
automatically reinvested in additional Shares, 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 Shareholder in writing. Such
dividends and other distributions will be reinvested in Shares at the net asset
value per share next determined on the payable date of such dividend or other
distribution. Each Shareholder may also elect to have all dividends and/or other
distributions automatically reinvested in Class C shares of certain open-end
investment companies managed by Chancellor LGT ("GT Global Funds"). Automatic
reinvestment in shares of a GT Global Fund are made at net asset value without
imposition of a sales charge. Reinvestments in a GT Global Fund may only be
directed to an account with the identical Shareholder registration and account
number. These elections may be changed by a Shareholder at any time; to be
effective with respect to a distribution, the Shareholder or the Shareholder's
broker must contact the Plan Agent by mail or telephone at least 15 business
days prior to the payment date.
Shareholders 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 Shareholder by GT Global Investor
Services, Inc., as dividend-paying agent. Shareholders 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 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 Shareholder elects to receive
dividends and other distributions in cash. A Shareholder whose Shares are held
by a broker-dealer or nominee that does not provide a dividend reinvestment
service may be required to have his Shares registered in his own name to
participate in the Plan. Similarly, a Shareholder may be unable to transfer his
account to certain broker-dealers and continue to participate in the Plan.
Investors who own Shares 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 in the account of
each
Prospectus Page 39
<PAGE>
GT GLOBAL SELECT FLOATING RATE FUND, INC.
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 Shareholder's proxy will
include those Shares 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 Shareholder of record, such as a bank, broker-dealer or
nominee, that holds Shares for others who are the beneficial owners, the Plan
Agent will administer the Plan on the basis of the number of Shares certified
from time to time by the record Shareholder as representing the total amount
registered in the Shareholder'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 (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 Shareholder'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
Shareholder 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 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 Shares through the GT Global
Automatic Investment Plan. Under this Plan, an amount specified by the
Shareholder 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.
Prospectus Page 40
<PAGE>
GT GLOBAL SELECT FLOATING RATE FUND, INC.
EXCHANGES
- --------------------------------------------------------------------------------
The Fund may make available to Shareholders who tender Shares pursuant to a
Repurchase Offer the privilege of exchanging Fund Shares at net asset value for
Class C 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 Shareholder's tender of
Fund Shares in a Repurchase Offer. No Early Withdrawal Charge will be imposed on
Shareholders choosing to exchange their Fund Shares for shares of any such GT
Global Fund; however, the exchanging Shareholders will be subject to the
contingent deferred sales charge applicable to such GT Global 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 Shares.
Similarly, Class C shares of GT Global Funds may be exchanged for Shares of the
Fund at net asset value, but exchanging shareholders will become subject to the
early withdrawal charge applicable to Fund Shares. Thus, Shares of the Fund
acquired in such an exchange may be subject to an early withdrawal charge upon a
subsequent repurchase of the Shares by the Fund. For purposes of calculating any
early withdrawal charge, the purchase of such Fund Shares acquired in an
exchange will be deemed to have occurred at the time of the initial purchase of
the Class C shares of the GT Global Fund.
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 Shares 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 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, 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 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,
Prospectus Page 41
<PAGE>
GT GLOBAL SELECT FLOATING RATE FUND, INC.
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 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 SHARES
- --------------------------------------------------------------------------------
The Fund is authorized to issue an unlimited number of Shares, $.001 par value.
Although it has no current intention of doing so, the Board of Trustees of the
Fund is authorized to classify and reclassify any unissued shares 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 Shares and the
description under "Description of Shares -- Certain Anti-Takeover Provisions of
the Declaration of Trust" are subject to the provisions contained in the Fund's
Declaration of Trust and Bylaws.
SHARES OF BENEFICIAL INTEREST
The Shares have no preemptive, conversion, exchange or redemption rights. Each
Share has equal voting, dividend, distribution and liquidation rights. The
outstanding Shares are, and those offered hereby, when issued, will be, fully
paid and nonassessable. Shareholders are entitled to one vote per share. All
voting rights for the election of Trustees are noncumulative, which means that
the holders of more than 50% of the Shares can elect 100% of the Trustees 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 Trustees.
Prospectus Page 42
<PAGE>
GT GLOBAL SELECT FLOATING RATE FUND, INC.
Shares will be held in book-entry form unless physical certificates are
requested in writing by a Shareholder.
CERTAIN ANTI-TAKEOVER PROVISIONS OF THE DECLARATION OF TRUST
The Fund presently has provisions in its Declaration of Trust that have the
effect of limiting (i) the ability of other entities or persons to acquire
control of the Fund and (ii) the Fund's freedom to engage in certain
transactions. These provisions of the Declaration of Trust may be regarded as
"anti-takeover" provisions, and provide that the affirmative vote of the holders
of at least 66 2/3% (which is higher than that required under the 1940 Act) of
the outstanding Shares is required generally to authorize any of the
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 Principal Shareholder 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 Declaration of
Trust 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
Trustees 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 would nevertheless be required. Reference is made to the
Declaration of Trust of the Fund, on file with the SEC, for the full text of
these provisions.
The provisions of the Declaration of Trust described above and the Fund's right
to make a tender offer for its shares could have the effect of depriving the
Shareholders 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 Shareholder. 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 Trustees of
the Fund has considered the foregoing anti-takeover provisions and concluded
that they are in the best interest of the Fund and its Shareholders.
- --------------------------------------------------------------------------------
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.
Prospectus Page 43
<PAGE>
GT GLOBAL SELECT FLOATING RATE FUND, INC.
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.
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 Shares 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 Shares and the Fund may be found in the
Registration Statement, on file with the SEC.
Prospectus Page 44
<PAGE>
GT GLOBAL SELECT FLOATING RATE FUND, INC.
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The Fund will send unaudited semiannual and audited annual financial statements
of the Fund to Shareholders, 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 ,
1998 appears on the following pages.
Prospectus Page 45
<PAGE>
GT GLOBAL SELECT FLOATING RATE FUND, INC.
REPORT OF INDEPENDENT ACCOUNTANT
- --------------------------------------------------------------------------------
To the Board of Directors and Stockholders of
GT Global Select Floating Rate Fund:
We have audited the accompanying statement of assets and liabilities of GT
Global Select Floating Rate Fund (the "Fund") as of , 1998. 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 , 1998. 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 , 1998, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
, 1998
Prospectus Page 46
<PAGE>
GT GLOBAL SELECT FLOATING RATE FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Cash.............................................................................. $
----------
Deferred organization expenses (Note 2)........................................... $
----------
LIABILITIES
Payable for deferred organization expenses (Note 2)............................... $
----------
Commitments (Notes 2 and 3)....................................................... $
----------
NET ASSETS, applicable to 10,000 shares of Common Stock, $.001 par value, issued and
outstanding; 1,000,000,000 shares authorized....................................... $
----------
NET ASSET VALUE PER SHARE........................................................... $ 10.00
----------
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO STATEMENT OF
ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
Prospectus Page 47
<PAGE>
GT GLOBAL SELECT 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: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
ranking category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the Company ranks in the lower end of its generic rating
category.
Prospectus Page 48
<PAGE>
GT GLOBAL SELECT FLOATING RATE FUND, INC.
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 49
<PAGE>
GT GLOBAL SELECT FLOATING RATE FUND, INC.
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 50
<PAGE>
GT GLOBAL SELECT FLOATING RATE FUND, INC.
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 51
<PAGE>
GT GLOBAL SELECT FLOATING RATE FUND
PART C -- OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(1) FINANCIAL STATEMENTS:
Report of Independent Accountants [to be supplied]
Statement of Assets and Liabilities [to be supplied]
(2) EXHIBITS:
<TABLE>
<S> <C>
(a) Declaration of Trust [filed herewith]
(b) Bylaws [filed herewith]
(c) None
(d) Instruments Defining Rights of Shareholders [to be supplied]
(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 [to be supplied]
(m) None
(n) Consent of Independent Accountants [to be supplied]
(o) None
(p) None
(q) None
</TABLE>
ITEM 25. MARKETING ARRANGEMENTS
See the Distribution Agreement filed as Exhibit (h)(1) to this Registration
Statement.
II-1
<PAGE>
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............................. $
National Association of Securities Dealers, Inc. Fees...............
Printing and Engraving Expenses.....................................
Legal Fees..........................................................
Accounting Expenses.................................................
Blue Sky Filing Fees and Expenses...................................
Miscellaneous Expenses..............................................
-------------
Total........................................................... $
-------------
-------------
</TABLE>
ITEM 27. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL
Until such time as the Registrant initiates 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, 1997 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 NOVEMBER 14, 1998
- -------------------------------------------------------------------------------------------- ---------------------
<S> <C>
Shares of Beneficial Interest, par value $0.001 per share................................... None
</TABLE>
ITEM 29. INDEMNIFICATION
Article Ten of the Fund's Declaration of Trust, filed as Exhibit 1 to this
Registration Statement, provides that the Fund shall indemnify its present and
past Trustees and officers to the maximum extent permitted by applicable law
(including Massachusetts law and the 1940 Act).
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended ("1933 Act"), may be permitted to Trustees, officers and
controlling persons by the Registrant's Declaration of Trust, By-Laws, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission ("Commission") such indemnification is against public
policy as expressed in the 1933 Act, and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a Trustee, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such Trustee, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
II-2
<PAGE>
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 issues.
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, 1997 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;
II-3
<PAGE>
(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.
(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 the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of San Francisco, and the State of California, on the
14th day of November, 1997.
GT GLOBAL SELECT FLOATING RATE FUND
By /s/ MICHAEL A. SILVER
-----------------------------------
Michael A. Silver
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/ MICHAEL A. SILVER President (Chief Executive Officer) and November 14, 1997
- --------------------------------- Trustee
Michael A. Silver
/s/ KENNETH W. CHANCEY Vice President and Treasurer November 14, 1997
- --------------------------------- (Principal Accounting Officer)
Kenneth W. Chancey
</TABLE>
II-5
<PAGE>
GT GLOBAL SELECT FLOATING RATE FUND, INC.
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL PAGE
NUMBER DOCUMENT DESCRIPTION NUMBER
- ----------- ------------------------------------------------------------------------------------- -------------------
<S> <C> <C>
(a) Declaration of Trust (filed herewith)................................................
(b) Bylaws (filed herewith)..............................................................
(c) None.................................................................................
(d) Instruments Defining Rights of Shareholders [to be supplied].........................
(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 [to be supplied]......................................
(m) None.................................................................................
(n) Consent of Independent Accountants [to be supplied]..................................
(o) None.................................................................................
(p) None.................................................................................
(q) None.................................................................................
</TABLE>
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GT GLOBAL SELECT FLOATING RATE FUND
A Massachusetts Business Trust
DECLARATION OF TRUST
November 13, 1997
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GT GLOBAL SELECT FLOATING RATE FUND
DECLARATION OF TRUST
DECLARATION OF TRUST, dated as of the 13th day of November, 1997, by R. Charles
Miller, the Trustee hereunder:
WHEREAS, the Trustee desire to establish a trust fund for the investment
and reinvestment of funds contributed thereto;
NOW, THEREFORE, the Trustee declares that all money and property
contributed to the trust fund hereunder shall be held and managed in trust under
this Declaration of Trust as herein set forth below.
