<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 29, 1997
FILE NO. 2-57526
811-2699
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
POST-EFFECTIVE AMENDMENT NO. 40
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
AMENDMENT NO. 36
------------------------
G.T. GLOBAL GROWTH SERIES
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
50 CALIFORNIA STREET, 27TH FLOOR,
SAN FRANCISCO, CALIFORNIA 94111
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(415) 392-6181
------------------------
<TABLE>
<S> <C>
DAVID J. THELANDER, ESQ. ARTHUR J. BROWN, ESQ.
VICE PRESIDENT & R. DARRELL MOUNTS, ESQ
ASSISTANT GENERAL COUNSEL KIRKPATRICK & LOCKHART LLP
CHANCELLOR LGT ASSET MANAGEMENT, INC. 1800 MASSACHUSETTS AVENUE, N.W.,
50 CALIFORNIA STREET, 27TH FLOOR 2ND FLOOR
SAN FRANCISCO, CALIFORNIA 94111 WASHINGTON, D.C. 20036
(NAME AND ADDRESS OF AGENT FOR SERVICE) (202) 778-9000
</TABLE>
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE:
/ / IMMEDIATELY UPON FILING PURSUANT TO PARAGRAPH (b) OF RULE 485
/X/ ON MAY 1, 1997 PURSUANT TO PARAGRAPH (b) OF RULE 485
/ / 60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (a)(1) OF RULE 485
/ / ON MAY 1, 1997 PURSUANT TO PARAGRAPH (a)(1) OF RULE 485
/ / 75 DAYS AFTER FILING PURSUANT TO PARAGRAPH (a)(2) OF RULE 485
/ / ON PURSUANT TO PARAGRAPH (a)(2) OF RULE 485
/ / THIS POST-EFFECTIVE AMENDMENT DESIGNATES A NEW EFFECTIVE DATE FOR A
PREVIOUSLY FILED POST-EFFECTIVE AMENDMENT.
PURSUANT TO RULE 24f-2 UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED,
REGISTRANT HAS ELECTED TO REGISTER AN INDEFINITE NUMBER OF ITS SHARES OF
BENEFICIAL INTEREST. A RULE 24f-2 NOTICE FOR REGISTRANT'S FISCAL YEAR ENDED
DECEMBER 31, 1996 WAS FILED ON FEBRUARY 28, 1997.
CERTAIN SERIES OF THE G.T. GLOBAL GROWTH SERIES ARE "FEEDER FUNDS" IN A
"MASTER/FEEDER" FUND ARRANGEMENT. THIS POST-EFFECTIVE AMENDMENT NO. 40 INCLUDES
A SIGNATURE PAGE FOR THE MASTER TRUST, GROWTH PORTFOLIO.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
G.T. GLOBAL GROWTH SERIES
CONTENTS OF POST-EFFECTIVE AMENDMENT
THIS POST-EFFECTIVE AMENDMENT TO THE REGISTRATION STATEMENT OF G.T. GLOBAL
GROWTH SERIES CONTAINS THE FOLLOWING DOCUMENTS:
<TABLE>
<S> <C> <C>
Facing Sheet
Contents of Post-Effective Amendment
Cross-Reference Sheet
Part A -- Prospectuses
-- GT Global Equity Funds -- Class A and Class B
-- GT Global Equity Funds -- Advisor Class
Part B -- Statements of Additional Information
-- GT Global Equity Funds -- Class A and Class B
-- GT Global Equity Funds -- Advisor Class
-- GT Global America Small Cap Growth Fund and GT Global America
Value Fund -- Class A and Class B
-- GT Global America Small Cap Growth Fund and GT Global America
Value Fund -- Advisor Class
Part C -- Other Information
Signature Pages -- G.T. Global Growth Series
-- Growth Portfolio
Exhibits
</TABLE>
<PAGE>
G.T. GLOBAL GROWTH SERIES
CROSS-REFERENCE SHEET
BETWEEN ITEMS ENUMERATED IN FORM N-1A AND THIS AMENDMENT
PROSPECTUS -- CLASS A AND CLASS B
<TABLE>
<CAPTION>
ITEM NO. OF
PART A OF FORM N-1A CAPTIONS IN PROSPECTUS
- -------------------------------------------- -----------------------------------------------------------------
<S> <C> <C>
1. Cover Page....................... Cover Page
2. Synopsis......................... Prospectus Summary
3. Condensed Financial
Information..................... Financial Highlights
4. General Description of
Registrant...................... Investment Objectives and Policies; Risk Factors; Management;
Other Information
5. Management of the Fund........... Management
5A. Management's Discussion of Fund
Performance..................... See Registrant's current Annual Report
6. Capital Stock and Other
Securities...................... Alternative Purchase Plan; Dividends, Other Distributions and
Federal Income Taxation; Other Information
7. Purchase of Securities Being
Offered......................... Alternative Purchase Plan; How to Invest; How to Make Exchanges;
Calculation of Net Asset Value; Management
8. Redemption or Repurchase......... Alternative Purchase Plan; How to Redeem Shares; Calculation of
Net Asset Value
9. Pending Legal Proceedings........ Not applicable
</TABLE>
<PAGE>
G.T. GLOBAL GROWTH SERIES
CROSS-REFERENCE SHEET
BETWEEN ITEMS ENUMERATED IN FORM N-1A AND THIS AMENDMENT
PROSPECTUS -- ADVISOR CLASS
<TABLE>
<CAPTION>
ITEM NO. OF
PART A OF FORM N-1A CAPTIONS IN PROSPECTUS
- -------------------------------------------- -----------------------------------------------------------------
<S> <C> <C>
1. Cover Page....................... Cover Page
2. Synopsis......................... Prospectus Summary
3. Condensed Financial
Information..................... Financial Highlights
4. General Description of
Registrant...................... Investment Objectives and Policies; Risk Factors; Management;
Other Information
5. Management of the Fund........... Management
5A. Management's Discussion of Fund
Performance..................... See Registrant's current Annual Report
6. Capital Stock and Other
Securities...................... Dividends, Other Distributions and Federal Income Taxation; Other
Information
7. Purchase of Securities Being
Offered......................... How to Invest; How to Make Exchanges; Calculation of Net Asset
Value; Management
8. Redemption or Repurchase......... How to Redeem Shares; Calculation of Net Asset Value
9. Pending Legal Proceedings........ Not applicable
</TABLE>
<PAGE>
G.T. GLOBAL GROWTH SERIES
CROSS-REFERENCE SHEET
BETWEEN ITEMS ENUMERATED IN FORM N-1A AND THIS AMENDMENT
STATEMENT OF ADDITIONAL INFORMATION -- CLASS A AND CLASS B
<TABLE>
<CAPTION>
ITEM NO. OF
PART B OF FORM N-1A CAPTIONS IN STATEMENT OF ADDITIONAL INFORMATION
- -------------------------------------------- -----------------------------------------------------------------
<S> <C> <C>
10. Cover Page....................... Cover Page
11. Table of Contents................ Table of Contents
12. General Information and
History......................... Cover Page
13. Investment Objectives and
Policies........................ Investment Objectives and Policies; Investment Limitations;
Options and Futures; Risk Factors
14. Management of the Fund........... Trustees and Executive Officers; Management
15. Control Persons and Principal
Holders of Securities........... Trustees and Executive Officers; Management
16. Investment Advisory and Other
Services........................ Management; Additional Information
17. Brokerage Allocation and Other
Practices....................... Execution of Portfolio Transactions
18. Capital Stock and Other
Securities...................... Additional Information
19. Purchase, Redemption and Pricing
of Securities Being Offered..... Valuation of Shares; Information Relating to
Sales and Redemptions
20. Tax Status....................... Taxes
21. Underwriters..................... Management
22. Calculation of Performance
Data............................ Investment Results
23. Financial Statements............. Financial Statements
</TABLE>
<PAGE>
G.T. GLOBAL GROWTH SERIES
CROSS-REFERENCE SHEET
BETWEEN ITEMS ENUMERATED IN FORM N-1A AND THIS AMENDMENT
STATEMENT OF ADDITIONAL INFORMATION -- ADVISOR CLASS
<TABLE>
<CAPTION>
ITEM NO. OF
PART B OF FORM N-1A CAPTIONS IN STATEMENT OF ADDITIONAL INFORMATION
- ------------------------------------------- ---------------------------------------------------------------
<S> <C> <C>
10. Cover Page...................... Cover Page
11. Table of Contents............... Table of Contents
12. General Information and
History........................ Cover Page
13. Investment Objectives and
Policies....................... Investment Objectives and Policies; Investment Limitations;
Options and Futures; Risk Factors
14. Management of the Fund.......... Trustees and Executive Officers; Management
15. Control Persons and Principal
Holders of Securities.......... Trustees and Executive Officers; Management
16. Investment Advisory and Other
Services....................... Management; Additional Information
17. Brokerage Allocation and Other
Practices...................... Execution of Portfolio Transactions
18. Capital Stock and Other
Securities..................... Additional Information
19. Purchase, Redemption and Pricing
of Securities Being Offered.... Valuation of Shares; Information Relating to
Sales and Redemptions
20. Tax Status...................... Taxes
21. Underwriters.................... Management
22. Calculation of Performance
Data........................... Investment Results
23. Financial Statements............ Financial Statements
</TABLE>
<PAGE>
GT GLOBAL EQUITY FUNDS
PROSPECTUS -- MAY 1, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
GT GLOBAL NEW PACIFIC GROWTH FUND GT GLOBAL WORLDWIDE GROWTH FUND
("PACIFIC FUND") ("WORLDWIDE FUND")
GT GLOBAL EUROPE GROWTH FUND GT GLOBAL AMERICA MID CAP GROWTH FUND
("EUROPE FUND") ("AMERICA MID CAP FUND")
GT GLOBAL JAPAN GROWTH FUND GT GLOBAL AMERICA SMALL CAP GROWTH FUND
("JAPAN FUND") ("AMERICA SMALL CAP FUND")
GT GLOBAL INTERNATIONAL GROWTH FUND GT GLOBAL AMERICA VALUE FUND
("INTERNATIONAL FUND") ("AMERICA VALUE FUND")
</TABLE>
THE PACIFIC FUND, EUROPE FUND, JAPAN FUND, INTERNATIONAL FUND AND WORLDWIDE FUND
each seeks long-term growth of capital by investing primarily in equity
securities of issuers domiciled in its Primary Investment Area (as defined
herein).
THE AMERICA MID CAP FUND seeks long-term growth of capital by investing
primarily in equity securities of companies domiciled in the United States that,
at the time of purchase, have market capitalizations of $1 billion to $5 billion
("U.S. mid cap companies").
THE AMERICA SMALL CAP FUND seeks long-term capital appreciation by investing all
of its investable assets in the Small Cap Portfolio, which, in turn, invests
primarily in equity securities of companies domiciled in the United States that,
at the time of purchase, have market capitalizations of up to $1 billion ("U.S.
small cap companies").
THE AMERICA VALUE FUND seeks long-term capital appreciation by investing all of
its investable assets in the Value Portfolio, which, in turn, invests primarily
in equity securities of companies domiciled in the United States that, at the
time of purchase, have market capitalizations of greater than $500 million and
that Chancellor LGT Asset Management, Inc. (the "Manager") believes to be
undervalued in relation to long-term earning power or other factors.
The Pacific Fund, Europe Fund, Japan Fund, International Fund, Worldwide Fund,
America Mid Cap Fund, America Small Cap Fund and America Value Fund are referred
to herein individually as a "Fund" and collectively as the "Funds." The Small
Cap Portfolio and Value Portfolio are referred to herein individually as a
"Portfolio" and collectively as the "Portfolios."
Each Portfolio's investment objective is identical to that of its corresponding
Fund. There can be no assurance that any Fund or either Portfolio will achieve
its investment objective. The investment experience of the America Small Cap
Fund and America Value Fund will correspond directly with the investment
experience of their corresponding Portfolios.
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR GUARANTEED BY,
ANY BANK, NOR ARE THEY FEDERALLY INSURED OR OTHERWISE PROTECTED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
The Funds and the Portfolios are managed and/or administered by the Manager. The
Manager and its worldwide affiliates are part of Liechtenstein Global Trust, a
provider of global asset management and private banking products and services to
individual and institutional investors.
This Prospectus sets forth concisely the information an investor should know
before investing and should be read carefully and retained for future reference.
A Statement of Additional Information, dated May 1, 1997, has been filed with
the Securities and Exchange Commission ("SEC") and, as supplemented or amended
from time to time, is incorporated herein by reference. The Statement of
Additional Information is available without charge by writing to the Funds at 50
California Street, 27th Floor, San Francisco, California 94111, or by calling
(800) 824-1580.
FOR FURTHER INFORMATION, CALL (800) 824-1580 OR CONTACT YOUR FINANCIAL ADVISOR.
[LOGO]
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus Page 1
<PAGE>
GT GLOBAL EQUITY FUNDS
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Prospectus Summary........................................................................ 3
Financial Highlights...................................................................... 8
Alternative Purchase Plan................................................................. 22
Investment Objectives and Policies........................................................ 23
Risk Factors.............................................................................. 29
How to Invest............................................................................. 32
How to Make Exchanges..................................................................... 39
How to Redeem Shares...................................................................... 40
Shareholder Account Manual................................................................ 42
Calculation of Net Asset Value............................................................ 43
Dividends, Other Distributions and Federal Income Taxation................................ 44
Management................................................................................ 45
Other Information......................................................................... 51
</TABLE>
Prospectus Page 2
<PAGE>
GT GLOBAL EQUITY FUNDS
PROSPECTUS SUMMARY
- ------------------------------------------------------------
The following summary is qualified in its entirety by the more detailed
information appearing in the body of this Prospectus. Cross-references in this
summary are to headings in the body of the Prospectus.
<TABLE>
<S> <C> <C>
The Funds and the Portfolios: Each Fund is a diversified series of G.T. Global Growth Series
(the "Company"). Each Portfolio is a diversified series of Growth
Portfolio.
Investment Objectives: The Pacific Fund, Europe Fund, Japan Fund, International Fund,
Worldwide Fund and America Mid Cap Fund seek long-term growth of
capital; the America Small Cap Fund and America Value Fund seek
long-term capital appreciation.
Principal Investments: The Pacific Fund, Europe Fund, Japan Fund, International Fund and
Worldwide Fund each invests primarily in equity securities of
issuers domiciled in its Primary Investment Area (as defined
herein).
The America Mid Cap Fund invests primarily in equity securities of
U.S. mid cap companies.
The America Small Cap Fund invests all of its investable assets in
the Small Cap Portfolio, which, in turn, invests primarily in
equity securities of U.S. small cap companies.
The America Value Fund invests all of its investable assets in the
Value Portfolio, which, in turn, invests primarily in equity
securities of companies domiciled in the United States that, at
the time of purchase, have market capitalizations of greater than
$500 million and that the Manager believes to be undervalued in
relation to long-term earning power or other factors.
Principal Risk Factors: There is no assurance that any Fund or either Portfolio will
achieve its investment objective. Each Fund's net asset value will
fluctuate, reflecting fluctuations in the market value of its, or
its corresponding Portfolio's, securities.
The Pacific Fund, Europe Fund, Japan Fund and International Fund
each invests primarily in foreign securities. The Worldwide Fund
may invest a significant portion of its assets in foreign
securities. Investments in foreign securities involve risks
relating to political and economic developments abroad and the
differences between the regulations to which U.S. and foreign
issuers are subject. Individual foreign economies also may differ
favorably or unfavorably from the U.S. economy. Changes in foreign
currency exchange rates also may affect a Fund's net asset value,
earnings and gains and losses realized on sales of securities.
The Pacific Fund, Europe Fund, Japan Fund, America Mid Cap Fund
and the Portfolios each invests a significant portion of its
assets in issuers in a particular country or region of the world.
As a result, such Funds and the Portfolios may be subject to
greater risks and may experience greater volatility than a fund
that is more broadly diversified geographically.
</TABLE>
Prospectus Page 3
<PAGE>
GT GLOBAL EQUITY FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
The Pacific Fund, Europe Fund, Japan Fund, International Fund,
Worldwide Fund and America Mid Cap Fund may engage in certain
foreign currency, options and futures transactions, and each
Portfolio may engage in certain options and futures transactions,
to attempt to hedge against the overall level of investment or
currency risk associated with its present or planned investments.
Such transactions involve certain risks and transaction costs.
See "Investment Objectives and Policies" and "Risk Factors."
Investment Manager: The Manager is part of Liechtenstein Global Trust, a provider of
global asset management and private banking products and services
to individual and institutional investors, entrusted with
approximately $84 billion in total assets as of December 31, 1996.
The Manager and its worldwide asset management affiliates maintain
fully staffed investment offices in Frankfurt, Hong Kong, London,
New York, San Francisco, Singapore, Sydney, Tokyo and Toronto. See
"Management."
Alternative Purchase Plan: Investors may select Class A or Class B shares, each subject to
different expenses and a different sales charge structure.
Class A Shares: Offered at net asset value plus any applicable sales charge
(maximum is 4.75% of public offering price) and subject to service
and distribution fees at the annualized rate of up to 0.35% of the
average daily net assets of each Fund's Class A shares.
Class B Shares: Offered at net asset value (a maximum contingent deferred sales
charge of 5% of the lesser of the shares' net asset value or the
original purchase price is imposed on certain redemptions made
within six years of date of purchase) and subject to service and
distribution fees at the annualized rate of up to 1.00% of the
average daily net assets of each Fund's Class B shares.
Shares Available Through: Class A and Class B shares of each Fund's shares of beneficial
interest are available through broker/dealers who have entered
into agreements to sell shares with the Funds' distributor, GT
Global, Inc. ("GT Global"). Shares also may be acquired directly
through GT Global or through exchanges of shares of other GT
Global Mutual Funds, which are open-end management investment
companies advised and/or administered by the Manager. See "How to
Invest" and "Shareholder Account Manual."
Exchange Privileges: Shares of a class of a Fund may be exchanged without a sales
charge for shares of the corresponding class of other GT Global
Mutual Funds. See "How to Make Exchanges" and "Shareholder Account
Manual."
Redemptions: Shares may be redeemed through brokers/dealers or the Funds'
transfer agent, GT Global Investor Services, Inc. ("Transfer
Agent"). See "How to Redeem Shares" and "Shareholder Account
Manual."
Dividends and Other
Distributions: Dividends are paid annually from net investment income and
realized net short-term capital gain; other distributions are paid
annually from net capital gain and net gains from foreign currency
transactions, if any.
</TABLE>
Prospectus Page 4
<PAGE>
GT GLOBAL EQUITY FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Reinvestment: Dividends and other distributions may be reinvested automatically
in Fund shares of the distributing class or in shares of the
corresponding class of other GT Global Mutual Funds without a
sales charge.
First Purchase: $500 minimum ($100 for individual retirement accounts ("IRAs") and
reduced amounts for certain other retirement plans).
Subsequent Purchases: $100 minimum (reduced amounts for IRAs and certain other
retirement plans).
Net Asset Values: Class A and Class B shares of each Fund are quoted daily in the
financial section of most newspapers.
Other Features:
Class A Shares: Letter of Intent Dollar Cost Averaging Program
Quantity Discounts Automatic Investment Plan
Right of Accumulation Systematic Withdrawal Plan
Reinstatement Privilege Portfolio Rebalancing Program
Class B Shares: Reinstatement Privilege Automatic Investment Plan
Systematic Withdrawal Plan Dollar Cost Averaging Program
Portfolio Rebalancing Program
</TABLE>
Prospectus Page 5
<PAGE>
GT GLOBAL EQUITY FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
SUMMARY OF INVESTOR COSTS. The expenses and maximum transactions costs
associated with investing in the Class A and Class B shares of the Funds are
reflected in the following tables (1):
<TABLE>
<CAPTION>
GT GLOBAL GT GLOBAL GT GLOBAL GT GLOBAL
WORLDWIDE INTERNATIONAL NEW PACIFIC EUROPE
GROWTH GROWTH GROWTH GROWTH
FUND FUND FUND FUND
----------------- ----------------- ----------------- -----------------
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION COSTS (2):
Maximum sales charge on purchases
(as a % of offering price)....................... 4.75% None 4.75% None 4.75% None 4.75% None
Sales charges on reinvested distributions to
shareholders..................................... None None None None None None None None
Maximum deferred sales charge (as a % of net asset
value at time of purchase or sale, whichever is
less)............................................ None 5.00% None 5.00% None 5.00% None 5.00%
Redemption charges................................ None None None None None None None None
Exchange fees:
-- On first four exchanges each year............ None None None None None None None None
-- On each additional exchange.................. $7.50 $7.50 $7.50 $7.50 $7.50 $7.50 $7.50 $7.50
ANNUAL FUND OPERATING EXPENSES (3):
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees..... 0.98% 0.98% 0.98% 0.98% 0.97% 0.97% 0.97% 0.97%
12b-1 distribution and service fees............... 0.35% 1.00% 0.35% 1.00% 0.35% 1.00% 0.35% 1.00%
Other expenses.................................... 0.47% 0.47% 0.58% 0.58% 0.67% 0.67% 0.56% 0.56%
------- ------- ------- ------- ------- ------- ------- -------
Total Fund Operating Expenses..................... 1.80% 2.45% 1.91% 2.56% 1.99% 2.64% 1.88% 2.53%
------- ------- ------- ------- ------- ------- ------- -------
</TABLE>
<TABLE>
<CAPTION>
GT GLOBAL AMERICA
GT GLOBAL GT GLOBAL GT GLOBAL
JAPAN AMERICA SMALL MID CAP AMERICA
GROWTH CAP GROWTH GROWTH VALUE
FUND FUND FUND FUND
----------------- ----------------- ----------------- -----------------
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION COSTS (2):
Maximum sales charge on purchases
(as a % of offering price)....................... 4.75% None 4.75% None 4.75% None 4.75% None
Sales charges on reinvested distributions to
shareholders..................................... None None None None None None None None
Maximum deferred sales charge (as a % of net asset
value at time of purchase or sale, whichever is
less)............................................ None 5.00% None 5.00% None 5.00% None 5.00%
Redemption charges................................ None None None None None None None None
Exchange fees:
-- On first four exchanges each year............ None None None None None None None None
-- On each additional exchange.................. $7.50 $7.50 $7.50 $7.50 $7.50 $7.50 $7.50 $7.50
ANNUAL FUND OPERATING EXPENSES (3):
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees..... 0.98% 0.98% 0.73% 0.73% 0.72% 0.72% 0.73% 0.73%
12b-1 distribution and service fees............... 0.35% 1.00% 0.35% 1.00% 0.35% 1.00% 0.35% 1.00%
Other expenses (after reimbursements)............. 0.61% 0.61% 0.92% 0.92% 0.34% 0.34% 0.92% 0.92%
------- ------- ------- ------- ------- ------- ------- -------
Total Fund Operating Expenses..................... 1.94% 2.59% 2.00% 2.65% 1.41% 2.06% 2.00% 2.65%
------- ------- ------- ------- ------- ------- ------- -------
</TABLE>
Prospectus Page 6
<PAGE>
GT GLOBAL EQUITY FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES:
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Funds, assuming a 5%
annual return:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
GT Global Worldwide Growth Fund
<S> <C> <C> <C> <C>
Class A shares (4)......................................................... $65 $102 $142 $252
Class B shares
Assuming a complete redemption at end of period (5)...................... $75 $107 $152 $282
Assuming no redemption................................................... $25 $ 77 $132 $282
GT Global International Growth Fund
Class A shares (4)......................................................... $66 $106 $147 $263
Class B shares
Assuming a complete redemption at end of period (5)...................... $76 $111 $158 $293
Assuming no redemption................................................... $26 $ 81 $138 $293
GT Global New Pacific Growth Fund
Class A shares (4)......................................................... $67 $108 $151 $271
Class B shares
Assuming a complete redemption at end of period (5)...................... $77 $113 $162 $301
Assuming no redemption................................................... $27 $ 83 $142 $301
GT Global Europe Growth Fund
Class A shares (4)......................................................... $66 $105 $146 $260
Class B shares
Assuming a complete redemption at end of period (5)...................... $76 $110 $156 $290
Assuming no redemption................................................... $26 $ 80 $136 $290
GT Global Japan Growth Fund
Class A shares (4)......................................................... $67 $106 $149 $266
Class B shares
Assuming a complete redemption at end of period (5)...................... $77 $112 $159 $296
Assuming no redemption................................................... $27 $ 82 $139 $296
GT Global America Small Cap Growth Fund
Class A shares (4)......................................................... $67 $108 $152 $272
Class B shares
Assuming a complete redemption at end of period (5)...................... $77 $113 $162 $302
Assuming no redemption................................................... $27 $ 83 $142 $302
GT Global America Mid Cap Growth Fund
Class A shares (4)......................................................... $61 $ 91 $122 $211
Class B shares
Assuming a complete redemption at end of period (5)...................... $71 $ 96 $132 $242
Assuming no redemption................................................... $21 $ 66 $112 $242
GT Global America Value Fund
Class A shares (4)......................................................... $67 $108 $152 $272
Class B shares
Assuming a complete redemption at end of period (5)...................... $77 $113 $162 $302
Assuming no redemption................................................... $27 $ 83 $142 $302
</TABLE>
- --------------
(1) THESE TABLES ARE INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUNDS. Long-term
shareholders may pay more than the economic equivalent of the maximum
front-end sales charges permitted by the National Association of Securities
Dealers, Inc. rules regarding investment companies. THE "HYPOTHETICAL
EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE EXPENSES. THE FUNDS' AND
THE PORTFOLIOS' ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN. The
tables and the assumption in the Hypothetical Example of a 5% annual return
are required by regulations of the SEC applicable to all mutual funds. The
5% annual return is not a prediction of and does not represent the Funds' or
the Portfolios' projected or actual performance.
(2) Sales charge waivers are available for Class A and Class B shares, and
reduced sales charge purchase plans are available for Class A shares. The
maximum 5% contingent deferred sales charge on Class B shares applies to
redemptions during the first year after purchase. The charge generally
declines by 1% annually thereafter, reaching zero after six years. See "How
to Invest."
(3) Expenses are based on the Funds' fiscal year ended December 31, 1996. "Other
expenses" include custody, transfer agency, legal, audit and other operating
expenses. See "Management" herein and the Statement of Additional
Information for more information. With respect to Class A shares, without
reimbursements, "Other expenses" and "Total Fund Operating Expenses" would
have been 2.01% and 3.09%, respectively, for the America Small Cap Fund and
its Portfolio, and 4.43% and 5.51%, respectively, for the America Value Fund
and its Portfolio. With respect to Class B shares, without reimbursements,
"Other expenses" and "Total Fund Operating
Expenses" would have been 2.01% and 3.74%, respectively, for the America
Small Cap Fund and its Portfolio, and 4.43% and 6.16%, respectively, for the
America Value Fund and its Portfolio. The Funds also offer Advisor Class
shares to certain categories of investors. See "Alternative Purchase Plan."
Advisor Class shares are not subject to 12b-1 distribution and service fees.
The Board of Trustees of the Company believes that the aggregate per share
expenses of the America Small Cap Fund and the America Value Fund and each
of their corresponding Portfolios will be approximately equal to the
expenses each such Fund would incur if its assets were invested directly in
the type of securities being held by its corresponding Portfolio.
(4) Assumes payment of maximum sales charge by the investor.
(5) Assumes deduction of the applicable contingent deferred sales charge.
Prospectus Page 7
<PAGE>
GT GLOBAL EQUITY FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The tables below provide condensed financial information concerning income and
capital changes for one share of each class of shares of each Fund offered
through this Prospectus for the periods shown. This information is supplemented
by the financial statements and accompanying notes appearing in the Statement of
Additional Information. The financial statements and notes for the fiscal year
ended December 31, 1996 have been audited by Coopers & Lybrand L.L.P.,
independent accountants, whose reports thereon appear in the Statement of
Additional Information. Information presented below for the periods ended
December 31, 1991 and prior thereto was audited by other auditors, which served
as the Funds' independent certified public accountants for those periods.
GT GLOBAL WORLDWIDE GROWTH FUND
<TABLE>
<CAPTION>
CLASS A+
---------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------------------
1996* 1995* 1994 1993* 1992 1991 1990
---------- ---------- ---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
period............................ $16.82 $15.53 $17.47 $14.47 $14.07 $11.83 $13.63
---------- ---------- ---------- ---------- ---------- ---------- ---------
Net investment income (loss)....... 0.03 -- -- 0.04 0.07 0.10 0.11
Net realized and unrealized gain
(loss) on investments............. 1.79 1.74 (1.16) 3.92 0.39 2.29 (1.82)
---------- ---------- ---------- ---------- ---------- ---------- ---------
Net increase (decrease) in net
asset value resulting from
investment operations............. 1.82 1.74 (1.16) 3.96 0.46 2.39 (1.71)
---------- ---------- ---------- ---------- ---------- ---------- ---------
Distributions:
Net investment income............ -- -- -- -- -- (0.15) (0.09)
Net realized gain on
investments..................... (1.93) (0.45) (0.78) (0.96) (0.06) -- --
---------- ---------- ---------- ---------- ---------- ---------- ---------
Total distributions............ (1.93) (0.45) (0.78) (0.96) (0.06) (0.15) (0.09)
---------- ---------- ---------- ---------- ---------- ---------- ---------
Net asset value, end of period..... $16.71 $16.82 $15.53 $17.47 $14.47 $14.07 $11.83
---------- ---------- ---------- ---------- ---------- ---------- ---------
---------- ---------- ---------- ---------- ---------- ---------- ---------
Total investment return (a)(c)..... 10.92% 11.23% (6.65)% 27.6% 3.3% 20.3% (12.5)%
---------- ---------- ---------- ---------- ---------- ---------- ---------
---------- ---------- ---------- ---------- ---------- ---------- ---------
Ratios and supplemental data:
Net assets, end of period (in
000's)............................ $125,556 $145,982 $182,467 $193,997 $141,310 $126,868 $85,894
Ratio of net investment income
(loss) to average net assets
(b)............................... 0.14% (0.06)% (0.01)% 0.9% 0.5% 0.8% 0.7%
Ratio of expenses to average net
assets:
With expense reductions (b)...... 1.72% 1.87% 1.81% 1.9% 2.1% 2.0% 2.1%
Without expense reductions (b)... 1.80% 1.93% 1.84% --%(d) --%(d) --%(d) --%(d)
Portfolio turnover rate+++......... 80% 113% 86% 92% 95% 122% 107%
Average commission rate per share
paid on portfolio
transactions+++................... $ 0.0263 N/A N/A N/A N/A N/A N/A
</TABLE>
- ------------------
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Portfolio turnover rate and average commission rate are calculated on the
basis of the Fund as a whole without distinguishing between the classes of
shares issued.
* The selected per share data were calculated based upon weighted average
shares outstanding during the period.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not include sales charges.
(d) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reduction, if any.
N/A Not applicable.
Prospectus Page 8
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL WORLDWIDE GROWTH FUND (CONTINUED)
<TABLE>
<CAPTION>
CLASS A+ CLASS B++
-------------------------------------- ------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
JUNE 9, 1987
(COMMENCEMENT APRIL 1,
YEAR ENDED DECEMBER OF OPERATIONS) 1993
31, THROUGH YEAR ENDED DECEMBER 31, TO
--------------------- DECEMBER 31, --------------------------------- DECEMBER 31,
1989 1988 1987 1996* 1995* 1994 1993*
--------- --------- -------------- --------- --------- --------- ------------
Per Share Operating
Performance:
Net asset value,
beginning of
period.................. $10.18 $8.84 $10.00 $16.50 $15.34 $17.39 $15.67
--------- --------- -------------- --------- --------- --------- ------------
Net investment income
(loss).................. (0.01) 0.02 (0.05) (0.09) (0.12) (0.11) (0.04)
Net realized and
unrealized gain (loss)
on investments.......... 3.82 1.42 (1.11) 1.75 1.73 (1.16) 2.72
--------- --------- -------------- --------- --------- --------- ------------
Net increase (decrease)
in net asset value
resulting from
investment operations... 3.81 1.44 (1.16) 1.66 1.61 (1.27) 2.68
--------- --------- -------------- --------- --------- --------- ------------
Distributions:
Net investment
income................ -- -- -- -- -- -- --
Net realized gain on
investments........... (0.36) (0.10) -- (1.93) (0.45) (0.78) (0.96)
--------- --------- -------------- --------- --------- --------- ------------
Total
distributions....... (0.36) (0.10) -- (1.93) (0.45) (0.78) (0.96)
--------- --------- -------------- --------- --------- --------- ------------
Net asset value, end of
period.................. $13.63 $10.18 $8.84 $16.23 $16.50 $15.34 $17.39
--------- --------- -------------- --------- --------- --------- ------------
--------- --------- -------------- --------- --------- --------- ------------
Total investment return
(a)(c).................. 37.6% 16.3% (11.60)% 10.16% 10.52% (7.32)% 17.3%
--------- --------- -------------- --------- --------- --------- ------------
--------- --------- -------------- --------- --------- --------- ------------
Ratios and supplemental
data:
Net assets, end of period
(in 000's).............. $38,263 $11,673 $6,570 $52,089 $56,095 $52,567 $20,592
Ratio of net investment
income (loss) to average
net assets (b).......... (0.1)% 0.2% (1.4)% (0.51)% (0.71)% (0.66)% (0.4)%
Ratio of expenses to
average net assets:
With expense reductions
(b)................... 2.0% 2.0% 2.8% 2.37% 2.52% 2.46% 2.5%
Without expense
reductions (b)........ --% --% --% 2.45% 2.58% 2.49% --%(d)
Portfolio turnover
rate+++................. 91% 181% 271% 80% 113% 86% 92%
Average commission rate
per share paid on
portfolio
transactions+++......... N/A N/A N/A $0.0263 N/A N/A N/A
</TABLE>
- ------------------
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Portfolio turnover rate and average commission rate are calculated on the
basis of the Fund as a whole without distinguishing between the classes of
shares issued.
* The selected per share data were calculated based upon weighted average
shares outstanding during the period.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not include sales charges.
(d) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reduction, if any.
N/A Not applicable.
Prospectus Page 9
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL INTERNATIONAL GROWTH FUND
<TABLE>
<CAPTION>
CLASS A+
----------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------------------------
1996* 1995 1994 1993* 1992 1991 1990
--------- --------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $9.08 $9.17 $11.02 $8.21 $8.74 $7.82 $9.25
--------- --------- ---------- ---------- ---------- ---------- ----------
Net investment income
(loss)....................... (0.01) 0.03 (0.04) 0.03 0.11 0.14 0.10
Net realized and unrealized
gain (loss) on investments... 0.84 0.32 (0.82) 2.78 (0.62) 0.89 (1.42)
--------- --------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net
asset value resulting from
investment operations........ 0.83 0.35 (0.86) 2.81 (0.51) 1.03 (1.32)
--------- --------- ---------- ---------- ---------- ---------- ----------
Distributions:
Net investment income....... -- -- (0.04) -- (0.02) (0.11) (0.11)
Net realized gain on
investments................ (0.99) (0.24) (0.95) -- -- -- --
In excess of net realized
gain on investments........ -- (0.20) -- -- -- -- --
--------- --------- ---------- ---------- ---------- ---------- ----------
Total distributions....... (0.99) (0.44) (0.99) (0.00) (0.02) (0.11) (0.11)
--------- --------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of
period....................... $8.92 $9.08 $9.17 $11.02 $8.21 $8.74 $7.82
--------- --------- ---------- ---------- ---------- ---------- ----------
--------- --------- ---------- ---------- ---------- ---------- ----------
Total investment return
(a)(c)....................... 9.28% 3.88% (7.78)% 34.2% (5.8)% 13.2% (14.3)%
--------- --------- ---------- ---------- ---------- ---------- ----------
--------- --------- ---------- ---------- ---------- ---------- ----------
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $196,601 $308,816 $430,701 $523,397 $421,693 $463,851 $343,949
Ratio of net investment income
(loss) to average net assets
(b).......................... (0.14) % 0.24% (0.04)% 0.3% 1.2% 1.5% 1.4%
Ratio of expenses to average
net assets:
With expense reductions
(b)........................ 1.80% 1.70% 1.70% 1.8% 1.9% 1.9% 1.9%
Without expense reductions
(b)........................ 1.91% 1.78% 1.75% --%(d) --%(d) --%(d) --%(d)
Portfolio turnover rate++..... 74% 75% 96% 90% 89% 83% 58%
Average commission rate per
share paid on portfolio
transactions++............... $ 0.0267 N/A N/A N/A N/A N/A N/A
</TABLE>
- --------------
+ Commencing April 1, 1993, the Fund began offering Class B shares. All
capital shares issued and outstanding as of March 31, 1993 were reclassified
as Class A shares.
++ Portfolio turnover rate and average commission rate are calculated on the
basis of the Fund as a whole without distinguishing between the classes of
shares issued.
* The selected per share data were calculated based upon weighted average
shares outstanding during the period.
** The per share data reflects a 3 for 1 stock split effective August 14, 1989.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not reflect the maximum sales charge on
purchases of Class A shares and the contingent deferred sales charge imposed
on certain redemptions of Class B shares.
(d) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reduction, if any.
N/A Not applicable.
Prospectus Page 10
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL INTERNATIONAL GROWTH FUND (CONTINUED)
<TABLE>
<CAPTION>
CLASS A+ CLASS B+
------------------------------------------------- ------------------------------------------------
APRIL 1,
1993
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, TO
------------------------------------------------- ----------------------------------- DECEMBER
1989** 1988** 1987** 1986** 1996* 1995* 1994 31, 1993*
---------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value,
beginning of period..... $6.77 $5.71 $6.13 $4.16 $8.91 $9.07 $10.98 $8.74
---------- --------- --------- --------- --------- --------- --------- ---------
Net investment income
(loss).................. 0.01 (0.01) (0.01) (0.05) (0.07) (0.04) (0.10) (0.01)
Net realized and
unrealized gain (loss)
on investments.......... 2.60 1.12 0.35 2.22 0.83 0.32 (0.82) 2.25
---------- --------- --------- --------- --------- --------- --------- ---------
Net increase (decrease)
in net asset value
resulting from
investment operations... 2.61 1.11 0.34 2.17 0.76 0.28 (0.92) 2.24
---------- --------- --------- --------- --------- --------- --------- ---------
Distributions:
Net investment
income................ -- -- -- -- -- -- (0.04) --
Net realized gain on
investments........... (0.13) (0.05) (0.76) (0.20) (0.99) (0.24) (0.95) --
In excess of net
realized gain on
investments........... -- -- -- -- -- (0.20) -- --
---------- --------- --------- --------- --------- --------- --------- ---------
Total
distributions....... (0.13) (0.05) (0.76) (0.20) (0.99) (0.44) (0.99) --
---------- --------- --------- --------- --------- --------- --------- ---------
Net asset value, end of
period.................. $9.25 $6.77 $5.71 $6.13 $8.68 $8.91 $9.07 $10.98
---------- --------- --------- --------- --------- --------- --------- ---------
---------- --------- --------- --------- --------- --------- --------- ---------
Total investment return
(a)(c).................. 38.6% 19.4% 6.2% 53.7% 8.67% 3.15% (8.36)% 25.63%
---------- --------- --------- --------- --------- --------- --------- ---------
---------- --------- --------- --------- --------- --------- --------- ---------
Ratios and supplemental
data:
Net assets, end of period
(in 000's).............. $ 136,975 $ 29,792 $ 17,178 $ 12,052 $ 64,102 $ 69,654 $ 71,794 $30,745
Ratio of net investment
income (loss) to average
net assets (b).......... 0.1% (0.2)% (0.3)% (0.9)% (0.79)% (0.41)% (0.69)% (0.4)%
Ratio of expenses to
average net assets:
With expense reductions
(b)................... 1.9% 2.1% 1.9% 1.9% 2.45% 2.35% 2.35% 2.4%
Without expense
reductions (b)........ --%(d) --%(d) --%(d) --%(d) 2.56% 2.43% 2.40% --%(d)
Portfolio turnover
rate++.................. 82% 115% 198% 122% 74% 75% 96% 90%
Average commission rate
per share paid on
portfolio
transactions++.......... N/A N/A N/A N/A $ 0.0267 N/A N/A N/A
</TABLE>
- --------------
+ Commencing April 1, 1993, the Fund began offering Class B shares. All
capital shares issued and outstanding as of March 31, 1993 were reclassified
as Class A shares.
++ Portfolio turnover rate amd average commission rate are calculated on the
basis of the Fund as a whole without distinguishing between the classes of
shares issued.
* The selected per share data were calculated based upon weighted average
shares outstanding during the period.
** The per share data reflects a 3 for 1 stock split effective August 14, 1989.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not reflect the maximum sales charge on
purchases of Class A shares and the contingent deferred sales charge imposed
on certain redemptions of Class B shares.
(d) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reduction, if any.
N/A Not applicable.
Prospectus Page 11
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
<TABLE>
<CAPTION>
CLASS A+
-----------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------------------------------
1996* 1995* 1994 1993 1992 1991 1990
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value,
beginning of period..... $12.47 $12.10 $15.86 $10.31 $11.30 $10.57 $12.61
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net investment income
(loss).................. 0.02 0.11 0.02 (0.03) 0.07 0.11 0.13
Net realized and
unrealized gain (loss)
on investments.......... 2.44 0.79 (3.15) 6.23 (0.97) 1.25 (1.51)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease)
in net asset value
resulting from
investment operations... 2.46 0.90 (3.13) 6.20 (0.90) 1.36 (1.38)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Distributions:
Net investment
income................ -- (0.10) (0.01) -- (0.06) (0.08) (0.12)
Net realized gain on
investments........... (1.81) (0.43) (0.55) (0.65) (0.03) (0.55) (0.54)
In excess of net
realized gain on
investments........... -- -- (0.07) -- -- -- --
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total
distributions....... (1.81) (0.53) (0.63) (0.65) (0.09) (0.63) (0.66)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of
period.................. $13.12 $12.47 $12.10 $15.86 $10.31 $11.30 $10.57
----------- ----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total investment return
(a)(c).................. 20.04% 7.45% (19.73)% 60.6% (8.0)% 13.1% (11.0)%
----------- ----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- ----------- -----------
Ratio and supplemental
data:
Net assets, end of period
(in 000's).............. $ 361,244 $ 383,722 $ 404,680 $ 498,898 $ 281,418 $ 333,800 $ 234,793
Ratio of net investment
income (loss) to average
net assets (b).......... 0.17% 0.91% 0.11% (0.3)% 0.6% 1.0% 1.1%
Ratio of expenses to
average net assets:
With expense reductions
(b)................... 1.86% 1.89% 1.81% 1.9% 2.0% 2.0% 2.1%
Without expense
reductions (b)........ 1.99% 1.94% --%(d) --%(d) --%(d) --%(d) --%(d)
Portfolio turnover
rate++.................. 93% 63% 87% 117% 72% 85% 75%
Average commission rate
per share paid on
portfolio
transactions++.......... $ 0.0032 N/A N/A N/A N/A N/A N/A
</TABLE>
- --------------
+ Commencing April 1, 1993, the Fund began offering Class B shares. All
capital shares issued and outstanding as of March 31, 1993 were reclassified
as Class A shares.
++ Portfolio turnover rate and average commission rate are calculated on the
basis of the Fund as a whole without distinguishing between the classes of
shares issued.
* The selected per share data were calculated based upon weighted average
shares outstanding during the period.
** The per share data reflects a 2 for 1 stock split effective August 14, 1989.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not reflect the maximum sales charge on
purchases of Class A shares and the contingent deferred sales charge imposed
on certain redemptions of Class B shares.
(d) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reduction, if any.
N/A Not applicable.
Prospectus Page 12
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND (CONTINUED)
<TABLE>
<CAPTION>
CLASS A+ CLASS B+
------------------------------------------------- ----------------------------------------------------
APRIL 1,
1993
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, TO
------------------------------------------------- --------------------------------------- DECEMBER
1989** 1988 1987 1986 1996* 1995* 1994 31, 1993
---------- ---------- ---------- ---------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value,
beginning of
period............... $8.74 $7.25 $14.98 $8.82 $12.29 $11.96 $15.79 $11.27
---------- ---------- ---------- ---------- ----------- ----------- ----------- ----------
Net investment income
(loss)............... (0.01) 0.01 (0.01) (0.05) (0.06) 0.03 (0.06) (0.10)
Net realized and
unrealized gain
(loss) on
investments.......... 4.21 1.66 0.51 6.22 2.38 0.75 (3.15) 5.27
---------- ---------- ---------- ---------- ----------- ----------- ----------- ----------
Net increase
(decrease) in net
asset value resulting
from investment
operations........... 4.20 1.67 0.50 6.17 2.32 0.78 (3.21) 5.17
---------- ---------- ---------- ---------- ----------- ----------- ----------- ----------
Distributions:
Net investment
income............. -- -- -- (0.01) -- (0.02) -- --
Net realized gain on
investments and
foreign currency... (0.33) (0.18) (8.23) -- (1.81) (0.43) (0.55) (0.65)
In excess of net
investment
income............. -- -- -- -- -- -- (0.07) --
In excess of net
realized gain on
investments........ -- -- -- -- -- -- -- --
---------- ---------- ---------- ---------- ----------- ----------- ----------- ----------
Total
distributions.... (0.33) (0.18) (8.23) (0.01) (1.81) (0.45) (0.62) (0.65)
---------- ---------- ---------- ---------- ----------- ----------- ----------- ----------
Net asset value, end
of period............ $12.61 $8.74 $7.25 $14.98 $12.80 $12.29 $11.96 $15.79
---------- ---------- ---------- ---------- ----------- ----------- ----------- ----------
---------- ---------- ---------- ---------- ----------- ----------- ----------- ----------
Total investment
return (a)(c)........ 48.1% 23.2% 5.7% 69.9% 19.28% 6.54% (20.30)% 46.3%
---------- ---------- ---------- ---------- ----------- ----------- ----------- ----------
---------- ---------- ---------- ---------- ----------- ----------- ----------- ----------
Ratio and supplemental
data:
Net assets, end of
period
(in 000's)........... $170,071 $ 56,342 $ 38,780 $ 50,647 $ 151,805 $ 130,887 $ 120,171 $ 72,122
Ratio of net
investment income
(loss) to average net
assets (b)........... (0.1)% 0.0% (0.2)% (0.5)% (0.48)% 0.26% (0.54)% (0.9)%
Ratio of expenses to
average
net assets:
With expense
reductions (b)..... 2.0% 2.2% 1.9% 1.4% 2.51% 2.54% 2.46% 2.5%
Without expense
reductions (b)..... --%(d) --%(d) --%(d) --%(d) 2.64% 2.59% --%(d) --%(d)
Portfolio turnover
rate++............... 70% 107% 215% 229% 93% 63% 87% 117%
Average commission
rate per share paid
on portfolio
transactions++....... N/A N/A N/A N/A $ 0.0032 N/A N/A N/A
</TABLE>
- ------------------
+ Commencing April 1, 1993, the Fund began offering Class B shares. All
capital shares issued and outstanding as of March 31, 1993 were reclassified
as Class A shares.
++ Portfolio turnover rate and average commission rate are calculated on the
basis of the Fund as a whole without distinguishing between the classes of
shares issued.
* The selected per share data were calculated based upon weighted average
shares outstanding during the period.
** The per share data reflects a 2 for 1 stock split effective August 14, 1989.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not reflect the maximum sales charge on
purchases of Class A shares and the contingent deferred sales charge imposed
on certain redemptions of Class B shares.
(d) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reduction, if any.
N/A Not applicable.
Prospectus Page 13
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL EUROPE GROWTH FUND
<TABLE>
<CAPTION>
CLASS A+
-----------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------
1996* 1995* 1994* 1993* 1992* 1991
--------- --------- --------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
period................................. $10.88 $10.03 $10.84 $8.51 $9.59 $9.33
--------- --------- --------- ----------- ----------- -------------
Net investment income................... (0.03) 0.04 0.06 0.05 0.11*** 0.21
Net realized and unrealized gain (loss)
on investments and foreign currency.... 2.16 0.95 (0.69) 2.36 (1.19) 0.19
--------- --------- --------- ----------- ----------- -------------
Net increase (decrease) in net asset
value resulting from investment
operations............................. 2.13 0.99 (0.63) 2.41 (1.08) 0.40
--------- --------- --------- ----------- ----------- -------------
Distributions:
Net investment income................. -- (0.10) (0.05) (0.06) -- (0.14)
Net realized gain on
investments.......................... (0.12) (0.04) -- -- -- --
In excess of net investment
income............................... -- -- -- (0.02) -- --
In excess of net realized gain
on investments....................... -- -- (0.13) -- -- --
--------- --------- --------- ----------- ----------- -------------
Total distributions................. (0.12) (0.14) (0.18) (0.08) -- (0.14)
--------- --------- --------- ----------- ----------- -------------
Net asset value, end of year............ $12.89 $10.88 $10.03 $10.84 $8.51 $9.59
--------- --------- --------- ----------- ----------- -------------
--------- --------- --------- ----------- ----------- -------------
Total investment
return (a)(c).......................... $ 19.61% 9.86% (5.80)% 28.3% (11.3)% 4.3%
--------- --------- --------- ----------- ----------- -------------
--------- --------- --------- ----------- ----------- -------------
Ratios and supplemental data:
Net assets, end of period
(in 000's)............................. $453,792 $483,375 $646,313 $854,701 $781,607 $1,211,709
Ratio of net investment income (loss) to
average net
assets (b)............................. (0.26)% 0.38% 0.61% 0.6% 1.2%*** 1.7%
Ratio of expenses to average net assets:
With expense
reductions (b)....................... 1.82% 1.83% 1.73% 1.9% 2.0%*** 1.8%
Without expense reductions (b)........ 1.88% 1.89% 1.81% --%(d) --%(d) --%(d)
Portfolio turnover rate++............... 1.23% 108% 91% 67% 65% 55%
Average commission rate per share paid
on portfolio transactions++............ $ 0.0277 N/A N/A N/A N/A N/A
<CAPTION>
1990
-----------
<S> <C>
Per Share Operating Performance:
Net asset value, beginning of
period................................. $10.94
-----------
Net investment income................... 0.10
Net realized and unrealized gain (loss)
on investments and foreign currency.... (1.71)
-----------
Net increase (decrease) in net asset
value resulting from investment
operations............................. (1.61)
-----------
Distributions:
Net investment income................. --
Net realized gain on
investments.......................... --
In excess of net investment
income............................... --
In excess of net realized gain
on investments....................... --
-----------
Total distributions................. --
-----------
Net asset value, end of year............ $9.33
-----------
-----------
Total investment
return (a)(c).......................... (14.7)%
-----------
-----------
Ratios and supplemental data:
Net assets, end of period
(in 000's)............................. $1,428,677
Ratio of net investment income (loss) to
average net
assets (b)............................. 1.1%
Ratio of expenses to average net assets:
With expense
reductions (b)....................... 1.9%
Without expense reductions (b)........ --%(d)
Portfolio turnover rate++............... 34%
Average commission rate per share paid
on portfolio transactions++............ N/A
</TABLE>
- ------------------
+ Commencing April 1, 1993, the Fund began offering Class B shares. All
capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Portfolio turnover rate and average commission rate are calculated on the
basis of the Fund as a whole without distinguishing between the classes of
shares issued.
* The selected per share data were calculated based upon weighted average
shares outstanding during the period.
** The per share data reflects a 2 for 1 stock split effective August 14,
1989.
*** Includes reimbursement by the Manager of Fund operating expenses of less
than one cent per share. Without such reimbursement, the ratio of expenses
to average net assets would have been 2.1% and the ratio of net investment
income to average net assets would have been 1.2%.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not reflect the maximum sales charge on
purchases of Class A shares and the contingent deferred sales charge
imposed on certain redemptions of Class B shares.
(d) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reduction, if any.
N/A Not applicable.
Prospectus Page 14
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL EUROPE GROWTH FUND (CONTINUED)
<TABLE>
<CAPTION>
CLASS A+ CLASS B+
------------------------------------ ------------------------------------------
APRIL 1,
1993
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, TO
------------------------------------ --------------------------- DECEMBER 31,
1989** 1988** 1987** 1986** 1996* 1995* 1994* 1993*
-------- ------ ------- ------ ------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $7.77 $7.76 $9.62 $6.82 $10.81 $9.97 $10.79 $9.02
-------- ------ ------- ------ ------- ------- ------- ------------
Net investment income
(loss)................................. (0.02) (0.07) --+++ (0.03)+++ (0.11) (0.03) -- --
Net realized and unrealized gain (loss)
on investments and foreign currency.... 3.19 0.87 0.57 2.83 2.15 0.94 (0.69) 1.85
-------- ------ ------- ------ ------- ------- ------- ------------
Net increase (decrease) in net asset
value resulting from investment
operations............................. 3.17 0.80 0.57 2.80 2.04 0.91 (0.69) 1.85
-------- ------ ------- ------ ------- ------- ------- ------------
Distributions:
Net investment income................. -- -- -- -- -- (0.03) -- (0.06)
In excess of net investment income.... -- -- -- -- -- -- -- (0.02)
Net realized gain on investments...... -- (0.79) (2.43) -- (0.12) (0.04) -- --
In excess of net realized gain on
investments.......................... -- -- -- -- -- -- (0.13) --
-------- ------ ------- ------ ------- ------- ------- ------------
Total distributions................. -- (0.79) (2.43) -- (0.12) (0.07) (0.13) (0.08)
-------- ------ ------- ------ ------- ------- ------- ------------
Net asset value, end of
period................................. $10.94 $7.77 $7.76 $9.62 $12.73 $10.81 $9.97 $10.79
-------- ------ ------- ------ ------- ------- ------- ------------
-------- ------ ------- ------ ------- ------- ------- ------------
Total investment return (a)(c).......... 40.7% 11.1% 6.6% 41.0% 18.79% 9.20% (6.38)% 20.5%
-------- ------ ------- ------ ------- ------- ------- ------------
-------- ------ ------- ------ ------- ------- ------- ------------
Ratios and supplemental data:
Net assets, end of period
(in 000's)............................. $382,428 $8,376 $10,227 $9,809 $87,092 $73,025 $81,602 $34,048
Ratio of net investment income (loss) to
average net
assets (b)............................. (0.6)% (1.0)% (0.00)%+++ (0.4)%+++ (0.91)% (0.27)% (0.04)% (0.1)%
Ratio of expenses to average
net assets:
With expense
reductions (b)....................... 1.9% 3.6% 2.0%+++ 2.0%+++ 2.47% 2.48% 2.38% 2.6%
Without expense reductions (b)........ --% --%(d) --%(d) --%(d) 2.53% 2.54% 2.46% --%(d)
Portfolio turnover rate++............... 43% 153% 193% 102% 123% 108% 91% 67%
Average commission rate per share paid
on portfolio transactions++............ N/A N/A N/A N/A $0.0277 N/A N/A N/A
</TABLE>
- ------------------
+ Commencing April 1, 1993, the Fund began offering Class B shares. All
capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Portfolio turnover rate and average commission rate are calculated on the
basis of the Fund as a whole without distinguishing between the classes of
shares issued.
+++ Includes waivers of investment management and administration fees and
partial reimbursement of operating expenses by the Manager.
* These selected per share data were calculated based upon weighted average
shares outstanding during the period.
** The per share data reflects a 2 for 1 stock split effective August 14,
1989.
*** Includes reimbursement by the Manager of Fund operating expenses of less
than one cent per share. Without such reimbursement, the ratio of expenses
to average net assets would have been 2.1% and the ratio of net investment
income to average net assets would have been 1.2%.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not reflect the maximum sales charge on
purchases of Class A shares and the contingent deferred sales charge
imposed on certain redemptions of Class B shares.
(d) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reduction, if any.
N/A Not applicable.
Prospectus Page 15
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
<TABLE>
<CAPTION>
CLASS A(D) CLASS B(D)
---------------------------------------- ----------------------------------------
OCTOBER 18, 1995 OCTOBER 18, 1995
(COMMENCEMENT (COMMENCEMENT
OF OPERATIONS) OF OPERATIONS)
1996 THROUGH DECEMBER 31, 1995 1996 THROUGH DECEMBER 31, 1995
---------- ---------------------------- ---------- ----------------------------
<S> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
year......................... $ 11.80 $11.43 $ 11.78 $11.43
---------- ------- ---------- -------
Net investment income
(loss)....................... (0.05)** 0.04* (0.14)** 0.02*
Net realized and unrealized
gain (loss) on investments... 1.69 0.33 1.70 0.33
---------- ------- ---------- -------
Net increase (decrease) in net
asset value resulting from
investment operations........ 1.64 0.37 1.56 0.35
---------- ------- ---------- -------
Distributions to shareholders:
From net realized gain on
investments................ (0.92) -- (0.92) --
---------- ------- ---------- -------
Total distributions....... (0.92) -- (0.92) --
---------- ------- ---------- -------
Net asset value, end of
year......................... $ 12.52 $11.80 $ 12.42 $11.78
---------- ------- ---------- -------
---------- ------- ---------- -------
Total investment return
(a)(c)....................... 13.81% 3.24% 13.14% 3.06%
---------- ------- ---------- -------
---------- ------- ---------- -------
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $ 8,448 $1,931 $ 10,694 $2,024
Ratio of net investment income
(loss) to average net assets:
With reimbursement by the
Manager (b)................ (0.38)% 1.68% (1.03)% 1.03%
Without reimbursement by the
Manager (b)................ (1.47)% (20.52)% (2.12)% (21.17)%
Ratio of expenses to average
net assets:
With reimbursement by the
Manager (b)................ 2.00% 2.00% 2.65% 2.65%
Without reimbursement by the
Manager (b)................ 3.09% 24.20% 3.74% 24.85%
Portfolio turnover rate+...... 150% N/A 150% N/A
Average commission rate per
share paid on portfolio
transactions+................ $ 0.0489 N/A $ 0.0489 N/A
</TABLE>
- ------------------
* Before reimbursement by the Manager the net investment loss per share would
have been $(0.47), $(0.49) and $(0.46) for Class A, Class B and Advisor
Class, respectively, from October 18, 1995 to December 31, 1995.
** Before reimbursement by the Manager the net investment loss per share would
have been $(0.19), $(0.28) and $(0.14) for Class A, Class B and Advisor
Class, respectively, for the year ended December 31, 1996.
+ Portfolio turnover rate and average commission rate paid on portfolio
transactions are calculated on the basis of the Portfolio as a whole without
distinguishing between the classes of shares issued.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not include sales charges.
(d) The selected per share data were calculated based upon weighted average
shares outstanding during the period.
Prospectus Page 16
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL AMERICA MID CAP GROWTH FUND
<TABLE>
<CAPTION>
CLASS A+
----------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------------------
1996 1995 1994* 1993 1992 1991 1990
------- ---------- ---------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value,
beginning of
year............... $19.07 $17.69 $17.17 $17.12 $14.13 $11.89 $12.84
------- ---------- ---------- ---------- ---------- --------- ---------
Net investment
income (loss)...... 0.03 0.24 0.04 (0.21) (0.11) 0.01 (0.01)
Net realized and
unrealized gain
(loss) on
investments........ 2.96 3.93 2.55 1.56 4.54 2.28 (0.94)
------- ---------- ---------- ---------- ---------- --------- ---------
Net increase
(decrease) in net
asset value
resulting from
investment
operations......... 2.99 4.17 2.59 1.35 4.43 2.29 (0.95)
------- ---------- ---------- ---------- ---------- --------- ---------
Distributions:
Net investment
income........... -- (0.21) (0.02) -- -- (0.01) --
Net realized gain
on investments... (1.29) (2.58) (2.05) (1.30) (1.44) (0.04) --
------- ---------- ---------- ---------- ---------- --------- ---------
Total
distributions... (1.29) (2.79) (2.07) (1.30) (1.44) (0.05) --
------- ---------- ---------- ---------- ---------- --------- ---------
Net asset value, end
of year............ $20.77 $19.07 $17.69 $17.17 $17.12 $14.13 $11.89
------- ---------- ---------- ---------- ---------- --------- ---------
------- ---------- ---------- ---------- ---------- --------- ---------
Total investment
return (a)(c)...... 15.65% 23.23% 15.69% 8.3% 31.7% 19.3% (7.4)%
------- ---------- ---------- ---------- ---------- --------- ---------
------- ---------- ---------- ---------- ---------- --------- ---------
Ratios and
supplemental data:
Net assets, end of
period (in
000's)............. $343,427 $ 396,291 $ 196,937 $ 116,468 $ 166,712 $ 88,041 $ 65,413
Ratio of net
investment income
(loss) to average
net assets......... 0.12% 1.24% 0.17% (0.7)% (1.1)% 0.0% (0.1)%
Ratio of expenses to
average net assets:
With expense
reductions....... 1.36% 1.46% 1.58% 1.6% 1.8% 1.7% 2.0%
Without expense
reductions....... 1.41% --%(d) --%(d) --%(d) --%(d) --%(d) --%(d)
Portfolio turnover
rate++............. 253% 71% 102% 92% 114% 156% 145%
Average commission
rate per share paid
on portfolio
transactions++..... $0.0536 N/A N/A N/A N/A N/A N/A
</TABLE>
- --------------
+ Commencing April 1, 1993, the Fund began offering Class B shares. All
capital shares issued and outstanding as of March 31, 1993 were reclassified
as Class A shares.
++ Portfolio turnover rate and average commission rate are calculated on the
basis of the Fund as a whole without distinguishing between the classes of
shares issued.
* The selected per share data were calculated based upon weighted average
shares outstanding during the period.
** Includes reimbursement by the Manager of Fund operating expenses of $0.11.
Without such reimbursement, the ratio of expenses to average net assets
would have been 3.3% and the ratio of net investment income to average net
assets would have been (1.2)%.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not include sales charge.
(d) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reduction, if any.
N/A Not applicable.
Prospectus Page 17
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL AMERICA MID CAP GROWTH FUND (CONTINUED)
<TABLE>
<CAPTION>
CLASS A+ CLASS B+
--------------------------------- -----------------------------------------------
JUNE 9, 1987
(COMMENCEMENT
OF APRIL 1,
YEAR ENDED OPERATIONS) 1993
DECEMBER 31, THROUGH YEAR ENDED DECEMBER 31, TO
----------------- DECEMBER 31, -------------------------------- DECEMBER 31,
1989 1988 1987 1996 1995 1994* 1993
------- ------- ------------- --------- --------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
year................................... $8.76 $8.56 $10.00 $18.77 $17.50 $17.09 $15.90
------- ------- ------------- --------- --------- -------- ------------
Net investment income (loss)............ 0.10** (0.40) (0.19) (0.11) 0.10 (0.09) (0.29)
Net realized and unrealized gain (loss)
on investments......................... 4.65 1.35 (1.25) 2.91 3.87 2.55 2.78
------- ------- ------------- --------- --------- -------- ------------
Net increase (decrease) in net asset
value resulting from investment
operations............................. 4.75 0.95 (1.44) 2.80 3.97 2.46 2.49
------- ------- ------------- --------- --------- -------- ------------
Distributions:
Net investment income................. (0.10) -- -- -- (0.12) -- --
Net realized gain on
investments.......................... (0.57) (0.75) -- (1.29) (2.58) (2.05) (1.30)
------- ------- ------------- --------- --------- -------- ------------
Total distributions................. (0.67) (0.75) -- (1.29) (2.70) (2.05) (1.30)
------- ------- ------------- --------- --------- -------- ------------
Net asset value, end of year............ $12.84 $8.76 $8.56 $20.28 $18.77 $17.50 $17.09
------- ------- ------------- --------- --------- -------- ------------
------- ------- ------------- --------- --------- -------- ------------
Total investment return (a)(c).......... 54.8% 11.1% (14.4)% 14.82% 22.42% 15.06% 16.1%
------- ------- ------------- --------- --------- -------- ------------
------- ------- ------------- --------- --------- -------- ------------
Ratios and supplemental data:
Net assets, end of period
(in 000's)............................. $9,930 $1,548 $1,039 $334,590 $348,435 $80,060 $ 1,982
Ratio of net investment income (loss) to
average net assets (b)................. 1.2%** (4.7)% (2.7)% (0.53)% 0.59% (0.48)% (1.3)%
Ratio of expenses to average
net assets (b):
With expense reductions............... 1.9%** 5.1% 3.8% 2.01% 2.11% 2.23% 2.2%
Without expense reductions............ --%(d) --%(d) --%(d) 2.06% --%(d) --%(d) --%(d)
Portfolio turnover rate++............... 133% 184% 505% 253% 71% 102% 92%
Average commission rate per share on
portfolio transactions++............... N/A N/A N/A $ 0.0536 N/A N/A N/A
</TABLE>
- --------------
+ Commencing April 1, 1993, the Fund began offering Class B shares. All
capital shares issued and outstanding as of March 31, 1993 were reclassified
as Class A shares.
++ Portfolio turnover rate and average commission rate are calculated on the
basis of the Fund as a whole without distinguishing between the classes of
shares issued.
* The selected per share data were calculated based upon weighted average
shares outstanding during the period.
** Includes reimbursement by the Manager of Fund operating expenses of $0.11.
Without such reimbursement, the ratio of expenses to average net assets
would have been 3.3% and the ratio of net investment income to average net
assets would have been (1.2)%.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not include sales charge.
(d) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reduction, if any.
N/A Not applicable.
Prospectus Page 18
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL AMERICA VALUE FUND
<TABLE>
<CAPTION>
CLASS A(D) CLASS B(D)
---------------------------------------- ----------------------------------------
OCTOBER 18, 1995 OCTOBER 18, 1995
(COMMENCEMENT (COMMENCEMENT
OF OPERATIONS) OF OPERATIONS)
1996 THROUGH DECEMBER 31, 1995 1996 THROUGH DECEMBER 31, 1995
---------- ---------------------------- ---------- ----------------------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
year.............................. $ 12.76 $11.43 $ 12.75 $11.43
---------- ------- ---------- -------
Net investment income (loss)....... (0.01)** 0.03* (0.10)** 0.01*
Net realized and unrealized gain
(loss) on investments............. 1.94 1.30 1.93 1.31
---------- ------- ---------- -------
Net increase (decrease) in net
asset value resulting from
investment operations............. 1.93 1.33 1.83 1.32
---------- ------- ---------- -------
Distributions to shareholders:
From net realized gain on
investments..................... (0.04) -- (0.04) --
---------- ------- ---------- -------
Total distributions............ (0.04) -- (0.04) --
---------- ------- ---------- -------
Net asset value, end of year....... $ 14.65 $12.76 $ 14.54 $12.75
---------- ------- ---------- -------
---------- ------- ---------- -------
Total investment return (a)(c)..... 15.12% 11.64% 14.35% 11.55%
---------- ------- ---------- -------
---------- ------- ---------- -------
Ratios and supplemental data:
Net assets, end of period (in
000's)............................ $ 2,529 $ 870 $ 5,503 $1,254
Ratio of net investment income
(loss) to average net assets:
With reimbursement by the Manager
(b)............................. (0.10)% 1.10% (0.75)% 0.45%
Without reimbursement by the
Manager (b)..................... (3.61)% (47.44)% (4.26)% (48.09)%
Ratio of expenses to average net
assets:
With reimbursement by the Manager
(b)............................. 2.00% 2.00% 2.65% 2.65%
Without reimbursement by the
Manager (b)..................... 5.51% 50.54% 6.16% 51.19%
Portfolio turnover rate+........... 256% N/A 256% N/A
Average turnover rate per share
paid on portfolio
transactions+..................... $ 0.0551 N/A $ 0.0551 N/A
</TABLE>
- ------------------
* Before reimbursement by the Manager the net investment loss per share would
have been $(1.11), $(1.13) and $(1.10) for Class A, Class B and Advisor
Class, respectively, from October 18, 1995 to December 31, 1995.
** Before reimbursement by the Manager the net investment loss per share would
have been $(.50), $(.59) and $(.46) for Class A, Class B and Advisor Class,
respectively, for the year ended December 31, 1996.
+ Portfolio turnover rate and average commission rate paid on portfolio
transactions are calculated on the basis of the Portfolio as a whole without
distinguishing between the classes of shares issued.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not include sales charges.
(d) The selected per share data were calculated based upon weighted average
shares outstanding during the period.
N/A Not applicable.
Prospectus Page 19
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL JAPAN GROWTH FUND
<TABLE>
<CAPTION>
CLASS A+
-------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------
1996* 1995* 1994 1993 1992* 1991 1990
-------- ---------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $11.00 $12.15 $11.61 $8.70 $11.16 $11.48 $16.39
-------- ---------- --------- --------- --------- --------- ---------
Net investment income
(loss)....................... (0.04) (0.04) (0.04) (0.14) --*** (0.09) (0.05)****
Net realized and unrealized
gain (loss) on investments... (0.77) 0.26 0.79 3.05 (2.40) (0.23) (4.60)
-------- ---------- --------- --------- --------- --------- ---------
Net increase (decrease) in net
asset value resulting from
investment operations........ (0.81) 0.22 0.75 2.91 (2.40) (0.32) (4.65)
-------- ---------- --------- --------- --------- --------- ---------
Distributions:
Net realized gain on
investments and foreign
currency................... (0.43) (1.37) (0.21) -- (0.06) -- (0.26)
-------- ---------- --------- --------- --------- --------- ---------
Total distributions....... (0.43) (1.37) (0.21) -- (0.06) -- (0.26)
-------- ---------- --------- --------- --------- --------- ---------
Net asset value, end of
period....................... $9.76 $11.00 $12.15 $11.61 $8.70 $11.16 $11.48
-------- ---------- --------- --------- --------- --------- ---------
-------- ---------- --------- --------- --------- --------- ---------
Total investment return
(a)(c)....................... (7.43)% 1.94% 6.56% 33.5% (21.5)% (2.8)% (28.7)%
-------- ---------- --------- --------- --------- --------- ---------
-------- ---------- --------- --------- --------- --------- ---------
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $ 63,585 $ 111,105 $ 98,066 $ 88,487 $ 93,865 $ 61,519 $ 51,693
Ratio of net investment income
(loss) to average net
assets....................... (0.40)% (0.40)% (0.32)% (0.3)% --%%*** (1.5)% (1.2)%****
Ratio of expenses to average
net assets:
With expense reductions..... 1.84% 1.99% 1.91% 2.1% 2.2%*** 2.2% 2.2%****
Without expense
reductions................. 1.94% 2.14% 2.03% --%(d) --%(d) --%(d) --%(d)
Portfolio turnover rate++..... 31% 67% 49% 104% 115% 251% 138%
Average commission rate per
share paid on portfolio
transactions++............... $ 0.0971 N/A N/A N/A N/A N/A N/A
</TABLE>
- --------------
+ Commencing April 1, 1993, the Fund began offering Class B shares. All
capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Portfolio turnover rate and average commission rate are calculated on the
basis of the Fund as a whole without distinguishing between the classes of
shares issued.
* The selected per share data were calculated based upon weighted average
shares outstanding during the period.
** The per share data reflects a 2 for 1 stock split effective August 15,
1988.
*** Includes reimbursement by the Manager of Fund operating expenses of $0.01.
Without such reimbursement, the ratio of expenses to average net assets
would have been 2.3% and the ratio of net investment loss to average net
assets would have been (0.1)%.
**** Includes reimbursement by the Manager of Fund operating expenses of $0.01.
Without such reimbursement, the ratio of expenses to average net assets
would have been 2.4% and the ratio of net investment loss to average net
assets would have been (1.35)%.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not reflect the maximum sales charge on
purchases of Class A shares and the contingent deferred sales charge
imposed on certain redemptions of Class B shares.
(d) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reduction, if any.
N/A Not applicable.
Prospectus Page 20
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL JAPAN GROWTH FUND (CONTINUED)
<TABLE>
<CAPTION>
CLASS A+ CLASS B+
----------------------------------------------- ----------------------------------------------
APRIL 1,
1993
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, TO
----------------------------------------------- --------------------------------- DECEMBER
1989 1988** 1987** 1986** 1996* 1995* 1994 31, 1993
--------- --------- --------- -------- ------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value,
beginning of period..... $10.57 $10.36 $9.88 $6.20 $10.78 $12.02 $11.57 $9.85
--------- --------- --------- -------- ------- --------- --------- ---------
Net investment income
(loss).................. (0.19) (0.20) (0.15) (0.14) (0.11) (0.12) (0.13) (0.18)
Net realized and
unrealized gain (loss)
on investments.......... 6.57 2.44 4.52 3.91 (0.75) 0.25 0.79 1.90
--------- --------- --------- -------- ------- --------- --------- ---------
Net increase (decrease)
in net asset value
resulting from
investment operations... 6.38 2.24 4.37 3.77 (0.86) 0.13 0.66 1.72
--------- --------- --------- -------- ------- --------- --------- ---------
Distributions:
Net realized gain on
investments and
foreign currency...... (0.56) (2.03) (3.89) (0.09) (0.43) (1.37) (0.21) --
--------- --------- --------- -------- ------- --------- --------- ---------
Total
distributions....... (0.56) (2.03) (3.89) (0.09) (0.43) (1.37) (0.21) --
--------- --------- --------- -------- ------- --------- --------- ---------
Net asset value, end of
period.................. $16.39 $10.57 $10.36 $9.88 $9.49 $10.78 $12.02 $11.57
--------- --------- --------- -------- ------- --------- --------- ---------
--------- --------- --------- -------- ------- --------- --------- ---------
Total investment return
(a)(c).................. 60.7% 21.9% 52.1% 61.3% (8.05)% 1.20% 5.81% 17.5%
--------- --------- --------- -------- ------- --------- --------- ---------
--------- --------- --------- -------- ------- --------- --------- ---------
Ratios and supplemental
data:
Net assets, end of period
(in 000's).............. $48,405 $18,591 $10,049 $7,313 $32,116 $41,274 $27,355 $3,699
Ratio of net investment
income (loss) to average
net assets (b).......... (1.6)% (1.5)% (2.4)% (1.6)% (1.05)% (1.05)% (0.97)% (0.9)%
Ratio of expenses to
average
net assets:
With expense reductions
(b)................... 2.1% 2.2% 3.0% 2.2% 2.49% 2.64% 2.56% 2.7%
Without expense
reductions (b)........ --%(d) --%(d) --%(d) --%(d) 2.59% 2.79% 2.68% --%(d)
Portfolio turnover
rate++.................. 108% 150% 319% 207% 31% 67% 49% 104%
Average commission rate
per share paid on
portfolio
transactions++.......... N/A N/A N/A N/A $0.0971 N/A N/A N/A
</TABLE>
- --------------
+ Commencing April 1, 1993, the Fund began offering Class B shares. All
capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Portfolio turnover rate and average commission rate are calculated on the
basis of the Fund as a whole without distinguishing between the classes of
shares issued.
* The selected per share data were calculated based upon weighted average
shares outstanding during the period.
** The per share data reflects a 2 for 1 stock split effective August 15,
1988.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not reflect the maximum sales charge on
purchases of Class A shares and the contingent deferred sales charge
imposed on certain redemptions of Class B shares.
(d) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reduction, if any.
N/A Not applicable.
Prospectus Page 21
<PAGE>
GT GLOBAL EQUITY FUNDS
ALTERNATIVE PURCHASE PLAN
- --------------------------------------------------------------------------------
DIFFERENCES BETWEEN THE CLASSES. The primary difference between the two classes
of each Fund's shares offered through this Prospectus lies in their sales charge
structures and ongoing expenses, as summarized below. Class A and Class B shares
of each Fund represent interests in the same Fund and have the same rights,
except that each class bears the separate expenses of its Rule 12b-1
distribution plan and has exclusive voting rights with respect to such plan, and
each class has a separate exchange privilege. See "Management" and "How to
Exchange Shares." Each class has distinct advantages and disadvantages for
different investors, and investors should choose the class that better suits
their circumstances and objectives.
CLASS A SHARES. Class A shares are sold at net asset value plus an initial sales
charge of up to 4.75% of the public offering price imposed at the time of
purchase. This initial sales charge is reduced or waived for certain purchases.
Purchases of $500,000 or more must be for Class A shares. Class A shares also
bear annual service and distribution fees of up to 0.35% of the average daily
net assets of that class.
CLASS B SHARES. Class B shares are sold at net asset value with no initial sales
charge at the time of purchase. Therefore, the entire amount of an investor's
purchase payment is invested in a Fund. Class B shares bear annual service and
distribution fees of up to 1.00% of the average daily net assets of that class,
and Class B shareholders pay a contingent deferred sales charge of up to 5% of
the lesser of the original purchase price or the net asset value of such shares
at the time of redemption. The higher service and distribution fees paid by the
Class B shares of a Fund will cause that class to have a higher expense ratio
and to pay lower dividends per share than Class A shares of the same Fund.
FACTORS TO CONSIDER IN CHOOSING A CLASS OF SHARES. In deciding which class of
shares of a Fund to purchase, investors should consider the foregoing factors as
well as the following:
INTENDED HOLDING PERIOD. Over time, the cumulative expense of the 1.00% annual
service and distribution fees on the Class B shares of a Fund will approximate
or exceed the expense of the applicable 4.75% maximum initial sales charge plus
the 0.35% service and distribution fees on that Fund's Class A shares. For
example, if net asset value remains constant, the Class B shares' aggregate
service and distribution fees would be equal to the Class A shares' initial
maximum sales charge and service and distribution fees approximately seven years
after purchase. Thereafter, Class B shares would experience higher cumulative
expenses. Investors who expect to maintain their investment in a Fund over the
long-term but do not qualify for a reduced initial sales charge might elect the
Class A initial sales charge alternative, because the indirect expense to the
shareholder of the accumulated service and distribution fees on the Class B
shares will exceed the initial sales charge paid by the shareholder plus the
indirect expense to the shareholder of the accumulated service and distribution
fees of Class A shares. Class B investors, however, enjoy the benefit of
permitting all their dollars to work from the time the investments are made. Any
positive investment return on this additional invested amount would partially or
wholly offset the higher annual expenses borne by Class B shares. Because the
Funds' future returns cannot be predicted, however, there can be no assurance
that such a positive return will be achieved.
Finally, Class B shareholders pay a contingent deferred sales charge if they
redeem during the first six years after purchase, unless a sales charge waiver
applies. Investors expecting to redeem during this period should consider the
cost of the applicable contingent deferred sales charge in addition to the
annual Class B service and distribution fees, as compared with the cost of the
applicable initial sales charge and annual service and distribution fees
applicable to the Class A shares.
REDUCED SALES CHARGES. Class A share purchases of $50,000 or more and Class A
share purchases made under a Fund's reduced sales charge plans may be made at a
reduced initial sales charge. See "How to Invest" for a complete list of reduced
sales charges applicable to Class A purchases.
WAIVER OF SALES CHARGES. The entire initial sales charge on Class A shares of a
Fund is waived for
Prospectus Page 22
<PAGE>
GT GLOBAL EQUITY FUNDS
certain eligible purchasers and these purchasers' entire purchase price would be
immediately invested in that Fund. Investors eligible for complete initial sales
charge waivers should purchase Class A shares. The contingent deferred sales
charge is waived for certain redemptions of Class B shares of a Fund. A 1%
contingent deferred sales charge is imposed on certain redemptions of Class A
shares on which no initial sales charge was assessed.
Investors should understand that the contingent deferred sales charge on the
Class B shares and the initial sales charge on the Class A shares are both
intended to compensate GT Global and selling broker/dealers for their
distribution services. Broker/dealers may receive different levels of
compensation for selling a particular class of shares of a Fund.
See "How to Invest," "How to Redeem Shares" and "Management" for a more complete
description of the initial and contingent deferred sales charges, service fees
and distribution fees for Class A and Class B shares of each Fund and
"Dividends, Other Distributions and Federal Income Taxation" and "Calculation of
Net Asset Value" for other differences between these two classes.
ADVISOR CLASS SHARES. Advisor Class shares are offered through a separate
Prospectus to (a) trustees or other fiduciaries purchasing shares for employee
benefit plans that are sponsored by organizations that have at least 1,000
employees; (b) any account with assets of at least $10,000 if (i) a financial
planner, trust company, bank trust department or registered investment adviser
has investment discretion over such account, and (ii) the account holder pays
such person as compensation for its advice and other services an annual fee of
at least .50% on the assets in the account; (c) any account with assets of a
least $10,000 if (i) such account is established under a "wrap fee" program, and
(ii) the account holder pays the sponsor of such program an annual fee of at
least .50% on the assets in the account; (d) accounts advised by one of the
companies composing or affiliated with Liechtenstein Global Trust; and (e) any
of the companies composing or affiliated with Liechtenstein Global Trust.
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES
AND POLICIES
- --------------------------------------------------------------------------------
THE PACIFIC FUND, EUROPE FUND, JAPAN FUND, INTERNATIONAL FUND AND WORLDWIDE FUND
The Pacific Fund, Europe Fund, Japan Fund, International Fund and Worldwide Fund
each seeks long-term growth of capital. Each of these Funds seeks its objective
by investing, under normal circumstances, at least 65% of its total assets in
equity securities of issuers domiciled in its Primary Investment Area, as
described below. Equity securities in which these Funds may invest include
common stocks, preferred stocks, convertible debt securities and warrants to
acquire such securities. These Funds' Primary Investment Areas include the
following countries:
PACIFIC FUND -- Australia, Hong Kong, India, Indonesia, Malaysia, New Zealand,
Pakistan, the Philippines, Singapore, South Korea, Taiwan and Thailand
EUROPE FUND -- Austria, Belgium, Denmark, Finland, France, Germany, Greece,
Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden,
Switzerland, Turkey and the United Kingdom
JAPAN FUND -- Japan
INTERNATIONAL FUND -- all countries listed for Pacific Fund, Europe Fund and
Japan Fund, and Argentina, Brazil, Canada, Chile, Colombia, Israel, Mexico, Peru
and Venezuela, but not the United States
WORLDWIDE FUND -- same as International Fund, but including the United States
Because the development of the world's economies and stock markets is rapidly
evolving, from time to time the Board of Trustees may add or delete countries
from a Fund's Primary Investment Area.
(1) The Worldwide Fund is designed for those investors desiring to delegate
equity investment decisions, including allocation of assets among the world's
different markets, currency strategies and individual stock selection, to the
Manager's professional team of investment specialists; (2) the International
Fund is intended for investors
Prospectus Page 23
<PAGE>
GT GLOBAL EQUITY FUNDS
seeking to complement their U.S. equity investments with a professionally
managed international portfolio; (3) the Pacific Fund and Europe Fund are
regional funds for investors interested in a more geographically concentrated
investment but still desiring to diversify across multiple markets; and (4) the
Japan Fund is designed for investors wishing to concentrate their investment in
a particular market but still desiring the professional management, liquidity
and diversification afforded by a mutual fund.
Each of the Pacific Fund, Europe Fund, Japan Fund, International Fund and
Worldwide Fund may invest up to 35% of its total assets in the equity securities
of issuers domiciled outside of its Primary Investment Area. Such investments
may include: (a) securities of issuers in countries that are not located in the
Primary Investment Area but are linked by tradition, economic markets, cultural
similarities or geography to the countries in such Primary Investment Area; and
(b) securities of issuers located elsewhere in the world that have operations in
the Primary Investment Area or that stand to benefit from political and economic
events in the Primary Investment Area.
Under normal circumstances, the assets of the Worldwide Fund and International
Fund are invested in the equity securities of issuers domiciled in at least
three different countries, and 20% to 60% of the Worldwide Fund's assets
normally are invested in the equity securities of U.S. issuers.
Each of the Pacific Fund, Europe Fund, Japan Fund, International Fund and
Worldwide Fund may invest up to 35% of its total assets in debt securities,
including U.S. and foreign government securities and corporate debt securities,
Samurai and Yankee bonds, Eurobonds and Depository Receipts. The issuers of such
debt securities may or may not be domiciled in the Primary Investment Area of a
particular Fund purchasing the securities. These Funds will limit their
purchases of debt securities to investment grade obligations. "Investment grade"
debt refers to those securities rated within one of the four highest ratings
categories by Moody's Investors Service, Inc. ("Moody's") or by Standard &
Poor's Ratings Group ("S&P"), or, if not similarly rated by any other nationally
recognized statistical rating organization ("NRSRO"), deemed by the Manager to
be of equivalent quality. Debt rated Baa by Moody's, which is the lowest
category of investment grade debt, is considered by Moody's to have speculative
characteristics. See the Statement of Additional Information for a description
of Moody's and S&P ratings.
THE AMERICA MID CAP FUND, AMERICA SMALL CAP FUND AND AMERICA VALUE FUND
The investment objective of the America Mid Cap Fund is long term growth of
capital. The investment objective of the America Small Cap Fund and America
Value Fund is long term capital appreciation.
The America Mid Cap Fund seeks its investment objective by investing, under
normal circumstances, at least 65% of its total assets in equity securities of
U.S. mid cap companies. Equity securities in which the Fund may invest include
common stocks, preferred stocks, convertible debt securities and warrants to
acquire such securities. The Fund may also invest up to 35% of its total assets
in the equity securities of (a) issuers domiciled in the United States that, at
the time of purchase, have market capitalizations of less than $1 billion or
greater than $5 billion; and (b) issuers domiciled outside the United States,
including (i) issuers in countries that are not located in the United States but
are linked by tradition, economic markets, cultural similarities or geography to
the United States; and (ii) issuers located elsewhere in the world that have
operations in the United States or that stand to benefit from political or
economic events in the United States. In addition, the Fund may invest up to 35%
of its total assets in investment grade debt securities, including U.S. and
foreign government securities and corporate debt securities, Samurai and Yankee
bonds, Euro bonds and Depositary Receipts. The issuers of such debt securities
may or may not be domiciled in the United States.
The America Small Cap Fund seeks its investment objective by investing all of
its investable assets in the Small Cap Portfolio, which, in turn, normally
invests at least 65% of its total assets in equity securities, including common
stocks, preferred stocks, convertible debt securities and warrants of U.S. small
cap companies. The remainder of the Small Cap Portfolio's assets may be invested
in common stocks, preferred stocks, convertible debt securities and warrants of
companies domiciled in the United States that, at the time of purchase, have
market capitalizations of greater than $1 billion and non-convertible debt
securities, U.S. government securities and high quality money market
instruments, such as U.S. government obligations, high grade commercial paper,
bank certificates of deposit and bankers' acceptances, of
Prospectus Page 24
<PAGE>
GT GLOBAL EQUITY FUNDS
issuers domiciled in the United States. The Small Cap Portfolio also may invest
up to 10% of its total assets in securities of foreign issuers in the form of
American Depository Receipts ("ADRs") or other similar securities convertible
into securities of foreign issuers.
The America Value Fund seeks its investment objective by investing all of its
investable assets in the Value Portfolio, which, in turn, normally invests at
least 65% of its total assets in equity securities, including common stocks,
preferred stocks, convertible debt securities and warrants of companies
domiciled in the United States that, at the time of purchase, have market
capitalizations of greater than $500 million and that the Manager believes to be
undervalued in relation to long-term earning power or other factors. The
remainder of the Value Portfolio's assets may be invested in common stocks,
preferred stocks, convertible debt securities and warrants of companies
domiciled in the United States that are smaller than those defined above and
non-convertible debt securities, U.S. government securities and high quality
money market instruments, such as U.S. government obligations, high grade
commercial paper, bank certificates of deposit and bankers' acceptances, of
issuers domiciled in the United States. The Value Portfolio also may invest up
to 10% of its total assets in securities of foreign issuers in the form of ADRs
or other similar securities convertible into securities of foreign issuers.
The debt obligations that the Portfolios may invest in are limited to U.S.
government securities and corporate debt securities of issuers domiciled in the
United States. The Portfolios will limit their purchases of debt securities to
investment grade obligations, as defined above.
For purposes of this Prospectus, market capitalization means the total market
value of a company's outstanding common stock. There is no necessary correlation
between market capitalization and the financial attributes (such as level of
assets, revenues or income) often used to measure a company's size.
SELECTION OF INVESTMENTS AND ASSET ALLOCATION
In managing the Pacific Fund, Europe Fund, Japan Fund, International Fund and
Worldwide Fund, the Manager seeks to identify those countries and industries
where economic and political factors, including currency movements, are likely
to produce above-average growth rates. The Manager further attempts to identify
those companies in such countries and industries that are best positioned and
managed to take advantage of these economic and political factors. The Manager
intends to invest in such markets only after balancing the potential for growth
of selected companies in each market relative to the risks of investing in each
such country. Among the factors to be considered are that several of the markets
included in the Primary Investment Areas of the Pacific Fund, Europe Fund,
International Fund and Worldwide Fund are so-called developing countries, and
their economies and markets are less developed and more prone to uncertainty,
instability and risk than those of the other markets in which such Funds invest.
In selecting equity securities for the America Mid Cap Fund and the Small Cap
Portfolio, the Manager uses a multi-stage process to identify companies that
possess sustainable above average growth at an attractive offering price. The
process for selecting small and mid cap growth stocks consists of four
components: asset allocation, industry diversification, stock selection and
quality control. The Manager tracks individual companies and categorizes them
into industry groups. Purchases and sales of individual securities are based on
the ratings established by the Manager on a weekly basis. Stocks ranked in the
top 30% are buys, and the bottom 30% are sells. The quality control process
ensures consistency with the industry and asset allocation guidelines as well as
stock guidelines. There is no assurance that this process will produce better or
more consistent results than other investment processes.
In selecting issuers for the Value Portfolio, the Manager attempts to identify
securities of issuers whose prospects and growth potential, in the Manager's
opinion, are currently undervalued by investors. In the Manager's view, an
issuer may show favorable prospects as a result of many factors, including
changes in management, shifts in supply and demand conditions in the industry in
which it operates, technological advances, new products or product cycles, or
changes in macroeconomic trends. The securities of such issuers may be
undervalued by the market due to many factors, including market decline,
tax-loss selling, poor economic conditions, limited coverage by the investment
community, investors' reluctance to overlook perceived financial, operational,
managerial or other problems affecting the issuer or the industry in which it
operates and other factors. The Manager will attempt to identify those
undervalued issuers with the potential for attractive returns.
Prospectus Page 25
<PAGE>
GT GLOBAL EQUITY FUNDS
For purposes of this Prospectus, an issuer typically is considered as domiciled
in a particular country if it is (a) organized under the laws of, or has its
principal office in, a particular country or (b) normally derives 50% or more of
its total revenues from business in that country, provided that, in the
Manager's view, the value of such issuer's securities tends to reflect such
country's development to a greater extent than developments elsewhere. However,
these are not absolute requirements, and certain companies incorporated in a
particular country and considered by the Manager to be located in that country
may have substantial foreign operations or subsidiaries and/or export sales
exceeding in size the assets or sales in that country.
The Manager allocates investments among fixed income securities of particular
issuers on the basis of its views as to the best values then currently available
in the marketplace. Such values are a function of yield, maturity, issue
classification and quality characteristics, coupled with expectations regarding
the economy, movements in the general level and term of interest rates, currency
values, political developments, and variations in the supply of funds available
for investment in the world bond market relative to the demands placed upon it.
If market interest rates decline, fixed income securities generally appreciate
in value and vice versa. Fixed income securities denominated in currencies other
than the U.S. dollar or in multinational currency units are evaluated on the
strength of the particular currency against the U.S. dollar as well as on the
current and expected levels of interest rates in the country or countries. In
addition to the foregoing, the Pacific Fund, Europe Fund, Japan Fund,
International Fund, Worldwide Fund and America Mid Cap Fund may seek to take
advantage of differences in relative values of fixed income securities among
various countries.
OTHER INVESTMENT POLICIES
TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, the Manager may employ a temporary defensive investment strategy if it
determines such a strategy to be warranted due to market, economic or political
conditions. During such time the Pacific Fund, Europe Fund, Japan Fund,
International Fund, Worldwide Fund, America Mid Cap Fund, Small Cap Portfolio
and Value Portfolio may each invest less than 65% of its total assets in the
types of securities covered by its primary investment policy. Under a defensive
strategy, the Pacific Fund, Europe Fund, Japan Fund, International Fund,
Worldwide Fund and America Mid Cap Fund may invest up to 100% of its total
assets in cash (U.S. dollars, foreign currencies or multinational currency
units) and/or high quality debt securities or money market instruments issued by
corporations or the U.S. or a foreign government. In addition, for temporary
defensive purposes, most or all investments of the Pacific Fund, Europe Fund,
Japan Fund, International Fund and Worldwide Fund may be made in the United
States and denominated in U.S. dollars. Under a defensive strategy, each
Portfolio may hold U.S. dollars and/or may invest any portion of its assets in
high quality domestic debt securities or high quality money market instruments.
To the extent a Fund or a Portfolio adopts a temporary defensive position, it
will not be invested so as to achieve directly its investment objective.
In addition, pending investment of proceeds from new sales of Fund shares or to
meet its ordinary daily cash needs, the Pacific Fund, Europe Fund, Japan Fund,
International Fund, Worldwide Fund and America Mid Cap Fund may hold cash (U.S.
dollars, foreign currencies or multinational currency units) and may invest in
high quality foreign or domestic money market instruments. Each Portfolio also
may hold U.S. dollars and/or invest in domestic debt securities or high quality
money market instruments pending investment of proceeds from new sales of
America Small Cap Fund or America Value Fund shares, or to meet its ordinary
daily cash needs.
INVESTMENTS IN OTHER INVESTMENT COMPANIES. With respect to certain countries,
investments may only be made through investment in other investment companies
that in turn are authorized to invest in the securities of such countries. The
Pacific Fund, Europe Fund, Japan Fund, International Fund, Worldwide Fund,
America Mid Cap Fund, Small Cap Portfolio and Value Portfolio may each invest up
to 10% of its total assets in other investment companies. As a shareholder in an
investment company, a Fund or a Portfolio would bear its ratable share of that
investment company's expenses, including its advisory and administration fees.
At the same time, the Fund or Portfolio would continue to pay its own management
fees and other expenses.
PRIVATIZATIONS. The governments of some foreign countries have been engaged in
programs of selling part or all of their stakes in government owned or
controlled enterprises ("privatizations"). The Manager believes that
privatizations may offer opportunities for significant capital appreciation and
intends to invest in privatizations in
Prospectus Page 26
<PAGE>
GT GLOBAL EQUITY FUNDS
appropriate circumstances. In certain foreign countries, the ability of foreign
entities to participate in privatizations may be limited by local law, or the
terms on which the Fund may be permitted to participate may be less advantageous
than those for local investors. There can be no assurance that foreign
governments will continue to sell companies currently owned or controlled by
them or that privatization programs will be succesful.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. Each Fund or
Portfolio may borrow from banks or may borrow through reverse repurchase
agreements and "roll" transactions in connection with meeting requests for the
redemption of the Fund's (or, in the case of a Portfolio, its corresponding
Fund's) shares. Each Fund or Portfolio also may borrow up to 5% of its total
assets for temporary or emergency purposes other than to meet redemptions. Each
Fund or Portfolio may borrow up to 33 1/3% of its total assets. However, no
additional investments will be made if a Fund or Portfolio's borrowings exceed
5% of its total assets. Any borrowing by a Fund or Portfolio may cause greater
fluctuation in the value of its (or, in the case of a Portfolio its
corresponding Fund's) shares than would be the case if a Fund or Portfolio did
not borrow.
A reverse repurchase agreement is a borrowing transaction in which a Fund or a
Portfolio transfers possession of a security to another party, such as a bank or
broker/dealer, in return for cash and agrees to repurchase the security in the
future at an agreed upon price which includes an interest component. A "roll"
borrowing transaction involves a Fund or Portfolio's sale of securities together
with its commitment (for which that Fund or Portfolio may receive a fee) to
purchase similar, but not identical, securities at a future date.
SECURITIES LENDING. The Funds and Portfolios may lend their portfolio securities
to broker/dealers or to other institutional investors. Securities lending allows
a Fund or a Portfolio to retain ownership of the securities loaned and, at the
same time, earn additional income that may be used to offset the Fund's or
Portfolio's custody fees. Each Fund or Portfolio limits its loans of portfolio
securities to an aggregate of 30% of the value of its total assets, measured at
the time any such loan is made. While a loan is outstanding, the borrower must
maintain with the Fund's or Portfolio's custodian collateral consisting of cash,
U.S. government securities or certain irrevocable letters of credit equal to at
least the value of the borrowed securities, plus any accrued interest. The risks
in lending portfolio securities, as with other extensions of secured credit,
consist of possible delay in receiving additional collateral or in recovery of
the securities and possible loss of rights in the collateral should the borrower
fail financially.
WHEN ISSUED OR FORWARD COMMITMENT SECURITIES. The Pacific Fund, Europe Fund,
Japan Fund, International Fund, Worldwide Fund and America Mid Cap Fund and the
Portfolios may purchase debt securities on a "when-issued" basis and may
purchase or sell such securities on a "forward commitment" basis in order to
hedge against anticipated changes in interest rates and prices. The price, which
generally is expressed in yield terms, is fixed at the time the commitment is
made, but delivery and payment for the securities take place at a later date.
When-issued securities and forward commitments may be sold prior to the
settlement date, but the Funds and Portfolios will purchase or sell when-issued
securities or enter into forward commitments only with the intention of actually
receiving or delivering the securities, as the case may be. No income accrues on
securities that have been purchased pursuant to a forward commitment or on a
when-issued basis prior to delivery to the Fund or Portfolio. If the Fund or
Portfolio disposes of the right to acquire a when-issued security prior to its
acquisition or disposes of its right to deliver or receive against a forward
commitment, it may incur a gain or loss. At the time a Fund or a Portfolio
enters into a transaction on a when-issued or forward commitment basis, a
segregated account consisting of cash or liquid securities equal to the value of
the when-issued or forward commitment securities will be established and
maintained with its custodian and will be marked to market daily. There is a
risk that the securities may not be delivered and that a Fund or a Portfolio may
incur a loss.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. The Pacific Fund, Europe
Fund, Japan Fund, International Fund, Worldwide Fund and America Mid Cap Fund
may use forward currency contracts, futures contracts, options on securities,
options on indices, options on currencies and options on futures contracts to
attempt to hedge against the overall level of investment risk normally
associated with each such Fund's portfolio. In addition, each Portfolio may use
options on securities, options on indices, futures contracts and options on
futures contracts to attempt to hedge against the overall level of investment
risk normally associated with its portfolio. These instruments are often
referred to as "derivatives," which may be
Prospectus Page 27
<PAGE>
GT GLOBAL EQUITY FUNDS
defined as financial instruments whose performance is derived, at least in part,
from the performance of another asset (such as a security, currency or an index
of securities). Each Fund and Portfolio may enter into such instruments up to
the full value of its portfolio assets. See "Risk Factors -- Options, Futures
and Forward Currency Strategies" herein and the Statement of Additional
Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Funds may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar or
may involve two foreign currencies. The Funds may enter into forward currency
contracts either with respect to specific transactions or with respect to such
Fund's portfolio positions. The Funds also may purchase and sell put and call
options on currencies, futures contracts on currencies and options on futures
contracts on currencies to hedge against movements in exchange rates.
In addition, each Fund and Portfolio may purchase and sell put and call options
on equity and debt securities to hedge against the risk of fluctuations in the
prices of securities held by the Fund or Portfolio or that the Manager intends
to include in the Fund's or Portfolio's portfolio. The Funds and Portfolios also
may buy and sell put and call options on stock indexes to hedge against overall
fluctuations in the securities markets or market sectors generally or in a
specific market sector.
Further, the Funds and Portfolios may sell stock index futures contracts and may
purchase put options or write call options on such futures contracts to protect
against a general stock market or market sector decline that could adversely
affect the Fund's or Portfolio's portfolio. The Funds and Portfolios also may
purchase stock index futures contracts and purchase call options or write put
options on such contracts to hedge against a general stock market or market
sector advance and thereby attempt to lessen the cost of future securities
acquisitions. A Fund or a Portfolio may use interest rate futures contracts and
options thereon to hedge the debt portion of its portfolio against changes in
the general level of interest rates.
AMERICAN DEPOSITORY RECEIPTS. The Pacific Fund, Europe Fund, Japan Fund,
International Fund, Worldwide Fund and America Mid Cap Fund and the Portfolios
may invest in securities of foreign issuers in the form of ADRs or other similar
securities convertible into securities of foreign issuers. These securities may
not necessarily be denominated in the same currency as the securities into which
they may be converted. ADRs are receipts typically issued by a United States
bank or trust company evidencing ownership of the underlying securities.
Generally, ADRs in registered form are designed for use in U.S. securities
markets. See "Investment Objectives and Policies" in the Statement of Additional
Information.
OTHER INFORMATION. The investment objective of each Fund may not be changed
without the approval of a majority of the Fund's outstanding voting securities.
A "majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the Fund's shares represented at a meeting at which more than 50% of the
Fund's outstanding shares are represented, or (ii) more than 50% of the Fund's
outstanding shares. In addition, each Fund has adopted certain investment
limitations that also may not be changed without shareholder approval. A
complete description of these limitations is included in the Statement of
Additional Information. Unless specifically noted, the Funds' investment
policies described in this Prospectus and in the Statement of Additional
Information are not fundamental policies and may be changed by vote of the
Company's Board of Trustees, without shareholder approval.
The approval of the America Small Cap Fund and America Value Fund and of other
investors in their corresponding Portfolio, if any, is not required to change
the investment objective, policies or limitations of that Portfolio, unless
otherwise specified. Written notice shall be provided to shareholders of such
Fund thirty days prior to any changes in its corresponding Portfolio's
investment objective.
OTHER INFORMATION REGARDING THE PORTFOLIOS. As previously described, the America
Small Cap Fund and America Value Fund, unlike mutual funds that directly acquire
and manage their own portfolios of securities, seek to achieve their investment
objective by investing all of their investable assets in the Small Cap Portfolio
and Value Portfolio, respectively, each of which is a separate investment
company. Because its corresponding Fund will invest only in its corresponding
Portfolio, that Fund's shareholders will acquire only an indirect interest in
the investments of that Portfolio.
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GT GLOBAL EQUITY FUNDS
The America Small Cap Fund and America Value Fund may each redeem its investment
in its corresponding Portfolio at any time, if the Board of Trustees of the
Company determines that it is in the best interests of that Fund and its
shareholders to do so. A change in a Portfolio's investment objective, policies
or limitations which is not approved by the Board or shareholders of the
corresponding Fund could require the Fund to redeem its interest in the
Portfolio. Any such redemption could result in a distribution in kind of
portfolio securities (as opposed to a cash distribution) by the Portfolio. In
addition, a distribution in kind could result in a less diversified portfolio of
investments for the Fund and could adversely affect the liquidity of the Fund.
Should such a distribution occur, the Fund could incur brokerage fees or other
transaction costs in converting such securities to cash. Upon redemption, the
Board would consider what action might be taken, including the investment of all
the investable assets of the Fund in another pooled investment entity having
substantially the same investment objective as the Fund or the retention by the
Fund of its own investment adviser to manage its assets in accordance with the
investment objective, policies and limitations discussed herein with respect to
the Fund and its investment in its corresponding Portfolio.
In addition to selling an interest to its corresponding Fund, each Portfolio may
sell interests to other non-affiliated investment companies and/or other
institutional investors. All institutional investors in a Portfolio will pay a
proportionate share of the Portfolio's expenses and will invest in the Portfolio
on the same terms and conditions. However, if another investment company invests
in a Portfolio, it would not be required to sell its shares at the same public
offering price as the Portfolio's corresponding Fund and may charge different
sales commissions. Therefore, investors in the America Small Cap Fund and
America Value Fund may experience different returns from investors in another
investment company that invests exclusively in its corresponding Portfolio. As
of the date of this Prospectus, the America Small Cap Fund and America Value
Fund are the only institutional investors in their corresponding Portfolios.
The America Small Cap Fund and America Value Fund may each be materially
affected by the actions of large investors in its corresponding Portfolio, if
any. For example, as with all open-end investment companies, if a large investor
were to redeem its interest in a Portfolio, (1) the Portfolio's remaining
investors could experience higher pro rata operating expenses, thereby producing
lower returns and (2) the Portfolio's security holdings may become less diverse,
resulting in increased risk. Institutional investors in a Portfolio that have a
greater pro rata ownership interest in the Portfolio than its corresponding Fund
could have effective voting control over the operation of the Portfolio.
- --------------------------------------------------------------------------------
RISK FACTORS
- --------------------------------------------------------------------------------
GENERAL. There is no assurance that any Fund or Portfolio will achieve its
investment objective. Each Fund's net asset value will fluctuate, reflecting
fluctuations in the market value of its, or its corresponding Portfolio's,
securities. Equity securities, particularly common stocks, generally represent
the most junior position in an issuer's capital structure and entitle holders to
an interest in the assets of an issuer, if any, remaining after all more senior
claims have been satisfied. In addition, the value of debt securities held by a
Fund or a Portfolio will fluctuate with changes in the perceived
creditworthiness of the issuers of such securities and interest rates.
FOREIGN INVESTING. The Pacific Fund, Europe Fund, Japan Fund and International
Fund each invests primarily in foreign securities and the Worldwide Fund may
invest a significant portion of its assets in foreign securities. Investing in
foreign securities entails certain risks. The securities of non-U.S. issuers
generally will not be registered with, nor will the issuers thereof be subject
to, the reporting requirements of the SEC. Accordingly, there may be less
publicly available information about foreign securities and issuers than is
available about domestic securities and issuers. Foreign companies generally are
not subject to uniform accounting, auditing and financial reporting standards,
practices and requirements comparable to those applicable to domestic companies.
Securities of some foreign companies are less liquid and their prices may be
more volatile than securities of comparable domestic companies. In addition,
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GT GLOBAL EQUITY FUNDS
certain costs attributable to foreign investing, such as custody charges, are
higher than those attributable to domestic investing. A Fund's interest and
dividends from foreign issuers may be subject to non-U.S. withholding taxes,
thereby reducing its net investment income.
With respect to some foreign countries, there is the increased possibility of
expropriation or confiscatory taxation, limitations on the removal of funds or
other assets of the Funds, political or social instability, or diplomatic
developments which could affect their 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 national product, rate of inflation,
rate of savings and capital reinvestment, resource self-sufficiency and balance
of payments positions.
Because the Pacific Fund, Europe Fund, Japan Fund, International Fund and
Worldwide Fund may invest substantially in securities denominated in currencies
other than the U.S. dollar, and because they may hold foreign currencies, they
will be affected favorably or unfavorably by exchange control regulations or
changes in the exchange rates between such currencies and the U.S. dollar.
Changes in currency exchange rates will influence the value of those Funds'
shares, and also may affect the value of dividends and interest earned by those
Funds and gains and losses realized by those Funds. Currencies generally are
evaluated on the basis of fundamental economic criteria (e.g., relative
inflation and interest rate levels and trends, growth rate forecasts, balance of
payments status and economic policies) as well as technical and political data.
The exchange rates between the U.S. dollar and other currencies are determined
by supply and demand in the currency exchange markets, the international balance
of payments, governmental intervention, speculation and other economic and
political conditions. If the currency in which a security is denominated
appreciates against the U.S. dollar, the dollar value of the security will
increase. Conversely, a decline in the exchange rate of the currency would
adversely affect the value of the security expressed in U.S. dollars.
INVESTING IN EMERGING MARKETS. Investing in emerging markets involves risks
relating to potential political and economic instability within such markets and
the risks of expropriation, nationalization, confiscation of assets and property
or the imposition of restrictions on foreign investment and on repatriation of
capital invested. In the event of such expropriation, nationalization or other
confiscation in any emerging market, a Fund could lose its entire investment in
that market.
Many emerging market countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have negative
effects on the economies and securities markets of certain emerging market
countries.
Economies in emerging markets generally are dependent heavily upon international
trade and, accordingly, have been and may continue to be affected adversely by
trade barriers, exchange controls, managed adjustments in relative currency
values and other protectionist measures imposed or negotiated by the countries
with which they trade. These economies also have been and may continue to be
affected adversely by economic conditions in the countries in which they trade.
The securities markets of emerging countries are substantially smaller, less
developed, less liquid and more volatile than the securities markets of the
United States and other more developed countries. Disclosure and regulatory
standards in many respects are less stringent than in the United States and
other major markets. There also may be a lower level of monitoring and
regulation of emerging securities markets and the activities of investors in
such markets, and enforcement of existing regulations has been extremely
limited.
In addition, brokerage commissions, custodial services and other costs relating
to investment in foreign markets generally are more expensive than in the United
States, particularly with respect to emerging markets. Such markets have
different settlement and clearance procedures. In certain markets there have
been times when settlements have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions. The
inability of a Fund to make intended securities purchases due to settlement
problems could cause the Fund to forego attractive investment opportunities.
Inability to dispose of a portfolio security caused by settlement problems could
result either in losses to the Fund due to subsequent declines in value of the
portfolio security or, if the Fund has entered into a contract to sell the
security, could result in possible liability to the purchaser.
In addition, many of the currencies in emerging market countries have
experienced steady devaluations relative to the U.S. dollar and major
devaluations have historically occured in certain countries.
CONCENTRATION. The Pacific Fund, Europe Fund, Japan Fund, America Mid Cap Fund
and the Portfolios each invests a significant portion of its assets in a
particular country or region of the world. As a
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<PAGE>
GT GLOBAL EQUITY FUNDS
result, such Funds and the Portfolios may be subject to greater risks and may
experience greater volatility than a fund that is more broadly diversified
geographically.
JAPAN. The Japan Fund invests primarily in equity securities of issuers
domiciled in Japan. Accordingly, the Japan Fund's performance will be closely
tied to economic and political conditions in Japan, and its performance is
expected to be more volatile than more geographically diversified funds. Changes
in regulatory, tax or economic policy in Japan could significantly affect the
Japanese securities markets and therefore the Japan Fund's performance.
Japan's economic growth has declined significantly since 1990. The general
government position has deteriorated as result of weakening economic growth and
stimulative measures taken to support economic activity and to restore financial
stability. Although the decline in interest rates and fiscal stimulation
packages have helped to contain recessionary forces, uncertainties remain. Japan
is also heavily dependent upon international trade, so its economy is especially
sensitive to trade barriers and disputes.
The common stocks of many Japanese companies trade at high price-earnings
ratios. Differences in accounting methods make it difficult to compare the
earnings of Japanese companies with those of companies in other countries,
especially the United States. In general, however, reported net income in Japan
is understated relative to U.S. accounting standards and this is one reason why
price-earnings ratios of the stocks of Japanese companies have tended
historically to be higher than those for U.S. stocks. In addition, Japanese
companies have tended to have higher growth rates than U.S. companies, and
Japanese interest rates have generally been lower than in the United States,
both of which factors tend to result in lower discount rates and higher
price-earnings ratios in Japan than in the United States.
The Japanese securities markets are less regulated than those in the United
States. Evidence has emerged from time to time of distortion of market prices to
serve political or other purposes. Shareholders' rights are also not always
equally enforced.
In addition, Japan's banking industry is undergoing problems related to bad
loans and declining values in real estate.
PACIFIC REGION COUNTRIES. The Pacific Fund invests primarily in equity
securities of issuers located in Pacific region countries other than Japan.
Certain of the risks associated with international investments are heightened
for investments in Pacific region countries. For example, some of the currencies
of Pacific region countries have experienced steady devaluations relative to the
U.S. dollar, and major adjustments have been made periodically in certain such
currencies. Certain countries, such as India, face serious exchange constraints.
Jurisdictional disputes also exist between South Korea and North Korea.
In addition, Hong Kong will revert to Chinese administration on July 1, 1997.
Investments in Hong Kong may be subject to expropriation, nationalization or
confiscation, in which case the Pacific Fund could lose its entire investment in
Hong Kong. In addition, the reversion of Hong Kong also presents a risk that the
Hong Kong dollar will be devalued and a risk of possible loss of investor
confidence in Hong Kong's currency, stock market and assets.
SMALL CAP COMPANIES. The Small Cap Portfolio invests primarily in equity
securities of U.S. small cap companies. Small cap companies may be more
vulnerable than larger companies to adverse business, economic or market
developments. Small cap companies may also have more limited product lines,
markets or financial resources than companies with larger capitalizations, and
may be more dependent on a relatively small management group. In addition, small
cap companies may not be well-known to the investing public, may not have
institutional ownership and may have only cyclical, static or moderate growth
prospects. Most small cap company stocks pay low or no dividends. Securities of
small cap companies are generally less liquid and their prices more volatile
than those of securities of larger companies. The securities of some small cap
companies may not be widely traded, and the Small Cap Portfolio's position in
securities of such companies may be substantial in relation to the market for
such securities. Accordingly, it may be difficult for the Small Cap Portfolio to
dispose of securities of these small cap companies at prevailing market prices
in order to meet redemptions.
OPTIONS, FUTURES AND FORWARD CURRENCY CONTRACTS. Although the Pacific Fund,
Europe Fund, Japan Fund, Worldwide Fund, International Fund and America Mid Cap
Fund is each authorized to enter into options, futures and forward currency
transactions and the Portfolios are authorized to enter into options and futures
transactions, such a Fund or a Portfolio might not enter into any such
transactions. Options, futures and foreign currency transactions involve certain
risks, which include: (1) dependence on the Manager's ability to predict
movements in the prices of individual securities, fluctuations in the general
securities markets or in the appropriate market sector and movements in interest
rates and currency
Prospectus Page 31
<PAGE>
GT GLOBAL EQUITY FUNDS
markets; (2) imperfect correlation, or even no correlation, between movements in
the price of options, forward contracts, futures contracts or options thereon
and movements in the price of the currency or security hedged or used for cover;
(3) the fact that skills and techniques needed to trade options, futures
contracts or options thereon or to use forward currency contracts are different
from those needed to select the securities in which a Fund or a Portfolio
invests; (4) lack of assurance that a liquid secondary market will exist for any
particular option, futures contract or option thereon at any particular time;
(5) the possible loss of principal under certain conditions; (6) the possible
inability of a Fund or a Portfolio to purchase or sell a portfolio security at a
time when it would otherwise be favorable for it to do so, or the possible need
for a Fund or a Portfolio to sell a security at a disadvantageous time, due to
the need for the Fund or Portfolio to maintain "cover" or to set aside
securities in connection with hedging transactions; and (7) the possible need to
defer closing out of certain options, futures contracts, forward currency
contracts and/or foreign currency positions in order for the Fund (or, in the
case of a Portfolio, its corresponding Fund) to qualify or continue to qualify
for the beneficial tax treatment afforded regulated investment companies under
the Internal Revenue Code of 1986, as amended, ("Code"). See "Dividends, Other
Distributions and Federal Income Taxation" herein and "Taxes" in the Statement
of Additional Information.
ILLIQUID SECURITIES. Each Fund and Portfolio may invest up to 15% of its net
assets in securities for which no readily available market exists, so-called
"illiquid securities." Illiquid securities may be more difficult to value than
liquid securities, and the sale of illiquid securities generally will require
more time and result in higher brokerage charges or dealer discounts and other
selling expenses than the sale of liquid securities. Moreover, illiquid
restricted securities often sell at a price lower than similar securities that
are not subject to restrictions on resale.
- --------------------------------------------------------------------------------
HOW TO INVEST
- --------------------------------------------------------------------------------
GENERAL. All purchase orders will be executed at the public offering price next
determined after the purchase order is received, which includes any applicable
sales charge for Class A shares. Orders received before the close of regular
trading on the New York Stock Exchange ("NYSE") (currently 4:00 p.m. Eastern
time, unless weather, equipment failure or other factors contribute to an
earlier closing time) on any Business Day will be executed at the public
offering price for the applicable class of shares determined that day. A
"Business Day" is any day Monday through Friday on which the NYSE is open for
business. The minimum initial investment is $500 ($100 for IRAs and $25 for
custodial accounts under Section 403(b)(7) of the Code and other tax-qualified
employer-sponsored retirement accounts, if made by such investors under a
systematic investment plan providing for monthly payments of at least that
amount), and the minimum for additional purchases is $100 ($25 for IRAs, Code
Section 403(b)(7) custodial accounts and other tax-qualified employer-sponsored
retirement accounts, as mentioned above). THE FUNDS AND GT GLOBAL RESERVE THE
RIGHT TO REJECT ANY PURCHASE ORDER AND TO SUSPEND THE OFFERING OF SHARES FOR A
PERIOD OF TIME. In particular, the Funds and GT Global may reject purchase
orders or exchanges by investors who appear to follow, in the Manager's
judgment, a market-timing strategy or otherwise engage in excessive trading. See
"How to Make Exchanges -- Limitations on Purchase Orders and Exchanges."
WHEN PLACING PURCHASE ORDERS, INVESTORS SHOULD SPECIFY WHETHER THE ORDER IS FOR
CLASS A OR CLASS B SHARES OF A FUND. ALL PURCHASE ORDERS THAT FAIL TO SPECIFY A
CLASS WILL AUTOMATICALLY BE INVESTED IN CLASS A SHARES. PURCHASES OF $500,000 OR
MORE MUST BE FOR CLASS A SHARES.
PURCHASES THROUGH BROKER/DEALERS. Shares of the Funds may be purchased through
broker/dealers with which GT Global has entered into dealer agreements. Orders
received by such broker/dealers before the close of regular trading on the NYSE
on a Business Day will be effected that day, provided that such order is
transmitted to the Transfer Agent prior to its close of business on such day.
The broker/dealer will be responsible for forwarding the investor's order to the
Transfer Agent so that it will be received prior to such time. After an initial
investment is made and a shareholder account is established through a
broker/dealer, at the investor's option, subsequent purchases may be
Prospectus Page 32
<PAGE>
GT GLOBAL EQUITY FUNDS
made directly through GT Global. See "Shareholder Account Manual."
Broker/dealers that do not have dealer agreements with GT Global also may offer
to place orders for the purchase of shares. Purchases made through such
broker/dealers will be effected at the public offering price next determined
after the order is received by the Transfer Agent. Such a broker/dealer may
charge the investor a transaction fee as determined by the broker/dealer. That
fee will be in addition to the sales charge payable by the investor with respect
to Class A shares, and may be avoided if shares are purchased through a
broker/dealer that has a dealer agreement with GT Global or directly through GT
Global.
PURCHASES THROUGH THE DISTRIBUTOR. Investors may purchase shares and open an
account directly through GT Global, each Fund's distributor, by completing and
signing an Account Application accompanying this Prospectus. Investors should
mail to the Transfer Agent the completed Account Application indicating the
class of shares together with a check to cover the purchase in accordance with
the instructions provided in the Shareholder Account Manual. Purchases will be
executed at the public offering price next determined after the Transfer Agent
has received the Account Application and check. Subsequent investments do not
need to be accompanied by such an application.
Investors also may purchase shares of the Funds through GT Global by bank wire.
Bank wire purchases will be effected at the next determined public offering
price after the bank wire is received. A wire investment is considered received
when the Transfer Agent is notified that the bank wire has been credited to a
Fund. The investor is responsible for providing prior telephonic or facsimile
notice to the Transfer Agent that a bank wire is being sent. An investor's bank
may charge a service fee for wiring money to the Funds. The Transfer Agent
currently does not charge a service fee for facilitating wire purchases, but
reserves the right to do so in the future. Investors desiring to open an account
by bank wire should call the Transfer Agent at the appropriate toll-free number
provided in the Shareholder Account Manual to obtain an account number and
detailed instructions.
CERTIFICATES. Physical certificates representing a Fund's shares will not be
issued unless a written request is submitted to the Transfer Agent. Shares of a
Fund are recorded on a register by the Transfer Agent, and shareholders who do
not elect to receive certificates have the same rights of ownership as if
certificates had been issued to them. Redemptions and exchanges by shareholders
who hold certificates may take longer to effect than similar transactions
involving non-certificated shares because the physical delivery and processing
of properly executed certificates is required. ACCORDINGLY, THE FUNDS AND GT
GLOBAL RECOMMEND THAT SHAREHOLDERS DO NOT REQUEST ISSUANCE OF CERTIFICATES.
PURCHASING CLASS A SHARES
Each Fund's public offering price for Class A shares is the next determined net
asset value per share (see "Calculation of Net Asset Value") plus a sales charge
determined in accordance with the following schedule:
<TABLE>
<CAPTION>
SALES CHARGE AS PERCENTAGE DEALER
OF REALLOWANCE AS
AMOUNT OF PURCHASE -------------------------- PERCENTAGE OF
AT THE PUBLIC OFFERING NET THE OFFERING
OFFERING PRICE PRICE INVESTMENT PRICE
- ---------------------------- ----------- ------------- -----------------
<S> <C> <C> <C>
Less than $50,000........... 4.75% 4.99 % 4.25%
$50,000 but less than
$100,000................... 4.00% 4.17 % 3.50%
$100,000 but less than
$250,000................... 3.00% 3.09 % 2.75%
$250,000 but less than
$500,000................... 2.00% 2.04 % 1.75%
$500,000 or more............ 0.00% 0.00 % *
</TABLE>
- --------------
* GT Global will pay the following commissions to broker/ dealers that
initiate and are responsible for purchases by any single purchaser of Class
A shares of $500,000 or more in the aggregate: 1.00% of the purchase amount
up to $3 million, plus 0.50% on the excess over $3 million. For purposes of
determining the appropriate commission to be paid in connection with the
transaction, GT Global will combine purchases made by a broker/dealer on
behalf of a single client so that the broker/dealer's commission, as
outlined above, will be based on the aggregate amount of such client's share
purchases over a rolling twelve month period from the date of the
transaction.
All shares purchased without a sales charge based on the aggregate purchase
amount equalling at least $500,000 will be subject to a contingent deferred
sales charge for the first year after their purchase equal to 1% of the lower of
the original purchase price or the net asset value of such shares at the time of
redemption. See "Contingent Deferred Sales Charge -- Class A Shares."
From time to time, GT Global may reallow to broker/ dealers the full amount of
the sales charge on Class A shares or may pay out additional amounts to
broker/dealers who sell Class A shares. In some instances, GT Global may offer
these reallowances or additional payments only to broker/dealers that have sold
or may sell significant amounts of Class A shares. To the extent that GT Global
reallows the full amount of the sales charge to broker/dealers, such
broker/dealers may be deemed to be underwriters under the Securities Act of
1933, as amended. Commissions also may be paid to broker/ dealers and other
financial institutions that initiate purchases of at least $500,000 made
pursuant to
Prospectus Page 33
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GT GLOBAL EQUITY FUNDS
sales charge waivers (i) and (vii), described below under "Sales Charge Waivers
- -- Class A Shares."
The following purchases may be aggregated for purposes of determining the
"Amount of Purchase":
(a) Individual purchases on behalf of a single purchaser, the purchaser's spouse
and their children under the age of 21 years, including purchases in connection
with an employee benefit plan(s) exclusively for the benefit of such
individual(s), such as an IRA, individual Code Section 403(b) plan or
single-participant self-employed individual retirement plan ("Keogh Plan") and
purchases made by a company controlled by such individual(s);
(b) Individual purchases by a trustee or other fiduciary purchasing shares for a
single trust estate or a single fiduciary account, including an employee benefit
plan (such as employer-sponsored pension, profit-sharing and stock bonus plans,
including plans under Code Section 401(k), and medical, life and disability
insurance trusts) other than a plan described in "(a)" above; and
(c) Individual purchases by a trustee or other fiduciary purchasing shares
concurrently for two or more employee benefit plans of a single employer or of
employers affiliated with each other (again excluding an employee benefit plan
described in "(a)" above).
SALES CHARGE WAIVERS -- CLASS A SHARES. Class A shares are sold at net asset
value without imposition of sales charges when investments are made by the
following classes of investors:
(i) Trustees or other fiduciaries purchasing shares for employee benefit plans
which are sponsored by organizations which have at least 100 but less than 1,000
employees, and trustees or other fiduciaries purchasing shares for employee
benefit plans which are sponsored by organizations with collective retirement
plan assets of $500,000 or more and have less than 100 employees, and purchases
of at least $500,000 by trustees or other fiduciaries of employee benefit plans
with collective retirement plan assets of $100 million or more.
(ii) Current or retired Trustees, Directors and officers of the investment
companies for which the Manager serves as investment manager and/or
administrator; employees or retired employees of the companies comprising
Liechtenstein Global Trust or affiliated companies of Liechtenstein Global
Trust; the children, siblings and parents of the persons in the foregoing
categories; and trusts primarily for the benefit of such persons.
(iii) Registered representatives or full-time employees of broker/dealers that
have entered into dealer agreements with GT Global, and the children, siblings
and parents of such persons, and employees of financial institutions that
directly, or through their affiliates, have entered into dealer agreements with
GT Global (or that otherwise have an arrangement with respect to sales of Fund
shares with a broker/dealer that has entered into a dealer agreement with GT
Global), and the children, siblings and parents of such employees.
(iv) Companies exchanging shares with or selling assets to one or more of the GT
Global Mutual Funds pursuant to a merger, acquisition or exchange offer.
(v) Shareholders of any of the GT Global Mutual Funds as of April 30, 1987 who
since that date continually have owned shares of one or more of the GT Global
Mutual Funds.
(vi) Purchases made through the automatic investment of dividends and other
distributions paid by any of the other GT Global Mutual Funds.
(vii) Registered investment advisers, trust companies and bank trust departments
exercising DISCRETIONARY investment authority with respect to the money to be
invested in the GT Global Mutual Funds provided that the aggregate amount
invested pursuant to this sales charge waiver equals at least $500,000, and
further provided that such money is not eligible to be invested in the Advisor
Class.
(viii) Clients of administrators of tax-qualified employee benefit plans which
have entered into agreements with GT Global.
(ix) Retirement plan participants who borrow from their retirement accounts by
redeeming GT Global Mutual Fund shares and subsequently repay such loans via a
purchase of Fund shares.
(x) Retirement plan participants who receive distributions from a tax-qualified
employer-sponsored retirement plan which is invested in GT Global Mutual Funds,
the proceeds of which are reinvested in Fund shares.
(xi) Accounts not eligible for the Advisor Class as to which a financial
institution or broker/dealer charges an account management fee, provided the
financial institution or broker/dealer has entered into an agreement with GT
Global regarding such accounts.
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<PAGE>
GT GLOBAL EQUITY FUNDS
(xii) Certain former AMA Investment Advisers' shareholders who became
shareholders of the GT Global Health Care Fund in October, 1989, and who have
continuously held shares in the GT Global Mutual Funds since that time.
(xiii) An investor purchasing shares of a Fund with redemption proceeds from a
registered management investment company that is not one of the GT Global Mutual
Funds, on which the investor was subject to a front-end sales charge or a
contingent deferred sales charge.
REINSTATEMENT PRIVILEGE. Shareholders who redeem their Class A shares in a Fund
have a one-time privilege of reinstating their investment by investing the
proceeds of the redemption at net asset value without a sales charge in Class A
shares of the Fund and/or one or more of the other GT Global Mutual Funds. The
Transfer Agent must receive from the investor or the investor's broker/dealer
within 180 days after the date of the redemption both a written request for
reinvestment and a check not exceeding the amount of the redemption proceeds.
The reinstatement purchase will be effected at the net asset value per share
next determined after such receipt. For a discussion of the federal income tax
consequences of a reinstatement, see "Dividends, Other Distributions and Federal
Income Taxation -- Taxes."
REDUCED SALES CHARGE PLANS -- CLASS A SHARES. Class A shares may be purchased at
reduced sales charges either through the Right of Accumulation or under a Letter
of Intent. For more details on these plans, investors should contact their
broker/ dealers or the Transfer Agent.
RIGHT OF ACCUMULATION. Pursuant to the Right of Accumulation, investors are
permitted to purchase shares of the Funds at the sales charge applicable to the
total of (a) the dollar amount then being purchased plus (b) the dollar amount
of the investor's concurrent purchases of other GT Global Mutual Funds (other
than GT Global Dollar Fund) plus (c) the price of all shares of GT Global Mutual
Funds (other than shares of GT Global Dollar Fund not acquired by exchange)
already held by the investor. To receive the Right of Accumulation, at the time
of purchase investors must give their broker/dealers, the Transfer Agent or GT
Global sufficient information to permit confirmation of qualification. THE
FOREGOING RIGHT OF ACCUMULATION APPLIES ONLY TO CLASS A SHARES OF THE FUNDS AND
OTHER GT GLOBAL MUTUAL FUNDS (OTHER THAN GT GLOBAL DOLLAR FUND).
LETTER OF INTENT. In executing a Letter of Intent ("LOI") an investor indicates
an aggregate investment amount he or she intends to invest in Class A shares of
the Funds and the Class A shares of other GT Global Mutual Funds (other than GT
Global Dollar Fund) in the following thirteen months. The LOI is included as
part of the Account Application located at the end of this Prospectus. The sales
charge applicable to that aggregate amount then becomes the applicable sales
charge on all purchases made concurrently with the execution of the LOI and in
the thirteen months following that execution. If an investor executes an LOI
within 90 days of a prior purchase of GT Global Mutual Fund Class A shares
(other than GT Global Dollar Fund), the prior purchase may be included under the
LOI and an appropriate adjustment, if any, with respect to the sales charges
paid by the investor in connection with the prior purchase will be made, based
on the then-current net asset value(s) of the pertinent Fund(s).
If at the end of the thirteen month period covered by the LOI, the total amount
of purchases does not equal the amount indicated, the investor will be required
to pay the difference between the sales charges paid at the reduced rate and the
sales charges applicable to the purchases actually made. Shares having a value
equal to 5% of the amount specified in the LOI will be held in escrow during the
thirteen month period (while remaining registered in the investor's name) and
are subject to redemption to assure any necessary payment to GT Global of a
higher applicable sales charge.
For purposes of an LOI, any registered investment adviser, trust company or bank
trust department which exercises investment discretion and which intends within
thirteen months to invest $500,000 or more can be treated as a single purchaser,
provided further that such entity places all purchase and redemption orders.
Such entities should be prepared to establish their qualification for such
treatment. THE FOREGOING LOI APPLIES ONLY TO CLASS A SHARES OF THE FUNDS AND
OTHER GT GLOBAL MUTUAL FUNDS (OTHER THAN GT GLOBAL DOLLAR FUND).
CONTINGENT DEFERRED SALES CHARGE -- CLASS A SHARES. Purchases of Class A shares
of $500,000 or more may be made without an initial sales charge. If a
shareholder redeems any Class A shares that were purchased without a sales
charge by reason of a purchase of $500,000 or more within one year after the
date of purchase, a contingent deferred sales charge of 1% of the lower of the
original purchase price or the net asset value of such shares at
Prospectus Page 35
<PAGE>
GT GLOBAL EQUITY FUNDS
the time of redemption will be charged. Class A shares will not be subject to
the contingent deferred sales charge to the extent that the value of such shares
represents: (1) reinvestment of dividends or other distributions or (2) shares
redeemed more than one year after their purchase. Such shares purchased without
a sales charge may be exchanged for Class A shares of another GT Global Mutual
Fund (other than GT Global Dollar Fund) without the imposition of a contingent
deferred sales charge, although the contingent deferred sales charge described
above will apply to the redemption of the shares acquired through an exchange.
The waivers set forth under "Contingent Deferred Sales Charge Waivers" below
apply to redemptions of Class A shares upon which a contingent deferred sales
charge would otherwise be imposed. For federal income tax purposes, the amount
of the contingent deferred sales charge will reduce the gain or increase the
loss, as the case may be, on the amount realized on redemption. The amount of
any contingent deferred sales charge will be paid to GT Global.
PURCHASING CLASS B SHARES
Each Fund's public offering price for Class B shares is the next determined net
asset value per share. See "Calculation of Net Asset Value." No initial sales
charge is imposed. A contingent deferred sales charge, however, is imposed on
certain redemptions of Class B shares. Because Class B shares are sold without
an initial sales charge, the Fund receives the full amount of the investor's
purchase payment. Class B Shares of a Fund may not be purchased for a Savings
Incentive Matched Plan for Employees of Small Employers Individual Retirement
Accounts ("SIMPLE IRAs") for which a designated financial institution was
selected by the employer on Form 5305-SIMPLE. Class B Shares of a Fund may still
be purchased for SIMPLE IRAs using Form 5304-SIMPLE. In addition, Class A shares
of a Fund may still be purchased for all SIMPLE IRAs.
Class B shares will not be subject to a contingent deferred sales charge to the
extent that the value of such shares represents: (1) reinvestment of dividends
or other distributions or (2) shares redeemed more than six years after their
purchase. Redemptions of most other Class B shares will be subject to a
contingent deferred sales charge. See "Contingent Deferred Sales Charge
Waivers." The amount of any applicable contingent deferred sales charge will be
calculated by multiplying the lesser of the original purchase price or the net
asset value of such shares at the time of redemption by the applicable
percentage shown in the table below.
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES
CHARGE AS A PERCENTAGE OF THE
LESSER OF NET ASSET VALUE AT
REDEMPTION
OR THE ORIGINAL
REDEMPTION DURING PURCHASE PRICE
- ------------------------------ -----------------------------
<S> <C>
1st Year Since Purchase....... 5%
2nd Year Since Purchase....... 4%
3rd Year Since Purchase....... 3%
4th Year Since Purchase....... 3%
5th Year Since Purchase....... 2%
6th year Since Purchase....... 1%
Thereafter.................... 0%
</TABLE>
In determining whether a contingent deferred sales charge is applicable, it will
be assumed that the redemption is made first of shares acquired pursuant to the
reinvestment of dividends and distributions; then of shares purchased seven
years or more prior to the redemption; and finally, of shares held for the
longest period of time within the applicable six-year period. For shares
acquired in an exchange, the length of holding period will be measured from the
date of original purchase.
For example, assume an investor purchased 100 shares at $10 per share for a cost
of $1,000. Subsequently, the shareholder acquired 15 additional shares through
dividend reinvestment. During the second year after the purchase, the investor
decided to redeem $500 of his or her investment. Assuming at the time of the
redemption a net asset value of $11 per share, the value of the investor's
shares would be $1,265 (115 shares at $11 per share). The contingent deferred
sales charge would not be applied to the value of the reinvested dividend
shares. Therefore, the 15 shares currently valued at $165.00 would be sold
without a contingent deferred sales charge. The number of shares needed to fund
the remaining $335.00 of the redemption would equal 30.455. Using the lower of
cost or market price to determine the contingent deferred sales charge the
original purchase price of $10.00 per share would be used. The contingent
deferred sales charge calculation would therefore be 30.455 shares times $10.00
per share at a contingent deferred sales charge rate of 4% (the applicable rate
in the second year after purchase) for a total contingent deferred sales charge
of $12.18.
For federal income tax purposes, the amount of the contingent deferred sales
charge will reduce the gain or increase the loss, as the case may be, on the
amount realized on redemption. The amount of any contingent deferred sales
charge will be paid to GT Global.
Prospectus Page 36
<PAGE>
GT GLOBAL EQUITY FUNDS
CONTINGENT DEFERRED SALES
CHARGE WAIVERS
The contingent deferred sales charge will be waived for: (1) exchanges, as
described below; (2) redemptions in connection with each Fund's systematic
withdrawal plan not in excess of 12% of the value of the account annually; (3)
total or partial redemptions made within one year following the death or
disability of a shareholder; (4) minimum required distributions made in
connection with a GT Global IRA, Keogh Plan or custodial account under Section
403(b) of the Code or other retirement plan following attainment of age 70 1/2;
(5) total or partial redemptions resulting from a distribution following
retirement in the case of a tax-qualified employer-sponsored retirement plan;
(6) when a redemption results from a tax-free return of an excess contribution
pursuant to Section 408(d)(4) or (5) of the Code or from the death or disability
of the employee; (7) a one-time reinvestment in Class B shares of a Fund within
180 days of a prior redemption; (8) redemptions pursuant to a Fund's right to
liquidate a shareholder's account involuntarily; (9) redemptions pursuant to
distributions from a tax-qualified employer-sponsored retirement plan, which is
invested in GT Global Mutual Funds, which are permitted to be made without
penalty pursuant to the Code (other than tax-free rollovers or transfers of
assets) and the proceeds of which are reinvested in Fund shares; (10)
redemptions made in connection with participant-directed exchanges between
options in an employer-sponsored benefit plan; (11) redemptions made for the
purpose of providing cash to fund a loan to a participant in a tax-qualified
retirement plan; (12) redemptions made in connection with a distribution from
any retirement plan or account that is permitted in accordance with the
provisions of Section 72(t)(2) of the Code, and the regulations promulgated
thereunder; (13) redemptions made in connection with a distribution from any
retirement plan or account that involves the return of an excess deferral amount
pursuant to Section 401(k)(8) or Section 402(g)(2) of the Code or the return of
excess aggregate contributions pursuant to Section 401(m)(6) of the Code; (14)
redemptions made in connection with a distribution from a qualified
profit-sharing or stock bonus plan described in Section 401(k) of the Code to a
participant or beneficiary under Section 401(k)(2)(B)(IV) of the Code upon
hardship of the covered employee (determined pursuant to Treasury Regulation
Section 1.401(k)-1(d)(2)); and (15) redemptions made by or for the benefit of
certain states, counties or cities, or any instrumentalities, departments or
authorities thereof where such entities are prohibited or limited by applicable
law from paying a sales charge or commission.
PROGRAMS APPLICABLE TO CLASS A SHARES AND CLASS B SHARES
AUTOMATIC INVESTMENT PLAN. Investors may purchase either Class A or Class B
shares of a Fund through the GT Global Automatic Investment Plan. Under this
Plan, an amount specified by the shareholder of $100 or more ($25 or more for
IRAs, Code Section 403(b)(7) custodial accounts and other tax-qualified
employer-sponsored retirement accounts) on a monthly or quarterly basis will be
sent to the Transfer Agent from the investor's bank for investment in the Fund.
Participants in the Automatic Investment Plan should not elect to receive
dividends or other distributions from a Fund in cash. A sales charge will be
applied to each automatic monthly purchase of Class A Fund shares in an amount
determined in accordance with the Right of Accumulation privilege described
above. To participate in the Automatic Investment Plan, investors should
complete the appropriate portion of the Supplemental Application provided at the
end of this Prospectus. Investors should contact their brokers or GT Global for
more information.
DOLLAR COST AVERAGING PROGRAM. Investors may purchase either Class A or Class B
shares of a Fund through the GT Global Dollar Cost Averaging Program whereby a
shareholder invests the same dollar amount each month. Accordingly, the investor
purchases more shares when a Fund's net asset value is relatively low and fewer
shares when a Fund's net asset value is relatively high. This can result in a
lower average cost-per-share than if the shareholder followed a less systematic
approach. Dollar cost averaging does not assure a profit and does not protect
against loss in declining markets. Because such a program involves continuous
investment in securities regardless of fluctuating price levels of such
securities, investors should consider their financial ability to continue
purchases when prices are declining.
A participant in the GT Global Dollar Cost Averaging Program first designates
the size of his or her monthly investment in a Fund ("Monthly Investment") after
participation in the Program begins. The Monthly Investment must be at least
$1,000. The investor then will make an initial investment of at least $10,000 in
the GT Global Dollar Fund.
Prospectus Page 37
<PAGE>
GT GLOBAL EQUITY FUNDS
Thereafter, each month an amount equal to the specified Monthly Investment
automatically will be redeemed from the GT Global Dollar Fund and invested in
Fund shares. A sales charge will be applied to each automatic monthly purchase
of Class A Fund shares in an amount determined in accordance with the Right of
Accumulation privilege described above. Investors should contact their brokers
or GT Global for more information.
PORTFOLIO REBALANCING PROGRAM. The GT Global Portfolio Rebalancing Program
("Program") permits eligible shareholders to establish and maintain an
allocation across a range of GT Global Mutual Funds. The Program automatically
rebalances their holdings of GT Global Mutual Funds to the established
allocation on a periodic basis. Under the Program, a shareholder may
predesignate, on a percentage basis, how the total value of his or her holdings
in a minimum of two, and a maximum of ten, GT Global Mutual Funds ("Personal
Portfolio") is to be rebalanced on a monthly, quarterly, semiannual, or annual
basis.
Rebalancing under the Program will be effected through the exchange of shares of
one or more GT Global Mutual Funds in the shareholder's Personal Portfolio for
shares of the same class(es) of one or more other GT Global Mutual Funds in the
shareholder's Personal Portfolio. See "How to Make Exchanges." If shares of the
Funds in a shareholder's Personal Portfolio have appreciated during a
rebalancing period, the Program will result in shares of Fund(s) that have
appreciated most during the period being exchanged for shares of Fund(s) that
have appreciated least. SUCH EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A
SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE MAY BE, FOR TAX PURPOSES.
See "Dividends, Other Distributions and Federal Income Taxation." Participation
in the Program does not assure that a shareholder will profit from purchases
under the Program nor does it prevent or lessen losses in a declining market.
The Program will automatically rebalance the shareholder's Personal Portfolio on
the 28th day of the last month of the period chosen (or immediately preceding
business day if the 28th is not a business day), subject to any limitations
below. The Program will not execute an exchange if the variance in a
shareholder's Personal Portfolio for a particular Fund would be 2% or less. In
predesignating percentages, shareholders must use whole percentages and totals
must equal 100%. Shareholders participating in the Program may not request
issuance of physical certificates representing a Fund's shares. Exchanges made
under the Program are not subject to the four free exchanges per year
limitation. The Funds and GT Global reserve the right to modify, suspend or
terminate the Program at any time on 60 days' prior written notice to
shareholders. A request to participate in the Program must be received in good
order at least five business days prior to the next rebalancing date. Once a
shareholder establishes the Program for his or her Personal Portfolio, a
shareholder cannot cancel or change which rebalancing frequency, which Funds or
what allocation percentages are assigned to the Program, unless canceled or
changed in writing and received by the Transfer Agent in good order at least
five business days prior to the rebalancing date. Shareholders participating in
the Program may also participate in the Right of Accumulation, Letter of Intent
and Dollar Cost Averaging Programs. Certain broker/dealers may charge a fee for
establishing accounts relating to the Program. Investors should contact their
broker/dealers or GT Global for more information.
Prospectus Page 38
<PAGE>
GT GLOBAL EQUITY FUNDS
HOW TO MAKE EXCHANGES
- --------------------------------------------------------------------------------
Shares of any Fund may be exchanged for shares of the same class of any other GT
Global Mutual Funds (including the other Funds), based on their respective net
asset values without imposition of any sales charges, provided that the
registration remains identical. EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A
SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE MAY BE, FOR TAX PURPOSES.
See "Dividends, Other Distributions and Federal Income Taxation -- Taxes." In
addition to the Funds, the GT Global Mutual Funds currently include:
-- GT GLOBAL EMERGING MARKETS FUND
-- GT GLOBAL HEALTH CARE FUND
-- GT GLOBAL FINANCIAL SERVICES FUND
-- GT GLOBAL INFRASTRUCTURE FUND
-- GT GLOBAL NATURAL RESOURCES FUND
-- GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
-- GT GLOBAL TELECOMMUNICATIONS FUND
-- GT GLOBAL LATIN AMERICA GROWTH FUND
-- GT GLOBAL GROWTH & INCOME FUND
-- GT GLOBAL GOVERNMENT INCOME FUND
-- GT GLOBAL STRATEGIC INCOME FUND
-- GT GLOBAL HIGH INCOME FUND
-- GT GLOBAL DOLLAR FUND
Up to four exchanges each year may be made without charge. A $7.50 service
charge will be imposed on each subsequent exchange. If an investor does not
surrender all of his or her shares in an exchange, the remaining balance in the
investor's account after the exchange must be at least $500. Exchange requests
received in good order by the Transfer Agent before the close of regular trading
on the NYSE on any Business Day will be processed at the net asset value
calculated on that day. The terms of the exchange offer may be modified at any
time, on 60 days' prior written notice to shareholders.
An investor interested in making an exchange should contact his broker/dealer or
the Transfer Agent to request the prospectus of the other GT Global Mutual
Fund(s) being considered. Certain brokers may charge a fee for handling
exchanges.
EXCHANGES BY TELEPHONE. A shareholder may give exchange instructions to his or
her broker/dealer or to the Transfer Agent by telephone at the appropriate
toll-free number provided in the Shareholder Account Manual. Exchange orders
will be accepted by telephone provided that the exchange involves only
uncertificated shares on deposit in the shareholder's account or for which
certificates previously have been deposited.
Shareholders automatically have telephone privileges to authorize exchanges. The
Funds, GT Global and the Transfer Agent will not be liable for any loss or
damage for acting in good faith upon instructions received by telephone and
reasonably believed to be genuine. The Funds employ reasonable procedures to
confirm that instructions communicated by telephone are genuine, including
requiring some form of personal identification prior to acting upon instructions
received by telephone, providing written confirmation of such transactions
and/or tape recording of telephone instructions.
EXCHANGES BY MAIL. Exchange orders should be sent by mail to the investor's
broker/dealer or to the Transfer Agent at the address set forth in the
Shareholder Account Manual.
LIMITATIONS ON PURCHASE ORDERS AND EXCHANGES. The GT Global Mutual Funds are not
intended to serve as vehicles for frequent trading in response to short-term
fluctuations in the market. Due to the disruptive effect that market-timing
investment strategies and excessive trading can have on efficient portfolio
management, each GT Global Mutual Fund and GT Global reserves the right to
refuse purchase orders and exchanges by any person or group, if, in the
Manager's judgment, such person or group was following a market-timing strategy
or was otherwise engaging in excessive trading.
In addition, each GT Global Mutual Fund and GT Global reserves the right to
refuse purchase orders and exchanges by any person or group if, in the Manager's
judgment, the Fund would not be able to invest the money effectively in
accordance with that Fund's investment objective and policies or would otherwise
potentially be adversely affected. Although a GT Global Mutual Fund will attempt
to give investors prior notice whenever it is reasonably able to do so, it may
impose the above restrictions at any time.
Finally, as described above, the Funds and GT Global reserve the right to reject
any purchase order.
Prospectus Page 39
<PAGE>
GT GLOBAL EQUITY FUNDS
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
Fund shares may be redeemed at their net asset value (subject to any applicable
contingent deferred sales charge for Class B shares or, in limited
circumstances, Class A shares) and redemption proceeds will be sent within seven
days of the execution of a redemption request. If a redeeming shareholder owns
both Class A and Class B shares of a Fund, Class A shares will be redeemed first
unless the shareholder specifically requests otherwise.
REDEMPTIONS THROUGH BROKER/DEALERS. Shareholders with accounts at broker/dealers
that sell shares of the Funds may submit redemption requests to such
broker/dealers. If the shares are held in the broker/dealer's "street name," the
redemption must be made through the broker/dealer. Broker/ dealers may honor a
redemption request either by repurchasing shares from a redeeming shareholder at
the shares' net asset value next determined after the broker/dealer receives the
request or, as described below, by forwarding such requests to the Transfer
Agent (see "How to Redeem Shares -- Redemptions Through the Transfer Agent").
Redemption proceeds normally will be paid by check or, if offered by the
broker/dealer, credited to the shareholder's brokerage account at the election
of the shareholder. Broker/dealers may impose a service charge for handling
redemption transactions placed through them and may have other requirements
concerning redemptions. Accordingly, shareholders should contact their
broker/dealers for more details.
REDEMPTIONS THROUGH THE TRANSFER AGENT. Redemption requests may be transmitted
to the Transfer Agent by telephone or by mail, in accordance with the
instructions provided in the Shareholder Account Manual. Redemptions will be
effected at the net asset value next determined after the Transfer Agent has
received the request in good order and any required supporting documentation
(less any applicable contingent deferred sales charge for Class B shares or, in
limited circumstances, Class A shares). Redemption requests will not require a
signature guarantee if the redemption proceeds are to be sent either: (i) to the
redeeming shareholder at the shareholder's address of record as maintained by
the Transfer Agent, provided the shareholder's address of record has not been
changed within the preceding thirty days; or (ii) directly to a pre-designated
bank, savings and loan or credit union account ("Pre-Designated Account"). ALL
OTHER REDEMPTION REQUESTS MUST BE ACCOMPANIED BY A SIGNATURE GUARANTEE OF THE
REDEEMING SHAREHOLDER'S SIGNATURE. A signature guarantee can be obtained from
any bank, U.S. trust company, a member firm of a U.S. stock exchange or a
foreign branch of any of the foregoing or other eligible guarantor institution.
A notary public is not an acceptable guarantor. A shareholder with questions
concerning the Funds' signature guarantee requirement should contact the
Transfer Agent.
Shareholders may qualify to have redemption proceeds sent to a Pre-Designated
Account by completing the appropriate section of the Account Application at the
end of this Prospectus. Shareholders with Pre-Designated Accounts should request
that redemption proceeds be sent either by bank wire or by check. The minimum
redemption amount for a bank wire is $1,000. Shareholders requesting a bank wire
should allow two business days from the time the redemption request is effected
for the proceeds to be deposited in the shareholder's Pre-Designated Account.
See "How to Redeem Shares -- Other Important Redemption Information."
Shareholders may change their Pre-Designated Accounts only by a letter of
instruction to the Transfer Agent containing all account signatures, each of
which must be guaranteed. The Transfer Agent currently does not charge a bank
wire service fee on each wire redemption sent, but reserves the right to do so
in the future. The shareholder's bank may charge a bank wire service fee.
REDEMPTIONS BY TELEPHONE. Redemption requests may be made by telephone by
calling the Transfer Agent at the appropriate toll free number provided in the
Shareholder Account Manual. Shareholders who hold certificates for shares may
not redeem by telephone. REDEMPTION REQUESTS MAY NOT BE MADE BY TELEPHONE FOR
THIRTY DAYS FOLLOWING ANY CHANGE OF THE SHAREHOLDER'S ADDRESS OF RECORD.
Prospectus Page 40
<PAGE>
GT GLOBAL EQUITY FUNDS
Shareholders automatically have telephone privileges to authorize redemptions.
The Funds, GT Global and the Transfer Agent will not be liable for any loss or
damage for acting in good faith upon instructions received by telephone and
reasonably believed to be genuine. The Funds employ reasonable procedures to
confirm that instructions communicated by telephone are genuine, including
requiring some form of personal identification prior to acting upon instructions
received by telephone, providing written confirmation of such transactions
and/or tape recording of telephone instructions.
REDEMPTIONS BY MAIL. Redemption requests should be mailed directly to the
Transfer Agent at the appropriate address provided in the Shareholder Account
Manual. As discussed above, requests for payment of redemption proceeds to a
party other than the shareholder of record and/or requests that redemption
proceeds be mailed to an address other than the shareholder's address of record
require a signature guarantee. In addition, if the shareholder's address of
record has been changed within the preceeding thirty days, a signature guarantee
is required. Redemptions of shares for which certificates have been issued must
be accompanied by properly endorsed share certificates.
SYSTEMATIC WITHDRAWAL PLAN. Shareholders owning shares with a value of $10,000
or more may participate in the GT Global Systematic Withdrawal Plan. A
participating shareholder will receive proceeds from monthly, quarterly or
annual redemptions of Fund shares with respect to either Class A or Class B
shares. No contingent deferred sales charge will be imposed on redemptions made
under the Systematic Withdrawal Plan. The minimum withdrawal amount is $100. The
amount or percentage a participating shareholder specifies to be redeemed may
not, on an annualized basis, exceed 12% of the value of the account, as of the
time the shareholder elects to participate in the Systematic Withdrawal Plan. To
participate in the Systematic Withdrawal Plan, investors should complete the
appropriate portion of the Supplemental Application provided at the end of this
Prospectus. Investors should contact their broker/ dealers or the Transfer Agent
for more information. With respect to Class A shares, participation in the
Systematic Withdrawal Plan concurrent with purchases of Class A shares of the
Fund may be disadvantageous to investors because of the sales charges involved
and possible tax implications, and therefore is discouraged. In addition,
shareholders who participate in the Systematic Withdrawal Plan should not elect
to reinvest dividends or other distributions in additional Fund shares.
OTHER IMPORTANT REDEMPTION INFORMATION. A request for redemption will not be
processed until all of the necessary documentation has been received in good
order. A shareholder in doubt about what documents are required should contact
his or her broker/dealer or the Transfer Agent.
Except in extraordinary circumstances and as permitted under the 1940 Act,
payment for shares redeemed by telephone or by mail will be made promptly after
receipt of a redemption request, if in good order, but not later than seven days
after the date the request is executed. Requests for redemption which are
subject to any special conditions or which specify a future or past effective
date cannot be accepted.
If the Transfer Agent is requested to redeem shares for which a Fund has not yet
received good payment, the Fund may delay payment of redemption proceeds until
it has assured itself that good payment has been collected for the purchase of
the shares. In the case of purchases by check, it can take up to 10 business
days to confirm that the check has cleared and good payment has been received.
Redemption proceeds will not be delayed when shares have been paid for by wire
or when the investor's account holds a sufficient number of shares for which
funds already have been collected.
A Fund may redeem the shares of any shareholder whose account is reduced to less
than $500 in net asset value through redemptions or other action by the
shareholder. Written notice will be given to the shareholder at least 60 days
prior to the date fixed for such redemption, during which time the shareholder
may increase his or her holdings to an aggregate amount of $500 or more (with a
minimum purchase of $100).
Prospectus Page 41
<PAGE>
GT GLOBAL EQUITY FUNDS
SHAREHOLDER ACCOUNT MANUAL
- --------------------------------------------------------------------------------
Shareholders are encouraged to place purchase, exchange and redemption orders
through their broker/dealers. Shareholders also may place such orders directly
through GT Global in accordance with this Manual. See "How to Invest;" "How to
Make Exchanges;" "How to Redeem Shares;" and "Dividends, Other Distributions and
Federal Income Taxation -- Taxes" for more information.
Each Funds' Transfer Agent is GT GLOBAL INVESTOR SERVICES, INC.
INVESTMENTS BY MAIL
Send completed Account Application (if initial purchase) or letter stating Fund
name, class of shares, shareholder's registered name and account number (if
subsequent purchase) with a check to:
GT Global
P.O. Box 7345
San Francisco, California 94120-7345
INVESTMENTS BY BANK WIRE
An investor opening a new account should call 1-800-223-2138 to obtain an
account number. WITHIN SEVEN DAYS OF PURCHASE SUCH AN INVESTOR MUST SEND A
COMPLETED ACCOUNT APPLICATION CONTAINING THE INVESTOR'S CERTIFIED TAXPAYER
IDENTIFICATION NUMBER TO GT GLOBAL AT THE ADDRESS PROVIDED ABOVE UNDER
"INVESTMENTS BY MAIL." Wire instructions must state Fund name, class of shares,
shareholder's registered name and account number. Bank wires should be sent
through the Federal Reserve Bank Wire System to:
WELLS FARGO BANK, N.A.
ABA 121000248
Attn: GT GLOBAL
ACCOUNT NO. 4023-050701
EXCHANGES BY TELEPHONE
Call GT Global at 1-800-223-2138
EXCHANGES BY MAIL
Send complete instructions, including name of Fund exchanging from, amount of
exchange, class of shares, name of the GT Global Mutual Fund exchanging into,
shareholder's registered name and account number, to:
GT Global
P.O. Box 7893
San Francisco, California 94120-7893
REDEMPTIONS BY TELEPHONE
Call GT Global at 1-800-223-2138
REDEMPTIONS BY MAIL
Send complete instructions, including name of Fund, class of shares, amount of
redemption, shareholder's registered name and account number, to:
GT Global
P.O. Box 7893
San Francisco, California 94120-7893
OVERNIGHT MAIL
Overnight mail services do not deliver to post office boxes. To send purchase,
exchange or redemption orders by overnight mail, comply with the above
instructions but send to the following address:
GT Global Investor Services
California Plaza
2121 N. California Boulevard
Suite 450
Walnut Creek, CA 94596
ADDITIONAL QUESTIONS
Shareholders with additional questions regarding purchase, exchange and
redemption procedures should call GT Global at 1-800-223-2138.
Prospectus Page 42
<PAGE>
GT GLOBAL EQUITY FUNDS
CALCULATION OF NET ASSET VALUE
- --------------------------------------------------------------------------------
Each Fund calculates its net asset value as of the close of regular trading on
the NYSE (currently 4:00 p.m. Eastern time, unless weather, equipment failure or
other factors contribute to an earlier closing time) each Business Day. Each
Fund's net asset value per share is computed by determining the value of its
total assets (which, for the America Small Cap Fund and America Value Fund, is
the value of each such Fund's proportionate share of total assets of its
corresponding Portfolio), subtracting all of its liabilities (including, for the
America Small Cap Fund and America Value Fund, its proportionate share of its
corresponding Portfolio's liabilities), and dividing the result by the total
number of shares outstanding at such time. Net asset value is determined
separately for each class of shares of each Fund.
Equity securities held by a Fund or a Portfolio are valued at the last sale
price on the exchange or in the over-the-counter ("OTC") market in which such
securities are primarily traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. Long-term debt obligations are valued at the mean of representative
quoted bid or asked prices for such securities or, if such prices are not
available, at prices for securities of comparable maturity, quality and type;
however, when the Manager deems it appropriate, prices obtained from a bond
pricing service will be used. Short-term debt investments are amortized to
maturity based on their cost, adjusted for foreign exchange translation and
market fluctuations, provided that such valuations represent fair value. When
market quotations for futures and options positions held by a Fund or a
Portfolio are readily available, those positions are valued based upon such
quotations.
Securities and other assets for which market quotations are not readily
available are valued at fair value determined in good faith by or under
direction of the Company's or Growth Portfolio's Board of Trustees. Securities
and other assets quoted in foreign currencies are valued in U.S. dollars based
on the prevailing exchange rates on that day.
Certain of the Funds' or Portfolios' securities, from time to time, may be
traded primarily on foreign exchanges or OTC dealer markets that may trade on
days when the NYSE is closed (such as Saturday). As a result, the net asset
value of a Fund's shares may be affected significantly by such trading on days
when shareholders have no access to the Fund.
The different service and distribution fees borne by each class of shares will
result in different net asset values and dividends. The per share net asset
value of the Class B shares of a Fund generally will be lower than that of the
Class A shares of that Fund because of the higher service and distribution fees
borne by the Class B shares. The per share net asset value of the Advisor Class
shares of a Fund generally will be higher than that of the Class A and Class B
shares of that Fund because of the absence of any service and distribution fees
applicable to the Advisor Class shares. It is expected, however, that the net
asset value per share of the classes will tend to converge immediately after the
payment of dividends, which will differ by approximately the amount of the
service and distribution fee accrual differential between the classes.
Prospectus Page 43
<PAGE>
GT GLOBAL EQUITY FUNDS
DIVIDENDS, OTHER DISTRIBUTIONS
AND FEDERAL INCOME TAXATION
- --------------------------------------------------------------------------------
DIVIDENDS AND OTHER DISTRIBUTIONS. Each Fund annually declares and pays as a
dividend all of its (or, in the case of the America Small Cap Fund and America
Value Fund, its proportionate share of its corresponding Portfolio's) net
investment income, if any, which includes dividends, accrued interest and earned
discount (including both original issue and market discounts) less applicable
expenses. Each Fund also annually distributes substantially all of its (or, in
the case of the America Small Cap Fund and America Value Fund, its proportionate
share of its corresponding Portfolio's) realized net short-term capital gain
(the excess of short-term capital gains over short-term capital losses), net
capital gain (the excess of net long-term capital gain over net short-term
capital loss) and net gains from foreign currency transactions, if any. Each
Fund may make an additional dividend or other distribution if necessary to avoid
a 4% excise tax on certain undistributed income and gain.
Dividends and other distributions paid by each Fund with respect to all classes
of its shares are calculated in the same manner and at the same time. The per
share income dividends on Class B shares of a Fund will be lower than the per
share income dividends on Class A shares of that Fund as a result of the higher
service and distribution fees applicable to Class B shares; and the per share
income dividends on both such classes of shares of a Fund will be lower than the
per share income dividends on the Advisor Class shares of that Fund as a result
of the absence of any service and distribution fees applicable to Advisor Class
shares. SHAREHOLDERS MAY ELECT:
/ / to have all dividends and other distributions automatically reinvested in
additional Fund shares of the distributing class (or in shares of the
corresponding class of other GT Global Mutual Funds); or
/ / to receive dividends in cash and have other distributions automatically
reinvested in additional Fund shares of the distributing class (or in shares
of the corresponding class of other GT Global Mutual Funds); or
/ / to receive other distributions in cash and have dividends automatically
reinvested in additional Fund shares of the distributing class (or in shares
of the corresponding class of other GT Global Mutual Funds); or
/ / to receive dividends and other distributions in cash.
Automatic reinvestments in additional shares are made at net asset value without
imposition of a sales charge. IF NO ELECTION IS MADE BY A SHAREHOLDER, ALL
DIVIDENDS AND OTHER DISTRIBUTIONS WILL BE AUTOMATICALLY REINVESTED IN ADDITIONAL
FUND SHARES OF THE DISTRIBUTING CLASS. Reinvestments in another GT Global Mutual
Fund may only be directed to an account with the identical shareholder
registration and account number. These elections may be changed by a shareholder
at any time; to be effective with respect to a distribution, the shareholder or
the shareholder's broker must contact the Transfer Agent by mail or telephone at
least 15 Business Days prior to the payment date. THE FEDERAL INCOME TAX
CONSEQUENCES OF DIVIDENDS AND OTHER DISTRIBUTIONS ARE THE SAME WHETHER THEY ARE
RECEIVED IN CASH OR REINVESTED IN ADDITIONAL SHARES.
Any dividend or other distribution paid by a Fund has the effect of reducing the
net asset value per share on the ex-dividend date by the amount thereof.
Therefore, a dividend or other distribution paid shortly after a purchase of
shares would represent, in substance, a return of capital to the shareholder (to
the extent the distribution is paid on the shares so purchased), even though
subject to income tax, as discussed below.
TAXES. Each Fund intends to continue to qualify for treatment as a regulated
investment company under the Code. In each taxable year that a Fund so
qualifies, the Fund (but not its shareholders) will be relieved of federal
income tax on that part of its investment company taxable income -- consisting
generally of its (or, in the case of the America Small Cap Fund and America
Value Fund, its proportionate share of its corresponding Portfolio's) net
investment income, net gains from certain foreign currency transactions and net
short-term capital gain -- and net capital gain that is distributed to its
shareholders.
Dividends from a Fund's investment company taxable income (whether paid in cash
or reinvested in additional shares) are taxable to its shareholders
Prospectus Page 44
<PAGE>
GT GLOBAL EQUITY FUNDS
as ordinary income to the extent of the Fund's earnings and profits.
Distributions of a Fund's net capital gain, when designated as such, are taxable
to its shareholders as long-term capital gains, regardless of how long they have
held their Fund shares and whether such distributions are paid in cash or
reinvested in additional shares.
Each Fund provides federal tax information to its shareholders annually,
including information about dividends and other distributions paid during the
preceding year and, under certain circumstances, the shareholders' respective
shares of any foreign taxes paid by the Fund (or, in the case of the America
Small Cap Fund and America Value Fund, its proportionate share of foreign taxes
paid by its corresponding Portfolio), in which event each shareholder would be
required to include in his or her gross income his or her pro rata share of
those taxes but might be entitled to claim a credit or deduction for them.
Each Fund must withhold 31% from dividends, capital gain distributions and
redemption proceeds payable to any individuals and certain other noncorporate
shareholders who have not furnished to the Fund a correct taxpayer
identification number or a properly completed claim for exemption on Form W-8 or
W-9. Withholding at that rate also is required from dividends and capital gain
distributions payable to such shareholders who otherwise are subject to backup
withholding. Fund accounts opened via a bank wire purchase (see "How to Invest
- -- Purchases Through the Distributor") are considered to have uncertified
taxpayer identification numbers unless a completed Form W-8 or W-9 or Account
Application is received by the Transfer Agent within seven days after the
purchase. A shareholder should contact the Transfer Agent if the shareholder is
uncertain whether a proper taxpayer identification number is on file with a
Fund.
A redemption of Fund shares may result in taxable gain or loss to the redeeming
shareholder, depending upon whether the redemption proceeds are more or less
than the shareholder's adjusted basis for the redeemed shares (which normally
includes any initial sales charge paid on Class A shares). An exchange of Fund
shares for shares of another GT Global Mutual Fund (including another Fund)
generally will have similar tax consequences. However, special tax rules apply
when a shareholder (1) disposes of Class A shares of a Fund through a redemption
or exchange within 90 days after purchase and (2) subsequently acquires Class A
shares of that Fund or any other GT Global Mutual Fund on which an initial sales
charge normally is imposed without paying that sales charge due to the
reinstatement privilege or exchange privilege. In these cases, any gain on the
disposition of the original Class A shares will be increased, or loss decreased,
by the amount of the sales charge paid when those shares were acquired, and that
amount will increase the adjusted basis of the shares subsequently acquired. In
addition, if shares of a Fund are purchased within 30 days before or after
redeeming other shares of that Fund (regardless of class) at a loss, all or part
of the loss will not be deductible and instead will increase the basis of the
newly purchased shares.
The foregoing is only a summary of some of the important federal tax
considerations generally affecting each Fund and its shareholders. See "Taxes"
in the Statement of Additional Information for a further discussion. There may
be other federal, state, local or foreign tax considerations applicable to a
particular investor. Prospective investors therefore are urged to consult their
tax advisers.
- --------------------------------------------------------------------------------
MANAGEMENT
- --------------------------------------------------------------------------------
The Company's Board of Trustees has overall responsibility for the operation of
each Fund. Pursuant to such responsibility, the Board has approved contracts
with various financial organizations to provide, among other things, day to day
management services required by each Fund. Growth Portfolio's Board of Trustees
has overall responsibility for the operation of each Portfolio. See "Directors,
Trustees, and Executive Officers" in the Statement of Additional Information for
a complete description of the Trustees of the Funds and the Portfolios.
Prospectus Page 45
<PAGE>
GT GLOBAL EQUITY FUNDS
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by Chancellor LGT
Asset Management, Inc. (the "Manager") as the investment manager of the Pacific
Fund, Europe Fund, Japan Fund, International Fund, Worldwide Fund, America Mid
Cap Fund and each Portfolio include, but are not limited to, determining the
composition of the portfolio of such Funds and the Portfolios and placing orders
to buy, sell or hold particular securities. In addition, the Manager provides
the following administrative services to each Fund and each Portfolio:
furnishing corporate officers and clerical staff; providing office space,
services and equipment; and supervising all matters relating to the Funds' and
Portfolios' operation.
The America Small Cap Fund and America Value Fund each pays the Manager
administration fees, computed daily and paid monthly, at the annualized rate of
0.25% of such Fund's average daily net assets. In addition, each such Fund bears
its pro rata portion of the investment management and administration fees paid
by its corresponding Portfolio to the Manager. The Portfolios each pay such
fees, computed daily and paid monthly, based on the average daily net assets of
such Portfolio, directly to the Manager at the annualized rate of .475% on the
first $500 million, .45% on the next $500 million, .425% on the next $500
million and .40% on all amounts thereafter.
The America Mid Cap Fund pays the Manager investment management and
administration fees, computed daily and paid monthly, based on its average daily
net assets, at the annualized rate of .725% on the first $500 million, .70% on
the next $500 million, .675% on the next $500 million, and .65% on amounts
thereafter. Each of the other Funds pays the Manager investment management and
administration fees, computed daily and paid monthly, based on its average daily
net assets, at the annualized rate of .975% on the first $500 million, .95% on
the next $500 million, .925% on the next $500 million and .90% on amounts
thereafter. These rates are higher than those paid by most mutual funds. Each
Fund and Portfolio pays all expenses not assumed by the Manager, GT Global or
other agents. The Manager and GT Global have undertaken to limit each Fund's,
other than America Small Cap Fund's, America Value Fund's and America Mid Cap
Fund's, expenses (exclusive of brokerage commissions, taxes, interest and
extraordinary expenses) to the maximum annual level of 2.25% and 2.90% of the
average daily net assets of such Fund's Class A and Class B shares,
respectively. Similarly, the Manager and GT Global have undertaken to limit the
America Small Cap Fund's, America Value Fund's and America Mid Cap Fund's
expenses (exclusive of brokerage commissions, taxes, interest and extraordinary
expenses) to the maximum annual level of 2.00% and 2.65% of the average daily
net assets of such Fund's Class A and Class B shares, respectively. These
undertakings may be changed or eliminated in the future.
The Manager also serves as each Fund's and each Portfolio's pricing and
accounting agent. For these services the Manager receives a fee at an annual
rate derived by applying 0.03% to the first $5 billion of assets of GT Global
Mutual Funds and 0.02% to the assets in excess of $5 billion and allocating the
result according to each Fund's average daily net assets.
The Manager provides investment management and/or administration services to the
GT Global Mutual Funds. The Manager and its worldwide asset management
affiliates have provided investment management and/or administration services to
institutional, corporate and individual clients around the world since 1969. The
U.S. offices of the Manager are located at 50 California Street, 27th Floor, San
Francisco, CA 94111 and 1166 Avenue of the Americas, New York, NY 10036.
The Manager and its worldwide affiliates, including LGT Bank in Liechtenstein,
formerly Bank in Liechtenstein, compose Liechtenstein Global Trust, formerly BIL
GT Group Limited. Liechtenstein Global Trust is a provider of global asset
management and private banking products and services to individual and
institutional investors. Liechtenstein Global Trust is controlled by the Prince
of Liechtenstein Foundation, which serves as a parent organization for the
various business enterprises of the Princely Family of Liechtenstein. The
principal business address of the Prince of Liechtenstein Foundation is
Herrengasse 12, FL-9490, Vaduz, Liechtenstein.
As of December 31, 1996, the Manager and its worldwide asset management
affiliates managed approximately $62 billion. In the United States, as of
December 31, 1996, the Manager managed or administered approximately $10 billion
of GT Global Mutual Funds. As of December 31, 1996, assets entrusted to
Liechtenstein Global Trust totalled approximately $84 billion.
On October 31, 1996, Chancellor Capital Management, Inc. ("Chancellor Capital")
merged with LGT Asset Management, Inc., and the resulting
Prospectus Page 46
<PAGE>
GT GLOBAL EQUITY FUNDS
entity was named Chancellor LGT Asset Management, Inc. As of September 30, 1996,
Chancellor Capital and its affiliates, based in New York, were the 15th largest
independent investment manager in the United States with approximately $33
billion in assets under management. Chancellor Capital specialized in public and
private U.S. equity and bond portfolio management for over 300 U.S.
institutional clients.
In addition to the investment resources of its San Francisco and New York
offices, the Manager draws upon the expertise, personnel, data and systems of
other offices of Liechtenstein Global Trust, including investment offices in
Frankfurt, Hong Kong, London, Singapore, Sydney, Tokyo, and Toronto. In managing
the GT Global Mutual Funds, the Manager employs a team approach, taking
advantage of its investment resources around the world in seeking to achieve
each Fund's investment objective. Many of the GT Global Mutual Funds' portfolio
managers are natives of the countries in which they invest, speak local
languages and/or live or work in the markets they follow.
The investment professionals primarily responsible for the portfolio management
of each Fund or Portfolio are as follows:
PACIFIC FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR
NAME/OFFICE THE FUND BUSINESS EXPERIENCE
- ----------------------- --------------------- ------------------------------------------------------------------------
<S> <C> <C>
Peter Eadon-Clarke Portfolio Manager Chief Investment Officer for the Pacific Rim (excluding Japan) for LGT
Hong Kong since 1997 Asset Management Ltd. (Hong Kong) and Portfolio Manager for the Manager
since 1992. Prior thereto, Mr. Eadon-Clarke was an Associate Director
at HSBC Asset Management in Hong Kong from 1984 to 1992. From 1980 to
1984, Mr. Eadon-Clarke was a Senior Fund Manager for Colonial Mutual
Life (London).
</TABLE>
EUROPE FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR
NAME/OFFICE THE FUND BUSINESS EXPERIENCE
- ----------------------- --------------------- ------------------------------------------------------------------------
<S> <C> <C>
Anna Powell Portfolio Manager Portfolio Manager for LGT Asset Management PLC (London) and the Manager
London since 1995 since 1995. From 1989 to 1995, Ms. Powell was a Portfolio Manager for
Robert Fleming & Co., Ltd. (London).
</TABLE>
SMALL CAP PORTFOLIO
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR
NAME/OFFICE THE PORTFOLIO BUSINESS EXPERIENCE
- ----------------------- --------------------- ------------------------------------------------------------------------
<S> <C> <C>
Mark J. Cunneen* Portfolio Manager Portfolio Manager for the Manager since 1992. From February 1992 until
New York since 1997 December 1992, Mr. Cunneen was President of DC Capital Inc., an
investment management firm. Prior thereto, Mr. Cunneen was Vice
President of Equity Investments at Massachusetts Financial Services
from 1987 until 1992.
</TABLE>
- --------------
*Employees of Chancellor Capital prior to October 31, 1996.
Prospectus Page 47
<PAGE>
GT GLOBAL EQUITY FUNDS
AMERICA MID CAP FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR
NAME/OFFICE THE FUND BUSINESS EXPERIENCE
- ----------------------- --------------------- ------------------------------------------------------------------------
<S> <C> <C>
Ellen H. Adams* Portfolio Manager Ms. Adams has been the Head of North American Equity for the Manager
New York since 1997 since 1995, Director of Equity Research for the Manager from May 1993
until 1995, and a Portfolio Manager and Analyst for the Manager from
1992 until May 1993. Prior thereto, Ms. Adams was a Portfolio Manager
for Neuberger and Berman from 1987 until 1992.
Brent W. Clum* Portfolio Manager Senior Equity Research Analyst for the Manager since 1995. Prior
New York since 1997 thereto, Mr. Clum was a Vice President and Analyst at T. Rowe Price
from 1990 to 1995. Mr. Clum is a Chartered Financial Analyst and a
Certified Public Accountant.
</TABLE>
VALUE PORTFOLIO
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR
NAME/OFFICE THE PORTFOLIO BUSINESS EXPERIENCE
- ------------------------ --------------------- ----------------------------------------------------------------------
<S> <C> <C>
Ted J. Ujazdowski* Portfolio Manager Portfolio Manager for the Manager since 1983. Mr. Ujazdowski has been
New York since 1997 Director of the Manager's Value Group since 1987.
Adam D. Scheiner* Portfolio Manager Portfolio Manager and Analyst of the Manager's Value Group since June
New York since 1997 1993. Prior thereto, Mr. Scheiner was a Securities Analyst at
Prudential Securities Incorporated from 1989 until June 1993.
Richard K. Collins* Portfolio Manager Senior Equity Portfolio Manager and Managing Director for the Manager
New York since 1997 since April 1993. Mr. Collins joined the Manager in 1982 as a Senior
Analyst and Portfolio Manager. From 1973 to 1982, Mr. Collins was a
Senior Equity Analyst and, commencing in 1976, Vice President of
Research for Scudder, Stevens & Clark. Mr. Collins was a Research
Analyst for Salomon Brothers from 1970 to 1973. He is a Chartered
Financial Analyst, a member of the Association of Investment
Management Research (AIMR) and the New York Society of Securities
Analysts.
</TABLE>
- --------------
*Employees of Chancellor Capital prior to October 31, 1996.
Prospectus Page 48
<PAGE>
GT GLOBAL EQUITY FUNDS
WORLDWIDE FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR
NAME/OFFICE THE FUND BUSINESS EXPERIENCE
- ------------------------ --------------------- ----------------------------------------------------------------------
<S> <C> <C>
Roger Yates Portfolio Manager Mr. Yates has been International Chief Investment Officer for the
London since 1996 Manager since September 1996. From 1994 to 1996, Mr. Yates was the
Chief Investment Officer and Portfolio Manager for Europe and the
United Kingdom for the Manager. From 1988 to 1994, Mr. Yates was an
Investment Manager for Morgan Grenfell Asset Management.
Michael Lindsell Portfolio Manager Head of Investment Strategy for Global Equities since 1996. From 1992
London since 1997 to 1996, Mr. Lindsell was Chief Investment Officer for Japan for LGT
Asset Management Ltd. (Hong Kong) as well as Portfolio Manager for
the Manager. Prior thereto, Mr. Lindsell was a Director of Warburg
Asset Management (Tokyo).
Richard K. Collins* Portfolio Manager Senior Equity Portfolio Manager and Managing Director for the Manager
New York since 1997 since April 1993. Mr. Collins joined the Manager in 1982 as a Senior
Analyst and Portfolio Manager. From 1973 to 1982, Mr. Collins was a
Senior Equity Analyst and, commencing in 1976, Vice President of
Research for Scudder, Stevens & Clark. Mr. Collins was a Research
Analyst for Salomon Brothers from 1970 to 1973. He is a Chartered
Financial Analyst, a member of the Association of Investment
Management Research (AIMR) and the New York Society of Securities
Analysts.
</TABLE>
JAPAN FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR
NAME/OFFICE THE FUND BUSINESS EXPERIENCE
- ------------------------ --------------------- ----------------------------------------------------------------------
<S> <C> <C>
Andrew Callender Portfolio Manager Head of Investment for Japan since 1997. From 1990 to 1997, Mr.
Tokyo since 1997 Callender was a Portfolio Manager for the Manager.
</TABLE>
INTERNATIONAL FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR
NAME/OFFICE THE FUND BUSINESS EXPERIENCE
- ------------------------ --------------------- ----------------------------------------------------------------------
<S> <C> <C>
Roger Yates Portfolio Manager Mr. Yates has been International Chief Investment Officer for the
London since 1996 Manager since September 1996. From 1994 to 1996, Mr. Yates was the
Chief Investment Officer and Portfolio Manager for Europe and the
United Kingdom for the Manager. From 1988 to 1994, Mr. Yates was an
Investment Manager for Morgan Grenfell Asset Management.
Michael Lindsell Portfolio Manager Head of Investment Strategy for Global Equities since 1996. From 1992
London since 1992 to 1996, Mr. Lindsell was Chief Investment Officer -- Japan for LGT
Asset Management Ltd. (Hong Kong) as well as Portfolio Manager for
the Manager. Prior thereto, Mr. Lindsell was a Director of Warburg
Asset Management (Tokyo).
</TABLE>
- --------------
* Employees of Chancellor Capital prior to October 31, 1996.
Prospectus Page 49
<PAGE>
GT GLOBAL EQUITY FUNDS
With respect to Small Cap Portfolio, America Mid Cap Fund and Value Portfolio,
the Manager utilizes a team approach that relies on its bottom-up,
research-intensive, process-driven stock selection capability to build the
various investment portfolios. The Manager's disciplined process combines the
inputs of analysts performing fundamental and quantitative research, various
committees that set the Manager's firmwide economic forecasts and sector and
industry allocations and portfolio management teams responsible for stock
selection decisions. While individual members of the Manager's investment team
are assigned primary responsibility for the day-to-day management of Small Cap
Portfolio, America Mid Cap Fund and Value Portfolio, the Portfolios and the
Fund, along with similarly managed accounts, are reviewed on a regular basis by
the applicable investment team to monitor compliance with applicable investment
guidelines.
In placing orders for the Funds' and Portfolios' portfolio transactions, the
Manager seeks to obtain the best net results. Consistent with its obligation to
obtain the best net results, the Manager may consider a broker/dealer's sale of
shares of the GT Global Mutual Funds as a factor in considering through whom
portfolio transactions will be effected. Brokerage transactions for a Fund or
Portfolio may be executed through affiliates of Liechtenstein Global Trust. High
portfolio turnover (over 100%) involves correspondingly greater brokerage
commissions and other transaction costs that the Funds or the Portfolios will
bear directly and could result in the realization of net capital gains which
would be taxable when distributed to shareholders. See "Dividends, Other
Distributions, and Federal Income Taxation."
DISTRIBUTION OF FUND SHARES. GT Global is the distributor of each Fund's Class A
and Class B shares. Like the Manager, GT Global is a subsidiary of Liechtenstein
Global Trust with offices at 50 California Street, 27th Floor, San Francisco,
California 94111. As distributor, GT Global collects the sales charges imposed
on purchases of Class A shares and and any contingent deferred sales charges
that may be imposed on certain redemptions of Class A and Class B shares. GT
Global reallows a portion of the sales charges on Class A shares to
broker/dealers that have sold such shares in accordance with the schedule set
forth above under "How to Invest." In addition, GT Global pays a commission
equal to 4.00% of the amount invested to broker/dealers who sell Class B shares.
A commission with respect to Class B shares is not paid on exchanges or certain
reinvestments in Class B shares.
GT Global, at its own expense, may provide additional promotional incentives to
broker/dealers that sell shares of the Funds and/or shares of the other GT
Global Mutual Funds. In some instances additional compensation or promotional
incentives may be offered to broker/dealers that have sold or may sell
significant amounts of shares during specified periods of time. Such
compensation and incentives may include, but are not limited to, cash,
merchandise, trips and financial assistance to brokers in connection with
preapproved conferences or seminars, sales or training programs for invited
sales personnel, payment for travel expenses (including meals and lodging)
incurred by sales personnel and members of their families or other invited
guests to various locations for such seminars or training programs, seminars for
the public, advertising and sales campaigns regarding one or more of the GT
Global Mutual Funds and/or other events sponsored by the broker/dealer. In
addition, GT Global makes ongoing payments to brokerage firms, financial
institutions (including banks) and others that facilitate the administration and
servicing of shareholder accounts.
Under a plan of distribution adopted by the Company's Board of Trustees pursuant
to Rule 12b-1 under the 1940 Act, with respect to each Fund's Class A shares
("Class A Plan"), each Fund may pay GT Global a service fee at the annualized
rate of up to 0.25% of the average daily net assets of the Fund's Class A shares
for its expenditures incurred in servicing and maintaining shareholder accounts,
and may pay GT Global a distribution fee at the annualized rate of up to 0.35%
of the average daily net assets of the Fund's Class A shares, less any amounts
paid by the Fund as the aforementioned service fee for its expenditures incurred
in providing services as distributor. All expenses for which GT Global is
reimbursed under the Class A Plan will have been incurred within one year of
such reimbursement.
Pursuant to a separate plan of distribution adopted with respect to each Fund's
Class B shares ("Class B Plan"), each Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.75% of the average daily net assets of the Fund's Class B shares
for its expenditures incurred in providing services as distributor.
Prospectus Page 50
<PAGE>
GT GLOBAL EQUITY FUNDS
Expenses incurred under the Class B Plan in excess of 1.00% annually may be
carried forward for reimbursement in subsequent years as long as such Plan
continues in effect.
GT Global's service and distribution expenses covered by the Plans include the
payment of ongoing commissions; the cost of any additional compensation paid by
GT Global to brokers and dealers; the costs of printing and mailing to
prospective investors prospectuses and other materials relating to the Funds;
the costs of developing, printing, distributing and publishing advertisements
and other sales literature; and allocated costs relating to GT Global's service
and distribution activities, including, among other things, employee salaries,
bonuses and other overhead expenses. In addition, its expenses covered by the
Class B Plan include payment of initial sales commissions to broker/dealers and
interest on any unreimbursed amounts carried forward thereunder.
The Glass-Steagall Act and other applicable laws, among other things, generally
prohibit federally chartered or supervised banks from engaging in the business
of underwriting or distributing securities. Accordingly, GT Global intends to
engage banks (if at all) only to perform administrative and shareholder
servicing functions. If a bank were prohibited from so acting, its shareholder
clients would be permitted to remain shareholders, and alternative means for
continuing the servicing of such shareholders would be sought. It is not
expected that shareholders would suffer any adverse financial consequences as a
result of any of these occurrences.
- --------------------------------------------------------------------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
CONFIRMATIONS AND REPORTS TO SHAREHOLDERS. Each time a transaction is made that
affects a shareholder's account in a Fund, the shareholder will receive from the
Transfer Agent a confirmation statement reflecting the transaction.
Confirmations for transactions effected pursuant to a Fund's Automatic
Investment Plan, Systematic Withdrawal Plan, and automatic dividend reinvestment
program may be provided quarterly. Shortly after the end of the Funds' fiscal
year on December 31 and fiscal half-year on June 30 of each year, shareholders
will receive an annual and semiannual report, respectively. In addition, the
federal income tax status of distributions made by the Funds to shareholders
will be reported after the end of the fiscal year on Form 1099-DIV. Under
certain circumstances, duplicate mailings of the foregoing reports to the same
household may be consolidated.
ORGANIZATION OF THE COMPANY. The Company is organized as a Massachusetts
business trust and is registered with the SEC as a diversified open-end
management investment company.
From time to time the Company has and may continue to establish additional
funds, each corresponding to a distinct investment portfolio and a distinct
series of the Company's shares of beneficial interest. Shares of each Fund are
entitled to one vote per share (with proportional voting for fractional shares)
and are freely transferable. Shareholders have no preemptive or conversion
rights.
On any matter submitted to a vote of shareholders, shares of each Fund will be
voted by that Fund's shareholders individually when the matter affects the
specific interest of that Fund only, such as approval of that Fund's investment
management arrangements. In addition, each class of shares of a Fund has
exclusive voting rights with respect to its distribution plan. The shares of all
the Company's Funds will be voted in the aggregate on other matters, such as the
election of Trustees and ratification of the selection by the Board of Trustees
of the Company's independent accountants.
The Company normally will not hold meetings of shareholders, except as required
under the 1940 Act. The Company would be required to hold a shareholders meeting
in the event that at any time less than a majority of the Trustees holding
office had been elected by shareholders. Trustees shall continue to hold office
until their successors are elected and have qualified. Shares of the Company's
Funds do not have cumulative voting rights, which means that the holders of a
majority of the shares voting for the election of Trustees can elect all the
Trustees. A Trustee may be removed upon a
Prospectus Page 51
<PAGE>
GT GLOBAL EQUITY FUNDS
majority vote of the shareholders qualified to vote in the election.
Shareholders holding 10% of the Company's outstanding voting securities may call
a meeting of shareholders for the purpose of voting upon the question of removal
of any Trustee or for any other purpose. The 1940 Act requires the Company to
assist shareholders in calling such a meeting.
Pursuant to the Company's Declaration of Trust, the Company may issue an
unlimited number of shares for each of the Funds, including an unlimited number
of Class A, Class B and Advisor Class shares of each Fund. Each share of a Fund
represents an interest in the Fund only, has no par value, represents an equal
proportionate interest in the Fund with other shares of the Fund and is entitled
to such dividends and distributions out of the income earned and gain realized
on the assets belonging to the Fund as may be declared by the Board of Trustees.
Each Class A, Class B and Advisor Class share of each Fund is equal as to
earnings, assets and voting privileges to each other share in such Fund, except
as noted above, and each class bears the expenses, if any, related to the
distribution of its shares. Shares of the Funds, when issued, are fully paid and
nonassessable.
ORGANIZATION OF THE PORTFOLIOS. Each Portfolio is organized as a subtrust of
Growth Portfolio, a New York common law trust. The Declaration of Trust provides
that the America Small Cap Fund, America Value Fund and other entities investing
in its corresponding Portfolio (E.G., other investment companies, insurance
company separate accounts and common and commingled trust funds), if any, each
will be liable for all obligations of that Portfolio. However, the Trustees of
the Company believe that the risk of such Funds' incurring financial loss
because of such liability is limited to circumstances in which both inadequate
insurance existed and each of the Portfolios itself was unable to meet its
obligations, and that neither such Funds nor their shareholders will be exposed
to a material risk of liability by reason of such Funds investing in their
corresponding Portfolios.
Whenever the America Small Cap Fund or America Value Fund is requested to vote
on any proposal of its corresponding Portfolio, such Fund will hold a meeting of
such Fund's shareholders and will cast its vote as instructed by its
shareholders. Shares for which no voting instructions are received will be voted
in the same proportion as the shares for which voting instructions are received.
SHAREHOLDER INQUIRIES. Shareholder inquiries may be made by calling the Funds
toll-free at (800) 223-2138 or by writing to the Funds at 50 California Street,
27th Floor, San Francisco, California 94111.
PERFORMANCE INFORMATION. Each Fund, from time to time, may include information
on its investment results and/or comparisons of its investment results to
various unmanaged indices or results of other mutual funds or groups of mutual
funds in advertisements, sales literature or reports furnished to present or
prospective shareholders.
In such materials, a Fund may quote its average annual total return
("Standardized Return"). Standardized Return is calculated separately for each
class of shares of each Fund. Standardized Return shows percentage rates
reflecting the average annual change in the value of an assumed investment in
the Fund at the end of one-, five- and ten-year periods, reduced by the maximum
applicable sales charge imposed on sales of Fund shares. If a one-, five- and/or
ten-year period has not yet elapsed, data will be provided as of the end of a
shorter period corresponding to the life of the Fund. Standardized Return
assumes reinvestment of all dividends and capital gain distributions.
In addition, in order to more completely represent a Fund's performance or more
accurately compare such performance to other measures of investment return, a
Fund also may include in advertisements, sales literature and shareholder
reports other total return performance data ("Non-Standardized Return").
Non-Standardized Return reflects percentage rates of return encompassing all
elements of return (i.e., income and capital appreciation or depreciation); it
assumes reinvestment of all dividends and capital gain
distributions. Non-Standardized Return may be quoted for the same or different
periods as those for which Standardized Return is quoted; it may consist of an
aggregate or average annual percentage rate of return, actual year-by-year rates
or any combination thereof. Non-Standardized Return may or may not take sales
charges into account; performance data calculated without taking the effect of
sales charges into account will be higher than data including the effect of such
charges.
Each Fund's performance data reflect past performance and is not necessarily
indicative of future results. A Fund's investment results will vary from time to
time depending upon market conditions, the composition of its portfolio and its
operating
Prospectus Page 52
<PAGE>
GT GLOBAL EQUITY FUNDS
expenses. These factors and possible differences in calculation methods should
be considered when comparing a Fund's investment results with those published
for other investment companies, other investment vehicles and unmanaged indices.
A Fund's results also should be considered relative to the risks associated with
its investment objective and policies. See "Investment Results" in the Statement
of Additional Information.
Each Fund's annual report contains additional information with respect to its
performance. The annual report is available to investors upon request and free
of charge.
TRANSFER AGENT. Shareholder servicing, reporting and general transfer agent
functions for the Funds are performed by GT Global Investor Services, Inc. The
Transfer Agent is an affiliate of the Manager and GT Global, a subsidiary of
Liechtenstein Global Trust, and maintains offices at California Plaza, 2121 N.
California Boulevard, Suite 450, Walnut Creek, California 94596.
CUSTODIAN. State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110 is custodian of each Fund's and each Portfolio's assets.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Company and to Growth
Portfolio. Kirkpatrick & Lockhart LLP also acts as counsel to the Manager, GT
Global and the Transfer Agent in connection with other matters.
INDEPENDENT ACCOUNTANTS. The Company's and each Fund's and Portfolio's
independent accountants are Coopers & Lybrand L.L.P., One Post Office Square,
Boston, Massachusetts 02109. Coopers & Lybrand L.L.P. conducts an annual audit
of each Fund and Portfolio, assists in the preparation of each Fund's and each
Portfolio's federal and state income tax returns and consults with the Company
and each Fund and Portfolio as to matters of accounting, regulatory filings and
federal and state income taxation.
MULTIPLE TRANSLATIONS OF THE PROSPECTUS. This Prospectus may be translated into
other languages. In the event of any inconsistency or ambiguity as to the
meaning of any word or phrase contained in a translation, the English text shall
prevail.
Prospectus Page 53
<PAGE>
GT GLOBAL EQUITY FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 54
<PAGE>
GT GLOBAL EQUITY FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 55
<PAGE>
GT GLOBAL EQUITY FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 56
<PAGE>
GT GLOBAL EQUITY FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 57
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT GLOBAL MUTUAL FUNDS
P.O. Box 7345 ACCOUNT APPLICATION
SAN FRANCISCO, CA 94120-7345
800/223-2138
</TABLE>
<TABLE>
<S> <C> <C>
/ / INDIVIDUAL / / JOINT TENANT / / GIFT/TRANSFER FOR MINOR / / TRUST / / CORP.
ACCOUNT REGISTRATION / / NEW ACCOUNT / / ACCOUNT REVISION (Account No.: --------------------------------------)
</TABLE>
NOTE: Trust registrations should specify name of trustee(s), beneficiary(ies)
and date of trust instrument. Registration for Uniform Gifts/Transfers to
Minors accounts should be in the name of one custodian and one minor and
include the state under which the custodianship is created.
<TABLE>
<S> <C> <C> <C>
------------------------------------ --------------------------------------------------------------------------------
Owner Social Security Number / / or Tax I.D. Number / / (Check applicable box)
------------------------------------ If more than one owner, social security number or taxpayer identification number
Co-owner 1 should be provided for first owner listed. If a purchase is made under Uniform Gift/
------------------------------------ Transfer to Minors Act, social security number of the minor must be provided.
Co-owner 2 Resident of / / U.S. / / Other (specify)-----------------------------------------
( )
---------------------------------------------------------------------- ---------------------------
Street Address Home Telephone
( )
---------------------------------------------------------------------- ---------------------------
City, State, Zip Code Business Telephone
</TABLE>
FUND SELECTION $500 minimum initial investment required for each Fund
selected. Checks should be made payable to "GT GLOBAL."
TO PURCHASE THE FUNDS LISTED BELOW PLEASE SELECT EITHER / / Class A Shares or
/ /Class B Shares (Not available for purchases of $500,000 or more or, except
for investors participating in the Portfolio Rebalancing Program, for the
GT Global Dollar Fund).
If a class share box is not checked, your investment will be made in Class A
shares.
<TABLE>
<S> <C> <C> <C> <C>
INITIAL INITIAL
INVESTMENT INVESTMENT
07 / / GT GLOBAL WORLDWIDE GROWTH FUND $ 13 / / GT GLOBAL LATIN AMERICA GROWTH FUND $
---------- ----------
05 / / GT GLOBAL INTERNATIONAL GROWTH FUND $ 24 / / GT GLOBAL AMERICA SMALL CAP GROWTH $
---------- FUND ----------
16 / / GT GLOBAL EMERGING MARKETS FUND $ 06 / / GT GLOBAL AMERICA MID CAP GROWTH FUND $
---------- ----------
11 / / GT GLOBAL HEALTH CARE FUND $ 23 / / GT GLOBAL AMERICA VALUE FUND $
---------- ----------
15 / / GT GLOBAL TELECOMMUNICATIONS FUND $ 04 / / GT GLOBAL JAPAN GROWTH FUND $
---------- ----------
19 / / GT GLOBAL INFRASTRUCTURE FUND $ 10 / / GT GLOBAL GROWTH & INCOME FUND $
---------- ----------
17 / / GT GLOBAL FINANCIAL SERVICES FUND $ 09 / / GT GLOBAL GOVERNMENT INCOME FUND $
---------- ----------
21 / / GT GLOBAL NATURAL RESOURCES FUND $ 08 / / GT GLOBAL STRATEGIC INCOME FUND $
---------- ----------
22 / / GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND $ 18 / / GT GLOBAL HIGH INCOME FUND $
---------- ----------
02 / / GT GLOBAL NEW PACIFIC GROWTH FUND $ 01 / / GT GLOBAL DOLLAR FUND $
---------- ----------
03 / / GT GLOBAL EUROPE GROWTH FUND $
----------
CHECKWRITING PRIVILEGE
Checkwriting privilege available on Class A shares of GT Global Dollar Fund and GT Global Government Income Fund.
/ / Check here if desired. You will be sent a book of checks.
CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS TOTAL INITIAL INVESTMENT: $
----------
All capital gains and dividend distributions will be reinvested in additional shares of the same class unless appropriate
boxes below are checked:
/ / Pay capital gain distributions only in cash / / Pay dividends only in cash / / Pay capital gain distributions AND
dividends in cash.