ARTICLE I
NAME, PRINCIPAL PLACE OF BUSINESS AND DEFINITIONS
NAME AND PRINCIPAL PLACE OF BUSINESS
Section 1. This Trust shall be known as "GT Global Select Floating Rate
Fund." The principal place of business of the Trust is 50 California Street,
27th Floor, San Francisco, California 94111. The Trust may establish and
maintain such other offices and places of business as the Trustees may determine
from time to time. The resident agent for the Trust in Massachusetts shall be CT
Corporation System, whose address is 2 Oliver Street, Boston, Massachusetts, or
such other person as the Trustees may designate from time to time.
DEFINITIONS
Section 2. Wherever used herein, unless otherwise required by the context
or specifically provided:
(a) The "1940 Act" refers to the Investment Company Act of 1940, as
amended from time to time;
(b) The terms "Commission," "Interested Person," "Majority of the
Outstanding Voting Securities" (as referred to in Section 2(a)(42) of the 1940
Act) and "Principal Underwriter" shall have the meanings given them in the 1940
Act, as amended from time to time;
(c) The "Trust" refers to GT Global Select Floating Rate Fund;
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(d) "Net Asset Value" means the net asset value of each Series of the
Trust determined in the manner provided in Article IX, Section 3;
(e) "Shareholder" means a record owner of Shares of the Trust;
(f) The "Trustees" means the persons who have signed this Declaration of
Trust so long as they shall continue in office in accordance with the terms
hereof, and all other persons who may from time to time be duly elected or
appointed, qualified and serving as Trustees in accordance with the provisions
of Article IV hereof, and reference herein to a Trustee or the Trustees shall
refer to such person or persons in his capacity or their capacities as trustees
hereunder.
(g) "Shares" means the equal proportionate transferable units of interest
into which the beneficial interest of each Series or Class thereof shall be
divided from time to time and includes fractions of shares as well as whole
shares (all of the transferable units of a Series or of a single Class may be
referred to as "Shares" as the context may require);
(h) "Series" refers to a series of Shares of the Trust established in
accordance with the provisions of Article III;
(i) "Class" refers to the class of Shares of a Series of the Trust
established in accordance with the provisions of Article III.
(j) "By-Laws" means the By-Laws of the Trust adopted by the Trustees, as
amended from time to time.
ARTICLE II
PURPOSE OF TRUST
The purpose of this Trust is to provide investors a continuous source of
managed investment in securities.
ARTICLE III
BENEFICIAL INTEREST
SHARES OF BENEFICIAL INTEREST
Section 1. The beneficial interest in the Trust shall be divided into such
transferable Shares of one or more separate and distinct Series or Classes
thereof as the Trustees shall from time to time create and establish. The number
of Shares is unlimited and each Share shall have a par value of $0.001 per Share
and upon issuance in accordance with the terms hereof shall be fully paid and
nonassessable. The Trustees shall have full power and authority, in their sole
discretion and without obtaining any prior authorization or vote of the
Shareholders of the Trust, to create and establish (and to change in any manner)
Shares with such preferences, terms of conversion, voting powers,
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rights, and privileges as the Trustees may from time to time determine, to
divide or combine the Shares into a greater or lesser number, to classify or
reclassify any unissued Shares into one or more Series or Classes of Shares, to
abolish any one or more Series or Classes of Shares, and to take such other
action with respect to the Shares as the Trustees may deem desirable. The
Trustees, in their discretion without a vote of the Shareholders, may divide the
Shares of any Series into Classes. In such event, each Class of a Series shall
represent interests in the assets of that Series and have identical voting,
dividend, liquidation, and other rights and the same terms and conditions,
except that expenses allocated to a Class of a Series may be borne solely by
such Class as shall be determined by the Trustees and a Class of a Series may
have exclusive voting rights with respect to matters affecting only that Class.
ESTABLISHMENT OF SERIES OR CLASS
Section 2. The Trust shall consist of one or more Series. Each Series shall
be established by the adoption of a resolution of the Trustees. The Trustees may
designate the relative rights and preferences of the Shares of each Series. The
Trustees may divide the Shares of any Series into Classes by the adoption of a
resolution. The Trustees may designate the relative rights and preferences of
each Class of Shares. At any time that there are no Shares outstanding of any
particular Series previously established and designated, the Trustees may by a
majority vote abolish that Series and the establishment and designation thereof.
At any time that there are no shares outstanding of any particular Class of a
Series, the Trustees may by a majority vote abolish that Class and the
establishment and designation thereof. The Trustees by a majority vote may
change the name of any Series or Class.
OWNERSHIP OF SHARES
Section 3. The ownership of Shares shall be recorded on the books of the
Trust. The Trustees may make such rules as they consider appropriate for the
transfer of Shares and similar matters. The record books of the Trust shall be
conclusive as to who are the holders of Shares and as to the number of Shares
held from time to time by each Shareholder.
INVESTMENT IN THE TRUST
Section 4. The Trustees shall accept investments in the Trust from such
persons and on such terms as they may from time to time authorize. Such
investments may be in the form of cash or securities in which the appropriate
Series is authorized to invest, valued as provided in Article IX, Section 3.
After the date of the initial contribution of capital, the number of Shares to
represent the initial contribution may in the Trustees' discretion be considered
as outstanding and the amount received by the Trustees on account of the
contribution shall be treated as an asset of the Trust or a Series thereof, as
appropriate. Subsequent investments in the Trust shall be credited to each
Shareholder's account in the form of full and fractional Shares based on the Net
Asset Value per Share next determined after the investment is received;
provided, however, that the Trustees may, in their sole discretion, impose a
sales charge upon investments in the Trust or Series or any Classes of Shares
thereof. The Trustees shall have the right to refuse to accept investments in
the Trust or any Series at any time without any cause or reason therefor
whatsoever.
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ASSETS AND LIABILITIES OF SERIES
Section 5. All consideration received by the Trust for the issue or sale of
Shares of a particular Series, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits, and
proceeds thereof, including any proceeds derived from the sale, exchange, or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall be
referred to as "assets belonging to" that Series. In addition, any assets,
income, earnings, profits, and proceeds thereof, funds, or payments which are
not readily identifiable as belonging to any particular Series shall be
allocated by the Trustees between and among one or more of the Series in such
manner as they, in their sole discretion, deem fair and equitable. Each such
allocation shall be conclusive and binding upon the Shareholders of all Series
for all purposes, and shall be referred to as assets belonging to that Series.
The assets belonging to a particular Series shall be so recorded upon the books
of the Trust, and shall be held by the Trustees in trust for the benefit of the
holders of Shares of that Series. The assets belonging to each particular Series
shall be charged with the liabilities of that Series and all expenses, costs,
charges, and reserves attributable to that Series except that liabilities and
expenses allocated solely to a particular Class shall be borne by that Class.
Any general liabilities, expenses, costs, charges, or reserves of the Trust or
Series which are not readily identifiable as belonging to any particular Series
or Class shall be allocated and charged by the Trustees between or among any one
or more of the Series or Classes in such manner as the Trustees in their sole
discretion deem fair and equitable. Each such allocation shall be conclusive and
binding upon the Shareholders of all Series or Classes for all purposes. Any
creditor of any Series may look only to the assets of that Series to satisfy
such creditor's debt.
NO PREEMPTIVE RIGHTS
Section 6. Shareholders shall have no preemptive or other right to
subscribe to any additional Shares or other securities issued by the Trust or
the Trustees.
STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY
Section 7. Shares shall be deemed to be personal property giving only the
rights provided in this Declaration of Trust. Every Shareholder by virtue or
having become a Shareholder shall be held expressly to have assented and agreed
to the terms of this Declaration of Trust and to have become a party hereto. The
death of a Shareholder during the continuance of the Trust shall not operate to
terminate the Trust nor entitle the representative of any deceased Shareholder
to an accounting or to take any action in court or elsewhere against the Trust
or the Trustees, but only to the rights of said decedent under this Trust.
Ownership of Shares shall not entitle the Shareholder to any title in or to the
whole or any part of the Trust property or right to call for a partition or
division of the same or for an accounting, nor shall the ownership of Shares
constitute the Shareholders as partners. Neither the Trust nor the Trustees
shall have any power to bind any Shareholder personally or to call upon any
Shareholder for the payment of any sum of money or assessment whatsoever other
than such as the Shareholder may at any time personally agree to pay by way of
subscription for any Shares or otherwise.
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ARTICLE IV
THE TRUSTEES
MANAGEMENT OF THE TRUST
Section 1. The business and affairs of the Trust shall be managed by the
Trustees, and they shall have all powers necessary and desirable to carry out
that responsibility. A Trustee shall not be required to be a Shareholder of the
Trust.
ELECTION OF TRUSTEES AND APPOINTMENT OF INITIAL TRUSTEES
Section 2. On a date fixed by the Trustees, the Shareholders shall elect
the Trustees. Until such election, the Trustees shall be the initial Trustee and
such other persons as may be hereafter appointed pursuant to Section 4 of this
Article IV. The initial Trustees shall be R. Charles Miller.
TERM OF OFFICE OF TRUSTEES
Section 3. The Trustees shall hold office during the lifetime of this
Trust, and until its termination as hereinafter provided; except (a) that any
Trustee may resign his trust by written instrument signed by him and delivered
to the other Trustees or to any officer of the Trust, which shall take effect
upon such delivery or upon such later date as is specified therein; (b) that any
Trustee may be removed with or without cause at any time by written instrument,
signed by at least two-thirds of the number of Trustees prior to such removal,
specifying the date when such removal shall become effective; (c) that any
Trustee who requests in writing to be retired or who has become incapacitated by
illness or injury may be retired by written instrument signed by a majority of
other Trustees, specifying the date of his retirement; and (d) that any Trustee
may be removed at any Special Meeting of the Trust by a vote of at least
two-thirds of the outstanding Shares.
RESIGNATION AND APPOINTMENT OF TRUSTEES
Section 4. In case of the declination, death, resignation, retirement,
removal, incapacity, or inability of any of the Trustees, or in case a vacancy
shall exist by reason of an increase in number or for any other reason, the
remaining Trustees shall fill such vacancy by appointment of such other person
as they in their discretion shall see fit consistent with the limitations under
the 1940 Act. Such appointment shall be evidenced by a written instrument signed
by a majority of the Trustees in office or by a recording in the records of the
Trust, whereupon the appointment shall take effect. An appointment of a Trustee
may be made by the Trustees then in office as aforesaid in anticipation of a
vacancy to occur by reason of retirement, resignation or increase in number of
Trustees effective at a later date, provided that said appointment shall become
effective only at or after the effective date of said retirement, resignation or
increase in number of Trustees. As soon as any Trustee so appointed shall have
accepted this trust, the trust estate shall vest in the new Trustee or Trustees,
together with the continuing Trustees, without any further act or conveyance,
and he shall be deemed a Trustee hereunder.
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TEMPORARY ABSENCE OF TRUSTEE
Section 5. Any Trustee may, by power of attorney, delegate his power for a
period not exceeding six months at any one time to any other Trustee or
Trustees, provided that in no case shall less than two Trustees personally
exercise the other powers hereunder except as herein otherwise expressly
provided.
NUMBER OF TRUSTEES
Section 6. The number of Trustees shall initially be one (1) and thereafter
shall be such number as shall be fixed from time to time by a written instrument
signed by a majority of the Trustees (or by an officer of the Trust pursuant to
a vote of the majority of such Trustees); provided, however, that the number of
Trustees serving hereunder at any time shall in no event be less than one (1)
nor more than fifteen (15).
Whenever a vacancy in the Board of Trustees shall occur, until such vacancy
is filled, or while any Trustee is absent from his state of domicile (unless
said Trustee has made arrangements to be informed about, and to participate in,
the affairs of the Trust during such absence), or is physically or mentally
incapacitated by reason of disease or otherwise, the other Trustees shall have
all the powers hereunder and the certificate of the other Trustees of such
vacancy, absence, or incapacity, shall be conclusive.
EFFECT OF DEATH, RESIGNATION, ETC. OF A TRUSTEE
Section 7. The death, declination, resignation, retirement, removal,
incapacity, or inability of the Trustees, or any one of them, shall not operate
to annul the Trust or to revoke any existing agency created pursuant to the
terms of this Declaration of Trust.
OWNERSHIP OF ASSETS OF THE TRUST
Section 8. The assets of the Trust shall be held separate and apart from
any assets now or hereafter held in any capacity other than as Trustee hereunder
by the Trustees or any successor Trustees. All of the assets of the Trust shall
at all times be considered as vested in the Trustees.
ARTICLE V
POWERS OF THE TRUSTEES
POWERS
Section 1. The Trustees in all instances shall act as principals, and are
and shall be free from the control of the Shareholders. The Trustees shall have
full power and authority to do any and all acts and to make and execute any and
all contracts and instruments that they may consider necessary or appropriate in
connection with the management of the Trust. The Trustees shall not in
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any way be bound or limited by present or future laws or customs in regard to
trust investments, but shall have full authority and power to make any and all
investments which they, in their uncontrolled discretion, shall deem proper to
accomplish the purposes of this Trust. Subject to any applicable limitation in
this Declaration of Trust or the By-Laws of the Trust, the Trustees shall have
power and authority, without limitation:
(a) To invest and reinvest cash and other property, and to hold cash or
other property uninvested, without in any event being bound or limited by any
present or future law or custom in regard to investments by trustees, and to
sell, exchange, lend, pledge, mortgage, hypothecate, write options on, and lease
any or all of the assets of the Trust; to purchase and sell (or write) options
on securities, currencies, indices, futures contracts, and other financial
instruments and enter into closing transactions in connection therewith; to
enter into all types of commodities contracts, including without limitation the
purchase and sale of futures contracts and forward contracts on securities,
indices, currencies, and other financial instruments; to engage in forward
commitment, "when issued," and delayed delivery transactions; to enter into
repurchase agreements and reverse repurchase agreements; and to employ all kinds
of hedging techniques and investment management strategies.
(b) To adopt By-Laws not inconsistent with this Declaration of Trust
providing for the conduct of the business of the Trust and to amend and repeal
them to the extent that they do not reserve the right to the Shareholders.
(c) To elect and remove such officers and appoint and terminate such
agents as they consider appropriate.
(d) To employ as custodian of any assets of the Trust subject to any
conditions set forth in this Declaration of Trust or in the By-Laws, if any, a
bank, trust company, or other entity permitted by the Commission to serve as
such.
(e) To retain a transfer agent and Shareholder servicing agent, or both.
(f) To provide for the distribution of Shares either through a principal
underwriter in the manner hereinafter provided for or by the Trust itself, or
both.
(g) To set record dates in the manner hereinafter provided for.
(h) To delegate such authority as they consider desirable to any officers
of the Trust and to any agent, independent contractor, custodian, or
underwriter.
(i) To sell or exchange any or all of the assets of the Trust, subject to
the provisions of Article XI, Section 4(b) hereof.
(j) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and deliver
powers of attorney to such person or persons
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as the Trustees shall deem proper, granting to such person or persons such power
and discretion with relation to securities or property as the Trustees shall
deem proper.
(k) To exercise powers and rights of subscription or otherwise which in
any manner arise out of ownership of securities.
(l) To hold any security or property in a form not indicating any trust,
whether in bearer, unregistered or other negotiable form; or either in its own
name or in the name of a custodian or a nominee or nominees, subject in either
case to proper safeguards according to the usual practice of Massachusetts trust
companies or investment companies.
(m) To establish separate and distinct Series with separately defined
investment objectives and policies and distinct investment purposes in
accordance with the provisions of Article III and to establish separate Classes
thereof.
(n) To allocate assets, liabilities, and expenses of the Trust to a
particular Series and liabilities and expenses to a particular Class thereof or
to apportion the same between or among two or more Series or Classes, provided
that any liabilities or expenses incurred by a particular Series or Class shall
be payable solely out of the assets belonging to that Series or Class as
provided for in Article III.
(o) To consent to or participate in any plan for the reorganization,
consolidation, or merger of any corporation or concern, any security of which is
held in the Trust; to consent to any contract, lease, mortgage, purchase, or
sale of property by such corporation or concern, and to pay calls or
subscriptions with respect to any security held in the Trust.
(p) To compromise, arbitrate, or otherwise adjust claims in favor of or
against the Trust or any matter in controversy including, but not limited to,
claims for taxes.
(q) To make distributions of income and of capital gains to Shareholders
in the manner hereinafter provided for.
(r) To borrow money.
(s) To establish, from time to time, a minimum total investment for
Shareholders, and to require the redemption of the Shares of any Shareholders
whose investment is less than such minimum upon giving notice to such
Shareholder.
No one dealing with the Trustees shall be under any obligation to make any
inquiry concerning the authority of the Trustees, or to see to the application
of any payments made or property transferred to the Trustees or upon their
order.
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TRUSTEES AND OFFICERS AS SHAREHOLDERS
Section 2. Any Trustee, officer, other agent, or independent contractor of
the Trust may acquire, own and dispose of Shares to the same extent as if he
were not a Trustee, officer, agent, or independent contractor; and the Trustees
may issue and sell or cause to be issued and sold Shares to and buy such Shares
from any such person or any firm or company in which he is interested, subjects
only to the general limitations herein contained as to the sale and purchase of
such Shares; and all subject to any restrictions which may be contained in the
By-Laws.
ACTION BY THE TRUSTEES
Section 3. The Trustees shall act by majority vote at a meeting in person
duly called, by written consent without a meeting or by telephonic meeting
provided a quorum of Trustees participate in any such telephonic meeting, unless
the 1940 Act requires that a particular action be taken only at a meeting in
person of the Trustees. At any meeting of the Trustees, one-third of the
Trustees shall constitute a quorum. Meetings of the Trustees may be called
orally or in writing by the Chairman of the Trustees or by any two other
Trustees. Notice of the time, date, and place of all meetings of the Trustees
shall be given by the party calling the meeting to each Trustee by telephone or
telegram sent to his home or business address at least twenty-four hours in
advance of the meeting or by written notice mailed to his home or business
address at least seventy-two hours in advance of the meeting. Notice need not be
given to any Trustee who attends the meeting without objecting to the lack of
notice or who executes a written waiver of notice with respect to the meeting
either before or after such meeting. Subject to the requirements of the 1940
Act, the Trustees by majority vote may delegate to any one of their number their
authority to approve particular matters or take particular actions on behalf of
the Trust.
CHAIRMAN OF THE BOARD OF TRUSTEES
Section 4. The Trustees may appoint one of their number to be Chairman of
the Board of Trustees. The Chairman shall preside at all meetings of the
Trustees, shall be responsible for the execution of policies established by the
Trustees and the administration of the Trust, and may be the chief executive,
financial and/or accounting officer of the Trust.
ARTICLE VI
EXPENSES OF THE TRUST
TRUSTEE REIMBURSEMENT
Section 1. Subject to the provisions of Article III, Section 5, the
Trustees shall be reimbursed from the Trust estate or the assets belonging to
the appropriate Series for their expenses and disbursements, including, without
limitation, fees and expenses of Trustees, interest expense, taxes, fees and
commissions of every kind, expenses of pricing Trust portfolio securities,
expenses of issue, repurchase and redemption of Shares, expenses of distributing
its Shares and providing services to Shareholders, expenses of registering and
qualifying the Trust and its Shares under
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Federal and State laws and regulations, charges of investment advisers,
administrators, custodians, transfer agents, and registrars, expenses of
preparing and setting in type prospectuses and statements of additional
information, expenses of printing and distributing prospectuses and statements
of additional information sent to existing Shareholders, auditing and legal
expenses, reports to Shareholders, expenses of meetings of Shareholders and
proxy solicitations therefor, insurance expense, association membership dues and
for such non-recurring items as may arise, including litigation to which the
Trust is a party (except those losses and expenses the indemnification of which
is not permitted under Article X hereof), and for all losses and liabilities
incurred by them in administering the Trust; and for the payment of such
expenses, disbursements, losses, and liabilities, the Trustees shall have a lien
on the assets belonging to the appropriate Series prior to any rights or
interests of the Shareholders thereto. This section shall not preclude the Trust
from directly paying any of the aforementioned fees and expenses.
ARTICLE VII
INVESTMENT ADVISER, PRINCIPAL UNDERWRITER AND TRANSFER AGENT
INVESTMENT ADVISER
Section 1. Subject to a vote of a Majority of the Outstanding Voting
Securities, the Trustees may from time to time enter into an investment advisory
and management contract(s) on behalf of the Trust or any Series thereof whereby
the other party(ies) to such contract(s) shall undertake to furnish the Trust
such management, investment advisory, statistical and research facilities and
services, and such other facilities and services, if any, and all upon such
terms and conditions, as the Trustees may in their discretion determine.
Notwithstanding any provisions of this Declaration of Trust, the Trustees may
authorize the investment adviser(s) (subject to such general or specific
instruments as the Trustees may from time to time adopt) to effect purchases,
sales, or exchanges of portfolio securities and other investment instruments of
the Trust or may authorize any officer, agent, or Trustee to effect such
purchases, sales, or exchanges pursuant to recommendations of the investment
adviser (and all without further action by the Trustees).
The Trustees may, subject to applicable requirements of the 1940 Act,
including those relating to Shareholder approval, authorize the investment
adviser to employ one or more sub-advisers from time to time to perform such of
the acts and services of the investment adviser, and upon such terms and
conditions, as may be agreed upon between the investment adviser and
sub-adviser.