SPECIAL CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS OPTION
Pay distributions noted above to another GT Global Mutual Fund: Fund Name ------------------------------------------
</TABLE>
AGREEMENTS & SIGNATURES
By the execution of this Account Application, I/we represent and warrant that
I/we have full right, power and authority and am/are of legal age in my/our
state of residence to make the investment applied for pursuant to this
Application. The person(s), if any, signing on behalf of the investor
represent and warrant that they are duly authorized to sign this Application
and to purchase, redeem or exchange shares of the Fund(s) on behalf of the
investor. I/WE HEREBY AFFIRM THAT I/WE HAVE RECEIVED A CURRENT PROSPECTUS OF
THE GT GLOBAL MUTUAL FUND(S) IN WHICH I/WE AM/ARE INVESTING AND I/WE AGREE TO
ITS TERMS AND CONDITIONS.
I/WE AND MY/OUR ASSIGNS AND SUCCESSORS UNDERSTAND AND AGREE THAT THE ACCOUNT
WILL BE SUBJECT TO THE TELEPHONE EXCHANGE AND TELEPHONE REDEMPTION PRIVILEGES
DESCRIBED IN THE CURRENT PROSPECTUS TO WHICH THIS APPLICATION IS ATTACHED AND
AGREE THAT GT GLOBAL, INC., G.T. GLOBAL GROWTH SERIES, G.T. INVESTMENT FUNDS,
INC., G.T. INVESTMENT PORTFOLIOS, INC. AND THE FUNDS' TRANSFER AGENT, THEIR
OFFICERS AND EMPLOYEES, WILL NOT BE LIABLE FOR ANY LOSS OR DAMAGES ARISING OUT
OF ANY SUCH TELEPHONE, TELEX OR TELEGRAPHIC INSTRUCTIONS REASONABLY BELIEVED
TO BE GENUINE, INCLUDING ANY SUCH LOSS OR DAMAGES DUE TO NEGLIGENCE ON THE
PART OF SUCH ENTITIES. THE INVESTOR(S) CERTIFIES(Y) AND AGREE(S) THAT THE
CERTIFICATIONS, AUTHORIZATIONS, DIRECTIONS AND RESTRICTIONS CONTAINED HEREIN
WILL CONTINUE UNTIL GT GLOBAL, INC., G.T. GLOBAL GROWTH SERIES, G.T.
INVESTMENT FUNDS, INC., G.T. INVESTMENT PORTFOLIOS, INC. OR THE FUNDS'
TRANSFER AGENT RECEIVES WRITTEN NOTICE OF ANY CHANGE OR REVOCATION. ANY CHANGE
IN THESE INSTRUCTIONS MUST BE IN WRITING AND IN SOME CASES, AS DESCRIBED IN
THE PROSPECTUS, REQUIRES THAT ALL SIGNATURES BE GUARANTEED.
PLEASE INDICATE THE NUMBER OF SIGNATURES REQUIRED TO PROCESS CHECKS OR
WRITTEN REDEMPTION REQUESTS: / / ONE / / TWO / / THREE / / FOUR.
(If you do not indicate the number of required signatures, ALL account
owners must sign checks and/or written redemption requests.)
UNDER PENALTIES OF PERJURY, I CERTIFY THAT THE TAXPAYER IDENTIFICATION
NUMBER ("NUMBER") PROVIDED ON THIS FORM IS MY (OR MY EMPLOYER'S, TRUST'S,
MINOR'S OR OTHER PAYEE'S) TRUE, CORRECT AND COMPLETE NUMBER AND MAY BE
ASSIGNED TO ANY NEW ACCOUNT OPENED UNDER THE EXCHANGE PRIVILEGE. I FURTHER
CERTIFY THAT I AM (OR THE PAYEE WHOSE NUMBER IS GIVEN IS) NOT SUBJECT TO
BACKUP WITHHOLDING BECAUSE: (A) I AM (OR THE PAYEE IS) EXEMPT FROM BACKUP
WITHHOLDING; (B) THE INTERNAL REVENUE SERVICE (THE "I.R.S.") HAS NOT NOTIFIED
ME THAT I AM (OR THE PAYEE IS) SUBJECT TO BACKUP WITHHOLDING AS A RESULT OF A
FAILURE TO REPORT ALL INTEREST OR DIVIDENDS; OR (C) THE I.R.S. HAS NOTIFIED ME
THAT I AM (THE PAYEE IS) NO LONGER SUBJECT TO BACKUP WITHHOLDING;
OR, / / I AM (THE PAYEE IS) SUBJECT TO BACKUP WITHHOLDING.
ALL ACCOUNT OWNERS MUST SIGN BELOW (Minors are not authorized signers)
Account revisions may require that signatures be guaranteed. Please see the
Prospectus.
THE I.R.S. DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT
OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING.
<TABLE>
<S> <C>
-----------------------------------------------------------
Date
X X
--------------------------------------------------------- ----------------------------------------------------------
X X
--------------------------------------------------------- ----------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
ACCOUNT PRIVILEGES
TELEPHONE EXCHANGE AND REDEMPTION AUTHORITY TO TRANSMIT REDEMPTION PROCEEDS TO
PRE-DESIGNATED ACCOUNT
I/We, either directly or through the Authorized By completing the following section, redemptions
Agent, if any, named below, hereby authorize the which exceed $1,000 may be wired or mailed to a
Transfer Agent of the GT Global Mutual Funds, to Pre-Designated Account at your bank. (Wiring
honor any telephone, telex or telegraphic instructions may be obtained from your bank.) A
instructions reasonably believed to be authentic bank wire service fee may be charged.
for redemption and/or exchange between a similar
class of shares of any of the Funds distributed --------------------------------------------------
by GT Global, Inc. Name of Bank
SPECIAL PURCHASE AND REDEMPTION PLANS --------------------------------------------------
/ / I have completed and attached the Bank Address
Supplemental Application for:
/ / AUTOMATIC INVESTMENT PLAN --------------------------------------------------
/ / SYSTEMATIC WITHDRAWAL PLAN Bank A.B.A Number Account Number
OTHER
/ / I/We owned shares of one or more Funds --------------------------------------------------
distributed by GT Global, Inc. as of April Names(s) in which Bank Account is Established
30, 1987 and since that date continuously A corporation (or partnership) must also submit a
have owned shares of such Funds. Attached is "Corporate Resolution" (or "Certificate of
a schedule showing the numbers of each of Partnership") indicating the names and titles of
my/our Shareholder Accounts. Officers authorized to act on its behalf.
</TABLE>
RIGHT OF ACCUMULATION -- CLASS A SHARES
/ / I/We qualify for the Right of Accumulation sales charge discount
described in the Prospectus and Statement of Additional Information of
the Fund purchased.
/ / I/We own shares of more than one Fund distributed by GT Global. Listed
below are the numbers of each of my/our Shareholder Accounts.
/ / The registration of some of my/our shares differs from that shown on this
Application. Below are the account number(s) and registration(s) in each
case.
LIST OF OTHER GT GLOBAL MUTUAL FUND ACCOUNTS:
<TABLE>
<CAPTION>
<S> <C>
------------------------------------------- --------------------------------------------------
------------------------------------------- --------------------------------------------------
------------------------------------------- --------------------------------------------------
Account Numbers Account Registrations
</TABLE>
LETTER OF INTENT -- CLASS A SHARES
/ / I agree to the terms of the Letter of Intent set forth below. Although I
am not obligated to do so, it is my intention to invest over a
thirteen-month period in Class A shares of one or more of the GT Global
Mutual Funds in an aggregate amount at least equal to:
/ / $50,000 / / $100,000 / / $250,000 / / $500,000
When a shareholder signs a Letter of Intent in order to qualify for a reduced
sales charge, Class A shares equal to 5% (in no case in excess of 1/2 of 1%
after an aggregate of $500,000 has been purchased under the Letter) of the
dollar amount specified in this Letter will be held in escrow in the
Shareholder's Account out of the initial purchase (or subsequent purchases, if
necessary) by GT Global, Inc. All dividends and other distributions will be
credited to the Shareholder's Account in shares (or paid in cash, if
requested). If the intended investment is not completed within the specified
thirteen-month period, the purchaser will remit to GT Global, Inc. the
difference between the sales charge actually paid and the sales charge which
would have been paid if the total of such purchases had been made at a single
time. If this difference is not paid within twenty days after written request
by GT Global, Inc. or the shareholder's Authorized Agent, the appropriate
number of escrowed shares will be redeemed to pay such difference. If the
proceeds from this redemption are inadequate, the purchaser will be liable to
GT Global, Inc. for the balance still outstanding. The Letter of Intent may be
revised upward at any time during the thirteen-month period, and such a
revision will be treated as a new Letter, except that the thirteen-month
period during which the purchase must be made will remain unchanged. Exchange
requests involving escrowed shares must specifically reference those shares.
Exchanges of escrowed shares may be delayed to allow for the extra processing
required.
Any questions relating to this Letter of Intent should be directed to GT
Global, 50 California Street, 27th Floor, San Francisco, CA 94111.
FOR USE BY AUTHORIZED AGENT (BROKER/DEALER) ONLY
We hereby submit this Account Application for the purchase of Class A shares
including such shares purchased under a Right of Accumulation or Letter of
Intent or for the purchase of Class B shares in accordance with the terms of
our Dealer Agreement with GT Global, Inc. and with the Prospectus and
Statement of Additional Information of each Fund purchased. We agree to notify
GT Global, Inc. of any purchases properly made under a Letter of Intent or
Right of Accumulation.
<TABLE>
<CAPTION>
<S> <C>
---------------------------------------------------------------------------------------------------------------------------------
Investment Dealer Name
---------------------------------------------------------------------------------------------------------------------------------
Main Office Address Branch Number Representative's Number Representative's Name
( )
- -----------------------------------------------------------------------------------------------------------------------
Branch Address Telephone
X
- -----------------------------------------------------------------------------------------------------------------------
Investment Dealer's Authorized Signature Title
</TABLE>
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT GLOBAL MUTUAL FUNDS SUPPLEMENTAL APPLICATION
P.O. Box 7345 SPECIAL INVESTMENT AND
SAN FRANCISCO, CA 94120-7345 WITHDRAWAL OPTIONS
800/223-2138
</TABLE>
<TABLE>
<S> <C> <C>
ACCOUNT REGISTRATION
Please supply the following information exactly as it appears on the Fund's records.
- --------------------------------------------------------- ---------------------------------------------------------
Fund Name Account Number
- ---------------------------------------------------------- ----------------------------------------------------------
Owner's Name Co-Owner 1
- ---------------------------------------------------------- ----------------------------------------------------------
Co-Owner 2 Telephone Number
- ---------------------------------------------------------- ----------------------------------------------------------
Street Address Social Security or Tax I.D. Number
- ----------------------------------------------------------
City, State, Zip Code
Resident of / / U.S. / / Other ------------------
AUTOMATIC INVESTMENT PLAN / / YES / / NO
I/We hereby authorize the Transfer Agent of the GT Global Mutual Funds to debit my/our personal checking account on
the designated dates in order to purchase / / Class A shares or / / Class B shares of the Fund indicated at the top of
this Supplemental Application at the applicable public offering price determined on that day.
/ / Monthly on the 25th day / / Quarterly beginning on the 25th day of the month you first select
(The request for participation in the Plan must be received by the 1st day of the month in which you wish investments
to begin.)
Amount of each debit (minimum $100) $
-------------------------------------------------
NOTE: A Bank Authorization Form (below) and a voided personal check must accompany the Automatic Investment Plan
Application.
</TABLE>
- --------------------------------------------------------------------------------
[LOGO]
<TABLE>
<S> <C>
GT GLOBAL MUTUAL FUNDS AUTOMATIC INVESTMENT PLAN
</TABLE>
<TABLE>
<S> <C> <C> <C>
BANK AUTHORIZATION
- ------------------------- ------------------------------ ------------
Bank Name Bank Address Bank Account Number
I/We authorize you, the above named bank, to debit my/our account for amounts drawn by the Transfer Agent of the GT
Global Mutual Funds, acting as my agent. I/We agree that your rights in respect to each withdrawal shall be the same as
if it were a check drawn upon you and signed by me/us. This authority shall remain in effect until I/we revoke it in
writing and you receive it. I/We agree that you shall incur no liability when honoring any such debit.
I/We further agree that you will incur no liability to me if you dishonor any such withdrawal. This will be so even
though such dishonor results in the forfeiture of investment.
- --------------------------------------------------------- ---------------------------------------------------------
Account Holder's Name Joint Account Holder's Name
X X
- ------------------------------------ -------------- ------------------------------------ --------------
Account Holder's Signature Date Joint Account Holder's Signature Date
</TABLE>
(OVER)
<PAGE>
<TABLE>
<S> <C> <C> <C>
SYSTEMATIC WITHDRAWAL PLAN / / YES / / NO
MINIMUM REQUIREMENTS: $10,000 INITIAL ACCOUNT BALANCE AND $100 MINIMUM PERIODIC PAYMENT.
I/We hereby authorize the Transfer Agent of the GT Global Mutual Funds to redeem the necessary number of / / Class A
or / / Class B shares from my/our GT Global Account on the designated dates in order to make the following periodic
payments:
/ / Monthly on the 25th day / / Quarterly beginning on the 25th day of the month you first select
(The request for participation in the Plan must be received by the 18th day of the month in which you wish withdrawals
to begin.)
Maximum annual withdrawal of 12% of initial account balance for shares subject to a contingent deferred sales charge.
Withdrawals in excess of 12% of the initial account balance annually may result in assessment of a contingent deferred
sales charge, as described in the applicable Fund's prospectus.
Amount of each check ($100 minimum): $ -----------------
Please make checks payable to: --------------------------------------------------------------------------------------
(TO BE COMPLETED ONLY IF Recipient
REDEMPTION PROCEEDS TO BE PAID --------------------------------------------------------------------------------------
TO OTHER THAN ACCOUNT HOLDER Street Address
OF RECORD OR MAILED TO ADDRESS --------------------------------------------------------------------------------------
OTHER THAN ADDRESS OF RECORD) City, State, Zip Code
NOTE: If recipient of checks is not the registered shareholder, signature(s) below must be guaranteed. A corporation
(or partnership) must also submit a "Corporate Resolution" (or "Certification of Partnership") indicating the names
and titles of Officers authorized to act on its behalf.
AGREEMENT AND SIGNATURES
The investor(s) certifies(y) and agree(s) that the certifications, authorizations, directions and restrictions
contained herein will continue until the Transfer Agent of the GT Global Mutual Funds receives written notice of any
change or revocation. Any change in these instructions must be in writing with all signatures guaranteed (if
applicable).
- ----------------------------------------------------------
Date
X X
- ----------------------------------------------------- ---------------------------------------------------
Signature Signature
- ----------------------------------------------------------- ---------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
X X
- ----------------------------------------------------- ---------------------------------------------------
Signature Signature
- ----------------------------------------------------------- ---------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
*Acceptable signature guarantors: (1) a commercial bank; (2) a U.S. trust company; (3) a member firm of a U.S. stock
exchange; (4) a foreign branch of any of the foregoing; or (5) any other eligible guarantor institution. A notary
public is NOT an acceptable guarantor. An investor with questions concerning the GT Global Mutual Funds signature
guarantee requirement should contact the Transfer Agent.
</TABLE>
- --------------------------------------------------------------------------------
INDEMNIFICATION AGREEMENT
To: Bank Named on the Reverse
In consideration of your compliance with the request and authorization of the
depositor(s) named on the reverse, the Transfer Agent of the GT Global Mutual
Funds hereby agrees:
1. To indemnify and hold you harmless from any loss you may incur because of the
payment by you and of any debit by the Transfer Agent to its own order on the
account of such depositor(s) and received by you in the regular course of
business for payment, or arising out of the dishonor by you of any debit,
provided there are sufficient funds in such account to pay the same upon
presentation.
2. To defend at its own expense any action which might be brought by any
depositor or any other persons because of your actions taken pursuant to the
above mentioned request or in any manner arising by reason of your participation
in connection with such request.
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL MUTUAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY OF THE GT GLOBAL
MUTUAL FUNDS, INCLUDING FEES, EXPENSES AND THE RISKS OF GLOBAL AND EMERGING
MARKET INVESTING AS WELL AS THE RISKS OF INVESTING IN RELATED INDUSTRIES,
PLEASE CONTACT YOUR FINANCIAL ADVISOR OR CALL GT GLOBAL DIRECTLY AT
1-800-824-1580.
GROWTH FUNDS
/ / GLOBALLY DIVERSIFIED FUNDS
GT GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity by investing outside
the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
/ / GLOBAL THEME FUNDS
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL HEALTH CARE FUND
Invests in growing health care industries worldwide
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in the new, unified Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA MID CAP GROWTH FUND
Concentrates on medium-sized companies in the U.S.
GT GLOBAL AMERICA VALUE FUND
Concentrates on equity securities of large cap U.S. companies believed to be
undervalued
GT GLOBAL JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUND
GT GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government bonds from around the world
INCOME FUNDS
GT GLOBAL GOVERNMENT INCOME FUND
Earns monthly income from global government securities
GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
GT GLOBAL HIGH INCOME FUND
Invests in debt securities in emerging markets
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[LOGO]
NO DEALER, SALES REPRESENTATIVE OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY G.T. GLOBAL GROWTH SERIES,
GT GLOBAL EQUITY FUNDS, GROWTH PORTFOLIO, CHANCELLOR LGT ASSET MANAGEMENT,
INC. OR GT GLOBAL, INC. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL
OR SOLICITATION OF ANY OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN
ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER.
EQUPR610040MC
<PAGE>
GT GLOBAL EQUITY FUNDS: ADVISOR CLASS
PROSPECTUS -- MAY 1, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
GT GLOBAL NEW PACIFIC GROWTH FUND GT GLOBAL WORLDWIDE GROWTH FUND
("PACIFIC FUND") ("WORLDWIDE FUND")
GT GLOBAL EUROPE GROWTH FUND GT GLOBAL AMERICA MID CAP GROWTH FUND
("EUROPE FUND") ("AMERICA MID CAP FUND")
GT GLOBAL JAPAN GROWTH FUND GT GLOBAL AMERICA SMALL CAP GROWTH FUND
("JAPAN FUND") ("AMERICA SMALL CAP FUND")
GT GLOBAL INTERNATIONAL GROWTH FUND GT GLOBAL AMERICA VALUE FUND
("INTERNATIONAL FUND") ("AMERICA VALUE FUND")
</TABLE>
THE PACIFIC FUND, EUROPE FUND, JAPAN FUND, INTERNATIONAL FUND AND WORLDWIDE FUND
each seeks long-term growth of capital by investing primarily in equity
securities of issuers domiciled in its Primary Investment Area (as defined
herein).
THE AMERICA MID CAP FUND seeks long-term growth of capital by investing
primarily in equity securities of companies domiciled in the United States that,
at the time of purchase, have market capitalizations of $1 billion to $5 billion
("U.S. mid cap companies").
THE AMERICA SMALL CAP FUND seeks long-term capital appreciation by investing all
of its investable assets in the Small Cap Portfolio, which, in turn, invests
primarily in equity securities of companies domiciled in the United States that,
at the time of purchase, have market capitalizations of up to $1 billion ("U.S.
small cap companies").
THE AMERICA VALUE FUND seeks long-term capital appreciation by investing all of
its investable assets in the Value Portfolio, which, in turn, invests primarily
in equity securities of companies domiciled in the United States that, at the
time of purchase, have market capitalizations of greater than $500 million and
that Chancellor LGT Asset Management, Inc. (the "Manager") believes to be
undervalued in relation to long-term earning power or other factors.
The Pacific Fund, Europe Fund, Japan Fund, International Fund, Worldwide Fund,
America Mid Cap Fund, America Small Cap Fund and America Value Fund are referred
to herein individually as a "Fund" and collectively as the "Funds." The Small
Cap Portfolio and Value Portfolio are referred to herein individually as a
"Portfolio" and collectively as the "Portfolios."
Each Portfolio's investment objective is identical to that of its corresponding
Fund. There can be no assurance that any Fund or either Portfolio will achieve
its investment objective. The investment experience of the America Small Cap
Fund and America Value Fund will correspond directly with the investment
experience of their corresponding Portfolios.
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR GUARANTEED BY,
ANY BANK, NOR ARE THEY FEDERALLY INSURED OR OTHERWISE PROTECTED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
The Funds and the Portfolios are managed and/or administered by the Manager. The
Manager and its worldwide affiliates are part of Liechtenstein Global Trust, a
provider of global asset management and private banking products and services to
individual and institutional investors.
Shares offered by this Prospectus are available for purchase only by certain
investors and are offered at net asset value without the imposition of a
front-end or contingent deferred sales charge or Rule 12b-1 fees.
This Prospectus sets forth concisely the information an investor should know
before investing and should be read carefully and retained for future reference.
A Statement of Additional Information, dated May 1, 1997, has been filed with
the Securities and Exchange Commission ("SEC") and, as supplemented or amended
from time to time, is incorporated herein by reference. The Statement of
Additional Information is available without charge by writing to the Funds at 50
California Street, 27th Floor, San Francisco, California 94111, or by calling
(800) 824-1580.
FOR FURTHER INFORMATION, CALL (800) 824-1580 OR CONTACT YOUR
FINANCIAL ADVISOR.
[LOGO]
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus Page 1
<PAGE>
GT GLOBAL EQUITY FUNDS
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Prospectus Summary........................................................................ 3
Financial Highlights...................................................................... 7
Investment Objectives and Policies........................................................ 21
Risk Factors.............................................................................. 27
How to Invest............................................................................. 30
How to Make Exchanges..................................................................... 32
How to Redeem Shares...................................................................... 33
Shareholder Account Manual................................................................ 35
Calculation of Net Asset Value............................................................ 36
Dividends, Other Distributions and Federal Income Taxation................................ 37
Management................................................................................ 38
Other Information......................................................................... 43
</TABLE>
Prospectus Page 2
<PAGE>
GT GLOBAL EQUITY FUNDS
PROSPECTUS SUMMARY
- ------------------------------------------------------------
The following summary is qualified in its entirety by the more detailed
information appearing in the body of this Prospectus. Cross-references in this
summary are to headings in the body of the Prospectus.
<TABLE>
<S> <C> <C>
The Funds and the Portfolios: Each Fund is a diversified series of G.T. Global Growth Series
(the "Company"). Each Portfolio is a diversified series of Growth
Portfolio.
Investment Objectives: The Pacific Fund, Europe Fund, Japan Fund, International Fund,
Worldwide Fund and America Mid Cap Fund seek long-term growth of
capital; the America Small Cap Fund and America Value Fund seek
long-term capital appreciation.
Principal Investments: The Pacific Fund, Europe Fund, Japan Fund, International Fund and
Worldwide Fund each invests primarily in equity securities of
issuers domiciled in its Primary Investment Area (as defined
herein).
The America Mid Cap Fund invests primarily in equity securities of
U.S. mid cap companies.
The America Small Cap Fund invests all of its investable assets in
the Small Cap Portfolio, which, in turn, invests primarily in
equity securities of U.S. small cap companies.
The America Value Fund invests all of its investable assets in the
Value Portfolio, which, in turn, invests primarily in equity
securities of companies domiciled in the United States that, at
the time of purchase, have market capitalizations of greater than
$500 million and that the Manager believes to be undervalued in
relation to long-term earning power or other factors.
Principal Risk Factors: There is no assurance that any Fund or either Portfolio will
achieve its investment objective. Each Fund's net asset value will
fluctuate, reflecting fluctuations in the market value of its, or
its corresponding Portfolio's, securities.
The Pacific Fund, Europe Fund, Japan Fund and International Fund
each invests primarily in foreign securities. The Worldwide Fund
may invest a significant portion of its assets in foreign
securities. Investments in foreign securities involve risks
relating to political and economic developments abroad and the
differences between the regulations to which U.S. and foreign
issuers are subject. Individual foreign economies also may differ
favorably or unfavorably from the U.S. economy. Changes in foreign
currency exchange rates also may affect a Fund's net asset value,
earnings and gains and losses realized on sales of securities.
The Pacific Fund, Europe Fund, Japan Fund, America Mid Cap Fund
and the Portfolios each invests a significant portion of its
assets in issuers in a particular country or region of the world.
As a result, such Funds and the Portfolios may be subject to
greater risks and may experience greater volatility than a fund
that is more broadly diversified geographically.
The Pacific Fund, Europe Fund, Japan Fund, International Fund,
Worldwide Fund and America Mid Cap Fund may engage in certain
foreign currency, options and futures transactions, and each
Portfolio may engage in certain options and futures transactions,
to attempt to hedge against the overall level of investment or
currency risk associated with its present or planned investments.
Such transactions involve certain risks and transaction costs.
</TABLE>
Prospectus Page 3
<PAGE>
GT GLOBAL EQUITY FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
See "Investment Objectives and Policies" and "Risk Factors."
Investment Manager: The Manager is part of Liechtenstein Global Trust, a provider of
global asset management and private banking products and services
to individual and institutional investors, entrusted with
approximately $84 billion in total assets as of December 31, 1996.
The Manager and its worldwide asset management affiliates maintain
fully staffed investment offices in Frankfurt, Hong Kong, London,
New York, San Francisco, Singapore, Sydney, Tokyo and Toronto. See
"Management."
Advisor Class shares are offered through this Prospectus to (a)
Advisor Class Shares: trustees or other fiduciaries purchasing shares for employee
benefit plans that are sponsored by organizations that have at
least 1,000 employees; (b) any account with assets of at least
$10,000 if (i) a financial planner, trust company, bank trust
department or registered investment adviser has investment
discretion over such account, and (ii) the account holder pays
such person as compensation for its advice and other services an
annual fee of at least .50% on the assets in the account; (c) any
account with assets of at least $10,000 if (i) such account is
established under a "wrap fee" program, and (ii) the account
holder pays the sponsor of such program an annual fee of at least
.50% on the assets in the account; (d) accounts advised by one of
the companies composing or affiliated with Liechtenstein Global
Trust; and (e) any of the companies composing or affiliated with
Liechtenstein Global Trust.
Shares Available Through: Advisor Class shares of each Fund's shares of beneficial interest
are available through Financial Advisors who have entered into
agreements with the Funds' distributor, GT Global, Inc. ("GT
Global") or certain of its affiliates. See "How to Invest" and
"Shareholder Account Manual."
Exchange Privileges: Advisor Class shares of a Fund may only be exchanged for Advisor
Class shares of other GT Global Mutual Funds, which are open-end
management investment companies advised and/or administered by the
Manager. See "How to Make Exchanges" and "Shareholder Account
Manual."
Redemptions: Shares may be redeemed through the Funds' transfer agent, GT
Global Investor Services, Inc. ("Transfer Agent"). See "How to
Redeem Shares" and "Shareholder Account Manual."
Dividends and Other
Distributions: Dividends are paid annually from net investment income and
realized net short-term capital gain; other distributions are paid
annually from net capital gain and net gains from foreign currency
transactions, if any.
Reinvestment: Dividends and other distributions may be reinvested automatically
in Advisor Class shares of the distributing Fund or in Advisor
Class shares of other GT Global Mutual Funds.
Net Asset Value: Advisor Class shares are expected to be quoted daily in the
financial section of most newspapers.
</TABLE>
Prospectus Page 4
<PAGE>
GT GLOBAL EQUITY FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
SUMMARY OF INVESTOR COSTS. The expenses and maximum transactions costs
associated with investing in the Advisor Class shares of the Funds are reflected
in the following tables (1):
<TABLE>
<CAPTION>
GT GLOBAL GT GLOBAL GT GLOBAL
GT GLOBAL GT GLOBAL NEW GT GLOBAL GT GLOBAL AMERICA AMERICA GT GLOBAL
WORLDWIDE INTERNATIONAL PACIFIC EUROPE JAPAN SMALL CAP MID CAP AMERICA
GROWTH GROWTH GROWTH GROWTH GROWTH GROWTH GROWTH VALUE
FUND FUND FUND FUND FUND FUND FUND FUND
--------- ------------- ----------- --------- --------- --------- --------- ---------
ADVISOR ADVISOR ADVISOR ADVISOR ADVISOR ADVISOR ADVISOR ADVISOR
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
--------- ------------- ----------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION COSTS:
Maximum sales charge on
purchases (as a % of
offering price)............ None None None None None None None None
Sales charges on reinvested
distributions to
shareholders............... None None None None None None None None
Maximum deferred sales
charges (as a % of net
asset value at time of
purchase or sale, whichever
is less)................... None None None None None None None None
Redemption charges.......... None None None None None None None None
Exchange fees:
-- On first four exchanges
each year.............. None None None None None None None None
-- On each additional
exchange............... $7.50 $7.50 $7.50 $7.50 $7.50 $7.50 $7.50 $7.50
ANNUAL FUND OPERATING EXPENSES
(2):
(AS A % OF AVERAGE NET
ASSETS)
Investment management and
administration fees........ .98% .98% .97% .97% .98% .73% .72% .73%
12b-1 distribution and
service fees............... None None None None None None None None
Other expenses (after reim-
bursements)................ .47% .58% .67% .56% .61% .92% .34% .92%
--------- ----- ----- --------- --------- --------- --------- ---------
Total Fund Operating
Expenses................... 1.45% 1.56% 1.64% 1.53% 1.59% 1.65% 1.06% 1.65%
--------- ----- ----- --------- --------- --------- --------- ---------
--------- ----- ----- --------- --------- --------- --------- ---------
</TABLE>
Prospectus Page 5
<PAGE>
GT GLOBAL EQUITY FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES:
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Funds, assuming a 5%
annual return:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
GT Global Worldwide Growth Fund
Advisor Class shares....................................................... $15 $47 $81 $177
GT Global International Growth Fund
Advisor Class shares....................................................... $16 $50 $86 $189
GT Global New Pacific Growth Fund
Advisor Class shares....................................................... $17 $53 $91 $198
GT Global Europe Growth Fund
Advisor Class shares....................................................... $16 $49 $85 $185
GT Global Japan Growth Fund
Advisor Class shares....................................................... $16 $51 $88 $192
GT Global America Small Cap Growth Fund
Advisor Class shares....................................................... $17 $53 $91 $199
GT Global America Mid Cap Growth Fund
Advisor Class shares....................................................... $11 $34 $60 $132
GT Global America Value Fund
Advisor Class shares....................................................... $17 $53 $91 $199
<FN>
- ------------------
(1) THESE TABLES ARE INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUNDS. THE
"HYPOTHETICAL EXAMPLE" SET FORTH ABOVE IS NOT A REPRESENTATION OF PAST OR
FUTURE EXPENSES. THE FUNDS' AND THE PORTFOLIOS' ACTUAL EXPENSES MAY BE MORE
OR LESS THAN THOSE SHOWN. The tables and the assumption in the Hypothetical
Example of a 5% annual return are required by regulations of the SEC
applicable to all mutual funds. The 5% annual return is not a prediction of
and does not represent the Funds' or the Portfolios' projected or actual
performance.
(2) Expenses are based on the Funds' fiscal year ended December 31, 1996.
"Other expenses" include custody, transfer agent, legal, audit and other
operating expenses. See "Management" herein and the Statement of Additional
Information for more information. Without reimbursements, "Other expenses"
and "Total Fund Operating Expenses" would have been 2.01% and 2.74%,
respectively, for the America Small Cap Fund and its Portfolio, and 4.43%
and 5.16%, respectively, for the America Value Fund and its Portfolio.
Investors purchasing Advisor Class shares through financial planners, trust
companies, bank trust departments or registered investment advisers, or
under a "wrap fee" program, will be subject to additional fees charged by
such entities or by the sponsors of such programs. Where any account
advised by one of the companies composing or affiliated with Liechtenstein
Global Trust invests in Advisor Class shares of a Fund, such account shall
not be subject to duplicative advisory fees. The Board of Trustees of the
Company believes that the aggregate per share expenses of the America Small
Cap Fund and the America Value Fund and each of their corresponding
Portfolios will be approximately equal to the expenses each Fund would
incur if their assets were invested directly in the type of securities
being held by its corresponding Portfolio.
</TABLE>
Prospectus Page 6
<PAGE>
GT GLOBAL EQUITY FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The tables below provide condensed financial information concerning income and
capital changes for one share of each class of shares of each Fund for the
periods shown. This information is supplemented by the financial statements and
accompanying notes appearing in the Statement of Additional Information. The
financial statements and notes for the fiscal year ended December 31, 1996, have
been audited by Coopers & Lybrand, L.L.P., independent accountants, whose
reports thereon appear in the Statement of Additional Information. Information
presented below for the periods ended December 31, 1991 and prior thereto was
audited by other auditors, which served as the Funds' independent certified
public accountants for those periods.
GT GLOBAL WORLDWIDE GROWTH FUND
<TABLE>
<CAPTION>
CLASS A+
-------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------
1996* 1995* 1994 1993* 1992 1991 1990 1989
--------- --------- --------- --------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value,
beginning of period..... $16.82 $15.53 $17.47 $14.47 $14.07 $11.83 $13.63 $10.18
--------- --------- --------- --------- --------- --------- -------- --------
Net investment income
(loss).................. 0.03 -- -- 0.04 0.07 0.10 0.11 (0.01)
Net realized and
unrealized gain (loss)
on investments.......... 1.79 1.74 (1.16) 3.92 0.39 2.29 (1.82) 3.82
--------- --------- --------- --------- --------- --------- -------- --------
Net increase (decrease)
in net asset value
resulting from
investment operations... 1.82 1.74 (1.16) 3.96 0.46 2.39 (1.71) 3.81
--------- --------- --------- --------- --------- --------- -------- --------
Distributions:
Net investment
income................ -- -- -- -- -- (0.15) (0.09) --
Net realized gain on
investments........... (1.93) (0.45) (0.78) (0.96) (0.06) -- -- (0.36)
--------- --------- --------- --------- --------- --------- -------- --------
Total
distributions....... (1.93) (0.45) (0.78) (0.96) (0.06) (0.15) (0.09) (0.36)
--------- --------- --------- --------- --------- --------- -------- --------
Net asset value, end of
period.................. $16.71 $16.82 $15.53 $17.47 $14.47 $14.07 $11.83 $13.63
--------- --------- --------- --------- --------- --------- -------- --------
--------- --------- --------- --------- --------- --------- -------- --------
Total investment return
(a)(c).................. 10.92% 11.23% (6.65)% 27.6% 3.3% 20.3% (12.5)% 37.6%
--------- --------- --------- --------- --------- --------- -------- --------
--------- --------- --------- --------- --------- --------- -------- --------
Ratios and supplemental
data:
Net assets, end of period
(in 000's).............. $125,556 $145,982 $182,467 $193,997 $141,310 $126,868 $85,894 $38,263
Ratio of net investment
income (loss) to average
net assets (b).......... 0.14% (0.06)% (0.01)% 0.9% 0.5% 0.8% 0.7% (0.1)%
Ratio of expenses to
average net assets:
With expense reductions
(b)................... 1.72% 1.87% 1.81% 1.9% 2.1% 2.0% 2.1% 2.0%
Without expense
reductions (b)........ 1.80% 1.93% 1.84% --%(d) --%(d) --%(d) --%(d) --%(d)
Portfolio turnover
rate++++................ 80% 113% 86% 92% 95% 122% 107% 91%
Average commission rate
per share paid on
portfolio
transactions++++........ $0.0263 N/A N/A N/A N/A N/A N/A N/A
<FN>
- ------------------
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++++ Portfolio turnover rate and average commission rate are calculated on the
basis of the Fund as a whole without distinguishing between the classes
of shares issued.
* The selected per share data were calculated based upon weighted average
shares outstanding during the period.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not include sales charges.
(d) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reduction, if any.
N/A Not applicable.
</TABLE>
Prospectus Page 7
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL WORLDWIDE GROWTH FUND (CONTINUED)
<TABLE>
<CAPTION>
CLASS A+ CLASS B++ ADVISOR CLASS+++
------------------------ ---------------------------------------------- ---------------------------
JUNE 9, 1987
(COMMENCEMENT
OF
YEAR OPERATIONS) APRIL 1, 1993 YEAR JUNE 1, 1995
ENDED THROUGH YEAR ENDED DECEMBER 31, TO ENDED TO
DECEMBER DECEMBER 31, ------------------------------ DECEMBER 31, DECEMBER DECEMBER 31,
31, 1988 1987 1996* 1995* 1994 1993* 31, 1996 1995
-------- ------------- -------- -------- -------- ------------- -------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value,
beginning of period..... $8.84 $10.00 $16.50 $15.34 $17.39 $15.67 $16.86 $15.26
-------- ------------- -------- -------- -------- ------------- -------- --------
Net investment income
(loss).................. 0.02 (0.05) (0.09) (0.12) (0.11) (0.04) 0.09 0.03
Net realized and
unrealized gain (loss)
on
investments............. 1.42 (1.11) 1.75 1.73 (1.16) 2.72 1.79 2.02
-------- ------------- -------- -------- -------- ------------- -------- --------
Net increase (decrease)
in net asset value
resulting from
investment
operations.............. 1.44 (1.16) 1.66 1.61 (1.27) 2.68 1.88 2.05
-------- ------------- -------- -------- -------- ------------- -------- --------
Distributions:
Net investment
income................ -- -- -- -- -- -- -- --
Net realized gain on
investments........... (0.10) -- (1.93) (0.45) (0.78) (0.96) (1.93) (0.45)
-------- ------------- -------- -------- -------- ------------- -------- --------
Total
distributions....... (0.10) -- (1.93) (0.45) (0.78) (0.96) (1.93) (0.45)
-------- ------------- -------- -------- -------- ------------- -------- --------
Net asset value, end of
period.................. $10.18 $8.84 $16.23 $16.50 $15.34 $17.39 $16.81 $16.86
-------- ------------- -------- -------- -------- ------------- -------- --------
-------- ------------- -------- -------- -------- ------------- -------- --------
Total investment
return (a)(c)........... 16.3% (11.60)%(a) 10.16% 10.52% (7.32)% 17.3% 11.31% 13.46%
-------- ------------- -------- -------- -------- ------------- -------- --------
-------- ------------- -------- -------- -------- ------------- -------- --------
Ratios and supplemental
data:
Net assets, end of period
(in 000's).............. $11,673 $6,570 $52,089 $56,095 $52,567 $20,592 $2,455 $1,693
Ratio of net investment
income (loss) to average
net assets (b).......... 0.2% (1.4)%(b) (0.51)% (0.71)% (0.66)% (0.4)% 0.49% 0.29%
Ratio of expenses to
average net assets:
With expense reductions
(b)................... 2.0% 2.8% 2.37% 2.52% 2.46% 2.5% 1.37% 1.52%
Without expense
reductions (b)........ --%(d) --%(d) 2.45% 2.58% 2.49% --%(d) 1.45% 1.58%
Portfolio turnover
rate++++................ 181% 271% 80% 113% 86% 92% 80% 113%
Average commission rate
per share paid on
portfolio
transactions++++........ N/A N/A $0.0263 N/A N/A N/A $0.0263 N/A
</TABLE>
- --------------
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ On June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on the
basis of the Fund as a whole without distinguishing between the classes of
shares issued.
* The selected per share data were calculated based upon weighted average
shares outstanding during the period.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not include sales charges.
(d) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reduction, if any.
N/A Not applicable.
Prospectus Page 8
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL INTERNATIONAL GROWTH FUND
<TABLE>
<CAPTION>
CLASS A+
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------------------------
<CAPTION>
1996* 1995 1994 1993* 1992 1991 1990
---------- ---------- ---------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $9.08 $9.17 $11.02 $8.21 $8.74 $7.82 $9.25
---------- ---------- ---------- ------------ ------------ ------------ ------------
Net investment income
(loss)....................... (0.01) 0.03 (0.04) 0.03 0.11 0.14 0.10
Net realized and unrealized
gain (loss) on
investments.................. 0.84 0.32 (0.82) 2.78 (0.62) 0.89 (1.42)
---------- ---------- ---------- ------------ ------------ ------------ ------------
Net increase (decrease) in net
asset value resulting from
investment
operations................... 0.83 0.35 (0.86) 2.81 (0.51) 1.03 (1.32)
---------- ---------- ---------- ------------ ------------ ------------ ------------
Distributions:
Net investment income....... -- -- (0.04) -- (0.02) (0.11) (0.11)
Net realized gain on
investments and foreign
currency................... (0.99) (0.24) (0.95) -- -- -- --
In excess of net realized
gain on investments........ -- (0.20) -- -- -- -- --
---------- ---------- ---------- ------------ ------------ ------------ ------------
Total distributions..... (0.99) (0.44) (0.99) -- (0.02) (0.11) (0.11)
---------- ---------- ---------- ------------ ------------ ------------ ------------
Net asset value, end of
period....................... $8.92 $9.08 $9.17 $11.02 $8.21 $8.74 $7.82
---------- ---------- ---------- ------------ ------------ ------------ ------------
---------- ---------- ---------- ------------ ------------ ------------ ------------
Total investment
return (a)(c)................ 9.28% 3.88% (7.78)% 34.2% (5.8)% 13.2% (14.3)%
---------- ---------- ---------- ------------ ------------ ------------ ------------
---------- ---------- ---------- ------------ ------------ ------------ ------------
Ratios and supplemental data:
Net assets, end of period
(in 000's)................... $196,601 $308,816 $430,701 $523,397 $421,693 $463,851 $343,949
Ratio of net investment income
(loss) to average net
assets....................... (0.14)% 0.24% (0.04)% 0.3% 1.2% 1.5% 1.4%
Ratio of expenses to average
net assets:
With expense
reductions................. 1.80% 1.70% 1.70% 1.8% 1.9% 1.9% 1.9%
Without expense
reductions................. 1.91% 1.78% 1.75% --%(d) --%(d) --%(d) --%(d)
Portfolio turnover
rate+++...................... 74% 75% 96% 90% 89% 83% 58%
Average commission rate per
share paid on portfolio
transactions+++.............. $ 0.0267 N/A N/A N/A N/A N/A N/A
<CAPTION>
<S> <C> <C>
1989** 1988**
------------ -----------
<S> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $6.77 $5.71
------------ -----------
Net investment income
(loss)....................... 0.01 (0.01)
Net realized and unrealized
gain (loss) on
investments.................. 2.60 1.12
------------ -----------
Net increase (decrease) in net
asset value resulting from
investment
operations................... 2.61 1.11
------------ -----------
Distributions:
Net investment income....... -- --
Net realized gain on
investments and foreign
currency................... (0.13) (0.05)
In excess of net realized
gain on investments........ -- --
------------ -----------
Total distributions..... (0.13) (0.05)
------------ -----------
Net asset value, end of
period....................... $9.25 $6.77
------------ -----------
------------ -----------
Total investment
return (a)(c)................ 38.6% 19.4%
------------ -----------
------------ -----------
Ratios and supplemental data:
Net assets, end of period
(in 000's)................... $136,975 $29,792
Ratio of net investment income
(loss) to average net
assets....................... 0.1% (0.2)%
Ratio of expenses to average
net assets:
With expense
reductions................. 1.9% 2.1%
Without expense
reductions................. --%(d) --%(d)
Portfolio turnover
rate+++...................... 82% 115%
Average commission rate per
share paid on portfolio
transactions+++.............. N/A N/A
</TABLE>
- --------------
+ Commencing April 1, 1993, the Fund began offering Class B shares. All
capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
+++ Portfolio turnover rate and average commission rate are calculated on the
basis of the Fund as a whole without distinguishing between the classes of
shares issued.
* The selected per share data were calculated based upon weighted average
shares outstanding during the period.
** The per share data reflects a 3 for 1 stock split effective August 14,
1989.
(a) Not annualized.
(b) Annualized for periods of less than one year.
(c) Total investment return does not reflect the maximum sales charge on
purchases of Class A shares and the contingent deferred sales charge
imposed on certain redemptions of Class B shares.
(d) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reduction, if any.
N/A Not applicable.
Prospectus Page 9
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL INTERNATIONAL GROWTH FUND (CONTINUED)
<TABLE>
<CAPTION>
CLASS A+ CLASS B+
------------------------- ----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, APRIL 1, 1993
YEAR ENDED DECEMBER 31, TO
------------------------- ----------------------------------- DECEMBER 31,
1987** 1986** 1996* 1995* 1994 1993*
----------- ----------- --------- --------- ----------- --------------
Per Share Operating Performance:
Net asset value, beginning of
period.................................. $6.13 $4.16 $8.91 $9.07 $10.98 $8.74
----------- ----------- --------- --------- ----------- --------------
Net investment income (loss)............. (0.01) (0.05) (0.07) (0.04) (0.10) (0.01)
Net realized and unrealized gain (loss)
on investments.......................... 0.35 2.22 0.83 0.32 (0.82) 2.25
----------- ----------- --------- --------- ----------- --------------
Net increase (decrease) in net asset
value resulting from investment
operations.............................. 0.34 2.17 0.76 0.28 (0.92) 2.24
----------- ----------- --------- --------- ----------- --------------
Distributions:
Net investment income.................. -- -- -- -- (0.04) --
Net realized gain on investments and
foreign currency...................... (0.76) (0.20) (0.99) (0.24) (0.95) --
In excess of net realized gain on
investments........................... -- -- -- (0.20) -- --
----------- ----------- --------- --------- ----------- --------------
Total distributions................ (0.76) (0.20) (0.99) (0.44) (0.99) --
----------- ----------- --------- --------- ----------- --------------
Net asset value, end of period........... $5.71 $6.13 $8.68 $8.91 $9.07 $10.98
----------- ----------- --------- --------- ----------- --------------
----------- ----------- --------- --------- ----------- --------------
Total investment return (a)(c)........... 6.2% 53.7% 8.67% 3.15% (8.36)% 25.63%
----------- ----------- --------- --------- ----------- --------------
----------- ----------- --------- --------- ----------- --------------
Ratios and supplemental data:
Net assets, end of period (in 000's)..... $17,178 $12,052 $64,102 $69,654 $71,794 $30,745
Ratio of net investment income (loss) to
average net assets (b).................. (0.3)% (0.9)% (0.79)% (0.41)% (0.69)% (0.4)%
Ratio of expenses to average net assets:
With expense reductions (b)............ 1.9% 1.9% 2.45% 2.35% 2.35% 2.4%
Without expense reductions (b)......... --%(d) --%(d) 2.56% 2.43% 2.40% --%(d)
Portfolio turnover rate+++............... 198% 122% 74% 75% 96% 90%
Average commission rate per share paid on
portfolio transactions+++............... N/A N/A $0.0267 N/A N/A N/A
<CAPTION>
ADVISOR CLASS++
--------------------------------
<S> <C> <C>
JUNE 1, 1995
YEAR ENDED TO
DECEMBER 31, DECEMBER 31,
1996* 1995
-------------- ---------------
Per Share Operating Performance:
Net asset value, beginning of
period.................................. $9.11 $8.49
-------------- ---------------
Net investment income (loss)............. 0.02 0.03
Net realized and unrealized gain (loss)
on investments.......................... 0.87 1.03
-------------- ---------------
Net increase (decrease) in net asset
value resulting from investment
operations.............................. 0.89 1.06
-------------- ---------------
Distributions:
Net investment income.................. -- --
Net realized gain on investments and
foreign currency...................... (0.99) (0.24)
In excess of net realized gain on
investments........................... -- (0.20)
-------------- ---------------
Total distributions................ (0.99) (0.44)
-------------- ---------------
Net asset value, end of period........... $9.01 $9.11
-------------- ---------------
-------------- ---------------
Total investment return (a)(c)........... 9.79% 12.56%
-------------- ---------------
-------------- ---------------
Ratios and supplemental data:
Net assets, end of period (in 000's)..... $ 461 $ 381
Ratio of net investment income (loss) to
average net assets (b).................. 0.21% 0.59%
Ratio of expenses to average net assets:
With expense reductions (b)............ 1.45% 1.35%
Without expense reductions (b)......... 1.56% 1.43%
Portfolio turnover rate+++............... 74% 75%
Average commission rate per share paid on
portfolio transactions+++............... $0.0267 N/A
</TABLE>
- --------------
+ Commencing April 1, 1993, the Fund began offering Class B shares. All
capital shares issued and outstanding as of March 31, 1993 were reclassified
as Class A shares.
++ On June 1, 1995, the Fund began offering Advisor Class shares.
+++ Portfolio turnover rate and average commission rate are calculated on the
basis of the Fund as a whole without distinguishing between the classes of
shares issued.
* The selected per share data were calculated based upon weighted average
shares outstanding during the period.
** The per share data reflects a 3 for 1 stock split effective August 14, 1989.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not reflect the maximum sales charge on
purchases of Class A shares and the contingent deferred sales charge imposed
on certain redemptions of Class B shares.
(d) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reduction, if any.
N/A Not applicable.
Prospectus Page 10
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
<TABLE>
<CAPTION>
CLASS A+
--------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------------------------------
1996* 1995* 1994 1993 1992 1991 1990
---------- ---------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $12.47 $12.10 $15.86 $10.31 $11.30 $10.57 $12.61
---------- ---------- ------------ ------------ ------------ ------------ ------------
Net investment income
(loss)....................... 0.02 0.11 0.02 (0.03) 0.07 0.11 0.13
Net realized and unrealized
gain (loss) on
investments.................. 2.44 0.79 (3.15) 6.23 (0.97) 1.25 (1.51)
---------- ---------- ------------ ------------ ------------ ------------ ------------
Net increase (decrease) in net
asset value resulting from
investment
operations................... 2.46 0.90 (3.13) 6.20 (0.90) 1.36 (1.38)
---------- ---------- ------------ ------------ ------------ ------------ ------------
Distributions:
Net investment income....... -- (0.10) (0.01) -- (0.06) (0.08) (0.12)
Net realized gain on
investments and foreign
currency................... (1.81) (0.43) (0.55) (0.65) (0.03) (0.55) (0.54)
In excess of net investment
income..................... -- -- -- -- -- -- --
In excess of net realized
gain on investments........ -- -- (0.07) -- -- -- --
---------- ---------- ------------ ------------ ------------ ------------ ------------
Total distributions....... (1.81) (0.53) (0.63) (0.65) (0.09) (0.63) (0.66)
---------- ---------- ------------ ------------ ------------ ------------ ------------
Net asset value, end of
period....................... $13.12 $12.47 $12.10 $15.86 $10.31 $11.30 $10.57
---------- ---------- ------------ ------------ ------------ ------------ ------------
---------- ---------- ------------ ------------ ------------ ------------ ------------
Total investment
return (a)(c)................ 20.04% 7.45% (19.73)% 60.6% (8.0)% 13.1% (11.0)%
---------- ---------- ------------ ------------ ------------ ------------ ------------
---------- ---------- ------------ ------------ ------------ ------------ ------------
Ratio and supplemental data:
Net assets, end of period
(in 000's)................... $361,244 $383,722 $404,680 $498,898 $281,418 $333,800 $234,793
Ratio of net investment income
(loss) to average net
assets....................... 0.17% 0.91% 0.11% (0.3)% 0.6% 1.0% 1.1%
Ratio of expenses to average
net assets:
With expense
reductions................. 1.86% 1.89% 1.81% 1.9% 2.0% 2.0% 2.1%
Without expense
reductions................. 1.99% 1.94% --%(d) --%(d) --%(d) --%(d) --%(d)
Portfolio turnover
rate+++...................... 93% 63% 87% 117% 72% 85% 75%
Average commission rate per
share paid on portfolio
transactions+++.............. $ 0.0032 N/A N/A N/A N/A N/A N/A
<CAPTION>
1989* 1988*
------------ -----------
<S> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $8.74 $7.25
------------ -----------
Net investment income
(loss)....................... (0.01) 0.01
Net realized and unrealized
gain (loss) on
investments.................. 4.21 1.66
------------ -----------
Net increase (decrease) in net
asset value resulting from
investment
operations................... 4.20 1.67
------------ -----------
Distributions:
Net investment income....... -- --
Net realized gain on
investments and foreign
currency................... (0.33) (0.18)
In excess of net investment
income..................... -- --
In excess of net realized
gain on investments........ -- --
------------ -----------
Total distributions....... (0.33) (0.18)
------------ -----------
Net asset value, end of
period....................... $12.61 $8.74
------------ -----------
------------ -----------
Total investment
return (a)(c)................ 48.1% 23.2%
------------ -----------
------------ -----------
Ratio and supplemental data:
Net assets, end of period
(in 000's)................... $170,071 $56,342
Ratio of net investment income
(loss) to average net
assets....................... (0.1)% 0.0%
Ratio of expenses to average
net assets:
With expense
reductions................. 2.0% 2.2%
Without expense
reductions................. --%(d) --%(d)
Portfolio turnover
rate+++...................... 70% 107%
Average commission rate per
share paid on portfolio
transactions+++.............. N/A N/A
</TABLE>
- --------------
+ Commencing April 1, 1993, the Fund began offering Class B shares. All
capital shares issued and outstanding as of March 31, 1993 were reclassified
as Class A shares.
+++ Portfolio turnover rate and average commission rate are calculated on the
basis of the Fund as a whole without distinguishing between the classes of
shares issued.
* The selected per share data were calculated based upon weighted average
shares outstanding during the period.
** The per share data reflects a 2 for 1 stock split effective August 14, 1989.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not reflect the maximum sales charge on
purchases of Class A shares and the contingent deferred sales charge imposed
on certain redemptions of Class B shares.
(d) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reduction, if any.
N/A Not applicable.
Prospectus Page 11
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND (CONTINUED)
<TABLE>
<CAPTION>
CLASS A+ CLASS B+
--------------------------- ---------------------------------------------------------
YEAR ENDED DECEMBER 31, APRIL 1, 1993
YEAR ENDED DECEMBER 31, TO
--------------------------- ---------------------------------------- DECEMBER 31,
1987* 1986* 1996* 1995* 1994 1993
------------ ------------ ------------ ---------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period........................ $14.98 $8.82 $12.29 $11.96 $15.79 $11.27
------------ ------------ ------------ ---------- ------------ --------------
Net investment income (loss)... (0.01) (0.05) (0.06) 0.03 (0.06) (0.10)
Net realized and unrealized
gain (loss) on investments.... 0.51 6.22 2.38 0.75 (3.15) 5.27
------------ ------------ ------------ ---------- ------------ --------------
Net increase (decrease) in net
asset value resulting from
investment operations......... 0.50 6.17 2.32 0.78 (3.21) 5.17
------------ ------------ ------------ ---------- ------------ --------------
Distributions:
Net investment income........ -- (0.01) -- (0.02) -- --
Net realized gain on
investments and foreign
currency.................... (8.23) -- (1.81) (0.43) (0.55) (0.65)
In excess of net investment
income...................... -- -- -- -- (0.07) --
In excess of net realized
gain on investments......... -- -- -- -- -- --
------------ ------------ ------------ ---------- ------------ --------------
Total distributions........ (8.23) (0.01) (1.81) (0.45) (0.62) (0.65)
------------ ------------ ------------ ---------- ------------ --------------
Net asset value, end of
period........................ $7.25 $14.98 $12.80 $12.29 $11.96 $15.79
------------ ------------ ------------ ---------- ------------ --------------
------------ ------------ ------------ ---------- ------------ --------------
Total investment
return (a)(c)................. 5.7% 69.9% 19.28% 6.54% (20.30)% 46.3%
------------ ------------ ------------ ---------- ------------ --------------
------------ ------------ ------------ ---------- ------------ --------------
Ratio and supplemental data:
Net assets, end of period
(in 000's).................... $ 38,780 $ 50,647 $151,805 $130,887 $120,171 $72,122
Ratio of net investment income
(loss) to average net
assets (b).................... (0.2)% (0.5)% (0.48)% 0.26% (0.54)% (0.9)%
Ratio of expenses to average
net assets:
With expense
reductions (b).............. 1.9% 1.4% 2.51% 2.54% 2.46% 2.5%
Without expense
reductions (b).............. --%(d) --%(d) 2.64% 2.59% --%(d) --%(d)
Portfolio turnover rate+++..... 215% 229% 93% 63% 87% 117%
Average commission rate per
share paid on portfolio
transactions+++............... N/A N/A $ 0.0032 N/A N/A N/A
<CAPTION>
ADVISOR CLASS++
-----------------------------
JUNE 1, 1995
YEAR ENDED TO
DECEMBER 31, DECEMBER 31,
1996* 1995*
------------ --------------
<S> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period........................ $12.45 $12.89
------------ --------------
Net investment income (loss)... 0.07 0.09
Net realized and unrealized
gain (loss) on investments.... 2.45 0.05
------------ --------------
Net increase (decrease) in net
asset value resulting from
investment operations......... 2.52 0.14
------------ --------------
Distributions:
Net investment income........ -- (0.15)
Net realized gain on
investments and foreign
currency.................... (1.81) (0.43)
In excess of net investment
income...................... -- --
In excess of net realized
gain on investments......... -- --
------------ --------------
Total distributions........ (1.81) (0.58)
------------ --------------
Net asset value, end of
period........................ $13.16 $12.45
------------ --------------
------------ --------------
Total investment
return (a)(c)................. 20.56% 1.07%
------------ --------------
------------ --------------
Ratio and supplemental data:
Net assets, end of period
(in 000's).................... $ 1,575 $ 935
Ratio of net investment income
(loss) to average net
assets (b).................... 0.52% 1.26%
Ratio of expenses to average
net assets:
With expense
reductions (b).............. 1.51% 1.54%
Without expense
reductions (b).............. 1.64% 1.59%
Portfolio turnover rate+++..... 93% 63%
Average commission rate per
share paid on portfolio
transactions+++............... $ 0.0032 N/A
</TABLE>
- --------------
+ Commencing April 1, 1993, the Fund began offering Class B shares. All
capital shares issued and outstanding as of March 31, 1993 were reclassified
as Class A shares.
++ On June 1, 1995, the Fund began offering Advisor Class shares.
+++ Portfolio turnover rate and average commission rate are calculated on the
basis of the Fund as a whole without distinguishing between the classes of
shares issued.
* The selected per share data were calculated based upon weighted average
shares outstanding during the period.
** The per share data reflects a 2 for 1 stock split effective August 14, 1989.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not reflect the maximum sales charge on
purchases of Class A shares and the contingent deferred sales charge imposed
on certain redemptions of Class B shares.
(d) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reduction, if any.
N/A Not applicable.
Prospectus Page 12
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL EUROPE GROWTH FUND
<TABLE>
<CAPTION>
CLASS A+
--------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------------------------------------
1996* 1995* 1994* 1993* 1992* 1991 1990
------------ ------------ ---------- ------------ ------------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value,
beginning of
period............. $10.88 $10.03 $10.84 $8.51 $9.59 $9.33 $10.94
------------ ------------ ---------- ------------ ------------ -------------- --------------
Net investment
income............. (0.03) 0.04 0.06 0.05 0.11*** 0.21 0.10
Net realized and
unrealized gain
(loss) on
investments and
foreign currency... 2.16 0.95 (0.69) 2.36 (1.19) 0.19 (1.71)
------------ ------------ ---------- ------------ ------------ -------------- --------------
Net increase
(decrease) in net
asset value
resulting from
invest-
ment operations.... 2.13 0.99 (0.63) 2.41 (1.08) 0.40 (1.61)
------------ ------------ ---------- ------------ ------------ -------------- --------------
Distributions:
Net investment
income........... -- (0.10) (0.05) (0.06) -- (0.14) --
Net realized gain
on investments... (0.12) (0.04) -- -- -- -- --
In excess of net
investment
income........... -- -- -- (0.02) -- -- --
In excess of net
realized gain on
investments...... -- -- (0.13) -- -- -- --
------------ ------------ ---------- ------------ ------------ -------------- --------------
Total
distributions.. (0.12) (0.14) (0.18) (0.08) -- (0.14) --
------------ ------------ ---------- ------------ ------------ -------------- --------------
Net asset value, end
of year............ $12.89 $10.88 $10.03 $10.84 $8.51 $9.59 $9.33
------------ ------------ ---------- ------------ ------------ -------------- --------------
------------ ------------ ---------- ------------ ------------ -------------- --------------
Total investment
return (a)(c)...... 19.61% 9.86% (5.80)% 28.3% (11.3)% 4.3% (14.7)%
------------ ------------ ---------- ------------ ------------ -------------- --------------
------------ ------------ ---------- ------------ ------------ -------------- --------------
Ratios and
supplemental data:
Net assets, end of
period (in
000's)............. $453,792 $483,375 $646,313 $854,701 $781,607 $1,211,709 $1,428,677
Ratio of net
investment income
(loss) to average
net assets......... (0.26)% 0.38% 0.61% 0.6% 1.2%*** 1.7% 1.1%
Ratio of expenses to
average net assets:
With expense
reductions....... 1.82% 1.83% 1.73% 1.9% 2.0%*** 1.8% 1.9%
Without expense
reductions....... 1.88% 1.89% 1.81% --%(d) --%(d) --%(d) --%(d)
Portfolio turnover
rate+++............ 123% 108% 91% 67% 65% 55% 34%
Average commission
rate per share paid
on portfolio
transactions+++.... $ 0.0277 N/A N/A N/A N/A N/A N/A
<CAPTION>
1989** 1988**
------------ ----------
<S> <C> <C>
Per Share Operating
Performance:
Net asset value,
beginning of
period............. $7.77 $7.76
------------ ----------
Net investment
income............. (0.02) (0.07)
Net realized and
unrealized gain
(loss) on
investments and
foreign currency... 3.19 0.87
------------ ----------
Net increase
(decrease) in net
asset value
resulting from
invest-
ment operations.... 3.17 0.80
------------ ----------
Distributions:
Net investment
income........... -- --
Net realized gain
on investments... -- --
In excess of net
investment
income........... -- (0.79)
In excess of net
realized gain on
investments...... -- --
------------ ----------
Total
distributions.. -- (0.79)
------------ ----------
Net asset value, end
of year............ $10.94 $7.77
------------ ----------
------------ ----------
Total investment
return (a)(c)...... 40.7% 11.1%
------------ ----------
------------ ----------
Ratios and
supplemental data:
Net assets, end of
period (in
000's)............. $382,428 $8,376
Ratio of net
investment income
(loss) to average
net assets......... (0.6)% (1.0)%
Ratio of expenses to
average net assets:
With expense
reductions....... 1.9% 3.6%
Without expense
reductions....... --%(d) --%(d)
Portfolio turnover
rate+++............ 43% 153%
Average commission
rate per share paid
on portfolio
transactions+++.... N/A N/A
</TABLE>
- ------------------
+ Commencing April 1, 1993, the Fund began offering Class B shares. All
capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
+++ Portfolio turnover rate and average commission rate are calculated on the
basis of the Fund as a whole without distinguishing between the classes of
shares issued.
* The selected per share data were calculated based upon weighted average
shares outstanding during the period.
** The per share data reflects a 2 for 1 stock split effective August 14,
1989.
*** Includes reimbursement by the Manager of Fund operating expenses of less
than one cent per share. Without such reimbursement, the ratio of expenses
to average net assets would have been 2.1% and the ratio of net investment
income to average net assets would have been 1.2%.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not reflect the maximum sales charge on
purchases of Class A shares and the contingent deferred sales charge
imposed on certain redemptions of Class B shares.
(d) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reduction, if any.
N/A Not applicable.
Prospectus Page 13
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL EUROPE GROWTH FUND (CONTINUED)
<TABLE>
<CAPTION>
ADVISOR
CLASS A+ CLASS B+ CLASS++
-------------------------- ----------------------------------------------------- --------------
YEAR ENDED DECEMBER 31, APRIL 1, 1993
YEAR ENDED DECEMBER 31, TO YEAR ENDED
-------------------------- ------------------------------------ DECEMBER 31, DECEMBER 31,
1987** 1986** 1996* 1995* 1994* 1993* 1996*
------------ ----------- ------------ --------- --------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning
of period................ $9.62 $6.82 $10.81 $9.97 $10.79 $9.02 $10.85
------------ ----------- ------------ --------- --------- -------------- --------------
Net investment income
(loss)................... --+++ (0.03)+++ (0.11) (0.03) -- -- 0.01
Net realized and
unrealized gain (loss) on
investments and foreign
currency................. 0.57 2.83 2.15 0.94 (0.69) 1.85 2.18
------------ ----------- ------------ --------- --------- -------------- --------------
Net increase (decrease) in
net asset value resulting
from investment
operations............... 0.57 2.80 2.04 0.91 (0.69) 1.85 2.19
------------ ----------- ------------ --------- --------- -------------- --------------
Distributions:
Net investment income... -- -- -- (0.03) -- (0.06) --
In excess of net
investment income...... -- -- -- -- -- (0.02) --
Net realized gain on
investments............ (2.43) -- (0.12) (0.04) -- -- (0.12)
In excess of net
realized gain on
investments............ -- -- -- -- (0.13) -- --
------------ ----------- ------------ --------- --------- -------------- --------------
Total
distributions...... (2.43) -- (0.12) (0.07) (0.13) (0.08) (0.12)
------------ ----------- ------------ --------- --------- -------------- --------------
Net asset value, end of
period................... $7.76 $9.62 $12.73 $10.81 $9.97 $10.79 $12.92
------------ ----------- ------------ --------- --------- -------------- --------------
------------ ----------- ------------ --------- --------- -------------- --------------
Total investment return
(a)(c)................... 6.6% 41.0% 18.79% 9.20% (6.38)% 20.5% 20.21%
------------ ----------- ------------ --------- --------- -------------- --------------
------------ ----------- ------------ --------- --------- -------------- --------------
Ratios and supplemental
data:
Net assets, end of period
(in 000's)............... $10,227 $9,809 $87,092 $73,025 $81,602 $34,048 $ 1,416
Ratio of net investment
income (loss) to average
net assets (b)........... (0.00)%+++ (0.4)%+++ (0.91)% (0.27)% (0.04)% (0.1)% 0.09%
Ratio of expenses to
average net assets:
With expense reductions
(b).................... 2.0%+++ 2.0%+++ 2.47% 2.48% 2.38% 2.6% 1.47%
Without expense
reductions (b)......... --%(d) --%(d) 2.53% 2.54% 2.46% --%(d) 1.53%
Portfolio turnover
rate+++.................. 193% 102% 123% 108% 91% 67% 123%
Average commission rate
per share paid on
portfolio
transactions+++.......... N/A N/A $0.0277 N/A N/A N/A $0.0277
<CAPTION>
JUNE 1, 1995
TO
DECEMBER 31,
1995(D)
--------------
<S> <C>
Per Share Operating
Performance:
Net asset value, beginning
of period................ $10.24
--------------
Net investment income
(loss)................... 0.08
Net realized and
unrealized gain (loss) on
investments and foreign
currency................. 0.71
--------------
Net increase (decrease) in
net asset value resulting
from investment
operations............... 0.79
--------------
Distributions:
Net investment income... (0.14)
In excess of net
investment income...... (0.04)
Net realized gain on
investments............ --
In excess of net
realized gain on
investments............ --
--------------
Total
distributions...... (0.18)
--------------
Net asset value, end of
period................... $10.85
--------------
--------------
Total investment return
(a)(c)................... 7.75%
--------------
--------------
Ratios and supplemental
data:
Net assets, end of period
(in 000's)............... $ 718
Ratio of net investment
income (loss) to average
net assets (b)........... 0.73%
Ratio of expenses to
average net assets:
With expense reductions
(b).................... 1.48%
Without expense
reductions (b)......... 1.54%
Portfolio turnover
rate+++.................. 108%
Average commission rate
per share paid on
portfolio
transactions+++.......... N/A
</TABLE>
- ------------------
+ Commencing April 1, 1993, the Fund began offering Class B shares. All
capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ On June 1, 1995, the Fund began offering Advisor Class shares.
+++ Portfolio turnover rate and average commission rate are calculated on the
basis of the Fund as a whole without distinguishing between the classes of
shares issued.
* The selected per share data were calculated based upon weighted average
shares outstanding during the period.
** The per share data reflects a 2 for 1 stock split effective August 14,
1989.
*** Includes reimbursement by the Manager of Fund operating expenses of less
than one cent per share. Without such reimbursement, the ratio of expenses
to average net assets would have been 2.1% and the ratio of net investment
income to average net assets would have been 1.2%.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not reflect the maximum sales charge on
purchases of Class A shares and the contingent deferred sales charge
imposed on certain redemptions of Class B shares.
(d) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reduction, if any.
N/A Not applicable.
Prospectus Page 14
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
<TABLE>
<CAPTION>
CLASS A(D)
-----------------------------------------------------------
OCTOBER 18,
1995
(COMMENCEMENT
OF OPERATIONS)
YEAR ENDED THROUGH
DECEMBER 31, DECEMBER 31,
1996 1995
--------------- ----------------------------
<S> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of year.......... $11.80 $11.43
-------- -------
Net investment income (loss)................ (0.05)** 0.04*
Net realized and unrealized gain (loss) on
investments................................ 1.69 0.33
-------- -------
Net increase (decrease) in net asset value
resulting from investment operations....... 1.64 0.37
-------- -------
Distributions to shareholders:
From net realized gain on
investments.............................. (0.92) --
-------- -------
Total distributions....................... (0.92) --
-------- -------
Net asset value, end of year................ $12.52 $11.80
-------- -------
-------- -------
Total investment return (a)(c).............. 13.81% 3.24%
-------- -------
-------- -------
Ratios and supplemental data:
Net assets, end of period (in 000's)........ $8,448 $1,931
Ratio of net investment income (loss) to
average net assets:
With reimbursement by the Manager (b)..... (0.38)% 1.68%
Without reimbursement by the Manager
(b)...................................... (1.47)% (20.52)%
Ratio of expenses to average net assets:
With reimbursement by the Manager (b)..... 2.00% 2.00%
Without reimbursement by the Manager
(b)...................................... 3.09% 24.20%
Portfolio turnover rate+.................... 150% N/A
Average commission rate per share paid on
portfolio transactions+.................... $0.0489 N/A
<CAPTION>
CLASS B(D)
-----------------------------------------------------------
OCTOBER 18,
1995
(COMMENCEMENT
OF OPERATIONS)
YEAR ENDED THROUGH
DECEMBER 31, DECEMBER 31,
1996 1995
--------------- ----------------------------
<S> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of year.......... $11.78 $11.43
-------- -------
Net investment income (loss)................ (0.14)** 0.02*
Net realized and unrealized gain (loss) on
investments................................ 1.70 0.33
-------- -------
Net increase (decrease) in net asset value
resulting from investment operations....... 1.56 0.35
-------- -------
Distributions to shareholders:
From net realized gain on
investments.............................. (0.92) --
-------- -------
Total distributions....................... (0.92) --
-------- -------
Net asset value, end of year................ $12.42 $11.78
-------- -------
-------- -------
Total investment return (a)(c).............. 13.14% 3.06%
-------- -------
-------- -------
Ratios and supplemental data:
Net assets, end of period (in 000's)........ $10,694 $2,024
Ratio of net investment income (loss) to
average net assets:
With reimbursement by the Manager (b)..... (1.03)% 1.03%
Without reimbursement by the Manager
(b)...................................... (2.12)% (21.17)%
Ratio of expenses to average net assets:
With reimbursement by the Manager (b)..... 2.65% 2.65%
Without reimbursement by the Manager
(b)...................................... 3.74% 24.85%
Portfolio turnover rate+.................... 150% N/A
Average commission rate per share paid on
portfolio transactions+.................... $0.0489 N/A
<CAPTION>
ADVISOR CLASS(D)
-----------------------------------------------------------
OCTOBER 18,
1995
(COMMENCEMENT
OF OPERATIONS)
YEAR ENDED THROUGH
DECEMBER 31, DECEMBER 31,
1996 1995
--------------- ----------------------------
Per Share Operating Performance:
Net asset value, beginning of year.......... $11.81 $11.43
-------- -------
Net investment income (loss)................ --** 0.05*
Net realized and unrealized gain (loss) on
investments................................ 1.69 0.33
-------- -------
Net increase (decrease) in net asset value
resulting from investment operations....... 1.69 0.38
-------- -------
Distributions to shareholders:
From net realized gain on
investments.............................. (0.92) --
-------- -------
Total distributions....................... (0.92) --
-------- -------
Net asset value, end of year................ $12.58 $11.81
-------- -------
-------- -------
Total investment return (a)(c).............. 14.22% 3.32%
-------- -------
-------- -------
Ratios and supplemental data:
Net assets, end of period (in 000's)........ $ 435 $ 52
Ratio of net investment income (loss) to
average net assets:
With reimbursement by the Manager (b)..... (0.03)% 2.03%
Without reimbursement by the Manager
(b)...................................... (1.12)% (20.17)%
Ratio of expenses to average net assets:
With reimbursement by the Manager (b)..... 1.65% 1.65%
Without reimbursement by the Manager
(b)...................................... 2.74% 23.85%
Portfolio turnover rate+.................... 150% N/A
Average commission rate per share paid on
portfolio transactions+.................... $0.0489 N/A
</TABLE>
- ------------------
* Before reimbursement by the Manager the net investment loss per share would
have been $(0.47), $(0.49), and $(0.46) for Class A, Class B, and Advisor
Class, respectively, from October 18, 1995 to December 31, 1995.
** Before reimbursement by the Manager the net investment loss per share would
have been $(0.19), $(0.28) and $(0.14) for Class A, Class B and Advisor
Class, respectively, for the year ended December 31, 1996.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not include sales charges.
(d) The selected per share data were calculated based upon weighted average
shares outstanding during the period.
+ Portfolio turnover rate and average commission rate paid on portfolio
transactions are calculated on the basis of the Portfolio as a whole without
distinguishing between the classes of shares issued.
N/A Not applicable.
Prospectus Page 15
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL AMERICA MID CAP GROWTH FUND
<TABLE>
<CAPTION>
CLASS A+
-----------------------------------------------------------------
1996 1995 1994* 1993 1992
--------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
year.............................. $19.07 $17.69 $17.17 $17.12 $14.13
--------- -------- -------- -------- --------
Net investment income (loss)....... 0.03 0.24 0.04 (0.21) (0.11)
Net realized and unrealized gain
(loss) on investments............. 2.96 3.93 2.55 1.56 4.54
--------- -------- -------- -------- --------
Net increase (decrease) in net
asset value resulting from
investment operations............. 2.99 4.17 2.59 1.35 4.43
--------- -------- -------- -------- --------
Distributions:
Net investment income............ -- (0.21) (0.02) -- --
Net realized gain on
investments..................... (1.29) (2.58) (2.05) (1.30) (1.44)
--------- -------- -------- -------- --------
Total distributions............ (1.29) (2.79) (2.07) (1.30) (1.44)
--------- -------- -------- -------- --------
Net asset value, end of year....... $20.77 $19.07 $17.69 $17.17 $17.12
--------- -------- -------- -------- --------
--------- -------- -------- -------- --------
Total investment return (a)(c)..... 15.65% 23.23% 15.69% 8.3% 31.7%
--------- -------- -------- -------- --------
--------- -------- -------- -------- --------
Ratios and supplemental data:
Net assets, end of period (in
000's)............................ $ 343,427 $396,291 $196,937 $116,468 $166,712
Ratio of net investment income
(loss) to average net assets...... 0.12% 1.24% 0.17% (0.7)% (1.1)%
Ratio of expenses to average net
assets:
With expense reductions.......... 1.36% 1.46% 1.58% 1.6% 1.8%
Without expense reductions....... 1.41% --%(d) --%(d) --%(d) --%(d)
Portfolio turnover rate+++......... 253% 71% 102% 92% 114%
Average commission rate per share
paid on portfolio
transactions+++................... $ 0.0536 N/A N/A N/A N/A
<CAPTION>
CLASS A+
--------------------------------------------
1991 1990 1989 1988
------- ------- ------ ------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
year.............................. $11.89 $12.84 $8.76 $8.56
------- ------- ------ ------
Net investment income (loss)....... 0.01 (0.01) 0.10** (0.40)
Net realized and unrealized gain
(loss) on investments............. 2.28 (0.94) 4.65 1.35
------- ------- ------ ------
Net increase (decrease) in net
asset value resulting from
investment operations............. 2.29 (0.95) 4.75 0.95
------- ------- ------ ------
Distributions:
Net investment income............ (0.01) -- (0.10) --
Net realized gain on
investments..................... (0.04) -- (0.57) (0.75)
------- ------- ------ ------
Total distributions............ (0.05) -- (0.67) (0.75)
------- ------- ------ ------
Net asset value, end of year....... $14.13 $11.89 $12.84 $8.76
------- ------- ------ ------
------- ------- ------ ------
Total investment return (a)(c)..... 19.3% (7.4)% 54.8% 11.1%
------- ------- ------ ------
------- ------- ------ ------
Ratios and supplemental data:
Net assets, end of period (in
000's)............................ $88,041 $65,413 $9,930 $1,548
Ratio of net investment income
(loss) to average net assets...... --% (0.1)% 1.2%* (4.7)%
Ratio of expenses to average net
assets:
With expense reductions.......... 1.7% 2.0% 1.9%* 5.1%
Without expense reductions....... --%(d) --%(d) --%(d) --%(d)
Portfolio turnover rate+++......... 156% 145% 133% 184%
Average commission rate per share
paid on portfolio
transactions+++................... N/A N/A N/A N/A
</TABLE>
- --------------
+ Commencing April 1, 1993, the Fund began offering Class B shares. All
capital shares issued and outstanding as of March 31, 1993 were reclassified
as Class A shares.
+++ Portfolio turnover rate and average commission rate are calculated on the
basis of the Fund as a whole without distinguishing between the classes of
shares issued.
* The selected per share data were calculated based upon weighted average
shares outstanding during the period.
** Includes reimbursement by the Manager of Fund operating expenses of $0.11.
Without such reimbursement, the ratio of expenses to average net assets
would have been 3.3% and the ratio of net investment income to average net
assets would have been (1.2)%.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not include sales charge.
(d) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reduction, if any.
N/A Not applicable.
Prospectus Page 16
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL AMERICA MID CAP GROWTH FUND (CONTINUED)
<TABLE>
<CAPTION>
ADVISOR
CLASS A+ CLASS B+ CLASS++
-------------- -------------------------------------------------- --------------
JUNE 9, 1987
(COMMENCEMENT
OF OPERATIONS) APRIL 1, 1993
THROUGH YEAR ENDED DECEMBER 31, TO YEAR ENDED
DECEMBER 31, --------------------------------- DECEMBER 31, DECEMBER 31,
1987 1996 1995 1994* 1993* 1996
-------------- -------- -------- ------------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of year...... $10.00 $ 18.77 $ 17.50 $ 17.09 $15.90 $19.05
------- -------- -------- ------------ ------- --------------
Net investment income (loss)............ (0.19) (0.11) 0.10 (0.09) (0.29) 0.09
Net realized and unrealized gain (loss)
on investments......................... (1.25) 2.91 3.87 2.55 2.78 2.91
------- -------- -------- ------------ ------- --------------
Net increase (decrease) in net asset
value resulting from investment
operations............................. (1.44) 2.80 3.97 2.46 2.49 3.00
------- -------- -------- ------------ ------- --------------
Distributions:
Net investment income................. -- -- (0.12) -- -- --
Net realized gain on investments...... -- (1.29) (2.58) (2.05) (1.30) (1.29)
------- -------- -------- ------------ ------- --------------
Total distributions................. -- (1.29) (2.70) (2.05) (1.30) (1.29)
------- -------- -------- ------------ ------- --------------
Net asset value, end of year............ $ 8.56 $ 20.88 $ 18.77 $ 17.50 $17.09 $20.76
------- -------- -------- ------------ ------- --------------
------- -------- -------- ------------ ------- --------------
Total investment return (a)(c).......... (14.4)% 14.82% 22.42% 15.06% 16.1% 15.72%
------- -------- -------- ------------ ------- --------------
------- -------- -------- ------------ ------- --------------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $1,039 $334,590 $348,435 $ 80,060 $1,982 $1,986
Ratio of net investment income (loss) to
average net assets (b)................. (2.7)% (0.53)% 0.59% (0.48)% (1.3)% 0.47%
Ratio of expenses to average net assets
(b):
With expense reductions............... 3.8% 2.01% 2.11% %2.23 2.2% 1.01%
Without expense reductions............ --% 2.06% -- (d) (d)--% --% 1.06%
Portfolio turnover rate+++.............. 505% 253% 71% % 102 92% 253%
Average commission rate per share on
portfolio transactions+++.............. N/A $ 0.0536 N/A N/A N/A $0.0536
<CAPTION>
JUNE 1, 1995
TO
DECEMBER 31,
1995
---------------
<S> <C>
Per Share Operating Performance:
Net asset value, beginning of year...... $20.61
---------------
Net investment income (loss)............ 0.21
Net realized and unrealized gain (loss)
on investments......................... 1.09
---------------
Net increase (decrease) in net asset
value resulting from investment
operations............................. 1.30
---------------
Distributions:
Net investment income................. (0.28)
Net realized gain on investments...... (2.58)
---------------
Total distributions................. (2.86)
---------------
Net asset value, end of year............ $19.05
---------------
---------------
Total investment return (a)(c).......... 6.01%
---------------
---------------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $1,394
Ratio of net investment income (loss) to
average net assets (b)................. 1.59%
Ratio of expenses to average net assets
(b):
With expense reductions............... 1.11%
Without expense reductions............ --%(d)
Portfolio turnover rate+++.............. 71%
Average commission rate per share on
portfolio transactions+++.............. N/A
</TABLE>
- --------------
+ Commencing April 1, 1993, the Fund began offering Class B shares. All
capital shares issued and outstanding as of March 31, 1993 were reclassified
as Class A shares.
++ On June 1, 1995, the Fund began offering Advisor Class shares.
+++ Portfolio turnover rate and average commission rate are calculated on the
basis of the Fund as a whole without distinguishing between the classes of
shares issued.
* The selected per share data were calculated based upon weighted average
shares outstanding during the period.
** Includes reimbursement by the Manager of Fund operating expenses of $0.11.
Without such reimbursement, the ratio of expenses to average net assets
would have been 3.3% and the ratio of net investment income to average net
assets would have been (1.2)%.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not include sales charge.
(d) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reduction, if any.
N/A Not applicable.
Prospectus Page 17
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL AMERICA VALUE FUND
<TABLE>
<CAPTION>
CLASS A(D)
---------------------------------
<S> <C> <C>
OCTOBER 18, 1995
(COMMENCE-
MENT OF OPERATIONS)
THROUGH
YEAR ENDED DECEMBER 31, 1996 DECEMBER 31, 1995
--------------- ---------------
Per Share Operating Performance:
Net asset value, beginning of year................. $12.76 $11.43
-------- -------
Net investment income (loss)....................... (0.01)** 0.03*
Net realized and unrealized gain (loss) on
investments....................................... 1.94 1.30
-------- -------
Net increase (decrease) in net asset value
resulting from investment operations.............. 1.93 1.33
-------- -------
Distributions to shareholders:
From net realized gain on investments............ (0.04) --
-------- -------
Total distributions.............................. (0.04) --
-------- -------
Net asset value, end of year....................... $14.65 $12.76
-------- -------
-------- -------
Total investment return (a)(c)..................... 15.12% 11.64%
-------- -------
-------- -------
Ratios and supplemental data:
Net assets, end of period (in 000's)............... $2,529 $870
Ratio of net investment income (loss) to average
net assets:
With reimbursement by the Manager (b)............ (0.10)% 1.10%
Without reimbursement by the
Manager (b)..................................... (3.61)% (47.44)%
Ratio of expenses to average net assets:
With reimbursement by the Manager (b)............ 2.00% 2.00%
Without reimbursement by the
Manager (b)..................................... 5.51% 50.54%
Portfolio turnover rate+........................... 256% N/A
Average commission rate per share paid on portfolio
transactions+..................................... $0.0551 N/A
<CAPTION>
CLASS B(D)
---------------------------------
<S> <C> <C>
OCTOBER 18, 1995
(COMMENCE-
MENT OF OPERATIONS)
THROUGH
YEAR ENDED DECEMBER 31, 1996 DECEMBER 31, 1995
--------------- ---------------
Per Share Operating Performance:
Net asset value, beginning of year................. $12.75 $11.43
-------- -------
Net investment income (loss)....................... (0.10)** 0.01*
Net realized and unrealized gain (loss) on
investments....................................... 1.93 1.31
-------- -------
Net increase (decrease) in net asset value
resulting from investment operations.............. 1.83 1.32
-------- -------
Distributions to shareholders:
From net realized gain on investments............ (0.04) --
-------- -------
Total distributions.............................. (0.04) --
-------- -------
Net asset value, end of year....................... $14.54 $12.75
-------- -------
-------- -------
Total investment return (a)(c)..................... 14.35% 11.55%
-------- -------
-------- -------
Ratios and supplemental data:
Net assets, end of period (in 000's)............... $5,503 $1,254
Ratio of net investment income (loss) to average
net assets:
With reimbursement by the Manager (b)............ (0.75)% 0.45%
Without reimbursement by the
Manager (b)..................................... (4.26)% (48.09)%
Ratio of expenses to average net assets:
With reimbursement by the Manager (b)............ 2.65% 2.65%
Without reimbursement by the
Manager (b)..................................... 6.16% 51.19%
Portfolio turnover rate+........................... 256% N/A
Average commission rate per share paid on portfolio
transactions+..................................... $0.0551 N/A
<CAPTION>
ADVISOR CLASS(D)
---------------------------------
OCTOBER 18, 1995
(COMMENCE-
MENT OF OPERATIONS)
THROUGH
YEAR ENDED DECEMBER 31, 1996 DECEMBER 31, 1995
--------------- ---------------
Per Share Operating Performance:
Net asset value, beginning of year................. $12.77 $11.43
-------- -------
Net investment income (loss)....................... 0.03** 0.04*
Net realized and unrealized gain (loss) on
investments....................................... 1.96 1.30
-------- -------
Net increase (decrease) in net asset value
resulting from investment operations.............. 1.99 1.34
-------- -------
Distributions to shareholders:
From net realized gain on investments............ (0.04) --
-------- -------
Total distributions.............................. (0.04) --
-------- -------
Net asset value, end of year....................... $14.72 $12.77
-------- -------
-------- -------
Total investment return (a)(c)..................... 15.58% 11.72%
-------- -------
-------- -------
Ratios and supplemental data:
Net assets, end of period (in 000's)............... $191 $81
Ratio of net investment income (loss) to average
net assets:
With reimbursement by the Manager (b)............ 0.25% 1.45%
Without reimbursement by the
Manager (b)..................................... (3.26)% (47.09)%
Ratio of expenses to average net assets:
With reimbursement by the Manager (b)............ 1.65% 1.65%
Without reimbursement by the
Manager (b)..................................... 5.16% 50.19%
Portfolio turnover rate+........................... 256% N/A
Average commission rate per share paid on portfolio
transactions+..................................... $0.0551 N/A
</TABLE>
- ------------------
* Before reimbursement by the Manager the net investment loss per share would
have been $(1.11), $(1.13) and $(1.10) for Class A, Class B and Advisor
Class, respectively, from October 18, 1995 to December 31, 1995.
** Before reimbursement by the Manager the net investment loss per share would
have been $(.50), $(.59) and (.46) for Class A, Class B and Advisor Class,
respectively, for the year ended December 31, 1996
+ Portfolio turnover rate and average commission rate paid on portfolio
transactions are calculated on the basis of the Portfolio as a whole without
distinguishing between the classes of shares issued.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not include sales charges.
(d) The selected per share data were calculated based upon weighted average
shares outstanding during the period.
N/A Not applicable.
Prospectus Page 18
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL JAPAN GROWTH FUND
<TABLE>
<CAPTION>
CLASS A+
------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------
1996* 1995* 1994 1993 1992* 1991
--------- --------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $11.00 $12.15 $11.61 $8.70 $11.16 $11.48
--------- --------- ----------- ----------- ------------ -----------
Net investment income
(loss)................................. (0.04) (0.04) (0.04) (0.14) --*** (0.09)
Net realized and unrealized gain (loss)
on
investments............................ (0.77) 0.26 0.79 3.05 (2.40) (0.23)
--------- --------- ----------- ----------- ------------ -----------
Net increase (decrease) in net asset
value resulting from investment
operations............................. (0.81) 0.22 0.75 2.91 (2.40) (0.32)
--------- --------- ----------- ----------- ------------ -----------
Distributions:
Net realized gain on investments and
foreign currency..................... (0.43) (1.37) (0.21) -- (0.06) --
--------- --------- ----------- ----------- ------------ -----------
Total distributions............... (0.43) (1.37) (0.21) -- (0.06) --
--------- --------- ----------- ----------- ------------ -----------
Net asset value, end of
period................................. $9.76 $11.00 $12.15 $11.61 $8.70 $11.16
--------- --------- ----------- ----------- ------------ -----------
--------- --------- ----------- ----------- ------------ -----------
Total investment
return (a)(c).......................... (7.43)% 1.94% 6.56% 33.5% (21.5)% (2.8)%
--------- --------- ----------- ----------- ------------ -----------
--------- --------- ----------- ----------- ------------ -----------
Ratios and supplemental data:
Net assets, end of period
(in 000's)............................. $63,585 $111,105 $98,066 $88,487 $93,865 $61,519
Ratio of net investment income (loss) to
average net assets (b)................. (0.40)% (0.40)% (0.32)% (0.3)% --%*** (1.5)%
Ratio of expenses to average net assets:
With expense
reductions (b)....................... 1.84% 1.99% 1.91% 2.1% 2.2%*** 2.2%
Without expense reductions (b)........ 1.94% 2.14% 2.03% --%(d) --%(d) --%(d)
Portfolio turnover rate+++.............. 31% 67% 49% 104% 115% 251%
Average commission rate per share paid
on portfolio transactions+++........... $0.0971 N/A N/A N/A N/A N/A
<CAPTION>
1990 1989 1988**
----------- ----------- -----------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $16.39 $10.57 $10.36
----------- ----------- -----------
Net investment income
(loss)................................. (0.05)**** (0.19) (0.20)
Net realized and unrealized gain (loss)
on
investments............................ (4.60) 6.57 2.44
----------- ----------- -----------
Net increase (decrease) in net asset
value resulting from investment
operations............................. (4.65) 6.38 2.24
----------- ----------- -----------
Distributions:
Net realized gain on investments and
foreign currency..................... (0.26) (0.56) (2.03)
----------- ----------- -----------
Total distributions............... (0.26) (0.56) (2.03)
----------- ----------- -----------
Net asset value, end of
period................................. $11.48 $16.39 $10.57
----------- ----------- -----------
----------- ----------- -----------
Total investment
return (a)(c).......................... (28.7)% 60.7% 21.9%
----------- ----------- -----------
----------- ----------- -----------
Ratios and supplemental data:
Net assets, end of period
(in 000's)............................. $51,693 $48,405 $18,591
Ratio of net investment income (loss) to
average net assets (b)................. (1.2)%**** (1.6)% (1.5)%
Ratio of expenses to average net assets:
With expense
reductions (b)....................... 2.2 %*** 2.1% 2.2%
Without expense reductions (b)........ --%(d) --%(d) --%(d)
Portfolio turnover rate+++.............. 138% 108% 150%
Average commission rate per share paid
on portfolio transactions+++........... N/A N/A N/A
</TABLE>
- --------------
+ Commencing April 1, 1993, the Fund began offering Class B shares. All
capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
+++ Portfolio turnover rate and average commission rate are calculated on the
basis of the Fund as a whole without distinguishing between the classes of
shares issued.
* The selected per share data were calculated based upon weighted average
shares outstanding during the period.
** The per share data reflects a 2 for 1 stock split effective August 15,
1988.
*** Includes reimbursement by the Manager of Fund operating expenses of $0.01.
Without such reimbursement, the ratio of expenses to average net assets
would have been 2.3% and the ratio of net investment loss to average net
assets would have been (0.1)%.
**** Includes reimbursement by the Manager of Fund operating expenses of $0.01.
Without such reimbursement, the ratio of expenses to average net assets
would have been 2.4% and the ratio of net investment loss to average net
assets would have been (1.35)%.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not reflect the maximum sales charge on
purchases of Class A shares and the contingent deferred sales charge
imposed on certain redemptions of Class B shares.
(d) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reduction, if any.
N/A Not applicable.
Prospectus Page 19
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL JAPAN GROWTH FUND (CONTINUED)
<TABLE>
<CAPTION>
CLASS A+ CLASS B+
------------------------- -------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, APRIL 1, 1993
YEAR ENDED DECEMBER 31, TO
------------------------- ------------------------------------------ DECEMBER 31,
1987** 1986** 1996* 1995* 1994 1993
----------- ----------- ------------ ------------ ------------ ----------------
Per Share Operating Performance:
Net asset value, beginning of period.... $9.88 $6.20 $10.78 $12.02 $11.57 $9.85
----------- ----------- ------------ ------------ ------------ -------
Net investment income (loss)............ (0.15) (0.14) (0.11) (0.12) (0.13) (0.18)
Net realized and unrealized gain (loss)
on investments......................... 4.52 3.91 (0.75) 0.25 0.79 1.90
----------- ----------- ------------ ------------ ------------ -------
Net increase (decrease) in net asset
value resulting from investment
operations............................. 4.37 3.77 (0.86) 0.13 0.66 1.72
----------- ----------- ------------ ------------ ------------ -------
Distributions:
Net realized gain on investments and
foreign currency..................... (3.89) (0.09) (0.43) (1.37) (0.21) --
----------- ----------- ------------ ------------ ------------ -------
Total distributions............... (3.89) (0.09) (0.43) (1.37) (0.21) --
----------- ----------- ------------ ------------ ------------ -------
Net asset value, end of period.......... $10.36 $9.88 $9.49 $10.78 $12.02 $11.57
----------- ----------- ------------ ------------ ------------ -------
----------- ----------- ------------ ------------ ------------ -------
Total investment return (a)(c).......... 52.1% 61.3% (8.05)% 1.20% 5.81% 17.5%
----------- ----------- ------------ ------------ ------------ -------
----------- ----------- ------------ ------------ ------------ -------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $10,049 $7,313 $32,116 $41,274 $27,355 $3,699
Ratio of net investment income (loss) to
average net assets (b)................. (2.4)% (1.6)% (1.05)% (1.05)% (0.97)% (0.9)%
Ratio of expenses to average net assets:
With expense reductions (b)........... 3.0% 2.2% 2.49% 2.64% 2.56% 2.7%
Without expense reductions (b)........ --%(d) --%(d) 2.59% 2.79% 2.68% --%
Portfolio turnover rate+++.............. 319% 207% 31% 67% 49% 104%
Average commission rate per share paid
on portfolio transactions+++........... N/A N/A $ 0.0971 N/A N/A N/A
<CAPTION>
ADVISOR CLASS++
-----------------------------------
<S> <C> <C>
JUNE 1, 1995
YEAR ENDED TO
DECEMBER 31, DECEMBER 31,
1996* 1995*
---------------- ----------------
Per Share Operating Performance:
Net asset value, beginning of period.... $11.02 $10.50
-------- -------
Net investment income (loss)............ (0.01) --
Net realized and unrealized gain (loss)
on investments......................... (0.77) 1.89
-------- -------
Net increase (decrease) in net asset
value resulting from investment
operations............................. (0.78) 1.89
-------- -------
Distributions:
Net realized gain on investments and
foreign currency..................... (0.43) (1.37)
-------- -------
Total distributions............... (0.43) (1.37)
-------- -------
Net asset value, end of period.......... $9.81 $11.02
-------- -------
-------- -------
Total investment return (a)(c).......... (7.14)% 18.14%
-------- -------
-------- -------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $413 $558
Ratio of net investment income (loss) to
average net assets (b)................. (0.05)% (0.05)%
Ratio of expenses to average net assets:
With expense reductions (b)........... 1.49% 1.64%
Without expense reductions (b)........ 1.59% 1.79%
Portfolio turnover rate+++.............. 31% 67%
Average commission rate per share paid
on portfolio transactions+++........... $0.0971 N/A
</TABLE>
- --------------
+ Commencing April 1, 1993, the Fund began offering Class B shares. All
capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ On June 1, 1995, the Fund began offering Advisor Class shares.
+++ Portfolio turnover rate and average commission rate are calculated on the
basis of the Fund as a whole without distinguishing between the classes of
shares issued.
* The selected per share data were calculated based upon weighted average
shares outstanding during the period.
** The per share data reflects a 2 for 1 stock split effective August 15,
1988.
*** Includes reimbursement by the Manager of Fund operating expenses of $0.01.
Without such reimbursement, the ratio of expenses to average net assets
would have been 2.3% and the ratio of net investment loss to average net
assets would have been (0.1)%.
**** Includes reimbursement by the Manager of Fund operating expenses of $0.01.
Without such reimbursement, the ratio of expenses to average net assets
would have been 2.4% and the ratio of net investment loss to average net
assets would have been (1.35)%.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not reflect the maximum sales charge on
purchases of Class A shares and the contingent deferred sales charge
imposed on certain redemptions of Class B shares.
(d) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reduction, if any.
N/A Not applicable.
Prospectus Page 20
<PAGE>
GT GLOBAL EQUITY FUNDS
INVESTMENT OBJECTIVES
AND POLICIES
- --------------------------------------------------------------------------------
THE PACIFIC FUND, EUROPE FUND, JAPAN FUND,
INTERNATIONAL FUND AND WORLDWIDE FUND
The Pacific Fund, Europe Fund, Japan Fund, International Fund and Worldwide Fund
each seeks long-term growth of capital. Each of these Funds seeks its objective
by investing, under normal circumstances, at least 65% of its total assets in
equity securities of issuers domiciled in its Primary Investment Area, as
described below. Equity securities in which these Funds may invest include
common stocks, preferred stocks, convertible debt securities and warrants to
acquire such securities. These Funds' Primary Investment Areas include the
following countries:
PACIFIC FUND -- Australia, Hong Kong, India, Indonesia, Malaysia, New Zealand,
Pakistan, the Philippines, Singapore, South Korea, Taiwan and Thailand
EUROPE FUND -- Austria, Belgium, Denmark, Finland, France, Germany, Greece,
Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden,
Switzerland, Turkey and the United Kingdom
JAPAN FUND -- Japan
INTERNATIONAL FUND -- all countries listed for Pacific Fund, Europe Fund and
Japan Fund, and Argentina, Brazil, Canada, Chile, Colombia, Israel, Mexico, Peru
and Venezuela, but not the United States
WORLDWIDE FUND -- same as International Fund, but including the United States
Because the development of the world's economies and stock markets is rapidly
evolving, from time to time the Board of Trustees may add or delete countries
from a Fund's Primary Investment Area.
(1) The Worldwide Fund is designed for those investors desiring to delegate
equity investment decisions, including allocation of assets among the world's
different markets, currency strategies and individual stock selection, to the
Manager's professional team of investment specialists; (2) the International
Fund is intended for investors seeking to complement their U.S. equity
investments with a professionally managed international portfolio; (3) the
Pacific Fund and Europe Fund are regional funds for investors interested in a
more geographically concentrated investment but still desiring to diversify
across multiple markets; and (4) the Japan Fund is designed for investors
wishing to concentrate their investment in a particular market but still
desiring the professional management, liquidity and diversification afforded by
a mutual fund.
Each of the Pacific Fund, Europe Fund, Japan Fund, International Fund and
Worldwide Fund may invest up to 35% of its total assets in the equity securities
of issuers domiciled outside of its Primary Investment Area. Such investments
may include: (a) securities of issuers in countries that are not located in the
Primary Investment Area but are linked by tradition, economic markets, cultural
similarities or geography to the countries in such Primary Investment Area; and
(b) securities of issuers located elsewhere in the world that have operations in
the Primary Investment Area or that stand to benefit from political and economic
events in the Primary Investment Area.
Under normal circumstances, the assets of the Worldwide Fund and International
Fund are invested in the equity securities of issuers domiciled in at least
three different countries, and 20% to 60% of the Worldwide Fund's assets
normally are invested in the equity securities of U.S. issuers.
Each of the Pacific Fund, Europe Fund, Japan Fund, International Fund and
Worldwide Fund may invest up to 35% of its total assets in debt securities,
including U.S. and foreign government securities and corporate debt securities,
Samurai and Yankee bonds, Eurobonds and Depository Receipts. The issuers of such
debt securities may or may not be domiciled in the Primary Investment Area of a
particular Fund purchasing the securities. These Funds will limit their
purchases of debt securities to investment grade obligations. "Investment grade"
debt refers to those securities rated within one of the four highest ratings
categories by Moody's Investors Service, Inc. ("Moody's") or by Standard &
Poor's Ratings Group ("S&P"), or, if not similarly rated by any other nationally
recognized statistical rating organization ("NRSRO"), deemed by the Manager to
be of equivalent quality. Debt rated Baa by Moody's, which is the lowest
category of investment grade debt, is considered by Moody's
Prospectus Page 21
<PAGE>
GT GLOBAL EQUITY FUNDS
to have speculative characteristics. See the Statement of Additional Information
for a description of Moody's and S&P ratings.
THE AMERICA MID CAP FUND, AMERICA SMALL CAP FUND AND AMERICA VALUE FUND
The investment objective of the America Mid Cap Fund is long-term growth of
capital. The investment objective of the America Small Cap Fund and America
Value Fund is long-term capital appreciation.
The America Mid Cap Fund seeks its investment objective by investing, under
normal circumstances, at least 65% of its total assets in equity securities of
U.S. mid cap companies. Equity securities in which the Fund may invest include
common stocks, preferred stocks, convertible debt securities and warrants to
acquire such securities. The Fund may also invest up to 35% of its total assets
in the equity securities of (a) issuers domiciled in the United States that, at
the time of purchase, have market capitalizations of less than $1 billion or
greater than $5 billion; and (b) issuers domiciled outside the United States,
including (i) issuers in countries that are not located in the United States but
are linked by tradition, economic markets, cultural similarities or geography to
the United States; and (ii) issuers located elsewhere in the world that have
operations in the United States or that stand to benefit from political or
economic events in the United States. In addition, the Fund may invest up to 35%
of its total assets in investment grade debt securities, including U.S. and
foreign government securities and corporate debt securities, Samurai and Yankee
bonds, Euro bonds and Depositary Receipts. The issuers of such debt securities
may or may not be domiciled in the United States.
The America Small Cap Fund seeks its investment objective by investing all of
its investable assets in the Small Cap Portfolio, which, in turn, normally
invests at least 65% of its total assets in equity securities, including common
stocks, preferred stocks, convertible debt securities and warrants of U.S. small
cap companies. The remainder of the Small Cap Portfolio's assets may be invested
in common stocks, preferred stocks, convertible debt securities and warrants of
companies domiciled in the United States that, at the time of purchase, have
market capitalizations greater than $1 billion, and non-convertible debt
securities, U.S. government securities and high quality money market
instruments, such as U.S. government obligations, high grade commercial paper,
bank certificates of deposit and bankers' acceptances of issuers domiciled in
the United States. The Small Cap Growth Portfolio also may invest up to 10% of
its total assets in securities of foreign issuers in the form of American
Depository Receipts ("ADRs") or other similar securities convertible into
securities of foreign issuers.
The America Value Fund seeks its investment objective by investing all of its
investable assets in the Value Portfolio, which, in turn, normally invests at
least 65% of its total assets in equity securities, including common stocks,
preferred stocks, convertible debt securities and warrants of companies
domiciled in the United States that, at the time of purchase, have market
capitalizations of greater than $500 million and that the Manager believes to be
undervalued in relation to long-term earning power or other factors. The
remainder of the Value Portfolio's assets may be invested in common stocks,
preferred stocks, convertible debt securities and warrants of companies
domiciled in the United States that are smaller than those defined above and
non-convertible debt securities, U.S. government securities and high quality
money market instruments, such as U.S. government obligations, high grade
commercial paper, bank certificates of deposit and bankers' acceptances, of
issuers domiciled in the United States. The Value Portfolio also may invest up
to 10% of its total assets in securities of foreign issuers in the form of ADRs
or other similar securities convertible into securities of foreign issuers.
The debt obligations that the Portfolios may invest in are limited to U.S.
government securities and corporate debt securities of issuers domiciled in the
United States. The Portfolios will limit their purchases of debt securities to
investment grade obligations, as defined above.
For purposes of this Prospectus, market capitalization means the total market
value of a company's outstanding common stock. There is no necessary correlation
between market capitalization and the financial attributes (such as level of
assets, revenues or income) often used to measure a company's size.
SELECTION OF INVESTMENTS AND ASSET ALLOCATION
In managing the Pacific Fund, Europe Fund, Japan Fund, International Fund and
Worldwide Fund, the Manager seeks to identify those countries and industries
where economic and political factors, including currency movements, are likely
to produce above-average growth rates. The Manager further attempts to identify
those companies in such countries and industries that are best positioned and
managed to take advantage of these economic and political factors. The Manager
intends to
Prospectus Page 22
<PAGE>
GT GLOBAL EQUITY FUNDS
invest in such markets only after balancing the potential for growth of selected
companies in each market relative to the risks of investing in each such
country. Among the factors to be considered are that several of the markets
included in the Primary Investment Areas of the Pacific Fund, Europe Fund,
International Fund and Worldwide Fund are so-called developing countries, and
their economies and markets are less developed and more prone to uncertainty,
instability and risk than those of the other markets in which such Funds invest.
In selecting equity securities for the America Mid Cap Fund and the Small Cap
Portfolio, the Manager uses a multi-stage process to identify companies that
possess sustainable above average growth at an attractive offering price. The
process for selecting small and mid cap growth stocks consists of four
components: asset allocation, industry diversification, stock selection and
quality control. The Manager tracks individual companies and categorizes them
into industry groups. Purchases and sales of individual securities are based on
the ratings established by the Manager on a weekly basis. Stocks ranked in the
top 30% are buys, and the bottom 30% are sells. The quality control process
ensures consistency with the industry and asset allocation guidelines as well as
stock guidelines. There is no assurance that this process will produce better or
more consistent results than other investment processes.
In selecting issuers for the Value Portfolio, the Manager attempts to identify
securities of issuers whose prospects and growth potential, in the Manager's
opinion, are currently undervalued by investors. In the Manager's view, an
issuer may show favorable prospects as a result of many factors, including
changes in management, shifts in supply and demand conditions in the industry in
which it operates, technological advances, new products or product cycles, or
changes in macroeconomic trends. The securities of such issuers may be
undervalued by the market due to many factors, including market decline,
tax-loss selling, poor economic conditions, limited coverage by the investment
community, investors' reluctance to overlook perceived financial, operational,
managerial or other problems affecting the issuer or the industry in which it
operates and other factors. The Manager will attempt to identify those
undervalued issuers with the potential for attractive returns.
For purposes of this Prospectus, an issuer typically is considered as domiciled
in a particular country if it is (a) organized under the laws of, or has its
principal office in, a particular country or (b) normally derives 50% or more of
its total revenues from business in that country, provided that, in the
Manager's view, the value of such issuer's securities tends to reflect such
country's development to a greater extent than developments elsewhere. However,
these are not absolute requirements, and certain companies incorporated in a
particular country and considered by the Manager to be located in that country
may have substantial foreign operations or subsidiaries and/or export sales
exceeding in size the assets or sales in that country.
The Manager allocates investments among fixed income securities of particular
issuers on the basis of its views as to the best values then currently available
in the market place. Such values are a function of yield, maturity, issue
classification and quality characteristics, coupled with expectations regarding
the economy, movements in the general level and term of interest rates, currency
values, political developments, and variations in the supply of funds available
for investment in the world bond market relative to the demands placed upon it.
If market interest rates decline, fixed income securities generally appreciate
in value and vice versa. Fixed income securities denominated in currencies other
than the U.S. dollar or in multinational currency units are evaluated on the
strength of the particular currency against the U.S. dollar as well as on the
current and expected levels of interest rates in the country or countries. In
addition to the foregoing, the Pacific Fund, Europe Fund, Japan Fund,
International Fund, Worldwide Fund and America Mid Cap Fund may seek to take
advantage of differences in relative values of fixed income securities among
various countries.
OTHER INVESTMENT POLICIES
TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, the Manager may employ a temporary defensive investment strategy if it
determines such a strategy to be warranted due to market, economic or political
conditions. During such time the Pacific Fund, Europe Fund, Japan Fund,
International Fund, Worldwide Fund, America Mid Cap Fund, Small Cap Portfolio
and Value Portfolio may each invest less than 65% of its total assets in the
types of securities covered by its primary investment policy. Under a defensive
strategy, the Pacific Fund, Europe Fund, Japan Fund, International Fund,
Worldwide Fund and America Mid Cap Fund may invest up to 100% of its total
assets in cash (U.S. dollars, foreign currencies or multinational currency
units) and/or high quality debt securities or money market
Prospectus Page 23
<PAGE>
GT GLOBAL EQUITY FUNDS
instruments issued by corporations or the U.S. or a foreign government. In
addition, for temporary defensive purposes, most or all investments of the
Pacific Fund, Europe Fund, Japan Fund, International Fund and Worldwide Fund may
be made in the United States and denominated in U.S. dollars. Under a defensive
strategy, each Portfolio may hold U.S. dollars and/or may invest any portion of
its assets in high quality domestic debt securities or high quality money market
instruments. To the extent a Fund or a Portfolio adopts a temporary defensive
position, it will not be invested so as to achieve directly its investment
objective.
In addition, pending investment of proceeds from new sales of Fund shares or to
meet its ordinary daily cash needs, the Pacific Fund, Europe Fund, Japan Fund,
International Fund, Worldwide Fund and America Mid Cap Fund may hold cash (U.S.
dollars, foreign currencies or multinational currency units) and may invest in
high quality foreign or domestic money market instruments. Each Portfolio also
may hold U.S. dollars and/or invest in domestic debt securities or high quality
money market instruments pending investment of proceeds from new sales of
America Small Cap Fund or America Value Fund shares, or to meet its ordinary
daily cash needs.
INVESTMENTS IN OTHER INVESTMENT COMPANIES. With respect to certain countries,
investments may only be made through investment in other investment companies
that in turn are authorized to invest in the securities of such countries. The
Pacific Fund, Europe Fund, Japan Fund, International Fund, Worldwide Fund,
America Mid Cap Fund, Small Cap Portfolio and Value Portfolio may each invest up
to 10% of its total assets in other investment companies. As a shareholder in an
investment company, a Portfolio would bear its ratable share of that investment
company's expenses, including its advisory and administration fees. At the same
time, the Fund or Portfolio would continue to pay its own management fees and
other expenses.
PRIVATIZATIONS. The governments of some foreign countries have been engaged in
programs of selling part or all of their stakes in government owned or
controlled enterprises ("privatizations"). The Manager believes that
privatizations may offer opportunities for significant capital appreciation and
intends to invest in privatizations in appropriate circumstances. In certain
foreign countries, the ability of foreign entities to participate in
privatizations may be limited by local law, or the terms on which the Fund may
be permitted to participate may be less advantageous than those for local
investors. There can be no assurance that foreign governments will continue to
sell companies currently owned or controlled by them or that privatization
programs will be successful.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. Each Fund and
Portfolio may borrow from banks or may borrow through reverse repurchase
agreements and "roll" transactions in connection with meeting requests for the
redemption of the Fund's (or, in the case of a Portfolio, its corresponding
Fund's) shares. Each Fund and Portfolio also may borrow up to 5% of its total
assets for temporary or emergency purposes other than to meet redemptions. Each
Fund or Portfolio may borrow up to 33 1/3% of its total assets. However, no
additional investments will be made if a Fund's or Portfolio's borrowings exceed
5% of its total assets. Any borrowing by a Fund or Portfolio may cause greater
fluctuation in the value of its (or, in the case of a Portfolio, its
corresponding Fund's) shares than would be the case if the Fund or Portfolio did
not borrow.
A reverse repurchase agreement is a borrowing transaction in which a Fund or a
Portfolio transfers possession of a security to another party, such as a bank or
broker/dealer, in return for cash and agrees to repurchase the security in the
future at an agreed upon price which includes an interest component. A "roll"
borrowing transaction involves a Fund's or Portfolio's sale of securities
together with its commitment (for which that Fund or Portfolio may receive a
fee) to purchase similar, but not identical, securities at a future date.
SECURITIES LENDING. The Funds and Portfolios may lend their portfolio securities
to broker/dealers or to other institutional investors. Securities lending allows
a Fund or a Portfolio to retain ownership of the securities loaned and, at the
same time, earn additional income that may be used to offset the Fund's or
Portfolio's custody fees. Each Fund or Portfolio limits its loans of portfolio
securities to an aggregate of 30% of the value of its total assets, measured at
the time any such loan is made. While a loan is outstanding, the borrower must
maintain with the Fund's or the Portfolio's custodian collateral consisting of
cash, U.S. government securities or certain irrevocable letters of credit equal
to at least the value of the borrowed securities, plus any accrued interest. The
risks in lending portfolio securities, as with other extensions of secured
credit, consist of possible delay in receiving additional collateral or in
recovery of the securities and possible loss of rights in the collateral should
the borrower fail financially.
Prospectus Page 24
<PAGE>
GT GLOBAL EQUITY FUNDS
WHEN ISSUED OR FORWARD COMMITMENT SECURITIES. The Pacific Fund, Europe Fund,
Japan Fund, International Fun, Worldwide Fund, America Mid Cap Fund and the
Portfolios may purchase debt securities on a "when-issued" basis and may
purchase or sell such securities on a "forward commitment" basis in order to
hedge against anticipated changes in interest rates and prices. The price, which
generally is expressed in yield terms, is fixed at the time the commitment is
made, but delivery and payment for the securities take place at a later date.
When-issued securities and forward commitments may be sold prior to the
settlement date, but the Funds and Portfolios will purchase or sell when-issued
securities or enter into forward commitments only with the intention of actually
receiving or delivering the securities, as the case may be. No income accrues on
securities that have been purchased pursuant to a forward commitment or on a
when-issued basis prior to delivery to the Fund or Portfolio. If the Fund or
Portfolio disposes of the right to acquire a when-issued security prior to its
acquisition or disposes of its right to deliver or receive against a forward
commitment, it may incur a gain or loss. At the time a Fund or a Portfolio
enters into a transaction on a when-issued or forward commitment basis, a
segregated account consisting of cash or liquid securities equal to the value of
the when-issued or forward commitment securities will be established and
maintained with its custodian and will be marked to market daily. There is a
risk that the securities may not be delivered and that a Fund or a Portfolio may
incur a loss.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. The Pacific Fund, Europe
Fund, Japan Fund, International Fund, Worldwide Fund and America Mid Cap Fund
may use forward currency contracts, futures contracts, options on securities,
options on indices, options on currencies and options on futures contracts to
attempt to hedge against the overall level of investment risk normally
associated with each such Fund's portfolio. In addition, each Portfolio may use
options on securities, options on indices, futures contracts and options on
futures contracts to attempt to hedge against the overall level of investment
risk normally associated with its portfolio. These instruments are often
referred to as "derivatives," which may be defined as financial instruments
whose performance is derived, at least in part, from the performance of another
asset (such as a security, currency or an index of securities). Each Fund and
Portfolio may enter into such instruments up to the full value of its portfolio
assets. See "Risk Factors -- Options, Futures and Forward Currency Strategies"
herein and the Statement of Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Funds may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar or
may involve two foreign currencies. The Funds may enter into forward currency
contracts either with respect to specific transactions or with respect to such
Fund's portfolio positions. The Funds also may purchase and sell put and call
options on currencies, futures contracts on currencies and options on futures
contracts on currencies to hedge against movements in exchange rates.
In addition, each Fund and Portfolio may purchase and sell put and call options
on equity and debt securities to hedge against the risk of fluctuations in the
prices of securities held by the Fund or Portfolio or that the Manager intends
to include in the Fund's or Portfolio's portfolio. The Funds and Portfolios also
may buy and sell put and call options on stock indexes to hedge against overall
fluctuations in the securities markets or market sectors generally or in a
specific market sector.
Further, the Funds and Portfolios may sell stock index futures contracts and may
purchase put options or write call options on such futures contracts to protect
against a general stock market or market sector decline that could adversely
affect the Fund's or Portfolio's portfolio. The Funds or Portfolios also may
purchase stock index futures contracts and purchase call options or write put
options on such contracts to hedge against a general stock market or market
sector advance and thereby attempt to lessen the cost of future securities
acquisitions. A Fund or a Portfolio may use interest rate futures contracts and
options thereon to hedge the debt portion of its portfolio against changes in
the general level of interest rates.
AMERICAN DEPOSITORY RECEIPTS. The Pacific Fund, Europe Fund, Japan Fund,
International Fund, Worldwide Fund and America Mid Cap Fund and the Portfolios
may invest in securities of foreign issuers in the form of ADRs or other similar
securities convertible into securities of foreign issuers. These securities may
not necessarily be denominated in the same currency as the securities into which
they may be converted. ADRs are receipts typically issued by a United States
bank or trust company evidencing ownership of the underlying securities.
Generally, ADRs in registered form are designed for use in U.S. securities
markets. See
Prospectus Page 25
<PAGE>
GT GLOBAL EQUITY FUNDS
"Investment Objectives and Policies" in the Statement of Additional Information.
OTHER INFORMATION. The investment objective of each Fund may not be changed
without the approval of a majority of the Fund's outstanding voting securities.
A "majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the Fund's shares represented at a meeting at which more than 50% of the
Fund's outstanding shares are represented, or (ii) more than 50% of the Fund's
outstanding shares. In addition, each Fund has adopted certain investment
limitations that also may not be changed without shareholder approval. A
complete description of these limitations is included in the Statement of
Additional Information. Unless specifically noted, the Funds' investment
policies described in this Prospectus and in the Statement of Additional
Information are not fundamental policies and may be changed by vote of the
Company's Board of Trustees, without shareholder approval.
The approval of the America Small Cap Fund and America Value Fund and of other
investors in their corresponding Portfolio, if any, is not required to change
the investment objective, policies or limitations of that Portfolio, unless
otherwise specified. Written notice shall be provided to shareholders of such
Fund thirty days prior to any changes in its corresponding Portfolio's
investment objective.
OTHER INFORMATION REGARDING THE PORTFOLIOS. As previously described, the America
Small Cap Fund and America Value Fund, unlike mutual funds that directly acquire
and manage their own portfolios of securities, seek to achieve their investment
objective by investing all of their investable assets in the Small Cap Portfolio
and Value Portfolio, respectively, each of which is a separate investment
company. Because its corresponding Fund will invest only in its corresponding
Portfolio, that Fund's shareholders will acquire only an indirect interest in
the investments of that Portfolio.
The America Small Cap Fund and America Value Fund may each redeem its investment
in its corresponding Portfolio at any time, if the Board of Trustees of the
Company determines that it is in the best interests of that Fund and its
shareholders to do so. A change in a Portfolio's investment objective, policies
or limitations which is not approved by the Board or shareholders of the
corresponding Fund could require the Fund to redeem its interest in the
Portfolio. Any such redemption could result in a distribution in kind of
portfolio securities (as opposed to a cash distribution) by the Portfolio. In
addition, a distribution in kind could result in a less diversified portfolio of
investments for the Fund and could adversely affect the liquidity of the Fund.
Should such a distribution occur, the Fund could incur brokerage fees or other
transaction costs in converting such securities to cash. Upon redemption, the
Board would consider what action might be taken, including the investment of all
the investable assets of the Fund in another pooled investment entity having
substantially the same investment objective as the Fund or the retention by the
Fund of its own investment adviser to manage its assets in accordance with the
investment objective, policies and limitations discussed herein with respect to
the Fund and its investment in its corresponding Portfolio.
In addition to selling an interest to its corresponding Fund, each Portfolio may
sell interests to other non-affiliated investment companies and/or other
institutional investors. All institutional investors in a Portfolio will pay a
proportionate share of the Portfolio's expenses and will invest in the Portfolio
on the same terms and conditions. However, if another investment company invests
in a Portfolio, it would not be required to sell its shares at the same public
offering price as the Portfolio's corresponding Fund and may charge different
sales commissions. Therefore, investors in the America Small Cap Fund and
America Value Fund may experience different returns from investors in another
investment company that invests exclusively in its corresponding Portfolio. As
of the date of this Prospectus, the America Small Cap Fund and America Value
Fund are the only institutional investors in their corresponding Portfolios.
The America Small Cap Fund and America Value Fund may each be materially
affected by the actions of large investors in its corresponding Portfolio, if
any. For example, as with all open-end investment companies, if a large investor
were to redeem its interest in a Portfolio, (1) the Portfolio's remaining
investors could experience higher pro rata operating expenses, thereby producing
lower returns and (2) the Portfolio's security holdings may become less diverse,
resulting in increased risk. Institutional investors in a Portfolio that have a
greater pro rata ownership interest in the Portfolio than its corresponding Fund
could have effective voting control over the operation of the Portfolio.
Prospectus Page 26
<PAGE>
GT GLOBAL EQUITY FUNDS
RISK FACTORS
- --------------------------------------------------------------------------------
GENERAL. There is no assurance that any Fund or Portfolio will achieve its
investment objective. Each Fund's net asset value will fluctuate, reflecting
fluctuations in the market value of its, or its corresponding Portfolio's,
securities. Equity securities, particularly common stocks, generally represent
the most junior position in an issuer's capital structure and entitle holders to
an interest in the assets of an issuer, if any, remaining after all more senior
claims have been satisfied. In addition, the value of debt securities held by a
Fund or a Portfolio will fluctuate with changes in the perceived
creditworthiness of the issuers of such securities and interest rates.
FOREIGN INVESTING. The Pacific Fund, Europe Fund, Japan Fund and International
Fund each invests primarily in foreign securities and the Worldwide Fund may
invest a significant portion of its assets in foreign securities. Investing in
foreign securities entails certain risks. The securities of non-U.S. issuers
generally will not be registered with, nor will the issuers thereof be subject
to, the reporting requirements of the SEC. Accordingly, there may be less
publicly available information about foreign securities and issuers than is
available about domestic securities and issuers. Foreign companies generally are
not subject to uniform accounting, auditing and financial reporting standards,
practices and requirements comparable to those applicable to domestic companies.
Securities of some foreign companies are less liquid and their prices may be
more volatile than securities of comparable domestic companies. In addition,
certain costs attributable to foreign investing, such as custody charges, are
higher than those attributable to domestic investing. A Fund's interest and
dividends from foreign issuers may be subject to non-U.S. withholding taxes,
thereby reducing its net investment income.
With respect to some foreign countries, there is the increased possibility of
expropriation or confiscatory taxation, limitations on the removal of funds or
other assets of the Funds, political or social instability, or diplomatic
developments which could affect their 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 national product, rate of inflation,
rate of savings and capital reinvestment, resource self-sufficiency and balance
of payments positions.
Because the Pacific Fund, Europe Fund, Japan Fund, International Fund and
Worldwide Fund may invest substantially in securities denominated in currencies
other than the U.S. dollar, and because they may hold foreign currencies, they
will be affected favorably or unfavorably by exchange control regulations or
changes in the exchange rates between such currencies and the U.S. dollar.
Changes in currency exchange rates will influence the value of those Funds'
shares, and also may affect the value of dividends and interest earned by Funds
and gains and losses realized by Funds. Currencies generally are evaluated on
the basis of fundamental economic criteria (e.g., relative inflation and
interest rate levels and trends, growth rate forecasts, balance of payments
status and economic policies) as well as technical and political data. The
exchange rates between the U.S. dollar and other currencies are determined by
supply and demand in the currency exchange markets, the international balance of
payments, governmental intervention, speculation and other economic and
political conditions. If the currency in which a security is denominated
appreciates against the U.S. dollar, the dollar value of the security will
increase. Conversely, a decline in the exchange rate of the currency would
adversely affect the value of the security expressed in U.S. dollars.
INVESTING IN EMERGING MARKETS. Investing in emerging markets involves risks
relating to potential political and economic instability within such markets and
the risks of expropriation, nationalization, confiscation of assets and property
or the imposition of restrictions on foreign investment and on repatriation of
capital invested. In the event of such expropriation, nationalization or other
confiscation in any emerging market, a Fund could lose its entire investment in
that market.
Many emerging market countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have negative
effects on the
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GT GLOBAL EQUITY FUNDS
economies and securities markets of certain emerging market countries.
Economies in emerging markets generally are dependent heavily upon international
trade and, accordingly, have been and may continue to be affected adversely by
trade barriers, exchange controls, managed adjustments in relative currency
values and other protectionist measures imposed or negotiated by the countries
with which they trade. These economies also have been and may continue to be
affected adversely by economic conditions in the countries in which they trade.
The securities markets of emerging countries are substantially smaller, less
developed, less liquid and more volatile than the securities markets of the
United States and other more developed countries. Disclosure and regulatory
standards in many respects are less stringent than in the United States and
other major markets. There also may be a lower level of monitoring and
regulation of emerging securities markets and the activities of investors in
such markets, and enforcement of existing regulations has been extremely
limited.
In addition, brokerage commissions, custodial services and other costs relating
to investment in foreign markets generally are more expensive than in the United
States, particularly with respect to emerging markets. Such markets have
different settlement and clearance procedures. In certain markets there have
been times when settlements have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions. The
inability of a Fund to make intended securities purchases due to settlement
problems could cause the Fund to forego attractive investment opportunities.
Inability to dispose of a portfolio security caused by settlement problems could
result either in losses to the Fund due to subsequent declines in value of the
portfolio security or, if the Fund has entered into a contract to sell the
security, could result in possible liability to the purchaser.
In addition, many of the currencies in emerging market countries have
experienced steady devaluations relative to the U.S. dollar and major
devalutions have historically occured in certain countries.
CONCENTRATION. The Pacific Fund, Europe Fund, Japan Fund, America Mid Cap Fund
and the Portfolios each invests a significant portion of its assets in a
particular country or region of the world. As a result, such Funds may be
subject to greater risks and may experience greater volatility than a fund that
is more broadly diversified geographically.
JAPAN. The Japan Fund invests primarily in equity securities of issuers
domiciled in Japan. Accordingly, the Japan Fund's performance will be closely
tied to economic and political conditions in Japan, and its performance is
expected to be more volatile than more geographically diversified funds. Changes
in regulatory, tax or economic policy in Japan could significantly affect the
Japanese securities markets and therefore the Japan Fund's performance.
Japan's economic growth has declined significantly since 1990. The general
government position has deteriorated as result of weakening economic growth and
stimulative measures taken to support economic activity and to restore financial
stability. Although the decline in interest rates and fiscal stimulation
packages have helped to contain recessionary forces, uncertainties remain. Japan
is also heavily dependent upon international trade, so its economy is especially
sensitive to trade barriers and disputes.
The common stocks of many Japanese companies trade at high price-earnings
ratios. Differences in accounting methods make it difficult to compare the
earnings of Japanese companies with those of companies in other countries,
especially the United States. In general, however, reported net income in Japan
is understated relative to U.S. accounting standards and this is one reason why
price-earnings ratios of the stocks of Japanese companies have tended
historically to be higher than those for U.S. stocks. In addition, Japanese
companies have tended to have higher growth rates than U.S. companies, and
Japanese interest rates have generally been lower than in the United States,
both of which factors tend to result in lower discount rates and higher
price-earnings ratios in Japan than in the United States.
The Japanese securities markets are less regulated than those in the United
States. Evidence has emerged from time to time of distortion of market prices to
serve political or other purposes. Shareholders' rights are also not always
equally enforced.
In addition, Japan's banking industry is undergoing problems related to bad
loans and declining values in real estate.
PACIFIC REGION COUNTRIES. The Pacific Fund invests primarily in equity
securities of issuers located in Pacific region countries other than Japan.
Certain of the risks associated with international investments are heightened
for investments in Pacific region countries. For example, some of the currencies
of Pacific region countries have experienced steady devaluations relative to the
U.S.
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GT GLOBAL EQUITY FUNDS
dollar, and major adjustments have been made periodically in certain such
currencies. Certain countries, such as India, face serious exchange constraints.
Jurisdictional disputes also exist between South Korea and North Korea.
In addition, Hong Kong will revert to Chinese administration on July 1, 1997.
Investments in Hong Kong may be subject to expropriation, nationalization or
confiscation, in which case the Pacific Fund could lose its entire investment in
Hong Kong. In addition, the reversion of Hong Kong also presents a risk that the
Hong Kong dollar will be devalued and a risk of possible loss of investor
confidence in Hong Kong's currency, stock market and assets.
SMALL CAP COMPANIES. The Small Cap Portfolio invests primarily in equity
securities of U.S. small cap companies. Small cap companies may be more
vulnerable than larger companies to adverse business, economic or market
developments. Small cap companies may also have more limited product lines,
markets or financial resources than companies with larger capitalizations, and
may be more dependent on a relatively small management group. In addition, small
cap companies may not be well-known to the investing public, may not have
institutional ownership and may have only cyclical, static or moderate growth
prospects. Most small cap company stocks pay low or no dividends. Securities of
small cap companies are generally less liquid and their prices more volatile
than those of securities of larger companies. The securities of some small cap
companies may not be widely traded, and the Small Cap Portfolio's position in
securities of such companies may be substantial in relation to the market for
such securities. Accordingly, it may be difficult for the Small Cap Portfolio to
dispose of securities of these small cap companies at prevailing market prices
in order to meet redemptions.
OPTIONS, FUTURES AND FORWARD CURRENCY CONTRACTS. Although the Pacific Fund,
Europe Fund, Japan Fund, Worldwide Fund, International Fund and America Mid Cap
Fund is each authorized to enter into options, futures and forward currency
transactions and the Portfolios are authorized to enter into options and futures
transactions, such a Fund or a Portfolio might not enter into any such
transactions. Options, futures and foreign currency transactions involve certain
risks, which include: (1) dependence on the Manager's ability to predict
movements in the prices of individual securities, fluctuations in the general
securities markets or in the appropriate market sector and movements in interest
rates and currency markets; (2) imperfect correlation, or even no correlation,
between movements in the price of options, forward contracts, futures contracts
or options thereon and movements in the price of the currency or security hedged
or used for cover; (3) the fact that skills and techniques needed to trade
options, futures contracts or options thereon or to use forward currency
contracts are different from those needed to select the securities in which a
Fund or a Portfolio invests; (4) lack of assurance that a liquid secondary
market will exist for any particular option, futures contract or option thereon
at any particular time; (5) the possible loss of principal under certain
conditions; (6) the possible inability of a Fund or a Portfolio to purchase or
sell a portfolio security at a time when it would otherwise be favorable for it
to do so, or the possible need for a Fund or a Portfolio to sell a security at a
disadvantageous time, due to the need for the Fund or Portfolio to maintain
"cover" or to set aside securities in connection with hedging transactions; and
(7) the possible need to defer closing out of certain options, futures
contracts, forward currency contracts and/or foreign currency positions in order
for the Fund (or, in the case of a Portfolio, its corresponding Fund) to qualify
or continue to qualify for the beneficial tax treatment afforded regulated
investment companies under the Internal Revenue Code of 1986, as amended,
("Code"). See "Dividends, Other Distributions and Federal Income Taxation"
herein and "Taxes" in the Statement of Additional Information.
ILLIQUID SECURITIES. Each Fund and Portfolio may invest up to 15% of its net
assets in securities for which no readily available market exists, so-called
"illiquid securities." Illiquid securities may be more difficult to value than
liquid securities, and the sale of illiquid securities generally will require
more time and result in higher brokerage charges or dealer discounts and other
selling expenses than the sale of liquid securities. Moreover, illiquid
restricted securities often sell at a price lower than similar securities that
are not subject to restrictions on resale.
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GT GLOBAL EQUITY FUNDS
HOW TO INVEST
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GENERAL. Advisor Class shares are offered through this Prospectus to (a)
trustees or other fiduciaries purchasing shares for employee benefit plans that
are sponsored by organizations that have at least 1,000 employees; (b) any
account with assets of at least $10,000 if (i) a financial planner, trust
company, bank trust department or registered investment adviser has investment
discretion over such account, and (ii) the account holder pays such person as
compensation for its advice and other services an annual fee of at least .50% on
the assets in the account ("Advisory Account"); (c) any account with assets of
at least $10,000 if (i) such account is established under a "wrap fee" program,
and (ii) the account holder pays the sponsor of such program an annual fee of at
least .50% on the assets in the account ("Wrap Fee Account"); (d) accounts
advised by one of the companies composing or affiliated with Liechtenstein
Global Trust; and (e) any of the companies composing or affiliated with
Liechtenstein Global Trust. Financial planners, trust companies, bank trust
companies and registered investment advisers referenced in subpart (b) and
sponsors of "wrap fee" programs referenced in subpart (c) are collectively
referred to as "Financial Advisors." Investors in Wrap Fee Accounts and Advisory
Accounts may only purchase Advisor Class shares through Financial Advisors who
have entered into agreements with GT Global and certain of its affiliates.
Investors may be charged a fee by their brokers or agents if they effect
transactions other than through a dealer.
All purchase orders will be executed at the public offering price next
determined after the purchase order is received. Orders received by GT Global
before the close of regular trading on the New York Stock Exchange ("NYSE")
(currently 4:00 p.m. Eastern time, unless weather, equipment failure or other
factors contribute to an earlier closing time) on any Business Day will be
executed at the public offering price for the applicable class of shares
determined that day. A "Business Day" is any day Monday through Friday on which
the NYSE is open for business. THE FUNDS AND GT GLOBAL RESERVE THE RIGHT TO
REJECT ANY PURCHASE ORDER AND TO SUSPEND THE OFFERING OF SHARES FOR A PERIOD OF
TIME. In particular, the Funds and GT Global may reject purchase orders or
exchanges by investors who appear to follow, in the Manager's judgment, a
market-timing strategy or otherwise engage in excessive trading. See "How to
Make Exchanges -- Limitations on Purchase Orders and Exchanges."
Fiduciaries and Financial Advisors may be required to provide information
satisfactory to GT Global concerning their eligibility to purchase Advisor Class
shares. For specific information on opening an account, please contact your
Financial Advisor or GT Global.
PURCHASES BY BANK WIRE. Shares of the Funds may also be purchased through GT
Global by bank wire. Bank wire purchases will be effected at the next determined
public offering price after the bank wire is received. Accordingly, a bank wire
received by the close of regular trading on the NYSE on a Business Day will be
effected that day. A wire investment is considered received when the Transfer
Agent is notified that the bank wire has been credited to a Fund. Prior
telephonic or facsimile notice that a bank wire is being sent must be provided
to the Transfer Agent. A bank may charge a service fee for wiring money to the
Funds. The Transfer Agent currently does not charge a service fee for
facilitating wire purchases, but reserves the right to do so in the future. For
more information, please refer to the Shareholder Account Manual in this
Prospectus.
CERTIFICATES. Physical certificates representing a Fund's shares will not be
issued unless a written request is submitted to the Transfer Agent. Shares of a
Fund are recorded on a register by the Transfer Agent, and shareholders who do
not elect to receive certificates have the same rights of ownership as if
certificates had been issued to them. Redemptions and exchanges by shareholders
who hold certificates may take longer to effect than similar transactions
involving non-certificated shares because the physical delivery and processing
of properly executed certificates is required. ACCORDINGLY, THE FUNDS AND GT
GLOBAL RECOMMEND THAT SHAREHOLDERS DO NOT REQUEST ISSUANCE OF CERTIFICATES.
PORTFOLIO REBALANCING PROGRAM. The GT Global Portfolio Rebalancing Program
("Program") permits eligible shareholders to establish and maintain an
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GT GLOBAL EQUITY FUNDS
allocation across a range of GT Global Mutual Funds. The Program automatically
rebalances their holdings of GT Global Mutual Funds to the established
allocation on a periodic basis. Under the Program, a shareholder may
predesignate, on a percentage basis, how the total value of his or her holdings
in a minimum of two, and a maximum of ten, GT Global Mutual Funds ("Personal
Portfolio") is to be rebalanced on a monthly, quarterly, semiannual, or annual
basis.
Rebalancing under the Program will be effected through the exchange of shares of
one or more GT Global Mutual Funds in the shareholder's Personal Portfolio for
shares of the same class(es) of one or more other GT Global Mutual Funds in the
shareholder's Personal Portfolio. See "How to Make Exchanges." If shares of the
Funds in a shareholder's Personal Portfolio have appreciated during a
rebalancing period, the Program will result in shares of Fund(s) that have
appreciated most during the period being exchanged for shares of Fund(s) that
have appreciated least. SUCH EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A
SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE MAY BE, FOR TAX PURPOSES.
See "Dividends, Other Distributions and Federal Income Taxation." Participation
in the Program does not assure that a shareholder will profit from purchases
under the Program nor does it prevent or lessen losses in a declining market.
The Program automatically rebalances the shareholder's Personal Portfolio on the
28th day of the last month of the period chosen (or immediately preceding
business day if the 28th is not a business day), subject to any limitations
below. The Program will not execute an exchange if the variance in a
shareholder's Personal Portfolio for a particular Fund would be 2% or less. In
predesignating percentages, shareholders must use whole percentages and totals
must equal 100%. Shareholders participating in the Program may not request
issuance of physical certificates representing a Fund's shares. Exchanges made
under the Program are not subject to the four free exchanges per year
limitation. The Funds and GT Global reserve the right to modify, suspend or
terminate the Program at any time on 60 days' prior written notice to
shareholders. A request to participate in the Program must be received in good
order at least five business days prior to the next rebalancing date. Once a
shareholder establishes the Program for his or her Personal Portfolio, a
shareholder cannot cancel or change which rebalancing frequency, which Funds or
what allocation percentages are assigned to the Program, unless cancelled or
changed in writing and received by the Transfer Agent in good order at least
five business days prior to the rebalancing date. Certain broker/dealers may
charge a fee for establishing accounts relating to the Program. Investors should
contact their broker/ dealers or GT Global for more information.
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GT GLOBAL EQUITY FUNDS
HOW TO MAKE EXCHANGES
- --------------------------------------------------------------------------------
Advisor Class shares of any Fund may be exchanged for Advisor Class shares of
other GT Global Mutual Funds (including the other Funds), based on their
respective net asset values, provided that the registration remains identical.
EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A SHAREHOLDER'S REALIZING A GAIN OR
LOSS, AS THE CASE MAY BE, FOR TAX PURPOSES. See "Dividends, Other Distributions
and Federal Income Taxation -- Taxes." In addition to the Funds, the GT Global
Mutual Funds currently include:
-- GT GLOBAL EMERGING MARKETS FUND
-- GT GLOBAL HEALTH CARE FUND
-- GT GLOBAL FINANCIAL SERVICES FUND
-- GT GLOBAL INFRASTRUCTURE FUND
-- GT GLOBAL NATURAL RESOURCES FUND
-- GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
-- GT GLOBAL TELECOMMUNICATIONS FUND
-- GT GLOBAL LATIN AMERICA GROWTH FUND
-- GT GLOBAL GROWTH & INCOME FUND
-- GT GLOBAL GOVERNMENT INCOME FUND
-- GT GLOBAL STRATEGIC INCOME FUND
-- GT GLOBAL HIGH INCOME FUND
-- GT GLOBAL DOLLAR FUND
Up to four exchanges each year may be made without charge. A $7.50 service
charge will be imposed on each subsequent exchange. Exchange requests received
in good order by the Transfer Agent before the close of regular trading on the
NYSE on any Business Day will be processed at the net asset value calculated on
that day. The terms of the exchange offer may be modified at any time, on 60
days' prior written notice.
EXCHANGES BY TELEPHONE. A shareholder may give exchange information to his or
her Financial Advisor. Exchange orders will be accepted by telephone provided
that the exchange involves only uncertificated shares on deposit in the
shareholder's account or for which certificates previously have been deposited.
Shareholders automatically have telephone privileges to authorize exchanges. The
Funds, GT Global and the Transfer Agent will not be liable for any loss or
damage for acting in good faith upon instructions received by telephone and
reasonably believed to be genuine. The Fund employs reasonable procedures to
confirm that instructions communicated by telephone are genuine, including
requiring some form of personal identification prior to acting upon instructions
received by telephone, providing written confirmation of such transactions
and/or tape recording of telephone instructions.
Investors in Wrap Fee Accounts and Advisory Accounts interested in making an
exchange should contact their Financial Advisors to request the prospectus of
the other GT Global Mutual Fund(s) being considered. Other investors should
contact GT Global. See the Shareholder Account Manual in this Prospectus.
LIMITATIONS ON PURCHASE ORDERS AND EXCHANGES. The GT Global Mutual Funds are not
intended to serve as vehicles for frequent trading in response to short-term
fluctuations in the market. Due to the disruptive effect that market-timing
investment strategies and excessive trading can have on efficient portfolio
management, each GT Global Mutual Fund and GT Global reserves the right to
refuse purchase orders and exchanges by any person or group, if, in the
Manager's judgment, such person or group was following a market-timing strategy
or was otherwise engaging in excessive trading.
In addition, each GT Global Mutual Fund and GT Global reserves the right to
refuse purchase orders and exchanges by any person or group if, in the Manager's
judgment, the Fund would not be able to invest the money effectively in
accordance with that Fund's investment objective and policies or would otherwise
potentially be adversely affected. Although a GT Global Mutual Fund will attempt
to give investors prior notice whenever it is reasonably able to do so, it may
impose the above restrictions at any time.
Finally, as described above, the Funds and GT Global reserve the right to reject
any purchase order.
Prospectus Page 32
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GT GLOBAL EQUITY FUNDS
HOW TO REDEEM SHARES
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Fund shares may be redeemed at their net asset value and redemption proceeds
will be sent within seven days of the execution of a redemption request.
Redemption requests may be transmitted to the Transfer Agent by telephone or by
mail, in accordance with the instructions provided in the Shareholder Account
Manual. Redemptions will be effected at the net asset value next determined
after the Transfer Agent has received the request in good order and any required
supporting documentation. Redemption requests will not require a signature
guarantee if the redemption proceeds are to be sent either: (i) to the redeeming
shareholder at the shareholder's address of record as maintained by the Transfer
Agent, provided that the shareholder's address of record has not been changed
within the preceding thirty days; or (ii) directly to a pre-designated bank,
savings and loan or credit union account ("Pre-Designated Account"). ALL OTHER
REDEMPTION REQUESTS MUST BE ACCOMPANIED BY A SIGNATURE GUARANTEE OF THE
REDEEMING SHAREHOLDER'S SIGNATURE. A signature guarantee can be obtained from
any bank, U.S. trust company, a member firm of a U.S. stock exchange or a
foreign branch of any of the foregoing or other eligible guarantor institution.
A notary public is not an acceptable guarantor.
Shareholders with Pre-Designated Accounts should request that redemption
proceeds be sent either by bank wire or by check. The minimum redemption amount
for a bank wire is $1,000. Shareholders requesting a bank wire should allow two
business days from the time the redemption request is effected for the proceeds
to be deposited in the shareholder's Pre-Designated Account. See "How to Redeem
Shares -- Other Important Redemption Information." Shareholders may change their
Pre-Designated Accounts only by a letter of instruction to the Transfer Agent
containing all account signatures, each of which must be guaranteed. The
Transfer Agent currently does not charge a bank wire service fee for each wire
redemption sent, but reserves the right to do so in the future. The
shareholder's bank may charge a bank wire service fee.
REDEMPTIONS BY TELEPHONE. Redemption requests may be made by telephone by
calling the Transfer Agent at the appropriate toll free number provided in the
Shareholder Account Manual. Shareholders who hold certificates for shares may
not redeem by telephone. REDEMPTION REQUESTS MAY NOT BE MADE BY TELEPHONE FOR
THIRTY DAYS FOLLOWING ANY CHANGE OF THE SHAREHOLDER'S ADDRESS OF RECORD.
Shareholders automatically have telephone privileges to authorize redemptions.
The Fund, GT Global and the Transfer Agent will not be liable for any loss or
damage for acting in good faith upon instructions received by telephone and
reasonably believed to be genuine. The Funds employ reasonable procedures to
confirm that instructions communicated by telephone are genuine, including
requiring some form of personal identification prior to acting upon instructions
received by telephone, providing written confirmation of such transactions
and/or tape recording of telephone instructions.
REDEMPTIONS BY MAIL. Redemption requests should be mailed directly to the
Transfer Agent at the appropriate address provided in the Shareholder Account
Manual. As discussed above, requests for payment of redemption proceeds to a
party other than the shareholder of record and/or requests that redemption
proceeds be mailed to an address other than the shareholder's address of record
require a signature guarantee. In addition, if the shareholder's address of
record has been changed within the preceding thirty days, a signature guarantee
is required. Redemptions of shares for which certificates have been issued must
be accompanied by properly endorsed share certificates.
OTHER IMPORTANT REDEMPTION INFORMATION. A request for redemption will not be
processed until all of the necessary documentation has been received in good
order. A shareholder in doubt about what documents are required should contact
his or her Financial Advisor.
Except in extraordinary circumstances and as permitted under the 1940 Act,
payment for shares redeemed by telephone or by mail will be made promptly after
receipt of a redemption request, if in good order, but not later than seven days
after
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GT GLOBAL EQUITY FUNDS
the date the request is executed. Requests for redemption which are subject to
any special conditions or which specify a future or past effective date cannot
be accepted.
If the Transfer Agent is requested to redeem shares for which a Fund has not yet
received good payment, the Fund may delay payment of redemption proceeds until
it has assured itself that good payment has been collected for the purchase of
the shares. In the case of purchases by check, it can take up to 10 business
days to confirm that the check has cleared and good payment has been received.
Redemption proceeds will not be delayed when shares have been paid for by wire
or when the investor's account holds a sufficient number of shares for which
funds already have been collected.
GT Global reserves the right to redeem the shares of any Advisory Account or
Wrap Fee Account if the amount invested in GT Global Mutual Funds through such
account is reduced to less than $500 through redemptions or other action by the
shareholder. Written notice will be given to the shareholder at least 60 days
prior to the date fixed for such redemption, during which time the shareholder
may increase the amount invested in GT Global Mutual Funds through such account
to an aggregate amount of $500 or more.
For additional information on how to redeem shares, see the Shareholder Account
Manual in this Prospectus, or contact your Financial Advisor.
Prospectus Page 34
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GT GLOBAL EQUITY FUNDS
SHAREHOLDER ACCOUNT MANUAL
- --------------------------------------------------------------------------------
Purchase, exchange and redemption orders should be placed in accordance with
this Manual. It is recommended that investors in Wrap Fee Accounts and Advisory
Accounts make such orders through their Financial Advisor. PLEASE BE CAREFUL TO
REFERENCE "ADVISOR CLASS" IN ALL INSTRUCTIONS PROVIDED. See "How to Invest;"
"How to Make Exchanges;" "How to Redeem Shares;" and "Dividends, Other
Distributions and Federal Income Taxation -- Taxes" for more information.
Each Funds' Transfer Agent is GT GLOBAL INVESTOR SERVICES, INC.
INVESTMENTS BY MAIL
Send completed Account Application (if initial purchase) or letter stating Fund
name, class of shares, shareholder's registered name and account number (if
subsequent purchase) with a check to:
GT Global
P.O. Box 7345
San Francisco, California 94120-7345
INVESTMENTS BY BANK WIRE
A new account may be opened by calling 1-800-223-2138 to obtain an account
number. WITHIN SEVEN DAYS OF PURCHASE A COMPLETED ACCOUNT APPLICATION CONTAINING
THE APPROPRIATE TAXPAYER IDENTIFICATION NUMBER MUST BE SENT TO GT GLOBAL AT THE
ADDRESS PROVIDED ABOVE UNDER "INVESTMENTS BY MAIL." Wire instructions must state
Fund name, class of shares, shareholder's registered name and account number.
Bank wires should be sent through the Federal Reserve Bank Wire System to:
WELLS FARGO BANK, N.A.
ABA 121000248
Attn: GT Global
ACCOUNT NO. 4023-050701
EXCHANGES BY TELEPHONE
Call GT Global at 1-800-223-2138
EXCHANGES BY MAIL
Send complete instructions, including name of Fund exchanging from, amount of
exchange, class of shares, name of the GT Global Mutual Fund exchanging into,
shareholder's registered name and account number, to:
GT Global
P.O. Box 7893
San Francisco, California 94120-7893
REDEMPTIONS BY TELEPHONE
Call GT Global at 1-800-223-2138
REDEMPTIONS BY MAIL
Send complete instructions, including name of Fund, class of shares, amount of
redemption, shareholder's registered name and account number, to:
GT Global
P.O. Box 7893
San Francisco, California 94120-7893
OVERNIGHT MAIL
Overnight mail services do not deliver to post office boxes. To send purchase,
exchange or redemption orders by overnight mail, comply with the above
instructions but send to the following address:
GT Global Investor Services
California Plaza
2121 N. California Boulevard
Suite 450
Walnut Creek, CA 94596
ADDITIONAL QUESTIONS
Shareholders with additional questions regarding purchase, exchange and
redemption procedures should call their financial advisor or GT Global at
1-800-223-2138.
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GT GLOBAL EQUITY FUNDS
CALCULATION OF NET ASSET VALUE
- --------------------------------------------------------------------------------
Each Fund calculates its net asset value as of the close of regular trading on
the NYSE (currently 4:00 p.m. Eastern time, unless weather, equipment failure or
other factors contribute to an earlier closing time) each Business Day. Each
Fund's net asset value per share is computed by determining the value of its
total assets (which, for the America Small Cap Fund and the America Value Fund,
is the value of each such Fund's proportionate share of total assets of its
corresponding Portfolio), subtracting all of its liabilities (including, for the
America Small Cap Fund and America Value Fund, its proportionate share of its
corresponding Portfolio's liabilities), and dividing the result by the total
number of shares outstanding at such time. Net asset value is determined
separately for each class of shares of each Fund.
Equity securities held by a Fund or a Portfolio are valued at the last sale
price on the exchange or in the over-the-counter ("OTC") market in which such
securities are primarily traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. Long-term debt obligations are valued at the mean of representative
quoted bid or asked prices for such securities or, if such prices are not
available, at prices for securities of comparable maturity, quality and type;
however, when the Manager deems it appropriate, prices obtained from a bond
pricing service will be used. Short-term debt investments are amortized to
maturity based on their cost, adjusted for foreign exchange translation and
market fluctuations, provided that such valuations represent fair value. When
market quotations for futures and options positions held by a Fund or a
Portfolio are readily available, those positions are valued based upon such
quotations.
Securities and other assets for which market quotations are not readily
available are valued at fair value determined in good faith by or under
direction of the Company's or Growth Portfolio's Board of Trustees. Securities
and other assets quoted in foreign currencies are valued in U.S. dollars based
on the prevailing exchange rates on that day.
Certain of the Funds' or Portfolios' securities, from time to time, may be
traded primarily on foreign exchanges or OTC dealer markets that may trade on
days when the NYSE is closed (such as Saturday). As a result, the net asset
value of a Fund's shares may be affected significantly by such trading on days
when shareholders have no access to the Fund.
Prospectus Page 36
<PAGE>
GT GLOBAL EQUITY FUNDS
DIVIDENDS, OTHER DISTRIBUTIONS
AND FEDERAL INCOME TAXATION
- --------------------------------------------------------------------------------
DIVIDENDS AND OTHER DISTRIBUTIONS. Each Fund annually declares and pays as a
dividend all of its (or, in the case of the America Small Cap Fund and America
Value Fund, its proportionate share of its corresponding Portfolio's) net
investment income, if any, which includes dividends, accrued interest and earned
discount (including both original issue and market discounts) less applicable
expenses. Each Fund also annually distributes substantially all of its (or, in
the case of the America Small Cap Fund and America Value Fund, its proportionate
share of its corresponding Portfolio's), realized net short-term capital gain
(the excess of short-term capital gains over short-term capital losses), net
capital gain (the excess of net long-term capital gain over net short-term
capital loss) and net gains from foreign currency transactions, if any. Each
Fund may make an additional dividend or other distribution if necessary to avoid
a 4% excise tax on certain undistributed income and gain.
Dividends and other distributions paid by each Fund with respect to all classes
of its shares are calculated in the same manner and at the same time. The per
share income dividends on Advisor Class shares of a Fund will be higher than the
per share income dividends on shares of other classes of that Fund as a result
of the service and distribution fee applicable to those other shares.
SHAREHOLDERS MAY ELECT:
/ / to have all dividends and other distributions automatically reinvested in
additional Advisor Class shares of the distributing Fund (or other GT Global
Mutual Funds); or
/ / to receive dividends in cash and have other distributions automatically
reinvested in additional Advisor Class shares of the distributing Fund (or
other GT Global Mutual Funds); or
/ / to receive other distributions in cash and have dividends automatically
reinvested in additional Advisor Class shares of the distributing Fund (or
other GT Global Mutual Funds); or
/ / to receive dividends and other distributions in cash.
Automatic reinvestments in additional Advisor Class shares are made at net asset
value without imposition of a sales charge. IF NO ELECTION IS MADE BY A
SHAREHOLDER, ALL DIVIDENDS AND OTHER DISTRIBUTIONS WILL BE AUTOMATICALLY
REINVESTED IN ADDITIONAL ADVISOR CLASS SHARES OF THE DISTRIBUTING FUND.
Reinvestments in another GT Global Mutual Fund may only be directed to an
account with the identical shareholder registration and account number. These
elections may be changed by a shareholder at any time; to be effective with
respect to a distribution, the shareholder or the shareholder's broker must
contact the Transfer Agent by mail or telephone at least 15 Business Days prior
to the payment date. THE FEDERAL INCOME TAX CONSEQUENCES OF DIVIDENDS AND OTHER
DISTRIBUTIONS ARE THE SAME WHETHER THEY ARE RECEIVED IN CASH OR REINVESTED IN
ADDITIONAL SHARES.
Any dividend or other distribution paid by a Fund has the effect of reducing the
net asset value per share on the ex-dividend date by the amount thereof.
Therefore, a dividend or other distribution paid shortly after a purchase of
shares would represent, in substance, a return of capital to the shareholder (to
the extent the distribution is paid on the shares so purchased), even though
subject to income tax, as discussed below.
TAXES. Each Fund intends to continue to qualify for treatment as a regulated
investment company under the Code. In each taxable year that a Fund so
qualifies, the Fund (but not its shareholders) will be relieved of federal
income tax on that part of its investment company taxable income -- consisting
generally of its (or, in the case of the America Small Cap Fund and America
Value Fund, its proportionate share of its corresponding Portfolio's) net
investment income, net gains from certain foreign currency transactions and net
short-term capital gain -- and net capital gain that is distributed to its
shareholders.
Dividends from a Fund's investment company taxable income (whether paid in cash
or reinvested in additional shares) are taxable to its shareholders as ordinary
income to the extent of the Fund's earnings and profits. Distributions of a
Fund's net capital gain, when designated as such, are taxable to its
shareholders as long-term capital gains, regardless of how long they have held
their Fund shares and whether such distributions are paid in cash or reinvested
in additional shares.
Prospectus Page 37
<PAGE>
GT GLOBAL EQUITY FUNDS
Each Fund provides federal tax information to its shareholders annually,
including information about dividends and other distributions paid during the
preceding year and, under certain circumstances, the shareholders' respective
shares of any foreign taxes paid by the Fund (or, in the case of the America
Small Cap Fund and America Value Fund, its proportionate share of foreign taxes
paid by its corresponding Portfolio), in which event each shareholder would be
required to include in his or her gross income his or her pro rata share of
those taxes but might be entitled to claim a credit or deduction for them.
Each Fund must withhold 31% from dividends, capital gain distributions and
redemption proceeds payable to any individuals and certain other noncorporate
shareholders who have not furnished to the Fund a correct taxpayer
identification number or a properly completed claim for exemption on Form W-8 or
W-9. Withholding at that rate also is required from dividends and capital gain
distributions payable to such shareholders who otherwise are subject to backup
withholding. Fund accounts opened via a bank wire purchase (see "How to Invest
- -- Purchases Through the Distributor") are considered to have uncertified
taxpayer identification numbers unless a completed Form W-8 or W-9 or Account
Application is received by the Transfer Agent within seven days after the
purchase. A shareholder should contact the Transfer Agent if the shareholder is
uncertain whether a proper taxpayer identification number is on file with a
Fund.
A redemption of Fund shares may result in taxable gain or loss to the redeeming
shareholder, depending upon whether the redemption proceeds are more or less
than the shareholder's adjusted basis for the redeemed shares. An exchange of
Fund shares for shares of another GT Global Mutual Fund (including another Fund)
generally will have similar tax consequences. In addition, if shares of a Fund
are purchased within 30 days before or after redeeming other shares of that Fund
(regardless of class) at a loss, all or a part of the loss will not be
deductible and instead will increase the basis of the newly purchased shares.
The foregoing is only a summary of some of the important federal tax
considerations generally affecting each Fund and its shareholders. See "Taxes"
in the Statement of Additional Information for a further discussion. There may
be other federal, state, local or foreign tax considerations applicable to a
particular investor. Prospective investors therefore are urged to consult their
tax advisers.
- --------------------------------------------------------------------------------
MANAGEMENT
- --------------------------------------------------------------------------------
The Company's Board of Trustees has overall responsibility for the operation of
each Fund. Pursuant to such responsibility, the Board has approved contracts
with various financial organizations to provide, among other things, day to day
management services required by each Fund. Growth Portfolio's Board of Trustees
has overall responsibility for the operation of each Portfolio. See "Directors,
Trustees, and Executive Officers" in the Statement of Additional Information for
a complete description of the Trustees of the Funds and the Portfolios.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by Chancellor LGT
Asset Management, Inc. (the "Manager") as the investment manager of the Pacific
Fund, Europe Fund, Japan Fund, International Fund, Worldwide Fund, America Mid
Cap Fund and each Portfolio include, but are not limited to, determining the
composition of the portfolio of such Funds and the Portfolios and placing orders
to buy, sell or hold particular securities. In addition, the Manager provides
the following administrative services to each Fund and each Portfolio:
furnishing corporate officers and clerical staff; providing office space,
services and equipment; and supervising all matters relating to the Funds' and
Portfolios' operation.
The America Small Cap Fund and America Value Fund each pays the Manager
administration fees, computed daily and paid monthly, at the annualized rate of
0.25% of such Fund's average daily net assets. In addition, each such Fund bears
its pro rata portion of the investment management and administration fees paid
by its corresponding Portfolio to the Manager. The Portfolios each pay such
Prospectus Page 38
<PAGE>
GT GLOBAL EQUITY FUNDS
fees, computed daily and paid monthly, based on the average daily net assets of
such Portfolio, directly to the Manager at the annualized rate of .475% on the
first $500 million, .45% on the next $500 million, .425% on the next $500
million and .40% on all amounts thereafter.
The America Mid Cap Fund pays the Manager investment management and
administration fees, computed daily and paid monthly, based on its average daily
net assets, at the annualized rate of .725% on the first $500 million, .70% on
the next $500 million, .675% on the next $500 million, and .65% on amounts
thereafter. Each of the other Funds pays the Manager investment management and
administration fees, computed daily and paid monthly, based on its average daily
net assets, at the annualized rate of .975% on the first $500 million, .95% on
the next $500 million, .925% on the next $500 million and .90% on amounts
thereafter. These rates are higher than those paid by most mutual funds. Each
Fund and Portfolio pays all expenses not assumed by the Manager, GT Global or
other agents. The Manager and GT Global have undertaken to limit each Fund's,
other than America Small Cap Fund's, America Value Fund's and America Mid Cap
Fund's, expenses (exclusive of brokerage commissions, taxes, interest and
extraordinary expenses) to the maximum annual level of 1.90% of the average
daily net assets of such Fund's Advisor Class shares. Similarly, the Manager and
GT Global have undertaken to limit the America Small Cap Fund's, America Value
Fund's and America Mid Cap Fund's expenses (exclusive of brokerage commissions,
taxes, interest and extraordinary expenses) to the maximum annual level of 1.65%
of the average daily net assets of each such Fund's Advisor Class shares. These
undertakings may be changed or eliminated in the future.
The Manager also serves as each Fund's and each Portfolio's pricing and
accounting agent. For these services the Manager receives a fee at an annual
rate derived by applying 0.03% to the first $5 billion of assets of GT Global
Mutual Funds and 0.02% to the assets in excess of $5 billion and allocating the
result according to each Fund's average daily net assets.
The Manager provides investment management and/or administration services to the
GT Global Mutual Funds. The Manager and its worldwide asset management
affiliates have provided investment management and/or administration services to
institutional, corporate and individual clients around the world since 1969. The
U.S. offices of the Manager are located at 50 California Street, 27th Floor, San
Francisco, CA 94111 and 1166 Avenue of the Americas, New York, NY 10036.
The Manager and its worldwide affiliates, including LGT Bank in Liechtenstein,
formerly Bank in Liechtenstein, compose Liechtenstein Global Trust, formerly BIL
GT Group Limited. Liechtenstein Global Trust is a provider of global asset
management and private banking products and services to individual and
institutional investors. Liechtenstein Global Trust is controlled by the Prince
of Liechtenstein Foundation, which serves as a parent organization for the
various business enterprises of the Princely Family of Liechtenstein. The
principal business address of the Prince of Liechtenstein Foundation is
Herrengasse 12, FL-9490, Vaduz, Liechtenstein.
As of December 31, 1996, the Manager and its worldwide asset management
affiliates managed approximately $62 billion. In the United States, as of
December 31, 1996, the Manager managed or administered approximately $10 billion
of GT Global Mutual Funds. As of December 31, 1996, assets entrusted to
Liechtenstein Global Trust totalled approximately $84 billion.
On October 31, 1996, Chancellor Capital Management, Inc. ("Chancellor Capital")
merged with LGT Asset Management, Inc., and the resulting entity was named
Chancellor LGT Asset Management, Inc. As of September 30, 1996, Chancellor
Capital and its affiliates, based in New York, were the 15th largest independent
investment manager in the United States with approximately $33 billion in assets
under management. Chancellor Capital specialized in public and private U.S.
equity and bond portfolio management for over 300 U.S. institutional clients.
In addition to the investment resources of its San Francisco and New York
offices, the Manager draws upon the expertise, personnel, data and systems of
other offices of Liechtenstein Global Trust, including investment offices in
Frankfurt, Hong Kong, London, Singapore, Sydney, Tokyo, and Toronto. In managing
the GT Global Mutual Funds, the Manager employs a team approach, taking
advantage of its investment resources around the world in seeking to achieve
each Fund's investment objective. Many of the GT Global Mutual Funds' portfolio
managers are natives of the countries in which they invest, speak local
languages and/or live or work in the markets they follow.
Prospectus Page 39
<PAGE>
GT GLOBAL EQUITY FUNDS
The investment professionals primarily responsible for the portfolio management
of each Fund or Portfolio are as follows:
PACIFIC FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR
NAME/OFFICE THE FUND BUSINESS EXPERIENCE
- ----------------------- --------------------- ------------------------------------------------------------------------
<S> <C> <C>
Peter Eadon-Clarke Portfolio Manager Chief Investment Officer for the Pacific Rim (excluding Japan) for LGT
Hong Kong since 1997 Asset Management Ltd. (Hong Kong) and Portfolio Manager for the Manager
since 1992. Prior thereto, Mr. Eadon-Clarke was an Associate Director
at HSBC Asset Management in Hong Kong from 1984 to 1992. From 1980 to
1984, Mr. Eadon-Clarke was a Senior Fund Manager for Colonial Mutual
Life (London).
</TABLE>
EUROPE FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR
NAME/OFFICE THE FUND BUSINESS EXPERIENCE
- ----------------------- --------------------- ------------------------------------------------------------------------
<S> <C> <C>
Anna Powell Portfolio Manager Portfolio Manager for LGT Asset Management PLC (London) and the Manager
London since 1995 since 1995. From 1989 to 1995, Ms. Powell was a Portfolio Manager for
Robert Fleming & Co. Ltd. (London).
</TABLE>
SMALL CAP PORTFOLIO
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR
NAME/OFFICE THE PORTFOLIO BUSINESS EXPERIENCE
- ----------------------- --------------------- ------------------------------------------------------------------------
<S> <C> <C>
Mark J. Cunneen* Portfolio Manager Portfolio Manager for the Manager since 1992. From February 1992 until
New York since 1997 December 1992, Mr. Cunneen was President of DC Capital Inc., an
investment management firm. Prior thereto, Mr. Cuneen was Vice
President of Equity Investments at Massachusetts Financial Services
from 1987 until 1992.
</TABLE>
AMERICA MID CAP FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR
NAME/OFFICE THE FUND BUSINESS EXPERIENCE
- ----------------------- --------------------- ------------------------------------------------------------------------
<S> <C> <C>
Ellen H. Adams* Portfolio Manager Ms. Adams has been the Head of North American Equity for the Manager
New York since 1997 since 1995, Director of Equity Research for the Manager from May 1993
until 1995, and a Portfolio Manager and Analyst for the Manager from
1992 until May 1993. Prior thereto, Ms. Adams was a Portfolio Manager
for Neuberger and Berman from 1987 until 1992.
Brent W. Clum* Portfolio Manager Senior Equity Research Analyst for the Manager since 1995. Prior
New York since 1997 thereto, Mr. Clum was a Vice President and Analyst at T. Rowe Price
from 1990 to 1995. Mr. Clum is a Chartered Financial Analyst and a
Certified Public Accountant.
</TABLE>
- --------------
* Employees of Chancellor Capital prior to October 31, 1996.
Prospectus Page 40
<PAGE>
GT GLOBAL EQUITY FUNDS
VALUE PORTFOLIO
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR
NAME/OFFICE THE PORTFOLIO BUSINESS EXPERIENCE
- ----------------------- --------------------- ------------------------------------------------------------------------
<S> <C> <C>
Ted J. Ujazdowski* Portfolio Manager Portfolio Manager for the Manager since 1983. Mr. Ujazdowski has been
New York since 1997 Director of the Manager's Value Group since 1987.
Adam D. Scheiner* Portfolio Manager Portfolio Manager and Analyst of the Manager's Value Group since June
New York since 1997 1993. Prior thereto, Mr. Scheiner was a Securities Analyst at
Prudential Securities Incorporated from 1989 until June 1993.
Richard K. Collins* Portfolio Manager Senior Equity Portfolio Manager and Managing Director for the Manager
New York since 1997 since April 1993. Mr. Collins joined the Manager in 1982 as a Senior
Analyst and Portfolio Manager. From 1973 to 1982, Mr. Collins was a
Senior Equity Analyst and, commencing in 1976, Vice President of
Research for Scudder, Stevens & Clark. Mr. Collins was a Research
Analyst for Salomon Brothers from 1970 to 1973. He is a Chartered
Financial Analyst, a member of the Association of Investment Management
Research (AIMR) and the New York Society of Securities Analysts.
</TABLE>
WORLDWIDE FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR
NAME/OFFICE THE FUND BUSINESS EXPERIENCE
- ----------------------- --------------------- ------------------------------------------------------------------------
<S> <C> <C>
Roger Yates Portfolio Manager Mr. Yates has been International Chief Investment Officer for the
London since 1996 Manager since September 1996. From 1994 to 1996, Mr. Yates was the
Chief Investment Officer and Portfolio Manager for Europe and the
United Kingdom for the Manager. From 1988 to 1994, Mr. Yates was an
Investment Manager for Morgan Grenfell Asset Management.
Michael Lindsell Portfolio Manager Head of Investment Strategy for Global Equities since 1996. From 1992 to
London since 1997 1996, Mr. Lindsell was Chief Investment Officer for Japan for LGT Asset
Management Ltd. (Hong Kong) as well as Portfolio Manager for the
Manager. Prior thereto, Mr. Lindsell was a Director of Warburg Asset
Management (Tokyo).
Richard K. Collins* Portfolio Manager Senior Equity Portfolio Manager and Managing Director for the Manager
New York since 1997 since April 1993. Mr. Collins joined the Manager in 1982 as a Senior
Analyst and Portfolio Manager. From 1973 to 1982, Mr. Collins was a
Senior Equity Analyst and, commencing in 1976, Vice President of
Research for Scudder, Stevens & Clark. Mr. Collins was a Research
Analyst for Salomon Brothers from 1970 to 1973. He is a Chartered
Financial Analyst, a member of the Association of Investment Management
Research (AIMR) and the New York Society of Securities Analysts.
</TABLE>
- --------------
* Employees of Chancellor Capital prior to October 31, 1996.
Prospectus Page 41
<PAGE>
GT GLOBAL EQUITY FUNDS
JAPAN FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR
NAME/OFFICE THE FUND BUSINESS EXPERIENCE
- ----------------------- --------------------- ------------------------------------------------------------------------
<S> <C> <C>
Andrew Callender Portfolio Manager Head of Investments for Japan since 1997. From 1990 to 1997, Mr.
Tokyo since 1997 Callender was a Portfolio Manager for the Manager.
</TABLE>
INTERNATIONAL FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR
NAME/OFFICE THE FUND BUSINESS EXPERIENCE
- ----------------------- --------------------- ------------------------------------------------------------------------
<S> <C> <C>
Roger Yates Portfolio Manager Mr. Yates has been International Chief Investment Officer for the
London since 1996 Manager since September 1996. From 1994 to 1996, Mr. Yates was the
Chief Investment Officer and Portfolio Manager for Europe and the
United Kingdom for the Manager. From 1988 to 1994, Mr. Yates was an
Investment Manager for Morgan Grenfell Asset Management.
Michael Lindsell Portfolio Manager Head of Investment Strategy for Global Equities since 1996. From 1992 to
London since 1992 1996, Mr. Lindsell was Chief Investment Officer for Japan for LGT Asset
Management Ltd. (Hong Kong) as well as Portfolio Manager for the
Manager. Prior thereto, Mr. Lindsell was a Director of Warburg Asset
Management (Tokyo).
</TABLE>
------------------------
With respect to Small Cap Portfolio, America Mid Cap Fund and Value Portfolio,
the Manager utilizes a team approach that relies on its bottom-up,
research-intensive, process-driven stock selection capability to build the
various investment portfolios. The Manager's disciplined process combines the
inputs of analysts performing fundamental and quantitative research, various
committees that set the Manager's firmwide economic forecasts and sector and
industry allocations and portfolio management teams responsible for stock
selection decisions. While individual members of the Manager's investment team
are assigned primary responsibility for the day-to-day management of Small Cap
Portfolio, America Mid Cap Fund and Value Portfolio, the Portfolios and the
Fund, along with similarly managed accounts, are reviewed on a regular basis by
the applicable investment team to monitor compliance with applicable investment
guidelines.
In placing orders for the Funds' and Portfolios' portfolio transactions, the
Manager seeks to obtain the best net results. Consistent with its obligation to
obtain the best net results, the Manager may consider a broker/dealer's sale of
shares of the GT Global Mutual Funds as a factor in considering through whom
portfolio transactions will be effected. Brokerage transactions for a Fund or
Portfolio may be executed through any affiliates of Liechtenstein Global Trust.
High portfolio turnover (over 100%) involves correspondingly greater brokerage
commissions and other transaction costs that the Funds or the Portfolios will
bear directly and could result in the realization of net capital gains which
would be taxable when distributed to shareholders. See "Dividends, Other
Distributions, and Federal Income Taxations."
DISTRIBUTION OF FUND SHARES. GT Global is the distributor of each Fund's Advisor
Class shares. Like the Manager, GT Global is a subsidiary of Liechtenstein
Global Trust with offices at 50 California Street, 27th Floor, San Francisco,
California 94111.
The Manager or an affiliate thereof may make ongoing payments to Financial
Advisors and others that facilitate the administration and servicing of Advisor
Class shareholder accounts.
GT Global, at its own expense, may also provide promotional incentives to
broker/dealers that sell shares of the Funds and/or shares of other GT Global
Mutual Funds. In some instances compensation or promotional incentives may be
offered to broker/dealers that have sold or may sell significant amounts of
shares during specified periods of time. Such compensation and incentives may
include, but are not limited to, cash, merchandise, trips and financial
assistance to brokers in connection with preapproved conferences or seminars,
sales or training programs for invited sales
Prospectus Page 42
<PAGE>
GT GLOBAL EQUITY FUNDS
personnel, payment for travel expenses (including meals and lodging) incurred by
sales personnel and members of their families or other invited guests to various
locations for such seminars or training programs, seminars for the public,
advertising and sales campaigns regarding one or more of the GT Global Mutual
Funds and/or other events sponsored by the broker/dealer.
The Glass-Steagall Act and other applicable laws, among other things, generally
prohibit federally chartered or supervised banks from engaging in the business
of underwriting or distributing securities. Accordingly, GT Global intends to
engage banks (if at all) only to perform administrative and shareholder
servicing functions. If a bank were prohibited from so acting, its shareholder
clients would be permitted to remain shareholders, and alternative means for
continuing the servicing of such shareholders would be sought. It is not
expected that shareholders would suffer any adverse financial consequences as a
result of any of these occurrences.
- --------------------------------------------------------------------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
CONFIRMATIONS AND REPORTS TO SHAREHOLDERS. Each time a transaction is made that
affects a shareholder's account in a Fund, the shareholder will receive from the
Transfer Agent a confirmation statement reflecting the transaction.
Confirmations for transactions effected pursuant to a Fund's automatic dividend
reinvestment program may be provided quarterly. Shortly after the end of the
Funds' fiscal year on December 31 and fiscal half-year on June 30 of each year,
shareholders will receive an annual and semiannual report, respectively. In
addition, the federal income tax status of distributions made by the Funds to
shareholders will be reported after the end of the fiscal year on Form 1099-DIV.
Under certain circumstances, duplicate mailings of the foregoing reports to the
same household may be consolidated.
ORGANIZATION OF THE COMPANY. The Company is organized as a Massachusetts
business trust and is registered with the SEC as a diversified open-end
management investment company.
From time to time the Company has and may continue to establish additional
funds, each corresponding to a distinct investment portfolio and a distinct
series of the Company's shares of beneficial interest. Shares of each Fund are
entitled to one vote per share (with proportional voting for fractional shares)
and are freely transferable. Shareholders have no preemptive or conversion
rights.
On any matter submitted to a vote of shareholders, shares of each Fund will be
voted by that Fund's shareholders individually when the matter affects the
specific interest of that Fund only, such as approval of that Fund's investment
management arrangements. In addition, each class of shares of a Fund has
exclusive voting rights with respect to its distribution plan. The shares of all
the Company's Funds will be voted in the aggregate on other matters, such as the
election of Trustees and ratification of the selection by the Board of Trustees
of the Company's independent accountants.
The Company normally will not hold meetings of shareholders, except as required
under the 1940 Act. The Company would be required to hold a shareholders meeting
in the event that at any time less than a majority of the Trustees holding
office had been elected by shareholders. Trustees shall continue to hold office
until their successors are elected and have qualified. Shares of the Company's
Funds do not have cumulative voting rights, which means that the holders of a
majority of the shares voting for the election of Trustees can elect all the
Trustees. A Trustee may be removed upon a majority vote of the shareholders
qualified to vote in the election. Shareholders holding 10% of the Company's
outstanding voting securities may call a meeting of shareholders for the purpose
of voting upon the question of removal of any Trustee or for any other purpose.
The 1940 Act requires the Company to assist shareholders in calling such a
meeting.
Each Fund offers Advisor Class shares through this Prospectus to certain
investors. Each Fund also offers Class A and Class B shares to investors through
a separate prospectus. Each class of shares will experience different net asset
values and dividends as a result of different expenses borne by
Prospectus Page 43
<PAGE>
GT GLOBAL EQUITY FUNDS
each class of shares. The per share net asset value of the Advisor Class shares
of a Fund generally will be higher than that of the Class A and B shares of that
Fund because of the higher expenses borne by the Class A and B shares.
Consequently, during comparable periods, the Funds expect the total return on an
investment in shares of the Advisor Class will be higher than the total return
on Class A or B shares.
Pursuant to the Company's Declaration of Trust, the Company may issue an
unlimited number of shares for each of the Funds, including an unlimited number
of Class A, Class B and Advisor Class shares of each Fund. Each share of a Fund
represents an interest in the Fund only, has no par value, represents an equal
proportionate interest in the Fund with other shares of the Fund and is entitled
to such dividends and distributions out of the income earned and gain realized
on the assets belonging to the Fund as may be declared by the Board of Trustees.
Each Class A, Class B and Advisor Class share of each Fund is equal as to
earnings, assets and voting privileges to each other share in such Fund, except
as noted above, and each class bears the expenses, if any, related to the
distribution of its shares. Shares of the Funds, when issued, are fully paid and
nonassessable.
ORGANIZATION OF THE PORTFOLIOS. Each Portfolio is organized as a subtrust of
Growth Portfolio, a New York common law trust. The Declaration of Trust provides
that the America Small Cap Fund, America Value Fund and other entities investing
in its corresponding Portfolio (E.G., other investment companies, insurance
company separate accounts and common and commingled trust funds), if any, each
will be liable for all obligations of that Portfolio. However, the Trustees of
the Company believe that the risk of such Funds' incurring financial loss
because of such liability is limited to circumstances in which both inadequate
insurance existed and each of the Portfolios itself was unable to meet its
obligations, and that neither such Funds nor their shareholders will be exposed
to a material risk of liability by reason of such Funds investing in their
corresponding Portfolios.
Whenever the America Small Cap Fund or America Value Fund is requested to vote
on any proposal of its corresponding Portfolio, such Fund will hold a meeting of
such Fund's shareholders and will cast its vote as instructed by its
shareholders. Shares for which no voting instructions are received will be voted
in the same proportion as the shares for which voting instructions are received.
SHAREHOLDER INQUIRIES. Shareholder inquiries may be made by calling the Funds
toll-free at (800) 223-2138 or by writing to the Funds at P.O. Box 7893, San
Francisco, CA 94120-7893.
PERFORMANCE INFORMATION. Each Fund, from time to time, may include information
on its investment results and/or comparisons of its investment results to
various unmanaged indices or results of other mutual funds or groups of mutual
funds in advertisements, sales literature or reports furnished to present or
prospective shareholders.
In such materials, a Fund may quote its average annual total return
("Standardized Return"). Standardized Return is calculated separately for each
class of shares of each Fund. Standardized Return shows percentage rates
reflecting the average annual change in the value of an assumed investment in
the Fund at the end of one-, five- and ten-year periods, reduced by the maximum
applicable sales charge imposed on sales of Fund shares. If a one-, five- and/or
ten-year period has not yet elapsed, data will be provided as of the end of a
shorter period corresponding to the life of the Fund. Standardized Return
assumes the reinvestment of all dividends and capital gain distributions.
In addition, in order to more completely represent a Fund's performance or more
accurately compare such performance to other measures of investment return, a
Fund also may include in advertisements, sales literature and shareholder
reports other total return performance data ("Non-Standardized Return").
Non-Standardized Return reflects percentage rates of return encompassing all
elements of return (i.e., income and capital appreciation or depreciation); it
assumes reinvestment of all dividends and capital gain distributions.
Non-Standardized Return may be quoted for the same or different periods as those
for which Standardized Return is quoted; it may consist of an aggregate or
average annual percentage rate of return, actual year-by-year rates or any
combination thereof. Non-Standardized Return may or may not take sales charges
into account; performance data calculated without taking the effect of sales
charges into account will be higher than data including the effect of such
charges.
Each Fund's performance data reflect past performance and is not necessarily
indicative of future results. A Fund's investment results will vary from time to
time depending upon market conditions, the composition of its portfolio and its
operating expenses. These factors and possible differences
Prospectus Page 44
<PAGE>
GT GLOBAL EQUITY FUNDS
in calculation methods should be considered when comparing a Fund's investment
results with those published for other investment companies, other investment
vehicles and unmanaged indices. A Fund's results also should be considered
relative to the risks associated with its investment objective and policies. See
"Investment Results" in the Statement of Additional Information.
Each Fund's annual report contains additional information with respect to its
performance. The annual report is available to investors upon request and free
of charge.
TRANSFER AGENT. Shareholder servicing, reporting and general transfer agent
functions for the Funds are performed by GT Global Investor Services, Inc. The
Transfer Agent is an affiliate of the Manager and GT Global, a subsidiary of
Liechtenstein Global Trust, and maintains offices at California Plaza, 2121 N.
California Boulevard, Suite 450, Walnut Creek, California 94596.
CUSTODIAN. State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110 is custodian of each Fund's and each Portfolio's assets.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Company and to Growth
Portfolio. Kirkpatrick & Lockhart LLP also acts as counsel to the Manager, GT
Global and the Transfer Agent in connection with other matters.
INDEPENDENT ACCOUNTANTS. The Company's and each Fund's and Portfolio's
independent accountants are Coopers & Lybrand L.L.P., One Post Office Square,
Boston, Massachusetts 02109. Coopers & Lybrand L.L.P. conducts an annual audit
of each Fund and Portfolio, assists in the preparation of each Fund's and each
Portfolio's federal and state income tax returns and consults with the Company
and each Fund and Portfolio as to matters of accounting, regulatory filings and
federal and state income taxation.
MULTIPLE TRANSLATIONS OF THE PROSPECTUS. This Prospectus may be translated into
other languages. In the event of any inconsistency or ambiguity as to the
meaning of any word or phrase contained in a translation, the English text shall
prevail.
Prospectus Page 45
<PAGE>
GT GLOBAL EQUITY FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 46
<PAGE>
GT GLOBAL EQUITY FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 47
<PAGE>
GT GLOBAL EQUITY FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 48
<PAGE>
GT GLOBAL EQUITY FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 49
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT GLOBAL MUTUAL FUNDS
P.O. Box 7345
SAN FRANCISCO, CA 94120-7345 ADVISOR CLASS
800/223-2138 ACCOUNT APPLICATION
</TABLE>
<TABLE>
<S> <C>
/ / INDIVIDUAL / / JOINT TENANT / / GIFT/TRANSFER FOR MINOR / / TRUST / / CORP.
ACCOUNT REGISTRATION / / NEW ACCOUNT / / ACCOUNT REVISION (Account No.: -------------------------------------)
NOTE: Trust registrations should specify name of trustee(s), beneficiary(ies) and date of trust instrument. Registration for Uniform
Gifts/Transfers to Minors accounts should be in the name of one custodian and one minor and include the state under which the
custodianship is created.
----------------------------------------------------------------
- ------------------------------------------------------------ Social Security Number / / or Tax I.D. Number / / (Check
Owner applicable box)
- ------------------------------------------------------------ If more than one owner, social security number or taxpayer
Co-owner 1 identification number should be provided for first owner listed.
- ------------------------------------------------------------ If a purchase is made under Uniform Gift/Transfer to Minors Act,
Co-owner 2 social security number of the minor must be provided.
Resident of / / U.S. / / Other (specify) ----------------
- -------------------------------------------------------------------------------------- ( )
Street Address ---------------------------
- -------------------------------------------------------------------------------------- Home Telephone
City, State, Zip Code ( )
---------------------------
Business Telephone
FUND SELECTION $500 minimum initial investment for each Fund is required. Checks should be made payable to "GT GLOBAL."
</TABLE>
<TABLE>
<S> <C> <C> <C>
INITIAL INITIAL
INVESTMENT INVESTMENT
407 / / GT GLOBAL WORLDWIDE GROWTH FUND $ 413 / / GT GLOBAL LATIN AMERICA GROWTH FUND $
---------- ----------
405 / / GT GLOBAL INTERNATIONAL GROWTH FUND $ 424 / / GT GLOBAL AMERICA SMALL CAP GROWTH $
---------- FUND ----------
416 / / GT GLOBAL EMERGING MARKETS FUND $ 406 / / GT GLOBAL AMERICA MID CAP GROWTH FUND $
---------- ----------
411 / / GT GLOBAL HEALTH CARE FUND $ 423 / / GT GLOBAL AMERICA VALUE FUND $
---------- ----------
415 / / GT GLOBAL TELECOMMUNICATIONS FUND $ 404 / / GT GLOBAL JAPAN GROWTH FUND $
---------- ----------
419 / / GT GLOBAL INFRASTRUCTURE FUND $ 410 / / GT GLOBAL GROWTH & INCOME FUND $
---------- ----------
417 / / GT GLOBAL FINANCIAL SERVICES FUND $ 409 / / GT GLOBAL GOVERNMENT INCOME FUND $
---------- ----------
421 / / GT GLOBAL NATURAL RESOURCES FUND $ 408 / / GT GLOBAL STRATEGIC INCOME FUND $
---------- ----------
422 / / GT GLOBAL CONSUMER PRODUCTS $ 418 / / GT GLOBAL HIGH INCOME FUND $
AND SERVICES FUND ---------- ----------
402 / / GT GLOBAL NEW PACIFIC GROWTH FUND $ 401 / / GT GLOBAL DOLLAR FUND $
---------- ----------
403 / / GT GLOBAL EUROPE GROWTH FUND $
----------
TOTAL INITIAL INVESTMENT: $
----------
</TABLE>
AGREEMENTS & SIGNATURES
By the execution of this Account Application, I/we represent and warrant that
I/we have full right power and authority and am/are of legal age in my/our
state of residence to make the investment applied for pursuant to this
Application. The person(s), if any, signing on behalf of the investor
represent and warrant that they are duly authorized to sign this Application
and to purchase, redeem or exchange shares of the Fund(s) on behalf of the
investor. I/WE HEREBY AFFIRM THAT I/WE HAVE RECEIVED A CURRENT ADVISOR CLASS
PROSPECTUS OF THE GT GLOBAL MUTUAL FUND(S) IN WHICH I/WE AM/ARE INVESTING AND
I/WE AGREE TO ITS TERMS AND CONDITIONS.
I/WE AND MY/OUR AGENTS, ASSIGNS AND SUCCESSORS UNDERSTAND AND AGREE THAT THE
ACCOUNT WILL BE SUBJECT TO THE TELEPHONE EXCHANGE AND TELEPHONE REDEMPTION
PRIVILEGES DESCRIBED IN THE CURRENT PROSPECTUS TO WHICH THIS APPLICATION IS
ATTACHED AND AGREE THAT GT GLOBAL, INC., G.T. GLOBAL GROWTH SERIES, G.T.
INVESTMENT FUNDS, INC., G.T. INVESTMENT PORTFOLIOS, INC. AND THE FUNDS'
TRANSFER AGENT, THEIR OFFICERS AND EMPLOYEES, WILL NOT BE LIABLE FOR ANY LOSS
OR DAMAGES ARISING OUT OF ANY SUCH TELEPHONE, TELEX OR TELEGRAPHIC
INSTRUCTIONS REASONABLY BELIEVED TO BE GENUINE, INCLUDING ANY SUCH LOSS OR
DAMAGES DUE TO NEGLIGENCE ON THE PART OF SUCH ENTITIES. THE INVESTOR(S)
CERTIFY(IES) AND AGREE(S) THAT THE CERTIFICATIONS, AUTHORIZATIONS, DIRECTIONS
AND RESTRICTIONS CONTAINED HEREIN WILL CONTINUE UNTIL GT GLOBAL, INC., G.T.
GLOBAL GROWTH SERIES, G.T. INVESTMENT FUNDS, INC., G.T. INVESTMENT PORTFOLIOS,
INC. OR THE FUNDS' TRANSFER AGENT RECEIVES WRITTEN NOTICE OF ANY CHANGE OR
REVOCATION. ANY CHANGE IN THESE INSTRUCTIONS MUST BE IN WRITING AND IN SOME
CASES, AS DESCRIBED IN THE PROSPECTUS, REQUIRES THAT ALL SIGNATURES BE
GUARANTEED.
PLEASE INDICATE THE NUMBER OF SIGNATURES REQUIRED TO PROCESS CHECKS OR
WRITTEN REDEMPTION REQUESTS: / / ONE / / TWO / / THREE / / FOUR.
(If you do not indicate the number of required signatures, ALL account
owners must sign checks and/or written redemption requests.)
UNDER PENALTIES OF PERJURY, I CERTIFY THAT THE TAXPAYER IDENTIFICATION
NUMBER ("NUMBER") PROVIDED ON THIS FORM IS MY (OR MY EMPLOYER'S, TRUST'S,
MINOR'S OR OTHER PAYEE'S) TRUE, CORRECT AND COMPLETE NUMBER AND MAY BE
ASSIGNED TO ANY NEW ACCOUNT OPENED UNDER THE EXCHANGE PRIVILEGE. I FURTHER
CERTIFY THAT I AM (OR THE PAYEE WHOSE NUMBER IS GIVEN IS) NOT SUBJECT TO
BACKUP WITHHOLDING BECAUSE: (A) I AM (OR THE PAYEE IS) EXEMPT FROM BACKUP
WITHHOLDING; (B) THE INTERNAL REVENUE SERVICE (THE "I.R.S.") HAS NOT NOTIFIED
ME THAT I AM (OR THE PAYEE IS) SUBJECT TO BACKUP WITHHOLDING AS A RESULT OF A
FAILURE TO REPORT ALL INTEREST OR DIVIDENDS; OR (C) THE I.R.S. HAS NOTIFIED ME
THAT I AM (THE PAYEE IS) NO LONGER SUBJECT TO BACKUP WITHHOLDING;
OR, / / I AM (THE PAYEE IS) SUBJECT TO BACKUP WITHHOLDING.
ALL ACCOUNT OWNERS MUST SIGN BELOW (Minors are not authorized signers)
Account revisions may require that signatures be guaranteed. Please see the
Prospectus.
THE I.R.S. DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT
OTHER THAN THE CERTIFICATION REQUIRED TO AVOID BACKUP WITHHOLDING.
<TABLE>
<S> <C>
----------------------------------------------------------
Date
X X
---------------------------------------------------------- ----------------------------------------------------------
X X
---------------------------------------------------------- ----------------------------------------------------------
</TABLE>
<PAGE>
ACCOUNT PRIVILEGES
CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS
All capital gains and dividend distributions will be reinvested in additional
shares of Advisor class unless appropriate boxes below are checked:
/ / Pay capital gain distributions only in cash / / Pay dividends only in
cash / / Pay capital gain distributions AND dividends in cash.
SPECIAL CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS OPTION
Pay distributions noted above to another GT Global Mutual Fund:
Fund Name --------------------------------------------------------------------
<TABLE>
<S> <C>
TELEPHONE EXCHANGE AND REDEMPTION AUTHORITY TO TRANSMIT REDEMPTION PROCEEDS TO
PRE-DESIGNATED ACCOUNT
I/We, either directly or through the Authorized Agent, if any, named By completing the following section, redemptions that
below, hereby authorize the Transfer Agent of the GT Global Mutual exceed $1,000 may be wired or mailed to a Pre-Designated
Funds, to honor any telephone, telex or telegraphic instructions Account at your bank. (Wiring instructions may be obtained
reasonably believed to be authentic for redemption and/or exchange from your bank.) A bank wire service fee may be charged.
between a similar class of shares of any of the Funds distributed by ----------------------------------------------------------
GT Global, Inc. Name of Bank
----------------------------------------------------------
Bank Address
----------------------------------------------------------
Bank A.B.A Number Account Number
----------------------------------------------------------
Names(s) in which Bank Account is Established
A corporation (or partnership) must also submit a
"Corporate Resolution" (or "Certificate of Partnership")
indicating the names and titles of Officers authorized to
act on its behalf.
</TABLE>
<TABLE>
<S> <C> <C> <C>
FOR USE BY AUTHORIZED AGENT ONLY
We hereby submit this Account Application for the purchase of Advisor Class shares in accordance with the terms of our Advisor Class
Agreement with GT Global, Inc. and with the Prospectus and Statement of Additional Information of each Fund purchased.
- ------------------------------------------------------------------------------------------------------------------------------------
Advisor's Name
- ------------------------------------------------------------------------------------------------------------------------------------
Main Office Address Branch Number (if applicable) Representative's Number Representative's Name
( )
- -------------------------------------------------------------------------------------------------------------------------
Branch Address Telephone
- -------------------------------------------------------------------------------------------------------------------------
Advisor's Authorized Signature Title
</TABLE>
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL MUTUAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY OF THE GT GLOBAL
MUTUAL FUNDS, INCLUDING FEES, EXPENSES AND THE RISKS OF GLOBAL AND EMERGING
MARKET INVESTING AS WELL AS THE RISKS OF INVESTING IN RELATED INDUSTRIES,
PLEASE CONTACT YOUR FINANCIAL ADVISOR OR CALL GT GLOBAL DIRECTLY AT
1-800-824-1580.
GROWTH FUNDS
/ / GLOBALLY DIVERSIFIED FUNDS
GT GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity by investing outside
the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
/ / GLOBAL THEME FUNDS
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL HEALTH CARE FUND
Invests in growing health care industries worldwide
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in the new, unified Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA MID CAP GROWTH FUND
Concentrates on medium-sized companies in the U.S.
GT GLOBAL AMERICA VALUE FUND
Concentrates on equity securities of large cap U.S. companies believed to be
undervalued
GT GLOBAL JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUND
GT GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government bonds from around the world
INCOME FUNDS
GT GLOBAL GOVERNMENT INCOME FUND
Earns monthly income from global government securities
GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
GT GLOBAL HIGH INCOME FUND
Invests in debt securities in emerging markets
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[LOGO]
NO DEALER, SALES REPRESENTATIVE OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY G.T. GLOBAL GROWTH SERIES,
GT GLOBAL EQUITY FUNDS, GROWTH PORTFOLIO, CHANCELLOR LGT ASSET MANAGEMENT,
INC. OR GT GLOBAL, INC. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL
OR SOLICITATION OF ANY OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN
ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER.
EQUPV705MC
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
GT GLOBAL INTERNATIONAL GROWTH FUND
GT GLOBAL NEW PACIFIC GROWTH FUND
GT GLOBAL EUROPE GROWTH FUND
GT GLOBAL AMERICA MID CAP GROWTH FUND
GT GLOBAL JAPAN GROWTH FUND
50 California Street, 27th Floor
San Francisco, California 94111
(415) 392-6181
Toll Free: (800) 824-1580
Statement of Additional Information
May 1, 1997
- --------------------------------------------------------------------------------
This Statement of Additional Information relates to the Class A and Class B
shares of GT Global Worldwide Growth Fund ("Worldwide Fund"), GT Global
International Growth Fund ("International Fund"), GT Global New Pacific Growth
Fund ("Pacific Fund"), GT Global Europe Growth Fund ("Europe Fund"), GT Global
America Mid Cap Growth Fund ("America Mid Cap Fund") and GT Global Japan Growth
Fund ("Japan Fund") (individually, a "Fund," and collectively, the "Funds").
Each Fund is a diversified series of G.T. Global Growth Series (the "Company"),
a registered open-end management investment company. This Statement of
Additional Information, which is not a prospectus, supplements and should be
read in conjunction with the Funds' current Class A and Class B Prospectus dated
May 1, 1997, a copy of which is available without charge by writing to the above
address or calling the Funds at the toll-free telephone number printed above.
Chancellor LGT Asset Management, Inc. (the "Manager") serves as each Fund's
investment manager and administrator. The distributor of the shares of each Fund
is GT Global, Inc. ("GT Global"). The Funds' transfer agent is GT Global
Investor Services, Inc. ("GT Services" or the "Transfer Agent").
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Investment Objectives and Policies....................................................................................... 2
Options, Futures and Currency Strategies................................................................................. 5
Risk Factors............................................................................................................. 13
Investment Limitations................................................................................................... 17
Execution of Portfolio Transactions...................................................................................... 19
Trustees and Executive Officers.......................................................................................... 21
Management............................................................................................................... 23
Valuation of Shares...................................................................................................... 25
Information Relating to Sales and Redemptions............................................................................ 26
Taxes.................................................................................................................... 28
Additional Information................................................................................................... 31
Investment Results....................................................................................................... 32
Description of Debt Ratings.............................................................................................. 40
Financial Statements..................................................................................................... 41
</TABLE>
[LOGO]
Statement of Additional Information Page 1
<PAGE>
GT GLOBAL EQUITY FUNDS
INVESTMENT OBJECTIVES
AND POLICIES
- --------------------------------------------------------------------------------
SELECTION OF INVESTMENTS
In determining the appropriate distribution of investments among various
countries and geographic regions for the Funds, the Manager ordinarily considers
the following factors: prospects for relative economic growth between the
different countries in which each Fund may invest; expected levels of inflation;
government policies influencing business conditions; the outlook for currency
relationships; and the range of the individual investment opportunities
available to international investors.
In analyzing companies for investment by each Fund, the Manager ordinarily looks
for one or more of the following characteristics: an above-average earnings
growth per share; high return on invested capital; a healthy balance sheet;
sound financial and accounting policies and overall financial strength; strong
competitive advantages; effective research and product development and
marketing; efficient service; pricing flexibility; strength of management; and
general operating characteristics which will enable the companies to compete
successfully in their respective marketplaces. In certain countries,
governmental restrictions and other limitations on investment may affect the
maximum percentage of equity ownership in any one company by a Fund or the Funds
in the aggregate. In addition, in some instances only special classes of
securities may be purchased by foreigners and the market prices, liquidity and
rights with respect to those securities may vary from shares owned by nationals.
At this time, the Manager is not aware of the existence of any investment or
exchange control regulations that might substantially impair the operations of
the Funds as described in the Prospectus and this Statement of Additional
Information. Although restrictions may in the future make it undesirable to
invest in certain countries, the Manager does not believe that any current
repatriation restrictions would affect its decisions to invest in the countries
eligible for investment by any Fund. It should be noted, however, that this
situation could change at any time.
INVESTMENTS IN OTHER INVESTMENT COMPANIES
With respect to certain countries, investments by a Fund presently may be made
only by acquiring shares of other investment companies with local governmental
approval to invest in those countries. At such time as direct investment in
these countries is allowed, the Funds anticipate investing directly in these
markets. The Funds may also invest in the securities of closed-end investment
companies within the limits of the Investment Company Act of 1940, as amended
(the "1940 Act"). These limitations currently provide that, in part, each Fund
may purchase shares of a closed-end investment company unless: (a) such a
purchase would cause a Fund to own more than 3% of the total outstanding voting
stock of the investment company or (b) such a purchase would cause a Fund to
have more than 5% of its assets invested in the investment company or more than
10% of its assets invested in an aggregate of all such investment companies.
Investment in investment companies may involve the payment of substantial
premiums above the value of such companies' portfolio securities. The Funds do
not intend to invest in such vehicles or funds unless the Manager determines
that the potential benefits of such investments justify the payment of any
applicable premiums. The return on such securities will be reduced by operating
expenses of such companies including payments to the investment managers of
those investment companies.
SAMURAI AND YANKEE BONDS
The International Fund, the Japan Fund, the Pacific Fund and the Worldwide Fund
may invest in yen-denominated bonds sold in Japan by non-Japanese issuers
("Samurai bonds"), and the Worldwide Fund and the America Mid Cap Fund may
invest in dollar-denominated bonds sold in the United States by non-U.S. issuers
("Yankee bonds"). As compared with bonds issued in their countries of domicile,
such bond issues normally carry a higher interest rate but are less actively
traded. It is the policy of each Fund to invest in Samurai or Yankee bond issues
only after taking into account considerations of quality and liquidity, as well
as yield. These bonds are issued by governments that are members of the
Organization for Economic Cooperation and Development or have AAA ratings. None
of the Funds has invested in Samurai or Yankee bonds since 1982.
DEPOSITORY RECEIPTS
Each Fund may hold securities of foreign issuers in the form of American
Depository Receipts ("ADRs"), American Depository Shares ("ADSs") and European
Depository Receipts ("EDRs") or other securities convertible into securities of
eligible European or Far Eastern issuers. These securities may not necessarily
be denominated in the same currency as the securities for which they may be
exchanged. ADRs and ADSs typically are issued by an American bank or trust
company
STATEMENT OF ADDITIONAL INFORMATION PAGE 2
<PAGE>
GT GLOBAL EQUITY FUNDS
and evidence ownership of underlying securities issued by a foreign corporation.
EDRs, which are sometimes referred to as Continental Depository Receipts
("CDRs"), are issued in Europe typically by foreign banks and trust companies
and evidence ownership of either foreign or domestic securities. Generally, ADRs
and ADSs in registered form are designed for use in United States securities
markets and EDRs in bearer form are designed for use in European securities
markets. For purposes of a Fund's investment policies, its investments in ADRs,
ADSs and EDRs will be deemed to be investments in the equity securities
representing securities of foreign issuers into which they may be converted.
ADR facilities may be established as either "unsponsored" or "sponsored." While
ADRs issued under these two types of facilities are in some respects similar,
there are distinctions between them relating to the rights and obligations of
ADR holders and the practices of market participants. A depository may establish
an unsponsored facility without participation by (or even necessarily the
acquiescence of) the issuer of the deposited securities, although typically the
depository requests a letter of non-objection from such issuer prior to the
establishment of the facility. Holders of unsponsored ADRs generally bear all
the costs of such facilities. The depository usually charges fees upon the
deposit and withdrawal of the deposited securities, the conversion of dividends
into U.S. dollars, the disposition of non-cash distributions and the performance
of other services. The depository of an unsponsored facility frequently is under
no obligation to distribute shareholder communications received from the issuer
of the deposited securities or to pass through voting rights to ADR holders with
respect to the deposited securities. Sponsored ADR facilities are created in
generally the same manner as unsponsored facilities, except that the issuer of
the deposited securities enters into a deposit agreement with the depository.
The deposit agreement sets out the rights and responsibilities of the issuer,
the depository and the ADR holders. With sponsored facilities, the issuer of the
deposited securities generally will bear some of the costs relating to the
facility (such as dividend payment fees of the depository), although ADR holders
continue to bear certain other costs (such as deposit and withdrawal fees).
Under the terms of most sponsored arrangements, depositories agree to distribute
notices of shareholder meetings and voting instructions, and to provide
shareholder communications and other information to the ADR holders at the
request of the issuer of the deposited securities. The Funds may invest in both
sponsored and unsponsored ADRs.
WARRANTS OR RIGHTS
Warrants or rights may be acquired by a Fund in connection with other securities
or separately and provide the Fund with the right to purchase at a later date
other securities of the issuer.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, each Fund may make secured loans
of its portfolio securities amounting to not more than 30% of its total assets.
Securities loans are made to broker/dealers or institutional investors pursuant
to agreements requiring that the loans continuously be secured by collateral at
least equal at all times to the value of the securities lent, plus any accrued
interest, "marked to market" on a daily basis. The Funds may pay reasonable
administrative and custodial fees in connection with the loans of their
securities. While the securities loans are outstanding, the Funds will continue
to receive the equivalent of the interest or dividends paid by the issuer on the
securities, as well as interest on the investment of the collateral or a fee
from the borrower. Each Fund will have a right to call each loan at any time and
obtain the securities within the stated settlement period. The Funds will not
have the right to vote equity securities while they are being lent, but may call
in a loan in anticipation of any important vote. Loans only will be made to
firms deemed by the Manager to be of good standing and will not be made unless,
in the judgment of the Manager, the consideration to be earned from such loans
would justify the risk.
COMMERCIAL BANK OBLIGATIONS
For the purposes of each Fund's investment policies with respect to bank
obligations, obligations of foreign branches of U.S. banks and of foreign banks
are obligations of the issuing bank and may be general obligations of the parent
bank. Such obligations, however, may be limited by the terms of a specific
obligation and by government regulation. As with investment in non-U.S.
securities in general, investments in the obligations of foreign branches of
U.S. banks and of foreign banks may subject the Funds to investment risks that
are different in some respects from those of investments in obligations of
domestic issuers. Although a Fund typically will acquire obligations issued and
supported by the credit of U.S. or foreign banks having total assets at the time
of purchase of $1 billion or more, this $1 billion figure is not an investment
policy or restriction of any Fund. For the purposes of calculation with respect
to the $1 billion figure, the assets of a bank will be deemed to include the
assets of its U.S. and non-U.S. branches.
REPURCHASE AGREEMENTS
A repurchase agreement is a transaction in which a Fund purchases a security
from a bank or recognized securities dealer and simultaneously commits to resell
that security to the bank or dealer at an agreed-upon price, date and market
rate of interest unrelated to the coupon rate or maturity of the purchased
security. Although repurchase agreements carry certain risks not associated with
direct investments in securities, including possible decline in the market value
of the underlying securities and delays and costs to the Fund if the other party
to the repurchase agreement becomes bankrupt, the Funds
STATEMENT OF ADDITIONAL INFORMATION PAGE 3
<PAGE>
GT GLOBAL EQUITY FUNDS
intend to enter into repurchase agreements only with banks and dealers believed
by the Manager to present minimal credit risks in accordance with guidelines
approved by the Company's Board of Trustees (the "Board"). The Manager reviews
and monitors the creditworthiness of such institutions under the Board's general
supervision.
A Fund will invest only in repurchase agreements collateralized at all times in
an amount at least equal to the repurchase price plus accrued interest. To the
extent that the proceeds from any sale of such collateral upon a default in the
obligation to repurchase were less than the repurchase price, the Fund would
suffer a loss. If the financial institution which is party to the repurchase
agreement petitions for bankruptcy or otherwise becomes subject to bankruptcy or
other liquidation proceedings, there may be restrictions on the Fund's ability
to sell the collateral and the Fund could suffer a loss. However, with respect
to financial institutions whose bankruptcy or liquidation proceedings are
subject to the U.S. Bankruptcy Code, each Fund intends to comply with provisions
under the U.S. Bankruptcy Code that would allow it immediately to resell the
collateral. A Fund will not enter into a repurchase agreement with a maturity of
more than seven days if, as a result, more than 15% of the value of its net
assets would be invested in such repurchase agreements and other illiquid
investments.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS
Each Fund's borrowings will not exceed 33 1/3% of its total assets, i.e., each
Fund's total assets at all times will equal at least 300% of the amount of
outstanding borrowings. If market fluctuations in the value of a Fund's
portfolio holdings or other factors cause the ratio of the Fund's total assets
to outstanding borrowings to fall below 300%, within three days (excluding
Sundays and holidays) of such event the Fund may be required to sell portfolio
securities to restore the 300% asset coverage, even though from an investment
standpoint such sales might be disadvantageous. Each Fund also may borrow up to
5% of its total assets for temporary or emergency purposes other than to meet
redemptions. Any borrowing by a Fund may cause greater fluctuation in the value
of its shares than would be the case if the Fund did not borrow.
Each Fund's fundamental investment limitations permit the Fund to borrow money
for leveraging purposes. Each Fund, however, currently is prohibited, pursuant
to a non-fundamental investment policy, from borrowing money in order to
purchase securities. Nevertheless, this policy may be changed in the future by
the Board. If a Fund employs leverage in the future, it would be subject to
certain additional risks. Use of leverage creates an opportunity for greater
growth of capital but would exaggerate any increases or decreases in a Fund's
net asset value. When the income and gains on securities purchased with the
proceeds of borrowings exceed the costs of such borrowings, a Fund's earnings or
net asset value will increase faster than otherwise would be the case;
conversely, if such income and gains fail to exceed such costs, a Fund's
earnings or net asset value would decline faster than would otherwise be the
case.
Each Fund may enter into reverse repurchase agreements. A reverse repurchase
agreement is a borrowing transaction in which the Fund transfers possession of a
security to another party, such as a bank or broker/dealer in return for cash,
and agrees to repurchase the security in the future at an agreed upon price,
which includes an interest component. Each Fund also may engage in "roll"
borrowing transactions which involve its sale of Government National Mortgage
Association certificates or other securities together with a commitment (for
which the Fund may receive a fee) to purchase similar, but not identical,
securities at a future date. A Fund will maintain, in a segregated account with
a custodian, cash or liquid securities in an amount sufficient to cover its
obligations under "roll" transactions and reverse repurchase agreements with
broker/dealers. No segregation is required for reverse repurchase agreements
with banks.
TEMPORARY DEFENSIVE STRATEGIES
Money market instruments in which the Funds may invest include the following:
government securities; high grade commercial paper; bank certificates of
deposit; bankers' acceptances; and repurchase agreements related to any of the
foregoing. High grade commercial paper refers to commercial paper rated P-1 by
Moody's Investors Service, Inc. ("Moody's") or A-1 by Standard & Poor's Ratings
Group ("S&P"), at the time of investment or, if unrated, deemed by the Manager
to be of comparable quality.
STATEMENT OF ADDITIONAL INFORMATION PAGE 4
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OPTIONS, FUTURES AND CURRENCY
STRATEGIES
- --------------------------------------------------------------------------------
SPECIAL RISKS OF OPTIONS, FUTURES AND CURRENCY STRATEGIES
The use of options, futures contracts and forward currency contracts ("Forward
Contracts") involves special considerations and risks, as described below. Risks
pertaining to particular instruments are described in the sections that follow.
(1) Successful use of most of these instruments depends upon the
Manager's ability to predict movements of the overall securities and
currency markets, which requires different skills than predicting changes in
the prices of individual securities. While the Manager is experienced in the
use of these instruments, there can be no assurance that any particular
strategy adopted will succeed.
(2) There might be imperfect correlation, or even no correlation,
between price movements of an instrument and price movements of the
investments being hedged. For example, if the value of an instrument used in
a short hedge increased by less than the decline in value of the hedged
investment, the hedge would not be fully successful. Such a lack of
correlation might occur due to factors unrelated to the value of the
investments being hedged, such as speculative or other pressures on the
markets in which the hedging instrument is traded. The effectiveness of
hedges using hedging instruments on indices will depend on the degree of
correlation between price movements in the index and price movements in the
investments being hedged.
(3) Hedging strategies, if successful, can reduce risk of loss by wholly
or partially offsetting the negative effect of unfavorable price movements
in the investments being hedged. However, hedging strategies can also reduce
opportunity for gain by offsetting the positive effect of favorable price
movements in the hedged investments. For example, if a Fund entered into a
short hedge because the Manager projected a decline in the price of a
security in the Fund's portfolio, and the price of that security increased
instead, the gain from that increase might be wholly or partially offset by
a decline in the price of the hedging instrument. Moreover, if the price of
the hedging instrument declined by more than the increase in the price of
the security, the Fund could suffer a loss. In either such case, the Fund
would have been in a better position had it not hedged at all.
(4) As described below, a Fund might be required to maintain assets as
"cover," maintain segregated accounts or make margin payments when it takes
positions in instruments involving obligations to third parties (I.E.,
instruments other than purchased options). If the Fund were unable to close
out its positions in such instruments, it might be required to continue to
maintain such assets or accounts or make such payments until the position
expired or matured. The requirements might impair the Fund's ability to sell
a portfolio security or make an investment at a time when it would otherwise
be favorable to do so, or require that the Fund sell a portfolio security at
a disadvantageous time. The Fund's ability to close out a position in an
instrument prior to expiration or maturity depends on the existence of a
liquid secondary market or, in the absence of such a market, the ability and
willingness of the other party to the transaction ("contra party") to enter
into a transaction closing out the position. Therefore, there is no
assurance that any position can be closed out at a time and price that is
favorable to the Fund.
WRITING CALL OPTIONS
A Fund may write (sell) call options on securities, indices and currencies. Call
options generally will be written on securities and currencies that, in the
opinion of the Manager, are not expected to make any major price moves in the
near future but that, over the long term, are deemed to be attractive
investments for the Fund.
A call option gives the holder (buyer) the right to purchase a security or
currency at a specified price (the exercise price) at any time until (American
style) or on (European style) a certain date (the expiration date). So long as
the obligation of the writer of a call option continues, he may be assigned an
exercise notice, requiring him to deliver the underlying security or currency
against payment of the exercise price. This obligation terminates upon the
expiration of the call option, or such earlier time at which the writer effects
a closing purchase transaction by purchasing an option identical to that
previously sold.
Portfolio securities or currencies on which call options may be written will be
purchased solely on the basis of investment considerations consistent with each
Fund's investment objectives. When writing a call option, a Fund, in return for
the premium, gives up the opportunity for profit from a price increase in the
underlying security or currency above the exercise price, and retains the risk
of loss should the price of the security or currency decline. Unlike one who
owns
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securities or currencies not subject to an option, a Fund has no control over
when it may be required to sell the underlying securities or currencies, since
most options may be exercised at any time prior to the option's expiration. If a
call option that a Fund has written expires, the Fund will realize a gain in the
amount of the premium; however, such gain may be offset by a decline in the
market value of the underlying security or currency during the option period. If
the call option is exercised, the Fund will realize a gain or loss from the sale
of the underlying security or currency, which will be increased or offset by the
premium received. The Fund does not consider a security or currency covered by a
call option to be "pledged" as that term is used in the Fund's policy that
limits the pledging or mortgaging of its assets.
Writing call options can serve as a limited short hedge because declines in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
appreciates to a price higher than the exercise price of the call option, it can
be expected that the option will be exercised and a Fund will be obligated to
sell the security or currency at less than its market value.
The premium that a Fund receives for writing a call option is deemed to
constitute the market value of an option. The premium a Fund will receive from
writing a call option will reflect, among other things, the current market price
of the underlying investment, the relationship of the exercise price to such
market price, the historical price volatility of the underlying investment and
the length of the option period. In determining whether a particular call option
should be written, the Manager will consider the reasonableness of the
anticipated premium and the likelihood that a liquid secondary market will exist
for those options.
Closing transactions will be effected in order to realize a profit on an
outstanding call option, to prevent an underlying security or currency from
being called, or to permit the sale of the underlying security or currency.
Furthermore, effecting a closing transaction will permit the Fund to write
another call option on the underlying security or currency with either a
different exercise price or expiration date or both.
The Funds will pay transaction costs in connection with the writing of options
and in entering into closing purchase contracts. Transaction costs relating to
options activity normally are higher than those applicable to purchases and
sales of portfolio securities.
The exercise price of the options may be below, equal to or above the current
market values of the underlying securities, indices or currencies at the time
the options are written. From time to time, a Fund may purchase an underlying
security or currency for delivery in accordance with the exercise of an option,
rather than delivering such security or currency from its portfolio. In such
cases, additional costs will be incurred.
A Fund will realize a profit or loss from a closing purchase transaction if the
cost of the transaction is less or more, respectively, than the premium received
from writing the option. Because increases in the market price of a call option
generally will reflect increases in the market price of the underlying security
or currency, any loss resulting from the repurchase of a call option is likely
to be offset in whole or in part by appreciation of the underlying security or
currency owned by the Fund.
WRITING PUT OPTIONS
The Funds may write put options on securities, indices and currencies. A put
option gives the purchaser of the option the right to sell, and the writer
(seller) the obligation to buy, the underlying security or currency at the
exercise price at any time until (American style) or on (European style) the
expiration date. The operation of put options in other respects, including their
related risks and rewards, is substantially identical to that of call options.
A Fund generally would write put options in circumstances where the Manager
wishes to purchase the underlying security or currency for the Fund's portfolio
at a price lower than the current market price of the security or currency. In
such event, the Fund would write a put option at an exercise price that, reduced
by the premium received on the option, reflects the lower price it is willing to
pay. Since the Fund also would receive interest on debt securities or currencies
maintained to cover the exercise price of the option, this technique could be
used to enhance current return during periods of market uncertainty. The risk in
such a transaction would be that the market price of the underlying security or
currency would decline below the exercise price, less the premium received.
Writing put options can serve as a limited long hedge because increases in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
depreciates to a price lower than the exercise price of the put option, it can
be expected that the put option will be exercised and a Fund will be obligated
to purchase the security or currency at greater than its market value.
PURCHASING PUT OPTIONS
Each Fund may purchase put options on securities, indices and currencies. As the
holder of a put option, a Fund would have the right to sell the underlying
security or currency at the exercise price at any time until (American style) or
on
STATEMENT OF ADDITIONAL INFORMATION PAGE 6
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GT GLOBAL EQUITY FUNDS
(European style) the expiration date. A Fund may enter into closing sale
transactions with respect to such option, exercise such option or permit such
option to expire.
A Fund may purchase a put option on an underlying security or currency
("protective put") owned by the Fund in order to protect against an anticipated
decline in the value of the security or currency. Such hedge protection is
provided only during the life of the put option when the Fund, as the holder of
the put option, is able to sell the underlying security or currency at the put
exercise price regardless of any decline in the underlying security's market
price or currency's exchange value. For example, a put option may be purchased
in order to protect unrealized appreciation of a security or currency when the
Manager deems it desirable to continue to hold the security or currency because
of tax considerations. The premium paid for the put option and any transaction
costs would reduce any profit otherwise available for distribution when the
security or currency eventually is sold.
A Fund also may purchase put options at a time when the Fund does not own the
underlying security or currency. By purchasing put options on a security or
currency it does not own, a Fund seeks to benefit from a decline in the market
price of the underlying security or currency. If the put option is not sold when
it has remaining value, and if the market price of the underlying security or
currency remains equal to or greater than the exercise price during the life of
the put option, the Fund will lose its entire investment in the put option. In
order for the purchase of a put option to be profitable, the market price of the
underlying security or currency must decline sufficiently below the exercise
price to cover the premium and transaction costs, unless the put option is sold
in a closing sale transaction.
PURCHASING CALL OPTIONS
Each Fund may purchase call options on securities, indices and currencies. As
the holder of a call option, a Fund would have the right to purchase the
underlying security or currency at the exercise price at any time until
(American style) or on (European style) the expiration date. A Fund may enter
into closing sale transactions with respect to such option, exercise such option
or permit such option to expire.
Call options may be purchased by a Fund for the purpose of acquiring the
underlying security or currency for its portfolio. Utilized in this fashion, the
purchase of call options would enable a Fund to acquire the security or currency
at the exercise price of the call option plus the premium paid. At times, the
net cost of acquiring the security or currency in this manner may be less than
the cost of acquiring the security or currency directly. This technique also may
be useful to the Funds in purchasing a large block of securities that would be
more difficult to acquire by direct market purchases. As long as it holds such a
call option, rather than the underlying security or currency itself, a Fund is
partially protected from any unexpected decline in the market price of the
underlying security or currency and, in such event, could allow the call option
to expire, incurring a loss only to the extent of the premium paid for the
option.
Each Fund also may purchase call options on underlying securities or currencies
it owns in order to protect unrealized gains on call options previously written
by it. A call option could be purchased for this purpose where tax
considerations make it inadvisable to realize such gains through a closing
purchase transaction. Call options also may be purchased at times to avoid
realizing losses that would result in a reduction of a Fund's current return.
For example, where a Fund has written a call option on an underlying security or
currency having a current market value below the price at which such security or
currency was purchased by the Fund, an increase in the market price could result
in the exercise of the call option written by the Fund and the realization of a
loss on the underlying security or currency. Accordingly, the Fund could
purchase a call option on the same underlying security or currency, which could
be exercised to fulfill the Fund's delivery obligations under its written call
(if it is exercised). This strategy could allow the Fund to avoid selling the
portfolio security or currency at a time when it has an unrealized loss;
however, the Fund would have to pay a premium to purchase the call option plus
transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of such
Fund's total assets at the time of purchase.
Each Fund may attempt to accomplish objectives similar to those involved in
using Forward Contracts by purchasing put or call options on currencies. A put
option gives a Fund as purchaser the right (but not the obligation) to sell a
specified amount of currency at the exercise price at any time until (American
style) or on (European style) the expiration date of the option. A call option
gives a Fund as purchaser the right (but not the obligation) to purchase a
specified amount of currency at the exercise price at any time until (American
style) or on (European style) the expiration date of the option. A Fund might
purchase a currency put option, for example, to protect itself against a decline
in the dollar value of a currency in which it holds or anticipates holding
securities. If the currency's value should decline against the dollar, the loss
in currency value should be offset, in whole or in part, by an increase in the
value of the put. If the value of the currency instead should rise against the
dollar, any gain to the Fund would be reduced by the premium it had paid for the
put option. A currency call option might be purchased, for example, in
anticipation of, or to protect against, a rise in the value against the dollar
of a currency in which the Fund anticipates purchasing securities.
STATEMENT OF ADDITIONAL INFORMATION PAGE 7
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GT GLOBAL EQUITY FUNDS
Options may be either listed on an exchange or traded in over-the-counter
("OTC") markets. Listed options are third-party contracts (I.E., performance of
the obligations of the purchaser and seller is guaranteed by the exchange or
clearing corporation), and have standardized strike prices and expiration dates.
OTC options are two-party contracts with negotiated strike prices and expiration
dates. A Fund will not purchase an OTC option unless the Manager believes that
daily valuations for such options are readily obtainable. OTC options differ
from exchange-traded options in that OTC options are transacted with dealers
directly and not through a clearing corporation (which guarantees performance).
Consequently, there is a risk of non-performance by the dealer. Since no
exchange is involved, OTC options are valued on the basis of an average of the
last bid prices obtained from dealers, unless a quotation from only one dealer
is available, in which case only that dealer's price will be used. In the case
of OTC options, there can be no assurance that a liquid secondary market will
exist for any particular option at any specific time.
The staff of the Securities and Exchange Commission ("SEC") considers purchased
OTC options to be illiquid securities. A Fund may also sell OTC options and, in
connection therewith, segregate assets or cover its obligations with respect to
OTC options written by the Fund. The assets used as cover for OTC options
written by a Fund will be considered illiquid unless the OTC options are sold to
qualified dealers who agree that the Fund may repurchase any OTC option it
writes at a maximum price to be calculated by a formula set forth in the option
agreement. The cover for an OTC option written subject to this procedure would
be considered illiquid only to the extent that the maximum repurchase price
under the formula exceeds the intrinsic value of the option.
A Fund's ability to establish and close out positions in exchange-listed options
depends on the existence of a liquid market. A Fund intends to purchase or write
only those exchange-listed options for which there appears to be a liquid
secondary market. However, there can be no assurance that such a market will
exist at any particular time. Closing transactions can be made for OTC options
only by negotiating directly with the contra party or by a transaction in the
secondary market if any such market exists. Although a Fund will enter into OTC
options only with contra parties that are expected to be capable of entering
into closing transactions with the Fund, there is no assurance that the Fund
will in fact be able to close out an OTC option position at a favorable price
prior to expiration. In the event of insolvency of the contra party, the Fund
might be unable to close out an OTC option position at any time prior to its
expiration.
INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or loss depends on
changes in the index in question (and thus on price movements in the securities
market or a particular market sector generally) rather than on price movements
in individual securities or futures contracts. When a Fund writes a call on an
index, it receives a premium and agrees that, prior to the expiration date, the
purchaser of the call, upon exercise of the call, will receive from the Fund an
amount of cash if the closing level of the index upon which the call is based is
greater than the exercise price of the call. The amount of cash is equal to the
difference between the closing price of the index and the exercise price of the
call times a specified multiple (the "multiplier"), which determines the total
dollar value for each point of such difference. When a Fund buys a call on an
index, it pays a premium and has the same rights as to such calls as are
indicated above. When a Fund buys a put on an index, it pays a premium and has
the right, prior to the expiration date, to require the seller of the put, upon
the Fund's exercise of the put, to deliver to the Fund an amount of cash if the
closing level of the index upon which the put is based is less than the exercise
price of the put, which amount of cash is determined by the multiplier, as
described above for calls. When a Fund writes a put on an index, it receives a
premium and the purchaser has the right, prior to the expiration date, to
require the Fund to deliver to it an amount of cash equal to the difference
between the closing level of the index and the exercise price times the
multiplier, if the closing level is less than the exercise price.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when a Fund writes a call
on an index it cannot provide in advance for its potential settlement
obligations by acquiring and holding the underlying securities. A Fund can
offset some of the risk of writing a call index option position by holding a
diversified portfolio of securities similar to those on which the underlying
index is based. However, a Fund cannot, as a practical matter, acquire and hold
a portfolio containing exactly the same securities as underlie the index and, as
a result, bears a risk that the value of the securities held will vary from the
value of the index.
Even if a Fund could assemble a securities portfolio that exactly reproduced the
composition of the underlying index, it still would not be fully covered from a
risk standpoint because of the "timing risk" inherent in writing index options.
When an index option is exercised, the amount of cash that the holder is
entitled to receive is determined by the difference between the exercise price
and the closing index level on the date when the option is exercised. As with
other kinds of options, the Fund, as the call writer, will not know that it has
been assigned until the next business day at the earliest. The time lag between
exercise and notice of assignment poses no risk for the writer of a covered call
on a specific underlying security, such as common stock, because there the
writer's obligation is to deliver the underlying security, not to pay its value
as of a fixed time in the past. So long as the writer already owns the
underlying security, it can satisfy its settlement
STATEMENT OF ADDITIONAL INFORMATION PAGE 8
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GT GLOBAL EQUITY FUNDS
obligations by simply delivering it, and the risk that its value may have
declined since the exercise date is borne by the exercising holder. In contrast,
even if the writer of an index call holds securities that exactly match the
composition of the underlying index, it will not be able to satisfy its
assignment obligations by delivering those securities against payment of the
exercise price. Instead, it will be required to pay cash in an amount based on
the closing index value on the exercise date; and by the time it learns that it
has been assigned, the index may have declined, with a corresponding decline in
the value of its securities portfolio. This "timing risk" is an inherent
limitation on the ability of index call writers to cover their risk exposure by
holding securities positions.
If a Fund has purchased an index option and exercises it before the closing
index value for that day is available, it runs the risk that the level of the
underlying index may subsequently change. If such a change causes the exercised
option to fall out-of-the-money, the Fund will be required to pay the difference
between the closing index value and the exercise price of the option (times the
applicable multiplier) to the assigned writer.
INTEREST RATE, CURRENCY AND STOCK INDEX FUTURES CONTRACTS
A Fund may enter into interest rate, currency or stock index futures contracts
("Futures" or "Futures Contracts") as a hedge against changes in prevailing
levels of interest rates, currency exchange rates or stock price levels in order
to establish more definitely the effective return on securities or currencies
held or intended to be acquired by the Fund. The Funds' hedging may include
sales of Futures as an offset against the effect of expected increases in
interest rates, or decreases in currency exchange rates and stock prices, and
purchases of Futures as an offset against the effect of expected declines in
interest rates, or increases in currency exchange rates or stock prices.
The Funds only will enter into Futures Contracts that are traded on futures
exchanges and are standardized as to maturity date and underlying financial
instrument. Futures exchanges and trading thereon in the United States are
regulated under the Commodity Exchange Act by the Commodity Futures Trading
Commission ("CFTC"). Futures are exchanged in London at the London International
Financial Futures Exchange.
Although techniques other than sales and purchases of Futures Contracts could be
used to reduce the Funds' exposure to interest rate and currency exchange rate
fluctuations, the Funds may be able to hedge its exposure more effectively and
at a lower cost through using Futures Contracts.
A Futures Contract provides for the future sale by one party and purchase by
another party of a specified amount of a specific financial instrument (security
or currency) for a specified price at a designated date, time and place. A stock
index Futures Contract provides for the delivery, at a designated date, time and
place, of an amount of cash equal to a specified dollar amount times the
difference between the stock index value at the close of trading on the contract
and the price at which the Futures Contract is originally struck; no physical
delivery of stocks comprising the index is made. Brokerage fees are incurred
when a Futures Contract is bought or sold, and margin deposits must be
maintained at all times the Futures Contract is outstanding.
Although Futures Contracts typically require future delivery of and payment for
financial instruments or currencies, Futures Contracts usually are closed out
before the delivery date. Closing out an open Futures Contract sale or purchase
is effected by entering into an offsetting Futures Contract purchase or sale,
respectively, for the same aggregate amount of the identical financial
instrument or currency and the same delivery date. If the offsetting purchase
price is less than the original sale price, the Fund realizes a gain; if it is
more, the Fund realizes a loss. Conversely, if the offsetting sale price is more
than the original purchase price, the Fund realizes a gain; if it is less, the
Fund realizes a loss. The transaction costs also must be included in these
calculations. There can be no assurance, however, that the Funds will be able to
enter into an offsetting transaction with respect to a particular Futures
Contract at a particular time. If a Fund is not able to enter into an offsetting
transaction, the Fund will continue to be required to maintain the margin
deposits on the Futures Contract.
As an example of an offsetting transaction, the contractual obligations arising
from the sale of one Futures Contract of September Deutschemarks on an exchange
may be fulfilled at any time before delivery under the Futures Contract is
required (I.E., on a specified date in September, the "delivery month") by the
purchase of another Futures Contract of September Deutschemarks on the same
exchange. In such instance, the difference between the price at which the
Futures Contract was sold and the price paid for the offsetting purchase, after
allowance for transaction costs, represents the profit or loss to the Fund.
The Funds' Futures transactions will be entered into for hedging purposes; that
is, Futures Contracts will be sold to protect against a decline in the price of
securities or currencies that a Fund owns, or Futures Contracts will be
purchased to protect the Fund against an increase in the price of securities or
currencies it has committed to purchase or expects to purchase.
"Margin" with respect to Futures Contracts is the amount of funds that must be
deposited by a Fund in order to initiate Futures trading and to maintain the
Fund's open positions in Futures Contracts. A margin deposit made when the
Futures Contract is entered into ("initial margin") is intended to ensure the
Fund's performance under the Futures Contract. The
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GT GLOBAL EQUITY FUNDS
margin required for a particular Futures Contract is set by the exchange on
which the Futures Contract is traded and may be significantly modified from time
to time by the exchange during the term of the Futures Contract.
Subsequent payments, called "variation margin," to and from the futures
commission merchant through which the Fund entered into the Futures Contract
will be made on a daily basis as the price of the underlying security, currency
or index fluctuates making the Futures Contract more or less valuable, a process
known as marking-to-market.
RISKS OF USING FUTURES CONTRACTS. The prices of Futures Contracts are
volatile and are influenced by, among other things, actual and anticipated
changes in interest and currency rates, which in turn are affected by fiscal and
monetary policies and national and international political and economic events.
There is a risk of imperfect correlation between changes in prices of Futures
Contracts and prices of the securities or currencies in the Fund's portfolio
being hedged. The degree of imperfection of correlation depends upon
circumstances such as: variations in speculative market demand for Futures and
for securities or currencies, including technical influences in Futures trading;
and differences between the financial instruments being hedged and the
instruments underlying the standard Futures Contracts available for trading. A
decision of whether, when and how to hedge involves skill and judgment, and even
a well-conceived hedge may be unsuccessful to some degree because of unexpected
market behavior or interest or currency rate trends.
Because of the low margin deposits required, Futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a Futures Contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the Futures Contract is deposited as margin, a subsequent 10%
decrease in the value of the Futures Contract would result in a total loss of
the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit, if the Futures Contract were closed out.
Thus, a purchase or sale of a Futures Contract may result in losses in excess of
the amount invested in the Futures Contract.
Most U.S. Futures exchanges limit the amount of fluctuation permitted in Futures
Contract and option on Futures Contract prices during a single trading day. The
daily limit establishes the maximum amount that the price of a Futures Contract
or option may vary either up or down from the previous day's settlement price at
the end of a trading session. Once the daily limit has been reached in a
particular type of Futures Contract or option, no trades may be made on that day
at a price beyond that limit. The daily limit governs only price movement during
a particular trading day and therefore does not limit potential losses, because
the limit may prevent the liquidation of unfavorable positions. Futures Contract
and option prices occasionally have moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some traders to substantial losses.
If a Fund were unable to liquidate a Futures or option on Futures position due
to the absence of a liquid secondary market or the imposition of price limits,
it could incur substantial losses. The Fund would continue to be subject to
market risk with respect to the position. In addition, except in the case of
purchased options, the Fund would continue to be required to make daily
variation margin payments and might be required to maintain the position being
hedged by the Future or option or to maintain cash or securities in a segregated
account.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
increased participation by speculators in the Futures markets. This
participation also might cause temporary price distortions. In addition,
activities of large traders in both the Futures and securities markets involving
arbitrage, "program trading" and other investment strategies might result in
temporary price distortions.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or currencies,
except that options on Futures Contracts give the purchaser the right, in return
for the premium paid, to assume a position in a Futures Contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the period of the option. Upon
exercise of the option, the delivery of the Futures position by the writer of
the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's Futures margin account, which represents the
amount by which the market price of the Futures Contract, at exercise, exceeds
(in the case of a call) or is less than (in the case of a put) the exercise
price of the option on the Futures Contract. If an option is exercised on the
last
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trading day prior to the expiration date of the option, the settlement will be
made entirely in cash equal to the difference between the exercise price of the
option and the closing level of the securities, currencies or index upon which
the Futures Contract is based on the expiration date. Purchasers of options who
fail to exercise their options prior to the exercise date suffer a loss of the
premium paid.
The purchase of call options on Futures can serve as a long hedge, and the
purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities, foreign currencies or indices.
If a Fund writes an option on a Futures Contract, it will be required to deposit
initial and variation margin pursuant to requirements similar to those
applicable to Futures Contracts. Premiums received from the writing of an option
on a Futures Contract are included in the initial margin deposit.
A Fund may seek to close out an option position by selling an option covering
the same Futures Contract and having the same exercise price and expiration
date. The ability to establish and close out positions on such options is
subject to the maintenance of a liquid secondary market.
LIMITATIONS ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON
CURRENCIES
To the extent that a Fund enters into Futures Contracts, options on Futures
Contracts, and options on foreign currencies traded on a CFTC-regulated
exchange, in each case other than for BONA FIDE hedging purposes (as defined by
the CFTC), the aggregate initial margin and premiums required to establish those
positions (excluding the amount by which options are "in-the-money") will not
exceed 5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund has
entered into. In general, a call option on a Futures Contract is "in-the-money"
if the value of the underlying Futures Contract exceeds the strike, I.E.,
exercise, price of the call; a put option on a Futures Contract is
"in-the-money" if the value of the underlying Futures Contract is exceeded by
the strike price of the put. This guideline may be modified by the Board without
a shareholder vote. This limitation does not limit the percentage of a Fund's
assets at risk to 5%.
FORWARD CURRENCY CONTRACTS
A Forward Contract is an obligation, generally arranged with a commercial bank
or other currency dealer, to purchase or sell a currency against another
currency at a future date and price as agreed upon by the parties. A Fund may
either accept or make delivery of the currency at the maturity of the Forward
Contract. A Fund may also, if its contra party agrees, prior to maturity, enter
into a closing transaction involving the purchase or sale of an offsetting
contract.
A Fund engages in forward currency transactions in anticipation of or to protect
itself against fluctuations in exchange rates. A Fund might sell a particular
foreign currency forward, for example, when it holds bonds denominated in a
foreign currency but anticipates, and seeks to be protected against, a decline
in the currency against the U.S. dollar. Similarly, a Fund might sell the U.S.
dollar forward when it holds bonds denominated in U.S. dollars but anticipates,
and seeks to be protected against, a decline in the U.S. dollar relative to
other currencies. Further, a Fund might purchase a currency forward to "lock in"
the price of securities denominated in that currency that it anticipates
purchasing.
Forward Contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A Forward
Contract generally has no deposit requirement, and no commissions are charged at
any stage for trades. Each Fund will enter into such Forward Contracts with
major U.S. or foreign banks and securities or currency dealers in accordance
with guidelines approved by the Board.
Each Fund may enter into Forward Contracts either with respect to specific
transactions or with respect to the overall investments of the Fund. The precise
matching of the Forward Contract amounts and the value of specific securities
generally will not be possible because the future value of such securities in
foreign currencies will change as a consequence of market movements in the value
of those securities between the date the Forward Contract is entered into and
the date it matures. Accordingly, it may be necessary for a Fund to purchase
additional foreign currency on the spot (I.E., cash) market (and bear the
expense of such purchase) if the market value of the security is less than the
amount of foreign currency the Fund is obligated to deliver and if a decision is
made to sell the security and make delivery of the foreign currency. Conversely,
it may be necessary to sell on the spot market some of the foreign currency the
Fund is obligated to deliver. The projection of short-term currency market
movements is extremely difficult, and the successful execution of a short-term
hedging strategy is highly uncertain. Forward Contracts involve the risk that
anticipated currency movements will not be predicted accurately, causing a Fund
to sustain losses on these contracts and transaction costs.
At or before the maturity of a Forward Contract requiring a Fund to sell a
currency, the Fund either may sell a portfolio security and use the sale
proceeds to make delivery of the currency or retain the security and offset its
contractual obligation to deliver the currency by purchasing a second contract
pursuant to which the Fund will obtain, on the maturity
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date, the same amount of the currency that it is obligated to deliver.
Similarly, a Fund may close out a Forward Contract requiring it to purchase a
specified currency by, if its contra party agrees, entering into a second
contract entitling it to sell the same amount of the same currency on the
maturity date of the first contract. The Fund would realize a gain or loss as a
result of entering into such an offsetting Forward Contract under either
circumstance to the extent the exchange rate or rates between the currencies
involved moved between the execution dates of the first contract and the
offsetting contract.
The cost to a Fund of engaging in Forward Contracts varies with factors such as
the currencies involved, the length of the contract period and the market
conditions then prevailing. Because Forward Contracts usually are entered into
on a principal basis, no fees or commissions are involved. The use of Forward
Contracts does not eliminate fluctuations in the prices of the underlying
securities a Fund owns or intends to acquire, but it does establish a rate of
exchange in advance. In addition, while Forward Contracts limit the risk of loss
due to a decline in the value of the hedged currencies, they also limit any
potential gain that might result should the value of the currencies increase.
FOREIGN CURRENCY STRATEGIES -- SPECIAL CONSIDERATIONS
A Fund may use options on foreign currencies, Futures on foreign currencies,
options on Futures on foreign currencies and Forward Contracts to hedge against
movements in the values of the foreign currencies in which the Fund's securities
are denominated. Such currency hedges can protect against price movements in a
security that a Fund owns or intends to acquire that are attributable to changes
in the value of the currency in which it is denominated. Such hedges do not,
however, protect against price movements in the securities that are attributable
to other causes.
A Fund might seek to hedge against changes in the value of a particular currency
when no Futures Contract, Forward Contract or option involving that currency is
available or one of such contracts is more expensive than certain other
contracts. In such cases, the Fund may hedge against price movements in that
currency by entering into a contract on another currency or basket or
currencies, the values of which the Manager believes will have a positive
correlation to the value of the currency being hedged. The risk that movements
in the price of the contract will not correlate perfectly with movements in the
price of the currency being hedged is magnified when this strategy is used.
The value of Futures Contracts, options on Futures Contracts, Forward Contracts
and options on foreign currencies depends on the value of the underlying
currency relative to the U.S. dollar. Because foreign currency transactions
occurring in the interbank market might involve substantially larger amounts
than those involved in the use of Futures Contracts, Forward Contracts or
options, a Fund could be disadvantaged by dealing in the odd lot market
(generally consisting of transactions of less than $1 million) for the
underlying foreign currencies at prices that are less favorable than for round
lots.
There is no systematic reporting of last sale information for foreign currencies
or any regulatory requirements that quotations available through dealers or
other market sources be firm or revised on a timely basis. Quotation information
generally is representative of very large transactions in the interbank market
and thus might not reflect odd-lot transactions where rates might be less
favorable. The interbank market in foreign currencies is a global,
round-the-clock market. To the extent the U.S. options or Futures markets are
closed while the markets for the underlying currencies remain open, significant
price and rate movements might take place in the underlying markets that cannot
be reflected in the markets for the Futures contracts or options until they
reopen.
Settlement of Futures Contracts, Forward Contracts and options involving foreign
currencies might be required to take place within the country issuing the
underlying currency. Thus, a Fund might be required to accept or make delivery
of the underlying foreign currency in accordance with any U.S. or foreign
regulations regarding the maintenance of foreign banking arrangements by U.S.
residents and might be required to pay any fees, taxes and charges associated
with such delivery assessed in the issuing country.
COVER
Transactions using Forward Contracts, Futures Contracts and options (other than
options that a Fund has purchased) expose the Fund to an obligation to another
party. A Fund will not enter into any such transactions unless it owns either
(1) an offsetting ("covered") position in securities, currencies, or other
options, Forward Contracts or Futures Contracts, or (2) cash, receivables and
short-term debt securities with a value sufficient at all times to cover its
potential obligations not covered as provided in (1) above. Each Fund will
comply with SEC guidelines regarding cover for these instruments and, if the
guidelines so require, set aside cash or liquid securities.
Assets used as cover or held in a segregated account cannot be sold while the
position in the corresponding Forward Contract, Futures Contract or option is
open, unless they are replaced with other appropriate assets. If a large portion
of a Fund's assets is used for cover or otherwise set aside, it could affect
portfolio management or the Fund's ability to meet redemption requests or other
current obligations.
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RISK FACTORS
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ILLIQUID SECURITIES
A Fund may invest up to 15% of its net assets in illiquid securities. Securities
may be considered illiquid if a Fund cannot reasonably expect within seven days
to sell the securities for approximately the amount at which the Fund values
such securities. See "Investment Limitations." The sale of illiquid securities,
if they can be sold at all, generally will require more time and result in
higher brokerage charges or dealer discounts and other selling expenses than the
sale of liquid securities such as securities eligible for trading on U.S.
securities exchanges or in the OTC markets. Moreover, restricted securities,
which may be illiquid for purposes of this limitation, often sell, if at all, at
a price lower than similar securities that are not subject to restrictions on
resale.
Illiquid securities include those that are subject to restrictions contained in
the securities laws of other countries. However, securities that are freely
marketable in the country where they are principally traded, but would not be
freely marketable in the United States, will not be considered illiquid. Where
registration is required, a Fund may be obligated to pay all or part of the
registration expenses and a considerable period may elapse between the time of
the decision to sell and the time the Fund may be permitted to sell a security
under an effective registration statement. If, during such a period, adverse
market conditions were to develop, the Fund might obtain a less favorable price
than prevailed when it decided to sell.
Not all restricted securities are illiquid. In recent years a large
institutional market has developed for certain securities that are not
registered under the Securities Act of 1933, as amended (the "1933 Act"),
including private placements, repurchase agreements, commercial paper, foreign
securities and corporate bonds and notes. These instruments are often restricted
securities because the securities are sold in transactions not requiring
registration. Institutional investors generally will not seek to sell these
instruments to the general public, but instead will often depend either on an
efficient institutional market in which such unregistered securities can be
readily resold or on an issuer's ability to honor a demand for repayment.
Therefore, the fact that there are contractual or legal restrictions on resale
to the general public or certain institutions is not dispositive of the
liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the registration
requirements of the 1933 Act for resales of certain securities to qualified
institutional buyers. Institutional markets for restricted securities have
developed as a result of Rule 144A, providing both readily ascertainable values
for restricted securities and the ability to liquidate an investment to satisfy
share redemption orders. Such markets include automated systems for the trading,
clearance and settlement of unregistered securities of domestic and foreign
issuers, such as the PORTAL System sponsored by the National Association of
Securities Dealers, Inc. An insufficient number of qualified institutional
buyers interested in purchasing Rule 144A-eligible restricted securities held by
a Fund, however, could affect adversely the marketability of such portfolio
securities and the Fund might be unable to dispose of such securities promptly
or at favorable prices.
With respect to liquidity determinations generally, the Board has the ultimate
responsibility for determining whether specific securities, including restricted
securities eligible for resale to qualified institutional buyers pursuant to
Rule 144A under the 1933 Act, are liquid or illiquid. The Board has delegated
the function of making day-to-day determinations of liquidity to the Manager in
accordance with procedures approved by the Board. The Manager takes into account
a number of factors in reaching liquidity decisions, including: (i) the
frequency of trading in the security; (ii) the number of dealers who make quotes
for the security; (iii) the number of dealers who have undertaken to make a
market in the security; (iv) the number of other potential purchasers; and (v)
the nature of the security and how trading is effected (e.g., the time needed to
sell the security, how offers are solicited, and the mechanics of transfer.) The
Manager monitors the liquidity of securities in each Fund's portfolio and
periodically reports such determinations to the Board.
FOREIGN SECURITIES
POLITICAL, SOCIAL AND ECONOMIC RISKS. Investing in securities of non-U.S.
companies may entail additional risks due to the potential political, social and
economic instability of certain countries and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment, convertibility of currencies into U.S. dollars and on repatriation
of capital invested. In the event of such expropriation, nationalization or
other confiscation by any country, a Fund could lose its entire investment in
any such country.
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GT GLOBAL EQUITY FUNDS
RELIGIOUS, POLITICAL AND ETHNIC INSTABILITY. Certain countries in which a
Fund may invest may have groups that advocate radical religious or revolutionary
philosophies or support ethnic independence. Any disturbance on the part of such
individuals could carry the potential for widespread destruction or confiscation
of property owned by individuals and entities foreign to such country and could
cause the loss of the Fund's investment in those countries. Instability may also
result from, among other things: (i) authoritarian governments or military
involvement in political and economic decision-making, including changes in
government through extra-constitutional means; (ii) popular unrest associated
with demands for improved political, economic and social conditions; and (iii)
hostile relations with neighboring or other countries. Such political, social
and economic instability could disrupt the principal financial markets in which
a Fund invests and adversely affect the value of its assets.
FOREIGN INVESTMENT RESTRICTIONS. Certain countries prohibit or impose
substantial restrictions on investments in their capital markets, particularly
their equity markets, by foreign entities such as a Fund. These restrictions or
controls may at times limit or preclude investment in certain securities and may
increase the cost and expenses of the Fund. For example, certain countries
require prior governmental approval before investments by foreign persons may be
made, or may limit the amount of investment by foreign persons in a particular
company, or limit the investment by foreign persons to only a specific class of
securities of a company that may have less advantageous terms than securities of
the company available for purchase by nationals. Moreover, the national policies
of certain countries may restrict investment opportunities in issuers or
industries deemed sensitive to national interests. In addition, some countries
require governmental approval for the repatriation of investment income, capital
or the proceeds of securities sales by foreign investors. In addition, if there
is a deterioration in a country's balance of payments or for other reasons, a
country may impose restrictions on foreign capital remittances abroad. A Fund
could be adversely affected by delays in, or a refusal to grant, any required
governmental approval for repatriation, as well as by the application to it of
other restrictions on investments.
NON-UNIFORM CORPORATE DISCLOSURE STANDARDS AND GOVERNMENTAL
REGULATION. Foreign companies are subject to accounting, auditing and financial
standards and requirements that differ, in some cases significantly, from those
applicable to U.S. companies. In particular, the assets, liabilities and profits
appearing on the financial statements of such a company may not reflect its
financial position or results of operations in the way they would be reflected
had such financial statements been prepared in accordance with U.S. generally
accepted accounting principles. Most of the securities held by a Fund (other
than the America Mid Cap Fund) will not be registered with the SEC or regulators
of any foreign country, nor will the issuers thereof be subject to the SEC's
reporting requirements. Thus, there will be less available information
concerning most foreign issuers of securities held by a Fund than is available
concerning U.S. issuers. In instances where the financial statements of an
issuer are not deemed to reflect accurately the financial situation of the
issuer, the Manager will take appropriate steps to evaluate the proposed
investment, which may include on-site inspection of the issuer, interviews with
its management and consultations with accountants, bankers and other
specialists. There is substantially less publicly available information about
foreign companies than there are reports and ratings published about U.S.
companies and the U.S. government. In addition, where public information is
available, it may be less reliable than such information regarding U.S. issuers.
Issuers of securities in foreign jurisdictions are generally not subject to the
same degree of regulation as are U.S. issuers with respect to such matters as
restrictions on market manipulation, insider trading rules, shareholder proxy
requirements and timely disclosure of information.
CURRENCY FLUCTUATIONS. Because each Fund, other than the America Mid Cap
Fund, under normal circumstances will invest a substantial portion of its total
assets in the securities of foreign issuers that are denominated in foreign
currencies, the strength or weakness of the U.S. dollar against such foreign
currencies will account for a significant part of the Fund's investment
performance. A decline in the value of any particular currency against the U.S.
dollar will cause a decline in the U.S. dollar value of a Fund's holdings of
securities and cash denominated in such currency and, therefore, will cause an
overall decline in the Fund's net asset value and any net investment income and
capital gains derived from such securities to be distributed in U.S. dollars to
shareholders of the Fund. Moreover, if the value of the foreign currencies in
which a Fund receives its income declines relative to the U.S. dollar between
the receipt of the income and the making of Fund distributions, it may be
required to liquidate securities in order to make distributions if it has
insufficient cash in U.S. dollars to meet distribution requirements.
The rate of exchange between the U.S. dollar and other currencies is determined
by several factors, including the supply and demand for particular currencies,
central bank efforts to support particular currencies, the relative movement of
interest rates and pace of business activity in the other countries and the
United States, and other economic and financial conditions affecting the world
economy.
Although each Fund values its assets daily in terms of U.S. dollars, they do not
intend to convert their holdings of foreign currencies into U.S. dollars on a
daily basis. Each Fund will do so, from time to time, and investors should be
aware of the costs of currency conversion. Although foreign exchange dealers do
not charge a fee for conversion, they do realize a profit based on the
difference ("spread") between the prices at which they buy and sell various
currencies. Thus, a dealer
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GT GLOBAL EQUITY FUNDS
may offer to sell a foreign currency to a Fund at one rate, while offering a
lesser rate of exchange should a Fund desire to sell that currency to the
dealer.
ADVERSE MARKET CHARACTERISTICS. Securities of many foreign issuers may be
less liquid and their prices more volatile than securities of comparable U.S.
issuers. In addition, foreign securities markets and brokers generally are
subject to less governmental supervision and regulation than in the United
States, and foreign securities exchange transactions usually are subject to
fixed commissions, which generally are higher than negotiated commissions on
U.S. transactions. In addition, foreign securities exchange transactions may be
subject to difficulties associated with the settlement of such transactions.
Delays in settlement could result in temporary periods when assets of a Fund are
uninvested and no return is earned thereon. The inability of a Fund to make
intended security purchases due to settlement problems could cause the Fund to
miss attractive investment opportunities. Inability to dispose of a portfolio
security due to settlement problems either could result in losses to a Fund due
to subsequent declines in value of the portfolio security or, if a Fund has
entered into a contract to sell the security, could result in possible liability
to the purchaser. The Manager will consider such difficulties when determining
the allocation of each Fund's assets, although the Manager does not believe that
such difficulties will have a material adverse effect on the Funds' portfolio
trading activities.
The Funds may use foreign custodians, which may involve risks in addition to
those related to the use of U.S. custodians. Such risks include uncertainties
relating to: (i) determining and monitoring the financial strength, reputation
and standing of the foreign custodian; (ii) maintaining appropriate safeguards
to protect the Funds' investments and (iii) obtaining and enforcing judgments
against such custodians.
WITHHOLDING TAXES. A Fund's net investment income from foreign issuers may
be subject to non-U.S. withholding taxes by the foreign issuer's country,
thereby reducing the Fund's net investment income or delaying the receipt of
income where those taxes may be recaptured. See "Taxes."
CONCENTRATION. To the extent a Fund invests a significant portion of its
assets in securities of issuers located in a particular country or region of the
world, it may be subject to greater risks and may experience greater volatility
than a fund that is more broadly diversified geographically.
SPECIAL CONSIDERATIONS AFFECTING WESTERN EUROPEAN COUNTRIES. The countries
that are members of the European Economic Community ("Common Market") (Belgium,
Denmark, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands,
Portugal, Spain and the United Kingdom) eliminated certain import tariffs and
quotas and other trade barriers with respect to one another over the past
several years. The Manager believes that this deregulation should improve the
prospects for economic growth in many Western European countries. Among other
things, the deregulation could enable companies domiciled in one country to
avail themselves of lower labor costs existing in other countries. In addition,
this deregulation could benefit companies domiciled in one country by opening
additional markets for their goods and services in other countries. Since,
however, it is not clear what the exact form or effect of these Common Market
reforms will be on business in Western Europe, it is impossible to predict the
long-term impact of the implementation of these programs on the securities owned
by a Fund.
SPECIAL CONSIDERATIONS AFFECTING RUSSIA AND EASTERN EUROPEAN COUNTRIES.
Investing in Russia and Eastern European countries involves a high degree of
risk and special considerations not typically associated with investing in the
U.S. securities markets and should be considered highly speculative. Such risks
include: (1) delays in settling portfolio transactions and risk of loss arising
out of the system of share registration and custody; (2) the risk that it may be
impossible or more difficult than in other countries to obtain and/or enforce a
judgment; (3) pervasiveness of corruption and crime in the economic system; (4)
currency exchange rate volatility and the lack of available currency hedging
instruments; (5) higher rates of inflation (including the risk of social unrest
associated with periods of hyper-inflation) and high unemployment; (6) controls
on foreign investment and local practices disfavoring foreign investors and
limitations on repatriation of invested capital, profits and dividends and on a
Fund's ability to exchange local currencies for U.S. dollars; (7) political
instability and social unrest and violence; (8) the risk that the governments of
Russia and Eastern European countries may decide not to continue to support the
economic reform programs implemented recently and may follow radically different
political and/or economic policies to the detriment of investors, including
non-market-oriented policies such as the support of certain industries at the
expense of other sectors or investors, or a return to the centrally planned
economy that existed when such countries had a communist form of government; (9)
the financial condition of companies in these countries, including large amounts
of inter-company debt that may create a payments crisis on a national scale;
(10) dependency on exports and the corresponding importance of international
trade; (11) the risk that the tax system in these countries will not be reformed
to prevent inconsistent, retroactive and/or exorbitant taxation; and (12) the
underdeveloped nature of the securities markets.
SPECIAL CONSIDERATIONS AFFECTING PACIFIC REGION COUNTRIES. Many Pacific
region countries may be subject to a greater degree of social, political and
economic instability than is the case in the United States. Such instability may
result from,
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among other things, the following: (i) authoritarian governments or military
involvement in political and economic decision making, and changes in government
through extra-constitutional means; (ii) popular unrest associated with demands
for improved political, economic and social conditions; (iii) internal
insurgencies; (iv) hostile relations with neighboring countries; and (v) ethnic,
religious and racial disaffection. Such social, political and economic
instability could significantly disrupt the principal financial markets in which
a Fund invests and adversely affect the value of a Fund's assets. In addition,
there may be the possibility of asset expropriations or future confiscatory
levels of taxation affecting the Funds.
Several Pacific region countries have or in the past have had hostile
relationships with neighboring nations or have experienced internal insurgency.
Thailand has experienced border conflicts with Laos and Cambodia, and India is
engaged in border disputes with several of its neighbors, including China and
Pakistan. An uneasy truce exists between North Korea and South Korea, and the
recurrence of hostilities remains possible. Reunification of North Korea and
South Korea could have a detrimental effect on the economy of South Korea. Also,
China continues to claim sovereignty over Taiwan and recently has conducted
military maneuvers near Taiwan.
The economies of most Pacific region countries are heavily dependent upon
international trade and are accordingly affected by protective trade barriers
and the economic conditions of their trading partners, principally the United
States, Japan, China and the European Community. The enactment by the United
States or other principal trading partners of protectionist trade legislation,
reduction of foreign investment in the local economies and general declines in
the international securities markets could have a significant adverse effect
upon the securities markets of Pacific region countries. In addition, the
economies of some of the Asia Pacific region countries, Australia and Indonesia,
for example, are vulnerable to weakness in world prices for their commodity
exports, including crude oil.
China is scheduled to assume sovereignty over Hong Kong on July 1, 1997.
Although China has committed by treaty to preserve the economic and social
freedoms enjoyed in Hong Kong for fifty years after regaining control of Hong
Kong, the continuation of the current form of the economic system in Hong Kong
after the reversion will depend on the actions of the government of China. In
addition, such reversion has increased sensitivity in Hong Kong to political
developments and statements by public figures in China. Business confidence in
Hong Kong, therefore, can be significantly affected by such developments and
statements, which in turn can affect markets and business performance.
In addition, the reversion of Hong Kong also presents a risk that the Hong Kong
dollar will be devalued and a risk of possible loss of investor confidence in
the Hong Kong markets and dollar. However, factors exist that are likely to
mitigate this risk. First, China has stated its intention to implement a "one
country, two systems" policy, which would preserve monetary sovereignty and
leave control in the hands of the Hong Kong Monetary Authority ("HKMA"). Second,
fixed rate parity with the U.S. dollar is seen as critical to maintaining
investors' confidence in the transition to Chinese rule and, therefore, it is
anticipated that, in the event international investors lose confidence in Hong
Kong dollar assets, the HKMA would intervene to support the currency, though
such intervention cannot be assured. Third, Hong Kong's and China's sizable
combined foreign exchange reserve may be used to support the value of the Hong
Kong dollar, provided that China does not appropriate such reserves for other
uses, which is not anticipated, but cannot be assured. Finally, China would be
likely to experience significant adverse political and economic consequences if
confidence in the Hong Kong dollar and the territory assets were to be
endangered.
SPECIAL CONSIDERATIONS AFFECTING LATIN AMERICAN COUNTRIES. Most Latin
American countries have experienced substantial, and in some periods extremely
high, rates of inflation for many years. Inflation and rapid fluctuations in
inflation rates have had and may continue to have very negative effects on the
economies and securities markets of certain Latin American countries. Certain
Latin American countries are also among the largest debtors to commercial banks
and foreign governments. At times certain Latin American countries have declared
moratoria on the payment of principal and/or interest on external debt. In
addition, certain Latin American securities markets have experienced high
volatility in recent years.
Latin American countries may also close certain sectors of their economies to
equity investments by foreigners. Further due to the absence of securities
markets and publicly owned corporations and due to restrictions on direct
investment by foreign entities, investments may only be made in certain Latin
American countries solely or primarily through governmentally approved
investment vehicles or companies.
Certain Latin American countries may have managed currencies that are maintained
at artificial levels to the U.S. dollar rather than at levels determined by the
market. This type of system can lead to sudden and large adjustments in the
currency which, in turn, can have a disruptive and negative effect on foreign
investors. For example, in late 1994, the value of the Mexican peso lost more
than one-third of its value relative to the U.S. dollar.
STATEMENT OF ADDITIONAL INFORMATION PAGE 16
<PAGE>
GT GLOBAL EQUITY FUNDS
SPECIAL CONSIDERATIONS AFFECTING EMERGING MARKETS. Investing in the
securities of companies in emerging markets may entail special risks relating to
potential political and economic instability and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment, convertibility into U.S. dollars and on repatriation of capital
invested. In the event of such expropriation, nationalization or other
confiscation by any country, a Fund could lose its entire investment in any such
country.
Emerging securities markets are substantially smaller, less developed, less
liquid and more volatile than the major securities markets. The limited size of
emerging securities markets and limited trading value in issuers compared to the
volume of trading in U.S. securities could cause prices to be erratic for
reasons apart from factors that affect the quality of the securities. For
example, limited market size may cause prices to be unduly influenced by traders
who control large positions. Adverse publicity and investors' perceptions,
whether or not based on fundamental analysis, may decrease the value and
liquidity of portfolio securities, especially in these markets. In addition,
securities traded in certain emerging markets may be subject to risks due to the
inexperience of financial intermediaries, a lack of modern technology, the lack
of a sufficient capital base to expand business operations, and the possibility
of permanent or temporary termination of trading.
Settlement mechanisms in emerging securities markets may be less efficient and
reliable than in more developed markets. In such emerging markets there may be
share registration and delivery delays or failures.
Many emerging market countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates and corresponding currency devaluations have had
and may continue to have negative effects on the economies and securities
markets of certain emerging market countries.
DEBT SECURITIES
Each Fund is permitted to purchase investment grade debt securities. In
selecting debt securities for investment, the Manager reviews and monitors the
creditworthiness of each issuer and issue and analyzes interest rate trends and
specific developments that may affect individual issuers, in addition to relying
on ratings assigned by S&P, Moody's or another nationally recognized statistical
rating organization ("NRSRO") as indicators of quality. Debt securities rated
Baa by Moody's or BBB by S&P are investment grade, although Moody's considers
securities rated Baa to have speculative characteristics. Changes in economic
conditions or other circumstances are more likely to lead to a weakened capacity
for such securities to make principal and interest payments than is the case for
higher grade debt securities. Each Fund is also permitted to purchase debt
securities that are not rated by S&P, Moody's or another NRSRO, but that the
Manager determines to be of comparable quality to that of rated securities in
which the Fund may invest. Such securities are included in the computation of
any percentage limitations applicable to the comparable rated securities.
Ratings of debt securities represent the rating agencies' opinions regarding
their quality, are not a guarantee of quality and may be reduced after a Fund
has acquired the security. The Manager will consider such an event in
determining whether a Fund should continue to hold the security but is not
required to dispose of it. Credit ratings attempt to evaluate the safety of
principal and interest payments and do not reflect an assessment of the
volatility of the security's market value or the liquidity of an investment in
the security. Also, NRSROs may fail to make timely changes in credit ratings in
response to subsequent events, so that an issuer's current financial condition
may be better or worse than the rating indicates. For a description of Moody's
and S&P ratings, see "Description of Debt Ratings" herein.
- --------------------------------------------------------------------------------
INVESTMENT LIMITATIONS
- --------------------------------------------------------------------------------
Each Fund has adopted the following investment limitations as fundamental
policies that (unless otherwise noted) may not be changed without approval by
the affirmative vote of the lesser of (i) 67% of the Fund's shares represented
at a meeting at which more than 50% of the outstanding shares are represented,
or (ii) more than 50% of the Fund's outstanding shares. No Fund may:
(1) Invest in companies for the purpose of exercising control or
management;
(2) Purchase or sell real estate; provided that a Fund may invest in
securities secured by real estate or interests therein or issued by
companies that invest in real estate or interests therein;
(3) Purchase or sell interests in oil, gas or other mineral exploration
or development programs, except that the Fund may invest in the securities
of companies that engage in these activities;
STATEMENT OF ADDITIONAL INFORMATION PAGE 17
<PAGE>
GT GLOBAL EQUITY FUNDS
(4) Purchase or sell commodities or commodity contracts, except that the
Fund may purchase and sell financial and currency futures contracts and
options thereon, and may purchase and sell currency forward contracts,
options on foreign currencies and may otherwise engage in other transactions
in foreign currencies;
(5) Mortgage, pledge or in any other manner transfer as security for any
indebtedness, any of its assets except to secure permitted borrowings.
Collateral arrangements with respect to initial or variation margin for
futures contracts will not be deemed to be a pledge of a Fund's assets;
(6) Borrow money in excess of 33 1/3% of the Fund's total assets
(including the amount borrowed), less all liabilities and indebtedness
(other than borrowing). Transactions involving options, futures contracts,
options on futures contracts and forward currency contracts, and collateral
arrangements relating thereto will not be deemed to be borrowings;
(7) Purchase securities on margin or effect short sales, except that a
Fund may obtain such short-term credits as may be necessary for the
clearance of purchases or sales of securities and except in connection with
the use of options, futures contracts, options thereon or forward currency
contracts. The Funds may make deposits of margin in connection with futures
and forward contracts and options thereon;
(8) Participate on a joint or a joint and several basis in any trading
account in securities. (The "bunching" of orders for the sale or purchase of
marketable portfolio securities with other accounts under the management of
the Manager to save brokerage costs or average prices among them is not
deemed to result in a securities trading account);
(9) Make loans, except that the Fund may purchase debt securities and
enter into repurchase agreements and make loans of portfolio securities;
(10) Purchase or retain the securities of an issuer if, to the Fund's
knowledge, one or more of the Trustees or officers of the Company or the
Manager individually own beneficially more than 1/2 of 1% of the securities
of such issuer and together own beneficially more than 5% of such
securities;
(11) Underwrite securities of other issuers, except to the extent that,
in connection with the disposition of portfolio securities, the Fund may be
deemed an underwriter under federal or state securities laws; and
(12) Invest more than 25% of the value of the Fund's total assets in
securities of issuers conducting their principal business activities in any
one industry, except that this limitation shall not apply to securities
issued or guaranteed as to principal and interest by the U.S. government or
any of its agencies or instrumentalities.
For purposes of the concentration policy contained in limitation (12) above,
each Fund intends to comply with the SEC staff position that securities issued
or guaranteed as to principal and interest by any single foreign government or
any supranational organization are considered to be securities of issuers in the
same industry.
The following investment limitations of each Fund are not fundamental policies
and may be changed by vote of the Board without shareholder approval. Each Fund
may not:
(1) Invest more than 15% of its net assets in illiquid securities, a
term which means securities that cannot be disposed of within seven days in
the normal course of business at approximately the amount at which the Fund
has valued the securities and includes, among other things, repurchase
agreements maturing in more than seven days;
(2) Borrow money except for temporary or emergency purposes (not for
leveraging) in excess of 33 1/3% of the value of the Fund's total assets; or
(3) Enter into a futures contract, an option on a futures contract or an
option on foreign currency traded on a CFTC-regulated exchange, in each case
other than for BONA FIDE hedging purposes (as defined by the CFTC), if the
aggregate initial margin and premiums required to establish all of these
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund
has entered into.
----------------------------
If a percentage restriction on investment or utilization of assets in an
investment policy or limitation is adhered to at the time an investment is made,
a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of a Fund's investment policies or restrictions. A Fund
may exchange securities, exercise conversion or subscription rights, warrants,
or other rights to purchase common stock or other equity securities and may
hold, except to the extent limited by the 1940 Act, any such securities so
acquired without regard to the Fund's investment policies and restrictions. The
original cost of the securities so acquired will be included in any subsequent
determination of a Fund's compliance with the investment percentage limitations
referred to above and in the Prospectus.
STATEMENT OF ADDITIONAL INFORMATION PAGE 18
<PAGE>
GT GLOBAL EQUITY FUNDS
EXECUTION OF PORTFOLIO
TRANSACTIONS
- --------------------------------------------------------------------------------
Subject to policies established by the Board, the Manager is responsible for the
execution of the Funds' portfolio transactions and the selection of
brokers/dealers who execute such transactions on behalf of the Funds. In
executing portfolio transactions, the Manager seeks the best net results for
each Fund, taking into account such factors as the price (including the
applicable brokerage commission or dealer spread), size of the order, difficulty
of execution and operational facilities of the firm involved. Although the
Manager generally seeks reasonably competitive commission rates and spreads,
payment of the lowest commission or spread is not necessarily consistent with
the best net results. While the Funds may engage in soft dollar arrangements for
research services, as described below, the Funds have no obligation to deal with
any broker/dealer or group of broker/dealers in the execution of portfolio
transactions.
Consistent with the interests of the Funds, the Manager may select brokers to
execute the Funds' portfolio transactions on the basis of the research services
they provide to the Manager for its use in managing the Funds and its other
advisory accounts. Such services may include furnishing analysis, reports and
information concerning issuers, industries, securities, geographic regions,
economic factors and trends, portfolio strategy, and performance of accounts;
and effecting securities transactions and performing functions incidental
thereto (such as clearance and settlement). Research and brokerage services
received from such broker is in addition to, and not in lieu of, the services
required to be performed by the Manager under the Management Contract (defined
below). A commission paid to such broker may be higher than that which another
qualified broker would have charged for effecting the same transaction, provided
that the Manager determines in good faith that such commission is reasonable in
terms either of that particular transaction or the overall responsibility of the
Manager to the Funds and its other clients and that the total commissions paid
by each Fund will be reasonable in relation to the benefits received by the
Funds over the long term. Research services may also be received from dealers
who execute Fund transactions in OTC markets.
The Manager may allocate brokerage transactions to broker/dealers who have
entered into arrangements under which the broker/dealer allocates a portion of
the commissions paid by the Fund toward payment of the Fund's expenses, such as
transfer agent and custodian fees.
Investment decisions for each Fund 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 one or more Funds. In such cases,
simultaneous transactions may occur. Purchases or sales are then allocated as to
price or amount in a manner deemed fair and equitable to all accounts involved.
While in some cases this practice could have a detrimental effect upon the price
or value of the security as far as a Fund is concerned, in other cases the
Manager believes that coordination and the ability to participate in volume
transactions will be beneficial to the Funds.
Under a policy adopted by the Board, and subject to the policy of obtaining the
best net results, the Manager may consider a broker/dealer's sale of the shares
of the Funds and the other funds for which the Manager serves as investment
manager and/or administrator in selecting broker/dealers for the execution of
portfolio transactions. This policy does not imply a commitment to execute
portfolio transactions through all broker/dealers that sell shares of the Funds
and such other funds.
Each Fund contemplates purchasing most foreign equity securities in OTC markets
or stock exchanges located in the countries in which the respective principal
offices of the issuers of the various securities are located, if that is the
best available market. The fixed commissions paid in connection with most such
foreign stock transactions generally are higher than negotiated commissions on
U.S. transactions. There generally is less government supervision and regulation
of foreign stock exchanges and brokers than in the United States. Foreign
security settlements may in some instances be subject to delays and related
administrative uncertainties.
Foreign equity securities may be held by a Fund in the form of ADRs, ADSs, EDRs,
CDRs or securities convertible into foreign equity securities. ADRs, ADSs, EDRs
and CDRs may be listed on stock exchanges, or traded in the OTC markets in the
United States or Europe, as the case may be. ADRs, like other securities traded
in the United States, will be subject to negotiated commission rates. The
foreign and domestic debt securities and money market instruments in which the
Funds may invest are generally traded in the OTC markets.
STATEMENT OF ADDITIONAL INFORMATION PAGE 19
<PAGE>
GT GLOBAL EQUITY FUNDS
Each Fund 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 Board 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.
For the fiscal year ended December 31, 1994, the Europe Fund paid to LGT Bank in
Liechtenstein (Deutschland) GmbH and LGT Bank in Liechtenstein AG, each an
"affiliated" broker as defined in the 1940 Act, aggregate brokerage commissions
of $58,346 and $26,599, respectively, for transactions involving purchases and
sales of portfolio securities which represented 2.67% and 1.22%, respectively,
of the total brokerage commissions paid by the Europe Fund, and 1.20% and 0.71%,
respectively, of the aggregate dollar amount of transactions involving payment
of commissions by the Europe Fund. For the fiscal year ended December 31, 1995,
the Europe Fund paid to LGT Bank in Liechtenstein AG and LGT Bank in
Liechtenstein (Zurich), each an "affiliated" broker, aggregate brokerage
commissions of $9,529 and $16,250, respectively, for transactions involving
purchases and sales of portfolio securities.
For the fiscal year ended December 31, 1995, the International Fund paid to LGT
Bank in Liechtenstein AG aggregate brokerage commissions of $1,475 for
transactions involving purchases and sales of portfolio securities which
represented 0.08% of the total brokerage commissions paid by the International
Fund and 0% of the aggregate dollar amount of tranactions involving payment of
commissions by the International Fund. For the fiscal year ended December 31,
1996, the International Fund paid to LGT Bank in Liechtenstein (Deutschland)
Gmbh and LGT Bank in Liechtenstein AG aggregate brokerage commissions of $7,562
and $3,918, respectively, for transactions involving purchases and sales of
portfolio securities which represented 0% and 0%, respectively, of the total
brokerage commissions paid by the International Fund, and 0% and 0%,
respectively, of the aggregate dollar amount of transactions involving payment
of commissions by the International Fund. For the fiscal year ended December 31,
1996, the Worldwide Fund paid to LGT Bank in Liechtenstein (Deutschland) Gmbh
aggregate brokerage commissions of $361.87 for transactions involving purchases
and sales of portfolio securities which represented 0% of the total brokerage
commissions paid by the Worldwide Fund, and 0% of the aggregate dollar amount of
transactions involving payment of commissions by the Worldwide Fund.
Aggregate brokerage commissions paid by the Funds for their three most recent
fiscal years were:
<TABLE>
<CAPTION>
FUND 1996 1995 1994
- -------------------------------------------------------------------------- ------------- ------------- -------------
<S> <C> <C> <C>
America Mid Cap Fund...................................................... $ 2,760,768 $ 878,569 $ 1,082,311
Europe Fund............................................................... $ 2,711,139 $ 3,877,784 $ 2,185,831
International Fund........................................................ $ 1,496,178 $ 1,889,228 $ 1,090,763
Japan Fund................................................................ $ 253,623 $ 440,117 $ 838,666
Pacific Fund.............................................................. $ 5,151,533 $ 3,310,887 $ 2,746,761
Worldwide Fund............................................................ $ 792,165 $ 1,007,167 $ 954,962
</TABLE>
PORTFOLIO TRADING AND TURNOVER
Although the Funds generally do not intend to trade for short-term profits, the
securities held by a Fund will be sold whenever the Manager believes it is
appropriate to do so, without regard to the length of time a particular security
may have been held. Portfolio turnover rate is calculated by dividing the lesser
of sales or purchases of portfolio securities by each Fund's average month-end
portfolio sales, excluding short-term investments. The portfolio turnover rate
will not be a limiting factor when the Manager deems portfolio changes
appropriate. Higher portfolio turnover involves correspondingly greater
brokerage commissions and other transaction costs that a Fund will bear directly
and may result in the realization of net capital gains that are taxable when
distributed to the Fund's shareholders. The portfolio turnover rates for the
fiscal years ended December 31, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
FUND 1996 1995
- ------------------------------------------------------------------------------------------------------ ---------- ----------
<S> <C> <C>
America Mid Cap Fund.................................................................................. 253% 71%
Europe Fund........................................................................................... 123% 108%
International Fund.................................................................................... 74% 75%
Japan Fund............................................................................................ 31% 67%
Pacific Fund.......................................................................................... 93% 63%
Worldwide Fund........................................................................................ 80% 113%
</TABLE>
STATEMENT OF ADDITIONAL INFORMATION PAGE 20
<PAGE>
GT GLOBAL EQUITY FUNDS
TRUSTEES AND EXECUTIVE OFFICERS
- --------------------------------------------------------------------------------
The Company's Trustees and Executive Officers are listed below.
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
William J. Guilfoyle*, 38 Director, LGT Asset Management, Inc. since 1996; Director, G.T. Insurance Agency ("G.T.
Trustee, Chairman of the Board and Insurance") since 1996; Director, Liechtenstein Global Trust AG (holding company of the
President various international LGT companies) Advisory Board since January 1996; President, GT
50 California Street Global since 1995; President and Chief Executive Officer, G.T. Insurance since 1995;
San Francisco, CA 94111 Director, Liechtenstein Global Trust AG from 1995 to January 1996; Senior Vice President
and Director, Sales and Marketing, G.T. Insurance from April 1995 to November 1995; Vice
President and Director of Marketing, GT Global from 1987 to 1995; Senior Vice President,
Retail Marketing, G.T. Insurance from 1993 to 1995; and Vice President, G.T. Insurance
from 1992 to 1993. Mr. Guilfoyle also is a director or trustee of each of the other
investment companies registered under the 1940 Act that is managed or administered by the
Manager.
C. Derek Anderson, 55 Chief Executive Officer, Anderson Capital Management, Inc.; Chairman and Chief Executive
Trustee Officer, Plantagenet Holdings, Ltd. from 1991 to present; Director, Munsingwear, Inc.; and
220 Sansome Street Director, American Heritage Group Inc. and various other companies. Mr. Anderson also is a
Suite 400 director or trustee of each of the other investment companies registered under the 1940
San Francisco, CA 94104 Act that is managed or administered by the Manager.
Frank S. Bayley, 57 Partner, Baker & McKenzie (a law firm); Director and Chairman, C.D. Stimson Company (a
Trustee private investment company). Mr. Bayley also is a director or trustee of each of the other
Two Embarcadero Center investment companies registered under the 1940 Act that is managed or administered by the
Suite 2400 Manager.
San Francisco, CA 94111
Arthur C. Patterson, 53 Managing Partner, Accel Partners (a venture capital firm). He also serves as a director of
Trustee various computing and software companies. Mr. Patterson also is a director or trustee of
One Embarcadero Center each of the other investment companies registered under the 1940 Act that is managed or
Suite 3820 administered by the Manager.
San Francisco, CA 94111
Ruth H. Quigley, 61 Private investor; and President, Quigley Friedlander & Co., Inc. (a financial advisory
Trustee services firm) from 1984 to 1986. Ms. Quigley also is a director or trustee of each of the
1055 California Street other investment companies registered under the 1940 Act that is managed or administered
San Francisco, CA 94108 by the Manager.
Robert G. Wade, Jr.*, 69 Consultant to the Manager; Chairman of the Board of Chancellor Capital Management, Inc.
Trustee from January 1995 to October 1996; President, Chief Executive Officer and Chairman of the
1166 Avenue of the Americas Board of Chancellor Capital Management, Inc. from 1988 to January 1995.
New York, NY 10036
</TABLE>
- --------------
* Mr. Guilfoyle and Mr. Wade are "interested persons" of the Company as
defined by the 1940 Act due to their affiliation with the LGT companies.
STATEMENT OF ADDITIONAL INFORMATION PAGE 21
<PAGE>
GT GLOBAL EQUITY FUNDS
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
James R. Tufts, 38 Chief Information Officer for the Manager since October 1996; President,
Vice President and Chief GT Services since 1995; Senior Vice President -- Finance and
Financial Officer Administration, GT Global, GT Services and G.T. Insurance from 1994 to
50 California Street 1995; Senior Vice President -- Finance and Administration, the Manager
San Francisco, CA 94111 from 1994 to October 1996; Vice President -- Finance, the Manager, GT
Global and GT Services from 1990 to 1994; Vice President -- Finance,
G.T. Insurance from 1992 to 1994; and Director, the Manager, GT Global
and GT Services since 1991.
Kenneth W. Chancey, 51 Vice President -- Mutual Fund Accounting, the Manager since 1992; and
Vice President and Principal Vice President, Putnam Fiduciary Trust Company from 1989 to 1992.
Accounting Officer
50 California Street
San Francisco, CA 94111
Helge K. Lee, 50 Executive Vice President, Asset Management Division, Liechtenstein
Vice President and Secretary Global Trust since October 1996; Senior Vice President, the Manager, GT
1166 Avenue of the Americas Global, GT Services and G.T. Insurance from February 1996 to October
New York, NY 10036 1996; Vice President, the Manager, the Manager, GT Global, GT Services
and G.T. Insurance from May 1994 to February 1996; General Counsel, the
Manager, the Manager, GT Global, GT Services and G.T. Insurance from May
1994 to October 1996; Secretary, the Manager, the Manager, GT Global, GT
Services and G.T. Insurance from May 1994 to October 1996; Senior Vice
President, General Counsel and Secretary, Strong/Corneliuson Management,
Inc.; and Secretary, each of the Strong Funds from October 1991 to May
1994.
</TABLE>
------------------------------
The Board has a Nominating and Audit Committee, comprised of Ms. Quigley and
Messrs. Anderson, Bayley and Patterson, which is responsible for nominating
persons to serve as Trustees, reviewing audits of the Company and the Funds and
recommending firms to serve as independent auditors of the Company. Each of the
Trustees and officers of the Company is also a director and officer of G.T.
Investment Portfolios, Inc., G.T. Investment Funds, Inc., G.T. Global Developing
Markets Fund, Inc. and GT Global Floating Rate Fund, Inc., and a Trustee and
officer of G.T. Global Eastern Europe Fund, G.T. Global Variable Investment
Trust, G.T. Global Variable Investment Series, Global High Income Portfolio,
Global Investment Portfolio and Floating Rate Portfolio, which also are
registered investment companies managed by the Manager. Each Trustee and officer
serves in total as a Director and or Trustee and officer, respectively, of 12
registered investment companies with 41 series managed or administered by the
Manager. The Company pays each Trustee who is not a director, officer or
employee of the Manager or any affiliated company $5,000 per annum plus $300 per
Fund for each meeting of the Board attended by the Trustee, and reimburses
travel and other expenses incurred in connection with attendance at such
meetings. Other Trustees and officers receive no compensation or expense
reimbursements from the Company. For the fiscal year ended December 31, 1996,
the Company paid Mr. Anderson, Mr. Bayley, Mr. Patterson and Ms. Quigley, who
are not directors, officers or employees of the Manager or any affiliated
company, total compensation of $18,150, $18,150, $16,350 and $18,150,
respectively, for their services as Trustees. For the year ended December 31,
1996, Mr. Anderson, Mr. Bayley, Mr. Patterson and Ms. Quigley received total
compensation of $87,600, $87,600, $80,100 and $87,600, respectively, from the
investment companies managed or administered by the Manager for which he or she
serves as a director or trustee. Fees and expenses disbursed to the Trustees
contained no accrued or payable pension or retirement benefits. As of the date
of this Statement of Additional Information, the officers and Trustees and their
families as a group owned in the aggregate beneficially or of record less than
1% of the outstanding shares of any Fund.
STATEMENT OF ADDITIONAL INFORMATION PAGE 22
<PAGE>
GT GLOBAL EQUITY FUNDS
MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES
The Manager serves as each Fund's investment manager and administrator under an
Investment Management and Administration Contract ("Management Contract")
between the Company and the Manager. As investment manager and administrator,
the Manager makes all investment decisions for each Fund and administers each
Fund's affairs. Among other things, the Manager furnishes the services and pays
the compensation and travel expenses of persons who perform the executive,
administrative, clerical and bookkeeping functions of the Company and the Funds
and provides suitable office space and necessary small office equipment and
utilities. The America Fund pays the Manager investment management and
administration fees, computed daily and paid monthly, based on its average daily
net assets, at the annualized rate of .725% on the first $500 million, .70% on
the next $500 million, .675% on the next $500 million, and .65% on amounts
thereafter. Each of the other Funds pay the Manager investment management and
administration fees, computed daily and paid monthly, based on its average daily
net assets, at the annualized rate of .975% on the first $500 million, .95% on
the next $500 million, .925% on the next $500 million, and .90% on amounts
thereafter.
The Management Contract may be renewed for additional one-year terms with
respect to each Fund, provided that any such renewal has been specifically
approved at least annually by: (i) the Board or the vote of a majority of the
Fund's outstanding voting securities (as defined in the 1940 Act), and (ii) a
majority of Trustees who are not parties to the Management Contract or
"interested persons" of any such party (as defined in the 1940 Act), cast in
person at a meeting called for the specific purpose of voting on such approval.
With respect to any Fund either the Company or the Manager may terminate the
Management Contract without penalty upon sixty (60) days' written notice to the
other party. The Management Contract terminates automatically in the event of
its assignment (as defined in the 1940 Act).
The amounts of investment management and administration fees paid by each Fund
to the Manager during the Funds' three most recent fiscal years were as follows:
<TABLE>
<CAPTION>
FUND 1996 1995 1994
- ---------------------------------------------------- ----------- ----------- -----------
America Mid Cap Fund................................ $4,982,969 $4,425,913 $1,283,893
<S> <C> <C> <C>
Europe Fund......................................... $5,416,280 $6,161,265 $8,319,087
International Fund.................................. $3,034,522 $4,027,923 $5,368,669
Japan Fund.......................................... $1,367,702 $1,167,576 $1,345,064
Pacific Fund........................................ $5,260,774 $5,176,333 $5,563,245
Worldwide Fund...................................... $1,885,798 $2,050,983 $3,355,681
</TABLE>
DISTRIBUTION SERVICES
Each Fund's Class A and Class B shares are offered continuously through the
Funds' principal underwriter and distributor, GT Global, on a "best efforts"
basis pursuant to separate Distribution Contracts between the Company and GT
Global.
As described in the Prospectus, the Company has adopted separate Distribution
Plans with respect to Class A and Class B shares of the Funds in accordance with
the provisions of Rule 12b-1 under the 1940 Act (each a "Class A Plan" and a
"Class B Plan," respectively, and collectively, the "Plans"). The rate of
payment by each Fund under the Plans, as described in the Prospectus, may not be
increased without the approval of the majority of the outstanding voting
securities of the affected class of that Fund. All expenses for which GT Global
is reimbursed under a Class A Plan will have been incurred within one year of
such reimbursement.
The following table discloses payments made by the Funds under the Class A Plan
and the Class B Plan for the Funds' fiscal year ended December 31, 1996.
<TABLE>
<CAPTION>
FUND CLASS A CLASS B
- ------------------------------------------------------------------------------------ ------------- -------------
<S> <C> <C>
America Mid Cap Fund................................................................ $ 1,251,494 $ 3,347,860
Europe Fund......................................................................... $ 1,666,909 $ 783,175
International Fund.................................................................. $ 847,585 $ 681,990
Japan Fund.......................................................................... $ 334,198 $ 439,916
Pacific Fund........................................................................ $ 1,366,421 $ 1,482,869
Worldwide Fund...................................................................... $ 477,375 $ 551,243
</TABLE>
STATEMENT OF ADDITIONAL INFORMATION PAGE 23
<PAGE>
GT GLOBAL EQUITY FUNDS
In approving the continuation of the Plans, the Trustees determined that the
continuation of the Plans was in the best interests of the shareholders.
Agreements related to the Plans also must be approved by vote of the Trustees,
including a majority of Trustees who are not "interested persons" of the Company
(as defined in the 1940 Act) and who have no direct or indirect financial
interests in the operation of the Plan, or in any agreement related thereto.
Each Plan requires that, at least quarterly, the Trustees review the amounts
expended thereunder and the purposes for which such expenditures were made. Each
Plan requires that as long as it is in effect, the selection and nomination of
Trustees who are not "interested persons" of the Company will be committed to
the discretion of the Trustees who are not "interested persons" of the Company,
as defined in the 1940 Act.
As discussed in the Prospectus, GT Global collects sales charges on sales of
Class A shares of the Funds, retains certain amounts of such charges and
reallows other amounts of such charges to broker/dealers who sell Class A shares
of the Funds. The following table reviews the extent of such activity during the
Funds' last three fiscal years:
<TABLE>
<CAPTION>
SALES CHARGES AMOUNTS AMOUNTS
FUND COLLECTED RETAINED REALLOWED
- -------------------------------------------------------------------- ------------- ------------- -------------
<S> <C> <C> <C>
America Mid Cap Fund .......................................... 1996 $ 363,803 $ 90,365 $ 273,438
1995 2,101,049 336,010 1,765,039
1994 1,213,567 80,807 1,132,760
Europe Fund ................................................... 1996 $ 155,198 $ 39,684 $ 115,514
1995 258,281 51,964 206,317
1994 2,448,091 137,252 2,310,839
International Fund ............................................ 1996 $ 106,879 $ 28,270 $ 78,609
1995 322,537 50,454 272,083
1994 1,230,657 106,490 1,124,167
Japan Fund .................................................... 1996 $ 117,891 $ 47,700 $ 70,191
1995 480,623 78,489 402,134
1994 945,666 23,730 921,936
Pacific Fund .................................................. 1996 $ 435,687 $ 133,060 $ 302,627
1995 734,983 141,263 593,720
1994 3,088,807 260,474 2,828,333
Worldwide Fund ................................................ 1996 $ 75,820 $ 21,390 $ 54,430
1995 180,015 28,527 151,488
1994 1,067,748 89,742 978,006
</TABLE>
GT Global receives contingent deferred sales charges payable with respect to
redemptions of Class B shares and certain Class A shares. For the fiscal years
ended December 31, 1996, December 31, 1995 and December 31, 1994, GT Global
collected contingent deferred sales charges in the following amounts:
<TABLE>
<CAPTION>
FUND 1996 1995 1994
- ------------------------------------------------------------------- ------------- ----------- -------------
<S> <C> <C> <C>
America Mid Cap Fund............................................... $ 1,901,165 $ 925,863 $ 130,809
Europe Fund........................................................ $ 377,041 $ 510,319 $ 237,076
International Fund................................................. $ 345,483 $ 329,959 $ 32,916
Japan Fund......................................................... $ 330,744 $ 213,714 $ 88,454
Pacific Fund....................................................... $ 636,270 $ 758,951 $ 280,905
Worldwide Fund..................................................... $ 260,826 $ 260,049 $ 13,472
</TABLE>
TRANSFER AGENCY AND ACCOUNTING AGENCY SERVICES
The Transfer Agent has been retained by the Funds to perform shareholder
servicing, reporting and general transfer agent functions for the Funds. For
these services, the Transfer Agent receives an annual maintenance fee of $17.50
per account, a new account fee of $4.00 per account, a per transaction fee of
$1.75 for all transactions other than exchanges and a per exchange fee of $2.25.
The Transfer Agent also is reimbursed by the Funds for its out-of-pocket
expenses for such items as postage, forms, telephone charges, stationery and
office supplies.
The Manager also serves as each Fund's pricing and accounting agent. For the
fiscal years ended December 31, 1995 and December 31, 1996, the accounting
services fees paid by the America Mid Cap Fund, Europe Fund, International Fund,
Japan Fund, Pacific Fund, and Worldwide Fund were $79,918 and $173,767, $62,660
and $139,442, $40,655 and $77,934, $14,483 and $35,119, $53,724 and $135,182 and
$22,092 and $48,430, respectively.
STATEMENT OF ADDITIONAL INFORMATION PAGE 24
<PAGE>
GT GLOBAL EQUITY FUNDS
EXPENSES OF THE FUNDS
Each Fund pays all expenses not assumed by the Manager, GT Global and other
agents. These expenses include, in addition to the advisory, distribution,
transfer agency, pricing and accounting agency and brokerage fees discussed
above, legal and audit expenses, custodian fees, trustees' fees, organizational
fees, fidelity bond and other insurance premiums, taxes, extraordinary expenses
and expenses of reports and prospectuses sent to existing investors. Certain of
these expenses, such as custodial fees and brokerage fees, generally are higher
for non-U.S. securities. The allocation of general Company expenses, and
expenses shared by the Funds with one another, are made on a basis deemed fair
and equitable, which may be based on the relative net assets of the Funds or the
nature of the services performed and relative applicability to each Fund.
Expenditures, including costs incurred in connection with the purchase or sale
of portfolio securities, that are capitalized in accordance with generally
accepted accounting principles applicable to investment companies, are accounted
for as capital items and not as expenses. The ratio of each Fund's, other than
America Fund's, expenses to its relative net assets can be expected to be higher
than the expense ratios of funds investing solely in domestic securities, since
the cost of maintaining the custody of foreign securities and the rate of
investment management fees paid by each Fund generally are higher than the
comparable expenses of such other funds.
- --------------------------------------------------------------------------------
VALUATION OF SHARES
- --------------------------------------------------------------------------------
As described in the Prospectus, each Fund's net asset value per share for each
class of shares is determined at the close of regular trading on the New York
Stock Exchange ("NYSE") (currently, 4:00 P.M. Eastern Time, unless weather,
equipment failure or other factors contribute to an earlier closing time).
Currently, the NYSE is closed on weekends and on certain days relating to the
following holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
July 4th, Labor Day, Thanksgiving Day and Christmas Day.
The Funds' portfolio securities and other assets are valued as follows:
Equity securities, including ADRs, ADSs and EDRs, which are traded on stock
exchanges, are valued at the last sale price on the exchange on which such
securities are traded, as of the close of business on the day the securities are
being valued or, lacking any sales, at the last available bid price. In cases
where securities are traded on more than one exchange, the securities are valued
on the exchange determined by the Manager to be the primary market. Securities
traded in the OTC market are valued at the last available bid price prior to the
time of valuation. The value of each security denominated in a currency other
than U.S. dollars will be translated into U.S. dollars at the prevailing
exchange rate as determined by the Manager on that day.
Long-term debt obligations are valued at the mean of representative quoted bid
or asked prices for such securities or, if such prices are not available, at
prices for securities of comparable maturity, quality and type; however, when
the Manager deems it appropriate, prices obtained for the day of valuation from
a bond pricing service will be used. Short-term debt investments are amortized
to maturity based on their cost, adjusted for foreign exchange translation,
provided that such valuations represent fair value.
Options on indices, securities and currencies purchased by the Funds are valued
at their last bid price in the case of listed options or at the average of the
last bid prices obtained from dealers, unless a quotation from only one dealer
is available, in which case only that dealer's price will be used, in the case
of OTC options. When market quotations for futures and options on futures held
by a Fund are readily available, those positions will be valued based upon such
quotations.
Securities and other assets for which market quotations are not readily
available (including restricted securities that are subject to limitations as to
their sale) are valued at fair value as determined in good faith by or under the
direction of the Board. The valuation procedures applied in any specific
instance are likely to vary from case to case. However, consideration generally
is given to the financial position of the issuer and other fundamental
analytical data relating to the investment and to the nature of the restrictions
on disposition of the securities (including any registration expenses that might
be borne by a Fund in connection with such disposition). In addition, other
factors, such as the cost of the investment, the market value of any
unrestricted securities of the same class (both at the time of purchase and at
the time of valuation), the size of the holding, the prices of any recent
transactions or offers with respect to such securities and any available
analysts' reports regarding the issuer, generally are considered.
STATEMENT OF ADDITIONAL INFORMATION PAGE 25
<PAGE>
GT GLOBAL EQUITY FUNDS
The fair value of any other assets is added to the value of all securities
positions to arrive at the value of a Fund's total assets. A Fund's liabilities,
including accruals for expenses, are deducted from its total assets. Once the
value of a Fund's net assets is so determined, that value is then divided by the
total number of shares outstanding (excluding treasury shares), and the result,
rounded to the nearer cent, is the net asset value per share.
Any assets or liabilities initially expressed in terms of foreign currencies are
translated into U.S. dollars at the official exchange rate or, alternatively, at
the mean of the current bid and asked prices of such currencies against the U.S.
dollar last quoted by a major bank that is a regular participant in the foreign
exchange market or on the basis of a pricing service that takes into account the
quotes provided by a number of such major banks. If none of these alternatives
is available or none is deemed to provide a suitable methodology for converting
a foreign currency into U.S. dollars, the Board, in good faith, will establish a
conversion rate for such currency.
European, Far Eastern or Latin American securities trading may not take place on
all days on which the NYSE is open. Further, trading takes place in Japanese
markets on certain Saturdays and in various foreign markets on days on which the
NYSE is not open. In addition, trading in securities on European and Far Eastern
securities exchanges and OTC markets generally is completed well before the
close of the business day in New York. Consequently, the calculation of the
Funds' net asset values may not take place contemporaneously with the
determination of the prices of securities held by the Funds. Events affecting
the values of portfolio securities that occur between the time their prices are
determined and the close of regular trading on the NYSE will not be reflected in
the Funds' net asset values unless the Manager, under the supervision of the
Board, determines that the particular event would materially affect net asset
value. As a result, a Fund's net asset value may be significantly affected by
such trading on days when a shareholder has no access to the Fund.
- --------------------------------------------------------------------------------
INFORMATION RELATING TO SALES
AND REDEMPTIONS
- --------------------------------------------------------------------------------
PAYMENT AND TERMS OF OFFERING
Payment for Class A or Class B shares purchased should accompany the purchase
order, or funds should be wired to the Transfer Agent as described in the
Prospectus. Payment, other than by wire transfer, must be made by check or money
order drawn on a U.S. bank. Checks or money orders must be payable in U.S.
dollars.
As a condition of this offering, if an order to purchase either class of shares
is cancelled due to nonpayment (for example, because a check is returned for
"not sufficient funds"), the person who made the order will be responsible for
any loss incurred by a Fund by reason of such cancellation, and if such
purchaser is a shareholder, that Fund shall have the authority as agent of the
shareholder to redeem shares in his or her account at their then-current net
asset value per share to reimburse that Fund for the loss incurred. Investors
whose purchase orders have been cancelled due to nonpayment may be prohibited
from placing future orders.
The Funds reserve the right at any time to waive or increase the minimum
requirements applicable to initial or subsequent investments with respect to any
person or class of persons. An order to purchase shares is not binding on a Fund
until it has been confirmed in writing by the Transfer Agent (or other
arrangements made with the Fund, in the case of orders utilizing wire transfer
of funds, as described above) and payment has been received. To protect existing
shareholders, the Funds reserve the right to reject any offer for a purchase of
shares by any individual.
SALES OUTSIDE THE UNITED STATES
Sales of Fund shares made through brokers outside the United States will be at
net asset value plus a sales commission, if any, established by that broker or
by local law. Such commission, if any, may be more or less than the sales
charges listed in the sales charge table included in the Prospectus.
LETTER OF INTENT -- CLASS A SHARES
A Letter of Intent ("LOI") is not a binding obligation to purchase the indicated
amount. During such time as Class A shares are held in escrow under an LOI to
ensure payment of applicable sales charges if the indicated amount is not met,
all dividends and other distributions on escrowed shares will be reinvested in
additional Class A shares or paid in cash, as specified by the shareholder. If
the intended investment is not completed within the specified 13-month period,
the purchaser must remit to GT Global the difference between the sales charge
actually paid and the sales charge that would have been applicable if the total
Class A purchases had been made at a single time. If this amount is not paid to
GT Global
STATEMENT OF ADDITIONAL INFORMATION PAGE 26
<PAGE>
GT GLOBAL EQUITY FUNDS
within 20 days after written request, the appropriate number of escrowed shares
will be redeemed and the proceeds paid to GT Global.
A registered investment adviser, trust company or trust department seeking to
execute an LOI as a single purchaser with respect to accounts over which it
exercises investment discretion is required to provide the Transfer Agent with
information establishing that such entity has discretionary authority with
respect to the money invested (e.g. by providing a copy of the pertinent
investment advisory agreement). Class A shares purchased in this manner must be
restrictively registered with the Transfer Agent so that only the investment
adviser, trust company or trust department, and not the beneficial owner, will
be able to place purchase, redemption and exchange orders.
AUTOMATIC INVESTMENT PLAN -- CLASS A SHARES AND CLASS B SHARES
To establish participation in the Funds' Automatic Investment Plan ("AIP"),
investors or their broker/dealers should specify whether investment will be in
Class A shares or Class B shares and send the following documents to the
Transfer Agent: (1) an AIP Application; (2) a Bank Authorization Form; and (3) a
voided personal check from the pertinent bank account. The necessary forms are
provided at the back of the Funds' Prospectus. Providing that an investor's bank
accepts the Bank Authorization Form, investment amounts will be drawn on the
designated dates (monthly on the 25th day or beginning quarterly on the 25th day
of the month the investor first selects) in order to purchase full and
fractional shares of a Fund at the public offering price determined on that day.
If the 25th day falls on a Saturday, Sunday or holiday, shares will be purchased
on the next business day. If an investor's check is returned because of
insufficient funds, a stop payment order or the account is closed, the AIP may
be discontinued, and any share purchase made upon deposit of such check may be
cancelled. Furthermore, the shareholder will be liable for any loss incurred by
a Fund by reason of such cancellation. Investors should allow one month for the
establishment of an AIP. An AIP may be terminated by the Transfer Agent or the
Funds upon 30 days' written notice or by the participant, at any time, without
penalty, upon written notice to the pertinent Fund or the Transfer Agent.
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS)
Class A or Class B shares of a Fund may be purchased as the underlying
investment for an IRA meeting the requirements of section 408(a) of the Internal
Revenue Code of 1986, as amended (the "Code"). IRA applications are available
from brokers, or GT Global.
EXCHANGES BETWEEN FUNDS
Shares of a Fund may be exchanged for shares of other GT Global Mutual Funds,
based on their respective net asset values without imposition of any sales
charges provided that the registration remains identical. Class A shares may be
exchanged only for Class A shares of other GT Global Mutual Funds. Class B
shares may be exchanged only for Class B shares of other GT Global Mutual Funds.
The exchange privilege is not an option or right to purchase shares but is
permitted under the current policies of the respective GT Global Mutual Funds.
The privilege may be discontinued or changed at any time by any of the Funds
upon 60 days' prior written notice to the shareholders of such Fund and is
available only in states where the exchange may be made legally. Before
purchasing shares through the exercise of the exchange privilege, a shareholder
should obtain and read a copy of the prospectus of the Fund to be purchased and
should consider the investment objective(s) of that Fund.
TELEPHONE REDEMPTIONS
A corporation or partnership wishing to utilize telephone redemption services
must submit a "Corporate Resolution" or "Certificate of Partnership" indicating
the names, titles and the required number of signatures of persons authorized to
act on its behalf. The certificate must be signed by a duly authorized
officer(s) and, in the case of a corporation, the corporate seal must be
affixed. All shareholders may request that redemption proceeds be transmitted by
bank wire directly to the shareholder's predesignated account at a domestic bank
or savings institution if the proceeds are at least $1,000. Costs in connection
with the administration of this service, including wire charges, will be borne
by the Funds. Proceeds of less than $ 1,000 will be mailed to the shareholder's
registered address of record. The Funds and the Transfer Agent reserve the right
to refuse any telephone instructions and may discontinue the aforementioned
redemption options upon 30 days' written notice.
SYSTEMATIC WITHDRAWAL PLAN
Shareholders owning Class A or Class B shares with a value of $10,000 or more of
any of the Funds, may establish a Systematic Withdrawal Plan ("SWP"). Under a
SWP, a shareholder will receive monthly or quarterly payments, in amounts of not
less than $100 per payment, through the automatic redemption of the necessary
number of shares on the designated dates (monthly or beginning quarterly on the
25th day of the month the investor first selects). If the 25th day falls on a
Saturday, Sunday or holiday, the redemption will take place on the prior
business day. Certificates, if any, for the shares being redeemed must be held
by the Transfer Agent. Checks will be made payable to the designated recipient
and mailed within seven days. If the recipient is other than the registered
shareholder, the signature of each shareholder must
STATEMENT OF ADDITIONAL INFORMATION PAGE 27
<PAGE>
GT GLOBAL EQUITY FUNDS
be guaranteed on the SWP application (see "How to Redeem Shares" in the
Prospectus). A corporation (or partnership) must also submit a "Corporation
Resolution" or "Certification of Partnership" indicating the names, titles, and
signatures of the individuals authorized to act on its behalf, and the SWP
application must be signed by a duly authorized officer(s) and the corporate
seal affixed.
With respect to a SWP, the maximum annual SWP withdrawal is 12% of the initial
account value. Withdrawals in excess of 12% of the initial account value
annually may result in assessment of a contingent deferred sales charge. See
"How to Invest" in the Prospectus.
Shareholders should be aware that systematic withdrawals may deplete or use up
entirely the initial investment and result in realized long-term or short-term
capital gains or losses. The SWP may be terminated at any time by the Transfer
Agent or a Fund upon 30 days' written notice or by a shareholder upon written
notice to a Fund or its Transfer Agent. Applications and further details
regarding establishment of a SWP are provided at the back of the Funds'
Prospectus.
SUSPENSION OF REDEMPTION PRIVILEGES
The Funds may suspend redemption privileges or postpone the date of payment for
more than seven days after a redemption order is received during any period: (1)
when the NYSE is closed other than customary weekend and holiday closings, or
when trading on the NYSE is restricted as directed by the SEC; (2) when an
emergency exists, as defined by the SEC, that would prohibit the Funds from
disposing of portfolio securities owned by them or in fairly determining the
value of their assets; or (3) as the SEC may otherwise permit.
REDEMPTIONS IN KIND
It is possible that conditions may arise in the future that would, in the
Board's opinion, make it undesirable for a Fund to pay for all redemptions in
cash. In such cases, the Board may authorize payment to be made in portfolio
securities or other property of a Fund, so-called "redemptions in kind." Payment
of redemptions in kind will be made in readily marketable securities. Such
securities would be valued at the same value assigned to them in computing the
net asset value per share. Shareholders receiving such securities would incur
brokerage costs in selling any such securities so received and would be subject
to any increase or decrease in the value of the securities until they were sold.
- --------------------------------------------------------------------------------
TAXES
- --------------------------------------------------------------------------------
GENERAL
Each Fund is treated as a separate corporation for federal income tax purposes.
In order to continue to qualify for treatment as a regulated investment company
("RIC") under the Code, each 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 gain and net gains
from certain foreign currency transactions) ("Distribution Requirement") and
must meet several additional requirements. With respect to each Fund, these
requirements include the following: (1) the Fund must derive at least 90% of its
gross income each taxable year from dividends, interest, payments with respect
to securities loans and gains from the sale or other disposition of securities
or foreign currencies, or other income (including gains from options, Futures or
Forward Contracts) derived with respect to its business of investing in
securities or those currencies ("Income Requirement"); (2) the Fund must derive
less than 30% of its gross income each taxable year from the sale or other
disposition of securities, or any of the following, that were held for less than
three months -- options or Futures (other than those on foreign currencies), or
foreign currencies (or options, Futures or Forward Contracts thereon) that are
not directly related to the Fund's principal business of investing in securities
(or options and Futures with respect to securities) ("Short-Short Limitation");
(3) at the close of each quarter of the Fund's taxable year, at least 50% of the
value of its total assets must be represented by cash and cash items, U.S.
government securities, securities of other RICs and other securities, with these
other securities limited, with respect to any one issuer, to an amount that does
not exceed 5% of the value of the Fund's total assets and that does not
represent more than 10% of the issuer's outstanding voting securities; and (4)
at the close of each quarter of the Fund's taxable year, not more than 25% of
the value of its total assets may be invested in securities (other than U.S.
government securities or the securities of other RICs) of any one issuer.
Dividends and other distributions declared by a 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
STATEMENT OF ADDITIONAL INFORMATION PAGE 28
<PAGE>
GT GLOBAL EQUITY FUNDS
December 31 of that year if the distributions are paid by the Fund during the
following January. Accordingly, those distributions will be taxed to
shareholders for the year in which that December 31 falls.
A portion of the dividends from a Fund's investment company taxable income
(whether paid in cash or reinvested in additional shares) may be eligible for
the dividends-received deduction allowed to corporations. The eligible portion
may not exceed the aggregate dividends received by a Fund from U.S.
corporations. However, dividends received by a corporate shareholder and
deducted by it pursuant to the dividends-received deduction are subject
indirectly to the alternative minimum tax.
If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares. Investors
also should be aware that if shares are purchased shortly before the record date
for any dividend or other distribution, the shareholder will pay full price for
the shares and receive some portion of the price back as a taxable distribution.
Each 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.
FOREIGN TAXES
Dividends and interest received by a Fund may be subject to income, withholding
or other taxes imposed by foreign countries that would reduce the yield on its
securities. Tax conventions between certain countries and the United States may
reduce or eliminate these foreign taxes, however, and many foreign countries do
not impose taxes on capital gains in respect of investments by foreign
investors. If more than 50% of the value of a Fund's total assets at the close
of its taxable year consists of securities of foreign corporations, the Fund
will be eligible to, and may, file an election with the Internal Revenue Service
that will enable its shareholders, in effect, to receive the benefit of the
foreign tax credit with respect to any foreign income taxes paid by it. Pursuant
to the election, a Fund will treat those taxes as dividends paid to its
shareholders and each shareholder will be required to (1) include in gross
income, and treat as paid by him, his proportionate share of those taxes, (2)
treat his share of those taxes and of any dividend paid by the Fund that
represents income from foreign sources as his own income from those sources, and
(3) either deduct the taxes deemed paid by him in computing his taxable income
or, alternatively, use the foregoing information in calculating the foreign tax
credit against his federal income tax. Each Fund will report to its shareholders
shortly after each taxable year their respective shares of the Fund's income
from sources within, and taxes paid to, foreign countries if it makes this
election.
PASSIVE FOREIGN INVESTMENT COMPANIES
Each Fund (other than the America Mid Cap Fund) may invest in the stock of
"passive foreign investment companies" ("PFICs"). A PFIC is a foreign
corporation that, in general, meets either of the following tests: (1) at least
75% of its gross income is passive or (2) an average of at least 50% of its
assets produce, or are held for the production of, passive income. Under certain
circumstances, a Fund will be subject to federal income tax on a portion of any
"excess distribution" received on, or of any gain from disposition of, stock of
a PFIC (collectively "PFIC income"), plus interest thereon, even if the Fund
distributes the PFIC income as a taxable dividend to its shareholders. The
balance of the PFIC income will be included in the Fund's investment company
taxable income and, accordingly, will not be taxable to the Fund to the extent
that income is distributed to its shareholders.
If a Fund invests in a PFIC and elects to treat the PFIC as a "qualified
electing fund" ("QEF"), then in lieu of the foregoing tax and interest
obligation, the Fund would be required to include in income each year its pro
rata share of the QEF's annual ordinary earnings and net capital gain (the
excess of net long-term capital gain over net short-term capital loss) -- which
most likely would have to be distributed by the Fund to satisfy the Distribution
Requirement and avoid imposition of the Excise Tax -- even if those earnings and
gain were not received by the Fund from the QEF. In most instances, it will be
very difficult, if not impossible, to make this election because of certain
requirements thereof.
Pursuant to proposed regulations, open-end RICs, such as the Funds, would be
entitled to elect to "mark-to-market" their stock in certain PFICs.
"Marking-to-market," in this context, means recognizing as gain for each taxable
year the excess, as of the end of that year, of the fair market value of each
such PFIC's stock over the adjusted basis in that stock (including
mark-to-market gain for each prior year for which an election was in effect).
NON-U.S. SHAREHOLDERS
Dividends paid by a Fund to a shareholder who, as to the United States, is a
nonresident alien individual, nonresident alien fiduciary of a trust or estate,
foreign corporation or foreign partnership ("foreign shareholder") generally
will be subject to U.S. withholding tax (at a rate of 30% or lower treaty rate).
Withholding will not apply if a dividend paid by a Fund to a foreign shareholder
is "effectively connected with the conduct of a U.S. trade or business," in
which case the reporting and withholding requirements applicable to domestic
shareholders will apply. A distribution of net capital gain
STATEMENT OF ADDITIONAL INFORMATION PAGE 29
<PAGE>
GT GLOBAL EQUITY FUNDS
by a Fund to a foreign shareholder generally will be subject to U.S. federal
income tax (at the rates applicable to domestic persons) only if the
distribution is "effectively connected" or the foreign shareholder is treated as
a resident alien individual for federal income tax purposes.
OPTIONS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS
The use of hedging transactions, such as selling (writing) and purchasing
options and Futures Contracts and entering into Forward Contracts, involves
complex rules that will determine, for federal income tax purposes, the
character and timing of recognition of the gains and losses a Fund realizes in
connection therewith. Gains from the disposition of foreign currencies (except
certain gains that may be excluded by future regulations), and gains from
options, Futures and Forward Contracts derived by a Fund with respect to its
business of investing in securities or foreign currencies, will qualify as
permissible income under the Income Requirement. However, income from the
disposition by a Fund of options and Futures (other than those on foreign
currencies) will be subject to the Short-Short Limitation if they are held for
less than three months. Income from the disposition by a Fund of foreign
currencies, and options, Futures and Forward Contracts on foreign currencies,
that are not directly related to the Fund's principal business of investing in
securities (or options and Futures with respect thereto) also will be subject to
the Short-Short Limitation if they are held for less than three months.
If a Fund satisfies certain requirements, any increase in value of a position
that is part of a "designated hedge" will be offset by any decrease in value
(whether realized or not) of the offsetting hedging position during the period
of the hedge for purposes of determining whether the Fund satisfies the
Short-Short Limitation. Thus, only the net gain (if any) from the designated
hedge will be included in gross income for purposes of that limitation. Each
Fund intends that, when it engages in hedging transactions, it will qualify for
this treatment, but at the present time it is not clear whether this treatment
will be available for all those transactions. To the extent this treatment is
not available, a Fund may be forced to defer the closing out of certain options,
Futures, Forward Contracts and/or foreign currency positions beyond the time
when it otherwise would be advantageous to do so, in order for the Fund to
continue to qualify as a RIC.
Futures and Forward Contracts that are subject to section 1256 of the Code
(other than those that are part of a "mixed straddle") ("Section 1256
Contracts") and that are held by a Fund at the end of its taxable year generally
will be deemed to have been sold at market value for federal income tax
purposes. Sixty percent of any net gain or loss recognized on these deemed
sales, and 60% of any net realized gain or loss from any actual sales of Section
1256 Contracts, will be treated as long-term capital gain or loss, and the
balance will be treated as short-term capital gain or loss. Section 988 of the
Code also may apply to gains and losses from transactions in foreign currencies,
foreign-currency-denominated debt securities and options, Futures and Forward
Contracts on foreign currencies ("Section 988" gains and losses). Each Section
988 gain or loss generally is computed separately and treated as ordinary income
or loss. In the case of overlap between Sections 1256 and 988, special
provisions determine the character and timing of any income, gain or loss. Each
Fund attempts to monitor Section 988 transactions to minimize any adverse tax
impact.
The foregoing is a general and abbreviated summary of certain federal tax
considerations affecting the Funds and their shareholders. Investors are urged
to consult their own tax advisers for more detailed information and for
information regarding any foreign, state and local taxes applicable to
distributions received from a Fund.
STATEMENT OF ADDITIONAL INFORMATION PAGE 30
<PAGE>
GT GLOBAL EQUITY FUNDS
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
LIECHTENSTEIN GLOBAL TRUST
Liechtenstein Global Trust AG, formerly BIL GT Group, is composed of the Manager
and its worldwide affiliates. Other worldwide affiliates of Liechtenstein Global
Trust include LGT Bank in Liechtenstein, formerly Bank in Liechtenstein, an
international financial services institution founded in 1920. LGT Bank in
Liechtenstein has principal offices in Vaduz, Liechtenstein. Its subsidiaries
currently include LGT Bank in Liechtenstein (Deutschland) GmbH, formerly Bank in
Liechtenstein (Frankfurt) GmbH, and LGT Asset Management AG, formerly Bilfinanz
und Verwaltung AG, in Zurich, Switzerland.
Worldwide asset management affiliates also currently include LGT Asset
Management PLC, formerly G.T. Management PLC, in London; LGT Asset Management
Ltd., formerly G.T. Management (Asia) Ltd., in Hong Kong; LGT Asset Management
Ltd., formerly G.T. Management (Japan), in Tokyo; LGT Asset Management Pte.
Ltd., formerly G.T. Management (Singapore) PTE Ltd., in Singapore; LGT Asset
Management Ltd., formerly G.T. Management (Australia) Ltd., in Sydney; and LGT
Asset Management GmbH, formerly BIL Asset Management GmbH, in Frankfurt.
CUSTODIAN
State Street Bank and Trust Company ("State Street"), 225 Franklin Street,
Boston, Massachusetts 02110, acts as custodian of the Funds' assets. State
Street is authorized to establish and has established separate accounts in
foreign currencies and to cause securities of the Company to be held in separate
accounts outside the United States in the custody of non-U.S. banks.
INDEPENDENT ACCOUNTANTS
The Company's and the Funds' independent accountants are Coopers & Lybrand
L.L.P., One Post Office Square, Boston, Massachusetts 02109. Coopers & Lybrand
L.L.P. conducts annual audits of the Funds, assists in the preparation of the
Funds' federal and state income tax returns and consults with the Company and
the Funds as to matters of accounting, regulatory filings and federal and state
income taxation.
The audited financial statements of the Company included in this Statement of
Additional Information have been examined by Coopers & Lybrand L.L.P. as stated
in their opinion appearing herein and are included in reliance upon such opinion
given upon the authority of that firm as experts in accounting and auditing.
USE OF NAME
The Manager has granted the Company the right to use the "GT" and "GT Global"
names and has reserved the right to withdraw its consent to the use of such
names by the Company and/or any of the Funds at any time, or to grant the use of
such names to any other company.
SHAREHOLDER LIABILITY
Under certain circumstances, shareholders of a Fund may be held personally
liable for the obligations of the Fund. The Company's Declaration of Trust
provides that shareholders shall not be subject to any personal liability for
the acts or obligations of a Fund or the Company and that every written
agreement, obligation or other undertaking made or issued by a Fund or the
Company shall contain a provision to the effect that shareholders are not
personally liable thereunder. The Declaration of Trust provides for
indemnification out of the Company's assets under certain circumstances, and
further provides that the Company shall, upon request, assume the defense of any
act or obligation of a Fund or the Company and that the Fund in which the
shareholder holds shares will indemnify the shareholder for all legal and other
expenses incurred therewith. Thus, the risk of any shareholder's incurring
financial loss beyond his or her investment, because of this theoretical
shareholder liability, is limited to circumstances in which the Fund or the
Company itself would be unable to meet its obligations.
STATEMENT OF ADDITIONAL INFORMATION PAGE 31
<PAGE>
GT GLOBAL EQUITY FUNDS
INVESTMENT RESULTS
- --------------------------------------------------------------------------------
STANDARDIZED RETURNS
Each Fund's "Standardized Returns," as referred to in the Prospectus (see "Other
Information -- Performance Information" in the Prospectus), is calculated
separately for Class A and Class B shares of each Fund, as follows: Standardized
Return (average annual total return ("T")) is computed by using the ending
redeeming value ("ERV") of a hypothetical initial investment of $1,000 ("P")
over a period of years ("n") according to the following formula as required by
the SEC: P(1+T) to the (n)th power=ERV. The following assumptions will be
reflected in computations made in accordance with this formula: (1) for Class A
shares, deduction of the maximum sales charge of 4.75% from the $1,000 initial
investment; (2) for Class B shares, deduction of the applicable contingent
deferred sales charge imposed on a redemption of Class B shares held for the
period; (3) reinvestment of dividends and other distributions at net asset value
on the reinvestment date determined by the Board; and (4) a complete redemption
at the end of any period illustrated.
The Standardized Returns for the Class A and Class B shares of the America Mid
Cap Fund, stated as average annualized total returns for the periods shown,
were:
<TABLE>
<CAPTION>
AMERICA MID CAP FUND AMERICA MID CAP FUND
PERIOD (CLASS A) (CLASS B)
- ------------------------------------------------------------------------- ---------------------- ----------------------
<S> <C> <C>
Fiscal year ended December 31, 1996...................................... 10.16% 9.82%
For the five years ended December 31, 1996............................... 17.52% N/A
April 1, 1993 (commencement of operations) through December 31, 1996..... N/A 17.78%
June 9, 1987 (commencement of operations) through December 31, 1996...... 14.49% N/A
</TABLE>
The Standardized Returns for the Class A and Class B shares of the Europe Fund,
stated as average annualized total returns for the periods shown, were:
<TABLE>
<CAPTION>
EUROPE FUND EUROPE FUND
PERIOD (CLASS A) (CLASS B)
- -------------------------------------------------------------------------------------------- ------------- -------------
<S> <C> <C>
Fiscal year ended December 31, 1996......................................................... 13.93% 13.79%
For the five years ended December 31, 1996.................................................. 6.07% N/A
For the ten years ended December 31, 1996................................................... 7.13% N/A
April 1, 1993 (commencement of operations) through December 31, 1996........................ N/A 10.07%
</TABLE>
The Standardized Returns for the Class A and Class B shares of the International
Fund, stated as average annualized total returns for the periods shown, were:
<TABLE>
<CAPTION>
INTERNATIONAL FUND INTERNATIONAL FUND
PERIOD (CLASS A) (CLASS B)
- ---------------------------------------------------------------------------------- ------------------ ------------------
<S> <C> <C>
Fiscal year ended December 31, 1996............................................... 4.09% 3.80%
For the five years ended December 31, 1996........................................ 4.73% N/A
For the ten years ended December 31, 1996......................................... 7.94% N/A
April 1, 1993 (commencement of operations) through December 31, 1996.............. N/A 6.37%
</TABLE>
The Standardized Returns for the Class A and Class B shares of the Japan Fund,
stated as average annualized total returns for the periods shown, were:
<TABLE>
<CAPTION>
JAPAN FUND JAPAN FUND
PERIOD (CLASS A) (CLASS B)
- ----------------------------------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
Fiscal year ended December 31, 1996............................................................ -11.82% -12.45%
For the five years ended December 31, 1996..................................................... 0.06% N/A
For the ten years ended December 31, 1996...................................................... 7.55% N/A
April 1, 1993 (commencement of operations) through December 31, 1996........................... N/A 3.25%
</TABLE>
STATEMENT OF ADDITIONAL INFORMATION PAGE 32
<PAGE>
GT GLOBAL EQUITY FUNDS
The Standardized Returns for the Class A and Class B shares of the Pacific Fund,
stated as average annualized total returns for the periods shown, were:
<TABLE>
<CAPTION>
PACIFIC FUND PACIFIC FUND
PERIOD (CLASS A) (CLASS B)
- --------------------------------------------------------------------------------------------- ------------ ------------
<S> <C> <C>
Fiscal year ended December 31, 1996.......................................................... 14.34% 14.28%
For the five years ended December 31, 1996................................................... 7.83% N/A
For the ten years ended December 31, 1996.................................................... 10.97% N/A
April 1, 1993 (commencement of operations) through December 31, 1996......................... N/A 10.45%
</TABLE>
The standardized Returns for the Class A and Class B shares of the Worldwide
Fund, stated as average annualized total returns for the periods shown, were:
<TABLE>
<CAPTION>
WORLDWIDE FUND WORLDWIDE FUND
PERIOD (CLASS A) (CLASS B)
- -------------------------------------------------------------------------------------- ---------------- ----------------
<S> <C> <C>
Fiscal year ended December 31, 1996................................................... 5.66% 5.24%
For the five years ended December 31, 1996............................................ 7.64% N/A
April 1, 1993 (commencement of operations) through December 31, 1996.................. N/A 7.10%
June 9, 1987 (commencement of operations) through December 31, 1996................... 8.34% N/A
</TABLE>
NON-STANDARDIZED RETURNS
In addition to Standardized Returns, each Fund also may include in
advertisements, sales literature and shareholder reports other total return
performance data ("Non-Standardized Return"). Non-Standardized Return is
calculated separately for Class A and Class B shares of each Fund and may be
calculated according to several different formulas. Non-Standardized Returns may
be quoted for the same or different time periods for which Standardized Returns
are quoted. Non-Standardized Returns may or may not take sales charges into
account; performance data calculated without taking the effect of sales charges
into account will be higher than data including the effect of such charges.
Average annual Non-Standardized Return ("T") is computed by using the ending
redeeming value ("ERV") of a hypothetical initial investment of $1,000 ("P")
over a period of years ("n") according to the following formula as required by
the SEC: P(1+T) to the (n)th power=ERV. The following assumptions will be
reflected in computations made in accordance with this formula: (1) no deduction
of sales charges; (2) reinvestment of dividends and other distributions at net
asset value on the reinvestment date determined by the Board; and (3) a complete
redemption at the end of any period illustrated.
The average annual Non-Standardized Returns for the Class A and Class B shares
of the America Mid Cap Fund, stated as average annualized total returns for the
periods shown, were:
<TABLE>
<CAPTION>
AMERICA MID CAP FUND AMERICA MID CAP FUND
PERIOD (CLASS A) (CLASS B)
- ------------------------------------------------------------------------- ---------------------- ----------------------
<S> <C> <C>
Fiscal year ended December 31, 1996...................................... 15.65% 14.82%
April 1, 1993 (commencement of operations) through December 31, 1996..... N/A 18.29%
June 9, 1987 (commencement of operations) through December 31, 1996...... 15.07% N/A
</TABLE>
The average annual Non-Standardized Returns for the Class A and Class B shares
of the Europe Fund, stated as average annualized total returns for the periods
shown, were:
<TABLE>
<CAPTION>
EUROPE FUND EUROPE FUND
PERIOD (CLASS A) (CLASS B)
- -------------------------------------------------------------------------------------------- ------------- -------------
<S> <C> <C>
Fiscal year ended December 31, 1996......................................................... 19.61% 18.79%
April 1, 1993 (commencement of operations) through December 31, 1996........................ N/A 10.68%
July 19, 1985 (commencement of operations) through December 31, 1996........................ 12.91% N/A
</TABLE>
The average annual Non-Standardized Returns for the Class A and Class B shares
of the International Fund, stated as average annualized total returns for the
periods shown, were:
<TABLE>
<CAPTION>
INTERNATIONAL FUND INTERNATIONAL FUND
PERIOD (CLASS A) (CLASS B)
- ---------------------------------------------------------------------------------- ------------------ ------------------
<S> <C> <C>
Fiscal year ended December 31, 1996............................................... 9.28% 8.67%
April 1, 1993 (commencement of operations) through December 31, 1996.............. N/A 7.04%
July 19, 1985 (commencement of operations) through December 31, 1996.............. 13.63% N/A
</TABLE>
The average annual Non-Standardized Returns for the Class A and Class B shares
of the Japan Fund, stated as average annualized total returns for the periods
shown, were:
<TABLE>
<CAPTION>
JAPAN FUND JAPAN FUND
PERIOD (CLASS A) (CLASS B)
- ----------------------------------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
Fiscal year ended December 31, 1996............................................................ -7.43% -8.05%
April 1, 1993 (commencement of operations) through December 31, 1996........................... N/A 3.95%
July 19, 1985 (commencement of operations) through December 31, 1996........................... 13.69% N/A
</TABLE>
STATEMENT OF ADDITIONAL INFORMATION PAGE 33
<PAGE>
GT GLOBAL EQUITY FUNDS
The average annual Non-Standardized Returns for the Class A and Class B shares
of the Pacific Fund, stated as average annualized total returns for the periods
shown, were:
<TABLE>
<CAPTION>
PACIFIC FUND PACIFIC FUND
PERIOD (CLASS A) (CLASS B)
- --------------------------------------------------------------------------------------------- ------------ ------------
<S> <C> <C>
Fiscal year ended December 31, 1996.......................................................... 20.04% 19.28%
April 1, 1993 (commencement of operations) through December 31, 1996......................... N/A 11.05%
January 19, 1977 (commencement of operations) through December 31, 1996...................... 13.76% N/A
</TABLE>
The average annual Non-Standardized Returns for the Class A and Class B shares
of the Worldwide Fund, stated as average annualized total returns for the
periods shown, were:
<TABLE>
<CAPTION>
WORLDWIDE FUND WORLDWIDE FUND
PERIOD (CLASS A) (CLASS B)
- -------------------------------------------------------------------------------------- ---------------- ----------------
<S> <C> <C>
Fiscal year ended December 31, 1996................................................... 10.92% 10.16%
April 1, 1993 (commencement of operations) through December 31, 1996.................. N/A 7.76%
June 9, 1987 (commencement of operations) through December 31, 1996................... 8.89% N/A
</TABLE>
Aggregate Non-Standardized Return ("T") is computed by using the ending value of
the account ("VOA") of a hypothetical initial investment of $1,000 ("P")
according to the following formula: T=(VOA/P)-1. Aggregate Non-Standardized
Return assumes reinvestment of dividends and other distributions and, as set
forth below, may or may not take sales charges into account.
The aggregate Non-Standardized Returns (not taking sales charges into account)
for the Class A and Class B shares of the America Mid Cap Fund, stated as
aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
AMERICA MID CAP FUND AMERICA MID CAP FUND
PERIOD (CLASS A) (CLASS B)
- ------------------------------------------------------------------------- ---------------------- ----------------------
<S> <C> <C>
April 1, 1993 (commencement of operations) through December 31, 1996..... N/A 87.74%
June 9, 1987 (commencement of operations) through December 31, 1996...... 282.75% N/A
</TABLE>
The aggregate Non-Standardized Returns (not taking sales charges into account)
for the Class A and Class B shares of the Europe Fund, stated as aggregate total
returns for the periods shown, were:
<TABLE>
<CAPTION>
EUROPE FUND EUROPE FUND
PERIOD (CLASS A) (CLASS B)
- -------------------------------------------------------------------------------------------- ------------- -------------
<S> <C> <C>
April 1, 1993 (commencement of operations) through December 31, 1996........................ N/A 46.33%
July 19, 1985 (commencement of operations) through December 31, 1996........................ 301.82% N/A
</TABLE>
The aggregate Non-Standardized Returns (not taking sales charges into account)
for the Class A and Class B shares of the International Fund, stated as
aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
INTERNATIONAL FUND INTERNATIONAL FUND
PERIOD (CLASS A) (CLASS B)
- ---------------------------------------------------------------------------------- ------------------ ------------------
<S> <C> <C>
April 1, 1993 (commencement of operations) through December 31, 1996.............. N/A 29.05%
July 19, 1985 (commencement of operations) through December 31, 1996.............. 332.07% N/A
</TABLE>
The aggregate Non-Standardized Returns (not taking sales charges into account)
for the Class A and Class B shares of the Japan Fund, stated as aggregate total
returns for the periods shown, were:
<TABLE>
<CAPTION>
JAPAN FUND JAPAN FUND
PERIOD (CLASS A) (CLASS B)
- ----------------------------------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
April 1, 1993 (commencement of operations) through December 31, 1996........................... N/A 15.65%
July 19, 1985 (commencement of operations) through December 31, 1996........................... 334.83% N/A
</TABLE>
The aggregate Non-Standardized Returns (not taking sales charges into account)
for the Class A and Class B shares of the Pacific Fund, stated as aggregate
total returns for the periods shown, were:
<TABLE>
<CAPTION>
PACIFIC FUND PACIFIC FUND
PERIOD (CLASS A) (CLASS B)
- --------------------------------------------------------------------------------------------- ------------ ------------
<S> <C> <C>
April 1, 1993 (commencement of operations) through December 31, 1996......................... N/A 48.17%
January 19, 1977 (commencement of operations) through December 31, 1996...................... 1209.45% N/A
</TABLE>
The aggregate Non-Standardized Returns (not taking sales charges into account)
for the Class A and Class B shares of the Worldwide Fund, stated as aggregate
total returns for the periods shown, were:
<TABLE>
<CAPTION>
WORLDWIDE FUND WORLDWIDE FUND
PERIOD (CLASS A) (CLASS B)
- -------------------------------------------------------------------------------------- ---------------- ----------------
<S> <C> <C>
April 1, 1993 (commencement of operations) through December 31, 1996.................. N/A 32.34%
June 9, 1987 (commencement of operations) through December 31, 1996................... 125.78% N/A
</TABLE>
STATEMENT OF ADDITIONAL INFORMATION PAGE 34
<PAGE>
GT GLOBAL EQUITY FUNDS
The aggregate Non-Standardized Returns (taking sales charges into account) for
the Class A and Class B of the America Mid Cap Fund, stated as aggregate total
returns for the periods shown, were:
<TABLE>
<CAPTION>
AMERICA MID CAP FUND AMERICA MID CAP FUND
PERIOD (CLASS A) (CLASS B)
- ------------------------------------------------------------------------- ---------------------- ----------------------
<S> <C> <C>
April 1, 1993 (commencement of operations) through December 31, 1996..... N/A 84.74%
June 9, 1987 (commencement of operations) through December 31, 1996...... 264.57% N/A
</TABLE>
The aggregate Non-Standardized Returns (taking sales charges into account) for
the Class A and Class B shares of the Europe Fund, stated as aggregate total
returns for the periods shown, were:
<TABLE>
<CAPTION>
EUROPE FUND EUROPE FUND
PERIOD (CLASS A) (CLASS B)
- -------------------------------------------------------------------------------------------- ------------- -------------
<S> <C> <C>
April 1, 1993 (commencement of operations) through December 31, 1996........................ N/A 43.33%
July 19, 1985 (commencement of operations) through December 31, 1996........................ 282.74% N/A
</TABLE>
The aggregate Non-Standardized Returns (taking sales charges into account) for
the Class A and Class B shares of the International Fund, stated as aggregate
total returns for the periods shown, were:
<TABLE>
<CAPTION>
INTERNATIONAL FUND INTERNATIONAL FUND
PERIOD (CLASS A) (CLASS B)
- ---------------------------------------------------------------------------------- ------------------ ------------------
<S> <C> <C>
April 1, 1993 (commencement of operations) through December 31, 1996.............. N/A 26.07%
July 19, 1985 (commencement of operations) through December 31, 1996.............. 311.54% N/A
</TABLE>
The aggregate Non-Standardized Returns (taking sales charges into account) for
the Class A and Class B shares of the Japan Fund, stated as aggregate total
returns for the periods shown, were:
<TABLE>
<CAPTION>
JAPAN FUND JAPAN FUND
PERIOD (CLASS A) (CLASS B)
- ----------------------------------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
April 1, 1993 (commencement of operations) through December 31, 1996........................... N/A 12.76%
July 19, 1985 (commencement of operations) through December 31, 1996........................... 314.18% N/A
</TABLE>
The aggregate Non-Standardized Returns (taking sales charges into account) for
the Class A and Class B shares of the Pacific Fund, stated as aggregate total
returns for the periods shown, were:
<TABLE>
<CAPTION>
PACIFIC FUND PACIFIC FUND
PERIOD (CLASS A) (CLASS B)
- --------------------------------------------------------------------------------------------- ------------ ------------
<S> <C> <C>
April 1, 1993 (commencement of operations) through December 31, 1996......................... N/A 45.17%
January 19, 1977 (commencement of operations) through December 31, 1996...................... 1147.25% N/A
</TABLE>
The aggregate Non-Standardized Returns (taking sales charges into account) for
the Class A and Class B shares of the Worldwide Fund, stated as aggregate total
returns for the periods shown, were:
<TABLE>
<CAPTION>
WORLDWIDE FUND WORLDWIDE FUND
PERIOD (CLASS A) (CLASS B)
- -------------------------------------------------------------------------------------- ---------------- ----------------
<S> <C> <C>
April 1, 1993 (commencement of operations) through December 31, 1996.................. N/A 29.34%
June 9, 1987 (commencement of operations) through December 31, 1996................... 115.06% N/A
</TABLE>
Each Fund's investment results will vary from time to time depending upon market
conditions, the composition of each Fund's portfolio and operating expenses of
each Fund, so that current or past yield or total return should not be
considered representative of what an investment in each Fund may earn in any
future period. These factors and possible differences in the methods used in
calculating investment results should be considered when comparing each Fund's
investment results with those published for other investment companies and other
investment vehicles. Each Fund's results also should be considered relative to
the risks associated with such Fund's investment objective and policies.
IMPORTANT POINTS TO NOTE ABOUT DATA RELATING TO WORLD EQUITY AND BOND MARKETS
Each Fund and GT Global may from time to time in advertisements, sales
literature and reports furnished to present or prospective shareholders compare
a Fund with, but not limited to, the following:
(1) The Salomon Brothers Non-U.S. Dollars Indices, which are measures of
the total return performance of high quality non-U.S. dollar denominated
securities in major sectors of the worldwide bond markets.
(2) The Lehman Brothers Government/Corporate Bond Index, which is a
comprehensive measure of all public obligations of the U.S. Treasury
(excluding flower bonds and foreign targeted issues), all publicly issued
debt of agencies of the U.S. Government (excluding mortgage backed
securities), and all public, fixed rate, non-convertible investment grade
domestic corporate debt rated at least Baa by Moody's or BBB by S&P, or, in
the case of nonrated bonds, BBB by Fitch Investors Service, Inc. ("Fitch")
(excluding Collateralized Mortgage Obligations).
STATEMENT OF ADDITIONAL INFORMATION PAGE 35
<PAGE>
GT GLOBAL EQUITY FUNDS
(3) The Consumer Price Index, which is a measure of the average change
in prices over time in a fixed market basket of goods and services (e.g.,
food, clothing, shelter, fuels, transportation fares, charges for doctors'
and dentists' services, prescription medicines, and other goods and services
that people buy for day-to-day living). There is inflation risk which does
not affect a security's value but its purchasing power i.e. the risk of
changing price levels in the economy that affects security prices or the
price of goods and services.
(4) Data and mutual fund rankings published or prepared by Lipper
Analytical Data Services, Inc. ("Lipper"), CDA/Wiesenberger Investment
Companies Service ("CDA/Wiesenberger"), Morningstar, Inc. and/or other
companies that rank and/or compare mutual funds by overall performance,
investment objectives, assets, expense levels, periods of existence and/or
other factors. In this regard each Fund may be compared to the Fund's "peer
group" as defined by Lipper, CDA/Wiesenberger, Morningstar and/or other
firms, as applicable, or to specific funds or groups of funds within or
without such peer group. Lipper generally ranks funds on the basis of total
return, assuming reinvestment of distributions, but does not take sales
charges or redemption fees into consideration, and is prepared without
regard to tax consequences. In addition to the mutual fund rankings, the
Fund's performance may be compared to mutual fund performance indices
prepared by Lipper. Morningstar is a mutual fund rating service that also
rates mutual funds on the basis of risk-adjusted performance. Morningstar
ratings are calculated from a fund's three, five and ten year average annual
returns with appropriate fee adjustments and a risk factor that reflects
fund performance relative to the three-month U.S. Treasury bill monthly
returns. Ten percent of the funds in an investment category receive five
stars and 22.5% receive four stars. The ratings are subject to change each
month.
(5) Bear Stearns Foreign Bond Index, which provides simple average
returns for individual countries and gross national product ("GNP") weighted
index, beginning in 1975. The returns are broken down by local market and
currency.
(6) Ibbottson Associates International Bond Index, which provides a
detailed breakdown of local market and currency returns since 1960.
(7) Standard & Poor's 500 Composite Stock Price Index which is a widely
recognized index composed of the capitalization-weighted average of the
prices of 500 of the largest publicly traded stocks in the United States.
(8) Salomon Brothers Broad Investment Grade Index which is a widely used
index composed of U.S. domestic government, corporate and mortgage-backed
fixed income securities.
(9) Dow Jones Industrial Average.
(10) CNBC/Financial News Composite Index.
(11) Morgan Stanley Capital International World Indices, including, among
others, the Morgan Stanley Capital International Europe, Australia, Far East
Index ("EAFE Index"). The EAFE index is an unmanaged index of more than
1,000 companies in Europe, Australia and the Far East.
(12) Salomon Brothers World Government Bond Index and Salomon Brothers
World Government Bond Index-Non-U.S. are each a widely used index composed
of world government bonds.
(13) The World Bank Publication of Trends in Developing Countries (TIDE).
TIDE provides brief reports on most of the World Bank's borrowing members.
The World Development Report is published annually and looks at global and
regional economic trends and their implications for the developing
economies.
(14) Salomon Brothers Global Telecommunications Index is composed of
telecommunications companies in the developing and emerging countries.
(15) Datastream and Worldscope each is an on-line database retrieval
service for information including, but not limited to, international
financial and economic data.
(16) International Financial Statistics, which is produced by the
International Monetary Fund.
(17) Various publications and annual reports produced by the World Bank
and its affiliates.
(18) Various publications from the International Bank for Reconstruction
and Development.
(19) Various publications including ratings agencies such as Moody's, S&P
and Fitch.
(20) Wilshire Associates which is an on-line database for international
financial and economic data including performance measure for a wide range
of securities.
STATEMENT OF ADDITIONAL INFORMATION PAGE 36
<PAGE>
GT GLOBAL EQUITY FUNDS
(21) Bank Rate National Monitor Index, which is an average of the quoted
rates for 100 leading banks and thrifts in ten U.S. cities.
(22) International Finance Corporation ("IFC") Emerging Markets Data Base
which provides detailed statistics on stock and bond markets in developing
countries.
(23) Various publications from the Organization for Economic Cooperation
and Development (OECD).
(24) Average of Savings Accounts, which is a measure of all kinds of
savings deposits, including longer-term certificates. Savings accounts offer
a guaranteed rate of return on principal, but no opportunity for capital
growth. During a portion of the period, the maximum rates paid on some
savings deposits were fixed by law.
Indices, economic and financial data prepared by the research departments of
various financial organizations, such as Salomon Brothers, Inc., Lehman
Brothers, Merrill Lynch, Pierce, Fenner & Smith, Inc., J. P. Morgan, Morgan
Stanley, Smith Barney, S.G. Warburg, Jardine Flemming, The Bank for
International Settlements, Asian Development Bank, Bloomberg, L.P., and
Ibbottson Associates may be used, as well as information reported by the Federal
Reserve and the respective Central Banks of various nations. In addition, GT
Global may use performance rankings, ratings and commentary reported
periodically in national financial publications, including Money Magazine,
Mutual Fund Magazine, Smart Money, Global Finance, EuroMoney, Financial World,
Forbes, Fortune, Business Week, Latin Finance, the Wall Street Journal, Emerging
Markets Weekly, Kiplinger's Guide To Personal Finance, Barron's, The Financial
Times, USA Today, The New York Times, Far Eastern Economic Review, The Economist
and Investors Business Digest. Each Fund may compare its performance to that of
other compilations or indices of comparable quality to those listed above and
other indices which may be developed and made available in the future.
Information relating to foreign market performance, capitalization and
diversification is based on sources believed to be reliable, but which may be
subject to revision and which has not been independently verified by the Company
or GT Global. The authors and publishers of such material are not to be
considered as "experts" under the 1933 Act as amended, on account of the
inclusion of such information herein.
GT Global believes that this information may be useful to investors considering
whether and to what extent to diversify their investments through the purchase
of mutual funds investing in securities on a global basis. However, this data is
not a representation of the past performance of any of these Funds, nor is it a
prediction of such performance. The performance of the Funds will differ from
the historical performance of relevant indices. The performance of indices does
not take expenses into account, while each Fund incurs expenses in its
operations, which will reduce performance. Each Fund is actively managed, I.E.,
the Manager, as each Fund's investment manager, actively purchases and sells
securities in seeking each Fund's investment objective. Moreover, each Fund may
invest a portion of its assets in corporate bonds, while certain indices relate
only to government bonds. Each of these factors will cause the performance of
each Fund to differ from relevant indices.
From time to time, each Fund and GT Global may refer to the number of
shareholders in the Funds or the aggregate number of shareholders in all GT
Global Mutual Funds or the dollar amount of each Fund's assets under management
in advertising materials.
GT Global believes each Fund is an appropriate investment for long-term
investment goals including funding retirement, paying for education or
purchasing a house. GT Global may provide information designed to help
individuals understand their investment goals and explore various financial
strategies. For example, GT Global may describe general principles of investing,
such as asset allocation, diversification and risk tolerance. Each Fund does not
represent a complete investment program and the investors should consider each
Fund as appropriate for a portion of their overall investment portfolio with
regard to their long-term investment goals. There is no assurance that any such
information will lead to achieving these goals or guarantee future results.
From time to time, GT Global may refer to or advertise the names of such
companies, or their products although there can be no assurance that any GT
Global Mutual Fund may own the securities of these companies.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical returns
of the capital markets in the United States, including common stocks, small
capitalization stocks, long-term corporate bonds, intermediate-term government
bonds, long-term government bonds, Treasury bills, the U.S. rate of inflation
(based on the CPI), and combinations of various capital markets. The performance
of these capital markets are based on the returns of different indices.
GT Global Funds may use the performance of these capital markets in order to
demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any of
these capital markets. The risks associated with the security types in any
capital market may or may not correspond directly to
STATEMENT OF ADDITIONAL INFORMATION PAGE 37
<PAGE>
GT GLOBAL EQUITY FUNDS
those of the funds. Ibbotson calculates total returns in the same method as the
funds. The funds may also compare performance to that of other compilations or
indices that may be developed and made available in the future.
Each Fund may quote various measures of volatility and benchmark correlation
such as beta, standard deviation and R(2) in advertising. In addition, each Fund
may compare these measures to those of other funds. Measures of volatility seek
to compare each Fund's historical share price fluctuations or total returns
compared to those of a benchmark. All measures of volatility and correlation are
calculated using averages of historical data.
Each Fund may advertise examples of the effects of periodic investment plans,
including the principle of dollar cost averaging programs. In such a program, an
investor invests a fixed dollar amount in a fund at periodic intervals, thereby
purchasing fewer shares when prices are high and more shares when prices are
low. While such a strategy does not assure a profit or guard against loss in a
declining market, the investor's average cost per share can be lower than if
fixed numbers of shares are purchased at the same intervals. In evaluating such
a plan, investors should consider their ability to continue purchasing shares
through periods of low price levels.
Each Fund may be available for purchase through retirement plans or other
programs offering deferral of income taxes, which may produce superior after tax
returns over time. For example, a $10,000 investment earning a taxable return of
10% annually would have an after-tax value of $17,976 after ten years, assuming
tax was deducted from the return each year at a 39.6% rate. An equivalent
tax-deferred investment would have an after-tax value of $19,626 after ten
years, assuming tax was deducted at a 39.6% rate from the deferred earnings at
the end of the ten-year period.
Each Fund may describe in its sales material and advertisements how an investor
may invest in the GT Global Mutual Funds through various retirement accounts and
plans that offer deferral of income taxes on investment earnings and may also
enable an investor to make pre-tax contributions. Because of their advantages,
these retirement accounts and plans may produce returns superior to comparable
non-retirement investments. In sales material and advertisements, the Funds may
also discuss these accounts and plans, which include:
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS): If you have earned income from employment
(including self-employment), you can contribute each year to an IRA up to the
lesser of (1) $2,000 for yourself or $4,000 for you and your spouse, regardless
of whether your spouse is employed, or (2) 100% of compensation. Some
individuals may be able to take an income tax deduction for the contribution.
Regular contributions may not be made for the year you become 70 1/2 or
thereafter. Please consult your tax advisor for more information.
ROLLOVER IRAS: Individuals who receive distributions from qualified retirement
plans (other than required distributions) and who wish to keep their savings
growing tax-deferred can rollover (or make a direct transfer of) their
distribution to a Rollover IRA. These accounts can also receive rollovers or
transfers from an existing IRA. If an "eligible rollover distribution" from a
qualified employer-sponsored retirement plan is not directly rolled over to an
IRA (or certain qualified plans), withholding at the rate of 20% will be
required for federal income tax purposes. A distribution from a qualified plan
that is not an "eligible rollover distribution," including a distribution that
is one of a series of substantially equal periodic payments, generally is
subject to regular wage withholding or withholding at the rate of 10% (depending
on the type and amount of the distribution), unless you elect not to have any
withholding apply. Please consult your tax advisor for more information.
SEP-IRAS: Simplified employee pension plans ("SEPs" or "SEP-IRAs") provide
self-employed individuals (and any eligible employees) with benefits similar to
Keogh-type plans or Code Section 401(k) plans, but with fewer administrative
requirements and therefore potential lower annual administration expenses.
CODE SECTION 403(B)(7) CUSTODIAL ACCOUNTS: Employees of public schools and most
other not-for-profit organizations can make pre-tax salary reduction
contributions to these accounts.
PROFIT-SHARING (INCLUDING SECTION 401(K)) AND MONEY PURCHASE PENSION
PLANS: Corporations can sponsor these qualified defined contribution plans for
their employees. A Section 401(k) plan, a type of profit-sharing plan,
additionally permits the eligible, participating employees to make pre-tax
salary reduction contributions to the plan (up to certain limitations).
SIMPLE RETIREMENT PLANS: Employers with no more than 100 employees who do not
maintain another retirement plan may establish a Savings Incentive Match Plan
for Employees ("SIMPLE") either as separate IRAs or as part of a Code Section
401(k) plan. SIMPLEs are not subject to the complicated nondiscrimination rules
that generally apply to qualified retirement plans.
GT Global may from time to time in its sales materials and advertising discuss
the risks inherent in investing. The major types of investment risks are market
risk, industry risk, credit risk, interest risk, liquidity risk and inflation
risk. Risk
STATEMENT OF ADDITIONAL INFORMATION PAGE 38
<PAGE>
GT GLOBAL EQUITY FUNDS
represents the possibility that you may lose some or all of your investment over
a period of time. A basic tenet of investing is the greater the potential
reward, the greater the risk.
From time to time, the Funds and GT Global will quote data regarding industries,
companies, individual countries, regions, world stock exchanges, and economic
and demographic statistics from sources GT Global deems reliable, including the
economic and financial data of such financial organizations as:
1) Stock market capitalization: Morgan Stanley Capital International World
Indices, IFC and Datastream.
2) Stock market trading volume: Morgan Stanley Capital International World
Indices and IFC.
3) The number of listed companies: IFC, LGT Guide to World Equity Markets,
Salomon Brothers, Inc., and S.G. Warburg.
4) Wage rates: U.S. Department of Labor Statistics and Morgan Stanley Capital
International World Indices.
5) International industry performance: Morgan Stanley Capital International
World Indices, Wilshire Associates and Salomon Brothers, Inc.
6) Stock market performance: Morgan Stanley Capital International World
Indices, IFC and Datastream.
7) The Consumer Price Index and inflation rate: The World Bank, Datastream and
IFC.
8) Gross Domestic Product ("GDP"): Datastream and The World Bank.
9) GDP growth rate: IFC, The World Bank and Datastream.
10) Population: The World Bank, Datastream and United Nations.
11) Average annual growth rate (%) of population: The World Bank, Datastream and
United Nations.
12) Age distribution within populations: Organization for Economic Cooperation
and Development and United Nations.
13) Total exports and imports by year: IFC, The World Bank and Datastream.
14) Top three companies by country, industry or market: IFC, LGT Guide to World
Equity Markets, Salomon Brothers Inc., and S.G. Warburg.
15) Foreign direct investments to developing countries: The World Bank and
Datastream.
16) Supply, consumption, demand and growth in demand of certain products,
services and industries, including, but not limited to electricity, water,
transportation, construction materials, natural resources, technology, other
basic infrastructure, financial services, health care services and supplies,
consumer products and services and telecommunications equipment and services
(sources of such information may include, but would not be limited to, The
World Bank, OECD, IMF, Bloomberg and Datastream).
17) Standard deviation and performance returns for U.S. and non-U.S. equity and
bond markets: Morgan Stanley Capital International.
18) Countries restructuring their debt, including those under the Brady Plan:
the Manager.
19) Political and economic structure of countries: Economist Intelligence Unit.
20) Government and corporate bonds -- credit ratings, yield to maturity and
performance returns: Salomon Brothers, Inc.
21) Dividend yields for U.S. and non-U.S. companies: Bloomberg.
From time to time, GT Global may include in its advertisement and sales
material, information about privatization, which is an economic process
involving the sale of state-owned companies to the private sector.
In advertising and sales materials, GT Global may make reference to or discuss
its products, services and accomplishments. Among these accomplishments are that
in 1983 GT Global provided assistance to the government of Hong Kong in linking
its currency to the U.S. dollar, and that in 1987 Japan's Ministry of Finance
licensed LGT Asset Management Ltd. (Japan) as one of the first foreign
discretionary investment managers for Japanese investors. Such accomplishments,
however, should not be viewed as an endorsement of the Manager or GT Global by
the government of Hong Kong, Japan's Ministry of Finance or any other government
or government agency. Nor do any such accomplishments of the Manager or GT
Global provide any assurance that the GT Global Mutual Funds' investment
objectives will be achieved.
STATEMENT OF ADDITIONAL INFORMATION PAGE 39
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL ADVANTAGE
As part of Liechtenstein Global Trust, GT Global continues a 75-year tradition
of service to individuals and institutions. Today we bring investors a
combination of experience, worldwide resources, a global perspective, investment
talent and a time tested investment discipline. With investment professionals in
nine offices worldwide, we witness world events and economic developments
firsthand.
The key to achieving consistent results is following a disciplined investment
process. Our approach to asset allocation takes advantage of GT Global's
worldwide presence and global perspective. Our "macroeconomic" worldview
determines our overall strategy of regional, country and sector allocations. Our
bottom up process of security selection combines fundamental research with
quantitative analysis through our proprietary models.
Built in checks and balances strengthen the process, enhancing professional
experience and judgment with an objective assessment of risk. Ultimately, each
security we select has passed a ranking system that helps our portfolio teams
determine when to buy and when to sell.
- --------------------------------------------------------------------------------
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF COMMERCIAL PAPER RATINGS
Moody's employs the designations "Prime-1" and "Prime-2" to indicate commercial
paper having the highest capacity for timely repayment. Issuers rated Prime-1
(or supporting institutions) have a superior ability for repayment of senior
short-term debt obligations. Prime-1 repayment ability will often be evidenced
by many of the following characteristics: leading market positions in
well-established industries; high rates of return on funds employed;
conservative capitalization structure with moderate reliance on debt and ample
asset protection; broad margins in earnings coverage of fixed financial charges
and high internal cash generation; and well-established access to a range of
financial markets and assured sources of alternate liquidity. Issuers rated
Prime-2 (or supporting institutions) have a strong ability for repayment of
senior short-term debt obligations. This normally will be evidenced by many of
the characteristics cited above but to a lesser degree. Earnings trends and
coverage ratios, while sound may be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
S&P rates commercial paper in four categories. "A-1" and "A-2" are the two
highest commercial paper rating categories. A-1 -- This highest category
indicates that the degree of safety regarding timely payment is strong. Those
issues determined to possess extremely strong safety characteristics will be
denoted with a plus sign (+) designation. A-2 -- Capacity for timely payment on
issues with this designation is satisfactory. However, the relative degree of
safety is not as high as for issues designated "A-1."
DESCRIPTION OF BOND RATINGS
Moody's rates the long-term debt securities issued by various entities from
"Aaa" to "C." Investment Grade Ratings are as follows:
Aaa -- Best quality. These securities carry the smallest degree of
investment risk and are generally referred to as "gilt edged." Interest
payments are protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- High quality by all standards. Together with the Aaa group they
comprise what are generally known as high grade bonds. They are rated lower
than the best bonds because margins of protection may not be as large as in
Aaa securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-term
risk appear somewhat larger than the Aaa securities.
A -- Upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa -- Medium-grade obligations (i.e., they are neither highly protected
nor poorly secured). Interest payments and principal security appear
adequate for the present but certain protective elements may be lacking or
may be characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
ABSENCE OF RATING: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.
STATEMENT OF ADDITIONAL INFORMATION PAGE 40
<PAGE>
GT GLOBAL EQUITY FUNDS
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies
that are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not
published in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa to B in its corporate bond rating system. The modifier 1
indicates that the company ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issue ranks in the lower end of its generic rating category.
S&P rates the securities debt of various entities in categories ranging from
"AAA" to "D" according to quality. Investment grade ratings are as follows:
AAA -- Highest rating. Capacity to pay interest and repay principal is
extremely strong.
AA -- High grade. Very strong capacity to pay interest and repay
principal. Generally, these bonds differ from AAA issues only in a small
degree.
A -- Have a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of change
in circumstances and economic conditions, than debt in higher rated
categories.
BBB -- Regarded as having adequate capacity to pay interest and repay
principal. These bonds normally exhibit adequate protection parameters, but
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal than for
debt in higher rated categories.
PLUS (+) OR MINUS (-): The ratings from "AA" to "BBB" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NR: Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements of each Fund as of December 31, 1996, and for
the fiscal year then ended, appear on the following pages.
STATEMENT OF ADDITIONAL INFORMATION PAGE 41
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
GT Global Growth Series:
We have audited the accompanying statement of assets and liabilities of GT
Global Worldwide Growth Fund, one of the funds organized as a series of GT
Global Growth Series, including the schedule of portfolio investments, as of
December 31, 1996, the related statement of operations for the year then ended,
the statements of changes in net assets for each of the two years in the period
then ended and the financial highlights for each of the five years in the period
then ended. These financial statements and the financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1996 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of GT
Global Worldwide Growth Fund as of December 31, 1996, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the five years in the period then ended, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
FEBRUARY 14, 1997
F1
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (19.4%)
Federated Department Stores, Inc.-/- ...................... US 82,000 $ 2,798,250 1.6
RETAILERS-APPAREL
Telecom Corporation of New Zealand Ltd. - ADR{\/} ......... NZ 25,000 2,025,000 1.1
TELEPHONE NETWORKS
EMI Group PLC ............................................. UK 82,480 1,956,075 1.1
LEISURE & TOURISM
Rentokil Group PLC ........................................ UK 239,000 1,804,777 1.0
CONSUMER SERVICES
Koninklijke Ahold N.V. .................................... NETH 26,647 1,667,367 0.9
RETAILERS-FOOD
Reuters Holdings PLC ...................................... UK 125,600 1,616,240 0.9
BROADCASTING & PUBLISHING
Carrefour Supermarche ..................................... FR 2,475 1,613,050 0.9
RETAILERS-FOOD
Adecco - Bearer-/- ........................................ SWTZ 6,410 1,609,686 0.9
CONSUMER SERVICES
Elsevier N.V. ............................................. NETH 92,651 1,567,444 0.9
BROADCASTING & PUBLISHING
Telecom Italia Mobile S.p.A. .............................. ITLY 604,510 1,534,218 0.9
WIRELESS COMMUNICATIONS
Aoyama Trading Co., Ltd. .................................. JPN 57,000 1,516,586 0.8
RETAILERS-APPAREL
DDI Corp. ................................................. JPN 220 1,455,771 0.8
WIRELESS COMMUNICATIONS
Burton Group PLC .......................................... UK 542,000 1,447,808 0.8
RETAILERS-APPAREL
Telefonica de Espana-/- ................................... SPN 56,700 1,317,436 0.7
TELEPHONE NETWORKS
EMAP PLC .................................................. UK 100,800 1,271,219 0.7
BROADCASTING & PUBLISHING
Portugal Telecom S.A. - Registered ........................ PORT 43,660 1,245,014 0.7
TELEPHONE NETWORKS
Sol Melia S.A.-/- ......................................... SPN 33,256 1,191,742 0.7
LEISURE & TOURISM
Stet Societa' Finanziaria Telefonica S.p.A. ............... ITLY 248,600 1,131,089 0.6
TELEPHONE NETWORKS
Comptoirs Modernes ........................................ FR 2,080 1,124,324 0.6
RETAILERS-FOOD
Compass Group PLC ......................................... UK 85,367 906,293 0.5
RESTAURANTS
Advanced Info. Service - Foreign .......................... THAI 95,000 889,201 0.5
WIRELESS COMMUNICATIONS
Telecel - Comunicacaoes Pessoais, S.A.-/- ................. PORT 13,498 862,130 0.5
WIRELESS COMMUNICATIONS
Dixons Group PLC .......................................... UK 92,100 856,341 0.5
RETAILERS-APPAREL
Granada Group PLC ......................................... UK 52,000 768,425 0.4
LEISURE & TOURISM
Cordiant PLC-/- ........................................... UK 407,000 728,279 0.4
BROADCASTING & PUBLISHING
</TABLE>
The accompanying notes are an integral part of the financial statements.
F2
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
Seven-Eleven Japan Ltd. ................................... JPN 500 $ 29,285 --
RETAILERS-OTHER
Kobenhavns Lufthavne AS ................................... DEN 139 14,166 --
TRANSPORTATION - AIRLINES
------------
34,947,216
------------
Finance (16.2%)
American International Group, Inc. ........................ US 32,200 3,485,650 1.9
INSURANCE - MULTI-LINE
United Overseas Bank Ltd. - Foreign ....................... SING 260,000 2,899,628 1.6
BANKS-MONEY CENTER
ITT Hartford Group, Inc. .................................. US 35,700 2,409,750 1.3
INSURANCE - MULTI-LINE
Australia & New Zealand Banking Group Ltd. ................ AUSL 335,300 2,112,441 1.2
BANKS-MONEY CENTER
HSBC Holdings PLC ......................................... HK 89,600 1,917,352 1.1
BANKS-MONEY CENTER
Royal & Sun Alliance Insurance Group PLC .................. UK 246,550 1,882,899 1.0
INSURANCE - MULTI-LINE
Barclays PLC .............................................. UK 103,600 1,777,521 1.0
BANKS-MONEY CENTER
AEGON N.V. ................................................ NETH 22,168 1,414,077 0.8
INSURANCE-LIFE
3I Group PLC .............................................. UK 167,670 1,398,207 0.8
INVESTMENT MANAGEMENT
Nichiei Co., Ltd. ......................................... JPN 18,000 1,329,475 0.7
OTHER FINANCIAL
Banco Popular Espanol S.A. ................................ SPN 5,890 1,157,483 0.6
BANKS-MONEY CENTER
Storebrand "A"-/- ......................................... NOR 178,202 1,023,498 0.6
INSURANCE - MULTI-LINE
Mapfre Vida Seguros ....................................... SPN 13,227 917,409 0.5
INSURANCE-LIFE
Skandia Forsakrings AB .................................... SWDN 30,929 876,214 0.5
INSURANCE - MULTI-LINE
Cheung Kong (Holdings) Ltd. ............................... HK 84,000 746,703 0.4
REAL ESTATE
Henderson Land Development Co., Ltd. ...................... HK 72,000 726,144 0.4
REAL ESTATE
JACCS Co., Ltd. ........................................... JPN 80,000 621,977 0.3
CONSUMER FINANCE
Thai Farmers Bank Public Co., Ltd. SEC{\/} ................ THAI 112,000 574,560 0.3
BANKS-MONEY CENTER
M & G Group PLC ........................................... UK 28,670 542,472 0.3
INVESTMENT MANAGEMENT
Cardif S.A. ............................................... FR 2,779 383,588 0.2
INSURANCE - MULTI-LINE
Land and House Co., Ltd. - Foreign ........................ THAI 50,000 364,650 0.2
REAL ESTATE
</TABLE>
The accompanying notes are an integral part of the financial statements.
F3
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (Continued)
Korea Exchange Bank ....................................... KOR 39,650 $ 360,027 0.2
BANKS-MONEY CENTER
Kookmin Bank-/- ........................................... KOR 16,820 274,071 0.2
BANKS-MONEY CENTER
Phatra Thanakit Co., Ltd. - Foreign ....................... THAI 61,900 176,229 0.1
INVESTMENT MANAGEMENT
------------
29,372,025
------------
Health Care (10.2%)
Sola International, Inc.-/- ............................... US 129,000 4,902,000 2.7
MEDICAL TECHNOLOGY & SUPPLIES
Novartis AG-/- ............................................ SWTZ 1,925 2,205,549 1.2
PHARMACEUTICALS
Bayer AG .................................................. GER 51,310 2,095,103 1.2
PHARMACEUTICALS
Takeda Chemical Industries ................................ JPN 93,000 1,952,229 1.1
PHARMACEUTICALS
Schering AG ............................................... GER 19,250 1,625,862 0.9
PHARMACEUTICALS
Taisho Pharmaceuticals .................................... JPN 65,000 1,532,913 0.9
PHARMACEUTICALS
Sanofi S.A. ............................................... FR 12,372 1,232,423 0.7
PHARMACEUTICALS
Astra AB "A" Free ......................................... SWDN 23,730 1,173,856 0.7
PHARMACEUTICALS
Siemens AG - New-/- ....................................... GER 22,020 1,038,004 0.6
MEDICAL TECHNOLOGY & SUPPLIES
M.L. Laboratories PLC-/- .................................. UK 115,291 402,729 0.2
PHARMACEUTICALS
------------
18,160,668
------------
Consumer Non-Durables (7.7%)
Sunbeam-Oster Co., Inc. ................................... US 181,000 4,660,750 2.6
HOUSEHOLD PRODUCTS
Schweitzer-Mauduit International, Inc. .................... US 110,000 3,478,750 1.9
TOBACCO
Amway Japan Ltd. .......................................... JPN 64,400 2,069,523 1.2
HOUSEHOLD PRODUCTS
Gucci Group - NY Registered Shares{\/} .................... ITLY 22,990 1,468,486 0.8
TEXTILES & APPAREL
Parmalat Finanziaria S.p.A. ............................... ITLY 505,420 773,977 0.4
FOOD
Vendex International N.V. ................................. NETH 17,699 757,796 0.4
OTHER CONSUMER GOODS
Giordano International Ltd. ............................... HK 864,000 737,316 0.4
TEXTILES & APPAREL
------------
13,946,598
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F4
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (7.6%)
Eastman Kodak Co. ......................................... US 52,800 $ 4,237,200 2.3
MISC. MATERIALS & COMMODITIES
Kimberly-Clark de Mexico, S.A. de C.V. "A" ................ MEX 108,000 2,134,740 1.2
PAPER/PACKAGING
Fernz Corp., Ltd. ......................................... NZ 540,000 1,850,622 1.0
CHEMICALS
Western Mining Corporation Holdings Ltd. .................. AUSL 265,000 1,669,540 0.9
METALS - NON-FERROUS
Pilkington PLC ............................................ UK 515,680 1,395,162 0.8
BUILDING MATERIALS & COMPONENTS
SGL Carbon AG ............................................. GER 9,080 1,145,332 0.6
METALS - NON-FERROUS
Fletcher Challenge Paper{/\} .............................. NZ 512,000 1,045,396 0.6
PAPER/PACKAGING
Siam Cement Co., Ltd. - Foreign ........................... THAI 13,700 431,715 0.2
CEMENT
------------
13,909,707
------------
Capital Goods (7.0%)
Premier Farnell PLC ....................................... UK 154,758 1,990,124 1.1
INDUSTRIAL COMPONENTS
Smiths Industries PLC ..................................... UK 142,040 1,950,618 1.1
AEROSPACE/DEFENSE
General Electric PLC-/- ................................... UK 286,730 1,880,438 1.0
AEROSPACE/DEFENSE
Canon, Inc. ............................................... JPN 75,000 1,658,604 0.9
OFFICE EQUIPMENT
Lockheed Martin Corp. ..................................... US 17,200 1,573,800 0.9
AEROSPACE/DEFENSE
Boeing Co. ................................................ US 14,600 1,553,075 0.9
AEROSPACE/DEFENSE
Bic ....................................................... FR 9,909 1,488,263 0.8
OFFICE EQUIPMENT
Telefonaktiebolaget LM Ericsson "B" ....................... SWDN 18,683 578,650 0.3
TELECOM EQUIPMENT
------------
12,673,572
------------
Multi-Industry/Miscellaneous (6.5%)
General Electric Co. ...................................... US 31,300 3,094,788 1.7
CONGLOMERATE
Citic Pacific Ltd. ........................................ HK 356,000 2,066,770 1.1
CONGLOMERATE
Hutchison Whampoa ......................................... HK 196,000 1,539,566 0.9
MULTI-INDUSTRY
Kinnevik AB "B" Free ...................................... SWDN 46,850 1,292,869 0.7
MULTI-INDUSTRY
Parkway Holdings Ltd. ..................................... SING 264,000 1,038,033 0.6
MULTI-INDUSTRY
Straits Steamship Land Ltd. ............................... SING 297,000 951,215 0.5
CONGLOMERATE
</TABLE>
The accompanying notes are an integral part of the financial statements.
F5
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Multi-Industry/Miscellaneous (Continued)
Wrightson Ltd. ............................................ NZ 1,000,000 $ 869,135 0.5
MULTI-INDUSTRY
Fletcher Challenge Ltd. ................................... NZ 250,000 768,443 0.4
MULTI-INDUSTRY
United Industrial Corp. ................................... SING 278,000 234,515 0.1
CONGLOMERATE
------------
11,855,334
------------
Technology (5.6%)
Intel Corporation ......................................... US 30,800 4,032,875 2.2
SEMICONDUCTORS
3Com Corp.-/- ............................................. US 48,300 3,544,013 2.0
NETWORKING
Group Axime-/- ............................................ FR 9,208 1,066,564 0.6
COMPUTERS & PERIPHERALS
Cap Gemini N.V. ........................................... NETH 32,750 952,520 0.5
COMPUTERS & PERIPHERALS
Bowthorpe PLC ............................................. UK 76,000 588,219 0.3
COMPUTERS & PERIPHERALS
------------
10,184,191
------------
Energy (5.5%)
Transocean Offshore, Inc. ................................. US 53,800 3,369,225 1.9
ENERGY SOURCES
Petroleo Brasileiro S.A. (Petrobras) - ADR-/- {\/} ........ BRZL 138,200 2,142,100 1.2
GAS PRODUCTION & DISTRIBUTION
United Utilities PLC ...................................... UK 125,700 1,336,639 0.7
ENERGY SOURCES
Elektrowatt AG-/- ......................................... SWTZ 2,927 1,165,987 0.7
ELECTRICAL & GAS UTILITIES
ABB Asea Brown Boveri Ltd. - Bearer ....................... SWTZ 913 1,136,132 0.6
ENERGY EQUIPMENT & SERVICES
Korea Electric Power Corp. ................................ KOR 26,000 759,169 0.4
ELECTRICAL & GAS UTILITIES
Yukong Ltd.: .............................................. KOR -- -- --
OIL
New-/- .................................................. -- 1,789 32,956 --
New 2-/- ................................................ -- 144 2,653 --
------------
9,944,861
------------
Consumer Durables (4.4%)
Futuris Corp., Ltd. ....................................... AUSL 1,248,100 1,705,515 0.9
AUTO PARTS
Bridgestone Corp. ......................................... JPN 85,000 1,615,411 0.9
AUTO PARTS
Volkswagen AG ............................................. GER 3,844 1,599,584 0.9
AUTOMOBILES
BBA Group PLC ............................................. UK 234,740 1,422,909 0.8
MULTI-INDUSTRY
</TABLE>
The accompanying notes are an integral part of the financial statements.
F6
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Durables (Continued)
Sharp Corp. ............................................... JPN 74,000 $ 1,054,768 0.6
CONSUMER ELECTRONICS
Valeo S.A. ................................................ FR 8,400 518,919 0.3
AUTO PARTS
------------
7,917,106
------------ -----
TOTAL EQUITY INVESTMENTS (cost $135,759,279) ................ 162,911,278 90.1
------------ -----
<CAPTION>
No. of % of Net
Warrants Country Warrants Assets
- ------------------------------------------------------------- -------- ----------- -------------
<S> <C> <C> <C> <C>
Straits Steamship Land Ltd. Warrants, expire
12/12/00-/- .............................................. SING 74,250 80,153 0.1
CONGLOMERATE
Thai Farmers Bank Ltd. Warrants, expire 9/15/02-/- ........ THAI 7,000 6,620 --
BANKS-MONEY CENTER
------------ -----
TOTAL WARRANTS (cost $48,726) ............................... 86,773 0.1
------------ -----
<CAPTION>
% of Net
Repurchase Agreement Assets
- ------------------------------------------------------------- -------------
<S> <C> <C> <C> <C>
Dated December 31, 1996, with State Street Bank & Trust
Co., due January 2, 1997, for an effective yield of 6.25%,
collateralized by $20,080,000 U.S. Treasury Notes, 6.125%
due 3/31/98 (market value of collateral is $20,504,050,
including accrued interest). (cost $20,100,489) .......... 20,100,489 11.1
------------ -----
TOTAL INVESTMENTS (cost $155,908,494) * .................... 183,098,540 101.3
Other Assets and Liabilities ................................ (2,278,697) (1.3)
------------ -----
NET ASSETS .................................................. $180,819,843 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
{/\} Australian currency denominated.
* For Federal income tax purposes, cost is $156,287,161 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 31,053,807
Unrealized depreciation: (4,242,428)
-------------
Net unrealized appreciation: $ 26,811,379
-------------
-------------
</TABLE>
Abbreviations:
ADR--American Depository Receipt
SEC--Share Entitlement Certificate
The accompanying notes are an integral part of the financial statements.
F7
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1996, was concentrated in
the following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets {d}
-------------------------------------------
Fixed Income,
Rights & Short-term
Country (Country Code/Currency Code) Equity Warrants & Other Total
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Australia (AUSL/AUD) ................. 3.0 3.0
Brazil (BRZL/BRL) .................... 1.2 1.2
France (FR/FRF) ...................... 4.1 4.1
Germany (GER/DEM) .................... 4.2 4.2
Hong Kong (HK/HKD) ................... 4.3 4.3
Italy (ITLY/ITL) ..................... 2.7 2.7
Japan (JPN/JPY) ...................... 8.2 8.2
Korea (KOR/KRW) ...................... 0.8 0.8
Mexico (MEX/MXN) ..................... 1.2 1.2
Netherlands (NETH/NLG) ............... 3.5 3.5
New Zealand (NZ/NZD) ................. 3.6 3.6
Norway (NOR/NOK) ..................... 0.6 0.6
Portugal (PORT/PTE) .................. 1.2 1.2
Singapore (SING/SGD) ................. 2.8 0.1 2.9
Spain (SPN/ESP) ...................... 2.5 2.5
Sweden (SWDN/SEK) .................... 2.2 2.2
Switzerland (SWTZ/CHF) ............... 3.4 3.4
Thailand (THAI/THB) .................. 1.3 1.3
United Kingdom (UK/GBP) .............. 15.4 15.4
United States & Other (US/USD) ....... 23.9 9.8 33.7
------ ----- ----- -----
Total ............................... 90.1 0.1 9.8 100.0
------ ----- ----- -----
------ ----- ----- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $180,819,843.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Forward Foreign Currency Contracts Outstanding
December 31, 1996
<TABLE>
<CAPTION>
Market Value Contract Delivery Unrealized
Contracts to Sell: (U.S. Dollars) Price Date Appreciation
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
French Francs........................... 3,869,685 5.09700 02/06/97 $ 54,192
French Francs........................... 2,362,192 5.07000 02/19/97 44,120
Japanese Yen............................ 2,707,607 111.74500 02/06/97 82,227
Japanese Yen............................ 2,607,668 110.48000 02/12/97 107,756
Japanese Yen............................ 2,779,774 110.38500 02/12/97 117,359
Swiss Francs............................ 4,068,462 1.31200 03/19/97 47,392
-------------- --------------
Total Contracts to Sell (Receivable
amount $18,848,434).................. 18,395,388 453,046
-------------- --------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 10.17%.
Total Open Forward Foreign Currency
Contracts............................ $ 453,046
--------------
--------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F8
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $135,808,005) (Note 1)........................ $162,998,051
Repurchase agreement, at value and cost................................................. 20,100,489
U.S. currency................................................................. $ 106
Foreign currencies (cost $607,474)............................................ 609,578 609,684
--------
Receivable for securities sold.......................................................... 3,643,988
Receivable for open forward foreign currency contracts, net (Note 1).................... 453,046
Receivable for Fund shares sold......................................................... 310,906
Dividends and dividend withholding tax reclaims receivable.............................. 270,020
Miscellaneous receivable................................................................ 16,481
Cash held as collateral for securities loaned (Note 1).................................. 10,713,362
------------
Total assets.......................................................................... 199,116,027
------------
Liabilities:
Payable for Fund shares repurchased..................................................... 5,331,764
Payable for securities purchased........................................................ 1,778,696
Payable for investment management and administration fees (Note 2)...................... 149,192
Payable for printing and postage expenses............................................... 103,584
Payable for service and distribution expenses (Note 2).................................. 81,488
Payable for transfer agent fees (Note 2)................................................ 68,179
Payable for professional fees........................................................... 42,534
Payable for registration and filing fees................................................ 11,143
Payable for Trustees' fees and expenses (Note 2)........................................ 6,053
Payable for fund accounting fees (Note 2)............................................... 3,553
Payable for custodian fees (Note 1)..................................................... 241
Other accrued expenses.................................................................. 6,395
Collateral for securities loaned (Note 1)............................................... 10,713,362
------------
Total liabilities..................................................................... 18,296,184
------------
Net assets................................................................................ $180,819,843
------------
------------
Class A:
Net asset value and redemption price per share ($125,555,861 DIVIDED BY 7,514,931 shares
outstanding)............................................................................. $ 16.71
------------
------------
Maximum offering price per share (100/95.25 of $16.71) *.................................. $ 17.54
------------
------------
Class B:+
Net asset value and offering price per share ($52,809,064 DIVIDED BY 3,253,378 shares
outstanding)............................................................................. $ 16.23
------------
------------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($2,454,918
DIVIDED BY 146,000 shares outstanding)................................................... $ 16.81
------------
------------
Net assets consist of:
Paid in capital (Note 4)................................................................ $146,425,969
Accumulated net realized gain on investments and foreign currency transactions.......... 6,708,041
Net unrealized appreciation on translation of assets and liabilities in foreign
currencies............................................................................. 495,787
Net unrealized appreciation of investments.............................................. 27,190,046
------------
Total -- representing net assets applicable to capital shares outstanding................. $180,819,843
------------
------------
<FN>
- --------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
F9
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
STATEMENT OF OPERATIONS
Year ended December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of $328,211)............................... $ 3,040,557
Interest income............................................................................ 552,838
Other income............................................................................... 1,634
-----------
Total investment income.................................................................. 3,595,029
-----------
Expenses:
Investment management and administration fees (Note 2)..................................... 1,885,798
Service and distribution expenses: (Note 2)
Class A..................................................................... $ 477,375
Class B..................................................................... 551,243 1,028,618
-----------
Transfer agent fees (Note 2)............................................................... 532,176
Custodian fees (Note 1).................................................................... 123,165
Printing and postage expenses (Note 2)..................................................... 82,142
Audit fees................................................................................. 51,972
Fund accounting fees....................................................................... 48,430
Registration and filing fees............................................................... 40,265
Trustees' fees and expenses (Note 2)....................................................... 15,372
Legal fees................................................................................. 11,712
Other expenses............................................................................. 14,952
-----------
Total expenses before reductions......................................................... 3,834,602
-----------
Expense reductions (Notes 1 & 5)....................................................... (157,930)
-----------
Total net expenses....................................................................... 3,676,672
-----------
Net investment loss.......................................................................... (81,643)
-----------
Net realized and unrealized gain (loss) on investments and foreign currencies:
(Note 1)
Net realized gain on investments.............................................. 18,255,475
Net realized gain on foreign currency transactions............................ 3,244,503
-----------
Net realized gain during the year........................................................ 21,499,978
Net change in unrealized appreciation on translation of assets and liabilities
in foreign currencies........................................................ 111,081
Net change in unrealized appreciation of investments.......................... (1,481,639)
-----------
Net unrealized depreciation during the year.............................................. (1,370,558)
-----------
Net realized and unrealized gain on investments and foreign currencies....................... 20,129,420
-----------
Net increase in net assets resulting from operations......................................... $20,047,777
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F10
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1996 December 31, 1995
----------------- -----------------
<S> <C> <C>
Decrease in net assets
Operations:
Net investment loss........................................................... $ (81,643) $ (458,117)
Net realized gain on investments and foreign currency transactions............ 21,499,978 9,995,501
Net change in unrealized appreciation (depreciation) on translation of assets
and liabilities in foreign currencies........................................ 111,081 (595,367)
Net change in unrealized appreciation (depreciation) of investments........... (1,481,639) 11,340,575
----------------- -----------------
Net increase in net assets resulting from operations........................ 20,047,777 20,282,592
----------------- -----------------
Class A:
Distributions to shareholders: (Note 1)
From net realized gain on investments......................................... (13,087,564) (3,836,040)
Class B:
Distributions to shareholders: (Note 1)
From net realized gain on investments......................................... (5,727,628) (1,484,807)
Advisor Class:
Distributions to shareholders: (Note 1)
From net realized gain on investments......................................... (175,598) (44,576)
----------------- -----------------
Total distributions......................................................... (18,990,790) (5,365,423)
----------------- -----------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested.............................. 290,210,249 134,626,823
Decrease from capital shares repurchased...................................... (314,217,462) (180,807,770)
----------------- -----------------
Net decrease from capital share transactions................................ (24,007,213) (46,180,947)
----------------- -----------------
Total decrease in net assets.................................................... (22,950,226) (31,263,778)
Net assets:
Beginning of year............................................................. 203,770,069 235,033,847
----------------- -----------------
End of year*.................................................................. $ 180,819,843 $ 203,770,069
----------------- -----------------
----------------- -----------------
--------------
*Includes undistributed net investment income of............................. $ 0 $ 0
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F11
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
Class A+
----------------------------------------------------------
Year ended December 31,
----------------------------------------------------------
1996 * 1995 * 1994 1993 * 1992
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 16.82 $ 15.53 $ 17.47 $ 14.47 $ 14.07
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... 0.03 0.00 0.00 0.04 0.07
Net realized and unrealized gain
(loss) on investments................ 1.79 1.74 (1.16) 3.92 0.39
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. 1.82 1.74 (1.16) 3.96 0.46
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ -- -- -- -- --
From net realized gain on
investments.......................... (1.93) (0.45) (0.78) (0.96) (0.06)
---------- ---------- ---------- ---------- ----------
Total distributions................. (1.93) (0.45) (0.78) (0.96) (0.06)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 16.71 $ 16.82 $ 15.53 $ 17.47 $ 14.47
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 10.92% 11.23% (6.65)% 27.6% 3.3%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 125,556 $ 145,982 $ 182,467 $ 193,997 $ 141,310
Ratio of net investment income (loss) to
average net assets..................... 0.14% (0.06)% (0.01)% 0.9% 0.5%
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.72% 1.87% 1.81% 1.9% 2.1%
Without expense reductions............ 1.80% 1.93% 1.84% --** --**
Portfolio turnover rate++++............. 80% 113% 86% 92% 95%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0263 N/A N/A N/A N/A
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commision rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
* Calculated based upon average shares outstanding during the period.
** Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
(a) Not annualized
(b) Annualized
(c) Total investment return does not include sales charges.
N/A Not applicable.
The accompanying notes are an integral part of the financial statements.
F12
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
Class B++ Advisor Class+++
------------------------------------------------- ----------------------------
April 1, 1993 Year June 1, 1995
Year ended December 31, to ended to
---------------------------------- December 31, December 31, December 31,
1996 * 1995 * 1994 1993 * 1996 * 1995 *
---------- ---------- ---------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 16.50 $ 15.34 $ 17.39 $ 15.67 $ 16.86 $ 15.26
---------- ---------- ---------- ------------- ------------- -------------
Income from investment operations:
Net investment income (loss).......... (0.09) (0.12) (0.11) (0.04) 0.09 0.03
Net realized and unrealized gain
(loss) on investments................ 1.75 1.73 (1.16) 2.72 1.79 2.02
---------- ---------- ---------- ------------- ------------- -------------
Net increase (decrease) from
investment operations.............. 1.66 1.61 (1.27) 2.68 1.88 2.05
---------- ---------- ---------- ------------- ------------- -------------
Distributions to shareholders:
From net investment income............ -- -- -- -- -- --
From net realized gain on
investments.......................... (1.93) (0.45) (0.78) (0.96) (1.93) (0.45)
---------- ---------- ---------- ------------- ------------- -------------
Total distributions................. (1.93) (0.45) (0.78) (0.96) (1.93) (0.45)
---------- ---------- ---------- ------------- ------------- -------------
Net asset value, end of period.......... $ 16.23 $ 16.50 $ 15.34 $ 17.39 $ 16.81 $ 16.86
---------- ---------- ---------- ------------- ------------- -------------
---------- ---------- ---------- ------------- ------------- -------------
Total investment return (c)............. 10.16% 10.52% (7.32)% 17.3%(a) 11.31% 13.46%(a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 52,809 $ 56,095 $ 52,567 $ 20,592 $ 2,455 $ 1,693
Ratio of net investment income (loss) to
average net assets..................... (0.51)% (0.71)% (0.66)% (0.4)%(b) 0.49% 0.29%(b)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.37% 2.52% 2.46% 2.5%(b) 1.37% 1.52%(b)
Without expense reductions............ 2.45% 2.58% 2.49% --* * 1.45% 1.58%(b)
Portfolio turnover rate++++............. 80% 113% 86% 92% 80% 113%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0263 N/A N/A N/A $ 0.0263 N/A
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commision rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
* Calculated based upon average shares outstanding during the period.
** Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
(a) Not annualized
(b) Annualized
(c) Total investment return does not include sales charges.
N/A Not applicable.
The accompanying notes are an integral part of the financial statements.
F13
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
GT Global Worldwide Growth Fund ("Fund"), is a separate series of GT Global
Growth Series ("Company"). The Company is organized as a Massachusetts business
trust and is registered under the Investment Company Act of 1940, as amended
("1940 Act"), as an open-end management investment company. The Company has
eight diversified series of shares in operation, each series corresponding to a
distinct portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles, and
the financial statements may include certain estimates from management.
(A) Portfolio Valuation
The Fund calculates the net asset value of Fund shares and completes orders to
purchase, exchange or repurchase Fund shares on each business day, with the
exception of those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market in which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by Chancellor LGT Asset
Management, Inc. (the "Manager") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
asked prices for such investments or, if such prices are not available, at
prices for investments of comparative maturity, quality and type; however, when
the Manager deems it appropriate, prices obtained for the day of valuation from
a bond pricing service will be used. Short-term investments with a maturity of
60 days or less are valued to amortized cost, adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Fund's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of Trustees.
(B) Foreign Currency Translation
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, other assets and liabilities
are recorded in the books and records of the Fund after translation to U.S.
dollars based on the exchange rates on that day. The cost of each security is
determined using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains or losses arise from changes in the
value of assets and liabilities other than investments in securities at year
end, resulting from changes in exchange rates.
(C) Repurchase Agreements
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, U.S. government securities or other
high quality debt securities of which the value, including accrued interest, is
at least equal to the amount to be repaid to the Fund under each agreement at
its maturity.
(D) Forward Foreign Currency Contracts
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss equal to
the difference between the value at the time it was opened and the value at the
time it was closed. The Fund could be exposed to risk if a counterparty is
unable to meet the terms of a contract or if
F14
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
the value of the currency changes unfavorably. The Fund may enter into Forward
Contracts in connection with planned purchases or sales of securities, or to
hedge against adverse fluctuations in exchange rates between currencies.
(E) Option Accounting Principles
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
market-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of on over-the-counter option, is valued at the average
of the last bid prices obtained from brokers, unless a quotation from only one
broker is available, in which case only that broker's price will be used. If an
option expires on its stipulated expiration date or if the Fund enters into a
closing purchase transaction, a gain or loss is realized without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option is extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the proceeds of
the sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium originally received. The Fund can write options only on
a covered basis, which, for a call, requires that the Fund hold the underlying
security, and, for a put, requires the Fund to set aside cash, U.S. government
securities or other liquid securities in an amount not less than the exercise
price or otherwise provide adequate cover at all times while the put option is
outstanding. The Fund may use options to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) Futures Contracts
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
(G) Security Transactions and Related Investment Income
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other then normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) Portfolio Securities Loaned
At December 31, 1996, stocks with an aggregate value of approximately
$10,156,208 were on loan to brokers. The loans were secured by cash collateral
of $10,713,362, received by the Fund. Cash collateral is received by the Fund
against loaned securities in an amount at least equal to 105% of the market
value of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 103% of the market value of the loaned
securities during the period of the loan. For the year ended December 31, 1996,
the Fund received securities lending fees of $74,109 which were used to reduce
custodian fees.
(I) Taxes
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, or excise tax on income
and capital gains.
F15
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
(J) Distribution to Shareholders
Distribution to shareholders are recorded by the Fund on the ex-date. Income and
capital gain distributions are determined in accordance with Federal income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) Foreign Securities
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets,
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(L) Restricted Securities
The Fund is permitted to invest in privately placed restrictions securities.
These securities may be resold in transactions exempt from registration or to
the public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
(M) Indexed Securities
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(N) Line of Credit
The Fund, along with certain other funds advised by the Manager, has a line of
credit with the Bank of Boston. The arrangement with the bank allows all
specified funds to borrow an aggregate maximum amount of $100,000,000.
2. Related Parties
Chancellor LGT Asset Management is the Fund's investment manager and
administrator. On October 31, 1996, Chancellor Capital Management, Inc. merged
with LGT Asset Management, Inc., and the surviving entity was renamed Chancellor
LGT Asset Management, Inc. The Fund pays investment management and
administration fees at the following annualized rates: 0.975% on the first $500
million of the average daily net assets of the Fund; 0.95% on the next $500
million; 0.925% on the next $500 million and 0.90% on amounts thereafter. These
fees are computed daily and paid monthly, and are subject to reduction in any
year to the extent that the Fund's expenses (exclusive of brokerage commissions,
taxes, interest, distribution-related expenses and extraordinary expenses)
exceed the most stringent limits prescribed by the laws or regulations of any
state in which the Fund's shares are offered for sale, based on the average
total net asset value of the Fund.
GT Global, Inc., an affiliate of the Manager, serves as the Fund's distributor.
The Fund offers Class A, Class B, and Advisor Class shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. GT Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the year ended December 31, 1996, GT Global retained $21,390
of such sales charges. Purchases of Class A shares exceeding $500,000 may be
subject to a contingent deferred sales charge ("CDSC") upon redemption, in
accordance with the Fund's current prospectus. GT Global collected CDSCs in the
amount of $204 for the year ended December 31, 1996. GT Global also makes
ongoing shareholder servicing and trail commission payments to dealers whose
clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSC's, in accordance with the Fund's current
prospectus. During the year ended December 31, 1996, GT Global collected CDSC's
in the amount of $260,826. In addition, GT Global makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class B
shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Trustees has
adopted separate distribution plans with respect to the Fund's Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which the Fund
reimburses GT Global for a portion of its shareholder servicing and distribution
expenses. Under the Class A Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class A shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.35% of the average daily net assets of the Fund's Class A
shares, less any amounts paid by the Fund as the aforementioned service fee, for
its expenditures incurred in providing services as distributor. All expenses for
which GT Global is reimbursed under the Class A Plan will have been incurred
within one year of such reimbursement.
Pursuant to the Fund's Class B Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.75% of the average daily net assets of the Fund's Class B shares
for its expenditures incurred in providing services as distributor. Expenses
incurred under the Class B Plan in excess of 1.00% annually may be carried
forward for reimbursement in subsequent years as long as that Plan continues in
effect.
F16
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
The Manager and GT Global have voluntarily undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest and extraordinary
items) to the maximum annual level of 2.25%, and 2.90%, and 1.90% of the average
daily net assets of the Fund's Class A, Class B and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by GT Global
of payments under the Class A Plan and/or Class B Plan and/ or reimbursements by
the Manager or GT Global of portions of the Fund's other operating expenses.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and GT Global, is the transfer agent of the Fund. For performing shareholder
servicing, reporting, and general transfer agent services, GT Services receives
an annual maintenance fee of $17.50 per account, a new account fee of $4.00 per
account, a per transaction fee of $1.75 for all transactions other than
exchanges and a per exchange fee of $2.25. GT Services also is reimbursed by the
Fund for its out-of-pocket expenses for such items as postage, forms, telephone
charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived by
applying 0.03% to the first $5 billion of assets of all registered mutual funds
advised by the Manager and 0.02% to the assets in excess of $5 billion and
allocating the result according to the Fund's average daily net assets.
The Company pays each of its Trustees who is not an employee, officer or
director of GT Capital, GT Global or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee.
3. Purchases and Sales of Securities
For the year ended December 31, 1996, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $144,310,622 and $181,937,744, respectively. There were
no purchases or sales of U.S. government obligations by the Fund during the
period.
4. Capital Shares
At December 31, 1996, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
Capital Share Transactions
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1996 December 31, 1995
-------------------------- --------------------------
Class A Shares Amount Shares Amount
- ------------------------------------------------------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold................................................. 14,357,786 $ 250,471,583 6,947,488 $ 112,415,112
Shares issued in connection with reinvestment of
distributions............................................. 670,053 11,082,654 198,449 3,306,220
----------- ------------- ----------- -------------
15,027,839 261,554,237 7,145,937 115,721,332
Shares repurchased.......................................... (16,192,391) (283,412,820) (10,218,028) (163,317,151)
----------- ------------- ----------- -------------
Net decrease................................................ (1,164,552) $ (21,858,583) (3,072,091) $ (47,595,819)
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
Year ended Year ended
December 31, 1996 December 31, 1995
-------------------------- --------------------------
Class B Shares Amount Shares Amount
- ------------------------------------------------------------ ----------- ------------- ----------- -------------
Shares sold................................................. 854,412 $ 14,531,361 1,002,715 $ 15,948,611
Shares issued in connection with reinvestment of
distributions............................................. 308,538 4,961,416 79,120 1,293,841
----------- ------------- ----------- -------------
1,162,950 19,492,777 1,081,835 17,242,452
Shares repurchased.......................................... (1,309,880) (22,330,821) (1,107,459) (17,390,637)
----------- ------------- ----------- -------------
Net decrease................................................ (146,930) $ (2,838,044) (25,624) $ (148,185)
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
June 1, 1995
(commencement of sale of
Year ended shares)
December 31, 1996 to December 31, 1995
-------------------------- --------------------------
Advisor Class Shares Amount Shares Amount
- ------------------------------------------------------------ ----------- ------------- ----------- -------------
Shares sold................................................. 521,049 $ 8,987,637 103,579 $ 1,618,463
Shares issued in connection with reinvestment of
distributions............................................. 10,546 175,598 2,669 44,576
----------- ------------- ----------- -------------
531,595 9,163,235 106,248 1,663,039
Shares repurchased.......................................... (485,979) (8,473,821) (5,864) (99,982)
----------- ------------- ----------- -------------
Net increase................................................ 45,616 $ 689,414 100,384 $ 1,563,057
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
F17
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
5. Expense Reductions
The Manager has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended December 31, 1996, the Fund's
expenses were reduced by $83,821 under these arrangements.