PRINCIPAL UNDERWRITER
Section 2. The Trustees may from time to time enter into one or more
contract(s) on behalf of the Trust or any Series or Class, providing for the
sale of the Shares whereby the Trust may either agree to sell the Shares to the
other party to the contract or appoint such other party its sales agent for such
Shares. In either case, the contract shall be on such terms and conditions as
may be prescribed in the By-Laws, if any, and such further terms and conditions
as the Trustees may in their discretion determine not inconsistent with the
provisions of this Article VII, or of the
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By-Laws, if any; and such contract also may provide for the repurchase or sale
of Shares by such other party as principal or as agent of the Trust. The
Trustees may in their discretion adopt a plan or plans of distribution and enter
into any related agreements whereby the Trust finances directly or indirectly
any activity that is primarily intended to result in sales of Shares.
TRANSFER AGENT
Section 3. The Trustees, on behalf of the Trust or any Series or Class, may
from time to time enter into a transfer agency and Shareholder service contract
whereby the other party shall undertake to furnish the Trust or any Series or
Class with transfer agency and shareholder services. The contract shall be on
such terms and conditions as the Trustees may in their discretion determine not
inconsistent with the provisions of this Declaration of Trust or of the By-Laws,
if any. Such services may be provided by one or more entities, including one or
more agents of such other party.
PARTIES TO CONTRACT
Section 4. Any contract of the character described in Sections 1, 2, and 3
of this Article VII or that relates to the provision of custodian services to
the Trust may be entered into with any corporation, firm, partnerships, trust,
or association, although one or more of the Trustees or officers of the Trust
may be an officer, director, trustee, shareholder, or member of such other party
to the contract, and no such contract shall be invalidated or rendered voidable
by reason of the existence of any relationship, nor shall any person holding
such relationship be liable merely by reason of such relationship for any loss
or expense to the Trust under or by reason of said contract or accountable for
any profit realized directly or indirectly therefrom, provided that the contract
when entered into was reasonable and fair and not inconsistent with the
provisions of this Article VII or the By-Laws, if any. The same person
(including a firm, corporation, partnership, trust, or association) may be the
other party to contracts entered into pursuant to Sections 1, 2, and 3 above or
with respect to the provision of custodian services to the Trust, and any
individual may be financially interested in or otherwise affiliated with persons
who are parties to any or all of the contracts mentioned in this Section 4.
ARTICLE VIII
SHAREHOLDERS VOTING POWERS AND MEETINGS
VOTING POWERS
Section 1. The Shareholders shall have power to vote (i) for the election
of Trustees as provided in Article IV, Section 2, (ii) for the removal of
Trustees as provided in Article IV, Section 3(d), (iii) with respect to any
investment advisory and management contract(s) as provided in Article VII,
Section 1, (iv) with respect to any termination or reorganization of the Trust
as provided in Article XI, Section 4, (v) with respect to the amendment of this
Declaration of Trust to the extent and as provided in Article XI, Section 7,
(vi) to the same extent as the shareholders of a Massachusetts business
corporation, as to whether or not a court action, proceeding, or claim should be
brought or maintained derivatively or as a class action on behalf of the Trust
or the Shareholders, provided, however, that a Shareholder of a particular
Series shall not be entitled to
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bring any derivative or class action on behalf of any other Series of the Trust,
and provided further that, within a Series, a Shareholder of a particular Class
shall not be entitled to bring any derivative or class action on behalf of any
other Class except with respect to matters sharing a common fact pattern with
said Shareholder's own Class; and (vii) with respect to such additional matters
relating to the Trust as may be required or authorized by law, by this
Declaration of Trust, or the By-Laws of the Trust, if any, or any registration
of the Trust with the Commission or any State, or as the Trustees may consider
desirable. On any matter submitted to a vote of the Shareholders, all Shares
shall be voted by individual Series or Classes, except (i) when required by the
1940 Act, Shares shall be voted in the aggregate and not by individual Series or
Classes; and (ii) when the Trustees have determined that the matter affects only
the interests of one or more Series or Classes, then only the Shareholders of
such Series or Class shall be entitled to vote thereon. Each whole Share shall
be entitled to one vote as to any matter on which it is entitled to vote, and
each fractional Share shall be entitled to a proportionate fractional vote.
There shall be no cumulative voting in the election of Trustees. Shares may be
voted in person or by proxy. Until Shares are issued, the Trustees may exercise
all rights of Shareholders and may take any action required or permitted by law,
this Declaration of Trust or any By-Laws of the Trust to be taken by
Shareholders.
MEETINGS
Section 2. The first Shareholders meeting shall be held as specified in
Section 2 of Article IV at the principal office of the Trust or such other place
as the Trustees may designate. Special meetings of the Shareholders or any
Series or Class thereof may be called by the Trustees and shall be called by the
Trustees upon the written request of Shareholders owning at least one-tenth of
the outstanding Shares entitled to vote. Special meetings of Shareholders shall
be held, notice of such meetings shall be delivered, and waiver of notice shall
occur according to the provisions of the Trust's By-Laws. Any action that may be
taken at a meeting of Shareholders may be taken without a meeting according to
the procedures set forth in the By-Laws.
QUORUM AND REQUIRED VOTE
Section 3. A majority of the Shares entitled to vote in person or by proxy
shall be a quorum for the transaction of business at a Shareholders' meeting,
except that where any provision of law or of this Declaration of Trust permits
or requires that holders of any Series or Class thereof shall vote as a Series
or Class, then a majority of the aggregate number of Shares of that Series or
Class thereof entitled to vote shall be necessary to constitute a quorum for the
transaction of business by that Series or Class. Any lesser number shall be
sufficient for adjournments. Any adjourned session or sessions may be held,
within one hundred twenty (120) days after the date set for the original
meeting, without the necessity of further notice. Except when a larger vote is
required by any provision of this Declaration of Trust or the By-Laws, a
Majority of the Outstanding Voting Securities voted in person or by proxy shall
decide any questions, provided that where any provision of law or of this
Declaration of Trust permits or requires that the holders of any Series or Class
shall vote as a Series or Class, then a Majority of the Outstanding Voting
Securities of that Series or Class voted on the matter shall decide that matter
insofar as that Series or Class is concerned, and further provided that a
plurality of the Shares voted in person or by proxy shall elect a Trustee.
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CERTAIN TRANSACTIONS.
Section 4.
(a) Notwithstanding any other provision hereof and subject to the
exception provided in Paragraph (d) of this Section, the transactions described
in Paragraph (c) of this Article shall require the affirmative vote or consent
of the holders of sixty-six and two-thirds percent (66 2/3%) of the outstanding
Shares of the Trust. Notwithstanding any other provision herein, such
affirmative vote shall be in addition to, and not in lieu of, the vote or
consent of the Shareholders of the Trust otherwise required by law (including
without limitation, any separate vote by class of capital stock that may be
required by the 1940 Act or by Massachusetts Law), by the terms of any Class or
Series that is now or hereafter authorized, or by any agreement between the
Trust and any national securities exchange.
(b) For purposes of this Section, the term "Principal Shareholder" shall
mean any corporation, person, or group (within the meaning of Rule 13d-5 under
the Securities Exchange Act of 1934), which is the beneficial owner, directly or
indirectly, of more than five percent (5%) of the outstanding Shares of the
Trust and shall include any affiliate or associate, as such terms are defined in
clause (2) below, of a Principal Shareholder. For the purposes of this Section,
in addition to the Shares which a corporation, person, entity, or group
beneficially owns directly, any corporation, person, entity, or group shall be
deemed to be the beneficial owner of any Shares (1) which it has the right to
acquire pursuant to any agreement or upon exercise of conversion rights or
warrants, or otherwise or (2) which are beneficially owned, directly or
indirectly (including Shares deemed owned through application of clause (1)
above), by any other corporation, person, entity, or group with which it or its
"affiliate" or "associate," as those terms are defined in Rule 12b-2 under the
Securities Exchange Act of 1934, has any agreement, arrangement, or
understanding for the purpose of acquiring, holding, voting, or disposing of
Shares of the Trust, or which is its "affiliate" or "associate" as so defined.
For purposes of this Section, calculation of the outstanding Shares of the Trust
shall not include Shares deemed owned through application of clause (1) above.
(c) This Section shall apply to the following transactions:
1. Merger, consolidation or statutory share exchange of the Trust
with or into any other corporation;
2. Issuance of any securities of the Trust to any Principal
Shareholder for entity for cash;
3. Sale, lease, or exchange of all or any substantial part of the
assets of the Trust to any person or entity (except assets having
an aggregate fair market value of less than $1,000,000); or
4. Sale, lease, or exchange to the Trust, in exchange for securities
of the
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Trust, of any assets of any person or entity (except assets
having an aggregate fair market value of less than $1,000,000).
5. Any amendment of this Declaration of Trust that makes the Shares
a "redeemable security" as that term is defined in the 1940 Act.
(d) The provisions of this Section shall not apply to any transaction
described in Paragraph (c) of this Section if the Trustees authorize such
transaction by an affirmative vote of a majority of the Trustees, including a
majority of the Trustees who are not "interested persons" of the Trust, as that
term is defined in the 1940 Act.
ARTICLE IX
DISTRIBUTIONS AND REDEMPTIONS
DISTRIBUTIONS
Section 1.
(a) The Trustees may from time to time declare and pay dividends and other
distributions. The amount of such dividends and the payment of them shall be
wholly in the discretion of the Trustees.
(b) The Trustees shall have power, to the fullest extent permitted by the
laws of the Commonwealth of Massachusetts, at any time to declare and cause to
be paid dividends on Shares of a particular Series, from the assets belonging to
that Series, which dividends and other distributions, at the election of the
Trustees, may be paid daily or otherwise pursuant to a standing resolution or
resolutions adopted only once or with such frequency as the Trustees may
determine, and may be payable in Shares, in cash or otherwise, at the election
of each Shareholder of that Series or Class. All dividends and distributions on
Shares of a particular Series shall be distributed pro rata to the holders of
that Series in proportion to the number of Shares of that Series held by such
holders at the date and time of record established for the payment of such
dividends or distributions, except that such dividends and distributions shall
appropriately reflect expenses allocated to a particular Class of such Series.
(c) Anything in this instrument to the contrary notwithstanding, the
Trustees may at any time declare and distribute a "stock dividend" pro rata
among the Shareholders of a particular Series or of a Class thereof as of the
record date fixed as provided in Section 3 of Article XI hereof.
PERIODIC REPURCHASE OFFERS
Section 2.
(a) Each Series of the Trust will make offers ("Offers") to repurchase its
Shares at quarterly intervals pursuant to Rule 23c-3 under the 1940 Act, as
amended from time to time
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("Rule 23c-3"). The Trustees may place such conditions and limitations on
Offers as may be permitted pursuant to Rule 23c-3 or order of the Commission.
(b) The first repurchase request deadline (as defined in Rule 23c-3) shall
occur no later than 180 days after the effective date of the Corporation's
initial registration statement. Subsequent repurchase request deadlines shall
occur every three months following the first repurchase request deadline.
(c) The repurchase pricing date (as defined in Rule 23c-3) shall occur no
later than the fourteenth day after a repurchase request deadline, or the next
business day if such day is not a business day.
(d) Offers may be suspended or postponed under certain circumstances, as
provided for in Rule 23c-3.
DETERMINATION OF NET ASSET VALUE AND VALUATION OF PORTFOLIO ASSETS
Section 3. The term "Net Asset Value" of any Series or Class shall mean
that amount by which the assets of that Series or Class exceed its liabilities,
all as determined by or under the direction of the Trustees. Net Asset Value per
Share shall be determined separately for each Series or Class of Shares, as
applicable, and shall be determined on such days and at such times as the
Trustees may determine. The determination shall be made with respect to
securities for which market quotations are readily available at the market value
of such securities; and with respect to other securities and assets, at the fair
value as determined in good faith by the Trustees, provided, however, that the
Trustees, without Shareholder approval, may alter the method of appraising
portfolio securities insofar as permitted under the 1940 Act and the rules,
regulations, and interpretations thereof promulgated or issued by the Commission
or insofar as permitted by any order of the Commission applicable to the Series.
The Trustees may delegate any of their powers and duties under this Section 3
with respect to appraisal of assets and liabilities. At any time the Trustees
may cause the Net Asset Value per Share last determined to be determined again
in a similar manner and may fix the time when such redetermined values shall
become effective.
ARTICLE X
LIMITATION OF LIABILITY AND INDEMNIFICATION
LIMITATION OF LIABILITY
Section 1. All persons extending credit to, contracting with, or having any
claim against the Trust or a particular Series shall look only to the assets of
the Trust or such Series, as the case may be, for payment under such credit,
contract, or claim; and neither the Shareholders nor the Trustees, nor any of
the Trust's officers, employees, or agents, whether past, present, or future,
nor any other Series shall be personally liable therefor.
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Every note, bond, contract, instrument, certificate, or undertaking and
every other act or thing whatsoever executed or done by or on behalf of the
Trust, any Series, or the Trustees or any of them in connection with the Trust
shall be conclusively deemed to have been executed or done only in or with
respect to their or his capacity as Trustees or Trustee and neither such
Trustees or Trustee nor the Shareholders shall be personally liable thereon.
Every note, bond, contract, instrument, certificate, or undertaking made or
issued by the Trustees or by any officers or officer shall give notice that the
same was executed or made by them on behalf of the Trust or by them as Trustees
or Trustee or as officers or officer and not individually and that the
obligations of such instrument are not binding upon any of them or the
Shareholders individually but are binding only upon the assets and property of
the Trust or the particular Series in question, as the case may be, but the
omission thereof shall not operate to bind any Trustees or Trustee or officers
or officer or Shareholders or Shareholder individually.
Section 2. Provided they have exercised reasonable care and have acted
under the reasonable belief that their actions are in the best interest of the
Trust, the Trustees and officers of the Trust shall not be responsible for or
liable in any event for neglect or wrongdoing of them or any officer, agent,
employee, investment adviser, or independent contractor of the Trust, but
nothing contained in this Declaration of Trust shall protect any Trustee or
officer against any liability to which he would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence, or reckless disregard of
the duties involved in the conduct of his office.
INDEMNIFICATION
Section 3.
(a) Subject to the exceptions and limitations contained in Section 3(b)
below:
(i) every person who is, or has been a Trustee or officer of the Trust
(hereinafter referred to as "Covered Person") shall be indemnified by the
appropriate Series to the fullest extent permitted by law against liability and
against all expenses reasonably incurred or paid by him in connection with any
claim, action, suit or proceeding in which he becomes involved as a party or
otherwise by virtue of his being or having been a Trustee or officer and against
amounts paid or incurred by him in the settlement or final resolution thereof;
(ii) the words "claim," "action," "suit," or "proceeding" shall apply
to all claims, actions, suits, or proceedings (civil, criminal, or other,
including appeals), actual or threatened while in office or thereafter, and the
words "liability" and "expenses" shall include, without limitation, attorneys'
fees, costs, judgments, amounts paid in settlement, fines, penalties, and other
liabilities.
(b) No indemnification shall be provided hereunder to a Covered Person:
(i) who shall have been adjudicated by a court or body before which
the proceeding was brought (A) to be liable to the Trust or its Shareholders by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office or
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(B) not to have acted in good faith in the reasonable belief that his action was
in the best interest of the Trust; or
(ii) in the event of a settlement, unless there has been a
determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence, or reckless disregard or the duties
involved in the conduct of his office,
(A) by the court or other body approving the settlement;
(B) by at least a majority of those Trustees who are neither
interested persons of the Trust nor parties to the matter based upon a
review of readily available facts (as opposed to a full trial-type
inquiry); or
(C) by written opinion of independent legal counsel based upon a
review of readily available facts (as opposed to a full trial-type
inquiry);
provided, however, that any Shareholder may, by appropriate legal proceedings,
challenge any such determination by the Trustees, or by independent counsel.
(c) The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not be exclusive of
or affect any other rights to which any Covered Person may now or hereafter be
entitled, shall continue as to a person who has ceased to be such Trustee or
officer, and shall inure to the benefit of the heirs, executors, and
administrators of such a person. Nothing contained herein shall affect any
rights to indemnification to which Trust personnel, other than Trustees and
officers, and other persons may be entitled to by contract or otherwise under
law.
(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit, or proceeding of the character described in
paragraph (a) of this Section 3 may be paid by the applicable Series from time
to time prior to final disposition thereof upon receipt of an undertaking by or
on behalf of such Covered Person that such amount will be paid over by him to
the applicable Series if it is ultimately determined that he is not entitled to
indemnification under this Section 3; provided, however, that either (a) such
Covered Person shall have provided appropriate security for such undertaking,
(b) the Trust is insured against losses arising out of any such advance
payments, or (c) either a majority of the Trustees who are neither interested
persons of the Trust nor parties to the matter, or independent legal counsel in
a written opinion, shall have determined, based upon a review of readily
available facts (as opposed to a trial type inquiry or full investigation), that
there is reason to believe that such Covered Person will not be disqualified
from indemnification under this Section 3.
SHAREHOLDERS
Section 4. In case any Shareholder or former Shareholder of any Series of
the Trust shall be held to be personally liable solely by reason of his being or
having been a Shareholder and not because of his acts or omissions or for some
other reason, the Shareholder or former Shareholder
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(or his heirs, executors, administrators, or other legal representatives or in
the case of a corporation or other entity, its corporate or other general
successor) shall be entitled out of the assets belonging to the applicable
Series to be held harmless from and indemnified against all loss and expense
arising from such liability. The Series shall, upon request by the Shareholder,
assume the defense of any claim made against the Shareholder for any act or
obligation of the Series and satisfy any judgment thereon.
ARTICLE XI
MISCELLANEOUS
TRUST NOT A PARTNERSHIP
Section 1. It is hereby expressly declared that a trust and not a
partnership is created hereby. No Trustee hereunder shall have any power to bind
personally either the Trust's officers or any Shareholder.
TRUSTEE'S GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR SURETY
Section 2. The exercise by the Trustees of their powers and discretion
hereunder in good faith and with reasonable care under the circumstances then
prevailing, shall be binding upon everyone interested. Subject to the provisions
of Article X, the Trustees shall not be liable for errors of judgment or
mistakes of fact or law. The Trustees may take advice of counsel or other
experts with respect to the meaning and operation of this Declaration of Trust,
and subject to the provisions of Article X, shall be under no liability for any
act or omission in accordance with such advice or for failing to follow such
advice. The Trustees shall not be required to give any bond as such, nor any
surety if a bond is obtained.
ESTABLISHMENT OF RECORD DATES
Section 3. The Trustees may close the stock transfer books of the Trust for
a period not exceeding sixty (60) days preceding the date of any meeting of
Shareholders, or the date for the payment of any dividends, or the date for the
allotment of rights, or the date when any change or conversion or exchange of
Shares shall go into effect; or in lieu of closing the stock transfer books as
aforesaid, the Trustees may fix in advance a date, not exceeding ninety (90)
days preceding the date of any meeting of Shareholders, or the date for payment
of any dividend, or the date for the allotment of rights, or the date when any
change or conversion or exchange of Shares shall go into effect, as a record
date for the determination of the Shareholders entitled to notice of, and to
vote at, any such meeting, or to receive payment of such dividend, or to receive
such allotment or rights, or to exercise such rights in respect of any such
change, conversion, or exchange of Shares, and in such case such Shareholders
and only such Shareholders as shall be Shareholders of record on the date so
fixed shall be entitled to such notice of, and to vote at, such meeting, or to
receive payment of such dividend, or to receive such allotment of rights, or to
exercise such rights, as the case may be, notwithstanding any transfer of any
Shares on the books of the Trust after any such record date fixed or aforesaid.
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TERMINATION OF TRUST
Section 4.
(a) Subject to the provisions of sub-section (b) of this Section 4, the
Trust shall continue without limitation of time.
(b) Subject to a vote of a Majority of the Outstanding Voting Securities
of each Series affected by the matter or, if applicable, to a vote of a Majority
of the Outstanding Voting Securities of the Trust, the Trustees may
(i) sell, convey, merge, and transfer all or substantially all of the
assets of the Trust or any affected Series to another Series or to any trust,
partnership, association, or corporation organized under the laws of any state
which is an investment company as defined in the 1940 Act, for adequate
consideration which may include the assumption of all outstanding obligations,
taxes, and other liabilities, accrued or contingent, of the Trust or any
affected Series, and which may include shares of beneficial interest or stock of
such Series, trust, partnership, association, or corporation; or
(ii) at any time sell and convert into money all or substantially all
of the assets of the Trust or any affected Series.
Upon making provision for the payment of all known liabilities of the Trust
or any affected Series in either (i) or (ii), by such assumption or otherwise,
the Trustees shall distribute the remaining proceeds or assets (as the case may
be) ratably among the holders of the Shares of the Trust or any affected Series
then outstanding; however, the payment to any particular Class within such
Series may be reduced by any fees, expenses, or charges allocated to that Class.
Nothing in this Declaration of Trust shall preclude Trustees from distributing
such remaining proceeds or assets so that holders of the Shares of a particular
Class of the Trust or any affected Series receive as their ratable distribution
shares solely of an analogous class, as determined by the Trustees, of such
Series, trust, partnership, association, or corporation.
The Trustees may take any of the actions specified in clauses (i) and (ii)
above without obtaining a vote of a Majority of the Outstanding Voting
Securities of any Series or the Trust if a majority of the Trustees makes a
determination that the continuation of a Series or the Trust is not in the best
interests of such Series, the Trust, or their respective Shareholders as a
result of factors or events adversely affecting the ability of such Series or
the Trust to conduct its business and operations in an economically viable
manner. Such factors and events may include the inability of a Series or the
Trust to maintain its assets at an appropriate size, changes in laws or
regulations governing the Series or Trust or affecting assets of the type in
which such Series or the Trust invests, or economic developments or trends
having a significant adverse impact on the business or operations of such Series
or the Trust.
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(c) Upon completion of the distribution of the remaining proceeds or the
remaining assets as provided in sub-section (b), the Trust or any affected
Series shall terminate and the Trustees shall be discharged of any and all
further liabilities and duties hereunder with respect thereto and the right,
title, and interest of all parties therein shall be canceled and discharged.