- --------------
Federal Tax Information (Unaudited):
For its fiscal year ended December 31, 1996, the total amount of income received
by the Fund from sources within foreign countries and possessions of the United
States was approximately $.28 per share (representing an approximate total of
$2,728,868). The total amount of taxes paid by the Fund to such countries was
approximately $.05 per share (representing an approximate total of $467,527).
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$17,732,920 as a capital gain dividend for the fiscal year ended December 31,
1996.
Pursuant to Section 854 of the Internal Revenue Code, the Fund designates 54% of
ordinary income dividends paid (including short-term capital gain distributions,
if any) by the Fund as income qualifying for the dividends received deduction
for corporations for the fiscal year ended
December 31, 1996.
F18
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
GT Global Growth Series:
We have audited the accompanying statement of assets and liabilities of GT
Global International Growth Fund, one of the funds organized as a series of GT
Global Growth Series, including the schedule of portfolio investments, as of
December 31, 1996, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended and the financial highlights for each of the five years in the
period then ended. These financial statements and the financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1996 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of GT
Global International Growth Fund as of December 31, 1996, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the five years in the period then ended, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
FEBRUARY 14, 1997
F19
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (29.5%)
DDI Corp. ................................................. JPN 720 $ 4,764,340 1.8
WIRELESS COMMUNICATIONS
Aoyama Trading Co., Ltd. .................................. JPN 166,000 4,416,724 1.7
RETAILERS-APPAREL
Adecco - Bearer-/- ........................................ SWTZ 16,510 4,146,009 1.6
CONSUMER SERVICES
Koninklijke Ahold N.V. .................................... NETH 65,406 4,092,612 1.6
RETAILERS-FOOD
Carrefour Supermarche ..................................... FR 6,245 4,070,100 1.6
RETAILERS-FOOD
Elsevier N.V. ............................................. NETH 234,183 3,961,844 1.5
BROADCASTING & PUBLISHING
Telecom Italia Mobile S.p.A. .............................. ITLY 1,500,180 3,807,388 1.5
WIRELESS COMMUNICATIONS
Reuters Holdings PLC ...................................... UK 271,130 3,488,942 1.3
BROADCASTING & PUBLISHING
Ito-Yokado Co., Ltd. ...................................... JPN 80,000 3,483,068 1.3
RETAILERS-OTHER
Rentokil Group PLC ........................................ UK 456,300 3,445,690 1.3
CONSUMER SERVICES
EMI Group PLC ............................................. UK 144,990 3,438,547 1.3
LEISURE & TOURISM
Telefonica de Espana-/- ................................... SPN 146,600 3,406,281 1.3
TELEPHONE NETWORKS
Burton Group PLC .......................................... UK 1,195,000 3,192,123 1.2
RETAILERS-APPAREL
Portugal Telecom S.A. - Registered ........................ PORT 109,250 3,115,387 1.2
TELEPHONE NETWORKS
EMAP PLC .................................................. UK 247,030 3,115,370 1.2
BROADCASTING & PUBLISHING
Sol Melia S.A.-/- ......................................... SPN 83,661 2,998,024 1.1
LEISURE & TOURISM
Stet Societa' Finanziaria Telefonica S.p.A. ............... ITLY 609,400 2,772,669 1.1
TELEPHONE NETWORKS
Comptoirs Modernes ........................................ FR 5,110 2,762,162 1.1
RETAILERS-FOOD
Telecom Corporation of New Zealand Ltd. ................... NZ 468,000 2,387,620 0.9
TELEPHONE NETWORKS
Dixons Group PLC .......................................... UK 208,350 1,937,227 0.7
RETAILERS-APPAREL
Cordiant PLC-/- ........................................... UK 1,073,070 1,920,134 0.7
BROADCASTING & PUBLISHING
Telecel - Comunicacoes Pessoais, S.A.-/- .................. PORT 27,589 1,762,136 0.7
TELECOM - OTHER
Compass Group PLC ......................................... UK 130,180 1,382,048 0.5
RESTAURANTS
Granada Group PLC ......................................... UK 86,250 1,274,551 0.5
LEISURE & TOURISM
Fast Retailing Co., Ltd. .................................. JPN 48,140 1,235,105 0.5
RETAILERS-APPAREL
</TABLE>
The accompanying notes are an integral part of the financial statements.
F20
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
Advanced Information Service: ............................. THAI -- -- 0.3
WIRELESS COMMUNICATIONS
Foreign ................................................. -- 44,800 $ 419,328 --
Local ................................................... -- 45,000 382,590 --
Seven-Eleven Japan Ltd. ................................... JPN 500 29,285 --
RETAILERS-OTHER
Kobenhavns Lufthavne AS ................................... DEN 286 29,146 --
TRANSPORTATION - AIRLINES
------------
77,236,450
------------
Finance (16.6%)
Royal & Sun Alliance Insurance Group PLC .................. UK 551,470 4,211,569 1.6
INSURANCE - MULTI-LINE
United Overseas Bank Ltd. - Foreign ....................... SING 341,300 3,806,320 1.5
BANKS-MONEY CENTER
Barclays PLC .............................................. UK 196,000 3,362,877 1.3
BANKS-MONEY CENTER
Nichiei Co., Ltd. ......................................... JPN 45,000 3,323,687 1.3
OTHER FINANCIAL
3I Group PLC .............................................. UK 367,550 3,065,015 1.2
INVESTMENT MANAGEMENT
Banco Popular Espanol S.A. ................................ SPN 14,510 2,851,457 1.1
BANKS-MONEY CENTER
Australia & New Zealand Banking Group Ltd. ................ AUSL 412,360 2,597,930 1.0
BANKS-MONEY CENTER
AEGON N.V. ................................................ NETH 34,790 2,219,223 0.9
INSURANCE-LIFE
Sun Hung Kai Properties Ltd. .............................. HK 178,000 2,180,696 0.8
REAL ESTATE
HSBC Holdings PLC ......................................... HK 100,000 2,139,902 0.8
BANKS-MONEY CENTER
Cheung Kong (Holdings) Ltd. ............................... HK 212,000 1,884,536 0.7
REAL ESTATE
Orix Corp. ................................................ JPN 43,700 1,819,575 0.7
OTHER FINANCIAL
M & G Group PLC ........................................... UK 92,960 1,758,918 0.7
INVESTMENT MANAGEMENT
Mapfre Vida Seguros ....................................... SPN 24,569 1,704,077 0.7
INSURANCE-LIFE
Henderson Land Development Co., Ltd. ...................... HK 159,000 1,603,569 0.6
REAL ESTATE
Skandia Forsakrings AB .................................... SWDN 56,520 1,601,204 0.6
INSURANCE - MULTI-LINE
Cardif S.A. ............................................... FR 6,218 858,276 0.3
INSURANCE - MULTI-LINE
Thai Farmers Bank Public Co., Ltd. SEC-/- {\/} ............ THAI 157,900 810,027 0.3
BANKS-MONEY CENTER
Korea Exchange Bank ....................................... KOR 71,700 651,045 0.2
BANKS-MONEY CENTER
Land and House Co., Ltd. - Foreign ........................ THAI 77,000 561,562 0.2
REAL ESTATE
</TABLE>
The accompanying notes are an integral part of the financial statements.
F21
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (Continued)
Phatra Thanakit Co., Ltd. - Foreign ....................... THAI 57,800 $ 164,557 0.1
INVESTMENT MANAGEMENT
Shinhan Bank-/- ........................................... KOR 2,740 43,946 --
BANKS-REGIONAL
------------
43,219,968
------------
Health Care (11.3%)
Novartis AG-/- ............................................ SWTZ 4,720 5,407,873 2.1
PHARMACEUTICALS
Bayer AG .................................................. GER 126,700 5,173,446 2.0
PHARMACEUTICALS
Takeda Chemical Industries ................................ JPN 243,000 5,100,985 2.0
PHARMACEUTICALS
Schering AG ............................................... GER 48,840 4,125,043 1.6
PHARMACEUTICALS
Sanofi S.A. ............................................... FR 31,048 3,092,812 1.2
PHARMACEUTICALS
Astra AB "A" Free ......................................... SWDN 58,280 2,882,946 1.1
PHARMACEUTICALS
Siemens AG - New-/- ....................................... GER 54,245 2,557,063 1.0
MEDICAL TECHNOLOGY & SUPPLIES
M.L. Laboratories PLC-/- .................................. UK 254,968 890,642 0.3
PHARMACEUTICALS
------------
29,230,810
------------
Capital Goods (7.0%)
Premier Farnell PLC ....................................... UK 287,500 3,697,132 1.4
INDUSTRIAL COMPONENTS
Bic ....................................................... FR 24,340 3,655,699 1.4
OFFICE EQUIPMENT
Canon, Inc. ............................................... JPN 150,000 3,317,208 1.3
OFFICE EQUIPMENT
Smiths Industries PLC ..................................... UK 236,350 3,245,765 1.2
AEROSPACE/DEFENSE
General Electric PLC-/- ................................... UK 428,470 2,810,000 1.1
AEROSPACE/DEFENSE
Telefonaktiebolaget LM Ericsson "B" ....................... SWDN 48,558 1,503,939 0.6
TELECOM EQUIPMENT
------------
18,229,743
------------
Materials/Basic Industry (6.7%)
Kimberly-Clark de Mexico, S.A. de C.V. "A" ................ MEX 176,900 3,496,625 1.3
PAPER/PACKAGING
PT Semen Gresik - Foreign ................................. INDO 929,000 2,990,428 1.1
CEMENT
Pilkington PLC ............................................ UK 1,087,050 2,940,991 1.1
BUILDING MATERIALS & COMPONENTS
Broken Hill Proprietary Co., Ltd. ......................... AUSL 198,911 2,831,878 1.1
MISC. MATERIALS & COMMODITIES
</TABLE>
The accompanying notes are an integral part of the financial statements.
F22
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (Continued)
SGL Carbon AG ............................................. GER 21,670 $ 2,733,407 1.0
METALS - NON-FERROUS
Western Mining Corporation Holdings Ltd. .................. AUSL 270,000 1,701,041 0.7
METALS - NON-FERROUS
Fletcher Challenge Paper{/\} .............................. NZ 512,000 1,045,396 0.4
PAPER/PACKAGING
------------
17,739,766
------------
Technology (5.3%)
Cap Gemini N.V. ........................................... NETH 98,520 2,865,414 1.1
COMPUTERS & PERIPHERALS
Group Axime-/- ............................................ FR 22,880 2,650,193 1.0
COMPUTERS & PERIPHERALS
Matsushita-Kotobuki Electronics Ltd. ...................... JPN 90,000 2,347,961 0.9
COMPUTERS & PERIPHERALS
Koei Co., Ltd. ............................................ JPN 102,500 1,965,705 0.8
SOFTWARE
Kyushu-Matsushita Electric Co., Ltd. ...................... JPN 137,000 1,775,225 0.7
COMPUTERS & PERIPHERALS
Bowthorpe PLC ............................................. UK 218,750 1,693,065 0.6
COMPUTERS & PERIPHERALS
Hosiden Electronics-/- .................................... JPN 69,000 489,366 0.2
COMPUTERS & PERIPHERALS
------------
13,786,929
------------
Consumer Durables (5.2%)
Sharp Corp. ............................................... JPN 300,000 4,276,088 1.6
CONSUMER ELECTRONICS
Volkswagen AG ............................................. GER 9,690 4,032,250 1.5
AUTOMOBILES
BBA Group PLC ............................................. UK 532,840 3,229,886 1.2
MULTI-INDUSTRY
Valeo S.A. ................................................ FR 20,700 1,278,764 0.5
AUTO PARTS
Samsung Electronics Co.: .................................. KOR -- -- 0.4
CONSUMER ELECTRONICS
Common .................................................. -- 12,206 735,004 --
New-/- .................................................. -- 3,678 189,466 --
------------
13,741,458
------------
Energy (5.0%)
United Utilities PLC ...................................... UK 311,900 3,316,608 1.3
ENERGY SOURCES
Petroleo Brasileiro S.A. (Petrobras) - ADR-/- {\/} ........ BRZL 197,900 3,067,450 1.2
GAS PRODUCTION & DISTRIBUTION
Elektrowatt AG-/- ......................................... SWTZ 7,353 2,929,110 1.1
ELECTRICAL & GAS UTILITIES
ABB Asea Brown Boveri Ltd. - Bearer ....................... SWTZ 2,305 2,868,330 1.1
ENERGY EQUIPMENT & SERVICES
</TABLE>
The accompanying notes are an integral part of the financial statements.
F23
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Energy (Continued)
Korea Electric Power Corp. ................................ KOR 28,000 $ 817,567 0.3
ELECTRICAL & GAS UTILITIES
------------
12,999,065
------------
Consumer Non-Durables (4.7%)
Amway Japan Ltd. .......................................... JPN 140,000 4,498,963 1.7
HOUSEHOLD PRODUCTS
Gucci Group - NY Registered Shares{\/} .................... ITLY 57,950 3,701,556 1.4
TEXTILES & APPAREL
Parmalat Finanziaria S.p.A. ............................... ITLY 1,227,960 1,880,440 0.7
FOOD
Vendex International N.V. ................................. NETH 43,464 1,860,944 0.7
OTHER CONSUMER GOODS
Giordano International Ltd. ............................... HK 537,000 458,262 0.2
TEXTILES & APPAREL
------------
12,400,165
------------
Multi-Industry/Miscellaneous (4.2%)
Kinnevik AB "B" Free ...................................... SWDN 119,910 3,309,027 1.3
MULTI-INDUSTRY
Citic Pacific Ltd. ........................................ HK 438,000 2,542,824 1.0
CONGLOMERATE
Hutchison Whampoa ......................................... HK 279,000 2,191,524 0.8
MULTI-INDUSTRY
Wrightson Ltd. ............................................ NZ 1,500,000 1,303,703 0.5
MULTI-INDUSTRY
Swire Pacific Ltd. "A" .................................... HK 96,000 915,438 0.4
MULTI-INDUSTRY
United Industrial Corp. ................................... SING 580,000 489,277 0.2
CONGLOMERATE
------------
10,751,793
------------ -----
TOTAL EQUITY INVESTMENTS (cost $217,710,991) ................ 249,336,147 95.5
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
F24
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
No. of Value % of Net
Warrants Country Warrants (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Thai Farmers Bank Ltd., Warrants expire 9/15/02 (cost
$9,592)-/- ............................................... THAI 9,738 $ 9,210 --
BANKS-MONEY CENTER
------------ -----
TOTAL INVESTMENTS (cost $217,720,583) * .................... 249,345,357 95.5
Other Assets and Liabilities ................................ 11,818,628 4.5
------------ -----
NET ASSETS .................................................. $261,163,985 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
{/\} Australian currency denominated.
* For Federal income tax purposes, cost is $219,363,482 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 41,743,561
Unrealized depreciation: (11,761,686)
-------------
Net unrealized appreciation: $ 29,981,875
-------------
-------------
</TABLE>
Abbreviations:
ADR -- American Depository Receipt
SEC -- Share Entitlement Certificate
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1996, was concentrated in
the following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets
{d}
---------------------------
Country (Country Code/Currency Code) Equity Other Total
- -------------------------------------- ------ ---------- -----
<S> <C> <C> <C>
Australia (AUSL/AUD) ................. 2.8 2.8
Brazil (BRZL/BRL) .................... 1.2 1.2
France (FR/FRF) ...................... 7.1 7.1
Germany (GER/DEM) .................... 7.1 7.1
Hong Kong (HK/HKD) ................... 5.3 5.3
Indonesia (INDO/IDR) ................. 1.1 1.1
Italy (ITLY/ITL) ..................... 4.7 4.7
Japan (JPN/JPY) ...................... 16.5 16.5
Korea (KOR/KRW) ...................... 0.9 0.9
Mexico (MEX/MXN) ..................... 1.3 1.3
Netherlands (NETH/NLG) ............... 5.8 5.8
New Zealand (NZ/NZD) ................. 1.8 1.8
Portugal (PORT/PTE) .................. 1.9 1.9
Singapore (SING/SGD) ................. 1.7 1.7
Spain (SPN/ESP) ...................... 4.2 4.2
Sweden (SWDN/SEK) .................... 3.6 3.6
Switzerland (SWTZ/CHF) ............... 5.9 5.9
Thailand (THAI/THB) .................. 0.9 0.9
United Kingdom (UK/GBP) .............. 21.7 21.7
United States & Other (US/USD) ....... 4.5 4.5
------ --- -----
Total ............................... 95.5 4.5 100.0
------ --- -----
------ --- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $261,163,985.
The accompanying notes are an integral part of the financial statements.
F25
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
Forward Foreign Currency Contracts Outstanding
December 31, 1996
<TABLE>
<CAPTION>
Market Value Contract Delivery Unrealized
Contracts to Sell: (U.S. Dollars) Price Date Appreciation
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
French Francs........................... 9,674,211 5.09700 02/06/97 $ 135,481
French Francs........................... 2,323,468 5.07000 02/19/97 43,396
Japanese Yen............................ 99,343 113.01500 01/07/97 2,413
Japanese Yen............................ 5,006,047 110.00000 01/07/97 262,135
Japanese Yen............................ 1,591,561 111.74500 02/06/97 48,333
Japanese Yen............................ 13,907,565 110.40000 02/12/97 585,189
Swiss Francs............................ 8,958,150 1.31200 03/19/97 104,350
-------------- --------------
Total Contracts to Sell (Receivable
amount $42,741,642).................. 41,560,345 1,181,297
-------------- --------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 15.91%.
Total Open Forward Foreign Currency
Contracts............................ $ 1,181,297
--------------
--------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F26
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $217,720,583) (Note 1)...... $249,345,357
U.S. currency............................................. $ 327
Foreign currencies (cost $4,610,163)...................... 4,680,132 4,680,459
----------
Receivable for securities sold........................................ 10,949,478
Receivable for open forward foreign currency contracts, net (Note
1)................................................................... 1,181,297
Dividends and dividend withholding tax reclaims receivable............ 461,548
Receivable for Fund shares sold....................................... 167,237
Miscellaneous receivable.............................................. 44,627
Cash held as collateral for securities loaned (Note 1)................ 20,879,528
------------
Total assets........................................................ 287,709,531
------------
Liabilities:
Payable for Fund shares repurchased................................... 3,247,882
Payable for securities purchased...................................... 1,708,549
Payable for investment management and administration fees (Note 2).... 217,392
Payable for loan outstanding (Note 1)................................. 129,000
Payable for service and distribution expenses (Note 2)................ 112,908
Payable for printing and postage expenses............................. 108,222
Payable for transfer agent fees (Note 2).............................. 69,383
Payable for professional fees......................................... 32,301
Payable for registration and filing fees.............................. 16,699
Payable for custodian fees (Note 1)................................... 13,453
Payable for fund accounting fees (Note 2)............................. 5,150
Payable for Trustees' fees and expenses (Note 2)...................... 5,079
Collateral for securities loaned (Note 1)............................. 20,879,528
------------
Total liabilities................................................... 26,545,546
------------
Net assets.............................................................. $261,163,985
------------
------------
Class A:
Net asset value and redemption price per share ($196,601,302 DIVIDED BY
22,035,585 shares outstanding)......................................... $ 8.92
------------
------------
Maximum offering price per share (100/95.25 of $8.92) *................. $ 9.36
------------
------------
Class B:+
Net asset value and offering price per share ($64,101,904 DIVIDED BY
7,387,563 shares outstanding).......................................... $ 8.68
------------
------------
Advisor Class:
Net asset value, offering price per share, and redemption price per
share ($460,779 DIVIDED BY 51,166 shares outstanding).................. $ 9.01
------------
------------
Net assets consist of:
Paid in capital (Note 4).............................................. $222,227,771
Accumulated net realized gain on investments and foreign currency
transactions......................................................... 6,042,757
Net unrealized appreciation on translation of assets and liabilities
in foreign currencies................................................ 1,268,683
Net unrealized appreciation of investments............................ 31,624,774
------------
Total -- representing net assets applicable to capital shares
outstanding............................................................ $261,163,985
------------
------------
<FN>
- --------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
F27
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
STATEMENT OF OPERATIONS
Year ended December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of $726,212)........... $ 4,899,862
Interest income........................................................ 282,325
-----------
Total investment income.............................................. 5,182,187
-----------
Expenses:
Investment management and administration fees (Note 2)................. 3,034,522
Service and distribution expenses: (Note 2)
Class A................................................. $ 847,585
Class B................................................. 681,990 1,529,575
-----------
Transfer agent fees (Note 2)........................................... 857,972
Custodian fees......................................................... 252,795
Printing and postage expenses.......................................... 130,720
Fund accounting fees (Note 2).......................................... 77,934
Registration and filing fees........................................... 61,482
Audit fees............................................................. 52,338
Trustees' fees and expenses (Note 2)................................... 12,934
Legal fees............................................................. 11,712
Other expenses (Note 1)................................................ 357,836
-----------
Total expenses before reductions..................................... 6,379,820
-----------
Expense reductions (Notes 1 & 5)................................... (336,949)
-----------
Total net expenses................................................... 6,042,871
-----------
Net investment loss...................................................... (860,684)
-----------
Net realized and unrealized gain (loss) on investments and
foreign currencies: (Note 1)
Net realized gain on investments.......................... 29,599,764
Net realized gain on foreign currency transactions........ 8,331,816
-----------
Net realized gain during the year.................................... 37,931,580
Net change in unrealized appreciation on translation of
assets and liabilities in foreign currencies............. 205,239
Net change in unrealized appreciation of investments...... (7,070,173)
-----------
Net unrealized depreciation during the year.......................... (6,864,934)
-----------
Net realized and unrealized gain on investments and foreign currencies... 31,066,646
-----------
Net increase in net assets resulting from operations..................... $30,205,962
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F28
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1996 December 31, 1995
----------------- -----------------
<S> <C> <C>
Decrease in net assets
Operations:
Net investment income (loss).............................. $ (860,684) $ 555,361
Net realized gain on investments and foreign currency
transactions............................................. 37,931,580 982,081
Net change in unrealized appreciation on translation of
assets and liabilities in foreign currencies............. 205,239 247,497
Net change in unrealized appreciation (depreciation) of
investments.............................................. (7,070,173) 7,882,538
----------------- -----------------
Net increase in net assets resulting from operations.... 30,205,962 9,667,477
----------------- -----------------
Class A:
Distributions to shareholders:
From net realized gain on investments..................... (20,343,820) (7,612,428)
In excess of net realized gain on investments............. -- (6,510,219)
Class B:
Distributions to shareholders:
From net realized gain on investments..................... (6,672,791) (1,774,209)
In excess of net realized gain on investments............. -- (1,517,320)
Advisor Class:
Distributions to shareholders:
From net realized gain on investments..................... (46,941) (9,818)
In excess of net realized gain on investments............. -- (8,396)
----------------- -----------------
Total distributions..................................... (27,063,552) (17,432,390)
----------------- -----------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested.......... 1,289,311,201 1,294,676,738
Decrease from capital shares repurchased.................. (1,410,140,865) (1,410,555,957)
----------------- -----------------
Net decrease from capital share transactions............ (120,829,664) (115,879,219)
----------------- -----------------
Total decrease in net assets................................ (117,687,254) (123,644,132)
Net assets:
Beginning of year......................................... 378,851,239 502,495,371
----------------- -----------------
End of year *............................................. $ 261,163,985 $ 378,851,239
----------------- -----------------
----------------- -----------------
--------------
*Includes undistributed net investment income of......... $ 0 $ 0
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F29
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
Class A+
----------------------------------------------------------
Year ended December 31,
----------------------------------------------------------
1996 (a) 1995 1994 1993 (a) 1992
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 9.08 $ 9.17 $ 11.02 $ 8.21 $ 8.74
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... (0.01) 0.03 (0.04) 0.03 0.11
Net realized and unrealized gain
(loss) on investments................ 0.84 0.32 (0.82) 2.78 (0.62)
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. 0.83 0.35 (0.86) 2.81 (0.51)
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ -- -- (0.04) -- (0.02)
From net realized gain on
investments.......................... (0.99) (0.24) (0.95) -- --
In excess of net realized gain on
investments.......................... -- (0.20) -- -- --
---------- ---------- ---------- ---------- ----------
Total distributions................. (0.99) (0.44) (0.99) -- (0.02)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 8.92 $ 9.08 $ 9.17 $ 11.02 $ 8.21
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (d)............. 9.28% 3.88% (7.78)% 34.23% (5.83)%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 196,601 $ 308,816 $ 430,701 $ 523,397 $ 421,693
Ratio of net investment income (loss) to
average net assets..................... (0.14)% 0.24% (0.04)% 0.3% 1.2%
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.80% 1.70% 1.70% 1.80% 1.90%
Without expense reductions............ 1.91% 1.78% 1.75% --%* --%*
Portfolio turnover rate++++............. 74% 75% 96% 90% 89%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0267 N/A N/A N/A N/A
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
(a) Calculated based upon average shares outstanding during the period.
(b) Not annualized
(c) Annualized
(d) Total investment return does not include sales charges.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
N/A Not applicable.
The accompanying notes are an integral part of the financial statements.
F30
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
Class B++ Advisor Class+++
------------------------------------------------- ----------------------------
April 1, 1993 Year June 1, 1995
Year ended December 31, to ended to
---------------------------------- December 31, December 31, December 31,
1996 (a) 1995 1994 1993 (a) 1996 (a) 1995
---------- ---------- ---------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 8.91 $ 9.07 $ 10.98 $ 8.74 $ 9.11 $ 8.49
---------- ---------- ---------- ------------- ------------- -------------
Income from investment operations:
Net investment income (loss).......... (0.07) (0.04) (0.10) (0.01) 0.02 0.03
Net realized and unrealized gain
(loss) on investments................ 0.83 0.32 (0.82) 2.25 0.87 1.03
---------- ---------- ---------- ------------- ------------- -------------
Net increase (decrease) from
investment operations.............. 0.76 0.28 (0.92) 2.24 0.89 1.06
---------- ---------- ---------- ------------- ------------- -------------
Distributions to shareholders:
From net investment income............ -- -- (0.04) -- -- --
From net realized gain on
investments.......................... (0.99) (0.24) (0.95) -- (0.99) (0.24)
In excess of net realized gain on
investments.......................... -- (0.20) -- -- -- (0.20)
---------- ---------- ---------- ------------- ------------- -------------
Total distributions................. (0.99) (0.44) (0.99) -- (0.99) (0.44)
---------- ---------- ---------- ------------- ------------- -------------
Net asset value, end of period.......... $ 8.68 $ 8.91 $ 9.07 $ 10.98 $ 9.01 $ 9.11
---------- ---------- ---------- ------------- ------------- -------------
---------- ---------- ---------- ------------- ------------- -------------
Total investment return (d)............. 8.67% 3.15% (8.36)% 25.63%(b) 9.79% 12.56%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 64,102 $ 69,654 $ 71,794 $ 30,745 $ 461 $ 381
Ratio of net investment income (loss) to
average net assets..................... (0.79)% (0.41)% (0.69)% (0.4)%(c) 0.21% 0.59%(c)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.45% 2.35% 2.35% 2.4%(c) 1.45% 1.35%(c)
Without expense reductions............ 2.56% 2.43% 2.40% --%* 1.56% 1.43%(c)
Portfolio turnover rate++++............. 74% 75% 96% 90% 74% 75%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0267 N/A N/A N/A $ 0.0267 N/A
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
(a) Calculated based upon average shares outstanding during the period.
(b) Not annualized
(c) Annualized
(d) Total investment return does not include sales charges.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
N/A Not applicable.
The accompanying notes are an integral part of the financial statements.
F31
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
GT Global International Growth Fund ("Fund"), is a separate series of GT Global
Growth Series ("Company"). The Company is organized as a Massachusetts business
trust and is registered under the Investment Company Act of 1940, as amended
("1940 Act"), as an open-end management investment company. The Company has
eight diversified series of shares in operation, each series corresponding to a
distinct portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles, and
the financial statements may include certain estimates from management.
(A) Portfolio Valuation
The Fund calculates the net asset value of Fund shares and completes orders to
purchase, exchange or repurchase Fund shares on each business day, with the
exception of those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market in which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by Chancellor LGT Asset
Management, Inc. (the "Manager") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
asked prices for such investments or, if such prices are not available, at
prices for investments of comparative maturity, quality and type; however, when
the Manager deems it appropriate, prices obtained for the day of valuation from
a bond pricing service will be used. Short-term investments with a maturity of
60 days or less are valued to amortized cost, adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Fund's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of Trustees.
(B) Foreign Currency Translation
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, other assets and liabilities
are recorded in the books and records of the Fund after translation to U.S.
dollars based on the exchange rates on that day. The cost of each security is
determined using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains or losses arise from changes in the
value of assets and liabilities other than investments in securities at year
end, resulting from changes in exchange rates.
(C) Repurchase Agreements
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, U.S. government securities or other
high quality debt securities of which the value, including accrued interest, is
at least equal to the amount to be repaid to the Fund under each agreement at
its maturity.
(D) Forward Foreign Currency Contracts
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss equal to
the difference between the value at the time it was opened and the value at the
time it was closed. The Fund could be exposed to risk if a counterparty is
unable to meet the terms of a contract or if
F32
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
the value of the currency changes unfavorably. The Fund may enter into Forward
Contracts in connection with planned purchases or sales of securities, or to
hedge against adverse fluctuations in exchange rates between currencies.
(E) Option Accounting Principles
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
market-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of on over-the-counter option, is valued at the average
of the last bid prices obtained from brokers, unless a quotation from only one
broker is available, in which case only that broker's price will be used. If an
option expires on its stipulated expiration date or if the Fund enters into a
closing purchase transaction, a gain or loss is realized without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option is extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the proceeds of
the sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium originally received. The Fund can write options only on
a covered basis, which, for a call, requires that the Fund hold the underlying
security, and, for a put, requires the Fund to set aside cash, U.S. government
securities or other liquid securities in an amount not less than the exercise
price or otherwise provide adequate cover at all times while the put option is
outstanding. The Fund may use options to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) Futures Contracts
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
(G) Security Transactions and Related Investment Income
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other then normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) Portfolio Securities Loaned
At December 31, 1996, stocks with an aggregate value of approximately
$19,408,528 were on loan to brokers. The loans were secured by cash collateral
of $20,879,528, received by the Fund. Cash collateral is received by the Fund
against loaned securities in an amount at least equal to 105% of the market
value of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 103% of the market value of the loaned
securities during the period of the loan. For the year ended December 31, 1996,
the Fund received securities lending fees of $157,185 which were used to reduce
custodian fees.
(I) Taxes
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, or excise tax on income
and capital gains.
F33
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
(J) Distribution to Shareholders
Distribution to shareholders are recorded by the Fund on the ex-date. Income and
capital gain distributions are determined in accordance with Federal income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) Foreign Securities
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets,
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(L) Restricted Securities
The Fund is permitted to invest in privately placed restrictions securities.
These securities may be resold in transactions exempt from registration or to
the public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
(M) Indexed Securities
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(N) Line of Credit
The Fund, along with certain other funds advised by the Manager, has a line of
credit with the Bank of Boston. The arrangement with the bank allows all
specified funds to borrow an aggregate maximum amount of $100,000,000. For the
year ended December 31, 1996, the Fund periodically borrowed various amounts at
a money market rate, with a balance of $129,000 outstanding on December 31,
1996.
For the year ended December 31, 1996, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
was $9,625,800 with a weighted average interest rate of 6.27%. Interest incurred
on this loan for the year ended December 31, 1996 was $8,383, included in "Other
Expenses" on the Statement of Operations.
2. Related Parties
Chancellor LGT Asset Management is the Fund's investment manager and
administrator. On October 31, 1996, Chancellor Capital Management, Inc. merged
with LGT Asset Management, Inc., and the surviving entity was renamed Chancellor
LGT Asset Management, Inc. The Fund pays investment management and
administration fees at the following annualized rates: 0.975% on the first $500
million of the average daily net assets of the Fund; 0.95% on the next $500
million; 0.925% on the next $500 million and 0.90% on amounts thereafter. These
fees are computed daily and paid monthly, and are subject to reduction in any
year to the extent that the Fund's expenses (exclusive of brokerage commissions,
taxes, interest, distribution-related expenses and extraordinary expenses)
exceed the most stringent limits prescribed by the laws or regulations of any
state in which the Fund's shares are offered for sale, based on the average
total net asset value of the Fund.
GT Global, Inc., an affiliate of the Manager, serves as the Fund's distributor.
The Fund offers Class A, Class B, and Advisor Class shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. GT Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the year ended December 31, 1996, GT Global retained $28,270
of such sales charges. Purchases of Class A shares exceeding $500,000 may be
subject to a contingent deferred sales charge ("CDSC") upon redemption, in
accordance with the Fund's current prospectus. GT Global collected CDSCs in the
amount of $20,052 for the year ended December 31, 1996. GT Global also makes
ongoing shareholder servicing and trail commission payments to dealers whose
clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSC's, in accordance with the Fund's current
prospectus. During the year ended December 31, 1996, GT Global collected CDSC's
in the amount of $345,483. In addition, GT Global makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class B
shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Trustees has
adopted separate distribution plans with respect to the Fund's Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which the Fund
reimburses GT Global for a portion of its shareholder servicing and distribution
expenses. Under the Class A Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class A shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.35% of the average daily net assets of the Fund's Class A
shares, less any amounts paid by the Fund as the aforementioned service fee, for
its expenditures incurred in providing services as distributor. All expenses for
which GT Global is reimbursed under the Class A Plan will have been incurred
within one year of such reimbursement.
Pursuant to the Fund's Class B Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT
F34
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
Global a distribution fee at the annualized rate of up to 0.75% of the average
daily net assets of the Fund's Class B shares for its expenditures incurred in
providing services as distributor. Expenses incurred under the Class B Plan in
excess of 1.00% annually may be carried forward for reimbursement in subsequent
years as long as that Plan continues in effect.
The Manager and GT Global have voluntarily undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest and extraordinary
items) to the maximum annual level of 2.25%, and 2.90%, and 1.90% of the average
daily net assets of the Fund's Class A, Class B and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by GT Global
of payments under the Class A Plan and/or Class B Plan and/or reimbursements by
the Manager or GT Global of portions of the Fund's other operating expenses.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and GT Global, is the transfer agent of the Fund. For performing shareholder
servicing, reporting, and general transfer agent services, GT Services receives
an annual maintenance fee of $17.50 per account, a new account fee of $4.00 per
account, a per transaction fee of $1.75 for all transactions other than
exchanges and a per exchange fee of $2.25. GT Services also is reimbursed by the
Fund for its out-of-pocket expenses for such items as postage, forms, telephone
charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived by
applying 0.03% to the first $5 billion of assets of all registered mutual funds
advised by the Manager and 0.02% to the assets in excess of $5 billion and
allocating the result according to the Fund's average daily net assets.
The Company pays each of its Trustees who is not an employee, officer or
director of GT Capital, GT Global or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee.
3. Purchases and Sales of Securities
For the year ended December 31, 1996, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $224,329,938 and $343,544,014, respectively. There were
no purchases or sales of U.S. government obligations by the Fund during the
period.
F35
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
4. Capital Shares
At December 31, 1996, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
Capital Share Transactions
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1996 December 31, 1995
------------------------------- -------------------------------
Class A Shares Amount Shares Amount
- --------------------------------------------- ------------- ---------------- ------------- ----------------
<S> <C> <C> <C> <C>
Shares sold.................................. 122,327,179 $ 1,141,723,541 140,096,147 $ 1,244,115,581
Shares issued in connection with reinvestment
of distributions........................... 1,912,490 16,848,644 1,274,450 11,483,253
------------- ---------------- ------------- ----------------
124,239,669 1,158,572,185 141,370,597 1,255,598,834
Shares repurchased........................... (136,198,803) (1,274,970,792) (154,325,977) (1,370,898,171)
------------- ---------------- ------------- ----------------
Net decrease................................. (11,959,134) $ (116,398,607) (12,955,380) $ (115,299,337)
------------- ---------------- ------------- ----------------
------------- ---------------- ------------- ----------------
Year ended Year ended
December 31, 1996 December 31, 1995
------------------------------- -------------------------------
Class B Shares Amount Shares Amount
- --------------------------------------------- ------------- ---------------- ------------- ----------------
Shares sold.................................. 11,345,619 $ 103,852,840 4,065,880 $ 35,727,913
Shares issued in connection with reinvestment
of distributions........................... 678,796 5,819,941 329,999 2,917,198
------------- ---------------- ------------- ----------------
12,024,415 109,672,781 4,395,879 38,645,111
Shares repurchased........................... (12,451,843) (114,133,394) (4,499,678) (39,592,887)
------------- ---------------- ------------- ----------------
Net decrease................................. (427,428) $ (4,460,613) (103,799) $ (947,776)
------------- ---------------- ------------- ----------------
------------- ---------------- ------------- ----------------
June 1, 1995
(commencement of sale of
Year ended shares)
December 31, 1996 to December 31, 1995
------------------------------- -------------------------------
Advisor Class Shares Amount Shares Amount
- --------------------------------------------- ------------- ---------------- ------------- ----------------
Shares sold.................................. 2,233,829 $ 21,033,137 47,423 $ 417,842
Shares issued in connection with reinvestment
of distributions........................... 3,723 33,098 1,656 14,951
------------- ---------------- ------------- ----------------
2,237,552 21,066,235 49,079 432,793
Shares repurchased........................... (2,228,201) (21,036,679) (7,264) (64,899)
------------- ---------------- ------------- ----------------
Net increase................................. 9,351 $ 29,556 41,815 $ 367,894
------------- ---------------- ------------- ----------------
------------- ---------------- ------------- ----------------
</TABLE>
5. Expense Reductions
The Manager has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended December 31, 1996, the Fund's
expenses were reduced by $179,764 under these arrangements.
- ------------
Federal Tax Information (Unaudited):
For its fiscal year ended December 31, 1996, the total amount of income received
by the Fund from sources within foreign countries and possessions of the United
States was approximately $.23 per share (representing an approximate total of
$6,254,495). The total amount of taxes paid by the Fund to such countries was
approximately $.05 per share (representing an approximate total of $1,336,665).
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$22,365,202 as a capital gain dividend for the fiscal year ended December 31,
1996.
F36
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
GT Global Growth Series:
We have audited the accompanying statement of assets and liabilities of GT
Global New Pacific Growth Fund, a series of shares of beneficial interest of GT
Global Growth Series, including the schedule of portfolio investments, as of
December 31, 1996, the related statement of operations for the year then ended,
the statements of changes in net assets for each of the two years in the period
then ended, and the financial highlights for each of the five years in the
period then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1996 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of GT
Global New Pacific Growth Fund as of December 31, 1996, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the five years in the period then ended, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
FEBRUARY 14, 1997
F37
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- --------------------------------------------------------- -------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Finance (42.9%)
New World Development Co., Ltd. ....................... HK 3,666,000 $ 24,767,067 4.8
REAL ESTATE
HSBC Holdings PLC ..................................... HK 1,027,600 21,989,630 4.3
BANKS-MONEY CENTER
Rashid Hussain Bhd. ................................... MAL 3,000,000 19,841,584 3.9
SECURITIES BROKER
Sun Hung Kai Properties Ltd. .......................... HK 1,530,000 18,744,182 3.6
REAL ESTATE
Cheung Kong (Holdings) Ltd. ........................... HK 1,883,000 16,738,589 3.3
REAL ESTATE
Guangzhou Investment Co., Ltd. ........................ HK 32,100,000 15,356,866 3.0
REAL ESTATE
Wharf (Holdings) Ltd. ................................. HK 2,500,000 12,477,373 2.4
REAL ESTATE
Hysan Development Co., Ltd. ........................... HK 2,769,000 11,027,308 2.1
REAL ESTATE
Malaysian Resources Corp., Bhd. ....................... MAL 2,524,000 9,946,059 1.9
REAL ESTATE
Lai Sun Development Co., Ltd. ......................... HK 5,000,000 7,564,003 1.5
REAL ESTATE
Metropolitan Bank & Trust Co. ......................... PHIL 300,000 7,425,743 1.4
BANKS-REGIONAL
Metroplex Bhd. ........................................ MAL 5,500,000 6,752,475 1.3
REAL ESTATE
Ayala Land, Inc. "B" .................................. PHIL 5,700,000 6,511,805 1.3
REAL ESTATE
Bank of East Asia Ltd. ................................ HK 1,222,600 5,437,993 1.1
BANKS-MONEY CENTER
Samanda Holdings Bhd. ................................. MAL 1,051,000 4,953,228 1.0
INVESTMENT MANAGEMENT
Public Bank Bhd. - Foreign ............................ MAL 2,199,333 4,659,973 0.9
BANKS-MONEY CENTER
HKR International Ltd. ................................ HK 2,258,960 3,811,666 0.7
REAL ESTATE
DCB Holdings Bhd. ..................................... MAL 990,000 3,391,485 0.7
BANKS-REGIONAL
Philippine Commercial International Bank-/- ........... PHIL 252,290 3,314,549 0.6
BANKS-MONEY CENTER
Wheelock & Co., Ltd. .................................. HK 1,000,000 2,851,047 0.6
REAL ESTATE
Megaworld Properties & Holdings, Inc.-/- .............. PHIL 5,888,500 2,354,503 0.5
REAL ESTATE
Bank of the Philippine Islands ........................ PHIL 362,430 2,194,454 0.4
BANKS-MONEY CENTER
Hong Kong Land Holdings Ltd.{\/} ...................... HK 603,353 1,677,321 0.3
REAL ESTATE INVESTMENT TRUST
PT Bank Internasional Indonesia - Foreign ............. INDO 1,464,666 1,442,333 0.3
BANKS-MONEY CENTER
State Bank of India Ltd. - GDR-/- {\/} ................ IND 75,100 1,304,487 0.3
BANKS-MONEY CENTER
</TABLE>
The accompanying notes are an integral part of the financial statements.
F38
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- --------------------------------------------------------- -------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Finance (Continued)
Amoy Properties Ltd. .................................. HK 613,500 $ 884,474 0.2
REAL ESTATE
China Resources Enterprise Ltd.-/- .................... HK 354,000 796,431 0.2
REAL ESTATE INVESTMENT TRUST
Overseas-Chinese Banking Corp., Ltd. - Foreign ........ SING 55,000 684,158 0.1
BANKS-REGIONAL
Malayan Banking Bhd. .................................. MAL 47,500 526,733 0.1
BANKS-MONEY CENTER
United Overseas Bank Ltd. - Foreign ................... SING 28,000 312,268 0.1
BANKS-MONEY CENTER
Siam Commercial Bank PLC - Foreign .................... THAI 22,600 163,941 --
BANKS-MONEY CENTER
MBF Capital Bhd. ...................................... MAL 6,000 9,743 --
OTHER FINANCIAL
Hong Leong Bank Bhd. .................................. MAL 1,000 3,485 --
BANKS-MONEY CENTER
--------------
219,916,956
--------------
Capital Goods (17.3%)
PWE Industries Bhd. ................................... MAL 1,358,000 26,353,267 5.1
ELECTRICAL PLANT/EQUIPMENT
Ekran Bhd. ............................................ MAL 5,196,000 21,812,911 4.2
MACHINERY & ENGINEERING
United Engineers Ltd. ................................. MAL 1,625,000 14,673,267 2.9
CONSTRUCTION
New World Infrastructure Ltd.-/- ...................... HK 4,165,563 12,172,449 2.4
INDUSTRIAL COMPONENTS
Mancon Bhd. ........................................... MAL 2,000,000 6,099,010 1.2
CONSTRUCTION
C & P Homes, Inc. ..................................... PHIL 8,308,900 4,271,521 0.8
CONSTRUCTION
Harbin Power Equipment Co., Ltd.-/- ................... HK 17,082,000 2,782,948 0.5
ELECTRICAL PLANT/EQUIPMENT
United Engineers Ltd., Convertible Unsecured Loan
Stock, 4% expires 5/22/99 ............................ MAL 522,500 424,208 0.1
CONSTRUCTION
Bandar Raya Developments Bhd. ......................... MAL 191,000 366,115 0.1
CONSTRUCTION
--------------
88,955,696
--------------
Multi-Industry/Miscellaneous (10.0%)
Citic Pacific Ltd. .................................... HK 3,534,000 20,516,757 4.0
CONGLOMERATE
Hutchison Whampoa ..................................... HK 1,864,000 14,641,583 2.8
MULTI-INDUSTRY
Gadek (Malaysia) Bhd. ................................. MAL 1,432,000 10,888,871 2.1
CONGLOMERATE
Pacific Dunlop Ltd. ................................... AUSL 1,030,000 2,618,575 0.5
MULTI-INDUSTRY
</TABLE>
The accompanying notes are an integral part of the financial statements.
F39
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- --------------------------------------------------------- -------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Multi-Industry/Miscellaneous (Continued)
E.R.G. Ltd. ........................................... AUSL 1,754,638 $ 2,230,413 0.4
MULTI-INDUSTRY
Wembley Industries Holdings Bhd.-/- ................... MAL 355,000 593,307 0.1
MULTI-INDUSTRY
Jardine Strategic Holdings Ltd.{\/} ................... HK 83,000 300,460 0.1
CONGLOMERATE
JG Summit Holdings Inc. "B" ........................... PHIL 748,000 210,784 --
CONGLOMERATE
Korea Fund, Inc.{\/} .................................. KOR 938 14,070 --
COUNTRY FUNDS
--------------
52,014,820
--------------
Consumer Durables (6.6%)
Edaran Otomobil Nasional Bhd. ......................... MAL 1,273,000 12,730,000 2.5
AUTOMOBILES
Perusahaan Otomobil Nasional Bhd. ..................... MAL 1,982,000 12,559,208 2.4
AUTOMOBILES
Uniwide Holdings, Inc.-/- ............................. PHIL 42,000,000 8,316,832 1.6
APPLIANCES & HOUSEHOLD
Samsung Electronics Co.: .............................. KOR -- -- 0.1
CONSUMER ELECTRONICS
New-/- .............................................. -- 10,204 525,642 --
Common .............................................. -- 1,430 86,110 --
--------------
34,217,792
--------------
Materials/Basic Industry (5.8%)
Western Mining Corporation Holdings Ltd. .............. AUSL 1,700,000 10,710,257 2.1
METALS - NON-FERROUS
Broken Hill Proprietary Co., Ltd. ..................... AUSL 658,893 9,380,601 1.8
MISC. MATERIALS & COMMODITIES
Cosco Pacific Ltd. .................................... HK 6,048,000 7,038,014 1.4
PAPER/PACKAGING
APC Group, Inc. ....................................... PHIL 1,000,000,000 1,142,422 0.2
MISC. MATERIALS & COMMODITIES
Oriental Press Group .................................. HK 1,280,000 575,123 0.1
PAPER/PACKAGING
PT Semen Cibinong - Foreign ........................... INDO 200,000 563,321 0.1
CEMENT
Pohang Iron & Steel Co., Ltd.-/- ...................... KOR 8,500 493,454 0.1
METALS - STEEL
--------------
29,903,192
--------------
Services (5.7%)
China Hong Kong Photo Products Holdings Ltd. .......... HK 20,466,000 6,880,217 1.3
WHOLESALE & INTERNATIONAL TRADE
PT Telekomunikasi Indonesia - Foreign ................. INDO 3,415,000 5,894,166 1.1
TELECOM - OTHER
News Corp., Ltd. ...................................... AUSL 948,933 5,005,891 1.0
BROADCASTING & PUBLISHING
</TABLE>
The accompanying notes are an integral part of the financial statements.
F40
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- --------------------------------------------------------- -------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Services (Continued)
Hong Kong & Shanghai Hotels ........................... HK 2,166,666 $ 4,090,163 0.8
LEISURE & TOURISM
Resorts World Bhd. .................................... MAL 750,000 3,415,842 0.7
LEISURE & TOURISM
Telecom Corporation of New Zealand Ltd. ............... NZ 484,000 2,469,248 0.5
TELEPHONE NETWORKS
Matichon Newspaper Group - Foreign .................... THAI 154,800 495,051 0.1
BROADCASTING & PUBLISHING
Television Broadcasts Ltd. ............................ HK 106,000 423,507 0.1
BROADCASTING & PUBLISHING
I.C.C. International Public Co., Ltd. - Foreign ....... THAI 60,059 299,815 0.1
WHOLESALE & INTERNATIONAL TRADE
--------------
28,973,900
--------------
Energy (5.1%)
Belle Corp.-/- ........................................ PHIL 54,100,000 15,039,223 2.9
OIL
Oil Search Ltd. ....................................... AUSL 3,987,000 7,760,507 1.5
OIL
Electricity Generating Public Co., Ltd. - Foreign ..... THAI 1,219,350 3,328,829 0.6
ELECTRICAL & GAS UTILITIES
Yukong Ltd.: .......................................... KOR -- -- 0.1
OIL
Common .............................................. -- 17,929 340,491 --
New-/- .............................................. -- 2,667 49,130 --
--------------
26,518,180
--------------
Consumer Non-Durables (1.1%)
R.J. Reynolds Bhd. .................................... MAL 1,360,000 3,689,505 0.7
TOBACCO
PT Indofood Sukses Makmur ............................. INDO 1,000,000 1,990,682 0.4
FOOD
--------------
5,680,187
-------------- -----
TOTAL EQUITY INVESTMENTS (cost $392,821,001) ............ 486,180,723 94.5
-------------- -----
<CAPTION>
No. of Value % of Net
Warrants Country Warrants (Note 1) Assets
- --------------------------------------------------------- -------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Hicom Holdings Bhd. Warrants, expire 12/18/00-/- ...... MAL 750,000 962,376 0.2
MISC. MATERIALS & COMMODITIES
Hysan Development Co., Ltd. Warrants, expire
4/30/98-/- ........................................... HK 200,950 181,879 --
REAL ESTATE
Hong Kong & Shanghai Hotels Warrants, expire
12/31/98-/- .......................................... HK 166,666 62,494 --
LEISURE & TOURISM
</TABLE>
The accompanying notes are an integral part of the financial statements.
F41
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
No. of Value % of Net
Warrants Country Warrants (Note 1) Assets
- --------------------------------------------------------- -------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Hang Lung Development Co. Warrants, expire
10/31/97-/- .......................................... HK 36,500 $ 10,855 --
REAL ESTATE
Oriental Press Group Warrants due 12/31/98-/- ......... HK 128,000 9,103 --
PAPER/PACKAGING
-------------- -----
TOTAL WARRANTS (cost $357,315) .......................... 1,226,707 0.2
-------------- -----
TOTAL INVESTMENTS (cost $393,178,316) * ................ 487,407,430 94.7
Other Assets and Liabilities ............................ 27,216,429 5.3
-------------- -----
NET ASSETS .............................................. $ 514,623,859 100.0
-------------- -----
-------------- -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $393,178,316 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 106,594,790
Unrealized depreciation: (12,365,676)
-------------
Net unrealized appreciation: $ 94,229,114
-------------
-------------
</TABLE>
Abbreviation:
GDR--Global Depository Receipt
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1996, was concentrated in
the following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets {d}
-------------------------------------------
Fixed Income,
Rights & Short-term
Country (Country Code/Currency Code) Equity Warrants & Other Total
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Australia (AUSL/AUD) ................. 7.3 7.3
Hong Kong (HK/HKD) ................... 41.6 41.6
India (IND/INR) ...................... 0.3 0.3
Indonesia (INDO/IDR) ................. 1.9 1.9
Korea (KOR/KRW) ...................... 0.3 0.3
Malaysia (MAL/MYR) ................... 31.9 0.2 32.1
New Zealand (NZ/NZD) ................. 0.5 0.5
Philippines (PHIL/PHP) ............... 9.7 9.7
Singapore (SING/SGD) ................. 0.2 0.2
Thailand (THAI/THB) .................. 0.8 0.8
United States & Other (US/USD) ....... 5.3 5.3
------ ----- ----- -----
Total ............................... 94.5 0.2 5.3 100.0
------ ----- ----- -----
------ ----- ----- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $514,623,859.
The accompanying notes are an integral part of the financial statements.
F42
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $393,178,316) (Note 1).......................... $487,407,430
U.S. currency................................................................. $6,814,128
Foreign currencies (cost $5,414).............................................. 5,935 6,820,063
----------
Receivable for securities sold............................................................ 45,339,261
Receivable for Fund shares sold........................................................... 3,868,309
Dividends receivable...................................................................... 1,029,758
Cash held as collateral for securities loaned (Note 1).................................... 63,740,591
------------
Total assets............................................................................ 608,205,412
------------
Liabilities:
Payable for Fund shares repurchased....................................................... 28,846,604
Payable for investment management and administration fees (Note 2)........................ 426,970
Payable for service and distribution expenses (Note 2).................................... 234,903
Payable for transfer agent fees (Note 2).................................................. 143,695
Payable for printing and postage expenses................................................. 84,954
Payable for registration and filing fees.................................................. 32,587
Payable for professional fees............................................................. 29,043
Payable for custodian fees (Note 1)....................................................... 21,083
Payable for fund accounting fees (Note 2)................................................. 10,055
Payable for Trustees' fees and expenses (Note 2).......................................... 6,926
Other accrued expenses.................................................................... 4,142
Collateral for securities loaned (Note 1)................................................. 63,740,591
------------
Total liabilities....................................................................... 93,581,553
------------
Net assets.................................................................................. $514,623,859
------------
------------
Class A:
Net asset value and redemption price per share ($361,243,935 DIVIDED BY 27,535,860 shares
outstanding)............................................................................... $ 13.12
------------
------------
Maximum offering price per share (100/95.25 of $13.12) *.................................... $ 13.77
------------
------------
Class B:+
Net asset value and offering price per share ($151,805,064 DIVIDED BY 11,855,984 shares
outstanding)............................................................................... $ 12.80
------------
------------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($1,574,860
DIVIDED BY 119,633 shares outstanding)..................................................... $ 13.16
------------
------------
Net assets consist of:
Paid in capital (Note 4).................................................................. $391,221,530
Accumulated net realized gain on investments and foreign currency transactions............ 29,169,621
Net unrealized appreciation on translation of assets and liabilities in foreign
currencies............................................................................... 3,594
Net unrealized appreciation of investments................................................ 94,229,114
------------
Total -- representing net assets applicable to capital shares outstanding................... $514,623,859
------------
------------
<FN>
- --------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
F43
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
STATEMENT OF OPERATIONS
Year ended December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income:
Dividend income (net of foreign withholding tax of $513,592) (Note 1)...................... $ 9,813,777
Interest income............................................................................ 1,152,414
------------
Total investment income.................................................................. 10,966,191
------------
Expenses:
Investment management and administration fees (Note 2)..................................... 5,260,774
Service and distribution expenses: (Note 2)
Class A..................................................................... $ 1,366,421
Class B..................................................................... 1,482,869 2,849,290
-----------
Transfer agent fees (Note 2)............................................................... 1,688,200
Custodian fees (Note 1).................................................................... 811,002
Registration and filing fees............................................................... 305,540
Printing and postage expenses.............................................................. 179,780
Fund accounting fees (Note 2).............................................................. 135,182
Audit fees................................................................................. 60,024
Legal fees................................................................................. 11,712
Trustees' fees and expenses (Note 2)....................................................... 9,882
Other expenses (Note 1).................................................................... 418,812
------------
Total expenses before reductions......................................................... 11,730,198
------------
Expense reductions (Note 1 & 5)........................................................ (737,169)
------------
Total net expenses....................................................................... 10,993,029
------------
Net investment loss.......................................................................... (26,838)
------------
Net realized and unrealized gain on investments and foreign currencies: (Note 1)
Net realized gain on investments.............................................. 94,626,790
Net realized loss on foreign currency transactions............................ (342,342)
-----------
Net realized gain during the year........................................................ 94,284,448
Net change in unrealized appreciation on translation of assets and liabilities
in foreign currencies........................................................ (106)
Net change in unrealized appreciation of investments.......................... 36,883,188
-----------
Net unrealized appreciation during the year.............................................. 36,883,082
------------
Net realized and unrealized gain on investments and foreign currencies....................... 131,167,530
------------
Net increase in net assets resulting from operations......................................... $131,140,692
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F44
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1996 December 31, 1995
----------------- -----------------
<S> <C> <C>
Decrease in net assets
Operations:
Net investment income (loss)........................................ $ (26,838) $ 4,037,605
Net realized gain on investments and foreign currency
transactions....................................................... 94,284,448 17,716,911
Net change in unrealized appreciation (depreciation) on translation
of assets and liabilities in foreign currencies.................... (106) 6,315
Net change in unrealized appreciation of investments................ 36,883,188 36,706,715
----------------- -----------------
Net increase in net assets resulting from operations.............. 131,140,692 58,467,546
----------------- -----------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income.......................................... -- (2,982,780)
From net realized gain on investments............................... (44,900,913) (13,196,301)
Class B:
Distributions to shareholders: (Note 1)
From net investment income.......................................... -- (228,209)
From net realized gain on investments............................... (18,754,735) (4,263,749)
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income.......................................... -- (11,427)
From net realized gain on investments............................... (250,756) (35,360)
----------------- -----------------
Total distributions............................................... (63,906,404) (20,717,826)
----------------- -----------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested.................... 5,158,291,909 3,442,682,160
Decrease from capital shares repurchased............................ (5,226,446,724) (3,489,738,455)
----------------- -----------------
Net decrease from capital share transactions...................... (68,154,815) (47,056,295)
----------------- -----------------
Total decrease in net assets.......................................... (920,527) (9,306,575)
Net assets:
Beginning of year................................................... 515,544,386 524,850,961
----------------- -----------------
End of year*........................................................ $ 514,623,859 $ 515,544,386
----------------- -----------------
----------------- -----------------
--------------
*Includes undistributed net investment income of................... $ 0 $ 0
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F45
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
Class A+
----------------------------------------------------------
Year ended December 31,
----------------------------------------------------------
1996 (d) 1995 (d) 1994 1993 1992
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.47 $ 12.10 $ 15.86 $ 10.31 $ 11.30
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... 0.02 0.11 0.02 (0.03) 0.07
Net realized and unrealized gain
(loss) on investments................ 2.44 0.79 (3.15) 6.23 (0.97)
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. 2.46 0.90 (3.13) 6.20 (0.90)
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ -- (0.10) (0.01) -- (0.06)
From net realized gain on
investments.......................... (1.81) (0.43) (0.55) (0.65) (0.03)
In excess of net investment income.... -- -- -- -- --
In excess of net realized gain on
investments.......................... -- -- (0.07) -- --
---------- ---------- ---------- ---------- ----------
Total distributions................. (1.81) (0.53) (0.63) (0.65) (0.09)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 13.12 $ 12.47 $ 12.10 $ 15.86 $ 10.31
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 20.04% 7.45% (19.73)% 60.61% (7.96)%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 361,244 $ 383,722 $ 404,680 $ 498,898 $ 281,418
Ratio of net investment income (loss) to
average net assets..................... 0.17% 0.91% 0.11% (0.3)% 0.6%
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.86% 1.89% 1.81% 1.9% 2.0%
Without expense reductions............ 1.99% 1.94% --* --* --*
Portfolio turnover rate++++............. 93% 63% 87% 117% 72%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0032 N/A N/A N/A N/A
</TABLE>
- ----------------
+ All capitals shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover and average commission rates are calculated on the
basis of the Fund as a whole without distinguishing between the
classes of shares issued.
(a) Not annualized
(b) Annualized
(c) Total investment return does not include sales charges.
(d) These selected per share operating data were calculated based upon
average shares outstanding during the period.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
N/A Not applicable
The accompanying notes are an integral part of the financial statements.
F46
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
Class B++ Advisor Class+++
------------------------------------------------- ----------------------------
April 1, 1993 Year June 1, 1995
Year ended December 31, to ended to
---------------------------------- December 31, December 31, December 31,
1996 (d) 1995 (d) 1994 1993 1996 (d) 1995 (d)
---------- ---------- ---------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.29 $ 11.96 $ 15.79 $ 11.27 $ 12.45 $ 12.89
---------- ---------- ---------- ------------- ------------- -------------
---------- ---------- ---------- ------------- ------------- -------------
Income from investment operations:
Net investment income (loss).......... (0.06) 0.03 (0.06) (0.10) 0.07 0.09
Net realized and unrealized gain
(loss) on investments................ 2.38 0.75 (3.15) 5.27 2.45 0.05
---------- ---------- ---------- ------------- ------------- -------------
Net increase (decrease) from
investment operations.............. 2.32 0.78 (3.21) 5.17 2.52 0.14
---------- ---------- ---------- ------------- ------------- -------------
Distributions to shareholders:
From net investment income............ -- (0.02) -- -- -- (0.15)
From net realized gain on
investments.......................... (1.81) (0.43) (0.55) (0.65) (1.81) (0.43)
In excess of net investment income.... -- - (0.07) -- -- --
In excess of net realized gain on
investments.......................... -- -- -- -- -- --
---------- ---------- ---------- ------------- ------------- -------------
Total distributions................. (1.81) (0.45) (0.62) (0.65) (1.81) (0.58)
---------- ---------- ---------- ------------- ------------- -------------
Net asset value, end of period.......... $ 12.80 $ 12.29 $ 11.96 $ 15.79 $ 13.16 $ 12.45
---------- ---------- ---------- ------------- ------------- -------------
---------- ---------- ---------- ------------- ------------- -------------
Total investment return (c)............. 19.28% 6.54% (20.30)% 46.30%(a) 20.56% 1.07%(a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 151,805 $ 130,887 $ 120,171 $ 72,122 $ 1,575 $ 935
Ratio of net investment income (loss) to
average net assets..................... (0.48)% 0.26% (0.54)% (0.9)%(b) 0.52% 1.26%
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.51% 2.54% 2.46% 2.5%(b) 1.51% 1.54%(b)
Without expense reductions............ 2.64% 2.59% --* --* 1.64% 1.59%(b)
Portfolio turnover rate++++............. 93% 63% 87% 117% 93% 63%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0032 N/A N/A N/A $ 0.0032 N/A
</TABLE>
- ----------------
+ All capitals shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover and average commission rates are calculated on the
basis of the Fund as a whole without distinguishing between the
classes of shares issued.
(a) Not annualized
(b) Annualized
(c) Total investment return does not include sales charges.
(d) These selected per share operating data were calculated based upon
average shares outstanding during the period.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
N/A Not applicable
The accompanying notes are an integral part of the financial statements.
F47
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
GT Global New Pacific Growth Fund ("Fund") is a separate series of GT Global
Growth Series ("Company"). The Company is organized as a Massachusetts business
trust and is registered under the Investment Company Act of 1940, as amended
("1940 Act"), as an open-end management investment company. The Company has
eight diversified series of shares in operation, each series corresponding to a
distinct portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles and the
financial statements may include certain estimates made by management.
(A) Portfolio Valuation
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market, as of
the close of business on the day the securities are being valued, or, lacking
any sales, at the last available bid price. In cases where securities are traded
on more than one exchange, the securities are valued on the exchange determined
by Chancellor LGT Asset Management, Inc. (the "Manager") to be the primary
market.
Fixed income securities are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for securities of comparative maturity, quality and type. However, when the
Manager deems it appropriate, prices obtained for the day of valuation from a
bond pricing service will be used. Short-term investments with a maturity of 60
days or less are valued at amortized cost, adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Company's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of Trustees.
(B) Foreign Currency Translation
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, other assets and liabilities
are recorded in the books and records of the Fund after translation to U.S.
dollars based on the exchange rates on that day. The cost of each security is
determined using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains or losses arise from changes in the
value of assets and liabilities other than investments in securities at year
end, resulting from changes in exchange rates.
(C) Repurchase Agreements
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, U.S. government securities or other
high quality debt securities of which the value, including accrued interest, is
at least equal to the amount to be repaid to the Fund under each agreement at
its maturity.
(D) Forward Foreign Currency Contracts
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss equal to
the difference between the value at the time it was opened and the value at the
time it was closed. The Fund could be exposed to risk if a counterparty is
unable to meet the terms of a contract or if
F48
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
the value of the currency changes unfavorably. The Fund may enter into Forward
Contracts in connection with planned purchases or sales of securities, or to
hedge against adverse fluctuations in exchange rates between currencies.
(E) Option Accounting Principles
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of an over-the-counter option, is valued at the average
of the last bid prices obtained from brokers, unless a quotation from only one
broker is available, in which case only that broker's price will be used. If an
option expires on its stipulated expiration date or if the Fund enters into a
closing purchase transaction, a gain or loss is realized without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option in extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the proceeds of
the sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium originally received. The Fund can write options only on
a covered basis, which, for a call, requires that the Fund hold the underlying
security, and, for a put, requires the Fund to set aside cash, U.S.government
securities or other liquid securities in an amount not less than the exercise
price or otherwise provide adequate cover at all times while the put option is
outstanding. The Fund may use options to manage its exposure to the stock and
bond markets and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) Futures Contracts
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock and bond
markets and to fluctuations in currency values or interest rates.
(G) Security Transactions and Related Investment Income
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other than normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) Portfolio Securities Loaned
At December 31, 1996, stocks with an aggregate value of approximately
$60,565,635 were on loan to brokers. The loans were secured by cash collateral
of $63,740,591, received by the Fund. Cash collateral is received by the Fund
against loaned securities in an amount at least equal to 105% of the market
value of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 103% of the market value of the loaned
securities during the period of the loan. For the year ended December 31, 1996,
the Fund received securities lending fees of $319,975 which were used to reduce
custodian fees.
(I) Taxes
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, or excise tax on income
and capital gains.
F49
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
(J) Distributions to Shareholders
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) Foreign Securities
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets,
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(L) Restricted Securities
The Fund is permitted to invest in privately placed restricted securities. These
securities may be resold in transactions exempt from registration or to the
public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
(M) Indexed Securities
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(N) Line of Credit
The Fund, along with certain other funds advised by the Manager, has a line of
credit with the Bank of Boston. The arrangement with the bank allows all
specified funds to borrow an aggregate maximum amount of $100,000,000. For the
year ended December 31, 1996, the Fund periodically borrowed amounts at a money
market rate, all of which has been repaid by December 31, 1996.
For the year ended December 31, 1996, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
was $16,333,333 with a weighted average interest rate of 6.27%. Interest
incurred on this loan for the year ended December 31, 1996 was $25,611, included
in "Other Expenses" on the Statement of Operations.
2. Related Parties
Chancellor LGT Asset Management, Inc. is the Fund's investment manager and
administrator. On October 31, 1996, Chancellor Capital Management, Inc. merged
with LGT Asset Management, Inc., and the surviving entity was renamed Chancellor
LGT Asset Management, Inc. The Fund pays investment management and
administration fees at the following annualized rates: 0.975% on the first $500
million of average daily net assets on the Fund; 0.95% on the next $500 million;
0.925% on the next $500 million and 0.90% on amounts thereafter. These fees are
computed daily and paid monthly, and are subject to reduction in any year to the
extent that the Fund's expenses (exclusive of brokerage commissions, taxes,
interest, distribution-related expenses and extraordinary expenses) exceed the
most stringent limits prescribed by the laws or regulations of any state in
which the Fund's shares are offered for sale, based on the average total net
asset value of the Fund.
GT Global, Inc. ("GT Global"), an affiliate of the Manager, serves as the Fund's
distributor. The Fund offers Class A, Class B, and Advisor Class shares for
purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. GT Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the year ended December 31, 1996, GT Global retained
$133,060 of such sales charges. Purchases of Class A shares exceeding $500,000
may be subject to a contingent deferred sales charge ("CDSC") upon redemption,
in accordance with the Fund's current prospectus. GT Global collected CDSCs in
the amount of $19,470 for the year ended December 31, 1996. GT Global also makes
ongoing shareholder servicing and trail commission payments to dealers whose
clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSCs, in accordance with the Fund's current
prospectus. For the year ended December 31, 1996, GT Global collected CDSCs in
the amount of $636,270. In addition, GT Global makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class B
shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Trustees has
adopted separate distribution plans with respect to the Fund's Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which the Fund
reimburses GT Global for a portion of its shareholder servicing and distribution
expenses. Under the Class A Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class A shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.35% of the average daily net assets of the Fund's Class A
shares, less any amounts paid by the Fund as the aforementioned service fee, for
its expenditures incurred in providing services as distributor. All expenses for
which GT Global is reimbursed under the Class A Plan will have been incurred
within one year of such reimbursement.
Pursuant to the Fund's Class B Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT
F50
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
Global a distribution fee at the annualized rate of up to 0.75% of the average
daily net assets of the Fund's Class B shares for its expenditures incurred in
providing services as distributor. Expenses incurred under the Class B Plan in
excess of 1.00% annually may be carried forward for reimbursement in subsequent
years as long as that Plan continues in effect.
The Manager and GT Global have voluntarily undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest and extraordinary
items) to the maximum annual level of 2.25%, 2.90%, and 1.90% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by GT Global
of payments under the Class A Plan and/or Class B Plan and/ or reimbursements by
the Manager or GT Global of portions of the Fund's other operating expenses.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and GT Global, is the transfer agent of the Fund. For performing shareholder
servicing, reporting, and general transfer agent services, GT Services receives
an annual maintenance fee of $17.50 per account, a new account fee of $4.00 per
account, a per transaction fee of $1.75 for all transactions other than
exchanges and a per exchange fee of $2.25. GT Services also is reimbursed by the
Fund for its out-of-pocket expenses for such items as postage, forms, telephone
charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived by
applying 0.03% of the first $5 billion of assets of all registered mutual funds
advised by the Manager and 0.02% to the assets in excess of $5 billion and
allocating the result according to the Fund's average daily net assets.
The Company pays each of its Trustees who is not an employee, officer or
director of the Manager, GT Global or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee.
3. Purchases and Sales of Securities
For the year ended December 31, 1996, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $479,521,098 and $557,132,554, respectively. There were
no purchases or sales of U.S. government obligations during the period.
F51
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
4. Capital Shares
At December 31, 1996, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
Capital Share Transactions
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1996 December 31, 1995
----------------------------- ------------------------------
Shares Amount Shares Amount
------------- -------------- ------------- ---------------
<S> <C> <C> <C> <C>
Class A
- ---------------------------------------------
Shares sold.................................. 285,658,529 $3,783,795,259 213,508,812 $ 2,634,346,068
Shares issued in connection with reinvestment
of distributions........................... 2,934,435 37,677,963 1,069,849 13,241,922
------------- -------------- ------------- ---------------
288,592,964 3,821,473,222 214,578,661 2,647,587,990
Shares repurchased........................... (291,833,470) (3,895,314,036) (217,241,112) (2,697,556,175)
------------- -------------- ------------- ---------------
Net decrease................................. (3,240,506) $ (73,840,814) (2,662,451) $ (49,968,185)
------------- -------------- ------------- ---------------
------------- -------------- ------------- ---------------
Year ended Year ended
December 31, 1996 December 31, 1995
----------------------------- ------------------------------
Shares Amount Shares Amount
------------- -------------- ------------- ---------------
Class B
- ---------------------------------------------
Shares sold.................................. 96,986,480 $1,263,551,513 64,930,186 $ 788,928,928
Shares issued in connection with reinvestment
of distributions........................... 1,241,219 15,565,185 307,922 3,759,320
------------- -------------- ------------- ---------------
98,227,699 1,279,116,698 65,238,108 792,688,248
Shares repurchased........................... (97,020,480) (1,273,495,413) (64,636,995) (790,755,338)
------------- -------------- ------------- ---------------
Net increase................................. 1,207,219 $ 5,621,285 601,113 $ 1,932,910
------------- -------------- ------------- ---------------
------------- -------------- ------------- ---------------
June 1, 1995
Year ended (commencement of sale of
December 31, 1996 shares) to December 31, 1995
----------------------------- ------------------------------
Shares Amount Shares Amount
------------- -------------- ------------- ---------------
Advisor Class
- ---------------------------------------------
Shares sold.................................. 4,311,411 $ 57,463,326 184,375 $ 2,360,516
Shares issued in connection with reinvestment
of distributions........................... 18,530 238,663 3,674 45,406
------------- -------------- ------------- ---------------
4,329,941 57,701,989 188,049 2,405,922
Shares repurchased........................... (4,285,455) (57,637,275) (112,902) (1,426,942)
------------- -------------- ------------- ---------------
Net increase................................. 44,486 $ 64,714 75,147 $ 978,980
------------- -------------- ------------- ---------------
------------- -------------- ------------- ---------------
</TABLE>
5. Expense Reductions
The Manager has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended December 31, 1996, the Fund's
expenses were reduced by $417,194 under these arrangements.
- --------------
Federal Tax Information (Unaudited):
For its fiscal year ended December 31, 1996, the total amount of income received
by the Fund from sources within foreign countries and possessions of the United
States was approximately $.39 per share (representing an approximate total of
$13,728,818). The total amount of taxes paid by the Fund to such countries was
approximately $.11 per share (representing an approximate total of $3,935,474).
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$58,445,881 as a capital gain dividend for the fiscal year ended December 31,
1996.
F52
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
GT Global Growth Series:
We have audited the accompanying statement of assets and liabilities of GT
Global Europe Growth Fund, one of the funds organized as a series of GT Global
Growth Series, including the schedule of portfolio investments, as of December
31, 1996, the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended and the financial highlights for each of the five years in the period then
ended. These financial statements and the financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1996 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of GT
Global Europe Growth Fund as of December 31, 1996, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended and the financial highlights for each of the five years
in the period then ended, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
FEBRUARY 14, 1997
F53
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (36.1%)
Reed International PLC .................................... UK 1,661,000 $ 31,428,168 5.8
BUSINESS & PUBLIC SERVICES
Koninklijke Ahold N.V. .................................... NETH 463,790 29,020,463 5.3
RETAILERS-FOOD
Adecco S.A.: .............................................. SWTZ -- -- 3.8
CONSUMER SERVICES
Common-/- ............................................... -- 69,306 17,567,332 --
Bearer-/- ............................................... -- 12,320 3,093,812 --
Comptoirs Modernes ........................................ FR 28,620 15,470,270 2.8
RETAILERS-FOOD
Reuters Holdings PLC ...................................... UK 1,041,500 13,402,179 2.5
BROADCASTING & PUBLISHING
Sol Melia S.A.-/- ......................................... SPN 366,400 13,130,086 2.4
LEISURE & TOURISM
Stet Societa' Finanziaria Telefonica S.p.A. ............... ITLY 2,820,800 12,834,173 2.4
TELEPHONE NETWORKS
EMAP PLC .................................................. UK 993,000 12,523,022 2.3
BROADCASTING & PUBLISHING
Sodexho S.A. .............................................. FR 21,970 12,257,394 2.3
RESTAURANTS
VNU (Verenigde Nederlandse Uitgeversbedrijven Verenigd
Bezit) ................................................... NETH 520,000 10,876,014 2.0
BROADCASTING & PUBLISHING
Kuoni Reisen Holdings "B" - Registered .................... SWTZ 3,920 9,521,674 1.8
LEISURE & TOURISM
Falck AS .................................................. DEN 21,200 6,337,495 1.2
CONSUMER SERVICES
Telecel - Comunicacaoes Pessoais, S.A.-/- ................. PORT 96,380 6,155,884 1.1
WIRELESS COMMUNICATIONS
Kobenhavns Lufthavne AS ................................... DEN 22,911 2,334,879 0.4
TRANSPORTATION - AIRLINES
------------
195,952,845
------------
Health Care (12.6%)
Astra AB "A" Free ......................................... SWDN 608,700 30,110,663 5.5
PHARMACEUTICALS
Schering AG ............................................... GER 201,430 17,012,846 3.1
PHARMACEUTICALS
OY Tamro AB ............................................... FIN 1,784,900 11,879,922 2.2
PHARMACEUTICALS
M.L. Laboratories PLC-/- .................................. UK 1,738,907 6,074,264 1.1
PHARMACEUTICALS
Nearmedic Ltd.-/- ......................................... ASTRI 25,584 3,663,636 0.7
PHARMACEUTICALS
------------
68,741,331
------------
Consumer Non-Durables (10.6%)
Gucci Group - NY Registered Shares{\/} .................... ITLY 260,550 16,642,631 3.1
TEXTILES & APPAREL
Parmalat Finanziaria S.p.A. ............................... ITLY 8,706,000 13,331,960 2.5
FOOD
</TABLE>
The accompanying notes are an integral part of the financial statements.
F54
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Non-Durables (Continued)
Polygram .................................................. NETH 219,300 $ 11,180,997 2.1
RECREATION
Vendex International N.V. ................................. NETH 215,739 9,237,029 1.7
OTHER CONSUMER GOODS
De Rigo S.p.A. - ADR-/- {\/} .............................. ITLY 407,150 3,715,244 0.7
TEXTILES & APPAREL
Industrie Natuzzi S.p.A. - ADR{\/} ........................ ITLY 72,500 1,667,500 0.3
HOUSEHOLD PRODUCTS
Luxottica Group S.p.A. - ADR{\/} .......................... ITLY 16,700 868,400 0.2
OTHER CONSUMER GOODS
------------
56,643,761
------------
Materials/Basic Industry (10.3%)
SGL Carbon AG ............................................. GER 184,700 23,297,659 4.3
METALS - NON-FERROUS
Bayer AG .................................................. GER 279,300 11,404,447 2.1
CHEMICALS
Degussa AG ................................................ GER 20,000 9,057,217 1.7
MISC. MATERIALS & COMMODITIES
Saes Getters S.p.A.: ...................................... ITLY -- -- 1.2
CHEMICALS
ADR-/- {\/} ............................................. -- 405,600 4,917,900 --
di Risp ................................................. -- 153,900 1,881,339 --
Castorama Dubois Investisse ............................... FR 31,949 5,507,810 1.0
BUILDING MATERIALS & COMPONENTS
------------
56,066,372
------------
Finance (7.7%)
3I Group PLC .............................................. UK 1,730,000 14,426,541 2.7
INVESTMENT MANAGEMENT
Unidanmark AS "A" ......................................... DEN 235,100 12,179,278 2.2
BANKS-REGIONAL
M & G Group PLC ........................................... UK 600,000 11,352,740 2.1
INVESTMENT MANAGEMENT
Invesco PLC ............................................... UK 744,800 3,303,137 0.6
INVESTMENT MANAGEMENT
Invesco Funding LLC - F/P-/- .............................. UK 148,960 660,627 0.1
OTHER FINANCIAL
------------
41,922,323
------------
Technology (6.0%)
TT Tieto Oy "B" ........................................... FIN 147,400 12,215,204 2.2
SOFTWARE
Dassault Systemes S.A.-/- ................................. FR 235,600 10,883,992 2.0
COMPUTERS & PERIPHERALS
Group Axime-/- ............................................ FR 83,170 9,633,591 1.8
COMPUTERS & PERIPHERALS
------------
32,732,787
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F55
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Capital Goods (5.4%)
Telefonaktiebolaget LM Ericsson "B" ....................... SWDN 649,600 $ 20,119,426 3.7
TELECOM EQUIPMENT
Premier Farnell PLC ....................................... UK 707,558 9,098,905 1.7
INDUSTRIAL COMPONENTS
------------
29,218,331
------------
Multi-Industry/Miscellaneous (5.0%)
Gehe AG ................................................... GER 210,000 13,449,285 2.5
MULTI-INDUSTRY
Assystem .................................................. FR 97,897 7,484,018 1.4
MULTI-INDUSTRY
Pricer AB-/- .............................................. SWDN 241,228 5,948,728 1.1
MISCELLANEOUS
------------
26,882,031
------------
Consumer Durables (2.7%)
Valeo S.A. ................................................ FR 235,571 14,552,649 2.7
------------
AUTO PARTS
Energy (1.9%)
Ente Nazionale Idrocarburi (ENI) S.p.A. ................... ITLY 2,054,800 10,583,237 1.9
OIL
------------ -----
TOTAL EQUITY INVESTMENTS (cost $442,040,217) ................ 533,295,667 98.3
------------ -----
<CAPTION>
No. of Value % of Net
Warrants Country Warrants (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Sandoz AG Warrants (Issuer: Barclays de Zoete Wedd), expire
9/26/97 (cost $5,206,856)-/- ............................. SWTZ 205,700 5,265,490 1.0
------------ -----
PHARMACEUTICALS
<CAPTION>
Value % of Net
Repurchase Agreement (Note 1) Assets
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1996, with State Street Bank & Trust
Co., due Jan-
uary 2, 1997, for an effective yield of 6.25%,
collateralized by $5,575,000 U.S. Treasury Notes, 6.125%
due 3/31/98 (market value of collateral is $5,692,733,
including accrued interest). (cost $5,576,968) .......... 5,576,968 1.0
------------ -----
TOTAL INVESTMENTS (cost $452,824,041) * .................... 544,138,125 100.3
Other Assets and Liabilities ................................ (1,837,959) (0.3)
------------ -----
NET ASSETS .................................................. $542,300,166 100.0
------------ -----
------------ -----
</TABLE>
- --------------
{\/} U.S. currency denominated.
-/- Non-income producing security.
* For Federal income tax purposes, cost is $455,367,626 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 103,578,152
Unrealized depreciation: (14,807,653)
-------------
Net unrealized appreciation: $ 88,770,499
-------------
-------------
</TABLE>
Abbreviation:
ADR--American Depository Receipt
The accompanying notes are an integral part of the financial statements.
F56
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1996, was concentrated in
the following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets {d}
-------------------------------------------
Fixed Income,
Rights & Short-term
Country (Country Code/Currency Code) Equity Warrants & Other Total
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Austria (ASTRI/ATS) .................. 0.7 0.7
Denmark (DEN/DKK) .................... 3.8 3.8
Finland (FIN/FIM) .................... 4.4 4.4
France (FR/FRF) ...................... 14.0 14.0
Germany (GER/DEM) .................... 13.7 13.7
Italy (ITLY/ITL) ..................... 12.3 12.3
Netherlands (NETH/NLG) ............... 11.1 11.1
Portugal (PORT/PTE) .................. 1.1 1.1
Spain (SPN/ESP) ...................... 2.4 2.4
Sweden (SWDN/SEK) .................... 10.3 10.3
Switzerland (SWTZ/CHF) ............... 5.6 1.0 6.6
United Kingdom (UK/GBP) .............. 18.9 18.9
United States & Other (US/USD) ....... 0.7 0.7
------ --- --- -----
Total ............................... 98.3 1.0 0.7 100.0
------ --- --- -----
------ --- --- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $542,300,166.
The accompanying notes are an integral part of the financial statements.
F57
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $452,824,041) (Note 1).......................... $ 544,138,125
U.S. currency................................................................. $ 520
Foreign currencies (cost $4,175,779).......................................... 4,084,658 4,085,178
----------
Receivable for securities sold............................................................ 29,744,338
Dividends and dividend withholding tax reclaims receivable................................ 584,065
Receivable for Fund shares sold........................................................... 377,792
Miscellaneous receivable.................................................................. 151,536
Cash held as collateral for securities loaned (Note 1).................................... 41,594,267
-------------
Total assets............................................................................ 620,675,301
-------------
Liabilities:
Payable for Fund shares repurchased....................................................... 20,846,830
Payable for securities purchased.......................................................... 14,915,226
Payable for investment management and administration fees (Note 2)........................ 463,933
Payable for service and distribution expenses (Note 2).................................... 213,794
Payable for transfer agent fees (Note 2).................................................. 141,484
Payable for printing and postage expenses................................................. 121,788
Payable for professional fees............................................................. 42,166
Payable for fund accounting fees (Note 2)................................................. 11,144
Payable for Trustees' fees and expenses (Note 2).......................................... 10,851
Payable for custodian fees (Note 1)....................................................... 7,799
Payable for registration and filing fees.................................................. 3,958
Other accrued expenses.................................................................... 1,895
Collateral for securities loaned (Note 1)................................................. 41,594,267
-------------
Total liabilities....................................................................... 78,375,135
-------------
Net assets.................................................................................. $ 542,300,166
-------------
-------------
Class A:
Net asset value and redemption price per share ($453,792,288 DIVIDED BY 35,218,353 shares
outstanding)............................................................................... $ 12.89
-------------
-------------
Maximum offering price per share (100/95.25 of $12.89) *.................................... $ 13.53
-------------
-------------
Class B:+
Net asset value and offering price per share ($87,091,501 DIVIDED BY 6,840,010 shares
outstanding)............................................................................... $ 12.73
-------------
-------------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($1,416,377
DIVIDED BY 109,635 shares outstanding)..................................................... $ 12.92
-------------
-------------
Net assets consist of:
Paid in capital (Note 4).................................................................. $ 553,764,310
Accumulated net realized loss on investments and foreign currency transactions............ (102,810,111)
Net unrealized appreciation on translation of assets and liabilities in foreign
currencies............................................................................... 31,883
Net unrealized appreciation of investments................................................ 91,314,084
-------------
Total -- representing net assets applicable to capital shares outstanding................... $ 542,300,166
-------------
-------------
<FN>
- --------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
F58
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
STATEMENT OF OPERATIONS
Year ended December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of $1,282,376)............................. $ 7,537,412
Interest income............................................................................ 1,133,425
Other income............................................................................... 35,493
------------
Total investment income.................................................................. 8,706,330
------------
Expenses:
Investment management and administration fees (Note 2)..................................... 5,416,280
Service and distribution expenses: (Note 2)
Class A..................................................................... $ 1,666,909
Class B..................................................................... 783,175 2,450,084
-----------
Transfer agent fees (Note 2)............................................................... 1,866,185
Custodian fees (Note 1).................................................................... 428,461
Printing and postage expenses.............................................................. 149,243
Fund accounting fees (Note 2).............................................................. 139,442
Registration and filing fees............................................................... 115,952
Audit fees................................................................................. 60,756
Trustees' fees and expenses (Note 2)....................................................... 20,130
Legal fees................................................................................. 11,713
Other expenses (Note 1).................................................................... 319,077
------------
Total expenses before reductions......................................................... 10,977,323
------------
Expense reductions (Notes 1 & 5)....................................................... (332,508)
------------
Total net expenses....................................................................... 10,644,815
------------
Net investment loss.......................................................................... (1,938,485)
------------
Net realized and unrealized gain on investments and foreign currencies: (Note 1)
Net realized gain on investments.............................................. 84,393,603
Net realized gain on foreign currency transactions............................ 2,147,797
-----------
Net realized gain during the year........................................................ 86,541,400
Net change in unrealized appreciation on translation of assets and liabilities
in foreign currencies........................................................ (218,619)
Net change in unrealized appreciation of investments.......................... 23,691,090
-----------
Net unrealized appreciation during the year.............................................. 23,472,471
------------
Net realized and unrealized gain on investments and foreign currencies....................... 110,013,871
------------
Net increase in net assets resulting from operations......................................... $108,075,386
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F59
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended Year ended
December 31, December 31,
1996 1995
-------------- ---------------
<S> <C> <C>
Decrease in net assets
Operations:
Net investment income (loss)........................................... $ (1,938,485) $ 1,909,382
Net realized gain on investments and foreign currency transactions..... 86,541,400 26,309,310
Net change in unrealized appreciation on translation of assets and
liabilities in foreign currencies..................................... (218,619) (158,136)
Net change in unrealized appreciation of investments................... 23,691,090 32,353,329
-------------- ---------------
Net increase in net assets resulting from operations................. 108,075,386 60,413,885
-------------- ---------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income............................................. -- (4,239,316)
From net realized gain on investments.................................. (4,360,146) (1,762,043)
Class B:
Distributions to shareholders: (Note 1)
From net investment income............................................. -- (173,659)
From net realized gain on investments.................................. (815,186) (269,455)
Advisor Class: (Note 1)
Distributions to shareholders:
From net investment income............................................. -- (9,151)
From net realized gain on investments.................................. (29,590) (2,596)
-------------- ---------------
Total distributions.................................................. (5,204,922) (6,456,220)
-------------- ---------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested....................... 3,224,591,371 1,608,239,408
Decrease from capital shares repurchased............................... (3,342,278,802) (1,832,994,490)
-------------- ---------------
Net decrease from capital share transactions......................... (117,687,431) (224,755,082)
-------------- ---------------
Total decrease in net assets............................................. (14,816,967) (170,797,417)
Net assets:
Beginning of year...................................................... 557,117,133 727,914,550
-------------- ---------------
End of year*........................................................... $ 542,300,166 $ 557,117,133
-------------- ---------------
-------------- ---------------
- --------------
*Includes undistributed net investment income of....................... $ 0 $ 285,680
-------------- ---------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F60
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
Class A+
----------------------------------------------------------
Year ended December 31,
----------------------------------------------------------
1996 (a) 1995 (a) 1994 (a) 1993 (a) 1992 (a)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 10.88 $ 10.03 $ 10.84 $ 8.51 $ 9.59
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... (0.03) 0.04 0.06 0.05 0.11**
Net realized and unrealized gain
(loss) on investments................ 2.16 0.95 (0.69) 2.36 (1.19)
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. 2.13 0.99 (0.63) 2.41 (1.08)
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ -- (0.10) (0.05) (0.06) --
From net realized gain on
investments.......................... (0.12) (0.04) -- -- --
In excess of net investment income.... -- -- -- (0.02) --
In excess of net realized gain on
investments.......................... -- -- (0.13) -- --
---------- ---------- ---------- ---------- ----------
Total distributions................. (0.12) (0.14) (0.18) (0.08) --
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 12.89 $ 10.88 $ 10.03 $ 10.84 $ 8.51
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (d)............. 19.61% 9.86% (5.8)% 28.3% (11.3)%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 453,792 $ 483,375 $ 646,313 $ 854,701 $ 781,607
Ratio of net investment income (loss) to
average net assets..................... (0.26)% 0.38% 0.61% 0.6% 1.2%**
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.82% 1.83% 1.73% 1.9% 2.0%**
Without expense reductions............ 1.88% 1.89% 1.81% --* --*
Portfolio turnover rate++++............. 123% 108% 91% 67% 65%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0277 N/A N/A N/A N/A
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
* * Includes reimbursement by Chancellor LGT Asset Management, Inc. of
Fund Class A operating expenses of less than one cent per share.
Without such reimbursement, the ratio of expenses to average net
assets would have been 2.1% and the ratio of net investment income to
average net assets would have been 1.2%.
(a) Calculated based upon weighted average shares outstanding during the
period.
(b) Annualized.
(c) Not Annualized.
(d) Total investment return does not include sales charges.
N/A Not applicable.
The accompanying notes are an integral part of the financial statements.
F61
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
Class B++ Advisor Class+++
------------------------------------------------- ---------------------------
April 1, 1993 Year June 1, 1995
Year ended December 31, to ended to
---------------------------------- December 31, December 31, December 31,
1996 (a) 1995 (a) 1994 (a) 1993 (a) 1996 (a) 1995 (a)
---------- ---------- ---------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 10.81 $ 9.97 $ 10.79 $ 9.02 $ 10.85 $ 10.24
---------- ---------- ---------- ------------- ------------ -------------
Income from investment operations:
Net investment income (loss).......... (0.11) (0.03) -- -- 0.01 0.08
Net realized and unrealized gain
(loss) on investments................ 2.15 0.94 (0.69) 1.85 2.18 0.71
---------- ---------- ---------- ------------- ------------ -------------
Net increase (decrease) from
investment operations.............. 2.04 0.91 (0.69) 1.85 2.19 0.79
---------- ---------- ---------- ------------- ------------ -------------
Distributions to shareholders:
From net investment income............ -- (0.03) -- (0.06) -- (0.14)
From net realized gain on
investments.......................... (0.12) (0.04) -- -- (0.12) (0.04)
In excess of net investment income.... -- -- -- (0.02) -- --
In excess of net realized gain on
investments.......................... -- -- (0.13) -- -- --
---------- ---------- ---------- ------------- ------------ -------------
Total distributions................. (0.12) (0.07) (0.13) (0.08) (0.12) (0.18)
---------- ---------- ---------- ------------- ------------ -------------
Net asset value, end of period.......... $ 12.73 $ 10.81 $ 9.97 $ 10.79 $ 12.92 $ 10.85
---------- ---------- ---------- ------------- ------------ -------------
---------- ---------- ---------- ------------- ------------ -------------
Total investment return (d)............. 18.79% 9.20% (6.38)% 20.5%(c) 20.21 % 7.75%(c)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 87,092 $ 73,025 $ 81,602 $ 34,048 $ 1,416 $ 718
Ratio of net investment income (loss) to
average net assets..................... (0.91)% (0.27)% (0.04)% (0.1)%(b) 0.09 % 0.73%(b)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.47% 2.48% 2.38% 2.6%(b) 1.47 % 1.48%(b)
Without expense reductions............ 2.53% 2.54% 2.46% --* 1.53 % 1.54%(b)
Portfolio turnover rate++++............. 123% 108% 91% 67% 123 % 108%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0277 N/A N/A N/A $ 0.0277 N/A
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
* * Includes reimbursement by Chancellor LGT Asset Management, Inc. of
Fund Class A operating expenses of less than one cent per share.
Without such reimbursement, the ratio of expenses to average net
assets would have been 2.1% and the ratio of net investment income to
average net assets would have been 1.2%.
(a) Calculated based upon weighted average shares outstanding during the
period.
(b) Annualized.
(c) Not Annualized.
(d) Total investment return does not include sales charges.
N/A Not applicable.
The accompanying notes are an integral part of the financial statements.
F62
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
GT Global Europe Growth Fund ("Fund"), is a separate series of GT Global Growth
Series ("Company"). The Company is organized as a Massachusetts business trust
and is registered under the Investment Company Act of 1940, as amended ("1940
Act"), as an open-end management investment company. The Company has eight
diversified series of shares in operation, each series corresponding to a
distinct portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles, and
therefore the financial statements may include certain estimates from
management.
(A) Portfolio Valuation
The Fund calculates the net asset value of Fund shares and completes orders to
purchase, exchange or repurchase Fund shares on each business day, with the
exception of those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market in which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by Chancellor LGT Asset
Management, Inc. (the "Manager") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
asked prices for such investments or, if such prices are not available, at
prices for investments of comparative maturity, quality and type; however, when
the Manager deems it appropriate, prices obtained for the day of valuation from
a bond pricing service will be used. Short-term investments with a maturity of
60 days or less are valued to amortized cost, adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Fund's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of Trustees.
(B) Foreign Currency Translation
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, other assets and liabilities
are recorded in the books and records of the Fund after translation to U.S.
dollars based on the exchange rates on that day. The cost of each security is
determined using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains or losses arise from changes in the
value of assets and liabilities other than investments in securities at year
end, resulting from changes in exchange rates.
(C) Repurchase Agreements
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, U.S. government securities or other
high quality debt securities of which the value, including accrued interest, is
at least equal to the amount to be repaid to the Fund under each agreement at
its maturity.
(D) Forward Foreign Currency Contracts
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss equal to
the difference between the value at the time it was opened and the value at the
time it was closed. The Fund could be exposed to risk if a counterparty is
unable to meet the terms of a contract or if
F63
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
the value of the currency changes unfavorably. The Fund may enter into Forward
Contracts in connection with planned purchases or sales of securities, or to
hedge against adverse fluctuations in exchange rates between currencies.
(E) Option Accounting Principles
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
market-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of on over-the-counter option, is valued at the average
of the last bid prices obtained from brokers, unless a quotation from only one
broker is available, in which case only that broker's price will be used. If an
option expires on its stipulated expiration date or if the Fund enters into a
closing purchase transaction, a gain or loss is realized without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option is extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the proceeds of
the sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium originally received. The Fund can write options only on
a covered basis, which, for a call, requires that the Fund hold the underlying
security, and, for a put, requires the Fund to set aside cash, U.S. government
securities or other liquid securities in an amount not less than the exercise
price or otherwise provide adequate cover at all times while the put option is
outstanding. The Fund may use options to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) Futures Contracts
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
(G) Security Transactions and Related Investment Income
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other then normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) Portfolio Securities Loaned
At December 31, 1996, stocks with an aggregate value of approximately
$39,888,283 were on loan to brokers. The loans were secured by cash collateral
of $41,594,267, received by the Fund. Cash collateral is received by the Fund
against loaned securities in an amount at least equal to 105% of the market
value of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 103% of the market value of the loaned
securities during the period of the loan. For the year ended December 31, 1996,
the Fund received securities lending fees of $170,632 which were used to reduce
custodian fees.
(I) Taxes
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, or excise tax on income
and capital gains. The Fund currently has a capital loss carryforward of
$100,715,450, of which $96,233,015 expires in 2000 and $4,482,435 expires in
2001.
F64
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
(J) Distribution to Shareholders
Distribution to shareholders are recorded by the Fund on the ex-date. Income and
capital gain distributions are determined in accordance with Federal income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) Foreign Securities
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets,
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(L) Restricted Securities
The Fund is permitted to invest in privately placed restrictions securities.
These securities may be resold in transactions exempt from registration or to
the public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
(M) Indexed Securities
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(N) Line of Credit
The Fund, along with certain other funds advised by the Manager, has a line of
credit with the Bank of Boston. The arrangement with the bank allows all
specified funds to borrow an aggregate maximum amount of $100,000,000.
2. Related Parties
Chancellor LGT Asset Management is the Fund's investment manager and
administrator. On October 31, 1996, Chancellor Capital Management, Inc. merged
with LGT Asset Management, Inc., and the surviving entity was renamed Chancellor
LGT Asset Management, Inc. The Fund pays investment management and
administration fees at the following annualized rates: 0.975% on the first $500
million of the average daily net assets of the Fund; 0.95% on the next $500
million; 0.925% on the next $500 million and 0.90% on amounts thereafter. These
fees are computed daily and paid monthly, and are subject to reduction in any
year to the extent that the Fund's expenses (exclusive of brokerage commissions,
taxes, interest, distribution-related expenses and extraordinary expenses)
exceed the most stringent limits prescribed by the laws or regulations of any
state in which the Fund's shares are offered for sale, based on the average
total net asset value of the Fund.
GT Global, Inc., an affiliate of the Manager, serves as the Fund's distributor.
The Fund offers Class A, Class B, and Advisor Class shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. GT Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the year ended December 31, 1996, GT Global retained $39,684
of such sales charges. Purchases of Class A shares exceeding $500,000 may be
subject to a contingent deferred sales charge ("CDSC") upon redemption, in
accordance with the Fund's current prospectus. GT Global collected CDSCs in the
amount of $5,089 for the year ended December 31, 1996. GT Global also makes
ongoing shareholder servicing and trail commission payments to dealers whose
clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSC's, in accordance with the Fund's current
prospectus. During the year ended December 31, 1996, GT Global collected CDSC's
in the amount of $377,041. In addition, GT Global makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class B
shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Trustees has
adopted separate distribution plans with respect to the Fund's Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which the Fund
reimburses GT Global for a portion of its shareholder servicing and distribution
expenses. Under the Class A Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class A shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.35% of the average daily net assets of the Fund's Class A
shares, less any amounts paid by the Fund as the aforementioned service fee, for
its expenditures incurred in providing services as distributor. All expenses for
which GT Global is reimbursed under the Class A Plan will have been incurred
within one year of such reimbursement.
Pursuant to the Fund's Class B Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.75% of the average daily net assets of the Fund's Class B shares
for its expenditures incurred in providing services as distributor. Expenses
incurred under the Class B Plan in excess of 1.00% annually may be carried
forward for reimbursement in subsequent years as long as that Plan continues in
effect.
F65
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
The Manager and GT Global have voluntarily undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest and extraordinary
items) to the maximum annual level of 2.25%, and 2.90%, and 1.90% of the average
daily net assets of the Fund's Class A, Class B and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by GT Global
of payments under the Class A Plan and/or Class B Plan and/ or reimbursements by
the Manager or GT Global of portions of the Fund's other operating expenses.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and GT Global, is the transfer agent of the Fund. For performing shareholder
servicing, reporting, and general transfer agent services, GT Services receives
an annual maintenance fee of $17.50 per account, a new account fee of $4.00 per
account, a per transaction fee of $1.75 for all transactions other than
exchanges and a per exchange fee of $2.25. GT Services also is reimbursed by the
Fund for its out-of-pocket expenses for such items as postage, forms, telephone
charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived by
applying 0.03% to the first $5 billion of assets of all registered mutual funds
advised by the Manager and 0.02% to the assets in excess of $5 billion and
allocating the result according to the Fund's average daily net assets.
The Company pays each of its Trustees who is not an employee, officer or
director of GT Capital, GT Global or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee.
3. Purchases and Sales of Securities
For the year ended December 31, 1996, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $648,654,686 and $748,627,276, respectively. There were
no purchases or sales of U.S. government obligations by the Fund during the
period.
4. Capital Shares
At December 31, 1996, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
Capital Share Transactions
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1996 December 31, 1995
---------------------------- -----------------------------
Class A Shares Amount Shares Amount
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 247,661,557 $2,968,073,960 148,571,806 $ 1,551,431,041
Shares issued in connection with
reinvestment of distributions......... 261,336 3,297,924 415,180 4,458,262
------------ -------------- ------------ ---------------
247,922,893 2,971,371,884 148,986,986 1,555,889,303
Shares repurchased...................... (257,136,969) (3,090,222,730) (169,021,976) (1,766,588,469)
------------ -------------- ------------ ---------------
Net decrease............................ (9,214,076) $ (118,850,846) (20,034,990) $ (210,699,166)
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
Year ended Year ended
December 31, 1996 December 31, 1995
---------------------------- -----------------------------
Class B Shares Amount Shares Amount
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 15,643,994 $ 188,596,754 4,792,541 $ 50,660,689
Shares issued in connection with
reinvestment of distributions......... 53,171 663,732 35,327 377,127
------------ -------------- ------------ ---------------
15,697,165 189,260,486 4,827,868 51,037,816
Shares repurchased...................... (15,609,973) (188,238,304) (6,262,885) (65,780,212)
------------ -------------- ------------ ---------------
Net increase (decrease)................. 87,192 $ 1,022,182 (1,435,017) $ (14,742,396)
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
June 1, 1995
Year ended (commencement of sale of
December 31, 1996 shares) to December 31, 1995
---------------------------- -----------------------------
Advisor Class Shares Amount Shares Amount
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 5,230,224 $ 63,929,457 122,102 $ 1,300,674
Shares issued in connection with
reinvestment of distributions......... 2,336 29,544 1,098 11,615
------------ -------------- ------------ ---------------
5,232,560 63,959,001 123,200 1,312,289
Shares repurchased...................... (5,189,081) (63,817,768) (57,044) (625,809)
------------ -------------- ------------ ---------------
Net increase............................ 43,479 $ 141,233 66,156 $ 686,480
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
</TABLE>
F66
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
5. Expense Reductions
The Manager has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended December 31, 1996, the Fund's
expenses were reduced by $161,876 under these arrangements.
- --------------
Federal Tax Information (Unaudited):
For its fiscal year ended December 31, 1996, the total amount of income received
by the Fund from sources within foreign countries and possessions of the United
States was approximately $.19 per share (representing an approximate total of
$8,299,061). The total amount of taxes paid by the Fund to such countries was
approximately $.03 per share (representing an approximate total of $1,282,376).
F67
<PAGE>
GT GLOBAL AMERICA FUNDS
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
GT Global Growth Series:
We have audited the accompanying statements of assets and liabilities of GT
Global America Mid Cap Growth Fund (previously GT Global America Growth Fund),
GT Global America Small Cap Growth Fund - Consolidated, and GT Global America
Value Fund - Consolidated, three of the funds organized as a series of GT Global
Growth Series, including the portfolios of investments, as of December 31, 1996,
the related statements of operations for the year then ended, the statements of
changes in net assets and the financial highlights for each of the periods
indicated herein. These financial statements and the financial highlights are
the responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1996, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial positions of
the GT Global America Mid Cap Growth Fund (previously GT Global America Growth
Fund), GT Global America Small Cap Growth Fund - Consolidated, and GT Global
America Value Fund - Consolidated, as of December 31, 1996, the results of their
operations for the year then ended, the changes in their net assets and the
financial highlights for each of the periods indicated herein, in conformity
with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
FEBRUARY 14, 1997
F68
<PAGE>
GT GLOBAL AMERICA MID CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Energy (24.7%)
Cooper Cameron Corp.-/- ................................... US 243,800 $ 18,650,694 2.7
ENERGY EQUIPMENT & SERVICES
Rowan Cos., Inc.-/- ....................................... US 804,400 18,199,550 2.7
ENERGY EQUIPMENT & SERVICES
ENSCO International, Inc.-/- .............................. US 328,600 15,937,100 2.3
ENERGY EQUIPMENT & SERVICES
Global Marine, Inc.-/- .................................... US 742,500 15,314,063 2.3
ENERGY EQUIPMENT & SERVICES
Western Atlas, Inc.-/- .................................... US 208,500 14,777,438 2.2
ENERGY EQUIPMENT & SERVICES
Ente Nazionale Idrocarburi (ENI) S.p.A. - ADR{\/} ......... ITLY 279,600 14,434,350 2.1
OIL
Marine Drilling Co., Inc.-/- .............................. US 710,700 13,991,906 2.1
ENERGY EQUIPMENT & SERVICES
Seacor Holdings, Inc.-/- .................................. US 217,500 13,702,500 2.0
ENERGY EQUIPMENT & SERVICES
Benton Oil & Gas Co.-/- ................................... US 492,000 11,131,500 1.6
OIL
Triton Energy Ltd.-/- ..................................... US 212,500 10,306,250 1.5
OIL
Atwood Oceanics, Inc.-/- .................................. US 131,500 8,350,250 1.2
ENERGY EQUIPMENT & SERVICES
Reading & Bates Corp.-/- .................................. US 290,800 7,706,200 1.1
ENERGY EQUIPMENT & SERVICES
Chesapeake Energy Corp.-/- ................................ US 109,600 6,096,500 0.9
GAS PRODUCTION & DISTRIBUTION
------------
168,598,301
------------
Technology (19.1%)
Microsoft Corp.-/- ........................................ US 268,200 22,160,025 3.3
SOFTWARE
Intel Corp. ............................................... US 156,900 20,544,094 3.0
SEMICONDUCTORS
3Com Corp.-/- ............................................. US 226,400 16,612,100 2.4
NETWORKING
American Power Conversion Corp.-/- ........................ US 509,300 13,878,425 2.0
NETWORKING
DSP Communications, Inc.-/- ............................... US 568,500 11,014,688 1.6
TELECOM TECHNOLOGY
Dynatech Corp.-/- ......................................... US 247,300 10,943,025 1.6
INSTRUMENTATION & TEST
Comverse Technology, Inc.-/- .............................. US 271,100 10,250,969 1.5
COMPUTERS & PERIPHERALS
Cisco Systems, Inc.-/- .................................... US 143,300 9,117,463 1.3
NETWORKING
Cognos, Inc.-/- {\/} ...................................... CAN 321,700 9,047,813 1.3
SOFTWARE
Computer Products, Inc.-/- ................................ US 398,500 7,770,750 1.1
COMPUTERS & PERIPHERALS
------------
131,339,352
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F69
<PAGE>
GT GLOBAL AMERICA MID CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (18.3%)
Loewen Group, Inc.{\/} .................................... CAN 461,300 $ 18,048,363 2.7
CONSUMER SERVICES
Ross Stores, Inc. ......................................... US 347,200 17,360,000 2.6
RETAILERS-APPAREL
TJX Cos., Inc. ............................................ US 355,300 16,832,338 2.5
RETAILERS-APPAREL
Safeway, Inc.-/- .......................................... US 352,800 15,082,200 2.2
RETAILERS-FOOD
Tiffany & Co. ............................................. US 353,700 12,954,263 1.9
RETAILERS-OTHER
Paychex, Inc. ............................................. US 225,100 11,578,581 1.7
CONSUMER SERVICES
Outdoor Systems, Inc.-/- .................................. US 307,650 8,652,656 1.3
BUSINESS & PUBLIC SERVICES
USAir Group, Inc.-/- ...................................... US 343,300 8,024,638 1.2
TRANSPORTATION - AIRLINES
HFS, Inc.-/- .............................................. US 95,700 5,718,075 0.8
LEISURE & TOURISM
Universal Outdoor Holdings, Inc.-/- ....................... US 220,000 5,170,000 0.8
BUSINESS & PUBLIC SERVICES
Footstar, Inc.-/- ......................................... US 97,900 2,435,263 0.4
RETAILERS-APPAREL
Claire's Stores, Inc. ..................................... US 95,900 1,246,700 0.2
RETAILERS-APPAREL
------------
123,103,077
------------
Consumer Non-Durables (14.2%)
Philip Morris Cos., Inc. .................................. US 229,400 25,836,175 3.8
FOOD
Nike, Inc. "B" ............................................ US 377,900 22,579,525 3.3
TEXTILES & APPAREL
Liz Claiborne, Inc. ....................................... US 293,400 11,332,575 1.7
TEXTILES & APPAREL
Foodmaker, Inc.-/- ........................................ US 1,113,900 9,885,863 1.5
FOOD
Nautica Enterprises, Inc.-/- .............................. US 331,000 8,357,750 1.2
TEXTILES & APPAREL
Richfood Holdings, Inc. ................................... US 271,500 6,583,875 1.0
FOOD
Rexall Sundown, Inc.-/- ................................... US 240,800 6,546,750 1.0
PERSONAL CARE/COSMETICS
Tommy Hilfiger Corp.-/- ................................... US 93,400 4,483,200 0.7
TEXTILES & APPAREL
------------
95,605,713
------------
Finance (8.9%)
BankAmerica Corp. ......................................... US 235,200 23,461,200 3.5
BANKS-SUPER REGIONAL
Union Planters Corp. ...................................... US 394,365 15,380,235 2.3
BANKS-REGIONAL
</TABLE>
The accompanying notes are an integral part of the financial statements.
F70
<PAGE>
GT GLOBAL AMERICA MID CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (Continued)
Citicorp .................................................. US 131,200 $ 13,513,600 2.0
BANKS-MONEY CENTER
Mark Twain Bancshares, Inc. ............................... US 154,600 7,536,750 1.1
BANKS-REGIONAL
------------
59,891,785
------------
Materials/Basic Industry (4.8%)
Cytec Industries, Inc.-/- ................................. US 390,700 15,872,188 2.3
CHEMICALS
Barrick Gold Corp. ........................................ CAN 377,000 10,807,223 1.6
GOLD
Oregon Metallurgical Corp.-/- ............................. US 190,900 6,156,525 0.9
METALS - NON-FERROUS
------------
32,835,936
------------
Capital Goods (3.0%)
Davox Corp.-/- ............................................ US 334,700 13,806,375 2.0
TELECOM EQUIPMENT
Pairgain Technologies, Inc.-/- ............................ US 231,000 7,031,063 1.0
TELECOM EQUIPMENT
------------
20,837,438
------------ -----
TOTAL EQUITY INVESTMENTS (cost $543,685,886) ................ 632,211,602 93.0
------------ -----
<CAPTION>
Value % of Net
Repurchase Agreement (Note 1) Assets
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1996, with State Street Bank & Trust
Co., due January 2, 1997, for an effective yield of 6.25%,
collateralized by $47,860,000 U.S. Treasury Notes, 6.125%
due 3/31/98 (market value of collateral is $48,870,709,
including accrued interest). (cost $47,911,316) .......... 47,911,316 7.0
------------ -----
TOTAL INVESTMENTS (cost $591,597,202) * .................... 680,122,918 100.0
Other Assets and Liabilities ................................ (119,840) (0.0)
------------ -----
NET ASSETS .................................................. $680,003,078 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $594,949,965 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 93,369,566
Unrealized depreciation: (8,196,613)
-------------
Net unrealized appreciation: $ 85,172,953
-------------
-------------
</TABLE>
Abbreviation:
ADR--American Depository Receipt
The accompanying notes are an integral part of the financial statements.
F71
<PAGE>
GT GLOBAL AMERICA MID CAP GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost $20,206,432; $591,597,202; and $8,925,422, respectively)
(Note 1).............................................................................................. $680,122,918
U.S. currency.......................................................................................... 56
Dividends receivable................................................................................... 464,678
Receivable for Fund shares sold........................................................................ 9,198,772
Receivable for securities sold......................................................................... 1,474,451
Receivable from Chancellor LGT Asset Management, Inc. (Note 2)......................................... --
Unamortized organizational costs (Note 1).............................................................. --
Miscellaneous receivable............................................................................... 101,169
Cash held as collateral for securities loaned (Note 1)................................................. 32,605,600
----------
Total assets......................................................................................... 723,967,644
----------
Liabilities:
Payable for custodian fees (Note 1).................................................................... 7,508
Payable for fund accounting fees (Note 2).............................................................. 13,643
Payable for Fund shares repurchased.................................................................... 10,244,161
Payable for investment management and administration fees (Note 2)..................................... 419,487
Payable for loan outstanding (Note 1).................................................................. --
Payable for printing and postage expenses.............................................................. 77,133
Payable for professional fees.......................................................................... 32,291
Payable for registration and filing fees............................................................... 13,189
Payable for securities purchased....................................................................... --
Payable for service and distribution expenses (Note 2)................................................. 387,262
Payable for transfer agent fees (Note 2)............................................................... 155,101
Payable for Trustees' fees and expenses (Note 2)....................................................... 8,705
Other accrued expenses (Note 1)........................................................................ 486
Collateral for securities loaned (Note 1).............................................................. 32,605,600
----------
Total liabilities.................................................................................... 43,964,566
Minority interest (Notes 1 & 2)........................................................................ --
----------
Net assets............................................................................................... $680,003,078
----------
----------
Class A:
Net asset value and redemption price per share ($8,448,005 DIVIDED BY 674,639;
$343,426,924 DIVIDED BY 16,536,083; and $2,528,653 DIVIDED BY 172,644 shares outstanding,
respectively)........................................................................................... $ 20.77
----------
----------
Maximum offering price per share (100/95.25 of $12.52; 100/95.25 of $20.77; and 100/95.25 of $14.65,
respectively) *......................................................................................... $ 21.81
----------
----------
Class B+
Net asset value and offering price per share ($10,694,097 DIVIDED BY 861,017;
$334,589,970 DIVIDED BY 16,498,419; and $5,503,054 DIVIDED BY 378,527 shares outstanding,
respectively)........................................................................................... $ 20.28
----------
----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($435,214 DIVIDED BY 34,597;
$1,986,184 DIVIDED BY 95,684; and $191,292 DIVIDED BY 12,994 shares outstanding, respectively).......... $ 20.76
----------
----------
Net assets consist of:
Paid in capital (Note 4)............................................................................... $601,059,922
Accumulated net realized gain (loss) on investments and foreign currency transactions.................. (9,582,560)
Net unrealized appreciation (depreciation) of investments.............................................. 88,525,716
----------
Total - representing net assets applicable to capital shares outstanding................................. $680,003,078
----------
----------
<FN>
- ----------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
F72
<PAGE>
GT GLOBAL AMERICA MID CAP GROWTH FUND
STATEMENT OF OPERATIONS
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Investment income: (Note 1)
Interest income........................................................................................ $6,000,887
Dividend income........................................................................................ 4,151,150
Other income........................................................................................... 68,462
----------
Total investment income.............................................................................. 10,220,499
----------
Expenses:
Amortization of organization costs (Note 1)............................................................ --
Custodian fees (Note 1)................................................................................ 80,790
Fund accounting fees (Note 2).......................................................................... 173,767
Insurance expenses..................................................................................... 5,461
Investment management and administration fees (Note 2)................................................. 4,982,969
Printing and postage expenses.......................................................................... 145,366
Professional fees...................................................................................... 66,122
Registration and filing fees........................................................................... 76,240
Service and distribution expenses: (Note 2)
Class A.............................................................................................. 1,251,494
Class B.............................................................................................. 3,347,860
Transfer agent fees (Note 2)........................................................................... 1,802,660
Trustees' fees and expenses (Note 2)................................................................... 16,532
Other expenses (Note 1)................................................................................ 10,000
----------
Total expenses before reductions and reimbursement..................................................... 11,959,261
Expense reductions (Notes 1 & 6)..................................................................... (371,416)
Expenses reimbursed by Chancellor LGT Asset Management, Inc. (Note 2)................................ --
----------
Total net expenses..................................................................................... 11,587,845
----------
Net investment loss...................................................................................... (1,367,346)
----------
Net realized and unrealized gain on investments: (Note 1)
Net realized gain on investments....................................................................... 24,290,969
Net realized gain (loss) on foreign currency transactions.............................................. 48,400
Net change in unrealized appreciation (depreciation) of investments.................................... 76,318,599
----------
Net realized and unrealized gain on investments.......................................................... 100,657,968
----------
Net increase in net assets resulting from operations..................................................... $99,290,622
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F73
<PAGE>
GT GLOBAL AMERICA MID CAP GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended
December 31,
--------------------------
1996 1995
------------ ------------
<S> <C> <C>
Increase (Decrease) in net assets
Operations:
Net investment income (loss)............................................................ $ (1,367,346) $ 5,981,525
Net realized gain on investments and foreign currency transactions...................... 24,339,369 93,317,375
Net change in unrealized appreciation (depreciation) of investments..................... 76,318,599 (4,611,894)
------------ ------------
Net increase in net assets resulting from operations.................................. 99,290,622 94,687,006
------------ ------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income.............................................................. -- (3,774,599)
From net realized gain on investments................................................... (21,518,831) (46,598,539)
Class B:
Distributions to shareholders: (Note 1)
From net investment income.............................................................. -- (1,969,042)
From net realized gain on investments................................................... (20,232,121) (41,818,697)
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income.............................................................. -- (18,429)
From net realized gain on investments................................................... (167,680) (170,545)
------------ ------------
Total distributions................................................................... (41,918,632) (94,349,851)
------------ ------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested........................................ 2,122,781,710 1,840,086,218
Decrease from capital shares repurchased................................................ (2,246,270,951) (1,371,300,487)
------------ ------------
Net increase (decrease) from capital share transactions............................... (123,489,241) 468,785,731
------------ ------------
Total increase (decrease) in net assets................................................... (66,117,251) 469,122,886
Net assets:
Beginning of period..................................................................... 746,120,329 276,997,443
------------ ------------
End of period *......................................................................... $680,003,078 $746,120,329
------------ ------------
------------ ------------
*Includes undistributed/accumulated netinvestment income (loss).......................... $ 0 $ 258,896
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F74
<PAGE>
GT GLOBAL AMERICA MID CAP GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
Class A+
----------------------------------------------------------
Year ended December 31,
----------------------------------------------------------
1996 1995 1994 (d) 1993 1992
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 19.07 $ 17.69 $ 17.17 $ 17.12 $ 14.13
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... 0.03 0.24 0.04 (0.21) (0.11)
Net realized and unrealized gain on
investments.......................... 2.96 3.93 2.55 1.56 4.54
---------- ---------- ---------- ---------- ----------
Net increase from investment
operations......................... 2.99 4.17 2.59 1.35 4.43
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ -- (0.21) (0.02) -- --
From net realized gain on
investments.......................... (1.29) (2.58) (2.05) (1.30) (1.44)
---------- ---------- ---------- ---------- ----------
Total distributions................. (1.29) (2.79) (2.07) (1.30) (1.44)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 20.77 $ 19.07 $ 17.69 $ 17.17 $ 17.12
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 15.65% 23.23% 15.69% 8.3% 31.7%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 343,427 $ 396,291 $ 196,937 $ 116,468 $ 166,712
Ratio of net investment income (loss) to
average net assets..................... 0.12% 1.24% 0.17% (0.7)% (1.1)%
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
6)................................... 1.36% 1.46% 1.58% 1.6% 1.8%
Without expense reductions............ 1.41% --%* --%* --%* --%*
Portfolio turnover rate++++............. 253% 71% 102% 92% 114%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0536 N/A N/A N/A N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the year.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
The accompanying notes are an integral part of the financial statements.
F75
<PAGE>
GT GLOBAL AMERICA MID CAP GROWTH FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
Class B++ Advisor Class+++
------------------------------------------------- ---------------------------
April 1, 1993 Year June 1, 1995
Year ended December 31, to ended to
---------------------------------- December 31, December 31, December 31,
1996 1995 1994 (d) 1993 1996 1995
---------- ---------- ---------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 18.77 $ 17.50 $ 17.09 $ 15.90 $ 19.05 $ 20.61
---------- ---------- ---------- ------------- ------------ -------------
Income from investment operations:
Net investment income (loss).......... (0.11) 0.10 (0.09) (0.29) 0.09 0.21
Net realized and unrealized gain on
investments.......................... 2.91 3.87 2.55 2.78 2.91 1.09
---------- ---------- ---------- ------------- ------------ -------------
Net increase from investment
operations......................... 2.80 3.97 2.46 2.49 3.00 1.30
---------- ---------- ---------- ------------- ------------ -------------
Distributions to shareholders:
From net investment income............ -- (0.12) -- -- -- (0.28)
From net realized gain on
investments.......................... (1.29) (2.58) (2.05) (1.30) (1.29) (2.58)
---------- ---------- ---------- ------------- ------------ -------------
Total distributions................. (1.29) (2.70) (2.05) (1.30) (1.29) (2.86)
---------- ---------- ---------- ------------- ------------ -------------
Net asset value, end of period.......... $ 20.28 $ 18.77 $ 17.50 $ 17.09 $ 20.76 $ 19.05
---------- ---------- ---------- ------------- ------------ -------------
---------- ---------- ---------- ------------- ------------ -------------
Total investment return (c)............. 14.82% 22.42% 15.06% 16.1%(b) 15.72 % 6.01%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 334,590 $ 348,435 $ 80,060 $ 1,982 $ 1,986 $ 1,394
Ratio of net investment income (loss) to
average net assets..................... (0.53)% 0.59% (0.48)% (1.3)%(a) 0.47 % 1.59%(a)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
6)................................... 2.01% 2.11% 2.23% 2.2%(a) 1.01 % 1.11%(a)
Without expense reductions............ 2.06% --%* --%* --%(a) * 1.06 % --%* (a)
Portfolio turnover rate++++............. 253% 71% 102% 92% 253 % 71%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0536 N/A N/A N/A $ 0.0536 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the year.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
The accompanying notes are an integral part of the financial statements.
F76
<PAGE>
GT GLOBAL AMERICA FUNDS
NOTES TO
FINANCIAL STATEMENTS
December 31, 1996
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
GT Global America Mid Cap Growth Fund (formerly named GT Global America Growth
Fund), GT Global America Small Cap Growth Fund, and GT Global America Value Fund
("Funds"), are separate series of GT Global Growth Series ("Company"). The
Company is organized as a Massachusetts business trust and is registered under
the Investment Company Act of 1940, as amended ("1940 Act"), as an open-end
management investment company. The Company has eight diversified series of
shares in operation, each series corresponding to a distinct portfolio of
investments.
The GT Global America Small Cap Growth Fund and GT Global America Value Fund
invest substantially all of their investable assets in Small Cap Growth
Portfolio and Value Portfolio ("Portfolios"), respectively. Each of these
Portfolios is organized as a New York Trust and is registered under the 1940 Act
as a diversified, open-end management investment company.
The Portfolios have investment objectives, policies, and limitations
substantially identical to those of their corresponding Funds. Therefore, the
financial statements of the GT Global America Small Cap Growth Fund, the GT
Global America Value Fund, and their respective Portfolios have been presented
on a consolidated basis, and represent all activities of both the respective
Funds and Portfolios. Through December 31, 1996, all of the shares of beneficial
interest of each Portfolio were owned either by its respective fund or
Chancellor LGT Asset Management, Inc. (the "Manager"), which has a nominal
($100) investment in each Portfolio.
The Funds offer Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Funds are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Funds. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The following is a summary of significant accounting policies consistently
followed by the Funds and Portfolios in the preparation of the financial
statements. The policies are in conformity with generally accepted accounting
principles, and the financial statements may include certain estimates made by
management.
(A) Portfolio Valuation
The Funds calculate the net asset value of and complete orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by the Manager to be the
primary market.
Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality and type; however, when the
Manager deems it appropriate, prices obtained for the day of valuation from a
bond pricing service will be used. Short-term investments with a maturity of 60
days or less are valued at amortized cost, adjusted for market fluctuation, if
any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Company's Board of Trustees.
(B) Repurchase Agreements
With respect to repurchase agreements entered into by a Fund or Portfolio (the
phrase "Fund or Portfolio" hereinafter includes the GT Global America Mid Cap
Growth Fund and each of the two Portfolios), it is the Fund's or Portfolio's
policy to always receive, as collateral, United States government securities or
other high quality debt securities of which the value, including accrued
interest, is at least equal to the amount to be repaid to the Fund or Portfolio
under each agreement at its maturity.
(C) Option Accounting Principles
When a Fund or Portfolio writes a call or put option, an amount equal to the
premium received is included in the Fund's or Portfolio's "Statement of Assets
and Liabilities" as an asset and an equivalent liability. The amount of the
liability is subsequently marked-to-market to reflect the current market value
of the option. The current market value of an option listed on a traded exchange
is valued at its last bid price, or, in the case of an over-the-counter option,
is valued at the average of the last bid prices obtained from brokers, unless a
quotation from only one broker is available, in which case only that broker's
price will be used. If an option expires on its stipulated expiration date or if
the Fund or Portfolio enters into a closing purchase transaction, a gain or loss
is realized without regard to any unrealized gain or loss on the underlying
security, and the liability related to such option is extinguished. If a written
call option is exercised, a gain or loss is realized from the sale of the
underlying security and the proceeds of the sale are increased by the premium
originally received. If a written put option is exercised, the cost of the
underlying security purchased would be decreased by the premium originally
received. The Fund or Portfolio can write options only on a covered basis,
which, for a call, requires that the Fund or Portfolio hold the underlying
security, and, for a put, requires the Fund or
F77
<PAGE>
GT GLOBAL AMERICA FUNDS
Portfolio to set aside cash, U.S. government securities or other liquid
securities in an amount not less than the exercise price or otherwise provide
adequate cover at all times while the put option is outstanding. The Fund or
Portfolio may use options to manage its exposure to the stock market and to
fluctuations in interest rates.
The premium paid by the Fund or Portfolio for the purchase of a call or put
option is included in the Fund's or Portfolio's "Statement of Assets and
Liabilities" as an investment and subsequently "marked-to-market" to reflect the
current market value of the option. If an option which the Fund or Portfolio has
purchased expires on the stipulated expiration date, the Fund or Portfolio
realizes a loss in the amount of the cost of the option. If the Fund or
Portfolio enters into a closing sale transaction, the Fund or Portfolio realizes
a gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund or Portfolio
exercises a call option, the cost of the securities acquired by exercising the
call is increased by the premium paid to buy the call. If the Fund or Portfolio
exercises a put option, it realizes a gain or loss from the sale of the
underlying security, and the proceeds from such sale are decreased by the
premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund or Portfolio may forego
the opportunity of profit if the market value of the underlying security or
index increases and the option is exercised. The risk in writing a put option is
that the Fund or Portfolio may incur a loss if the market value of the
underlying security or index decreases and the option is exercised. In addition,
there is the risk the Fund or Portfolio may not be able to enter into a closing
transaction because of an illiquid secondary market.
(D) Futures Contracts
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund or Portfolio is required to pledge to the broker an amount of cash or
securities equal to the minimum "initial margin" requirements of the exchange on
which the contract is traded. Pursuant to the contract, the Fund or Portfolio
agrees to receive from or pay to the broker an amount of cash equal to the daily
fluctuation in value of the contract. Such receipts or payments are known as
"variation margin" and are recorded by the Fund or Portfolio as unrealized gains
or losses. When the contract is closed, the Fund or Portfolio records a realized
gain or loss equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed. The potential risk
to the Fund or Portfolio is that the change in value of the underlying
securities may not correlate to the change in value of the contracts. The Fund
or Portfolio may use futures contracts to manage its exposure to the stock
market and to fluctuations in interest rates.
(E) Security Transactions and Related Investment Income
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund or Portfolio
may trade securities on other than normal settlement terms. This may increase
the risk if the other party to the transaction fails to deliver and causes the
Fund or Portfolio to subsequently invest at less advantageous prices.
(F) Portfolio Securities Loaned
At December 31, 1996, stocks with an aggregate value listed below were on loan
to brokers. These loans were secured by cash collateral received by the fund or
portfolios:
<TABLE>
<CAPTION>
December 31, 1996 Year ended
-------------------------------- December 31, 1996
Aggregate Value Cash -----------------
GT Global on Loan Collateral Fees Earned
- ---------------------------------------- --------------- -------------- -----------------
<S> <C> <C> <C>
America Mid Cap Growth Fund............. $ 31,491,056 $ 32,605,600 $163,841
Small Cap Growth Portfolio.............. 380,738 383,400 61
</TABLE>
Cash collateral is received by the Fund or Portfolio against loaned securities
in the amount at least equal to 102% of the market value of the loaned
securities at the inception of each loan. This collateral must be maintained at
not less than 100% of the market value of the loaned securities during the
period of the loan. Security lending fees earned were used to reduce the Fund's
or Portfolio's custodian fees.
(G) Deferred Organizational Expenses
Expenses incurred by the GT Global America Small Cap Growth Fund, the GT Global
America Value Fund, and their respective Portfolios in connection with their
organization, their initial registration with the Securities and Exchange
Commission and with various states and the initial public offering of their
shares aggregated $63,500 for each Fund and $25,000 for each Portfolio. These
expenses are being amortized on a straight-line basis over a five-year period.
(H) Taxes
It is the policy of the Funds and Portfolios to meet the requirements for
qualification as a "regulated investment company" under the Internal Revenue
Code of 1986, as amended ("Code"). It is also the intention of the Funds to make
distributions sufficient to avoid imposition of any excise tax under Section
4982 of the Code. Therefore, no provision has been made for Federal taxes on
income, capital gains, or unrealized appreciation of securities held, and excise
tax on income and capital gains.
F78
<PAGE>
GT GLOBAL AMERICA FUNDS
(I) Distributions to Shareholders
Distributions to shareholders are recorded by each Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund or Portfolios and timing
differences.
(J) Restricted Securities
A Fund or Portfolio is permitted to invest in privately placed restricted
securities. These securities may be resold in transactions exempt from
registration or to the public if the securities are registered. Disposal of
these securities may involve time-consuming negotiations and expense, and prompt
sale at an acceptable price may be difficult.
(K) Indexed Securities
A Fund or Portfolio may invest in indexed securities whose value is linked
either directly or indirectly to changes in foreign currencies, interest rates,
equities, indices, or other reference instruments. Indexed securities may be
more volatile than the reference instrument itself, but any loss is limited to
the amount of the original investment.
(L) Line of Credit
Each of the Funds, along with certain other funds advised by the Manager, has a
line of credit with the Bank of Boston. The arrangement with the bank allows all
specified funds to borrow an aggregate maximum amount of $100,000,000. Each of
these three funds is limited to borrowing up to 33 1/3% of the value of each
Fund's total assets. On December 31, 1996, the GT Global America Value Fund
borrowed $1,000,000 at a money market rate.
For the year ended December 31, 1996, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
for the GT Global America Value Fund was $1,000,000 with a weighted average
interest rate of 6.43%. Interest incurred on this loan for the year ended
December 31, 1996, was $2,681, included in "Other Expenses" on the Statement of
Operations.
2. Related Parties
Chancellor LGT Asset Management, Inc. is the Funds' and Portfolios' investment
manager and administrator. On October 31, 1996, Chancellor Capital Management,
Inc. merged with LGT Asset Management, Inc., and the surviving entity was
renamed Chancellor LGT Asset Management, Inc. The GT Global America Small Cap
Growth Fund and GT Global America Value Fund each pays the Manager
administration fees at the annualized rate of 0.25% of such Fund's average daily
net assets. Each Portfolio pays investment management and administration fees to
the Manager at the annualized rate of 0.475% on the first $500 million of
average daily net assets of the Portfolio; 0.45% on the next $500 million;
0.425% on the next $500 million; and 0.40% on amounts thereafter. GT Global
America Mid Cap Growth Fund pays investment management and administration fees
to the Manager at the annualized rate of 0.725% on the first $500 million of
average daily net assets on the Fund; 0.70% on the next $500 million; 0.675% on
the next $500 million and 0.65% on amounts thereafter. These fees are computed
daily and paid monthly, and are subject to reduction in any year to the extent
that the Fund's or Portfolio's expenses (exclusive of brokerage commissions,
taxes, interest, distribution-related expenses and extraordinary expenses)
exceed the most stringent limits prescribed by the laws or regulations of any
state in which the Fund's shares are offered for sale, based on the average
total net asset value of the Fund.
GT Global, Inc. ("GT Global"), an affiliate of the Manager, serves as the Funds'
distributor. The Funds offer Class A, Class B, and Advisor Class shares for
purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. GT Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the year ended December 31, 1996, GT Global retained the
following sales charges: $90,365 for the GT Global America Mid Cap Growth Fund,
$9,945 for the GT Global America Small Cap Growth Fund, and $1,702 for the GT
Global America Value Fund. Purchases of Class A shares exceeding $500,000 may be
subject to a contingent deferred sales charge ("CDSC") upon redemption, in
accordance with the Fund's current prospectus. GT Global collected such CDSCs in
the amount of $39,930 for the year ended December 31, 1996 for the GT Global
America Mid Cap Growth Fund. GT Global also makes ongoing shareholder servicing
and trail commission payments to dealers whose clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSCs, in accordance with the Fund's current
prospectus. For the year ended December 31, 1996, GT Global collected such CDSCs
in the amount of: $1,901,165 for the GT Global America Mid Cap Growth Fund,
$28,162 for the GT Global America Small Cap Growth Fund, and $5,608 for the GT
Global America Value Fund. In addition, GT Global makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class B
shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Trustees has
adopted separate distribution plans with respect to the Funds' Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which a Fund
reimburses GT Global for a portion of its shareholder servicing and distribution
expenses. Under the Class A Plan, a Fund may pay GT Global a service fee at the
annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class A shares for GT Global's expenditures incurred in servicing and
maintaining shareholder accounts, and may pay GT Global a distribution fee at
the annualized rate of up to 0.35% of the average daily net assets of the Fund's
Class A shares, less any amounts paid by the Fund as the aforementioned service
fee, for GT
F79
<PAGE>
GT GLOBAL AMERICA FUNDS
Global's expenditures incurred in providing services as distributor. All
expenses for which GT Global is reimbursed under the Class A Plan will have been
incurred within one year of such reimbursement.
Pursuant to the Funds' Class B Plan, a Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for GT Global's expenditures incurred in servicing and
maintaining shareholder accounts, and may pay GT Global a distribution fee at
the annualized rate of up to 0.75% of the average daily net assets of the Fund's
Class B shares for GT Global's expenditures incurred in providing services as
distributor. Expenses incurred under the Class B Plan in excess of 1.00%
annually may be carried forward for reimbursement in subsequent years as long as
that Plan continues in effect.
The Manager and GT Global voluntarily have undertaken to limit each Fund's
expenses (exclusive of brokerage commissions, taxes, interest, and extraordinary
items) to the maximum annual level of 2.00%, 2.65%, and 1.65% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by GT Global
of payments under the Class A Plan and/or Class B Plan and/ or reimbursements by
the Manager or GT Global of portions of the Fund's other operating expenses.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and GT Global, is the transfer agent of the Funds. For performing shareholder
servicing, reporting, and general transfer agent services, GT Services receives
an annual maintenance fee of $17.50 per account, a new account fee of $4.00 per
account, a per transaction fee of $1.75 for all transactions other than
exchanges and a per exchange fee of $2.25. GT Services also is reimbursed by the
Funds for its out-of-pocket expenses for such items as postage, forms, telephone
charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Funds. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of a Fund's average daily net assets. The annual fee rate is derived by applying
0.03% to the first $5 billion of assets of all registered mutual funds advised
by the Manager and 0.02% to the assets in excess of $5 billion and allocating
the result according to a Fund's average daily net assets.
The Company pays each of its Trustees who is not an employee, officer or
director of the Manager, GT Global or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee. Each
Portfolio pays each of its Trustees who is not an employee, officer or director
of the Manager, GT Global or GT Services $500 per year plus $150 for each
meeting of the board or any committee thereof attended by the Trustees.
At December 31, 1996, all of the shares of beneficial interest of each Portfolio
were owned either by its Fund or the Manager.
3. Purchases and Sales of Securities
For the year ended December 31, 1996, purchases of investment securities by the
GT Global America Mid Cap Growth Fund, Small Cap Growth Portfolio, and Value
Portfolio, other than U.S. government obligations and short-term investments,
aggregated $1,468,522,964, $33,591,427 and $19,537,714, respectively. Sales of
investment securities by the GT Global America Mid Cap Growth Fund, Small Cap
Growth Portfolio, and Value Portfolio, other than U.S. government obligations
and short-term investments, aggregated $1,493,844,266, $19,321,092 and
$13,037,066, respectively. There were no purchases or sales of U.S. government
obligations by a Fund or Portfolio during the year.
F80
<PAGE>
GT GLOBAL AMERICA FUNDS
4. Capital Shares
At December 31, 1996, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the
Funds were as follows:
Capital Share Transactions
GT Global America Mid Cap Growth Fund
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1996 December 31, 1995
---------------------------- -----------------------------
Class A Shares Amount Shares Amount
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 89,962,964 $1,853,673,285 64,255,259 $ 1,354,329,879
Shares issued in connection with
reinvestment of distributions......... 853,598 17,867,701 2,163,720 42,170,721
------------ -------------- ------------ ---------------
90,816,562 1,871,540,986 66,418,979 1,396,500,600
Shares repurchased...................... (95,061,922) (1,956,032,031) (56,768,364) (1,210,272,338)
------------ -------------- ------------ ---------------
Net increase (decrease)................. (4,245,360) $ (84,491,045) 9,650,615 $ 186,228,262
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
Year ended Year ended
December 31, 1996 December 31, 1995
---------------------------- -----------------------------
Class B Shares Amount Shares Amount
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 11,161,651 $ 224,412,718 19,673,669 $ 406,685,987
Shares issued in connection with
reinvestment of distributions......... 803,575 16,429,676 1,832,696 35,169,188
------------ -------------- ------------ ---------------
11,965,226 240,842,394 21,506,365 441,855,175
Shares repurchased...................... (14,026,348) (280,392,879) (7,522,345) (160,828,667)
------------ -------------- ------------ ---------------
Net increase (decrease)................. (2,061,122) $ (39,550,485) 13,984,020 $ 281,026,508
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
June 1, 1995
(commencenment of
Year ended sale of shares) to
December 31, 1996 December 31, 1995
---------------------------- -----------------------------
Advisor Class Shares Amount Shares Amount
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 485,169 $ 10,230,701 72,809 $ 1,541,469
Shares issued in connection with
reinvestment of distributions......... 8,013 167,629 9,711 188,974
------------ -------------- ------------ ---------------
493,182 10,398,330 82,520 1,730,443
Shares repurchased...................... (470,673) (9,846,041) (9,345) (199,482)
------------ -------------- ------------ ---------------
Net increase............................ 22,509 $ 552,289 73,175 $ 1,530,961
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
</TABLE>
F81
<PAGE>
GT GLOBAL AMERICA FUNDS
5. Holdings of 5% Voting Securities of Portfolio Companies
Investments of 5% or more of an issuer's outstanding voting securities by a Fund
or Portfolio are defined in the Investment Company Act of 1940, as amended, as
an "affiliated company". During the year ended December 31, 1996, transactions
with affiliated companies by the GT Global America Mid Cap Growth Fund were as
follows:
<TABLE>
<CAPTION>
Net
Realized
Purchases Gain Dividend
Affiliates Cost Sales Cost (Loss) Income
- ---------------------------------------- ------------ ------------- ---------- ------------
<S> <C> <C> <C> <C>
Abaxis, Inc............................. -- $ 4,406,425 $ (233,474) --
Ann Taylor Stores, Inc.................. $ 667,826 27,428,533 1,773,714 --
Equity Inns, Inc........................ 8,589,208 21,730,721 774,204 $ 344,848
Haggar Corp............................. -- 13,475,105 (4,771,163) 58,740
Landmark Graphics Corp.................. 22,307,844 22,307,844 13,028,001 --
Michaels Stores, Inc.................... 1,253,238 31,700,975 (1,716,413) --
Varsity Spirit Corp..................... -- 3,384,724 1,747,526 13,686
Younkers, Inc........................... 4,702,055 14,761,596 7,926,666 --
</TABLE>
6. Expense Reductions
The Manager has directed certain portfolio trades to brokers who paid a portion
of a Fund's or Portfolio's expenses. For the year ended December 31, 1996, the
expenses of GT Global America Mid Cap Growth Fund were reduced by $207,575 under
these arrangements.
- ------------
Federal Tax Information (Unaudited):
Pursuant to Section 852 of the Internal Revenue Code, the GT Global America
Mid-Cap Growth Fund designates $30,037,928 as a capital gain dividend for the
fiscal year ended December 31, 1996.
Pursuant to Section 854 of the Internal Revenue Code, the Funds designate the
following percentage amounts of ordinary income dividends paid (including
short-term capital gain distributions, if any) by the Funds as income qualifying
for the dividends received deduction for corporations for the fiscal year ended
December 31, 1996:
<TABLE>
<CAPTION>
Fund
- ----------------------------------------
<S> <C>
GT Global America Small Cap Growth
Fund................................... 4%
GT Global America Mid-Cap Growth Fund... 23%
GT Global America Value Fund............ 100%
</TABLE>
F82
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
GT Global Growth Series:
We have audited the accompanying statement of assets and liabilities of GT
Global Japan Growth Fund, a series of shares of beneficial interest of GT Global
Growth Series, including the schedule of portfolio investments, as of December
31, 1996, the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the period
then ended. These financial statements and the financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1996 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of GT
Global Japan Growth Fund, as of December 31, 1996, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended, and the financial highlights for each of the five
years in the period then ended, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
FEBRUARY 14, 1997
F83
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% of Net
Equity Investments Shares Value Assets
- ---------------------------------------------------------------------- ----------- ------------ -------------
<S> <C> <C> <C>
Services (36.6%)
Southland Corp.{l} -/- {\/} ........................................ 1,848,200 $ 5,486,841 5.7
RETAILERS-OTHER
Aoyama Trading Co., Ltd. ........................................... 175,200 4,661,507 4.9
RETAILERS-APPAREL
Ito-Yokado Co., Ltd. ............................................... 100,000 4,353,836 4.5
RETAILERS-OTHER
DDI Corp. .......................................................... 650 4,301,140 4.5
WIRELESS COMMUNICATIONS
Seven-Eleven Japan Ltd. ............................................ 50,000 2,928,473 3.0
RETAILERS-OTHER
Autobacs Seven Co., Ltd. ........................................... 40,000 2,829,993 2.9
RETAILERS-OTHER
Yoshinoya D&C Co., Ltd. ............................................ 200 2,453,352 2.6
RESTAURANTS
Fast Retailing Co., Ltd. ........................................... 90,000 2,309,088 2.4
RETAILERS-APPAREL
Nissen Co. ......................................................... 273,000 1,910,245 2.0
RETAILERS-OTHER
Nitori Co. ......................................................... 59,400 1,031,393 1.1
RETAILERS-OTHER
Xebio Co., Ltd. .................................................... 25,000 745,076 0.8
RETAILERS-APPAREL
Blue Grass Co., Ltd. ............................................... 44,000 710,781 0.7
RETAILERS-APPAREL
Ten Allied Co. ..................................................... 65,000 634,502 0.7
RESTAURANTS
Bunkyodo Co., Ltd. ................................................. 35,000 489,806 0.5
RETAILERS-OTHER
Fujitsu Business Systems ........................................... 15,000 327,833 0.3
BUSINESS & PUBLIC SERVICES
------------
35,173,866
------------
Health Care (9.6%)
Takeda Chemical Industries ......................................... 270,000 5,667,761 5.9
PHARMACEUTICALS
Olympus Optical Co., Ltd. .......................................... 230,000 2,185,556 2.3
MEDICAL TECHNOLOGY & SUPPLIES
Taisho Pharmaceuticals ............................................. 55,000 1,297,080 1.4
PHARMACEUTICALS
------------
9,150,397
------------
Technology (9.2%)
Matsushita-Kotobuki Electronics Ltd. ............................... 160,000 4,174,153 4.3
COMPUTERS & PERIPHERALS
Koei Co., Ltd. ..................................................... 87,400 1,676,123 1.7
SOFTWARE
Hosiden Electronics-/- ............................................. 223,000 1,581,574 1.6
COMPUTERS & PERIPHERALS
Kyushu-Matsushita Electric Co., Ltd. ............................... 65,000 842,260 0.9
COMPUTERS & PERIPHERALS
</TABLE>
The accompanying notes are an integral part of the financial statements.
F84
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% of Net
Equity Investments Shares Value Assets
- ---------------------------------------------------------------------- ----------- ------------ -------------
<S> <C> <C> <C>
Technology (Continued)
Geomatec Co., Ltd. ................................................. 25,000 $ 645,733 0.7
COMPUTERS & PERIPHERALS
------------
8,919,843
------------
Capital Goods (9.2%)
Murata Manufacturing Co., Ltd. ..................................... 115,000 3,824,724 4.0
ELECTRICAL PLANT/EQUIPMENT
Higashi Nihon House ................................................ 152,000 1,956,462 2.0
CONSTRUCTION
Canon, Inc. ........................................................ 55,000 1,216,310 1.3
OFFICE EQUIPMENT
Shima Seiki Manufacturing Ltd. ..................................... 20,000 932,965 1.0
MACHINE TOOLS
Komori Corp. ....................................................... 40,000 850,035 0.9
MACHINERY & ENGINEERING
NEC System Integration & Construction .............................. 60 1,197 --
CONSTRUCTION
Japan Foundation Engineering ....................................... 90 1,174 --
CONSTRUCTION
------------
8,782,867
------------
Finance (6.9%)
Nichiei Co., Ltd. .................................................. 60,000 4,431,583 4.6
OTHER FINANCIAL
Diamond Lease Co., Ltd. ............................................ 175,000 2,222,270 2.3
OTHER FINANCIAL
------------
6,653,853
------------
Consumer Non-Durables (5.3%)
Amway Japan Ltd.{z} ................................................ 145,000 4,659,641 4.8
HOUSEHOLD PRODUCTS
Tsutsumi Jewelry Co., Ltd. ......................................... 20,600 510,729 0.5
PERSONAL CARE/COSMETICS
------------
5,170,370
------------
Materials/Basic Industry (2.4%)
Toyo Exterior ...................................................... 80,000 1,188,666 1.2
BUILDING MATERIALS & COMPONENTS
Gakken ............................................................. 200,000 1,131,652 1.2
PAPER/PACKAGING
------------
2,320,318
------------ -----
TOTAL EQUITY INVESTMENTS (cost $90,397,106) .......................... 76,171,514 79.2
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
F85
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
<TABLE>
<CAPTION>
Principal % of Net
Fixed Income Investments Currency Amount Value Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C>
Government & Government Agency Obligations (7.0%)
Austria (3.5%)
Republic of Austria, 4.5% due 9/28/05{z} ................ JPY 340,000,000 $ 3,362,846 3.5
Japan (3.5%)
Japanese Government Bond, 3.8% due 9/20/16{z} ........... JPY 375,000,000 3,400,462 3.5
------------
Total Government & Government Agency Obligations (cost
$7,210,305) ................................................ 6,763,308
------------
Corporate Bonds (1.0%)
Japan (1.0%)
Higashi Nihon House Co., Convertible Bond, 0.375% due
4/30/00 (cost $1,089,201) .............................. CHF 1,150,000 906,764 1.0
------------ -----
TOTAL FIXED INCOME INVESTMENTS (cost $8,299,506) ............ 7,670,072 8.0
------------ -----
<CAPTION>
Number of % of Net
Options Currency Contracts Value Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C>
Simex Nikkei Put Options, strike JPY20,500, expire 3/14/97
(cost $325,798)-/- ....................................... JPY 140 834,485 0.9
------------ -----
INDEX OPTIONS
<CAPTION>
% of Net
Repurchase Agreement Value Assets
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C>
Dated December 31, 1996, with State Street Bank & Trust
Co., due January 2, 1997, for an effective yield of 6.25%,
collateralized by $380,000 U.S. Treasury Notes, 6.125% due
3/31/98 (market value of collateral is $388,025, including
accrued interest). (cost $376,066) ....................... 376,066 0.4
------------ -----
TOTAL INVESTMENTS (cost $99,398,476) * ..................... 85,052,137 88.5
Other Assets and Liabilities ................................ 11,062,550 11.5
------------ -----
NET ASSETS .................................................. $ 96,114,687 100.0
------------ -----
------------ -----
</TABLE>
- --------------
{z} Security is segregated as collateral for written futures. See Note
1 of Notes to Financial Statements.
{l} This is a U.S. security of which approximately 62.5% of its
outstanding stock is owned by Ito-Yokado Co., Ltd.
{\/} U.S. currency denominated.
-/- Non-income producing security.
* For Federal income tax purposes, cost is $100,530,250 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 4,077,832
Unrealized depreciation: (19,555,945)
-------------
Net unrealized depreciation: $ (15,478,113)
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F86
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
Forward Foreign Currency Contracts Outstanding
December 31, 1996
<TABLE>
<CAPTION>
Unrealized
Market Value Contract Delivery Appreciation
Contracts to Buy: (U.S. Dollars) Price Date (Depreciation)
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
Japanese Yen............................ 1,738,446 113.34500 02/12/97 $ (26,078)
-------------- --------------
Total Contracts to Buy (Payable amount
$1,764,524).......................... 1,738,446 (26,078)
-------------- --------------
THE VALUE OF CONTRACTS TO BUY AS
PERCENTAGE OF NET ASSETS IS 1.81%.
<CAPTION>
Contracts to Sell:
- ----------------------------------------
<S> <C> <C> <C> <C>
Japanese Yen............................ 9,561,451 110.40000 02/12/97 402,317
Japanese Yen............................ 44,330,362 110.40000 02/12/97 1,865,290
-------------- --------------
Total Contracts to Sell (Receivable
amount $56,159,420).................. 53,891,813 2,267,607
-------------- --------------
THE VALUE OF CONTRACTS TO SELL AS A
PERCENTAGE OF NET ASSETS IS 56.07%.
Total Open Forward Foreign Currency
Contracts, Net....................... $ 2,241,529
--------------
--------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Written Futures Contracts Outstanding
December 31, 1996
<TABLE>
<CAPTION>
Expiration No. of Market
Description Date Contracts Currency Value
- ---------------------------------------- ---------- --------- -------- -----------
<S> <C> <C> <C> <C>
Simex Nikkei 225 Index Future (Face
$13,432,632)........................... 03/15/97 150 JPY $12,533,474
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F87
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $99,398,476) (Note 1)....... $ 85,052,137
U.S. currency............................................. $ 810
Foreign currencies (cost $7,317,540)...................... 7,202,621 7,203,431
----------
Receivable for securities sold........................................ 2,922,583
Receivable for open forward foreign currency contracts, net (Note
1)................................................................... 2,241,529
Receivable for initial margin (Note 1)................................ 1,405,431
Interest receivable................................................... 87,851
Receivable for Fund shares sold....................................... 63,925
Dividends receivable.................................................. 50,940
Cash held as collateral for securities loaned (Note 1)................ 5,979,995
------------
Total assets........................................................ 105,007,822
------------
Liabilities:
Payable for loan outstanding (Note 1)................................. 2,000,000
Payable for Fund shares repurchased................................... 634,140
Payable for investment management and administration fees (Note 2).... 83,572
Payable for service and distribution expenses (Note 2)................ 48,382
Payable for transfer agent fees (Note 2).............................. 47,598
Payable for printing and postage expenses............................. 44,043
Payable for professional fees......................................... 23,272
Payable for custodian fees............................................ 10,360
Payable for registration and filing fees.............................. 8,995
Payable for Trustees' fees and expenses (Note 2)...................... 3,985
Payable for fund accounting fees (Note 2)............................. 1,952
Other accrued expenses................................................ 6,841
Collateral for securities loaned (Note 1)............................. 5,979,995
------------
Total liabilities................................................... 8,893,135
------------
Net assets.............................................................. $ 96,114,687
------------
------------
Class A:
Net asset value and redemption price per share ($63,584,967 DIVIDED BY
6,517,910 shares outstanding).......................................... $ 9.76
------------
------------
Maximum offering price per share (100/95.25 of $9.76) *................. $ 10.25
------------
------------
Class B:+
Net asset value and offering price per share ($32,116,485 DIVIDED BY
3,382,968 shares outstanding).......................................... $ 9.49
------------
------------
Advisor Class:
Net asset value, offering price per share, and redemption price per
share ($413,235 DIVIDED BY 42,104 shares outstanding).................. $ 9.81
------------
------------
Net assets consist of:
Paid in capital (Note 4).............................................. $110,959,451
Accumulated net realized loss on investments and foreign currency
transactions......................................................... (3,515,352)
Net unrealized appreciation on translation of assets and liabilities
in foreign currencies................................................ 2,117,769
Net unrealized depreciation of investments............................ (13,447,181)
------------
Total -- representing net assets applicable to capital shares
outstanding............................................................ $ 96,114,687
------------
------------
<FN>
- --------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
F88
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
STATEMENT OF OPERATIONS
Year ended December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Interest income......................................................... $ 1,356,810
Dividend income (net of foreign withholding tax of $116,158)............ 663,718
Other income............................................................ 2,221
------------
Total investment income............................................... 2,022,749
------------
Expenses:
Investment management and administration fees (Note 2).................. 1,367,702
Service and distribution expenses: (Note 2)
Class A................................................. $ 334,198
Class B................................................. 439,916 774,114
------------
Transfer agent fees (Note 2)............................................ 486,650
Custodian fees (Note 1)................................................. 109,903
Registration and filing fees............................................ 75,992
Printing and postage expenses........................................... 71,503
Audit fees.............................................................. 53,358
Fund accounting fees (Note 2)........................................... 35,119
Trustees' fees and expenses (Note 2).................................... 14,640
Legal fees.............................................................. 11,882
Other expenses.......................................................... 7,446
------------
Total expenses before reductions...................................... 3,008,309
------------
Expense reductions (Notes 1 & 5).................................... (144,104)
------------
Total net expenses.................................................... 2,864,205
------------
Net investment loss....................................................... (841,456)
------------
Net realized and unrealized gain (loss) on investments and
foreign currencies: (Note 1)
Net realized loss on investments.......................... (8,109,001)
Net realized gain on foreign currency transactions........ 11,961,938
------------
Net realized gain during the year..................................... 3,852,937
Net change in unrealized appreciation on translation of
assets and liabilities in foreign currencies............. (464,975)
Net change in unrealized depreciation of investments...... (11,261,238)
------------
Net unrealized depreciation during the year........................... (11,726,213)
------------
Net realized and unrealized loss on investments and foreign currencies.... (7,873,276)
------------
Net decrease in net assets resulting from operations...................... $ (8,714,732)
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F89
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1996 December 31, 1995
----------------- -----------------
<S> <C> <C>
Increase (Decrease) in net assets
Operations:
Net investment loss....................................... $ (841,456) $ (662,252)
Net realized gain on investments and foreign currency
transactions............................................. 3,852,937 14,964,910
Net change in unrealized appreciation (depreciation) on
translation of assets and liabilities in foreign
currencies............................................... (464,975) 923,132
Net change in unrealized depreciation of investments...... (11,261,238) (11,851,499)
----------------- -----------------
Net increase (decrease) in net assets resulting from
operations............................................. (8,714,732) 3,374,291
----------------- -----------------
Class A:
Distributions to shareholders: (Note 1)
From net realized gain on investments..................... (2,883,812) (11,936,435)
Class B:
Distributions to shareholders: (Note 1)
From net realized gain on investments..................... (1,472,016) (4,652,476)
Advisor Class:
Distributions to shareholders: (Note 1)
From net realized gain on investments..................... (18,593) (58,144)
----------------- -----------------
Total distributions..................................... (4,374,421) (16,647,055)
----------------- -----------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested.......... 510,718,392 565,596,580
Decrease from capital shares repurchased.................. (554,451,474) (524,808,353)
----------------- -----------------
Net increase (decrease) from capital share
transactions........................................... (43,733,082) 40,788,227
----------------- -----------------
Total increase (decrease) in net assets..................... (56,822,235) 27,515,463
Net assets:
Beginning of year......................................... 152,936,922 125,421,459
----------------- -----------------
End of year*.............................................. $ 96,114,687 $ 152,936,922
----------------- -----------------
----------------- -----------------
--------------
*Includes undistributed net investment income of......... $ 0 $ 0
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F90
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
Class A+
----------------------------------------------------------
Year ended December 31,
----------------------------------------------------------
1996 (a) 1995 (a) 1994 1993 1992 (a)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 11.00 $ 12.15 $ 11.61 $ 8.70 $ 11.16
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment loss................... (0.04) (0.04) (0.04) (0.14) (0.00) *
Net realized and unrealized gain
(loss) on investments................ (0.77) 0.26 0.79 3.05 (2.40)
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. (0.81) 0.22 0.75 2.91 (2.40)
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.43) (1.37) (0.21) -- (0.06)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 9.76 $ 11.00 $ 12.15 $ 11.61 $ 8.70
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (d)............. (7.43)% 1.94% 6.56% 33.45% (21.5)%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 63,585 $ 111,105 $ 98,066 $ 88,487 $ 93,865
Ratio of net investment loss to average
net assets............................. (0.40)% (0.40)% (0.32)% (0.3)% (0.0)%*
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.84% 1.99% 1.91% 2.1% 2.2%*
Without expense reductions............ 1.94% 2.14% 2.03% --%** --%**
Portfolio turnover rate++++............. 31% 67% 49% 104% 115%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0971 N/A N/A N/A N/A
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
* Includes reimbursement by Chancellor LGT Asset Management, Inc. of
operating expenses of $0.01. Without such reimbursement, the ratio of
expenses to average net assets would have been 2.3% and the ratio of
net investment loss to average net assets would have been (0.1)% (See
Note 2).
* * Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
(a) These selected per share data were calculated based upon average
shares outstanding during the period.
(b) Not annualized
(c) Annualized
(d) Total investment return does not include sales charges.
N/A Not applicable
The accompanying notes are an integral part of the financial statements.
F91
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
Class B++ Advisor Class+++
------------------------------------------------- ---------------------------
April 1, 1993 June 1, 1995
Year ended December 31, to Year ended to
---------------------------------- December 31, December 31, December 31,
1996 (a) 1995 (a) 1994 1993 1996 (a) 1995 (a)
---------- ---------- ---------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 10.78 $ 12.02 $ 11.57 $ 9.85 $ 11.02 $ 10.50
---------- ---------- ---------- ------------- ------------- ------------
Income from investment operations:
Net investment loss................... (0.11) (0.12) (0.13) (0.18) (0.01) (0.00)
Net realized and unrealized gain
(loss) on investments................ (0.75) 0.25 0.79 1.90 (0.77) 1.89
---------- ---------- ---------- ------------- ------------- ------------
Net increase (decrease) from
investment operations.............. (0.86) 0.13 0.66 1.72 (0.78) 1.89
---------- ---------- ---------- ------------- ------------- ------------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.43) (1.37) (0.21) -- (0.43) (1.37)
---------- ---------- ---------- ------------- ------------- ------------
Net asset value, end of period.......... $ 9.49 $ 10.78 $ 12.02 $ 11.57 $ 9.81 $ 11.02
---------- ---------- ---------- ------------- ------------- ------------
---------- ---------- ---------- ------------- ------------- ------------
Total investment return (d)............. (8.05)% 1.20% 5.81% 17.46%(b) (7.14)% 18.14 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 32,116 $ 41,274 $ 27,355 $ 3,699 $ 413 $ 558
Ratio of net investment loss to average
net assets............................. (1.05)% (1.05)% (0.97)% (0.9)%(c) (0.05)% (0.05)%(c)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.49% 2.64% 2.56% 2.7%(c) 1.49% 1.64 %(c)
Without expense reductions............ 2.59% 2.79% 2.68% --%** 1.59% 1.79 %(c)
Portfolio turnover rate++++............. 31% 67% 49% 104% 31% 67 %
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0971 N/A N/A N/A $ 0.0971 N/A
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
* Includes reimbursement by Chancellor LGT Asset Management, Inc. of
operating expenses of $0.01. Without such reimbursement, the ratio of
expenses to average net assets would have been 2.3% and the ratio of
net investment loss to average net assets would have been (0.1)% (See
Note 2).
* * Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
(a) These selected per share data were calculated based upon average
shares outstanding during the period.
(b) Not annualized
(c) Annualized
(d) Total investment return does not include sales charges.
N/A Not applicable
The accompanying notes are an integral part of the financial statements.
F92
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
GT Global Japan Growth Fund ("Fund"), is a separate series of GT Global Growth
Series ("Company"). The Company is organized as a Massachusetts business trust
and is registered under the Investment Company Act of 1940, as amended ("1940
Act"), as an open-end management investment company. The Company has eight
diversified series of shares in operation, each series corresponding to a
distinct portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles, and
the financial statements may include certain estimates made by management.
(A) Portfolio Valuation
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market in which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by Chancellor LGT Asset
Management, Inc. (the "Manager") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality and type. However, when the
Manager deems it appropriate, prices obtained for the day of valuation from a
bond pricing service will be used. Short-term investments with a maturity of 60
days or less are valued at amortized cost, adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Company's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued to the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of Trustees.
(B) Foreign Currency Translation
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, other assets and liabilities
are recorded in the books and records of the Fund after translation to U.S.
dollars based on the exchange rates on that day. The cost of each security is
determined using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
value of assets and liabilities other than investments in securities at year
end, resulting from changes in exchange rates.
(C) Repurchase Agreements
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, United States government securities or
other high quality debt securities of which the value, including accrued
interest, is at least equal to the amount to be repaid to the Fund under each
agreement at its maturity.
(D) Forward Foreign Currency Contracts
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss equal to
the difference between the value at the time it was opened and the value at the
time it was closed. The Fund could be exposed to risk if a counterparty is
unable to meet the terms of a contract or if
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GT GLOBAL JAPAN GROWTH FUND
the value of the currency changes unfavorably. The Fund may enter into Forward
Contracts in connection with planned purchases or sales of securities, or to
hedge against adverse fluctuations in exchange rates between currencies.
(E) Option Accounting Principles
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of an over-the-counter option, is valued at the average
of the last bid prices obtained from brokers, unless a quotation from only one
broker is available, in which case only that broker's price will be used. If an
option expires on its stipulated expiration date or if the Fund enters into a
closing purchase transaction, a gain or loss is realized without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option is extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the proceeds of
the sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium originally received. The Fund can write options only on
a covered basis, which, for a call, requires that the Fund hold the underlying
security, and, for a put, requires the Fund to set aside cash, U.S. government
securities or other liquid securities in an amount not less than the exercise
price or otherwise provide adequate cover at all times while the put option is
outstanding. The Fund may use options to manage its exposure to the stock and
bond markets and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) Futures Contracts
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock and bond
markets and to fluctuations in currency values or interest rates. At December
31, 1996, the Fund had segregated securities valued at $11,422,949 and cash of
$1,405,431 to cover margin requirements on open futures contracts.
(G) Security Transactions and Related Investment Income
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other than normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) Portfolio Securities Loaned
At December 31, 1996, stocks with an aggregate value of $5,699,560 were on loan
to brokers. The loans were secured by cash collateral of $5,979,995, received by
the Fund. For international securities, cash collateral is received by the Fund
against loaned securities in an amount at least equal to 105% of the market
value of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 103% of the market value of the loaned
securities during the period of the loan. For domestic securities, cash
collateral is received by the Fund against loaned securities in an amount at
least equal to 102% of the market value of the loaned securities at the
inception of each loan. This collateral must be maintained at not less than 100%
of the market value of the loaned securities during the period of each loan. For
the year ended December 31, 1996, the Fund received securities lending fees of
$89,879 which were used to reduce custodian fees.
(I) Taxes
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue
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GT GLOBAL JAPAN GROWTH FUND
Code of 1986, as amended ("Code"). It is also the intention of the Fund to make
distributions sufficient to avoid imposition of any excise tax under Section
4982 of the Code. Therefore, no provision has been made for Federal taxes on
income, capital gains, and unrealized appreciation of securities held, or for
excise tax on income and capital gains.
(J) Distributions to Shareholders
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) Foreign Securities
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. These risks of investing in foreign markets may
include foreign currency exchange rate fluctuations, perceived credit risk,
adverse political and economic developments and possible adverse foreign
government intervention.
(L) Restricted Securities
The Fund is permitted to invest in privately placed restricted securities. These
securities may by resold in transactions exempt from registration or to the
public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
(M) Indexed Securities
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(N) Line of Credit
The Fund, along with certain other funds advised by the Manager, has a line of
credit with the Bank of Boston. The arrangement with the bank allows all
specified funds to borrow an aggregate maximum amount of $100,000,000. On
December 31, 1996, the Fund borrowed $2,000,000 at a money market rate.
For the year ended December 31, 1996, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
was $2,000,000 with a weighted average interest rate of 8%. Interest incurred on
this loan for the year ended December 31, 1996 was $444.
2. Related Parties
Chancellor LGT Asset Management, Inc. is the Fund's investment manager and
administrator. On October 31, 1996, Chancellor Capital Management, Inc. merged
with LGT Asset Management, Inc., and the surviving entity was renamed Chancellor
LGT Asset Management, Inc. The Fund pays investment management and
administration fees to the Manager at the following annualized rates: 0.975% on
the first $500 million of average daily net assets of the Fund; 0.95% on the
next $500 million; 0.925% of the next $500 million and 0.90% on amounts
thereafter. These fees are computed daily and paid monthly, and are subject to
reduction in any period to the extent that the Fund's expenses (exclusive of
brokerage commissions, taxes, interest, distribution-related expenses and
extraordinary expenses) exceed the most stringent limits prescribed by the laws
or regulations of any state in which the Fund's shares are offered for sale,
based on the average net asset value of the Fund.
GT Global, Inc. ("GT Global"), an affiliate of the Manager, serves as the Fund's
distributor. The Fund offers Class A, Class B, and Advisor Class shares for
purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. GT Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the year ended December 31, 1996, GT Global retained $47,700
of such sales charges. Purchases of Class A shares exceeding $500,000 may be
subject to a contingent deferred sales charge ("CDSC") upon redemption, in
accordance with the Fund's current prospectus. GT Global collected such CDSCs in
the amount of $18,349 for the year ended December 31, 1996. GT Global also makes
ongoing shareholder servicing and trail commission payments to dealers whose
clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSCs, in accordance with the Fund's current
prospectus. During the year ended December 31, 1996, GT Global collected such
CDSCs in the amount of $330,744. In addition, GT Global makes ongoing
shareholder servicing and trail commission payments to dealers whose clients
hold Class B shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Trustees has
adopted separate distribution plans with respect to the Fund's Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which the Fund
reimburses GT Global for a portion of its shareholder servicing and distribution
expenses. Under the Class A Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class A shares for GT Global's expenditures incurred in servicing and
maintaining shareholder accounts, and may pay GT Global a distribution fee at
the annualized rate of up to 0.35% of the average daily net assets of the Fund's
Class A shares, less any amounts paid by the Fund as the aforementioned service
fee, for its expenditures incurred in providing services as distributor. All
expenses for which GT Global is reimbursed under the Class A Plan will have been
incurred within one year of such reimbursement.
Pursuant to the Fund's Class B Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily
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GT GLOBAL JAPAN GROWTH FUND
net assets of the Fund's Class B shares for its expenditures incurred in
servicing and maintaining shareholder accounts, and may pay GT Global a
distribution fee at the annualized rate of up to 0.75% of the average daily net
assets of the Fund's Class B shares for GT Global's expenditures incurred in
providing services as distributor. Expenses incurred under the Class B Plan in
excess of 1.00% annually may be carried forward for reimbursement in subsequent
years as long as that Plan continues in effect.
The Manager and GT Global have voluntarily undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest, and extraordinary
items) to the maximum annual level of 2.25%, 2.90%, and 1.90% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by GT Global
of payments under the Class A Plan and/or Class B Plan and/ or reimbursements by
the Manager or GT Global of portions of the Fund's other operating expenses.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and GT Global, is the transfer agent of the Fund. For performing shareholder
servicing, reporting, and general transfer agent services, GT Services receives
an annual maintenance fee of $17.50 per account, a new account fee of $4.00 per
account, a per transaction fee of $1.75 for all transactions other than
exchanges and a per exchange fee of $2.25. GT Services is also reimbursed by the
Funds for its out-of-pocket expenses for such items as postage, forms, telephone
charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived by
applying 0.03% to the first $5 billion of assets of all registered mutual funds
advised by the Manager and 0.02% to the assets in excess of $5 billion and
allocating the result according to the Fund's average daily net assets.
The Company pays each of its Trustees who is not an employee, officer or
director of the Manager, GT Global or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee.
3. Purchases and Sales of Securities
For the year ended December 31, 1996, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $36,975,149 and $63,613,560, respectively. There were no
purchases or sales of U.S. government obligations by the Fund during the year.
F96
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GT GLOBAL JAPAN GROWTH FUND
4. Capital Shares
At December 31, 1996, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
Capital Share Transactions
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1996 December 31, 1995
------------------------- ----------------------------
Class A Shares Amount Shares Amount
- ------------------------------------------------------------ ----------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Shares sold................................................. 39,042,903 $423,073,924 42,162,424 $ 483,616,630
Shares issued in connection with reinvestment of
distributions............................................. 225,741 2,221,785 899,831 9,789,980
----------- ------------ ------------- -------------
39,268,644 425,295,709 43,062,255 493,406,610
Shares repurchased.......................................... (42,853,058) (464,603,203) (41,032,648) (470,692,845)
----------- ------------ ------------- -------------
Net increase (decrease)..................................... (3,584,414) $(39,307,494) 2,029,607 $ 22,713,765
----------- ------------ ------------- -------------
----------- ------------ ------------- -------------
Year ended Year ended
December 31, 1996 December 31, 1995
------------------------- ----------------------------
Class B Shares Amount Shares Amount
- ------------------------------------------------------------ ----------- ------------ ------------- -------------
Shares sold................................................. 7,303,169 $ 77,038,650 5,971,262 $ 67,899,245
Shares issued in connection with reinvestment of
distributions............................................. 111,715 1,070,181 340,110 3,629,261
----------- ------------ ------------- -------------
7,414,884 78,108,831 6,311,372 71,528,506
Shares repurchased.......................................... (7,859,944) (82,438,811) (4,758,650) (53,997,274)
----------- ------------ ------------- -------------
Net increase (decrease)..................................... (445,060) $ (4,329,980) 1,552,722 $ 17,531,232
----------- ------------ ------------- -------------
----------- ------------ ------------- -------------
June 1, 1995
(commencement of sale of
Year ended shares)
December 31, 1996 to December 31, 1995
------------------------- ----------------------------
Advisor Class Shares Amount Shares Amount
- ------------------------------------------------------------ ----------- ------------ ------------- -------------
Shares sold................................................. 666,196 $ 7,296,458 55,192 $ 604,443
Shares issued in connection with reinvestment of
distributions............................................. 1,759 17,394 5,231 57,021
----------- ------------ ------------- -------------
667,955 7,313,852 60,423 661,464
Shares repurchased.......................................... (676,463) (7,409,460) (9,811) (118,234)
----------- ------------ ------------- -------------
Net increase (decrease)..................................... (8,508) $ (95,608) 50,612 $ 543,230
----------- ------------ ------------- -------------
----------- ------------ ------------- -------------
</TABLE>
5. Expense Reductions
The Manager has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended December 31, 1996, the Fund's
expenses were reduced by $54,225 under these arrangements.
- --------------
Federal Tax Information (Unaudited):
Pursuant to section 852 of the Internal Revenue Code, the GT Global Japan Growth
Fund designates $3,387,112 as a capital gain dividend for the fiscal year ended
December 31, 1996.
F97
<PAGE>
GT GLOBAL AMERICA FUNDS
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL AMERICA FUNDS
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL AMERICA FUNDS
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL MUTUAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY OF THE GT GLOBAL
MUTUAL FUNDS, INCLUDING FEES, EXPENSES AND THE RISKS OF GLOBAL AND EMERGING
MARKET INVESTING AS WELL AS THE RISKS OF INVESTING IN RELATED INDUSTRIES,
PLEASE CONTACT YOUR FINANCIAL ADVISER OR CALL GT GLOBAL DIRECTLY AT
1-800-824-1580.
GROWTH FUNDS
/ / GLOBALLY DIVERSIFIED FUNDS
GT GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity by investing outside
the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
/ / GLOBAL THEME FUNDS
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL HEALTH CARE FUND
Invests in growing health care industries worldwide
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in the new, unified Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
GT GLOBAL AMERICA MID CAP GROWTH FUND
Concentrates on medium-sized companies in the U.S.
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA VALUE FUND
Concentrates on equity securities of large cap U.S. companies believed to be
undervalued
GT GLOBAL JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUND
GT GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government bonds from around the world
INCOME FUNDS
GT GLOBAL GOVERNMENT INCOME FUND
Earns monthly income from global government securities
GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
GT GLOBAL HIGH INCOME FUND
Invests in debt securities in emerging markets
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[LOGO]
NO DEALER, SALES REPRESENTATIVE OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
STATEMENT OF ADDITIONAL INFORMATION AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY G.T.
GLOBAL GROWTH SERIES, CHANCELLOR LGT ASSET MANAGEMENT, INC., OR GT GLOBAL,
INC. THIS STATEMENT OF ADDITIONAL INFORMATION DOES NOT CONSTITUTE AN OFFER
TO SELL OR SOLICITATION OF ANY OFFER TO BUY ANY OF THE SECURITIES OFFERED
HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER IN SUCH JURISDICTION.
EQUSA705MC
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND:
GT GLOBAL INTERNATIONAL GROWTH FUND:
GT GLOBAL NEW PACIFIC GROWTH FUND:
GT GLOBAL EUROPE GROWTH FUND:
GT GLOBAL AMERICA MID CAP GROWTH FUND:
GT GLOBAL JAPAN GROWTH FUND:
ADVISOR CLASS
50 California Street, 27th Floor
San Francisco, California 94111
(415) 392-6181
Toll Free: (800) 824-1580
Statement of Additional Information
May 1, 1997
- --------------------------------------------------------------------------------
This Statement of Additional Information relates to the Advisor Class shares of
GT Global Worldwide Growth Fund ("Worldwide Fund"), GT Global International
Growth Fund ("International Fund"), GT Global New Pacific Growth Fund ("Pacific
Fund"), GT Global Europe Growth Fund ("Europe Fund") GT Global America Mid Cap
Growth Fund ("America Mid Cap Fund") and GT Global Japan Growth Fund ("Japan
Fund") (individually, a "Fund," and collectively, the "Funds"). Each Fund is a
diversified series of G.T. Global Growth Series (the "Company"), a registered
open-end management investment company. This Statement of Additional
Information, which is not a prospectus, supplements and should be read in
conjunction with the Funds' current Advisor Class Prospectus dated May 1, 1997,
a copy of which is available without charge by writing to the above address or
calling the Funds at the toll-free telephone number printed above.
Chancellor LGT Asset Management, Inc. (the "Manager") serves as each Fund's
investment manager and administrator. The distributor of the shares of each Fund
is GT Global, Inc. ("GT Global"). The Funds' transfer agent is GT Global
Investor Services, Inc. ("GT Services" or the "Transfer Agent").
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Investment Objectives and Policies....................................................................................... 2
Options, Futures and Currency Strategies................................................................................. 5
Risk Factors............................................................................................................. 14
Investment Limitations................................................................................................... 19
Execution of Portfolio Transactions...................................................................................... 21
Trustees and Executive Officers.......................................................................................... 23
Management............................................................................................................... 25
Valuation of Shares...................................................................................................... 26
Information Relating to Sales and Redemptions............................................................................ 27
Taxes.................................................................................................................... 28
Additional Information................................................................................................... 31
Investment Results....................................................................................................... 32
Description of Debt Ratings.............................................................................................. 39
Financial Statements..................................................................................................... 40
</TABLE>
[LOGO]
Statement of Additional Information Page 1
<PAGE>
GT GLOBAL EQUITY FUNDS
INVESTMENT OBJECTIVES
AND POLICIES
- --------------------------------------------------------------------------------
SELECTION OF INVESTMENTS
In determining the appropriate distribution of investments among various
countries and geographic regions for the Funds, the Manager ordinarily considers
the following factors: prospects for relative economic growth between the
different countries in which each Fund may invest; expected levels of inflation;
government policies influencing business conditions; the outlook for currency
relationships; and the range of the individual investment opportunities
available to international investors.
In analyzing companies for investment by each Fund, the Manager ordinarily looks
for one or more of the following characteristics: an above-average earnings
growth per share; high return on invested capital; a healthy balance sheet;
sound financial and accounting policies and overall financial strength; strong
competitive advantages; effective research and product development and
marketing; efficient service; pricing flexibility; strength of management; and
general operating characteristics which will enable the companies to compete
successfully in their respective marketplaces. In certain countries,
governmental restrictions and other limitations on investment may affect the
maximum percentage of equity ownership in any one company by a Fund or the Funds
in the aggregate. In addition, in some instances only special classes of
securities may be purchased by foreigners and the market prices, liquidity and
rights with respect to those securities may vary from shares owned by nationals.
At this time, the Manager is not aware of the existence of any investment or
exchange control regulations that might substantially impair the operations of
the Funds as described in the Prospectus and this Statement of Additional
Information. Although restrictions may in the future make it undesirable to
invest in certain countries, the Manager does not believe that any current
repatriation restrictions would affect its decisions to invest in the countries
eligible for investment by any Fund. It should be noted, however, that this
situation could change at any time.
INVESTMENTS IN OTHER INVESTMENT COMPANIES
With respect to certain countries, investments by a Fund presently may be made
only by acquiring shares of other investment companies with local governmental
approval to invest in those countries. At such time as direct investment in
these countries is allowed, the Funds anticipate investing directly in these
markets. The Funds may also invest in the securities of closed-end investment
companies within the limits of the Investment Company Act of 1940, as amended
(the "1940 Act"). These limitations currently provide that, in part, each Fund
may purchase shares of a closed-end investment company unless: (a) such a
purchase would cause a Fund to own more than 3% of the total outstanding voting
stock of the investment company or (b) such a purchase would cause a Fund to
have more than 5% of its assets invested in the investment company or more than
10% of its assets invested in an aggregate of all such investment companies.
Investment in investment companies may involve the payment of substantial
premiums above the value of such companies' portfolio securities. The Funds do
not intend to invest in such vehicles or funds unless the Manager determines
that the potential benefits of such investments justify the payment of any
applicable premiums. The return on such securities will be reduced by operating
expenses of such companies including payments to the investment managers of
those investment companies.
SAMURAI AND YANKEE BONDS
The International Fund, the Japan Fund, the Pacific Fund and the Worldwide Fund
may invest in yen-denominated bonds sold in Japan by non-Japanese issuers
("Samurai bonds"), and the Worldwide Fund and the America Mid Cap Fund may
invest in dollar-denominated bonds sold in the United States by non-U.S. issuers
("Yankee bonds"). As compared with bonds issued in their countries of domicile,
such bond issues normally carry a higher interest rate but are less actively
traded. It is the policy of each Fund to invest in Samurai or Yankee bond issues
only after taking into account considerations of quality and liquidity, as well
as yield. These bonds are issued by governments that are members of the
Organization for Economic Cooperation and Development or have AAA ratings. None
of the Funds has invested in Samurai or Yankee bonds since 1982.
DEPOSITORY RECEIPTS
Each Fund may hold securities of foreign issuers in the form of American
Depository Receipts ("ADRs"), American Depository Shares ("ADSs") and European
Depository Receipts ("EDRs") or other securities convertible into securities of
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GT GLOBAL EQUITY FUNDS
eligible European or Far Eastern issuers. These securities may not necessarily
be denominated in the same currency as the securities for which they may be
exchanged. ADRs and ADSs typically are issued by an American bank or trust
company and evidence ownership of underlying securities issued by a foreign
corporation. EDRs, which are sometimes referred to as Continental Depository
Receipts ("CDRs"), are issued in Europe typically by foreign banks and trust
companies and evidence ownership of either foreign or domestic securities.
Generally, ADRs and ADSs in registered form are designed for use in United
States securities markets and EDRs in bearer form are designed for use in
European securities markets. For purposes of a Fund's investment policies, its
investments in ADRs, ADSs and EDRs will be deemed to be investments in the
equity securities representing securities of foreign issuers into which they may
be converted.
ADR facilities may be established as either "unsponsored" or "sponsored." While
ADRs issued under these two types of facilities are in some respects similar,
there are distinctions between them relating to the rights and obligations of
ADR holders and the practices of market participants. A depository may establish
an unsponsored facility without participation by (or even necessarily the
acquiescence of) the issuer of the deposited securities, although typically the
depository requests a letter of non-objection from such issuer prior to the
establishment of the facility. Holders of unsponsored ADRs generally bear all
the costs of such facilities. The depository usually charges fees upon the
deposit and withdrawal of the deposited securities, the conversion of dividends
into U.S. dollars, the disposition of non-cash distributions and the performance
of other services. The depository of an unsponsored facility frequently is under
no obligation to distribute shareholder communications received from the issuer
of the deposited securities or to pass through voting rights to ADR holders with
respect to the deposited securities. Sponsored ADR facilities are created in
generally the same manner as unsponsored facilities, except that the issuer of
the deposited securities enters into a deposit agreement with the depository.
The deposit agreement sets out the rights and responsibilities of the issuer,
the depository and the ADR holders. With sponsored facilities, the issuer of the
deposited securities generally will bear some of the costs relating to the
facility (such as dividend payment fees of the depository), although ADR holders
continue to bear certain other costs (such as deposit and withdrawal fees).
Under the terms of most sponsored arrangements, depositories agree to distribute
notices of shareholder meetings and voting instructions, and to provide
shareholder communications and other information to the ADR holders at the
request of the issuer of the deposited securities. The Funds may invest in both
sponsored and unsponsored ADRs.
WARRANTS OR RIGHTS
Warrants or rights may be acquired by a Fund in connection with other securities
or separately and provide the Fund with the right to purchase at a later date
other securities of the issuer.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, each Fund may make secured loans
of its portfolio securities amounting to not more than 30% of its total assets.
Securities loans are made to broker/dealers or institutional investors pursuant
to agreements requiring that the loans continuously be secured by collateral at
least equal at all times to the value of the securities lent, plus any accrued
interest, "marked to market" on a daily basis. The Funds may pay reasonable
administrative and custodial fees in connection with the loans of their
securities. While the securities loans are outstanding, the Funds will continue
to receive the equivalent of the interest or dividends paid by the issuer on the
securities, as well as interest on the investment of the collateral or a fee
from the borrower. Each Fund will have a right to call each loan at any time and
obtain the securities within the stated settlement period. The Funds will not
have the right to vote equity securities while they are being lent, but may call
in a loan in anticipation of any important vote. Loans only will be made to
firms deemed by the Manager to be of good standing and will not be made unless,
in the judgment of the Manager, the consideration to be earned from such loans
would justify the risk.
COMMERCIAL BANK OBLIGATIONS
For the purposes of each Fund's investment policies with respect to bank
obligations, obligations of foreign branches of U.S. banks and of foreign banks
are obligations of the issuing bank and may be general obligations of the parent
bank. Such obligations, however, may be limited by the terms of a specific
obligation and by government regulation. As with investment in non-U.S.
securities in general, investments in the obligations of foreign branches of
U.S. banks and of foreign banks may subject the Funds to investment risks that
are different in some respects from those of investments in obligations of
domestic issuers. Although a Fund typically will acquire obligations issued and
supported by the credit of U.S. or foreign banks having total assets at the time
of purchase of $1 billion or more, this $1 billion figure is not an investment
policy or restriction of any Fund. For the purposes of calculation with respect
to the $1 billion figure, the assets of a bank will be deemed to include the
assets of its U.S. and non-U.S. branches.
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REPURCHASE AGREEMENTS
A repurchase agreement is a transaction in which a Fund purchases a security
from a bank or recognized securities dealer and simultaneously commits to resell
that security to the bank or dealer at an agreed-upon price, date and market
rate of interest unrelated to the coupon rate or maturity of the purchased
security. Although repurchase agreements carry certain risks not associated with
direct investments in securities, including possible decline in the market value
of the underlying securities and delays and costs to the Fund if the other party
to the repurchase agreement becomes bankrupt, the Funds intend to enter into
repurchase agreements only with banks and dealers believed by the Manager to
present minimal credit risks in accordance with guidelines approved by the
Company's Board of Trustees (the "Board"). The Manager reviews and monitors the
creditworthiness of such institutions under the Board's general supervision.
A Fund will invest only in repurchase agreements collateralized at all times in
an amount at least equal to the repurchase price plus accrued interest. To the
extent that the proceeds from any sale of such collateral upon a default in the
obligation to repurchase were less than the repurchase price, the Fund would
suffer a loss. If the financial institution which is party to the repurchase
agreement petitions for bankruptcy or otherwise becomes subject to bankruptcy or
other liquidation proceedings, there may be restrictions on the Fund's ability
to sell the collateral and the Fund could suffer a loss. However, with respect
to financial institutions whose bankruptcy or liquidation proceedings are
subject to the U.S. Bankruptcy Code, each Fund intends to comply with provisions
under the U.S. Bankruptcy Code that would allow it immediately to resell the
collateral. A Fund will not enter into a repurchase agreement with a maturity of
more than seven days if, as a result, more than 15% of the value of its net
assets would be invested in such repurchase agreements and other illiquid
investments.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS
Each Fund's borrowings will not exceed 33 1/3% of its total assets, i.e., each
Fund's total assets at all times will equal at least 300% of the amount of
outstanding borrowings. If market fluctuations in the value of a Fund's
portfolio holdings or other factors cause the ratio of the Fund's total assets
to outstanding borrowings to fall below 300%, within three days (excluding
Sundays and holidays) of such event the Fund may be required to sell portfolio
securities to restore the 300% asset coverage, even though from an investment
standpoint such sales might be disadvantageous. Each Fund also may borrow up to
5% of its total assets for temporary or emergency purposes other than to meet
redemptions. Any borrowing by a Fund may cause greater fluctuation in the value
of its shares than would be the case if the Fund did not borrow.
Each Fund's fundamental investment limitations permit the Fund to borrow money
for leveraging purposes. Each Fund, however, currently is prohibited, pursuant
to a non-fundamental investment policy, from borrowing money in order to
purchase securities. Nevertheless, this policy may be changed in the future by
the Board. If a Fund employs leverage in the future, it would be subject to
certain additional risks. Use of leverage creates an opportunity for greater
growth of capital but would exaggerate any increases or decreases in a Fund's
net asset value. When the income and gains on securities purchased with the
proceeds of borrowings exceed the costs of such borrowings, a Fund's earnings or
net asset value will increase faster than otherwise would be the case;
conversely, if such income and gains fail to exceed such costs, a Fund's
earnings or net asset value would decline faster than would otherwise be the
case.
Each Fund may enter into reverse repurchase agreements. A reverse repurchase
agreement is a borrowing transaction in which the Fund transfers possession of a
security to another party, such as a bank or broker/dealer in return for cash,
and agrees to repurchase the security in the future at an agreed upon price,
which includes an interest component. Each Fund also may engage in "roll"
borrowing transactions which involve its sale of Government National Mortgage
Association certificates or other securities together with a commitment (for
which the Fund may receive a fee) to purchase similar, but not identical,
securities at a future date. A Fund will maintain, in a segregated account with
a custodian, cash or liquid securities in an amount sufficient to cover its
obligations under "roll" transactions and reverse repurchase agreements with
broker/dealers. No segregation is required for reverse repurchase agreements
with banks.
TEMPORARY DEFENSIVE STRATEGIES
Money market instruments in which the Funds may invest include the following:
government securities; high grade commercial paper; bank certificates of
deposit; bankers' acceptances; and repurchase agreements related to any of the
foregoing. High grade commercial paper refers to commercial paper rated P-1 by
Moody's Investors Service, Inc. ("Moody's") or A-1 by Standard & Poor's Ratings
Group ("S&P"), at the time of investment or, if unrated, deemed by the Manager
to be of comparable quality.
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OPTIONS, FUTURES AND CURRENCY
STRATEGIES
- --------------------------------------------------------------------------------
SPECIAL RISKS OF OPTIONS, FUTURES AND CURRENCY STRATEGIES
The use of options, futures contracts and forward currency contracts ("Forward
Contracts") involves special considerations and risks, as described below. Risks
pertaining to particular instruments are described in the sections that follow.
(1) Successful use of most of these instruments depends upon the
Manager's ability to predict movements of the overall securities and
currency markets, which requires different skills than predicting changes in
the prices of individual securities. While the Manager is experienced in the
use of these instruments, there can be no assurance that any particular
strategy adopted will succeed.
(2) There might be imperfect correlation, or even no correlation,
between price movements of an instrument and price movements of the
investments being hedged. For example, if the value of an instrument used in
a short hedge increased by less than the decline in value of the hedged
investment, the hedge would not be fully successful. Such a lack of
correlation might occur due to factors unrelated to the value of the
investments being hedged, such as speculative or other pressures on the
markets in which the hedging instrument is traded. The effectiveness of
hedges using hedging instruments on indices will depend on the degree of
correlation between price movements in the index and price movements in the
investments being hedged.
(3) Hedging strategies, if successful, can reduce risk of loss by wholly
or partially offsetting the negative effect of unfavorable price movements
in the investments being hedged. However, hedging strategies can also reduce
opportunity for gain by offsetting the positive effect of favorable price
movements in the hedged investments. For example, if a Fund entered into a
short hedge because the Manager projected a decline in the price of a
security in the Fund's portfolio, and the price of that security increased
instead, the gain from threat increase might by wholly or partially offset
by a decline in the price of the hedging instrument. Moreover, if the price
of the hedging instrument declined by more than the increase in the price of
the security, the Fund could suffer a loss. In either such case, the Fund
would have been in a better position had it not hedged at all.
(4) As described below, a Fund might be required to maintain assets as
"cover," maintain segregated accounts or make margin payments when it takes
positions in instruments involving obligations to third parties (I.E.,
instruments other than purchased options). If the Fund were unable to close
out its positions in such instruments, it might be required to continue to
maintain such assets or accounts or make such payments until the position
expired or matured. The requirements might impair the Fund's ability to sell
a portfolio security or make an investment at a time when it would otherwise
be favorable to do so, or require that the Fund sell a portfolio security at
a disadvantageous time. The Fund's ability to close out a position in an
instrument prior to expiration or maturity depends on the existence of a
liquid secondary market or, in the absence of such a market, the ability and
willingness of the other party to the transaction ("contra party") to enter
into a transaction closing out the position. Therefore, there is no
assurance that any position can be closed out at a time and price that is
favorable to the Fund.
WRITING CALL OPTIONS
A Fund may write (sell) call options on securities, indices and currencies. Call
options generally will be written on securities and currencies that, in the
opinion of the Manager, are not expected to make any major price moves in the
near future but that, over the long term, are deemed to be attractive
investments for the Fund.
A call option gives the holder (buyer) the right to purchase a security or
currency at a specified price (the exercise price) at any time until (American
style) or on (European style) a certain date (the expiration date). So long as
the obligation of the writer of a call option continues, he may be assigned an
exercise notice, requiring him to deliver the underlying security or currency
against payment of the exercise price. This obligation terminates upon the
expiration of the call option, or such earlier time at which the writer effects
a closing purchase transaction by purchasing an option identical to that
previously sold.
Portfolio securities or currencies on which call options may be written will be
purchased solely on the basis of investment considerations consistent with each
Fund's investment objectives. When writing a call option, a Fund, in return for
the
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GT GLOBAL EQUITY FUNDS
premium, gives up the opportunity for profit from a price increase in the
underlying security or currency above the exercise price, and retains the risk
of loss should the price of the security or currency decline. Unlike one who
owns securities or currencies not subject to an option, a Fund has no control
over when it may be required to sell the underlying securities or currencies,
since most options may be exercised at any time prior to the option's
expiration. If a call option that a Fund has written expires, the Fund will
realize a gain in the amount of the premium; however, such gain may be offset by
a decline in the market value of the underlying security or currency during the
option period. If the call option is exercised, the Fund will realize a gain or
loss from the sale of the underlying security or currency, which will be
increased or offset by the premium received. The Fund does not consider a
security or currency covered by a call option to be "pledged" as that term is
used in the Fund's policy that limits the pledging or mortgaging of its assets.
Writing call options can serve as a limited short hedge because declines in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
appreciates to a price higher than the exercise price of the call option, it can
be expected that the option will be exercised and a Fund will be obligated to
sell the security or currency at less than its market value.
The premium that a Fund receives for writing a call option is deemed to
constitute the market value of an option. The premium a Fund will receive from
writing a call option will reflect, among other things, the current market price
of the underlying investment, the relationship of the exercise price to such
market price, the historical price volatility of the underlying investment and
the length of the option period. In determining whether a particular call option
should be written, the Manager will consider the reasonableness of the
anticipated premium and the likelihood that a liquid secondary market will exist
for those options.
Closing transactions will be effected in order to realize a profit on an
outstanding call option, to prevent an underlying security or currency from
being called, or to permit the sale of the underlying security or currency.
Furthermore, effecting a closing transaction will permit the Fund to write
another call option on the underlying security or currency with either a
different exercise price or expiration date or both.
The Funds will pay transaction costs in connection with the writing of options
and in entering into closing purchase contracts. Transaction costs relating to
options activity normally are higher than those applicable to purchases and
sales of portfolio securities.
The exercise price of the options may be below, equal to or above the current
market values of the underlying securities, indices or currencies at the time
the options are written. From time to time, a Fund may purchase an underlying
security or currency for delivery in accordance with the exercise of an option,
rather than delivering such security or currency from its portfolio. In such
cases, additional costs will be incurred.
A Fund will realize a profit or loss from a closing purchase transaction if the
cost of the transaction is less or more, respectively, than the premium received
from writing the option. Because increases in the market price of a call option
generally will reflect increases in the market price of the underlying security
or currency, any loss resulting from the repurchase of a call option is likely
to be offset in whole or in part by appreciation of the underlying security or
currency owned by the Fund.
WRITING PUT OPTIONS
The Funds may write put options on securities, indices and currencies. A put
option gives the purchaser of the option the right to sell, and the writer
(seller) the obligation to buy, the underlying security or currency at the
exercise price at any time until (American style) or on (European style) the
expiration date. The operation of put options in other respects, including their
related risks and rewards, is substantially identical to that of call options.
A Fund generally would write put options in circumstances where the Manager
wishes to purchase the underlying security or currency for the Fund's portfolio
at a price lower than the current market price of the security or currency. In
such event, the Fund would write a put option at an exercise price that, reduced
by the premium received on the option, reflects the lower price it is willing to
pay. Since the Fund also would receive interest on debt securities or currencies
maintained to cover the exercise price of the option, this technique could be
used to enhance current return during periods of market uncertainty. The risk in
such a transaction would be that the market price of the underlying security or
currency would decline below the exercise price, less the premium received.
Writing put options can serve as a limited long hedge because increases in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
depreciates to a price lower than the exercise price of the put option, it can
be expected that the put option will be exercised and a Fund will be obligated
to purchase the security or currency at more than its market value.
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PURCHASING PUT OPTIONS
Each Fund may purchase put options on securities, indices and currencies. As the
holder of a put option, a Fund would have the right to sell the underlying
security or currency at the exercise price at any time until (American style) or
on (European style) the expiration date. A Fund may enter into closing sale
transactions with respect to such option, exercise such option or permit such
option to expire.