FILING OF COPIES, REFERENCES, HEADINGS
Section 5. The original or a copy of this instrument and of each amendment
hereto shall be kept at the office of the Trust where it may be inspected by any
shareholder. A copy of this instrument and of each amendment hereto shall be
filed with the Secretary of the Commonwealth of Massachusetts and the Boston
City Clerk, as well as any other governmental office where such filing may from
time to time be required. Anyone dealing with the Trust may rely on a
certificate by an officer or Trustee of the Trust as to whether or not any such
amendments to this Declaration of Trust have been made and as to any matters in
connection with the Trust hereunder, and with the same effect as if it were the
original, may rely on a copy certified by an officer or Trustee of the Trust to
be a copy of this instrument or of any such amendments. In this instrument or in
any such amendments, references to this instrument, and all expressions like
"herein," "hereof," and "hereunder," shall be deemed to refer to this instrument
as amended from time to time. The masculine gender shall include the feminine
and neuter genders. Headings are placed herein for convenience of reference
only, and in case of any conflict, the text of this instrument, rather than the
headings, shall control. This instrument may be executed in any number of
counterparts, each of which shall be deemed an original.
APPLICABLE LAW
Section 6. The Trust set forth in this instrument is created under and is
to be governed by and construed and administered according to the laws of the
Commonwealth of Massachusetts. The Trust shall be of the type commonly called a
Massachusetts business trust, and, without limiting the provisions hereof, the
Trust may exercise all powers which are ordinarily exercised by such a trust.
AMENDMENTS
Section 7. All rights granted to the Shareholders under this Declaration of
Trust are granted subject to the reservation of the right to amend this
Declaration of Trust as herein provided, except that no amendment shall repeal
the limitations on personal liability of any Shareholder or Trustee or repeal
the prohibition of assessment upon the Shareholders without the express consent
of each Shareholder or Trustee involved. Subject to the foregoing, the
provisions of this Declaration of Trust (whether or not related to the rights of
Shareholders) may be amended at any time, so long as such amendment does not
adversely affect the rights of any Shareholder with respect to which such
amendment is or purports to be applicable and so long as such amendment is not
in contravention of applicable law, including the 1940 Act, by an instrument in
writing signed by a majority of the then Trustees (or by an officer of the Trust
pursuant to the vote of a majority of such Trustees). Except as provided in the
first sentence of this Section 7, any amendment to this Declaration of Trust
that adversely affects the rights of Shareholders may be adopted at any time by
an instrument signed in writing by a majority of the then Trustees (or by an
officer of the Trust pursuant to the
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vote of a majority of such Trustees) when authorized to do so by a vote of a
Majority of the Outstanding Voting Securities; provided, however, that an
amendment that shall affect the Shareholders of one or more Series (or of one or
more Classes), but not the Shareholders of all outstanding Series (or Classes),
shall be authorized by a vote of a Majority of the Outstanding Voting Securities
of each Series (or Class, as the case may be) affected, and no vote of a Series
(or Class) not affected shall be required. Subject to the foregoing, any such
amendment shall be effective as provided in the instrument containing the terms
of such amendment or, if there is no provision therein with respect to
effectiveness, upon the execution of such instrument and of a certificate (which
may be a part of such instrument) executed by a Trustee or officer to the effect
that such amendment has been duly adopted. Copies of the amendment to this
Declaration of Trust shall be filed as specified in Section 5 of this Article
XI. A restated Declaration of Trust, integrating into a single instrument all of
the provisions of the Declaration of Trust which are then in effect and
operative, may be executed from time to time by a majority of the Trustees and
shall be effective upon filing as specified in such Section 5.
FISCAL YEAR
Section 8. The fiscal year of the Trust shall be determined by the
Trustees, provided, however, that the Trustees may change the fiscal year of the
Trust without Shareholder approval.
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IN WITNESS WHEREOF, the undersigned, being the initial Trustee of the
Trust, have executed this instrument as of the day and year first above written.
(SEAL)
----------------------------------------
R. Charles Miller, as
Trustee and not individually
Address:
1800 Massachusetts Avenue, N.W.
Washington, DC 20036
Before me this ___ day of ________, 1997 personally appeared the
above-named _____________ who acknowledged the foregoing instrument to be his
free act and deed.
----------------------------------------
Notary Public
My commission expires:
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GT GLOBAL SELECT FLOATING RATE FUND
A Massachusetts Business Trust
BY-LAWS
November 13, 1997
<PAGE>
BY-LAWS OF GT GLOBAL SELECT FLOATING RATE FUND
ARTICLE I
DECLARATION OF TRUST,
LOCATION OF OFFICES, AND SEAL
Section 1.01. DECLARATION OF TRUST: These By-Laws shall be subject to the
Declaration of Trust, as from time to time in effect (the "Declaration of
Trust"), of GT Global Select Floating Rate Fund, the Massachusetts business
trust established by the Declaration of Trust (the "Trust").
Section 1.02. SEAL: The seal of the Trust shall be circular in form and
shall bear the name of the Trust. The form of the seal shall be subject to
alteration by the Trustees and the seal may be used by causing it or a facsimile
to be impressed or affixed or printed or otherwise reproduced. Any officer or
Trustee of the Trust shall have authority to affix the seal of the Trust to any
document, instrument or other paper executed and delivered by or on behalf of
the Trust; however, unless otherwise required by the Trustees, the seal shall
not be necessary to be placed on and its absence shall not impair the validity
of any document, instrument, or other paper executed by or on behalf of the
Trust. If the Trust is required to place its seal to a document, it is
sufficient to meet the requirement of any law, rule, or regulation relating to
such a seal to place the word "Seal" adjacent to the signature of the person
authorized to sign the document on behalf of the Trust.
ARTICLE II
SHAREHOLDERS
Section 2.01. SHAREHOLDER MEETINGS: Meetings of the shareholders may be
called at any time by the Trustees or, if the Trustees shall fail to call any
meeting for a period of 30 days after written request of Shareholders owning at
least one-tenth of the outstanding shares entitled to vote, then such
Shareholders may call such meeting. Each call of a meeting shall state the
place, date, hour, and purposes of the meeting.
Section 2.02. PLACE OF MEETINGS: All meetings of the Shareholders shall be
held at the principal office of the Trust, except that the Trustees may
designate a different place of meeting within the United States.
Section 2.03. NOTICE OF MEETING: The Secretary or an Assistant Secretary or
such other officer as may be designated by the Trustees shall cause notice of
the place, date, and hour, and purpose or purposes for which the meeting is
called, to be mailed, not less than fifteen days before
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the date of the meeting, to each Shareholder entitled to vote at such meeting,
at his address as it appears on the records of the Trust at the time of such
mailing. Notice of any Shareholders' meeting need not be given to any
Shareholder if a written waiver of notice, executed before or after such
meeting, is filed with the records of such meeting, or to any Shareholder who
shall attend such meeting in person or by proxy. Notice of adjournment of a
Shareholders' meeting to another time or place need not be given, if such time
and place are announced at the meeting.
Section 2.04. BALLOTS: 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.
Section 2.05. VOTING; PROXIES: Shareholders entitled to vote may vote
either in person or by proxy, provided that an instrument authorizing such proxy
to act is executed by the Shareholder in writing and dated not more than eleven
months before the meeting, unless the instrument specifically provides for a
longer period. Proxies shall be delivered to the Secretary of the Trust or other
person responsible for recording the proceedings before being voted. A proxy
with respect to shares held in the name of two or more persons shall be valid if
executed by one of them unless at or prior to exercise of such proxy the Trust
receives a specific written notice to the contrary from any one of them. Unless
otherwise specifically limited by their terms, proxies shall entitle the holder
thereof to vote at any adjournment of a meeting. A proxy purporting to be
exercised by or on behalf of a Shareholder shall be deemed valid unless
challenged at or prior to its exercise and the burden of proving invalidity
shall rest on the challenger. At all meetings of the Shareholders, unless the
voting is conducted by inspectors, all questions relating to the qualifications
of voters, the validity of proxies, and the acceptance or rejection of votes
shall be decided by the Chairman of the meeting.
Section 2.06. ACTION WITHOUT A MEETING: Any action to be taken by
Shareholders may be taken without a meeting if all Shareholders entitled to vote
on the matter consent to the action in writing and the written consents are
filed with the records of meetings of Shareholders of the Trust. Such consent
shall be treated for all purposes as a vote at a meeting.
ARTICLE III
TRUSTEES
Section 3.01. REGULAR MEETINGS: Regular meetings of the Trustees may be
held without further call or notice at such places and at such times as the
Trustees may from time to time determine, provided that notice of the first
regular meeting following any such determination shall be given to absent
Trustees.
Section 3.02. SPECIAL MEETINGS: Special meetings of the Trustees may be
held at any time and at any place designated in the call of the meeting, when
called by the Chairman of the Trustees
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or by two or more Trustees, provided that notice thereof shall be given to each
Trustee as set forth in the Declaration of Trust.
Section 3.03. COMMITTEES: The Trustees, by vote of a majority of the
Trustees then in office, may elect from their number an executive committee or
other committees and may delegate thereto some or all of their powers except
those which by law, by the Declaration of Trust, or by these By-Laws may not be
delegated. Except as the Trustees may otherwise determine, any such committee
may make rules for the conduct of its business, but unless otherwise provided by
the Trustees or in such rules, its business shall be conducted so far as
possible in the same manner as is provided by these By-Laws for the Trustees
themselves. All members of such committees shall hold such offices at the
pleasure of the Trustees. The Trustees may abolish any such committee at any
time. Any committee to which the Trustees delegate any of their powers or duties
shall keep records of its meetings and shall report its actions to the Trustees.
The Trustees shall have power to rescind any action of any committee, but no
such rescission shall have retroactive effect. Any such committee may act by
meeting in person, by unanimous written consent, or by telephonic meeting
provided a quorum of members participates in any such telephonic meeting.
Section 3.04. OTHER COMMITTEES: The Trustees may appoint other committees,
each consisting of one or more persons, who need not be Trustees. Each such
committee shall have such powers perform such duties and abide by such
procedures as may be determined from time to time by the Trustees, but shall not
exercise any power which may lawfully be exercised only by the Trustees or a
committee of Trustees.
Section 3.05. COMPENSATION: Each Trustee and each committee member may
receive such compensation for his services and reimbursement for his expenses as
may be fixed from time to time by resolution of the Trustees.
ARTICLE IV
OFFICERS
Section 4.01. GENERAL: The officers of the Trust shall be a President, a
Treasurer, a Secretary, and such other officers, if any, as the Trustees from
time to time may in their discretion elect or appoint. The Trust also may have
such agents, if any, as the Trustees from time to time may in their discretion
appoint. Any officer may be but need not be a Trustee or shareholder. Any two or
more offices may be held by the same person.
Section 4.02. ELECTION AND TERM OF OFFICE: The President, the Treasurer,
and the Secretary shall be elected annually by the Trustees at their first
meeting in each calendar year or at such later meeting in such year as the
Trustees shall determine ("Annual Meeting"). Other officers or agents, if any,
may be elected or appointed by the Trustees at said meeting or at any other
time. The President, Treasurer and Secretary shall hold office until the next
Annual Meeting and until their
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respective successors are chosen and qualified, or in each case until he dies,
resigns, is removed, or become disqualified. Each other officer shall hold
office and each agent shall retain his authority at the pleasure of the
Trustees.
Section 4.03. POWERS: Subject to the other provisions of these By-Laws,
each officer shall have, in addition to the duties and powers herein and in the
Declaration of Trust set forth, such duties and powers as are commonly incident
to his office as if the Trust were organized as a Massachusetts business
corporation and such other duties and powers as the Trustees may from time to
time designate.
Section 4.04. CHAIRMAN OF THE BOARD: The Chairman of the Board of Trustees,
if one is so appointed, shall be chosen from among the Trustees and may hold
office only so long as he continues to be a Trustee. Unless the Trustees
otherwise provide, the Chairman, if any is so appointed, shall preside at all
meetings of the Shareholders and of the Trustees at which he is present; may be
EX OFFICIO a member of all committees established by the Trustees; and shall
have such other duties and powers as specified herein and as may be assigned to
him by the Trustees.
Section 4.05. PRESIDENT: The President shall be the chief executive officer
of the Trust and, subject to the supervision of the Trustees, shall have general
charge of the business, affairs and property of the Trust and general
supervision over its officers, employees, and agents. He shall exercise such
other powers and perform such other duties as from time to time may be assigned
to him by the Trustees.
Section 4.06. VICE PRESIDENTS: The Trustees may from time to time designate
and elect one or more Vice Presidents who shall have such powers and perform
such duties as from time to time may be assigned to them by the Trustees or the
President. If there be more than one Vice President, the Board of Trustees may
determine which one or more of the Vice Presidents shall perform any of such
duties or exercise any of such functions, or if such determination is not made
by the Board of Trustees, the President may make such determination.
Section 4.07. TREASURER AND ASSISTANT TREASURERS: The Treasurer shall be
the principal financial and accounting officer of the Trust and shall have
general charge of the finances and books of account of the Trust. Except as
otherwise provided by the Trustees, he shall have general supervision of the
funds and property of the Trust and of the performance by the custodian of its
duties with respect thereto. He shall render to the Trustees, whenever directed
by the Trustees, an account of the financial condition of the Trust and of all
his transactions as Treasurer; and as soon as possible after the close of each
financial year he shall make and submit to the Trustees a like report for such
financial year. He shall perform all the acts incidental to the office of
Treasurer, subject to the control of the Trustees.
The Assistant Treasurer, or if there shall be more than one, the Assistant
Treasurers in the order determined by the Board of Trustees or the President
shall, in the absence of the Treasurer or in the event of his inability or
refusal to act, perform the duties and exercise the powers of the Treasurer and
shall perform other duties and have such other powers as the Board of Trustees
may
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from time to time prescribe.
Section 4.08. SECRETARY AND ASSISTANT SECRETARIES: The Secretary shall
attend to the giving and serving of all notices of the Trust and shall record
all proceedings of the meetings of the Shareholders and Trustees in books to be
kept for that purpose. He shall keep in safe custody the seal of the Trust, and
shall have charge of the records of the Trust, all of which shall at all
reasonable times be open to inspection by the Trustees. He shall perform such
other duties as appertain to his office or as may be required by the Trustees.
The Assistant Secretary, or if there be more than one, the Assistant
Secretaries in the order determined by the Board of Trustees or the President
shall, in the absence of the Secretary or in the event of his inability or
refusal to act, perform the duties and exercise the powers of the Secretary and
shall perform such other duties and have such other powers as the Trustees may
from time to time prescribe.
Section 4.09. SUBORDINATE OFFICERS: The Trustees from time to time may
appoint such other officers or agents as they may deem advisable, each of whom
shall have such title, hold office for such period, have such authority, and
perform such duties as the Trustees may determine. The Trustees from time to
time may delegate to one or more officers or agents the power to appoint any
such subordinate officers or agents and to prescribe their respective rights,
terms of office, authorities, and duties.
Section 4.10. REMUNERATION: The salaries or other compensation of the
officers of the Trust shall be fixed from time to time by resolution of the
Trustees, except that the Trustees may by resolution delegate to any person or
group of persons the power to fix the salaries or other compensation of any
subordinate officers or agents appointed in accordance with the provisions of
Section 4.09 hereof.
Section 4.11. SURETY BONDS: The Trustees may require any officer or agent
of the Trust to execute a bond (including, without limitation, any bond required
by the Investment Company Act of 1940, as amended, ("1940 Act") and the rules
and regulations of the Securities and Exchange Commission ("Commission") to the
Trust in such sum and with such surety or sureties as the Trustees may
determine, conditioned upon the faithful performance of his duties to the Trust,
including responsibility for negligence and for the accounting of any of the
Trust's property, funds, or securities that may come into his hands.
Section 4.12. RESIGNATION: Any officer may resign his office at any time by
delivering a written resignation to the Trustees, the President, the Secretary,
or any Assistant Secretary. Unless otherwise specified therein, such resignation
shall take effect upon delivery.
Section 4.13. REMOVAL: Any officer may be removed from office whenever, in
the judgment of the Trustees, the best interest of the Trust will be served
thereby, by the vote of a majority of the Trustees given at a regular meeting or
any special meeting of the Trustees called for such purpose. In addition, any
officer or agent appointed in accordance with the provision of Section 4.09
hereof
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may be removed, either with or without cause, by any officer upon whom such
power of removal shall have been conferred by the Trustees.
Section 4.14. VACANCIES AND NEWLY CREATED OFFICES: If any vacancy shall
occur in any office by reason of death, resignation, removal, disqualification,
or other cause, or if any new office shall be created, such vacancies or newly
created offices may be filled by the Trustees at any regular or special meeting
of the Trustees or, in the case of any office created pursuant to Section 4.09
hereof, by any officer upon whom such power shall have been conferred by the
Trustees.
ARTICLE V
CUSTODIAN
Section 5.01. EMPLOYMENT OF CUSTODIAN: The Trustees shall at all times
employ one or more banks or trust companies organized under the laws of the U.S.
or one of the states thereof provided that each such bank or trust company has
capital, surplus, and undivided profits of at least two million dollars
($2,000,000) as custodian with authority as the Trust's agent, but subject to
such restrictions, limitations, and other requirements, if any, as may be
contained in these By-Laws:
(1) to hold the securities owned by the Trust and deliver the same upon
written order, or oral order if confirmed in writing, or order
delivered by such electromechanical or electronic devices as are
agreed to by the Trust and the custodian, if such procedures have been
authorized in writing by the Trust;
(2) to receive and give receipt for any moneys due to the Trust and
deposit the same in its own banking department or elsewhere as the
Trustees may direct; and
(3) to disburse such moneys upon orders or vouchers;
and the Trust also may employ such custodian as its agent:
(1) to keep the books and accounts of the Trust and furnish clerical and
accounting services; and
(2) to compute, if authorized to do so by the Trustees, the Net Asset
Value of any Series or Class (which terms are defined in the
Declaration of Trust) in accordance with the provisions of the
Declaration of Trust;
all upon such basis of compensation as may be agreed upon in writing between the
Trust and the custodian. If so directed by a vote of a majority of the
outstanding shares of the Trust entitled to vote, the custodian shall deliver
and pay over all property of the Trust held by it as specified in such vote.
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The Trustees also may authorize the custodian to employ one or more
sub-custodians from time to time to perform such of the acts and services of the
custodian, and upon such terms and conditions, as may be agreed upon between the
custodian and such sub-custodian and approved by the Trustees, provided that in
every case such sub-custodian shall be a bank or trust company organized under
the laws of the United States or one of the states thereof and having capital,
surplus and undivided profits of at least two million dollars ($2,000,000) or
such other person as may be permitted by the Commission, or otherwise in
accordance with the 1940 Act.
Section 5.02. USE OF CENTRAL SECURITIES HANDLING SYSTEM: Subject to such
rules, regulations, and orders as the Commission may adopt, the Trustees may
direct the custodian to deposit any or all of the securities owned by the Trust
(1) in a system for the central handling of securities established by a national
securities exchange or a national securities association registered with the
Commission under the Securities Exchange Act of 1934, pursuant to which system
all securities of any particular class or series of any issuer deposited within
the system are treated as fungible and may be transferred or pledged by
bookkeeping entry without physical delivery of such securities, provided that
all such deposits shall be subject to withdrawal only upon the order of the
Trust; or (2) with such other person as may be permitted by the Commission, or
otherwise in accordance with the 1940 Act.
ARTICLE VI
EXECUTION OF PAPERS
Section 6.01. GENERAL: Except as the Trustees may generally or in
particular cases authorize the execution thereof in some other manner, all
deeds, leases, transfers, contracts, bonds, notes, checks, drafts, and other
obligations made, accepted, or endorsed by the Trust shall be executed by the
President, any Vice President, or the Treasurer, or by whomever else shall be
designated for that purpose by the Trustees, and need not bear the seal of the
Trust.
ARTICLE VII
INSPECTION OF RECORDS, ACCOUNTS, AND BOOKS OF THE TRUST
Section 7.01. INSPECTION OF RECORDS, ACCOUNTS, AND BOOKS: The records,
accounts, and books of any Series of the Trust shall be open to the inspection
of any Shareholder, provided that the Shareholder (1) has been a Shareholder of
record for six months or more and (2) owns at least 5% of the outstanding shares
of such Series. Except as limited by applicable law, the Trustees shall have the
power to determine from time to time the conditions and regulations under which
Shareholders may inspect the records, accounts, and books of the Trust or of any
Series thereof.
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ARTICLE VIII
SHARES OF BENEFICIAL INTEREST
Section 8.01. SHARE CERTIFICATES: No certificates certifying the ownership
of Shares shall be issued except as the Trustees may otherwise authorize. In the
event that the Trustees authorize the issuance of Share certificates, subject to
the provisions of Section 7.01, each Shareholder shall be entitled to a
certificate stating the number of shares owned by him, in such form as shall be
prescribed from time to time by the Trustees. Such certificate shall be signed
by the President or a Vice President and by the Treasurer, or the Assistant
Treasurer, or the Secretary or the Assistant Secretary. Such signatures may be
facsimiles if the certificate is signed by a transfer or shareholder services
agent or by a registrar, other than a Trustee, officer, or employee of the
Trust. In case any officer who has signed or whose facsimile signature has been
placed on such certificate shall have ceased to be such officer before such
certificate is issued, it may be issued by the Trust with the same effect as if
he were such officer at the time of its issue.
In lieu of issuing certificates for shares, the Trustees, the transfer
agent, or shareholder services agent may either issue receipts therefor or may
keep accounts upon the books of the Trust for the record holders of such shares,
who shall in either case be deemed, for all purposes hereunder, to be the
holders of certificates for such shares as if they had accepted such
certificates and shall be held to have expressly assented and agreed to the
terms hereof.
Section 8.02. LOSS OF CERTIFICATES: In the case of the alleged loss or
destruction or the mutilation of a Share certificate, a duplicate certificate
may be issued in place thereof, upon such terms as the Trustees may prescribe.