A Fund may purchase a put option on an underlying security or currency
("protective put") owned by the Fund in order to protect against an anticipated
decline in the value of the security or currency. Such hedge protection is
provided only during the life of the put option when the Fund, as the holder of
the put option, is able to sell the underlying security or currency at the put
exercise price regardless of any decline in the underlying security's market
price or currency's exchange value. For example, a put option may be purchased
in order to protect unrealized appreciation of a security or currency when the
Manager deems it desirable to continue to hold the security or currency because
of tax considerations. The premium paid for the put option and any transaction
costs would reduce any profit otherwise available for distribution when the
security or currency eventually is sold.
A Fund also may purchase put options at a time when the Fund does not own the
underlying security or currency. By purchasing put options on a security or
currency it does not own, a Fund seeks to benefit from a decline in the market
price of the underlying security or currency. If the put option is not sold when
it has remaining value, and if the market price of the underlying security or
currency remains equal to or greater than the exercise price during the life of
the put option, the Fund will lose its entire investment in the put option. In
order for the purchase of a put option to be profitable, the market price of the
underlying security or currency must decline sufficiently below the exercise
price to cover the premium and transaction costs, unless the put option is sold
in a closing sale transaction.
PURCHASING CALL OPTIONS
Each Fund may purchase call options on securities, indices and currencies. As
the holder of a call option, a Fund would have the right to purchase the
underlying security or currency at the exercise price at any time until
(American style) or on (European style) the expiration date. A Fund may enter
into closing sale transactions with respect to such option, exercise such option
or permit such option to expire.
Call options may be purchased by a Fund for the purpose of acquiring the
underlying security or currency for its portfolio. Utilized in this fashion, the
purchase of call options would enable a Fund to acquire the security or currency
at the exercise price of the call option plus the premium paid. At times, the
net cost of acquiring the security or currency in this manner may be less than
the cost of acquiring the security or currency directly. This technique also may
be useful to the Funds in purchasing a large block of securities that would be
more difficult to acquire by direct market purchases. As long as it holds such a
call option, rather than the underlying security or currency itself, a Fund is
partially protected from any unexpected decline in the market price of the
underlying security or currency and, in such event, could allow the call option
to expire, incurring a loss only to the extent of the premium paid for the
option.
Each Fund also may purchase call options on underlying securities or currencies
it owns in order to protect unrealized gains on call options previously written
by it. A call option could be purchased for this purpose where tax
considerations make it inadvisable to realize such gains through a closing
purchase transaction. Call options also may be purchased at times to avoid
realizing losses that would result in a reduction of a Fund's current return.
For example, where a Fund has written a call option on an underlying security or
currency having a current market value below the price at which such security or
currency was purchased by the Fund, an increase in the market price could result
in the exercise of the call option written by the Fund and the realization of a
loss on the underlying security or currency. Accordingly, the Fund could
purchase a call option on the same underlying security or currency, which could
be exercised to fulfill the Fund's delivery obligations under its written call
(if it is exercised). This strategy could allow the Fund to avoid selling the
portfolio security or currency at a time when it has an unrealized loss;
however, the Fund would have to pay a premium to purchase the call option plus
transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of such
Fund's total assets at the time of purchase.
Each Fund may attempt to accomplish objectives similar to those involved in
using Forward Contracts by purchasing put or call options on currencies. A put
option gives a Fund as purchaser the right (but not the obligation) to sell a
specified amount of currency at the exercise price at any time until (American
style) or on (European style) the expiration of the option. A call option gives
a Fund as purchaser the right (but not the obligation) to purchase a specified
amount of currency at the exercise price at any time until (American style) or
on (European style) the expiration date of the option. A Fund might purchase a
currency put option, for example, to protect itself against a decline in the
dollar value of a currency in which it holds or anticipates holding securities.
If the currency's value should decline against the dollar, the loss in
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currency value should be offset, in whole or in part, by an increase in the
value of the put. If the value of the currency instead should rise against the
dollar, any gain to the Fund would be reduced by the premium it had paid for the
put option. A currency call option might be purchased, for example, in
anticipation of, or to protect against, a rise in the value against the dollar
of a currency in which the Fund anticipates purchasing securities.
Options may be either listed on an exchange or traded in over-the-counter
("OTC") markets. Listed options are third-party contracts (I.E., performance of
the obligations of the purchaser and seller is guaranteed by the exchange or
clearing corporation), and have standardized strike prices and expiration dates.
OTC options are two-party contracts with negotiated strike prices and expiration
dates. A Fund will not purchase an OTC option unless the Manager believes that
daily valuations for such options are readily obtainable. OTC options differ
from exchange-traded options in that OTC options are transacted with dealers
directly and not through a clearing corporation (which guarantees performance).
Consequently, there is a risk of non-performance by the dealer. Since no
exchange is involved, OTC options are valued on the basis of an average of the
last bid prices obtained from dealers, unless a quotation from only one dealer
is available, in which case only that dealer's price will be used. In the case
of OTC options, there can be no assurance that a liquid secondary market will
exist for any particular option at any specific time.
The staff of the Securities and Exchange Commission ("SEC") considers purchased
OTC options to be illiquid securities. A Fund may also sell OTC options and, in
connection therewith, segregate assets or cover its obligations with respect to
OTC options written by the Fund. The assets used as cover for OTC options
written by a Fund will be considered illiquid unless the OTC options are sold to
qualified dealers who agree that the Fund may repurchase any OTC option it
writes at a maximum price to be calculated by a formula set forth in the option
agreement. The cover for an OTC option written subject to this procedure would
be considered illiquid only to the extent that the maximum repurchase price
under the formula exceeds the intrinsic value of the option.
A Fund's ability to establish and close out positions in exchange-listed options
depends on the existence of a liquid market. A Fund intends to purchase or write
only those exchange-listed options for which there appears to be a liquid
secondary market. However, there can be no assurance that such a market will
exist at any particular time. Closing transactions can be made for OTC options
only by negotiating directly with the contra party or by a transaction in the
secondary market if any such market exists. Although a Fund will enter into OTC
options only with contra parties that are expected to be capable of entering
into closing transactions with the Fund, there is no assurance that the Fund
will in fact be able to close out an OTC option position at a favorable price
prior to expiration. In the event of insolvency of the contra party, the Fund
might be unable to close out an OTC option position at any time prior to its
expiration.
INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or loss depends on
changes in the index in question (and thus on price movements in the securities
market or a particular market sector generally) rather than on price movements
in individual securities or futures contracts. When a Fund writes a call on an
index, it receives a premium and agrees that, prior to the expiration date, the
purchaser of the call, upon exercise of the call, will receive from the Fund an
amount of cash if the closing level of the index upon which the call is based is
greater than the exercise price of the call. The amount of cash is equal to the
difference between the closing price of the index and the exercise price of the
call times a specified multiple (the "multiplier"), which determines the total
dollar value for each point of such difference. When a Fund buys a call on an
index, it pays a premium and has the same rights as to such calls as are
indicated above. When a Fund buys a put on an index, it pays a premium and has
the right, prior to the expiration date, to require the seller of the put, upon
the Fund's exercise of the put, to deliver to the Fund an amount of cash if the
closing level of the index upon which the put is based is less than the exercise
price of the put, which amount of cash is determined by the multiplier, as
described above for calls. When a Fund writes a put on an index, it receives a
premium and the purchaser has the right, prior to the expiration date, to
require the Fund to deliver to it an amount of cash equal to the difference
between the closing level of the index and the exercise price times the
multiplier, if the closing level is less than the exercise price.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when a Fund writes a call
on an index it cannot provide in advance for its potential settlement
obligations by acquiring and holding the underlying securities. A Fund can
offset some of the risk of writing a call index option position by holding a
diversified portfolio of securities similar to those on which the underlying
index is based. However, a Fund cannot, as a practical matter, acquire and hold
a portfolio containing exactly the same securities as underlie the index and, as
a result, bears a risk that the value of the securities held will vary from the
value of the index.
Even if a Fund could assemble a securities portfolio that exactly reproduced the
composition of the underlying index, it still would not be fully covered from a
risk standpoint because of the "timing risk" inherent in writing index options.
When
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an index option is exercised, the amount of cash that the holder is entitled to
receive is determined by the difference between the exercise price and the
closing index level on the date when the option is exercised. As with other
kinds of options, the Fund, as the call writer, will not know that it has been
assigned until the next business day at the earliest. The time lag between
exercise and notice of assignment poses no risk for the writer of a covered call
on a specific underlying security, such as common stock, because there the
writer's obligation is to deliver the underlying security, not to pay its value
as of a fixed time in the past. So long as the writer already owns the
underlying security, it can satisfy its settlement obligations by simply
delivering it, and the risk that its value may have declined since the exercise
date is borne by the exercising holder. In contrast, even if the writer of an
index call holds securities that exactly match the composition of the underlying
index, it will not be able to satisfy its assignment obligations by delivering
those securities against payment of the exercise price. Instead, it will be
required to pay cash in an amount based on the closing index value on the
exercise date; and by the time it learns that it has been assigned, the index
may have declined, with a corresponding decline in the value of its securities
portfolio. This "timing risk" is an inherent limitation on the ability of index
call writers to cover their risk exposure by holding securities positions.
If a Fund has purchased an index option and exercises it before the closing
index value for that day is available, it runs the risk that the level of the
underlying index may subsequently change. If such a change causes the exercised
option to fall out-of-the-money, the Fund will be required to pay the difference
between the closing index value and the exercise price of the option (times the
applicable multiplier) to the assigned writer.
INTEREST RATE, CURRENCY AND STOCK INDEX FUTURES CONTRACTS
A Fund may enter into interest rate, currency or stock index futures contracts
("Futures" or "Futures Contracts") as a hedge against changes in prevailing
levels of interest rates, currency exchange rates or stock price levels in order
to establish more definitely the effective return on securities or currencies
held or intended to be acquired by the Fund. The Funds' hedging may include
sales of Futures as an offset against the effect of expected increases in
interest rates, or decreases in currency exchange rates and stock prices, and
purchases of Futures as an offset against the effect of expected declines in
interest rates, or increases in currency exchange rates or stock prices.
The Funds only will enter into Futures Contracts that are traded on futures
exchanges and are standardized as to maturity date and underlying financial
instrument. Futures exchanges and trading thereon in the United States are
regulated under the Commodity Exchange Act by the Commodity Futures Trading
Commission ("CFTC"). Futures are exchanged in London at the London International
Financial Futures Exchange.
Although techniques other than sales and purchases of Futures Contracts could be
used to reduce the Funds' exposure to interest rate and currency exchange rate
fluctuations, the Funds may be able to hedge its exposure more effectively and
at a lower cost through using Futures Contracts.
A Futures Contract provides for the future sale by one party and purchase by
another party of a specified amount of a specific financial instrument (security
or currency) for a specified price at a designated date, time and place. A stock
index Futures Contract provides for the delivery, at a designated date, time and
place, of an amount of cash equal to a specified dollar amount times the
difference between the stock index value at the close of trading on the contract
and the price at which the Futures Contract is originally struck; no physical
delivery of stocks comprising the index is made. Brokerage fees are incurred
when a Futures Contract is bought or sold, and margin deposits must be
maintained at all times the Futures Contract is outstanding.
Although Futures Contracts typically require future delivery of and payment for
financial instruments or currencies, Futures Contracts usually are closed out
before the delivery date. Closing out an open Futures Contract sale or purchase
is effected by entering into an offsetting Futures Contract purchase or sale,
respectively, for the same aggregate amount of the identical financial
instrument or currency and the same delivery date. If the offsetting purchase
price is less than the original sale price, the Fund realizes a gain; if it is
more, the Fund realizes a loss. Conversely, if the offsetting sale price is more
than the original purchase price, the Fund realizes a gain; if it is less, the
Fund realizes a loss. The transaction costs also must be included in these
calculations. There can be no assurance, however, that the Funds will be able to
enter into an offsetting transaction with respect to a particular Futures
Contract at a particular time. If a Fund is not able to enter into an offsetting
transaction, the Fund will continue to be required to maintain the margin
deposits on the Futures Contract.
As an example of an offsetting transaction, the contractual obligations arising
from the sale of one Futures Contract of September Deutschemarks on an exchange
may be fulfilled at any time before delivery under the Futures Contract is
required (I.E., on a specified date in September, the "delivery month") by the
purchase of another Futures Contract of September Deutschemarks on the same
exchange. In such instance, the difference between the price at which the
Futures
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Contract was sold and the price paid for the offsetting purchase, after
allowance for transaction costs, represents the profit or loss to the Fund.
The Funds' Futures transactions will be entered into for hedging purposes; that
is, Futures Contracts will be sold to protect against a decline in the price of
securities or currencies that a Fund owns, or Futures Contracts will be
purchased to protect the Fund against an increase in the price of securities or
currencies it has committed to purchase or expects to purchase.
"Margin" with respect to Futures Contracts is the amount of funds that must be
deposited by a Fund in order to initiate Futures trading and to maintain the
Fund's open positions in Futures Contracts. A margin deposit made when the
Futures Contract is entered into ("initial margin") is intended to ensure the
Fund's performance under the Futures Contract. The margin required for a
particular Futures Contract is set by the exchange on which the Futures Contract
is traded and may be significantly modified from time to time by the exchange
during the term of the Futures Contract.
Subsequent payments, called "variation margin," to and from the futures
commission merchant through which the Fund entered into the Futures Contract
will be made on a daily basis as the price of the underlying security, currency
or index fluctuates making the Futures Contract more or less valuable, a process
known as marking-to-market.
RISKS OF USING FUTURES CONTRACTS. The prices of Futures Contracts are
volatile and are influenced by, among other things, actual and anticipated
changes in interest and currency rates, which in turn are affected by fiscal and
monetary policies and national and international political and economic events.
There is a risk of imperfect correlation between changes in prices of Futures
Contracts and prices of the securities or currencies in the Fund's portfolio
being hedged. The degree of imperfection of correlation depends upon
circumstances such as: variations in speculative market demand for Futures and
for securities or currencies, including technical influences in Futures trading;
and differences between the financial instruments being hedged and the
instruments underlying the standard Futures Contracts available for trading. A
decision of whether, when and how to hedge involves skill and judgment, and even
a well-conceived hedge may be unsuccessful to some degree because of unexpected
market behavior or interest or currency rate trends.
Because of the low margin deposits required, Futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a Futures Contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the Futures Contract is deposited as margin, a subsequent 10%
decrease in the value of the Futures Contract would result in a total loss of
the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit, if the Futures Contract were closed out.
Thus, a purchase or sale of a Futures Contract may result in losses in excess of
the amount invested in the Futures Contract.
Most U.S. Futures exchanges limit the amount of fluctuation permitted in Futures
Contract and option on Futures Contract prices during a single trading day. The
daily limit establishes the maximum amount that the price of a Futures Contract
or option may vary either up or down from the previous day's settlement price at
the end of a trading session. Once the daily limit has been reached in a
particular type of Futures Contract or option, no trades may be made on that day
at a price beyond that limit. The daily limit governs only price movement during
a particular trading day and therefore does not limit potential losses, because
the limit may prevent the liquidation of unfavorable positions. Futures Contract
and option prices occasionally have moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some traders to substantial losses.
If a Fund were unable to liquidate a Futures or option on Futures position due
to the absence of a liquid secondary market or the imposition of price limits,
it could incur substantial losses. The Fund would continue to be subject to
market risk with respect to the position. In addition, except in the case of
purchased options, the Fund would continue to be required to make daily
variation margin payments and might be required to maintain the position being
hedged by the Future or option or to maintain cash or securities in a segregated
account.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
increased participation by speculators in the Futures markets. This
participation also might cause temporary price
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distortions. In addition, activities of large traders in both the Futures and
securities markets involving arbitrage, "program trading" and other investment
strategies might result in temporary price distortions.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or currencies,
except that options on Futures Contracts give the purchaser the right, in return
for the premium paid, to assume a position in a Futures Contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the period of the option. Upon
exercise of the option, the delivery of the Futures position by the writer of
the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's Futures margin account, which represents the
amount by which the market price of the Futures Contract, at exercise, exceeds
(in the case of a call) or is less than (in the case of a put) the exercise
price of the option on the Futures Contract. If an option is exercised on the
last trading day prior to the expiration date of the option, the settlement will
be made entirely in cash equal to the difference between the exercise price of
the option and the closing level of the securities, currencies or index upon
which the Futures Contract is based on the expiration date. Purchasers of
options who fail to exercise their options prior to the exercise date suffer a
loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and the
purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities, foreign currencies or indices.
If a Fund writes an option on a Futures Contract, it will be required to deposit
initial and variation margin pursuant to requirements similar to those
applicable to Futures Contracts. Premiums received from the writing of an option
on a Futures Contract are included in the initial margin deposit.
A Fund may seek to close out an option position by selling an option covering
the same Futures Contract and having the same exercise price and expiration
date. The ability to establish and close out positions on such options is be
subject to the maintenance of a liquid secondary market.
LIMITATIONS ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON
CURRENCIES
To the extent that a Fund enters into Futures Contracts, options on Futures
Contracts, and options on foreign currencies traded on a CFTC-regulated
exchange, in each case other than for BONA FIDE hedging purposes (as defined by
the CFTC), the aggregate initial margin and premiums required to establish those
positions (excluding the amount by which options are "in-the-money") will not
exceed 5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund has
entered into. In general, a call option on a Futures Contract is "in-the-money"
if the value of the underlying Futures Contract exceeds the strike, I.E.,
exercise, price of the call; a put option on a Futures Contract is
"in-the-money" if the value of the underlying Futures Contract is exceeded by
the strike price of the put. This guideline may be modified by the Board without
a shareholder vote. This limitation does not limit the percentage of a Fund's
assets at risk to 5%.
FORWARD CURRENCY CONTRACTS
A Forward Contract is an obligation, generally arranged with a commercial bank
or other currency dealer, to purchase or sell a currency against another
currency at a future date and price as agreed upon by the parties. A Fund may
either accept or make delivery of the currency at the maturity of the Forward
Contract. A Fund may also, if its contra party agrees, prior to maturity, enter
into a closing transaction involving the purchase or sale of an offsetting
contract.
A Fund engages in forward currency transactions in anticipation of or to protect
itself against fluctuations in exchange rates. A Fund might sell a particular
foreign currency forward, for example, when it holds bonds denominated in a
foreign currency but anticipates, and seeks to be protected against, a decline
in the currency against the U.S. dollar. Similarly, a Fund might sell the U.S.
dollar forward when it holds bonds denominated in U.S. dollars but anticipates,
and seeks to be protected against, a decline in the U.S. dollar relative to
other currencies. Further, a Fund might purchase a currency forward to "lock in"
the price of securities denominated in that currency that it anticipates
purchasing.
Forward Contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A Forward
Contract generally has no deposit requirement, and no commissions are charged at
any stage for trades. Each Fund will enter into such Forward Contracts with
major U.S. or foreign banks and securities or currency dealers in accordance
with guidelines approved by the Board.
Each Fund may enter into Forward Contracts either with respect to specific
transactions or with respect to the overall investments of the Fund. The precise
matching of the Forward Contract amounts and the value of specific securities
generally will not be possible because the future value of such securities in
foreign currencies will change as a consequence
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GT GLOBAL EQUITY FUNDS
of market movements in the value of those securities between the date the
Forward Contract is entered into and the date it matures. Accordingly, it may be
necessary for a Fund to purchase additional foreign currency on the spot (I.E.,
cash) market (and bear the expense of such purchase) if the market value of the
security is less than the amount of foreign currency the Fund is obligated to
deliver and if a decision is made to sell the security and make delivery of the
foreign currency. Conversely, it may be necessary to sell on the spot market
some of the foreign currency the Fund is obligated to deliver. The projection of
short-term currency market movements is extremely difficult, and the successful
execution of a short-term hedging strategy is highly uncertain. Forward
Contracts involve the risk that anticipated currency movements will not be
predicted accurately, causing a Fund to sustain losses on these contracts and
transaction costs.
At or before the maturity of a Forward Contract requiring a Fund to sell a
currency, the Fund either may sell a portfolio security and use the sale
proceeds to make delivery of the currency or retain the security and offset its
contractual obligation to deliver the currency by purchasing a second contract
pursuant to which the Fund will obtain, on the maturity date, the same amount of
the currency that it is obligated to deliver. Similarly, a Fund may close out a
Forward Contract requiring it to purchase a specified currency by, if its contra
party agrees, entering into a second contract entitling it to sell the same
amount of the same currency on the maturity date of the first contract. The Fund
would realize a gain or loss as a result of entering into such an offsetting
Forward Contract under either circumstance to the extent the exchange rate or
rates between the currencies involved moved between the execution dates of the
first contract and the offsetting contract.
The cost to a Fund of engaging in Forward Contracts varies with factors such as
the currencies involved, the length of the contract period and the market
conditions then prevailing. Because Forward Contracts usually are entered into
on a principal basis, no fees or commissions are involved. The use of Forward
Contracts does not eliminate fluctuations in the prices of the underlying
securities a Fund owns or intends to acquire, but it does establish a rate of
exchange in advance. In addition, while Forward Contracts limit the risk of loss
due to a decline in the value of the hedged currencies, they also limit any
potential gain that might result should the value of the currencies increase.
FOREIGN CURRENCY STRATEGIES -- SPECIAL CONSIDERATIONS
A Fund may use options on foreign currencies, Futures on foreign currencies,
options on Futures on foreign currencies and Forward Contracts to hedge against
movements in the values of the foreign currencies in which the Fund's securities
are denominated. Such currency hedges can protect against price movements in a
security that a Fund owns or intends to acquire that are attributable to changes
in the value of the currency in which it is denominated. Such hedges do not,
however, protect against price movements in the securities that are attributable
to other causes.
A Fund might seek to hedge against changes in the value of a particular currency
when no Futures Contract, Forward Contract or option involving that currency is
available or one of such contracts is more expensive than certain other
contracts. In such cases, the Fund may hedge against price movements in that
currency by entering into a contract on another currency or basket of
currencies, the values of which the Manager believes will have a positive
correlation to the value of the currency being hedged. The risk that movements
in the price of the contract will not correlate perfectly with movements in the
price of the currency being hedged is magnified when this strategy is used.
The value of Futures Contracts, options on Futures Contracts, Forward Contracts
and options on foreign currencies depends on the value of the underlying
currency relative to the U.S. dollar. Because foreign currency transactions
occurring in the interbank market might involve substantially larger amounts
than those involved in the use of Futures Contracts, Forward Contracts or
options, a Fund could be disadvantaged by dealing in the odd lot market
(generally consisting of transactions of less than $1 million) for the
underlying foreign currencies at prices that are less favorable than for round
lots.
There is no systematic reporting of last sale information for foreign currencies
or any regulatory requirements that quotations available through dealers or
other market sources be firm or revised on a timely basis. Quotation information
generally is representative of very large transactions in the interbank market
and thus might not reflect odd-lot transactions where rates might be less
favorable. The interbank market in foreign currencies is a global,
round-the-clock market. To the extent the U.S. options or Futures markets are
closed while the markets for the underlying currencies remain open, significant
price and rate movements might take place in the underlying markets that cannot
be reflected in the markets for the Futures contracts or options until they
reopen.
Settlement of Futures Contracts, Forward Contracts and options involving foreign
currencies might be required to take place within the country issuing the
underlying currency. Thus, a Fund might be required to accept or make delivery
of the underlying foreign currency in accordance with any U.S. or foreign
regulations regarding the maintenance of foreign banking arrangements by U.S.
residents and might be required to pay any fees, taxes and charges associated
with such delivery assessed in the issuing country.
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GT GLOBAL EQUITY FUNDS
COVER
Transactions using Forward Contracts, Futures Contracts and options (other than
options that a Fund has purchased) expose the Fund to an obligation to another
party. A Fund will not enter into any such transactions unless it owns either
(1) an offsetting ("covered") position in securities, currencies or other
options, Forward Contracts or Futures Contracts, or (2) cash, receivables and
short-term debt securities with a value sufficient at all times to cover its
potential obligations not covered as provided in (1) above. Each Fund will
comply with SEC guidelines regarding cover for these instruments and, if the
guidelines so require, set aside cash or liquid securities.
Assets used as cover or held in a segregated account cannot be sold while the
position in the corresponding Forward Contract, Futures Contract or option is
open, unless they are replaced with other appropriate assets. If a large portion
of a Fund's assets is used for cover or otherwise set aside, it could affect
portfolio management or the Fund's ability to meet redemption requests or other
current obligations.
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RISK FACTORS
- --------------------------------------------------------------------------------
ILLIQUID SECURITIES
A Fund may invest up to 15% of its net assets in illiquid securities. Securities
may be considered illiquid if a Fund cannot reasonably expect within seven days
to sell the securities for approximately the amount at which the Fund values
such securities. See "Investment Limitations." The sale of illiquid securities,
if they can be sold at all, generally will require more time and result in
higher brokerage charges or dealer discounts and other selling expenses than the
sale of liquid securities such as securities eligible for trading on U.S.
securities exchanges or in the OTC markets. Moreover, restricted securities,
which may be illiquid for purposes of this limitation, often sell, if at all, at
a price lower than similar securities that are not subject to restrictions on
resale.
Illiquid securities include those that are subject to restrictions contained in
the securities laws of other countries. However, securities that are freely
marketable in the country where they are principally traded, but would not be
freely marketable in the United States, will not be considered illiquid. Where
registration is required, a Fund may be obligated to pay all or part of the
registration expenses and a considerable period may elapse between the time of
the decision to sell and the time the Fund may be permitted to sell a security
under an effective registration statement. If, during such a period, adverse
market conditions were to develop, the Fund might obtain a less favorable price
than prevailed when it decided to sell.
Not all restricted securities are illiquid. In recent years a large
institutional market has developed for certain securities that are not
registered under the Securities Act of 1933, as amended (the "1933 Act"),
including private placements, repurchase agreements, commercial paper, foreign
securities and corporate bonds and notes. These instruments are often restricted
securities because the securities are sold in transactions not requiring
registration. Institutional investors generally will not seek to sell these
instruments to the general public, but instead will often depend either on an
efficient institutional market in which such unregistered securities can be
readily resold or on an issuer's ability to honor a demand for repayment.
Therefore, the fact that there are contractual or legal restrictions on resale
to the general public or certain institutions is not dispositive of the
liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the registration
requirements of the 1933 Act for resales of certain securities to qualified
institutional buyers. Institutional markets for restricted securities have
developed as a result of Rule 144A, providing both readily ascertainable values
for restricted securities and the ability to liquidate an investment to satisfy
share redemption orders. Such markets include automated systems for the trading,
clearance and settlement of unregistered securities of domestic and foreign
issuers, such as the PORTAL System sponsored by the National Association of
Securities Dealers, Inc. An insufficient number of qualified institutional
buyers interested in purchasing Rule 144A-eligible restricted securities held by
a Fund, however, could affect adversely the marketability of such portfolio
securities and the Fund might be unable to dispose of such securities promptly
or at favorable prices.
With respect to liquidity determinations generally, the Board has the ultimate
responsibility for determining whether specific securities, including restricted
securities eligible for resale to qualified institutional buyers pursuant to
Rule 144A under the 1933 Act, are liquid or illiquid. The Board has delegated
the function of making day-to-day determinations of liquidity to the Manager in
accordance with procedures approved by the Board. The Manager takes into account
a number of factors in reaching liquidity decisions, including: (i) the
frequency of trading in the security; (ii) the number of dealers who make quotes
for the security; (iii) the number of dealers who have undertaken to make a
market in the security; (iv) the number of other potential purchasers; and (v)
the nature of the security and how trading is effected (e.g., the time needed to
sell the security, how offers are solicited, and the mechanics of transfer.) The
Manager monitors the liquidity of securities in each Fund's portfolio and
periodically reports such determinations to the Board.
FOREIGN SECURITIES
POLITICAL, SOCIAL AND ECONOMIC RISKS. Investing in securities of non-U.S.
companies may entail additional risks due to the potential political, social and
economic instability of certain countries and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment, convertibility of currencies into U.S. dollars and on repatriation
of capital invested. In the event of such expropriation, nationalization or
other confiscation by any country, a Fund could lose its entire investment in
any such country.
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RELIGIOUS, POLITICAL AND ETHNIC INSTABILITY. Certain countries in which a
Fund may invest may have groups that advocate radical religious or revolutionary
philosophies or support ethnic independence. Any disturbance on the part of such
individuals could carry the potential for widespread destruction or confiscation
of property owned by individuals and entities foreign to such country and could
cause the loss of the Fund's investment in those countries. Instability may also
result from, among other things: (i) authoritarian governments or military
involvement in political and economic decision-making, including changes in
government through extra-constitutional means; (ii) popular unrest associated
with demands for improved political, economic and social conditions; and (iii)
hostile relations with neighboring or other countries. Such political, social
and economic instability could disrupt the principal financial markets in which
a Fund invests and adversely affect the value of its assets.
FOREIGN INVESTMENT RESTRICTIONS. Certain countries prohibit or impose
substantial restrictions on investments in their capital markets, particularly
their equity markets, by foreign entities such as a Fund. These restrictions or
controls may at times limit or preclude investment in certain securities and may
increase the cost and expenses of the Fund. For example, certain countries
require prior governmental approval before investments by foreign persons may be
made, or may limit the amount of investment by foreign persons in a particular
company, or limit the investment by foreign persons to only a specific class of
securities of a company that may have less advantageous terms than securities of
the company available for purchase by nationals. Moreover, the national policies
of certain countries may restrict investment opportunities in issuers or
industries deemed sensitive to national interests. In addition, some countries
require governmental approval for the repatriation of investment income, capital
or the proceeds of securities sales by foreign investors. In addition, if there
is a deterioration in a country's balance of payments or for other reasons, a
country may impose restrictions on foreign capital remittances abroad. A Fund
could be adversely affected by delays in, or a refusal to grant, any required
governmental approval for repatriation, as well as by the application to it of
other restrictions on investments.
NON-UNIFORM CORPORATE DISCLOSURE STANDARDS AND GOVERNMENTAL
REGULATION. Foreign companies are subject to accounting, auditing and financial
standards and requirements that differ, in some cases significantly, from those
applicable to U.S. companies. In particular, the assets, liabilities and profits
appearing on the financial statements of such a company may not reflect its
financial position or results of operations in the way they would be reflected
had such financial statements been prepared in accordance with U.S. generally
accepted accounting principles. Most of the securities held by a Fund (other
than the America Mid Cap Fund) will not be registered with the SEC or regulators
of any foreign country, nor will the issuers thereof be subject to the SEC's
reporting requirements. Thus, there will be less available information
concerning most foreign issuers of securities held by a Fund than is available
concerning U.S. issuers. In instances where the financial statements of an
issuer are not deemed to reflect accurately the financial situation of the
issuer, the Manager will take appropriate steps to evaluate the proposed
investment, which may include on-site inspection of the issuer, interviews with
its management and consultations with accountants, bankers and other
specialists. There is substantially less publicly available information about
foreign companies than there are reports and ratings published about U.S.
companies and the U.S. government. In addition, where public information is
available, it may be less reliable than such information regarding U.S. issuers.
Issuers of securities in foreign jurisdictions are generally not subject to the
same degree of regulation as are U.S. issuers with respect to such matters as
restrictions on market manipulation, insider trading rules, shareholder proxy
requirements and timely disclosure of information.
CURRENCY FLUCTUATIONS. Because each Fund, other than the America Mid Cap
Fund, under normal circumstances will invest a substantial portion of its total
assets in the securities of foreign issuers that are denominated in foreign
currencies, the strength or weakness of the U.S. dollar against such foreign
currencies will account for a significant part of the Fund's investment
performance. A decline in the value of any particular currency against the U.S.
dollar will cause a decline in the U.S. dollar value of a Fund's holdings of
securities and cash denominated in such currency and, therefore, will cause an
overall decline in the Fund's net asset value and any net investment income and
capital gains derived from such securities to be distributed in U.S. dollars to
shareholders of the Fund. Moreover, if the value of the foreign currencies in
which a Fund receives its income declines relative to U.S. dollars between the
receipt of income and the making of Fund distributions, it may be required to
liquidate securities in order to make distributions if it has insufficient cash
in U.S. dollars to meet distribution requirements.
The rate of exchange between the U.S. dollar and other currencies is determined
by several factors, including the supply and demand for particular currencies,
central bank efforts to support particular currencies, the relative movement of
interest rates and pace of business activity in the other countries and the
United States, and other economic and financial conditions affecting the world
economy.
Although each Fund values its assets daily in terms of U.S. dollars, they do not
intend to convert their holdings of foreign currencies into U.S. dollars on a
daily basis. Each Fund will do so, from time to time, and investors should be
aware of the
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costs of currency conversion. Although foreign exchange dealers do not charge a
fee for conversion, they do realize a profit based on the difference ("spread")
between the prices at which they buy and sell various currencies. Thus, a dealer
may offer to sell a foreign currency to a Fund at one rate, while offering a
lesser rate of exchange should a Fund desire to sell that currency to the
dealer.
ADVERSE MARKET CHARACTERISTICS. Securities of many foreign issuers may be
less liquid and their prices more volatile than securities of comparable U.S.
issuers. In addition, foreign securities markets and brokers generally are
subject to less governmental supervision and regulation than in the United
States, and foreign securities exchange transactions usually are subject to
fixed commissions, which generally are higher than negotiated commissions on
U.S. transactions. In addition, foreign securities exchange transactions may be
subject to difficulties associated with the settlement of such transactions.
Delays in settlement could result in temporary periods when assets of a Fund are
uninvested and no return is earned thereon. The inability of a Fund to make
intended security purchases due to settlement problems could cause the Fund to
miss attractive investment opportunities. Inability to dispose of a portfolio
security due to settlement problems either could result in losses to a Fund due
to subsequent declines in value of the portfolio security or, if a Fund has
entered into a contract to sell the security, could result in possible liability
to the purchaser. The Manager will consider such difficulties when determining
the allocation of each Fund's assets, although the Manager does not believe that
such difficulties will have a material adverse effect on the Funds' portfolio
trading activities.
The Funds may use foreign custodians, which may involve risks in addition to
those related to the use of U.S. custodians. Such risks include uncertainties
relating to: (i) determining and monitoring the financial strength, reputation
and standing of the foreign custodian; (ii) maintaining appropriate safeguards
to protect the Funds' investments and (iii) obtaining and enforcing judgments
against such custodians.
WITHHOLDING TAXES. A Fund's net investment income from foreign issuers may
be subject to non-U.S. withholding taxes by the foreign issuer's country,
thereby reducing the Fund's net investment income or delaying the receipt of
income whose those taxes may be recaptured. See "Taxes."
CONCENTRATION. To the extent a Fund invests a significant portion of its
assets in securities of issuers located in a particular country or region of the
world, it may be subject to greater risks and may experience greater volatility
than a fund that is more broadly diversified geographically.
SPECIAL CONSIDERATIONS AFFECTING WESTERN EUROPEAN COUNTRIES. The countries
that are members of the European Economic Community ("Common Market") (Belgium,
Denmark, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands,
Portugal, Spain and the United Kingdom) eliminated certain import tariffs and
quotas and other trade barriers with respect to one another over the past
several years. The Manager believes that this deregulation should improve the
prospects for economic growth in many Western European countries. Among other
things, the deregulation could enable companies domiciled in one country to
avail themselves of lower labor costs existing in other countries. In addition,
this deregulation could benefit companies domiciled in one country by opening
additional markets for their goods and services in other countries. Since,
however, it is not clear what the exact form or effect of these Common Market
reforms will be on business in Western Europe, it is impossible to predict the
long-term impact of the implementation of these programs on the securities owned
by a Fund.
SPECIAL CONSIDERATIONS AFFECTING RUSSIA AND EASTERN EUROPEAN
COUNTRIES. Investing in Russia and Eastern European countries involves a high
degree of risk and special considerations not typically associated with
investing in the U.S. securities markets and should be considered highly
speculative. Such risks include: (1) delays in settling portfolio transactions
and risk of loss arising out of the system of share registration and custody;
(2) the risk that it may be impossible or more difficult than in other countries
to obtain and/or enforce a judgment; (3) pervasiveness of corruption and crime
in the economic system; (4) currency exchange rate volatility and the lack of
available currency hedging instruments; (5) higher rates of inflation (including
the risk of social unrest associated with periods of hyper-inflation) and high
unemployment; (6) controls on foreign investment and local practices disfavoring
foreign investors and limitations on repatriation of invested capital, profits
and dividends and on a Fund's ability to exchange local currencies for U.S.
dollars; (7) political instability and social unrest and violence; (8) the risk
that the governments of Russia and Eastern European countries may decide not to
continue to support the economic reform programs implemented recently and may
follow radically different political and/or economic policies to the detriment
of investors, including non-market-oriented policies such as the support of
certain industries at the expense of other sectors or investors, or a return to
the centrally planned economy that existed when such countries had a communist
form of government; (9) the financial condition of companies in these countries,
including large amounts of inter-company debt that may create a payments crisis
on a national scale; (10) dependency on exports and the corresponding importance
of international trade; (11) the risk that
Statement of Additional Information Page 16
<PAGE>
GT GLOBAL EQUITY FUNDS
the tax system in these countries will not be reformed to prevent inconsistent,
retroactive and/or exorbitant taxation; and (12) the underdeveloped nature of
the securities markets.
SPECIAL CONSIDERATIONS AFFECTING PACIFIC REGION COUNTRIES. Many Pacific
region countries may be subject to a greater degree of social, political and
economic instability than is the case in the United States. Such instability may
result from, among other things, the following: (i) authoritarian governments or
military involvement in political and economic decision making, and changes in
government through extra-constitutional means; (ii) popular unrest associated
with demands for improved political, economic and social conditions; (iii)
internal insurgencies; (iv) hostile relations with neighboring countries; and
(v) ethnic, religious and racial disaffection. Such social, political and
economic instability could significantly disrupt the principal financial markets
in which a Fund invests and adversely affect the value of a Fund's assets. In
addition, there may be the possibility of asset expropriations or future
confiscatory levels of taxation affecting the Funds.
Several Pacific region countries have or in the past have had hostile
relationships with neighboring nations or have experienced internal insurgency.
Thailand has experienced border conflicts with Laos and Cambodia, and India is
engaged in border disputes with several of its neighbors, including China and
Pakistan. An uneasy truce exists between North Korea and South Korea, and the
recurrence of hostilities remains possible. Reunification of North Korea and
South Korea could have a detrimental effect on the economy of South Korea. Also,
China continues to claim sovereignty over Taiwan and recently has conducted
military maneuvers near Taiwan.
The economies of most Pacific region countries are heavily dependent upon
international trade and are accordingly affected by protective trade barriers
and the economic conditions of their trading partners, principally the United
States, Japan, China and the European Community. The enactment by the United
States or other principal trading partners of protectionist trade legislation,
reduction of foreign investment in the local economies and general declines in
the international securities markets could have a significant adverse effect
upon the securities markets of Pacific region countries. In addition, the
economies of some of the Asia Pacific region countries, Australia and Indonesia,
for example, are vulnerable to weakness in world prices for their commodity
exports, including crude oil.
China is scheduled to assume sovereignty over Hong Kong on July 1, 1997.
Although China has committed by treaty to preserve the economic and social
freedoms enjoyed in Hong Kong for fifty years after regaining control of Hong
Kong, the continuation of the current form of the economic system in Hong Kong
after the reversion will depend on the actions of the government of China. In
addition, such reversion has increased sensitivity in Hong Kong to political
developments and statements by public figures in China. Business confidence in
Hong Kong, therefore, can be significantly affected by such developments and
statements, which in turn can affect markets and business performance.
In addition, the reversion of Hong Kong also presents a risk that the Hong Kong
dollar will be devalued and a risk of possible loss of investor confidence in
the Hong Kong markets and dollar. However, factors exist that are likely to
mitigate this risk. First, China has stated its intention to implement a "one
country, two systems" policy, which would preserve monetary sovereignty and
leave control in the hands of the Hong Kong Monetary Authority ("HKMA").
Second, fixed rate parity with the U.S. dollar is seen as critical to
maintaining investors' confidence in the transition to Chinese rule and,
therefore, it is anticipated that, in the event international investors lose
confidence in Hong Kong dollar assets, the HKMA would intervene to support the
currency, though such intervention cannot be assured. Third, Hong Kong's and
China's sizable combined foreign exchange reserve may be used to support the
value of the Hong Kong dollar, provided that China does not appropriate such
reserves for other uses, which is not anticipated, but cannot be assured.
Finally, China would be likely to experience significant adverse political and
economic consequences if confidence in the Hong Kong dollar and the territory
assets were to be endangered.
SPECIAL CONSIDERATIONS AFFECTING LATIN AMERICAN COUNTRIES. Most Latin
American countries have experienced substantial, and in some periods extremely
high, rates of inflation for many years. Inflation and rapid fluctuations in
inflation rates have had and may continue to have very negative effects on the
economies and securities markets of certain Latin American countries. Certain
Latin American countries are also among the largest debtors to commercial banks
and foreign governments. At times certain Latin American countries have declared
moratoria on the payment of principal and/or interest on external debt. In
addition, certain Latin American securities markets have experienced high
volatility in recent years.
Latin American countries may also close certain sectors of their economies to
equity investments by foreigners. Further due to the absence of securities
markets and publicly owned corporations and due to restrictions on direct
investment by foreign entities, investments may only be made in certain Latin
American countries solely or primarily through governmentally approved
investment vehicles or companies.
Statement of Additional Information Page 17
<PAGE>
GT GLOBAL EQUITY FUNDS
Certain Latin American countries may have managed currencies that are maintained
at artificial levels to the U.S. dollar rather than at levels determined by the
market. This type of system can lead to sudden and large adjustments in the
currency which, in turn, can have a disruptive and negative effect on foreign
investors. For example, in late 1994, the value of the Mexican peso lost more
than one-third of its value relative to the U.S. dollar.
SPECIAL CONSIDERATIONS AFFECTING EMERGING MARKETS. Investing in the
securities of companies in emerging markets may entail special risks relating to
potential political and economic instability and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment, convertibility into U.S. dollars and on repatriation of capital
invested. In the event of such expropriation, nationalization or other
confiscation by any country, a Fund could lose its entire investment in any such
country.
Emerging securities markets are substantially smaller, less developed, less
liquid and more volatile than the major securities markets. The limited size of
emerging securities markets and limited trading value in issuers compared to the
volume of trading in U.S. securities could cause prices to be erratic for
reasons apart from factors that affect the quality of the securities. For
example, limited market size may cause prices to be unduly influenced by traders
who control large positions. Adverse publicity and investors' perceptions,
whether or not based on fundamental analysis, may decrease the value and
liquidity of portfolio securities, especially in these markets. In addition,
securities traded in certain emerging markets may be subject to risks due to the
inexperience of financial intermediaries, a lack of modern technology, the lack
of a sufficient capital base to expand business operations, and the possibility
of permanent or temporary termination of trading.
Settlement mechanisms in emerging securities markets may be less efficient and
reliable than in more developed markets. In such emerging markets there may be
share registration and delivery delays or failures.
Many emerging market countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates and corresponding currency devaluations have had
and may continue to have negative effects on the economies and securities
markets of certain emerging market countries.
DEBT SECURITIES
Each Fund is permitted to purchase investment grade debt securities. In
selecting debt securities for investment, the Manager reviews and monitors the
creditworthiness of each issuer and issue and analyzes interest rate trends and
specific developments that may affect individual issuers, in addition to relying
on ratings assigned by S&P, Moody's or another nationally recognized statistical
rating organization ("NRSRO") as indicators of quality. Debt securities rated
Baa by Moody's or BBB by S&P are investment grade, although Moody's considers
securities rated Baa to have speculative characteristics. Changes in economic
conditions or other circumstances are more likely to lead to a weakened capacity
for such securities to make principal and interest payments than is the case for
higher grade debt securities. Each Fund is also permitted to purchase debt
securities that are not rated by S&P, Moody's or another NRSRO, but that the
Manager determines to be of comparable quality to that of rated securities in
which the Fund may invest. Such securities are included in the computation of
any percentage limitations applicable to the comparable rated securities.
Ratings of debt securities represent the rating agencies' opinions regarding
their quality, are not a guarantee of quality and may be reduced after a Fund
has acquired the security. The Manager will consider such an event in
determining whether a Fund should continue to hold the security but is not
required to dispose of it. Credit ratings attempt to evaluate the safety of
principal and interest payments and do not reflect an assessment of the
volatility of the security's market value or the liquidity of an investment in
the security. Also, NRSROs may fail to make timely changes in credit ratings in
response to subsequent events, so that an issuer's current financial condition
may be better or worse than the rating indicates. For a description of Moody's
and S&P ratings, see "Description of Debt Ratings" herein.
Statement of Additional Information Page 18
<PAGE>
GT GLOBAL EQUITY FUNDS
INVESTMENT LIMITATIONS
- --------------------------------------------------------------------------------
Each Fund has adopted the following investment limitations as fundamental
policies that (unless otherwise noted) may not be changed without approval by
the affirmative vote of the lesser of (i) 67% of the Fund's shares represented
at a meeting at which more than 50% of the outstanding shares are represented,
or (ii) more than 50% of the Fund's outstanding shares. No Fund may:
(1) Invest in companies for the purpose of exercising control or
management;
(2) Purchase or sell real estate; provided that a Fund may invest in
securities secured by real estate or interests therein or issued by
companies that invest in real estate or interests therein;
(3) Purchase or sell interests in oil, gas or other mineral exploration
or development programs, except that the Fund may invest in the securities
of companies that engage in these activities;
(4) Purchase or sell commodities or commodity contracts, except that the
Fund may purchase and sell financial and currency futures contracts and
options thereon, and may purchase and sell currency forward contracts,
options on foreign currencies and may otherwise engage in other transactions
in foreign currencies;
(5) Mortgage, pledge or in any other manner transfer as security for any
indebtedness, any of its assets except to secure permitted borrowings.
Collateral arrangements with respect to initial or variation margin for
futures contracts will not be deemed to be a pledge of a Fund's assets;
(6) Borrow money in excess of 33 1/3% of the Fund's total assets
(including the amount borrowed), less all liabilities and indebtedness
(other than borrowing). Transactions involving options, futures contracts,
options on futures contracts and forward currency contracts, and collateral
arrangements relating thereto will not be deemed to be borrowings;
(7) Purchase securities on margin or effect short sales, except that a
Fund may obtain such short-term credits as may be necessary for the
clearance of purchases or sales of securities and except in connection with
the use of options, futures contracts, options thereon or forward currency
contracts. The Funds may make deposits of margin in connection with futures
and forward contracts and options thereon;
(8) Participate on a joint or a joint and several basis in any trading
account in securities. (The "bunching" of orders for the sale or purchase of
marketable portfolio securities with other accounts under the management of
the Manager to save brokerage costs or average prices among them is not
deemed to result in a securities trading account);
(9) Make loans, except that the Fund may purchase debt securities and
enter into repurchase agreements and make loans of portfolio securities;
(10) Purchase or retain the securities of an issuer if, to the Fund's
knowledge, one or more of the Trustees or officers of the Company or the
Manager individually own beneficially more than 1/2 of 1% of the securities
of such issuer and together own beneficially more than 5% of such
securities;
(11) Underwrite securities of other issuers, except to the extent that,
in connection with the disposition of portfolio securities, the Fund may be
deemed an underwriter under federal or state securities laws; and
(12) Invest more than 25% of the value of the Fund's total assets in
securities of issuers conducting their principal business activities in any
one industry, except that this limitation shall not apply to securities
issued or guaranteed as to principal and interest by the U.S. government or
any of its agencies or instrumentalities.
For purposes of the concentration policy contained in limitation (12) above,
each Fund intends to comply with the SEC staff position that securities issued
or guaranteed as to principal and interest by any single foreign government or
any supranational organization are considered to be securities of issuers in the
same industry.
Statement of Additional Information Page 19
<PAGE>
GT GLOBAL EQUITY FUNDS
The following investment limitations of each Fund are not fundamental policies
and may be changed by vote of the Board without shareholder approval. Each Fund
may not:
(1) Invest more than 15% of its net assets in illiquid securities, a
term which means securities that cannot be disposed of within seven days in
the normal course of business at approximately the amount at which the Fund
has valued the securities and includes, among other things, repurchase
agreements maturing in more than seven days;
(2) Borrow money except for temporary or emergency purposes (not for
leveraging) in excess of 33 1/3% of the value of the Fund's total assets; or
(3) Enter into a futures contract, an option on a future contract or an
option on foreign currency traded on a CFTC-regulated exchange, in each case
other than for BONA FIDE hedging purposes (as defined by the CFTC), if the
aggregate initial margin and premiums required to establish all of these
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund
has entered into.
----------------------------
If a percentage restriction on investment or utilization of assets in an
investment policy or limitation is adhered to at the time an investment is made,
a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of a Fund's investment policies or restrictions. A Fund
may exchange securities, exercise conversion or subscription rights, warrants,
or other rights to purchase common stock or other equity securities and may
hold, except to the extent limited by the 1940 Act, any such securities so
acquired without regard to the Fund's investment policies and restrictions. The
original cost of the securities so acquired will be included in any subsequent
determination of a Fund's compliance with the investment percentage limitations
referred to above and in the Prospectus.
Statement of Additional Information Page 20
<PAGE>
GT GLOBAL EQUITY FUNDS
EXECUTION OF PORTFOLIO
TRANSACTIONS
- --------------------------------------------------------------------------------
Subject to policies established by the Board, the Manager is responsible for the
execution of the Funds' portfolio transactions and the selection of
brokers/dealers who execute such transactions on behalf of the Funds. In
executing portfolio transactions, the Manager seeks the best net results for
each Fund, taking into account such factors as the price (including the
applicable brokerage commission or dealer spread), size of the order, difficulty
of execution and operational facilities of the firm involved. Although the
Manager generally seeks reasonably competitive commission rates and spreads,
payment of the lowest commission or spread is not necessarily consistent with
the best net results. While the Funds may engage in soft dollar arrangements for
research services, as described below, the Funds have no obligation to deal with
any broker/dealer or group of broker/dealers in the execution of portfolio
transactions.
Consistent with the interests of the Funds, the Manager may select brokers to
execute the Funds' portfolio transactions on the basis of the research services
they provide to the Manager for its use in managing the Funds and its other
advisory accounts. Such services may include furnishing analysis, reports and
information concerning issuers, industries, securities, geographic regions,
economic factors and trends, portfolio strategy, and performance of accounts;
and effecting securities transactions and performing functions incidental
thereto (such as clearance and settlement). Research and brokerage services
received from such broker is in addition to, and not in lieu of, the services
required to be performed by the Manager under the Management Contract (defined
below). A commission paid to such broker may be higher than that which another
qualified broker would have charged for effecting the same transaction, provided
that the Manager determines in good faith that such commission is reasonable in
terms either of that particular transaction or the overall responsibility of the
Manager to the Funds and its other clients and that the total commissions paid
by each Fund will be reasonable in relation to the benefits received by the
Funds over the long term. Research services may also be received from dealers
who execute Fund transactions in OTC markets.
The Manager may allocate brokerage transactions to broker/dealers who have
entered into arrangements under which the broker/dealer allocates a portion of
the commissions paid by the Fund toward payment of the Fund's expenses, such as
transfer agent and custodian fees.
Investment decisions for each Fund 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 one or more Funds. In such cases,
simultaneous transactions may occur. Purchases or sales are then allocated as to
price or amount in a manner deemed fair and equitable to all accounts involved.
While in some cases this practice could have a detrimental effect upon the price
or value of the security as far as a Fund is concerned, in other cases the
Manager believes that coordination and the ability to participate in volume
transactions will be beneficial to the Funds.
Under a policy adopted by the Board, and subject to the policy of obtaining the
best net results, the Manager may consider a broker/dealer's sale of the shares
of the Funds and the other funds for which the Manager serves as investment
manager and/or administrator in selecting broker/dealers for the execution of
portfolio transactions. This policy does not imply a commitment to execute
portfolio transactions through all broker/dealers that sell shares of the Funds
and such other funds.
Each Fund contemplates purchasing most foreign equity securities in OTC markets
or stock exchanges located in the countries in which the respective principal
offices of the issuers of the various securities are located, if that is the
best available market. The fixed commissions paid in connection with most such
foreign stock transactions generally are higher than negotiated commissions on
U.S. transactions. There generally is less government supervision and regulation
of foreign stock exchanges and brokers than in the United States. Foreign
security settlements may in some instances be subject to delays and related
administrative uncertainties.
Foreign equity securities may be held by a Fund in the form of ADRs, ADSs, EDRs,
CDRs or securities convertible into foreign equity securities. ADRs, ADSs, EDRs
and CDRs may be listed on stock exchanges, or traded in the OTC markets in the
United States or Europe, as the case may be. ADRs, like other securities traded
in the United States, will be subject to
Statement of Additional Information Page 21
<PAGE>
GT GLOBAL EQUITY FUNDS
negotiated commission rates. The foreign and domestic debt securities and money
market instruments in which the Funds may invest are generally traded in the OTC
markets.
Each Fund 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 Board 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.
For the fiscal year ended December 31, 1994, the Europe Fund paid to LGT Bank in
Liechtenstein (Deutschland) GmbH and LGT Bank in Liechtenstein AG, each an
"affiliated" broker as defined in the 1940 Act, aggregate brokerage commissions
of $58,346 and $26,599, respectively, for transactions involving purchases and
sales of portfolio securities which represented 2.67% and 1.22%, respectively,
of the total brokerage commissions paid by the Europe Fund, and 1.20% and 0.71%,
respectively, of the aggregate dollar amount of transactions involving payment
of commissions by the Europe Fund. For the fiscal year ended December 31, 1995,
the Europe Fund paid to LGT Bank in Liechtenstein AG and LGT Bank in
Liechtenstein (Zurich), each an "affiliated" broker, aggregate brokerage
commissions of $9,529 and $16,250, respectively, for transactions involving
purchases and sales of portfolio securities.
For the fiscal year ended December 31, 1995, the International Fund paid to LGT
Bank in Liechtenstein AG aggregate brokerage commissions of $1,475 for
transactions involving purchases and sales of portfolio securities which
represented 0.08% of the total brokerage commissions paid by the International
Fund and 0% of the aggregate dollar amount of transactions involving payment of
commissions by the International Fund. For the fiscal year ended December 31,
1996, the International Fund paid to LGT Bank in Liechtenstein (Deutschland)
Gmbh and LGT Bank in Liechtenstein AG aggregate brokerage commissions of $7,562
and $3,918, respectively, for transactions involving purchases and sales of
portfolio securities which represented 0% and 0%, respectively, of the total
brokerage commissions paid by the International Fund, and 0% and 0%,
respectively, of the aggregate dollar amount of transactions involving payment
of commissions by the International Fund. For the fiscal year ended December 31,
1996, the Worldwide Fund paid to LGT Bank in Liechtenstein (Deutschland) Gmbh
aggregate brokerage commissions of $361.87 for transactions involving purchases
and sales of portfolio securities which represented 0% of the total brokerage
commissions paid by the Worldwide Fund, and 0% of the aggregate dollar amount of
the transactions involving payment of commissions by the Worldwide Fund.
Aggregate brokerage commissions paid by the Funds for their three most recent
fiscal years were:
<TABLE>
<CAPTION>
FUND 1996 1995 1994
- -------------------------------------------------------------------------- ------------- ------------- -------------
<S> <C> <C> <C>
America Mid Cap Fund...................................................... $ 2,760,768 $ 878,569 $ 1,082,311
Europe Fund............................................................... $ 2,711,139 $ 3,877,784 $ 2,185,831
International Fund........................................................ $ 1,496,178 $ 1,889,228 $ 1,090,763
Japan Fund................................................................ $ 253,623 $ 440,117 $ 838,666
Pacific Fund.............................................................. $ 5,151,533 $ 3,310,887 $ 2,746,761
Worldwide Fund............................................................ $ 792,165 $ 1,007,167 $ 954,962
</TABLE>
PORTFOLIO TRADING AND TURNOVER
Although the Funds generally do not intend to trade for short-term profits, the
securities held by a Fund will be sold whenever the Manager believes it is
appropriate to do so, without regard to the length of time a particular security
may have been held. Portfolio turnover rate is calculated by dividing the lesser
of sales or purchases of portfolio securities by each Fund's average month-end
portfolio sales, excluding short-term investments. The portfolio turnover rate
will not be a limiting factor when the Manager deems portfolio changes
appropriate. Higher portfolio turnover involves correspondingly greater
brokerage commissions and other transaction costs that a Fund will bear directly
and may result in the realization of net capital gains that are taxable when
distributed to the Fund's shareholders. The portfolio turnover rates for the
fiscal years ended December 31, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
FUND 1996 1995
- ------------------------------------------------------------------------------------------------------ ---------- ----------
<S> <C> <C>
America Mid Cap Fund.................................................................................. 253% 71%
Europe Fund........................................................................................... 123% 108%
International Fund.................................................................................... 74% 75%
Japan Fund............................................................................................ 31% 67%
Pacific Fund.......................................................................................... 93% 63%
Worldwide Fund........................................................................................ 80% 113%
</TABLE>
Statement of Additional Information Page 22
<PAGE>
GT GLOBAL EQUITY FUNDS
TRUSTEES AND EXECUTIVE OFFICERS
- --------------------------------------------------------------------------------
The Company's Trustees and Executive Officers are listed below.
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
William J. Guilfoyle*, 38 Director, LGT Asset Management, Inc. since 1996; Director, G.T. Insurance Agency ("G.T.
Trustee, Chairman of the Board and Insurance") since 1996; Director, Liechtenstein Global Trust AG (holding company of the
President various international LGT companies) Advisory Board since January 1996; President, GT
50 California Street Global since 1995; President and Chief Executive Officer, G.T. Insurance since 1995;
San Francisco, CA 94111 Director, Liechtenstein Global Trust AG from 1995 to January 1996; Senior Vice President
and Director, Sales and Marketing, G.T. Insurance from April 1995 to November 1995; Vice
President and Director of Marketing, GT Global from 1987 to 1995; Senior Vice President,
Retail Marketing, G.T. Insurance from 1993 to 1995; and Vice President, G.T. Insurance
from 1992 to 1993. Mr. Guilfoyle also is a director or trustee of each of the other
investment companies registered under the 1940 Act that is managed or administered by the
Manager.
C. Derek Anderson, 55 Chief Executive Officer, Anderson Capital Management, Inc.; Chairman and Chief Executive
Trustee Officer, Plantagenet Holdings, Ltd. from 1991 to present; Director, Munsingwear, Inc.; and
220 Sansome Street Director, American Heritage Group Inc. and various other companies. Mr. Anderson also is a
Suite 400 director or trustee of each of the other investment companies registered under the 1940
San Francisco, CA 94104 Act that is managed or administered by the Manager.
Frank S. Bayley, 57 Partner, Baker & McKenzie (a law firm); Director and Chairman, C.D. Stimson Company (a
Trustee private investment company). Mr. Bayley also is a director or trustee of each of the other
Two Embarcadero Center investment companies registered under the 1940 Act that is managed or administered by the
Suite 2400 Manager.
San Francisco, CA 94111
Arthur C. Patterson, 53 Managing Partner, Accel Partners (a venture capital firm). He also serves as a director of
Trustee various computing and software companies. Mr. Patterson also is a director or trustee of
One Embarcadero Center each of the other investment companies registered under the 1940 Act that is managed or
Suite 3820 administered by the Manager.
San Francisco, CA 94111
Ruth H. Quigley, 61 Private investor; and President, Quigley Friedlander & Co., Inc. (a financial advisory
Trustee services firm) from 1984 to 1986. Ms. Quigley also is a director or trustee of each of the
1055 California Street other investment companies registered under the 1940 Act that is managed or administered
San Francisco, CA 94108 by the Manager.
Robert G. Wade, Jr.*, 69 Consultant to the Manager; Chairman of the Board of Chancellor Capital Management, Inc.
Trustee from January 1995 to October 1996; President, Chief Executive Officer and Chairman of the
1166 Avenue of the Americas Board of Chancellor Capital Management, Inc. from 1988 to January 1995.
New York, NY 10036
</TABLE>
- --------------
* Mr. Guilfoyle and Mr. Wade are "interested persons" of the Company as
defined by the 1940 Act due to their affiliation with the LGT companies.
Statement of Additional Information Page 23
<PAGE>
GT GLOBAL EQUITY FUNDS
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
James R. Tufts, 38 Chief Information Officer for the Manager since October 1996; President,
Vice President and Chief GT Services since 1995; Senior Vice President -- Finance and
Financial Officer Administration, GT Global, GT Services and G.T. Insurance from 1994 to
50 California Street 1995; Senior Vice President -- Finance and Administration, the Manager
San Francisco, CA 94111 from 1994 to October 1996; Vice President -- Finance, the Manager, GT
Global and GT Services from 1990 to 1994; Vice President -- Finance,
G.T. Insurance from 1992 to 1994; and Director, the Manager, GT Global
and GT Services since 1991.
Kenneth W. Chancey, 51 Vice President -- Mutual Fund Accounting, the Manager since 1992; and
Vice President and Principal Vice President, Putnam Fiduciary Trust Company from 1989 to 1992.
Accounting Officer
50 California Street
San Francisco, CA 94111
Helge K. Lee, 50 Executive Vice President, Asset Management Division, Liechtenstein
Vice President and Secretary Global Trust since October 1996; Senior Vice President, the Manager, GT
1166 Avenue of the Americas Global, GT Services and G.T. Insurance from February 1996 to October
New York, NY 10036 1996; Vice President, the Manager, the Manager, GT Global, GT Services
and G.T. Insurance from May 1994 to February 1996; General Counsel, the
Manager, the Manager, GT Global, GT Services and G.T. Insurance from May
1994 to October 1996; Secretary, the Manager, the Manager, GT Global, GT
Services and G.T. Insurance from May 1994 to October 1996; Senior Vice
President, General Counsel and Secretary, Strong/Corneliuson Management,
Inc.; and Secretary, each of the Strong Funds from October 1991 to May
1994.
</TABLE>
------------------------------
The Board has a Nominating and Audit Committee, comprised of Ms. Quigley and
Messrs. Anderson, Bayley and Patterson, which is responsible for nominating
persons to serve as Trustees, reviewing audits of the Company and the Funds and
recommending firms to serve as independent auditors of the Company. Each of the
Trustees and officers of the Company is also a director and officer of G.T.
Investment Portfolios, Inc., G.T. Investment Funds, Inc., G.T. Global Developing
Markets Fund, Inc. and G.T. Global Floating Rate Fund, Inc., and a Trustee and
officer of G.T. Global Eastern Europe Fund, G.T. Global Variable Investment
Trust, G.T. Global Variable Investment Series, Global High Income Portfolio,
Global Investment Portfolio and Floating Rate Portfolio, which also are
registered investment companies managed by the Manager. Each Trustee and officer
serves in total as a Director and or Trustee and officer, respectively, of 12
registered investment companies with 41 series managed or administered by the
Manager. The Company pays each Trustee who is not a director, officer or
employee of the Manager or any affiliated company $5,000 per annum plus $300 per
Fund for each meeting of the Board attended by the Trustee, and reimburses
travel and other expenses incurred in connection with attendance at such
meetings. Other Trustees and officers receive no compensation or expense
reimbursements from the Company. For the fiscal year ended December 31, 1996,
the Company paid Mr. Anderson, Mr. Bayley, Mr. Patterson and Ms. Quigley, who
are not directors, officers or employees of the Manager or any affiliated
company, total compensation of $18,150, $18,150, $16,350 and $18,150,
respectively, for their services as Trustees. For the year ended December 31,
1996, Mr. Anderson, Mr. Bayley, Mr. Patterson and Ms. Quigley received total
compensation of $87,600, $87,600, $80,100 and $87,600, respectively, from the
investment companies managed or administered by the Manager for which he or she
serves as a director or trustee. Fees and expenses disbursed to the Trustees
contained no accrued or payable pension or retirement benefits. As of the date
of this Statement of Additional Information, the officers and Trustees and their
families as a group owned in the aggregate beneficially or of record less than
1% of the outstanding shares of any Fund.
Statement of Additional Information Page 24
<PAGE>
GT GLOBAL EQUITY FUNDS
MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES
The Manager serves as each Fund's investment manager and administrator under an
Investment Management and Administration Contract ("Management Contract")
between the Company and the Manager. As investment manager and administrator,
the Manager makes all investment decisions for each Fund and administers each
Fund's affairs. Among other things, the Manager furnishes the services and pays
the compensation and travel expenses of persons who perform the executive,
administrative, clerical and bookkeeping functions of the Company and the Funds
and provides suitable office space and necessary small office equipment and
utilities. The America Fund pays the Manager investment management and
administration fees, computed daily and paid monthly, based on its average daily
net assets, at the annualized rate of .725% on the first $500 million, .70% on
the next $500 million, .675% on the next $500 million, and .65% on amounts
thereafter. Each of the other Funds pay the Manager investment management and
administration fees, computed daily and paid monthly, based on its average daily
net assets, at the annualized rate of .975% on the first $500 million, .95% on
the next $500 million, .925% on the next $500 million, and .90% on amounts
thereafter.
The Management Contract may be renewed for additional one-year terms with
respect to each Fund, provided that any such renewal has been specifically
approved at least annually by: (i) the Board or the vote of a majority of the
Fund's outstanding voting securities (as defined in the 1940 Act), and (ii) a
majority of Trustees who are not parties to the Management Contract or
"interested persons" of any such party (as defined in the 1940 Act), cast in
person at a meeting called for the specific purpose of voting on such approval.
With respect to any Fund either the Company or the Manager may terminate the
Management Contract without penalty upon sixty (60) days' written notice to the
other party. The Management Contract terminates automatically in the event of
its assignment (as defined in the 1940 Act).
The amounts of investment management and administration fees paid by each Fund
to the Manager during the Funds' three most recent fiscal years were as follows:
<TABLE>
<CAPTION>
FUND 1996 1995 1994
- ------------------------------------------------------------ --------------- --------------- ---------------
<S> <C> <C> <C>
America Mid Cap Fund........................................ $ 4,982,969 $ 4,425,913 $ 1,283,893
Europe Fund................................................. $ 5,416,280 $ 6,161,265 $ 8,319,087
International Fund.......................................... $ 3,034,522 $ 4,027,923 $ 5,368,669
Japan Fund.................................................. $ 1,367,702 $ 1,167,576 $ 1,345,064
Pacific Fund................................................ $ 5,260,774 $ 5,176,333 $ 5,563,245
Worldwide Fund.............................................. $ 1,885,798 $ 2,050,983 $ 3,355,681
</TABLE>
DISTRIBUTION SERVICES
Each Fund's Advisor Class shares are offered continuously through the Funds'
principal underwriter and distributor, GT Global, on a "best efforts" basis
without a sales charge or a contingent deferred sales charge.
TRANSFER AGENCY AND ACCOUNTING AGENCY SERVICES
The Transfer Agent has been retained by the Funds to perform shareholder
servicing, reporting and general transfer agent functions for the Funds. For
these services, the Transfer Agent receives an annual maintenance fee of $17.50
per account, a new account fee of $4.00 per account, a per transaction fee of
$1.75 for all transactions other than exchanges and a per exchange fee of $2.25.
The Transfer Agent also is reimbursed by the Funds for its out-of-pocket
expenses for such items as postage, forms, telephone charges, stationery and
office supplies.
The Manager also serves as each Fund's pricing and accounting agent. For the
fiscal years ended December 31, 1995 and December 31, 1996, the accounting
services fees paid by the America Mid Cap Fund, Europe Fund, International Fund,
Japan Fund, Pacific Fund and Worldwide Fund were $79,918 and $173,767, $62,660
and $139,442, $40,655 and $77,934, $14,483 and $35,119, $53,724 and $135,182,
and $22,092 and $48,430, respectively.
EXPENSES OF THE FUNDS
Each Fund pays all expenses not assumed by the Manager, GT Global and other
agents. These expenses include, in addition to the advisory, distribution,
transfer agency, pricing and accounting agency and brokerage fees discussed
above, legal and audit expenses, custodian fees, trustees' fees, organizational
fees, fidelity bond and other insurance premiums,
Statement of Additional Information Page 25
<PAGE>
GT GLOBAL EQUITY FUNDS
taxes, extraordinary expenses and expenses of reports and prospectuses sent to
existing investors. Certain of these expenses, such as custodial fees and
brokerage fees generally are higher for non-U.S. securities. The allocation of
general Company expenses, and expenses shared by the Funds with one another, are
made on a basis deemed fair and equitable, which may be based on the relative
net assets of the Funds or the nature of the services performed and relative
applicability to each Fund. Expenditures, including costs incurred in connection
with the purchase or sale of portfolio securities, that are capitalized in
accordance with generally accepted accounting principles applicable to
investment companies, are accounted for as capital items and not as expenses.
The ratio of each Fund's, other than America Fund's, expenses to its relative
net assets can be expected to be higher than the expense ratios of funds
investing solely in domestic securities, since the cost of maintaining the
custody of foreign securities and the rate of investment management fees paid by
each Fund generally are higher than the comparable expenses of such other funds.
- --------------------------------------------------------------------------------
VALUATION OF SHARES
- --------------------------------------------------------------------------------
As described in the Prospectus, each Fund's net asset value per share for each
class of shares is determined at the close of regular trading on the New York
Stock Exchange ("NYSE") (currently, 4:00 P.M. Eastern Time, unless weather,
equipment failure or other factors contribute to an earlier closing time).
Currently, the NYSE is closed on weekends and on certain days relating to the
following holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
July 4th, Labor Day, Thanksgiving Day and Christmas Day.
The Funds' portfolio securities and other assets are valued as follows:
Equity securities, including ADRs, ADSs and EDRs, which are traded on stock
exchanges, are valued at the last sale price on the exchange on which such
securities are traded, as of the close of business on the day the securities are
being valued or, lacking any sales, at the last available bid price. In cases
where securities are traded on more than one exchange, the securities are valued
on the exchange determined by the Manager to be the primary market. Securities
traded in the OTC market are valued at the last available bid price prior to the
time of valuation. The value of each security denominated in a currency other
than U.S. dollars will be translated into U.S. dollars at the prevailing
exchange rate as determined by the Manager on that day.
Long-term debt obligations are valued at the mean of representative quoted bid
or asked prices for such securities or, if such prices are not available, at
prices for securities of comparable maturity, quality and type; however, when
the Manager deems it appropriate, prices obtained for the day of valuation from
a bond pricing service will be used. Short-term debt investments are amortized
to maturity based on their cost, adjusted for foreign exchange translation,
provided that such valuations represent fair value.
Options on indices, securities and currencies purchased by the Funds are valued
at their last bid price in the case of listed options or at the average of the
last bid prices obtained from dealers, unless a quotation from only one dealer
is available, in which case only that dealer's price will be used, in the case
of OTC options. When market quotations for futures and options on futures held
by a Fund are readily available, those positions will be valued based upon such
quotations.
Securities and other assets for which market quotations are not readily
available (including restricted securities that are subject to limitations as to
their sale) are valued at fair value as determined in good faith by or under the
direction of the Board. The valuation procedures applied in any specific
instance are likely to vary from case to case. However, consideration generally
is given to the financial position of the issuer and other fundamental
analytical data relating to the investment and to the nature of the restrictions
on disposition of the securities (including any registration expenses that might
be borne by a Fund in connection with such disposition). In addition, other
factors, such as the cost of the investment, the market value of any
unrestricted securities of the same class (both at the time of purchase and at
the time of valuation), the size of the holding, the prices of any recent
transactions or offers with respect to such securities and any available
analysts' reports regarding the issuer, generally are considered.
The fair value of any other assets is added to the value of all securities
positions to arrive at the value of a Fund's total assets. A Fund's liabilities,
including accruals for expenses, are deducted from its total assets. Once the
value of a Fund's net assets is so determined, that value is then divided by the
total number of shares outstanding (excluding treasury shares), and the result,
rounded to the nearer cent, is the net asset value per share.
Statement of Additional Information Page 26
<PAGE>
GT GLOBAL EQUITY FUNDS
Any assets or liabilities initially expressed in terms of foreign currencies are
translated into U.S. dollars at the official exchange rate or, alternatively, at
the mean of the current bid and asked prices of such currencies against the U.S.
dollar last quoted by a major bank that is a regular participant in the foreign
exchange market or on the basis of a pricing service that takes into account the
quotes provided by a number of such major banks. If none of these alternatives
is available or none is deemed to provide a suitable methodology for converting
a foreign currency into U.S. dollars, the Board, in good faith, will establish a
conversion rate for such currency.
European, Far Eastern or Latin American securities trading may not take place on
all days on which the NYSE is open. Further, trading takes place in Japanese
markets on certain Saturdays and in various foreign markets on days on which the
NYSE is not open. In addition, trading in securities on European and Far Eastern
securities exchanges and OTC markets generally is completed well before the
close of the business day in New York. Consequently, the calculation of the
Funds' net asset values may not take place contemporaneously with the
determination of the prices of securities held by the Funds. Events affecting
the values of portfolio securities that occur between the time their prices are
determined and the close of regular trading on the NYSE will not be reflected in
the Funds' net asset values unless the Manager, under the supervision of the
Board, determines that the particular event would materially affect net asset
value. As a result, a Fund's net asset value may be significantly affected by
such trading on days when a shareholder has no access to the Fund.
- --------------------------------------------------------------------------------
INFORMATION RELATING TO SALES
AND REDEMPTIONS
- --------------------------------------------------------------------------------
PAYMENT AND TERMS OF OFFERING
Payment for Advisor Class shares purchased should accompany the purchase order,
or funds should be wired to the Transfer Agent as described in the Prospectus.
Payment, other than by wire transfer, must be made by check or money order drawn
on a U.S. bank. Checks or money orders must be payable in U.S. dollars.
As a condition of this offering, if an order to purchase either class of shares
is cancelled due to nonpayment (for example, because a check is returned for
"not sufficient funds"), the person who made the order will be responsible for
any loss incurred by a Fund by reason of such cancellation, and if such
purchaser is a shareholder, that Fund shall have the authority as agent of the
shareholder to redeem shares in his or her account at their then-current net
asset value per share to reimburse that Fund for the loss incurred. Investors
whose purchase orders have been cancelled due to nonpayment may be prohibited
from placing future orders.
The Funds reserve the right at any time to waive or increase the minimum
requirements applicable to initial or subsequent investments with respect to any
person or class of persons. An order to purchase shares is not binding on a Fund
until it has been confirmed in writing by the Transfer Agent (or other
arrangements made with the Fund, in the case of orders utilizing wire transfer
of funds, as described above) and payment has been received. To protect existing
shareholders, the Funds reserve the right to reject any offer for a purchase of
shares by any individual.
SALES OUTSIDE THE UNITED STATES
Sales of Fund shares made through brokers outside the United States will be at
net asset value plus a sales commission, if any, established by that broker or
by local law.
EXCHANGES BETWEEN FUNDS
Shares of a Fund may be exchanged for shares of other GT Global Mutual Funds,
based on their respective net asset values without imposition of any sales
charges provided that the registration remains identical. Advisor Class shares
may be exchanged only for Advisor Class shares of other GT Global Mutual Funds.
The exchange privilege is not an option or right to purchase shares but is
permitted under the current policies of the respective GT Global Mutual Funds.
The privilege may be discontinued or changed at any time by any of the Funds
upon 60 days' prior written notice to the shareholders of such Fund and is
available only in states where the exchange may be made legally. Before
purchasing shares through the exercise of the exchange privilege, a shareholder
should obtain and read a copy of the prospectus of the Fund to be purchased and
should consider the investment objective(s) of that Fund.
Statement of Additional Information Page 27
<PAGE>
GT GLOBAL EQUITY FUNDS
TELEPHONE REDEMPTIONS
A corporation or partnership wishing to utilize telephone redemption services
must submit a "Corporate Resolution" or "Certificate of Partnership" indicating
the names, titles and the required number of signatures of persons authorized to
act on its behalf. The certificate must be signed by a duly authorized
officer(s) and, in the case of a corporation, the corporate seal must be
affixed. All shareholders may request that redemption proceeds be transmitted by
bank wire directly to the shareholder's predesignated account at a domestic bank
or savings institution if the proceeds are at least $1,000. Costs in connection
with the administration of this service, including wire charges, will be borne
by the Funds. Proceeds of less than $1,000 will be mailed to the shareholder's
registered address of record. The Funds and the Transfer Agent reserve the right
to refuse any telephone instructions and may discontinue the aforementioned
redemption options upon 30 days' written notice.
SUSPENSION OF REDEMPTION PRIVILEGES
The Funds may suspend redemption privileges or postpone the date of payment for
more than seven days after a redemption order is received during any period: (1)
when the NYSE is closed other than customary weekend and holiday closings, or
when trading on the NYSE is restricted as directed by the SEC; (2) when an
emergency exists, as defined by the SEC, that would prohibit the Funds from
disposing of portfolio securities owned by them or in fairly determining the
value of their assets; or (3) as the SEC may otherwise permit.
REDEMPTIONS IN KIND
It is possible that conditions may arise in the future that would, in the
Board's opinion, make it undesirable for a Fund to pay for all redemptions in
cash. In such cases, the Board may authorize payment to be made in portfolio
securities or other property of a Fund, so-called "redemptions in kind." Payment
of redemptions in kind will be made in readily marketable securities. Such
securities would be valued at the same value assigned to them in computing the
net asset value per share. Shareholders receiving such securities would incur
brokerage costs in selling any such securities so received and would be subject
to any increase or decrease in the value of the securities until they were sold.
- --------------------------------------------------------------------------------
TAXES
- --------------------------------------------------------------------------------
GENERAL
Each Fund is treated as a separate corporation for federal income tax purposes.
In order to continue to qualify for treatment as a regulated investment company
("RIC") under the Code, each 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 gain and net gains
from certain foreign currency transactions) ("Distribution Requirement") and
must meet several additional requirements. With respect to each Fund, these
requirements include the following: (1) the Fund must derive at least 90% of its
gross income each taxable year from dividends, interest, payments with respect
to securities loans and gains from the sale or other disposition of securities
or foreign currencies, or other income (including gains from options, Futures or
Forward Contracts) derived with respect to its business of investing in
securities or those currencies ("Income Requirement"); (2) the Fund must derive
less than 30% of its gross income each taxable year from the sale or other
disposition of securities, or any of the following, that were held for less than
three months--options or Futures (other than those on foreign currencies), or
foreign currencies (or options, Futures or Forward Contracts thereon) that are
not directly related to the Fund's principal business of investing in securities
(or options and Futures with respect to securities) ("Short-Short Limitation");
(3) at the close of each quarter of the Fund's taxable year, at least 50% of the
value of its total assets must be represented by cash and cash items, U.S.
government securities, securities of other RICs and other securities, with these
other securities limited, with respect to any one issuer, to an amount that does
not exceed 5% of the value of the Fund's total assets and that does not
represent more than 10% of the issuer's outstanding voting securities; and (4)
at the close of each quarter of the Fund's taxable year, not more than 25% of
the value of its total assets may be invested in securities (other than U.S.
government securities or the securities of other RICs) of any one issuer.
Dividends and other distributions declared by a 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.
Statement of Additional Information Page 28
<PAGE>
GT GLOBAL EQUITY FUNDS
A portion of the dividends from a Fund's investment company taxable income
(whether paid in cash or reinvested in additional shares) may be eligible for
the dividends-received deduction allowed to corporations. The eligible portion
may not exceed the aggregate dividends received by a Fund from U.S.
corporations. However, dividends received by a corporate shareholder and
deducted by it pursuant to the dividends-received deduction are subject
indirectly to the alternative minimum tax.
If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares. Investors
also should be aware that if shares are purchased shortly before the record date
for any dividend or other distribution, the shareholder will pay full price for
the shares and receive some portion of the price back as a taxable distribution.
Each 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.
FOREIGN TAXES
Dividends and interest received by a Fund may be subject to income, withholding
or other taxes imposed by foreign countries that would reduce the yield on its
securities. Tax conventions between certain countries and the United States may
reduce or eliminate these foreign taxes, however, and many foreign countries do
not impose taxes on capital gains in respect of investments by foreign
investors. If more than 50% of the value of a Fund's total assets at the close
of its taxable year consists of securities of foreign corporations, the Fund
will be eligible to, and may, file an election with the Internal Revenue Service
that will enable its shareholders, in effect, to receive the benefit of the
foreign tax credit with respect to any foreign income taxes paid by it. Pursuant
to the election, a Fund will treat those taxes as dividends paid to its
shareholders and each shareholder will be required to (1) include in gross
income, and treat as paid by him, his proportionate share of those taxes, (2)
treat his share of those taxes and of any dividend paid by the Fund that
represents income from foreign sources as his own income from those sources, and
(3) either deduct the taxes deemed paid by him in computing his taxable income
or, alternatively, use the foregoing information in calculating the foreign tax
credit against his federal income tax. Each Fund will report to its shareholders
shortly after each taxable year their respective shares of the Fund's income
from sources within, and taxes paid to, foreign countries if it makes this
election.
PASSIVE FOREIGN INVESTMENT COMPANIES
Each Fund (other than the America Mid Cap Fund) may invest in the stock of
"passive foreign investment companies" ("PFICs"). A PFIC is a foreign
corporation that, in general, meets either of the following tests: (1) at least
75% of its gross income is passive or (2) an average of at least 50% of its
assets produce, or are held for the production of, passive income. Under certain
circumstances, a Fund will be subject to federal income tax on a portion of any
"excess distribution" received on, or of any gain from disposition of, stock of
a PFIC (collectively "PFIC income"), plus interest thereon, even if the Fund
distributes the PFIC income as a taxable dividend to its shareholders. The
balance of the PFIC income will be included in the Fund's investment company
taxable income and, accordingly, will not be taxable to the Fund to the extent
that income is distributed to its shareholders.
If a Fund invests in a PFIC and elects to treat the PFIC as a "qualified
electing fund" ("QEF"), then in lieu of the foregoing tax and interest
obligation, the Fund would be required to include in income each year its pro
rata share of the QEF's annual ordinary earnings and net capital gain (the
excess of net long-term capital gain over net short-term capital loss) -- which
most likely would have to be distributed by the Fund to satisfy the Distribution
Requirement and avoid imposition of the Excise Tax -- even if those earnings and
gain were not received by the Fund from the QEF. In most instances, it will be
very difficult, if not impossible, to make this election because of certain
requirements thereof.
Pursuant to proposed regulations, open-end RICs, such as the Funds, would be
entitled to elect to "mark-to-market" their stock in certain PFICs.
"Marking-to-market," in this context, means recognizing as gain for each taxable
year the excess, as of the end of that year, of the fair market value of each
such PFIC's stock over the adjusted basis in that stock (including
mark-to-market gain for each prior year for which an election was in effect).
NON-U.S. SHAREHOLDERS
Dividends paid by a Fund to a shareholder who, as to the United States, is a
nonresident alien individual, nonresident alien fiduciary of a trust or estate,
foreign corporation or foreign partnership ("foreign shareholder") generally
will be subject to U.S. withholding tax (at a rate of 30% or lower treaty rate).
Withholding will not apply if a dividend paid by a Fund to a foreign shareholder
is "effectively connected with the conduct of a U.S. trade or business," in
which case the reporting and withholding requirements applicable to domestic
shareholders will apply. A distribution of net capital gain by a Fund to foreign
shareholders generally will be subject to U.S. federal income tax (at the rates
applicable to domestic
Statement of Additional Information Page 29
<PAGE>
GT GLOBAL EQUITY FUNDS
persons) only if the distribution is "effectively connected" or the foreign
shareholder is treated as a resident alien individual for federal income tax
purposes.
OPTIONS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS
The use of hedging transactions, such as selling (writing) and purchasing
options and Futures Contracts and entering into Forward Contracts, involves
complex rules that will determine, for federal income tax purposes, the
character and timing of recognition of the gains and losses a Fund realizes in
connection therewith. Gains from the disposition of foreign currencies (except
certain gains that may be excluded by future regulations), and gains from
options, Futures and Forward Contracts derived by a Fund with respect to its
business of investing in securities or foreign currencies, will qualify as
permissible income under the Income Requirement. However, income from the
disposition by a Fund of options and Futures (other than those on foreign
currencies) will be subject to the Short-Short Limitation if they are held for
less than three months. Income from the disposition by a Fund of foreign
currencies, and options, Futures and Forward Contracts on foreign currencies,
that are not directly related to the Fund's principal business of investing in
securities (or options and Futures with respect thereto) also will be subject to
the Short-Short Limitation if they are held for less than three months.
If a Fund satisfies certain requirements, any increase in value of a position
that is part of a "designated hedge" will be offset by any decrease in value
(whether realized or not) of the offsetting hedging position during the period
of the hedge for purposes of determining whether the Fund satisfies the
Short-Short Limitation. Thus, only the net gain (if any) from the designated
hedge will be included in gross income for purposes of that limitation. Each
Fund intends that, when it engages in hedging transactions, it will qualify for
this treatment, but at the present time it is not clear whether this treatment
will be available for all those transactions. To the extent this treatment is
not available, a Fund may be forced to defer the closing out of certain options,
Futures, Forward Contracts and/or foreign currency positions beyond the time
when it otherwise would be advantageous to do so, in order for the Fund to
continue to qualify as a RIC.
Futures and Forward Contracts that are subject to section 1256 of the Code
(other than those that are part of a "mixed straddle") ("Section 1256
Contracts") and that are held by a Fund at the end of its taxable year generally
will be deemed to have been sold at market value for federal income tax
purposes. Sixty percent of any net gain or loss recognized on these deemed
sales, and 60% of any net realized gain or loss from any actual sales of Section
1256 Contracts, will be treated as long-term capital gain or loss, and the
balance will be treated as short-term capital gain or loss. Section 988 of the
Code also may apply to gains and losses from transactions in foreign currencies,
foreign-currency-denominated debt securities and options, Futures and Forward
Contracts on foreign currencies ("Section 988" gains and losses). Each Section
988 gain or loss generally is computed separately and treated as ordinary income
or loss. In the case of overlap between sections 1256 and 988, special
provisions determine the character and timing of any income, gain or loss. Each
Fund attempts to monitor section 988 transactions to minimize any adverse tax
impact.
The foregoing is a general and abbreviated summary of certain federal tax
considerations affecting the Funds and their shareholders. Investors are urged
to consult their own tax advisers for more detailed information and for
information regarding any foreign, state and local taxes applicable to
distributions received from a Fund.
Statement of Additional Information Page 30
<PAGE>
GT GLOBAL EQUITY FUNDS
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
LIECHTENSTEIN GLOBAL TRUST
Liechtenstein Global Trust AG, formerly BIL GT Group, is composed of the Manager
and its worldwide affiliates. Other worldwide affiliates of the Liechtenstein
Global Trust include LGT Bank in Liechtenstein, formerly Bank in Liechtenstein,
an international financial services institution founded in 1920. LGT Bank in
Liechtenstein has principal offices in Vaduz, Liechtenstein. Its subsidiaries
currently include LGT Bank in Liechtenstein (Deutschland) GmbH, formerly Bank in
Liechtenstein (Frankfurt) GmbH, and LGT Asset Management AG, formerly Bilfinanz
und Verwaltung AG, in Zurich, Switzerland.
Worldwide asset management affiliates also currently include LGT Asset
Management PLC, formerly G.T. Management PLC, in London; LGT Asset Management
Ltd., formerly G.T. Management (Asia) Ltd., in Hong Kong; LGT Asset Management
Ltd., formerly G.T. Management (Japan), in Tokyo; LGT Asset Management Pte.
Ltd., formerly G.T. Management (Singapore) PTE Ltd., in Singapore; LGT Asset
Management Ltd. formerly G.T. Management (Australia) Ltd., in Sydney; and LGT
Asset Management GmbH, formerly BIL Asset Management GmbH, in Frankfurt.
CUSTODIAN
State Street Bank and Trust Company ("State Street"), 225 Franklin Street,
Boston, Massachusetts 02110, acts as custodian of the Funds' assets. State
Street is authorized to establish and has established separate accounts in
foreign currencies and to cause securities of the Company to be held in separate
accounts outside the United States in the custody of non-U.S. banks.
INDEPENDENT ACCOUNTANTS
The Company's and the Funds' independent accountants are Coopers & Lybrand,
L.L.P., One Post Office Square, Boston, Massachusetts 02109. Coopers & Lybrand,
L.L.P., conducts annual audits of the Funds, assists in the preparation of the
Funds' federal and state income tax returns and consults with the Company and
the Funds as to matters of accounting, regulatory filings and federal and state
income taxation.
The audited financial statements of the Company included in this Statement of
Additional Information have been examined by Coopers & Lybrand, L.L.P. as stated
in their opinion appearing herein and are included in reliance upon such opinion
given upon the authority of that firm as experts in accounting and auditing.
USE OF NAME
The Manager has granted the Company the right to use the "GT" and "GT Global"
names and has reserved the right to withdraw its consent to the use of such
names by the Company and/or any of the Funds at any time, or to grant the use of
such names to any other company.
SHAREHOLDER LIABILITY
Under certain circumstances, shareholders of a Fund may be held personally
liable for the obligations of the Fund. The Company's Declaration of Trust
provides that shareholders shall not be subject to any personal liability for
the acts or obligations of a Fund or the Company and that every written
agreement, obligation or other undertaking made or issued by a Fund or the
Company shall contain a provision to the effect that shareholders are not
personally liable thereunder. The Declaration of Trust provides for
indemnification out of the Company's assets under certain circumstances, and
further provides that the Company shall, upon request, assume the defense of any
act or obligation of a Fund or the Company and that the Fund in which the
shareholder holds shares will indemnify the shareholder for all legal and other
expenses incurred therewith. Thus, the risk of any shareholder's incurring
financial loss beyond his or her investment, because of this theoretical
shareholder liability, is limited to circumstances in which the Fund or the
Company itself would be unable to meet its obligations.
Statement of Additional Information Page 31
<PAGE>
GT GLOBAL EQUITY FUNDS
INVESTMENT RESULTS
- --------------------------------------------------------------------------------
STANDARDIZED RETURNS
Each Fund's "Standardized Returns," as referred to in the Prospectus (see "Other
Information -- Performance Information" in the Prospectus), is calculated
separately for Class A, Class B and Advisor Class shares of each Fund, as
follows: Standardized Return (average annual total return ("T")) is computed by
using the ending redeeming value ("ERV") of a hypothetical initial investment of
$1,000 ("P") over a period of years ("n") according to the following formula as
required by the SEC: P(1+T) to the (n)th power=ERV. The following assumptions
will be reflected in computations made in accordance with this formula: (1) for
Class A shares, deduction of the maximum sales charge of 4.75% from the $1,000
initial investment; (2) for Class B shares, deduction of the applicable
contingent deferred sales charge imposed on a redemption of Class B shares held
for the period; (3) for Advisor Class shares, deduction of a sales charge is not
applicable; (4) reinvestment of dividends and other distributions at net asset
value on the reinvestment date determined by the Board; and (5) a complete
redemption at the end of any period illustrated.
The Standardized Returns for the Class A, Class B and Advisor Class shares of
the America Mid Cap Fund, stated as average annualized total returns for the
periods shown, were:
<TABLE>
<CAPTION>
AMERICA MID CAP FUND AMERICA MID CAP FUND AMERICA MID CAP FUND
PERIOD (CLASS A) (CLASS B) (ADVISOR CLASS)
- ------------------------------------------------ ----------------------- ----------------------- -----------------------
<S> <C> <C> <C>
Fiscal year ended December 31, 1996............. 10.16% 9.82% 15.72%
For the five years ended December 31, 1996...... 17.52% n/a n/a
June 1, 1995 (commencement of operations)
through December 31, 1996...................... n/a n/a 13.75%
April 1, 1993 (commencement of operations)
through December 31, 1996...................... n/a 17.78% n/a
June 9, 1987 (commencement of operations)
through December 31, 1996...................... 14.49% n/a n/a
</TABLE>
The Standardized Returns for the Class A, Class B and Advisor Class shares of
the Europe Fund, stated as average annualized total returns for the periods
shown, were:
<TABLE>
<CAPTION>
EUROPE FUND EUROPE FUND EUROPE FUND
PERIOD (CLASS A) (CLASS B) (ADVISOR CLASS)
- --------------------------------------------------------------------------- ------------- ------------- ---------------
<S> <C> <C> <C>
Fiscal year ended December 31, 1996........................................ 13.93% 13.79% 20.21%
For the five years ended December 31, 1996................................. 6.07% n/a n/a
For the ten years ended December 31, 1996.................................. 7.13% n/a n/a
June 1, 1995 (commencement of operations) through December 31, 1996........ n/a n/a 17.72%
April 1, 1993 (commencement of operations) through December 31, 1996....... n/a 10.07% n/a
</TABLE>
The Standardized Returns for the Class A, Class B and Advisor Class shares of
the International Fund, stated as average annualized total returns for the
periods shown, were:
<TABLE>
<CAPTION>
INTERNATIONAL FUND INTERNATIONAL FUND INTERNATIONAL FUND
PERIOD (CLASS A) (CLASS B) (ADVISOR CLASS)
- ------------------------------------------------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C>
Fiscal year ended December 31, 1996.......................... 4.09% 3.80% 9.79%
For the five years ended December 31, 1996................... 4.73% n/a n/a
For the ten years ended December 31, 1996.................... 7.94% n/a n/a
June 1, 1995 (commencement of operations)
through December 31, 1996................................... n/a n/a 14.28%
April 1, 1993 (commencement of operations) through December
31, 1996.................................................... n/a 6.37% n/a
</TABLE>
Statement of Additional Information Page 32
<PAGE>
GT GLOBAL EQUITY FUNDS
The Standardized Returns for the Class A, Class B and Advisor Class shares of
the Japan Fund, stated as average annualized total returns for the periods
shown, were:
<TABLE>
<CAPTION>
JAPAN FUND
JAPAN FUND JAPAN FUND (ADVISOR
PERIOD (CLASS A) (CLASS B) CLASS)
- ------------------------------------------------------------------------------ ----------- ----------- --------------
<S> <C> <C> <C>
Fiscal year ended December 31, 1996........................................... -11.82% -12.45% -7.14%
For the five years ended December 31, 1996.................................... 0.06% n/a n/a
For the ten years ended December 31, 1996..................................... 7.55% n/a n/a
June 1, 1995 (commencement of operations) through December 31, 1996........... n/a n/a 6.01%
April 1, 1993 (commencement of operations) through December 31, 1996.......... n/a 3.25% n/a
</TABLE>
The Standardized Returns for the Class A, Class B and Advisor Class shares of
the Pacific Fund, stated as average annualized total returns for the periods
shown, were:
<TABLE>
<CAPTION>
PACIFIC FUND PACIFIC FUND PACIFIC FUND
PERIOD (CLASS A) (CLASS B) (ADVISOR CLASS)
- ---------------------------------------------------------------------------- ------------- ------------- ---------------
<S> <C> <C> <C>
Fiscal year ended December 31, 1996......................................... 14.34% 14.28% 20.56%
For the five years ended December 31, 1996.................................. 7.83% n/a n/a
For the ten years ended December 31, 1996................................... 10.97% n/a n/a
June 1, 1995 (commencement of operations) through December 31, 1996......... n/a n/a 13.26%
April 1, 1993 (commencement of operations) through December 31, 1996........ n/a 10.45% n/a
</TABLE>
The Standardized Returns for the Class A, Class B and Advisor Class shares of
the Worldwide Fund, stated as average annualized total returns for the periods
shown, were:
<TABLE>
<CAPTION>
WORLDWIDE FUND WORLDWIDE FUND WORLDWIDE FUND
PERIOD (CLASS A) (CLASS B) (ADVISOR CLASS)
- ------------------------------------------------------------------- ----------------- ----------------- -----------------
<S> <C> <C> <C>
Fiscal year ended December 31, 1996................................ 5.66% 5.24% 11.31%
For the five years ended December 31, 1996......................... 7.64% n/a n/a
June 1, 1995 (commencement of operations) through December 31,
1996.............................................................. n/a n/a 15.86%
April 1, 1993 (commencement of operations) through December 31,
1996.............................................................. n/a 7.10% n/a
June 9, 1987 (commencement of operations) through December 31,
1996.............................................................. 8.34% n/a n/a
</TABLE>
NON-STANDARDIZED RETURNS
In addition to Standardized Returns, each Fund also may include in
advertisements, sales literature and shareholder reports other total return
performance data ("Non-Standardized Return"). Non-Standardized Return is
calculated separately for Class A, Class B and Advisor Class shares of each Fund
and may be calculated according to several different formulas. Non-Standardized
Returns may be quoted for the same or different time periods for which
Standardized Returns are quoted. Non-Standardized Returns for Class A and Class
B shares may or may not take sales charges into account; performance data
calculated without taking the effect of sales charges into account will be
higher than data including the effect of such charges. Advisor Class shares are
not subject to sales charges.
Aggregate Non-Standardized Return ("T") is computed by using the ending value of
the account ("VOA") of a hypothetical initial investment of $1,000 ("P")
according to the following formula: T=(VOA/P)-1. Aggregate Non-Standardized
Return assumes reinvestment of dividends and other distributions.
The aggregate Non-Standardized Returns (not taking sales charges into account)
for the Class A, Class B and Advisor Class shares of the America Mid Cap Fund,
stated as aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
AMERICA MID CAP FUND AMERICA MID CAP FUND AMERICA MID CAP FUND
PERIOD (CLASS A) (CLASS B) (ADVISOR CLASS)
- ------------------------------------------------ ----------------------- ----------------------- -----------------------
<S> <C> <C> <C>
June 1, 1995 (commencement of operations)
through December 31, 1996...................... n/a n/a 22.67%
April 1, 1993 (commencement of operations)
through December 31, 1996...................... n/a 87.74% n/a
June 9, 1987 (commencement of operations)
through December 31, 1996...................... 282.75% n/a n/a
</TABLE>
The aggregate Non-Standardized Returns (not taking sales charges into account)
for the Class A, Class B and Advisor Class shares of the Europe Fund, stated as
aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
EUROPE FUND EUROPE FUND EUROPE FUND
PERIOD (CLASS A) (CLASS B) (ADVISOR CLASS)
- --------------------------------------------------------------------------- ------------- ------------- ---------------
<S> <C> <C> <C>
June 1, 1995 (commencement of operations) through December 31, 1996........ n/a n/a 29.53%
April 1, 1993 (commencement of operations) through December 31, 1996....... n/a 46.33% n/a
July 19, 1985 (commencement of operations) through December 31, 1996....... 301.82% n/a n/a
</TABLE>
Statement of Additional Information Page 33
<PAGE>
GT GLOBAL EQUITY FUNDS
The aggregate Non-Standardized Returns (not taking sales charges into account)
for the Class A, Class B and Advisor Class shares of the International Fund,
stated as aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
INTERNATIONAL FUND INTERNATIONAL FUND INTERNATIONAL FUND
PERIOD (CLASS A) (CLASS B) (ADVISOR CLASS)
- ------------------------------------------------------------- ------------------ ------------------- -------------------
<S> <C> <C> <C>
June 1, 1995 (commencement of operations)
through December 31, 1996................................... n/a n/a 23.58%
April 1, 1993 (commencement of operations) through December
31, 1996.................................................... n/a 29.05% n/a
July 19, 1985 (commencement of operations) through December
31, 1996.................................................... 332.07% n/a n/a
</TABLE>
The aggregate Non-Standardized Returns (not taking sales charges into account)
for the Class A, Class B and Advisor Class shares of the Japan Fund, stated as
aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
JAPAN FUND JAPAN FUND JAPAN FUND
PERIOD (CLASS A) (CLASS B) (ADVISOR CLASS)
- ------------------------------------------------------------------------------ ----------- ------------- ---------------
<S> <C> <C> <C>
June 1, 1995 (commencement of operations) through December 31, 1996........... n/a n/a 9.71%
April 1, 1993 (commencement of operations) through December 31, 1996.......... n/a 15.65% n/a
</TABLE>
The aggregate Non-Standardized Returns (not taking sales charges into account)
for the Class A, Class B and Advisor Class shares of the Pacific Fund, stated as
aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
PACIFIC FUND PACIFIC FUND PACIFIC FUND
PERIOD (CLASS A) (CLASS B) (ADVISOR CLASS)
- ---------------------------------------------------------------------------- ------------ ------------- ---------------
<S> <C> <C> <C>
June 1, 1995 (commencement of operations) through December 31, 1996......... n/a n/a 21.84%
April 1, 1993 (commencement of operations) through December 31, 1996........ n/a 48.17% n/a
July 19, 1985 (commencement of operations) through December 31, 1996........ 1,209.45% n/a n/a
</TABLE>
The aggregate Non-Standardized Returns (not taking sales charges into account)
for the Class A, Class B and Advisor Class shares of the Worldwide Fund, stated
as aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
WORLDWIDE FUND WORLDWIDE FUND WORLDWIDE FUND
PERIOD (CLASS A) (CLASS B) (ADVISOR CLASS)
- ------------------------------------------------------------------- ---------------- ----------------- -----------------
<S> <C> <C> <C>
June 1, 1995 (commencement of operations) through December 31,
1996.............................................................. n/a n/a 26.30%
April 1, 1993 (commencement of operations) through December 31,
1996.............................................................. n/a 32.34% n/a
June 9, 1987 (commencement of operations) through December 31,
1996.............................................................. 125.78% n/a n/a
</TABLE>
Each Fund's investment results will vary from time to time depending upon market
conditions, the composition of each Fund's portfolio and operating expenses of
each Fund, so that current or past yield or total return should not be
considered representative of what an investment in each Fund may earn in any
future period. These factors and possible differences in the methods used in
calculating investment results should be considered when comparing each Fund's
investment results with those published for other investment companies and other
investment vehicles. Each Fund's results also should be considered relative to
the risks associated with such Fund's investment objective and policies.
IMPORTANT POINTS TO NOTE ABOUT DATA RELATING TO WORLD EQUITY AND BOND MARKETS
Each Fund and GT Global may from time to time in advertisements, sales
literature and reports furnished to present or prospective shareholders compare
the Fund with, but not limited to, the following:
(1) The Salomon Brothers Non-U.S. Dollars Indices, which are measures of
the total return performance of high quality non-U.S. dollar denominated
securities in major sectors of the worldwide bond markets.
(2) The Lehman Brothers Government/Corporate Bond Index, which is a
comprehensive measure of all public obligations of the U.S. Treasury
(excluding flower bonds and foreign targeted issues), all publicly issued
debt of agencies of the U.S. Government (excluding mortgage backed
securities), and all public, fixed rate, non-convertible investment grade
domestic corporate debt rated at least Baa by Moody's or BBB by S&P, or, in
the case of nonrated bonds, BBB by Fitch Investors Service, Inc. ("Fitch"),
(excluding Collateralized Mortgage Obligations).
(3) The Consumer Price Index, which is a measure of the average change
in prices over time in a fixed market basket of goods and services (e.g.,
food, clothing, shelter, fuels, transportation fares, charges for doctors'
and dentists' services, prescription medicines, and other goods and services
that people buy for day-to-day living). There is inflation risk which does
not affect a security's value but its purchasing power i.e. the risk of
changing price levels in the economy that affects security prices or the
price of goods and services.
Statement of Additional Information Page 34
<PAGE>
GT GLOBAL EQUITY FUNDS
(4) Data and mutual fund rankings published or prepared by Lipper
Analytical Data Services, Inc. ("Lipper"), CDA/Wiesenberger Investment
Companies Service ("CDA/Wiesenberger"), Morningstar, Inc. and/or other
companies that rank and/or compare mutual funds by overall performance,
investment objectives, assets, expense levels, periods of existence and/or
other factors. In this regard each Fund may be compared to the Fund's "peer
group" as defined by Lipper, CDA/Wiesenberger, Morningstar and/or other
firms, as applicable, or to specific funds or groups of funds within or
without such peer group. Lipper generally ranks funds on the basis of total
return, assuming reinvestment of distributions, but does not take sales
charges or redemption fees into consideration, and is prepared without
regard to tax consequences. In addition to the mutual fund rankings, the
Fund's performance may be compared to mutual fund performance indices
prepared by Lipper. Morningstar is a mutual fund rating service that also
rates mutual funds on the basis of risk-adjusted performance. Morningstar
ratings are calculated from a fund's three, five and ten year average annual
returns with appropriate fee adjustments and a risk factor that reflects
fund performance relative to the three-month U.S. Treasury bill monthly
returns. Ten percent of the funds in an investment category receive five
stars and 22.5% receive four stars. The ratings are subject to change each
month.
(5) Bear Stearns Foreign Bond Index, which provides simple average
returns for individual countries and gross national product ("GNP")-weighted
index, beginning in 1975. The returns are broken down by local market and
currency.
(6) Ibbottson Associates International Bond Index, which provides a
detailed breakdown of local market and currency returns since 1960.
(7) Standard & Poor's 500 Composite Stock Price Index which is a widely
recognized index composed of the capitalization-weighted average of the
prices of 500 of the largest publicly traded stocks in the United States.
(8) Salomon Brothers Broad Investment Grade Index which is a widely used
index composed of U.S. domestic government, corporate and mortgage-backed
fixed income securities.
(9) Dow Jones Industrial Average.
(10) CNBC/Financial News Composite Index.
(11) Morgan Stanley Capital International World Indices, including, among
others, the Morgan Stanley Capital International Europe, Australia, Far East
Index ("EAFE Index"). The EAFE index is an unmanaged index of more than
1,000 companies in Europe, Australia and the Far East.
(12) Salomon Brothers World Government Bond Index and Salomon Brothers
World Government Bond Index-Non-U.S. are each a widely used index composed
of world government bonds.
(13) The World Bank Publication of Trends in Developing Countries (TIDE).
TIDE provides brief reports on most of the World Bank's borrowing members.
The World Development Report is published annually and looks at global and
regional economic trends and their implications for the developing
economies.
(14) Salomon Brothers Global Telecommunications Index is composed of
telecommunications companies in the developing and emerging countries.
(15) Datastream and Worldscope each is an on-line database retrieval
service for information including, but not limited to, international
financial and economic data.
(16) International Financial Statistics, which is produced by the
International Monetary Fund.
(17) Various publications and annual reports, produced by the World Bank
and its affiliates.
(18) Various publications from the International Bank for Reconstruction
and Development.
(19) Various publications including ratings agencies such as Moody's, S&P
and Fitch.
(20) Wilshire Associates which is an on-line database for international
financial and economic data including performance measure for a wide range
of securities.
(21) Bank Rate National Monitor Index, which is an average of the quoted
rates for 100 leading banks and thrifts in ten U.S. cities.
(22) International Finance Corporation ("IFC") Emerging Markets Data Base
which provides detailed statistics on stock and bond markets in developing
countries.
Statement of Additional Information Page 35
<PAGE>
GT GLOBAL EQUITY FUNDS
(23) Various publications from the Organization for Economic Cooperation
and Development (OECD).
(24) Average of Savings Accounts, which is a measure of all kinds of
savings deposits, including longer-term certificates. Savings accounts offer
a guaranteed rate of return on principal, but no opportunity for capital
growth. During a portion of the period, the maximum rates paid on some
savings deposits were fixed by law.
Indices, economic and financial data prepared by the research departments of
various financial organizations, such as Salomon Brothers, Inc., Lehman
Brothers, Merrill Lynch, Pierce, Fenner & Smith, Inc., J. P. Morgan, Morgan
Stanley, Smith Barney, S.G. Warburg, Jardine Fleming, The Bank for International
Settlements, Asian Development Bank, Bloomberg, L.P., and Ibbottson Associates
may be used, as well as information reported by the Federal Reserve and the
respective Central Banks of various nations. In addition, GT Global may use
performance rankings, ratings and commentary reported periodically in national
financial publications, including Money Magazine, Mutual Fund Magazine, Smart
Money, Global Finance, EuroMoney, Financial World, Forbes, Fortune, Business
Week, Latin Finance, the Wall Street Journal, Emerging Markets Weekly,
Kiplinger's Guide To Personal Finance, Barron's, The Financial Times, USA Today,
The New York Times, Far Eastern Economic Review, The Economist and Investors
Business Digest. Each Fund may compare its performance to that of other
compilations or indices of comparable quality to those listed above and other
indices which may be developed and made available in the future.
Information relating to foreign market performance, capitalization and
diversification is based on sources believed to be reliable, but which may be
subject to revision and which has not been independently verified by the Company
or GT Global. The authors and publishers of such material are not to be
considered as "experts" under the 1933 Act, as amended, on account of the
inclusion of such information herein.
GT Global believes that this information may be useful to investors considering
whether and to what extent to diversify their investments through the purchase
of mutual funds investing in securities on a global basis. However, this data is
not a representation of the past performance of any of these Funds, nor is it a
prediction of such performance. The performance of the Funds will differ from
the historical performance of relevant indices. The performance of indices does
not take expenses into account, while each Fund incurs expenses in its
operations, which will reduce performance. Each Fund is actively managed, I.E.,
the Manager, as each Fund's investment manager, actively purchases and sells
securities in seeking each Fund's investment objective. Moreover, each Fund may
invest a portion of its assets in corporate bonds, while certain indices relate
only to government bonds. Each of these factors will cause the performance of
each Fund to differ from relevant indices.
From time to time, each Fund and GT Global may refer to the number of
shareholders in the Funds or the aggregate number of shareholders in all GT
Global Mutual Funds or the dollar amount of each Fund's assets under management
in advertising materials.
GT Global believes each Fund is an appropriate investment for long-term
investment goals including, but not limited to funding retirement, paying for
education or purchasing a house. GT Global may provide information designed to
help individuals understand their investment goals and explore various financial
strategies. For example, GT Global may describe general principles of investing,
such as asset allocation, diversification and risk tolerance. Each Fund does not
represent a complete investment program and the investors should consider each
Fund as appropriate for a portion of their overall investment portfolio with
regard to their long-term investment goals. There is no assurance that any such
information will lead to achieving these goals or guarantee future results.
From time to time, GT Global may refer to or advertise the names of such
companies, or their products although there can be no assurance that any GT
Global Mutual Fund may own the securities of these companies.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical returns
of the capital markets in the United States, including common stocks, small
capitalization stocks, long-term corporate bonds, intermediate-term government
bonds, long-term government bonds, Treasury bills, the U.S. rate of inflation
(based on the CPI), and combinations of various capital markets. The performance
of these capital markets are based on the returns of different indices.
GT Global Mutual Funds may use the performance of these capital markets in order
to demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any of
these capital markets. The risks associated with the security types in any
capital market may or may not correspond directly to those of the funds.
Ibbotson calculates total returns in the same method as the funds. The funds may
also compare performance to that of other compilations or indices that may be
developed and made available in the future.
Each Fund may quote various measures of volatility and benchmark correlation
such as beta, standard deviation and R(2) in advertising. In addition, each Fund
may compare these measures to those of other funds. Measures of volatility seek
to
Statement of Additional Information Page 36
<PAGE>
GT GLOBAL EQUITY FUNDS
compare each Fund's historical share price fluctuations or total returns
compared to those of a benchmark. All measures of volatility and correlation are
calculated using averages of historical data.
Each Fund may advertise examples of the effects of periodic investment plans,
including the principle of dollar cost averaging programs. In such a program, an
investor invests a fixed dollar amount in a fund at periodic intervals, thereby
purchasing fewer shares when prices are high and more shares when prices are
low. While such a strategy does not assure a profit or guard against loss in a
declining market, the investor's average cost per share can be lower than if
fixed numbers of shares are purchased at the same intervals. In evaluating such
a plan, investors should consider their ability to continue purchasing shares
through periods of low price levels.
Each Fund may be available for purchase through retirement plans or other
programs offering deferral of income taxes, which may produce superior after-tax
returns over time. For example, a $10,000 investment earning a taxable return of
10% annually would have an after-tax value of $17,976 after ten years, assuming
tax was deducted from the return each year at a 39.6% rate. An equivalent
tax-deferred investment would have an after-tax value of $19,626 after ten
years, assuming tax was deducted at a 39.6% rate from the deferred earnings at
the end of the ten-year period.
Each Fund may describe in its sales material and advertisements how an investor
may invest in the GT Global Mutual Funds through various retirement accounts and
plans that offer deferral of income taxes on investment earnings and may also
enable an investor to make pre-tax contributions. Because of their advantages,
these retirement accounts and plans may produce returns superior to comparable
non-retirement investments. In sales material and advertisements, the Funds may
also discuss these plans, which include:
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS): If you have earned income from employment
(including self-employment), you can contribute each year to an IRA up to the
lesser of (1) $2,000 for yourself or $4,000 for you and your spouse, regardless
of whether your spouse is employed, or (2) 100% of compensation. Some
individuals may be able to take an income tax deduction for the contribution.
Regular contributions may not be made for the year you become 70 1/2 or
thereafter. Please consult your tax advisor for more information.
ROLLOVER IRAS: Individuals who receive distributions from qualified retirement
plans (other than required distributions) and who wish to keep their savings
growing tax-deferred can rollover (or make a direct transfer of) their
distribution to a Rollover IRA. These accounts can also receive rollovers or
transfers from an existing IRA. If an "eligible rollover distribution" from a
qualified employer-sponsored retirement plan is not directly rolled over to an
IRA (or certain qualified plans), withholding at the rate of 20% will be
required for federal income tax purposes. A distribution from a qualified plan
that is not an "eligible rollover distribution," including a distribution that
is one of a series of substantially equal periodic payments, generally is
subject to regular wage withholding or withholding at the rate of 10% (depending
on the type and amount of the distribution), unless you elect not to have any
withholding apply. Please consult your tax advisor for more information.
SEP-IRAS: Simplified employee pension plans ("SEPs" or "SEP-IRAs") provide
self-employed individuals (and any eligible employees) with benefits similar to
Keogh-type plans or Code Section 401(k) plans, but with fewer administrative
requirements and therefore potential lower annual administration expenses.
CODE SECTION 403(B)(7) CUSTODIAL ACCOUNTS: Employees of public schools and most
other not-for-profit organizations can make pre-tax salary reduction
contributions to these accounts.
PROFIT-SHARING (INCLUDING SECTION 401(K)) AND MONEY PURCHASE PENSION
PLANS: Corporations can sponsor these qualified defined contribution plans for
their employees. A Section 401(k) plan, a type of profit-sharing plan,
additionally permits the eligible, participating employees to make pre-tax
salary reduction contributions to the plan (up to certain limitations).
SIMPLE RETIREMENT PLANS: Employers with no more than 100 employees who do not
maintain another retirement plan may establish a Savings Incentive Match Plan
for Employees ("SIMPLE") either as separate IRAs or as part of a Code Section
401(k) plan. SIMPLEs are not subject to the complicated nondiscrimination rules
that generally apply to qualified retirement plans.
GT Global may from time to time in its sales materials and advertising discuss
the risks inherent in investing. The major types of investment risk are market
risk, industry risk, credit risk, interest rate risk, liquidity risk and
inflation risk. Risk represents the possibility that you may lose some or all of
your investment over a period of time. A basic tenet of investing is the greater
the potential reward, the greater the risk.
Statement of Additional Information Page 37
<PAGE>
GT GLOBAL EQUITY FUNDS
From time to time, the Funds and GT Global will quote data regarding industries,
companies, individual countries, regions, world stock exchanges, and economic
and demographic statistics from sources GT Global deems reliable, including the
economic and financial data of such financial organizations as:
1) Stock market capitalization: Morgan Stanley Capital International World
Indices, IFC and Datastream.
2) Stock market trading volume: Morgan Stanley Capital International World
Indices and IFC.
3) The number of listed companies: IFC, LGT Guide to World Equity Markets,
Salomon Brothers, Inc., and S.G. Warburg.
4) Wage rates: U.S. Department of Labor Statistics and Morgan Stanley Capital
International World Indices.
5) International industry performance: Morgan Stanley Capital International
World Indices, Wilshire Associates and Salomon Brothers, Inc.
6) Stock market performance: Morgan Stanley Capital International World
Indices, IFC and Datastream.
7) The Consumer Price Index and inflation rate: The World Bank, Datastream and
IFC.
8) Gross Domestic Product ("GDP"): Datastream and The World Bank.
9) GDP growth rate: IFC, The World Bank and Datastream.
10) Population: The World Bank, Datastream and United Nations.
11) Average annual growth rate (%) of population: The World Bank, Datastream and
United Nations.
12) Age distribution within populations: Organization for Economic Cooperation
and Development and United Nations.
13) Total exports and imports by year: IFC, The World Bank and Datastream.
14) Top three companies by country, industry or market: IFC, LGT Guide to World
Equity Markets, Salomon Brothers Inc., and S.G. Warburg.
15) Foreign direct investments to developing countries: The World Bank and
Datastream.
16) Supply, consumption, demand and growth in demand of certain products,
services and industries, including, but not limited to electricity, water,
transportation, construction materials, natural resources, technology, other
basic infrastructure, financial services, health care services and supplies,
consumer products and services and telecommunications equipment and services
(sources of such information may include, but would not be limited to, The
World Bank, OECD, IMF, Bloomberg and Datastream).
17) Standard deviation and performance returns for U.S. and non-U.S. equity and
bond markets: Morgan Stanley Capital International.
18) Countries restructuring their debt, including those under the Brady Plan:
the Manager.
19) Political and economic structure of countries: Economist Intelligence Unit.
20) Government and corporate bonds -- credit ratings, yield to maturity and
performance returns: Salomon Brothers, Inc.
21) Dividend yields for U.S. and non-U.S. companies: Bloomberg.
From time to time, GT Global may include in its advertisement and sales
material, information about privatization, which is an economic process
involving the sale of state-owned companies to the private sector.
In advertising and sales materials, GT Global may make reference to or discuss
its products, services and accomplishments. Among these accomplishments are that
in 1983 GT Global provided assistance to the government of Hong Kong in linking
its currency to the U.S. dollar, and that in 1987 Japan's Ministry of Finance
licensed LGT Asset Management Ltd. (Japan) as one of the first foreign
discretionary investment managers for Japanese investors. Such accomplishments,
however, should not be viewed as an endorsement of the Manager or GT Global by
the government of Hong Kong, Japan's Ministry of Finance or any other government
or government agency. Nor do any such accomplishments of the Manager or GT
Global provide any assurance that the GT Global Mutual Fund's investment
objectives will be achieved.
GT GLOBAL ADVANTAGE
As part of Liechtenstein Global Trust, GT Global continues a 75-year tradition
of service to individuals and institutions. Today we bring investors a
combination of experience, worldwide resources, a global perspective, investment
talent and a time tested investment discipline. With investment professionals in
nine offices worldwide, we witness world events and economic developments
firsthand.
Statement of Additional Information Page 38
<PAGE>
GT GLOBAL EQUITY FUNDS
The key to achieving consistent results is following a disciplined investment
process. Our approach to asset allocation takes advantage of GT Global's
worldwide presence and global perspective. Our "macroeconomic" worldview
determines our overall strategy of regional, country and sector allocations. Our
bottom up process of security selection combines fundamental research with
quantitative analysis through our proprietary models.
Built in checks and balances strengthen the process, enhancing professional
experience and judgment with an objective assessment of risk. Ultimately, each
security we select has passed a ranking system that helps our portfolio teams
determine when to buy and when to sell.
- --------------------------------------------------------------------------------
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF COMMERCIAL PAPER RATINGS
Moody's employs the designations "Prime-1" and "Prime-2" to indicate commercial
paper having the highest capacity for timely repayment. Issuers rated Prime-1
(or supporting institutions) have a superior ability for repayment of senior
short-term debt obligations. Prime-1 repayment ability will often be evidenced
by many of the following characteristics: leading market positions in
well-established industries; high rates of return on funds employed;
conservative capitalization structure with moderate reliance on debt and ample
asset protection; broad margins in earnings coverage of fixed financial charges
and high internal cash generation; and well-established access to a range of
financial markets and assured sources of alternate liquidity. Issuers rated
Prime-2 (or supporting institutions) have a strong ability for repayment of
senior short-term debt obligations. This normally will be evidenced by many of
the characteristics cited above but to a lesser degree. Earnings trends and
coverage ratios, while sound may be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
S&P rates commercial paper in four categories. "A-1" and "A-2" are the two
highest commercial paper rating categories. A-1 -- This highest category
indicates that the degree of safety regarding timely payment is strong. Those
issues determined to possess extremely strong safety characteristics will be
denoted with a plus sign (+) designation. A-2 -- Capacity for timely payment on
issues with this designation is satisfactory. However, the relative degree of
safety is not as high as for issues designated "A-1."
DESCRIPTION OF BOND RATINGS
Moody's rates the long-term debt securities issued by various entities from
"Aaa" to "C." Investment Grade Ratings are as follows:
Aaa -- Best quality. These securities carry the smallest degree of
investment risk and are generally referred to as "gilt edged." Interest
payments are protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- High quality by all standards. Together with the Aaa group they
comprise what are generally known as high grade bonds. They are rated lower
than the best bonds because margins of protection may not be as large as in
Aaa securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-term
risk appear somewhat larger than the Aaa securities.
A -- Upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa -- Medium-grade obligations (i.e., they are neither highly protected
nor poorly secured). Interest payments and principal security appear
adequate for the present but certain protective elements may be lacking or
may be characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
ABSENCE OF RATING: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.
Should no rating be assigned, the reason may be one of the following:
Statement of Additional Information Page 39
<PAGE>
GT GLOBAL EQUITY FUNDS
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies
that are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not
published in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa to B in its corporate bond rating system. The modifier 1
indicates that the company ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issue ranks in the lower end of its generic rating category.
S&P rates the securities debt of various entities in categories ranging from
"AAA" to "D" according to quality. Investment grade ratings are as follows:
AAA -- Highest rating. Capacity to pay interest and repay principal is
extremely strong.
AA -- High grade. Very strong capacity to pay interest and repay
principal. Generally, these bonds differ from AAA issues only in a small
degree.
A -- Have a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of change
in circumstances and economic conditions, than debt in higher rated
categories.
BBB -- Regarded as having adequate capacity to pay interest and repay
principal. These bonds normally exhibit adequate protection parameters, but
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal than for
debt in higher rated categories.
PLUS (+) OR MINUS (-): The ratings from "AA" to "BBB" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NR: Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements of each Fund as of December 31, 1996, and for
the year then ended, appear on the following pages.
Statement of Additional Information Page 40
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
GT Global Growth Series:
We have audited the accompanying statement of assets and liabilities of GT
Global Worldwide Growth Fund, one of the funds organized as a series of GT
Global Growth Series, including the schedule of portfolio investments, as of
December 31, 1996, the related statement of operations for the year then ended,
the statements of changes in net assets for each of the two years in the period
then ended and the financial highlights for each of the five years in the period
then ended. These financial statements and the financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1996 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of GT
Global Worldwide Growth Fund as of December 31, 1996, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the five years in the period then ended, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
FEBRUARY 14, 1997
F1
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (19.4%)
Federated Department Stores, Inc.-/- ...................... US 82,000 $ 2,798,250 1.6
RETAILERS-APPAREL
Telecom Corporation of New Zealand Ltd. - ADR{\/} ......... NZ 25,000 2,025,000 1.1
TELEPHONE NETWORKS
EMI Group PLC ............................................. UK 82,480 1,956,075 1.1
LEISURE & TOURISM
Rentokil Group PLC ........................................ UK 239,000 1,804,777 1.0
CONSUMER SERVICES
Koninklijke Ahold N.V. .................................... NETH 26,647 1,667,367 0.9
RETAILERS-FOOD
Reuters Holdings PLC ...................................... UK 125,600 1,616,240 0.9
BROADCASTING & PUBLISHING
Carrefour Supermarche ..................................... FR 2,475 1,613,050 0.9
RETAILERS-FOOD
Adecco - Bearer-/- ........................................ SWTZ 6,410 1,609,686 0.9
CONSUMER SERVICES
Elsevier N.V. ............................................. NETH 92,651 1,567,444 0.9
BROADCASTING & PUBLISHING
Telecom Italia Mobile S.p.A. .............................. ITLY 604,510 1,534,218 0.9
WIRELESS COMMUNICATIONS
Aoyama Trading Co., Ltd. .................................. JPN 57,000 1,516,586 0.8
RETAILERS-APPAREL
DDI Corp. ................................................. JPN 220 1,455,771 0.8
WIRELESS COMMUNICATIONS
Burton Group PLC .......................................... UK 542,000 1,447,808 0.8
RETAILERS-APPAREL
Telefonica de Espana-/- ................................... SPN 56,700 1,317,436 0.7
TELEPHONE NETWORKS
EMAP PLC .................................................. UK 100,800 1,271,219 0.7
BROADCASTING & PUBLISHING
Portugal Telecom S.A. - Registered ........................ PORT 43,660 1,245,014 0.7
TELEPHONE NETWORKS
Sol Melia S.A.-/- ......................................... SPN 33,256 1,191,742 0.7
LEISURE & TOURISM
Stet Societa' Finanziaria Telefonica S.p.A. ............... ITLY 248,600 1,131,089 0.6
TELEPHONE NETWORKS
Comptoirs Modernes ........................................ FR 2,080 1,124,324 0.6
RETAILERS-FOOD
Compass Group PLC ......................................... UK 85,367 906,293 0.5
RESTAURANTS
Advanced Info. Service - Foreign .......................... THAI 95,000 889,201 0.5
WIRELESS COMMUNICATIONS
Telecel - Comunicacaoes Pessoais, S.A.-/- ................. PORT 13,498 862,130 0.5
WIRELESS COMMUNICATIONS
Dixons Group PLC .......................................... UK 92,100 856,341 0.5
RETAILERS-APPAREL
Granada Group PLC ......................................... UK 52,000 768,425 0.4
LEISURE & TOURISM
Cordiant PLC-/- ........................................... UK 407,000 728,279 0.4
BROADCASTING & PUBLISHING
</TABLE>
The accompanying notes are an integral part of the financial statements.
F2
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
Seven-Eleven Japan Ltd. ................................... JPN 500 $ 29,285 --
RETAILERS-OTHER
Kobenhavns Lufthavne AS ................................... DEN 139 14,166 --
TRANSPORTATION - AIRLINES
------------
34,947,216
------------
Finance (16.2%)
American International Group, Inc. ........................ US 32,200 3,485,650 1.9
INSURANCE - MULTI-LINE
United Overseas Bank Ltd. - Foreign ....................... SING 260,000 2,899,628 1.6
BANKS-MONEY CENTER
ITT Hartford Group, Inc. .................................. US 35,700 2,409,750 1.3
INSURANCE - MULTI-LINE
Australia & New Zealand Banking Group Ltd. ................ AUSL 335,300 2,112,441 1.2
BANKS-MONEY CENTER
HSBC Holdings PLC ......................................... HK 89,600 1,917,352 1.1
BANKS-MONEY CENTER
Royal & Sun Alliance Insurance Group PLC .................. UK 246,550 1,882,899 1.0
INSURANCE - MULTI-LINE
Barclays PLC .............................................. UK 103,600 1,777,521 1.0
BANKS-MONEY CENTER
AEGON N.V. ................................................ NETH 22,168 1,414,077 0.8
INSURANCE-LIFE
3I Group PLC .............................................. UK 167,670 1,398,207 0.8
INVESTMENT MANAGEMENT
Nichiei Co., Ltd. ......................................... JPN 18,000 1,329,475 0.7
OTHER FINANCIAL
Banco Popular Espanol S.A. ................................ SPN 5,890 1,157,483 0.6
BANKS-MONEY CENTER
Storebrand "A"-/- ......................................... NOR 178,202 1,023,498 0.6
INSURANCE - MULTI-LINE
Mapfre Vida Seguros ....................................... SPN 13,227 917,409 0.5
INSURANCE-LIFE
Skandia Forsakrings AB .................................... SWDN 30,929 876,214 0.5
INSURANCE - MULTI-LINE
Cheung Kong (Holdings) Ltd. ............................... HK 84,000 746,703 0.4
REAL ESTATE
Henderson Land Development Co., Ltd. ...................... HK 72,000 726,144 0.4
REAL ESTATE
JACCS Co., Ltd. ........................................... JPN 80,000 621,977 0.3
CONSUMER FINANCE
Thai Farmers Bank Public Co., Ltd. SEC{\/} ................ THAI 112,000 574,560 0.3
BANKS-MONEY CENTER
M & G Group PLC ........................................... UK 28,670 542,472 0.3
INVESTMENT MANAGEMENT
Cardif S.A. ............................................... FR 2,779 383,588 0.2
INSURANCE - MULTI-LINE
Land and House Co., Ltd. - Foreign ........................ THAI 50,000 364,650 0.2
REAL ESTATE
</TABLE>
The accompanying notes are an integral part of the financial statements.
F3
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (Continued)
Korea Exchange Bank ....................................... KOR 39,650 $ 360,027 0.2
BANKS-MONEY CENTER
Kookmin Bank-/- ........................................... KOR 16,820 274,071 0.2
BANKS-MONEY CENTER
Phatra Thanakit Co., Ltd. - Foreign ....................... THAI 61,900 176,229 0.1
INVESTMENT MANAGEMENT
------------
29,372,025
------------
Health Care (10.2%)
Sola International, Inc.-/- ............................... US 129,000 4,902,000 2.7
MEDICAL TECHNOLOGY & SUPPLIES
Novartis AG-/- ............................................ SWTZ 1,925 2,205,549 1.2
PHARMACEUTICALS
Bayer AG .................................................. GER 51,310 2,095,103 1.2
PHARMACEUTICALS
Takeda Chemical Industries ................................ JPN 93,000 1,952,229 1.1
PHARMACEUTICALS
Schering AG ............................................... GER 19,250 1,625,862 0.9
PHARMACEUTICALS
Taisho Pharmaceuticals .................................... JPN 65,000 1,532,913 0.9
PHARMACEUTICALS
Sanofi S.A. ............................................... FR 12,372 1,232,423 0.7
PHARMACEUTICALS
Astra AB "A" Free ......................................... SWDN 23,730 1,173,856 0.7
PHARMACEUTICALS
Siemens AG - New-/- ....................................... GER 22,020 1,038,004 0.6
MEDICAL TECHNOLOGY & SUPPLIES
M.L. Laboratories PLC-/- .................................. UK 115,291 402,729 0.2
PHARMACEUTICALS
------------
18,160,668
------------
Consumer Non-Durables (7.7%)
Sunbeam-Oster Co., Inc. ................................... US 181,000 4,660,750 2.6
HOUSEHOLD PRODUCTS
Schweitzer-Mauduit International, Inc. .................... US 110,000 3,478,750 1.9
TOBACCO
Amway Japan Ltd. .......................................... JPN 64,400 2,069,523 1.2
HOUSEHOLD PRODUCTS
Gucci Group - NY Registered Shares{\/} .................... ITLY 22,990 1,468,486 0.8
TEXTILES & APPAREL
Parmalat Finanziaria S.p.A. ............................... ITLY 505,420 773,977 0.4
FOOD
Vendex International N.V. ................................. NETH 17,699 757,796 0.4
OTHER CONSUMER GOODS
Giordano International Ltd. ............................... HK 864,000 737,316 0.4
TEXTILES & APPAREL
------------
13,946,598
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F4
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (7.6%)
Eastman Kodak Co. ......................................... US 52,800 $ 4,237,200 2.3
MISC. MATERIALS & COMMODITIES
Kimberly-Clark de Mexico, S.A. de C.V. "A" ................ MEX 108,000 2,134,740 1.2
PAPER/PACKAGING
Fernz Corp., Ltd. ......................................... NZ 540,000 1,850,622 1.0
CHEMICALS
Western Mining Corporation Holdings Ltd. .................. AUSL 265,000 1,669,540 0.9
METALS - NON-FERROUS
Pilkington PLC ............................................ UK 515,680 1,395,162 0.8
BUILDING MATERIALS & COMPONENTS
SGL Carbon AG ............................................. GER 9,080 1,145,332 0.6
METALS - NON-FERROUS
Fletcher Challenge Paper{/\} .............................. NZ 512,000 1,045,396 0.6
PAPER/PACKAGING
Siam Cement Co., Ltd. - Foreign ........................... THAI 13,700 431,715 0.2
CEMENT
------------
13,909,707
------------
Capital Goods (7.0%)
Premier Farnell PLC ....................................... UK 154,758 1,990,124 1.1
INDUSTRIAL COMPONENTS
Smiths Industries PLC ..................................... UK 142,040 1,950,618 1.1
AEROSPACE/DEFENSE
General Electric PLC-/- ................................... UK 286,730 1,880,438 1.0
AEROSPACE/DEFENSE
Canon, Inc. ............................................... JPN 75,000 1,658,604 0.9
OFFICE EQUIPMENT
Lockheed Martin Corp. ..................................... US 17,200 1,573,800 0.9
AEROSPACE/DEFENSE
Boeing Co. ................................................ US 14,600 1,553,075 0.9
AEROSPACE/DEFENSE
Bic ....................................................... FR 9,909 1,488,263 0.8
OFFICE EQUIPMENT
Telefonaktiebolaget LM Ericsson "B" ....................... SWDN 18,683 578,650 0.3
TELECOM EQUIPMENT
------------
12,673,572
------------
Multi-Industry/Miscellaneous (6.5%)
General Electric Co. ...................................... US 31,300 3,094,788 1.7
CONGLOMERATE
Citic Pacific Ltd. ........................................ HK 356,000 2,066,770 1.1
CONGLOMERATE
Hutchison Whampoa ......................................... HK 196,000 1,539,566 0.9
MULTI-INDUSTRY
Kinnevik AB "B" Free ...................................... SWDN 46,850 1,292,869 0.7
MULTI-INDUSTRY
Parkway Holdings Ltd. ..................................... SING 264,000 1,038,033 0.6
MULTI-INDUSTRY
Straits Steamship Land Ltd. ............................... SING 297,000 951,215 0.5
CONGLOMERATE
</TABLE>
The accompanying notes are an integral part of the financial statements.
F5
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Multi-Industry/Miscellaneous (Continued)
Wrightson Ltd. ............................................ NZ 1,000,000 $ 869,135 0.5
MULTI-INDUSTRY
Fletcher Challenge Ltd. ................................... NZ 250,000 768,443 0.4
MULTI-INDUSTRY
United Industrial Corp. ................................... SING 278,000 234,515 0.1
CONGLOMERATE
------------
11,855,334
------------
Technology (5.6%)
Intel Corporation ......................................... US 30,800 4,032,875 2.2
SEMICONDUCTORS
3Com Corp.-/- ............................................. US 48,300 3,544,013 2.0
NETWORKING
Group Axime-/- ............................................ FR 9,208 1,066,564 0.6
COMPUTERS & PERIPHERALS
Cap Gemini N.V. ........................................... NETH 32,750 952,520 0.5
COMPUTERS & PERIPHERALS
Bowthorpe PLC ............................................. UK 76,000 588,219 0.3
COMPUTERS & PERIPHERALS
------------
10,184,191
------------
Energy (5.5%)
Transocean Offshore, Inc. ................................. US 53,800 3,369,225 1.9
ENERGY SOURCES
Petroleo Brasileiro S.A. (Petrobras) - ADR-/- {\/} ........ BRZL 138,200 2,142,100 1.2
GAS PRODUCTION & DISTRIBUTION
United Utilities PLC ...................................... UK 125,700 1,336,639 0.7
ENERGY SOURCES
Elektrowatt AG-/- ......................................... SWTZ 2,927 1,165,987 0.7
ELECTRICAL & GAS UTILITIES
ABB Asea Brown Boveri Ltd. - Bearer ....................... SWTZ 913 1,136,132 0.6
ENERGY EQUIPMENT & SERVICES
Korea Electric Power Corp. ................................ KOR 26,000 759,169 0.4
ELECTRICAL & GAS UTILITIES
Yukong Ltd.: .............................................. KOR -- -- --
OIL
New-/- .................................................. -- 1,789 32,956 --
New 2-/- ................................................ -- 144 2,653 --
------------
9,944,861
------------
Consumer Durables (4.4%)
Futuris Corp., Ltd. ....................................... AUSL 1,248,100 1,705,515 0.9
AUTO PARTS
Bridgestone Corp. ......................................... JPN 85,000 1,615,411 0.9
AUTO PARTS
Volkswagen AG ............................................. GER 3,844 1,599,584 0.9
AUTOMOBILES
BBA Group PLC ............................................. UK 234,740 1,422,909 0.8
MULTI-INDUSTRY
</TABLE>
The accompanying notes are an integral part of the financial statements.
F6
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Durables (Continued)
Sharp Corp. ............................................... JPN 74,000 $ 1,054,768 0.6
CONSUMER ELECTRONICS
Valeo S.A. ................................................ FR 8,400 518,919 0.3
AUTO PARTS
------------
7,917,106
------------ -----
TOTAL EQUITY INVESTMENTS (cost $135,759,279) ................ 162,911,278 90.1
------------ -----
<CAPTION>
No. of % of Net
Warrants Country Warrants Assets
- ------------------------------------------------------------- -------- ----------- -------------
<S> <C> <C> <C> <C>
Straits Steamship Land Ltd. Warrants, expire
12/12/00-/- .............................................. SING 74,250 80,153 0.1
CONGLOMERATE
Thai Farmers Bank Ltd. Warrants, expire 9/15/02-/- ........ THAI 7,000 6,620 --
BANKS-MONEY CENTER
------------ -----
TOTAL WARRANTS (cost $48,726) ............................... 86,773 0.1
------------ -----
<CAPTION>
% of Net
Repurchase Agreement Assets
- ------------------------------------------------------------- -------------
<S> <C> <C> <C> <C>
Dated December 31, 1996, with State Street Bank & Trust
Co., due January 2, 1997, for an effective yield of 6.25%,
collateralized by $20,080,000 U.S. Treasury Notes, 6.125%
due 3/31/98 (market value of collateral is $20,504,050,
including accrued interest). (cost $20,100,489) .......... 20,100,489 11.1
------------ -----
TOTAL INVESTMENTS (cost $155,908,494) * .................... 183,098,540 101.3
Other Assets and Liabilities ................................ (2,278,697) (1.3)
------------ -----
NET ASSETS .................................................. $180,819,843 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
{/\} Australian currency denominated.
* For Federal income tax purposes, cost is $156,287,161 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 31,053,807
Unrealized depreciation: (4,242,428)
-------------
Net unrealized appreciation: $ 26,811,379
-------------
-------------
</TABLE>
Abbreviations:
ADR--American Depository Receipt
SEC--Share Entitlement Certificate
The accompanying notes are an integral part of the financial statements.
F7
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1996, was concentrated in
the following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets {d}
-------------------------------------------
Fixed Income,
Rights & Short-term
Country (Country Code/Currency Code) Equity Warrants & Other Total
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Australia (AUSL/AUD) ................. 3.0 3.0
Brazil (BRZL/BRL) .................... 1.2 1.2
France (FR/FRF) ...................... 4.1 4.1
Germany (GER/DEM) .................... 4.2 4.2
Hong Kong (HK/HKD) ................... 4.3 4.3
Italy (ITLY/ITL) ..................... 2.7 2.7
Japan (JPN/JPY) ...................... 8.2 8.2
Korea (KOR/KRW) ...................... 0.8 0.8
Mexico (MEX/MXN) ..................... 1.2 1.2
Netherlands (NETH/NLG) ............... 3.5 3.5
New Zealand (NZ/NZD) ................. 3.6 3.6
Norway (NOR/NOK) ..................... 0.6 0.6
Portugal (PORT/PTE) .................. 1.2 1.2
Singapore (SING/SGD) ................. 2.8 0.1 2.9
Spain (SPN/ESP) ...................... 2.5 2.5
Sweden (SWDN/SEK) .................... 2.2 2.2
Switzerland (SWTZ/CHF) ............... 3.4 3.4
Thailand (THAI/THB) .................. 1.3 1.3
United Kingdom (UK/GBP) .............. 15.4 15.4
United States & Other (US/USD) ....... 23.9 9.8 33.7
------ ----- ----- -----
Total ............................... 90.1 0.1 9.8 100.0
------ ----- ----- -----
------ ----- ----- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $180,819,843.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Forward Foreign Currency Contracts Outstanding
December 31, 1996
<TABLE>
<CAPTION>
Market Value Contract Delivery Unrealized
Contracts to Sell: (U.S. Dollars) Price Date Appreciation
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
French Francs........................... 3,869,685 5.09700 02/06/97 $ 54,192
French Francs........................... 2,362,192 5.07000 02/19/97 44,120
Japanese Yen............................ 2,707,607 111.74500 02/06/97 82,227
Japanese Yen............................ 2,607,668 110.48000 02/12/97 107,756
Japanese Yen............................ 2,779,774 110.38500 02/12/97 117,359
Swiss Francs............................ 4,068,462 1.31200 03/19/97 47,392
-------------- --------------
Total Contracts to Sell (Receivable
amount $18,848,434).................. 18,395,388 453,046
-------------- --------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 10.17%.
Total Open Forward Foreign Currency
Contracts............................ $ 453,046
--------------
--------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F8
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $135,808,005) (Note 1)........................ $162,998,051
Repurchase agreement, at value and cost................................................. 20,100,489
U.S. currency................................................................. $ 106
Foreign currencies (cost $607,474)............................................ 609,578 609,684
--------
Receivable for securities sold.......................................................... 3,643,988
Receivable for open forward foreign currency contracts, net (Note 1).................... 453,046
Receivable for Fund shares sold......................................................... 310,906
Dividends and dividend withholding tax reclaims receivable.............................. 270,020
Miscellaneous receivable................................................................ 16,481
Cash held as collateral for securities loaned (Note 1).................................. 10,713,362
------------
Total assets.......................................................................... 199,116,027
------------
Liabilities:
Payable for Fund shares repurchased..................................................... 5,331,764
Payable for securities purchased........................................................ 1,778,696
Payable for investment management and administration fees (Note 2)...................... 149,192
Payable for printing and postage expenses............................................... 103,584
Payable for service and distribution expenses (Note 2).................................. 81,488
Payable for transfer agent fees (Note 2)................................................ 68,179
Payable for professional fees........................................................... 42,534
Payable for registration and filing fees................................................ 11,143
Payable for Trustees' fees and expenses (Note 2)........................................ 6,053
Payable for fund accounting fees (Note 2)............................................... 3,553
Payable for custodian fees (Note 1)..................................................... 241
Other accrued expenses.................................................................. 6,395
Collateral for securities loaned (Note 1)............................................... 10,713,362
------------
Total liabilities..................................................................... 18,296,184
------------
Net assets................................................................................ $180,819,843
------------
------------
Class A:
Net asset value and redemption price per share ($125,555,861 DIVIDED BY 7,514,931 shares
outstanding)............................................................................. $ 16.71
------------
------------
Maximum offering price per share (100/95.25 of $16.71) *.................................. $ 17.54
------------
------------
Class B:+
Net asset value and offering price per share ($52,809,064 DIVIDED BY 3,253,378 shares
outstanding)............................................................................. $ 16.23
------------
------------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($2,454,918
DIVIDED BY 146,000 shares outstanding)................................................... $ 16.81
------------
------------
Net assets consist of:
Paid in capital (Note 4)................................................................ $146,425,969
Accumulated net realized gain on investments and foreign currency transactions.......... 6,708,041
Net unrealized appreciation on translation of assets and liabilities in foreign
currencies............................................................................. 495,787
Net unrealized appreciation of investments.............................................. 27,190,046
------------
Total -- representing net assets applicable to capital shares outstanding................. $180,819,843
------------
------------
<FN>
- --------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
F9
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
STATEMENT OF OPERATIONS
Year ended December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of $328,211)............................... $ 3,040,557
Interest income............................................................................ 552,838
Other income............................................................................... 1,634
-----------
Total investment income.................................................................. 3,595,029
-----------
Expenses:
Investment management and administration fees (Note 2)..................................... 1,885,798
Service and distribution expenses: (Note 2)
Class A..................................................................... $ 477,375
Class B..................................................................... 551,243 1,028,618
-----------
Transfer agent fees (Note 2)............................................................... 532,176
Custodian fees (Note 1).................................................................... 123,165
Printing and postage expenses (Note 2)..................................................... 82,142
Audit fees................................................................................. 51,972
Fund accounting fees....................................................................... 48,430
Registration and filing fees............................................................... 40,265
Trustees' fees and expenses (Note 2)....................................................... 15,372
Legal fees................................................................................. 11,712
Other expenses............................................................................. 14,952
-----------
Total expenses before reductions......................................................... 3,834,602
-----------
Expense reductions (Notes 1 & 5)....................................................... (157,930)
-----------
Total net expenses....................................................................... 3,676,672
-----------
Net investment loss.......................................................................... (81,643)
-----------
Net realized and unrealized gain (loss) on investments and foreign currencies:
(Note 1)
Net realized gain on investments.............................................. 18,255,475
Net realized gain on foreign currency transactions............................ 3,244,503
-----------
Net realized gain during the year........................................................ 21,499,978
Net change in unrealized appreciation on translation of assets and liabilities
in foreign currencies........................................................ 111,081
Net change in unrealized appreciation of investments.......................... (1,481,639)
-----------
Net unrealized depreciation during the year.............................................. (1,370,558)
-----------
Net realized and unrealized gain on investments and foreign currencies....................... 20,129,420
-----------
Net increase in net assets resulting from operations......................................... $20,047,777
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F10
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1996 December 31, 1995
----------------- -----------------
<S> <C> <C>
Decrease in net assets
Operations:
Net investment loss........................................................... $ (81,643) $ (458,117)
Net realized gain on investments and foreign currency transactions............ 21,499,978 9,995,501
Net change in unrealized appreciation (depreciation) on translation of assets
and liabilities in foreign currencies........................................ 111,081 (595,367)
Net change in unrealized appreciation (depreciation) of investments........... (1,481,639) 11,340,575
----------------- -----------------
Net increase in net assets resulting from operations........................ 20,047,777 20,282,592
----------------- -----------------
Class A:
Distributions to shareholders: (Note 1)
From net realized gain on investments......................................... (13,087,564) (3,836,040)
Class B:
Distributions to shareholders: (Note 1)
From net realized gain on investments......................................... (5,727,628) (1,484,807)
Advisor Class:
Distributions to shareholders: (Note 1)
From net realized gain on investments......................................... (175,598) (44,576)
----------------- -----------------
Total distributions......................................................... (18,990,790) (5,365,423)
----------------- -----------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested.............................. 290,210,249 134,626,823
Decrease from capital shares repurchased...................................... (314,217,462) (180,807,770)
----------------- -----------------
Net decrease from capital share transactions................................ (24,007,213) (46,180,947)
----------------- -----------------
Total decrease in net assets.................................................... (22,950,226) (31,263,778)
Net assets:
Beginning of year............................................................. 203,770,069 235,033,847
----------------- -----------------
End of year*.................................................................. $ 180,819,843 $ 203,770,069
----------------- -----------------
----------------- -----------------
--------------
*Includes undistributed net investment income of............................. $ 0 $ 0
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F11
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
Class A+
----------------------------------------------------------
Year ended December 31,
----------------------------------------------------------
1996 * 1995 * 1994 1993 * 1992
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 16.82 $ 15.53 $ 17.47 $ 14.47 $ 14.07
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... 0.03 0.00 0.00 0.04 0.07
Net realized and unrealized gain
(loss) on investments................ 1.79 1.74 (1.16) 3.92 0.39
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. 1.82 1.74 (1.16) 3.96 0.46
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ -- -- -- -- --
From net realized gain on
investments.......................... (1.93) (0.45) (0.78) (0.96) (0.06)
---------- ---------- ---------- ---------- ----------
Total distributions................. (1.93) (0.45) (0.78) (0.96) (0.06)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 16.71 $ 16.82 $ 15.53 $ 17.47 $ 14.47
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 10.92% 11.23% (6.65)% 27.6% 3.3%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 125,556 $ 145,982 $ 182,467 $ 193,997 $ 141,310
Ratio of net investment income (loss) to
average net assets..................... 0.14% (0.06)% (0.01)% 0.9% 0.5%
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.72% 1.87% 1.81% 1.9% 2.1%
Without expense reductions............ 1.80% 1.93% 1.84% --** --**
Portfolio turnover rate++++............. 80% 113% 86% 92% 95%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0263 N/A N/A N/A N/A
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commision rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
* Calculated based upon average shares outstanding during the period.
** Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
(a) Not annualized
(b) Annualized
(c) Total investment return does not include sales charges.
N/A Not applicable.
The accompanying notes are an integral part of the financial statements.
F12
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
Class B++ Advisor Class+++
------------------------------------------------- ----------------------------
April 1, 1993 Year June 1, 1995
Year ended December 31, to ended to
---------------------------------- December 31, December 31, December 31,
1996 * 1995 * 1994 1993 * 1996 * 1995 *
---------- ---------- ---------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 16.50 $ 15.34 $ 17.39 $ 15.67 $ 16.86 $ 15.26
---------- ---------- ---------- ------------- ------------- -------------
Income from investment operations:
Net investment income (loss).......... (0.09) (0.12) (0.11) (0.04) 0.09 0.03
Net realized and unrealized gain
(loss) on investments................ 1.75 1.73 (1.16) 2.72 1.79 2.02
---------- ---------- ---------- ------------- ------------- -------------
Net increase (decrease) from
investment operations.............. 1.66 1.61 (1.27) 2.68 1.88 2.05
---------- ---------- ---------- ------------- ------------- -------------
Distributions to shareholders:
From net investment income............ -- -- -- -- -- --
From net realized gain on
investments.......................... (1.93) (0.45) (0.78) (0.96) (1.93) (0.45)
---------- ---------- ---------- ------------- ------------- -------------
Total distributions................. (1.93) (0.45) (0.78) (0.96) (1.93) (0.45)
---------- ---------- ---------- ------------- ------------- -------------
Net asset value, end of period.......... $ 16.23 $ 16.50 $ 15.34 $ 17.39 $ 16.81 $ 16.86
---------- ---------- ---------- ------------- ------------- -------------
---------- ---------- ---------- ------------- ------------- -------------
Total investment return (c)............. 10.16% 10.52% (7.32)% 17.3%(a) 11.31% 13.46%(a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 52,809 $ 56,095 $ 52,567 $ 20,592 $ 2,455 $ 1,693
Ratio of net investment income (loss) to
average net assets..................... (0.51)% (0.71)% (0.66)% (0.4)%(b) 0.49% 0.29%(b)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.37% 2.52% 2.46% 2.5%(b) 1.37% 1.52%(b)
Without expense reductions............ 2.45% 2.58% 2.49% --* * 1.45% 1.58%(b)
Portfolio turnover rate++++............. 80% 113% 86% 92% 80% 113%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0263 N/A N/A N/A $ 0.0263 N/A
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commision rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
* Calculated based upon average shares outstanding during the period.
** Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
(a) Not annualized
(b) Annualized
(c) Total investment return does not include sales charges.
N/A Not applicable.
The accompanying notes are an integral part of the financial statements.
F13
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
GT Global Worldwide Growth Fund ("Fund"), is a separate series of GT Global
Growth Series ("Company"). The Company is organized as a Massachusetts business
trust and is registered under the Investment Company Act of 1940, as amended
("1940 Act"), as an open-end management investment company. The Company has
eight diversified series of shares in operation, each series corresponding to a
distinct portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles, and
the financial statements may include certain estimates from management.
(A) Portfolio Valuation
The Fund calculates the net asset value of Fund shares and completes orders to
purchase, exchange or repurchase Fund shares on each business day, with the
exception of those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market in which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by Chancellor LGT Asset
Management, Inc. (the "Manager") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
asked prices for such investments or, if such prices are not available, at
prices for investments of comparative maturity, quality and type; however, when
the Manager deems it appropriate, prices obtained for the day of valuation from
a bond pricing service will be used. Short-term investments with a maturity of
60 days or less are valued to amortized cost, adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Fund's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of Trustees.
(B) Foreign Currency Translation
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, other assets and liabilities
are recorded in the books and records of the Fund after translation to U.S.
dollars based on the exchange rates on that day. The cost of each security is
determined using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains or losses arise from changes in the
value of assets and liabilities other than investments in securities at year
end, resulting from changes in exchange rates.
(C) Repurchase Agreements
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, U.S. government securities or other
high quality debt securities of which the value, including accrued interest, is
at least equal to the amount to be repaid to the Fund under each agreement at
its maturity.
(D) Forward Foreign Currency Contracts
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss equal to
the difference between the value at the time it was opened and the value at the
time it was closed. The Fund could be exposed to risk if a counterparty is
unable to meet the terms of a contract or if
F14
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
the value of the currency changes unfavorably. The Fund may enter into Forward
Contracts in connection with planned purchases or sales of securities, or to
hedge against adverse fluctuations in exchange rates between currencies.
(E) Option Accounting Principles
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
market-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of on over-the-counter option, is valued at the average
of the last bid prices obtained from brokers, unless a quotation from only one
broker is available, in which case only that broker's price will be used. If an
option expires on its stipulated expiration date or if the Fund enters into a
closing purchase transaction, a gain or loss is realized without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option is extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the proceeds of
the sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium originally received. The Fund can write options only on
a covered basis, which, for a call, requires that the Fund hold the underlying
security, and, for a put, requires the Fund to set aside cash, U.S. government
securities or other liquid securities in an amount not less than the exercise
price or otherwise provide adequate cover at all times while the put option is
outstanding. The Fund may use options to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) Futures Contracts
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
(G) Security Transactions and Related Investment Income
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other then normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) Portfolio Securities Loaned
At December 31, 1996, stocks with an aggregate value of approximately
$10,156,208 were on loan to brokers. The loans were secured by cash collateral
of $10,713,362, received by the Fund. Cash collateral is received by the Fund
against loaned securities in an amount at least equal to 105% of the market
value of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 103% of the market value of the loaned
securities during the period of the loan. For the year ended December 31, 1996,
the Fund received securities lending fees of $74,109 which were used to reduce
custodian fees.
(I) Taxes
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, or excise tax on income
and capital gains.
F15
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
(J) Distribution to Shareholders
Distribution to shareholders are recorded by the Fund on the ex-date. Income and
capital gain distributions are determined in accordance with Federal income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) Foreign Securities
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets,
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(L) Restricted Securities
The Fund is permitted to invest in privately placed restrictions securities.
These securities may be resold in transactions exempt from registration or to
the public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
(M) Indexed Securities
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(N) Line of Credit
The Fund, along with certain other funds advised by the Manager, has a line of
credit with the Bank of Boston. The arrangement with the bank allows all
specified funds to borrow an aggregate maximum amount of $100,000,000.
2. Related Parties
Chancellor LGT Asset Management is the Fund's investment manager and
administrator. On October 31, 1996, Chancellor Capital Management, Inc. merged
with LGT Asset Management, Inc., and the surviving entity was renamed Chancellor
LGT Asset Management, Inc. The Fund pays investment management and
administration fees at the following annualized rates: 0.975% on the first $500
million of the average daily net assets of the Fund; 0.95% on the next $500
million; 0.925% on the next $500 million and 0.90% on amounts thereafter. These
fees are computed daily and paid monthly, and are subject to reduction in any
year to the extent that the Fund's expenses (exclusive of brokerage commissions,
taxes, interest, distribution-related expenses and extraordinary expenses)
exceed the most stringent limits prescribed by the laws or regulations of any
state in which the Fund's shares are offered for sale, based on the average
total net asset value of the Fund.
GT Global, Inc., an affiliate of the Manager, serves as the Fund's distributor.
The Fund offers Class A, Class B, and Advisor Class shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. GT Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the year ended December 31, 1996, GT Global retained $21,390
of such sales charges. Purchases of Class A shares exceeding $500,000 may be
subject to a contingent deferred sales charge ("CDSC") upon redemption, in
accordance with the Fund's current prospectus. GT Global collected CDSCs in the
amount of $204 for the year ended December 31, 1996. GT Global also makes
ongoing shareholder servicing and trail commission payments to dealers whose
clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSC's, in accordance with the Fund's current
prospectus. During the year ended December 31, 1996, GT Global collected CDSC's
in the amount of $260,826. In addition, GT Global makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class B
shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Trustees has
adopted separate distribution plans with respect to the Fund's Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which the Fund
reimburses GT Global for a portion of its shareholder servicing and distribution
expenses. Under the Class A Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class A shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.35% of the average daily net assets of the Fund's Class A
shares, less any amounts paid by the Fund as the aforementioned service fee, for
its expenditures incurred in providing services as distributor. All expenses for
which GT Global is reimbursed under the Class A Plan will have been incurred
within one year of such reimbursement.
Pursuant to the Fund's Class B Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.75% of the average daily net assets of the Fund's Class B shares
for its expenditures incurred in providing services as distributor. Expenses
incurred under the Class B Plan in excess of 1.00% annually may be carried
forward for reimbursement in subsequent years as long as that Plan continues in
effect.
F16
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
The Manager and GT Global have voluntarily undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest and extraordinary
items) to the maximum annual level of 2.25%, and 2.90%, and 1.90% of the average
daily net assets of the Fund's Class A, Class B and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by GT Global
of payments under the Class A Plan and/or Class B Plan and/ or reimbursements by
the Manager or GT Global of portions of the Fund's other operating expenses.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and GT Global, is the transfer agent of the Fund. For performing shareholder
servicing, reporting, and general transfer agent services, GT Services receives
an annual maintenance fee of $17.50 per account, a new account fee of $4.00 per
account, a per transaction fee of $1.75 for all transactions other than
exchanges and a per exchange fee of $2.25. GT Services also is reimbursed by the
Fund for its out-of-pocket expenses for such items as postage, forms, telephone
charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived by
applying 0.03% to the first $5 billion of assets of all registered mutual funds
advised by the Manager and 0.02% to the assets in excess of $5 billion and
allocating the result according to the Fund's average daily net assets.
The Company pays each of its Trustees who is not an employee, officer or
director of GT Capital, GT Global or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee.
3. Purchases and Sales of Securities
For the year ended December 31, 1996, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $144,310,622 and $181,937,744, respectively. There were
no purchases or sales of U.S. government obligations by the Fund during the
period.
4. Capital Shares
At December 31, 1996, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
Capital Share Transactions
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1996 December 31, 1995
-------------------------- --------------------------
Class A Shares Amount Shares Amount
- ------------------------------------------------------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold................................................. 14,357,786 $ 250,471,583 6,947,488 $ 112,415,112
Shares issued in connection with reinvestment of
distributions............................................. 670,053 11,082,654 198,449 3,306,220
----------- ------------- ----------- -------------
15,027,839 261,554,237 7,145,937 115,721,332
Shares repurchased.......................................... (16,192,391) (283,412,820) (10,218,028) (163,317,151)
----------- ------------- ----------- -------------
Net decrease................................................ (1,164,552) $ (21,858,583) (3,072,091) $ (47,595,819)
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
Year ended Year ended
December 31, 1996 December 31, 1995
-------------------------- --------------------------
Class B Shares Amount Shares Amount
- ------------------------------------------------------------ ----------- ------------- ----------- -------------
Shares sold................................................. 854,412 $ 14,531,361 1,002,715 $ 15,948,611
Shares issued in connection with reinvestment of
distributions............................................. 308,538 4,961,416 79,120 1,293,841
----------- ------------- ----------- -------------
1,162,950 19,492,777 1,081,835 17,242,452
Shares repurchased.......................................... (1,309,880) (22,330,821) (1,107,459) (17,390,637)
----------- ------------- ----------- -------------
Net decrease................................................ (146,930) $ (2,838,044) (25,624) $ (148,185)
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
June 1, 1995
(commencement of sale of
Year ended shares)
December 31, 1996 to December 31, 1995
-------------------------- --------------------------
Advisor Class Shares Amount Shares Amount
- ------------------------------------------------------------ ----------- ------------- ----------- -------------
Shares sold................................................. 521,049 $ 8,987,637 103,579 $ 1,618,463
Shares issued in connection with reinvestment of
distributions............................................. 10,546 175,598 2,669 44,576
----------- ------------- ----------- -------------
531,595 9,163,235 106,248 1,663,039
Shares repurchased.......................................... (485,979) (8,473,821) (5,864) (99,982)
----------- ------------- ----------- -------------
Net increase................................................ 45,616 $ 689,414 100,384 $ 1,563,057
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
F17
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
5. Expense Reductions
The Manager has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended December 31, 1996, the Fund's
expenses were reduced by $83,821 under these arrangements.
- --------------
Federal Tax Information (Unaudited):
For its fiscal year ended December 31, 1996, the total amount of income received
by the Fund from sources within foreign countries and possessions of the United
States was approximately $.28 per share (representing an approximate total of
$2,728,868). The total amount of taxes paid by the Fund to such countries was
approximately $.05 per share (representing an approximate total of $467,527).
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$17,732,920 as a capital gain dividend for the fiscal year ended December 31,
1996.
Pursuant to Section 854 of the Internal Revenue Code, the Fund designates 54% of
ordinary income dividends paid (including short-term capital gain distributions,
if any) by the Fund as income qualifying for the dividends received deduction
for corporations for the fiscal year ended
December 31, 1996.
F18
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
GT Global Growth Series:
We have audited the accompanying statement of assets and liabilities of GT
Global International Growth Fund, one of the funds organized as a series of GT
Global Growth Series, including the schedule of portfolio investments, as of
December 31, 1996, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended and the financial highlights for each of the five years in the
period then ended. These financial statements and the financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1996 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of GT
Global International Growth Fund as of December 31, 1996, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the five years in the period then ended, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
FEBRUARY 14, 1997
F19
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (29.5%)
DDI Corp. ................................................. JPN 720 $ 4,764,340 1.8
WIRELESS COMMUNICATIONS
Aoyama Trading Co., Ltd. .................................. JPN 166,000 4,416,724 1.7
RETAILERS-APPAREL
Adecco - Bearer-/- ........................................ SWTZ 16,510 4,146,009 1.6
CONSUMER SERVICES
Koninklijke Ahold N.V. .................................... NETH 65,406 4,092,612 1.6
RETAILERS-FOOD
Carrefour Supermarche ..................................... FR 6,245 4,070,100 1.6
RETAILERS-FOOD
Elsevier N.V. ............................................. NETH 234,183 3,961,844 1.5
BROADCASTING & PUBLISHING
Telecom Italia Mobile S.p.A. .............................. ITLY 1,500,180 3,807,388 1.5
WIRELESS COMMUNICATIONS
Reuters Holdings PLC ...................................... UK 271,130 3,488,942 1.3
BROADCASTING & PUBLISHING
Ito-Yokado Co., Ltd. ...................................... JPN 80,000 3,483,068 1.3
RETAILERS-OTHER
Rentokil Group PLC ........................................ UK 456,300 3,445,690 1.3
CONSUMER SERVICES
EMI Group PLC ............................................. UK 144,990 3,438,547 1.3
LEISURE & TOURISM
Telefonica de Espana-/- ................................... SPN 146,600 3,406,281 1.3
TELEPHONE NETWORKS
Burton Group PLC .......................................... UK 1,195,000 3,192,123 1.2
RETAILERS-APPAREL
Portugal Telecom S.A. - Registered ........................ PORT 109,250 3,115,387 1.2
TELEPHONE NETWORKS
EMAP PLC .................................................. UK 247,030 3,115,370 1.2
BROADCASTING & PUBLISHING
Sol Melia S.A.-/- ......................................... SPN 83,661 2,998,024 1.1
LEISURE & TOURISM
Stet Societa' Finanziaria Telefonica S.p.A. ............... ITLY 609,400 2,772,669 1.1
TELEPHONE NETWORKS
Comptoirs Modernes ........................................ FR 5,110 2,762,162 1.1
RETAILERS-FOOD
Telecom Corporation of New Zealand Ltd. ................... NZ 468,000 2,387,620 0.9
TELEPHONE NETWORKS
Dixons Group PLC .......................................... UK 208,350 1,937,227 0.7
RETAILERS-APPAREL
Cordiant PLC-/- ........................................... UK 1,073,070 1,920,134 0.7
BROADCASTING & PUBLISHING
Telecel - Comunicacoes Pessoais, S.A.-/- .................. PORT 27,589 1,762,136 0.7
TELECOM - OTHER
Compass Group PLC ......................................... UK 130,180 1,382,048 0.5
RESTAURANTS
Granada Group PLC ......................................... UK 86,250 1,274,551 0.5
LEISURE & TOURISM
Fast Retailing Co., Ltd. .................................. JPN 48,140 1,235,105 0.5
RETAILERS-APPAREL
</TABLE>
The accompanying notes are an integral part of the financial statements.
F20
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
Advanced Information Service: ............................. THAI -- -- 0.3
WIRELESS COMMUNICATIONS
Foreign ................................................. -- 44,800 $ 419,328 --
Local ................................................... -- 45,000 382,590 --
Seven-Eleven Japan Ltd. ................................... JPN 500 29,285 --
RETAILERS-OTHER
Kobenhavns Lufthavne AS ................................... DEN 286 29,146 --
TRANSPORTATION - AIRLINES
------------
77,236,450
------------
Finance (16.6%)
Royal & Sun Alliance Insurance Group PLC .................. UK 551,470 4,211,569 1.6
INSURANCE - MULTI-LINE
United Overseas Bank Ltd. - Foreign ....................... SING 341,300 3,806,320 1.5
BANKS-MONEY CENTER
Barclays PLC .............................................. UK 196,000 3,362,877 1.3
BANKS-MONEY CENTER
Nichiei Co., Ltd. ......................................... JPN 45,000 3,323,687 1.3
OTHER FINANCIAL
3I Group PLC .............................................. UK 367,550 3,065,015 1.2
INVESTMENT MANAGEMENT
Banco Popular Espanol S.A. ................................ SPN 14,510 2,851,457 1.1
BANKS-MONEY CENTER
Australia & New Zealand Banking Group Ltd. ................ AUSL 412,360 2,597,930 1.0
BANKS-MONEY CENTER
AEGON N.V. ................................................ NETH 34,790 2,219,223 0.9
INSURANCE-LIFE
Sun Hung Kai Properties Ltd. .............................. HK 178,000 2,180,696 0.8
REAL ESTATE
HSBC Holdings PLC ......................................... HK 100,000 2,139,902 0.8
BANKS-MONEY CENTER
Cheung Kong (Holdings) Ltd. ............................... HK 212,000 1,884,536 0.7
REAL ESTATE
Orix Corp. ................................................ JPN 43,700 1,819,575 0.7
OTHER FINANCIAL
M & G Group PLC ........................................... UK 92,960 1,758,918 0.7
INVESTMENT MANAGEMENT
Mapfre Vida Seguros ....................................... SPN 24,569 1,704,077 0.7
INSURANCE-LIFE
Henderson Land Development Co., Ltd. ...................... HK 159,000 1,603,569 0.6
REAL ESTATE
Skandia Forsakrings AB .................................... SWDN 56,520 1,601,204 0.6
INSURANCE - MULTI-LINE
Cardif S.A. ............................................... FR 6,218 858,276 0.3
INSURANCE - MULTI-LINE
Thai Farmers Bank Public Co., Ltd. SEC-/- {\/} ............ THAI 157,900 810,027 0.3
BANKS-MONEY CENTER
Korea Exchange Bank ....................................... KOR 71,700 651,045 0.2
BANKS-MONEY CENTER
Land and House Co., Ltd. - Foreign ........................ THAI 77,000 561,562 0.2
REAL ESTATE
</TABLE>
The accompanying notes are an integral part of the financial statements.
F21
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (Continued)
Phatra Thanakit Co., Ltd. - Foreign ....................... THAI 57,800 $ 164,557 0.1
INVESTMENT MANAGEMENT
Shinhan Bank-/- ........................................... KOR 2,740 43,946 --
BANKS-REGIONAL
------------
43,219,968
------------
Health Care (11.3%)
Novartis AG-/- ............................................ SWTZ 4,720 5,407,873 2.1
PHARMACEUTICALS
Bayer AG .................................................. GER 126,700 5,173,446 2.0
PHARMACEUTICALS
Takeda Chemical Industries ................................ JPN 243,000 5,100,985 2.0
PHARMACEUTICALS
Schering AG ............................................... GER 48,840 4,125,043 1.6
PHARMACEUTICALS
Sanofi S.A. ............................................... FR 31,048 3,092,812 1.2
PHARMACEUTICALS
Astra AB "A" Free ......................................... SWDN 58,280 2,882,946 1.1
PHARMACEUTICALS
Siemens AG - New-/- ....................................... GER 54,245 2,557,063 1.0
MEDICAL TECHNOLOGY & SUPPLIES
M.L. Laboratories PLC-/- .................................. UK 254,968 890,642 0.3
PHARMACEUTICALS
------------
29,230,810
------------
Capital Goods (7.0%)
Premier Farnell PLC ....................................... UK 287,500 3,697,132 1.4
INDUSTRIAL COMPONENTS
Bic ....................................................... FR 24,340 3,655,699 1.4
OFFICE EQUIPMENT
Canon, Inc. ............................................... JPN 150,000 3,317,208 1.3
OFFICE EQUIPMENT
Smiths Industries PLC ..................................... UK 236,350 3,245,765 1.2
AEROSPACE/DEFENSE
General Electric PLC-/- ................................... UK 428,470 2,810,000 1.1
AEROSPACE/DEFENSE
Telefonaktiebolaget LM Ericsson "B" ....................... SWDN 48,558 1,503,939 0.6
TELECOM EQUIPMENT
------------
18,229,743
------------
Materials/Basic Industry (6.7%)
Kimberly-Clark de Mexico, S.A. de C.V. "A" ................ MEX 176,900 3,496,625 1.3
PAPER/PACKAGING
PT Semen Gresik - Foreign ................................. INDO 929,000 2,990,428 1.1
CEMENT
Pilkington PLC ............................................ UK 1,087,050 2,940,991 1.1
BUILDING MATERIALS & COMPONENTS
Broken Hill Proprietary Co., Ltd. ......................... AUSL 198,911 2,831,878 1.1
MISC. MATERIALS & COMMODITIES
</TABLE>
The accompanying notes are an integral part of the financial statements.
F22
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (Continued)
SGL Carbon AG ............................................. GER 21,670 $ 2,733,407 1.0
METALS - NON-FERROUS
Western Mining Corporation Holdings Ltd. .................. AUSL 270,000 1,701,041 0.7
METALS - NON-FERROUS
Fletcher Challenge Paper{/\} .............................. NZ 512,000 1,045,396 0.4
PAPER/PACKAGING
------------
17,739,766
------------
Technology (5.3%)
Cap Gemini N.V. ........................................... NETH 98,520 2,865,414 1.1
COMPUTERS & PERIPHERALS
Group Axime-/- ............................................ FR 22,880 2,650,193 1.0
COMPUTERS & PERIPHERALS
Matsushita-Kotobuki Electronics Ltd. ...................... JPN 90,000 2,347,961 0.9
COMPUTERS & PERIPHERALS
Koei Co., Ltd. ............................................ JPN 102,500 1,965,705 0.8
SOFTWARE
Kyushu-Matsushita Electric Co., Ltd. ...................... JPN 137,000 1,775,225 0.7
COMPUTERS & PERIPHERALS
Bowthorpe PLC ............................................. UK 218,750 1,693,065 0.6
COMPUTERS & PERIPHERALS
Hosiden Electronics-/- .................................... JPN 69,000 489,366 0.2
COMPUTERS & PERIPHERALS
------------
13,786,929
------------
Consumer Durables (5.2%)
Sharp Corp. ............................................... JPN 300,000 4,276,088 1.6
CONSUMER ELECTRONICS
Volkswagen AG ............................................. GER 9,690 4,032,250 1.5
AUTOMOBILES
BBA Group PLC ............................................. UK 532,840 3,229,886 1.2
MULTI-INDUSTRY
Valeo S.A. ................................................ FR 20,700 1,278,764 0.5
AUTO PARTS
Samsung Electronics Co.: .................................. KOR -- -- 0.4
CONSUMER ELECTRONICS
Common .................................................. -- 12,206 735,004 --
New-/- .................................................. -- 3,678 189,466 --
------------
13,741,458
------------
Energy (5.0%)
United Utilities PLC ...................................... UK 311,900 3,316,608 1.3
ENERGY SOURCES
Petroleo Brasileiro S.A. (Petrobras) - ADR-/- {\/} ........ BRZL 197,900 3,067,450 1.2
GAS PRODUCTION & DISTRIBUTION
Elektrowatt AG-/- ......................................... SWTZ 7,353 2,929,110 1.1
ELECTRICAL & GAS UTILITIES
ABB Asea Brown Boveri Ltd. - Bearer ....................... SWTZ 2,305 2,868,330 1.1
ENERGY EQUIPMENT & SERVICES
</TABLE>
The accompanying notes are an integral part of the financial statements.
F23
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Energy (Continued)
Korea Electric Power Corp. ................................ KOR 28,000 $ 817,567 0.3
ELECTRICAL & GAS UTILITIES
------------
12,999,065
------------
Consumer Non-Durables (4.7%)
Amway Japan Ltd. .......................................... JPN 140,000 4,498,963 1.7
HOUSEHOLD PRODUCTS
Gucci Group - NY Registered Shares{\/} .................... ITLY 57,950 3,701,556 1.4
TEXTILES & APPAREL
Parmalat Finanziaria S.p.A. ............................... ITLY 1,227,960 1,880,440 0.7
FOOD
Vendex International N.V. ................................. NETH 43,464 1,860,944 0.7
OTHER CONSUMER GOODS
Giordano International Ltd. ............................... HK 537,000 458,262 0.2
TEXTILES & APPAREL
------------
12,400,165
------------
Multi-Industry/Miscellaneous (4.2%)
Kinnevik AB "B" Free ...................................... SWDN 119,910 3,309,027 1.3
MULTI-INDUSTRY
Citic Pacific Ltd. ........................................ HK 438,000 2,542,824 1.0
CONGLOMERATE
Hutchison Whampoa ......................................... HK 279,000 2,191,524 0.8
MULTI-INDUSTRY
Wrightson Ltd. ............................................ NZ 1,500,000 1,303,703 0.5
MULTI-INDUSTRY
Swire Pacific Ltd. "A" .................................... HK 96,000 915,438 0.4
MULTI-INDUSTRY
United Industrial Corp. ................................... SING 580,000 489,277 0.2
CONGLOMERATE
------------
10,751,793
------------ -----
TOTAL EQUITY INVESTMENTS (cost $217,710,991) ................ 249,336,147 95.5
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
F24
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
No. of Value % of Net
Warrants Country Warrants (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Thai Farmers Bank Ltd., Warrants expire 9/15/02 (cost
$9,592)-/- ............................................... THAI 9,738 $ 9,210 --
BANKS-MONEY CENTER
------------ -----
TOTAL INVESTMENTS (cost $217,720,583) * .................... 249,345,357 95.5
Other Assets and Liabilities ................................ 11,818,628 4.5
------------ -----
NET ASSETS .................................................. $261,163,985 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
{/\} Australian currency denominated.
* For Federal income tax purposes, cost is $219,363,482 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 41,743,561
Unrealized depreciation: (11,761,686)
-------------
Net unrealized appreciation: $ 29,981,875
-------------
-------------
</TABLE>
Abbreviations:
ADR -- American Depository Receipt
SEC -- Share Entitlement Certificate
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1996, was concentrated in
the following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets
{d}
---------------------------
Country (Country Code/Currency Code) Equity Other Total
- -------------------------------------- ------ ---------- -----
<S> <C> <C> <C>
Australia (AUSL/AUD) ................. 2.8 2.8
Brazil (BRZL/BRL) .................... 1.2 1.2
France (FR/FRF) ...................... 7.1 7.1
Germany (GER/DEM) .................... 7.1 7.1
Hong Kong (HK/HKD) ................... 5.3 5.3
Indonesia (INDO/IDR) ................. 1.1 1.1
Italy (ITLY/ITL) ..................... 4.7 4.7
Japan (JPN/JPY) ...................... 16.5 16.5
Korea (KOR/KRW) ...................... 0.9 0.9
Mexico (MEX/MXN) ..................... 1.3 1.3
Netherlands (NETH/NLG) ............... 5.8 5.8
New Zealand (NZ/NZD) ................. 1.8 1.8
Portugal (PORT/PTE) .................. 1.9 1.9
Singapore (SING/SGD) ................. 1.7 1.7
Spain (SPN/ESP) ...................... 4.2 4.2
Sweden (SWDN/SEK) .................... 3.6 3.6
Switzerland (SWTZ/CHF) ............... 5.9 5.9
Thailand (THAI/THB) .................. 0.9 0.9
United Kingdom (UK/GBP) .............. 21.7 21.7
United States & Other (US/USD) ....... 4.5 4.5
------ --- -----
Total ............................... 95.5 4.5 100.0
------ --- -----
------ --- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $261,163,985.
The accompanying notes are an integral part of the financial statements.
F25
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
Forward Foreign Currency Contracts Outstanding
December 31, 1996
<TABLE>
<CAPTION>
Market Value Contract Delivery Unrealized
Contracts to Sell: (U.S. Dollars) Price Date Appreciation
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
French Francs........................... 9,674,211 5.09700 02/06/97 $ 135,481
French Francs........................... 2,323,468 5.07000 02/19/97 43,396
Japanese Yen............................ 99,343 113.01500 01/07/97 2,413
Japanese Yen............................ 5,006,047 110.00000 01/07/97 262,135
Japanese Yen............................ 1,591,561 111.74500 02/06/97 48,333
Japanese Yen............................ 13,907,565 110.40000 02/12/97 585,189
Swiss Francs............................ 8,958,150 1.31200 03/19/97 104,350
-------------- --------------
Total Contracts to Sell (Receivable
amount $42,741,642).................. 41,560,345 1,181,297
-------------- --------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 15.91%.
Total Open Forward Foreign Currency
Contracts............................ $ 1,181,297
--------------
--------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F26
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $217,720,583) (Note 1)...... $249,345,357
U.S. currency............................................. $ 327
Foreign currencies (cost $4,610,163)...................... 4,680,132 4,680,459
----------
Receivable for securities sold........................................ 10,949,478
Receivable for open forward foreign currency contracts, net (Note
1)................................................................... 1,181,297
Dividends and dividend withholding tax reclaims receivable............ 461,548
Receivable for Fund shares sold....................................... 167,237
Miscellaneous receivable.............................................. 44,627
Cash held as collateral for securities loaned (Note 1)................ 20,879,528
------------
Total assets........................................................ 287,709,531
------------
Liabilities:
Payable for Fund shares repurchased................................... 3,247,882
Payable for securities purchased...................................... 1,708,549
Payable for investment management and administration fees (Note 2).... 217,392
Payable for loan outstanding (Note 1)................................. 129,000
Payable for service and distribution expenses (Note 2)................ 112,908
Payable for printing and postage expenses............................. 108,222
Payable for transfer agent fees (Note 2).............................. 69,383
Payable for professional fees......................................... 32,301
Payable for registration and filing fees.............................. 16,699
Payable for custodian fees (Note 1)................................... 13,453
Payable for fund accounting fees (Note 2)............................. 5,150
Payable for Trustees' fees and expenses (Note 2)...................... 5,079
Collateral for securities loaned (Note 1)............................. 20,879,528
------------
Total liabilities................................................... 26,545,546
------------
Net assets.............................................................. $261,163,985
------------
------------
Class A:
Net asset value and redemption price per share ($196,601,302 DIVIDED BY
22,035,585 shares outstanding)......................................... $ 8.92
------------
------------
Maximum offering price per share (100/95.25 of $8.92) *................. $ 9.36
------------
------------
Class B:+
Net asset value and offering price per share ($64,101,904 DIVIDED BY
7,387,563 shares outstanding).......................................... $ 8.68
------------
------------
Advisor Class:
Net asset value, offering price per share, and redemption price per
share ($460,779 DIVIDED BY 51,166 shares outstanding).................. $ 9.01
------------
------------
Net assets consist of:
Paid in capital (Note 4).............................................. $222,227,771
Accumulated net realized gain on investments and foreign currency
transactions......................................................... 6,042,757
Net unrealized appreciation on translation of assets and liabilities
in foreign currencies................................................ 1,268,683
Net unrealized appreciation of investments............................ 31,624,774
------------
Total -- representing net assets applicable to capital shares
outstanding............................................................ $261,163,985
------------
------------
<FN>
- --------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
F27
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
STATEMENT OF OPERATIONS
Year ended December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of $726,212)........... $ 4,899,862
Interest income........................................................ 282,325
-----------
Total investment income.............................................. 5,182,187
-----------
Expenses:
Investment management and administration fees (Note 2)................. 3,034,522
Service and distribution expenses: (Note 2)
Class A................................................. $ 847,585
Class B................................................. 681,990 1,529,575
-----------
Transfer agent fees (Note 2)........................................... 857,972
Custodian fees......................................................... 252,795
Printing and postage expenses.......................................... 130,720
Fund accounting fees (Note 2).......................................... 77,934
Registration and filing fees........................................... 61,482
Audit fees............................................................. 52,338
Trustees' fees and expenses (Note 2)................................... 12,934
Legal fees............................................................. 11,712
Other expenses (Note 1)................................................ 357,836
-----------
Total expenses before reductions..................................... 6,379,820
-----------
Expense reductions (Notes 1 & 5)................................... (336,949)
-----------
Total net expenses................................................... 6,042,871
-----------
Net investment loss...................................................... (860,684)
-----------
Net realized and unrealized gain (loss) on investments and
foreign currencies: (Note 1)
Net realized gain on investments.......................... 29,599,764
Net realized gain on foreign currency transactions........ 8,331,816
-----------
Net realized gain during the year.................................... 37,931,580
Net change in unrealized appreciation on translation of
assets and liabilities in foreign currencies............. 205,239
Net change in unrealized appreciation of investments...... (7,070,173)
-----------
Net unrealized depreciation during the year.......................... (6,864,934)
-----------
Net realized and unrealized gain on investments and foreign currencies... 31,066,646
-----------
Net increase in net assets resulting from operations..................... $30,205,962
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F28
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1996 December 31, 1995
----------------- -----------------
<S> <C> <C>
Decrease in net assets
Operations:
Net investment income (loss).............................. $ (860,684) $ 555,361
Net realized gain on investments and foreign currency
transactions............................................. 37,931,580 982,081
Net change in unrealized appreciation on translation of
assets and liabilities in foreign currencies............. 205,239 247,497
Net change in unrealized appreciation (depreciation) of
investments.............................................. (7,070,173) 7,882,538
----------------- -----------------
Net increase in net assets resulting from operations.... 30,205,962 9,667,477
----------------- -----------------
Class A:
Distributions to shareholders:
From net realized gain on investments..................... (20,343,820) (7,612,428)
In excess of net realized gain on investments............. -- (6,510,219)
Class B:
Distributions to shareholders:
From net realized gain on investments..................... (6,672,791) (1,774,209)
In excess of net realized gain on investments............. -- (1,517,320)
Advisor Class:
Distributions to shareholders:
From net realized gain on investments..................... (46,941) (9,818)
In excess of net realized gain on investments............. -- (8,396)
----------------- -----------------
Total distributions..................................... (27,063,552) (17,432,390)
----------------- -----------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested.......... 1,289,311,201 1,294,676,738
Decrease from capital shares repurchased.................. (1,410,140,865) (1,410,555,957)
----------------- -----------------
Net decrease from capital share transactions............ (120,829,664) (115,879,219)
----------------- -----------------
Total decrease in net assets................................ (117,687,254) (123,644,132)
Net assets:
Beginning of year......................................... 378,851,239 502,495,371
----------------- -----------------
End of year *............................................. $ 261,163,985 $ 378,851,239
----------------- -----------------
----------------- -----------------
--------------
*Includes undistributed net investment income of......... $ 0 $ 0
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F29
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
Class A+
----------------------------------------------------------
Year ended December 31,
----------------------------------------------------------
1996 (a) 1995 1994 1993 (a) 1992
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 9.08 $ 9.17 $ 11.02 $ 8.21 $ 8.74
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... (0.01) 0.03 (0.04) 0.03 0.11
Net realized and unrealized gain
(loss) on investments................ 0.84 0.32 (0.82) 2.78 (0.62)
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. 0.83 0.35 (0.86) 2.81 (0.51)
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ -- -- (0.04) -- (0.02)
From net realized gain on
investments.......................... (0.99) (0.24) (0.95) -- --
In excess of net realized gain on
investments.......................... -- (0.20) -- -- --
---------- ---------- ---------- ---------- ----------
Total distributions................. (0.99) (0.44) (0.99) -- (0.02)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 8.92 $ 9.08 $ 9.17 $ 11.02 $ 8.21
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (d)............. 9.28% 3.88% (7.78)% 34.23% (5.83)%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 196,601 $ 308,816 $ 430,701 $ 523,397 $ 421,693
Ratio of net investment income (loss) to
average net assets..................... (0.14)% 0.24% (0.04)% 0.3% 1.2%
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.80% 1.70% 1.70% 1.80% 1.90%
Without expense reductions............ 1.91% 1.78% 1.75% --%* --%*
Portfolio turnover rate++++............. 74% 75% 96% 90% 89%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0267 N/A N/A N/A N/A
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
(a) Calculated based upon average shares outstanding during the period.
(b) Not annualized
(c) Annualized
(d) Total investment return does not include sales charges.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
N/A Not applicable.
The accompanying notes are an integral part of the financial statements.
F30
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
Class B++ Advisor Class+++
------------------------------------------------- ----------------------------
April 1, 1993 Year June 1, 1995
Year ended December 31, to ended to
---------------------------------- December 31, December 31, December 31,
1996 (a) 1995 1994 1993 (a) 1996 (a) 1995
---------- ---------- ---------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 8.91 $ 9.07 $ 10.98 $ 8.74 $ 9.11 $ 8.49
---------- ---------- ---------- ------------- ------------- -------------
Income from investment operations:
Net investment income (loss).......... (0.07) (0.04) (0.10) (0.01) 0.02 0.03
Net realized and unrealized gain
(loss) on investments................ 0.83 0.32 (0.82) 2.25 0.87 1.03
---------- ---------- ---------- ------------- ------------- -------------
Net increase (decrease) from
investment operations.............. 0.76 0.28 (0.92) 2.24 0.89 1.06
---------- ---------- ---------- ------------- ------------- -------------
Distributions to shareholders:
From net investment income............ -- -- (0.04) -- -- --
From net realized gain on
investments.......................... (0.99) (0.24) (0.95) -- (0.99) (0.24)
In excess of net realized gain on
investments.......................... -- (0.20) -- -- -- (0.20)
---------- ---------- ---------- ------------- ------------- -------------
Total distributions................. (0.99) (0.44) (0.99) -- (0.99) (0.44)
---------- ---------- ---------- ------------- ------------- -------------
Net asset value, end of period.......... $ 8.68 $ 8.91 $ 9.07 $ 10.98 $ 9.01 $ 9.11
---------- ---------- ---------- ------------- ------------- -------------
---------- ---------- ---------- ------------- ------------- -------------
Total investment return (d)............. 8.67% 3.15% (8.36)% 25.63%(b) 9.79% 12.56%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 64,102 $ 69,654 $ 71,794 $ 30,745 $ 461 $ 381
Ratio of net investment income (loss) to
average net assets..................... (0.79)% (0.41)% (0.69)% (0.4)%(c) 0.21% 0.59%(c)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.45% 2.35% 2.35% 2.4%(c) 1.45% 1.35%(c)
Without expense reductions............ 2.56% 2.43% 2.40% --%* 1.56% 1.43%(c)
Portfolio turnover rate++++............. 74% 75% 96% 90% 74% 75%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0267 N/A N/A N/A $ 0.0267 N/A
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
(a) Calculated based upon average shares outstanding during the period.
(b) Not annualized
(c) Annualized
(d) Total investment return does not include sales charges.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
N/A Not applicable.
The accompanying notes are an integral part of the financial statements.
F31
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
GT Global International Growth Fund ("Fund"), is a separate series of GT Global
Growth Series ("Company"). The Company is organized as a Massachusetts business
trust and is registered under the Investment Company Act of 1940, as amended
("1940 Act"), as an open-end management investment company. The Company has
eight diversified series of shares in operation, each series corresponding to a
distinct portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles, and
the financial statements may include certain estimates from management.
(A) Portfolio Valuation
The Fund calculates the net asset value of Fund shares and completes orders to
purchase, exchange or repurchase Fund shares on each business day, with the
exception of those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market in which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by Chancellor LGT Asset
Management, Inc. (the "Manager") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
asked prices for such investments or, if such prices are not available, at
prices for investments of comparative maturity, quality and type; however, when
the Manager deems it appropriate, prices obtained for the day of valuation from
a bond pricing service will be used. Short-term investments with a maturity of
60 days or less are valued to amortized cost, adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Fund's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of Trustees.
(B) Foreign Currency Translation
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, other assets and liabilities
are recorded in the books and records of the Fund after translation to U.S.
dollars based on the exchange rates on that day. The cost of each security is
determined using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains or losses arise from changes in the
value of assets and liabilities other than investments in securities at year
end, resulting from changes in exchange rates.
(C) Repurchase Agreements
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, U.S. government securities or other
high quality debt securities of which the value, including accrued interest, is
at least equal to the amount to be repaid to the Fund under each agreement at
its maturity.
(D) Forward Foreign Currency Contracts
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss equal to
the difference between the value at the time it was opened and the value at the
time it was closed. The Fund could be exposed to risk if a counterparty is
unable to meet the terms of a contract or if
F32
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
the value of the currency changes unfavorably. The Fund may enter into Forward
Contracts in connection with planned purchases or sales of securities, or to
hedge against adverse fluctuations in exchange rates between currencies.
(E) Option Accounting Principles
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
market-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of on over-the-counter option, is valued at the average
of the last bid prices obtained from brokers, unless a quotation from only one
broker is available, in which case only that broker's price will be used. If an
option expires on its stipulated expiration date or if the Fund enters into a
closing purchase transaction, a gain or loss is realized without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option is extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the proceeds of
the sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium originally received. The Fund can write options only on
a covered basis, which, for a call, requires that the Fund hold the underlying
security, and, for a put, requires the Fund to set aside cash, U.S. government
securities or other liquid securities in an amount not less than the exercise
price or otherwise provide adequate cover at all times while the put option is
outstanding. The Fund may use options to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) Futures Contracts
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
(G) Security Transactions and Related Investment Income
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other then normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) Portfolio Securities Loaned
At December 31, 1996, stocks with an aggregate value of approximately
$19,408,528 were on loan to brokers. The loans were secured by cash collateral
of $20,879,528, received by the Fund. Cash collateral is received by the Fund
against loaned securities in an amount at least equal to 105% of the market
value of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 103% of the market value of the loaned
securities during the period of the loan. For the year ended December 31, 1996,
the Fund received securities lending fees of $157,185 which were used to reduce
custodian fees.
(I) Taxes
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, or excise tax on income
and capital gains.
F33
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
(J) Distribution to Shareholders
Distribution to shareholders are recorded by the Fund on the ex-date. Income and
capital gain distributions are determined in accordance with Federal income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) Foreign Securities
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets,
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(L) Restricted Securities
The Fund is permitted to invest in privately placed restrictions securities.
These securities may be resold in transactions exempt from registration or to
the public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
(M) Indexed Securities
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(N) Line of Credit
The Fund, along with certain other funds advised by the Manager, has a line of
credit with the Bank of Boston. The arrangement with the bank allows all
specified funds to borrow an aggregate maximum amount of $100,000,000. For the
year ended December 31, 1996, the Fund periodically borrowed various amounts at
a money market rate, with a balance of $129,000 outstanding on December 31,
1996.
For the year ended December 31, 1996, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
was $9,625,800 with a weighted average interest rate of 6.27%. Interest incurred
on this loan for the year ended December 31, 1996 was $8,383, included in "Other
Expenses" on the Statement of Operations.
2. Related Parties
Chancellor LGT Asset Management is the Fund's investment manager and
administrator. On October 31, 1996, Chancellor Capital Management, Inc. merged
with LGT Asset Management, Inc., and the surviving entity was renamed Chancellor
LGT Asset Management, Inc. The Fund pays investment management and
administration fees at the following annualized rates: 0.975% on the first $500
million of the average daily net assets of the Fund; 0.95% on the next $500
million; 0.925% on the next $500 million and 0.90% on amounts thereafter. These
fees are computed daily and paid monthly, and are subject to reduction in any
year to the extent that the Fund's expenses (exclusive of brokerage commissions,
taxes, interest, distribution-related expenses and extraordinary expenses)
exceed the most stringent limits prescribed by the laws or regulations of any
state in which the Fund's shares are offered for sale, based on the average
total net asset value of the Fund.
GT Global, Inc., an affiliate of the Manager, serves as the Fund's distributor.
The Fund offers Class A, Class B, and Advisor Class shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. GT Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the year ended December 31, 1996, GT Global retained $28,270
of such sales charges. Purchases of Class A shares exceeding $500,000 may be
subject to a contingent deferred sales charge ("CDSC") upon redemption, in
accordance with the Fund's current prospectus. GT Global collected CDSCs in the
amount of $20,052 for the year ended December 31, 1996. GT Global also makes
ongoing shareholder servicing and trail commission payments to dealers whose
clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSC's, in accordance with the Fund's current
prospectus. During the year ended December 31, 1996, GT Global collected CDSC's
in the amount of $345,483. In addition, GT Global makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class B
shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Trustees has
adopted separate distribution plans with respect to the Fund's Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which the Fund
reimburses GT Global for a portion of its shareholder servicing and distribution
expenses. Under the Class A Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class A shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.35% of the average daily net assets of the Fund's Class A
shares, less any amounts paid by the Fund as the aforementioned service fee, for
its expenditures incurred in providing services as distributor. All expenses for
which GT Global is reimbursed under the Class A Plan will have been incurred
within one year of such reimbursement.
Pursuant to the Fund's Class B Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT
F34
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
Global a distribution fee at the annualized rate of up to 0.75% of the average
daily net assets of the Fund's Class B shares for its expenditures incurred in
providing services as distributor. Expenses incurred under the Class B Plan in
excess of 1.00% annually may be carried forward for reimbursement in subsequent
years as long as that Plan continues in effect.
The Manager and GT Global have voluntarily undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest and extraordinary
items) to the maximum annual level of 2.25%, and 2.90%, and 1.90% of the average
daily net assets of the Fund's Class A, Class B and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by GT Global
of payments under the Class A Plan and/or Class B Plan and/or reimbursements by
the Manager or GT Global of portions of the Fund's other operating expenses.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and GT Global, is the transfer agent of the Fund. For performing shareholder
servicing, reporting, and general transfer agent services, GT Services receives
an annual maintenance fee of $17.50 per account, a new account fee of $4.00 per
account, a per transaction fee of $1.75 for all transactions other than
exchanges and a per exchange fee of $2.25. GT Services also is reimbursed by the
Fund for its out-of-pocket expenses for such items as postage, forms, telephone
charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived by
applying 0.03% to the first $5 billion of assets of all registered mutual funds
advised by the Manager and 0.02% to the assets in excess of $5 billion and
allocating the result according to the Fund's average daily net assets.
The Company pays each of its Trustees who is not an employee, officer or
director of GT Capital, GT Global or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee.
3. Purchases and Sales of Securities
For the year ended December 31, 1996, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $224,329,938 and $343,544,014, respectively. There were
no purchases or sales of U.S. government obligations by the Fund during the
period.
F35
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
4. Capital Shares
At December 31, 1996, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
Capital Share Transactions
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1996 December 31, 1995
------------------------------- -------------------------------
Class A Shares Amount Shares Amount
- --------------------------------------------- ------------- ---------------- ------------- ----------------
<S> <C> <C> <C> <C>
Shares sold.................................. 122,327,179 $ 1,141,723,541 140,096,147 $ 1,244,115,581
Shares issued in connection with reinvestment
of distributions........................... 1,912,490 16,848,644 1,274,450 11,483,253
------------- ---------------- ------------- ----------------
124,239,669 1,158,572,185 141,370,597 1,255,598,834
Shares repurchased........................... (136,198,803) (1,274,970,792) (154,325,977) (1,370,898,171)
------------- ---------------- ------------- ----------------
Net decrease................................. (11,959,134) $ (116,398,607) (12,955,380) $ (115,299,337)
------------- ---------------- ------------- ----------------
------------- ---------------- ------------- ----------------
Year ended Year ended
December 31, 1996 December 31, 1995
------------------------------- -------------------------------
Class B Shares Amount Shares Amount
- --------------------------------------------- ------------- ---------------- ------------- ----------------
Shares sold.................................. 11,345,619 $ 103,852,840 4,065,880 $ 35,727,913
Shares issued in connection with reinvestment
of distributions........................... 678,796 5,819,941 329,999 2,917,198
------------- ---------------- ------------- ----------------
12,024,415 109,672,781 4,395,879 38,645,111
Shares repurchased........................... (12,451,843) (114,133,394) (4,499,678) (39,592,887)
------------- ---------------- ------------- ----------------
Net decrease................................. (427,428) $ (4,460,613) (103,799) $ (947,776)
------------- ---------------- ------------- ----------------
------------- ---------------- ------------- ----------------
June 1, 1995
(commencement of sale of
Year ended shares)
December 31, 1996 to December 31, 1995
------------------------------- -------------------------------
Advisor Class Shares Amount Shares Amount
- --------------------------------------------- ------------- ---------------- ------------- ----------------
Shares sold.................................. 2,233,829 $ 21,033,137 47,423 $ 417,842
Shares issued in connection with reinvestment
of distributions........................... 3,723 33,098 1,656 14,951
------------- ---------------- ------------- ----------------
2,237,552 21,066,235 49,079 432,793
Shares repurchased........................... (2,228,201) (21,036,679) (7,264) (64,899)
------------- ---------------- ------------- ----------------
Net increase................................. 9,351 $ 29,556 41,815 $ 367,894
------------- ---------------- ------------- ----------------
------------- ---------------- ------------- ----------------
</TABLE>
5. Expense Reductions
The Manager has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended December 31, 1996, the Fund's
expenses were reduced by $179,764 under these arrangements.
- ------------
Federal Tax Information (Unaudited):
For its fiscal year ended December 31, 1996, the total amount of income received
by the Fund from sources within foreign countries and possessions of the United
States was approximately $.23 per share (representing an approximate total of
$6,254,495). The total amount of taxes paid by the Fund to such countries was
approximately $.05 per share (representing an approximate total of $1,336,665).
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$22,365,202 as a capital gain dividend for the fiscal year ended December 31,
1996.
F36
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
GT Global Growth Series:
We have audited the accompanying statement of assets and liabilities of GT
Global New Pacific Growth Fund, a series of shares of beneficial interest of GT
Global Growth Series, including the schedule of portfolio investments, as of
December 31, 1996, the related statement of operations for the year then ended,
the statements of changes in net assets for each of the two years in the period
then ended, and the financial highlights for each of the five years in the
period then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1996 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of GT
Global New Pacific Growth Fund as of December 31, 1996, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the five years in the period then ended, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
FEBRUARY 14, 1997
F37
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- --------------------------------------------------------- -------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Finance (42.9%)
New World Development Co., Ltd. ....................... HK 3,666,000 $ 24,767,067 4.8
REAL ESTATE
HSBC Holdings PLC ..................................... HK 1,027,600 21,989,630 4.3
BANKS-MONEY CENTER
Rashid Hussain Bhd. ................................... MAL 3,000,000 19,841,584 3.9
SECURITIES BROKER
Sun Hung Kai Properties Ltd. .......................... HK 1,530,000 18,744,182 3.6
REAL ESTATE
Cheung Kong (Holdings) Ltd. ........................... HK 1,883,000 16,738,589 3.3
REAL ESTATE
Guangzhou Investment Co., Ltd. ........................ HK 32,100,000 15,356,866 3.0
REAL ESTATE
Wharf (Holdings) Ltd. ................................. HK 2,500,000 12,477,373 2.4
REAL ESTATE
Hysan Development Co., Ltd. ........................... HK 2,769,000 11,027,308 2.1
REAL ESTATE
Malaysian Resources Corp., Bhd. ....................... MAL 2,524,000 9,946,059 1.9
REAL ESTATE
Lai Sun Development Co., Ltd. ......................... HK 5,000,000 7,564,003 1.5
REAL ESTATE
Metropolitan Bank & Trust Co. ......................... PHIL 300,000 7,425,743 1.4
BANKS-REGIONAL
Metroplex Bhd. ........................................ MAL 5,500,000 6,752,475 1.3
REAL ESTATE
Ayala Land, Inc. "B" .................................. PHIL 5,700,000 6,511,805 1.3
REAL ESTATE
Bank of East Asia Ltd. ................................ HK 1,222,600 5,437,993 1.1
BANKS-MONEY CENTER
Samanda Holdings Bhd. ................................. MAL 1,051,000 4,953,228 1.0
INVESTMENT MANAGEMENT
Public Bank Bhd. - Foreign ............................ MAL 2,199,333 4,659,973 0.9
BANKS-MONEY CENTER
HKR International Ltd. ................................ HK 2,258,960 3,811,666 0.7
REAL ESTATE
DCB Holdings Bhd. ..................................... MAL 990,000 3,391,485 0.7
BANKS-REGIONAL
Philippine Commercial International Bank-/- ........... PHIL 252,290 3,314,549 0.6
BANKS-MONEY CENTER
Wheelock & Co., Ltd. .................................. HK 1,000,000 2,851,047 0.6
REAL ESTATE
Megaworld Properties & Holdings, Inc.-/- .............. PHIL 5,888,500 2,354,503 0.5
REAL ESTATE
Bank of the Philippine Islands ........................ PHIL 362,430 2,194,454 0.4
BANKS-MONEY CENTER
Hong Kong Land Holdings Ltd.{\/} ...................... HK 603,353 1,677,321 0.3
REAL ESTATE INVESTMENT TRUST
PT Bank Internasional Indonesia - Foreign ............. INDO 1,464,666 1,442,333 0.3
BANKS-MONEY CENTER
State Bank of India Ltd. - GDR-/- {\/} ................ IND 75,100 1,304,487 0.3
BANKS-MONEY CENTER
</TABLE>
The accompanying notes are an integral part of the financial statements.
F38
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- --------------------------------------------------------- -------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Finance (Continued)
Amoy Properties Ltd. .................................. HK 613,500 $ 884,474 0.2
REAL ESTATE
China Resources Enterprise Ltd.-/- .................... HK 354,000 796,431 0.2
REAL ESTATE INVESTMENT TRUST
Overseas-Chinese Banking Corp., Ltd. - Foreign ........ SING 55,000 684,158 0.1
BANKS-REGIONAL
Malayan Banking Bhd. .................................. MAL 47,500 526,733 0.1
BANKS-MONEY CENTER
United Overseas Bank Ltd. - Foreign ................... SING 28,000 312,268 0.1
BANKS-MONEY CENTER
Siam Commercial Bank PLC - Foreign .................... THAI 22,600 163,941 --
BANKS-MONEY CENTER
MBF Capital Bhd. ...................................... MAL 6,000 9,743 --
OTHER FINANCIAL
Hong Leong Bank Bhd. .................................. MAL 1,000 3,485 --
BANKS-MONEY CENTER
--------------
219,916,956
--------------
Capital Goods (17.3%)
PWE Industries Bhd. ................................... MAL 1,358,000 26,353,267 5.1
ELECTRICAL PLANT/EQUIPMENT
Ekran Bhd. ............................................ MAL 5,196,000 21,812,911 4.2
MACHINERY & ENGINEERING
United Engineers Ltd. ................................. MAL 1,625,000 14,673,267 2.9
CONSTRUCTION
New World Infrastructure Ltd.-/- ...................... HK 4,165,563 12,172,449 2.4
INDUSTRIAL COMPONENTS
Mancon Bhd. ........................................... MAL 2,000,000 6,099,010 1.2
CONSTRUCTION
C & P Homes, Inc. ..................................... PHIL 8,308,900 4,271,521 0.8
CONSTRUCTION
Harbin Power Equipment Co., Ltd.-/- ................... HK 17,082,000 2,782,948 0.5
ELECTRICAL PLANT/EQUIPMENT
United Engineers Ltd., Convertible Unsecured Loan
Stock, 4% expires 5/22/99 ............................ MAL 522,500 424,208 0.1
CONSTRUCTION
Bandar Raya Developments Bhd. ......................... MAL 191,000 366,115 0.1
CONSTRUCTION
--------------
88,955,696
--------------
Multi-Industry/Miscellaneous (10.0%)
Citic Pacific Ltd. .................................... HK 3,534,000 20,516,757 4.0
CONGLOMERATE
Hutchison Whampoa ..................................... HK 1,864,000 14,641,583 2.8
MULTI-INDUSTRY
Gadek (Malaysia) Bhd. ................................. MAL 1,432,000 10,888,871 2.1
CONGLOMERATE
Pacific Dunlop Ltd. ................................... AUSL 1,030,000 2,618,575 0.5
MULTI-INDUSTRY
</TABLE>
The accompanying notes are an integral part of the financial statements.
F39
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- --------------------------------------------------------- -------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Multi-Industry/Miscellaneous (Continued)
E.R.G. Ltd. ........................................... AUSL 1,754,638 $ 2,230,413 0.4
MULTI-INDUSTRY
Wembley Industries Holdings Bhd.-/- ................... MAL 355,000 593,307 0.1
MULTI-INDUSTRY
Jardine Strategic Holdings Ltd.{\/} ................... HK 83,000 300,460 0.1
CONGLOMERATE
JG Summit Holdings Inc. "B" ........................... PHIL 748,000 210,784 --
CONGLOMERATE
Korea Fund, Inc.{\/} .................................. KOR 938 14,070 --
COUNTRY FUNDS
--------------
52,014,820
--------------
Consumer Durables (6.6%)
Edaran Otomobil Nasional Bhd. ......................... MAL 1,273,000 12,730,000 2.5
AUTOMOBILES
Perusahaan Otomobil Nasional Bhd. ..................... MAL 1,982,000 12,559,208 2.4
AUTOMOBILES
Uniwide Holdings, Inc.-/- ............................. PHIL 42,000,000 8,316,832 1.6
APPLIANCES & HOUSEHOLD
Samsung Electronics Co.: .............................. KOR -- -- 0.1
CONSUMER ELECTRONICS
New-/- .............................................. -- 10,204 525,642 --
Common .............................................. -- 1,430 86,110 --
--------------
34,217,792
--------------
Materials/Basic Industry (5.8%)
Western Mining Corporation Holdings Ltd. .............. AUSL 1,700,000 10,710,257 2.1
METALS - NON-FERROUS
Broken Hill Proprietary Co., Ltd. ..................... AUSL 658,893 9,380,601 1.8
MISC. MATERIALS & COMMODITIES
Cosco Pacific Ltd. .................................... HK 6,048,000 7,038,014 1.4
PAPER/PACKAGING
APC Group, Inc. ....................................... PHIL 1,000,000,000 1,142,422 0.2
MISC. MATERIALS & COMMODITIES
Oriental Press Group .................................. HK 1,280,000 575,123 0.1
PAPER/PACKAGING
PT Semen Cibinong - Foreign ........................... INDO 200,000 563,321 0.1
CEMENT
Pohang Iron & Steel Co., Ltd.-/- ...................... KOR 8,500 493,454 0.1
METALS - STEEL
--------------
29,903,192
--------------
Services (5.7%)
China Hong Kong Photo Products Holdings Ltd. .......... HK 20,466,000 6,880,217 1.3
WHOLESALE & INTERNATIONAL TRADE
PT Telekomunikasi Indonesia - Foreign ................. INDO 3,415,000 5,894,166 1.1
TELECOM - OTHER
News Corp., Ltd. ...................................... AUSL 948,933 5,005,891 1.0
BROADCASTING & PUBLISHING
</TABLE>
The accompanying notes are an integral part of the financial statements.
F40
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- --------------------------------------------------------- -------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Services (Continued)
Hong Kong & Shanghai Hotels ........................... HK 2,166,666 $ 4,090,163 0.8
LEISURE & TOURISM
Resorts World Bhd. .................................... MAL 750,000 3,415,842 0.7
LEISURE & TOURISM
Telecom Corporation of New Zealand Ltd. ............... NZ 484,000 2,469,248 0.5
TELEPHONE NETWORKS
Matichon Newspaper Group - Foreign .................... THAI 154,800 495,051 0.1
BROADCASTING & PUBLISHING
Television Broadcasts Ltd. ............................ HK 106,000 423,507 0.1
BROADCASTING & PUBLISHING
I.C.C. International Public Co., Ltd. - Foreign ....... THAI 60,059 299,815 0.1
WHOLESALE & INTERNATIONAL TRADE
--------------
28,973,900
--------------
Energy (5.1%)
Belle Corp.-/- ........................................ PHIL 54,100,000 15,039,223 2.9
OIL
Oil Search Ltd. ....................................... AUSL 3,987,000 7,760,507 1.5
OIL
Electricity Generating Public Co., Ltd. - Foreign ..... THAI 1,219,350 3,328,829 0.6
ELECTRICAL & GAS UTILITIES
Yukong Ltd.: .......................................... KOR -- -- 0.1
OIL
Common .............................................. -- 17,929 340,491 --
New-/- .............................................. -- 2,667 49,130 --
--------------
26,518,180
--------------
Consumer Non-Durables (1.1%)
R.J. Reynolds Bhd. .................................... MAL 1,360,000 3,689,505 0.7
TOBACCO
PT Indofood Sukses Makmur ............................. INDO 1,000,000 1,990,682 0.4
FOOD
--------------
5,680,187
-------------- -----
TOTAL EQUITY INVESTMENTS (cost $392,821,001) ............ 486,180,723 94.5
-------------- -----
<CAPTION>
No. of Value % of Net
Warrants Country Warrants (Note 1) Assets
- --------------------------------------------------------- -------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Hicom Holdings Bhd. Warrants, expire 12/18/00-/- ...... MAL 750,000 962,376 0.2
MISC. MATERIALS & COMMODITIES
Hysan Development Co., Ltd. Warrants, expire
4/30/98-/- ........................................... HK 200,950 181,879 --
REAL ESTATE
Hong Kong & Shanghai Hotels Warrants, expire
12/31/98-/- .......................................... HK 166,666 62,494 --
LEISURE & TOURISM
</TABLE>
The accompanying notes are an integral part of the financial statements.
F41
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
No. of Value % of Net
Warrants Country Warrants (Note 1) Assets
- --------------------------------------------------------- -------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Hang Lung Development Co. Warrants, expire
10/31/97-/- .......................................... HK 36,500 $ 10,855 --
REAL ESTATE
Oriental Press Group Warrants due 12/31/98-/- ......... HK 128,000 9,103 --
PAPER/PACKAGING
-------------- -----
TOTAL WARRANTS (cost $357,315) .......................... 1,226,707 0.2
-------------- -----
TOTAL INVESTMENTS (cost $393,178,316) * ................ 487,407,430 94.7
Other Assets and Liabilities ............................ 27,216,429 5.3
-------------- -----
NET ASSETS .............................................. $ 514,623,859 100.0
-------------- -----
-------------- -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $393,178,316 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 106,594,790
Unrealized depreciation: (12,365,676)
-------------
Net unrealized appreciation: $ 94,229,114
-------------
-------------
</TABLE>
Abbreviation:
GDR--Global Depository Receipt
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1996, was concentrated in
the following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets {d}
-------------------------------------------
Fixed Income,
Rights & Short-term
Country (Country Code/Currency Code) Equity Warrants & Other Total
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Australia (AUSL/AUD) ................. 7.3 7.3
Hong Kong (HK/HKD) ................... 41.6 41.6
India (IND/INR) ...................... 0.3 0.3
Indonesia (INDO/IDR) ................. 1.9 1.9
Korea (KOR/KRW) ...................... 0.3 0.3
Malaysia (MAL/MYR) ................... 31.9 0.2 32.1
New Zealand (NZ/NZD) ................. 0.5 0.5
Philippines (PHIL/PHP) ............... 9.7 9.7
Singapore (SING/SGD) ................. 0.2 0.2
Thailand (THAI/THB) .................. 0.8 0.8
United States & Other (US/USD) ....... 5.3 5.3
------ ----- ----- -----
Total ............................... 94.5 0.2 5.3 100.0
------ ----- ----- -----
------ ----- ----- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $514,623,859.
The accompanying notes are an integral part of the financial statements.
F42
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $393,178,316) (Note 1).......................... $487,407,430
U.S. currency................................................................. $6,814,128
Foreign currencies (cost $5,414).............................................. 5,935 6,820,063
----------
Receivable for securities sold............................................................ 45,339,261
Receivable for Fund shares sold........................................................... 3,868,309
Dividends receivable...................................................................... 1,029,758
Cash held as collateral for securities loaned (Note 1).................................... 63,740,591
------------
Total assets............................................................................ 608,205,412
------------
Liabilities:
Payable for Fund shares repurchased....................................................... 28,846,604
Payable for investment management and administration fees (Note 2)........................ 426,970
Payable for service and distribution expenses (Note 2).................................... 234,903
Payable for transfer agent fees (Note 2).................................................. 143,695
Payable for printing and postage expenses................................................. 84,954
Payable for registration and filing fees.................................................. 32,587
Payable for professional fees............................................................. 29,043
Payable for custodian fees (Note 1)....................................................... 21,083
Payable for fund accounting fees (Note 2)................................................. 10,055
Payable for Trustees' fees and expenses (Note 2).......................................... 6,926
Other accrued expenses.................................................................... 4,142
Collateral for securities loaned (Note 1)................................................. 63,740,591
------------
Total liabilities....................................................................... 93,581,553
------------
Net assets.................................................................................. $514,623,859
------------
------------
Class A:
Net asset value and redemption price per share ($361,243,935 DIVIDED BY 27,535,860 shares
outstanding)............................................................................... $ 13.12
------------
------------
Maximum offering price per share (100/95.25 of $13.12) *.................................... $ 13.77
------------
------------
Class B:+
Net asset value and offering price per share ($151,805,064 DIVIDED BY 11,855,984 shares
outstanding)............................................................................... $ 12.80
------------
------------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($1,574,860
DIVIDED BY 119,633 shares outstanding)..................................................... $ 13.16
------------
------------
Net assets consist of:
Paid in capital (Note 4).................................................................. $391,221,530
Accumulated net realized gain on investments and foreign currency transactions............ 29,169,621
Net unrealized appreciation on translation of assets and liabilities in foreign
currencies............................................................................... 3,594
Net unrealized appreciation of investments................................................ 94,229,114
------------
Total -- representing net assets applicable to capital shares outstanding................... $514,623,859
------------
------------
<FN>
- --------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
F43
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
STATEMENT OF OPERATIONS
Year ended December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income:
Dividend income (net of foreign withholding tax of $513,592) (Note 1)...................... $ 9,813,777
Interest income............................................................................ 1,152,414
------------
Total investment income.................................................................. 10,966,191
------------
Expenses:
Investment management and administration fees (Note 2)..................................... 5,260,774
Service and distribution expenses: (Note 2)
Class A..................................................................... $ 1,366,421
Class B..................................................................... 1,482,869 2,849,290
-----------
Transfer agent fees (Note 2)............................................................... 1,688,200
Custodian fees (Note 1).................................................................... 811,002
Registration and filing fees............................................................... 305,540
Printing and postage expenses.............................................................. 179,780
Fund accounting fees (Note 2).............................................................. 135,182
Audit fees................................................................................. 60,024
Legal fees................................................................................. 11,712
Trustees' fees and expenses (Note 2)....................................................... 9,882
Other expenses (Note 1).................................................................... 418,812
------------
Total expenses before reductions......................................................... 11,730,198
------------
Expense reductions (Note 1 & 5)........................................................ (737,169)
------------
Total net expenses....................................................................... 10,993,029
------------
Net investment loss.......................................................................... (26,838)
------------
Net realized and unrealized gain on investments and foreign currencies: (Note 1)
Net realized gain on investments.............................................. 94,626,790
Net realized loss on foreign currency transactions............................ (342,342)
-----------
Net realized gain during the year........................................................ 94,284,448
Net change in unrealized appreciation on translation of assets and liabilities
in foreign currencies........................................................ (106)
Net change in unrealized appreciation of investments.......................... 36,883,188
-----------
Net unrealized appreciation during the year.............................................. 36,883,082
------------
Net realized and unrealized gain on investments and foreign currencies....................... 131,167,530
------------
Net increase in net assets resulting from operations......................................... $131,140,692
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F44
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1996 December 31, 1995
----------------- -----------------
<S> <C> <C>
Decrease in net assets
Operations:
Net investment income (loss)........................................ $ (26,838) $ 4,037,605
Net realized gain on investments and foreign currency
transactions....................................................... 94,284,448 17,716,911
Net change in unrealized appreciation (depreciation) on translation
of assets and liabilities in foreign currencies.................... (106) 6,315
Net change in unrealized appreciation of investments................ 36,883,188 36,706,715
----------------- -----------------
Net increase in net assets resulting from operations.............. 131,140,692 58,467,546
----------------- -----------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income.......................................... -- (2,982,780)
From net realized gain on investments............................... (44,900,913) (13,196,301)
Class B:
Distributions to shareholders: (Note 1)
From net investment income.......................................... -- (228,209)
From net realized gain on investments............................... (18,754,735) (4,263,749)
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income.......................................... -- (11,427)
From net realized gain on investments............................... (250,756) (35,360)
----------------- -----------------
Total distributions............................................... (63,906,404) (20,717,826)
----------------- -----------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested.................... 5,158,291,909 3,442,682,160
Decrease from capital shares repurchased............................ (5,226,446,724) (3,489,738,455)
----------------- -----------------
Net decrease from capital share transactions...................... (68,154,815) (47,056,295)
----------------- -----------------
Total decrease in net assets.......................................... (920,527) (9,306,575)
Net assets:
Beginning of year................................................... 515,544,386 524,850,961
----------------- -----------------
End of year*........................................................ $ 514,623,859 $ 515,544,386
----------------- -----------------
----------------- -----------------
--------------
*Includes undistributed net investment income of................... $ 0 $ 0
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F45
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
Class A+
----------------------------------------------------------
Year ended December 31,
----------------------------------------------------------
1996 (d) 1995 (d) 1994 1993 1992
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.47 $ 12.10 $ 15.86 $ 10.31 $ 11.30
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... 0.02 0.11 0.02 (0.03) 0.07
Net realized and unrealized gain
(loss) on investments................ 2.44 0.79 (3.15) 6.23 (0.97)
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. 2.46 0.90 (3.13) 6.20 (0.90)
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ -- (0.10) (0.01) -- (0.06)
From net realized gain on
investments.......................... (1.81) (0.43) (0.55) (0.65) (0.03)
In excess of net investment income.... -- -- -- -- --
In excess of net realized gain on
investments.......................... -- -- (0.07) -- --
---------- ---------- ---------- ---------- ----------
Total distributions................. (1.81) (0.53) (0.63) (0.65) (0.09)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 13.12 $ 12.47 $ 12.10 $ 15.86 $ 10.31
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 20.04% 7.45% (19.73)% 60.61% (7.96)%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 361,244 $ 383,722 $ 404,680 $ 498,898 $ 281,418
Ratio of net investment income (loss) to
average net assets..................... 0.17% 0.91% 0.11% (0.3)% 0.6%
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.86% 1.89% 1.81% 1.9% 2.0%
Without expense reductions............ 1.99% 1.94% --* --* --*
Portfolio turnover rate++++............. 93% 63% 87% 117% 72%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0032 N/A N/A N/A N/A
</TABLE>
- ----------------
+ All capitals shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover and average commission rates are calculated on the
basis of the Fund as a whole without distinguishing between the
classes of shares issued.
(a) Not annualized
(b) Annualized
(c) Total investment return does not include sales charges.
(d) These selected per share operating data were calculated based upon
average shares outstanding during the period.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
N/A Not applicable
The accompanying notes are an integral part of the financial statements.
F46
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
Class B++ Advisor Class+++
------------------------------------------------- ----------------------------
April 1, 1993 Year June 1, 1995
Year ended December 31, to ended to
---------------------------------- December 31, December 31, December 31,
1996 (d) 1995 (d) 1994 1993 1996 (d) 1995 (d)
---------- ---------- ---------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.29 $ 11.96 $ 15.79 $ 11.27 $ 12.45 $ 12.89
---------- ---------- ---------- ------------- ------------- -------------
---------- ---------- ---------- ------------- ------------- -------------
Income from investment operations:
Net investment income (loss).......... (0.06) 0.03 (0.06) (0.10) 0.07 0.09
Net realized and unrealized gain
(loss) on investments................ 2.38 0.75 (3.15) 5.27 2.45 0.05
---------- ---------- ---------- ------------- ------------- -------------
Net increase (decrease) from
investment operations.............. 2.32 0.78 (3.21) 5.17 2.52 0.14
---------- ---------- ---------- ------------- ------------- -------------
Distributions to shareholders:
From net investment income............ -- (0.02) -- -- -- (0.15)
From net realized gain on
investments.......................... (1.81) (0.43) (0.55) (0.65) (1.81) (0.43)
In excess of net investment income.... -- - (0.07) -- -- --
In excess of net realized gain on
investments.......................... -- -- -- -- -- --
---------- ---------- ---------- ------------- ------------- -------------
Total distributions................. (1.81) (0.45) (0.62) (0.65) (1.81) (0.58)
---------- ---------- ---------- ------------- ------------- -------------
Net asset value, end of period.......... $ 12.80 $ 12.29 $ 11.96 $ 15.79 $ 13.16 $ 12.45
---------- ---------- ---------- ------------- ------------- -------------
---------- ---------- ---------- ------------- ------------- -------------
Total investment return (c)............. 19.28% 6.54% (20.30)% 46.30%(a) 20.56% 1.07%(a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 151,805 $ 130,887 $ 120,171 $ 72,122 $ 1,575 $ 935
Ratio of net investment income (loss) to
average net assets..................... (0.48)% 0.26% (0.54)% (0.9)%(b) 0.52% 1.26%
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.51% 2.54% 2.46% 2.5%(b) 1.51% 1.54%(b)
Without expense reductions............ 2.64% 2.59% --* --* 1.64% 1.59%(b)
Portfolio turnover rate++++............. 93% 63% 87% 117% 93% 63%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0032 N/A N/A N/A $ 0.0032 N/A
</TABLE>
- ----------------
+ All capitals shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover and average commission rates are calculated on the
basis of the Fund as a whole without distinguishing between the
classes of shares issued.
(a) Not annualized
(b) Annualized
(c) Total investment return does not include sales charges.
(d) These selected per share operating data were calculated based upon
average shares outstanding during the period.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
N/A Not applicable
The accompanying notes are an integral part of the financial statements.
F47
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
GT Global New Pacific Growth Fund ("Fund") is a separate series of GT Global
Growth Series ("Company"). The Company is organized as a Massachusetts business
trust and is registered under the Investment Company Act of 1940, as amended
("1940 Act"), as an open-end management investment company. The Company has
eight diversified series of shares in operation, each series corresponding to a
distinct portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles and the
financial statements may include certain estimates made by management.
(A) Portfolio Valuation
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market, as of
the close of business on the day the securities are being valued, or, lacking
any sales, at the last available bid price. In cases where securities are traded
on more than one exchange, the securities are valued on the exchange determined
by Chancellor LGT Asset Management, Inc. (the "Manager") to be the primary
market.
Fixed income securities are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for securities of comparative maturity, quality and type. However, when the
Manager deems it appropriate, prices obtained for the day of valuation from a
bond pricing service will be used. Short-term investments with a maturity of 60
days or less are valued at amortized cost, adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Company's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of Trustees.
(B) Foreign Currency Translation
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, other assets and liabilities
are recorded in the books and records of the Fund after translation to U.S.
dollars based on the exchange rates on that day. The cost of each security is
determined using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains or losses arise from changes in the
value of assets and liabilities other than investments in securities at year
end, resulting from changes in exchange rates.
(C) Repurchase Agreements
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, U.S. government securities or other
high quality debt securities of which the value, including accrued interest, is
at least equal to the amount to be repaid to the Fund under each agreement at
its maturity.
(D) Forward Foreign Currency Contracts
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss equal to
the difference between the value at the time it was opened and the value at the
time it was closed. The Fund could be exposed to risk if a counterparty is
unable to meet the terms of a contract or if
F48
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
the value of the currency changes unfavorably. The Fund may enter into Forward
Contracts in connection with planned purchases or sales of securities, or to
hedge against adverse fluctuations in exchange rates between currencies.
(E) Option Accounting Principles
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of an over-the-counter option, is valued at the average
of the last bid prices obtained from brokers, unless a quotation from only one
broker is available, in which case only that broker's price will be used. If an
option expires on its stipulated expiration date or if the Fund enters into a
closing purchase transaction, a gain or loss is realized without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option in extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the proceeds of
the sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium originally received. The Fund can write options only on
a covered basis, which, for a call, requires that the Fund hold the underlying
security, and, for a put, requires the Fund to set aside cash, U.S.government
securities or other liquid securities in an amount not less than the exercise
price or otherwise provide adequate cover at all times while the put option is
outstanding. The Fund may use options to manage its exposure to the stock and
bond markets and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) Futures Contracts
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock and bond
markets and to fluctuations in currency values or interest rates.
(G) Security Transactions and Related Investment Income
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other than normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) Portfolio Securities Loaned
At December 31, 1996, stocks with an aggregate value of approximately
$60,565,635 were on loan to brokers. The loans were secured by cash collateral
of $63,740,591, received by the Fund. Cash collateral is received by the Fund
against loaned securities in an amount at least equal to 105% of the market
value of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 103% of the market value of the loaned
securities during the period of the loan. For the year ended December 31, 1996,
the Fund received securities lending fees of $319,975 which were used to reduce
custodian fees.
(I) Taxes
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, or excise tax on income
and capital gains.
F49
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
(J) Distributions to Shareholders
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) Foreign Securities
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets,
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(L) Restricted Securities
The Fund is permitted to invest in privately placed restricted securities. These
securities may be resold in transactions exempt from registration or to the
public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
(M) Indexed Securities
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(N) Line of Credit
The Fund, along with certain other funds advised by the Manager, has a line of
credit with the Bank of Boston. The arrangement with the bank allows all
specified funds to borrow an aggregate maximum amount of $100,000,000. For the
year ended December 31, 1996, the Fund periodically borrowed amounts at a money
market rate, all of which has been repaid by December 31, 1996.
For the year ended December 31, 1996, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
was $16,333,333 with a weighted average interest rate of 6.27%. Interest
incurred on this loan for the year ended December 31, 1996 was $25,611, included
in "Other Expenses" on the Statement of Operations.
2. Related Parties
Chancellor LGT Asset Management, Inc. is the Fund's investment manager and
administrator. On October 31, 1996, Chancellor Capital Management, Inc. merged
with LGT Asset Management, Inc., and the surviving entity was renamed Chancellor
LGT Asset Management, Inc. The Fund pays investment management and
administration fees at the following annualized rates: 0.975% on the first $500
million of average daily net assets on the Fund; 0.95% on the next $500 million;
0.925% on the next $500 million and 0.90% on amounts thereafter. These fees are
computed daily and paid monthly, and are subject to reduction in any year to the
extent that the Fund's expenses (exclusive of brokerage commissions, taxes,
interest, distribution-related expenses and extraordinary expenses) exceed the
most stringent limits prescribed by the laws or regulations of any state in
which the Fund's shares are offered for sale, based on the average total net
asset value of the Fund.
GT Global, Inc. ("GT Global"), an affiliate of the Manager, serves as the Fund's
distributor. The Fund offers Class A, Class B, and Advisor Class shares for
purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. GT Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the year ended December 31, 1996, GT Global retained
$133,060 of such sales charges. Purchases of Class A shares exceeding $500,000
may be subject to a contingent deferred sales charge ("CDSC") upon redemption,
in accordance with the Fund's current prospectus. GT Global collected CDSCs in
the amount of $19,470 for the year ended December 31, 1996. GT Global also makes
ongoing shareholder servicing and trail commission payments to dealers whose
clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSCs, in accordance with the Fund's current
prospectus. For the year ended December 31, 1996, GT Global collected CDSCs in
the amount of $636,270. In addition, GT Global makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class B
shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Trustees has
adopted separate distribution plans with respect to the Fund's Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which the Fund
reimburses GT Global for a portion of its shareholder servicing and distribution
expenses. Under the Class A Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class A shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.35% of the average daily net assets of the Fund's Class A
shares, less any amounts paid by the Fund as the aforementioned service fee, for
its expenditures incurred in providing services as distributor. All expenses for
which GT Global is reimbursed under the Class A Plan will have been incurred
within one year of such reimbursement.
Pursuant to the Fund's Class B Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT
F50
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
Global a distribution fee at the annualized rate of up to 0.75% of the average
daily net assets of the Fund's Class B shares for its expenditures incurred in
providing services as distributor. Expenses incurred under the Class B Plan in
excess of 1.00% annually may be carried forward for reimbursement in subsequent
years as long as that Plan continues in effect.
The Manager and GT Global have voluntarily undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest and extraordinary
items) to the maximum annual level of 2.25%, 2.90%, and 1.90% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by GT Global
of payments under the Class A Plan and/or Class B Plan and/ or reimbursements by
the Manager or GT Global of portions of the Fund's other operating expenses.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and GT Global, is the transfer agent of the Fund. For performing shareholder
servicing, reporting, and general transfer agent services, GT Services receives
an annual maintenance fee of $17.50 per account, a new account fee of $4.00 per
account, a per transaction fee of $1.75 for all transactions other than
exchanges and a per exchange fee of $2.25. GT Services also is reimbursed by the
Fund for its out-of-pocket expenses for such items as postage, forms, telephone
charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived by
applying 0.03% of the first $5 billion of assets of all registered mutual funds
advised by the Manager and 0.02% to the assets in excess of $5 billion and
allocating the result according to the Fund's average daily net assets.
The Company pays each of its Trustees who is not an employee, officer or
director of the Manager, GT Global or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee.
3. Purchases and Sales of Securities
For the year ended December 31, 1996, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $479,521,098 and $557,132,554, respectively. There were
no purchases or sales of U.S. government obligations during the period.
F51
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
4. Capital Shares
At December 31, 1996, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
Capital Share Transactions
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1996 December 31, 1995
----------------------------- ------------------------------
Shares Amount Shares Amount
------------- -------------- ------------- ---------------
<S> <C> <C> <C> <C>
Class A
- ---------------------------------------------
Shares sold.................................. 285,658,529 $3,783,795,259 213,508,812 $ 2,634,346,068
Shares issued in connection with reinvestment
of distributions........................... 2,934,435 37,677,963 1,069,849 13,241,922
------------- -------------- ------------- ---------------
288,592,964 3,821,473,222 214,578,661 2,647,587,990
Shares repurchased........................... (291,833,470) (3,895,314,036) (217,241,112) (2,697,556,175)
------------- -------------- ------------- ---------------
Net decrease................................. (3,240,506) $ (73,840,814) (2,662,451) $ (49,968,185)
------------- -------------- ------------- ---------------
------------- -------------- ------------- ---------------
Year ended Year ended
December 31, 1996 December 31, 1995
----------------------------- ------------------------------
Shares Amount Shares Amount
------------- -------------- ------------- ---------------
Class B
- ---------------------------------------------
Shares sold.................................. 96,986,480 $1,263,551,513 64,930,186 $ 788,928,928
Shares issued in connection with reinvestment
of distributions........................... 1,241,219 15,565,185 307,922 3,759,320
------------- -------------- ------------- ---------------
98,227,699 1,279,116,698 65,238,108 792,688,248
Shares repurchased........................... (97,020,480) (1,273,495,413) (64,636,995) (790,755,338)
------------- -------------- ------------- ---------------
Net increase................................. 1,207,219 $ 5,621,285 601,113 $ 1,932,910
------------- -------------- ------------- ---------------
------------- -------------- ------------- ---------------
June 1, 1995
Year ended (commencement of sale of
December 31, 1996 shares) to December 31, 1995
----------------------------- ------------------------------
Shares Amount Shares Amount
------------- -------------- ------------- ---------------
Advisor Class
- ---------------------------------------------
Shares sold.................................. 4,311,411 $ 57,463,326 184,375 $ 2,360,516
Shares issued in connection with reinvestment
of distributions........................... 18,530 238,663 3,674 45,406
------------- -------------- ------------- ---------------
4,329,941 57,701,989 188,049 2,405,922
Shares repurchased........................... (4,285,455) (57,637,275) (112,902) (1,426,942)
------------- -------------- ------------- ---------------
Net increase................................. 44,486 $ 64,714 75,147 $ 978,980
------------- -------------- ------------- ---------------
------------- -------------- ------------- ---------------
</TABLE>
5. Expense Reductions
The Manager has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended December 31, 1996, the Fund's
expenses were reduced by $417,194 under these arrangements.
- --------------
Federal Tax Information (Unaudited):
For its fiscal year ended December 31, 1996, the total amount of income received
by the Fund from sources within foreign countries and possessions of the United
States was approximately $.39 per share (representing an approximate total of
$13,728,818). The total amount of taxes paid by the Fund to such countries was
approximately $.11 per share (representing an approximate total of $3,935,474).
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$58,445,881 as a capital gain dividend for the fiscal year ended December 31,
1996.
F52
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
GT Global Growth Series:
We have audited the accompanying statement of assets and liabilities of GT
Global Europe Growth Fund, one of the funds organized as a series of GT Global
Growth Series, including the schedule of portfolio investments, as of December
31, 1996, the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended and the financial highlights for each of the five years in the period then
ended. These financial statements and the financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1996 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of GT
Global Europe Growth Fund as of December 31, 1996, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended and the financial highlights for each of the five years
in the period then ended, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
FEBRUARY 14, 1997
F53
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (36.1%)
Reed International PLC .................................... UK 1,661,000 $ 31,428,168 5.8
BUSINESS & PUBLIC SERVICES
Koninklijke Ahold N.V. .................................... NETH 463,790 29,020,463 5.3
RETAILERS-FOOD
Adecco S.A.: .............................................. SWTZ -- -- 3.8
CONSUMER SERVICES
Common-/- ............................................... -- 69,306 17,567,332 --
Bearer-/- ............................................... -- 12,320 3,093,812 --
Comptoirs Modernes ........................................ FR 28,620 15,470,270 2.8
RETAILERS-FOOD
Reuters Holdings PLC ...................................... UK 1,041,500 13,402,179 2.5
BROADCASTING & PUBLISHING
Sol Melia S.A.-/- ......................................... SPN 366,400 13,130,086 2.4
LEISURE & TOURISM
Stet Societa' Finanziaria Telefonica S.p.A. ............... ITLY 2,820,800 12,834,173 2.4
TELEPHONE NETWORKS
EMAP PLC .................................................. UK 993,000 12,523,022 2.3
BROADCASTING & PUBLISHING
Sodexho S.A. .............................................. FR 21,970 12,257,394 2.3
RESTAURANTS
VNU (Verenigde Nederlandse Uitgeversbedrijven Verenigd
Bezit) ................................................... NETH 520,000 10,876,014 2.0
BROADCASTING & PUBLISHING
Kuoni Reisen Holdings "B" - Registered .................... SWTZ 3,920 9,521,674 1.8
LEISURE & TOURISM
Falck AS .................................................. DEN 21,200 6,337,495 1.2
CONSUMER SERVICES
Telecel - Comunicacaoes Pessoais, S.A.-/- ................. PORT 96,380 6,155,884 1.1
WIRELESS COMMUNICATIONS
Kobenhavns Lufthavne AS ................................... DEN 22,911 2,334,879 0.4
TRANSPORTATION - AIRLINES
------------
195,952,845
------------
Health Care (12.6%)
Astra AB "A" Free ......................................... SWDN 608,700 30,110,663 5.5
PHARMACEUTICALS
Schering AG ............................................... GER 201,430 17,012,846 3.1
PHARMACEUTICALS
OY Tamro AB ............................................... FIN 1,784,900 11,879,922 2.2
PHARMACEUTICALS
M.L. Laboratories PLC-/- .................................. UK 1,738,907 6,074,264 1.1
PHARMACEUTICALS
Nearmedic Ltd.-/- ......................................... ASTRI 25,584 3,663,636 0.7
PHARMACEUTICALS
------------
68,741,331
------------
Consumer Non-Durables (10.6%)
Gucci Group - NY Registered Shares{\/} .................... ITLY 260,550 16,642,631 3.1
TEXTILES & APPAREL
Parmalat Finanziaria S.p.A. ............................... ITLY 8,706,000 13,331,960 2.5
FOOD
</TABLE>
The accompanying notes are an integral part of the financial statements.
F54
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Non-Durables (Continued)
Polygram .................................................. NETH 219,300 $ 11,180,997 2.1
RECREATION
Vendex International N.V. ................................. NETH 215,739 9,237,029 1.7
OTHER CONSUMER GOODS
De Rigo S.p.A. - ADR-/- {\/} .............................. ITLY 407,150 3,715,244 0.7
TEXTILES & APPAREL
Industrie Natuzzi S.p.A. - ADR{\/} ........................ ITLY 72,500 1,667,500 0.3
HOUSEHOLD PRODUCTS
Luxottica Group S.p.A. - ADR{\/} .......................... ITLY 16,700 868,400 0.2
OTHER CONSUMER GOODS
------------
56,643,761
------------
Materials/Basic Industry (10.3%)
SGL Carbon AG ............................................. GER 184,700 23,297,659 4.3
METALS - NON-FERROUS
Bayer AG .................................................. GER 279,300 11,404,447 2.1
CHEMICALS
Degussa AG ................................................ GER 20,000 9,057,217 1.7
MISC. MATERIALS & COMMODITIES
Saes Getters S.p.A.: ...................................... ITLY -- -- 1.2
CHEMICALS
ADR-/- {\/} ............................................. -- 405,600 4,917,900 --
di Risp ................................................. -- 153,900 1,881,339 --
Castorama Dubois Investisse ............................... FR 31,949 5,507,810 1.0
BUILDING MATERIALS & COMPONENTS
------------
56,066,372
------------
Finance (7.7%)
3I Group PLC .............................................. UK 1,730,000 14,426,541 2.7
INVESTMENT MANAGEMENT
Unidanmark AS "A" ......................................... DEN 235,100 12,179,278 2.2
BANKS-REGIONAL
M & G Group PLC ........................................... UK 600,000 11,352,740 2.1
INVESTMENT MANAGEMENT
Invesco PLC ............................................... UK 744,800 3,303,137 0.6
INVESTMENT MANAGEMENT
Invesco Funding LLC - F/P-/- .............................. UK 148,960 660,627 0.1
OTHER FINANCIAL
------------
41,922,323
------------
Technology (6.0%)
TT Tieto Oy "B" ........................................... FIN 147,400 12,215,204 2.2
SOFTWARE
Dassault Systemes S.A.-/- ................................. FR 235,600 10,883,992 2.0
COMPUTERS & PERIPHERALS
Group Axime-/- ............................................ FR 83,170 9,633,591 1.8
COMPUTERS & PERIPHERALS
------------
32,732,787
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F55
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Capital Goods (5.4%)
Telefonaktiebolaget LM Ericsson "B" ....................... SWDN 649,600 $ 20,119,426 3.7
TELECOM EQUIPMENT
Premier Farnell PLC ....................................... UK 707,558 9,098,905 1.7
INDUSTRIAL COMPONENTS
------------
29,218,331
------------
Multi-Industry/Miscellaneous (5.0%)
Gehe AG ................................................... GER 210,000 13,449,285 2.5
MULTI-INDUSTRY
Assystem .................................................. FR 97,897 7,484,018 1.4
MULTI-INDUSTRY
Pricer AB-/- .............................................. SWDN 241,228 5,948,728 1.1
MISCELLANEOUS
------------
26,882,031
------------
Consumer Durables (2.7%)
Valeo S.A. ................................................ FR 235,571 14,552,649 2.7
------------
AUTO PARTS
Energy (1.9%)
Ente Nazionale Idrocarburi (ENI) S.p.A. ................... ITLY 2,054,800 10,583,237 1.9
OIL
------------ -----
TOTAL EQUITY INVESTMENTS (cost $442,040,217) ................ 533,295,667 98.3
------------ -----
<CAPTION>
No. of Value % of Net
Warrants Country Warrants (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Sandoz AG Warrants (Issuer: Barclays de Zoete Wedd), expire
9/26/97 (cost $5,206,856)-/- ............................. SWTZ 205,700 5,265,490 1.0
------------ -----
PHARMACEUTICALS
<CAPTION>
Value % of Net
Repurchase Agreement (Note 1) Assets
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1996, with State Street Bank & Trust
Co., due Jan-
uary 2, 1997, for an effective yield of 6.25%,
collateralized by $5,575,000 U.S. Treasury Notes, 6.125%
due 3/31/98 (market value of collateral is $5,692,733,
including accrued interest). (cost $5,576,968) .......... 5,576,968 1.0
------------ -----
TOTAL INVESTMENTS (cost $452,824,041) * .................... 544,138,125 100.3
Other Assets and Liabilities ................................ (1,837,959) (0.3)
------------ -----
NET ASSETS .................................................. $542,300,166 100.0
------------ -----
------------ -----
</TABLE>
- --------------
{\/} U.S. currency denominated.
-/- Non-income producing security.
* For Federal income tax purposes, cost is $455,367,626 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 103,578,152
Unrealized depreciation: (14,807,653)
-------------
Net unrealized appreciation: $ 88,770,499
-------------
-------------
</TABLE>
Abbreviation:
ADR--American Depository Receipt
The accompanying notes are an integral part of the financial statements.
F56
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1996, was concentrated in
the following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets {d}
-------------------------------------------
Fixed Income,
Rights & Short-term
Country (Country Code/Currency Code) Equity Warrants & Other Total
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Austria (ASTRI/ATS) .................. 0.7 0.7
Denmark (DEN/DKK) .................... 3.8 3.8
Finland (FIN/FIM) .................... 4.4 4.4
France (FR/FRF) ...................... 14.0 14.0
Germany (GER/DEM) .................... 13.7 13.7
Italy (ITLY/ITL) ..................... 12.3 12.3
Netherlands (NETH/NLG) ............... 11.1 11.1
Portugal (PORT/PTE) .................. 1.1 1.1
Spain (SPN/ESP) ...................... 2.4 2.4
Sweden (SWDN/SEK) .................... 10.3 10.3
Switzerland (SWTZ/CHF) ............... 5.6 1.0 6.6
United Kingdom (UK/GBP) .............. 18.9 18.9
United States & Other (US/USD) ....... 0.7 0.7
------ --- --- -----
Total ............................... 98.3 1.0 0.7 100.0
------ --- --- -----
------ --- --- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $542,300,166.
The accompanying notes are an integral part of the financial statements.
F57
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $452,824,041) (Note 1).......................... $ 544,138,125
U.S. currency................................................................. $ 520
Foreign currencies (cost $4,175,779).......................................... 4,084,658 4,085,178
----------
Receivable for securities sold............................................................ 29,744,338
Dividends and dividend withholding tax reclaims receivable................................ 584,065
Receivable for Fund shares sold........................................................... 377,792
Miscellaneous receivable.................................................................. 151,536
Cash held as collateral for securities loaned (Note 1).................................... 41,594,267
-------------
Total assets............................................................................ 620,675,301
-------------
Liabilities:
Payable for Fund shares repurchased....................................................... 20,846,830
Payable for securities purchased.......................................................... 14,915,226
Payable for investment management and administration fees (Note 2)........................ 463,933
Payable for service and distribution expenses (Note 2).................................... 213,794
Payable for transfer agent fees (Note 2).................................................. 141,484
Payable for printing and postage expenses................................................. 121,788
Payable for professional fees............................................................. 42,166
Payable for fund accounting fees (Note 2)................................................. 11,144
Payable for Trustees' fees and expenses (Note 2).......................................... 10,851
Payable for custodian fees (Note 1)....................................................... 7,799
Payable for registration and filing fees.................................................. 3,958
Other accrued expenses.................................................................... 1,895
Collateral for securities loaned (Note 1)................................................. 41,594,267
-------------
Total liabilities....................................................................... 78,375,135
-------------
Net assets.................................................................................. $ 542,300,166
-------------
-------------
Class A:
Net asset value and redemption price per share ($453,792,288 DIVIDED BY 35,218,353 shares
outstanding)............................................................................... $ 12.89
-------------
-------------
Maximum offering price per share (100/95.25 of $12.89) *.................................... $ 13.53
-------------
-------------
Class B:+
Net asset value and offering price per share ($87,091,501 DIVIDED BY 6,840,010 shares
outstanding)............................................................................... $ 12.73
-------------
-------------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($1,416,377
DIVIDED BY 109,635 shares outstanding)..................................................... $ 12.92
-------------
-------------
Net assets consist of:
Paid in capital (Note 4).................................................................. $ 553,764,310
Accumulated net realized loss on investments and foreign currency transactions............ (102,810,111)
Net unrealized appreciation on translation of assets and liabilities in foreign
currencies............................................................................... 31,883
Net unrealized appreciation of investments................................................ 91,314,084
-------------
Total -- representing net assets applicable to capital shares outstanding................... $ 542,300,166
-------------
-------------
<FN>
- --------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
F58
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
STATEMENT OF OPERATIONS
Year ended December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of $1,282,376)............................. $ 7,537,412
Interest income............................................................................ 1,133,425
Other income............................................................................... 35,493
------------
Total investment income.................................................................. 8,706,330
------------
Expenses:
Investment management and administration fees (Note 2)..................................... 5,416,280
Service and distribution expenses: (Note 2)
Class A..................................................................... $ 1,666,909
Class B..................................................................... 783,175 2,450,084
-----------
Transfer agent fees (Note 2)............................................................... 1,866,185
Custodian fees (Note 1).................................................................... 428,461
Printing and postage expenses.............................................................. 149,243
Fund accounting fees (Note 2).............................................................. 139,442
Registration and filing fees............................................................... 115,952
Audit fees................................................................................. 60,756
Trustees' fees and expenses (Note 2)....................................................... 20,130
Legal fees................................................................................. 11,713
Other expenses (Note 1).................................................................... 319,077
------------
Total expenses before reductions......................................................... 10,977,323
------------
Expense reductions (Notes 1 & 5)....................................................... (332,508)
------------
Total net expenses....................................................................... 10,644,815
------------
Net investment loss.......................................................................... (1,938,485)
------------
Net realized and unrealized gain on investments and foreign currencies: (Note 1)
Net realized gain on investments.............................................. 84,393,603
Net realized gain on foreign currency transactions............................ 2,147,797
-----------
Net realized gain during the year........................................................ 86,541,400
Net change in unrealized appreciation on translation of assets and liabilities
in foreign currencies........................................................ (218,619)
Net change in unrealized appreciation of investments.......................... 23,691,090
-----------
Net unrealized appreciation during the year.............................................. 23,472,471
------------
Net realized and unrealized gain on investments and foreign currencies....................... 110,013,871
------------
Net increase in net assets resulting from operations......................................... $108,075,386
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F59
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended Year ended
December 31, December 31,
1996 1995
-------------- ---------------
<S> <C> <C>
Decrease in net assets
Operations:
Net investment income (loss)........................................... $ (1,938,485) $ 1,909,382
Net realized gain on investments and foreign currency transactions..... 86,541,400 26,309,310
Net change in unrealized appreciation on translation of assets and
liabilities in foreign currencies..................................... (218,619) (158,136)
Net change in unrealized appreciation of investments................... 23,691,090 32,353,329
-------------- ---------------
Net increase in net assets resulting from operations................. 108,075,386 60,413,885
-------------- ---------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income............................................. -- (4,239,316)
From net realized gain on investments.................................. (4,360,146) (1,762,043)
Class B:
Distributions to shareholders: (Note 1)
From net investment income............................................. -- (173,659)
From net realized gain on investments.................................. (815,186) (269,455)
Advisor Class: (Note 1)
Distributions to shareholders:
From net investment income............................................. -- (9,151)
From net realized gain on investments.................................. (29,590) (2,596)
-------------- ---------------
Total distributions.................................................. (5,204,922) (6,456,220)
-------------- ---------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested....................... 3,224,591,371 1,608,239,408
Decrease from capital shares repurchased............................... (3,342,278,802) (1,832,994,490)
-------------- ---------------
Net decrease from capital share transactions......................... (117,687,431) (224,755,082)
-------------- ---------------
Total decrease in net assets............................................. (14,816,967) (170,797,417)
Net assets:
Beginning of year...................................................... 557,117,133 727,914,550
-------------- ---------------
End of year*........................................................... $ 542,300,166 $ 557,117,133
-------------- ---------------
-------------- ---------------
- --------------
*Includes undistributed net investment income of....................... $ 0 $ 285,680
-------------- ---------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F60
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
Class A+
----------------------------------------------------------
Year ended December 31,
----------------------------------------------------------
1996 (a) 1995 (a) 1994 (a) 1993 (a) 1992 (a)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 10.88 $ 10.03 $ 10.84 $ 8.51 $ 9.59
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... (0.03) 0.04 0.06 0.05 0.11**
Net realized and unrealized gain
(loss) on investments................ 2.16 0.95 (0.69) 2.36 (1.19)
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. 2.13 0.99 (0.63) 2.41 (1.08)
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ -- (0.10) (0.05) (0.06) --
From net realized gain on
investments.......................... (0.12) (0.04) -- -- --
In excess of net investment income.... -- -- -- (0.02) --
In excess of net realized gain on
investments.......................... -- -- (0.13) -- --
---------- ---------- ---------- ---------- ----------
Total distributions................. (0.12) (0.14) (0.18) (0.08) --
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 12.89 $ 10.88 $ 10.03 $ 10.84 $ 8.51
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (d)............. 19.61% 9.86% (5.8)% 28.3% (11.3)%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 453,792 $ 483,375 $ 646,313 $ 854,701 $ 781,607
Ratio of net investment income (loss) to
average net assets..................... (0.26)% 0.38% 0.61% 0.6% 1.2%**
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.82% 1.83% 1.73% 1.9% 2.0%**
Without expense reductions............ 1.88% 1.89% 1.81% --* --*
Portfolio turnover rate++++............. 123% 108% 91% 67% 65%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0277 N/A N/A N/A N/A
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
* * Includes reimbursement by Chancellor LGT Asset Management, Inc. of
Fund Class A operating expenses of less than one cent per share.
Without such reimbursement, the ratio of expenses to average net
assets would have been 2.1% and the ratio of net investment income to
average net assets would have been 1.2%.
(a) Calculated based upon weighted average shares outstanding during the
period.
(b) Annualized.
(c) Not Annualized.
(d) Total investment return does not include sales charges.
N/A Not applicable.
The accompanying notes are an integral part of the financial statements.
F61
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
Class B++ Advisor Class+++
------------------------------------------------- ---------------------------
April 1, 1993 Year June 1, 1995
Year ended December 31, to ended to
---------------------------------- December 31, December 31, December 31,
1996 (a) 1995 (a) 1994 (a) 1993 (a) 1996 (a) 1995 (a)
---------- ---------- ---------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 10.81 $ 9.97 $ 10.79 $ 9.02 $ 10.85 $ 10.24
---------- ---------- ---------- ------------- ------------ -------------
Income from investment operations:
Net investment income (loss).......... (0.11) (0.03) -- -- 0.01 0.08
Net realized and unrealized gain
(loss) on investments................ 2.15 0.94 (0.69) 1.85 2.18 0.71
---------- ---------- ---------- ------------- ------------ -------------
Net increase (decrease) from
investment operations.............. 2.04 0.91 (0.69) 1.85 2.19 0.79
---------- ---------- ---------- ------------- ------------ -------------
Distributions to shareholders:
From net investment income............ -- (0.03) -- (0.06) -- (0.14)
From net realized gain on
investments.......................... (0.12) (0.04) -- -- (0.12) (0.04)
In excess of net investment income.... -- -- -- (0.02) -- --
In excess of net realized gain on
investments.......................... -- -- (0.13) -- -- --
---------- ---------- ---------- ------------- ------------ -------------
Total distributions................. (0.12) (0.07) (0.13) (0.08) (0.12) (0.18)
---------- ---------- ---------- ------------- ------------ -------------
Net asset value, end of period.......... $ 12.73 $ 10.81 $ 9.97 $ 10.79 $ 12.92 $ 10.85
---------- ---------- ---------- ------------- ------------ -------------
---------- ---------- ---------- ------------- ------------ -------------
Total investment return (d)............. 18.79% 9.20% (6.38)% 20.5%(c) 20.21 % 7.75%(c)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 87,092 $ 73,025 $ 81,602 $ 34,048 $ 1,416 $ 718
Ratio of net investment income (loss) to
average net assets..................... (0.91)% (0.27)% (0.04)% (0.1)%(b) 0.09 % 0.73%(b)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.47% 2.48% 2.38% 2.6%(b) 1.47 % 1.48%(b)
Without expense reductions............ 2.53% 2.54% 2.46% --* 1.53 % 1.54%(b)
Portfolio turnover rate++++............. 123% 108% 91% 67% 123 % 108%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0277 N/A N/A N/A $ 0.0277 N/A
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
* * Includes reimbursement by Chancellor LGT Asset Management, Inc. of
Fund Class A operating expenses of less than one cent per share.
Without such reimbursement, the ratio of expenses to average net
assets would have been 2.1% and the ratio of net investment income to
average net assets would have been 1.2%.
(a) Calculated based upon weighted average shares outstanding during the
period.
(b) Annualized.
(c) Not Annualized.
(d) Total investment return does not include sales charges.
N/A Not applicable.
The accompanying notes are an integral part of the financial statements.
F62
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
GT Global Europe Growth Fund ("Fund"), is a separate series of GT Global Growth
Series ("Company"). The Company is organized as a Massachusetts business trust
and is registered under the Investment Company Act of 1940, as amended ("1940
Act"), as an open-end management investment company. The Company has eight
diversified series of shares in operation, each series corresponding to a
distinct portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles, and
therefore the financial statements may include certain estimates from
management.
(A) Portfolio Valuation
The Fund calculates the net asset value of Fund shares and completes orders to
purchase, exchange or repurchase Fund shares on each business day, with the
exception of those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market in which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by Chancellor LGT Asset
Management, Inc. (the "Manager") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
asked prices for such investments or, if such prices are not available, at
prices for investments of comparative maturity, quality and type; however, when
the Manager deems it appropriate, prices obtained for the day of valuation from
a bond pricing service will be used. Short-term investments with a maturity of
60 days or less are valued to amortized cost, adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Fund's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of Trustees.
(B) Foreign Currency Translation
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, other assets and liabilities
are recorded in the books and records of the Fund after translation to U.S.
dollars based on the exchange rates on that day. The cost of each security is
determined using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains or losses arise from changes in the
value of assets and liabilities other than investments in securities at year
end, resulting from changes in exchange rates.
(C) Repurchase Agreements
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, U.S. government securities or other
high quality debt securities of which the value, including accrued interest, is
at least equal to the amount to be repaid to the Fund under each agreement at
its maturity.
(D) Forward Foreign Currency Contracts
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss equal to
the difference between the value at the time it was opened and the value at the
time it was closed. The Fund could be exposed to risk if a counterparty is
unable to meet the terms of a contract or if
F63
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
the value of the currency changes unfavorably. The Fund may enter into Forward
Contracts in connection with planned purchases or sales of securities, or to
hedge against adverse fluctuations in exchange rates between currencies.
(E) Option Accounting Principles
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
market-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of on over-the-counter option, is valued at the average
of the last bid prices obtained from brokers, unless a quotation from only one
broker is available, in which case only that broker's price will be used. If an
option expires on its stipulated expiration date or if the Fund enters into a
closing purchase transaction, a gain or loss is realized without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option is extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the proceeds of
the sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium originally received. The Fund can write options only on
a covered basis, which, for a call, requires that the Fund hold the underlying
security, and, for a put, requires the Fund to set aside cash, U.S. government
securities or other liquid securities in an amount not less than the exercise
price or otherwise provide adequate cover at all times while the put option is
outstanding. The Fund may use options to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) Futures Contracts
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
(G) Security Transactions and Related Investment Income
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other then normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) Portfolio Securities Loaned
At December 31, 1996, stocks with an aggregate value of approximately
$39,888,283 were on loan to brokers. The loans were secured by cash collateral
of $41,594,267, received by the Fund. Cash collateral is received by the Fund
against loaned securities in an amount at least equal to 105% of the market
value of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 103% of the market value of the loaned
securities during the period of the loan. For the year ended December 31, 1996,
the Fund received securities lending fees of $170,632 which were used to reduce
custodian fees.
(I) Taxes
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, or excise tax on income
and capital gains. The Fund currently has a capital loss carryforward of
$100,715,450, of which $96,233,015 expires in 2000 and $4,482,435 expires in
2001.
F64
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
(J) Distribution to Shareholders
Distribution to shareholders are recorded by the Fund on the ex-date. Income and
capital gain distributions are determined in accordance with Federal income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) Foreign Securities
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets,
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(L) Restricted Securities
The Fund is permitted to invest in privately placed restrictions securities.
These securities may be resold in transactions exempt from registration or to
the public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
(M) Indexed Securities
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(N) Line of Credit
The Fund, along with certain other funds advised by the Manager, has a line of
credit with the Bank of Boston. The arrangement with the bank allows all
specified funds to borrow an aggregate maximum amount of $100,000,000.
2. Related Parties
Chancellor LGT Asset Management is the Fund's investment manager and
administrator. On October 31, 1996, Chancellor Capital Management, Inc. merged
with LGT Asset Management, Inc., and the surviving entity was renamed Chancellor
LGT Asset Management, Inc. The Fund pays investment management and
administration fees at the following annualized rates: 0.975% on the first $500
million of the average daily net assets of the Fund; 0.95% on the next $500
million; 0.925% on the next $500 million and 0.90% on amounts thereafter. These
fees are computed daily and paid monthly, and are subject to reduction in any
year to the extent that the Fund's expenses (exclusive of brokerage commissions,
taxes, interest, distribution-related expenses and extraordinary expenses)
exceed the most stringent limits prescribed by the laws or regulations of any
state in which the Fund's shares are offered for sale, based on the average
total net asset value of the Fund.
GT Global, Inc., an affiliate of the Manager, serves as the Fund's distributor.
The Fund offers Class A, Class B, and Advisor Class shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. GT Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the year ended December 31, 1996, GT Global retained $39,684
of such sales charges. Purchases of Class A shares exceeding $500,000 may be
subject to a contingent deferred sales charge ("CDSC") upon redemption, in
accordance with the Fund's current prospectus. GT Global collected CDSCs in the
amount of $5,089 for the year ended December 31, 1996. GT Global also makes
ongoing shareholder servicing and trail commission payments to dealers whose
clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSC's, in accordance with the Fund's current
prospectus. During the year ended December 31, 1996, GT Global collected CDSC's
in the amount of $377,041. In addition, GT Global makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class B
shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Trustees has
adopted separate distribution plans with respect to the Fund's Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which the Fund
reimburses GT Global for a portion of its shareholder servicing and distribution
expenses. Under the Class A Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class A shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.35% of the average daily net assets of the Fund's Class A
shares, less any amounts paid by the Fund as the aforementioned service fee, for
its expenditures incurred in providing services as distributor. All expenses for
which GT Global is reimbursed under the Class A Plan will have been incurred
within one year of such reimbursement.
Pursuant to the Fund's Class B Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.75% of the average daily net assets of the Fund's Class B shares
for its expenditures incurred in providing services as distributor. Expenses
incurred under the Class B Plan in excess of 1.00% annually may be carried
forward for reimbursement in subsequent years as long as that Plan continues in
effect.
F65
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
The Manager and GT Global have voluntarily undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest and extraordinary
items) to the maximum annual level of 2.25%, and 2.90%, and 1.90% of the average
daily net assets of the Fund's Class A, Class B and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by GT Global
of payments under the Class A Plan and/or Class B Plan and/ or reimbursements by
the Manager or GT Global of portions of the Fund's other operating expenses.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and GT Global, is the transfer agent of the Fund. For performing shareholder
servicing, reporting, and general transfer agent services, GT Services receives
an annual maintenance fee of $17.50 per account, a new account fee of $4.00 per
account, a per transaction fee of $1.75 for all transactions other than
exchanges and a per exchange fee of $2.25. GT Services also is reimbursed by the
Fund for its out-of-pocket expenses for such items as postage, forms, telephone
charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived by
applying 0.03% to the first $5 billion of assets of all registered mutual funds
advised by the Manager and 0.02% to the assets in excess of $5 billion and
allocating the result according to the Fund's average daily net assets.
The Company pays each of its Trustees who is not an employee, officer or
director of GT Capital, GT Global or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee.
3. Purchases and Sales of Securities
For the year ended December 31, 1996, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $648,654,686 and $748,627,276, respectively. There were
no purchases or sales of U.S. government obligations by the Fund during the
period.
4. Capital Shares
At December 31, 1996, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
Capital Share Transactions
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1996 December 31, 1995
---------------------------- -----------------------------
Class A Shares Amount Shares Amount
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 247,661,557 $2,968,073,960 148,571,806 $ 1,551,431,041
Shares issued in connection with
reinvestment of distributions......... 261,336 3,297,924 415,180 4,458,262
------------ -------------- ------------ ---------------
247,922,893 2,971,371,884 148,986,986 1,555,889,303
Shares repurchased...................... (257,136,969) (3,090,222,730) (169,021,976) (1,766,588,469)
------------ -------------- ------------ ---------------
Net decrease............................ (9,214,076) $ (118,850,846) (20,034,990) $ (210,699,166)
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
Year ended Year ended
December 31, 1996 December 31, 1995
---------------------------- -----------------------------
Class B Shares Amount Shares Amount
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 15,643,994 $ 188,596,754 4,792,541 $ 50,660,689
Shares issued in connection with
reinvestment of distributions......... 53,171 663,732 35,327 377,127
------------ -------------- ------------ ---------------
15,697,165 189,260,486 4,827,868 51,037,816
Shares repurchased...................... (15,609,973) (188,238,304) (6,262,885) (65,780,212)
------------ -------------- ------------ ---------------
Net increase (decrease)................. 87,192 $ 1,022,182 (1,435,017) $ (14,742,396)
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
June 1, 1995
Year ended (commencement of sale of
December 31, 1996 shares) to December 31, 1995
---------------------------- -----------------------------
Advisor Class Shares Amount Shares Amount
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 5,230,224 $ 63,929,457 122,102 $ 1,300,674
Shares issued in connection with
reinvestment of distributions......... 2,336 29,544 1,098 11,615
------------ -------------- ------------ ---------------
5,232,560 63,959,001 123,200 1,312,289
Shares repurchased...................... (5,189,081) (63,817,768) (57,044) (625,809)
------------ -------------- ------------ ---------------
Net increase............................ 43,479 $ 141,233 66,156 $ 686,480
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
</TABLE>
F66
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
5. Expense Reductions
The Manager has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended December 31, 1996, the Fund's
expenses were reduced by $161,876 under these arrangements.
- --------------
Federal Tax Information (Unaudited):
For its fiscal year ended December 31, 1996, the total amount of income received
by the Fund from sources within foreign countries and possessions of the United
States was approximately $.19 per share (representing an approximate total of
$8,299,061). The total amount of taxes paid by the Fund to such countries was
approximately $.03 per share (representing an approximate total of $1,282,376).
F67
<PAGE>
GT GLOBAL AMERICA FUNDS
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
GT Global Growth Series:
We have audited the accompanying statements of assets and liabilities of GT
Global America Mid Cap Growth Fund (previously GT Global America Growth Fund),
GT Global America Small Cap Growth Fund - Consolidated, and GT Global America
Value Fund - Consolidated, three of the funds organized as a series of GT Global
Growth Series, including the portfolios of investments, as of December 31, 1996,
the related statements of operations for the year then ended, the statements of
changes in net assets and the financial highlights for each of the periods
indicated herein. These financial statements and the financial highlights are
the responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1996, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial positions of
the GT Global America Mid Cap Growth Fund (previously GT Global America Growth
Fund), GT Global America Small Cap Growth Fund - Consolidated, and GT Global
America Value Fund - Consolidated, as of December 31, 1996, the results of their
operations for the year then ended, the changes in their net assets and the
financial highlights for each of the periods indicated herein, in conformity
with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
FEBRUARY 14, 1997
F68
<PAGE>
GT GLOBAL AMERICA MID CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Energy (24.7%)
Cooper Cameron Corp.-/- ................................... US 243,800 $ 18,650,694 2.7
ENERGY EQUIPMENT & SERVICES
Rowan Cos., Inc.-/- ....................................... US 804,400 18,199,550 2.7
ENERGY EQUIPMENT & SERVICES
ENSCO International, Inc.-/- .............................. US 328,600 15,937,100 2.3
ENERGY EQUIPMENT & SERVICES
Global Marine, Inc.-/- .................................... US 742,500 15,314,063 2.3
ENERGY EQUIPMENT & SERVICES
Western Atlas, Inc.-/- .................................... US 208,500 14,777,438 2.2
ENERGY EQUIPMENT & SERVICES
Ente Nazionale Idrocarburi (ENI) S.p.A. - ADR{\/} ......... ITLY 279,600 14,434,350 2.1
OIL
Marine Drilling Co., Inc.-/- .............................. US 710,700 13,991,906 2.1
ENERGY EQUIPMENT & SERVICES
Seacor Holdings, Inc.-/- .................................. US 217,500 13,702,500 2.0
ENERGY EQUIPMENT & SERVICES
Benton Oil & Gas Co.-/- ................................... US 492,000 11,131,500 1.6
OIL
Triton Energy Ltd.-/- ..................................... US 212,500 10,306,250 1.5
OIL
Atwood Oceanics, Inc.-/- .................................. US 131,500 8,350,250 1.2
ENERGY EQUIPMENT & SERVICES
Reading & Bates Corp.-/- .................................. US 290,800 7,706,200 1.1
ENERGY EQUIPMENT & SERVICES
Chesapeake Energy Corp.-/- ................................ US 109,600 6,096,500 0.9
GAS PRODUCTION & DISTRIBUTION
------------
168,598,301
------------
Technology (19.1%)
Microsoft Corp.-/- ........................................ US 268,200 22,160,025 3.3
SOFTWARE
Intel Corp. ............................................... US 156,900 20,544,094 3.0
SEMICONDUCTORS
3Com Corp.-/- ............................................. US 226,400 16,612,100 2.4
NETWORKING
American Power Conversion Corp.-/- ........................ US 509,300 13,878,425 2.0
NETWORKING
DSP Communications, Inc.-/- ............................... US 568,500 11,014,688 1.6
TELECOM TECHNOLOGY
Dynatech Corp.-/- ......................................... US 247,300 10,943,025 1.6
INSTRUMENTATION & TEST
Comverse Technology, Inc.-/- .............................. US 271,100 10,250,969 1.5
COMPUTERS & PERIPHERALS
Cisco Systems, Inc.-/- .................................... US 143,300 9,117,463 1.3
NETWORKING
Cognos, Inc.-/- {\/} ...................................... CAN 321,700 9,047,813 1.3
SOFTWARE
Computer Products, Inc.-/- ................................ US 398,500 7,770,750 1.1
COMPUTERS & PERIPHERALS
------------
131,339,352
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F69
<PAGE>
GT GLOBAL AMERICA MID CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (18.3%)
Loewen Group, Inc.{\/} .................................... CAN 461,300 $ 18,048,363 2.7
CONSUMER SERVICES
Ross Stores, Inc. ......................................... US 347,200 17,360,000 2.6
RETAILERS-APPAREL
TJX Cos., Inc. ............................................ US 355,300 16,832,338 2.5
RETAILERS-APPAREL
Safeway, Inc.-/- .......................................... US 352,800 15,082,200 2.2
RETAILERS-FOOD
Tiffany & Co. ............................................. US 353,700 12,954,263 1.9
RETAILERS-OTHER
Paychex, Inc. ............................................. US 225,100 11,578,581 1.7
CONSUMER SERVICES
Outdoor Systems, Inc.-/- .................................. US 307,650 8,652,656 1.3
BUSINESS & PUBLIC SERVICES
USAir Group, Inc.-/- ...................................... US 343,300 8,024,638 1.2
TRANSPORTATION - AIRLINES
HFS, Inc.-/- .............................................. US 95,700 5,718,075 0.8
LEISURE & TOURISM
Universal Outdoor Holdings, Inc.-/- ....................... US 220,000 5,170,000 0.8
BUSINESS & PUBLIC SERVICES
Footstar, Inc.-/- ......................................... US 97,900 2,435,263 0.4
RETAILERS-APPAREL
Claire's Stores, Inc. ..................................... US 95,900 1,246,700 0.2
RETAILERS-APPAREL
------------
123,103,077
------------
Consumer Non-Durables (14.2%)
Philip Morris Cos., Inc. .................................. US 229,400 25,836,175 3.8
FOOD
Nike, Inc. "B" ............................................ US 377,900 22,579,525 3.3
TEXTILES & APPAREL
Liz Claiborne, Inc. ....................................... US 293,400 11,332,575 1.7
TEXTILES & APPAREL
Foodmaker, Inc.-/- ........................................ US 1,113,900 9,885,863 1.5
FOOD
Nautica Enterprises, Inc.-/- .............................. US 331,000 8,357,750 1.2
TEXTILES & APPAREL
Richfood Holdings, Inc. ................................... US 271,500 6,583,875 1.0
FOOD
Rexall Sundown, Inc.-/- ................................... US 240,800 6,546,750 1.0
PERSONAL CARE/COSMETICS
Tommy Hilfiger Corp.-/- ................................... US 93,400 4,483,200 0.7
TEXTILES & APPAREL
------------
95,605,713
------------
Finance (8.9%)
BankAmerica Corp. ......................................... US 235,200 23,461,200 3.5
BANKS-SUPER REGIONAL
Union Planters Corp. ...................................... US 394,365 15,380,235 2.3
BANKS-REGIONAL
</TABLE>
The accompanying notes are an integral part of the financial statements.
F70
<PAGE>
GT GLOBAL AMERICA MID CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (Continued)
Citicorp .................................................. US 131,200 $ 13,513,600 2.0
BANKS-MONEY CENTER
Mark Twain Bancshares, Inc. ............................... US 154,600 7,536,750 1.1
BANKS-REGIONAL
------------
59,891,785
------------
Materials/Basic Industry (4.8%)
Cytec Industries, Inc.-/- ................................. US 390,700 15,872,188 2.3
CHEMICALS
Barrick Gold Corp. ........................................ CAN 377,000 10,807,223 1.6
GOLD
Oregon Metallurgical Corp.-/- ............................. US 190,900 6,156,525 0.9
METALS - NON-FERROUS
------------
32,835,936
------------
Capital Goods (3.0%)
Davox Corp.-/- ............................................ US 334,700 13,806,375 2.0
TELECOM EQUIPMENT
Pairgain Technologies, Inc.-/- ............................ US 231,000 7,031,063 1.0
TELECOM EQUIPMENT
------------
20,837,438
------------ -----
TOTAL EQUITY INVESTMENTS (cost $543,685,886) ................ 632,211,602 93.0
------------ -----
<CAPTION>
Value % of Net
Repurchase Agreement (Note 1) Assets
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1996, with State Street Bank & Trust
Co., due January 2, 1997, for an effective yield of 6.25%,
collateralized by $47,860,000 U.S. Treasury Notes, 6.125%
due 3/31/98 (market value of collateral is $48,870,709,
including accrued interest). (cost $47,911,316) .......... 47,911,316 7.0
------------ -----
TOTAL INVESTMENTS (cost $591,597,202) * .................... 680,122,918 100.0
Other Assets and Liabilities ................................ (119,840) (0.0)
------------ -----
NET ASSETS .................................................. $680,003,078 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $594,949,965 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 93,369,566
Unrealized depreciation: (8,196,613)
-------------
Net unrealized appreciation: $ 85,172,953
-------------
-------------
</TABLE>
Abbreviation:
ADR--American Depository Receipt
The accompanying notes are an integral part of the financial statements.
F71
<PAGE>
GT GLOBAL AMERICA MID CAP GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost $20,206,432; $591,597,202; and $8,925,422, respectively)
(Note 1).............................................................................................. $680,122,918
U.S. currency.......................................................................................... 56
Dividends receivable................................................................................... 464,678
Receivable for Fund shares sold........................................................................ 9,198,772
Receivable for securities sold......................................................................... 1,474,451
Receivable from Chancellor LGT Asset Management, Inc. (Note 2)......................................... --
Unamortized organizational costs (Note 1).............................................................. --
Miscellaneous receivable............................................................................... 101,169
Cash held as collateral for securities loaned (Note 1)................................................. 32,605,600
----------
Total assets......................................................................................... 723,967,644
----------
Liabilities:
Payable for custodian fees (Note 1).................................................................... 7,508
Payable for fund accounting fees (Note 2).............................................................. 13,643
Payable for Fund shares repurchased.................................................................... 10,244,161
Payable for investment management and administration fees (Note 2)..................................... 419,487
Payable for loan outstanding (Note 1).................................................................. --
Payable for printing and postage expenses.............................................................. 77,133
Payable for professional fees.......................................................................... 32,291
Payable for registration and filing fees............................................................... 13,189
Payable for securities purchased....................................................................... --
Payable for service and distribution expenses (Note 2)................................................. 387,262
Payable for transfer agent fees (Note 2)............................................................... 155,101
Payable for Trustees' fees and expenses (Note 2)....................................................... 8,705
Other accrued expenses (Note 1)........................................................................ 486
Collateral for securities loaned (Note 1).............................................................. 32,605,600
----------
Total liabilities.................................................................................... 43,964,566
Minority interest (Notes 1 & 2)........................................................................ --
----------
Net assets............................................................................................... $680,003,078
----------
----------
Class A:
Net asset value and redemption price per share ($8,448,005 DIVIDED BY 674,639;
$343,426,924 DIVIDED BY 16,536,083; and $2,528,653 DIVIDED BY 172,644 shares outstanding,
respectively)........................................................................................... $ 20.77
----------
----------
Maximum offering price per share (100/95.25 of $12.52; 100/95.25 of $20.77; and 100/95.25 of $14.65,
respectively) *......................................................................................... $ 21.81
----------
----------
Class B+
Net asset value and offering price per share
($10,694,097 DIVIDED BY 861,017; $334,589,970 DIVIDED BY 16,498,419; and $5,503,054 DIVIDED BY 378,527
shares outstanding, respectively)....................................................................... $ 20.28
----------
----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($435,214 DIVIDED BY 34,597;
$1,986,184 DIVIDED BY 95,684; and $191,292 DIVIDED BY 12,994 shares outstanding, respectively).......... $ 20.76
----------
----------
Net assets consist of:
Paid in capital (Note 4)............................................................................... $601,059,922
Accumulated net realized gain (loss) on investments and foreign currency transactions.................. (9,582,560)
Net unrealized appreciation (depreciation) of investments.............................................. 88,525,716
----------
Total -- representing net assets applicable to capital shares outstanding................................ $680,003,078
----------
----------
<FN>
- ----------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
F72
<PAGE>
GT GLOBAL AMERICA MID CAP GROWTH FUND
STATEMENT OF OPERATIONS
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Investment income: (Note 1)
Interest income........................................................................................ $6,000,887
Dividend income........................................................................................ 4,151,150
Other income........................................................................................... 68,462
----------
Total investment income.............................................................................. 10,220,499
----------
Expenses:
Amortization of organization costs (Note 1)............................................................ --
Custodian fees (Note 1)................................................................................ 80,790
Fund accounting fees (Note 2).......................................................................... 173,767
Insurance expenses..................................................................................... 5,461
Investment management and administration fees (Note 2)................................................. 4,982,969
Printing and postage expenses.......................................................................... 145,366
Professional fees...................................................................................... 66,122
Registration and filing fees........................................................................... 76,240
Service and distribution expenses: (Note 2)
Class A.............................................................................................. 1,251,494
Class B.............................................................................................. 3,347,860
Transfer agent fees (Note 2)........................................................................... 1,802,660
Trustees' fees and expenses (Note 2)................................................................... 16,532
Other expenses (Note 1)................................................................................ 10,000
----------
Total expenses before reductions and reimbursement..................................................... 11,959,261
Expense reductions (Notes 1 & 6)..................................................................... (371,416)
Expenses reimbursed by Chancellor LGT Asset Management, Inc. (Note 2)................................ --
----------
Total net expenses..................................................................................... 11,587,845
----------
Net investment loss...................................................................................... (1,367,346)
----------
Net realized and unrealized gain on investments: (Note 1)
Net realized gain on investments....................................................................... 24,290,969
Net realized gain (loss) on foreign currency transactions.............................................. 48,400
Net change in unrealized appreciation (depreciation) of investments.................................... 76,318,599
----------
Net realized and unrealized gain on investments.......................................................... 100,657,968
----------
Net increase in net assets resulting from operations..................................................... $99,290,622
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F73
<PAGE>
GT GLOBAL AMERICA MID CAP GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
Year ended Year ended
December 31, December 31,
1996 1995
------------ ------------
Increase (Decrease) in net assets
Operations:
Net investment income (loss)............................................................ $ (1,367,346) $ 5,981,525
Net realized gain on investments and foreign currency transactions...................... 24,339,369 93,317,375
Net change in unrealized appreciation (depreciation) of investments..................... 76,318,599 (4,611,894)
------------ ------------
Net increase in net assets resulting from operations.................................. 99,290,622 94,687,006
------------ ------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income.............................................................. -- (3,774,599)
From net realized gain on investments................................................... (21,518,831) (46,598,539)
Class B:
Distributions to shareholders: (Note 1)
From net investment income.............................................................. -- (1,969,042)
From net realized gain on investments................................................... (20,232,121) (41,818,697)
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income.............................................................. -- (18,429)
From net realized gain on investments................................................... (167,680) (170,545)
------------ ------------
Total distributions................................................................... (41,918,632) (94,349,851)
------------ ------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested........................................ 2,122,781,710 1,840,086,218
Decrease from capital shares repurchased................................................ (2,246,270,951) (1,371,300,487)
------------ ------------
Net increase (decrease) from capital share transactions............................... (123,489,241) 468,785,731
------------ ------------
Total increase (decrease) in net assets................................................... (66,117,251) 469,122,886
Net assets:
Beginning of period..................................................................... 746,120,329 276,997,443
------------ ------------
End of period *......................................................................... $680,003,078 $746,120,329
------------ ------------
------------ ------------
*Includes undistributed/accumulated net investment income (loss)......................... $ 0 $ 258,896
------------ ------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F74
<PAGE>
GT GLOBAL AMERICA MID CAP GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
Class A+
----------------------------------------------------------
Year ended December 31,
----------------------------------------------------------
1996 1995 1994 (d) 1993 1992
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 19.07 $ 17.69 $ 17.17 $ 17.12 $ 14.13
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... 0.03 0.24 0.04 (0.21) (0.11)
Net realized and unrealized gain on
investments.......................... 2.96 3.93 2.55 1.56 4.54
---------- ---------- ---------- ---------- ----------
Net increase from investment
operations......................... 2.99 4.17 2.59 1.35 4.43
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ -- (0.21) (0.02) -- --
From net realized gain on
investments.......................... (1.29) (2.58) (2.05) (1.30) (1.44)
---------- ---------- ---------- ---------- ----------
Total distributions................. (1.29) (2.79) (2.07) (1.30) (1.44)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 20.77 $ 19.07 $ 17.69 $ 17.17 $ 17.12
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 15.65% 23.23% 15.69% 8.3% 31.7%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 343,427 $ 396,291 $ 196,937 $ 116,468 $ 166,712
Ratio of net investment income (loss) to
average net assets..................... 0.12% 1.24% 0.17% (0.7)% (1.1)%
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
6)................................... 1.36% 1.46% 1.58% 1.6% 1.8%
Without expense reductions............ 1.41% --%* --%* --%* --%*
Portfolio turnover rate++++............. 253% 71% 102% 92% 114%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0536 N/A N/A N/A N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the year.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
The accompanying notes are an integral part of the financial statements.
F75
<PAGE>
GT GLOBAL AMERICA MID CAP GROWTH FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
Class B++ Advisor Class+++
------------------------------------------------- ---------------------------
April 1, 1993 Year June 1, 1995
Year ended December 31, to ended to
---------------------------------- December 31, December 31, December 31,
1996 1995 1994 (d) 1993 1996 1995
---------- ---------- ---------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 18.77 $ 17.50 $ 17.09 $ 15.90 $ 19.05 $ 20.61
---------- ---------- ---------- ------------- ------------ -------------
Income from investment operations:
Net investment income (loss).......... (0.11) 0.10 (0.09) (0.29) 0.09 0.21
Net realized and unrealized gain on
investments.......................... 2.91 3.87 2.55 2.78 2.91 1.09
---------- ---------- ---------- ------------- ------------ -------------
Net increase from investment
operations......................... 2.80 3.97 2.46 2.49 3.00 1.30
---------- ---------- ---------- ------------- ------------ -------------
Distributions to shareholders:
From net investment income............ -- (0.12) -- -- -- (0.28)
From net realized gain on
investments.......................... (1.29) (2.58) (2.05) (1.30) (1.29) (2.58)
---------- ---------- ---------- ------------- ------------ -------------
Total distributions................. (1.29) (2.70) (2.05) (1.30) (1.29) (2.86)
---------- ---------- ---------- ------------- ------------ -------------
Net asset value, end of period.......... $ 20.28 $ 18.77 $ 17.50 $ 17.09 $ 20.76 $ 19.05
---------- ---------- ---------- ------------- ------------ -------------
---------- ---------- ---------- ------------- ------------ -------------
Total investment return (c)............. 14.82% 22.42% 15.06% 16.1%(b) 15.72 % 6.01%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 334,590 $ 348,435 $ 80,060 $ 1,982 $ 1,986 $ 1,394
Ratio of net investment income (loss) to
average net assets..................... (0.53)% 0.59% (0.48)% (1.3)%(a) 0.47 % 1.59%(a)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
6)................................... 2.01% 2.11% 2.23% 2.2%(a) 1.01 % 1.11%(a)
Without expense reductions............ 2.06% --%* --%* --%(a) * 1.06 % --%* (a)
Portfolio turnover rate++++............. 253% 71% 102% 92% 253 % 71%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0536 N/A N/A N/A $ 0.0536 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the year.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
The accompanying notes are an integral part of the financial statements.
F76
<PAGE>
GT GLOBAL AMERICA FUNDS
NOTES TO
FINANCIAL STATEMENTS
December 31, 1996
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
GT Global America Mid Cap Growth Fund (formerly named GT Global America Growth
Fund), GT Global America Small Cap Growth Fund, and GT Global America Value Fund
("Funds"), are separate series of GT Global Growth Series ("Company"). The
Company is organized as a Massachusetts business trust and is registered under
the Investment Company Act of 1940, as amended ("1940 Act"), as an open-end
management investment company. The Company has eight diversified series of
shares in operation, each series corresponding to a distinct portfolio of
investments.
The GT Global America Small Cap Growth Fund and GT Global America Value Fund
invest substantially all of their investable assets in Small Cap Growth
Portfolio and Value Portfolio ("Portfolios"), respectively. Each of these
Portfolios is organized as a New York Trust and is registered under the 1940 Act
as a diversified, open-end management investment company.
The Portfolios have investment objectives, policies, and limitations
substantially identical to those of their corresponding Funds. Therefore, the
financial statements of the GT Global America Small Cap Growth Fund, the GT
Global America Value Fund, and their respective Portfolios have been presented
on a consolidated basis, and represent all activities of both the respective
Funds and Portfolios. Through December 31, 1996, all of the shares of beneficial
interest of each Portfolio were owned either by its respective fund or
Chancellor LGT Asset Management, Inc. (the "Manager"), which has a nominal
($100) investment in each Portfolio.
The Funds offer Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Funds are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Funds. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The following is a summary of significant accounting policies consistently
followed by the Funds and Portfolios in the preparation of the financial
statements. The policies are in conformity with generally accepted accounting
principles, and the financial statements may include certain estimates made by
management.
(A) Portfolio Valuation
The Funds calculate the net asset value of and complete orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by the Manager to be the
primary market.
Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality and type; however, when the
Manager deems it appropriate, prices obtained for the day of valuation from a
bond pricing service will be used. Short-term investments with a maturity of 60
days or less are valued at amortized cost, adjusted for market fluctuation, if
any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Company's Board of Trustees.
(B) Repurchase Agreements
With respect to repurchase agreements entered into by a Fund or Portfolio (the
phrase "Fund or Portfolio" hereinafter includes the GT Global America Mid Cap
Growth Fund and each of the two Portfolios), it is the Fund's or Portfolio's
policy to always receive, as collateral, United States government securities or
other high quality debt securities of which the value, including accrued
interest, is at least equal to the amount to be repaid to the Fund or Portfolio
under each agreement at its maturity.
(C) Option Accounting Principles
When a Fund or Portfolio writes a call or put option, an amount equal to the
premium received is included in the Fund's or Portfolio's "Statement of Assets
and Liabilities" as an asset and an equivalent liability. The amount of the
liability is subsequently marked-to-market to reflect the current market value
of the option. The current market value of an option listed on a traded exchange
is valued at its last bid price, or, in the case of an over-the-counter option,
is valued at the average of the last bid prices obtained from brokers, unless a
quotation from only one broker is available, in which case only that broker's
price will be used. If an option expires on its stipulated expiration date or if
the Fund or Portfolio enters into a closing purchase transaction, a gain or loss
is realized without regard to any unrealized gain or loss on the underlying
security, and the liability related to such option is extinguished. If a written
call option is exercised, a gain or loss is realized from the sale of the
underlying security and the proceeds of the sale are increased by the premium
originally received. If a written put option is exercised, the cost of the
underlying security purchased would be decreased by the premium originally
received. The Fund or Portfolio can write options only on a covered basis,
which, for a call, requires that the Fund or Portfolio hold the underlying
security, and, for a put, requires the Fund or
F77
<PAGE>
GT GLOBAL AMERICA FUNDS
Portfolio to set aside cash, U.S. government securities or other liquid
securities in an amount not less than the exercise price or otherwise provide
adequate cover at all times while the put option is outstanding. The Fund or
Portfolio may use options to manage its exposure to the stock market and to
fluctuations in interest rates.
The premium paid by the Fund or Portfolio for the purchase of a call or put
option is included in the Fund's or Portfolio's "Statement of Assets and
Liabilities" as an investment and subsequently "marked-to-market" to reflect the
current market value of the option. If an option which the Fund or Portfolio has
purchased expires on the stipulated expiration date, the Fund or Portfolio
realizes a loss in the amount of the cost of the option. If the Fund or
Portfolio enters into a closing sale transaction, the Fund or Portfolio realizes
a gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund or Portfolio
exercises a call option, the cost of the securities acquired by exercising the
call is increased by the premium paid to buy the call. If the Fund or Portfolio
exercises a put option, it realizes a gain or loss from the sale of the
underlying security, and the proceeds from such sale are decreased by the
premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund or Portfolio may forego
the opportunity of profit if the market value of the underlying security or
index increases and the option is exercised. The risk in writing a put option is
that the Fund or Portfolio may incur a loss if the market value of the
underlying security or index decreases and the option is exercised. In addition,
there is the risk the Fund or Portfolio may not be able to enter into a closing
transaction because of an illiquid secondary market.
(D) Futures Contracts
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund or Portfolio is required to pledge to the broker an amount of cash or
securities equal to the minimum "initial margin" requirements of the exchange on
which the contract is traded. Pursuant to the contract, the Fund or Portfolio
agrees to receive from or pay to the broker an amount of cash equal to the daily
fluctuation in value of the contract. Such receipts or payments are known as
"variation margin" and are recorded by the Fund or Portfolio as unrealized gains
or losses. When the contract is closed, the Fund or Portfolio records a realized
gain or loss equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed. The potential risk
to the Fund or Portfolio is that the change in value of the underlying
securities may not correlate to the change in value of the contracts. The Fund
or Portfolio may use futures contracts to manage its exposure to the stock
market and to fluctuations in interest rates.
(E) Security Transactions and Related Investment Income
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund or Portfolio
may trade securities on other than normal settlement terms. This may increase
the risk if the other party to the transaction fails to deliver and causes the
Fund or Portfolio to subsequently invest at less advantageous prices.
(F) Portfolio Securities Loaned
At December 31, 1996, stocks with an aggregate value listed below were on loan
to brokers. These loans were secured by cash collateral received by the fund or
portfolios:
<TABLE>
<CAPTION>
December 31, 1996 Year ended
-------------------------------- December 31, 1996
Aggregate Value Cash -----------------
GT Global on Loan Collateral Fees Earned
- ---------------------------------------- --------------- -------------- -----------------
<S> <C> <C> <C>
America Mid Cap Growth Fund............. $ 31,491,056 $ 32,605,600 $163,841
Small Cap Growth Portfolio.............. 380,738 383,400 61
</TABLE>
Cash collateral is received by the Fund or Portfolio against loaned securities
in the amount at least equal to 102% of the market value of the loaned
securities at the inception of each loan. This collateral must be maintained at
not less than 100% of the market value of the loaned securities during the
period of the loan. Security lending fees earned were used to reduce the Fund's
or Portfolio's custodian fees.
(G) Deferred Organizational Expenses
Expenses incurred by the GT Global America Small Cap Growth Fund, the GT Global
America Value Fund, and their respective Portfolios in connection with their
organization, their initial registration with the Securities and Exchange
Commission and with various states and the initial public offering of their
shares aggregated $63,500 for each Fund and $25,000 for each Portfolio. These
expenses are being amortized on a straight-line basis over a five-year period.
(H) Taxes
It is the policy of the Funds and Portfolios to meet the requirements for
qualification as a "regulated investment company" under the Internal Revenue
Code of 1986, as amended ("Code"). It is also the intention of the Funds to make
distributions sufficient to avoid imposition of any excise tax under Section
4982 of the Code. Therefore, no provision has been made for Federal taxes on
income, capital gains, or unrealized appreciation of securities held, and excise
tax on income and capital gains.
F78
<PAGE>
GT GLOBAL AMERICA FUNDS
(I) Distributions to Shareholders
Distributions to shareholders are recorded by each Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund or Portfolios and timing
differences.
(J) Restricted Securities
A Fund or Portfolio is permitted to invest in privately placed restricted
securities. These securities may be resold in transactions exempt from
registration or to the public if the securities are registered. Disposal of
these securities may involve time-consuming negotiations and expense, and prompt
sale at an acceptable price may be difficult.
(K) Indexed Securities
A Fund or Portfolio may invest in indexed securities whose value is linked
either directly or indirectly to changes in foreign currencies, interest rates,
equities, indices, or other reference instruments. Indexed securities may be
more volatile than the reference instrument itself, but any loss is limited to
the amount of the original investment.
(L) Line of Credit
Each of the Funds, along with certain other funds advised by the Manager, has a
line of credit with the Bank of Boston. The arrangement with the bank allows all
specified funds to borrow an aggregate maximum amount of $100,000,000. Each of
these three funds is limited to borrowing up to 33 1/3% of the value of each
Fund's total assets. On December 31, 1996, the GT Global America Value Fund
borrowed $1,000,000 at a money market rate.
For the year ended December 31, 1996, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
for the GT Global America Value Fund was $1,000,000 with a weighted average
interest rate of 6.43%. Interest incurred on this loan for the year ended
December 31, 1996, was $2,681, included in "Other Expenses" on the Statement of
Operations.
2. Related Parties
Chancellor LGT Asset Management, Inc. is the Funds' and Portfolios' investment
manager and administrator. On October 31, 1996, Chancellor Capital Management,
Inc. merged with LGT Asset Management, Inc., and the surviving entity was
renamed Chancellor LGT Asset Management, Inc. The GT Global America Small Cap
Growth Fund and GT Global America Value Fund each pays the Manager
administration fees at the annualized rate of 0.25% of such Fund's average daily
net assets. Each Portfolio pays investment management and administration fees to
the Manager at the annualized rate of 0.475% on the first $500 million of
average daily net assets of the Portfolio; 0.45% on the next $500 million;
0.425% on the next $500 million; and 0.40% on amounts thereafter. GT Global
America Mid Cap Growth Fund pays investment management and administration fees
to the Manager at the annualized rate of 0.725% on the first $500 million of
average daily net assets on the Fund; 0.70% on the next $500 million; 0.675% on
the next $500 million and 0.65% on amounts thereafter. These fees are computed
daily and paid monthly, and are subject to reduction in any year to the extent
that the Fund's or Portfolio's expenses (exclusive of brokerage commissions,
taxes, interest, distribution-related expenses and extraordinary expenses)
exceed the most stringent limits prescribed by the laws or regulations of any
state in which the Fund's shares are offered for sale, based on the average
total net asset value of the Fund.
GT Global, Inc. ("GT Global"), an affiliate of the Manager, serves as the Funds'
distributor. The Funds offer Class A, Class B, and Advisor Class shares for
purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. GT Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the year ended December 31, 1996, GT Global retained the
following sales charges: $90,365 for the GT Global America Mid Cap Growth Fund,
$9,945 for the GT Global America Small Cap Growth Fund, and $1,702 for the GT
Global America Value Fund. Purchases of Class A shares exceeding $500,000 may be
subject to a contingent deferred sales charge ("CDSC") upon redemption, in
accordance with the Fund's current prospectus. GT Global collected such CDSCs in
the amount of $39,930 for the year ended December 31, 1996 for the GT Global
America Mid Cap Growth Fund. GT Global also makes ongoing shareholder servicing
and trail commission payments to dealers whose clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSCs, in accordance with the Fund's current
prospectus. For the year ended December 31, 1996, GT Global collected such CDSCs
in the amount of: $1,901,165 for the GT Global America Mid Cap Growth Fund,
$28,162 for the GT Global America Small Cap Growth Fund, and $5,608 for the GT
Global America Value Fund. In addition, GT Global makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class B
shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Trustees has
adopted separate distribution plans with respect to the Funds' Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which a Fund
reimburses GT Global for a portion of its shareholder servicing and distribution
expenses. Under the Class A Plan, a Fund may pay GT Global a service fee at the
annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class A shares for GT Global's expenditures incurred in servicing and
maintaining shareholder accounts, and may pay GT Global a distribution fee at
the annualized rate of up to 0.35% of the average daily net assets of the Fund's
Class A shares, less any amounts paid by the Fund as the aforementioned service
fee, for GT
F79
<PAGE>
GT GLOBAL AMERICA FUNDS
Global's expenditures incurred in providing services as distributor. All
expenses for which GT Global is reimbursed under the Class A Plan will have been
incurred within one year of such reimbursement.
Pursuant to the Funds' Class B Plan, a Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for GT Global's expenditures incurred in servicing and
maintaining shareholder accounts, and may pay GT Global a distribution fee at
the annualized rate of up to 0.75% of the average daily net assets of the Fund's
Class B shares for GT Global's expenditures incurred in providing services as
distributor. Expenses incurred under the Class B Plan in excess of 1.00%
annually may be carried forward for reimbursement in subsequent years as long as
that Plan continues in effect.
The Manager and GT Global voluntarily have undertaken to limit each Fund's
expenses (exclusive of brokerage commissions, taxes, interest, and extraordinary
items) to the maximum annual level of 2.00%, 2.65%, and 1.65% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by GT Global
of payments under the Class A Plan and/or Class B Plan and/ or reimbursements by
the Manager or GT Global of portions of the Fund's other operating expenses.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and GT Global, is the transfer agent of the Funds. For performing shareholder
servicing, reporting, and general transfer agent services, GT Services receives
an annual maintenance fee of $17.50 per account, a new account fee of $4.00 per
account, a per transaction fee of $1.75 for all transactions other than
exchanges and a per exchange fee of $2.25. GT Services also is reimbursed by the
Funds for its out-of-pocket expenses for such items as postage, forms, telephone
charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Funds. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of a Fund's average daily net assets. The annual fee rate is derived by applying
0.03% to the first $5 billion of assets of all registered mutual funds advised
by the Manager and 0.02% to the assets in excess of $5 billion and allocating
the result according to a Fund's average daily net assets.
The Company pays each of its Trustees who is not an employee, officer or
director of the Manager, GT Global or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee. Each
Portfolio pays each of its Trustees who is not an employee, officer or director
of the Manager, GT Global or GT Services $500 per year plus $150 for each
meeting of the board or any committee thereof attended by the Trustees.
At December 31, 1996, all of the shares of beneficial interest of each Portfolio
were owned either by its Fund or the Manager.
3. Purchases and Sales of Securities
For the year ended December 31, 1996, purchases of investment securities by the
GT Global America Mid Cap Growth Fund, Small Cap Growth Portfolio, and Value
Portfolio, other than U.S. government obligations and short-term investments,
aggregated $1,468,522,964, $33,591,427 and $19,537,714, respectively. Sales of
investment securities by the GT Global America Mid Cap Growth Fund, Small Cap
Growth Portfolio, and Value Portfolio, other than U.S. government obligations
and short-term investments, aggregated $1,493,844,266, $19,321,092 and
$13,037,066, respectively. There were no purchases or sales of U.S. government
obligations by a Fund or Portfolio during the year.
F80
<PAGE>
GT GLOBAL AMERICA FUNDS
4. Capital Shares
At December 31, 1996, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the
Funds were as follows:
Capital Share Transactions
GT Global America Mid Cap Growth Fund
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1996 December 31, 1995
---------------------------- -----------------------------
Class A Shares Amount Shares Amount
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 89,962,964 $1,853,673,285 64,255,259 $ 1,354,329,879
Shares issued in connection with
reinvestment of distributions......... 853,598 17,867,701 2,163,720 42,170,721
------------ -------------- ------------ ---------------
90,816,562 1,871,540,986 66,418,979 1,396,500,600
Shares repurchased...................... (95,061,922) (1,956,032,031) (56,768,364) (1,210,272,338)
------------ -------------- ------------ ---------------
Net increase (decrease)................. (4,245,360) $ (84,491,045) 9,650,615 $ 186,228,262
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
Year ended Year ended
December 31, 1996 December 31, 1995
---------------------------- -----------------------------
Class B Shares Amount Shares Amount
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 11,161,651 $ 224,412,718 19,673,669 $ 406,685,987
Shares issued in connection with
reinvestment of distributions......... 803,575 16,429,676 1,832,696 35,169,188
------------ -------------- ------------ ---------------
11,965,226 240,842,394 21,506,365 441,855,175
Shares repurchased...................... (14,026,348) (280,392,879) (7,522,345) (160,828,667)
------------ -------------- ------------ ---------------
Net increase (decrease)................. (2,061,122) $ (39,550,485) 13,984,020 $ 281,026,508
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
June 1, 1995
(commencenment of
Year ended sale of shares) to
December 31, 1996 December 31, 1995
---------------------------- -----------------------------
Advisor Class Shares Amount Shares Amount
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 485,169 $ 10,230,701 72,809 $ 1,541,469
Shares issued in connection with
reinvestment of distributions......... 8,013 167,629 9,711 188,974
------------ -------------- ------------ ---------------
493,182 10,398,330 82,520 1,730,443
Shares repurchased...................... (470,673) (9,846,041) (9,345) (199,482)
------------ -------------- ------------ ---------------
Net increase............................ 22,509 $ 552,289 73,175 $ 1,530,961
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
</TABLE>
F81
<PAGE>
GT GLOBAL AMERICA FUNDS
5. Holdings of 5% Voting Securities of Portfolio Companies
Investments of 5% or more of an issuer's outstanding voting securities by a Fund
or Portfolio are defined in the Investment Company Act of 1940, as amended, as
an "affiliated company". During the year ended December 31, 1996, transactions
with affiliated companies by the GT Global America Mid Cap Growth Fund were as
follows:
<TABLE>
<CAPTION>
Net
Realized
Purchases Gain Dividend
Affiliates Cost Sales Cost (Loss) Income
- ---------------------------------------- ------------ ------------- ---------- ------------
<S> <C> <C> <C> <C>
Abaxis, Inc............................. -- $ 4,406,425 $ (233,474) --
Ann Taylor Stores, Inc.................. $ 667,826 27,428,533 1,773,714 --
Equity Inns, Inc........................ 8,589,208 21,730,721 774,204 $ 344,848
Haggar Corp............................. -- 13,475,105 (4,771,163) 58,740
Landmark Graphics Corp.................. 22,307,844 22,307,844 13,028,001 --
Michaels Stores, Inc.................... 1,253,238 31,700,975 (1,716,413) --
Varsity Spirit Corp..................... -- 3,384,724 1,747,526 13,686
Younkers, Inc........................... 4,702,055 14,761,596 7,926,666 --
</TABLE>
6. Expense Reductions
The Manager has directed certain portfolio trades to brokers who paid a portion
of a Fund's or Portfolio's expenses. For the year ended December 31, 1996, the
expenses of GT Global America Mid Cap Growth Fund were reduced by $207,575 under
these arrangements.
- ------------
Federal Tax Information (Unaudited):
Pursuant to Section 852 of the Internal Revenue Code, the GT Global America
Mid-Cap Growth Fund designates $30,037,928 as a capital gain dividend for the
fiscal year ended December 31, 1996.
Pursuant to Section 854 of the Internal Revenue Code, the Funds designate the
following percentage amounts of ordinary income dividends paid (including
short-term capital gain distributions, if any) by the Funds as income qualifying
for the dividends received deduction for corporations for the fiscal year ended
December 31, 1996:
<TABLE>
<CAPTION>
Fund
- ----------------------------------------
<S> <C>
GT Global America Small Cap Growth
Fund................................... 4%
GT Global America Mid-Cap Growth Fund... 23%
GT Global America Value Fund............ 100%
</TABLE>
F82
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
GT Global Growth Series:
We have audited the accompanying statement of assets and liabilities of GT
Global Japan Growth Fund, a series of shares of beneficial interest of GT Global
Growth Series, including the schedule of portfolio investments, as of December
31, 1996, the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the period
then ended. These financial statements and the financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1996 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of GT
Global Japan Growth Fund, as of December 31, 1996, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended, and the financial highlights for each of the five
years in the period then ended, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
FEBRUARY 14, 1997
F83
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% of Net
Equity Investments Shares Value Assets
- ---------------------------------------------------------------------- ----------- ------------ -------------
<S> <C> <C> <C>
Services (36.6%)
Southland Corp.{l} -/- {\/} ........................................ 1,848,200 $ 5,486,841 5.7
RETAILERS-OTHER
Aoyama Trading Co., Ltd. ........................................... 175,200 4,661,507 4.9
RETAILERS-APPAREL
Ito-Yokado Co., Ltd. ............................................... 100,000 4,353,836 4.5
RETAILERS-OTHER
DDI Corp. .......................................................... 650 4,301,140 4.5
WIRELESS COMMUNICATIONS
Seven-Eleven Japan Ltd. ............................................ 50,000 2,928,473 3.0
RETAILERS-OTHER
Autobacs Seven Co., Ltd. ........................................... 40,000 2,829,993 2.9
RETAILERS-OTHER
Yoshinoya D&C Co., Ltd. ............................................ 200 2,453,352 2.6
RESTAURANTS
Fast Retailing Co., Ltd. ........................................... 90,000 2,309,088 2.4
RETAILERS-APPAREL
Nissen Co. ......................................................... 273,000 1,910,245 2.0
RETAILERS-OTHER
Nitori Co. ......................................................... 59,400 1,031,393 1.1
RETAILERS-OTHER
Xebio Co., Ltd. .................................................... 25,000 745,076 0.8
RETAILERS-APPAREL
Blue Grass Co., Ltd. ............................................... 44,000 710,781 0.7
RETAILERS-APPAREL
Ten Allied Co. ..................................................... 65,000 634,502 0.7
RESTAURANTS
Bunkyodo Co., Ltd. ................................................. 35,000 489,806 0.5
RETAILERS-OTHER
Fujitsu Business Systems ........................................... 15,000 327,833 0.3
BUSINESS & PUBLIC SERVICES
------------
35,173,866
------------
Health Care (9.6%)
Takeda Chemical Industries ......................................... 270,000 5,667,761 5.9
PHARMACEUTICALS
Olympus Optical Co., Ltd. .......................................... 230,000 2,185,556 2.3
MEDICAL TECHNOLOGY & SUPPLIES
Taisho Pharmaceuticals ............................................. 55,000 1,297,080 1.4
PHARMACEUTICALS
------------
9,150,397
------------
Technology (9.2%)
Matsushita-Kotobuki Electronics Ltd. ............................... 160,000 4,174,153 4.3
COMPUTERS & PERIPHERALS
Koei Co., Ltd. ..................................................... 87,400 1,676,123 1.7
SOFTWARE
Hosiden Electronics-/- ............................................. 223,000 1,581,574 1.6
COMPUTERS & PERIPHERALS
Kyushu-Matsushita Electric Co., Ltd. ............................... 65,000 842,260 0.9
COMPUTERS & PERIPHERALS
</TABLE>
The accompanying notes are an integral part of the financial statements.
F84
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% of Net
Equity Investments Shares Value Assets
- ---------------------------------------------------------------------- ----------- ------------ -------------
<S> <C> <C> <C>
Technology (Continued)
Geomatec Co., Ltd. ................................................. 25,000 $ 645,733 0.7
COMPUTERS & PERIPHERALS
------------
8,919,843
------------
Capital Goods (9.2%)
Murata Manufacturing Co., Ltd. ..................................... 115,000 3,824,724 4.0
ELECTRICAL PLANT/EQUIPMENT
Higashi Nihon House ................................................ 152,000 1,956,462 2.0
CONSTRUCTION
Canon, Inc. ........................................................ 55,000 1,216,310 1.3
OFFICE EQUIPMENT
Shima Seiki Manufacturing Ltd. ..................................... 20,000 932,965 1.0
MACHINE TOOLS
Komori Corp. ....................................................... 40,000 850,035 0.9
MACHINERY & ENGINEERING
NEC System Integration & Construction .............................. 60 1,197 --
CONSTRUCTION
Japan Foundation Engineering ....................................... 90 1,174 --
CONSTRUCTION
------------
8,782,867
------------
Finance (6.9%)
Nichiei Co., Ltd. .................................................. 60,000 4,431,583 4.6
OTHER FINANCIAL
Diamond Lease Co., Ltd. ............................................ 175,000 2,222,270 2.3
OTHER FINANCIAL
------------
6,653,853
------------
Consumer Non-Durables (5.3%)
Amway Japan Ltd.{z} ................................................ 145,000 4,659,641 4.8
HOUSEHOLD PRODUCTS
Tsutsumi Jewelry Co., Ltd. ......................................... 20,600 510,729 0.5
PERSONAL CARE/COSMETICS
------------
5,170,370
------------
Materials/Basic Industry (2.4%)
Toyo Exterior ...................................................... 80,000 1,188,666 1.2
BUILDING MATERIALS & COMPONENTS
Gakken ............................................................. 200,000 1,131,652 1.2
PAPER/PACKAGING
------------
2,320,318
------------ -----
TOTAL EQUITY INVESTMENTS (cost $90,397,106) .......................... 76,171,514 79.2
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
F85
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
<TABLE>
<CAPTION>
Principal % of Net
Fixed Income Investments Currency Amount Value Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C>
Government & Government Agency Obligations (7.0%)
Austria (3.5%)
Republic of Austria, 4.5% due 9/28/05{z} ................ JPY 340,000,000 $ 3,362,846 3.5
Japan (3.5%)
Japanese Government Bond, 3.8% due 9/20/16{z} ........... JPY 375,000,000 3,400,462 3.5
------------
Total Government & Government Agency Obligations (cost
$7,210,305) ................................................ 6,763,308
------------
Corporate Bonds (1.0%)
Japan (1.0%)
Higashi Nihon House Co., Convertible Bond, 0.375% due
4/30/00 (cost $1,089,201) .............................. CHF 1,150,000 906,764 1.0
------------ -----
TOTAL FIXED INCOME INVESTMENTS (cost $8,299,506) ............ 7,670,072 8.0
------------ -----
<CAPTION>
Number of % of Net
Options Currency Contracts Value Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C>
Simex Nikkei Put Options, strike JPY20,500, expire 3/14/97
(cost $325,798)-/- ....................................... JPY 140 834,485 0.9
------------ -----
INDEX OPTIONS
<CAPTION>
% of Net
Repurchase Agreement Value Assets
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C>
Dated December 31, 1996, with State Street Bank & Trust
Co., due January 2, 1997, for an effective yield of 6.25%,
collateralized by $380,000 U.S. Treasury Notes, 6.125% due
3/31/98 (market value of collateral is $388,025, including
accrued interest). (cost $376,066) ....................... 376,066 0.4
------------ -----
TOTAL INVESTMENTS (cost $99,398,476) * ..................... 85,052,137 88.5
Other Assets and Liabilities ................................ 11,062,550 11.5
------------ -----
NET ASSETS .................................................. $ 96,114,687 100.0
------------ -----
------------ -----
</TABLE>
- --------------
{z} Security is segregated as collateral for written futures. See Note
1 of Notes to Financial Statements.
{l} This is a U.S. security of which approximately 62.5% of its
outstanding stock is owned by Ito-Yokado Co., Ltd.
{\/} U.S. currency denominated.
-/- Non-income producing security.
* For Federal income tax purposes, cost is $100,530,250 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 4,077,832
Unrealized depreciation: (19,555,945)
-------------
Net unrealized depreciation: $ (15,478,113)
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F86
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
Forward Foreign Currency Contracts Outstanding
December 31, 1996
<TABLE>
<CAPTION>
Unrealized
Market Value Contract Delivery Appreciation
Contracts to Buy: (U.S. Dollars) Price Date (Depreciation)
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
Japanese Yen............................ 1,738,446 113.34500 02/12/97 $ (26,078)
-------------- --------------
Total Contracts to Buy (Payable amount
$1,764,524).......................... 1,738,446 (26,078)
-------------- --------------
THE VALUE OF CONTRACTS TO BUY AS
PERCENTAGE OF NET ASSETS IS 1.81%.
<CAPTION>
Contracts to Sell:
- ----------------------------------------
<S> <C> <C> <C> <C>
Japanese Yen............................ 9,561,451 110.40000 02/12/97 402,317
Japanese Yen............................ 44,330,362 110.40000 02/12/97 1,865,290
-------------- --------------
Total Contracts to Sell (Receivable
amount $56,159,420).................. 53,891,813 2,267,607
-------------- --------------
THE VALUE OF CONTRACTS TO SELL AS A
PERCENTAGE OF NET ASSETS IS 56.07%.
Total Open Forward Foreign Currency
Contracts, Net....................... $ 2,241,529
--------------
--------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Written Futures Contracts Outstanding
December 31, 1996
<TABLE>
<CAPTION>
Expiration No. of Market
Description Date Contracts Currency Value
- ---------------------------------------- ---------- --------- -------- -----------
<S> <C> <C> <C> <C>
Simex Nikkei 225 Index Future (Face
$13,432,632)........................... 03/15/97 150 JPY $12,533,474
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F87
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $99,398,476) (Note 1)....... $ 85,052,137
U.S. currency............................................. $ 810
Foreign currencies (cost $7,317,540)...................... 7,202,621 7,203,431
----------
Receivable for securities sold........................................ 2,922,583
Receivable for open forward foreign currency contracts, net (Note
1)................................................................... 2,241,529
Receivable for initial margin (Note 1)................................ 1,405,431
Interest receivable................................................... 87,851
Receivable for Fund shares sold....................................... 63,925
Dividends receivable.................................................. 50,940
Cash held as collateral for securities loaned (Note 1)................ 5,979,995
------------
Total assets........................................................ 105,007,822
------------
Liabilities:
Payable for loan outstanding (Note 1)................................. 2,000,000
Payable for Fund shares repurchased................................... 634,140
Payable for investment management and administration fees (Note 2).... 83,572
Payable for service and distribution expenses (Note 2)................ 48,382
Payable for transfer agent fees (Note 2).............................. 47,598
Payable for printing and postage expenses............................. 44,043
Payable for professional fees......................................... 23,272
Payable for custodian fees............................................ 10,360
Payable for registration and filing fees.............................. 8,995
Payable for Trustees' fees and expenses (Note 2)...................... 3,985
Payable for fund accounting fees (Note 2)............................. 1,952
Other accrued expenses................................................ 6,841
Collateral for securities loaned (Note 1)............................. 5,979,995
------------
Total liabilities................................................... 8,893,135
------------
Net assets.............................................................. $ 96,114,687
------------
------------
Class A:
Net asset value and redemption price per share ($63,584,967 DIVIDED BY
6,517,910 shares outstanding).......................................... $ 9.76
------------
------------
Maximum offering price per share (100/95.25 of $9.76) *................. $ 10.25
------------
------------
Class B:+
Net asset value and offering price per share ($32,116,485 DIVIDED BY
3,382,968 shares outstanding).......................................... $ 9.49
------------
------------
Advisor Class:
Net asset value, offering price per share, and redemption price per
share ($413,235 DIVIDED BY 42,104 shares outstanding).................. $ 9.81
------------
------------
Net assets consist of:
Paid in capital (Note 4).............................................. $110,959,451
Accumulated net realized loss on investments and foreign currency
transactions......................................................... (3,515,352)
Net unrealized appreciation on translation of assets and liabilities
in foreign currencies................................................ 2,117,769
Net unrealized depreciation of investments............................ (13,447,181)
------------
Total -- representing net assets applicable to capital shares
outstanding............................................................ $ 96,114,687
------------
------------
<FN>
- --------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
F88
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
STATEMENT OF OPERATIONS
Year ended December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Interest income......................................................... $ 1,356,810
Dividend income (net of foreign withholding tax of $116,158)............ 663,718
Other income............................................................ 2,221
------------
Total investment income............................................... 2,022,749
------------
Expenses:
Investment management and administration fees (Note 2).................. 1,367,702
Service and distribution expenses: (Note 2)
Class A................................................. $ 334,198
Class B................................................. 439,916 774,114
------------
Transfer agent fees (Note 2)............................................ 486,650
Custodian fees (Note 1)................................................. 109,903
Registration and filing fees............................................ 75,992
Printing and postage expenses........................................... 71,503
Audit fees.............................................................. 53,358
Fund accounting fees (Note 2)........................................... 35,119
Trustees' fees and expenses (Note 2).................................... 14,640
Legal fees.............................................................. 11,882
Other expenses.......................................................... 7,446
------------
Total expenses before reductions...................................... 3,008,309
------------
Expense reductions (Notes 1 & 5).................................... (144,104)
------------
Total net expenses.................................................... 2,864,205
------------
Net investment loss....................................................... (841,456)
------------
Net realized and unrealized gain (loss) on investments and
foreign currencies: (Note 1)
Net realized loss on investments.......................... (8,109,001)
Net realized gain on foreign currency transactions........ 11,961,938
------------
Net realized gain during the year..................................... 3,852,937
Net change in unrealized appreciation on translation of
assets and liabilities in foreign currencies............. (464,975)
Net change in unrealized depreciation of investments...... (11,261,238)
------------
Net unrealized depreciation during the year........................... (11,726,213)
------------
Net realized and unrealized loss on investments and foreign currencies.... (7,873,276)
------------
Net decrease in net assets resulting from operations...................... $ (8,714,732)
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F89
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1996 December 31, 1995
----------------- -----------------
<S> <C> <C>
Increase (Decrease) in net assets
Operations:
Net investment loss....................................... $ (841,456) $ (662,252)
Net realized gain on investments and foreign currency
transactions............................................. 3,852,937 14,964,910
Net change in unrealized appreciation (depreciation) on
translation of assets and liabilities in foreign
currencies............................................... (464,975) 923,132
Net change in unrealized depreciation of investments...... (11,261,238) (11,851,499)
----------------- -----------------
Net increase (decrease) in net assets resulting from
operations............................................. (8,714,732) 3,374,291
----------------- -----------------
Class A:
Distributions to shareholders: (Note 1)
From net realized gain on investments..................... (2,883,812) (11,936,435)
Class B:
Distributions to shareholders: (Note 1)
From net realized gain on investments..................... (1,472,016) (4,652,476)
Advisor Class:
Distributions to shareholders: (Note 1)
From net realized gain on investments..................... (18,593) (58,144)
----------------- -----------------
Total distributions..................................... (4,374,421) (16,647,055)
----------------- -----------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested.......... 510,718,392 565,596,580
Decrease from capital shares repurchased.................. (554,451,474) (524,808,353)
----------------- -----------------
Net increase (decrease) from capital share
transactions........................................... (43,733,082) 40,788,227
----------------- -----------------
Total increase (decrease) in net assets..................... (56,822,235) 27,515,463
Net assets:
Beginning of year......................................... 152,936,922 125,421,459
----------------- -----------------
End of year*.............................................. $ 96,114,687 $ 152,936,922
----------------- -----------------
----------------- -----------------
--------------
*Includes undistributed net investment income of......... $ 0 $ 0
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F90
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
Class A+
----------------------------------------------------------
Year ended December 31,
----------------------------------------------------------
1996 (a) 1995 (a) 1994 1993 1992 (a)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 11.00 $ 12.15 $ 11.61 $ 8.70 $ 11.16
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment loss................... (0.04) (0.04) (0.04) (0.14) (0.00) *
Net realized and unrealized gain
(loss) on investments................ (0.77) 0.26 0.79 3.05 (2.40)
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. (0.81) 0.22 0.75 2.91 (2.40)
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.43) (1.37) (0.21) -- (0.06)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 9.76 $ 11.00 $ 12.15 $ 11.61 $ 8.70
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (d)............. (7.43)% 1.94% 6.56% 33.45% (21.5)%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 63,585 $ 111,105 $ 98,066 $ 88,487 $ 93,865
Ratio of net investment loss to average
net assets............................. (0.40)% (0.40)% (0.32)% (0.3)% (0.0)%*
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.84% 1.99% 1.91% 2.1% 2.2%*
Without expense reductions............ 1.94% 2.14% 2.03% --%** --%**
Portfolio turnover rate++++............. 31% 67% 49% 104% 115%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0971 N/A N/A N/A N/A
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
* Includes reimbursement by Chancellor LGT Asset Management, Inc. of
operating expenses of $0.01. Without such reimbursement, the ratio of
expenses to average net assets would have been 2.3% and the ratio of
net investment loss to average net assets would have been (0.1)% (See
Note 2).
* * Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
(a) These selected per share data were calculated based upon average
shares outstanding during the period.
(b) Not annualized
(c) Annualized
(d) Total investment return does not include sales charges.
N/A Not applicable
The accompanying notes are an integral part of the financial statements.
F91
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
Class B++ Advisor Class+++
------------------------------------------------- ---------------------------
April 1, 1993 June 1, 1995
Year ended December 31, to Year ended to
---------------------------------- December 31, December 31, December 31,
1996 (a) 1995 (a) 1994 1993 1996 (a) 1995 (a)
---------- ---------- ---------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 10.78 $ 12.02 $ 11.57 $ 9.85 $ 11.02 $ 10.50
---------- ---------- ---------- ------------- ------------- ------------
Income from investment operations:
Net investment loss................... (0.11) (0.12) (0.13) (0.18) (0.01) (0.00)
Net realized and unrealized gain
(loss) on investments................ (0.75) 0.25 0.79 1.90 (0.77) 1.89
---------- ---------- ---------- ------------- ------------- ------------
Net increase (decrease) from
investment operations.............. (0.86) 0.13 0.66 1.72 (0.78) 1.89
---------- ---------- ---------- ------------- ------------- ------------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.43) (1.37) (0.21) -- (0.43) (1.37)
---------- ---------- ---------- ------------- ------------- ------------
Net asset value, end of period.......... $ 9.49 $ 10.78 $ 12.02 $ 11.57 $ 9.81 $ 11.02
---------- ---------- ---------- ------------- ------------- ------------
---------- ---------- ---------- ------------- ------------- ------------
Total investment return (d)............. (8.05)% 1.20% 5.81% 17.46%(b) (7.14)% 18.14 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 32,116 $ 41,274 $ 27,355 $ 3,699 $ 413 $ 558
Ratio of net investment loss to average
net assets............................. (1.05)% (1.05)% (0.97)% (0.9)%(c) (0.05)% (0.05)%(c)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.49% 2.64% 2.56% 2.7%(c) 1.49% 1.64 %(c)
Without expense reductions............ 2.59% 2.79% 2.68% --%** 1.59% 1.79 %(c)
Portfolio turnover rate++++............. 31% 67% 49% 104% 31% 67 %
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0971 N/A N/A N/A $ 0.0971 N/A
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
* Includes reimbursement by Chancellor LGT Asset Management, Inc. of
operating expenses of $0.01. Without such reimbursement, the ratio of
expenses to average net assets would have been 2.3% and the ratio of
net investment loss to average net assets would have been (0.1)% (See
Note 2).
* * Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
(a) These selected per share data were calculated based upon average
shares outstanding during the period.
(b) Not annualized
(c) Annualized
(d) Total investment return does not include sales charges.
N/A Not applicable
The accompanying notes are an integral part of the financial statements.
F92
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
GT Global Japan Growth Fund ("Fund"), is a separate series of GT Global Growth
Series ("Company"). The Company is organized as a Massachusetts business trust
and is registered under the Investment Company Act of 1940, as amended ("1940
Act"), as an open-end management investment company. The Company has eight
diversified series of shares in operation, each series corresponding to a
distinct portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles, and
the financial statements may include certain estimates made by management.
(A) Portfolio Valuation
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market in which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by Chancellor LGT Asset
Management, Inc. (the "Manager") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality and type. However, when the
Manager deems it appropriate, prices obtained for the day of valuation from a
bond pricing service will be used. Short-term investments with a maturity of 60
days or less are valued at amortized cost, adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Company's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued to the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of Trustees.
(B) Foreign Currency Translation
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, other assets and liabilities
are recorded in the books and records of the Fund after translation to U.S.
dollars based on the exchange rates on that day. The cost of each security is
determined using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
value of assets and liabilities other than investments in securities at year
end, resulting from changes in exchange rates.
(C) Repurchase Agreements
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, United States government securities or
other high quality debt securities of which the value, including accrued
interest, is at least equal to the amount to be repaid to the Fund under each
agreement at its maturity.
(D) Forward Foreign Currency Contracts
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss equal to
the difference between the value at the time it was opened and the value at the
time it was closed. The Fund could be exposed to risk if a counterparty is
unable to meet the terms of a contract or if
F93
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
the value of the currency changes unfavorably. The Fund may enter into Forward
Contracts in connection with planned purchases or sales of securities, or to
hedge against adverse fluctuations in exchange rates between currencies.
(E) Option Accounting Principles
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of an over-the-counter option, is valued at the average
of the last bid prices obtained from brokers, unless a quotation from only one
broker is available, in which case only that broker's price will be used. If an
option expires on its stipulated expiration date or if the Fund enters into a
closing purchase transaction, a gain or loss is realized without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option is extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the proceeds of
the sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium originally received. The Fund can write options only on
a covered basis, which, for a call, requires that the Fund hold the underlying
security, and, for a put, requires the Fund to set aside cash, U.S. government
securities or other liquid securities in an amount not less than the exercise
price or otherwise provide adequate cover at all times while the put option is
outstanding. The Fund may use options to manage its exposure to the stock and
bond markets and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) Futures Contracts
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock and bond
markets and to fluctuations in currency values or interest rates. At December
31, 1996, the Fund had segregated securities valued at $11,422,949 and cash of
$1,405,431 to cover margin requirements on open futures contracts.
(G) Security Transactions and Related Investment Income
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other than normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) Portfolio Securities Loaned
At December 31, 1996, stocks with an aggregate value of $5,699,560 were on loan
to brokers. The loans were secured by cash collateral of $5,979,995, received by
the Fund. For international securities, cash collateral is received by the Fund
against loaned securities in an amount at least equal to 105% of the market
value of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 103% of the market value of the loaned
securities during the period of the loan. For domestic securities, cash
collateral is received by the Fund against loaned securities in an amount at
least equal to 102% of the market value of the loaned securities at the
inception of each loan. This collateral must be maintained at not less than 100%
of the market value of the loaned securities during the period of each loan. For
the year ended December 31, 1996, the Fund received securities lending fees of
$89,879 which were used to reduce custodian fees.
(I) Taxes
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue
F94
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GT GLOBAL JAPAN GROWTH FUND
Code of 1986, as amended ("Code"). It is also the intention of the Fund to make
distributions sufficient to avoid imposition of any excise tax under Section
4982 of the Code. Therefore, no provision has been made for Federal taxes on
income, capital gains, and unrealized appreciation of securities held, or for
excise tax on income and capital gains.
(J) Distributions to Shareholders
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) Foreign Securities
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. These risks of investing in foreign markets may
include foreign currency exchange rate fluctuations, perceived credit risk,
adverse political and economic developments and possible adverse foreign
government intervention.
(L) Restricted Securities
The Fund is permitted to invest in privately placed restricted securities. These
securities may by resold in transactions exempt from registration or to the
public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
(M) Indexed Securities
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(N) Line of Credit
The Fund, along with certain other funds advised by the Manager, has a line of
credit with the Bank of Boston. The arrangement with the bank allows all
specified funds to borrow an aggregate maximum amount of $100,000,000. On
December 31, 1996, the Fund borrowed $2,000,000 at a money market rate.
For the year ended December 31, 1996, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
was $2,000,000 with a weighted average interest rate of 8%. Interest incurred on
this loan for the year ended December 31, 1996 was $444.
2. Related Parties
Chancellor LGT Asset Management, Inc. is the Fund's investment manager and
administrator. On October 31, 1996, Chancellor Capital Management, Inc. merged
with LGT Asset Management, Inc., and the surviving entity was renamed Chancellor
LGT Asset Management, Inc. The Fund pays investment management and
administration fees to the Manager at the following annualized rates: 0.975% on
the first $500 million of average daily net assets of the Fund; 0.95% on the
next $500 million; 0.925% of the next $500 million and 0.90% on amounts
thereafter. These fees are computed daily and paid monthly, and are subject to
reduction in any period to the extent that the Fund's expenses (exclusive of
brokerage commissions, taxes, interest, distribution-related expenses and
extraordinary expenses) exceed the most stringent limits prescribed by the laws
or regulations of any state in which the Fund's shares are offered for sale,
based on the average net asset value of the Fund.
GT Global, Inc. ("GT Global"), an affiliate of the Manager, serves as the Fund's
distributor. The Fund offers Class A, Class B, and Advisor Class shares for
purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. GT Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the year ended December 31, 1996, GT Global retained $47,700
of such sales charges. Purchases of Class A shares exceeding $500,000 may be
subject to a contingent deferred sales charge ("CDSC") upon redemption, in
accordance with the Fund's current prospectus. GT Global collected such CDSCs in
the amount of $18,349 for the year ended December 31, 1996. GT Global also makes
ongoing shareholder servicing and trail commission payments to dealers whose
clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSCs, in accordance with the Fund's current
prospectus. During the year ended December 31, 1996, GT Global collected such
CDSCs in the amount of $330,744. In addition, GT Global makes ongoing
shareholder servicing and trail commission payments to dealers whose clients
hold Class B shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Trustees has
adopted separate distribution plans with respect to the Fund's Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which the Fund
reimburses GT Global for a portion of its shareholder servicing and distribution
expenses. Under the Class A Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class A shares for GT Global's expenditures incurred in servicing and
maintaining shareholder accounts, and may pay GT Global a distribution fee at
the annualized rate of up to 0.35% of the average daily net assets of the Fund's
Class A shares, less any amounts paid by the Fund as the aforementioned service
fee, for its expenditures incurred in providing services as distributor. All
expenses for which GT Global is reimbursed under the Class A Plan will have been
incurred within one year of such reimbursement.
Pursuant to the Fund's Class B Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily
F95
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GT GLOBAL JAPAN GROWTH FUND
net assets of the Fund's Class B shares for its expenditures incurred in
servicing and maintaining shareholder accounts, and may pay GT Global a
distribution fee at the annualized rate of up to 0.75% of the average daily net
assets of the Fund's Class B shares for GT Global's expenditures incurred in
providing services as distributor. Expenses incurred under the Class B Plan in
excess of 1.00% annually may be carried forward for reimbursement in subsequent
years as long as that Plan continues in effect.
The Manager and GT Global have voluntarily undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest, and extraordinary
items) to the maximum annual level of 2.25%, 2.90%, and 1.90% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by GT Global
of payments under the Class A Plan and/or Class B Plan and/ or reimbursements by
the Manager or GT Global of portions of the Fund's other operating expenses.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and GT Global, is the transfer agent of the Fund. For performing shareholder
servicing, reporting, and general transfer agent services, GT Services receives
an annual maintenance fee of $17.50 per account, a new account fee of $4.00 per
account, a per transaction fee of $1.75 for all transactions other than
exchanges and a per exchange fee of $2.25. GT Services is also reimbursed by the
Funds for its out-of-pocket expenses for such items as postage, forms, telephone
charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived by
applying 0.03% to the first $5 billion of assets of all registered mutual funds
advised by the Manager and 0.02% to the assets in excess of $5 billion and
allocating the result according to the Fund's average daily net assets.
The Company pays each of its Trustees who is not an employee, officer or
director of the Manager, GT Global or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee.
3. Purchases and Sales of Securities
For the year ended December 31, 1996, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $36,975,149 and $63,613,560, respectively. There were no
purchases or sales of U.S. government obligations by the Fund during the year.
F96
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GT GLOBAL JAPAN GROWTH FUND
4. Capital Shares
At December 31, 1996, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
Capital Share Transactions
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1996 December 31, 1995
------------------------- ----------------------------
Class A Shares Amount Shares Amount
- ------------------------------------------------------------ ----------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Shares sold................................................. 39,042,903 $423,073,924 42,162,424 $ 483,616,630
Shares issued in connection with reinvestment of
distributions............................................. 225,741 2,221,785 899,831 9,789,980
----------- ------------ ------------- -------------
39,268,644 425,295,709 43,062,255 493,406,610
Shares repurchased.......................................... (42,853,058) (464,603,203) (41,032,648) (470,692,845)
----------- ------------ ------------- -------------
Net increase (decrease)..................................... (3,584,414) $(39,307,494) 2,029,607 $ 22,713,765
----------- ------------ ------------- -------------
----------- ------------ ------------- -------------
Year ended Year ended
December 31, 1996 December 31, 1995
------------------------- ----------------------------
Class B Shares Amount Shares Amount
- ------------------------------------------------------------ ----------- ------------ ------------- -------------
Shares sold................................................. 7,303,169 $ 77,038,650 5,971,262 $ 67,899,245
Shares issued in connection with reinvestment of
distributions............................................. 111,715 1,070,181 340,110 3,629,261
----------- ------------ ------------- -------------
7,414,884 78,108,831 6,311,372 71,528,506
Shares repurchased.......................................... (7,859,944) (82,438,811) (4,758,650) (53,997,274)
----------- ------------ ------------- -------------
Net increase (decrease)..................................... (445,060) $ (4,329,980) 1,552,722 $ 17,531,232
----------- ------------ ------------- -------------
----------- ------------ ------------- -------------
June 1, 1995
(commencement of sale of
Year ended shares)
December 31, 1996 to December 31, 1995
------------------------- ----------------------------
Advisor Class Shares Amount Shares Amount
- ------------------------------------------------------------ ----------- ------------ ------------- -------------
Shares sold................................................. 666,196 $ 7,296,458 55,192 $ 604,443
Shares issued in connection with reinvestment of
distributions............................................. 1,759 17,394 5,231 57,021
----------- ------------ ------------- -------------
667,955 7,313,852 60,423 661,464
Shares repurchased.......................................... (676,463) (7,409,460) (9,811) (118,234)
----------- ------------ ------------- -------------
Net increase (decrease)..................................... (8,508) $ (95,608) 50,612 $ 543,230
----------- ------------ ------------- -------------
----------- ------------ ------------- -------------
</TABLE>
5. Expense Reductions
The Manager has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended December 31, 1996, the Fund's
expenses were reduced by $54,225 under these arrangements.
- --------------
Federal Tax Information (Unaudited):
Pursuant to section 852 of the Internal Revenue Code, the GT Global Japan Growth
Fund designates $3,387,112 as a capital gain dividend for the fiscal year ended
December 31, 1996.
F97
<PAGE>
GT GLOBAL AMERICA FUNDS
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL AMERICA FUNDS
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL AMERICA FUNDS
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL AMERICA FUNDS
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL MUTUAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY OF THE GT GLOBAL
MUTUAL FUNDS, INCLUDING FEES, EXPENSES AND THE RISKS OF GLOBAL AND EMERGING
MARKET INVESTING AS WELL AS THE RISKS OF INVESTING IN RELATED INDUSTRIES,
PLEASE CONTACT YOUR FINANCIAL ADVISER OR CALL GT GLOBAL DIRECTLY AT
1-800-824-1580.
GROWTH FUNDS
/ / GLOBALLY DIVERSIFIED FUNDS
GT GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity by investing outside
the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
/ / GLOBAL THEME FUNDS
GT GLOBAL HEALTH CARE FUND
Invests in growing health care industries worldwide
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in the new, unified Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA MID CAP GROWTH FUND
Concentrates on medium-sized companies in the U.S.
GT GLOBAL AMERICA VALUE FUND
Concentrates on large cap equity securities of U.S. companies believed to be
undervalued
GT GLOBAL JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUND
GT GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government bonds from around the world
INCOME FUNDS
GT GLOBAL GOVERNMENT INCOME FUND
Earns monthly income from global government securities
GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
GT GLOBAL HIGH INCOME FUND
Invests in debt securities in emerging markets
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[LOGO]
NO DEALER, SALES REPRESENTATIVE OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
STATEMENT OF ADDITIONAL INFORMATION AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY G.T.
GLOBAL GROWTH SERIES, CHANCELLOR LGT ASSET MANAGEMENT, INC. OR GT GLOBAL,
INC. THIS STATEMENT OF ADDITIONAL INFORMATION DOES NOT CONSTITUTE AN OFFER
TO SELL OR SOLICITATION OF ANY OFFER TO BUY ANY OF THE SECURITIES OFFERED
HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER IN SUCH JURISDICTION.
EQUSX705MC
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
50 California Street, 27th Floor
San Francisco, California 94111
(415) 392-6181
Toll Free: (800) 824-1580
Statement of Additional Information
May 1, 1997
- --------------------------------------------------------------------------------
This Statement of Additional Information relates to the Class A and Class B
shares of GT Global America Small Cap Growth Fund ("Small Cap Fund") and GT
Global America Value Fund ("America Value Fund") (individually, a "Fund," and
collectively, the "Funds"). Each Fund is a diversified series of G.T. Global
Growth Series (the "Company"), a registered open-end management investment
company. The Small Cap Fund and America Value Fund invest all of their
investable assets in the Small Cap Portfolio and Value Portfolio (individually,
a "Portfolio," and collectively, the "Portfolios"), respectively. This Statement
of Additional Information, which is not a prospectus, supplements and should be
read in conjunction with the Funds' current Class A and Class B Prospectus dated
May 1, 1997, a copy of which is available without charge by writing to the above
address or calling the Funds at the toll-free telephone number printed above.
Chancellor LGT Asset Management, Inc. (the "Manager") serves as each Portfolio's
investment manager and administrator, and also serves as each Fund's
administrator. The distributor of the shares of each Fund is GT Global, Inc.
("GT Global"). The Funds' transfer agent is GT Global Investor Services, Inc.
("GT Services" or the "Transfer Agent").
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE NO.
-----------
<S> <C>
Investment Objectives and Policies..................................................................................... 2
Options and Futures.................................................................................................... 4
Risk Factors........................................................................................................... 11
Investment Limitations................................................................................................. 12
Execution of Portfolio Transactions.................................................................................... 14
Trustees and Executive Officers........................................................................................ 16
Management............................................................................................................. 18
Valuation of Shares.................................................................................................... 20
Information Relating to Sales and Redemptions.......................................................................... 21
Taxes.................................................................................................................. 23
Additional Information................................................................................................. 25
Investment Results..................................................................................................... 26
Description of Debt Ratings............................................................................................ 31
Financial Statements................................................................................................... 33
</TABLE>
[LOGO]
Statement of Additional Information Page 1
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
INVESTMENT OBJECTIVES
AND POLICIES
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES
The investment objective of each Fund is long-term capital appreciation. The
Small Cap Fund and America Value Fund each seeks to achieve its investment
objective by investing all of its investable assets in the Small Cap Portfolio
and Value Portfolio, respectively, each of which is a subtrust (a "series") of
Growth Portfolio, a registered open-end management investment company with an
investment objective that is identical to that of its corresponding Fund.
Whenever the phrase "all of the Fund's investable assets" is used herein and in
the Prospectus, it means that the only investment securities that will be held
by a Fund will be its interest in its corresponding Portfolio. A Fund may
withdraw its investment in its corresponding Portfolio at any time, if the Board
of Trustees of the Company determines that it is in the best interests of the
Fund and its shareholders to do so. Upon any such withdrawal, a Fund's assets
would be invested in accordance with the investment policies described below and
in the Prospectus with respect to its corresponding Portfolio.
INVESTMENTS IN OTHER INVESTMENT COMPANIES
The Portfolios may invest in the securities of closed-end investment companies
within the limits of the Investment Company Act of 1940, as amended (the "1940
Act"). These limitations currently provide that, in general, each Portfolio may
purchase shares of a closed-end investment company unless (a) such a purchase
would cause a Portfolio to own more than 3% of the total outstanding voting
stock of the investment company or (b) such a purchase would cause a Portfolio
to have more than 5% of its assets invested in the investment company or more
than 10% of its assets invested in an aggregate of all such investment
companies. Investment in investment companies may involve the payment of
substantial premiums above the value of such companies' portfolio securities.
The Portfolios do not intend to invest in such vehicles or funds unless the
Manager determines that the potential benefits of such investments justify the
payment of any applicable premiums. The return on such securities will be
reduced by operating expenses of such companies including payments to the
investment managers of those investment companies.
DEPOSITORY RECEIPTS
Each Portfolio may invest up to 10% of its total assets in securities of foreign
issuers in the form of American Depository Receipts ("ADRs") American Depository
Shares ("ADSs") and European Depository Receipts ("EDRs") or other securities
convertible into securities of eligible European or Far Eastern issuers. These
securities may not necessarily be denominated in the same currency as the
securities for which they may be exchanged. ADRs and ADSs typically are issued
by an American bank or trust company and evidence ownership of underlying
securities issued by a foreign corporation. EDRs, which are sometimes referred
to as Continental Depository Receipts ("CDRs"), are issued in Europe typically
by foreign banks and trust companies and evidence ownership of either foreign or
domestic securities. Generally, ADRs and ADSs in registered form are designed
for use in United States securities markets and EDRs in bearer form are designed
for use in European securities markets. For purposes of a Portfolio's investment
policies, its investments in ADRs, ADSs and EDRs will be deemed to be
investments in the equity securities representing securities of foreign issuers
into which they may be converted.
ADR facilities may be established as either "unsponsored" or "sponsored." While
ADRs issued under these two types of facilities are in some respects similar,
there are distinctions between them relating to the rights and obligations of
ADR holders and the practices of market participants. A depository may establish
an unsponsored facility without participation by (or even necessarily the
acquiescence of) the issuer of the deposited securities, although typically the
depository requests a letter of non-objection from such issuer prior to the
establishment of the facility. Holders of unsponsored ADRs generally bear all
the costs of such facilities. The depository usually charges fees upon the
deposit and withdrawal of the deposited securities, the conversion of dividends
into U.S. dollars, the disposition of non-cash distributions, and the
performance of other services. The depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited securities or to pass through voting
rights to ADR holders with respect to the deposited securities. Sponsored ADR
facilities are created in generally the same manner as unsponsored facilities,
except that the issuer of the deposited securities enters into a deposit
agreement with the depository. The deposit agreement sets out the rights and
responsibilities of the issuer, the depository and the ADR holders. With
sponsored facilities, the issuer of the deposited securities generally will bear
some of the costs relating to the
Statement of Additional Information Page 2
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
facility (such as dividend payment fees of the depository), although ADR holders
continue to bear certain other costs (such as deposit and withdrawal fees).
Under the terms of most sponsored arrangements, depositories agree to distribute
notices of shareholder meetings and voting instructions, and to provide
shareholder communications and other information to the ADR holders at the
request of the issuer of the deposited securities. The Portfolios may invest in
both sponsored and unsponsored ADRs.
WARRANTS OR RIGHTS
Warrants or rights may be acquired by a Portfolio in connection with other
securities or separately and provide the Portfolio with the right to purchase at
a later date other securities of the issuer.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, each Portfolio may make secured
loans of its portfolio securities amounting to not more than 30% of its total
assets. Securities loans are made to broker/dealers or institutional investors
pursuant to agreements requiring that the loans continuously be secured by
collateral at least equal at all times to the value of the securities lent, plus
any accrued interest, "marked to market" on a daily basis. The Portfolios may
pay reasonable administrative and custodial fees in connection with the loans of
their securities. While the securities loans are outstanding, the Portfolios
will continue to receive the equivalent of the interest or dividends paid by the
issuer on the securities, as well as interest on the investment of the
collateral or a fee from the borrower. Each Portfolio will have a right to call
each loan at any time and obtain the securities within the stated settlement
period. The Portfolios will not have the right to vote equity securities while
they are being lent, but may call in a loan in anticipation of any important
vote. Loans will only be made to firms deemed by the Manager to be of good
standing and will not be made unless, in the judgment of the Manager, the
consideration to be earned from such loans would justify the risk.
COMMERCIAL BANK OBLIGATIONS
For the purposes of each Portfolio's investment policies with respect to bank
obligations, obligations of foreign branches of U.S. banks are obligations of
the issuing bank and may be general obligations of the parent bank. Such
obligations, however, may be limited by the terms of a specific obligation and
by government regulation. Although a Portfolio typically will acquire
obligations issued and supported by the credit of U.S. banks having total assets
at the time of purchase of $1 billion or more, this $1 billion figure is not an
investment policy or restriction of any Portfolio. For the purposes of
calculation with respect to the $1 billion figure, the assets of a bank will be
deemed to include the assets of its U.S. and non-U.S. branches.
REPURCHASE AGREEMENTS
A repurchase agreement is a transaction in which a Portfolio purchases a
security from a bank or recognized securities dealer and simultaneously commits
to resell that security to the bank or dealer at an agreed-upon price, date and
market rate of interest unrelated to the coupon rate or maturity of the
purchased security. Although repurchase agreements carry certain risks not
associated with direct investment in securities, including possible decline in
the market value of the underlying securities and delays and costs to the
Portfolio if the other party to the repurchase agreement becomes bankrupt, the
Portfolios intend to enter into repurchase agreements only with banks and
dealers believed by the Manager to present minimal credit risks in accordance
with guidelines approved by Growth Portfolio's Board of Trustees. The Manager
will review and monitor the creditworthiness of such institutions under the
general supervision of Growth Portfolio's Board.
Each Portfolio will invest only in repurchase agreements collateralized at all
times in an amount at least equal to the repurchase price plus accrued interest.
To the extent that the proceeds from any sale of such collateral upon a default
in the obligation to repurchase were less than the repurchase price, the Fund
would suffer a loss. If the financial institution which is party to the
repurchase agreement petitions for bankruptcy or otherwise becomes subject to
bankruptcy or other liquidation proceedings, there may be restrictions on the
Portfolio's ability to sell the collateral and the Portfolio could suffer a
loss. However, with respect to financial institutions whose bankruptcy or
liquidation proceedings are subject to the U.S. Bankruptcy Code, the Portfolios
intend to comply with provisions under the U.S. Bankruptcy Code that would allow
them to immediately to resell the collateral. A Portfolio will not enter into a
repurchase agreement with a maturity of more than seven days if, as a result,
more than 15% of the value of its net assets would be invested in such
repurchase agreements and other illiquid investments.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS
Each Portfolio's borrowings will not exceed 33 1/3% of its total assets, i.e.,
each Portfolio's total assets at all times will equal at least 300% of the
amount of outstanding borrowings. If market fluctuations in the value of a
Portfolio's portfolio holdings or other factors cause the ratio of the
Portfolio's total assets to outstanding borrowings to fall below 300%, within
three
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days (excluding Sundays and holidays) of such event the Portfolio may be
required to sell portfolio securities to restore the 300% asset coverage, even
though from an investment standpoint such sales might be disadvantageous. Each
Portfolio also may borrow up to 5% of its total assets for temporary or
emergency purposes other than to meet redemptions. Any borrowing by a Portfolio
may cause greater fluctuation in the value of its corresponding Fund's shares
than would be the case if the Portfolio did not borrow.
Each Portfolio's fundamental investment limitations permit the Portfolio to
borrow money for leveraging purposes. Each Portfolio, however, currently is
prohibited, pursuant to a non-fundamental investment policy, from borrowing
money in order to purchase securities. Nevertheless, this policy may be changed
in the future by Growth Portfolio's Board of Trustees. If a Portfolio employs
leverage in the future, it would be subject to certain additional risks. Use of
leverage creates an opportunity for greater growth of capital but would
exaggerate any increases or decreases in a Portfolio's net asset value. When the
income and gains on securities purchased with the proceeds of borrowings exceed
the costs of such borrowings, a Portfolio's earnings or net asset value will
increase faster than otherwise would be the case; conversely, if such income and
gains fail to exceed such costs, a Portfolio's earnings or net asset value would
decline faster than would otherwise be the case.
Each Portfolio may enter into reverse repurchase agreements. A reverse
repurchase agreement is a borrowing transaction in which the Portfolio transfers
possession of a security to another party, such as a bank or broker/dealer in
return for cash, and agrees to repurchase the security in the future at an
agreed upon price, which includes an interest component. Each Portfolio also may
engage in "roll" borrowing transactions which involve its sale of Government
National Mortgage Association certificates or other securities together with a
commitment (for which the Portfolio may receive a fee) to purchase similar, but
not identical, securities at a future date. Each Portfolio will maintain, in a
segregated account with a custodian, cash or liquid securities in an amount
sufficient to cover its obligations under "roll" transactions and reverse
repurchase agreements with broker/dealers. No segregation is required for
reverse repurchase agreements with banks.
TEMPORARY DEFENSIVE STRATEGIES
Money market instruments in which the Portfolios may invest include the
following: government securities; high grade commercial paper; bank certificates
of deposit; bankers' acceptances; and repurchase agreements related to any of
the foregoing. High grade commercial paper refers to commercial paper rated P-1
by Moody's Investors Service, Inc. ("Moody's") or A-1 by Standard & Poor's
Ratings Group ("S&P"), at the time of investment or, if unrated, deemed by the
Manager to be of comparable quality.
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OPTIONS AND FUTURES
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SPECIAL RISKS OF OPTIONS AND FUTURES
The use of options and futures contracts involves special considerations and
risks, as described below. Risks pertaining to particular instruments are
described in the sections that follow.
(1) Successful use of most of these instruments depends upon the
Manager's ability to predict movements of the overall securities markets,
which requires different skills than predicting changes in the prices of
individual securities. While the Manager is experienced in the use of these
instruments, there can be no assurance that any particular strategy adopted
will succeed.
(2) There might be imperfect correlation, or even no correlation,
between price movements of an instrument and price movements of the
investments being hedged. For example, if the value of an instrument used in
a short hedge increased by less than the decline in value of the hedged
investment, the hedge would not be fully successful. Such a lack of
correlation might occur due to factors unrelated to the value of the
investments being hedged, such as speculative or other pressures on the
markets in which the hedging instrument is traded. The effectiveness of
hedges using hedging instruments on indices will depend on the degree of
correlation between price movements in the index and price movements in the
investments being hedged.
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(3) Hedging strategies, if successful, can reduce risk of loss by wholly
or partially offsetting the negative effect of unfavorable price movements
in the investments being hedged. However, hedging strategies can also reduce
opportunity for gain by offsetting the positive effect of favorable price
movements in the hedged investments. For example, if a Portfolio entered
into a short hedge because the Manager projected a decline in the price of a
security in the Portfolio's securities portfolio, and the price of that
security increased instead, the gain from that increase might be wholly or
partially offset by a decline in the price of the hedging instrument.
Moreover, if the price of the hedging instrument declined by more than the
increase in the price of the security, the Portfolio could suffer a loss. In
either such case, the Portfolio would have been in a better position had it
not hedged at all.
(4) As described below, a Portfolio might be required to maintain assets
as "cover," maintain segregated accounts or make margin payments when it
takes positions in instruments involving obligations to third parties (I.E.,
instruments other than purchased options). If the Portfolio were unable to
close out its positions in such instruments, it might be required to
continue to maintain such assets or accounts or make such payments until the
position expired or matured. The requirements might impair the Portfolio's
ability to sell a portfolio security or make an investment at a time when it
would otherwise be favorable to do so, or require that the Portfolio sell a
portfolio security at a disadvantageous time. The Portfolio's ability to
close out a position in an instrument prior to expiration or maturity
depends on the existence of a liquid secondary market or, in the absence of
such a market, the ability and willingness of the other party to the
transaction ("contra party") to enter into a transaction closing out the
position. Therefore, there is no assurance that any position can be closed
out at a time and price that is favorable to a Portfolio.
WRITING CALL OPTIONS
A Portfolio may write (sell) call options on securities and indices. Call
options generally will be written on securities that, in the opinion of the
Manager, are not expected to make any major price moves in the near future but
that, over the long term, are deemed to be attractive investments for the
Portfolio.
A call option gives the holder (buyer) the right to purchase a security at a
specified price (the exercise price) at any time until (American style) or on
(European style) a certain date (the expiration date). So long as the obligation
of the writer of a call option continues, he or she may be assigned an exercise
notice, requiring him or her to deliver the underlying security against payment
of the exercise price. This obligation terminates upon the expiration of the
call option, or such earlier time at which the writer effects a closing purchase
transaction by purchasing an option identical to that previously sold.
Portfolio securities on which call options may be written will be purchased
solely on the basis of investment considerations consistent with each
Portfolio's investment objective. When writing a call option, a Portfolio, in
return for the premium, gives up the opportunity for profit from a price
increase in the underlying security above the exercise price, and retains the
risk of loss should the price of the security decline. Unlike one who owns
securities not subject to an option, a Portfolio has no control over when it may
be required to sell the underlying securities, since most options may be
exercised at any time prior to the option's expiration. If a call option that a
Portfolio has written expires, the Portfolio will realize a gain in the amount
of the premium; however, such gain may be offset by a decline in the market
value of the underlying security during the option period. If the call option is
exercised, the Portfolio will realize a gain or loss from the sale of the
underlying security, which will be increased or offset by the premium received.
Each Portfolio does not consider a security covered by a call option to be
"pledged" as that term is used in the Portfolio's policy that limits the
pledging or mortgaging of its assets.
Writing call options can serve as a limited short hedge because declines in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security appreciates to a price
higher than the exercise price of the call option, it can be expected that the
option will be exercised and a Portfolio will be obligated to sell the security
at less than its market value.
The premium that a Portfolio receives for writing a call option is deemed to
constitute the market value of an option. The premium a Portfolio will receive
from writing a call option will reflect, among other things, the current market
price of the underlying investment, the relationship of the exercise price to
such market price, the historical price volatility of the underlying investment
and the length of the option period. In determining whether a particular call
option should be written, the Manager will consider the reasonableness of the
anticipated premium and the likelihood that a liquid secondary market will exist
for those options.
Closing transactions will be effected in order to realize a profit on an
outstanding call option, to prevent an underlying security from being called, or
to permit the sale of the underlying security. Furthermore, effecting a closing
transaction will
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permit a Portfolio to write another call option on the underlying security with
either a different exercise price or expiration date or both.
Each Portfolio will pay transaction costs in connection with the writing of
options and in entering into closing purchase contracts. Transaction costs
relating to options activity normally are higher than those applicable to
purchases and sales of portfolio securities.
The exercise price of the options may be below, equal to or above the current
market values of the underlying securities or indices at the time the options
are written. From time to time, a Portfolio may purchase an underlying security
for delivery in accordance with the exercise of an option, rather than
delivering such security from its portfolio. In such cases, additional costs
will be incurred.
A Portfolio will realize a profit or loss from a closing purchase transaction if
the cost of the transaction is less or more, respectively, than the premium
received from writing the option. Because increases in the market price of a
call option generally will reflect increases in the market price of the
underlying security, any loss resulting from the repurchase of a call option is
likely to be offset in whole or in part by appreciation of the underlying
security owned by the Portfolio.
WRITING PUT OPTIONS
The Portfolios may write put options on securities and indices. A put option
gives the purchaser of the option the right to sell, and the writer (seller) the
obligation to buy, the underlying security at the exercise price at any time
until (American style) or on (European style) the expiration date. The operation
of put options in other respects, including their related risks and rewards, is
substantially identical to that of call options.
A Portfolio generally would write put options in circumstances where the Manager
wishes to purchase the underlying security for the Portfolio's portfolio at a
price lower than the current market price of the security. In such event, the
Portfolio would write a put option at an exercise price that, reduced by the
premium received on the option, reflects the lower price it is willing to pay.
Since the Portfolio also would receive interest on debt securities maintained to
cover the exercise price of the option, this technique could be used to enhance
current return during periods of market uncertainty. The risk in such a
transaction would be that the market price of the underlying security would
decline below the exercise price, less the premium received.
Writing put options can serve as a limited long hedge because increases in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security depreciates to a price
lower than the exercise price of the put option, it can be expected that the put
option will be exercised and a Portfolio will be obligated to purchase the
security at greater than its market value.
PURCHASING PUT OPTIONS
Each Portfolio may purchase put options on securities and indices. As the holder
of a put option, a Portfolio would have the right to sell the underlying
security at the exercise price at any time until (American style) or on
(European style) the expiration date. A Portfolio may enter into closing sale
transactions with respect to such options, exercise such options or permit such
options to expire.
A Portfolio may purchase a put option on an underlying security ("protective
put") owned by the Portfolio in order to protect against an anticipated decline
in the value of the security. Such hedge protection is provided only during the
life of the put option when the Portfolio, as the holder of the put option, is
able to sell the underlying security at the put exercise price regardless of any
decline in the underlying security's market price. For example, a put option may
be purchased in order to protect unrealized appreciation of a security when the
Manager deems it desirable to continue to hold the security because of tax
considerations. The premium paid for the put option and any transaction costs
would reduce any profit otherwise available for distribution when the security
eventually is sold.
A Portfolio also may purchase put options at a time when the Portfolio does not
own the underlying security. By purchasing put options on a security it does not
own, a Portfolio seeks to benefit from a decline in the market price of the
underlying security. If the put option is not sold when it has remaining value,
and if the market price of the underlying security remains equal to or greater
than the exercise price during the life of the put option, the Portfolio will
lose its entire investment in the put option. In order for the purchase of a put
option to be profitable, the market price of the underlying security must
decline sufficiently below the exercise price to cover the premium and
transaction costs, unless the put option is sold in a closing sale transaction.
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PURCHASING CALL OPTIONS
Each Portfolio may purchase call options on securities and indices. As the
holder of a call option, a Portfolio would have the right to purchase the
underlying security at the exercise price at any time until (American style) or
on (European style) the expiration date. A Portfolio may enter into closing sale
transactions with respect to such option, exercise such options or permit such
options to expire.
Call options may be purchased by a Portfolio for the purpose of acquiring the
underlying security for its portfolio. Utilized in this fashion, the purchase of
call options would enable a Portfolio to acquire the security at the exercise
price of the call option plus the premium paid. At times, the net cost of
acquiring the security in this manner may be less than the cost of acquiring the
security directly. This technique also may be useful to the Portfolios in
purchasing a large block of securities that would be more difficult to acquire
by direct market purchases. As long as it holds such a call option, rather than
the underlying security itself, a Portfolio is partially protected from any
unexpected decline in the market price of the underlying security and, in such
event, could allow the call option to expire, incurring a loss only to the
extent of the premium paid for the option.
Each Portfolio also may purchase call options on underlying securities it owns
in order to protect unrealized gains on call options previously written by it. A
call option could be purchased for this purpose where tax considerations make it
inadvisable to realize such gains through a closing purchase transaction. Call
options also may be purchased at times to avoid realizing losses that would
result in a reduction of a Portfolio's current return. For example, where a
Portfolio has written a call option on an underlying security having a current
market value below the price at which such security was purchased by the
Portfolio, an increase in the market price could result in the exercise of the
call option written by the Portfolio and the realization of a loss on the
underlying security. Accordingly, the Portfolio could purchase a call option on
the same underlying security, which could be exercised to fulfill the
Portfolio's delivery obligations under its written call (if it is exercised).
This strategy could allow the Portfolio to avoid selling the portfolio security
at a time when it has an unrealized loss; however, the Portfolio would have to
pay a premium to purchase the call option plus transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of such
Portfolio's total assets at the time of purchase.
Options may be either listed on an exchange or traded in over-the-counter
("OTC") markets. Listed options are third-party contracts (I.E., performance of
the obligations of the purchaser and seller is guaranteed by the exchange or
clearing corporation), and have standardized strike prices and expiration dates.
OTC options are two-party contracts with negotiated strike prices and expiration
dates. A Portfolio will not purchase an OTC option unless the Manager believes
that daily valuations for such options are readily obtainable. OTC options
differ from exchange-traded options in that OTC options are transacted with
dealers directly and not through a clearing corporation (which guarantees
performance). Consequently, there is a risk of non-performance by the dealer.
Since no exchange is involved, OTC options are valued on the basis of an average
of the last bid prices obtained from dealers, unless a quotation from only one
dealer is available in which case only that dealer's price will be used. In the
case of OTC options, there can be no assurance that a liquid secondary market
will exist for any particular option at any specific time.
The staff of the Securities and Exchange Commission ("SEC") considers purchased
OTC options to be illiquid securities. A Portfolio may also sell OTC options
and, in connection therewith, set aside assets or cover its obligations with
respect to OTC options written by the Portfolio. The assets used as cover for
OTC options written by a Portfolio will be considered illiquid unless the OTC
options are sold to qualified dealers who agree that the Portfolio may
repurchase any OTC option it writes at a maximum price to be calculated by a
formula set forth in the option agreement. The cover for an OTC option written
subject to this procedure would be considered illiquid only to the extent that
the maximum repurchase price under the formula exceeds the intrinsic value of
the option.
A Portfolio's ability to establish and close out positions in exchange-listed
options depends on the existence of a liquid market. A Portfolio intends to
purchase or write only those exchange-listed options for which there appears to
be a liquid secondary market. However, there can be no assurance that such a
market will exist at any particular time. Closing transactions can be made for
OTC options only by negotiating directly with the contra party or by a
transaction in the secondary market if any such market exists. Although a
Portfolio will enter into OTC options only with contra parties that are expected
to be capable of entering into closing transactions with the Portfolio, there is
no assurance that the Portfolio will in fact be able to close out an OTC option
position at a favorable price prior to expiration. In the event of insolvency of
the contra party, the Portfolio might be unable to close out an OTC option
position at any time prior to its expiration.
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INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or loss depends on
changes in the index in question (and thus on price movements in the securities
market or a particular market sector generally) rather than on price movements
in individual securities or futures contracts. When a Portfolio writes a call on
an index, it receives a premium and agrees that, prior to the expiration date,
the purchaser of the call, upon exercise of the call, will receive from the
Portfolio an amount of cash if the closing level of the index upon which the
call is based is greater than the exercise price of the call. The amount of cash
is equal to the difference between the closing price of the index and the
exercise price of the call times a specified multiple (the "multiplier"), which
determines the total dollar value for each point of such difference. When a
Portfolio buys a call on an index, it pays a premium and has the same rights as
to such call as are indicated above. When a Portfolio buys a put on an index, it
pays a premium and has the right, prior to the expiration date, to require the
seller of the put, upon the Portfolio's exercise of the put, to deliver to the
Portfolio an amount of cash if the closing level of the index upon which the put
is based is less than the exercise price of the put, which amount of cash is
determined by the multiplier, as described above for calls. When a Portfolio
writes a put on an index, it receives a premium and the purchaser has the right,
prior to the expiration date, to require the Portfolio to deliver to it an
amount of cash equal to the difference between the closing level of the index
and the exercise price times the multiplier, if the closing level is less than
the exercise price.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when a Portfolio writes a
call on an index it cannot provide in advance for its potential settlement
obligations by acquiring and holding the underlying securities. A Portfolio can
offset some of the risk of writing a call index option position by holding a
diversified portfolio of securities similar to those on which the underlying
index is based. However, a Portfolio cannot, as a practical matter, acquire and
hold a portfolio containing exactly the same securities as underlie the index
and, as a result, bears a risk that the value of the securities held will vary
from the value of the index.
Even if a Portfolio could assemble a securities portfolio that exactly
reproduced the composition of the underlying index, it still would not be fully
covered from a risk standpoint because of the "timing risk" inherent in writing
index options. When an index option is exercised, the amount of cash that the
holder is entitled to receive is determined by the difference between the
exercise price and the closing index level on the date when the option is
exercised. As with other kinds of options, the Portfolio as the call writer,
will not know that it has been assigned until the next business day at the
earliest. The time lag between exercise and notice of assignment poses no risk
for the writer of a covered call on a specific underlying security, such as
common stock, because there the writer's obligation is to deliver the underlying
security, not to pay its value as of a fixed time in the past. So long as the
writer already owns the underlying security, it can satisfy its settlement
obligations by simply delivering it, and the risk that its value may have
declined since the exercise date is borne by the exercising holder. In contrast,
even if the writer of an index call holds securities that exactly match the
composition of the underlying index, it will not be able to satisfy its
assignment obligations by delivering those securities against payment of the
exercise price. Instead, it will be required to pay cash in an amount based on
the closing index value on the exercise date; and by the time it learns that it
has been assigned, the index may have declined, with a corresponding decline in
the value of its securities portfolio. This "timing risk" is an inherent
limitation on the ability of index call writers to cover their risk exposure by
holding securities positions.
If a Portfolio has purchased an index option and exercises it before the closing
index value for that day is available, it runs the risk that the level of the
underlying index may subsequently change. If such a change causes the exercised
option to fall out-of-the-money, the Portfolio will be required to pay the
difference between the closing index value and the exercise price of the option
(times the applicable multiplier) to the assigned writer.
INTEREST RATE AND STOCK INDEX FUTURES CONTRACTS
A Portfolio may enter into interest rate or stock index futures contracts
("Futures" or "Futures Contracts") as a hedge against changes in prevailing
levels of interest rates or stock price levels in order to establish more
definitely the effective return on securities held or intended to be acquired by
the Portfolio. A Portfolio's hedging may include sales of Futures as an offset
against the effect of expected increases in interest rates, or decreases in
stock prices, and purchases of Futures as an offset against the effect of
expected declines in interest rates, or increases in stock prices.
The Portfolios only will enter into Futures Contracts that are traded on futures
exchanges and are standardized as to maturity date and underlying financial
instrument. Futures exchanges and trading thereon in the United States are
regulated under the Commodity Exchange Act by the Commodity Futures Trading
Commission ("CFTC").
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Although techniques other than sales and purchases of Futures Contracts could be
used to reduce a Portfolio's exposure to interest rate and stock market
fluctuations, the Portfolio may be able to hedge its exposure more effectively
and at a lower cost through using Futures Contracts.
A Futures Contract provides for the future sale by one party and purchase by
another party of a specified amount of a specific financial instrument for a
specified price at a designated date, time and place. A stock index Futures
Contract provides for the delivery, at a designated date, time and place, of an
amount of cash equal to a specified dollar amount times the difference between
the stock index value at the close of trading on the contract and the price at
which the Futures Contract is originally struck; no physical delivery of stocks
comprising the index is made. Brokerage fees are incurred when a Futures
Contract is bought or sold, and margin deposits must be maintained at all times
the Futures Contract is outstanding.
Although Futures Contracts typically require future delivery of and payment for
financial instruments, Futures Contracts usually are closed out before the
delivery date. Closing out an open Futures Contract sale or purchase is effected
by entering into an offsetting Futures Contract purchase or sale, respectively,
for the same aggregate amount of the identical financial instrument and the same
delivery date. If the offsetting purchase price is less than the original sale
price, the Portfolio realizes a gain; if it is more, the Portfolio realizes a
loss. Conversely, if the offsetting sale price is more than the original
purchase price, the Portfolio realizes a gain; if it is less, the Portfolio
realizes a loss. The transaction costs also must be included in these
calculations. There can be no assurance, however, that a Portfolio will be able
to enter into an offsetting transaction with respect to a particular Futures
Contract at a particular time. If a Portfolio is not able to enter into an
offsetting transaction, the Portfolio will continue to be required to maintain
the margin deposits on the Futures Contract.
As an example of an offsetting transaction, the contractual obligations arising
from the sale of one September stock index Futures Contract on an exchange may
be fulfilled at any time before delivery under the Futures Contract is required
(I.E., on a specified date in September, the "delivery month") by the purchase
of the same September stock index Futures Contract on the same exchange. In such
instance, the difference between the price at which the Futures Contract was
sold and the price paid for the offsetting purchase, after allowance for
transaction costs, represents the profit or loss to the Portfolio.
Each Portfolio's Futures transactions will be entered into for hedging purposes;
that is, Futures Contracts will be sold to protect against a decline in the
price of securities that a Portfolio owns, or Futures Contracts will be
purchased to protect the Portfolio against an increase in the price of
securities it has committed to purchase or expects to purchase.
"Margin" with respect to Futures Contracts is the amount of funds that must be
deposited by a Portfolio in order to initiate Futures trading and to maintain
the Portfolio's open positions in Futures Contracts. A margin deposit made when
the Futures Contract is entered into ("initial margin") is intended to ensure
the Portfolio's performance under the Futures Contract. The margin required for
a particular Futures Contract is set by the exchange on which the Futures
Contract is traded and may be significantly modified from time to time by the
exchange during the term of the Futures Contract.
Subsequent payments, called "variation margin," to and from the futures
commission merchant through which the Portfolio entered into the Futures
Contract will be made on a daily basis as the price of the underlying security
or index fluctuates making the Futures Contract more or less valuable, a process
known as marking-to-market.
RISKS OF USING FUTURES CONTRACTS. The prices of Futures Contracts are
volatile and are influenced by, among other things, actual and anticipated
changes in interest rates and in stock market movements, which in turn are
affected by fiscal and monetary policies and national and international
political and economic events.
There is a risk of imperfect correlation between changes in prices of Futures
Contracts and prices of the securities in the Portfolio's portfolio being
hedged. The degree of imperfection of correlation depends upon circumstances
such as variations in speculative market demand for Futures and for securities,
including technical influences in Futures trading; and differences between the
financial instruments being hedged and the instruments underlying the standard
Futures Contracts available for trading. A decision of whether, when and how to
hedge involves skill and judgment, and even a well-conceived hedge may be
unsuccessful to some degree because of unexpected market behavior or interest
rate trends.
Because of the low margin deposits required, Futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a Futures Contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the Futures Contract is deposited as margin, a subsequent 10%
decrease in the value of the Futures Contract would result in a total loss of
the margin deposit, before any
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deduction for the transaction costs, if the account were then closed out. A 15%
decrease would result in a loss equal to 150% of the original margin deposit, if
the Futures Contract were closed out. Thus, a purchase or sale of a Futures
Contract may result in losses in excess of the amount invested in the Futures
Contract.
Most U.S. Futures exchanges limit the amount of fluctuation permitted in Futures
Contract and options on Futures Contract prices during a single trading day. The
daily limit establishes the maximum amount that the price of a Futures Contract
or option may vary either up or down from the previous day's settlement price at
the end of a trading session. Once the daily limit has been reached in a
particular type of Futures Contract or option, no trades may be made on that day
at a price beyond that limit. The daily limit governs only price movement during
a particular trading day and therefore does not limit potential losses, because
the limit may prevent the liquidation of unfavorable positions. Futures Contract
and option prices occasionally have moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some traders to substantial losses.
If a Portfolio were unable to liquidate a Futures or option on Futures position
due to the absence of a liquid secondary market or the imposition of price
limits, it could incur substantial losses. The Portfolio would continue to be
subject to market risk with respect to the position. In addition, except in the
case of purchased options, the Portfolio would continue to be required to make
daily variation margin payments and might be required to maintain the position
being hedged by the Future or option or to maintain cash or securities in a
segregated account.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
increased participation by speculators in the Futures markets. This
participation also might cause temporary price distortions. In addition,
activities of large traders in both the Futures and securities markets involving
arbitrage, "program trading" and other investment strategies might result in
temporary price distortions.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities, except that
options on Futures Contracts give the purchaser the right, in return for the
premium paid, to assume a position in a Futures Contract (a long position if the
option is a call and a short position if the option is a put) at a specified
exercise price at any time during the period of the option. Upon exercise of the
option, the delivery of the Futures position by the writer of the option to the
holder of the option will be accompanied by delivery of the accumulated balance
in the writer's Futures margin account, which represents the amount by which the
market price of the Futures Contract, at exercise, exceeds (in the case of a
call) or is less than (in the case of a put) the exercise price of the option on
the Futures Contract. If an option is exercised on the last trading day prior to
the expiration date of the option, the settlement will be made entirely in cash
equal to the difference between the exercise price of the option and the closing
level of the securities or index upon which the Futures Contract is based on the
expiration date. Purchasers of options who fail to exercise their options prior
to the exercise date suffer a loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and the
purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities or indices.
If a Portfolio writes an option on a Futures Contract, it will be required to
deposit initial and variation margin pursuant to requirements similar to those
applicable to Futures Contracts. Premiums received from the writing of an option
on a Futures Contract are included in the initial margin deposit.
A Portfolio may seek to close out an option position by selling an option
covering the same Futures Contract and having the same exercise price and
expiration date. The ability to establish and close out positions on such
options is subject to the maintenance of a liquid secondary market.
LIMITATION ON USE OF FUTURES AND OPTIONS ON FUTURES
To the extent that a Portfolio enters into Futures Contracts and options on
Futures Contracts, in each case other than for BONA FIDE hedging purposes (as
defined by the CFTC), the aggregate initial margin and premiums required to
establish these positions (excluding the amount by which options are
"in-the-money") will not exceed 5% of the liquidation value of
Statement of Additional Information Page 10
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
the Portfolio's portfolio, after taking into account unrealized profits and
unrealized losses on any contracts the Portfolio has entered into. In general, a
call option on a Futures Contract is "in-the-money" if the value of the
underlying Futures Contract exceeds the strike, I.E., exercise, price of the
call; a put option on a Futures Contract is "in-the-money" if the value of the
underlying Futures Contract is exceeded by the strike price of the put. This
guideline may be modified by Growth Portfolio's Board of Trustees without a
shareholder vote. This limitation does not limit the percentage of a Portfolio's
assets at risk to 5%.
COVER
Transactions using Futures Contracts and options (other than options that a
Portfolio has purchased) expose the Portfolio to an obligation to another party.
A Portfolio will not enter into any such transactions unless it owns either (1)
an offsetting ("covered") position in securities or other options or Futures
Contracts, or (2) cash, receivables and short-term debt securities with a value
sufficient at all times to cover its potential obligations not covered as
provided in (1) above. Each Portfolio will comply with SEC guidelines regarding
cover for these instruments and, if the guidelines so require, set aside cash or
liquid securities.
Assets used as cover or held in a segregated account cannot be sold while the
position in the corresponding Futures Contract or option is open, unless they
are replaced with other appropriate assets. If a large portion of a Portfolio's
assets are used for cover or otherwise set aside, it could affect portfolio
management or the Portfolio's ability to meet redemption requests or other
current obligations.
- --------------------------------------------------------------------------------
RISK FACTORS
- --------------------------------------------------------------------------------
ILLIQUID SECURITIES
A Portfolio may invest up to 15% of its net assets in illiquid securities.
Securities may be considered illiquid if a Portfolio cannot reasonably expect
within seven days to sell the securities for approximately the amount at which
the Portfolio values such securities. See "Investment Limitations." The sale of
illiquid securities, if they can be sold at all, generally will require more
time and result in higher brokerage charges or dealer discounts and other
selling expenses than the sale of liquid securities such as securities eligible
for trading on U.S. securities exchanges or in the OTC markets. Moreover,
restricted securities, which may be illiquid for purposes of this limitation,
often sell, if at all, at a price lower than similar securities that are not
subject to restrictions on resale.
Illiquid securities include those that are subject to restrictions contained in
the securities laws of other countries. However, securities that are freely
marketable in the country where they are principally traded, but would not be
freely marketable in the United States, will not be considered illiquid. Where
registration is required, a Portfolio may be obligated to pay all or part of the
registration expenses and a considerable period may elapse between the time of
the decision to sell and the time the Portfolio may be permitted to sell a
security under an effective registration statement. If, during such a period,
adverse market conditions were to develop, the Portfolio might obtain a less
favorable price than prevailed when it decided to sell.
Not all restricted securities are illiquid. In recent years a large
institutional market has developed for certain securities that are not
registered under the Securities Act of 1933, as amended (the "1933 Act"),
including private placements, repurchase agreements, commercial paper, foreign
securities and corporate bonds and notes. These instruments are often restricted
securities because the securities are sold in transactions not requiring
registration. Institutional investors generally will not seek to sell these
instruments to the general public, but instead will often depend either on an
efficient institutional market in which such unregistered securities can be
readily resold or on an issuer's ability to honor a demand for repayment.
Therefore, the fact that there are contractual or legal restrictions on resale
to the general public or certain institutions is not dispositive of the
liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the registration
requirements of the 1933 Act for resales of certain securities to qualified
institutional buyers. Institutional markets for restricted securities have
developed as a result of Rule 144A, providing both readily ascertainable values
for restricted securities and the ability to liquidate an investment to satisfy
share redemption orders. Such markets include automated systems for the trading,
clearance and settlement of
Statement of Additional Information Page 11
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
unregistered securities of domestic and foreign issuers, such as the PORTAL
System sponsored by the National Association of Securities Dealers, Inc. An
insufficient number of qualified institutional buyers interested in purchasing
Rule 144A-eligible restricted securities held by a Portfolio, however, could
affect adversely the marketability of such portfolio securities and the
Portfolio might be unable to dispose of such securities promptly or at favorable
prices.
With respect to liquidity determinations generally, Growth Portfolio's Board of
Trustees has the ultimate responsibility for determining whether specific
securities, including restricted securities eligible for resale to qualified
institutional buyers pursuant to Rule 144A under the 1933 Act, are liquid or
illiquid. That Board of Trustees has delegated the function of making day-to-day
determinations of liquidity to the Manager in accordance with procedures
approved by that Board of Trustees. The Manager takes into account a number of
factors in reaching liquidity decisions, including: (i) the frequency of trading
in the security; (ii) the number of dealers who make quotes for the security;
(iii) the number of dealers who have undertaken to make a market in the
security; (iv) the number of other potential purchasers; and (v) the nature of
the security and how trading is effected (e.g., the time needed to sell the
security, how offers are solicited, and the mechanics of transfer). The Manager
monitors the liquidity of securities in each Portfolio's securities portfolio
and periodically reports such determinations to Growth Portfolio's Board of
Trustees.
DEBT SECURITIES
Each Portfolio is permitted to purchase investment grade debt securities. In
selecting debt securities for investment, the Manager reviews and monitors the
creditworthiness of each issuer and issue and analyzes interest rate trends and
specific developments that may affect individual issuers, in addition to relying
on ratings assigned by S&P, Moody's or another nationally recognized statistical
rating organization ("NRSRO") as indicators of quality. Debt securities rated
Baa by Moody's or BBB by S&P are investment grade, although Moody's considers
securities rated Baa to have speculative characteristics. Changes in economic
conditions or other circumstances are more likely to lead to a weakened capacity
for such securities to make principal and interest payments than is the case for
higher grade debt securities. Each Portfolio is also permitted to purchase debt
securities that are not rated by S&P, Moody's or another NRSRO but that the
Manager determines to be of comparable quality to that of rated securities in
which the Portfolio may invest. Such securities are included in the computation
of any percentage limitations applicable to the comparable rated securities.
Ratings of debt securities represent the rating agencies' opinions regarding
their quality, are not a guarantee of quality and may be reduced after a
Portfolio has acquired the security. The Manager will consider such an event in
determining whether a Portfolio should continue to hold the security but is not
required to despose of it. Credit ratings attempt to evaluate the safety of
principal and interest payments and do not reflect an assessment of the
volatility of the security's market value or the liquidity of an investment in
the security. Also, NRSROs may fail to make timely changes in credit ratings in
response to subsequent events, so that an issuer's current financial condition
may be better or worse than the rating indicates. For a description of Moody's
and S&P ratings, see "Description of Debt Ratings" herein.
- --------------------------------------------------------------------------------
INVESTMENT LIMITATIONS
- --------------------------------------------------------------------------------
THE FUNDS
The Small Cap Fund and America Value Fund each has the following fundamental
investment policy to enable it to invest in the Small Cap Portfolio and Value
Portfolio, respectively:
Notwithstanding any other investment policy of the Fund, the Fund may invest
all of its investable assets (cash, securities and receivables related to
securities) in an open-end management investment company having
substantially the same investment objective, policies and limitations as the
Fund.
All other investment policies and limitations of each Fund and its corresponding
Portfolio are identical. Therefore, although the following discusses certain
investment policies and limitations of each Portfolio and Growth Portfolio's
Board of Trustees, it applies equally to each Fund and the Company's Board of
Trustees.
Each Portfolio has adopted the following investment limitations as fundamental
policies that (unless otherwise noted) may not be changed without approval by
the affirmative vote of the lesser of (i) 67% of the Portfolio's shares
represented at a
Statement of Additional Information Page 12
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
meeting at which more than 50% of the outstanding shares are represented, or
(ii) more than 50% of the Portfolio's outstanding shares. Whenever a Fund is
requested to vote on a change in the investment limitations of its corresponding
Portfolio, the Fund will hold a meeting of its shareholders and will cast its
votes as instructed by the shareholders. Neither Portfolio may:
(1) Invest in companies for the purpose of exercising control or
management;
(2) Purchase or sell real estate; provided that a Portfolio may invest
in securities secured by real estate or interests therein or issued by
companies that invest in real estate or interests therein;
(3) Purchase or sell interests in oil, gas or other mineral exploration
or development programs, except that the Portfolio may invest in the
securities of companies that engage in these activities;
(4) Purchase or sell commodities or commodity contracts, except that the
Portfolio may purchase and sell futures contracts and options;
(5) Mortgage, pledge or in any other manner transfer as security for any
indebtedness, any of its assets except to secure permitted borrowings.
Collateral arrangements with respect to initial or variation margin for
futures contracts and options will not be deemed to be a pledge of a
Portfolio's assets;
(6) Borrow money in excess of 33 1/3% of the Portfolio's total assets
(including the amount borrowed), less all liabilities and indebtedness
(other than borrowing). Transactions involving options, futures contracts,
options on futures contracts, and collateral arrangements relating thereto
will not be deemed to be borrowings;
(7) Purchase securities on margin or effect short sales, except that a
Portfolio may obtain such short-term credits as may be necessary for the
clearance of purchases or sales of securities and except in connection with
the use of options, futures contracts or options thereon. The Portfolios may
make deposits of margin in connection with futures contracts and options
thereon;
(8) Participate on a joint or a joint and several basis in any trading
account in securities. (The "bunching" of orders for the sale or purchase of
marketable portfolio securities with other accounts under the management of
the Manager to save brokerage costs or average prices among them is not
deemed to result in a securities trading account);
(9) Make loans, except that the Portfolio may purchase debt securities
and enter into repurchase agreements and make loans of portfolio securities;
(10) Purchase or retain the securities of an issuer if, to the knowledge
of the Portfolio after reasonable inquiry, any of the Trustees or officers
of Growth Portfolio or the Portfolio's investment adviser or distributor
individually own beneficially more than 1/2 of 1% of the outstanding
securities of such issuer and together own beneficially more than 5% of the
securities;
(11) Underwrite securities of other issuers, except to the extent that,
in connection with the disposition of portfolio securities, the Portfolio
may be deemed an underwriter under federal or state securities laws; and
(12) Invest more than 25% of the value of the Portfolio's total assets in
securities of issuers conducting their principal business activities in any
one industry, except that this limitation shall not apply to securities
issued or guaranteed as to principal and interest by the U.S. government or
any of its agencies or instrumentalities.
In addition, each Portfolio has adopted as a fundamental investment policy a
classification as a "diversified" portfolio under the 1940 Act. This means that,
with respect to 75% of the Portfolio's total assets, no more than 5% will be
invested in the securities of any one issuer, and the Portfolio will purchase no
more than 10% of the outstanding voting securities of any one issuer. This
policy cannot be changed without approval by the holders of a majority of the
Portfolio's outstanding voting securities as defined above.
The following investment limitations of each Portfolio are not fundamental
policies and may be changed by vote of Growth Portfolio's Board of Trustees
without shareholder approval. Neither Portfolio may:
(1) Invest more than 15% of its net assets in illiquid securities, a
term which means securities that cannot be disposed of within seven days in
the normal course of business at approximately the amount at which the
Portfolio has valued the securities and includes, among other things,
repurchase agreements maturing in more than seven days;
Statement of Additional Information Page 13
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
(2) Borrow money except for temporary or emergency purposes (not for
leveraging) in excess of 33 1/3% of the value of the Portfolio's total
assets;
(3) Enter into a futures contract or an option on a futures contract, in
each case other than for BONA FIDE hedging purposes (as defined by the
CFTC), if the aggregate initial margin and premiums required to establish
all of these positions (excluding the amount by which options are
"in-the-money") exceeds 5% of the liquidation value of the Portfolio's
portfolio, after taking into account unrealized profits and unrealized
losses on any contracts the Portfolio has entered into; or
(4) Purchase securities of other investment companies, except to the
extent permitted by the 1940 Act, in the open market at no more than
customary commission rates. This limitation does not apply to securities
received or acquired as dividends, through offers of exchange, or as a
result of reorganization, consolidation, or merger.
If a percentage restriction on investment or utilization of assets in an
investment policy or limitation is adhered to at the time an investment is made,
a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of a Portfolio's investment policies or restrictions. A
Portfolio may exchange securities, exercise conversion or subscription rights,
warrants, or other rights to purchase common stock or other equity securities
and may hold, except to the extent limited by the 1940 Act, any such securities
so acquired without regard to the Portfolio's investment policies and
limitations. The original cost of the securities so acquired will be included in
any subsequent determination of a Portfolio's compliance with the investment
percentage limitations referred to above and in the Prospectus.
- --------------------------------------------------------------------------------
EXECUTION OF PORTFOLIO TRANSACTIONS
- --------------------------------------------------------------------------------
Subject to policies established by Growth Portfolio's Board of Trustees, the
Manager is responsible for the execution of the Portfolios' securities
transactions and the selection of brokers/dealers who execute such transactions
on behalf of the Portfolios. In executing portfolio transactions, the Manager
seeks the best net results for each Portfolio, taking into account such factors
as the price (including the applicable brokerage commission or dealer spread),
size of the order, difficulty of execution and operational facilities of the
firm involved. Although the Manager generally seeks reasonably competitive
commission rates and spreads, payment of the lowest commission or spread is not
necessarily consistent with the best net results. While the Portfolios may
engage in soft dollar arrangements for research services, as described below,
the Portfolios have no obligation to deal with any broker/dealer or group of
broker/dealers in the execution of portfolio transactions.
Consistent with the interests of the Portfolios, the Manager may select brokers
to execute the Portfolios' securities transactions on the basis of the research
services they provide to the Manager for its use in managing the Portfolios and
its other advisory accounts. Such services may include furnishing analyses,
reports and information concerning issuers, industries, securities, geographic
regions, economic factors and trends, portfolio strategy, and performance of
accounts, and effecting securities transactions and performing functions
incidental thereto (such as clearance and settlement). Research and brokerage
services received from such broker is in addition to, and not in lieu of, the
services required to be performed by the Manager under the Management Contract
(defined below). A commission paid to such broker may be higher than that which
another qualified broker would have charged for effecting the same transaction,
provided that the Manager determines in good faith that such commission is
reasonable in terms either of that particular transaction or the overall
responsibility of the Manager to the Portfolios and its other clients and that
the total commissions paid by each Fund will be reasonable in relation to the
benefits received by the Portfolios over the long term. Research services may
also be received from dealers who execute Portfolio transactions in OTC markets.
The Manager may allocate brokerage transactions to broker/dealers who have
entered into arrangements under which the broker/dealer allocates a portion of
the commissions paid by the Portfolio toward payment of the Portfolio's
expenses, such as custodian fees.
Investment decisions for each 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
Statement of Additional Information Page 14
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
two or more of such accounts, including one or more Portfolios. In such cases,
simultaneous transactions may occur. Purchases or sales are then allocated as to
price or amount in a manner deemed fair and equitable to all accounts involved.
While in some cases this practice could have a detrimental effect upon the price
or value of the security as far as a Portfolio is concerned, in other cases the
Manager believes that coordination and the ability to participate in volume
transactions will be beneficial to the Portfolios.
Under a policy adopted by Growth Portfolio's Board of Trustees, and subject to
the policy of obtaining the best net results, the Manager may consider a
broker/dealer's sale of the shares of the Funds and the other funds for which
the Manager serves as investment manager and/or administrator in selecting
broker/dealers for the execution of portfolio transactions. This policy does not
imply a commitment to execute portfolio transactions through all broker/dealers
that sell shares of the Funds and such other funds.
Each 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. Growth 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.
For the fiscal year ended December 31, 1996, and for the fiscal period October
18, 1995 (commencement of operations) to December 31, 1995, the Small Cap
Portfolio paid aggregate brokerage commissions of $54,241 and $3,317,
respectively. For the fiscal year ended December 31, 1996, and for the fiscal
period October 18, 1995 (commencement of operations) to December 31, 1995, the
Value Portfolio paid aggregate brokerage commissions of $37,380 and $1,032,
respectively.
PORTFOLIO TRADING AND TURNOVER
Although the Portfolios generally do not intend to trade for short-term profits,
the securities held by a Portfolio will be sold whenever the Manager believes it
is appropriate to do so, without regard to the length of time a particular
security may have been held. Portfolio turnover rate is calculated by dividing
the lesser of sales or purchases of portfolio securities by each Portfolio's
average month-end portfolio value, excluding short-term investments. The
portfolio turnover rate will not be a limiting factor when the Manager deems
portfolio changes appropriate. Higher portfolio turnover involves
correspondingly greater brokerage commissions and other transaction costs that a
Portfolio will bear directly and may result in the realization of net capital
gains that are taxable when distributed to each corresponding Fund's
shareholders. For the fiscal year ended December 31, 1996, the Small Cap
Portfolio's and Value Portfolio's portfolio turnover rates were 150% and 256%,
respectively.
Statement of Additional Information Page 15
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
TRUSTEES AND EXECUTIVE OFFICERS
- --------------------------------------------------------------------------------
The Company's Trustees and Executive Officers are listed below.
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
FUNDS AND ADDRESS EXPERIENCE FOR THE PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
William J. Guilfoyle*, 38 Director, LGT Asset Management, Inc. since 1996; Director, G.T. Insurance Agency ("G.T.
Trustee, Chairman of the Board and Insurance") since 1996; Director, Liechtenstein Global Trust AG (holding company of the
President various international LGT companies) Advisory Board since January 1996; President, GT
50 California Street Global since 1995; President and Chief Executive Officer, G.T. Insurance since 1995;
San Francisco, CA 94111 Director, Liechtenstein Global Trust AG from 1995 to January 1996; Senior Vice President
and Director, Sales and Marketing, G.T. Insurance from April 1995 to November 1995; Vice
President and Director of Marketing, GT Global from 1987 to 1995; Senior Vice President,
Retail Marketing, G.T. Insurance from 1993 to 1995; and Vice President, G.T. Insurance
from 1992 to 1993. Mr. Guilfoyle also is a director or trustee of each of the other
investment companies registered under the 1940 Act that is managed or administered by the
Manager.
C. Derek Anderson, 55 Chief Executive Officer, Anderson Capital Management, Inc.; Chairman and Chief Executive
Trustee Officer, Plantagenet Holdings, Ltd. from 1991 to present; Director, Munsingwear, Inc.; and
220 Sansome Street Director, American Heritage Group Inc. and various other companies. Mr. Anderson also is a
Suite 400 director or trustee of each of the other investment companies registered under the 1940
San Francisco, CA 94104 Act that is managed or administered by the Manager.
Frank S. Bayley, 57 Partner, Baker & McKenzie (a law firm): Director and Chairman, C.D. Stimson Company (a
Trustee private investment company). Mr. Bayley also is a director or trustee of each of the other
Two Embarcadero Center investment companies registered under the 1940 Act that is managed or administered by the
Suite 2400 Manager.
San Francisco, CA 94111
Arthur C. Patterson, 53 Managing Partner, Accel Partners (a venture capital firm). He also serves as a director of
Trustee various computing and software companies. Mr. Patterson also is a director or trustee of
One Embarcadero Center each of the other investment companies registered under the 1940 Act that is managed or
Suite 3820 administered by the Manager.
San Francisco, CA 94111
Ruth H. Quigley, 61 Private investor; and President, Quigley Friedlander & Co., Inc. (a financial advisory
Trustee services firm) from 1984 to 1986. Ms. Quigley also is a director or trustee of each of the
1055 California Street other investment companies registered under the 1940 Act that is managed or administered
San Francisco, CA 94108 by the Manager.
Robert G. Wade, Jr.*, 69 Consultant to the Manager; Chairman of the Board of Chancellor Capital Management, Inc.
Trustee from January 1995 to October 1996; President, Chief Executive Officer and Chairman of the
1166 Avenue of the Americas Board of Chancellor Capital Management, Inc. from 1988 to January 1995.
New York, NY 10036
</TABLE>
- --------------
* Mr. Guilfolye and Mr. Wade are "interested persons" of the Company as
defined by the 1940 Act due to their affiliation with the LGT companies.
Statement of Additional Information Page 16
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
FUNDS AND ADDRESS EXPERIENCE FOR THE PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
James R. Tufts, 38 Chief Information Officer for the Manager since October 1996; President,
Vice President and Chief GT Services since 1995; Senior Vice President -- Finance and
Financial Officer Administration, GT Global, GT Services and G.T. Insurance from 1994 to
50 California Street 1995; Senior Vice President -- Finance and Administration, the Manager
San Francisco, CA 94111 from 1994 to October 1996; Vice President -- Finance, the Manager, GT
Global and GT Services from 1990 to 1994; Vice President -- Finance,
G.T. Insurance from 1992 to 1994; and Director, the Manager, GT Global
and GT Services since 1991.
Kenneth W. Chancey, 51 Vice President -- Mutual Fund Accounting, the Manager since 1992; and
Vice President and Principal Vice President, Putnam Fiduciary Trust Company from 1989 to 1992.
Accounting Officer
50 California Street
San Francisco, CA 94111
Helge K. Lee, 50 Executive Vice President, Asset Management Division, Liechtenstein
Vice President and Secretary Global Trust since October 1996; Senior Vice President, the Manager, GT
1166 Avenue of the Americas Global, GT Services and G.T. Insurance from February 1996 to October
New York, NY 10036 1996; Vice President, the Manager, GT Global, GT Services and G.T.