Section 8.03. DISCONTINUANCE OF ISSUANCE OF CERTIFICATES: The Trustees may
at any time discontinue the issuance of Share certificates and may, by written
notice to each Shareholder, require the surrender of Share certificates to the
Trust for cancellation. Such surrender and cancellation shall not affect the
ownership of Shares in the Trust.
Section 8.04. EQUITABLE INTEREST NOT RECOGNIZED: The Trust shall be
entitled to treat the holder of record of any Share or Shares of the Trust as
the holder in fact thereof, and shall not be bound to recognize any equitable or
other claim of interest in such Share or Shares on the part of any other person
except as may be otherwise expressly provided by law.
Section 8.05. TRANSFER OF SHARES: The Shares of the Trust shall be
transferable only by transfer recorded on the books of the Trust, in person or
by attorney.
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ARTICLE IX
ACCOUNTANT
Section 9.01. ACCOUNTANT:
(a) The Trust shall employ an independent public accountant or firm of
independent public accountants as its accountant to examine the accounts of the
Trust and to sign and certify the financial statements of the Trust.
(b) Any vacancy occurring due to the death or resignation of the accountant
may be filled by a majority vote of the Trustees who are not interested persons
of the Trust.
ARTICLE X
INSURANCE
Section 10.01. INSURANCE OF OFFICERS, TRUSTEES, AND EMPLOYEES: The Trust
may purchase and maintain insurance on behalf of any person who is or was a
Trustee, officer, or employee of the Trust, or is or was serving at the request
of the Trust as a Trustee, officer, or employee of a corporation, partnership,
joint venture, trust, or other enterprise against any liability asserted against
him and incurred by him in any such capacity or arising out of his status as
such, whether or not the Trust would have the power to indemnify him against
such liability.
The Trust may not acquire or obtain a contract for insurance that protects
or purports to protect any Trustee or officer of the Trust against any liability
to the Trust or its Shareholders to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office.
ARTICLE XI
AMENDMENTS; REPORTS; MISCELLANEOUS
Section 11.01. AMENDMENTS: These By-Laws may be amended or repealed, in
whole or in part, by a majority of the Trustees then in office at any meeting of
the Trustees, or by one or more writings signed by such majority.
Section 11.02. REPORTS: The Trustees shall at least semiannually submit to
the Shareholders
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a written report of the transactions of the Trust, including financial
statements that shall at least annually be certified by independent public
accountants.
Section 11.03. GENDER: As used in these By-Laws, the masculine gender shall
include the feminine and neuter genders.
Section 11.04. HEADINGS: Headings are placed in these By-Laws for
convenience of reference only and, in case of any conflict, the text of these
By-Laws rather than the headings shall control.
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<PAGE>
GT GLOBAL SELECT 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 Select 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, at the net asset value ("NAV") 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"). 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 NAV 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 value (determined as of the Valuation Date) of the
Shares received and will have a cost basis equal to such value.
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
<PAGE>
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 NAV 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.
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.
2
<PAGE>
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.
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.
3
<PAGE>
14
All correspondence concerning the Plan should be directed to
GT Global Investor Services, Inc., the Plan Agent for GT Global Select 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>
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,
- 5 -
<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
- 6 -
<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 SELECT FLOATING RATE FUND, INC.
AND
CHANCELLOR LGT ASSET MANAGEMENT, INC.
Contract made as of ______________, 1997, between GT Global Select 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.
(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.
<PAGE>
(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.
(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;
2
<PAGE>
(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.
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
3
<PAGE>
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 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.
4
<PAGE>
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 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 SELECT FLOATING RATE
FUND, INC.
By:
- ---------------------------- --------------------------
Attest: CHANCELLOR LGT ASSET
MANAGEMENT, INC.
By:
- ---------------------------- --------------------------
5
<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.
- 4 -
<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.
- 5 -
<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
- 6 -
<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:
- ----------------------------- ------------------------------------
- 7 -
<PAGE>
DISTRIBUTION CONTRACT BETWEEN
GT GLOBAL SELECT FLOATING RATE FUND, INC.
AND GT GLOBAL, INC.
THIS DISTRIBUTION CONTRACT, dated as of _________________, 1997 between GT
GLOBAL SELECT 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 of dividends and other
distributions paid by the Fund;
<PAGE>
(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 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.
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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.
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,
3
<PAGE>
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 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.
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<PAGE>
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.
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 SELECT FLOATING RATE FUND, INC.
By:
- ------------------- -------------------------------
Attest: GT GLOBAL, INC.
By:
- -------------------- -------------------------------
5
<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
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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,
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<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:
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Company Name
-------------------------------------------------------------------
Address
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City State Zip Code
By:
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Signature Print Name and Title
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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 SELECT FLOATING RATE FUND, INC.
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
CUSTODIAN CONTRACT
This Contract between GT Global Select 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;
2
<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
3
<PAGE>
appointed pursuant to Section 2.9 or in the name or nominee name of any
sub-custodian appointed pursuant to Article l. 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
4
<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;
5
<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;
6
<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.
7
<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;
4) 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
8
<PAGE>
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 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.
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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 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 3.5 hereof.
3.4 HOLDING SECURITIES. The Custodian may hold securities and other non-cash
property for all of its customers, including the Portfolios of the Fund,
with a foreign sub-custodian in a single account that is identified as
belonging to the Custodian for the benefit of its customers, PROVIDED
HOWEVER, that (i) the records of the Custodian with respect to securities
and other non-cash property of the Portfolios which are maintained in such
account shall identify by book-entry those securities and other non-cash
property belonging to the Portfolios and (ii) the Custodian shall require
that securities and other non-cash property so held by the foreign
sub-custodian be held separately from any assets of the foreign
sub-custodian or of others.
3.5 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
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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.
3.6 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.
3.7 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.
3.8 TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT. (a) Except as otherwise provided
in paragraph (b) of this Section 3.8, 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.
3.9 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
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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.
3.10 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 3.13 hereof, the Custodian shall not be liable
for any loss, 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. Notwithstanding the foregoing provisions of this
paragraph 3.10, in delegating custody duties to State Street London Ltd.,
the Custodian shall not be relieved of any responsibility to the Fund for
any loss due to such delegation, except such loss as may result from (a)
political risk (including, but not limited to, exchange control
restrictions, confiscation, expropriation, nationalization, insurrection,
civil strife or armed hostilities) or (b) other losses (excluding a
bankruptcy or insolvency of State Street London Ltd. not caused by
political risk) due to Acts of God, nuclear incident or other losses under
circumstances where the Custodian and State Street London Ltd. have
exercised reasonable care.
3.11 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.
3.12 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
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<PAGE>
thereof) or that its shareholders' equity has declined below S200 million
(in each case computed in accordance with generally accepted U.S.
accounting principles).
3.13 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.
3.14 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 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
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<PAGE>
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, 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
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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
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
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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-II, and Form N-SAR or other annual
reports to the Securities and Exchange Commission and with respect to any other
requirements of such Commission.
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 3.10)
and, regardless of whether assets are maintained in the custody of a foreign
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banking institution, a foreign securities depository, or a branch of a U.S. bank
as contemplated by paragraph 3.11 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 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
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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 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
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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 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
19
<PAGE>
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.
20
<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 SELECT FLOATING RATE FUND, INC.
By
- ------------------------- ---------------------------------------
ATTEST STATE STREET BANK AND TRUST COMPANY
By
- ------------------------- ---------------------------------------
21
<PAGE>
SCHEDULE A
The following foreign bank institutions and foreign securities depositories
have been approved by the Board of Directors of GT Global Select 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:
- --------------------------
22
<PAGE>
TRANSFER AGENCY CONTRACT BETWEEN
GT GLOBAL SELECT FLOATING RATE FUND, INC.
AND
GT GLOBAL INVESTOR SERVICES, INC.
This Transfer Agency Contract ("Contract") is made as of _______________,
1997 between GT Global Select 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
<PAGE>
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.
(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.
-2-
<PAGE>
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;
(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
-3-
<PAGE>
confirmation of receipt of payment for such Shares, GT shall create an account
and issue and credit Shares to such account.
(2) TRANSFERS OF SHARES. When the Distributor, a Shareholder or a
Shareholder's Agent provides GT with instructions to transfer Shares on the
books of 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.
-4-
<PAGE>
(C) SPECIAL INVESTMENT AND WITHDRAWAL PLANS. GT shall process transactions
of Shareholders participating in any special investment and/or withdrawal plans
or programs established by the 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 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.
-5-
<PAGE>
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.
(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.
-6-
<PAGE>
(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
-7-
<PAGE>
negligence on the part of GT, or reckless disregard by GT of such duties,
obligations and responsibilities.
(D) Without limiting the generality of the foregoing subparagraphs of this
Paragraph XIV or of any other provision of this Contract, in connection with
GT's duties under this Contract, GT shall not be under any duty or obligation to
inquire into and shall not be liable for or in respect of:
(1) the validity or invalidity or authority or lack thereof of any
Oral or Written Instruction, notice or other instrument which conforms to the
applicable requirements of this Contract, if any, and which GT reasonably
believes to be genuine; or
(2) delays or errors or loss of data occurring by reason of
circumstances beyond GT's control, including acts of civil or military
authority, national emergencies, labor difficulties, fire, mechanical breakdown,
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
-8-
<PAGE>
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 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.
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<PAGE>
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.
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
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<PAGE>
thereby. This Contract shall be binding and shall inure to the benefit of the
parties hereto and their respective successors.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Contract to be
executed by their officers designated below on the day and year first written
above.
GT GLOBAL SELECT FLOATING RATE FUND, INC.
-------------------- ---------------------------
Attest: By:
GT GLOBAL INVESTOR SERVICES, INC.
-------------------- ---------------------------
Attest: By:
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<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 Select 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.
(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.
<PAGE>
(e) "Oral Instruction" means oral instructions actually received
by Chancellor LGT from an Authorized Person or from a person reasonably
believed by Chancellor LGT to be an Authorized Person, provided that, any
Oral Instruction shall be promptly confirmed by Written Instructions.
(f) "Prospectus" means the current prospectus of the Fund.
(g) "Shares" means shares of beneficial interest of the Fund 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 currently effective Prospectus and
transmit to the Portfolio's investment manager.
(b) ACCOUNTING AGENT. As fund accounting agent, Chancellor LGT
shall:
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<PAGE>
(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
(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;
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<PAGE>
(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
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
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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, 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
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(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 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
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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
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
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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.
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.
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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
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 SELECT FLOATING RATE FUND, INC.
By:
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Attest:
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FLOATING RATE PORTFOLIO
By:
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Attest:
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CHANCELLOR LGT ASSET MANAGEMENT, INC.
By:
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Attest:
--------------------------
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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 of the .02% (2 basis points) of the Fund's
GT Global Group of Funds: average daily net assets
.01% (1 basis point) of the Portfolio's
average daily net assets
In excess of $5 billion in net assets .01% (1 basis point) of the Fund's
of the GT Global Group of Funds: average daily net assets
.01% (1 basis point) of the Portfolio's
average daily net assets