Insurance from May 1994 to February 1996; General Counsel, the Manager,
GT Global, GT Services and G.T. Insurance from May 1994 to October 1996;
Secretary, the Manager, GT Global, GT Services and G.T. Insurance from
May 1994 to October 1996; Senior Vice President, General Counsel and
Secretary, Strong/Corneliuson Management, Inc.; and Secretary, each of
the Strong Funds from October 1991 through May 1994.
</TABLE>
------------------------
The Company's Board of Trustees has a Nominating and Audit Committee, comprised
of Ms. Quigley and Messrs. Anderson, Bayley and Patterson, which is responsible
for nominating persons to serve as Trustees, reviewing audits of the Company and
the Funds and recommending firms to serve as independent auditors of the
Company. Each of the Trustees and officers of the Company is also a director and
officer of G.T. Investment Portfolios, Inc., G.T. Investment Funds, Inc., G.T.
Global Developing Markets Fund, Inc. and G.T. Global Floating Rate Fund, Inc.
and a Trustee and officer of G.T. Global Eastern Europe Fund, G.T. Global
Variable Investment Trust, G.T. Global Variable Investment Series, Global High
Income Portfolio, Global Investment Portfolio and Floating Rate Portfolio, which
also are registered investment companies managed by the Manager. Each Trustee
and officer serves in total as a Director and or Trustee and officer,
respectively, of 12 registered investment companies with 41 series managed or
administered by the Manager. The Company pays each Trustee who is not a
director, officer or employee of the Manager or any affiliated company $5,000
per annum plus $300 per Fund for each meeting of the Board attended by the
Trustee, and reimburses travel and other expenses incurred in connection with
attendance at such meetings. Other Trustees and officers receive no compensation
or expense reimbursements from the Company. For the fiscal year ended December
31, 1996, Mr. Anderson, Mr. Bayley, Mr. Patterson and Ms. Quigley, who are not
directors, officers or employees of the Manager or any affiliated company,
received total compensation of $6,050, $6,050, $5,450 and $6,050, respectively,
from the Company for their services as Trustees. For the year ended December 31,
1996, Mr. Anderson, Mr. Bayley, Mr. Patterson and Ms. Quigley received total
compensation of $87,600, $87,600, $80,100 and $87,600, respectively, from the
investment companies managed or administered by the Manager for which he or she
served as a director or trustee. Fees and expenses disbursed to the Trustees
contained no accrued or payable pension or retirement benefits. As of the date
of this Statement of Additional Information, the officers and Trustees and their
families as a group owned in the aggregate beneficially or of record less than
1% of the shares of the America Value Fund and less than 1% of the shares of the
Small Cap Fund.
Statement of Additional Information Page 17
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES RELATING TO THE FUNDS AND THE
PORTFOLIOS
The Manager serves as each Portfolio's investment manager and administrator
under an Investment Management and Administration Contract ("Portfolio
Management Contract") between Growth Portfolio and the Manager. The Manager
serves as administrator to each Fund under an administration contract between
the Company and the Manager ("Administration Contract"). The Administration
Contract will not be deemed an advisory contract, as defined under the 1940 Act.
As investment manager and administrator, the Manager makes all investment
decisions for each Portfolio and, as administrator, administers each Portfolio's
and Fund's affairs. Among other things, the Manager furnishes the services and
pays the compensation and travel expenses of persons who perform the executive,
administrative, clerical and bookkeeping functions of the Portfolio and the
Funds and provides suitable office space and necessary small office equipment
and utilities. For these services, each Fund will pay administration fees to the
Manager at the annualized rate of 0.25% of the Fund's average daily net assets.
In addition, each Fund bears a pro rata portion of the investment management and
administration fee paid by its corresponding Portfolio to the Manager. Each
Portfolio pays such fees based on its average daily net assets, computed daily
and paid monthly, at the annualized rate of 0.475% on the first $500 million,
0.45% on the next $500 million, 0.425% on the next $500 million, and 0.40% on
all amounts thereafter.
The Portfolio Management Contract may be renewed with respect to a Portfolio for
one-year terms, provided that any such renewal has been specifically approved at
least annually by: (i) Growth Portfolio's Board of Trustees or the vote of a
majority of the Portfolio's outstanding voting securities (as defined in the
1940 Act), and (ii) a majority of Growth Portfolio's Trustees who are not
parties to the Portfolio Management Contract or "interested persons" of any such
party (as defined in the 1940 Act), cast in person at a meeting called for the
specific purpose of voting on such approval. The Portfolio Management Contract
provides that with respect to each Portfolio, and the Administration Contract
provides that with respect to each Fund, either the Company, Growth Portfolio or
the Manager may terminate the contract without penalty upon sixty days' written
notice to the other party. The Portfolio Management Contract terminates
automatically in the event of its assignment (as defined in the 1940 Act).
For the fiscal period October 18, 1995 (commencement of operations) to December
31, 1995, the Small Cap Portfolio and the Value Portfolio paid fees of $1,293
and $622, respectively, to the Manager. For the same period, the Small Cap Fund
and America Value Fund paid administration fees of $755 and $349, respectively,
to the Manager. For the fiscal period October 18, 1995 (commencement of
operations) to December 31, 1995, the Manager reimbursed the Small Cap Portfolio
and Value Portfolio for their respective investment management and
administration fees in the amounts of $1,293 and $622, respectively; for the
same period, the Small Cap Fund and America Value Fund reimbursed administration
fees in the amounts of $755 and $349, respectively. Accordingly, the manager
reimbursed each Fund and its respective Portfolio investment management and
administration fees in the aggregate amounts of $2,048 and $971, respectively.
For the fiscal year ended December 31, 1996, the Small Cap Portfolio and the
Value Portfolio paid fees of $73,312 and $27,487, respectively, to the Manager.
For the same period, the Small Cap Fund and America Value Fund paid
administration fees of $39,004 and $14,722, respectively, to the Manager. For
the fiscal year ended December 31, 1996, the Manager reimbursed the Small Cap
Portfolio and Value Portfolio for their respective investment management and
administration fees in the amounts of $73,312 and $27,487, respectively; for the
same period, the Small Cap Fund and America Value Fund paid administration fees
of $39,004 and $14,722, respectively. Accordingly, the Manager reimbursed each
Fund and its corresponding Portfolio investment management and administration
fees in the aggregate amounts of $112,316 and $42,209, respectively.
For the fiscal period October 18, 1995 (commencement of operations) to December
31, 1995, the Manager, pursuant to a voluntary expense undertaking to limit
expenses to the maximum annual level of 2.00% and 2.65%, respectively, of
average daily net assets of the Class A shares and Class B shares of the Funds,
reimbursed the Small Cap Fund and America Value Fund for expenses in the
additional amounts of $65,079 and $66,907, respectively.
For the fiscal year ended December 31, 1996, the Manager, pursuant to its
voluntary expense undertaking, reimbursed the Small Cap Fund and America Value
Fund for expenses in the additional amounts of $58,269 and $164,683,
respectively.
DISTRIBUTION SERVICES
Each Fund's Class A and Class B shares are offered continuously through the
Funds' principal underwriter and distributor, GT Global, on a "best efforts"
basis pursuant to separate Distribution Contracts between the Company and GT
Global.
Statement of Additional Information Page 18
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
As described in the Prospectus, the Company has adopted separate Distribution
Plans with respect to each class of shares of the Funds in accordance with the
provisions of Rule 12b-1 under the 1940 Act (each a "Class A Plan" and a "Class
B Plan," respectively, and collectively, the "Plans"). The rate of payment by
each Fund under the Plans, as described in the Prospectus, may not be increased
without the approval of the majority of the outstanding voting securities of the
affected class of that Fund. All expenses for which GT Global is reimbursed
under a Class A Plan will have been incurred within one year of such
reimbursement. The Funds make no payments under the Class A Plan or the Class B
Plan to any party other than GT Global.
Payments made under the Plans for the fiscal year ended December 31, 1996 by the
Small Cap Fund and America Value Fund for Class A and Class B shares were
$25,545 and $80,691, and $6,742 and $38,173, respectively.
In approving the continuation of the Plans, the Company's Trustees determined
that the continuation of the Plans was in the best interests of the
shareholders. Agreements related to the Plans also must be approved by vote of
the Company's Trustees, including a majority of those Trustees who are not
"interested persons" of the Company (as defined in the 1940 Act) and who have no
direct or indirect financial interests in the operation of the Plan, or in any
agreement related thereto.
Each Plan requires that, at least quarterly, the Company's Trustees review the
amounts expended thereunder and the purposes for which such expenditures were
made. Each Plan requires that as long as it is in effect, the selection and
nomination of the Company's Trustees who are not "interested persons" of the
Company will be committed to the discretion of those Trustees who are not
"interested persons" of the Company, as defined in the 1940 Act.
As discussed in the Prospectus, GT Global collects sales charges on sales of
Class A shares of the Funds, retains certain amounts of such charges and
reallows other amounts of such charges to broker/dealers who sell shares of the
Funds.
The following table reviews the extent of such activity during the last two
fiscal years.
<TABLE>
<CAPTION>
SALES CHARGES AMOUNTS AMOUNTS
OCTOBER 18, 1995 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1995 COLLECTED RETAINED REALLOWED
- ----------------------------------------------------------------------------------- ------------- ----------- -----------
<S> <C> <C> <C>
Small Cap Fund..................................................................... $ 3,729 $ 2,815 $ 914
America Value Fund................................................................. 1,650 326 1,324
<CAPTION>
SALES CHARGES AMOUNTS AMOUNTS
YEAR ENDED DECEMBER 31, 1996 COLLECTED RETAINED REALLOWED
- ----------------------------------------------------------------------------------- ------------- ----------- -----------
<S> <C> <C> <C>
Small Cap Fund..................................................................... $ 28,750 $ 9,945 $ 18,805
America Value Fund................................................................. 7,345 1,702 5,643
</TABLE>
GT Global receives any contingent deferred sales charges payable with respect to
redemptions of Class B shares and certain Class A shares. For the period October
18, 1995 (commencement of operations) to December 31, 1995, GT Global collected
contingent deferred sales charges for the Small Cap Fund and America Value Fund
of $112 and $0, respectively. For the fiscal year ended December 31, 1996, GT
Global collected contingent deferred sales charges for the Small Cap Fund and
America Value Fund of $28,162 and $5,608, respectively.
TRANSFER AGENCY AND ACCOUNTING AGENCY SERVICES
The Transfer Agent has been retained by the Funds to perform shareholder
servicing, reporting and general transfer agent functions for the Funds. For
these services, the Transfer Agent receives an annual maintenance fee of $17.50
per account, a new account fee of $4.00 per account, a per transaction fee of
$1.75 for all transactions other than exchanges and a per exchange fee of $2.25.
The Transfer Agent also is reimbursed by the Funds for its out-of-pocket
expenses for such items as postage, forms, telephone charges, stationery and
office supplies.The Manager also serves as each Fund's pricing and accounting
agent. For the fiscal year ended December 31, 1996 and the period October 18,
1995 (commencement of operations) to December 31, 1995, the Small Cap Fund and
America Value Fund paid accounting services fees of $76 and $3,900, and $36 and
$1,472, respectively.
EXPENSES OF THE FUNDS AND THE PORTFOLIOS
Each Fund and each Portfolio pays all expenses not assumed by the Manager, GT
Global and other agents. These expenses include, in addition to the advisory,
distribution, transfer agency, pricing and accounting agency and brokerage fees
discussed above, legal and audit expenses, custodian fees, trustees' fees,
organizational fees, fidelity bond and other insurance premiums, taxes,
extraordinary expenses, and expenses of reports and prospectuses sent to
existing investors. The allocation of general Company expense and expenses
shared by the Funds with one another, are made on a basis deemed fair and
equitable, which may be based on the relative net assets of the Funds or the
nature of the services performed and relative applicability to each Fund.
Similarly, the allocation of general Growth Portfolio expenses, and expenses
shared by the Portfolios with each other, are made on a basis deemed fair and
equitable, and may be based on the relative net assets of the Portfolios or the
nature of the services performed and relative applicablility to each Portfolio.
Expenditures, including costs incurred in connection with the purchase or sale
of portfolio securities, that are capitalized in accordance with generally
accepted accounting principles applicable to investment companies, are accounted
for as capital items and not as expenses.
Statement of Additional Information Page 19
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
VALUATION OF SHARES
- --------------------------------------------------------------------------------
As described in the Prospectus, each Fund's net asset value per share for each
class of shares is determined at the close of regular trading on the New York
Stock Exchange ("NYSE") (currently, 4:00 P.M. Eastern Time, unless weather,
equipment failure or other factors contribute to an earlier closing time).
Currently, the NYSE is closed on weekends and on certain days relating to the
following holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
July 4th, Labor Day, Thanksgiving Day and Christmas Day.
Each Portfolio's securities and other assets are valued as follows:
Equity securities, which are traded on stock exchanges, are valued at the last
sale price on the exchange on which such securities are traded, as of the close
of business on the day the securities are being valued or, lacking any sales, at
the last available bid price. In cases where securities are traded on more than
one exchange, the securities are valued on the exchange determined by the
Manager to be the primary market. Securities traded in the OTC market are valued
at the last available bid price prior to the time of valuation.
Long-term debt obligations are valued at the mean of representative quoted bid
or asked prices for such securities or, if such prices are not available, at
prices for securities of comparable maturity, quality and type; however, when
the Manager deems it appropriate, prices obtained for the day of valuation from
a bond pricing service will be used. Short-term debt investments are amortized
to maturity based on their cost, provided that such valuations represent fair
value.
Options on indices and securities purchased by the Portfolios are valued at
their last bid price in the case of listed options or at the average of the last
bid prices obtained from dealers in the case of OTC options. When market
quotations for futures and options on futures held by a Portfolio are readily
available, those positions will be valued based upon such quotations.
Securities and other assets for which market quotations are not readily
available (including restricted securities that are subject to limitations as to
their sale) are valued at fair value as determined in good faith by or under the
direction of the Growth Portfolio's Board of Trustees. The valuation procedures
applied in any specific instance are likely to vary from case to case. However,
consideration generally is given to the financial position of the issuer and
other fundamental analytical data relating to the investment and to the nature
of the restrictions on disposition of the securities (including any registration
expenses that might be borne by a Portfolio in connection with such
disposition). In addition, other factors, such as the cost of the investment,
the market value of any unrestricted securities of the same class (both at the
time of purchase and at the time of valuation), the size of the holding, the
prices of any recent transactions or offers with respect to such securities and
any available analysts' reports regarding the issuer, generally are considered.
The fair value of any other assets is added to the value of all securities
positions to arrive at the value of a Portfolio's total assets. A Portfolio's
liabilities, including accruals for expenses, are deducted from its total assets
to determine its net assets. The value of a Fund's net assets is the value of
its investment in its corresponding Portfolio (i.e., its proportionate interest
in the Portfolio's net assets). Once the value of a Fund's net assets is so
determined, that value is then divided by the total number of shares outstanding
(excluding treasury shares), and the result, rounded to the nearer cent, is the
net asset value per share.
Statement of Additional Information Page 20
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
INFORMATION RELATING TO SALES
AND REDEMPTIONS
- --------------------------------------------------------------------------------
PAYMENT AND TERMS OF OFFERING
Payment for Class A or Class B shares purchased should accompany the purchase
order, or funds should be wired to the Transfer Agent as described in the
Prospectus. Payment, other than by wire transfer, must be made by check or money
order drawn on a U.S. bank. Checks or money orders must be payable in U.S.
dollars.
As a condition of this offering, if an order to purchase either class of shares
is cancelled due to nonpayment (for example, because a check is returned for
"not sufficient funds"), the person who made the order will be responsible for
any loss incurred by a Fund by reason of such cancellation, and if such
purchaser is a shareholder, that Fund shall have the authority as agent of the
shareholder to redeem shares in his or her account at their then-current net
asset value per share to reimburse that Fund for the loss incurred. Investors
whose purchase orders have been cancelled due to nonpayment may be prohibited
from placing future orders.
The Funds reserve the right at any time to waive or increase the minimum
requirements applicable to initial or subsequent investments with respect to any
person or class of persons. An order to purchase shares is not binding on a Fund
until it has been confirmed in writing by the Transfer Agent (or other
arrangements made with the Fund, in the case of orders utilizing wire transfer
of funds, as described above) and payment has been received. To protect existing
shareholders, the Funds reserve the right to reject any offer for a purchase of
shares by any individual.
SALES OUTSIDE THE UNITED STATES
Sales of Fund shares made through brokers outside the United States will be at
net asset value plus a sales commission, if any, established by that broker or
by local law. Such commission, if any, may be more or less than the sales
charges listed in the sales charge table included in the Prospectus.
LETTER OF INTENT -- CLASS A SHARES
A Letter of Intent ("LOI") is not a binding obligation to purchase the indicated
amount. During such time as Class A shares are held in escrow under an LOI to
ensure payment of applicable sales charges if the indicated amount is not met,
all dividends and other distributions on escrowed shares will be reinvested in
additional Class A shares or paid in cash, as specified by the shareholder. If
the intended investment is not completed within the specified 13-month period,
the purchaser must remit to GT Global the difference between the sales charge
actually paid and the sales charge that would have been applicable if the total
Class A purchases had been made at a single time. If this amount is not paid to
GT Global within 20 days after written request, the appropriate number of
escrowed shares will be redeemed and the proceeds paid to GT Global.
A registered investment adviser, trust company or trust department seeking to
execute an LOI as a single purchaser with respect to accounts over which it
exercises investment discretion is required to provide the Transfer Agent with
information establishing that such entity has discretionary authority with
respect to the money invested (e.g. by providing a copy of the pertinent
investment advisory agreement). Class A shares purchased in this manner must be
restrictively registered with the Transfer Agent so that only the investment
adviser, trust company or trust department, and not the beneficial owner, will
be able to place purchase, redemption and exchange orders.
AUTOMATIC INVESTMENT PLAN -- CLASS A SHARES AND CLASS B SHARES
To establish participation in the Funds' Automatic Investment Plan ("AIP"),
investors or their broker/dealers should specify whether investment will be in
Class A shares or Class B shares and send the following documents to the
Transfer Agent: (1) an AIP Application; (2) a Bank Authorization Form; and (3) a
voided personal check from the pertinent bank account. The necessary forms are
provided at the back of the Funds' Prospectus. Providing that an investor's bank
accepts the Bank Authorization Form, investment amounts will be drawn on the
designated dates (monthly on the 25th day or beginning quarterly on the 25th day
of the month the investor first selects) in order to purchase full and
fractional shares of a Fund at the public offering price determined on that day.
If the 25th day falls on a Saturday, Sunday or holiday, shares will be purchased
on the next business day. If an investor's check is returned because of
insufficient funds, a stop payment order or the account is closed, the AIP may
be discontinued, and any share purchase made upon deposit of such check may be
cancelled. Furthermore, the shareholder will be liable for any loss incurred by
a Fund by reason of such cancellation. Investors should allow one month for the
establishment of an AIP. An AIP may be terminated by the Transfer Agent or the
Funds upon 30 days' written notice or by the participant, at any time, without
penalty, upon written notice to the pertinent Fund or the Transfer Agent.
Statement of Additional Information Page 21
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS)
Class A or Class B shares of a Fund may be purchased as the underlying
investment for an IRA meeting the requirements of section 408(a) of the Internal
Revenue Code of 1986, as amended (the "Code"). IRA applications are available
from brokers, or GT Global.
EXCHANGES BETWEEN FUNDS
Shares of a Fund may be exchanged for shares of other GT Global Mutual Funds,
based on their respective net asset values without imposition of any sales
charges provided that the registration remains identical. Class A shares may be
exchanged only for Class A shares of other GT Global Mutual Funds. Class B
shares may be exchanged only for Class B shares of other GT Global Mutual Funds.
The exchange privilege is not an option or right to purchase shares but is
permitted under the current policies of the respective GT Global Mutual Funds.
The privilege may be discontinued or changed at any time by any of the Funds
upon 60 days' prior written notice to the shareholders of such Fund and is
available only in states where the exchange may be made legally. Before
purchasing shares through the exercise of the exchange privilege, a shareholder
should obtain and read a copy of the prospectus of the Fund to be purchased and
should consider the investment objective(s) of that Fund.
TELEPHONE REDEMPTIONS
A corporation or partnership wishing to utilize telephone redemption services
must submit a "Corporate Resolution" or "Certificate of Partnership" indicating
the names, titles and the required number of signatures of persons authorized to
act on its behalf. The certificate must be signed by a duly authorized
officer(s) and, in the case of a corporation, the corporate seal must be
affixed. All shareholders may request that redemption proceeds be transmitted by
bank wire directly to the shareholder's predesignated account at a domestic bank
or savings institution if the proceeds are at least $1,000. Costs in connection
with the administration of this service, including wire charges, will be borne
by the Funds. Proceeds of less than $ 1,000 will be mailed to the shareholder's
registered address of record. The Funds and the Transfer Agent reserve the right
to refuse any telephone instructions and may discontinue the aforementioned
redemption options upon 30 days' written notice.
SYSTEMATIC WITHDRAWAL PLAN
Shareholders owning Class A or Class B shares with a value of $10,000 or more of
any of the Funds, may establish a Systematic Withdrawal Plan ("SWP"). Under a
SWP, a shareholder will receive monthly or quarterly payments, in amounts of not
less than $100 per payment, through the automatic redemption of the necessary
number of shares on the designated dates (monthly or beginning quarterly on the
25th day of the month the investor first selects). If the 25th day falls on a
Saturday, Sunday or holiday, the redemption will take place on the prior
business day. Certificates, if any, for the shares being redeemed must be held
by the Transfer Agent. Checks will be made payable to the designated recipient
and mailed within seven days. If the recipient is other than the registered
shareholder, the signature of each shareholder must be guaranteed on the SWP
application (see "How to Redeem Shares" in the Prospectus). A corporation (or
partnership) must also submit a "Corporation Resolution" or "Certification of
Partnership" indicating the names, titles, and signatures of the individuals
authorized to act on its behalf, and the SWP application must be signed by a
duly authorized officer(s) and the corporate seal affixed.
With respect to a SWP, the maximum annual SWP withdrawal is 12% of the initial
account value. Withdrawals in excess of 12% of the initial account value
annually may result in assessment of a contingent deferred sales charge. See
"How to Invest" in the Prospectus.
Shareholders should be aware that systematic withdrawals may deplete or use up
entirely the initial investment and result in realized long-term or short-term
capital gains or losses. The SWP may be terminated at any time by the Transfer
Agent or a Fund upon 30 days' written notice or by a shareholder upon written
notice to a Fund or its Transfer Agent. Applications and further details
regarding establishment of a SWP are provided at the back of the Funds'
Prospectus.
SUSPENSION OF REDEMPTION PRIVILEGES
The Funds may suspend redemption privileges or postpone the date of payment for
more than seven days after a redemption order is received during any period: (1)
when the NYSE is closed other than customary weekend and holiday closings, or
when trading on the NYSE is restricted as directed by the SEC; (2) when an
emergency exists, as defined by the SEC, that would prohibit the Funds from
disposing of portfolio securities owned by them or in fairly determining the
value of their assets; or (3) as the SEC may otherwise permit.
REDEMPTIONS IN KIND
It is possible that conditions may arise in the future that would, in the
opinion of the Company's Board of Trustees, make it undesirable for a Fund to
pay for all redemptions in cash. In such cases and to the extent permitted by
Rule 18f-1 under the 1940 Act, the Board may authorize payment to be made in
portfolio securities or other property of a Fund's corresponding Portfolio,
so-called "redemptions in kind." Payment of redemptions in kind will be made in
readily
Statement of Additional Information Page 22
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
marketable securities. Such securities would be valued at the same value
assigned to them in computing the net asset value per share. Shareholders
receiving such securities would incur brokerage costs in selling any such
securities so received and would be subject to any increase or decrease in the
value of the securities until they were sold.
- --------------------------------------------------------------------------------
TAXES
- --------------------------------------------------------------------------------
TAXATION OF THE FUNDS
Each Fund is treated as a separate corporation for federal income tax purposes.
In order to continue to qualify for treatment as a regulated investment company
("RIC") under the Code, each Fund must distribute to its shareholders for each
taxable year at least 90% of its investment company taxable income (consisting
generally of net investment income and net short-term capital gain)
("Distribution Requirement") and must meet several additional requirements. With
respect to each Fund, these requirements include the following: (1) the Fund
must derive at least 90% of its gross income each taxable year from dividends,
interest, payments with respect to securities loans and gains from the sale or
other disposition of securities, or other income (including gains from options
or Futures) derived with respect to its business of investing in securities
("Income Requirement"); (2) the Fund must derive less than 30% of its gross
income each taxable year from the sale or other disposition of securities,
options or Futures held for less than three months ("Short-Short Limitation");
(3) at the close of each quarter of the Fund's taxable year, at least 50% of the
value of its total assets must be represented by cash and cash items, U.S.
government securities, securities of other RICs and other securities, with these
other securities limited, with respect to any one issuer, to an amount that does
not exceed 5% of the value of the Fund's total assets and that does not
represent more than 10% of the issuer's outstanding voting securities; and (4)
at the close of each quarter of the Fund's taxable year, not more than 25% of
the value of its total assets may be invested in securities (other than U.S.
government securities or the securities of other RICs) of any one issuer. Each
Fund, as an investor in its corresponding Portfolio, is deemed to own a
proportionate share of the Portfolio's assets, and to earn a proportionate share
of the Portfolio's income, for purposes of determining whether the Fund
satisfies all of the requirements described above to qualify as a RIC.
Each 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 each Fund of
hedging transactions engaged in by its corresponding Portfolio.
TAXATION OF THE PORTFOLIOS
GENERAL. Each Portfolio is treated as a separate partnership for federal
income tax purposes and is not a "publicly traded partnership." As a result,
each Portfolio is not subject to federal income tax; instead, each Fund, as an
investor in its corresponding Portfolio, is 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. Each Portfolio also is not
subject to New York income or franchise tax.
Because, as noted above, each Fund is deemed to own a proportionate share of its
corresponding Portfolio's assets, and to earn a proportionate share of its
corresponding Portfolio's income, for purposes of determining whether the Fund
satisfies the requirements to qualify as a RIC, each Portfolio intends to
continue to conduct its operations so that its corresponding Fund will be able
to continue to satisfy all those requirements.
Distributions to each Fund from its corresponding Portfolio (whether pursuant to
a partial or complete withdrawal 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. Each Fund's basis for its interest in its corresponding
Portfolio generally will equal the amount of cash and the basis of any property
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
Statement of Additional Information Page 23
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
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.
OPTIONS AND FUTURES TRANSACTIONS. The Portfolios' use of hedging
transactions, such as selling (writing) and purchasing options and Futures,
involves complex rules that will determine, for federal income tax purposes, the
character and timing of recognition of the gains and losses a Portfolio realizes
in connection therewith. Gains from options and Futures derived by a Portfolio
with respect to its business of investing in securities will qualify as
permissible income under the Income Requirement for its corresponding Fund.
However, income from the disposition by a Portfolio of options and Futures will
be subject to the Short-Short Limitation for its corresponding Fund if they are
held for less than three months.
If a Portfolio satisfies certain requirements, any increase in value of a
position that is part of a "designated hedge" will be offset by any decrease in
value (whether realized or not) of the offsetting hedging position during the
period of the hedge for purposes of determining whether its corresponding Fund
satisfies the Short-Short Limitation. Thus, only the net gain (if any) from the
designated hedge will be included in gross income for purposes of that
limitation. Each Portfolio intends that, when it engages in hedging
transactions, it will qualify for this treatment, but at the present time it is
not clear whether this treatment will be available for all those transactions.
To the extent this treatment is not available, a Portfolio may be forced to
defer the closing out of certain options and Futures, beyond the time when it
otherwise would be advantageous to do so, in order for its corresponding Fund to
continue to qualify as a RIC.
Futures that are subject to section 1256 of the Code (other than those that are
part of a "mixed straddle") ("Section 1256 Contracts") and that are held by a
Portfolio at the end of its taxable year generally will be deemed to have been
sold at market value for federal income tax purposes. Sixty percent of any net
gain or loss recognized on these deemed sales, and 60% of any net realized gain
or loss from any actual sales of Section 1256 Contracts, will be treated as
long-term capital gain or loss, and the balance will be treated as short-term
capital gain or loss.
TAXATION OF THE FUNDS' SHAREHOLDERS
Dividends and other distributions declared by a Fund in, and payable to
shareholders of record as of a date in, October, November or December of any
year will be deemed to have been paid by the Fund and received by the
shareholders on December 31 of that year if the distributions are paid by the
Fund during the following January. Accordingly, those distributions will be
taxed to shareholders for the year in which that December 31 falls.
A portion of the dividends from a Fund's investment company taxable income
(whether paid in cash or reinvested in additional shares) may be eligible for
the dividends-received deduction allowed to corporations. The eligible portion
may not exceed the aggregate dividends received by a Fund (directly or through a
Portfolio) from U.S. corporations. However, dividends received by a corporate
shareholder and deducted by it pursuant to the dividends-received deduction may
be subject indirectly to the alternative minimum tax.
If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares. Investors
also should be aware that if shares are purchased shortly before the record date
for any dividend or other distribution, the shareholder will pay full price for
the shares and receive some portion of the price back as a taxable distribution.
Dividends paid by a Fund to a shareholder who, as to the United States, is a
nonresident alien individual, nonresident alien fiduciary of a trust or estate,
foreign corporation or foreign partnership ("foreign shareholder") generally
will be subject to U.S. withholding tax (at a rate of 30% or lower treaty rate).
Withholding will not apply if a dividend paid by a Fund to a foreign shareholder
is "effectively connected with the conduct of a U.S. trade or business," in
which case the reporting and withholding requirements applicable to domestic
shareholders will apply. A distribution of net capital gain by a Fund to a
foreign shareholder generally will be subject to U.S. federal income tax (at the
rates applicable to domestic persons) only if the distribution is "effectively
connected" or the foreign shareholder is treated as a resident alien individual
for federal income tax purposes.
The foregoing is a general and abbreviated summary of certain federal tax
considerations affecting the Funds, their shareholders and the Portfolios.
Investors are urged to consult their own tax advisers for more detailed
information and for information regarding any foreign, state and local taxes
applicable to distributions received from a Fund.
Statement of Additional Information Page 24
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
LIECHTENSTEIN GLOBAL TRUST
Liechtenstein Global Trust AG, formerly BIL GT Group, is composed of the Manager
and its worldwide affiliates. Other worldwide affiliates of Liechtenstein Global
Trust include LGT Bank in Liechtenstein, formerly Bank in Liechtenstein, an
international financial services institution founded in 1920. LGT Bank in
Liechtenstein has principal offices in Vaduz, Liechtenstein. Its subsidiaries
currently include LGT Bank in Liechtenstein (Deutschland) GmbH, formerly Bank in
Liechtenstein (Frankfurt) GmbH, and LGT Asset Management AG, formerly Bilfinanz
und Verwaltung AG, in Zurich, Switzerland.
Worldwide asset management affiliates also currently include LGT Asset
Management PLC, formerly G.T. Management PLC, in London; LGT Asset Management
Ltd., formerly G.T. Management (Asia) Ltd., in Hong Kong; LGT Asset Management
Ltd., formerly G.T. Management (Japan), in Tokyo; LGT Asset Management Pte.
Ltd., formerly G.T. Management (Singapore) PTE Ltd., in Singapore; LGT Asset
Management Ltd., formerly G.T. Management (Australia) Ltd., in Sydney; and LGT
Asset Management GmbH, formerly BIL Asset Management GmbH, in Frankfurt.
CUSTODIAN
State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts
02110, acts as custodian of the Portfolios' assets.
INDEPENDENT ACCOUNTANTS
The Company's and the Portfolios' independent accountants are Coopers & Lybrand
L.L.P., One Post Office Square, Boston, Massachusetts 02109. Coopers & Lybrand
L.L.P. conducts annual audits of the Funds and the Portfolios, assists in the
preparation of the Funds' and the Portfolios' federal and state income tax
returns and consults with the Company and the Funds and Growth Portfolio and the
Portfolios as to matters of accounting, regulatory filings and federal and state
income taxation.
The audited financial statements of the Company and Growth Portfolio included in
this Statement of Additional Information have been examined by Coopers & Lybrand
L.L.P. as stated in their opinion appearing herein and are included in reliance
upon such opinion given upon the authority of that firm as experts in accounting
and auditing.
USE OF NAME
The Manager has granted the Company the right to use the "GT" and "GT Global"
names and has reserved the right to withdraw its consent to the use of such
names by the Company at any time, or to grant the use of such names to any other
company.
SHAREHOLDER LIABILITY
Under certain circumstances, shareholders of a Fund may be held personally
liable for the obligations of the Fund. The Company's Declaration of Trust
provides that shareholders shall not be subject to any personal liability for
the acts or obligations of a Fund or the Company and that every written
agreement, obligation or other undertaking made or issued by a Fund or the
Company shall contain a provision to the effect that shareholders are not
personally liable thereunder. The Declaration of Trust provides for
indemnification out of the Company's assets under certain circumstances, and
further provides that the Company shall, upon request, assume the defense of any
act or obligation of a Fund or the Company and that the Fund in which the
shareholder holds shares will indemnify the shareholder for all legal and other
expenses incurred therewith. Thus, the risk of any shareholder's incurring
financial loss beyond his or her investment, because of this theoretical
shareholder liability, is limited to circumstances in which the Fund or the
Company itself would be unable to meet its obligations.
Statement of Additional Information Page 25
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
INVESTMENT RESULTS
- --------------------------------------------------------------------------------
STANDARDIZED RETURNS
Each Fund's "Standardized Returns," as referred to in the Prospectus (see "Other
Information -- Performance Information" in the Prospectus), is calculated
separately for Class A and Class B shares of each Fund, as follows: Standardized
Return (average annual total return ("T")) is computed by using the ending
redeeming value ("ERV") of a hypothetical initial investment of $1,000 ("P")
over a period of years ("n") according to the following formula as required by
the SEC: P(1+T) to the (n)th power = ERV. The following assumptions will be
reflected in computations made in accordance with this formula: (1) for Class A
shares, deduction of the maximum sales charge of 4.75% from the $1,000 initial
investment; (2) for Class B shares, deduction of the applicable contingent
deferred sales charge imposed on a redemption of Class B shares held for the
period; (3) reinvestment of dividends and other distributions at net asset value
on the reinvestment date determined by the Company's Board of Trustees; and (4)
a complete redemption at the end of any period illustrated.
The Standardized Returns for the Class A and Class B shares of the Small Cap
Fund and America Value Fund, stated as average annualized total returns for the
periods shown, were:
<TABLE>
<CAPTION>
AMERICA
SMALL CAP SMALL CAP VALUE
FUND FUND FUND
PERIOD (CLASS A) (CLASS B) (CLASS A)
- ------------------------------------------------------------------------------------- ------------- ------------- -----------
<S> <C> <C> <C>
Fiscal year ended December 31, 1996.................................................. 8.40% 8.14% 9.65%
October 18, 1995 (commencement of operations) through December 31, 1996.............. 9.81% 10.38% 19.83%
<CAPTION>
AMERICA
VALUE
FUND
PERIOD (CLASS B)
- ------------------------------------------------------------------------------------- -----------
<S> <C>
Fiscal year ended December 31, 1996.................................................. 9.35%
October 18, 1995 (commencement of operations) through December 31, 1996.............. 20.28%
</TABLE>
NON-STANDARDIZED RETURNS
In addition to Standardized Returns, each Fund also may include in
advertisements, sales literature and shareholder reports other total return
performance data ("Non-Standardized Return"). Non-Standardized Return is
calculated separately for Class A and Class B shares of each Fund and may be
calculated according to several different formulas. Non-Standardized Returns may
be quoted for the same or different time periods for which Standardized Returns
are quoted. Non-Standardized Returns may or may not take sales charges into
account; performance data calculated without taking the effect of sales charges
into account will be higher than data including the effect of such charges.
Average annual Non-Standardized Return ("T") is computed by using the ending
redeeming value ("ERV") of a hypothetical initial investment of $1,000 ("P")
over a period of years ("n") according to the following formula as required by
the SEC: P(1+T) to the (n)th power = ERV. The following assumptions will be
reflected in computations made in accordance with this formula: (1) no deduction
of sales charges; (2) reinvestment of dividends and other distributions at net
asset value on the reinvestment date determined by the Company's Board of
Trustees; and (3) a complete redemption at the end of any period illustrated.
The average annual Non-Standardized Returns for the Class A and Class B shares
of the Small Cap Fund and America Value Fund, stated as average annualized total
returns for the periods shown, were:
<TABLE>
<CAPTION>
AMERICA
SMALL CAP SMALL CAP VALUE
FUND FUND FUND
PERIOD (CLASS A) (CLASS B) (CLASS A)
- ------------------------------------------------------------------------------------- ------------- ------------- -----------
<S> <C> <C> <C>
Fiscal year ended December 31, 1996.................................................. 13.81% 13.14% 15.12%
October 18, 1995 (commencement of operations) through December 31, 1996.............. 14.34% 13.63% 23.20%
<CAPTION>
AMERICA
VALUE
FUND
PERIOD (CLASS B)
- ------------------------------------------------------------------------------------- -----------
<S> <C>
Fiscal year ended December 31, 1996.................................................. 14.35%
October 18, 1995 (commencement of operations) through December 31, 1996.............. 22.43%
</TABLE>
Aggregate Non-Standardized Return ("T") is computed by using the ending value of
the account ("VOA") of a hypothetical initial investment of $1,000 ("P")
according to the following formula: T = (VOA/P)-1. Aggregate Non-Standardized
Return assumes reinvestment of dividends and other distributions.
Statement of Additional Information Page 26
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
The aggregate Non-Standardized Returns (not taking sales charges into account)
for the Class A and Class B shares of the Small Cap Fund and America Value Fund,
stated as aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
AMERICA
SMALL CAP SMALL CAP VALUE
FUND FUND FUND
PERIOD (CLASS A) (CLASS B) (CLASS A)
- ------------------------------------------------------------------------------------- ------------- ------------- -----------
<S> <C> <C> <C>
October 18, 1995 (commencement of operations) through December 31, 1996.............. 17.49% 16.61% 28.52%
<CAPTION>
AMERICA
VALUE
FUND
PERIOD (CLASS B)
- ------------------------------------------------------------------------------------- -----------
<S> <C>
October 18, 1995 (commencement of operations) through December 31, 1996.............. 27.55%
</TABLE>
The aggregate Non-Standardized Returns (taking sales charges into account) for
the Class A and Class B shares of the Small Cap Fund and America Value Fund,
stated as aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
AMERICA
SMALL CAP SMALL CAP VALUE
FUND FUND FUND
PERIOD (CLASS A) (CLASS B) (CLASS A)
- ------------------------------------------------------------------------------------- ------------- ------------- -----------
<S> <C> <C> <C>
October 18, 1995 (commencement of operations) through December 31, 1996.............. 11.91% 12.61% 22.41%
<CAPTION>
AMERICA
VALUE
FUND
PERIOD (CLASS B)
- ------------------------------------------------------------------------------------- -----------
<S> <C>
October 18, 1995 (commencement of operations) through December 31, 1996.............. 23.55%
</TABLE>
Each Fund's investment results will vary from time to time depending upon market
conditions, the composition of each Fund's portfolio and operating expenses of
each Fund, so that current or past yield or total return should not be
considered representative of what an investment in each Fund may earn in any
future period. These factors and possible differences in the methods used in
calculating investment results should be considered when comparing each Fund's
investment results with those published for other investment companies and other
investment vehicles. Each Fund's results also should be considered relative to
the risks associated with such Fund's investment objective and policies.
In advertising and sales materials, GT Global may make reference to or discuss
its products, services and accomplishments. Among these accomplishments are that
in 1983 GT Global provided assistance to the government of Hong Kong in linking
its currency to the U.S. dollar, and that in 1987 Japan's Ministry of Finance
licensed LGT Asset Management Ltd. (Japan) as one of the first foreign
discretionary investment managers for Japanese investors. Such accomplishments,
however, should not be viewed as an endorsement of the Manager or GT Global by
the government of Hong Kong, Japan's Ministry of Finance or any other government
or government agency. Nor do any such accomplishments of the Manager or GT
Global provide any assurance that the GT Global Mutual Funds' investment
objectives will be achieved.
IMPORTANT POINTS TO NOTE ABOUT DATA RELATING TO WORLD EQUITY AND BOND MARKETS
Each Fund and GT Global may from time to time in advertisements, sales
literature and reports furnished to present and prospective shareholders compare
the Fund with the following:
(1) The Lehman Bros. Government/Corporate Bond Index, which is a
comprehensive measure of all public obligations of the U.S. Treasury
(excluding flower bonds and foreign targeted issues), all publicly issued
debt of agencies of the U.S. Government (excluding mortgage backed
securities), and all public, fixed rate, non-convertible investment grade
domestic corporate debt rated at least Baa by Moody's, or BBB by S&P, or, in
the case of nonrated bonds, BBB by Fitch Investors Service, Inc. ("Fitch")
(excluding Collateralized Mortgage Obligations).
(2) The Consumer Price Index, which is a measure of the average change
in prices over time in a fixed market basket of goods and services (e.g.,
food, clothing, shelter, fuels, transportation fares, charges for doctors'
and dentists' services, prescription medicines, and other goods and services
that people buy for day-to-day living). There is inflation risk which does
not affect a security's value but its purchasing power i.e. the risk of
changing price levels in the economy that affects security prices or the
price of goods and services.
(3) Data and mutual fund rankings published or prepared by Lipper
Analytical Data Services, Inc. ("Lipper"), CDA/Wiesenberger Investment
Companies Service ("CDA/Wiesenberger"), Morningstar, Inc. and/or other
companies that rank and/or compare mutual funds by overall performance,
investment objectives, assets, expense levels, periods of existence and/or
other factors. In this regard each Fund may be compared to the Fund's "peer
group" as defined by Lipper, CDA/Wiesenberger, Morningstar and/or other
firms, as applicable, or to specific funds or groups of funds within or
without such peer group. Lipper generally ranks funds on the basis of total
return, assuming reinvestment of distributions, but does not take sales
charges or redemption fees into consideration, and is prepared without
regard to tax consequences. In addition to the mutual fund rankings, the
Fund's performance may be compared to mutual fund performance indices
prepared by Lipper. Morningstar is a mutual fund rating service that also
rates mutual funds on the basis of risk-adjusted performance. Morningstar
ratings are calculated from a fund's three, five and ten year average annual
returns with appropriate fee adjustments and a risk factor that reflects
fund performance relative to the three-month U.S. Treasury bill monthly
returns. Ten percent of the funds in an investment category receive five
stars and 22.5% receive four stars. The ratings are subject to change each
month.
Statement of Additional Information Page 27
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
(4) Standard & Poor's 500 Composite Stock Price Index which is a widely
recognized index composed of the capitalization-weighted average of the
prices of 500 of the largest publicly traded stocks in the United States.
(5) Salomon Brothers Broad Investment Grade Index which is a widely used
index composed of U.S. domestic government, corporate and mortgage-backed
fixed income securities.
(6) Dow Jones Industrial Average.
(7) CNBC/Financial News Composite Index.
(8) Morgan Stanley Capital International World Indices, including, among
others, the Morgan Stanley Capital International U.S. Index.
(9) Datastream and Worldscope each is an on-line database retrieval
service for information including, but not limited to, international
financial and economic data.
(10) Various publications including ratings agencies such as Moody's, S&P
and Fitch.
(11) Wilshire Associates which is an on-line database for international
financial and economic data including performance measure for a wide range
of securities.
(12) Bank Rate National Monitor Index, which is an average of the quoted
rates for 100 leading banks and thrifts in ten U.S. cities.
(13) Average of Savings Accounts, which is a measure of all kinds of
savings deposits, including longer-term certificates (based on figures
supplied by the U.S. League of Savings Institutions). Savings accounts offer
a guaranteed rate of return on principal, but no opportunity for capital
growth. During a portion of the period, the maximum rates paid on some
savings deposits were fixed by law.
Indices, economic and financial data prepared by the research departments of
various financial organizations, such as Salomon Brothers, Inc., Lehman
Brothers, Merrill Lynch, Pierce, Fenner & Smith, Inc., J. P. Morgan, Morgan
Stanley, Smith Barney, S.G. Warburg, Jardine Fleming, The Bank for International
Settlements, Asian Development Bank, Bloomberg, L.P., and Ibbottson Associates
may be used, as well as information reported by the Federal Reserve and the
respective Central Banks of various nations. In addition, GT Global may use
performance rankings, ratings and commentary reported periodically in national
financial publications, including but not limited to Money Magazine, Mutual Fund
Magazine, Smart Money, Global Finance, EuroMoney, Financial World, Forbes,
Fortune, Business Week, Latin Finance, the Wall Street Journal, Emerging Markets
Weekly, Kiplinger's Guide To Personal Finance, Barron's, The Financial Times,
USA Today, The New York Times, Far Eastern Economic Review, The Economist,
Investors Business Daily, Congressional Quarterly and Investors Business Digest.
Each Fund may compare its performance to that of other compilations or indices
of comparable quality to those listed above and other indices which may be
developed and made available in the future.
Information relating to foreign market performance, capitalization and
diversification is based on sources believed to be reliable, but which may be
subject to revision and which has not been independently verified by the Company
or GT Global. The authors and publishers of such material are not to be
considered as "experts" under the 1933 Act, as amended, on account of the
inclusion of such information herein.
GT Global believes that this information may be useful to investors considering
whether and to what extent to diversify their invesments through the purchase of
mutual funds investing in securities on a global basis. However, this data is
not a representation of the past performance of any of these Funds, nor is it a
prediction of such performance. The performance of the Funds will differ from
the historical performance of relevant indices. The performance of indices does
not take expenses into account, while each Fund incurs expenses in its
operations, which will reduce performance. Each Fund is actively managed, I.E.,
the Manager, as each Fund's investment manager, actively purchases and sells
securities in seeking each Fund's investment objective. Moreover, each Fund may
invest a portion of its assets in corporate bonds, while certain indices relate
only to government bonds. Each of these factors will cause the performance of
each Fund to differ from relevant indices.
From time to time, each Fund and GT Global may refer to the number of
shareholders in the Funds or the aggregate number of shareholders in all GT
Global Mutual Funds or the dollar amount of each Fund's assets under management
in advertising materials.
GT Global believes each Fund is an appropriate investment for long-term
investment goals including funding retirement, paying for education or
purchasing a house. GT Global may provide information designed to help
individuals understand
Statement of Additional Information Page 28
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
their investment goals and explore various financial strategies. For example, GT
Global may describe general principles of investing, such as asset allocation,
diversification and risk tolerance. Each Fund does not represent a complete
investment program and the investors should consider each Fund as appropriate
for a portion of their overall investment portfolio with regard to their
long-term investment goals. There is no assurance that any such information will
lead to achieving these goals or guarantee future results.
From time to time, GT Global may refer to or advertise the names of such
companies, or their products although there can be no assurance that any GT
Global Mutual Fund may own the securities of these companies.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical returns
of the capital markets in the United States, including common stocks, small
capitalization stocks, long-term corporate bonds, intermediate-term government
bonds, long-term government bonds, Treasury bills, the U.S. rate of inflation
(based on the CPI), and combinations of various capital markets. The performance
of these capital markets are based on the returns of different indices.
GT Global Mutual Funds may use the performance of these capital markets in order
to demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any of
these capital markets. The risks associated with the security types in any
capital market may or may not correspond directly to those of the funds.
Ibbotson calculates total returns in the same method as the funds. The Funds may
also compare performance to that of other compilations or indices that may be
developed and made available in the future.
Each Fund may quote various measures of volatility and benchmark correlation
such as beta, standard deviation and R(2) in advertising. In addition, each Fund
may compare these measures to those of other funds. Measures of volatility seek
to compare each Fund's historical share price fluctuations or total returns
compared to those of a benchmark. All measures of volatility and correlation are
calculated using averages of historical data.
Each Fund may advertise examples of the effects of periodic investment plans,
including the principle of dollar cost averaging programs. In such a program, an
investor invests a fixed dollar amount in a fund at periodic intervals, thereby
purchasing fewer shares when prices are high and more shares when prices are
low. While such a strategy does not assure a profit or guard against loss in a
declining market, the investor's average cost per share can be lower than if
fixed numbers of shares are purchased at the same intervals. In evaluating such
a plan, investors should consider their ability to continue purchasing shares
through periods of low price levels.
Each Fund may be available for purchase through retirement plans or other
programs offering deferral of income taxes, which may produce superior after-tax
returns over time. For example, a $10,000 investment earning a taxable return of
10% annually would have an after-tax value of $17,976 after ten years, assuming
tax was deducted from the return each year at a 39.6% rate. An equivalent
tax-deferred investment would have an after-tax value of $19,626 after ten
years, assuming tax was deducted at a 39.6% rate from the deferred earnings at
the end of the ten-year period.
Each Fund may describe in its sales material and advertisements how an investor
may invest in GT Global Mutual Funds through various retirement accounts and
plans that offer deferral of income taxes on investment earnings and may also
enable an investor to make pre-tax contributions. Because of their advantages,
these retirement accounts and plans may produce returns superior to comparable
non-retirement investments. In sales materials and advertisements, the Funds may
also discuss these accounts and plans, which include:
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS): If you have earned income from employment
(including self-employment), you can contribute each year to an IRA up to the
lesser of (1) $2,000 for yourself or $4,000 for you and your spouse, regardless
of whether your spouse is employed, or (2) 100% of compensation. Some
individuals may be able to take an income tax deduction for the contribution.
Regular contributions may not be made for the year you become 70 1/2 or
thereafter. Please consult your tax advisor for more information.
ROLLOVER IRAS: Individuals who receive distributions from qualified retirement
plans (other than required distributions) and who wish to keep their savings
growing tax-deferred can rollover (or make a direct transfer of) their
distribution to a Rollover IRA. These accounts can also receive rollovers or
transfers from an existing IRA. If an "eligible rollover distribution" from a
qualified employer-sponsored retirement plan is not directly rolled over to an
IRA (or certain qualified plans), withholding at the rate of 20% will be
required for federal income tax purposes. A distribution from a qualified plan
that is not an "eligible rollover distribution," including a distribution that
is one of a series of substantially equal periodic payments, generally is
subject to regular wage withholding or withholding at the rate of 10% (depending
on the type and amount of the distribution), unless you elect not to have any
withholding apply. Please consult your tax advisor for more information.
Statement of Additional Information Page 29
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
SEP-IRAS: Simplified employee pension plans ("SEPs" or "SEP-IRAs") provide
self-employed individuals (and any eligible employees) with benefits similar to
Keogh-type plans or Code Section 401(k) plans, but with fewer administrative
requirements and therefore potential lower annual administration expenses.
CODE SECTION 403(B)(7) CUSTODIAL ACCOUNTS: Employees of public schools and most
other not-for-profit organizations can make pre-tax salary reduction
contributions to these accounts.
PROFIT-SHARING (INCLUDING SECTION 401(K)) AND MONEY PURCHASE PENSION
PLANS: Corporations can sponsor these qualified defined contribution plans for
their employees. A Section 401(k) plan, a type of profit-sharing plan,
additionally permits the eligible, participating employees to make pre-tax
salary reduction contributions to the plan (up to certain limitations).
SIMPLE RETIREMENT PLANS: Employers with no more than 100 employees who do not
maintain another retirement plan may establish a Savings Incentive Match Plan
for Employees ("SIMPLE") either as separate IRAs or as part of a Code Section
401(k) plan. SIMPLEs are not subject to the complicated nondiscrimination rules
that generally apply to qualified retirement plans.
GT Global may from time to time in its sales materials and advertising discuss
the risks inherent in investing. The major types of investment risks are market
risk, industry risk, credit risk, interest risk, liquidity risk and inflation
risk. Risk represents the possibility that you may lose some or all of your
investment over a period of time. A basic tenet of investing is the greater the
potential reward, the greater the risk.
From time to time, the Funds and GT Global will quote data regarding:
industries, companies, individual countries, regions, world stock exchanges, and
economic and demographic statistics from sources GT Global deems reliable
including the economic and financial data of such financial organizations as:
1) Stock market capitalization: Morgan Stanley Capital International World
Indices, International Finance Corporation ("IFC") and Datastream.
2) Stock market trading volume: Morgan Stanley Capital International World
Indices and IFC.
3) The number of listed companies: IFC, LGT Guide to World Equity Markets,
Salomon Brothers, Inc. and S.G. Warburg.
4) Wage rates: U.S. Department of Labor Statistics and Morgan Stanley Capital
International World Indices.
5) International industry performance: Morgan Stanley Capital International
World Indices, Wilshire Associates and Salomon Brothers, Inc.
6) Stock market performance: Morgan Stanley Capital International World
Indices, IFC, Datastream, S&P 500, DJIA and Wilshire Associates.
7) The Consumer Price Index and inflation rate: The World Bank, Datastream, IFC
and Ibbotson Assoc.
8) Gross Domestic Product (GDP): Datastream and The World Bank.
9) GDP growth rate: IFC, The World Bank and Datastream.
10) Population: The World Bank, Datastream and United Nations.
11) Average annual growth rate (%) of population: The World Bank, Datastream and
United Nations.
12) Age distribution within populations: Organization for Economic Cooperation
and Development and United Nations.
13) Total exports and imports by year: IFC, The World Bank and Datastream.
14) Top three companies by country, industry or market: IFC, LGT Guide to World
Equity Markets, Salomon Brothers Inc. and S.G. Warburg.
15) Foreign direct investments to developing countries: The World Bank and
Datastream.
Statement of Additional Information Page 30
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
16) Supply, consumption, demand and growth in demand of certain products,
services and industries, including, but not limited to electricity, water,
transportation, construction materials, natural resources, technology, other
basic infrastructure, financial services, health care services and supplies,
consumer products and services and telecommunications equipment and services
(sources of such information may include The World Bank, OECD, IMF,
Bloomberg and Datastream).
17) Standard deviation and performance returns for U.S. and non-U.S. equity and
bond markets: Morgan Stanley Capital International.
18) Countries restructuring their debt, including those under the Brady Plan:
the Manager.
19) Political and economic structure of countries: Economist Intelligence Unit.
20) Government and corporate bonds -- credit ratings, yield to maturity and
performance returns: Salomon Brothers, Inc.
21) Dividend yields for U.S. and non-U.S. companies: Bloomberg.
In advertising and sales materials, GT Global may make reference to or discuss
its products, services and accomplishments. Among these accomplishments are that
in 1983 GT Global provided assistance to the government of Hong Kong in linking
its currency to the U.S. dollar, and that in 1987 Japan's Ministry of Finance
licensed LGT Asset Management Ltd. (Japan) as one of the first foreign
discretionary investment managers for Japanese investors. Such accomplishments,
however, should not be viewed as an endorsement of the Manager or GT Global by
the government of Hong Kong, Japan's Ministry of Finance or any other government
or government agency. Nor do any such accomplishments of the Manager or GT
Global provide any assurance that the GT Global Mutual Funds' investment
objectives will be achieved.
From time to time, GT Global may include in its advertisements and sales
material information about privatization which is an economic process involving
the sale of state-owned companies to the private sector.
GT GLOBAL ADVANTAGE
As part of Liechtenstein Global Trust, GT Global continues a 75-year tradition
of service to individuals and institutions. Today we bring investors a
combination of experience, worldwide resources, a global perspective, investment
talent and a time tested investment discipline. With investment professionals in
nine offices worldwide, we witness world events and economic developments
firsthand.
The key to achieving consistent results is following a disciplined investment
process. Our approach to asset allocation takes advantage of GT Global's
worldwide presence and global perspective. Our "macroeconomic" world view
determines our overall strategy of regional, country and sector allocations. Our
bottom up process of security selection combines fundamental research with
quantitative analysis through our proprietary models.
Built in checks and balances strengthen the process, enhancing professional
experience and judgment with an objective assessment of risk. Ultimately, each
security we select has passed a ranking system that helps our portfolio teams
determine when to buy and when to sell.
- --------------------------------------------------------------------------------
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF COMMERCIAL PAPER RATINGS
Moody's employs the designations "Prime-1" and "Prime-2" to indicate commercial
paper having the highest capacity for timely repayment. Issuers rated Prime-1
(or supporting institutions) have a superior ability for repayment of senior
short-term debt obligations. Prime-1 repayment ability will often be evidenced
by many of the following characteristics: leading market positions in
well-established industries; high rates of return on funds employed;
conservative capitalization structure with moderate reliance on debt and ample
asset protection; broad margins in earnings coverage of fixed financial charges
and high internal cash generation; and well-established access to a range of
financial markets and assured sources of alternate liquidity. Issuers rated
Prime-2 (or supporting institutions) have a strong ability for repayment
Statement of Additional Information Page 31
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
of senior short-term debt obligations. This normally will be evidenced by many
of the characteristics cited above but to a lesser degree. Earnings trends and
coverage ratios, while sound may be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
S&P rates commercial paper in four categories. "A-1" and "A-2" are the two
highest commercial paper rating categories. A-1 -- This highest category
indicates that the degree of safety regarding timely payment is strong. Those
issues determined to possess extremely strong safety characteristics will be
denoted with a plus sign (+) designation. A-2 -- Capacity for timely payment on
issues with this designation is satisfactory. However, the relative degree of
safety is not as high as for issues designated "A-1."
DESCRIPTION OF BOND RATINGS
Moody's rates the long-term debt securities issued by various entities from
"Aaa" to "C." Investment Grade Ratings are as follows:
Aaa -- Best quality. These securities carry the smallest degree of
investment risk and are generally referred to as "gilt edged." Interest
payments are protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- High quality by all standards. Together with the Aaa group they
comprise what are generally known as high grade bonds. They are rated lower
than the best bonds because margins of protection may not be as large as in
Aaa securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-term
risk appear somewhat larger than the Aaa securities.
A -- Upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa -- Medium-grade obligations (i.e., they are neither highly protected
nor poorly secured). Interest payments and principal security appear
adequate for the present but certain protective elements may be lacking or
may be characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
ABSENCE OF RATING: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies
that are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not
published in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa to B in its corporate bond rating system. The modifier 1
indicates that the company ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issue ranks in the lower end of its generic rating category.
S&P rates the securities debt of various entities in categories ranging from
"AAA" to "D" according to quality. Investment grade ratings are as follows:
AAA -- Highest rating. Capacity to pay interest and repay principal is
extremely strong.
AA -- High grade. Very strong capacity to pay interest and repay
principal. Generally, these bonds differ from AAA issues only in a small
degree.
A -- Have a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of change
in circumstances and economic conditions, than debt in higher rated
categories.
Statement of Additional Information Page 32
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
BBB -- Regarded as having adequate capacity to pay interest and repay
principal. These bonds normally exhibit adequate protection parameters, but
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal than for
debt in higher rated categories.
PLUS (+) OR MINUS (-): The ratings from "AA" to "BBB" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NR: Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements of each Fund as of December 31, 1996 and for
the fiscal year then ended appear on the following pages.
Statement of Additional Information Page 33
<PAGE>
GT GLOBAL AMERICA FUNDS
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
GT Global Growth Series:
We have audited the accompanying statements of assets and liabilities of GT
Global America Mid Cap Growth Fund (previously GT Global America Growth Fund),
GT Global America Small Cap Growth Fund - Consolidated, and GT Global America
Value Fund - Consolidated, three of the funds organized as a series of GT Global
Growth Series, including the portfolios of investments, as of December 31, 1996,
the related statements of operations for the year then ended, the statements of
changes in net assets and the financial highlights for each of the periods
indicated herein. These financial statements and the financial highlights are
the responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1996, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial positions of
the GT Global America Mid Cap Growth Fund (previously GT Global America Growth
Fund), GT Global America Small Cap Growth Fund - Consolidated, and GT Global
America Value Fund - Consolidated, as of December 31, 1996, the results of their
operations for the year then ended, the changes in their net assets and the
financial highlights for each of the periods indicated herein, in conformity
with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
FEBRUARY 14, 1997
F1
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Shares (Note 1) Assets
- ---------------------------------------------------------------------- ----------- ------------ -------------
<S> <C> <C> <C>
Services (31.0%)
Caribiner International, Inc.-/- ................................... 17,700 $ 889,425 4.5
CONSUMER SERVICES
Extended Stay America, Inc.-/- ..................................... 33,200 668,150 3.4
LEISURE & TOURISM
The Sports Authority, Inc.-/- ...................................... 29,250 636,188 3.2
RETAILERS-OTHER
Proffitt's, Inc.-/- ................................................ 14,456 533,065 2.7
RETAILERS-OTHER
Quality Dining, Inc.-/- ............................................ 28,400 507,650 2.6
RESTAURANTS
WinStar Communications, Inc.-/- .................................... 20,900 438,900 2.2
WIRELESS COMMUNICATIONS
Hughes Supply, Inc. ................................................ 9,800 422,625 2.2
CONSUMER SERVICES
Measurex Corp. ..................................................... 16,900 405,600 2.1
CONSUMER SERVICES
Harveys Casino Resorts ............................................. 23,000 388,125 2.0
LEISURE & TOURISM
Intercel, Inc.-/- .................................................. 25,000 306,250 1.6
WIRELESS COMMUNICATIONS
Stein Mart, Inc.-/- ................................................ 14,700 297,675 1.5
RETAILERS-OTHER
Rio Hotel and Casino, Inc.-/- ...................................... 11,700 171,113 0.9
LEISURE & TOURISM
Players International, Inc.-/- ..................................... 30,300 162,863 0.8
LEISURE & TOURISM
Lamar Advertising Co.-/- ........................................... 5,000 121,250 0.6
BUSINESS & PUBLIC SERVICES
Grey Advertising, Inc. ............................................. 300 75,000 0.4
BUSINESS & PUBLIC SERVICES
Marker International-/- ............................................ 10,000 53,750 0.3
WHOLESALE & INTERNATIONAL TRADE
------------
6,077,629
------------
Consumer Durables (15.3%)
Ethan Allen Interiors, Inc. ........................................ 25,100 966,345 4.9
HOUSING
Syratech Corp.-/- .................................................. 27,600 869,400 4.4
APPLIANCES & HOUSEHOLD
Champion Enterprises, Inc.-/- ...................................... 38,068 742,326 3.8
HOUSING
Southern Energy Homes, Inc.-/- ..................................... 20,100 231,150 1.2
HOUSING
REX Stores Corp.-/- ................................................ 24,700 200,688 1.0
CONSUMER ELECTRONICS
------------
3,009,909
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F2
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Shares (Note 1) Assets
- ---------------------------------------------------------------------- ----------- ------------ -------------
<S> <C> <C> <C>
Finance (14.0%)
Sovereign Bancorp, Inc. ............................................ 47,500 $ 623,438 3.2
BANKS-REGIONAL
Storage USA, Inc. .................................................. 15,500 583,188 3.0
REAL ESTATE
Bradley Real Estate, Inc. .......................................... 22,800 410,400 2.1
REAL ESTATE INVESTMENT TRUST
Mid-America Apartment Communities, Inc. ............................ 9,800 282,975 1.4
REAL ESTATE
Toronto-Dominion Bank{\/} (.) ...................................... 9,219 235,085 1.2
BANKS-REGIONAL
AmVestors Financial Corp. .......................................... 15,900 234,525 1.2
INSURANCE-LIFE
Game Financial Corp.-/- ............................................ 26,900 201,750 1.0
CONSUMER FINANCE
Union Planters Corp. ............................................... 4,575 178,425 0.9
BANKS-REGIONAL
------------
2,749,786
------------
Capital Goods (13.3%)
Belden, Inc. ....................................................... 22,000 814,000 4.2
ELECTRICAL PLANT/EQUIPMENT
Tekelec-/- ......................................................... 40,000 630,000 3.2
TELECOM EQUIPMENT
Plasma & Materials Technologies, Inc.-/- ........................... 37,500 440,625 2.2
ELECTRICAL PLANT/EQUIPMENT
Belmont Homes, Inc.-/- ............................................. 42,600 410,025 2.1
CONSTRUCTION
American Buildings Co.-/- .......................................... 9,500 226,813 1.2
CONSTRUCTION
Cuno, Inc.-/- ...................................................... 5,500 81,813 0.4
ENVIRONMENTAL
------------
2,603,276
------------
Technology (5.5%)
Dallas Semiconductor Corp. ......................................... 24,300 558,900 2.8
SEMICONDUCTORS
Logicon, Inc. ...................................................... 14,300 521,950 2.7
SOFTWARE
------------
1,080,850
------------
Materials/Basic Industry (4.9%)
Falcon Building Products, Inc.-/- .................................. 32,700 482,325 2.5
BUILDING MATERIALS & COMPONENTS
Fibreboard Corp.-/- ................................................ 11,500 388,125 2.0
PAPER/PACKAGING
Commercial Intertech Corp. ......................................... 5,500 74,938 0.4
METALS - NON-FERROUS
------------
945,388
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F3
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Shares (Note 1) Assets
- ---------------------------------------------------------------------- ----------- ------------ -------------
<S> <C> <C> <C>
Consumer Non-Durables (4.0%)
Coachmen Industries, Inc. .......................................... 27,300 $ 774,638 4.0
------------
RECREATION
Health Care (1.8%)
Cohr, Inc.-/- ...................................................... 12,800 345,600 1.8
MEDICAL TECHNOLOGY & SUPPLIES
------------ -----
TOTAL EQUITY INVESTMENTS (cost $18,365,112) .......................... 17,587,076 89.8
------------ -----
<CAPTION>
Value % of Net
Repurchase Agreement (Note 1) Assets
- ---------------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C>
Dated December 31, 1996, with State Street Bank & Trust Co., due
January 2, 1997, for an effective yield of 6.25%, collateralized by
$1,570,000 U.S. Treasury Bonds, 8.125% due 8/15/19 (market value of
collateral is $1,883,365, including accrued interest). (cost
$1,841,320) ....................................................... 1,841,320 9.4
------------ -----
TOTAL INVESTMENTS (cost $20,206,432) * ............................... 19,428,396 99.2
Other Assets and Liabilities ......................................... 148,920 0.8
------------ -----
NET ASSETS ........................................................... $ 19,577,316 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
(.) Country of origin for this security is Canada. All other securities
on this portfolio originate from the U.S.
* For Federal income tax purposes, cost is $20,242,867 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 1,368,000
Unrealized depreciation: (2,182,471)
-------------
Net unrealized depreciation: $ (814,471)
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F4
<PAGE>
GT GLOBAL AMERICA VALUE FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Shares (Note 1) Assets
- ---------------------------------------------------------------------- ----------- ------------ -------------
<S> <C> <C> <C>
Finance (28.8%)
Travelers Group, Inc. .............................................. 5,600 $ 254,100 3.1
INSURANCE - MULTI-LINE
Allstate Corp. ..................................................... 3,575 206,903 2.5
INSURANCE - MULTI-LINE
Chase Manhattan Corp. .............................................. 2,275 203,044 2.5
BANKS-MONEY CENTER
BankAmerica Corp. .................................................. 1,675 167,081 2.0
BANKS-SUPER REGIONAL
First Union Corp. (N.C.) ........................................... 2,250 166,500 2.0
BANKS-SUPER REGIONAL
Student Loan Marketing Association ................................. 1,775 165,297 2.0
OTHER FINANCIAL
Norwest Corp. ...................................................... 3,725 162,038 2.0
OTHER FINANCIAL
NationsBank Corp. .................................................. 1,650 161,288 2.0
BANKS-SUPER REGIONAL
Aetna, Inc. ........................................................ 1,800 144,000 1.8
INSURANCE-LIFE
Exel Ltd. .......................................................... 3,400 128,775 1.6
INSURANCE - PROPERTY-CASUALTY
Simon DeBartolo Group, Inc. ........................................ 3,150 97,650 1.2
REAL ESTATE INVESTMENT TRUST
Bankers Trust New York Corp. ....................................... 975 84,094 1.0
BANKS-MONEY CENTER
Household International, Inc. ...................................... 900 83,025 1.0
OTHER FINANCIAL
Corestates Financial Corp. ......................................... 1,550 80,406 1.0
BANKS-SUPER REGIONAL
Starwood Lodging Trust ............................................. 1,350 74,419 0.9
REAL ESTATE INVESTMENT TRUST
Beacon Properties Corp. ............................................ 1,350 49,444 0.6
REAL ESTATE INVESTMENT TRUST
Highwoods Properties, Inc. ......................................... 1,425 48,094 0.6
REAL ESTATE INVESTMENT TRUST
Equity Residential Property Trust .................................. 1,075 44,344 0.5
REAL ESTATE INVESTMENT TRUST
Felcor Suite Hotels, Inc. .......................................... 1,225 43,334 0.5
REAL ESTATE
------------
2,363,836
------------
Services (22.6%)
Tuesday Morning Corp.-/- ........................................... 13,200 282,145 3.4
RETAILERS-OTHER
AT&T Corp. ......................................................... 5,650 245,775 3.0
TELEPHONE - LONG DISTANCE
Dayton Hudson Corp. ................................................ 5,450 213,913 2.6
RETAILERS-OTHER
Burlington Northern, Inc. .......................................... 2,400 207,300 2.5
TRANSPORTATION - ROAD & RAIL
</TABLE>
The accompanying notes are an integral part of the financial statements.
F5
<PAGE>
GT GLOBAL AMERICA VALUE FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Shares (Note 1) Assets
- ---------------------------------------------------------------------- ----------- ------------ -------------
<S> <C> <C> <C>
Services (Continued)
Sears, Roebuck and Co. ............................................. 4,350 $ 200,644 2.4
RETAILERS-OTHER
GTE Corp. .......................................................... 3,825 174,038 2.1
TELEPHONE NETWORKS
Time Warner, Inc. .................................................. 4,225 158,438 1.9
BROADCASTING & PUBLISHING
Federated Department Stores, Inc.-/- ............................... 3,700 126,263 1.5
RETAILERS-APPAREL
Comcast Corp. "A" .................................................. 5,075 90,398 1.1
CABLE TELEVISION
The Limited, Inc. .................................................. 4,725 86,822 1.1
RETAILERS-APPAREL
Telefonica De Peru - ADR{\/} (.) ................................... 4,400 83,050 1.0
TELEPHONE NETWORKS
------------
1,868,786
------------
Energy (18.5%)
Tosco Corp. ........................................................ 2,400 189,900 2.3
GAS PRODUCTION & DISTRIBUTION
Amerada Hess Corp. ................................................. 2,925 169,284 2.1
OIL
Texaco, Inc. ....................................................... 1,725 169,266 2.1
OIL
CMS Energy Corp. ................................................... 3,950 132,819 1.6
ENERGY EQUIPMENT & SERVICES
Illinova Corp. ..................................................... 4,775 131,313 1.6
ENERGY EQUIPMENT & SERVICES
Occidental Petroleum Corp. ......................................... 5,350 125,056 1.5
OIL
Amoco Corp. ........................................................ 1,100 88,550 1.1
OIL
Edison International ............................................... 4,400 87,450 1.1
ELECTRICAL & GAS UTILITIES
Pinnacle West Capital Corp. ........................................ 2,725 86,519 1.1
ELECTRICAL & GAS UTILITIES
Ultramar Diamond Shamrock Corp. .................................... 2,725 86,178 1.0
OIL
Southern Co. ....................................................... 3,800 85,975 1.0
ELECTRICAL & GAS UTILITIES
Mobil Corp. ........................................................ 700 85,575 1.0
OIL
GPU, Inc. .......................................................... 2,525 84,903 1.0
ELECTRICAL & GAS UTILITIES
------------
1,522,788
------------
Materials/Basic Industry (11.4%)
Hercules, Inc. ..................................................... 5,275 228,144 2.8
CHEMICALS
Aluminum Company of America (ALCOA) ................................ 2,700 172,125 2.1
METALS - NON-FERROUS
</TABLE>
The accompanying notes are an integral part of the financial statements.
F6
<PAGE>
GT GLOBAL AMERICA VALUE FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Shares (Note 1) Assets
- ---------------------------------------------------------------------- ----------- ------------ -------------
<S> <C> <C> <C>
Materials/Basic Industry (Continued)
W.R. Grace & Co. ................................................... 3,225 $ 166,894 2.0
CHEMICALS
Union Carbide Corporate Holdings Co. ............................... 3,725 152,259 1.9
CHEMICALS
Monsanto Co. ....................................................... 3,250 126,344 1.5
CHEMICALS
Champion International Corp. ....................................... 2,000 86,500 1.1
PAPER/PACKAGING
------------
932,266
------------
Capital Goods (7.7%)
WMX Technologies, Inc. ............................................. 7,100 231,638 2.8
ENVIRONMENTAL
Textron, Inc. ...................................................... 1,800 169,650 2.1
AEROSPACE/DEFENSE
PPG Industries, Inc. ............................................... 2,800 157,150 1.9
MACHINERY & ENGINEERING
AlliedSignal, Inc.-/- .............................................. 1,150 77,050 0.9
AEROSPACE/DEFENSE
------------
635,488
------------
Consumer Non-Durables (5.1%)
Philip Morris Cos., Inc. ........................................... 2,450 275,931 3.4
FOOD
RJR Nabisco Holdings Corp. ......................................... 2,675 90,950 1.1
TOBACCO
Fruit of the Loom, Inc.-/- ......................................... 1,200 45,450 0.6
TEXTILES & APPAREL
------------
412,331
------------
Consumer Durables (5.0%)
Ford Motor Co. ..................................................... 6,550 208,781 2.5
AUTOMOBILES
Chrysler Corp. ..................................................... 6,125 202,125 2.5
AUTOMOBILES
------------
410,906
------------
Technology (2.7%)
3Com Corp.-/- ...................................................... 3,000 220,125 2.7
------------
NETWORKING
Health Care (2.5%)
Schering-Plough Corp. .............................................. 1,800 116,550 1.4
PHARMACEUTICALS
Meditrust Corp. .................................................... 2,300 92,000 1.1
HEALTH CARE SERVICES
------------
208,550
------------ -----
TOTAL EQUITY INVESTMENTS (cost $8,590,364) ........................... 8,575,076 104.3
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
F7
<PAGE>
GT GLOBAL AMERICA VALUE FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Repurchase Agreement (Note 1) Assets
- ---------------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C>
Dated December 31, 1996, with State Street Bank and Trust Company,
due January 2, 1997, for an effective yield of 6.25%,
collateralized by $285,000 U.S. Treasury Bonds, 8.125% due 8/15/19
(market value of collateral is $350,568, including accrued
interest). (cost $335,058) ........................................ $ 335,058 4.1
------------ -----
TOTAL INVESTMENTS (cost $8,925,422) * ............................... 8,910,134 108.4
Other Assets and Liabilities ......................................... (687,135) (8.4)
------------ -----
NET ASSETS ........................................................... $ 8,222,999 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
(.) Country of origin for this security is Peru. All other securities
on this portfolio originate from the U.S.
* For Federal income tax purposes, cost is $8,932,288 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 247,944
Unrealized depreciation: (270,098)
-------------
Net unrealized depreciation: $ (22,154)
-------------
-------------
</TABLE>
Abbreviations
ADR--American Depository Receipt
The accompanying notes are an integral part of the financial statements.
F8
<PAGE>
GT GLOBAL AMERICA FUNDS
STATEMENTS OF ASSETS
AND LIABILITIES
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT Global
------------------------------
America
Small Cap America
Growth Value
Fund-Consolidated Fund-Consolidated
-------------- --------------
<S> <C> <C>
Assets:
Investments in securities, at value (cost $20,206,432; $591,597,202; and
$8,925,422, respectively) (Note 1)................................................ $19,428,396 $8,910,134
U.S. currency...................................................................... 719 458
Dividends receivable............................................................... 5,419 19,245
Receivable for Fund shares sold.................................................... 243,542 55,384
Receivable for securities sold..................................................... -- 375,200
Receivable from Chancellor LGT Asset Management, Inc. (Note 2)..................... -- 164
Unamortized organizational costs (Note 1).......................................... 67,160 67,160
Miscellaneous receivable........................................................... -- --
Cash held as collateral for securities loaned (Note 1)............................. 383,400 --
-------------- --------------
Total assets..................................................................... 20,128,636 9,427,745
-------------- --------------
Liabilities:
Payable for custodian fees (Note 1)................................................ 1,246 847
Payable for fund accounting fees (Note 2).......................................... 1,316 655
Payable for Fund shares repurchased................................................ -- 145,847
Payable for investment management and administration fees (Note 2)................. 6,085 --
Payable for loan outstanding (Note 1).............................................. -- 1,000,000
Payable for printing and postage expenses.......................................... 28,326 23,712
Payable for professional fees...................................................... 17,368 14,390
Payable for registration and filing fees........................................... 2,236 800
Payable for securities purchased................................................... 88,158 --
Payable for service and distribution expenses (Note 2)............................. 11,436 5,367
Payable for transfer agent fees (Note 2)........................................... 5,396 4,727
Payable for Trustees' fees and expenses (Note 2)................................... 4,769 4,769
Other accrued expenses (Note 1).................................................... 1,484 3,532
Collateral for securities loaned (Note 1).......................................... 383,400 --
-------------- --------------
Total liabilities................................................................ 551,220 1,204,646
Minority interest (Notes 1 & 2).................................................... 100 100
-------------- --------------
Net assets........................................................................... $19,577,316 $8,222,999
-------------- --------------
-------------- --------------
Class A:
Net asset value and redemption price per share ($8,448,005 DIVIDED BY 674,639;
$343,426,924 DIVIDED BY 16,536,083; and $2,528,653 DIVIDED BY 172,644 shares
outstanding, respectively).......................................................... $ 12.52 $ 14.65
-------------- --------------
-------------- --------------
Maximum offering price per share (100/95.25 of $12.52; 100/95.25 of $20.77; and
100/95.25 of $14.65, respectively) *................................................ $ 13.14 $ 15.38
-------------- --------------
-------------- --------------
Class B+
Net asset value and offering price per share ($10,694,097 DIVIDED BY 861,017;
$334,589,970 DIVIDED BY 16,498,419; and $5,503,054 DIVIDED BY 378,527 shares
outstanding, respectively).......................................................... $ 12.42 $ 14.54
-------------- --------------
-------------- --------------
Advisor Class:
Net asset value, offering price per share, and redemption price per share
($435,214 DIVIDED BY 34,597; $1,986,184 DIVIDED BY 95,684; and
$191,292 DIVIDED BY 12,994 shares outstanding, respectively)........................ $ 12.58 $ 14.72
-------------- --------------
-------------- --------------
Net assets consist of:
Paid in capital (Note 4)........................................................... $20,517,740 $7,555,852
Accumulated net realized gain (loss) on investments and foreign currency
transactions...................................................................... (162,388) 682,435
Net unrealized appreciation (depreciation) of investments.......................... (778,036) (15,288)
-------------- --------------
Total -- representing net assets applicable to capital shares outstanding............ $19,577,316 $8,222,999
-------------- --------------
-------------- --------------
<FN>
- ----------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
F9
<PAGE>
GT GLOBAL AMERICA FUNDS
STATEMENTS OF OPERATIONS
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT Global
-------------------------------
America
Small Cap America
Growth Value
Fund-Consolidated Fund-Consolidated
-------------- ---------------
<S> <C> <C>
Investment income: (Note 1)
Interest income.................................................................... $ 139,343 $ 38,541
Dividend income.................................................................... 100,331 73,377
Other income....................................................................... 13,476 --
-------------- ---------------
Total investment income.......................................................... 253,150 111,918
-------------- ---------------
Expenses:
Amortization of organization costs (Note 1)........................................ 17,751 17,751
Custodian fees (Note 1)............................................................ 9,620 11,920
Fund accounting fees (Note 2)...................................................... 3,900 1,472
Insurance expenses................................................................. -- --
Investment management and administration fees (Note 2)............................. 112,316 42,209
Printing and postage expenses...................................................... 84,918 74,018
Professional fees.................................................................. 68,740 63,594
Registration and filing fees....................................................... 46,078 47,078
Service and distribution expenses: (Note 2)
Class A.......................................................................... 25,545 6,742
Class B.......................................................................... 80,691 38,173
Transfer agent fees (Note 2)....................................................... 65,971 26,438
Trustees' fees and expenses (Note 2)............................................... 16,640 16,640
Other expenses (Note 1)............................................................ 2,081 2,935
-------------- ---------------
Total expenses before reductions and reimbursement................................. 534,251 348,970
Expense reductions (Notes 1 & 6)................................................. -- --
Expenses reimbursed by Chancellor LGT Asset Management, Inc. (Note 2)............ (170,585) (206,892)
-------------- ---------------
Total net expenses................................................................. 363,666 142,078
-------------- ---------------
Net investment loss.................................................................. (110,516) (30,160)
-------------- ---------------
Net realized and unrealized gain on investments: (Note 1)
Net realized gain on investments................................................... 1,264,693 733,904
Net realized gain (loss) on foreign currency transactions.......................... (4) --
Net change in unrealized appreciation (depreciation) of investments................ (782,829) (69,965)
-------------- ---------------
Net realized and unrealized gain on investments...................................... 481,860 663,939
-------------- ---------------
Net increase in net assets resulting from operations................................. $ 371,344 $ 633,779
-------------- ---------------
-------------- ---------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F10
<PAGE>
GT GLOBAL AMERICA FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT Global
------------------------------------------------------
America Small Cap America Value
Growth Fund-Consolidated Fund-Consolidated
-------------------------- --------------------------
October 18, October 18,
1995 1995
(commencement (commencement
of of
Year ended operations) Year ended operations)
December to December to
31, December 31, 31, December 31,
1996 1995 1996 1995
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Increase (Decrease) in net assets
Operations:
Net investment income (loss).................................... $(110,516) $ 4,070 $ (30,160) $ 1,048
Net realized gain on investments and foreign currency
transactions................................................... 1,264,689 -- 733,904 --
Net change in unrealized appreciation (depreciation) of
investments.................................................... (782,829) 4,793 (69,965) 54,677
----------- ------------- ----------- -------------
Net increase in net assets resulting from operations.......... 371,344 8,863 633,779 55,725
----------- ------------- ----------- -------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income...................................... -- -- -- --
From net realized gain on investments........................... (564,752) -- (7,007) --
Class B:
Distributions to shareholders: (Note 1)
From net investment income...................................... -- -- -- --
From net realized gain on investments........................... (727,944) -- (14,950) --
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income...................................... -- -- -- --
From net realized gain on investments........................... (28,106) -- (443) --
----------- ------------- ----------- -------------
Total distributions........................................... (1,320,802) -- (22,400) --
----------- ------------- ----------- -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested................ 43,976,336 4,974,031 11,770,124 2,211,337
Decrease from capital shares repurchased........................ (27,455,528) (1,076,928) (6,364,460) (161,106)
----------- ------------- ----------- -------------
Net increase (decrease) from capital share transactions....... 16,520,808 3,897,103 5,405,664 2,050,231
----------- ------------- ----------- -------------
Total increase (decrease) in net assets........................... 15,571,350 3,905,966 6,017,043 2,105,956
Net assets:
Beginning of period............................................. 4,005,966 100,000 2,205,956 100,000
----------- ------------- ----------- -------------
End of period *................................................. 1$9,577,316 $4,005,966 $8,222,999 $2,205,956
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
*Includes undistributed/accumulated net investment income
(loss)........................................................... $ 0 $ 4,070 $ 0 $ 1,048
----------- ------------- ----------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F11
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
Class A Class B
---------------------------- ----------------------------
October 18, October 18,
1995 1995
(commencement (commencement
Year of operations) Year of operations)
ended to December ended to December
December 31, 31, December 31, 31,
1996 (d) 1995 (d) 1996 (d) 1995 (d)
------------ -------------- ------------ --------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 11.80 $ 11.43 $ 11.78 $ 11.43
------------ -------------- ------------ --------------
Income from investment operations:
Net investment income (loss).......... (0.05) ** 0.04* (0.14) ** 0.02*
Net realized and unrealized gain on
investments.......................... 1.69 0.33 1.70 0.33
------------ -------------- ------------ --------------
Net increase from investment
operations......................... 1.64 0.37 1.56 0.35
------------ -------------- ------------ --------------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.92) -- (0.92) --
------------ -------------- ------------ --------------
Total distributions................. (0.92) -- (0.92) --
------------ -------------- ------------ --------------
Net asset value, end of period.......... $ 12.52 $ 11.80 $ 12.42 $ 11.78
------------ -------------- ------------ --------------
------------ -------------- ------------ --------------
Total investment return (c)............. 13.81 % 3.24 %(b) 13.14 % 3.06 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 8,448 $ 1,931 $ 10,694 $ 2,024
Ratio of net investment income (loss) to
average net assets:
With expense reimbursement by
Chancellor LGT Asset Management, Inc.
(Note 2)............................. (0.38)% 1.68 %(a) (1.03)% 1.03 %(a)
Without expense reimbursement by
Chancellor LGT Asset Management,
Inc.................................. (1.47)% (20.52)%(a) (2.12)% (21.17)%(a)
Ratio of expenses to average net assets:
With expense reimbursement by
Chancellor LGT Asset Management, Inc.
(Note 2)............................. 2.00 % 2.00 %(a) 2.65 % 2.65 %(a)
Without expense reimbursement by
Chancellor LGT Asset Management,
Inc.................................. 3.09 % 24.20 %(a) 3.74 % 24.85 %(a)
Portfolio turnover rate+................ 150 % N/A 150 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0489 N/A $ 0.0489 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total Investment Return does not include sales charges.
(d) Calculated based upon weighted average shares outstanding during the
period.
* Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.47), $(0.49), and
$(0.46) for Class A, Class B, and Advisor Class, respectively, from
October 18, 1995 to December 31, 1995.
** Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.19), $(0.28), and
$(0.14) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1996.
+ Portfolio turnover rate and average commission rate paid on portfolio
transactions are calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
The accompanying notes are an integral part of the financial statements.
F12
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
Advisor Class
----------------------------
October 18,
1995
(commencement
Year of operations)
ended to December
December 31, 31,
1996 (d) 1995 (d)
------------ --------------
<S> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 11.81 $ 11.43
------------ --------------
Income from investment operations:
Net investment income (loss).......... --** 0.05*
Net realized and unrealized gain on
investments.......................... 1.69 0.33
------------ --------------
Net increase from investment
operations......................... 1.69 0.38
------------ --------------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.92) --
------------ --------------
Total distributions................. (0.92) --
------------ --------------
Net asset value, end of period.......... $ 12.58 $ 11.81
------------ --------------
------------ --------------
Total investment return (c)............. 14.22 % 3.32 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 435 $ 52
Ratio of net investment income (loss) to
average net assets:
With expense reimbursement by
Chancellor LGT Asset Management, Inc.
(Note 2)............................. (0.03)% 2.03 %(a)
Without expense reimbursement by
Chancellor LGT Asset Management,
Inc.................................. (1.12)% (20.17)%(a)
Ratio of expenses to average net assets:
With expense reimbursement by
Chancellor LGT Asset Management, Inc.
(Note 2)............................. 1.65 % 1.65 %(a)
Without expense reimbursement by
Chancellor LGT Asset Management,
Inc.................................. 2.74 % 23.85 %(a)
Portfolio turnover rate+................ 150 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0489 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total Investment Return does not include sales charges.
(d) Calculated based upon weighted average shares outstanding during the
period.
* Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.47), $(0.49), and
$(0.46) for Class A, Class B, and Advisor Class, respectively, from
October 18, 1995 to December 31, 1995.
** Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.19), $(0.28), and
$(0.14) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1996.
+ Portfolio turnover rate and average commission rate paid on portfolio
transactions are calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
The accompanying notes are an integral part of the financial statements.
F13
<PAGE>
GT GLOBAL AMERICA VALUE FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
Class A Class B
---------------------------- ----------------------------
October 18, October 18,
1995 1995
(commencement (commencement
Year of operations) Year of operations)
ended to December ended to December
December 31, 31, December 31, 31,
1996 (d) 1995 (d) 1996 (d) 1995 (d)
------------ -------------- ------------ --------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.76 $ 11.43 $ 12.75 $ 11.43
------------ -------------- ------------ --------------
Income from investment operations:
Net investment income (loss).......... (0.01) ** 0.03* (0.10) ** 0.01*
Net realized and unrealized gain on
investments.......................... 1.94 1.30 1.93 1.31
------------ -------------- ------------ --------------
Net increase from investment
operations......................... 1.93 1.33 1.83 1.32
------------ -------------- ------------ --------------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.04) -- (0.04) --
------------ -------------- ------------ --------------
Total distributions................. (0.04) -- (0.04) --
------------ -------------- ------------ --------------
Net asset value, end of period.......... $ 14.65 $ 12.76 $ 14.54 $ 12.75
------------ -------------- ------------ --------------
------------ -------------- ------------ --------------
Total investment return (c)............. 15.12 % 11.64 %(b) 14.35 % 11.55 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 2,529 $ 870 $ 5,503 $ 1,254
Ratio of net investment income (loss) to
average net assets:
With reimbursement by Chancellor LGT
Asset Management, Inc. (Note 2)...... (0.10)% 1.10 %(a) (0.75)% 0.45 %(a)
Without reimbursement by Chancellor
LGT Asset Management, Inc............ (3.61)% (47.44)%(a) (4.26)% (48.09)%(a)
Ratio of expenses to average net assets:
With reimbursement by Chancellor LGT
Asset Management, Inc. (Note 2)...... 2.00 % 2.00 %(a) 2.65 % 2.65 %(a)
Without reimbursement by Chancellor
LGT Asset Management, Inc............ 5.51 % 50.54 %(a) 6.16 % 51.19 %(a)
Portfolio turnover rate+................ 256 % N/A 256 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0551 N/A $ 0.0551 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon weighted average shares outstanding during the
period.
* Before reimbursement by Chancellor LGT Asset Management, Inc, the net
investment loss per share would have been $(1.11), $(1.13), and
$(1.10) for Class A, Class B, and Advisor Class, respectively, from
October 18, 1995 to December 31, 1995.
** Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(.50),$(.59), and $(.46)
for Class A, Class B, and Advisor Class, respectively, for the year
ended December 31, 1996.
+ Portfolio turnover rate and average commission rate paid on portfolio
transactions are calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
The accompanying notes are an integral part of the financial statements.
F14
<PAGE>
GT GLOBAL AMERICA VALUE FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
Advisor Class
----------------------------
October 18,
1995
(commencement
Year of operations)
ended to December
December 31, 31,
1996 (d) 1995 (d)
------------ --------------
<S> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.77 $ 11.43
------------ --------------
Income from investment operations:
Net investment income (loss).......... 0.03** 0.04*
Net realized and unrealized gain on
investments.......................... 1.96 1.30
------------ --------------
Net increase from investment
operations......................... 1.99 1.34
------------ --------------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.04) --
------------ --------------
Total distributions................. (0.04) --
------------ --------------
Net asset value, end of period.......... $ 14.72 $ 12.77
------------ --------------
------------ --------------
Total investment return (c)............. 15.58 % 11.72 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 191 $ 81
Ratio of net investment income (loss) to
average net assets:
With reimbursement by Chancellor LGT
Asset Management, Inc. (Note 2)...... 0.25 % 1.45 %(a)
Without reimbursement by Chancellor
LGT Asset Management, Inc............ (3.26)% (47.09)%(a)
Ratio of expenses to average net assets:
With reimbursement by Chancellor LGT
Asset Management, Inc. (Note 2)...... 1.65 % 1.65 %(a)
Without reimbursement by Chancellor
LGT Asset Management, Inc............ 5.16 % 50.19 %(a)
Portfolio turnover rate+................ 256 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0551 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon weighted average shares outstanding during the
period.
* Before reimbursement by Chancellor LGT Asset Management, Inc, the net
investment loss per share would have been $(1.11), $(1.13), and
$(1.10) for Class A, Class B, and Advisor Class, respectively, from
October 18, 1995 to December 31, 1995.
** Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(.50),$(.59), and $(.46)
for Class A, Class B, and Advisor Class, respectively, for the year
ended December 31, 1996.
+ Portfolio turnover rate and average commission rate paid on portfolio
transactions are calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
The accompanying notes are an integral part of the financial statements.
F15
<PAGE>
GT GLOBAL AMERICA FUNDS
NOTES TO
FINANCIAL STATEMENTS
December 31, 1996
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
GT Global America Mid Cap Growth Fund (formerly named GT Global America Growth
Fund), GT Global America Small Cap Growth Fund, and GT Global America Value Fund
("Funds"), are separate series of GT Global Growth Series ("Company"). The
Company is organized as a Massachusetts business trust and is registered under
the Investment Company Act of 1940, as amended ("1940 Act"), as an open-end
management investment company. The Company has eight diversified series of
shares in operation, each series corresponding to a distinct portfolio of
investments.
The GT Global America Small Cap Growth Fund and GT Global America Value Fund
invest substantially all of their investable assets in Small Cap Growth
Portfolio and Value Portfolio ("Portfolios"), respectively. Each of these
Portfolios is organized as a New York Trust and is registered under the 1940 Act
as a diversified, open-end management investment company.
The Portfolios have investment objectives, policies, and limitations
substantially identical to those of their corresponding Funds. Therefore, the
financial statements of the GT Global America Small Cap Growth Fund, the GT
Global America Value Fund, and their respective Portfolios have been presented
on a consolidated basis, and represent all activities of both the respective
Funds and Portfolios. Through December 31, 1996, all of the shares of beneficial
interest of each Portfolio were owned either by its respective fund or
Chancellor LGT Asset Management, Inc. (the "Manager"), which has a nominal
($100) investment in each Portfolio.
The Funds offer Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Funds are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Funds. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The following is a summary of significant accounting policies consistently
followed by the Funds and Portfolios in the preparation of the financial
statements. The policies are in conformity with generally accepted accounting
principles, and the financial statements may include certain estimates made by
management.
(A) Portfolio Valuation
The Funds calculate the net asset value of and complete orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by the Manager to be the
primary market.
Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality and type; however, when the
Manager deems it appropriate, prices obtained for the day of valuation from a
bond pricing service will be used. Short-term investments with a maturity of 60
days or less are valued at amortized cost, adjusted for market fluctuation, if
any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Company's Board of Trustees.
(B) Repurchase Agreements
With respect to repurchase agreements entered into by a Fund or Portfolio (the
phrase "Fund or Portfolio" hereinafter includes the GT Global America Mid Cap
Growth Fund and each of the two Portfolios), it is the Fund's or Portfolio's
policy to always receive, as collateral, United States government securities or
other high quality debt securities of which the value, including accrued
interest, is at least equal to the amount to be repaid to the Fund or Portfolio
under each agreement at its maturity.
(C) Option Accounting Principles
When a Fund or Portfolio writes a call or put option, an amount equal to the
premium received is included in the Fund's or Portfolio's "Statement of Assets
and Liabilities" as an asset and an equivalent liability. The amount of the
liability is subsequently marked-to-market to reflect the current market value
of the option. The current market value of an option listed on a traded exchange
is valued at its last bid price, or, in the case of an over-the-counter option,
is valued at the average of the last bid prices obtained from brokers, unless a
quotation from only one broker is available, in which case only that broker's
price will be used. If an option expires on its stipulated expiration date or if
the Fund or Portfolio enters into a closing purchase transaction, a gain or loss
is realized without regard to any unrealized gain or loss on the underlying
security, and the liability related to such option is extinguished. If a written
call option is exercised, a gain or loss is realized from the sale of the
underlying security and the proceeds of the sale are increased by the premium
originally received. If a written put option is exercised, the cost of the
underlying security purchased would be decreased by the premium originally
received. The Fund or Portfolio can write options only on a covered basis,
which, for a call, requires that the Fund or Portfolio hold the underlying
security, and, for a put, requires the Fund or
F16
<PAGE>
GT GLOBAL AMERICA FUNDS
Portfolio to set aside cash, U.S. government securities or other liquid
securities in an amount not less than the exercise price or otherwise provide
adequate cover at all times while the put option is outstanding. The Fund or
Portfolio may use options to manage its exposure to the stock market and to
fluctuations in interest rates.
The premium paid by the Fund or Portfolio for the purchase of a call or put
option is included in the Fund's or Portfolio's "Statement of Assets and
Liabilities" as an investment and subsequently "marked-to-market" to reflect the
current market value of the option. If an option which the Fund or Portfolio has
purchased expires on the stipulated expiration date, the Fund or Portfolio
realizes a loss in the amount of the cost of the option. If the Fund or
Portfolio enters into a closing sale transaction, the Fund or Portfolio realizes
a gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund or Portfolio
exercises a call option, the cost of the securities acquired by exercising the
call is increased by the premium paid to buy the call. If the Fund or Portfolio
exercises a put option, it realizes a gain or loss from the sale of the
underlying security, and the proceeds from such sale are decreased by the
premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund or Portfolio may forego
the opportunity of profit if the market value of the underlying security or
index increases and the option is exercised. The risk in writing a put option is
that the Fund or Portfolio may incur a loss if the market value of the
underlying security or index decreases and the option is exercised. In addition,
there is the risk the Fund or Portfolio may not be able to enter into a closing
transaction because of an illiquid secondary market.
(D) Futures Contracts
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund or Portfolio is required to pledge to the broker an amount of cash or
securities equal to the minimum "initial margin" requirements of the exchange on
which the contract is traded. Pursuant to the contract, the Fund or Portfolio
agrees to receive from or pay to the broker an amount of cash equal to the daily
fluctuation in value of the contract. Such receipts or payments are known as
"variation margin" and are recorded by the Fund or Portfolio as unrealized gains
or losses. When the contract is closed, the Fund or Portfolio records a realized
gain or loss equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed. The potential risk
to the Fund or Portfolio is that the change in value of the underlying
securities may not correlate to the change in value of the contracts. The Fund
or Portfolio may use futures contracts to manage its exposure to the stock
market and to fluctuations in interest rates.
(E) Security Transactions and Related Investment Income
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund or Portfolio
may trade securities on other than normal settlement terms. This may increase
the risk if the other party to the transaction fails to deliver and causes the
Fund or Portfolio to subsequently invest at less advantageous prices.
(F) Portfolio Securities Loaned
At December 31, 1996, stocks with an aggregate value listed below were on loan
to brokers. These loans were secured by cash collateral received by the fund or
portfolios:
<TABLE>
<CAPTION>
December 31, 1996 Year ended
-------------------------------- December 31, 1996
Aggregate Value Cash -----------------
GT Global on Loan Collateral Fees Earned
- ---------------------------------------- --------------- -------------- -----------------
<S> <C> <C> <C>
America Mid Cap Growth Fund............. $ 31,491,056 $ 32,605,600 $163,841
Small Cap Growth Portfolio.............. 380,738 383,400 61
</TABLE>
Cash collateral is received by the Fund or Portfolio against loaned securities
in the amount at least equal to 102% of the market value of the loaned
securities at the inception of each loan. This collateral must be maintained at
not less than 100% of the market value of the loaned securities during the
period of the loan. Security lending fees earned were used to reduce the Fund's
or Portfolio's custodian fees.
(G) Deferred Organizational Expenses
Expenses incurred by the GT Global America Small Cap Growth Fund, the GT Global
America Value Fund, and their respective Portfolios in connection with their
organization, their initial registration with the Securities and Exchange
Commission and with various states and the initial public offering of their
shares aggregated $63,500 for each Fund and $25,000 for each Portfolio. These
expenses are being amortized on a straight-line basis over a five-year period.
(H) Taxes
It is the policy of the Funds and Portfolios to meet the requirements for
qualification as a "regulated investment company" under the Internal Revenue
Code of 1986, as amended ("Code"). It is also the intention of the Funds to make
distributions sufficient to avoid imposition of any excise tax under Section
4982 of the Code. Therefore, no provision has been made for Federal taxes on
income, capital gains, or unrealized appreciation of securities held, and excise
tax on income and capital gains.
F17
<PAGE>
GT GLOBAL AMERICA FUNDS
(I) Distributions to Shareholders
Distributions to shareholders are recorded by each Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund or Portfolios and timing
differences.
(J) Restricted Securities
A Fund or Portfolio is permitted to invest in privately placed restricted
securities. These securities may be resold in transactions exempt from
registration or to the public if the securities are registered. Disposal of
these securities may involve time-consuming negotiations and expense, and prompt
sale at an acceptable price may be difficult.
(K) Indexed Securities
A Fund or Portfolio may invest in indexed securities whose value is linked
either directly or indirectly to changes in foreign currencies, interest rates,
equities, indices, or other reference instruments. Indexed securities may be
more volatile than the reference instrument itself, but any loss is limited to
the amount of the original investment.
(L) Line of Credit
Each of the Funds, along with certain other funds advised by the Manager, has a
line of credit with the Bank of Boston. The arrangement with the bank allows all
specified funds to borrow an aggregate maximum amount of $100,000,000. Each of
these three funds is limited to borrowing up to 33 1/3% of the value of each
Fund's total assets. On December 31, 1996, the GT Global America Value Fund
borrowed $1,000,000 at a money market rate.
For the year ended December 31, 1996, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
for the GT Global America Value Fund was $1,000,000 with a weighted average
interest rate of 6.43%. Interest incurred on this loan for the year ended
December 31, 1996, was $2,681, included in "Other Expenses" on the Statement of
Operations.
2. Related Parties
Chancellor LGT Asset Management, Inc. is the Funds' and Portfolios' investment
manager and administrator. On October 31, 1996, Chancellor Capital Management,
Inc. merged with LGT Asset Management, Inc., and the surviving entity was
renamed Chancellor LGT Asset Management, Inc. The GT Global America Small Cap
Growth Fund and GT Global America Value Fund each pays the Manager
administration fees at the annualized rate of 0.25% of such Fund's average daily
net assets. Each Portfolio pays investment management and administration fees to
the Manager at the annualized rate of 0.475% on the first $500 million of
average daily net assets of the Portfolio; 0.45% on the next $500 million;
0.425% on the next $500 million; and 0.40% on amounts thereafter. GT Global
America Mid Cap Growth Fund pays investment management and administration fees
to the Manager at the annualized rate of 0.725% on the first $500 million of
average daily net assets on the Fund; 0.70% on the next $500 million; 0.675% on
the next $500 million and 0.65% on amounts thereafter. These fees are computed
daily and paid monthly, and are subject to reduction in any year to the extent
that the Fund's or Portfolio's expenses (exclusive of brokerage commissions,
taxes, interest, distribution-related expenses and extraordinary expenses)
exceed the most stringent limits prescribed by the laws or regulations of any
state in which the Fund's shares are offered for sale, based on the average
total net asset value of the Fund.
GT Global, Inc. ("GT Global"), an affiliate of the Manager, serves as the Funds'
distributor. The Funds offer Class A, Class B, and Advisor Class shares for
purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. GT Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the year ended December 31, 1996, GT Global retained the
following sales charges: $90,365 for the GT Global America Mid Cap Growth Fund,
$9,945 for the GT Global America Small Cap Growth Fund, and $1,702 for the GT
Global America Value Fund. Purchases of Class A shares exceeding $500,000 may be
subject to a contingent deferred sales charge ("CDSC") upon redemption, in
accordance with the Fund's current prospectus. GT Global collected such CDSCs in
the amount of $39,930 for the year ended December 31, 1996 for the GT Global
America Mid Cap Growth Fund. GT Global also makes ongoing shareholder servicing
and trail commission payments to dealers whose clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSCs, in accordance with the Fund's current
prospectus. For the year ended December 31, 1996, GT Global collected such CDSCs
in the amount of: $1,901,165 for the GT Global America Mid Cap Growth Fund,
$28,162 for the GT Global America Small Cap Growth Fund, and $5,608 for the GT
Global America Value Fund. In addition, GT Global makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class B
shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Trustees has
adopted separate distribution plans with respect to the Funds' Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which a Fund
reimburses GT Global for a portion of its shareholder servicing and distribution
expenses. Under the Class A Plan, a Fund may pay GT Global a service fee at the
annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class A shares for GT Global's expenditures incurred in servicing and
maintaining shareholder accounts, and may pay GT Global a distribution fee at
the annualized rate of up to 0.35% of the average daily net assets of the Fund's
Class A shares, less any amounts paid by the Fund as the aforementioned service
fee, for GT
F18
<PAGE>
GT GLOBAL AMERICA FUNDS
Global's expenditures incurred in providing services as distributor. All
expenses for which GT Global is reimbursed under the Class A Plan will have been
incurred within one year of such reimbursement.
Pursuant to the Funds' Class B Plan, a Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for GT Global's expenditures incurred in servicing and
maintaining shareholder accounts, and may pay GT Global a distribution fee at
the annualized rate of up to 0.75% of the average daily net assets of the Fund's
Class B shares for GT Global's expenditures incurred in providing services as
distributor. Expenses incurred under the Class B Plan in excess of 1.00%
annually may be carried forward for reimbursement in subsequent years as long as
that Plan continues in effect.
The Manager and GT Global voluntarily have undertaken to limit each Fund's
expenses (exclusive of brokerage commissions, taxes, interest, and extraordinary
items) to the maximum annual level of 2.00%, 2.65%, and 1.65% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by GT Global
of payments under the Class A Plan and/or Class B Plan and/ or reimbursements by
the Manager or GT Global of portions of the Fund's other operating expenses.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and GT Global, is the transfer agent of the Funds. For performing shareholder
servicing, reporting, and general transfer agent services, GT Services receives
an annual maintenance fee of $17.50 per account, a new account fee of $4.00 per
account, a per transaction fee of $1.75 for all transactions other than
exchanges and a per exchange fee of $2.25. GT Services also is reimbursed by the
Funds for its out-of-pocket expenses for such items as postage, forms, telephone
charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Funds. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of a Fund's average daily net assets. The annual fee rate is derived by applying
0.03% to the first $5 billion of assets of all registered mutual funds advised
by the Manager and 0.02% to the assets in excess of $5 billion and allocating
the result according to a Fund's average daily net assets.
The Company pays each of its Trustees who is not an employee, officer or
director of the Manager, GT Global or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee. Each
Portfolio pays each of its Trustees who is not an employee, officer or director
of the Manager, GT Global or GT Services $500 per year plus $150 for each
meeting of the board or any committee thereof attended by the Trustees.
At December 31, 1996, all of the shares of beneficial interest of each Portfolio
were owned either by its Fund or the Manager.
3. Purchases and Sales of Securities
For the year ended December 31, 1996, purchases of investment securities by the
GT Global America Mid Cap Growth Fund, Small Cap Growth Portfolio, and Value
Portfolio, other than U.S. government obligations and short-term investments,
aggregated $1,468,522,964, $33,591,427 and $19,537,714, respectively. Sales of
investment securities by the GT Global America Mid Cap Growth Fund, Small Cap
Growth Portfolio, and Value Portfolio, other than U.S. government obligations
and short-term investments, aggregated $1,493,844,266, $19,321,092 and
$13,037,066, respectively. There were no purchases or sales of U.S. government
obligations by a Fund or Portfolio during the year.
F19
<PAGE>
GT GLOBAL AMERICA FUNDS
4. Capital Shares
At December 31, 1996, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the
Funds were as follows:
Capital Share Transactions
GT Global America Small Cap Growth Fund
<TABLE>
<CAPTION>
October 18, 1995
(commencement of
Year ended operations) to
December 31, 1996 December 31, 1995
---------------------------- -----------------------------
Class A Shares Amount Shares Amount
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 1,491,083 $ 20,216,595 189,034 $ 2,222,360
Shares issued in connection with
reinvestment of distributions......... 39,998 505,573 -- --
------------ -------------- ------------ ---------------
1,531,081 20,722,168 189,034 2,222,360
Shares repurchased...................... (1,019,989) (13,880,892) (28,403) (333,346)
------------ -------------- ------------ ---------------
Net increase............................ 511,092 $ 6,841,276 160,631 $ 1,889,014
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
October 18, 1995
(commencement of
Year ended operations) to
December 31, 1996 December 31, 1995
---------------------------- -----------------------------
Class B Shares Amount Shares Amount
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 1,665,796 $ 22,115,741 232,055 $ 2,734,475
Shares issued in connection with
reinvestment of distributions......... 52,848 663,246 -- --
------------ -------------- ------------ ---------------
1,718,644 22,778,987 232,055 2,734,475
Shares repurchased...................... (1,029,367) (13,501,795) (63,231) (743,582)
------------ -------------- ------------ ---------------
Net increase............................ 689,277 $ 9,277,192 168,824 $ 1,990,893
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
October 18, 1995
(commencement of
Year ended operations) to
December 31, 1996 December 31, 1995
---------------------------- -----------------------------
Advisor Class Shares Amount Shares Amount
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 33,521 $ 447,953 1,456 $ 17,196
Shares issued in connection with
reinvestment of distributions......... 2,144 27,228 -- --
------------ -------------- ------------ ---------------
35,665 475,181 1,456 17,196
Shares repurchased...................... (5,440) (72,841) -- --
------------ -------------- ------------ ---------------
Net increase............................ 30,225 $ 402,340 1,456 $ 17,196
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
</TABLE>
F20
<PAGE>
GT GLOBAL AMERICA FUNDS
GT Global America Value Fund
<TABLE>
<CAPTION>
October 18, 1995
(commencement of
Year ended operations) to
December 31, 1996 December 31, 1995
---------------------------- -----------------------------
Class A Shares Amount Shares Amount
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 392,444 $ 5,443,835 70,225 $ 874,678
Shares issued in connection with
reinvestment of distributions......... 365 5,408 -- --
------------ -------------- ------------ ---------------
392,809 5,449,243 70,225 874,678
Shares repurchased...................... (288,378) (3,812,666) (4,928) (61,818)
------------ -------------- ------------ ---------------
Net increase............................ 104,431 $ 1,636,577 65,297 $ 812,860
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
October 18, 1995
(commencement of
Year ended operations) to
December 31, 1996 December 31, 1995
---------------------------- -----------------------------
Class B Shares Amount Shares Amount
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 445,266 $ 6,167,388 103,345 $ 1,292,349
Shares issued in connection with
reinvestment of distributions......... 918 13,509 -- --
------------ -------------- ------------ ---------------
446,184 6,180,897 103,345 1,292,349
Shares repurchased...................... (166,052) (2,502,350) (7,866) (99,288)
------------ -------------- ------------ ---------------
Net increase............................ 280,132 $ 3,678,547 95,479 $ 1,193,061
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
October 18, 1995
(commencement of
Year ended operations) to
December 31, 1996 December 31, 1995
---------------------------- -----------------------------
Advisor Class Shares Amount Shares Amount
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 10,181 $ 139,541 3,461 $ 44,310
Shares issued in connection with
reinvestment of distributions......... 30 443 -- --
------------ -------------- ------------ ---------------
10,211 139,984 3,461 44,310
Shares repurchased...................... (3,594) (49,444) -- --
------------ -------------- ------------ ---------------
Net increase............................ 6,617 $ 90,540 3,461 $ 44,310
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
</TABLE>
5. Holdings of 5% Voting Securities of Portfolio Companies
Investments of 5% or more of an issuer's outstanding voting securities by a Fund
or Portfolio are defined in the Investment Company Act of 1940, as amended, as
an "affiliated company". During the year ended December 31, 1996, transactions
with affiliated companies by the GT Global America Mid Cap Growth Fund were as
follows:
<TABLE>
<CAPTION>
Net
Realized
Purchases Gain Dividend
Affiliates Cost Sales Cost (Loss) Income
- ---------------------------------------- ------------ ------------- ---------- ------------
<S> <C> <C> <C> <C>
Abaxis, Inc............................. -- $ 4,406,425 $ (233,474) --
Ann Taylor Stores, Inc.................. $ 667,826 27,428,533 1,773,714 --
Equity Inns, Inc........................ 8,589,208 21,730,721 774,204 $ 344,848
Haggar Corp............................. -- 13,475,105 (4,771,163) 58,740
Landmark Graphics Corp.................. 22,307,844 22,307,844 13,028,001 --
Michaels Stores, Inc.................... 1,253,238 31,700,975 (1,716,413) --
Varsity Spirit Corp..................... -- 3,384,724 1,747,526 13,686
Younkers, Inc........................... 4,702,055 14,761,596 7,926,666 --
</TABLE>
6. Expense Reductions
The Manager has directed certain portfolio trades to brokers who paid a portion
of a Fund's or Portfolio's expenses. For the year ended December 31, 1996, the
expenses of GT Global America Mid Cap Growth Fund were reduced by $207,575 under
these arrangements.
- --------------
Federal Tax Information (Unaudited):
Pursuant to Section 852 of the Internal Revenue Code, the GT Global America
Mid-Cap Growth Fund designates $30,037,928 as a capital gain dividend for the
fiscal year ended December 31, 1996.
Pursuant to Section 854 of the Internal Revenue Code, the Funds designate the
following percentage amounts of ordinary income dividends paid (including
short-term capital gain distributions, if any) by the Funds as income qualifying
for the dividends received deduction for corporations for the fiscal year ended
December 31, 1996:
<TABLE>
<CAPTION>
Fund
- ----------------------------------------
<S> <C>
GT Global America Small Cap Growth
Fund................................... 4%
GT Global America Mid-Cap Growth Fund... 23%
GT Global America Value Fund............ 100%
</TABLE>
F21
<PAGE>
GT GLOBAL AMERICA FUNDS
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL AMERICA FUNDS
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL AMERICA FUNDS
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
GT GLOBAL MUTUAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY OF THE GT GLOBAL
MUTUAL FUNDS, INCLUDING FEES, EXPENSES AND THE RISKS OF GLOBAL AND EMERGING
MARKET INVESTING AS WELL AS THE RISKS OF INVESTING IN RELATED INDUSTRIES,
PLEASE CONTACT YOUR FINANCIAL ADVISER OR CALL GT GLOBAL DIRECTLY AT
1-800-824-1580.
GROWTH FUNDS
/ / GLOBALLY DIVERSIFIED FUNDS
GT GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity by investing outside
the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
/ / GLOBAL THEME FUNDS
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL HEALTH CARE FUND
Invests in growing health care industries worldwide
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in the new, unified Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA MID CAP GROWTH FUND
Concentrates on medium-sized companies in the U.S.
GT GLOBAL AMERICA VALUE FUND
Concentrates on equity securities of large cap U.S. companies believed to be
undervalued
GT GLOBAL JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUND
GT GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government bonds from around the world
INCOME FUNDS
GT GLOBAL GOVERNMENT INCOME FUND
Earns monthly income from global government securities
GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
GT GLOBAL HIGH INCOME FUND
Invests in debt securities in emerging markets
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[LOGO]
NO DEALER, SALES REPRESENTATIVE OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
STATEMENT OF ADDITIONAL INFORMATION AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY GT
GLOBAL AMERICA SMALL CAP GROWTH FUND, GT GLOBAL AMERICA VALUE FUND, SMALL
CAP PORTFOLIO, VALUE PORTFOLIO, G.T. GLOBAL GROWTH SERIES, CHANCELLOR LGT
ASSET MANAGEMENT, INC. OR GT GLOBAL, INC. THIS STATEMENT OF ADDITIONAL
INFORMATION DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF ANY
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
AMESA705MC
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND:
GT GLOBAL AMERICA VALUE FUND:
ADVISOR CLASS
50 California Street, 27th Floor
San Francisco, California 94111
(415) 392-6181
Toll Free: (800) 824-1580
Statement of Additional Information
May 1, 1997
- --------------------------------------------------------------------------------
This Statement of Additional Information relates to the Advisor Class shares of
GT Global America Small Cap Growth Fund ("Small Cap Fund") and GT Global America
Value Fund ("America Value Fund") (individually, a "Fund," and collectively, the
"Funds"). Each Fund is a diversified series of G.T. Global Growth Series (the
"Company"), a registered open-end management investment company. The Small Cap
Fund and America Value Fund invest all of their investable assets in the Small
Cap Portfolio and Value Portfolio (individually, a "Portfolio," and
collectively, the "Portfolios"), respectively. This Statement of Additional
Information, which is not a prospectus, supplements and should be read in
conjunction with the Funds' current Advisor Class Prospectus dated May 1, 1997,
a copy of which is available without charge by writing to the above address or
calling the Funds at the toll-free telephone number printed above.
Chancellor LGT Asset Management, Inc. (the "Manager") serves as each Portfolio's
investment manager and administrator, and also serves as each Fund's
administrator. The distributor of the shares of each Fund is GT Global, Inc.
("GT Global"). The Funds' transfer agent is GT Global Investor Services, Inc.
("GT Services" or the "Transfer Agent").
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Investment Objectives and Policies....................................................................................... 2
Options and Futures...................................................................................................... 4
Risk Factors............................................................................................................. 11
Investment Limitations................................................................................................... 13
Execution of Portfolio Transactions...................................................................................... 15
Trustees and Executive Officers.......................................................................................... 17
Management............................................................................................................... 19
Valuation of Shares...................................................................................................... 20
Information Relating to Sales and Redemptions............................................................................ 21
Taxes.................................................................................................................... 22
Additional Information................................................................................................... 25
Investment Results....................................................................................................... 26
Description of Debt Ratings.............................................................................................. 32
Financial Statements..................................................................................................... 33
</TABLE>
[LOGO]
Statement of Additional Information Page 1
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
INVESTMENT OBJECTIVES
AND POLICIES
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES
The investment objective of each Fund is long-term capital appreciation. The
Small Cap Fund and America Value Fund each seeks to achieve its investment
objective by investing all of its investable assets in the Small Cap Portfolio
and Value Portfolio, respectively, each of which is a subtrust (a "series") of
Growth Portfolio, a registered open-end management investment company with an
investment objective that is identical to that of its corresponding Fund.
Whenever the phrase "all of the Fund's investable assets" is used herein and in
the Prospectus, it means that the only investment securities that will be held
by a Fund will be its interest in its corresponding Portfolio. A Fund may
withdraw its investment in its corresponding Portfolio at any time, if the Board
of Trustees of the Company determines that it is in the best interests of the
Fund and its shareholders to do so. Upon any such withdrawal, a Fund's assets
would be invested in accordance with the investment policies described below and
in the Prospectus with respect to its corresponding Portfolio.
INVESTMENTS IN OTHER INVESTMENT COMPANIES
The Portfolios may invest in the securities of closed-end investment companies
within the limits of the Investment Company Act of 1940, as amended (the "1940
Act"). These limitations currently provide that, in general, each Portfolio may
purchase shares of a closed-end investment company unless (a) such a purchase
would cause a Portfolio to own more than 3% of the total outstanding voting
stock of the investment company or (b) such a purchase would cause a Portfolio
to have more than 5% of its assets invested in the investment company or more
than 10% of its assets invested in an aggregate of all such investment
companies. Investment in investment companies may involve the payment of
substantial premiums above the value of such companies' portfolio securities.
The Portfolios do not intend to invest in such vehicles or funds unless the
Manager determines that the potential benefits of such investments justify the
payment of any applicable premiums. The return on such securities will be
reduced by operating expenses of such companies including payments to the
investment managers of those investment companies.
DEPOSITORY RECEIPTS
Each Portfolio may invest up to 10% of its total assets in securities of foreign
issuers in the form of American Depository Receipts ("ADRs"), American
Depository Shares ("ADSs") and European Depository Receipts ("EDRs") or other
securities convertible into securities of eligible European or Far Eastern
issuers. These securities may not necessarily be denominated in the same
currency as the securities for which they may be exchanged. ADRs and ADSs
typically are issued by an American bank or trust company and evidence ownership
of underlying securities issued by a foreign corporation. EDRs, which are
sometimes referred to as Continental Depository Receipts ("CDRs"), are issued in
Europe typically by foreign banks and trust companies and evidence ownership of
either foreign or domestic securities. Generally, ADRs and ADSs in registered
form are designed for use in United States securities markets and EDRs in bearer
form are designed for use in European securities markets. For purposes of a
Portfolio's investment policies, its investments in ADRs, ADSs and EDRs will be
deemed to be investments in the equity securities representing securities of
foreign issuers into which they may be converted.
ADR facilities may be established as either "unsponsored" or "sponsored." While
ADRs issued under these two types of facilities are in some respects similar,
there are distinctions between them relating to the rights and obligations of
ADR holders and the practices of market participants. A depository may establish
an unsponsored facility without participation by (or even necessarily the
acquiescence of) the issuer of the deposited securities, although typically the
depository requests a letter of non-objection from such issuer prior to the
establishment of the facility. Holders of unsponsored ADRs generally bear all
the costs of such facilities. The depository usually charges fees upon the
deposit and withdrawal of the deposited securities, the conversion of dividends
into U.S. dollars, the disposition of non-cash distributions, and the
performance of other services. The depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited securities or to pass through voting
rights to ADR holders with respect to the deposited securities. Sponsored ADR
facilities are created in generally the same manner as unsponsored facilities,
except that the issuer of the deposited securities enters into a deposit
agreement with the depository. The deposit agreement sets out the rights and
responsibilities of the issuer, the depository and the ADR
Statement of Additional Information Page 2
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
holders. With sponsored facilities, the issuer of the deposited securities
generally will bear some of the costs relating to the facility (such as dividend
payment fees of the depository), although ADR holders continue to bear certain
other costs (such as deposit and withdrawal fees). Under the terms of most
sponsored arrangements, depositories agree to distribute notices of shareholder
meetings and voting instructions, and to provide shareholder communications and
other information to the ADR holders at the request of the issuer of the
deposited securities. The Portfolios may invest in both sponsored and
unsponsored ADRs.
WARRANTS OR RIGHTS
Warrants or rights may be acquired by a Portfolio in connection with other
securities or separately and provide the Portfolio with the right to purchase at
a later date other securities of the issuer.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, each Portfolio may make secured
loans of its portfolio securities amounting to not more than 30% of its total
assets. Securities loans are made to broker/dealers or institutional investors
pursuant to agreements requiring that the loans continuously be secured by
collateral at least equal at all times to the value of the securities lent, plus
any accrued interest, "marked to market" on a daily basis. The Portfolios may
pay reasonable administrative and custodial fees in connection with the loans of
their securities. While the securities loans are outstanding, the Portfolios
will continue to receive the equivalent of the interest or dividends paid by the
issuer on the securities, as well as interest on the investment of the
collateral or a fee from the borrower. Each Portfolio will have a right to call
each loan at any time and obtain the securities within the stated settlement
period. The Portfolios will not have the right to vote equity securities while
they are being lent, but may call in a loan in anticipation of any important
vote. Loans will only be made to firms deemed by the Manager to be of good
standing and will not be made unless, in the judgment of the Manager, the
consideration to be earned from such loans would justify the risk.
COMMERCIAL BANK OBLIGATIONS
For the purposes of each Portfolio's investment policies with respect to bank
obligations, obligations of foreign branches of U.S. banks are obligations of
the issuing bank and may be general obligations of the parent bank. Such
obligations, however, may be limited by the terms of a specific obligation and
by government regulation. Although a Portfolio typically will acquire
obligations issued and supported by the credit of U.S. banks having total assets
at the time of purchase of $1 billion or more, this $1 billion figure is not an
investment policy or restriction of any Portfolio. For the purposes of
calculation with respect to the $1 billion figure, the assets of a bank will be
deemed to include the assets of its U.S. and non-U.S. branches.
REPURCHASE AGREEMENTS
A repurchase agreement is a transaction in which a Portfolio purchases a
security from a bank or recognized securities dealer and simultaneously commits
to resell that security to the bank or dealer at an agreed-upon price, date and
market rate of interest unrelated to the coupon rate or maturity of the
purchased security. Although repurchase agreements carry certain risks not
associated with direct investment in securities, including possible decline in
market value of the underlying securities and delays and costs to the Portfolio
if the other party to the repurchase agreement becomes bankrupt, the Portfolios
intend to enter into repurchase agreements only with banks and dealers believed
by the Manager to present minimal credit risks in accordance with guidelines
approved by Growth Portfolio's Board of Trustees. The Manager will review and
monitor the creditworthiness of such institutions under the general supervision
of Growth Portfolio's Board.
Each Portfolio will invest only in repurchase agreements collateralized at all
times in an amount at least equal to the repurchase price plus accrued interest.
To the extent that the proceeds from any sale of such collateral upon a default
in the obligation to repurchase were less than the repurchase price, the Fund
would suffer a loss. If the financial institution which is party to the
repurchase agreement petitions for bankruptcy or otherwise becomes subject to
bankruptcy or other liquidation proceedings, there may be restrictions on the
Portfolio's ability to sell the collateral and the Portfolio could suffer a
loss. However, with respect to financial institutions whose bankruptcy or
liquidation proceedings are subject to the U.S. Bankruptcy Code, the Portfolios
intend to comply with provisions under the U.S. Bankruptcy Code that would allow
them to immediately to resell the collateral. A Portfolio will not enter into a
repurchase agreement with a maturity of more than seven days if, as a result,
more than 15% of the value of its net assets would be invested in such
repurchase agreements and other illiquid investments.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS
Each Portfolio's borrowings will not exceed 33 1/3% of its total assets, i.e.,
each Portfolio's total assets at all times will equal at least 300% of the
amount of outstanding borrowings. If market fluctuations in the value of a
Portfolio's portfolio holdings
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or other factors cause the ratio of the Portfolio's total assets to outstanding
borrowings to fall below 300%, within three days (excluding Sundays and
holidays) of such event the Portfolio may be required to sell portfolio
securities to restore the 300% asset coverage, even though from an investment
standpoint such sales might be disadvantageous. Each Portfolio also may borrow
up to 5% of its total assets for temporary or emergency purposes other than to
meet redemptions. Any borrowing by a Portfolio may cause greater fluctuation in
the value of its corresponding Fund's shares than would be the case if the
Portfolio did not borrow.
Each Portfolio's fundamental investment limitations permit the Portfolio to
borrow money for leveraging purposes. Each Portfolio, however, currently is
prohibited, pursuant to a non-fundamental investment policy, from borrowing
money in order to purchase securities. Nevertheless, this policy may be changed
in the future by Growth Portfolio's Board of Trustees. If a Portfolio employs
leverage in the future, it would be subject to certain additional risks. Use of
leverage creates an opportunity for greater growth of capital but would
exaggerate any increases or decreases in a Portfolio's net asset value. When the
income and gains on securities purchased with the proceeds of borrowings exceed
the costs of such borrowings, a Portfolio's earnings or net asset value will
increase faster than otherwise would be the case; conversely, if such income and
gains fail to exceed such costs, a Portfolio's earnings or net asset value would
decline faster than would otherwise be the case.
Each Portfolio may enter into reverse repurchase agreements. A reverse
repurchase agreement is a borrowing transaction in which the Portfolio transfers
possession of a security to another party, such as a bank or broker/dealer in
return for cash, and agrees to repurchase the security in the future at an
agreed upon price, which includes an interest component. Each Portfolio also may
engage in "roll" borrowing transactions which involve its sale of Government
National Mortgage Association certificates or other securities together with a
commitment (for which the Portfolio may receive a fee) to purchase similar, but
not identical, securities at a future date. Each Portfolio will maintain, in a
segregated account with a custodian, cash or liquid securities in an amount
sufficient to cover its obligations under "roll" transactions and reverse
repurchase agreements with broker/dealers. No segregation is required for
reverse repurchase agreements with banks.
TEMPORARY DEFENSIVE STRATEGIES
Money market instruments in which the Portfolios may invest include the
following: government securities; high grade commercial paper; bank certificates
of deposit; bankers' acceptances; and repurchase agreements related to any of
the foregoing. High grade commercial paper refers to commercial paper rated P-1
by Moody's Investors Service, Inc. ("Moody's") or A-1 by Standard and Poor's
Ratings Group ("S&P"), at the time of investment or, if unrated, deemed by the
Manager to be of comparable quality.
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OPTIONS AND FUTURES
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SPECIAL RISKS OF OPTIONS AND FUTURES
The use of options and futures contracts involves special considerations and
risks, as described below. Risks pertaining to particular instruments are
described in the sections that follow.
(1) Successful use of most of these instruments depends upon the
Manager's ability to predict movements of the overall securities markets,
which requires different skills than predicting changes in the prices of
individual securities. While the Manager is experienced in the use of these
instruments, there can be no assurance that any particular strategy adopted
will succeed.
(2) There might be imperfect correlation, or even no correlation,
between price movements of an instrument and price movements of the
investments being hedged. For example, if the value of an instrument used in
a short hedge increased by less than the decline in value of the hedged
investment, the hedge would not be fully successful. Such a lack of
correlation might occur due to factors unrelated to the value of the
investments being hedged, such as speculative or other pressures on the
markets in which the hedging instrument is traded. The effectiveness of
hedges using hedging instruments on indices will depend on the degree of
correlation between price movements in the index and price movements in the
investments being hedged.
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(3) Hedging strategies, if successful, can reduce risk of loss by wholly
or partially offsetting the negative effect of unfavorable price movements
in the investments being hedged. However, hedging strategies can also reduce
opportunity for gain by offsetting the positive effect of favorable price
movements in the hedged investments. For example, if a Portfolio entered
into a short hedge because the Manager projected a decline in the price of a
security in the Portfolio's securities portfolio, and the price of that
security increased instead, the gain from that increase might be wholly or
partially offset by a decline in the price of the hedging instrument.
Moreover, if the price of the hedging instrument declined by more than the
increase in the price of the security, the Portfolio could suffer a loss. In
either such case, the Portfolio would have been in a better position had it
not hedged at all.
(4) As described below, a Portfolio might be required to maintain assets
as "cover," maintain segregated accounts or make margin payments when it
takes positions in instruments involving obligations to third parties (I.E.,
instruments other than purchased options). If the Portfolio were unable to
close out its positions in such instruments, it might be required to
continue to maintain such assets or accounts or make such payments until the
position expired or matured. The requirements might impair the Portfolio's
ability to sell a portfolio security or make an investment at a time when it
would otherwise be favorable to do so, or require that the Portfolio sell a
portfolio security at a disadvantageous time. The Portfolio's ability to
close out a position in an instrument prior to expiration or maturity
depends on the existence of a liquid secondary market or, in the absence of
such a market, the ability and willingness of the other party to the
transaction ("contra party") to enter into a transaction closing out the
position. Therefore, there is no assurance that any position can be closed
out at a time and price that is favorable to a Portfolio.
WRITING CALL OPTIONS
A Portfolio may write (sell) call options on securities and indices. Call
options generally will be written on securities that, in the opinion of the
Manager, are not expected to make any major price moves in the near future but
that, over the long term, are deemed to be attractive investments for the
Portfolio.
A call option gives the holder (buyer) the right to purchase a security at a
specified price (the exercise price) at any time until (American style) or on
(European style) a certain date (the expiration date). So long as the obligation
of the writer of a call option continues, he or she may be assigned an exercise
notice, requiring him or her to deliver the underlying security against payment
of the exercise price. This obligation terminates upon the expiration of the
call option, or such earlier time at which the writer effects a closing purchase
transaction by purchasing an option identical to that previously sold.
Portfolio securities on which call options may be written will be purchased
solely on the basis of investment considerations consistent with each
Portfolio's investment objective. When writing a call option, a Portfolio, in
return for the premium, gives up the opportunity for profit from a price
increase in the underlying security above the exercise price, and retains the
risk of loss should the price of the security decline. Unlike one who owns
securities not subject to an option, a Portfolio has no control over when it may
be required to sell the underlying securities, since most options may be
exercised at any time prior to the option's expiration. If a call option that a
Portfolio has written expires, the Portfolio will realize a gain in the amount
of the premium; however, such gain may be offset by a decline in the market
value of the underlying security during the option period. If the call option is
exercised, the Portfolio will realize a gain or loss from the sale of the
underlying security, which will be increased or offset by the premium received.
Each Portfolio does not consider a security covered by a call option to be
"pledged" as that term is used in the Portfolio's policy that limits the
pledging or mortgaging of its assets.
Writing call options can serve as a limited short hedge because declines in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security appreciates to a price
higher than the exercise price of the call option, it can be expected that the
option will be exercised and a Portfolio will be obligated to sell the security
at less than its market value.
The premium that a Portfolio receives for writing a call option is deemed to
constitute the market value of an option. The premium a Portfolio will receive
from writing a call option will reflect, among other things, the current market
price of the underlying investment, the relationship of the exercise price to
such market price, the historical price volatility of the underlying investment
and the length of the option period. In determining whether a particular call
option should be written, the Manager will consider the reasonableness of the
anticipated premium and the likelihood that a liquid secondary market will exist
for those options.
Closing transactions will be effected in order to realize a profit on an
outstanding call option, to prevent an underlying security from being called, or
to permit the sale of the underlying security. Furthermore, effecting a closing
transaction will
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permit a Portfolio to write another call option on the underlying security with
either a different exercise price or expiration date or both.
Each Portfolio will pay transaction costs in connection with the writing of
options and in entering into closing purchase contracts. Transaction costs
relating to options activity normally are higher than those applicable to
purchases and sales of portfolio securities.
The exercise price of the options may be below, equal to or above the current
market values of the underlying securities or indices at the time the options
are written. From time to time, a Portfolio may purchase an underlying security
for delivery in accordance with the exercise of an option, rather than
delivering such security from its portfolio. In such cases, additional costs
will be incurred.
A Portfolio will realize a profit or loss from a closing purchase transaction if
the cost of the transaction is less or more, respectively, than the premium
received from writing the option. Because increases in the market price of a
call option generally will reflect increases in the market price of the
underlying security, any loss resulting from the repurchase of a call option is
likely to be offset in whole or in part by appreciation of the underlying
security owned by the Portfolio.
WRITING PUT OPTIONS
The Portfolios may write put options on securities and indices. A put option
gives the purchaser of the option the right to sell, and the writer (seller) the
obligation to buy, the underlying security at the exercise price at any time
until (American style) or on (European style) the expiration date. The operation
of put options in other respects, including their related risks and rewards, is
substantially identical to that of call options.
A Portfolio generally would write put options in circumstances where the Manager
wishes to purchase the underlying security for the Portfolio's portfolio at a
price lower than the current market price of the security. In such event, the
Portfolio would write a put option at an exercise price that, reduced by the
premium received on the option, reflects the lower price it is willing to pay.
Since the Portfolio also would receive interest on debt securities maintained to
cover the exercise price of the option, this technique could be used to enhance
current return during periods of market uncertainty. The risk in such a
transaction would be that the market price of the underlying security would
decline below the exercise price, less the premium received.
Writing put options can serve as a limited long hedge because increases in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security depreciates to a price
lower than the exercise price of the put option, it can be expected that the put
option will be exercised and a Portfolio will be obligated to purchase the
security at greater than its market value.
PURCHASING PUT OPTIONS
Each Portfolio may purchase put options on securities and indices. As the holder
of a put option, a Portfolio would have the right to sell the underlying
security at the exercise price at any time until (American style) or on
(European style) the expiration date. A Portfolio may enter into closing sale
transactions with respect to such options, exercise such options or permit such
options to expire.
A Portfolio may purchase a put option on an underlying security ("protective
put") owned by the Portfolio in order to protect against an anticipated decline
in the value of the security. Such hedge protection is provided only during the
life of the put option when the Portfolio, as the holder of the put option, is
able to sell the underlying security at the put exercise price regardless of any
decline in the underlying security's market price. For example, a put option may
be purchased in order to protect unrealized appreciation of a security when the
Manager deems it desirable to continue to hold the security because of tax
considerations. The premium paid for the put option and any transaction costs
would reduce any profit otherwise available for distribution when the security
eventually is sold.
A Portfolio also may purchase put options at a time when the Portfolio does not
own the underlying security. By purchasing put options on a security it does not
own, a Portfolio seeks to benefit from a decline in the market price of the
underlying security. If the put option is not sold when it has remaining value,
and if the market price of the underlying security remains equal to or greater
than the exercise price during the life of the put option, the Portfolio will
lose its entire investment in the put option. In order for the purchase of a put
option to be profitable, the market price of the underlying security must
decline sufficiently below the exercise price to cover the premium and
transaction costs, unless the put option is sold in a closing sale transaction.
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PURCHASING CALL OPTIONS
Each Portfolio may purchase call options on securities and indices. As the
holder of a call option, a Portfolio would have the right to purchase the
underlying security at the exercise price at any time until (American style) or
on (European style) the expiration date. A Portfolio may enter into closing sale
transactions with respect to such options, exercise such options or permit such
options to expire.
Call options may be purchased by a Portfolio for the purpose of acquiring the
underlying security for its portfolio. Utilized in this fashion, the purchase of
call options would enable a Portfolio to acquire the security at the exercise
price of the call option plus the premium paid. At times, the net cost of
acquiring the security in this manner may be less than the cost of acquiring the
security directly. This technique also may be useful to the Portfolios in
purchasing a large block of securities that would be more difficult to acquire
by direct market purchases. As long as it holds such a call option, rather than
the underlying security itself, a Portfolio is partially protected from any
unexpected decline in the market price of the underlying security and, in such
event, could allow the call option to expire, incurring a loss only to the
extent of the premium paid for the option.
Each Portfolio also may purchase call options on underlying securities it owns
in order to protect unrealized gains on call options previously written by it. A
call option could be purchased for this purpose where tax considerations make it
inadvisable to realize such gains through a closing purchase transaction. Call
options also may be purchased at times to avoid realizing losses that would
result in a reduction of a Portfolio's current return. For example, where a
Portfolio has written a call option on an underlying security having a current
market value below the price at which such security was purchased by the
Portfolio, an increase in the market price could result in the exercise of the
call option written by the Portfolio and the realization of a loss on the
underlying security. Accordingly, the Portfolio could purchase a call option on
the same underlying security, which could be exercised to fulfill the
Portfolio's delivery obligations under its written call (if it is exercised).
This strategy could allow the Portfolio to avoid selling the portfolio security
at a time when it has an unrealized loss; however, the Portfolio would have to
pay a premium to purchase the call option plus transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of such
Portfolio's total assets at the time of purchase.
Options may be either listed on an exchange or traded in over-the-counter
("OTC") markets. Listed options are third-party contracts (I.E., performance of
the obligations of the purchaser and seller is guaranteed by the exchange or
clearing corporation), and have standardized strike prices and expiration dates.
OTC options are two-party contracts with negotiated strike prices and expiration
dates. A Portfolio will not purchase an OTC option unless the Manager believes
that daily valuations for such options are readily obtainable. OTC options
differ from exchange-traded options in that OTC options are transacted with
dealers directly and not through a clearing corporation (which guarantees
performance). Consequently, there is a risk of non-performance by the dealer.
Since no exchange is involved, OTC options are valued on the basis of an average
of the last bid prices obtained from dealers, unless a quotation from only one
dealer is available in which case only that dealer's price will be used. In the
case of OTC options, there can be no assurance that a liquid secondary market
will exist for any particular option at any specific time.
The staff of the Securities and Exchange Commission ("SEC") considers purchased
OTC options to be illiquid securities. A Portfolio may also sell OTC options
and, in connection therewith, set aside assets or cover its obligations with
respect to OTC options written by the Portfolio. The assets used as cover for
OTC options written by a Portfolio will be considered illiquid unless the OTC
options are sold to qualified dealers who agree that the Portfolio may
repurchase any OTC option it writes at a maximum price to be calculated by a
formula set forth in the option agreement. The cover for an OTC option written
subject to this procedure would be considered illiquid only to the extent that
the maximum repurchase price under the formula exceeds the intrinsic value of
the option.
A Portfolio's ability to establish and close out positions in exchange-listed
options depends on the existence of a liquid market. A Portfolio intends to
purchase or write only those exchange-listed options for which there appears to
be a liquid secondary market. However, there can be no assurance that such a
market will exist at any particular time. Closing transactions can be made for
OTC options only by negotiating directly with the contra party or by a
transaction in the secondary market if any such market exists. Although a
Portfolio will enter into OTC options only with contra parties that are expected
to be capable of entering into closing transactions with the Portfolio, there is
no assurance that the Portfolio will in fact be able to close out an OTC option
position at a favorable price prior to expiration. In the event of insolvency of
the contra party, the Portfolio might be unable to close out an OTC option
position at any time prior to its expiration.
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INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or loss depends on
changes in the index in question (and thus on price movements in the securities
market or a particular market sector generally) rather than on price movements
in individual securities or futures contracts. When a Portfolio writes a call on
an index, it receives a premium and agrees that, prior to the expiration date,
the purchaser of the call, upon exercise of the call, will receive from the
Portfolio an amount of cash if the closing level of the index upon which the
call is based is greater than the exercise price of the call. The amount of cash
is equal to the difference between the closing price of the index and the
exercise price of the call times a specified multiple (the "multiplier"), which
determines the total dollar value for each point of such difference. When a
Portfolio buys a call on an index, it pays a premium and has the same rights as
to such call as are indicated above. When a Portfolio buys a put on an index, it
pays a premium and has the right, prior to the expiration date, to require the
seller of the put, upon the Portfolio's exercise of the put, to deliver to the
Portfolio an amount of cash if the closing level of the index upon which the put
is based is less than the exercise price of the put, which amount of cash is
determined by the multiplier, as described above for calls. When a Portfolio
writes a put on an index, it receives a premium and the purchaser has the right,
prior to the expiration date, to require the Portfolio to deliver to it an
amount of cash equal to the difference between the closing level of the index
and the exercise price times the multiplier, if the closing level is less than
the exercise price.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when a Portfolio writes a
call on an index it cannot provide in advance for its potential settlement
obligations by acquiring and holding the underlying securities. A Portfolio can
offset some of the risk of writing a call index option position by holding a
diversified portfolio of securities similar to those on which the underlying
index is based. However, a Portfolio cannot, as a practical matter, acquire and
hold a portfolio containing exactly the same securities as underlie the index
and, as a result, bears a risk that the value of the securities held will vary
from the value of the index.
Even if a Portfolio could assemble a securities portfolio that exactly
reproduced the composition of the underlying index, it still would not be fully
covered from a risk standpoint because of the "timing risk" inherent in writing
index options. When an index option is exercised, the amount of cash that the
holder is entitled to receive is determined by the difference between the
exercise price and the closing index level on the date when the option is
exercised. As with other kinds of options, the Portfolio, as the call writer,
will not know that it has been assigned until the next business day at the
earliest. The time lag between exercise and notice of assignment poses no risk
for the writer of a covered call on a specific underlying security, such as
common stock, because there the writer's obligation is to deliver the underlying
security, not to pay its value as of a fixed time in the past. So long as the
writer already owns the underlying security, it can satisfy its settlement
obligations by simply delivering it, and the risk that its value may have
declined since the exercise date is borne by the exercising holder. In contrast,
even if the writer of an index call holds securities that exactly match the
composition of the underlying index, it will not be able to satisfy its
assignment obligations by delivering those securities against payment of the
exercise price. Instead, it will be required to pay cash in an amount based on
the closing index value on the exercise date; and by the time it learns that it
has been assigned, the index may have declined, with a corresponding decline in
the value of its securities portfolio. This "timing risk" is an inherent
limitation on the ability of index call writers to cover their risk exposure by
holding securities positions.
If a Portfolio has purchased an index option and exercises it before the closing
index value for that day is available, it runs the risk that the level of the
underlying index may subsequently change. If such a change causes the exercised
option to fall out-of-the-money, the Portfolio will be required to pay the
difference between the closing index value and the exercise price of the option
(times the applicable multiplier) to the assigned writer.
INTEREST RATE AND STOCK INDEX FUTURES CONTRACTS
A Portfolio may enter into interest rate or stock index futures contracts
("Futures" or "Futures Contracts") as a hedge against changes in prevailing
levels of interest rates or stock price levels in order to establish more
definitely the effective return on securities held or intended to be acquired by
the Portfolio. A Portfolio's hedging may include sales of Futures as an offset
against the effect of expected increases in interest rates or decreases in stock
prices, and purchases of Futures as an offset against the effect of expected
declines in interest rates or increases in stock prices.
The Portfolios only will enter into Futures Contracts that are traded on futures
exchanges and are standardized as to maturity date and underlying financial
instrument. Futures exchanges and trading thereon in the United States are
regulated under the Commodity Exchange Act by the Commodity Futures Trading
Commission ("CFTC").
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Although techniques other than sales and purchases of Futures Contracts could be
used to reduce a Portfolio's exposure to interest rate and stock market
fluctuations, the Portfolio may be able to hedge its exposure more effectively
and at a lower cost through using Futures Contracts.
A Futures Contract provides for the future sale by one party and purchase by
another party of a specified amount of a specific financial instrument for a
specified price at a designated date, time and place. A stock index Futures
Contract provides for the delivery, at a designated date, time and place, of an
amount of cash equal to a specified dollar amount times the difference between
the stock index value at the close of trading on the contract and the price at
which the Futures Contract is originally struck; no physical delivery of stocks
comprising the index is made. Brokerage fees are incurred when a Futures
Contract is bought or sold, and margin deposits must be maintained at all times
the Futures Contract is outstanding.
Although Futures Contracts typically require future delivery of and payment for
financial instruments, Futures Contracts usually are closed out before the
delivery date. Closing out an open Futures Contract sale or purchase is effected
by entering into an offsetting Futures Contract purchase or sale, respectively,
for the same aggregate amount of the identical financial instrument and the same
delivery date. If the offsetting purchase price is less than the original sale
price, the Portfolio realizes a gain; if it is more, the Portfolio realizes a
loss. Conversely, if the offsetting sale price is more than the original
purchase price, the Portfolio realizes a gain; if it is less, the Portfolio
realizes a loss. The transaction costs also must be included in these
calculations. There can be no assurance, however, that a Portfolio will be able
to enter into an offsetting transaction with respect to a particular Futures
Contract at a particular time. If a Portfolio is not able to enter into an
offsetting transaction, the Portfolio will continue to be required to maintain
the margin deposits on the Futures Contract.
As an example of an offsetting transaction, the contractual obligations arising
from the sale of one September stock index Futures Contract on an exchange may
be fulfilled at any time before delivery under the Futures Contract is required
(I.E., on a specified date in September, the "delivery month") by the purchase
of the same September stock index Futures Contract on the same exchange. In such
instance, the difference between the price at which the Futures Contract was
sold and the price paid for the offsetting purchase, after allowance for
transaction costs, represents the profit or loss to the Portfolio.
Each Portfolio's Futures transactions will be entered into for hedging purposes;
that is, Futures Contracts will be sold to protect against a decline in the
price of securities that a Portfolio owns, or Futures Contracts will be
purchased to protect the Portfolio against an increase in the price of
securities it has committed to purchase or expects to purchase.
"Margin" with respect to Futures Contracts is the amount of funds that must be
deposited by a Portfolio in order to initiate Futures trading and to maintain
the Portfolio's open positions in Futures Contracts. A margin deposit made when
the Futures Contract is entered into ("initial margin") is intended to ensure
the Portfolio's performance under the Futures Contract. The margin required for
a particular Futures Contract is set by the exchange on which the Futures
Contract is traded and may be significantly modified from time to time by the
exchange during the term of the Futures Contract.
Subsequent payments, called "variation margin," to and from the futures
commission merchant through which the Portfolio entered into the Futures
Contract will be made on a daily basis as the price of the underlying security
or index fluctuates making the Futures Contract more or less valuable, a process
known as marking-to-market.
RISKS OF USING FUTURES CONTRACTS. The prices of Futures Contracts are
volatile and are influenced by, among other things, actual and anticipated
changes in interest rates and in stock market movements, which in turn are
affected by fiscal and monetary policies and national and international
political and economic events.
There is a risk of imperfect correlation between changes in prices of Futures
Contracts and prices of the securities in the Portfolio's portfolio being
hedged. The degree of imperfection of correlation depends upon circumstances
such as variations in speculative market demand for Futures and for securities,
including technical influences in Futures trading; and differences between the
financial instruments being hedged and the instruments underlying the standard
Futures Contracts available for trading. A decision of whether, when and how to
hedge involves skill and judgment, and even a well-conceived hedge may be
unsuccessful to some degree because of unexpected market behavior or interest
rate trends.
Because of the low margin deposits required, Futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a Futures Contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the Futures Contract is deposited as margin, a subsequent 10%
decrease in the value of the Futures Contract would result in a total loss of
the margin deposit, before any
Statement of Additional Information Page 9
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
deduction for the transaction costs, if the account were then closed out. A 15%
decrease would result in a loss equal to 150% of the original margin deposit, if
the Futures Contract were closed out. Thus, a purchase or sale of a Futures
Contract may result in losses in excess of the amount invested in the Futures
Contract.
Most U.S. Futures exchanges limit the amount of fluctuation permitted in Futures
Contract and options on Futures Contract prices during a single trading day. The
daily limit establishes the maximum amount that the price of a Futures Contract
or option may vary either up or down from the previous day's settlement price at
the end of a trading session. Once the daily limit has been reached in a
particular type of Futures Contract or option, no trades may be made on that day
at a price beyond that limit. The daily limit governs only price movement during
a particular trading day and therefore does not limit potential losses, because
the limit may prevent the liquidation of unfavorable positions. Futures Contract
and option prices occasionally have moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some traders to substantial losses.
If a Portfolio were unable to liquidate a Futures or option on Futures position
due to the absence of a liquid secondary market or the imposition of price
limits, it could incur substantial losses. The Portfolio would continue to be
subject to market risk with respect to the position. In addition, except in the
case of purchased options, the Portfolio would continue to be required to make
daily variation margin payments and might be required to maintain the position
being hedged by the Future or option or to maintain cash or securities in a
segregated account.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
increased participation by speculators in the Futures markets. This
participation also might cause temporary price distortions. In addition,
activities of large traders in both the Futures and securities markets involving
arbitrage, "program trading" and other investment strategies might result in
temporary price distortions.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities, except that
options on Futures Contracts give the purchaser the right, in return for the
premium paid, to assume a position in a Futures Contract (a long position if the
option is a call and a short position if the option is a put) at a specified
exercise price at any time during the period of the option. Upon exercise of the
option, the delivery of the Futures position by the writer of the option to the
holder of the option will be accompanied by delivery of the accumulated balance
in the writer's Futures margin account, which represents the amount by which the
market price of the Futures Contract, at exercise, exceeds (in the case of a
call) or is less than (in the case of a put) the exercise price of the option on
the Futures Contract. If an option is exercised on the last trading day prior to
the expiration date of the option, the settlement will be made entirely in cash
equal to the difference between the exercise price of the option and the closing
level of the securities or index upon which the Futures Contract is based on the
expiration date. Purchasers of options who fail to exercise their options prior
to the exercise date suffer a loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and the
purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities or indices.
If a Portfolio writes an option on a Futures Contract, it will be required to
deposit initial and variation margin pursuant to requirements similar to those
applicable to Futures Contracts. Premiums received from the writing of an option
on a Futures Contract are included in the initial margin deposit.
A Portfolio may seek to close out an option position by selling an option
covering the same Futures Contract and having the same exercise price and
expiration date. The ability to establish and close out positions on such
options is subject to the maintenance of a liquid secondary market.
LIMITATIONS ON USE OF FUTURES AND OPTIONS ON FUTURES
To the extent that a Portfolio enters into Futures Contracts and options on
Futures Contracts, in each case other than for BONA FIDE hedging purposes (as
defined by the CFTC), the aggregate initial margin and premiums required to
establish these positions (excluding the amount by which options are
"in-the-money") will not exceed 5% of the liquidation value of
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GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
the Portfolio's portfolio, after taking into account unrealized profits and
unrealized losses on any contracts the Portfolio has entered into. In general, a
call option on a Futures Contract is "in-the-money" if the value of the
underlying Futures Contract exceeds the strike, I.E., exercise, price of the
call; a put option on a Futures Contract is "in-the-money" if the value of the
underlying Futures Contract is exceeded by the strike price of the put. This
guideline may be modified by Growth Portfolio's Board of Trustees without a
shareholder vote. This limitation does not limit the percentage of a Portfolio's
assets at risk to 5%.
COVER
Transactions using Futures Contracts and options (other than options that a
Portfolio has purchased) expose the Portfolio to an obligation to another party.
A Portfolio will not enter into any such transactions unless it owns either (1)
an offsetting ("covered") position in securities or other options or Futures
Contracts, or (2) cash, receivables and short-term debt securities with a value
sufficient at all times to cover its potential obligations not covered as
provided in (1) above. Each Portfolio will comply with SEC guidelines regarding
cover for these instruments and, if the guidelines so require, set aside cash or
liquid securities.
Assets used as cover or held in a segregated account cannot be sold while the
position in the corresponding Futures Contract or option is open, unless they
are replaced with other appropriate assets. If a large portion of a Portfolio's
assets are used for cover or otherwise set aside, it could affect portfolio
management or the Portfolio's ability to meet redemption requests or other
current obligations.
- --------------------------------------------------------------------------------
RISK FACTORS
- --------------------------------------------------------------------------------
ILLIQUID SECURITIES
A Portfolio may invest up to 15% of its net assets in illiquid securities.
Securities may be considered illiquid if a Portfolio cannot reasonably expect
within seven days to sell the securities for approximately the amount at which
the Portfolio values such securities. See "Investment Limitations." The sale of
illiquid securities, if they can be sold at all, generally will require more
time and result in higher brokerage charges or dealer discounts and other
selling expenses than the sale of liquid securities such as securities eligible
for trading on U.S. securities exchanges or in the OTC markets. Moreover,
restricted securities, which may be illiquid for purposes of this limitation,
often sell, if at all, at a price lower than similar securities that are not
subject to restrictions on resale.
Illiquid securities include those that are subject to restrictions contained in
the securities laws of other countries. However, securities that are freely
marketable in the country where they are principally traded, but would not be
freely marketable in the United States, will not be considered illiquid. Where
registration is required, a Portfolio may be obligated to pay all or part of the
registration expenses and a considerable period may elapse between the time of
the decision to sell and the time the Portfolio may be permitted to sell a
security under an effective registration statement. If, during such a period,
adverse market conditions were to develop, the Portfolio might obtain a less
favorable price than prevailed when it decided to sell.
Not all restricted securities are illiquid. In recent years a large
institutional market has developed for certain securities that are not
registered under the Securities Act of 1933, as amended (the "1933 Act"),
including private placements, repurchase agreements, commercial paper, foreign
securities and corporate bonds and notes. These instruments are often restricted
securities because the securities are sold in transactions not requiring
registration. Institutional investors generally will not seek to sell these
instruments to the general public, but instead will often depend either on an
efficient institutional market in which such unregistered securities can be
readily resold or on an issuer's ability to honor a demand for repayment.
Therefore, the fact that there are contractual or legal restrictions on resale
to the general public or certain institutions is not dispositive of the
liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the registration
requirements of the 1933 Act for resales of certain securities to qualified
institutional buyers. Institutional markets for restricted securities have
developed as a result of Rule 144A, providing both readily ascertainable values
for restricted securities and the ability to liquidate an investment to satisfy
share redemption orders. Such markets include automated systems for the trading,
clearance and settlement of
Statement of Additional Information Page 11
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GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
unregistered securities of domestic and foreign issuers, such as the PORTAL
System sponsored by the National Association of Securities Dealers, Inc. An
insufficient number of qualified institutional buyers interested in purchasing
Rule 144A-eligible restricted securities held by a Portfolio, however, could
affect adversely the marketability of such portfolio securities and the
Portfolio might be unable to dispose of such securities promptly or at favorable
prices.
With respect to liquidity determinations generally, Growth Portfolio's Board of
Trustees has the ultimate responsibility for determining whether specific
securities, including restricted securities eligible for resale to qualified
institutional buyers pursuant to Rule 144A under the 1933 Act, are liquid or
illiquid. That Board of Trustees has delegated the function of making day-to-day
determinations of liquidity to the Manager in accordance with procedures
approved by that Board of Trustees. The Manager takes into account a number of
factors in reaching liquidity decisions, including: (i) the frequency of trading
in the security; (ii) the number of dealers who make quotes for the security;
(iii) the number of dealers who have undertaken to make a market in the
security; (iv) the number of other potential purchasers; and (v) the nature of
the security and how trading is effected (e.g., the time needed to sell the
security, how offers are solicited, and the mechanics of transfer). The Manager
monitors the liquidity of securities in each Portfolio's securities portfolio
and periodically reports such determinations to the Portfolio's Board of
Trustees.
DEBT SECURITIES
Each Portfolio is permitted to purchase investment grade debt securities. In
selecting debt securities for investment, the Manager reviews and monitors the
creditworthiness of each issuer and issue and analyzes interest rate trends and
specific developments that may affect individual issuers, in addition to relying
on ratings assigned by S&P, Moody's or another nationally recognized statistical
rating organization ("NRSRO") as indicators of quality. Debt securities rated
Baa by Moody's or BBB by S&P are investment grade, although Moody's considers
securities rated Baa to have speculative characteristics. Changes in economic
conditions or other circumstances are more likely to lead to a weakened capacity
for such securities to make principal and interest payments than is the case for
higher grade debt securities. Each Portfolio is also permitted to purchase debt
securities that are not rated by S&P, Moody's or another NRSRO but that the
Manager determines to be of comparable quality to that of rated securities in
which the Portfolio may invest. Such securities are included in the computation
of any percentage limitations applicable to the comparable rated securities.
Ratings of debt securities represent the rating agencies' opinions regarding
their quality, are not a guarantee of quality and may be reduced after a
Portfolio has acquired the security. The Manager will consider such an event in
determining whether a Portfolio should continue to hold the security but is not
required to dispose of it. Credit ratings attempt to evaluate the safety of
principal and interest payments and do not reflect an assessment of the
volatility of the security's market value or the liquidity of an investment in
the security. Also, NRSROs may fail to make timely changes in credit ratings in
response to subsequent events, so that an issuer's current financial condition
may be better or worse than the rating indicates. For a description of Moody's
and S&P ratings, see "Description of Debt Ratings" herein.
Statement of Additional Information Page 12
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GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
INVESTMENT LIMITATIONS
- --------------------------------------------------------------------------------
THE FUNDS
The Small Cap Fund and America Value Fund each has the following fundamental
investment policy to enable it to invest in the Small Cap Portfolio and Value
Portfolio, respectively:
Notwithstanding any other investment policy of the Fund, the Fund may invest
all of its investable assets (cash, securities and receivables related to
securities) in an open-end management investment company having
substantially the same investment objective, policies and limitations as the
Fund.
All other investment policies and limitations of each Fund and its corresponding
Portfolio are identical. Therefore, although the following discusses certain
investment policies and limitations of each Portfolio and Growth Portfolio's
Board of Trustees, it applies equally to each Fund and the Company's Board of
Trustees.
Each Portfolio has adopted the following investment limitations as fundamental
policies that (unless otherwise noted) may not be changed without approval by
the affirmative vote of the lesser of (i) 67% of the Portfolio's shares
represented at a meeting at which more than 50% of the outstanding shares are
represented, or (ii) more than 50% of the Portfolio's outstanding shares.
Whenever a Fund is requested to vote on a change in the investment limitations
of its corresponding Portfolio, the Fund will hold a meeting of its shareholders
and will cast its votes as instructed by the shareholders. Neither Portfolio
may:
(1) Invest in companies for the purpose of exercising control or
management;
(2) Purchase or sell real estate; provided that a Portfolio may invest
in securities secured by real estate or interests therein or issued by
companies that invest in real estate or interests therein;
(3) Purchase or sell interests in oil, gas or other mineral exploration
or development programs, except that the Portfolio may invest in the
securities of companies that engage in these activities;
(4) Purchase or sell commodities or commodity contracts, except that the
Portfolio may purchase and sell futures contracts and options;
(5) Mortgage, pledge or in any other manner transfer as security for any
indebtedness, any of its assets except to secure permitted borrowings.
Collateral arrangements with respect to initial or variation margin for
futures contracts and options will not be deemed to be a pledge of a
Portfolio's assets;
(6) Borrow money in excess of 33 1/3% of the Portfolio's total assets
(including the amount borrowed), less all liabilities and indebtedness
(other than borrowing). Transactions involving options, futures contracts,
options on futures contracts, and collateral arrangements relating thereto
will not be deemed to be borrowings;
(7) Purchase securities on margin or effect short sales, except that a
Portfolio may obtain such short-term credits as may be necessary for the
clearance of purchases or sales of securities and except in connection with
the use of options, futures contracts or options thereon. The Portfolios may
make deposits of margin in connection with futures contracts and options
thereon;
(8) Participate on a joint or a joint and several basis in any trading
account in securities. (The "bunching" of orders for the sale or purchase of
marketable portfolio securities with other accounts under the management of
the Manager to save brokerage costs or average prices among them is not
deemed to result in a securities trading account);
(9) Make loans, except that the Portfolio may purchase debt securities
and enter into repurchase agreements and make loans of portfolio securities;
(10) Purchase or retain the securities of an issuer if, to the knowledge
of the Portfolio after reasonable inquiry, any of the Trustees or officers
of Growth Portfolio or the Portfolio's investment adviser or distributor
individually own
Statement of Additional Information Page 13
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GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
beneficially more than 1/2 of 1% of the outstanding securities of such
issuer and together own beneficially more than 5% of the securities;
(11) Underwrite securities of other issuers, except to the extent that,
in connection with the disposition of portfolio securities, the Portfolio
may be deemed an underwriter under federal or state securities laws; and
(12) Invest more than 25% of the value of the Portfolio's total assets in
securities of issuers conducting their principal business activities in any
one industry, except that this limitation shall not apply to securities
issued or guaranteed as to principal and interest by the U.S. government or
any of its agencies or instrumentalities.
In addition, each Portfolio has adopted as a fundamental investment policy a
classification as a "diversified" portfolio under the 1940 Act. This means that,
with respect to 75% of the Portfolio's total assets, no more than 5% will be
invested in the securities of any one issuer, and the Portfolio will purchase no
more than 10% of the outstanding voting securities of any one issuer. This
policy cannot be changed without approval by the holders of a majority of the
Portfolio's outstanding voting securities as defined above.
The following investment limitations of each Portfolio are not fundamental
policies and may be changed by vote of Growth Portfolio's Board of Trustees
without shareholder approval. Neither Portfolio may:
(1) Invest more than 15% of its net assets in illiquid securities, a
term which means securities that cannot be disposed of within seven days in
the normal course of business at approximately the amount at which the
Portfolio has valued the securities and includes, among other things,
repurchase agreements maturing in more than seven days;
(2) Borrow money except for temporary or emergency purposes (not for
leveraging) in excess of 33 1/3% of the value of the Portfolio's total
assets;
(3) Enter into a futures contract or an option on a futures contract, in
each case other than for BONA FIDE hedging purposes (as defined by the
CFTC), if the aggregate initial margin and premiums required to establish
all of these positions (excluding the amount by which options are
"in-the-money") exceeds 5% of the liquidation value of the Portfolio's
portfolio, after taking into account unrealized profits and unrealized
losses on any contracts the Portfolio has entered into; or
(4) Purchase securities of other investment companies, except to the
extent permitted by the 1940 Act, in the open market at no more than
customary commission rates. This limitation does not apply to securities
received or acquired as dividends, through offers of exchange, or as a
result of reorganization, consolidation, or merger.
If a percentage restriction on investment or utilization of assets in an
investment policy or limitation is adhered to at the time an investment is made,
a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of a Portfolio's investment policies or restrictions. A
Portfolio may exchange securities, exercise conversion or subscription rights,
warrants, or other rights to purchase common stock or other equity securities
and may hold, except to the extent limited by the 1940 Act, any such securities
so acquired without regard to the Portfolio's investment policies and
limitations. The original cost of the securities so acquired will be included in
any subsequent determination of a Portfolio's compliance with the investment
percentage limitations referred to above and in the Prospectus.
Statement of Additional Information Page 14
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
EXECUTION OF PORTFOLIO TRANSACTIONS
- --------------------------------------------------------------------------------
Subject to policies established by Growth Portfolio's Board of Trustees, the
Manager is responsible for the execution of the Portfolios' securities
transactions and the selection of brokers/dealers who execute such transactions
on behalf of the Portfolios. In executing portfolio transactions, the Manager
seeks the best net results for each Portfolio, taking into account such factors
as the price (including the applicable brokerage commission or dealer spread),
size of the order, difficulty of execution and operational facilities of the
firm involved. Although the Manager generally seeks reasonably competitive
commission rates and spreads, payment of the lowest commission or spread is not
necessarily consistent with the best net results. While the Portfolios may
engage in soft dollar arrangements for research services, as described below,
the Portfolios have no obligation to deal with any broker/dealer or group of
broker/dealers in the execution of portfolio transactions.
Consistent with the interests of the Portfolios, the Manager may select brokers
to execute the Portfolios' securities transactions on the basis of the research
services they provide to the Manager for its use in managing the Portfolios and
its other advisory accounts. Such services may include furnishing analyses,
reports and information concerning issuers, industries, securities, geographic
regions, economic factors and trends, portfolio strategy, and performance of
accounts, and effecting securities transactions and performing functions
incidental thereto (such as clearance and settlement). Research and brokerage
services received from such broker is in addition to, and not in lieu of, the
services required to be performed by the Manager under the Management Contract
(defined below). A commission paid to such broker may be higher than that which
another qualified broker would have charged for effecting the same transaction,
provided that the Manager determines in good faith that such commission is
reasonable in terms either of that particular transaction or the overall
responsibility of the Manager to the Portfolios and its other clients and that
the total commissions paid by each Fund will be reasonable in relation to the
benefits received by the Portfolios over the long term. Research services may
also be received from dealers who execute Portfolio transactions in OTC markets.
The Manager may allocate brokerage transactions to broker/dealers who have
entered into arrangements under which the broker/dealer allocates a portion of
the commissions paid by the Portfolio toward payment of the Portfolio's
expenses, such as custodian fees.
Investment decisions for each 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 one or more Portfolios. In such
cases, simultaneous transactions may occur. Purchases or sales are then
allocated as to price or amount in a manner deemed fair and equitable to all
accounts involved. While in some cases this practice could have a detrimental
effect upon the price or value of the security as far as a Portfolio is
concerned, in other cases the Manager believes that coordination and the ability
to participate in volume transactions will be beneficial to the Portfolios.
Under a policy adopted by Growth Portfolio's Board of Trustees, and subject to
the policy of obtaining the best net results, the Manager may consider a
broker/dealer's sale of the shares of the Funds and the other funds for which
the Manager serves as investment manager and/or administrator in selecting
broker/dealers for the execution of portfolio transactions. This policy does not
imply a commitment to execute portfolio transactions through all broker/dealers
that sell shares of the Funds and such other funds.
Each 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. Growth 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.
For the fiscal year ended December 31, 1996, and for the fiscal period October
18, 1995 (commencement of operations) to December 31, 1995, the Small Cap
Portfolio paid aggregate brokerage commissions of $54,241 and $3,317,
respectively.
Statement of Additional Information Page 15
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GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
For the fiscal year ended December 31, 1995, and for the fiscal period October
18, 1995 (commencement of operations) to December 31, 1995, the Value Portfolio
paid aggregate brokerage commissions of $37,380 and $1,032, respectively.
PORTFOLIO TRADING AND TURNOVER
Although the Portfolios generally do not intend to trade for short-term profits,
the securities held by a Portfolio will be sold whenever the Manager believes it
is appropriate to do so, without regard to the length of time a particular
security may have been held. Portfolio turnover rate is calculated by dividing
the lesser of sales or purchases of portfolio securities by each Portfolio's
average month-end portfolio value, excluding short-term investments. The
portfolio turnover rate will not be a limiting factor when the Manager deems
portfolio changes appropriate. Higher portfolio turnover involves
correspondingly greater brokerage commissions and other transaction costs that a
Portfolio will bear directly and may result in the realization of net capital
gains that are taxable when distributed to each corresponding Fund's
shareholders. For the fiscal year ended December 31, 1996, the Small Cap
Portfolio's and Value Portfolio's portfolio turnover rates were 150% and 256%,
respectively.
Statement of Additional Information Page 16
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GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
TRUSTEES AND EXECUTIVE OFFICERS
- --------------------------------------------------------------------------------
The Company's Trustees and Executive Officers are listed below.
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
William J. Guilfoyle*, 38 Director, LGT Asset Management, Inc. since 1996; Director, G.T. Insurance Agency ("G.T.
Trustee, Chairman of the Board and Insurance") since 1996; Director, Liechtenstein Global Trust AG (holding company of the
President various international LGT companies) Advisory Board since January 1996; President, GT
50 California Street Global since 1995; President and Chief Executive Officer, G.T. Insurance since 1995;
San Francisco, CA 94111 Director, Liechtenstein Global Trust AG from 1995 to January 1996; Senior Vice President
and Director, Sales and Marketing, G.T. Insurance from April 1995 to November 1995; Vice
President and Director of Marketing, GT Global from 1987 to 1995; Senior Vice President,
Retail Marketing, G.T. Insurance from 1993 to 1995; and Vice President, G.T. Insurance
from 1992 to 1993. Mr. Guilfoyle also is a director or trustee of each of the other
investment companies registered under the 1940 Act that is managed or administered by the
Manager.
C. Derek Anderson, 55 Chief Executive Officer, Anderson Capital Management, Inc.; Chairman and Chief Executive
Trustee Officer, Plantagenet Holdings, Ltd. from 1991 to present; Director, Munsingwear, Inc.; and
220 Sansome Street Director, American Heritage Group Inc. and various other companies. Mr. Anderson also is a
Suite 400 director or trustee of each of the other investment companies registered under the 1940
San Francisco, CA 94104 Act that is managed or administered by the Manager.
Frank S. Bayley, 57 Partner, Baker & McKenzie (a law firm); Director and Chairman, C.D. Stimson Company (a
Trustee private investment company). Mr. Bayley also is a director or trustee of each of the other
Two Embarcadero Center investment companies registered under the 1940 Act that is managed or administered by the
Suite 2400 Manager.
San Francisco, CA 94111
Arthur C. Patterson, 53 Managing Partner, Accel Partners (a venture capital firm). He also serves as a director of
Trustee various computing and software companies. Mr. Patterson also is a director or trustee of
One Embarcadero Center each of the other investment companies registered under the 1940 Act that is managed or
Suite 3820 administered by the Manager.
San Francisco, CA 94111
Ruth H. Quigley, 61 Private investor; and President, Quigley Friedlander & Co., Inc. (a financial advisory
Trustee services firm) from 1984 to 1986. Ms. Quigley also is a director or trustee or each of the
1055 California Street other investment companies registered under the 1940 Act that is managed or administered
San Francisco, CA 94108 by the Manager.
Robert G. Wade, Jr.*, 69 Consultant to the Manager; Chairman of the Board of Chancellor Capital Management, Inc.
Trustee from January 1995 to October 1996; President, Chief Executive Officer and Chairman of the
1166 Avenue of the Americas Board of Chancellor Capital Management, Inc. from 1988 to January 1995.
New York, NY 10036
</TABLE>
- --------------
* Mr. Guilfoyle and Mr. Wade are "interested persons" of the Company as
defined by the 1940 Act due to their affiliation with the LGT companies.
Statement of Additional Information Page 17
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
James R. Tufts, 38 Chief Information Officer for the Manager since October 1996; President,
Vice President and Chief GT Services since 1995; Senior Vice President -- Finance and
Financial Officer Administration, GT Global, GT Services and G.T. Insurance, from 1994 to
50 California Street 1995; Senior Vice President -- Finance and Administration, the Manager
San Francisco, CA 94111 from 1994 to October 1996; Vice President -- Finance, the Manager, GT
Global and GT Services from 1990 to 1994; Vice President -- Finance,
G.T. Insurance from 1992 to 1994; and Director, the Manager, GT Global
and GT Services since 1991.
Kenneth W. Chancey, 51 Vice President -- Mutual Fund Accounting, the Manager since 1992; and
Vice President and Vice President, Putnam Fiduciary Trust Company from 1989 to 1992.
Principal Accounting Officer
50 California Street
San Francisco, CA 94111
Helge K. Lee, 50 Executive Vice President, Asset Management Division, Liechtenstein
Vice President and Secretary Global Trust since October 1996; Senior Vice President, the Manager, GT
1166 Avenue of the Americas Global, GT Services and G.T. Insurance from February 1996 to October
New York, NY 10036 1996; Vice President, the Manager, GT Global, GT Services and G.T.
Insurance from May 1994 to February 1996; General Counsel, the Manager,
GT Global, GT Services and G.T. Insurance from May 1994 to October 1996;
Secretary, the Manager, GT Global, GT Services and G.T. Insurance from
May 1994 to October 1996; Senior Vice President, General Counsel and
Secretary, Strong/Corneliuson Management, Inc.; and Secretary, each of
the Strong Funds from October 1991 through May 1994.
</TABLE>
------------------------
The Company's Board of Trustees has a Nominating and Audit Committee, comprised
of Ms. Quigley and Messrs. Anderson, Bayley and Patterson, which is responsible
for nominating persons to serve as Trustees, reviewing audits of the Company and
the Funds and recommending firms to serve as independent auditors of the
Company. Each of the Trustees and officers of the Company is also a director and
officer of G.T. Investment Portfolios, Inc., G.T. Investment Funds, Inc., G.T.
Global Developing Markets Fund, Inc. and G.T. Global Floating Rate Fund, Inc.
and a Trustee and officer of G.T. Global Eastern Europe Fund, G.T. Global
Variable Investment Trust, G.T. Global Variable Investment Series, Global High
Income Portfolio, Global Investment Portfolio and Floating Rate Portfolio, which
also are registered investment companies managed by the Manager. Each Trustee
and officer serves in total as a Director and or Trustee and officer,
respectively, of 12 registered investment companies with 41 series managed or
administered by the Manager. The Company pays each Trustee who is not a
director, officer or employee of the Manager or any affiliated company $5,000
per annum plus $300 per Fund for each meeting of the Board attended by the
Trustee, and reimburses travel and other expenses incurred in connection with
attendance at such meetings. Other Trustees and officers receive no compensation
or expense reimbursements from the Company. For the fiscal year ended December
31, 1996, Mr. Anderson, Mr. Bayley, Mr. Patterson and Ms. Quigley, who are not
directors, officers or employees of the Manager or any affiliated company,
received total compensation of $6,050, $6,050, $5,450 and $6,050, respectively,
from the Company for their services as Trustees. For the year ended December 31,
1996, Mr. Anderson, Mr. Bayley, Mr. Patterson and Ms. Quigley received total
compensation of $87,600, $87,600, $80,100 and $87,600, respectively, from the
investment companies managed or administered by the Manager for which he or she
served as a director or trustee. Fees and expenses disbursed to the Trustees
contained no accrued or payable pension or retirement benefits. As of the date
of this Statement of Additional Information, the officers and Trustees and their
families as a group owned in the aggregate beneficially or of record less than
1% of the shares of the America Value Fund and less than 1% of the shares of the
Small Cap Fund.
Statement of Additional Information Page 18
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES RELATING TO THE FUNDS AND THE
PORTFOLIOS
The Manager serves as each Portfolio's investment manager and administrator
under an Investment Management and Administration Contract ("Portfolio
Management Contract") between Growth Portfolio and the Manager. The Manager
serves as administrator to each Fund under an administration contract between
the Company and the Manager ("Administration Contract"). The Administration
Contract will not be deemed an advisory contract, as defined under the 1940 Act.
As investment manager and administrator, the Manager makes all investment
decisions for each Portfolio and, as administrator, administers each Portfolio's
and Fund's affairs. Among other things, the Manager furnishes the services and
pays the compensation and travel expenses of persons who perform the executive,
administrative, clerical and bookkeeping functions of the Portfolio and the
Funds and provides suitable office space and necessary small office equipment
and utilities. For these services, each Fund will pay administration fees to the
Manager at the annualized rate of 0.25% of the Fund's average daily net assets.
In addition, each Fund bears a pro rata portion of the investment management and
administration fee paid by its corresponding Portfolio to the Manager. Each
Portfolio pays such fees based on its average daily net assets, computed daily
and paid monthly, at the annualized rate of 0.475% on the first $500 million,
0.45% on the next $500 million, 0.425% on the next $500 million, and 0.40% on
all amounts thereafter.
The Portfolio Management Contract may be renewed with respect to a Portfolio for
one-year terms, provided that any such renewal has been specifically approved at
least annually by: (i) Growth Portfolio's Board of Trustees or the vote of a
majority of the Portfolio's outstanding voting securities (as defined in the
1940 Act), and (ii) a majority of Growth Portfolio's Trustees who are not
parties to the Portfolio Management Contract or "interested persons" of any such
party (as defined in the 1940 Act), cast in person at a meeting called for the
specific purpose of voting on such approval. The Portfolio Management Contract
provides that with respect to each Portfolio, and the Administration Contract
provides that with respect to each Fund, either the Company, Growth Portfolio or
the Manager may terminate the contract without penalty upon sixty days' written
notice to the other party. The Portfolio Management Contract terminates
automatically in the event of its assignment (as defined in the 1940 Act).
For the fiscal period October 18, 1995 (commencement of operations) to December
31, 1995, the Small Cap Portfolio and the Value Portfolio paid fees of $1,293
and $622, respectively, to the Manager. For the same period, the Small Cap Fund
and America Value Fund paid administration fees of $755 and $349, respectively,
to the Manager. For the fiscal period October 18, 1995 (commencement of
operations) to December 31, 1995, the Manager reimbursed the Small Cap Portfolio
and Value Portfolio for their respective investment management and
administration fees in the amounts of $1,293 and $622, respectively; for the
same period, the Small Cap Fund and America Value Fund reimbursed administration
fees in the amounts of $755 and $349, respectively. Accordingly, the Manager
reimbursed each Fund and its respective Portfolio investment management and
administration fees in the aggregate amounts of $2,048 and $971, respectively.
For the fiscal year ended December 31, 1996, the Small Cap Portfolio and the
Value Portfolio paid fees of $73,312 and $27,487, respectively, to the Manager.
For the same period, the Small Cap Fund and America Value Fund paid
administration fees of $39,004 and $14,722, respectively, to the Manager. For
the fiscal year ended December 31, 1996, the Manager reimbursed the Small Cap
Portfolio and Value Portfolio for their respective investment management and
administration fees in the amounts of $73,312 and $27,487, respectively; for the
same period, the Small Cap Fund and America Value Fund paid administration fees
of $39,004 and $14,722, respectively. Accordingly, the Manager reimbursed each
Fund and its corresponding Portfolio investment management and administration
fees in the aggregate amounts of $112,316 and $42,209, respectively.
For the fiscal period October 18, 1995 (commencement of operations) to December
31, 1995, the Manager, pursuant to a voluntary expense undertaking to limit
expenses to the maximum annual level of 1.65% of average daily net assets of
Advisor Class shares of the Funds, reimbursed the Small Cap Fund and America
Value Fund for expenses in the additional amounts of $65,079 and $66,907,
respectively.
For the fiscal year ended December 31, 1996, the Manager, pursuant to its
voluntary expense undertaking, reimbursed the Small Cap Fund and America Value
Fund for expenses in the additional amounts of $58,269 and $164,683,
respectively.
Statement of Additional Information Page 19
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
DISTRIBUTION SERVICES
Each Fund's Advisor Class shares are offered continuously through the Funds'
principal underwriter and distributor, GT Global, on a "best efforts" basis
without a sales charge or a contingent deferred sales charge.
TRANSFER AGENCY AND ACCOUNTING AGENCY SERVICES
The Transfer Agent has been retained by the Funds to perform shareholder
servicing, reporting and general transfer agent functions for the Funds. For
these services, the Transfer Agent receives an annual maintenance fee of $17.50
per account, a new account fee of $4.00 per account, a per transaction fee of
$1.75 for all transactions other than exchanges and a per exchange fee of $2.25.
The Transfer Agent also is reimbursed by the Funds for its out-of-pocket
expenses for such items as postage, forms, telephone charges, stationery and
office supplies. The Manager also serves as each Fund's pricing and accounting
agent. For the fiscal year ended December 31, 1996 and the period October 18,
1995 (commencement of operations) to December 31, 1995, the Small Cap Fund and
America Value Fund paid accounting services fees of $76 and $3,900, and $36 and
$1,472, respectively.
EXPENSES OF THE FUNDS AND THE PORTFOLIOS
Each Fund and each Portfolio pays all expenses not assumed by the Manager, GT
Global and other agents. These expenses include, in addition to the advisory,
distribution, transfer agency, pricing and accounting agency and brokerage fees
discussed above, legal and audit expenses, custodian fees, trustees' fees,
organizational fees, fidelity bond and other insurance premiums, taxes,
extraordinary expenses and expenses of reports and prospectuses sent to existing
investors. The allocation of general Company expenses, and expenses shared by
the Funds with one another, are made on a basis deemed fair and equitable, which
may be based on the relative net assets of the Funds or the nature of the
services performed and relative applicability to each Fund. Similarly, the
allocation of general Growth Portfolio expenses, and expenses shared by the
Portfolios with each other, are made on a basis deemed fair and equitable, and
may be based on the relative net assets of the Portfolios or the nature of the
services performed and relative applicability to each Portfolio. Expenditures,
including costs incurred in connection with the purchase or sale of portfolio
securities, that are capitalized in accordance with generally accepted
accounting principles applicable to investment companies, are accounted for as
capital items and not as expenses.
- --------------------------------------------------------------------------------
VALUATION OF SHARES
- --------------------------------------------------------------------------------
As described in the Prospectus, each Fund's net asset value per share for each
class of shares is determined at the close of regular trading on the New York
Stock Exchange ("NYSE") (currently, 4:00 P.M. Eastern Time, unless weather,
equipment failure or other factors contribute to an earlier closing time).
Currently, the NYSE is closed on weekends and on certain days relating to the
following holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
July 4th, Labor Day, Thanksgiving Day and Christmas Day.
Each Portfolio's securities and other assets are valued as follows:
Equity securities, which are traded on stock exchanges, are valued at the last
sale price on the exchange on which such securities are traded, as of the close
of business on the day the securities are being valued or, lacking any sales, at
the last available bid price. In cases where securities are traded on more than
one exchange, the securities are valued on the exchange determined by the
Manager to be the primary market. Securities traded in the OTC market are valued
at the last available bid price prior to the time of valuation.
Long-term debt obligations are valued at the mean of representative quoted bid
or asked prices for such securities or, if such prices are not available, at
prices for securities of comparable maturity, quality and type; however, when
the Manager deems it appropriate, prices obtained for the day of valuation from
a bond pricing service will be used. Short-term debt investments are amortized
to maturity based on their cost, provided that such valuations represent fair
value.
Options on indices and securities purchased by the Portfolios are valued at
their last bid price in the case of listed options or at the average of the last
bid prices obtained from dealers in the case of OTC options. When market
quotations for futures and options on futures held by a Portfolio are readily
available, those positions will be valued based upon such quotations.
Statement of Additional Information Page 20
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
Securities and other assets for which market quotations are not readily
available (including restricted securities that are subject to limitations as to
their sale) are valued at fair value as determined in good faith by or under the
direction of the Growth Portfolio's Board of Trustees. The valuation procedures
applied in any specific instance are likely to vary from case to case. However,
consideration generally is given to the financial position of the issuer and
other fundamental analytical data relating to the investment and to the nature
of the restrictions on disposition of the securities (including any registration
expenses that might be borne by a Portfolio in connection with such
disposition). In addition, other factors, such as the cost of the investment,
the market value of any unrestricted securities of the same class (both at the
time of purchase and at the time of valuation), the size of the holding, the
prices of any recent transactions or offers with respect to such securities and
any available analysts' reports regarding the issuer, generally are considered.
The fair value of any other assets is added to the value of all securities
positions to arrive at the value of a Portfolio's total assets. A Portfolio's
liabilities, including accruals for expenses, are deducted from its total assets
to determine its net assets. The value of a Fund's net assets is the value of
its investment in its corresponding Portfolio (i.e., its proportionate interest
in the Portfolio's net assets). Once the value of a Fund's net assets is so
determined, that value is then divided by the total number of shares outstanding
(excluding treasury shares), and the result, rounded to the nearer cent, is the
net asset value per share.
- --------------------------------------------------------------------------------
INFORMATION RELATING TO SALES
AND REDEMPTIONS
- --------------------------------------------------------------------------------
PAYMENT AND TERMS OF OFFERING
Payment for Advisor Class shares purchased should accompany the purchase order,
or funds should be wired to the Transfer Agent as described in the Prospectus.
Payment, other than by wire transfer, must be made by check or money order drawn
on a U.S. bank. Checks or money orders must be payable in U.S. dollars.
As a condition of this offering, if an order to purchase either class of shares
is cancelled due to nonpayment (for example, because a check is returned for
"not sufficient funds"), the person who made the order will be responsible for
any loss incurred by a Fund by reason of such cancellation, and if such
purchaser is a shareholder, that Fund shall have the authority as agent of the
shareholder to redeem shares in his or her account at their then-current net
asset value per share to reimburse that Fund for the loss incurred. Investors
whose purchase orders have been cancelled due to nonpayment may be prohibited
from placing future orders.
The Funds reserve the right at any time to waive or increase the minimum
requirements applicable to initial or subsequent investments with respect to any
person or class of persons. An order to purchase shares is not binding on a Fund
until it has been confirmed in writing by the Transfer Agent (or other
arrangements made with the Fund, in the case of orders utilizing wire transfer
of funds, as described above) and payment has been received. To protect existing
shareholders, the Funds reserve the right to reject any offer for a purchase of
shares by any individual.
SALES OUTSIDE THE UNITED STATES
Sales of Fund shares made through brokers outside the United States will be at
net asset value plus a sales commission, if any, established by that broker or
by local law.
EXCHANGES BETWEEN FUNDS
Shares of a Fund may be exchanged for shares of other GT Global Mutual Funds,
based on their respective net asset values without imposition of any sales
charges provided that the registration remains identical. Advisor Class shares
may be exchanged only for Advisor Class shares of other GT Global Mutual Funds.
The exchange privilege is not an option or right to purchase shares but is
permitted under the current policies of the respective GT Global Mutual Funds.
The privilege may be discontinued or changed at any time by any of the Funds
upon 60 days' prior written notice to the shareholders of such Fund and is
available only in states where the exchange may be made legally. Before
purchasing shares through the exercise of the exchange privilege, a shareholder
should obtain and read a copy of the prospectus of the Fund to be purchased and
should consider the investment objective(s) of that Fund.
Statement of Additional Information Page 21
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
TELEPHONE REDEMPTIONS
A corporation or partnership wishing to utilize telephone redemption services
must submit a "Corporate Resolution" or "Certificate of Partnership" indicating
the names, titles and the required number of signatures of persons authorized to
act on its behalf. The certificate must be signed by a duly authorized
officer(s) and, in the case of a corporation, the corporate seal must be
affixed. All shareholders may request that redemption proceeds be transmitted by
bank wire directly to the shareholder's predesignated account at a domestic bank
or savings institution if the proceeds are at least $1,000. Costs in connection
with the administration of this service, including wire charges, will be borne
by the Funds. Proceeds of less than $ 1,000 will be mailed to the shareholder's
registered address of record. The Funds and the Transfer Agent reserve the right
to refuse any telephone instructions and may discontinue the aforementioned
redemption options upon 30 days' written notice.
SUSPENSION OF REDEMPTION PRIVILEGES
The Funds may suspend redemption privileges or postpone the date of payment for
more than seven days after a redemption order is received during any period: (1)
when the NYSE is closed other than customary weekend and holiday closings, or
when trading on the NYSE is restricted as directed by the SEC; (2) when an
emergency exists, as defined by the SEC, that would prohibit the Funds from
disposing of portfolio securities owned by them or in fairly determining the
value of their assets; or (3) as the SEC may otherwise permit.
REDEMPTIONS IN KIND
It is possible that conditions may arise in the future that would, in the
opinion of the Company's Board of Trustees, make it undesirable for a Fund to
pay for all redemptions in cash. In such cases and to the extent permitted by
Rule 18f-1 under the 1940 Act, the Board may authorize payment to be made in
portfolio securities or other property of a Fund's corresponding Portfolio,
so-called "redemptions in kind." Payment of redemptions in kind will be made in
readily marketable securities. Such securities would be valued at the same value
assigned to them in computing the net asset value per share. Shareholders
receiving such securities would incur brokerage costs in selling any such
securities so received and would be subject to any increase or decrease in the
value of the securities until they were sold.
- --------------------------------------------------------------------------------
TAXES
- --------------------------------------------------------------------------------
TAXATION OF THE FUNDS
Each Fund is treated as a separate corporation for federal income tax purposes.
In order to continue to qualify for treatment as a regulated investment company
("RIC") under the Code, each Fund must distribute to its shareholders for each
taxable year at least 90% of its investment company taxable income (consisting
generally of net investment income and net short-term capital gain
("Distribution Requirement") and must meet several additional requirements. With
respect to each Fund, these requirements include the following: (1) the Fund
must derive at least 90% of its gross income each taxable year from dividends,
interest, payments with respect to securities loans and gains from the sale or
other disposition of securities or other income (including gains from options or
Futures) derived with respect to its business of investing in securities
("Income Requirement"); (2) the Fund must derive less than 30% of its gross
income each taxable year from the sale or other disposition of securities,
options or Futures held for less than three months ("Short-Short Limitation");
(3) at the close of each quarter of the Fund's taxable year, at least 50% of the
value of its total assets must be represented by cash and cash items, U.S.
government securities, securities of other RICs and other securities, with these
other securities limited, with respect to any one issuer, to an amount that does
not exceed 5% of the value of the Fund's total assets and that does not
represent more than 10% of the issuer's outstanding voting securities; and (4)
at the close of each quarter of the Fund's taxable year, not more than 25% of
the value of its total assets may be invested in securities (other than U.S.
government securities or the securities of other RICs) of any one issuer. Each
Fund, as an investor in its corresponding Portfolio, is deemed to own a
proportionate share of the Portfolios assets, and to earn a proportionate share
of the Portfolio's income, for purposes of determining whether the Fund
satisfies all of the requirements described above to qualify as a RIC.
Statement of Additional Information Page 22
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
Each 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 each Fund of
hedging transactions engaged in by its corresponding Portfolio.
TAXATION OF THE PORTFOLIOS
GENERAL. Each Portfolio is treated as a separate partnership for federal
income tax purposes and is not a "publicly traded partnership." As a result,
each Portfolio is not subject to federal income tax; instead, each Fund, as an
investor in its corresponding Portfolio, is 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. Each Portfolio also is not
subject to New York income or franchise tax.
Because, as noted above, each Fund is deemed to own a proportionate share of its
corresponding Portfolio's assets, and to earn a proportionate share of its
corresponding Portfolio's income, for purposes of determining whether the Fund
satisfies the requirements to qualify as a RIC, each Portfolio intends to
continue to conduct its operations so that its corresponding Fund will be able
to continue to satisfy all those requirements.
Distributions to each Fund from its corresponding Portfolio (whether pursuant to
a partial or complete withdrawal 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. Each Fund's basis for its interest in its corresponding
Portfolio generally will equal the amount of cash and the basis of any property
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.
OPTIONS AND FUTURES TRANSACTIONS. The Portfolios' use of hedging
transactions, such as selling (writing) and purchasing options and Futures,
involves complex rules that will determine, for federal income tax purposes, the
character and timing of recognition of the gains and losses a Portfolio realizes
in connection therewith. Gains from options and Futures derived by a Portfolio
with respect to its business of investing in securities will qualify as
permissible income under the Income Requirement for its corresponding Fund.
However, income from the disposition by a Portfolio of options and Futures will
be subject to the Short-Short Limitation for its corresponding Fund if they are
held for less than three months.
If a Portfolio satisfies certain requirements, any increase in value of a
position that is part of a "designated hedge" will be offset by any decrease in
value (whether realized or not) of the offsetting hedging position during the
period of the hedge for purposes of determining whether its corresponding Fund
satisfies the Short-Short Limitation. Thus, only the net gain (if any) from the
designated hedge will be included in gross income for purposes of that
limitation. Each Portfolio intends that, when it engages in hedging
transactions, it will qualify for this treatment, but at the present time it is
not clear whether this treatment will be available for all those transactions.
To the extent this treatment is not available, a Portfolio may be forced to
defer the closing out of certain options and Futures, beyond the time when it
otherwise would be advantageous to do so, in order for the Fund to continue to
qualify as a RIC.
Futures that are subject to section 1256 of the Code (other than those that are
part of a "mixed straddle") ("Section 1256 Contracts") and that are held by a
Portfolio at the end of its taxable year generally will be deemed to have been
sold at market value for federal income tax purposes. Sixty percent of any net
gain or loss recognized on these deemed sales, and 60% of any net realized gain
or loss from any actual sales of Section 1256 Contracts, will be treated as
long-term capital gain or loss, and the balance will be treated as short-term
capital gain or loss.
TAXATION OF THE FUNDS' SHAREHOLDERS
Dividends and other distributions declared by a 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.
Statement of Additional Information Page 23
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
A portion of the dividends from a Fund's investment company taxable income
(whether paid in cash or reinvested in additional shares) may be eligible for
the dividends-received deduction allowed to corporations. The eligible portion
may not exceed the aggregate dividends received by a Fund (directly or through a
Portfolio) from U.S. corporations. However, dividends received by a corporate
shareholder and deducted by it pursuant to the dividends-received deduction may
be subject indirectly to the alternative minimum tax.
If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares. Investors
also should be aware that if shares are purchased shortly before the record date
for any dividend or other distribution, the shareholder will pay full price for
the shares and receive some portion of the price back as a taxable distribution.
Dividends paid by a Fund to a shareholder who, as to the United States, is a
nonresident alien individual, nonresident alien fiduciary of a trust or estate,
foreign corporation or foreign partnership ("foreign shareholder") generally
will be subject to U.S. withholding tax (at a rate of 30% or lower treaty rate).
Withholding will not apply if a dividend paid by a Fund to a foreign shareholder
is "effectively connected with the conduct of a U.S. trade or business," in
which case the reporting and withholding requirements applicable to domestic
shareholders will apply. A distribution of net capital gain by a Fund to a
foreign shareholder generally will be subject to U.S. federal income tax (at the
rates applicable to domestic persons) only if the distribution is "effectively
connected" or the foreign shareholder is treated as a resident alien individual
for federal income tax purposes.
The foregoing is a general and abbreviated summary of certain federal tax
considerations affecting the Funds, their shareholders and the Portfolios.
Investors are urged to consult their own tax advisers for more detailed
information and for information regarding any foreign, state and local taxes
applicable to distributions received from a Fund.
Statement of Additional Information Page 24
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
LIECHTENSTEIN GLOBAL TRUST
Liechtenstein Global Trust AG, formerly BIL GT Group, is composed of the Manager
and its worldwide affiliates. Other worldwide affiliates of Liechtenstein Global
Trust include LGT Bank in Liechtenstein, formerly Bank in Liechtenstein, an
international financial services institution founded in 1920. LGT Bank in
Liechtenstein has principal offices in Vaduz, Liechtenstein. Its subsidiaries
currently include LGT Bank in Liechtenstein (Deutschland) GmbH, formerly Bank in
Liechtenstein (Frankfurt) GmbH, and LGT Asset Management AG, formerly Bilfinanz
und Verwaltung AG, in Zurich, Switzerland.
Worldwide asset management affiliates also currently include LGT Asset
Management PLC, formerly G.T. Management PLC, in London; LGT Asset Management
Ltd., formerly G.T. Management (Asia) Ltd., in Hong Kong; LGT Asset Management
Ltd., formerly G.T. Management (Japan), in Tokyo; LGT Asset Management Pte.
Ltd., formerly G.T. Management (Singapore) PTE Ltd., in Singapore; LGT Asset
Management Ltd., formerly G.T. Management (Australia) Ltd., in Sydney; and LGT
Asset Management GmbH, formerly BIL Asset Management GmbH, in Frankfurt.
CUSTODIAN
State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts
02110, acts as custodian of the Portfolios' assets.
INDEPENDENT ACCOUNTANTS
The Company's and the Portfolios' independent accountants are Coopers & Lybrand
L.L.P., One Post Office Square, Boston, Massachusetts 02109. Coopers & Lybrand
L.L.P. conducts annual audits of the Funds and the Portfolios, assists in the
preparation of the Funds' and the Portfolios' federal and state income tax
returns and consults with the Company and the Funds and Growth Portfolio and the
Portfolios as to matters of accounting, regulatory filings and federal and state
income taxation.
The audited financial statements of the Company and Growth Portfolio included in
this Statement of Additional Information have been examined by Coopers & Lybrand
L.L.P. as stated in their opinion appearing herein and are included in reliance
upon such opinion given upon the authority of that firm as experts in accounting
and auditing.
USE OF NAME
The Manager has granted the Company the right to use the "GT" and "GT Global"
names and has reserved the right to withdraw its consent to the use of such
names by the Company at any time, or to grant the use of such names to any other
company.
SHAREHOLDER LIABILITY
Under certain circumstances, shareholders of a Fund may be held personally
liable for the obligations of the Fund. The Company's Declaration of Trust
provides that shareholders shall not be subject to any personal liability for
the acts or obligations of a Fund or the Company and that every written
agreement, obligation or other undertaking made or issued by a Fund or the
Company shall contain a provision to the effect that shareholders are not
personally liable thereunder. The Declaration of Trust provides for
indemnification out of the Company's assets under certain circumstances, and
further provides that the Company shall, upon request, assume the defense of any
act or obligation of a Fund or the Company and that the Fund in which the
shareholder holds shares will indemnify the shareholder for all legal and other
expenses incurred therewith. Thus, the risk of any shareholder's incurring
financial loss beyond his or her investment, because of this theoretical
shareholder liability, is limited to circumstances in which the Fund or the
Company itself would be unable to meet its obligations.
Statement of Additional Information Page 25
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
INVESTMENT RESULTS
- --------------------------------------------------------------------------------
STANDARDIZED RETURNS
Each Fund's "Standardized Returns," as referred to in the Prospectus (see "Other
Information -- Performance Information" in the Prospectus), is calculated
separately for Class A, Class B and Advisor Class shares of each Fund, as
follows: Standardized Return (average annual total return ("T")) is computed by
using the ending redeeming value ("ERV") of a hypothetical initial investment of
$1,000 ("P") over a period of years ("n") according to the following formula as
required by the SEC: P(1+T) to the (n)th power = ERV. The following assumptions
will be reflected in computations made in accordance with this formula: (1) for
Class A shares, deduction of the maximum sales charge of 4.75% from the $1,000
initial investment; (2) for Class B shares, deduction of the applicable
contingent deferred sales charge imposed on a redemption of Class B shares held
for the period; (3) for Advisor Class shares, deduction of a sales charge is not
applicable; (4) reinvestment of dividends and other distributions at net asset
value on the reinvestment date determined by the Company's Board of Trustees;
and (5) a complete redemption at the end of any period illustrated.
The Standardized Returns for the Class A, Class B and Advisor Class shares of
the Small Cap Fund, stated as average annualized total returns for the periods
shown, were:
<TABLE>
<CAPTION>
SMALL CAP
SMALL CAP SMALL CAP FUND
FUND FUND (ADVISOR
PERIOD (CLASS A) (CLASS B) CLASS)
- -------------------------------------------------- ----------- ----------- ------------
<S> <C> <C> <C>
Fiscal year ended December 31, 1996............... 8.40% 8.14% 14.22%
October 18, 1995 (commencement of operations)
through December 31, 1996........................ 9.81% 10.38% 14.76%
</TABLE>
The Standardized Returns for the Class A, Class B and Advisor Class shares of
the America Value Fund, stated as average annualized total returns for the
periods shown, were:
<TABLE>
<CAPTION>
AMERICA
AMERICA AMERICA VALUE FUND
VALUE FUND VALUE FUND (ADVISOR
PERIOD (CLASS A) (CLASS B) CLASS)
- -------------------------------------------------- ----------- ----------- ------------
<S> <C> <C> <C>
Fiscal year ended October 31, 1996................ 9.65% 9.35% 15.58%
October 18, 1995 (commencement of operations)
through December 31, 1996........................ 19.83% 20.28% 23.68%
</TABLE>
NON-STANDARDIZED RETURNS
In addition to Standardized Returns, each Fund also may include in
advertisements, sales literature and shareholder reports other total return
performance data ("Non-Standardized Return"). Non-Standardized Return is
calculated separately for Class A, Class B and Advisor Class shares of each Fund
and may be calculated according to several different formulas. Non-Standardized
Returns may be quoted for the same or different time periods for which
Standardized Returns are quoted. Non-Standardized Returns for Class A and Class
B shares may or may not take sales charges into account; performance data
calculated without taking the effect of sales charges into account will be
higher than data including the effect of such charges. Advisor Class shares are
not subject to sale charges.
Aggregate Non-Standardized Return ("T") is computed by using the ending value of
the account ("VOA") of a hypothetical initial investment of $1,000 ("P")
according to the following formula: T=(VOA/P)-1. Aggregate Non-Standardized
Return assumes reinvestment of dividends and other distributions.
The aggregate Non-Standardized Returns (not taking sales charges into account)
for the Class A, Class B and Advisor Class shares of the Small Cap Fund, stated
as aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
SMALL CAP
SMALL CAP SMALL CAP FUND
FUND FUND (ADVISOR
PERIOD (CLASS A) (CLASS B) CLASS)
- -------------------------------------------------- ----------- ----------- ------------
<S> <C> <C> <C>
October 18, 1995 (commencement of operations)
through December 31, 1996........................ 17.49% 16.61% 18.01%
</TABLE>
Statement of Additional Information Page 26
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
The aggregate Non-Standardized Returns (not taking sales charges into account)
for the Class A, Class B and Advisor Class shares of the America Value Fund,
stated as aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
AMERICA
AMERICA AMERICA VALUE FUND
VALUE FUND VALUE FUND (ADVISOR
PERIOD (CLASS A) (CLASS B) CLASS)
- -------------------------------------------------- ----------- ----------- ------------
<S> <C> <C> <C>
October 18, 1995 (commencement of operations)
through December 31, 1996........................ 28.52% 27.55% 29.13%
</TABLE>
Each Fund's investment results will vary from time to time depending upon market
conditions, the composition of each Fund's portfolio and operating expenses of
each Fund, so that current or past yield or total return should not be
considered representative of what an investment in each Fund may earn in any
future period. These factors and possible differences in the methods used in
calculating investment results should be considered when comparing each Fund's
investment results with those published for other investment companies and other
investment vehicles. Each Fund's results also should be considered relative to
the risks associated with such Fund's investment objective and policies.
In advertising and sales materials, GT Global may make reference to or discuss
its products, services and accomplishments. Among these accomplishments are that
in 1983 GT Global provided assistance to the government of Hong Kong in linking
its currency to the U.S. dollar, and that in 1987 Japan's Ministry of Finance
licensed LGT Asset Management Ltd. (Japan) as one of the first foreign
discretionary investment managers for Japanese investors. Such accomplishments,
however, should not be viewed as an endorsement of the Manager or GT Global by
the government of Hong Kong, Japan's Ministry of Finance or any other government
or government agency. Nor do any such accomplishments of the Manager or GT
Global provide any assurance that the GT Global Mutual Funds' investment
objectives will be achieved.
IMPORTANT POINTS TO NOTE ABOUT DATA RELATING TO WORLD EQUITY AND BOND MARKETS
Each Fund and GT Global may from time to time in advertisements, sales
literature and reports furnished to present and prospective shareholders compare
the Fund with the following:
(1) The Lehman Bros. Government/Corporate Bond Index, which is a
comprehensive measure of all public obligations of the U.S. Treasury
(excluding flower bonds and foreign targeted issues), all publicly issued
debt of agencies of the U.S. Government (excluding mortgage backed
securities), and all public, fixed rate, non-convertible investment grade
domestic corporate debt rated at least Baa by Moody's, or BBB by S&P, or, in
the case of nonrated bonds, BBB by Fitch Investors Service, Inc. ("Fitch")
(excluding Collateralized Mortgage Obligations).
(2) The Consumer Price Index, which is a measure of the average change
in prices over time in a fixed market basket of goods and services (e.g.,
food, clothing, shelter, fuels, transportation fares, charges for doctors'
and dentists' services, prescription medicines, and other goods and services
that people buy for day-to-day living). There is inflation risk which does
not affect a security's value but its purchasing power i.e. the risk of
changing price levels in the economy that affects security prices or the
price of goods and services.
(3) Data and mutual fund rankings published or prepared by Lipper
Analytical Data Services, Inc. ("Lipper"), CDA/Wiesenberger Investment
Companies Service ("CDA/Wiesenberger"), Morningstar, Inc. and/or other
companies that rank and/or compare mutual funds by overall performance,
investment objectives, assets, expense levels, periods of existence and/or
other factors. In this regard each Fund may be compared to the Fund's "peer
group" as defined by Lipper, CDA/Wiesenberger, Morningstar and/or other
firms, as applicable, or to specific funds or groups of funds within or
without such peer group. Lipper generally ranks funds on the basis of total
return, assuming reinvestment of distributions, but does not take sales
charges or redemption fees into consideration, and is prepared without
regard to tax consequences. In addition to the mutual fund rankings, the
Fund's performance may be compared to mutual fund performance indices
prepared by Lipper. Morningstar is a mutual fund rating service that also
rates mutual funds on the basis of risk-adjusted performance. Morningstar
ratings are calculated from a fund's three, five and ten year average annual
returns with appropriate fee adjustments and a risk factor that reflects
fund performance relative to the three-month U.S. Treasury bill monthly
returns. Ten percent of the funds in an investment category receive five
stars and 22.5% receive four stars. The ratings are subject to change each
month.
(4) Standard & Poor's 500 Composite Stock Price Index which is a widely
recognized index composed of the capitalization-weighted average of the
prices of 500 of the largest publicly traded stocks in the United States.
(5) Salomon Brothers Broad Investment Grade Index which is a widely used
index composed of U.S. domestic government, corporate and mortgage-backed
fixed income securities.
(6) Dow Jones Industrial Average.
Statement of Additional Information Page 27
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
(7) CNBC/Financial News Composite Index.
(8) Morgan Stanley Capital International World Indices, including, among
others, the Morgan Stanley Capital International U.S. Index.
(9) Datastream and Worldscope each is an on-line database retrieval
service for information including, but not limited to, international
financial and economic data.
(10) Various publications including ratings agencies such as Moody's, S&P
and Fitch.
(11) Wilshire Associates which is an on-line database for international
financial and economic data including performance measure for a wide range
of securities.
(12) Bank Rate National Monitor Index, which is an average of the quoted
rates for 100 leading banks and thrifts in ten U.S. cities.
(13) Average of Savings Accounts, which is a measure of all kinds of
savings deposits, including longer-term certificates (based on figures
supplied by the U.S. League of Savings Institutions). Savings accounts offer
a guaranteed rate of return on principal, but no opportunity for capital
growth. During a portion of the period, the maximum rates paid on some
savings deposits were fixed by law.
Indices, economic and financial data prepared by the research departments of
various financial organizations, such as Salomon Brothers, Inc., Lehman
Brothers, Merrill Lynch, Pierce, Fenner & Smith, Inc., J. P. Morgan, Morgan
Stanley, Smith Barney, S.G. Warburg, Jardine Fleming, The Bank for International
Settlements, Asian Development Bank, Bloomberg, L.P., and Ibbottson Associates
may be used, as well as information reported by the Federal Reserve and the
respective Central Banks of various nations. In addition, GT Global may use
performance rankings, ratings and commentary reported periodically in national
financial publications, including but not limited to, Money Magazine, Mutual
Fund Magazine, Smart Money, Global Finance, EuroMoney, Financial World, Forbes,
Fortune, Business Week, Latin Finance, the Wall Street Journal, Emerging Markets
Weekly, Kiplinger's Guide To Personal Finance, Barron's, The Financial Times,
USA Today, The New York Times, Far Eastern Economic Review, The Economist,
Investors Business Daily, Congressional Quarterly and Investors Business Digest.
Each Fund may compare its performance to that of other compilations or indices
of comparable quality to those listed above and other indices which may be
developed and made available in the future.
Information relating to foreign market performance, capitalization and
diversification is based on sources believed to be reliable, but which may be
subject to revision and which has not been independently verified by the Company
or GT Global. The authors and publishers of such material are not to be
considered as "experts" under the 1933 Act, as amended, on account of the
inclusion of such information herein.
GT Global believes that this information may be useful to investors considering
whether and to what extent to diversify their invesments through the purchase of
mutual funds investing in securities on a global basis. However, this data is
not a representation of the past performance of any of these Funds, nor is it a
prediction of such performance. The performance of the Funds will differ from
the historical performance of relevant indices. The performance of indices does
not take expenses into account, while each Fund incurs expenses in its
operations, which will reduce performance. Each Fund is actively managed, I.E.,
the Manager, as each Fund's investment manager, actively purchases and sells
securities in seeking each Fund's investment objective. Moreover, each Fund may
invest a portion of its assets in corporate bonds, while certain indices relate
only to government bonds. Each of these factors will cause the performance of
each Fund to differ from relevant indices.
From time to time, each Fund and GT Global may refer to the number of
shareholders in the Funds or the aggregate number of shareholders in all GT
Global Mutual Funds or the dollar amount of each Fund's assets under management
in advertising materials.
GT Global believes each Fund is an appropriate investment for long-term
investment goals including funding retirement, paying for education or
purchasing a house. GT Global may provide information designed to help
individuals understand their investment goals and explore various financial
strategies. For example, GT Global may describe general principles of investing,
such as asset allocation, diversification and risk tolerance. Each Fund does not
represent a complete investment program and the investors should consider each
Fund as appropriate for a portion of their overall investment portfolio with
regard to their long-term investment goals. There is no assurance that any such
information will lead to achieving these goals or guarantee future results.
Statement of Additional Information Page 28
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
From time to time, GT Global may refer to or advertise the names of such
companies, or their products although there can be no assurance that any GT
Global Mutual Fund may own the securities of these companies.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical returns
of the capital markets in the United States, including common stocks, small
capitalization stocks, long-term corporate bonds, intermediate-term government
bonds, long-term government bonds, Treasury bills, the U.S. rate of inflation
(based on the CPI), and combinations of various capital markets. The performance
of these capital markets are based on the returns of different indices.
GT Global Mutual Funds may use the performance of these capital markets in order
to demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any of
these capital markets. The risks associated with the security types in any
capital market may or may not correspond directly to those of the funds.
Ibbotson calculates total returns in the same method as the funds. The funds may
also compare performance to that of other compilations or indices that may be
developed and made available in the future.
Each Fund may quote various measures of volatility and benchmark correlation
such as beta, standard deviation and R(2) in advertising. In addition, each Fund
may compare these measures to those of other funds. Measures of volatility seek
to compare each Fund's historical share price fluctuations or total returns
compared to those of a benchmark. All measures of volatility and correlation are
calculated using averages of historical data.
Each Fund may advertise examples of the effects of periodic investment plans,
including the principle of dollar cost averaging programs. In such a program, an
investor invests a fixed dollar amount in a fund at periodic intervals, thereby
purchasing fewer shares when prices are high and more shares when prices are
low. While such a strategy does not assure a profit or guard against loss in a
declining market, the investor's average cost per share can be lower than if
fixed numbers of shares are purchased at the same intervals. In evaluating such
a plan, investors should consider their ability to continue purchasing shares
through periods of low price levels.
Each Fund may be available for purchase through retirement plans or other
programs offering deferral of income taxes, which may produce superior after-tax
returns over time. For example, a $10,000 investment earning a taxable return of
10% annually would have an after-tax value of $17,976 after ten years, assuming
tax was deducted from the return each year at a 39.6% rate. An equivalent
tax-deferred investment would have an after-tax value of $19,626 after ten
years, assuming tax was deducted at a 39.6% rate from the deferred earnings at
the end of the ten-year period.
Each Fund may describe in its sales material and advertisements how an investor
may invest in GT Global Mutual Funds through various retirement accounts and
plans that offer deferral of income taxes on investment earnings and may also
enable an investor to make pre-tax contributions. Because of their advantages,
these retirement accounts and plans may produce returns superior to comparable
non-retirement investments. In sales material and advertisements, the Funds may
also discuss these accounts and plans, which include:
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS): If you have earned income from employment
(including self-employment), you can contribute each year to an IRA up to the
lesser of (1) $2,000 for yourself or $4,000 for you and your spouse, regardless
of whether your spouse is employed or (2) 100% of compensation. Some individuals
may be able to take an income tax deduction for the contribution. Regular
contributions may not be made for the year you become 70 1/2 or thereafter.
Please consult your tax advisor for more information.
ROLLOVER IRAS: Individuals who receive distributions from qualified retirement
plans (other than required distributions) and who wish to keep their savings
growing tax-deferred can rollover (or make a direct transfer of) their
distribution to a Rollover IRA. These accounts can also receive rollovers or
transfers from an existing IRA. If an "eligible rollover distribution" from a
qualified employer-sponsored retirement plan is not directly rolled over to an
IRA (or certain qualified plans), withholding at the rate of 20% will be
required for federal income tax purposes. A distribution from a qualified plan
that is not an "eligible rollover distribution," including a distribution that
is one of a series of substantially equal periodic payments, generally is
subject to regular wage withholding or withholding at the rate of 10% (depending
on the type and amount of the distribution), unless you elect not to have any
withholding apply. Please consult your tax advisor for more information.
SEP-IRAS: Simplified employee pension plans ("SEPs" or "SEP-IRAs") provide
self-employed individuals (and any eligible employees) with benefits similar to
Keogh-type plans or Code Section 401(k) plans, but with fewer administrative
requirements and therefore potential lower annual administration expenses.
CODE SECTION 403(B)(7) CUSTODIAL ACCOUNTS: Employees of public schools and most
other not-for-profit organizations can make pre-tax salary reduction
contributions to these accounts.
Statement of Additional Information Page 29
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
PROFIT-SHARING (INCLUDING SECTION 401(K)) AND MONEY PURCHASE PENSION
PLANS: Corporations can sponsor these qualified defined contribution plans for
their employees. A Section 401(k) plan, a type of profit-sharing plan,
additionally permits the eligible, participating employees to make pre-tax
salary reduction contributions to the plan (up to certain limitations).
SIMPLE RETIREMENT PLANS: Employers with no more than 100 employees who do not
maintain another retirement plan may establish a Savings Incentive Match Plan
for Employees ("SIMPLE") either as separate IRAs or as part of a Code Section
401(k) plan. SIMPLEs are not subject to the complicated nondiscrimination rules
that generally apply to qualified retirement plans.
GT Global may from time to time in its sales materials and advertising discuss
the risks inherent in investing. The major types of investment risks are market
risk, industry risk, credit risk, interest risk, liquidity risk and inflation
risk. Risk represents the possibility that you may lose some or all of your
investment over a period of time. A basic tenet of investing is the greater the
potential reward, the greater the risk.
From time to time, the Funds and GT Global will quote data regarding:
industries, companies, individual countries, regions, world stock exchanges, and
economic and demographic statistics from sources GT Global deems reliable
including the economic and financial data of the referenced financial
organizations such as:
1) Stock market capitalization: Morgan Stanley Capital International World
Indices, International Finance Corporation ("IFC") and Datastream.
2) Stock market trading volume: Morgan Stanley Capital International World
Indices and IFC.
3) The number of listed companies: IFC, LGT Guide to World Equity Markets,
Salomon Brothers, Inc., and S.G. Warburg.
4) Wage rates: U.S. Department of Labor Statistics and Morgan Stanley Capital
International World Indices.
5) International industry performance: Morgan Stanley Capital International
World Indices, Wilshire Associates and Salomon Brothers, Inc.
6) Stock market performance: Morgan Stanley Capital International World
Indices, IFC, Datastream, S&P 500, DJIA and Wilshire Associates.
7) The Consumer Price Index and inflation rate: The World Bank, Datastream, IFC
and Ibbotson Assoc.
8) Gross Domestic Product (GDP): Datastream and The World Bank.
9) GDP growth rate: IFC, Datastream and The World Bank.
10) Population: The World Bank, Datastream and United Nations.
11) Average annual growth rate (%) of population: The World Bank, Datastream and
United Nations.
12) Age distribution within populations: Organization for Economic Cooperation
and Development and United Nations.
13) Total exports and imports by year: IFC, The World Bank and Datastream.
14) Top three companies by country, industry or market: IFC, LGT Guide to World
Equity Markets, Salomon Brothers Inc., and S.G. Warburg.
15) Foreign direct investments to developing countries: The World Bank and
Datastream.
16) Supply, consumption, demand and growth in demand of certain products,
services and industries, including, but not limited to electricity, water,
transportation, construction materials, natural resources, technology, other
basic infrastructure, financial services, health care services and supplies,
consumer products and services and telecommunications equipment and services
(sources of such information may include The World Bank, OECD, IMF,
Bloomberg and Datastream).
17) Standard deviation and performance returns for U.S. and non-U.S. equity and
bond markets: Morgan Stanley Capital International.
18) Countries restructuring their debt, including those under the Brady Plan:
the Manager.
19) Political and economic structure of countries: Economist Intelligence Unit.
Statement of Additional Information Page 30
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
20) Government and corporate bonds -- credit ratings, yield to maturity and
performance returns: Salomon Brothers, Inc.
21) Dividend yields for U.S. and non-U.S. companies: Bloomberg.
From time to time, GT Global may include in its advertisement and sales material
information about privatization, which is an economic process involving the sale
of state-owned companies to the private sector.
In advertising and sales materials, GT Global may make reference to or discuss
its products, services and accomplishments. Among these accomplishments are that
in 1983 GT Global provided assistance to the government of Hong Kong in linking
its currency to the U.S. dollar, and that in 1987 Japan's Ministry of Finance
licensed LGT Asset Management Ltd. (Japan) as one of the first foreign
discretionary investment managers for Japanese investors. Such accomplishments,
however, should not be viewed as an endorsement of the Manager or GT Global by
the government of Hong Kong, Japan's Ministry of Finance or any other government
or government agency. Nor do any such accomplishments of the Manager or GT
Global provide any assurance that the GT Global Mutual Funds' investment
objectives will be achieved.
GT GLOBAL ADVANTAGE
As part of Liechtenstein Global Trust, GT Global continues a 75-year tradition
of service to individuals and institutions. Today we bring investors a
combination of experience, worldwide resources, a global perspective, investment
talent and a time tested investment discipline. With investment professionals in
nine offices worldwide, we witness world events and economic developments
firsthand.
The key to achieving consistent results is following a disciplined investment
process. Our approach to asset allocation takes advantage of GT Global's
worldwide presence and global perspective. Our "macroeconomic" world view
determines our overall strategy of regional, country and sector allocations. Our
bottom up process of security selection combines fundamental research with
quantitative analysis through our proprietary models.
Built in checks and balances strengthen the process, enhancing professional
experience and judgment with an objective assessment of risk. Ultimately, each
security we select has passed a ranking system that helps our portfolio teams
determine when to buy and when to sell.
Statement of Additional Information Page 31
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF COMMERCIAL PAPER RATINGS
Moody's employs the designations "Prime-1" and "Prime-2" to indicate commercial
paper having the highest capacity for timely repayment. Issuers rated Prime-1
(or supporting institutions) have a superior ability for repayment of senior
short-term debt obligations. Prime-1 repayment ability will often be evidenced
by many of the following characteristics: leading market positions in
well-established industries; high rates of return on funds employed;
conservative capitalization structure with moderate reliance on debt and ample
asset protection; broad margins in earnings coverage of fixed financial charges
and high internal cash generation; and well-established access to a range of
financial markets and assured sources of alternate liquidity. Issuers rated
Prime-2 (or supporting institutions) have a strong ability for repayment of
senior short-term debt obligations. This normally will be evidenced by many of
the characteristics cited above but to a lesser degree. Earnings trends and
coverage ratios, while sound may be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
S&P rates commercial paper in four categories. "A-1" and "A-2" are the two
highest commercial paper rating categories. A-1 -- This highest category
indicates that the degree of safety regarding timely payment is strong. Those
issues determined to possess extremely strong safety characteristics will be
denoted with a plus sign (+) designation. A-2 -- Capacity for timely payment on
issues with this designation is satisfactory. However, the relative degree of
safety is not as high as for issues designated "A-1."
DESCRIPTION OF BOND RATINGS
Moody's rates the long-term debt securities issued by various entities from
"Aaa" to "C." Investment grade ratings are as follows:
Aaa -- Best quality. These securities carry the smallest degree of
investment risk and are generally referred to as "gilt edged." Interest
payments are protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- High quality by all standards. Together with the Aaa group they
comprise what are generally known as high grade bonds. They are rated lower
than the best bond 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 the Aaa securities.
A -- Upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa -- Medium-grade obligations (i.e., they are neither highly protected
nor poorly secured). Interest payments and principal security appear
adequate for the present but certain protective elements may be lacking or
may be characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
ABSENCE OF RATING: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies
that are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not
published in Moody's publications.
Statement of Additional Information Page 32
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa to B in its corporate bond rating system. The modifier 1
indicates that the company ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issue ranks in the lower end of its generic rating category.
S&P rates the securities debt of various entities in categories ranging from
"AAA" to "D" according to quality. Investment grade ratings are as follows:
AAA -- Highest rating. Capacity to pay interest and repay principal is
extremely strong.
AA -- High grade. Very strong capacity to pay interest and repay
principal. Generally, these bonds differ from AAA issues only in a small
degree.
A -- Have a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of change
in circumstances and economic conditions, than debt in higher rated
categories.
BBB -- Regarded as having adequate capacity to pay interest and repay
principal. These bonds normally exhibit adequate protection parameters, but
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal than for
debt in higher rated categories.
PLUS (+) OR MINUS (-): The ratings from "AA" to "BBB" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NR: Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements of each Fund as of December 31, 1996 and for
the fiscal year then ended appear on the following pages.
Statement of Additional Information Page 33
<PAGE>
GT GLOBAL AMERICA FUNDS
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
GT Global Growth Series:
We have audited the accompanying statements of assets and liabilities of GT
Global America Mid Cap Growth Fund (previously GT Global America Growth Fund),
GT Global America Small Cap Growth Fund - Consolidated, and GT Global America
Value Fund - Consolidated, three of the funds organized as a series of GT Global
Growth Series, including the portfolios of investments, as of December 31, 1996,
the related statements of operations for the year then ended, the statements of
changes in net assets and the financial highlights for each of the periods
indicated herein. These financial statements and the financial highlights are
the responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1996, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial positions of
the GT Global America Mid Cap Growth Fund (previously GT Global America Growth
Fund), GT Global America Small Cap Growth Fund - Consolidated, and GT Global
America Value Fund - Consolidated, as of December 31, 1996, the results of their
operations for the year then ended, the changes in their net assets and the
financial highlights for each of the periods indicated herein, in conformity
with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
FEBRUARY 14, 1997
F1
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Shares (Note 1) Assets
- ---------------------------------------------------------------------- ----------- ------------ -------------
<S> <C> <C> <C>
Services (31.0%)
Caribiner International, Inc.-/- ................................... 17,700 $ 889,425 4.5
CONSUMER SERVICES
Extended Stay America, Inc.-/- ..................................... 33,200 668,150 3.4
LEISURE & TOURISM
The Sports Authority, Inc.-/- ...................................... 29,250 636,188 3.2
RETAILERS-OTHER
Proffitt's, Inc.-/- ................................................ 14,456 533,065 2.7
RETAILERS-OTHER
Quality Dining, Inc.-/- ............................................ 28,400 507,650 2.6
RESTAURANTS
WinStar Communications, Inc.-/- .................................... 20,900 438,900 2.2
WIRELESS COMMUNICATIONS
Hughes Supply, Inc. ................................................ 9,800 422,625 2.2
CONSUMER SERVICES
Measurex Corp. ..................................................... 16,900 405,600 2.1
CONSUMER SERVICES
Harveys Casino Resorts ............................................. 23,000 388,125 2.0
LEISURE & TOURISM
Intercel, Inc.-/- .................................................. 25,000 306,250 1.6
WIRELESS COMMUNICATIONS
Stein Mart, Inc.-/- ................................................ 14,700 297,675 1.5
RETAILERS-OTHER
Rio Hotel and Casino, Inc.-/- ...................................... 11,700 171,113 0.9
LEISURE & TOURISM
Players International, Inc.-/- ..................................... 30,300 162,863 0.8
LEISURE & TOURISM
Lamar Advertising Co.-/- ........................................... 5,000 121,250 0.6
BUSINESS & PUBLIC SERVICES
Grey Advertising, Inc. ............................................. 300 75,000 0.4
BUSINESS & PUBLIC SERVICES
Marker International-/- ............................................ 10,000 53,750 0.3
WHOLESALE & INTERNATIONAL TRADE
------------
6,077,629
------------
Consumer Durables (15.3%)
Ethan Allen Interiors, Inc. ........................................ 25,100 966,345 4.9
HOUSING
Syratech Corp.-/- .................................................. 27,600 869,400 4.4
APPLIANCES & HOUSEHOLD
Champion Enterprises, Inc.-/- ...................................... 38,068 742,326 3.8
HOUSING
Southern Energy Homes, Inc.-/- ..................................... 20,100 231,150 1.2
HOUSING
REX Stores Corp.-/- ................................................ 24,700 200,688 1.0
CONSUMER ELECTRONICS
------------
3,009,909
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F2
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Shares (Note 1) Assets
- ---------------------------------------------------------------------- ----------- ------------ -------------
<S> <C> <C> <C>
Finance (14.0%)
Sovereign Bancorp, Inc. ............................................ 47,500 $ 623,438 3.2
BANKS-REGIONAL
Storage USA, Inc. .................................................. 15,500 583,188 3.0
REAL ESTATE
Bradley Real Estate, Inc. .......................................... 22,800 410,400 2.1
REAL ESTATE INVESTMENT TRUST
Mid-America Apartment Communities, Inc. ............................ 9,800 282,975 1.4
REAL ESTATE
Toronto-Dominion Bank{\/} (.) ...................................... 9,219 235,085 1.2
BANKS-REGIONAL
AmVestors Financial Corp. .......................................... 15,900 234,525 1.2
INSURANCE-LIFE
Game Financial Corp.-/- ............................................ 26,900 201,750 1.0
CONSUMER FINANCE
Union Planters Corp. ............................................... 4,575 178,425 0.9
BANKS-REGIONAL
------------
2,749,786
------------
Capital Goods (13.3%)
Belden, Inc. ....................................................... 22,000 814,000 4.2
ELECTRICAL PLANT/EQUIPMENT
Tekelec-/- ......................................................... 40,000 630,000 3.2
TELECOM EQUIPMENT
Plasma & Materials Technologies, Inc.-/- ........................... 37,500 440,625 2.2
ELECTRICAL PLANT/EQUIPMENT
Belmont Homes, Inc.-/- ............................................. 42,600 410,025 2.1
CONSTRUCTION
American Buildings Co.-/- .......................................... 9,500 226,813 1.2
CONSTRUCTION
Cuno, Inc.-/- ...................................................... 5,500 81,813 0.4
ENVIRONMENTAL
------------
2,603,276
------------
Technology (5.5%)
Dallas Semiconductor Corp. ......................................... 24,300 558,900 2.8
SEMICONDUCTORS
Logicon, Inc. ...................................................... 14,300 521,950 2.7
SOFTWARE
------------
1,080,850
------------
Materials/Basic Industry (4.9%)
Falcon Building Products, Inc.-/- .................................. 32,700 482,325 2.5
BUILDING MATERIALS & COMPONENTS
Fibreboard Corp.-/- ................................................ 11,500 388,125 2.0
PAPER/PACKAGING
Commercial Intertech Corp. ......................................... 5,500 74,938 0.4
METALS - NON-FERROUS
------------
945,388
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F3
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Shares (Note 1) Assets
- ---------------------------------------------------------------------- ----------- ------------ -------------
<S> <C> <C> <C>
Consumer Non-Durables (4.0%)
Coachmen Industries, Inc. .......................................... 27,300 $ 774,638 4.0
------------
RECREATION
Health Care (1.8%)
Cohr, Inc.-/- ...................................................... 12,800 345,600 1.8
MEDICAL TECHNOLOGY & SUPPLIES
------------ -----
TOTAL EQUITY INVESTMENTS (cost $18,365,112) .......................... 17,587,076 89.8
------------ -----
<CAPTION>
Value % of Net
Repurchase Agreement (Note 1) Assets
- ---------------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C>
Dated December 31, 1996, with State Street Bank & Trust Co., due
January 2, 1997, for an effective yield of 6.25%, collateralized by
$1,570,000 U.S. Treasury Bonds, 8.125% due 8/15/19 (market value of
collateral is $1,883,365, including accrued interest). (cost
$1,841,320) ....................................................... 1,841,320 9.4
------------ -----
TOTAL INVESTMENTS (cost $20,206,432) * ............................... 19,428,396 99.2
Other Assets and Liabilities ......................................... 148,920 0.8
------------ -----
NET ASSETS ........................................................... $ 19,577,316 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
(.) Country of origin for this security is Canada. All other securities
on this portfolio originate from the U.S.
* For Federal income tax purposes, cost is $20,242,867 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 1,368,000
Unrealized depreciation: (2,182,471)
-------------
Net unrealized depreciation: $ (814,471)
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F4
<PAGE>
GT GLOBAL AMERICA VALUE FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Shares (Note 1) Assets
- ---------------------------------------------------------------------- ----------- ------------ -------------
<S> <C> <C> <C>
Finance (28.8%)
Travelers Group, Inc. .............................................. 5,600 $ 254,100 3.1
INSURANCE - MULTI-LINE
Allstate Corp. ..................................................... 3,575 206,903 2.5
INSURANCE - MULTI-LINE
Chase Manhattan Corp. .............................................. 2,275 203,044 2.5
BANKS-MONEY CENTER
BankAmerica Corp. .................................................. 1,675 167,081 2.0
BANKS-SUPER REGIONAL
First Union Corp. (N.C.) ........................................... 2,250 166,500 2.0
BANKS-SUPER REGIONAL
Student Loan Marketing Association ................................. 1,775 165,297 2.0
OTHER FINANCIAL
Norwest Corp. ...................................................... 3,725 162,038 2.0
OTHER FINANCIAL
NationsBank Corp. .................................................. 1,650 161,288 2.0
BANKS-SUPER REGIONAL
Aetna, Inc. ........................................................ 1,800 144,000 1.8
INSURANCE-LIFE
Exel Ltd. .......................................................... 3,400 128,775 1.6
INSURANCE - PROPERTY-CASUALTY
Simon DeBartolo Group, Inc. ........................................ 3,150 97,650 1.2
REAL ESTATE INVESTMENT TRUST
Bankers Trust New York Corp. ....................................... 975 84,094 1.0
BANKS-MONEY CENTER
Household International, Inc. ...................................... 900 83,025 1.0
OTHER FINANCIAL
Corestates Financial Corp. ......................................... 1,550 80,406 1.0
BANKS-SUPER REGIONAL
Starwood Lodging Trust ............................................. 1,350 74,419 0.9
REAL ESTATE INVESTMENT TRUST
Beacon Properties Corp. ............................................ 1,350 49,444 0.6
REAL ESTATE INVESTMENT TRUST
Highwoods Properties, Inc. ......................................... 1,425 48,094 0.6
REAL ESTATE INVESTMENT TRUST
Equity Residential Property Trust .................................. 1,075 44,344 0.5
REAL ESTATE INVESTMENT TRUST
Felcor Suite Hotels, Inc. .......................................... 1,225 43,334 0.5
REAL ESTATE
------------
2,363,836
------------
Services (22.6%)
Tuesday Morning Corp.-/- ........................................... 13,200 282,145 3.4
RETAILERS-OTHER
AT&T Corp. ......................................................... 5,650 245,775 3.0
TELEPHONE - LONG DISTANCE
Dayton Hudson Corp. ................................................ 5,450 213,913 2.6
RETAILERS-OTHER
Burlington Northern, Inc. .......................................... 2,400 207,300 2.5
TRANSPORTATION - ROAD & RAIL
</TABLE>
The accompanying notes are an integral part of the financial statements.
F5
<PAGE>
GT GLOBAL AMERICA VALUE FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Shares (Note 1) Assets
- ---------------------------------------------------------------------- ----------- ------------ -------------
<S> <C> <C> <C>
Services (Continued)
Sears, Roebuck and Co. ............................................. 4,350 $ 200,644 2.4
RETAILERS-OTHER
GTE Corp. .......................................................... 3,825 174,038 2.1
TELEPHONE NETWORKS
Time Warner, Inc. .................................................. 4,225 158,438 1.9
BROADCASTING & PUBLISHING
Federated Department Stores, Inc.-/- ............................... 3,700 126,263 1.5
RETAILERS-APPAREL
Comcast Corp. "A" .................................................. 5,075 90,398 1.1
CABLE TELEVISION
The Limited, Inc. .................................................. 4,725 86,822 1.1
RETAILERS-APPAREL
Telefonica De Peru - ADR{\/} (.) ................................... 4,400 83,050 1.0
TELEPHONE NETWORKS
------------
1,868,786
------------
Energy (18.5%)
Tosco Corp. ........................................................ 2,400 189,900 2.3
GAS PRODUCTION & DISTRIBUTION
Amerada Hess Corp. ................................................. 2,925 169,284 2.1
OIL
Texaco, Inc. ....................................................... 1,725 169,266 2.1
OIL
CMS Energy Corp. ................................................... 3,950 132,819 1.6
ENERGY EQUIPMENT & SERVICES
Illinova Corp. ..................................................... 4,775 131,313 1.6
ENERGY EQUIPMENT & SERVICES
Occidental Petroleum Corp. ......................................... 5,350 125,056 1.5
OIL
Amoco Corp. ........................................................ 1,100 88,550 1.1
OIL
Edison International ............................................... 4,400 87,450 1.1
ELECTRICAL & GAS UTILITIES
Pinnacle West Capital Corp. ........................................ 2,725 86,519 1.1
ELECTRICAL & GAS UTILITIES
Ultramar Diamond Shamrock Corp. .................................... 2,725 86,178 1.0
OIL
Southern Co. ....................................................... 3,800 85,975 1.0
ELECTRICAL & GAS UTILITIES
Mobil Corp. ........................................................ 700 85,575 1.0
OIL
GPU, Inc. .......................................................... 2,525 84,903 1.0
ELECTRICAL & GAS UTILITIES
------------
1,522,788
------------
Materials/Basic Industry (11.4%)
Hercules, Inc. ..................................................... 5,275 228,144 2.8
CHEMICALS
Aluminum Company of America (ALCOA) ................................ 2,700 172,125 2.1
METALS - NON-FERROUS
</TABLE>
The accompanying notes are an integral part of the financial statements.
F6
<PAGE>
GT GLOBAL AMERICA VALUE FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Shares (Note 1) Assets
- ---------------------------------------------------------------------- ----------- ------------ -------------
<S> <C> <C> <C>
Materials/Basic Industry (Continued)
W.R. Grace & Co. ................................................... 3,225 $ 166,894 2.0
CHEMICALS
Union Carbide Corporate Holdings Co. ............................... 3,725 152,259 1.9
CHEMICALS
Monsanto Co. ....................................................... 3,250 126,344 1.5
CHEMICALS
Champion International Corp. ....................................... 2,000 86,500 1.1
PAPER/PACKAGING
------------
932,266
------------
Capital Goods (7.7%)
WMX Technologies, Inc. ............................................. 7,100 231,638 2.8
ENVIRONMENTAL
Textron, Inc. ...................................................... 1,800 169,650 2.1
AEROSPACE/DEFENSE
PPG Industries, Inc. ............................................... 2,800 157,150 1.9
MACHINERY & ENGINEERING
AlliedSignal, Inc.-/- .............................................. 1,150 77,050 0.9
AEROSPACE/DEFENSE
------------
635,488
------------
Consumer Non-Durables (5.1%)
Philip Morris Cos., Inc. ........................................... 2,450 275,931 3.4
FOOD
RJR Nabisco Holdings Corp. ......................................... 2,675 90,950 1.1
TOBACCO
Fruit of the Loom, Inc.-/- ......................................... 1,200 45,450 0.6
TEXTILES & APPAREL
------------
412,331
------------
Consumer Durables (5.0%)
Ford Motor Co. ..................................................... 6,550 208,781 2.5
AUTOMOBILES
Chrysler Corp. ..................................................... 6,125 202,125 2.5
AUTOMOBILES
------------
410,906
------------
Technology (2.7%)
3Com Corp.-/- ...................................................... 3,000 220,125 2.7
------------
NETWORKING
Health Care (2.5%)
Schering-Plough Corp. .............................................. 1,800 116,550 1.4
PHARMACEUTICALS
Meditrust Corp. .................................................... 2,300 92,000 1.1
HEALTH CARE SERVICES
------------
208,550
------------ -----
TOTAL EQUITY INVESTMENTS (cost $8,590,364) ........................... 8,575,076 104.3
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
F7
<PAGE>
GT GLOBAL AMERICA VALUE FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Repurchase Agreement (Note 1) Assets
- ---------------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C>
Dated December 31, 1996, with State Street Bank and Trust Company,
due January 2, 1997, for an effective yield of 6.25%,
collateralized by $285,000 U.S. Treasury Bonds, 8.125% due 8/15/19
(market value of collateral is $350,568, including accrued
interest). (cost $335,058) ........................................ $ 335,058 4.1
------------ -----
TOTAL INVESTMENTS (cost $8,925,422) * ............................... 8,910,134 108.4
Other Assets and Liabilities ......................................... (687,135) (8.4)
------------ -----
NET ASSETS ........................................................... $ 8,222,999 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
(.) Country of origin for this security is Peru. All other securities
on this portfolio originate from the U.S.
* For Federal income tax purposes, cost is $8,932,288 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 247,944
Unrealized depreciation: (270,098)
-------------
Net unrealized depreciation: $ (22,154)
-------------
-------------
</TABLE>
Abbreviations
ADR--American Depository Receipt
The accompanying notes are an integral part of the financial statements.
F8
<PAGE>
GT GLOBAL AMERICA FUNDS
STATEMENTS OF ASSETS
AND LIABILITIES
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT Global
------------------------------
America
Small Cap America
Growth Value
Fund-Consolidated Fund-Consolidated
-------------- --------------
<S> <C> <C>
Assets:
Investments in securities, at value (cost $20,206,432; $591,597,202; and
$8,925,422, respectively) (Note 1)................................................ $19,428,396 $8,910,134
U.S. currency...................................................................... 719 458
Dividends receivable............................................................... 5,419 19,245
Receivable for Fund shares sold.................................................... 243,542 55,384
Receivable for securities sold..................................................... -- 375,200
Receivable from Chancellor LGT Asset Management, Inc. (Note 2)..................... -- 164
Unamortized organizational costs (Note 1).......................................... 67,160 67,160
Miscellaneous receivable........................................................... -- --
Cash held as collateral for securities loaned (Note 1)............................. 383,400 --
-------------- --------------
Total assets..................................................................... 20,128,636 9,427,745
-------------- --------------
Liabilities:
Payable for custodian fees (Note 1)................................................ 1,246 847
Payable for fund accounting fees (Note 2).......................................... 1,316 655
Payable for Fund shares repurchased................................................ -- 145,847
Payable for investment management and administration fees (Note 2)................. 6,085 --
Payable for loan outstanding (Note 1).............................................. -- 1,000,000
Payable for printing and postage expenses.......................................... 28,326 23,712
Payable for professional fees...................................................... 17,368 14,390
Payable for registration and filing fees........................................... 2,236 800
Payable for securities purchased................................................... 88,158 --
Payable for service and distribution expenses (Note 2)............................. 11,436 5,367
Payable for transfer agent fees (Note 2)........................................... 5,396 4,727
Payable for Trustees' fees and expenses (Note 2)................................... 4,769 4,769
Other accrued expenses (Note 1).................................................... 1,484 3,532
Collateral for securities loaned (Note 1).......................................... 383,400 --
-------------- --------------
Total liabilities................................................................ 551,220 1,204,646
Minority interest (Notes 1 & 2).................................................... 100 100
-------------- --------------
Net assets........................................................................... $19,577,316 $8,222,999
-------------- --------------
-------------- --------------
Class A:
Net asset value and redemption price per share ($8,448,005 DIVIDED BY 674,639;
$343,426,924 DIVIDED BY 16,536,083; and $2,528,653 DIVIDED BY 172,644 shares
outstanding, respectively).......................................................... $ 12.52 $ 14.65
-------------- --------------
-------------- --------------
Maximum offering price per share (100/95.25 of $12.52; 100/95.25 of $20.77; and
100/95.25 of $14.65, respectively) *................................................ $ 13.14 $ 15.38
-------------- --------------
-------------- --------------
Class B+
Net asset value and offering price per share ($10,694,097 DIVIDED BY 861,017;
$334,589,970 DIVIDED BY 16,498,419; and $5,503,054 DIVIDED BY 378,527 shares
outstanding, respectively).......................................................... $ 12.42 $ 14.54
-------------- --------------
-------------- --------------
Advisor Class:
Net asset value, offering price per share, and redemption price per share
($435,214 DIVIDED BY 34,597; $1,986,184 DIVIDED BY 95,684; and
$191,292 DIVIDED BY 12,994 shares outstanding, respectively)........................ $ 12.58 $ 14.72
-------------- --------------
-------------- --------------
Net assets consist of:
Paid in capital (Note 4)........................................................... $20,517,740 $7,555,852
Accumulated net realized gain (loss) on investments and foreign currency
transactions...................................................................... (162,388) 682,435
Net unrealized appreciation (depreciation) of investments.......................... (778,036) (15,288)
-------------- --------------
Total -- representing net assets applicable to capital shares outstanding............ $19,577,316 $8,222,999
-------------- --------------
-------------- --------------
<FN>
- ----------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
F9
<PAGE>
GT GLOBAL AMERICA FUNDS
STATEMENTS OF OPERATIONS
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT Global
-------------------------------
America
Small Cap America
Growth Value
Fund-Consolidated Fund-Consolidated
-------------- ---------------
<S> <C> <C>
Investment income: (Note 1)
Interest income.................................................................... $ 139,343 $ 38,541
Dividend income.................................................................... 100,331 73,377
Other income....................................................................... 13,476 --
-------------- ---------------
Total investment income.......................................................... 253,150 111,918
-------------- ---------------
Expenses:
Amortization of organization costs (Note 1)........................................ 17,751 17,751
Custodian fees (Note 1)............................................................ 9,620 11,920
Fund accounting fees (Note 2)...................................................... 3,900 1,472
Insurance expenses................................................................. -- --
Investment management and administration fees (Note 2)............................. 112,316 42,209
Printing and postage expenses...................................................... 84,918 74,018
Professional fees.................................................................. 68,740 63,594
Registration and filing fees....................................................... 46,078 47,078
Service and distribution expenses: (Note 2)
Class A.......................................................................... 25,545 6,742
Class B.......................................................................... 80,691 38,173
Transfer agent fees (Note 2)....................................................... 65,971 26,438
Trustees' fees and expenses (Note 2)............................................... 16,640 16,640
Other expenses (Note 1)............................................................ 2,081 2,935
-------------- ---------------
Total expenses before reductions and reimbursement................................. 534,251 348,970
Expense reductions (Notes 1 & 6)................................................. -- --
Expenses reimbursed by Chancellor LGT Asset Management, Inc. (Note 2)............ (170,585) (206,892)
-------------- ---------------
Total net expenses................................................................. 363,666 142,078
-------------- ---------------
Net investment loss.................................................................. (110,516) (30,160)
-------------- ---------------
Net realized and unrealized gain on investments: (Note 1)
Net realized gain on investments................................................... 1,264,693 733,904
Net realized gain (loss) on foreign currency transactions.......................... (4) --
Net change in unrealized appreciation (depreciation) of investments................ (782,829) (69,965)
-------------- ---------------
Net realized and unrealized gain on investments...................................... 481,860 663,939
-------------- ---------------
Net increase in net assets resulting from operations................................. $ 371,344 $ 633,779
-------------- ---------------
-------------- ---------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F10
<PAGE>
GT GLOBAL AMERICA FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT Global
------------------------------------------------------
America Small Cap America Value
Growth Fund-Consolidated Fund-Consolidated
-------------------------- --------------------------
October 18, October 18,
1995 1995
(commencement (commencement
of of
Year ended operations) Year ended operations)
December to December to
31, December 31, 31, December 31,
1996 1995 1996 1995
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Increase (Decrease) in net assets
Operations:
Net investment income (loss).................................... $(110,516) $ 4,070 $ (30,160) $ 1,048
Net realized gain on investments and foreign currency
transactions................................................... 1,264,689 -- 733,904 --
Net change in unrealized appreciation (depreciation) of
investments.................................................... (782,829) 4,793 (69,965) 54,677
----------- ------------- ----------- -------------
Net increase in net assets resulting from operations.......... 371,344 8,863 633,779 55,725
----------- ------------- ----------- -------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income...................................... -- -- -- --
From net realized gain on investments........................... (564,752) -- (7,007) --
Class B:
Distributions to shareholders: (Note 1)
From net investment income...................................... -- -- -- --
From net realized gain on investments........................... (727,944) -- (14,950) --
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income...................................... -- -- -- --
From net realized gain on investments........................... (28,106) -- (443) --
----------- ------------- ----------- -------------
Total distributions........................................... (1,320,802) -- (22,400) --
----------- ------------- ----------- -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested................ 43,976,336 4,974,031 11,770,124 2,211,337
Decrease from capital shares repurchased........................ (27,455,528) (1,076,928) (6,364,460) (161,106)
----------- ------------- ----------- -------------
Net increase (decrease) from capital share transactions....... 16,520,808 3,897,103 5,405,664 2,050,231
----------- ------------- ----------- -------------
Total increase (decrease) in net assets........................... 15,571,350 3,905,966 6,017,043 2,105,956
Net assets:
Beginning of period............................................. 4,005,966 100,000 2,205,956 100,000
----------- ------------- ----------- -------------
End of period *................................................. 1$9,577,316 $4,005,966 $8,222,999 $2,205,956
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
*Includes undistributed/accumulated net investment income
(loss)........................................................... $ 0 $ 4,070 $ 0 $ 1,048
----------- ------------- ----------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F11
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
Class A Class B
---------------------------- ----------------------------
October 18, October 18,
1995 1995
(commencement (commencement
Year of operations) Year of operations)
ended to December ended to December
December 31, 31, December 31, 31,
1996 (d) 1995 (d) 1996 (d) 1995 (d)
------------ -------------- ------------ --------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 11.80 $ 11.43 $ 11.78 $ 11.43
------------ -------------- ------------ --------------
Income from investment operations:
Net investment income (loss).......... (0.05) ** 0.04* (0.14) ** 0.02*
Net realized and unrealized gain on
investments.......................... 1.69 0.33 1.70 0.33
------------ -------------- ------------ --------------
Net increase from investment
operations......................... 1.64 0.37 1.56 0.35
------------ -------------- ------------ --------------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.92) -- (0.92) --
------------ -------------- ------------ --------------
Total distributions................. (0.92) -- (0.92) --
------------ -------------- ------------ --------------
Net asset value, end of period.......... $ 12.52 $ 11.80 $ 12.42 $ 11.78
------------ -------------- ------------ --------------
------------ -------------- ------------ --------------
Total investment return (c)............. 13.81 % 3.24 %(b) 13.14 % 3.06 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 8,448 $ 1,931 $ 10,694 $ 2,024
Ratio of net investment income (loss) to
average net assets:
With expense reimbursement by
Chancellor LGT Asset Management, Inc.
(Note 2)............................. (0.38)% 1.68 %(a) (1.03)% 1.03 %(a)
Without expense reimbursement by
Chancellor LGT Asset Management,
Inc.................................. (1.47)% (20.52)%(a) (2.12)% (21.17)%(a)
Ratio of expenses to average net assets:
With expense reimbursement by
Chancellor LGT Asset Management, Inc.
(Note 2)............................. 2.00 % 2.00 %(a) 2.65 % 2.65 %(a)
Without expense reimbursement by
Chancellor LGT Asset Management,
Inc.................................. 3.09 % 24.20 %(a) 3.74 % 24.85 %(a)
Portfolio turnover rate+................ 150 % N/A 150 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0489 N/A $ 0.0489 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total Investment Return does not include sales charges.
(d) Calculated based upon weighted average shares outstanding during the
period.
* Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.47), $(0.49), and
$(0.46) for Class A, Class B, and Advisor Class, respectively, from
October 18, 1995 to December 31, 1995.
** Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.19), $(0.28), and
$(0.14) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1996.
+ Portfolio turnover rate and average commission rate paid on portfolio
transactions are calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
The accompanying notes are an integral part of the financial statements.
F12
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
Advisor Class
----------------------------
October 18,
1995
(commencement
Year of operations)
ended to December
December 31, 31,
1996 (d) 1995 (d)
------------ --------------
<S> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 11.81 $ 11.43
------------ --------------
Income from investment operations:
Net investment income (loss).......... --** 0.05*
Net realized and unrealized gain on
investments.......................... 1.69 0.33
------------ --------------
Net increase from investment
operations......................... 1.69 0.38
------------ --------------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.92) --
------------ --------------
Total distributions................. (0.92) --
------------ --------------
Net asset value, end of period.......... $ 12.58 $ 11.81
------------ --------------
------------ --------------
Total investment return (c)............. 14.22 % 3.32 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 435 $ 52
Ratio of net investment income (loss) to
average net assets:
With expense reimbursement by
Chancellor LGT Asset Management, Inc.
(Note 2)............................. (0.03)% 2.03 %(a)
Without expense reimbursement by
Chancellor LGT Asset Management,
Inc.................................. (1.12)% (20.17)%(a)
Ratio of expenses to average net assets:
With expense reimbursement by
Chancellor LGT Asset Management, Inc.
(Note 2)............................. 1.65 % 1.65 %(a)
Without expense reimbursement by
Chancellor LGT Asset Management,
Inc.................................. 2.74 % 23.85 %(a)
Portfolio turnover rate+................ 150 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0489 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total Investment Return does not include sales charges.
(d) Calculated based upon weighted average shares outstanding during the
period.
* Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.47), $(0.49), and
$(0.46) for Class A, Class B, and Advisor Class, respectively, from
October 18, 1995 to December 31, 1995.
** Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.19), $(0.28), and
$(0.14) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1996.
+ Portfolio turnover rate and average commission rate paid on portfolio
transactions are calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
The accompanying notes are an integral part of the financial statements.
F13
<PAGE>
GT GLOBAL AMERICA VALUE FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
Class A Class B
---------------------------- ----------------------------
October 18, October 18,
1995 1995
(commencement (commencement
Year of operations) Year of operations)
ended to December ended to December
December 31, 31, December 31, 31,
1996 (d) 1995 (d) 1996 (d) 1995 (d)
------------ -------------- ------------ --------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.76 $ 11.43 $ 12.75 $ 11.43
------------ -------------- ------------ --------------
Income from investment operations:
Net investment income (loss).......... (0.01) ** 0.03* (0.10) ** 0.01*
Net realized and unrealized gain on
investments.......................... 1.94 1.30 1.93 1.31
------------ -------------- ------------ --------------
Net increase from investment
operations......................... 1.93 1.33 1.83 1.32
------------ -------------- ------------ --------------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.04) -- (0.04) --
------------ -------------- ------------ --------------
Total distributions................. (0.04) -- (0.04) --
------------ -------------- ------------ --------------
Net asset value, end of period.......... $ 14.65 $ 12.76 $ 14.54 $ 12.75
------------ -------------- ------------ --------------
------------ -------------- ------------ --------------
Total investment return (c)............. 15.12 % 11.64 %(b) 14.35 % 11.55 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 2,529 $ 870 $ 5,503 $ 1,254
Ratio of net investment income (loss) to
average net assets:
With reimbursement by Chancellor LGT
Asset Management, Inc. (Note 2)...... (0.10)% 1.10 %(a) (0.75)% 0.45 %(a)
Without reimbursement by Chancellor
LGT Asset Management, Inc............ (3.61)% (47.44)%(a) (4.26)% (48.09)%(a)
Ratio of expenses to average net assets:
With reimbursement by Chancellor LGT
Asset Management, Inc. (Note 2)...... 2.00 % 2.00 %(a) 2.65 % 2.65 %(a)
Without reimbursement by Chancellor
LGT Asset Management, Inc............ 5.51 % 50.54 %(a) 6.16 % 51.19 %(a)
Portfolio turnover rate+................ 256 % N/A 256 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0551 N/A $ 0.0551 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon weighted average shares outstanding during the
period.
* Before reimbursement by Chancellor LGT Asset Management, Inc, the net
investment loss per share would have been $(1.11), $(1.13), and
$(1.10) for Class A, Class B, and Advisor Class, respectively, from
October 18, 1995 to December 31, 1995.
** Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(.50),$(.59), and $(.46)
for Class A, Class B, and Advisor Class, respectively, for the year
ended December 31, 1996.
+ Portfolio turnover rate and average commission rate paid on portfolio
transactions are calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
The accompanying notes are an integral part of the financial statements.
F14
<PAGE>
GT GLOBAL AMERICA VALUE FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
Advisor Class
----------------------------
October 18,
1995
(commencement
Year of operations)
ended to December
December 31, 31,
1996 (d) 1995 (d)
------------ --------------
<S> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.77 $ 11.43
------------ --------------
Income from investment operations:
Net investment income (loss).......... 0.03** 0.04*
Net realized and unrealized gain on
investments.......................... 1.96 1.30
------------ --------------
Net increase from investment
operations......................... 1.99 1.34
------------ --------------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.04) --
------------ --------------
Total distributions................. (0.04) --
------------ --------------
Net asset value, end of period.......... $ 14.72 $ 12.77
------------ --------------
------------ --------------
Total investment return (c)............. 15.58 % 11.72 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 191 $ 81
Ratio of net investment income (loss) to
average net assets:
With reimbursement by Chancellor LGT
Asset Management, Inc. (Note 2)...... 0.25 % 1.45 %(a)
Without reimbursement by Chancellor
LGT Asset Management, Inc............ (3.26)% (47.09)%(a)
Ratio of expenses to average net assets:
With reimbursement by Chancellor LGT
Asset Management, Inc. (Note 2)...... 1.65 % 1.65 %(a)
Without reimbursement by Chancellor
LGT Asset Management, Inc............ 5.16 % 50.19 %(a)
Portfolio turnover rate+................ 256 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0551 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon weighted average shares outstanding during the
period.
* Before reimbursement by Chancellor LGT Asset Management, Inc, the net
investment loss per share would have been $(1.11), $(1.13), and
$(1.10) for Class A, Class B, and Advisor Class, respectively, from
October 18, 1995 to December 31, 1995.
** Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(.50),$(.59), and $(.46)
for Class A, Class B, and Advisor Class, respectively, for the year
ended December 31, 1996.
+ Portfolio turnover rate and average commission rate paid on portfolio
transactions are calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
The accompanying notes are an integral part of the financial statements.
F15
<PAGE>
GT GLOBAL AMERICA FUNDS
NOTES TO
FINANCIAL STATEMENTS
December 31, 1996
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
GT Global America Mid Cap Growth Fund (formerly named GT Global America Growth
Fund), GT Global America Small Cap Growth Fund, and GT Global America Value Fund
("Funds"), are separate series of GT Global Growth Series ("Company"). The
Company is organized as a Massachusetts business trust and is registered under
the Investment Company Act of 1940, as amended ("1940 Act"), as an open-end
management investment company. The Company has eight diversified series of
shares in operation, each series corresponding to a distinct portfolio of
investments.
The GT Global America Small Cap Growth Fund and GT Global America Value Fund
invest substantially all of their investable assets in Small Cap Growth
Portfolio and Value Portfolio ("Portfolios"), respectively. Each of these
Portfolios is organized as a New York Trust and is registered under the 1940 Act
as a diversified, open-end management investment company.
The Portfolios have investment objectives, policies, and limitations
substantially identical to those of their corresponding Funds. Therefore, the
financial statements of the GT Global America Small Cap Growth Fund, the GT
Global America Value Fund, and their respective Portfolios have been presented
on a consolidated basis, and represent all activities of both the respective
Funds and Portfolios. Through December 31, 1996, all of the shares of beneficial
interest of each Portfolio were owned either by its respective fund or
Chancellor LGT Asset Management, Inc. (the "Manager"), which has a nominal
($100) investment in each Portfolio.
The Funds offer Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Funds are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Funds. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The following is a summary of significant accounting policies consistently
followed by the Funds and Portfolios in the preparation of the financial
statements. The policies are in conformity with generally accepted accounting
principles, and the financial statements may include certain estimates made by
management.
(A) Portfolio Valuation
The Funds calculate the net asset value of and complete orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by the Manager to be the
primary market.
Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality and type; however, when the
Manager deems it appropriate, prices obtained for the day of valuation from a
bond pricing service will be used. Short-term investments with a maturity of 60
days or less are valued at amortized cost, adjusted for market fluctuation, if
any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Company's Board of Trustees.
(B) Repurchase Agreements
With respect to repurchase agreements entered into by a Fund or Portfolio (the
phrase "Fund or Portfolio" hereinafter includes the GT Global America Mid Cap
Growth Fund and each of the two Portfolios), it is the Fund's or Portfolio's
policy to always receive, as collateral, United States government securities or
other high quality debt securities of which the value, including accrued
interest, is at least equal to the amount to be repaid to the Fund or Portfolio
under each agreement at its maturity.
(C) Option Accounting Principles
When a Fund or Portfolio writes a call or put option, an amount equal to the
premium received is included in the Fund's or Portfolio's "Statement of Assets
and Liabilities" as an asset and an equivalent liability. The amount of the
liability is subsequently marked-to-market to reflect the current market value
of the option. The current market value of an option listed on a traded exchange
is valued at its last bid price, or, in the case of an over-the-counter option,
is valued at the average of the last bid prices obtained from brokers, unless a
quotation from only one broker is available, in which case only that broker's
price will be used. If an option expires on its stipulated expiration date or if
the Fund or Portfolio enters into a closing purchase transaction, a gain or loss
is realized without regard to any unrealized gain or loss on the underlying
security, and the liability related to such option is extinguished. If a written
call option is exercised, a gain or loss is realized from the sale of the
underlying security and the proceeds of the sale are increased by the premium
originally received. If a written put option is exercised, the cost of the
underlying security purchased would be decreased by the premium originally
received. The Fund or Portfolio can write options only on a covered basis,
which, for a call, requires that the Fund or Portfolio hold the underlying
security, and, for a put, requires the Fund or
F16
<PAGE>
GT GLOBAL AMERICA FUNDS
Portfolio to set aside cash, U.S. government securities or other liquid
securities in an amount not less than the exercise price or otherwise provide
adequate cover at all times while the put option is outstanding. The Fund or
Portfolio may use options to manage its exposure to the stock market and to
fluctuations in interest rates.
The premium paid by the Fund or Portfolio for the purchase of a call or put
option is included in the Fund's or Portfolio's "Statement of Assets and
Liabilities" as an investment and subsequently "marked-to-market" to reflect the
current market value of the option. If an option which the Fund or Portfolio has
purchased expires on the stipulated expiration date, the Fund or Portfolio
realizes a loss in the amount of the cost of the option. If the Fund or
Portfolio enters into a closing sale transaction, the Fund or Portfolio realizes
a gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund or Portfolio
exercises a call option, the cost of the securities acquired by exercising the
call is increased by the premium paid to buy the call. If the Fund or Portfolio
exercises a put option, it realizes a gain or loss from the sale of the
underlying security, and the proceeds from such sale are decreased by the
premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund or Portfolio may forego
the opportunity of profit if the market value of the underlying security or
index increases and the option is exercised. The risk in writing a put option is
that the Fund or Portfolio may incur a loss if the market value of the
underlying security or index decreases and the option is exercised. In addition,
there is the risk the Fund or Portfolio may not be able to enter into a closing
transaction because of an illiquid secondary market.
(D) Futures Contracts
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund or Portfolio is required to pledge to the broker an amount of cash or
securities equal to the minimum "initial margin" requirements of the exchange on
which the contract is traded. Pursuant to the contract, the Fund or Portfolio
agrees to receive from or pay to the broker an amount of cash equal to the daily
fluctuation in value of the contract. Such receipts or payments are known as
"variation margin" and are recorded by the Fund or Portfolio as unrealized gains
or losses. When the contract is closed, the Fund or Portfolio records a realized
gain or loss equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed. The potential risk
to the Fund or Portfolio is that the change in value of the underlying
securities may not correlate to the change in value of the contracts. The Fund
or Portfolio may use futures contracts to manage its exposure to the stock
market and to fluctuations in interest rates.
(E) Security Transactions and Related Investment Income
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund or Portfolio
may trade securities on other than normal settlement terms. This may increase
the risk if the other party to the transaction fails to deliver and causes the
Fund or Portfolio to subsequently invest at less advantageous prices.
(F) Portfolio Securities Loaned
At December 31, 1996, stocks with an aggregate value listed below were on loan
to brokers. These loans were secured by cash collateral received by the fund or
portfolios:
<TABLE>
<CAPTION>
December 31, 1996 Year ended
-------------------------------- December 31, 1996
Aggregate Value Cash -----------------
GT Global on Loan Collateral Fees Earned
- ---------------------------------------- --------------- -------------- -----------------
<S> <C> <C> <C>
America Mid Cap Growth Fund............. $ 31,491,056 $ 32,605,600 $163,841
Small Cap Growth Portfolio.............. 380,738 383,400 61
</TABLE>
Cash collateral is received by the Fund or Portfolio against loaned securities
in the amount at least equal to 102% of the market value of the loaned
securities at the inception of each loan. This collateral must be maintained at
not less than 100% of the market value of the loaned securities during the
period of the loan. Security lending fees earned were used to reduce the Fund's
or Portfolio's custodian fees.
(G) Deferred Organizational Expenses
Expenses incurred by the GT Global America Small Cap Growth Fund, the GT Global
America Value Fund, and their respective Portfolios in connection with their
organization, their initial registration with the Securities and Exchange
Commission and with various states and the initial public offering of their
shares aggregated $63,500 for each Fund and $25,000 for each Portfolio. These
expenses are being amortized on a straight-line basis over a five-year period.
(H) Taxes
It is the policy of the Funds and Portfolios to meet the requirements for
qualification as a "regulated investment company" under the Internal Revenue
Code of 1986, as amended ("Code"). It is also the intention of the Funds to make
distributions sufficient to avoid imposition of any excise tax under Section
4982 of the Code. Therefore, no provision has been made for Federal taxes on
income, capital gains, or unrealized appreciation of securities held, and excise
tax on income and capital gains.
F17
<PAGE>
GT GLOBAL AMERICA FUNDS
(I) Distributions to Shareholders
Distributions to shareholders are recorded by each Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund or Portfolios and timing
differences.
(J) Restricted Securities
A Fund or Portfolio is permitted to invest in privately placed restricted
securities. These securities may be resold in transactions exempt from
registration or to the public if the securities are registered. Disposal of
these securities may involve time-consuming negotiations and expense, and prompt
sale at an acceptable price may be difficult.
(K) Indexed Securities
A Fund or Portfolio may invest in indexed securities whose value is linked
either directly or indirectly to changes in foreign currencies, interest rates,
equities, indices, or other reference instruments. Indexed securities may be
more volatile than the reference instrument itself, but any loss is limited to
the amount of the original investment.
(L) Line of Credit
Each of the Funds, along with certain other funds advised by the Manager, has a
line of credit with the Bank of Boston. The arrangement with the bank allows all
specified funds to borrow an aggregate maximum amount of $100,000,000. Each of
these three funds is limited to borrowing up to 33 1/3% of the value of each
Fund's total assets. On December 31, 1996, the GT Global America Value Fund
borrowed $1,000,000 at a money market rate.
For the year ended December 31, 1996, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
for the GT Global America Value Fund was $1,000,000 with a weighted average
interest rate of 6.43%. Interest incurred on this loan for the year ended
December 31, 1996, was $2,681, included in "Other Expenses" on the Statement of
Operations.
2. Related Parties
Chancellor LGT Asset Management, Inc. is the Funds' and Portfolios' investment
manager and administrator. On October 31, 1996, Chancellor Capital Management,
Inc. merged with LGT Asset Management, Inc., and the surviving entity was
renamed Chancellor LGT Asset Management, Inc. The GT Global America Small Cap
Growth Fund and GT Global America Value Fund each pays the Manager
administration fees at the annualized rate of 0.25% of such Fund's average daily
net assets. Each Portfolio pays investment management and administration fees to
the Manager at the annualized rate of 0.475% on the first $500 million of
average daily net assets of the Portfolio; 0.45% on the next $500 million;
0.425% on the next $500 million; and 0.40% on amounts thereafter. GT Global
America Mid Cap Growth Fund pays investment management and administration fees
to the Manager at the annualized rate of 0.725% on the first $500 million of
average daily net assets on the Fund; 0.70% on the next $500 million; 0.675% on
the next $500 million and 0.65% on amounts thereafter. These fees are computed
daily and paid monthly, and are subject to reduction in any year to the extent
that the Fund's or Portfolio's expenses (exclusive of brokerage commissions,
taxes, interest, distribution-related expenses and extraordinary expenses)
exceed the most stringent limits prescribed by the laws or regulations of any
state in which the Fund's shares are offered for sale, based on the average
total net asset value of the Fund.
GT Global, Inc. ("GT Global"), an affiliate of the Manager, serves as the Funds'
distributor. The Funds offer Class A, Class B, and Advisor Class shares for
purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. GT Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the year ended December 31, 1996, GT Global retained the
following sales charges: $90,365 for the GT Global America Mid Cap Growth Fund,
$9,945 for the GT Global America Small Cap Growth Fund, and $1,702 for the GT
Global America Value Fund. Purchases of Class A shares exceeding $500,000 may be
subject to a contingent deferred sales charge ("CDSC") upon redemption, in
accordance with the Fund's current prospectus. GT Global collected such CDSCs in
the amount of $39,930 for the year ended December 31, 1996 for the GT Global
America Mid Cap Growth Fund. GT Global also makes ongoing shareholder servicing
and trail commission payments to dealers whose clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSCs, in accordance with the Fund's current
prospectus. For the year ended December 31, 1996, GT Global collected such CDSCs
in the amount of: $1,901,165 for the GT Global America Mid Cap Growth Fund,
$28,162 for the GT Global America Small Cap Growth Fund, and $5,608 for the GT
Global America Value Fund. In addition, GT Global makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class B
shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Trustees has
adopted separate distribution plans with respect to the Funds' Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which a Fund
reimburses GT Global for a portion of its shareholder servicing and distribution
expenses. Under the Class A Plan, a Fund may pay GT Global a service fee at the
annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class A shares for GT Global's expenditures incurred in servicing and
maintaining shareholder accounts, and may pay GT Global a distribution fee at
the annualized rate of up to 0.35% of the average daily net assets of the Fund's
Class A shares, less any amounts paid by the Fund as the aforementioned service
fee, for GT
F18
<PAGE>
GT GLOBAL AMERICA FUNDS
Global's expenditures incurred in providing services as distributor. All
expenses for which GT Global is reimbursed under the Class A Plan will have been
incurred within one year of such reimbursement.
Pursuant to the Funds' Class B Plan, a Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for GT Global's expenditures incurred in servicing and
maintaining shareholder accounts, and may pay GT Global a distribution fee at
the annualized rate of up to 0.75% of the average daily net assets of the Fund's
Class B shares for GT Global's expenditures incurred in providing services as
distributor. Expenses incurred under the Class B Plan in excess of 1.00%
annually may be carried forward for reimbursement in subsequent years as long as
that Plan continues in effect.
The Manager and GT Global voluntarily have undertaken to limit each Fund's
expenses (exclusive of brokerage commissions, taxes, interest, and extraordinary
items) to the maximum annual level of 2.00%, 2.65%, and 1.65% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by GT Global
of payments under the Class A Plan and/or Class B Plan and/ or reimbursements by
the Manager or GT Global of portions of the Fund's other operating expenses.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and GT Global, is the transfer agent of the Funds. For performing shareholder
servicing, reporting, and general transfer agent services, GT Services receives
an annual maintenance fee of $17.50 per account, a new account fee of $4.00 per
account, a per transaction fee of $1.75 for all transactions other than
exchanges and a per exchange fee of $2.25. GT Services also is reimbursed by the
Funds for its out-of-pocket expenses for such items as postage, forms, telephone
charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Funds. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of a Fund's average daily net assets. The annual fee rate is derived by applying
0.03% to the first $5 billion of assets of all registered mutual funds advised
by the Manager and 0.02% to the assets in excess of $5 billion and allocating
the result according to a Fund's average daily net assets.
The Company pays each of its Trustees who is not an employee, officer or
director of the Manager, GT Global or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee. Each
Portfolio pays each of its Trustees who is not an employee, officer or director
of the Manager, GT Global or GT Services $500 per year plus $150 for each
meeting of the board or any committee thereof attended by the Trustees.
At December 31, 1996, all of the shares of beneficial interest of each Portfolio
were owned either by its Fund or the Manager.
3. Purchases and Sales of Securities
For the year ended December 31, 1996, purchases of investment securities by the
GT Global America Mid Cap Growth Fund, Small Cap Growth Portfolio, and Value
Portfolio, other than U.S. government obligations and short-term investments,
aggregated $1,468,522,964, $33,591,427 and $19,537,714, respectively. Sales of
investment securities by the GT Global America Mid Cap Growth Fund, Small Cap
Growth Portfolio, and Value Portfolio, other than U.S. government obligations
and short-term investments, aggregated $1,493,844,266, $19,321,092 and
$13,037,066, respectively. There were no purchases or sales of U.S. government
obligations by a Fund or Portfolio during the year.
F19
<PAGE>
GT GLOBAL AMERICA FUNDS
4. Capital Shares
At December 31, 1996, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the
Funds were as follows:
Capital Share Transactions
GT Global America Small Cap Growth Fund
<TABLE>
<CAPTION>
October 18, 1995
(commencement of
Year ended operations) to
December 31, 1996 December 31, 1995
---------------------------- -----------------------------
Class A Shares Amount Shares Amount
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 1,491,083 $ 20,216,595 189,034 $ 2,222,360
Shares issued in connection with
reinvestment of distributions......... 39,998 505,573 -- --
------------ -------------- ------------ ---------------
1,531,081 20,722,168 189,034 2,222,360
Shares repurchased...................... (1,019,989) (13,880,892) (28,403) (333,346)
------------ -------------- ------------ ---------------
Net increase............................ 511,092 $ 6,841,276 160,631 $ 1,889,014
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
October 18, 1995
(commencement of
Year ended operations) to
December 31, 1996 December 31, 1995
---------------------------- -----------------------------
Class B Shares Amount Shares Amount
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 1,665,796 $ 22,115,741 232,055 $ 2,734,475
Shares issued in connection with
reinvestment of distributions......... 52,848 663,246 -- --
------------ -------------- ------------ ---------------
1,718,644 22,778,987 232,055 2,734,475
Shares repurchased...................... (1,029,367) (13,501,795) (63,231) (743,582)
------------ -------------- ------------ ---------------
Net increase............................ 689,277 $ 9,277,192 168,824 $ 1,990,893
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
October 18, 1995
(commencement of
Year ended operations) to
December 31, 1996 December 31, 1995
---------------------------- -----------------------------
Advisor Class Shares Amount Shares Amount
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 33,521 $ 447,953 1,456 $ 17,196
Shares issued in connection with
reinvestment of distributions......... 2,144 27,228 -- --
------------ -------------- ------------ ---------------
35,665 475,181 1,456 17,196
Shares repurchased...................... (5,440) (72,841) -- --
------------ -------------- ------------ ---------------
Net increase............................ 30,225 $ 402,340 1,456 $ 17,196
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
</TABLE>
F20
<PAGE>
GT GLOBAL AMERICA FUNDS
GT Global America Value Fund
<TABLE>
<CAPTION>
October 18, 1995
(commencement of
Year ended operations) to
December 31, 1996 December 31, 1995
---------------------------- -----------------------------
Class A Shares Amount Shares Amount
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 392,444 $ 5,443,835 70,225 $ 874,678
Shares issued in connection with
reinvestment of distributions......... 365 5,408 -- --
------------ -------------- ------------ ---------------
392,809 5,449,243 70,225 874,678
Shares repurchased...................... (288,378) (3,812,666) (4,928) (61,818)
------------ -------------- ------------ ---------------
Net increase............................ 104,431 $ 1,636,577 65,297 $ 812,860
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
October 18, 1995
(commencement of
Year ended operations) to
December 31, 1996 December 31, 1995
---------------------------- -----------------------------
Class B Shares Amount Shares Amount
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 445,266 $ 6,167,388 103,345 $ 1,292,349
Shares issued in connection with
reinvestment of distributions......... 918 13,509 -- --
------------ -------------- ------------ ---------------
446,184 6,180,897 103,345 1,292,349
Shares repurchased...................... (166,052) (2,502,350) (7,866) (99,288)
------------ -------------- ------------ ---------------
Net increase............................ 280,132 $ 3,678,547 95,479 $ 1,193,061
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
October 18, 1995
(commencement of
Year ended operations) to
December 31, 1996 December 31, 1995
---------------------------- -----------------------------
Advisor Class Shares Amount Shares Amount
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 10,181 $ 139,541 3,461 $ 44,310
Shares issued in connection with
reinvestment of distributions......... 30 443 -- --
------------ -------------- ------------ ---------------
10,211 139,984 3,461 44,310
Shares repurchased...................... (3,594) (49,444) -- --
------------ -------------- ------------ ---------------
Net increase............................ 6,617 $ 90,540 3,461 $ 44,310
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
</TABLE>
5. Holdings of 5% Voting Securities of Portfolio Companies
Investments of 5% or more of an issuer's outstanding voting securities by a Fund
or Portfolio are defined in the Investment Company Act of 1940, as amended, as
an "affiliated company". During the year ended December 31, 1996, transactions
with affiliated companies by the GT Global America Mid Cap Growth Fund were as
follows:
<TABLE>
<CAPTION>
Net
Realized
Purchases Gain Dividend
Affiliates Cost Sales Cost (Loss) Income
- ---------------------------------------- ------------ ------------- ---------- ------------
<S> <C> <C> <C> <C>
Abaxis, Inc............................. -- $ 4,406,425 $ (233,474) --
Ann Taylor Stores, Inc.................. $ 667,826 27,428,533 1,773,714 --
Equity Inns, Inc........................ 8,589,208 21,730,721 774,204 $ 344,848
Haggar Corp............................. -- 13,475,105 (4,771,163) 58,740
Landmark Graphics Corp.................. 22,307,844 22,307,844 13,028,001 --
Michaels Stores, Inc.................... 1,253,238 31,700,975 (1,716,413) --
Varsity Spirit Corp..................... -- 3,384,724 1,747,526 13,686
Younkers, Inc........................... 4,702,055 14,761,596 7,926,666 --
</TABLE>
6. Expense Reductions
The Manager has directed certain portfolio trades to brokers who paid a portion
of a Fund's or Portfolio's expenses. For the year ended December 31, 1996, the
expenses of GT Global America Mid Cap Growth Fund were reduced by $207,575 under
these arrangements.
- --------------
Federal Tax Information (Unaudited):
Pursuant to Section 852 of the Internal Revenue Code, the GT Global America
Mid-Cap Growth Fund designates $30,037,928 as a capital gain dividend for the
fiscal year ended December 31, 1996.
Pursuant to Section 854 of the Internal Revenue Code, the Funds designate the
following percentage amounts of ordinary income dividends paid (including
short-term capital gain distributions, if any) by the Funds as income qualifying
for the dividends received deduction for corporations for the fiscal year ended
December 31, 1996:
<TABLE>
<CAPTION>
Fund
- ----------------------------------------
<S> <C>
GT Global America Small Cap Growth
Fund................................... 4%
GT Global America Mid-Cap Growth Fund... 23%
GT Global America Value Fund............ 100%
</TABLE>
F21
<PAGE>
GT GLOBAL AMERICA FUNDS
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL AMERICA FUNDS
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL AMERICA FUNDS
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
GT GLOBAL MUTUAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY OF THE GT GLOBAL
MUTUAL FUNDS, INCLUDING FEES, EXPENSES AND THE RISKS OF GLOBAL AND EMERGING
MARKET INVESTING AS WELL AS THE RISKS OF INVESTING IN RELATED INDUSTRIES,
PLEASE CONTACT YOUR FINANCIAL ADVISER OR CALL GT GLOBAL DIRECTLY AT
1-800-824-1580.
GROWTH FUNDS
/ / GLOBALLY DIVERSIFIED FUNDS
GT GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity by investing outside
the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
/ / GLOBAL THEME FUNDS
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL HEALTH CARE FUND
Invests in growing health care industries worldwide
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in the new, unified Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA MID CAP GROWTH FUND
Concentrates on medium-sized companies in the U.S.
GT GLOBAL AMERICA VALUE FUND
Concentrates on equity securities of large cap U.S. companies believed to be
undervalued
GT GLOBAL JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUND
GT GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government bonds from around the world
INCOME FUNDS
GT GLOBAL GOVERNMENT INCOME FUND
Earns monthly income from global government securities
GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
GT GLOBAL HIGH INCOME FUND
Invests in debt securities in emerging markets
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[LOGO]
NO DEALER, SALES REPRESENTATIVE OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
STATEMENT OF ADDITIONAL INFORMATION AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY GT
GLOBAL AMERICA SMALL CAP GROWTH FUND, GT GLOBAL AMERICA VALUE FUND, SMALL
CAP PORTFOLIO, VALUE PORTFOLIO, G.T. GLOBAL GROWTH SERIES, CHANCELLOR LGT
ASSET MANAGEMENT, INC. OR GT GLOBAL. THIS STATEMENT OF ADDITIONAL
INFORMATION DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF ANY
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
AMESX705MC
<PAGE>
G.T. GLOBAL GROWTH SERIES
PART C: OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS.
The following audited financial statements as of December 31, 1996, and
for the fiscal year then ended for the Class A, Class B and Advisor Class of the
GT Global Worldwide Growth Fund, GT Global International Growth Fund, GT Global
New Pacific Growth Fund, GT Global Europe Growth Fund, GT Global Japan Growth
Fund, GT Global America Mid Cap Growth Fund (collectively, the "Initial Six
Series"), GT Global America Small Cap Growth Fund and GT Global America Value
Fund, each a series of the Registrant, are included in the Funds' Statements of
Additional Information and are filed herewith:
-- Reports of Independent Accountants
-- Portfolios of Investments
-- Statements of Assets and Liabilities
-- Statements of Operations
-- Statements of Changes in Net Assets
-- Financial Highlights
-- Notes to Financial Statements
(b) EXHIBITS REQUIRED BY PART C, ITEM 24 OF FORM N-1A.
(1)(a) The Registrant's Agreement and Declaration of Trust, as
amended(6).
(1)(b) Certificate of Secretary amending the Registrant's Agreement and
Declaration of Trust dated May 4, 1995(4).
(2) The Registrant's By-Laws, as amended -- Filed herewith.
(3) Not Applicable.
(4) Instruments Defining Rights of Shareholders -- To be filed.
(5)(a) Investment Management and Administration Contract dated April 24,
1989 relating to the Initial Six Series -- Filed herewith.
(5)(b) Form of Administration Contract relating to: GT Global America
Small Cap Growth Fund and GT Global America Value Fund(6).
(6)(a) Distribution Agreement relating to Class A shares -- Filed
herewith.
(6)(b) Distribution Agreement relating to Class B shares -- Filed
herewith.
(6)(c) Distribution Agreement relating to Advisor Class shares -- Filed
herewith.
(7) Not Applicable.
(8)(a) Custodian Agreement between the Registrant and State Street Bank
and Trust Company -- Filed herewith.
(9)(a) Transfer Agent Contract dated May 25, 1990 -- Filed herewith.
(9)(b) Other material contracts:
(i) Broker/dealer sales contract -- Filed herewith.
(ii) Bank sales contract -- Filed herewith.
(iii) Agency sales contract -- Filed herewith.
(iv) Foreign sales contract -- Filed herewith.
(10)(a) Opinion and Consent of Counsel relating to the Initial Six
Series(1).
C-1
<PAGE>
(10)(b) Opinion and Consent of Counsel relating to GT Global America
Small Cap Growth Fund and GT Global America Value Fund(6).
(11) Consents of Coopers & Lybrand, Independent Accountants relating to:
(i) GT Global Worldwide Growth Fund -- Filed herewith.
(ii) GT Global International Growth Fund -- Filed herewith.
(iii) GT Global New Pacific Growth Fund -- Filed herewith.
(iv) GT Global Europe Growth Fund -- Filed herewith.
(v) GT Global Japan Growth Fund -- Filed herewith.
(vi) GT Global America Mid Cap Growth Fund -- Filed herewith.
(vii) GT Global America Small Cap Growth Fund -- Filed herewith.
(viii) GT Global America Value Fund -- Filed herewith.
(12) Not Applicable.
(13) Not Applicable.
(14)(a) Model Retirement Plan -- GT Global Individual Retirement Account
Disclosure Statement and Application -- Filed herewith.
(14)(b) Model Retirement Plan -- GT Global SIMPLE Individual Retirement
Account. Disclosure Statement and Application -- Filed herewith.
(14)(c) Model Retirement Plan -- GT Global Simplified Employee Pension
Individual Retirement Account. Disclosure Statement and
Application -- Filed herewith.
(15)(a) Distribution Plan adopted pursuant to Rule 12b-1 relating to
Class A shares -- Filed herewith.
(15)(b) Distribution Plan adopted pursuant to Rule 12b-1 relating to
Class B shares -- Filed herewith.
(16) Schedules of Computation of Performance Quotations relating to the
Class A, Class B and Advisor Class shares of:
(a) GT Global America Mid Cap Growth Fund(8).
(b) GT Global Europe Growth Fund(8).
(c) GT Global International Growth Fund(8).
(d) GT Global Japan Growth Fund(8).
(e) GT Global New Pacific Growth Fund(8).
(f) GT Global Worldwide Growth Fund(8).
(g) GT Global America Small Cap Growth Fund(8).
(h) GT Global America Value Fund(8).
(17) Financial Data Schedule -- Filed herewith.
(18) Multiple Class Plan adopted pursuant to Rule 18f-3 (9).
Other Exhibits:
(a) Power of Attorney for G.T. Global Growth Series -- Superceded.
(b) Power of Attorney for Growth Portfolio(5).
(c) Power of Attorney for Helge K. Lee, Peter R. Guarino and David J.
Thelander(7).
(d) Power of Attorney for David J. Thelander, Daniel R. Waltcher and
Matthew M. O'Toole(9).
- ------------------------
(1) Incorporated by reference to Exhibit 10 of Post-Effective Amendment No. 11
to the Registration Statement on Form N-1A, filed in 1985.
C-2
<PAGE>
(2) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 22 to the Registration Statement on Form N-1A,
filed on February 28, 1992.
(3) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 31 to the Registration Statement on Form N-1A,
filed on April 26, 1994.
(4) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 34 to the Registration Statement on Form N-1A,
filed on May 24, 1995.
(5) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 35 to the Registration Statement on Form N-1A,
filed on August 4, 1995.
(6) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 36 to the Registration Statement on Form N-1A,
filed on October 18, 1995.
(7) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 37 to the Registration Statement on Form N-1A,
filed on February 15, 1996.
(8) Incorporated by reference to the indentically enumerated Exhibit of
Post-Effective Amendment No. 38 to the Registration Statement on Form N-1A,
filed on April 19, 1996.
(9) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 39 to the Registration Statement on Form N-1A,
filed on February 28, 1997.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE REGISTRANT
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
As of March 15, 1997:
<TABLE>
<CAPTION>
NUMBER OF
TITLE OF CLASS RECORD HOLDERS
- ------------------------------------------------------------------------------------ ----------------
<S> <C>
Shares of Beneficial Interest, no par value, of:
GT Global America Mid Cap Growth Fund Class A................................. 29,582
GT Global America Mid Cap Growth Fund Class B................................. 27,507
GT Global America Mid Cap Growth Fund Advisor Class........................... 286
GT Global Europe Growth Fund Class A.......................................... 55,794
GT Global Europe Growth Fund Class B.......................................... 9,542
GT Global Europe Growth Fund Advisor Class.................................... 158
GT Global International Growth Fund Class A................................... 19,650
GT Global International Growth Fund Class B................................... 7,254
GT Global International Growth Fund Advisor Class............................. 97
GT Global Japan Growth Fund Class A........................................... 8,797
GT Global Japan Growth Fund Class B........................................... 3,705
GT Global Japan Growth Fund Advisor Class..................................... 86
GT Global New Pacific Growth Fund Class A..................................... 35,165
GT Global New Pacific Growth Fund Class B..................................... 16,127
GT Global New Pacific Growth Fund Advisor Class............................... 223
GT Global Worldwide Growth Fund Class A....................................... 11,796
GT Global Worldwide Growth Fund Class B....................................... 6,167
GT Global Worldwide Growth Fund Advisor Class................................. 156
GT Global America Small Cap Growth Fund Class A............................... 1,117
GT Global America Small Cap Growth Fund Class B............................... 1,395
GT Global America Small Cap Growth Fund Advisor Class......................... 116
GT Global America Value Fund Class A.......................................... 469
GT Global America Value Fund Class B.......................................... 749
GT Global America Value Fund Advisor Class.................................... 83
</TABLE>
C-3
<PAGE>
ITEM 27. INDEMNIFICATION
Section 5.3 of the Registrant's Declaration of Trust provides for
indemnification of certain persons acting on behalf of the Registrant.
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, bylaws, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission ("Commission") such indemnification is against public
policy as expressed in the 1933 Act, and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a Trustee, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such Trustee, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to 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 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
See the material under the heading "Management" included in Part A
(Prospectus) of this amendment and the material appearing under the headings
"Trustees and Executive Officers" and "Management" included in Part B (Statement
of Additional Information) of this Amendment. Information as to the Directors
and Officers of the Adviser is included in its Form ADV (File No. 801-10254),
filed with the Commission, which is incorporated herein by reference.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) In addition to the Registrant, GT Global, Inc. is the principal
underwriter for the following other investment companies: G.T. Investment
Portfolios, Inc. (which includes one fund currently in operation: GT Global
Dollar Fund); and G.T. Investment Funds, Inc. (which includes twelve funds
currently in operation: GT Global Strategic Income Fund, GT Global Government
Income Fund, GT Global High Income Fund, GT Global Growth & Income Fund, GT
Global Latin America Growth Fund, GT Global Telecommunications Fund, GT Global
Health Care Fund, GT Global Financial Services Fund, GT Global Infrastructure
Fund, GT Global Consumer Products and Services Fund, GT Global Natural Resources
Fund and GT Global Emerging Markets Fund); G.T. Global Variable Investment
Series (which includes five funds in operation: GT Global Variable New Pacific
Fund, GT Global Variable Europe Fund, GT Global Variable America Fund, GT Global
Variable International Fund and GT Global Money Market Fund); and G.T. Global
Variable Investment Trust (which includes nine funds in operation: GT Global
Variable Latin America Fund, GT Global Variable Emerging Markets Fund, GT Global
Variable Infrastructure Fund, GT Global Variable Natural Resources Fund, GT
Global Variable Telecommunications Fund, GT Global Variable Growth & Income
Fund, GT Global Variable Strategic Income Fund, GT Global Variable Global
Government Income Fund and GT Global Variable U.S. Government Income Fund).
C-4
<PAGE>
(b) Directors and Officers of GT Global, Inc.
Unless otherwise indicated, the business address of each person listed is 50
California Street, San Francisco, CA 94111.
<TABLE>
<CAPTION>
POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- -------------------------------------------- ---------------------------------- ----------------------------------
<S> <C> <C>
William J. Guilfoyle President and Director Chairman of the Board of Directors
and President
James R. Tufts Senior Vice President -- Finance Vice President, Treasurer and
and Administration and Director Principal Financial Officer
Helge K. Lee Senior Vice President and General Vice President and Secretary
Counsel
Raymond R. Cunningham Senior Vice President -- None
National Sales Manager
and Director
Richard Healey Senior Vice President -- None
Retail Marketing
Philip D. Edelstein Senior Vice President -- Regional None
9 Huntly Circle Sales Manager
Palm Beach Gardens, FL 33418
Stephen A. Maginn Senior Vice President -- None
519 S. Juanita Regional Sales Manager
Redondo Beach, CA 90277
David J. Thelander Vice President, Secretary and Assistant Secretary
Assistant General Counsel
Peter J. Wolfert Senior Vice President -- None
Information Technology
Christine M. Pallatto Senior Vice President -- Human None
Resources
Margo A. Tammen Vice President -- Finance & None
Administration
Gary M. Castro Assistant Treasurer & Controller None
Dennis W. Reichert Assistant Treasurer & Budget None
Director
David P. Anderson, Jr. Vice President None
1012 William
Plymouth, MI 48170
Jon Burke Vice President None
31 Darlene Drive
Southboro, MA 01772
Phil Christopher Vice President None
3621 59th Avenue, SW
Seattle, WA 98116
</TABLE>
C-5
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- -------------------------------------------- ---------------------------------- ----------------------------------
<S> <C> <C>
Anthony DiBacco Vice President None
30585 Via Lindosa Way
Laguna Niguel, CA 92677
Stephen Duffy Vice President None
1120 Gables Drive
Atlanta, GA 30319
Ned E. Hammond Vice President None
5901 McFarland Ct.
Plano, TX 75093
Campbell Judge Vice President None
4312 Linden Hills Blvd., #202
Minneapolis, MN 55410
Richard Kashnowski Vice President None
1454 High School Drive
Brentwood, MO 63144
Robin Kraebel Vice President None
49 Bergin Avenue
Waldwick, NJ 07463
Allen M. Kuhn Vice President None
7220 Garfield Street
New Orleans, LA 70118
Jeffrey S. Kulik Vice President None
6540 Autumn Wind Circle
Clarksville, MD 21029
Steven C. Manns Vice President None
3025 Caswell Drive
Troy, MI 48084
C. David Matthews Vice President None
2445 Pebblebrook
Westlake, OH 44145
Wayne F. Meyer Vice President None
2617 Sun Meadow Drive
Chesterfield, MO 63005
Dean Phillips Vice President None
3406 Bishop Park Drive, #428
Winter Park, FL 32792
James B. Sandidge Vice President None
16437 W. First Ave.
Golden, CO 80401
Philip Schertz Vice President None
25 Ivy Place
Wayne, NJ 07470
Peter Sykes Vice President None
1655 E. Sherman Ave.
Salt Lake City, UT 84105
</TABLE>
C-6
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- -------------------------------------------- ---------------------------------- ----------------------------------
<S> <C> <C>
Lance Vetter Vice President None
10915 La Salinas Circle
Boca Raton, FL 33428
Tommy D. Wells Vice President None
25 Crane Drive
Sam Anselmo, CA 94960
Todd H. Westby Vice President None
3405 Goshen Road
Newtown Square, PA 19073
Brian A. Williams Vice President None
874 Lincoln Ave.
Winnetka, IL 60093
Eric T. Zeigler Vice President None
3100 The Strand
Manhattan Beach, CA 90266
</TABLE>
(c) None.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
Accounts, books and other records required by Rules 31a-1 and 31a-2 under
the Investment Company Act of 1940, as amended, are maintained and held in the
offices of the Registrant and its investment manager, Chancellor LGT Asset
Management, Inc., 50 California Street, San Francisco, California 94111 and its
custodian, State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110.
Records covering shareholder accounts are maintained and kept by the
Registrant's transfer agent, GT Global Investor Services, Inc., 2121 N.
California Boulevard, Suite 450, Walnut Creek, California 94596, and records
covering portfolio transactions are maintained and kept by the Registrant's
Custodian, State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110.
ITEM 31. MANAGEMENT SERVICES
Not applicable.
ITEM 32. UNDERTAKINGS
None.
C-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and
the Investment Company Act of 1940, as amended, the Registrant hereby certifies
that it meets all of the requirements for effectiveness of this Amendment
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused
this Post-Effective Amendment to this Registration Statement to be signed on its
behalf by the undersigned, thereto duly authorized, in the City of San Francisco
and the State of California, on the 28th day of April, 1997.
G.T. GLOBAL GROWTH SERIES
By: William J. Guilfoyle*
President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement of G.T. Global Growth
Series has been signed below by the following persons in the capacities
indicated on the 28th day of April, 1997.
President, Trustee and
William J. Guilfoyle* Chairman of the Board
(Principal Executive Officer)
/s/ JAMES R. TUFTS
- ---------------------------------------- Vice President, Treasurer and
James R. Tufts Principal Financial Officer
/s/ KENNETH W. CHANCEY
- ---------------------------------------- Vice President and Principal
Kenneth W. Chancey Accounting Officer
C. Derek Anderson* Trustee
Arthur C. Patterson* Trustee
Frank S. Bayley* Trustee
Ruth H. Quigley* Trustee
Robert G. Wade, Jr.* Trustee
*By: /s/ DAVID J. THELANDER
-----------------------------------
David J. Thelander
Attorney-in-Fact, pursuant to
Power-of-Attorney previously filed.
C-8
<PAGE>
SIGNATURES
Growth Portfolio has duly caused this Post-Effective Amendment of G.T.
Global Growth Series 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
28th day of April, 1997.
GROWTH PORTFOLIO
By: William J. Guilfoyle*
President
This Post-Effective Amendment to the Registration Statement of G.T. Global
Growth Series has been signed below by the following persons in the capacities
indicated on the 28th day of April, 1997.
<TABLE>
<S> <C>
William J. Guilfoyle* President, Trustee and Chairman of the Board
(Principal Executive Officer)
/S/ JAMES R. TUFTS Vice President, Treasurer and Principal
- -------------------------------------- Financial Officer
James R. Tufts
/S/ KENNETH W. CHANCEY Vice President and Principal Accounting Officer
- --------------------------------------
Kenneth W. Chancey
C. Derek Anderson* Trustee
Arthur C. Patterson* Trustee
Frank S. Bayley* Trustee
Ruth H. Quigley* Trustee
Robert G. Wade, Jr.* Trustee
*By: /S/ DAVID J. THELANDER
-------------------------------------------
David J. Thelander
Attorney-in-Fact, pursuant to
Power-of-Attorney previously filed.
</TABLE>
C-9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000202032
<NAME> G.T. GLOBAL GROWTH SERIES
<SERIES>
<NUMBER> 011
<NAME> GT GLOBAL AMERICA GROWTH FUND - CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 591597
<INVESTMENTS-AT-VALUE> 680123
<RECEIVABLES> 11239
<ASSETS-OTHER> 32606
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 723968
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 43965
<TOTAL-LIABILITIES> 43965
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 601060
<SHARES-COMMON-STOCK> 16536
<SHARES-COMMON-PRIOR> 0
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<ACCUMULATED-NET-GAINS> (9583)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 88526
<NET-ASSETS> 680003
<DIVIDEND-INCOME> 4151
<INTEREST-INCOME> 6001
<OTHER-INCOME> 68
<EXPENSES-NET> (11587)
<NET-INVESTMENT-INCOME> (1367)
<REALIZED-GAINS-CURRENT> 24339
<APPREC-INCREASE-CURRENT> 76319
<NET-CHANGE-FROM-OPS> 99291
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 21519
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 89963
<NUMBER-OF-SHARES-REDEEMED> (95062)
<SHARES-REINVESTED> 854
<NET-CHANGE-IN-ASSETS> (66117)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 11959
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<RETURNS-OF-CAPITAL> 0
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000202032
<NAME> G.T. GLOBAL GROWTH SERIES
<SERIES>
<NUMBER> 012
<NAME> GT GLOBAL AMERICA GROWTH FUND - CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
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<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
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<OTHER-ITEMS-LIABILITIES> 43965
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<SHARES-COMMON-PRIOR> 0
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<NET-ASSETS> 680003
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<OTHER-INCOME> 68
<EXPENSES-NET> (11587)
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<REALIZED-GAINS-CURRENT> 24339
<APPREC-INCREASE-CURRENT> 76319
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<NUMBER-OF-SHARES-REDEEMED> (14026)
<SHARES-REINVESTED> 804
<NET-CHANGE-IN-ASSETS> (66117)
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<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 11959
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<PER-SHARE-NAV-BEGIN> 18.770
<PER-SHARE-NII> (.110)
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<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.280
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000202032
<NAME> G.T. GLOBAL GROWTH SERIES
<SERIES>
<NUMBER> 013
<NAME> GT GLOBAL AMERICA GROWTH FUND - ADVISOR CLASS
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 591597
<INVESTMENTS-AT-VALUE> 680123
<RECEIVABLES> 11239
<ASSETS-OTHER> 32606
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 723968
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 43965
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<PAID-IN-CAPITAL-COMMON> 601060
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<ACCUMULATED-NII-CURRENT> 0
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<ACCUMULATED-NET-GAINS> (9583)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 88526
<NET-ASSETS> 680003
<DIVIDEND-INCOME> 4151
<INTEREST-INCOME> 6001
<OTHER-INCOME> 68
<EXPENSES-NET> (11587)
<NET-INVESTMENT-INCOME> (1367)
<REALIZED-GAINS-CURRENT> 24339
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000202032
<NAME> G.T. GLOBAL GROWTH SERIES
<SERIES>
<NUMBER> 021
<NAME> GT GLOBAL EUROPE GROWTH FUND - CLASS A
<MULTIPLIER> 1000
<S> <C>
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<EXPENSES-NET> (10645)
<NET-INVESTMENT-INCOME> (1938)
<REALIZED-GAINS-CURRENT> 86541
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
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TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000202032
<NAME> G.T. GLOBAL GROWTH SERIES
<SERIES>
<NUMBER> 022
<NAME> GT GLOBAL EUROPE GROWTH FUND - CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
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</LEGEND>
<CIK> 0000202032
<NAME> G.T. GLOBAL GROWTH SERIES
<SERIES>
<NUMBER> 023
<NAME> GT GLOBAL EUROPE GROWTH FUND - ADVISOR CLASS
<MULTIPLIER> 1000
<S> <C>
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<PERIOD-END> DEC-31-1996
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<TABLE> <S> <C>
<PAGE>
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
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</LEGEND>
<CIK> 0000202032
<NAME> G.T. GLOBAL GROWTH SERIES
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<TABLE> <S> <C>
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
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</LEGEND>
<CIK> 0000202032
<NAME> G.T. GLOBAL GROWTH SERIES
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
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<NAME> G.T. GLOBAL GROWTH SERIES
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
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<CIK> 0000202032
<NAME> G.T. GLOBAL GROWTH SERIES
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
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<NAME> G.T. GLOBAL GROWTH SERIES
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<NAME> G.T. GLOBAL GROWTH SERIES
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<NAME> G.T. GLOBAL GROWTH SERIES
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<NET-CHANGE-IN-ASSETS> 6017
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 42
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 349
<AVERAGE-NET-ASSETS> 7132
<PER-SHARE-NAV-BEGIN> 12.770
<PER-SHARE-NII> .03
<PER-SHARE-GAIN-APPREC> 1.960
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.04)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.720
<EXPENSE-RATIO> 1.650
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
AMENDMENT TO BYLAWS OF
G.T. GLOBAL GROWTH FUNDS
In accord with Section 3.9 of Article III of the Declaration of Trust of
G.T. Global Growth Funds (the "Trust") and Article VI of the Bylaws of the
Trust, the Bylaws of the Trust are hereby altered, amended and added to by
majority vote of the entire Board of Trustees of the Trust as hereinprovided
below:
The title of the Bylaws of the Trust is hereby amended to read "Bylaws of
G.T. Global Growth Series," effective upon the effectiveness of an amendment to
Section 1.1 of Article I of the Declaration of Trust to change the name of the
Trust accordingly.
Section 1.04 of Article I of the Bylaws is hereby amended by deleting
the third sentence thereof and substituting therefor the following sentence:
"Any meeting of stockholders, whether or not a quorum is present, may be
adjourned from time to time by the vote of the holders of a majority of the
shares present in person or represented by proxy thereat and entitle to vote,
but in the absence of a quorum no other business may be transacted at such
meeting, except that the stockholders present or represented by proxy at a
duly called or held meeting, at which a quorum is present, may continue to
transact business until adjournment, notwithstanding the withdrawal of such
stockholder to leave less than a quorum, if any action taken (other than
adjournment) is approved by at least a majority of the shares required to
constitute a quorum."
IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of the 6th day of May, 1987.
/s/ C. Derek Anderson
----------------------------
C. Derek Anderson
/s/ Frank S. Bayley
----------------------------
Frank S. Bayley
/s/ Robert J. Boyd
----------------------------
Robert J. Boyd
/s/ Jonathan Custance Baker
----------------------------
Jonathan Custance Baker
/s/ Michael F. O'Neill
----------------------------
Michael F. O'Neill
/s/ Ruth H. Quigley
----------------------------
Ruth H. Quigley
<PAGE>
BY-LAWS
OF
G.T. GLOBAL GROWTH SERIES*
ARTICLE I.
STOCKHOLDERS
Section 1.01 Special Meetings. Special meetings of the
------------ ----------------
stockholders may be called by the Chairman of the Board or the President or
by a majority of the Board of Trustees by vote at a meeting or in writing
with or without a meeting. Special meetings of the stockholders shall be
called by the Secretary (i) upon the written request of the holders of shares
entitled to not less than 25% of all the votes entitled to be cast at such
meeting, provided that (a) such request shall state the purposes of such
meeting and the matters proposed to be acted on, and (b) the stockholders
requesting such meeting shall have paid to the Trust the reasonably estimated
cost of preparing and mailing the notice thereof, which cost estimate the
Secretary shall determine and specify to such stockholders, or (ii) as may
otherwise be required by the 1940 Act, any other law or the Declaration of
Trust of this Trust (the "Declaration of Trust"). No special meeting need be
called upon the request of the holders of shares entitled to less than a
majority of all votes entitled to be cast at such meeting to consider any
matter that is substantially the same as a matter voted upon at any special
meeting of the stockholders held during the preceding twelve months.
Section 1.02. Place of Meeting. Meetings of the stockholders shall
------------- ----------------
be held at such time and place in the United States of America as shall be
designated from time to time by the Board of Trustees and stated in the
notice of the meeting or in a duly executed waiver of notice thereof.
Section 1.03. Notice of Meetings. Not less than ten days nor more
------------ ------------------
than ninety days before the date of every stockholders' meeting, the
Secretary shall give to each stockholder entitled to vote at such meeting,
written notice stating the time and place of the meeting and, if notice of
the purpose is required by statute or otherwise, the purpose or purposes for
which the meeting is called, either by mail or by presenting it to the
stockholder personally or by leaving it at the stockholder's residence or
usual place of business. Notwithstanding the foregoing provision, a waiver of
notice in writing, signed by the person or persons entitled to such notice
and filed with the records of the meeting, whether before or after the
holding thereof, or actual attendance at the meeting in person or by proxy,
shall be deemed equivalent to the giving of such notice to such persons.
*As amended May 6, 1987
1
<PAGE>
A meeting of stockholders convened on the date for which it was called may be
adjourned from time to time without further notice to a date not more than 120
days after the original record date.
Section 1.04. Quorum. Unless otherwise required by law or the
------------ ------
Declaration of trust, at any meeting of stockholders the presence in person or
by proxy of stockholders entitled to cast a majority of the votes thereat shall
constitute a quorum; but this Section shall not affect any requirement under
statute or under the Declaration of Trust for the vote necessary for the
adoption of any measure. In the event that any meeting a quorum exists for the
transaction of some business but does not exist for the transaction of other
business, the business as to which the quorum is present may be transacted by
the holders of stock present in person or by proxy who are entitled to vote
thereon. Any meeting of stockholders, whether or not a quorum is present, may
be adjourned from time to time by the note of the holders of a majority of the
shares present in person or represented by proxy thereat and entitled to vote,
but in the absence of a quorum no other business may be transacted at such
meeting, except that the stockholders present or represented by proxy at a duly
called or held meeting, at which a quorum is present, may continue to transact
business until adjournment, notwithstanding the withdrawal of such stockholders
to leave less than a quorum, if any action taken (other than adjournment) is
approved by at least a majority of the shares required to constitute a quorum.
At any such adjourned meeting at which a quorum shall be present any business
may be transacted which might have been transacted by the meeting as originally
called.
Section 1.05. Votes Required. Unless otherwise required by law or
------------ --------------
the Declaration of Trust, a Majority Stockholder Vote at a meeting of
stockholders, duly called and at which a quorum is present, shall be
sufficient to take or authorize action upon any matter which may properly
come before the meeting, except that a plurality of all the votes cast at a
meeting at which a quorum is present is sufficient to elect a trustee, and
unless more than a majority of votes cast is required by stature or by the
Declaration of Trust. Each outstanding share of stock shall be entitled to
one vote on each matter submitted to a vote at a meeting of stockholders and
fractional shares shall be entitled to corresponding fractions of one vote on
such matter.
Section 1.06. Proxies. A stockholder may vote the shares owned of
------------ -------
record by the stockholder either in person or by proxy executed in writing by
the stockholder or the stockholder's duly authorized attorney-in-fact. No
proxy shall be valid after eleven months from its date, unless otherwise
provided in the proxy. Every proxy shall be in writing, subscribed by the
stockholder or the stockholder's duly authorized attorney, but need not be
sealed, witnessed or acknowledged
Section 1.07. List of Stockholders. At each meeting of
------------ --------------------
stockholders, a full, true and complete list in alphabetical order of all
stockholders entitled to vote at such meeting, certifying the number of
shares held by each, shall be made available by the Secretary.
2
<PAGE>
Section 1.08 Voting. In all elections for trustees every
------------ ------
stockholder shall have the right to vote, in person or by proxy, the shares
owned of record by the stockholder, for as many persons as there are trustees
to be elected and for whose election the stockholder has a right to vote
provided that no stockholder may cast more votes for any candidate than the
number of shares owned of record by the stockholder. At all meetings of
stockholders, unless the voting is conducted by inspectors, the proxies and
ballots shall be received, and all questions regarding the qualification of
voters and the validity of proxies and the acceptance or rejection of votes
shall be decided by the chairman of the meeting. If demanded by
stockholders, present in person or by proxy, entitled to cast 10% in number
of votes, or if ordered by the chairman, the vote upon any election or
question shall be taken by ballot. Upon like demand or order, the voting
shall be conducted by two inspectors in which event the proxies and ballots
shall be received, and all questions regarding the qualification of voters
and the validity of proxies and the acceptance or rejection of votes shall be
decided, by such inspectors. Unless so demanded or ordered, no vote need be
by ballot, and voting need not be conducted by inspectors. Inspectors may be
elected by the stockholders at their annual meeting, to serve until the close
of the next annual meeting and their election may be held at the same time as
the election of trustees. In case of a failure to elect inspectors, or in
case an inspector shall fail to attend, or refuse or be unable to serve, the
stockholders at any meeting may choose an inspector or inspectors to act at
such meeting, and in default of such election the chairman of the meeting may
appoint an inspector or inspectors. No candidate for election as a trustee
at a meeting shall serve as an inspector thereat.
Section 1.09. Action by Stockholders Other than at a Meeting. Any
------------ ----------------------------------------------
action required or permitted to be taken at any meeting of stockholders may
be taken without a meeting, if a consent in writing, setting forth such
action, is signed by all the stockholders entitled to vote on the subject
matter thereof and any other stockholders entitled to notice of a meeting of
stockholders (but not to vote thereat) have waived in writing any rights
which they may have to dissent from such action, and such consent and waiver
are filed with the records of the Trust.
ARTICLE II.
BOARD OF TRUSTEES
Section 2.01. Regular Meetings. The Board of Trustees shall hold
------------ ----------------
such regular meetings on such dates and at such places as may be designated
from time to time by the Board of Trustees, provided that the Board of
Trustees shall hold no fewer than four regular meetings annually.
Section 2.02. Special Meetings. Special meetings of the Board of
------------ ----------------
Trustees may be called at any time by the Chairman of the Board, the
President or the Secretary of the Trust, or by a majority of the Board of
Trustees by vote at a meeting, or in writing with or without a meeting. Such
special meetings shall be held at such places as may be designated in the
calls.
3
<PAGE>
Section 2.03. Notice of Meetings. Notice of the place, day and
------------ ------------------
hour of every regular and special meeting shall be given to each trustee five
days (or more) before the meeting, orally in person or by telephone, or in
writing by delivering such written notice to the trustee by telegraph, or by
leaving the same at the trustee's residence or usual place of business; in
the alternative, written notice may be given to a trustee by mailing the same
six days (or more) before the meeting, postage prepaid, and addressed to the
trustee at the trustee's last known business or residence post office
address, according to the records of the Trust. Unless required by these
By-Laws or by resolution of the Board of Trustees, no notice of any meeting
of the Board of Trustees need state the purpose of such meeting or the
business to be transacted thereat. No notice of any meeting of the Board of
Trustees need be given to any trustee who attends, or to any trustee who in
writing executed and filed with the records of the meeting either before or
after the holding thereof, waives such notice. Any meeting of the Board of
Trustees, regular or special, may adjourn from time to time to reconvene at
the same or some other place, and no notice need be given of any such
adjourned meeting other than by announcement.
Section 2.04. Quorum. At all meetings of the Board of Trustees,
------------ ------
one-third of the entire Board of Trustees (but in no event fewer than two
trustees) shall constitute a quorum for the transaction of business. Except
in cases in which it is by law, by the Declaration of Trust or by these
By-Laws otherwise provided, the vote of a majority of such quorum at a duly
constituted meeting shall be sufficient to elect and pass any measure. In
the absence of a quorum, the trustees present by majority vote and without
notice other than by announcement at the meeting may adjourn the meeting from
time to time until a quorum shall attend. At any such adjourned meeting at
which a quorum shall be present, any business may be transacted which might
have been transacted at the meeting as originally notified.
Section 2.05. Compensation and Expenses. Trustees may, pursuant to
------------ -------------------------
resolution of the Board of Trustees, be paid fees for their services, which
fees may consist of an annual fee or retainer and/or a fixed fee for
attendance of meetings. In addition, trustees may in the same manner be
reimbursed for expenses incurred in connection with their attendance at
meetings or otherwise in performing their duties as trustees. Members of
committees may be allowed like compensation and reimbursement. Nothing
herein contained shall preclude any trustee from serving the Trust in any
other capacity and receiving compensation therefor.
Section 2.06. Action by Trustees Other than at a Meeting. Any
------------ ------------------------------------------
action required or permitted to be taken at any meeting of the Board of
Trustees, or of any committee thereof, may be taken without a meeting, if a
written consent to such action is signed by all members of the Board of
Trustees or of such committee, as the case may be, and such written consent
is filed with the minutes of proceedings of the Board of Trustees or
committee.
4
<PAGE>
Section 2.07. Holding of Meetings by Conference Telephone Call. At
------------
any regular or special meeting of the Board of Trustees or any committee
thereof, members thereof may participate in such meeting by means of
conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other. Participation
in a meeting pursuant to this section shall constitute presence in person at
such meeting.
ARTICLE III.
OFFICERS
Section 3.01. Executive Officers. The Board of Trustees shall
------------ ------------------
choose a Chairman of the Board from among the trustees, and shall choose a
President, a Secretary and a Treasurer who need not be trustees. The Board
of Trustees may choose an Executive Vice President, one or more Senior Vice
Presidents, one or more Vice Presidents, one or more Assistant Secretaries
and one or more Assistant Treasurers, none of whom need be a trustee. Any
two or more of the above-mentioned offices, except those of President and a
Vice President, may be held by the same person, but no officer shall execute,
acknowledge or verify any instrument in more than one capacity if such
instrument be required by law, by the Declaration of Trust, by the By-Laws or
by resolution of the Board of Trustees to be executed by any two or more
officers. Each such officer shall hold office until the officer's successor
shall have been duly chosen and qualified, or until the officer shall have
resigned or shall have been removed. Any vacancy in any of the above offices
may be filled for the unexpired portion of the term of the Board of Trustees
at any regular or special meeting.
Section 3.02. Chairman of the Board. The Chairman of the Board, if
------------ ---------------------
one be elected, shall preside at all meetings of the Board of Trustees and of
the stockholders at which the Chairman is present. The Chairman shall have and
may exercise such powers as are, from time to time, assigned to the Chairman by
the Board of Trustees.
Section 3.03. President. In the absence of the Chairman of the
------------ ---------
Board, the President shall preside at all meetings of the stockholders and of
the Board of Trustees at which he shall be present; he shall have general
charge and supervision of the assets and affairs of the Trust; he may sign
and execute, in the name of the Trust, all authorized deed, mortgages, bonds,
contracts or other instruments, except in cases in which the signing and
execution thereof shall have been expressly delegated to some other officer
or agent of the Trust; and, in general, he shall perform all duties incident
to the office of a president of a business trust, and such other duties as
are from time to time assigned by the Board of Trustees.
Section 3.04. Vice Presidents. The Vice President or Vice
------------ ---------------
Presidents, at the request of the President, or in his absence or during the
President's inability or refusal to act, shall perform the duties and
exercise the functions of the President, and when so acting shall have the
powers of the President. If there be more than one Vice President,
5
<PAGE>
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. The Vice President or Vice Presidents shall have
such other powers and perform such other duties as may be assigned by the
Board of Trustees or the President.
Section 3.05. Secretary and Assistant Secretaries. The Secretary
------------ -----------------------------------
shall keep the minutes of the meetings of the stockholders, of the Board of
Trustees and of any committees, in books provided for the purpose; shall see
that all notices are duly given in accordance with the provisions of these
By-Laws or as required by law; he shall be custodian of the records of the
Trust; he shall see that the corporate seal is affixed to all documents the
execution of which, on behalf of the Trust, under its seal, is duly
authorized, and when so affixed may attest the same; and in general, he shall
perform all duties incident to the office of a secretary of a business
trust, and such other duties as, from time to time, may be assigned by the
Board of Trustees, the Chairman, or the President.
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 Board of
Trustees may from time to time prescribe.
Section 3.06. Treasurer and Assistant Treasurer. The Treasurer
------------ ---------------------------------
shall have charge of and be responsible for all funds, securities, receipt s
and disbursements of the Trust, and shall deposit, or cause to be deposited
in the name of the Trust, all moneys or other valuable effects in such banks,
trust companies or other depositories as shall, from time to time, be
selected by the Board of Trustees; the Treasurer shall render to the
President, the Chairman, and to the Board of Trustees, whenever requested, an
account of the financial condition of the Trust, and in general, he shall
perform all the duties incident to the office of a treasurer of a business
trust, such other duties as may be assigned by the Board of Trustees or the
President.
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 from time to time prescribe.
Section 3.07. Subordinate Officers. The Board of Trustees may from
------------ --------------------
time to time appoint such subordinate officers as it may deem desirable. Each
such officer shall hold office for such period and perform such duties as the
Board of Trustees or the President may prescribe. The Board of Trustees may,
from time to time, authorize any committee or officer to appoint and remove
subordinate officers and prescribe the duties thereof.
6
<PAGE>
Section 3.08. Removal. Any officer or agent of the Trust may be
------------ -------
removed by the Board of Trustees whenever, in its judgment, the best interest
of the Trust will be served thereby, but such removal shall be without
prejudice to the contractual rights, if any, of the person so removed.
ARTICLE IV.
STOCK
Section 4.01. Certificates. Each stockholder shall be entitled to
------------ ------------
a certificate or certificates which shall represent and certify the number of
shares of stock owned by the stockholder in the Trust. Each stock
certificate shall include on its face the name of the Trust, the name of the
stockholder or other person to whom it is issued, and the class of stock and
number of shares it represents. Such certificates shall be signed by the
Chairman of the Board, the President or a Vice President and countersigned by
the Secretary or an Assistant Secretary or the Treasurer or an Assistant
Treasurer, and sealed with the seal of the Trust or a facsimile of such seal.
The signatures may be either manual or facsimile signatures and the seal may
be either facsimile or any other form of seal. No certificates shall be
issued for fractional shares. Stock certificates shall be in such form, not
inconsistent with law or with the Declaration of Trust, as shall be approved
by the Board of Trustees. In case any officer of the Trust who has signed
any certificate ceases to be an officer of the Trust, whether because of
death, resignation or otherwise, before such certificate is issued, the
certificate may nevertheless be issued and delivered by the Trust as if the
officer had not ceased to be such officer as of the date of its issue. Stock
certificates need not be issued except to stockholders who request such
issuance in writing.
Section 4.02. Record Dates. The Board of Trustees is hereby
------------ ------------
empowered to fix, in advance, a date as the record date for the purpose of
determining stockholders entitled to notice of, or to vote at, any meeting of
stockholders, or stockholders entitled to receive payment of any dividend ,
capital gains distribution or the allotment of any rights, or in order to
make a determination of stockholders for any other proper purpose. Such date
in any case shall be not more than ninety days, and in case of a meeting of
stockholders, not less than ten days, prior to the date on which the
particular action, requiring such determination of stockholders, is to be
taken.
Section 4.03. Replacement Certificates. The Board of Trustees may
------------ ------------------------
direct a new stock certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the Trust alleged to have
been lost, stolen or destroyed, upon the making of an affidavit of that fact
by the person claiming the certificate of stock to be lost, stolen or
destroyed. When authorizing such issue of a new certificate or certificates,
the Board of Trustees may in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or his legal representative to advertise the
same in such manner as it shall require and/or to give
7
<PAGE>
the Trust a bond in such sum as it may direct as indemnity against any claim
that may be made against the Trust with respect to the certificate alleged to
have been lost, stolen or destroyed.
Section 4.04. Certification of Beneficial Owners. The Board of
------------ ----------------------------------
Trustees may adopt by resolution a procedure by which a stockholder of the
Trust may certify in writing to the Trust that any shares of stock registered
in the name of the stockholder are held for the account of a specified person
other than the stockholder. The resolution shall set forth the class of
stockholders who may certify; the purpose for which the certification may be
made; the form of certification and the information to be contained in it; if
the certification is with respect to a record date or a closing of the stock
transfer books, the time after the record date or closing of the stock
transfer books within which the certification must be received by the Trust;
and any other provisions with respect to the procedure which the Board
considers necessary or desirable. On receipt of a certification which
complies with the procedure adopted by the Board in accordance with this
Section, the person specified in the certification is, for the purpose set
forth in the certification, the holder of record of the specified stock in
place of the stockholder who makes the certification.
ARTICLE V.
GENERAL PROVISIONS
Section 5.01. Checks. All checks or demands for money and notes of
------------ ------
the Trust shall be signed by such officer or officers or such other person or
persons as the Board of Trustees may from time to time designate.
Section 5.02. Custodian. All securities and cash of the Trust
------------ ---------
shall be held by a custodian which shall be a bank or trust company having
(according to its last published report) not less than $2,000,000 aggregate
capital, surplus and undivided profits, provided such a custodian can be
found ready and willing to act. The Trust shall enter into a written
contract with the Custodian regarding the powers, duties and compensation of
the custodian with respect to the cash and securities of the Trust held by
the custodian. Said contract and all amendments thereto shall be approved by
the Board of Trustees. The Trust shall upon the resignation or inability to
serve of the custodian use its best efforts to obtain a successor custodian;
require that the cash and securities owned by the Trust be delivered directly
to the successor custodian; and in the event that no successor custodian can
be found, submit to the stockholders, before permitting delivery of the cash
and securities owned by the Trust to other than a successor custodian, the
question whether or not the Trust shall be liquidated or shall function
without a custodian.
Section 5.03. Prohibited Transactions. No officer or trustee of
the Trust or of its investment adviser shall deal for or on behalf of the
Trust with himself, as principal or agent, or with any corporation or
partnership in which he has a financial interest, This prohibition shall not
prevent: (a) officers or trustees of the Trust from having a financial
8
<PAGE>
interest in the Trust, or its investment adviser; (b) the purchase of
securities for the portfolio of the Trust or the sale of securities owned by
the Trust through a securities dealer, one or more of whose partners,
officers or directors is an officer of trustee of the Trust, provided such
transactions are handled in the capacity of broker only and provided
commissions charged do not exceed customary brokerage charges for such
service; or (c) the employment of legal counsel, registrar, transfer agent,
dividend disbursing agent or custodian having a partner, officer or trustees
who is an officer or trustee of the Trust, provided only customary fees are
charged for services rendered to or for the benefit of the Trust.
Section 5.04. Seal. The Board of Trustees may provide a suitable
------------ ----
seal, bearing the name of the Trust, which seal, if one is provided, shall be
in the custody of the Secretary. The Board of Trustees may authorize one or
more duplicate seals and provide for the custody thereof. If the Trust is
required to place its corporate seal to a document, it is sufficient to meet
the requirement of any law, rule, or regulation relating to a corporate seal
to place the word "Seal" adjacent to the signature of the person authorized
to sign the document on behalf of the Trust.
Section 5.05. Bonds. The Board of Trustees may require any
------------ -----
officer, agent or employee of the Trust to give a bond to the Trust,
conditioned upon the faithful discharge of his duties, with one or more
sureties and in such amount as may be satisfactory to the Board of Trustees.
The Board of Trustees shall, in any event, require the Trust to provide and
maintain a bond issued by a reputable fidelity insurance company, against
larceny and embezzlement, covering each officer and employee of the Trust who
may singly, or jointly with others, have access to securities or funds of the
Trust, either directly or through authority to draw upon such funds, or to
direct generally the disposition of such securities, such bond or bonds to be
in such reasonable amount as a majority of the Board of Trustees who are not
such officers or employees of the Trust shall determine with due
consideration to the value of the aggregate assets of the Trust to which any
such officer or employee may have access, or in any amount or upon such terms
as the Commission may prescribe by order, rule or regulations.
Section 5.06. Voting Upon Shares in Other Corporations. Stock of
------------ ----------------------------------------
other corporations or associations, registered in the name of the Trust, may
be voted by the President, a Vice President, or a proxy appointed by either
of them. The Board of Trustees, however, may by resolution appoint some
other person to vote such shares, in which case such person shall be entitled
to vote such shares upon the production of a certified copy of such
resolution.
ARTICLE VI.
AMENDMENT OF BY-LAWS
9
<PAGE>
Subject to the Declaration of Trust, these By-Laws of the Trust may be
altered, amended, added to or repealed by Majority Shareholder Vote or by
majority vote of the entire Board of Trustees.
ARTICLE VII.
DEFINITIONS
Unless the context requires otherwise, capitalized terms in these By-Laws
have the same meaning as defined in the Declaration of Trust.
<PAGE>
INVESTMENT MANAGEMENT AND ADMINISTRATION CONTRACT
BETWEEN G.T. GLOBAL GROWTH SERIES AND
G.T. CAPITAL MANAGEMENT, INC.
Contract made as of April 24, 1989, between G. T. Global Growth Series, a
Massachusetts business trust ("Company") and G.T. Capital Management, Inc.
("G.T."), a California corporation.
WHEREAS the Company is registered under the Investment Company Act of
1940, as amended ("1940 Act") as an open-end management investment company,
and intends to offer for public sale shares of G.T. America Growth Fund,
G.T. Europe Growth Fund, G.T. International Growth Fund, G.T. Japan Growth
Fund, G.T. Pacific Growth Fund and G.T. Worldwide Growth Fund, each being a
series of the Company's shares of beneficial interest; and
WHEREAS the Company hereafter may establish additional series of its
shares of beneficial interest (any such additional series, together with the
series named in the paragraph immediately preceding, are collectively
referred to herein as the "Funds," and singly may be referred to as a
"Fund"); and
WHEREAS the Company desires to retain G.T. as investment manager and
administrator to furnish certain administrative, investment advisory and
portfolio management services to the Company and the Funds, and G. T. 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 Company hereby appoints G.T. as investment
manager and administrator of each Fund for the period and on the terms set
forth in this Contract. G.T. 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 Company's Board of Trustees
("Board"), G.T. will provide a continuous investment program for each Fund,
including investment research and management with respect to all securities
and investments and cash equivalents of the Fund. G.T. will determine from
time to time what securities and other investments will be purchased,
retained or sold by each Fund, and the brokers and dealers through whom
trades will be executed.
(b) G.T. 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 G.T. may, in its discretion purchase and sell
portfolio securities to and from brokers and
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dealers who sell shares of the Funds or provide the Funds of G.T.'s other
clients with research analysis, advice and similar services. G.T. 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 G.T.'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 G.T. to the Funds and its other clients and that the total commissions or
spreads paid by each Fund will be reasonable in relation to the benefits to
the Fund over the long term. In no instance will portfolio securities be
purchased from or sold to G.T. or any affiliated person thereof except in
accordance with the federal securities law and the rules and regulations
thereunder. Whenever G.T. simultaneously places orders to purchase or sell
the same security on behalf of a Fund and one or more other accounts advised
by G.T., 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 Company
recognizes that in some cases this procedure may adversely affect the results
obtained for each Fund.
(c) G.T. will oversee the maintenance of all books and records with
respect to the securities transactions of the Funds, 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, G.T. hereby
agrees that all records which it maintains for the Company are the property of
the Company, agrees to preserve for the periods prescribed by Rule 31a-2 under
the 1940 Act any records which it maintains for the Company and which are
required to be maintained by Rule 31a-1 under the 1940 Act, and further agrees
to surrender promptly to the Company any records which it maintains for the
Company upon request by the Company.
(d) G.T. will oversee the computation of the net asset value and the
net income of each Fund as described in the currently effective registration
statement of the Company under the Securities Act of 1933, as amended, and
1940 Act and any supplements thereto ("Registration Statement") or as more
frequently requested by the Board.
3. DUTIES AS ADMINISTRATOR. G.T. will administer the affairs of each
Fund subject to the supervision of the Board and the following understandings:
(a) G.T. will supervise all aspects of the operations of each 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 Funds.
(b) At G.T.'s expense, G.T. will provide the Company and the Funds
with such corporate, administrative and clerical personnel (including
officers of the Company) and services as are reasonably deemed necessary or
advisable by the Board.
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(c) G.T. will arrange, but not pay, for the periodic preparation,
updating, filing and dissemination (as applicable) of each Fund's prospectus,
statement of additional information, proxy material, tax returns and required
reports with or to the Fund's shareholders, the Securities and Exchange
Commission and other appropriate federal or state regulatory authorities.
(d) G.T. will provide the Company and the Funds with, or obtain for
them, 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, G.T. will act in conformity with the Articles of
Incorporation, By-Laws and Registration Statement of the Company 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 G.T.'s DUTIES AS INVESTMENT MANAGER AND
ADMINISTRATOR. With respect to one or more of the Funds, G.T. may enter into
one or more contracts ("Sub-Advisory or Sub-Administration Contract") with a
sub-adviser or sub-administrator in which G.T. delegates to such sub-adviser
or sub-administrator the performance of any or all of the services specified
in Paragraph 2 and 3 of this Contract provided that (i) each Sub-Advisory and
Sub-Administration Contract imposes on the sub-adviser or sub-administrator
bound thereby all the duties and conditions to which G. T. is subject with
respect to the delegated services under Paragraphs 2, 3, and 4 of this
Contract; (ii) each Sub-Advisory or Sub-Administration Contract meets all
requirements of the 1940 Act and rules thereunder; and (iii) G.T. shall not
enter into a Sub-Advisory or Sub-Administration Contract unless it is
approved by the Board prior to implementation.
6. SERVICES NOT EXCLUSIVE. The services furnished by G.T.
hereunder are not to be deemed exclusive and G. T. 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 G.T. who may also be a Trustee,
officer or employee of the Company, 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.
7. EXPENSES.
(a) During the term of this Contract, each Fund will bear all
expenses not specifically assumed by G.T., incurred in its operations and the
offering of its shares.
(b) Expenses borne by each 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 G.T. under
this Contract; (iii) expenses of
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<PAGE>
organizing the Company and the Fund; (iv) filing fees and expenses relating
to the registration and qualification of the Fund's shares and the Company
under federal and/or state securities laws and maintaining such registrations
and qualifications; (v) fees and salaries payable to the Company'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 Company of the
Fund 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) with respect to existing
shareholders, expenses of setting in type, printing and mailing prospectuses
and supplements thereto, statements of additional information and supplements
thereto, 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 Company is a party and the
expenses the Company may incur as a result of its legal obligations to
provide indemnification to its officer, Trustees, employees and agents)
incurred by the Company or 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
costs of investment company literature and other publications provided by the
Company to its Trustees and officers; and (xviii) costs of mailing,
stationery and communications equipment.
(c) All general expenses of the Company and joint expenses of the
Funds shall be allocated among each Fund on a basis deemed fair and equitable
by G.T., subject to the Board's supervision.
(d) G.T. will assume the cost of any compensation for services provided
to the Company received by the officers of the Company and by the Trustees of
the Company who are not independent Trustees.
(e) The payment or assumption by G. T. of any expense of the Company
or any Fund that G.T. is not required by this Contact to pay or assume shall
not obligate G.T. to pay or assume the same or any similar expense of the
Company or any Fund on any subsequent occasion.
8. COMPENSATION.
(a) For the services provided under this Contract, G.T. America
Growth Fund will pay G.T. a fee, computed daily and paid monthly at the
annualized rate of 0.75% of the Fund's average daily net assets.
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(b) For the services provided under this Contract, G.T. Europe Growth
Fund, G.T. International Growth Fund, G.T. Japan Growth Fund, G.T. Pacific
Growth Fund and G.T. Worldwide Growth Fund each will pay G.T. a fee computed
daily and paid monthly at the annualized rate of 1.00% of the Fund's average
daily set assets.
(c) For the services provided under this Contract, each Fund as
hereafter may be established will pay to G. T. a fee in an amount to be
agreed upon in a written fee contract ("Fee Contract") executed by the
Company on behalf of such Fund and by G. T. All such Fee Contracts shall
provide that they are subject to all terms and conditions of this Contract.
(d) The fee shall be computed daily and paid monthly to G.T. on or
before the last business day of the next succeeding calendar month.
(e) G.T. agrees to reduce the fee payable to it under this Contract
by the amount by which the ordinary operating expenses of a Fund for any
fiscal year, excluding interest, taxes, distribution and extraordinary
expenses, shall exceed the most stringent limits prescribed by any state in
which Fund shares are offered for sale. Costs incurred in connection with
the purchase or sale of portfolio securities, including brokerage fees and
commissions which are capitalized in accordance with generally accepted
accounting principles applicable to investment companies, shall be accounted
for as capital items and not expenses. Proper accruals shall be made for a
Fund for any projected reduction hereunder and corresponding amounts shall be
withheld from the fees paid by that Fund to G.T. Any additional reduction
computed as being necessary at the end of the fiscal year shall be deducted
from the fee for the last month of such fiscal year. If the amount of the
fee payable by a Fund to G.T. is less than the amount by which the Fund's
expenses exceeds an applicable expense limitation, G.T. shall reimburse the
Fund's expenses in an amount sufficient to enable the Fund to meet such
limitation.
(f) 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.
9. LIMITATION OF LIABILITY OF G. T. AND INDEMNIFICATION. G.T. shall
not be liable, and each Fund shall indemnify G.T. and its directors, officers
and employees, for any costs or liabilities arising from any error of judgment
or mistake of law or any loss suffered by the Fund or the Company in connection
with the matters to which this Contract relates except a loss resulting from
willful misfeasance, bad faith or gross negligence or the part of G.T. in the
performance by G.T. of its duties or from reckless disregard by G.T. of its
obligations and duties under this Contract. Any person even though also an
officer, partner, employee or agent of G.T., who may be or become an officer,
Trustee, employee or agent of the Company shall be deemed when rendering
services to a Fund or the Company or acting with respect to any business of a
Fund or the
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Company, to be rendering such service to or acting solely for the Fund or the
Company and not as an officer, partner, employee, or agent or one under the
control or direction of G.T. even though paid by it.
10. DURATION AND TERMINATION.
(a) This Contract shall become effective on the date hereabove
written, provided that this Contract shall not take effect with respect to
any Fund unless it has first been approved (i) by a vote of a majority of the
Independent Trustees, cast in person at a meeting called for the purpose of
voting on such approval, and (ii) by vote of a majority of that 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 each 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 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 that
Fund.
(c) Notwithstanding the foregoing, with respect to any 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 G.T. or by G.T. at
any time, without the payment of any penalty, on sixty days' written notice
to the Company. Termination of this Contract with respect to one Fund shall
not affect the continued effectiveness of this Contract with respect to any
other Fund. This Contract will automatically terminate in the event of its
assignment.
11. AMENDMENT OF THIS CONTRACT. 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.
12. 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.
13. LIMITATION OF SHAREHOLDER LIABILITY It is expressly agreed
that the obligations of the Company hereunder shall not be binding upon any
of the Trustees, shareholders, nominees, officers, agents or employees of the
Company personally, but shall only bind the assets and property of the Funds
as provided in the Company's Declaration of Trust. The execution and
delivery of this Contract have been authorized by the Trustees of the Company
and shareholders of the Funds, and this Contract has
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<PAGE>
been executed and delivered by an authorized officer of the Company acting as
such; neither such authorization by such Trustees and shareholders nor such
execution and delivery by such officer shall be deemed to have been made by
any of them individually or to impose any liability on any of them
personally, but shall bind only the assets and property of the Funds, as
provided in the Company's Declaration of Trust.
14. MISCELLANEOUS. The captions in this Contract are included for
convenience or reference only and in no way define or limit 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: G.T. GLOBAL GROWTH SERIES
/s/ Joseph Licean /s/ James W. Churm
- ------------------------ --------------------------
James W. Churm
Vice President
Attest: G.T. CAPITAL MANAGEMENT, INC.
/s/ Joseph Licean By: /s/ James R. Tufts
- ------------------------ --------------------------
James R. Tufts
Vice President - Finance
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DISTRIBUTION CONTRACT
CLASS A SHARES
BETWEEN G.T. GLOBAL GROWTH SERIES
AND G.T. GLOBAL FINANCIAL SERVICES, INC.
THIS DISTRIBUTION CONTRACT, dated as of March 31, 1993, between G.T.
GLOBAL GROWTH SERIES, a Massachusetts business trust ("Company"), and G.T.
GLOBAL FINANCIAL SERVICES, INC., a California corporation ("G.T. Global"), is
made with reference to the following facts:
A. The Company is an open-end management investment company.
B. The Company's Board of Trustees ("Board") has established Class A and
Class B shares of each Series.
C. As of this date, the existing shares of each Series of the Company
("Funds") are subject to a Distribution Contract in effect since the later of
February 24, 1989, or the commencement of operation of each Fund, the substance
of which is substantially similar to that contained in this Contract.
D. As of the close of business on this date all of the publicly issued,
outstanding shares of each Fund are being redesignated as Class A shares of the
respective Fund.
E. G.T. Global has the facilities to sell and distribute the Class A
shares of beneficial interest of the various Funds.
F. The Company and G.T. Global desire to enter into a distribution
contract with respect to the Class A shares of the Funds.
NOW, THEREFORE, the parties agree as follows:
1. G.T. Global shall be the exclusive principal underwriter for the
sale of Class A shares of each Fund, except as otherwise provided pursuant to
paragraph 20 hereof. The terms "Class A shares of the Fund" or "Class A
shares" as used herein shall mean Class A shares of beneficial interest
issued by the Funds.
2. In the sale of Class A shares of each Fund, G.T. Global shall act as
agent of the Company except in any transaction in which G.T. Global sells such
Class A shares as a dealer to the public, in which event G.T. Global shall act
as principal for its own account.
3. The Company shall sell Class A shares only through G.T. Global except
that the Company may at any time:
(a) Issue Class A shares to any corporation, association,
trust, partnership, or other organization, or its, or their,
security holders, beneficiaries, or
<PAGE>
members, in connection with a merger, consolidation, or
reorganization to which the Company is a party, or in
connection with the acquisition of all or substantially all
the property and assets of such corporation, association,
trust, partnership, or other organization;
(b) Issue Class A shares of a Fund at net asset value to
the holders of Class A shares of the other Funds or Class A
shares of other investment companies managed by G.T. Capital
Management, Inc., pursuant to any exchange or reinvestment option
made available as described in the current Prospectus of the
Fund;
(c) Issue Class A shares at net asset value to a Fund's
shareholders in connection with the reinvestment of dividends
and other distributions paid by the Fund;
(d) Issue Class A shares of a Fund at net asset value to
Trustees, officers, and employees of the Company, 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;
(e) Issue Class A shares of a Fund at net asset value to
the sponsor organization, custodian or depository of a periodic
or single payment plan, or similar plan for the purchase of
Class A shares of the Fund, purchasing for such plan;
(f) Issue Class A shares of a Fund in the course of any
other transaction specifically provided for in the Prospectus of
the Funds, or upon obtaining the written consent of G.T. Global
thereto; or
(g) Sell Class A shares outside of the North American
continent, Hawaii, and Puerto Rico through such other principal
underwriter or principal underwriters as may be designated from
time to time by the Company, pursuant to paragraph 20 hereof.
4. G.T. Global shall devote its best efforts to the sale of Class A
shares of the Funds. G.T. Global shall maintain a sales organization suited
to the sale of Class A shares of the Funds and shall use its best efforts to
effect such sales in countries as to which the Company 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
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jurisdictions in which it sells or offers Class A shares for sale and in
which qualification is required.
5. Within the United States of America, G.T. Global shall offer and sell
Class A shares only to or through such dealers as are members in good standing
of the National Association of Securities Dealers, Inc. ("NASD"), or to persons
legally engaged in dealer activities who are exempt from NASD membership in
accord with applicable law. Class A shares of a Fund sold to dealers shall be
for resale by such dealers only at the public offering price set forth in the
effective Prospectus relating to the Fund which is part of the Company'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 Class A shares of a Fund to dealers at such discounts from
said public offering price as are set forth in the Prospectus, and/or in a
Dealer Agreement between G.T. Global and the dealer, but neither such discounts
nor commissions shall exceed the sales charge or discounts referred to in the
Prospectus.
6. In its sales to dealers, G.T. Global shall use its best efforts to
determine that such dealers are appropriately qualified to transact business in
securities under applicable laws, rules and regulations promulgated by such
national, state, local or other governmental or quasi-governmental authorities
as may in a particular instance have jurisdiction.
7. The applicable public offering price of Class A shares of a Fund
shall be the price which is equal to the net asset value per Class A share
plus such sales charge as may be provided for in the Prospectus. Net asset
value per Class A share shall be determined for each Fund in the manner and
at the time or times set forth in and subject to the provisions of its
Prospectus.
8. All orders for Class A shares received by G.T. Global shall, unless
rejected by G.T. Global or the Company, 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 Company to withhold Class A shares of the Funds from sale under
paragraph 16 hereof.
9. The Company or its transfer agent shall be promptly advised of all
orders received, and shall cause Class A shares of Funds to be issued upon
payment received in accord with policies established by the Company and G.T.
Global.
10. G.T. Global shall adopt and follow procedures as approved by the
officers of the Company for the confirmation of sales to dealers, the
collection of amounts payable by dealers on such sales, and the cancellation
of unsettled transactions, as may be necessary to comply with the
requirements of the NASD and the 1940 Act, as such requirements may from time
to time exist.
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<PAGE>
11. The compensation for the services of G.T. Global as a principal
underwriter under this Contract shall be the sales charge, if any, which is
collected on sales of Class A shares. In addition, G.T. Global is entitled
to fees, if any, payable under the Company's Plan of Distribution applicable
to the Class A shares of the Funds ("Class A Plan").
12. The Company agrees to use its best efforts to maintain its
registration as an open-end management investment company under the 1940 Act.
13. The Company agrees to use its best efforts to maintain an effective
prospectus relating to each Fund under the 1933 Act, and warrants that such
prospectus will contain all statements required by and will conform with the
requirements of the 1933 Act and the rules and regulations thereunder, and
that no part of any such prospectus, at the time the Registration Statement
of which it is a part is ordered effective, will contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein, or necessary to make the statements therein not misleading. G.T.
Global agrees and warrants that it will not in the sale of Class A shares of
the Funds use any prospectus, advertising or sales literature not approved by
the Company 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 Company
harmless from any and all loss, expense, damage and liability resulting from
a breach by G.T. Global of the agreements and warranties in this paragraph,
or from the use of any sales literature, information, statistics or other aid
or device employed in connection with the sale of Class A shares.
14. The expense of each printing of each Prospectus and each revision
thereof or addition thereto deemed necessary by the Company's officers to
meet the requirements of applicable laws shall be divided between the
Company, G.T. Global and any other principal underwriter of the Class A
shares of the Funds as they may from time to time agree.
15. The Company agrees to use its best efforts to qualify and maintain
the qualification of an appropriate number of the Class A shares of each Fund
for sale under the securities laws of such states as G.T. Global and the
Company may approve. Any such qualification may be withheld, terminated or
withdrawn by the Company at any time in its discretion. The expense of
qualification and maintenance of qualification shall be borne by the Company,
but G.T. Global shall furnish such information and other materials relating
to its affairs and activities as may be required by the Company or its
counsel in connection with such qualification.
16. The Company and G.T. Global acknowledge that each has the right to
reject any order for the purchase of Class A shares for any reason. In
addition, the Company may withhold Class A shares from sale in any state or
country temporarily or permanently if, in the opinion of its counsel, such
offer or sale would be contrary to law or if the Board of Trustees or the
President or any Vice President of the Company determines that such offer or
sale is not in the best interest of the Company. The Company 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
4
<PAGE>
withholding by reason of non-delivery of Fund Class A shares after a good
faith confirmation by G.T. Global of sales thereof prior to receipt of notice
of such withholding.
17. Each Fund shall reimburse G.T. Global for a portion of its
expenditures incurred in providing services under this Contract at the rate
and under the terms specified with respect o such Fund in the Class A Plan,
as such Plan may be amended from time to time.
18. (a) With respect to any Fund, this Contract may be
terminated at any time, without payment of any penalty, by vote
of a majority of the members of the Board of Trustees of the
Company who are not interested persons of the Company and have
no direct or indirect financial interest in the operation of the
Plan or in any agreements related to the Plan or by vote of a
majority of the outstanding voting securities of the Company on
thirty (30) days' written notice to G.T. Global, or by G.T.
Global on like notice to the Company. Termination of this
Contract with respect to Class A shares of one Fund shall not
affect its continued effectiveness with respect to Class A
shares of any other Fund.
(b) This Contract may be terminated by either party upon
five (5) days' written notice to the other party in the event
that the Securities and Exchange Commission has issued an order
or obtained an injunction or other court order suspending
effectiveness of the Registration Statement covering the Class A
shares of the Funds.
(c) This Contract may also be terminated by the Company
upon five (5) days' written notice to G.T. Global, should the
NASD expel G.T. Global or suspend its membership in that
organization.
(d) G.T. Global shall inform the Company promptly of the
institution of any proceedings against it by the Securities and
Exchange Commission, the NASD or any state regulatory authority.
19. This Agreement shall automatically terminate in the event of its
assignment. The term "assignment" shall have the meaning defined in the 1940
Act.
20. With respect to any Fund, upon sixty (60) days' written notice to
G.T. Global, the Company may from time to time designate other principal
underwriters of Class A shares with respect to areas other than the North
American continent, Hawaii, Puerto Rico and such countries as to which the
Company 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 Class A shares in the areas so designated shall
terminate, but this Contract shall remain otherwise in full effect until
terminated in accordance with the provisions of paragraphs 18 and 19 hereof.
21. No provision of this Contract shall protect or purport to protect
G.T. Global against any liability to the Company or holders of Class A shares
of the Funds for which G.T. Global would otherwise be liable by reason of
willful misfeasance, bad faith or negligence.
5
<PAGE>
22. Unless sooner terminated in accordance with the provisions of
paragraphs 18 or 19 hereof, this Contract shall continue in effect with
respect to each Fund for periods of up to one year, but only so long as such
continuance is specifically approved at least annually (i) by vote of a
majority of the Trustees of the Company who are not interested persons of the
Company and who have no direct or indirect financial interest in the Plan or
any agreements relating to the Plan, and who are not parties to this Contract
or interested persons of any such party as defined by the 1940 Act, cast in
person at a meeting called for the purpose of voting on such approval; and
(ii) by either the Board of Trustees of the Company or a vote of a majority
of the outstanding Class A shares of the Company as defined by the 1940 Act.
23. It is expressly agreed that the obligations of the Company
hereunder shall not be binding upon any of the Trustees, shareholders,
nominees, officers, agents or employees of the Company personally, but shall
only bind the assets and property of the Funds, as provided in the Company's
Declaration of Trust. The execution and delivery of this Contract have been
authorized by the Trustees of the Company, and this Contract has been
executed and delivered by an authorized officer of the Company acting as
such; neither such authorization by such Trustees nor such execution and
delivery by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the assets and property of the Funds, as provided in the Company's
Declaration of Trust.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed in duplicate original by their officers thereunder duly authorized as
of the day and year first written above.
Attest: G.T. GLOBAL GROWTH SERIES
/s/ Peter R. Guarino By:/s/ James W. Churm
- ------------------------ -----------------------------
Attest: G.T. GLOBAL FINANCIAL
SERVICES, INC.
/s/ Peter R. Guarino By:/s/ William J. Guilfoyle
- ------------------------ -----------------------------
6
<PAGE>
DISTRIBUTION CONTRACT
CLASS B SHARES
BETWEEN G.T. GLOBAL GROWTH SERIES
AND G.T. GLOBAL FINANCIAL SERVICES, INC.
THIS DISTRIBUTION CONTRACT, dated as of March 31, 1993, between G.T.
GLOBAL GROWTH SERIES, a Massachusetts business trust ("Company"), and G.T.
GLOBAL FINANCIAL SERVICES, INC., a California corporation ("G.T. Global"), is
made with reference to the following facts:
A. The Company is an open-end management investment company.
B. The Company's Board of Trustees ("Board") has established Class A and
Class B shares of each Series.
C. G.T. Global has the facilities to sell and distribute the Class B
shares of beneficial interest of the various series established from time to
time by the Company ("Funds").
D. The Company and G.T. Global desire to enter into a distribution
contract with respect to the Class B shares of the Funds.
NOW, THEREFORE, the parties agree as follows:
1. G.T. Global shall be the exclusive principal underwriter for the sale
of Class B shares of each Fund, except as otherwise provided pursuant to
paragraph 20 hereof. The terms "Class B shares of the Fund" or "Class B
shares" as used herein shall mean Class B shares of beneficial interest
issued by the Funds.
2. In the sale of Class B shares of each Fund, G.T. Global shall act as
agent of the Company except in any transaction in which G.T. Global sells such
Class B shares as a dealer to the public, in which event G.T. Global shall act
as principal for its own account.
3. The Company shall sell Class B shares only through G.T. Global except
that the Company may at any time:
(a) Issue Class B shares to any corporation, association,
trust, partnership, or other organization, or its, or their,
security holders, beneficiaries, or members, in connection with
a merger, consolidation, or reorganization to which the Company
is a party, or in connection with the acquisition of all or
substantially all the property and assets of such corporation,
association, trust, partnership, or other organization;
(b) Issue Class B shares of a Fund to the holders of Class
B shares of the other Funds or Class B shares of other
investment companies managed by G.T.
<PAGE>
Capital Management, Inc., pursuant to any exchange or
reinvestment option made available as described in the current
Prospectus of the Fund;
(c) Issue Class B shares to a Fund's shareholders in
connection with the reinvestment of dividends and other
distributions paid by the Fund;
(d) Issue Class B shares of a Fund to Trustees, officers,
and employees of the Company, 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;
(e) Issue Class B shares of a Fund to the sponsor
organization, custodian or depository of a periodic or single
payment plan, or similar plan for the purchase of Class B shares
of the Fund, purchasing for such plan;
(f) Issue Class B shares of a Fund in the course of any
other transaction specifically provided for in the Prospectus of
the Funds, or upon obtaining the written consent of G.T. Global
thereto; or
(g) Sell Class B shares outside of the North American
continent, Hawaii and Puerto Rico through such other principal
underwriter or principal underwriters as may be designated from
time to time by the Company, pursuant to paragraph 20 hereof.
4. G.T. Global shall devote its best efforts to the sale of Class B
shares of the Funds. G.T. Global shall maintain a sales organization suited to
the sale of Class B shares of the Funds and shall use its best efforts to
effect such sales in countries as to which the Company shall have expressly
waived in writing its right to designate another principal underwriter
pursuant to paragraph 20 hereof, and shall effect and maintain appropriate
qualification to do so in all those jurisdictions in which it sells or offers
Class B shares for sale and in which qualification is required.
5. Within the United States of America, G.T. Global shall offer and sell
Class B shares only to or through such dealers as are members in good standing
of the National Association of Securities Dealers, Inc. ("NASD"), or to persons
legally engaged in dealer activities who are exempt from NASD membership in
accord with applicable law. Class B shares of a Fund sold to dealers shall be
for resale by such dealers only at the public offering price set forth in the
effective Prospectus relating to the Fund which is part of the Company's
-2-
<PAGE>
Registration Statement in effect under the Securities Act of 1933, as amended
("1933 Act"), at the time of such offer or sale (herein, the "Prospectus").
6. In its sales to dealers, 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 Class B shares of a Fund
shall be the price which is equal to the net asset value per Class B share.
Net asset value per Class B share shall be determined for a Fund in the
manner and at the time or times set forth in and subject to the provisions of
its Prospectus.
8. All orders for Class B shares received by G.T. Global shall, unless
rejected by G.T. Global or the Company, 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 Company to
withhold Class B shares of the Funds from sale under paragraph 16 hereof.
9. The Company or its transfer agent shall be promptly advised of all
orders received, and shall cause Class B shares of Funds to be issued upon
payment received in accord with policies established by the Company and G.T.
Global.
10. G.T. Global shall adopt and follow procedures as approved by the
officers of the Company 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 all contingent deferred sales charges
that may be imposed on redemptions of Class B shares. In addition, G.T. Global
is entitled to fees, if any, payable under the Company's Plan of Distribution
applicable to the Class B shares of the Funds ("Class B Plan").
12. The Company agrees to use its best efforts to maintain its
registration as an open-end management investment company under the 1940 Act.
13. The Company agrees to use its best efforts to maintain an effective
prospectus relating to each Fund under the 1933 Act, and warrants that such
prospectus will contain all statements required by and will conform with the
requirements of the 1933 Act and the rules and regulations thereunder, and that
no part of any such prospectus, at the time the Registration Statement of which
it is a part is ordered effective, will contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein,
or necessary to make the
-3-
<PAGE>
statements therein not misleading. G.T. Global agrees and warrants that it
will not in the sale of Class B shares of the Funds use any prospectus,
advertising or sales literature not approved by the Company 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 Company harmless from any and all loss,
expense, damage and liability resulting from a breach by G.T. Global of the
agreements and warranties in this paragraph, or from the use of any sales
literature, information, statistics or other aid or device employed in
connection with the sale of Class B shares.
14. The expense of each printing of each Prospectus and each revision
thereof or addition thereto deemed necessary by the Company's officers to meet
the requirements of applicable laws shall be divided between the Company, G.T.
Global and any other principal underwriter of the Class B shares of the Funds
as they may from time to time agree.
15. The Company agrees to use its best efforts to qualify and maintain
the qualification of an appropriate number of the Class B shares of each Fund
for sale under the securities laws of such states as G.T. Global and the
Company may approve. Any such qualification may be withheld, terminated or
withdrawn by the Company at any time in its discretion. The expense of
qualification and maintenance of qualification shall be borne by the Company,
but G.T. Global shall furnish such information and other materials relating
to its affairs and activities as may be required by the Company or its
counsel in connection with such qualification.
16. The Company and G.T. Global acknowledge that each has the right to
reject any order for the purchase of Class B shares for any reason. In
addition, the Company may withhold Class B shares from sale in any state or
country temporarily or permanently if, in the opinion of its counsel, such
offer or sale would be contrary to law or if the Board of Trustees or the
President or any Vice President of the Company determines that such offer or
sale is not in the best interest of the Company. The Company 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 Class B shares after a good faith confirmation by G.T.
Global of sales thereof prior to receipt of notice of such withholding.
17. Each Fund shall reimburse G.T. Global for a portion of its
expenditures incurred in providing services under this Contract at the rate and
under the terms specified with respect to such Fund in the Class B Plan, as
such Plan may be amended from time to time.
18. (a) With respect to any Fund, this Contract may be
terminated at any time, without payment of any penalty, by vote
of a majority of the members of the Board of Trustees of the
Company who are not interested persons of the Company and have
no direct or indirect financial interest in the operation of the
Plan or in any agreements related to the Plan or by vote of a
majority of the outstanding voting securities of the Fund on
thirty (30) days' written notice to G.T. Global, or by G.T.
Global on like notice to the Company. Termination of this
Contract with respect to Class B shares of
-4-
<PAGE>
one Fund shall not affect its continued effectiveness with
respect to Class B shares of any other Fund.
(b) This Contract may be terminated by either party upon
five (5) days' written notice to the other party in the event
that the Securities and Exchange Commission has issued an order
or obtained an injunction or other court order suspending
effectiveness of the Registration Statement covering the Class B
shares of the Funds.
(c) This Contract may also be terminated by the Company
upon five (5) days' written notice to G.T. Global, should the
NASD expel G.T. Global or suspend its membership in that
organization.
(d) G.T. Global shall inform the Company promptly of the
institution of any proceedings against it by the Securities and
Exchange Commission, the NASD or any state regulatory authority.
19. This Agreement shall automatically terminate in the event of its
assignment. The term "assignment" shall have the meaning defined in the 1940
Act.
20. With respect to any Fund, upon sixty (60) days' written notice to
G.T. Global, the Company may from time to time designate other principal
underwriters of Class B shares with respect to areas other than the North
American continent, Hawaii, Puerto Rico and such countries as to which the
Company 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 Class B shares in the areas so designated shall
terminate, but this Contract shall remain otherwise in full effect until
terminated in accordance with the provisions of paragraphs 18 and 19 hereof.
21. No provision of this Contract shall protect or purport to protect
G.T. Global against any liability to the Company or holders of Class B shares
of the Funds 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 18 or 19 hereof, this Contract shall continue in effect with respect
to each Fund for periods of up to one year, but only so long as such
continuance is specifically approved at least annually (i) by vote of a
majority of the Trustees of the Company who are not interested persons of the
Company and who have no direct or indirect financial interest in the Plan or
any agreements relating to the Plan, and who are not parties to this Contract
or interested persons of any such party as defined by the 1940 Act, cast in
person at a meeting called for the purpose of voting on such approval; and
(ii) by either the Board of Trustees of the Company or a vote of a majority
of the outstanding Class B shares of the Company as defined by the 1940 Act.
23. It is expressly agreed that the obligations of the Company hereunder
shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Company personally, but shall only bind
the assets and property of the Funds, as provided in the Company's
Declaration of Trust. The execution and delivery of this Contract have been
-5-
<PAGE>
authorized by the Trustees of the Company, and this Contract has been
executed and delivered by an authorized officer of the Company acting as
such; neither such authorization by such Trustees nor such execution and
delivery by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the assets and property of the Funds, as provided in the Company's
Declaration of Trust.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed in duplicate original by their officers thereunder duly authorized as
of the day and year first written above.
Attest: G.T. GLOBAL GROWTH SERIES
/s/ Peter R. Guarino By:/s/ James W. Churm
- ----------------------- ----------------------------
Attest: G.T. GLOBAL FINANCIAL
SERVICES, INC.
/s/ Peter R. Guarino By:/s/ William J. Guilfoyle
- ----------------------- ----------------------------
-6-
<PAGE>
DISTRIBUTION CONTRACT
Advisor Class Shares
between G.T. GLOBAL GROWTH SERIES
and G.T. GLOBAL FINANCIAL SERVICES, INC.
This distribution contract, dated as of June 1, 1995, between G.T.
GLOBAL GROWTH SERIES, a Massachusetts business trust ("Company"), and G.T.
GLOBAL FINANCIAL SERVICES, INC., a California corporation ("G.T. Global"), is
made with reference to the following facts:
A. The Company is an open-end management investment company.
B. G.T. Global has the facilities to sell and distribute the Advisor
Class shares of common stock of the various series established from time to
time by the Company ("Funds").
C. The Company's Board of Trustees ("Board") has established Class A,
Class B and Advisor Class shares of each Fund.
D. The Company and G.T. Global have entered into a separate
distribution contract with respect to the Class A and Class B shares of the
Funds.
E. The Company and G.T. Global desire to enter into a distribution
contract with respect to the Advisor Class shares of the Funds.
NOW, THEREFORE, the parties agree as follows:
1. G.T. Global shall be the exclusive principal underwriter for the
sale of Advisor Class shares of each Fund, except as otherwise provided
pursuant to paragraph 19 hereof. The terms "Advisor Class shares of the
Fund" or "Advisor Class shares" as used herein shall mean Advisor Class
shares of common stock issued by the Funds.
2. In the sale of Advisor Class shares of each Fund, G.T. Global shall
act as agent of the Company except in any transaction in which G.T. Global
sells such Advisor Class shares as a dealer, in which event G.T. Global shall
act as principal for its own account.
3. The Company shall sell Advisor Class shares only through G.T.
Global except that the Company may at any time:
(a) Issue Advisor Class shares to any corporation, association,
trust, partnership, or other organization, or its, or their,
security holders, beneficiaries, or members, in connection
with a merger, consolidation, or reorganization to which the
Company is a party or in connection with the
-1-
<PAGE>
acquisition of all or substantially all the property and assets
of such corporation, association, trust, partnership, or other
organization;
(b) Issue Advisor Class shares of a Fund at net asset value to the
holders of Advisor Class shares of the other Funds or Advisor
Class shares of other investment companies managed by LGT
Asset Management, Inc., pursuant to any exchange or
reinvestment option made available as described in the current
Prospectus of the Fund;
(c) Issue Advisor Class shares at net asset value to a Fund's
shareholders in connection with the reinvestment of dividends
and other distributions paid by the Fund;
(d) Issue Advisor Class shares of a Fund at net asset value to the
sponsor organization, custodian or depository of a periodic or
single payment plan, or similar plan for the purchase of
Advisor Class shares of the Fund, purchasing for such plan;
(e) Issue Advisor Class shares of a Fund in the course of any
other transaction specifically provided for in the Prospectus
of the Fund, or upon obtaining the written consent of G.T.
Global thereto; or
(f) Sell Advisor Class shares outside of the North American
continent, Hawaii and Puerto Rico through such other principal
underwriter or principal underwriters as may be designated
from time to time by the Company, pursuant to paragraph 19
hereof.
4. G.T. Global shall devote its best efforts to the sale of Advisor
Class shares of the Funds. G.T. Global shall maintain a sales organization
suited to the sale of Advisor Class shares of the Funds and shall use its
best efforts to effect such sales in countries as to which the Company shall
have expressly waived in writing its right to designate another principal
underwriter pursuant to paragraph 19 hereof, and shall effect and maintain
appropriate qualification to do so in all those jurisdictions in which it
sells or offers Advisor Class shares for sale and in which qualification is
required. G.T. Global shall use its best efforts to ensure that sales of
Advisor Class shares are made to investors eligible to invest in Advisor
Class shares, as defined in the Prospectuses of the Funds.
5. Advisor Class shares of a Fund sold to dealers shall be for resale
by such dealers only at the public offering price set forth in the effective
Prospectus relating to the Fund which is part of the Company's Registration
Statement in effect under the Securities Act of 1933, as amended ("1933
Act"), at the time of such offer or sale (herein, the "Prospectus").
6. In its sales to dealers, 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
-2-
<PAGE>
and regulations promulgated by such national, state, local or other
governmental or quasi-governmental authorities as may in a particular
instance have jurisdiction.
7. The applicable public offering price of Advisor Class shares of a
Fund shall be the Price which is equal to the net asset value per Advisor
Class share. Net asset value per Advisor Class share shall be determined for
a Fund in the manner and at the time or times set forth in and subject to the
provisions of its Prospectus.
8. All orders for Advisor Class shares received by G.T. Global shall,
unless rejected by G.T. Global or the Company, 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 Investment Company
Act of 1940, as amended ("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 Company to
withhold Advisor Class shares of the Funds from sale under paragraph 16
hereof.
9. The Company or its transfer agent shall be promptly advised of all
orders received, and shall cause shares of Funds to be issued upon payment
received in accord with policies established by the Company and G.T. Global.
10. G.T. Global shall adopt and follow procedures as approved by the
officers of the Company 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. G.T. Global shall receive no compensation for its services as a
principal underwriter under this Contract.
12. The Company agrees to use its best efforts to maintain its
registration as an open-end management investment company under the 1940 Act.
13. The Company agrees to use its best efforts to maintain an effective
prospectus relating to each Fund under the 1933 Act, and warrants that such
prospectus will contain all statements required by and will conform with the
requirements of the 1933 Act and the rules and regulations thereunder, and
that no part of any such prospectus, at the time the Registration Statement
of which it is a part is ordered effective, will contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein, or necessary to make the statements therein not misleading. G.T.
Global agrees and warrants that it will not in the sale of Advisor Class
shares of the Funds use any prospectus, advertising or sales literature not
approved by the Company 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
Company harmless from any and all loss, expense, damage and liability
resulting from a
-3-
<PAGE>
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 Advisor Class shares not
approved by the Company and its officers.
14. The expense of each printing of each Prospectus and each revision
thereof or addition thereto ("Printing Costs") deemed necessary by the
Company's officers to meet the requirements of applicable laws shall be
divided between the Company, G.T. Global and any other principal underwriter
of the Advisor Class shares of the Funds as set forth in this Paragraph 14.
G.T. Global shall pay the Printing Costs for each Prospectus of the Funds
except that the Funds will be responsible for the payment of the Printing
Costs for each Prospectus provided to existing shareholders of Advisor Class
shares.
15. The Company agrees to use its best efforts to qualify and maintain
the qualification of an appropriate number of the Advisor Class shares of
each Fund for sale under the securities laws of such states as G.T. Global
and the Company may approve. Any such qualification may be withheld,
terminated or withdrawn by the Company at any time in its discretion. The
expense of qualification and maintenance of qualification shall be borne by
the Company, but G.T. Global shall furnish such information and other
materials relating to its affairs and activities as may be required by the
Company or its counsel in connection with such qualification.
16. The Company and G.T. Global acknowledge that each has the right to
reject any order for the purchase of Advisor Class shares for any reason. In
addition, the Company may withhold Advisor Class shares from sale in any
state or country temporarily or permanently if, in the opinion of its counsel,
such offer or sale would be contrary to law or if the Board of Trustees or
the President or any Vice President of the Company determines that such offer
or sale is not in the best interest of the Company. The Company 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 Advisor Class shares after a good faith confirmation by
G.T. Global of sales thereof prior to receipt of notice of such withholding.
17. (a) With respect to any Fund, this Contract may be terminated at
any time, without payment of any penalty, by the Company on thirty (30) days'
written notice to G.T. Global, or by G.T. Global on like notice to the
Company. Termination of this Contract with respect to Advisor Class shares of
one Fund shall not affect its continued effectiveness with respect to Advisor
Class shares of any other Fund.
(b) This Contract may be terminated by either party upon five (5) days'
written notice to the other party in the event that the Securities and
Exchange Commission has issued an order or obtained an injunction or other
court order suspending effectiveness of the Registration Statement covering
the Advisor Class shares of the Funds.
(c) This Contract may also be terminated by the Company upon five (5)
days' written notice to G.T. Global, should the NASD expel G.T. Global or
suspend its membership in that organization.
-4-
<PAGE>
(d) G.T. Global shall inform the Company promptly of the institution of
any proceedings against it by the Securities and Exchange Commission, the
NASD or any state regulatory authority.
18. This Contract shall automatically terminate in the event of its
assignment. The term "assignment" shall have the meaning defined in the
1940 Act.
19. With respect to any Fund, upon sixty (60) days' written notice to
G.T. Global, the Company may from time to time designate other principal
underwriters of Advisor Class shares with respect to areas other than the
North American continent, Hawaii, Puerto Rico and such countries as to which
the Company 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 Advisor Class shares in the areas so designated shall
terminate, but this Contract shall remain otherwise in full effect until
terminated in accordance with the provisions of paragraphs 17 and 18 hereof.
20. No provision of this Contract shall protect or purport to protect
G.T. Global against any liability to the Company or holders of Advisor Class
shares of the Funds for which G.T. Global would otherwise be liable by
reason of willful misfeasance, bad faith or negligence.
21. Unless sooner terminated in accordance with the provisions of
paragraphs 17 or 18 hereof, this Contract shall continue in effect with
respect to each Fund for periods of up to one year, but only so long as such
continuance is specifically approved at least annually (i) by vote of a
majority of the Trustees of the Company who are not parties to this Contract
or interested persons of any such party as defined by the 1940 Act, cast
in person at a meeting called for the purpose of voting on such approval; and
(ii) either the Board of Trustees of the Company or a vote of a majority of
the outstanding voting securities of the Advisor Class shares of the Company
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: G.T. GLOBAL GROWTH SERIES
/s/ Peter R. Guarino By: /s/ Helge Krist Lee
- ------------------------ ---------------------------
Peter R. Guarino Helge Krist Lee
Assistant Secretary Vice President and Secretary
Attest: G.T. GLOBAL FINANCIAL SERVICES, INC.
/s/ Peter R. Guarino By: /s/ William J. Guilfoyle
- ------------------------ ---------------------------
Peter R. Guarino Willaim J. Guilfoyle
Assistant Secretary Senior Vice President
-5-
<PAGE>
CUSTODIAN CONTRACT
Between
G.T. GLOBAL GROWTH SERIES
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
Page
----
1. Employment of Custodian and Property to be Held By It 1
2. Duties of the Custodian with Respect to Property of the Fund Held by the
Custodian in the United States 2
2.1 Holding Securities 3
2.2 Delivery of Securities 3
2.3 Registration of Securities 7
2.4 Bank Accounts 8
2.5 Availability of Federal Funds 9
2.6 Collection of Income 9
2.7 Payment of Fund Monies 10
2.8 Liability for Payment in Advance of Receipt of
Securities Purchased 12
2.9 Appointment of Agents 13
2.10 Deposit of Fund Assets in Securities System 13
2.10A Fund Assets Held in the Custodian's Direct Paper System 16
2.11 Segregated Account 17
2.12 Ownership Certificates for Tax Purposes 18
2.13 Proxies 18
2.14 Communications Relating to Portfolio Securities 19
3. Duties of Custodian With Respect to Property of the Fund Held
Outside of the United States 19
3.1 Appointment of Foreign Sub-Custodians 19
3.2 Assets to be Held 20
3.3 Foreign Securities Depositories 20
` 3.4 Segregation of Securities 21
3.5 Agreements with Foreign Banking Institutions 21
3.6 Access of Independent Accountants of the Fund 22
3.7 Reports by Custodian 22
3.8 Transactions in Foreign Custody Account 22
3.9 Liability of Foreign Sub-Custodian 23
3.10 Liability of Custodian 24
3.11 Reimbursement for Advances 25
3.12 Monitoring Responsibilities 25
3.13 Branches of U.S. Banks 26
<PAGE>
4. Payments for Sales or Repurchase or Redemptions of Shares
of the Fund 26
5. Proper Instructions 27
6. Actions Permitted Without Express Authority 28
7. Evidence of Authority 28
8. Duties of Custodian With Respect to the Books of Account and
Calculation of Net Asset Value and Net Income 29
9. Records 29
10. Opinion of Fund's Independent Accountants 30
11. Reports to Fund by Independent Public Accountants 30
12. Compensation by Custodian 31
13. Responsibility of Custodian 31
14. Effective Period, Termination and Amendment 33
15. Successor Custodian 34
16. Interpretive and Additional Provisions 36
17. Additional Funds 36
18. Massachusetts Law to Apply 36
19. Prior Contracts 37
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CUSTODIAN CONTRACT
This Contract between G.T. Global Growth Series, a business trust
organized organized and existing under the laws of Massachusetts, 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:
WHEREAS, the Fund is authorized to issue shares in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets; and
WHEREAS, the Fund intends to initially offer shares in six series, the
G. T. America Growth Fund and G. T. Europe Growth Fund, G.T. International
Growth Fund, G.T. Japan Growth Fund, G.T. Pacific Growth Fund and G.T.
Worldwide Growth Fund (such series together with all other series
subsequently established by the Fund and made subject to this Contract in
accordance with paragraph 17, being herein referred to as the "Portfolio(s)");
NOW THEREFOR, 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 the assets of
the Portfolios of the Fund, including securities which the Fund, on behalf of
the applicable Portfolio desires to be held in places within the United
States ("domestic securities") and
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securities it desires to be held outside the United States ("foreign
securities") pursuant to the provisions of the Declaration of Trust. The
Fund on behalf of the Portfolio(s) agrees to deliver to the Custodian all
securities and cash of the Portfolios, and all payments of income, payments
of principal or capital distributions received by it with respect to all
securities owned by the Portfolio(s) from time to time, and the cash
consideration received by it for such new or treasury shares of beneficial
interest of the Fund representing interests in the Portfolios, ("Shares") as
may be issued or sold from time to time. The Custodian shall not be
responsible for any property of a Portfolio held or received by the Portfolio
and not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article 5),
the Custodian shall on behalf of the applicable Portfolio(s) 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 Trustees of the Fund on
behalf of the applicable Portfolio(s), 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 on behalf of the applicable Portfolio(s) 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
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2.1 HOLDING SECURITIES. The Custodian shall hold and physically segregate
for the account of each Portfolio all non-cash property, to be held by it
in the United States including all domestic securities owned by such
Portfolio, 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 System" and (b) commercial
paper of an issuer for which State Street Bank and Trust Company acts as
issuing and paying agent ("Direct Paper") which is deposited and/or
maintained in the Direct Paper System of the Custodian pursuant to Section
2.10A.
2.2 DELIVERY OF SECURITIES. The Custodian shall release and deliver domestic
securities owned by a Portfolio 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 from the Fund on behalf of the applicable Portfolio,
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 Portfolio
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
Portfolio;
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3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.10 thereof;
4) To the depository agent in connection with tender or other
similar offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such securities are
called, redeemed, 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 Portfolio 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 delivered to the Custodian;
7) Upon the sale of such securities for the account of the
Portfolio, 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
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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;
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 Portfolio, BUT ONLY against receipt of adequate collateral
as agreed upon from time to time by the Custodian and the Fund
on behalf of the Portfolio, 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
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the delivery of securities owned by the
Portfolio prior to the receipt of such collateral;
11) For delivery as security in connection with any borrowings by
the Fund on behalf of the Portfolio requiring a pledge of assets
by the Fund on behalf of the Portfolio, BUT ONLY against receipt
of amounts borrowed;
12) For delivery in accordance with the provisions of any agreement
among the Fund on behalf of the Portfolio, 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 Portfolio of
the Fund;
13) For delivery in accordance with the provisions of any agreement
among the Fund on behalf of the Portfolio, 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
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account deposits in connection with transactions by the Portfolio
of the Fund;
14) Upon receipt of instructions from the transfer agent, ("Transfer
Agent") for the Fund, for delivery to such Transfer Agent or to
the holders of shares in connection with distributions in kind,
as may be described from time to time in the currently effective
prospectus and statement of additional information of the Fund,
related to the Portfolio ("Prospectus"), in satisfaction of
requests by holders of Shares for repurchase or redemption; and
15) For any other proper corporate purpose, but only upon receipt
of, in addition to Proper Instructions from the Fund on behalf of
the applicable Portfolio, a certified copy of a resolution of the
Board of Trustees or of the Executive Committee signed by an
officer of the Fund and certified by the Secretary or an
Assistant Secretary, specifying the securities of the Portfolio
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
Portfolio or in the name of any nominee of the Fund on behalf of the
Portfolio or of any nominee of
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the Custodian which nominee shall be assigned exclusively to the
Portfolio, 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 Portfolio, or in the
name or nominee name of any agent appointed pursuant to Section 2.9 or
in the name or nominee name of any sub-custodian appointed pursuant to
Article 1. All securities accepted by the Custodian on behalf of the
Portfolio under the terms of this Contract shall be in "street name" or
other good delivery from.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of each Portfolio of
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 Portfolio, other than cash maintained by the Portfolio 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 a
Portfolio 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 on behalf of each applicable Portfolio be approved by vote of a
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majority of the Board of Trustees 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 on behalf of each applicable Portfolio and the Custodian, the
Custodian shall, upon the receipt of Proper Instructions from the
Fund on behalf of a Portfolio, make federal funds available to such
Portfolio 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 such Portfolio which are deposited into the
Portfolio's account.
2.6 Collection of Income. The Custodian shall collect on a timely basis all
income and other payments with respect to registered domestic securities
held hereunder to which each Portfolio 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 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 such Portfolio'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 each Portfolio on securities loaned pursuant to
the provisions of Section 2.2 (10) shall be the responsibility of the Fund.
The Custodian will have
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no duty or responsibility in connection therewith, other than to
provide the Fund with such information or data as may be necessary
to assist the Fund in arranging for the timely delivery to the
Custodian of the income to which the Portfolio is properly entitled.
2.7 PAYMENT OF FUND MONIES. Upon receipt of Proper Instructions from the Fund
on behalf of the applicable Portfolio, which may be continuing
instructions when deemed appropriate by the parties, the Custodian shall pay out
monies of a Portfolio 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
Portfolio 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 Portfolio 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
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accordance with the conditions set forth in Section 2.10A; (d)
in the case of repurchase agreements entered into between the
Fund on behalf of the Portfolio 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 Portfolio
of securities owned by the Custodian along with written
evidence of the agreement by the Custodian to repurchase such
securities from the Portfolio 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 from the Fund as defined in Article 5;
2) In connection with conversion, exchange or surrender of
securities owned by the Portfolio as set forth in Section 2.2
hereof;
3) For the redemption or repurchase of Shares issued by the
Portfolio as set forth in Article 4 hereof;
4) For the payment of any expense or liability incurred by the
Portfolio, including but not limited to the following payments
for the account of the Portfolio: interest, taxes, management,
accounting, transfer agent and legal fees, and operating expenses
of
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the Fund whether or not such expenses are to be in whole or
part capitalized or treated as deferred expenses;
5) For the payment of any dividends on Shares of the Portfolio
declared pursuant to the governing documents of the Fund;
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For any other proper purpose, BUT ONLY upon receipt of, in
addition to Proper Instructions from the Fund on behalf of the
Portfolio, a certified copy of a resolution of the Board of
Trustees 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 a
Portfolio is made by the Custodian in advance of receipt of the securities
purchased in the absence of specific written instructions from the Fund on
behalf of such Portfolio 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.
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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, 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 of its responsibilities or liabilities hereunder.
2.10 DEPOSIT OF FUND ASSETS IN SECURITIES SYSTEMS. The Custodian may deposit
and/or maintain securities owned by a Portfolio 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 System" 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 keep securities of the Portfolio 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;
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2) The records of the Custodian with respect to securities of the
Portfolio which are maintained in a Securities System shall
identify by book-entry those securities belonging to the
Portfolio;
3) The Custodian shall pay for securities purchased for the account
of the Portfolio 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
Portfolio. The Custodian shall transfer securities sold for the
account of the Portfolio 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 Portfolio. Copies of all advises from the
Securities System of transfers of securities for the account of
the Portfolio shall identify the Portfolio, be maintained for the
Portfolio by the Custodian and be provided to the Fund at its
request. Upon request, the Custodian shall furnish the Fund on
behalf of the Portfolio confirmation of each transfer to or from
the account of the portfolio in the form of a written advice or
notice and shall furnish to the Fund on behalf of the Portfolio
copies of daily transaction sheets reflecting each
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day's transactions in the Securities System for the account of
the Portfolio.
4) The Custodian shall provide the Fund for the Portfolio with any
report obtained by the Custodian on the Securities System's
accounting system, internal accounting control and procedures for
safeguarding securities deposited in the Securities System;
5) The Custodian shall have received from the Fund on behalf of the
Portfolio the initial or annual certificate, as the case may be,
required by Article 14 hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for the benefit of the
Portfolio for any loss or damage to the Portfolio 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 or damage if and to the extent that the
Portfolio has not been made whole for any such loss or damage.
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2.10A FUND ASSETS HELD IN THE CUSTODIAN'S DIRECT PAPER SYSTEM
The Custodian may deposit and/or maintain securities owned by a Portfolio
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 from the
Fund on behalf of the Portfolio;
2) The Custodian may keep securities of the Portfolio 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
Portfolio which are maintained in the Direct Paper System shall
identify by book-entry those securities belonging to the
Portfolio;
4) The Custodian shall pay for securities purchased for the account
of the Portfolio 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 Portfolio. The Custodian shall transfer
securities sold for the account of the Portfolio 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 Portfolio;
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5) The Custodian shall furnish the Fund on behalf of the Portfolio
confirmation of each transfer to or from the account of the
Portfolio, 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 on behalf of the Portfolio copies of daily
transaction sheets reflecting each day's transaction in the
Securities System for the account of the Portfolio;
6) The Custodian shall provide the Fund on behalf of the Portfolio
with any report on its system of internal accounting control as
the Fund may reasonably request from time to time.
2.11 SEGREGATED ACCOUNT. The Custodian shall upon receipt of Proper
Instructions from the Fund on behalf of each applicable Portfolio establish
and maintain a segregated account or accounts for and on behalf of each
such Portfolio, 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 on behalf of the Portfolio, 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,
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regarding escrow or other arrangements in connection with transactions by
the Portfolio, (ii) for purposes of segregating cash or government
securities in connection with options purchased, sold or written by the
Portfolio or commodity futures contract or options thereon purchased or
sold by the Portfolio, (iii) for the purposes of compliance by the
Portfolio 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) for other proper corporate
purposes, but only, in the case of clause (iv), upon receipt of, in
addition to Proper Instructions from the Fund on behalf of the applicable
Portfolio, a certified copy of a resolution of the Board of Trustees or of
the Executive Committee signed by an officer of the Fund and certified by
the Secretary or an Assistant Secretary, setting forth the purpose or
purposes of such segregated account and declaring such purposes to be
proper corporate purposes.
2.12 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 each Portfolio held by it and in
connection with transfers of securities.
2.13 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
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Portfolio or a nominee of the Portfolio, all proxies, without indication
of the manner in which such proxies are to be voted, and shall promptly
deliver to the Portfolio such proxies, all proxy soliciting materials and
all notices relating to such securities.
2.14 COMMUNICATIONS RELATING TO PORTFOLIO SECURITIES. The Custodian shall
transmit promptly to the Fund for each Portfolio 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 on behalf
of the Portfolio and the maturity of futures contracts purchased or sold by
the Portfolio) received by the Custodian from issuers of the securities
being held for the Portfolio. With respect to tender or exchange offers,
the Custodian shall transmit promptly to the Portfolio all written
information received by the Custodian from issuers of the securities whose
tender or exchange is sought and from the party (or his agents) making the
tender or exchange offer. If the Portfolio desires to take action with
respect to any tender offer, exchange offer or any other similar
transaction, the Portfolio shall notify the Custodian at least three
business days prior to the date on which the Custodian is to take such
action.
3. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD OUTSIDE
OF THE UNITED STATES
3.1 APPOINTMENT OF FOREIGN SUB-CUSTODIANS. The Fund hereby authorizes and
instructs the Custodian to employ as sub-custodians for the Portfolio's
securities
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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 5 of this Contract, together with a certified
resolution of the Fund's Board of Trustees, 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 Property Instructions, the Fund may
instruct the Custodian to cease the employment of any one or more such
sub-custodians for maintaining custody of the Portfolio'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)(1) 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 Portfolio's foreign securities transactions.
3.3 FOREIGN SECURITIES DEPOSITORIES. Except as may otherwise be agreed upon
in writing by the Custodian and the Fund, assets of the Portfolios 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.
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3.4 SEGREGATION OF SECURITIES. The Custodian shall identify on its books as
belonging to each applicable Portfolio of the Fund, the foreign securities
of such Portfolios held by each foreign sub-custodian. Each agreement
pursuant to which the Custodian employs a foreign banking institution shall
require that such institution establish a custody account for the Custodian
on behalf of the Fund for each applicable Portfolio of the Fund and
physically segregate in each account, securities and other assets of the
Portfolios, and, in the event that such institution deposits the securities
of one or more of the Portfolios in a foreign securities depository, that
it shall identify on its books as belonging to the Custodian, as agent for
each applicable Portfolio, the securities so deposited.
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 assets of each Portfolio
will not be subject to any right, charge, security interest, lien or claim
of any kind in favor of the foreign banking institution of its creditors or
agent, except a claim of payment for their safe custody or administration;
(b) beneficial ownership for the assets of each portfolio 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 each applicable Portfolio; (d) officers of or
auditors employed by, or other representatives of the Custodian, including
to the extent permitted under applicable law the independent public
accountants for the Fund, will be given access to the books and records of
the foreign banking
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institution relating to its actions under its agreement
with the Custodian; and (e) assets of the Portfolios 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 Portfolio(s) held by foreign sub-custodians,
including but not limited to an identification of entities having
possession of the Portfolio(s) securities and other assets and advises or
notifications of any transfers of securities to or from each custodial
account maintained by a foreign banking institution for the Custodian on
behalf of each applicable Portfolio indicating, as to securities acquired
for a Portfolio, 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
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<PAGE>
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 each
applicable Portfolio and delivery of securities maintained for the account
of each applicable Portfolio may be affected 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 each Fund from and against any loss, damage, cost, expense,
liability or claim arising out of or in connection with the institution's
performance of such obligations. At the election of the Fund, it shall be
entitled to be subrogated to the rights of the Custodian
23
<PAGE>
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.
24
<PAGE>
3.11 REIMBURSEMENT FOR ADVANCES. If the Fund requires the Custodian to
advance cash or securities for any purpose for the benefit of a Portfolio
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 applicable Portfolio 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 such Portfolios 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 thereof) or that
its
25
<PAGE>
shareholders' equity has declined below $200 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 Portfolios 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 each Portfolio of 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.
4. PAYMENT FOR SALES OR REPURCHASES OR REDEMPTIONS OF SHARES OF THE FUND.
The Custodian shall receive from the distributor for the Shares or from the
Transfer Agent of the Fund and deposit into the account of the appropriate
Portfolio such payments as are received for Shares of that Portfolio issued or
sold from time to time by the Fund. The Custodian will provide timely
notification to the Fund on behalf of each such Portfolio and the Transfer
Agent of any receipt by it of payments for Shares of such Portfolio.
From such funds as may be available for the purpose but subject to the
limitations of the Declaration of Trust and any applicable votes of the Board of
Trustees of the Fund pursuant thereto, the Custodian shall, upon receipt of
instructions from the Transfer
26
<PAGE>
Agent, make funds available for payment to holders of Shares who have
delivered to the Transfer Agent a request for redemption or repurchase of
their Shares. In connection with the redemption or repurchase of Shares of a
Portfolio, the Custodian is authorized upon receipt of instructions from the
Transfer Agent to wire funds to or through a commercial bank designated by
the redeeming shareholders. In connection with the redemption or repurchase
of Shares of the Fund, the Custodian shall honor checks drawn on the
Custodian by a holder of Shares, which checks have been furnished by the Fund
to the holder of Shares, when presented to the Custodian in accordance with
such procedures and controls as are mutually agreed upon from time to time
between the Fund and the Custodian.
5. PROPER INSTRUCTIONS. Proper Instructions as used throughout this
Contract means a writing signed or initialed by one or more person or persons as
the Board of Trustees 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. Oral instructions will be considered Proper Instructions if the
Custodian reasonably believes them to have been given by a person authorized to
give such instructions with respect to the transaction involved. The Fund shall
cause all oral instructions to be confirmed in writing. Upon receipt of a
certificate of the Secretary or an Assistant Secretary as to the authorization
by the Board of Trustees of the Fund accompanied by a detailed description of
procedures approved by the Board of Trustees, Proper Instructions may include
communications effected directly between electro-mechanical or electronic
devices provided that the Board of Trustees and the
27
<PAGE>
Custodian are satisfied that such procedures afford adequate safeguards for
the Portfolios' 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 2.11.
6. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY. The Custodian may in its
discretion, without express authority from the Fund on behalf of each
applicable Portfolio:
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 on behalf of
the Portfolio;
2) surrender securities in temporary form for securities in definitive
form;
3) endorse for collection, in the name of the Portfolio, checks, drafts
and other negotiable instruments; and
4) 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 Portfolio except as otherwise directed by the
Board of Trustees of the Fund.
7. 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
Trustees of the Fund as conclusive
28
<PAGE>
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 Trustees
pursuant to the Declaration of Trust 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.
8. DUTIES OF CUSTODIAN WITH RESPECT TO THE BOOKS OF ACCOUNT AND CALCULATION OF
NET ASSET VALUE AND NET INCOME.
The Custodian shall keep the books of account and compute the net asset
value per share of each Portfolio. The Custodian shall also calculate daily
the net income of the Portfolio as described in the Fund's currently
effective prospectus related to such Portfolio and shall advise the Fund and
the Transfer Agent daily 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
daily income of each Portfolio shall be made at the time or times described
from time to time in the Fund's currently effective prospectus related to
such Portfolio.
9. RECORDS
The Custodian shall with respect to each Portfolio create and maintain all
records relating to its activities and obligations under this Contract in such
manner as will meet the obligations of the Fund under the Investment Company
Act
of 1940, with particular attention to Section 31 thereof and Rules 31a-1 and
31a-2 thereunder, applicable federal and state tax laws and any other law or
administrative rules or procedures which may be applicable to the Fund. All
such records shall be the property of the Fund and shall at all
29
<PAGE>
times during the regular business hours of the Custodian be open for
inspection by duly authorized officers, employees or agents of 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 each Portfolio 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.
10. OPINION OF FUND'S INDEPENDENT ACCOUNTANT
The Custodian shall take all reasonable action, as the Fund on behalf of
each applicable Portfolio 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-1A, and Form N-SAR or other annual reports to the Securities and Exchange
Commission and with respect to any other requirements of such Commission.
11. REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS
The Custodian shall provide the Fund, on behalf of each of the Portfolios
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 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
30
<PAGE>
assurance that any material inadequacies would be disclosed by such
examination, and, if there are no such inadequacies, the reports shall so
state.
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 on
behalf of each applicable Portfolio 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 in carrying out the provisions of this Contract, but shall be
kept 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 Fund)
on all matters, and shall be without liability for any action reasonably taken
or omitted pursuant to such advice. Notwithstanding the foregoing, the
responsibility of the Custodian with respect to redemptions effected by check
shall be in accordance with a separate Agreement entered into between the
Custodian and the Fund.
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<PAGE>
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 sub-custodians
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
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 Funds 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 on behalf of a Portfolio 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 or the Portfolio being liable for the payment
of money or incurring liability of some other form, the Fund on behalf of the
Portfolio, as a prerequisite to requiring the Custodian to take such action,
shall provide indemnity to the Custodian in an amount and form satisfactory to
it.
If the Fund requires the Custodian to advance cash or securities for any
purpose for the benefit of a Portfolio 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
32
<PAGE>
nominee's own negligent action, negligent failure to act or willful
misconduct, any property at any time held for the account of the applicable
Portfolio 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 such Portfolio'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 with respect to a Portfolio 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 Trustees of the Fund has approved the
initial use of a particular Securities System by such Portfolio and the receipt
of an annual certificate of the Secretary or an Assistant Secretary that the
Board of Trustees has reviewed the use by such Portfolio of such Securities
System, as required in each case by Rules 17f-4 and 17f-5 under the Investment
Company Act of 1940, as amended and that the Custodian shall not with respect
to a Portfolio act under Section 2.10A hereof in the absence of receipt of an
initial certificate of the Secretary or an Assistant Secretary that the Board
of Trustees has approved the initial use of the Direct Paper System by such
Portfolio and the receipt of an annual certificate of the Secretary or an
Assistant Secretary
33
<PAGE>
that the Board of Trustees has reviewed the use by such Portfolio 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 Declaration of Trust, and further
provided, that the Fund on behalf of one or more of the Portfolios may at any
time by action of its Board of Trustees (i) substitute another bank or trust
company for the Custodian by giving notice as described above to the
Custodian, or (ii) immediately terminate this Contract in the event of the
appointment of a conservator or receiver for the Custodian by the Comptroller
of the Currency or upon the happening of a like event at the direction of an
appropriate regulatory agency or court of competent jurisdiction.
Upon termination of the Contract, the Fund on behalf of each applicable
Portfolio 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 for the Fund, of one or more of the Portfolios
shall be appointed by the Board of Trustees 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 of each
applicable Portfolio then held by it hereunder and shall transfer to an account
of the successor custodian all of the securities of each such Portfolio held in
a Securities System.
34
<PAGE>
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 Trustees
of the Fund, deliver at the office of the Custodian and 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 Trustees 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 $25,00,000, all securities, funds and other
properties held by the Custodian on behalf of each applicable Portfolio and all
instruments held by the Custodian relative thereto and all other property held
by it under this Contract on behalf of each applicable Portfolio and to transfer
to an account of such successor custodian all the securities of each such
Portfolio 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 Trustees 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
35
<PAGE>
and the provisions of this Contract relating to the duties and obligations of
the Custodian shall remain in full force and effect.
16. INTERPRETIVE AND ADDITIONAL PROVISIONS
In connection with the operation of this Contract, the Custodian and the
Fund on behalf of each of the Portfolios, may from time to time agree on such
provisions interpretive of or in addition to the provisions of this Contract as
may in their joint opinion be consistent with the general tenor of this
Contract. Any such interpretive or additional provisions shall be in a writing
signed by both parties and shall be annexed hereto, provided that no such
interpretive or additional provisions shall contravene any applicable federal or
state regulations or any provision of the Declaration of Trust 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. ADDITIONAL FUNDS
In the event that the Fund establishes one or more series of Shares in
addition to G.T. America Growth Fund, G.T. Europe Growth Fund, G.T.
International Growth Fund, G.T. Japan Growth Fund, G.T. Pacific Growth Fund and
G.T. Worldwide Growth Fund with respect to which it desires to have the
Custodian render services as custodian under the terms hereof, it shall so
notify the Custodian in writing, and if the Custodian agrees in writing to
provide such services, such series of Shares shall become a Portfolio hereunder.
18. MASSACHUSETTS LAW TO APPLY
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<PAGE>
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
19. PRIOR CONTRACTS
This Contract supersedes and terminates, as of the date hereof, all prior
contracts between the Fund on behalf of each of the Portfolios and the Custodian
relating to the custody of the Fund's assets.
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 15th day of September, 1988.
ATTEST: G. T. GLOBAL GROWTH SERIES
/s/ Robert Goletto By: /s/ Jeffrey Bartfeld
- ------------------------ -------------------------------------
ATTEST: STATE STREET BANK AND TRUST COMPANY
/s/ MCeiaul By: /s/ G. Enos
- ------------------------ -------------------------------------
Assistant Secretary Vice President
37
<PAGE>
STATE STREET BANK AND TRUST COMPANY
Custodian and Fund Accounting Fee Schedule
G.T. GLOBAL FUNDS
G.T. Worldwide Growth Fund
G.T. International Growth Fund
G.T. Europe Growth Fund
G.T. Pacific Growth Fund
G.T. Japan Growth Fund
G.T. America Growth Fund
G.T. Global Bond Fund
G.T. Government Income Fund
______________________________________________________________________________
I. ANNUAL FEES PER PORTFOLIO
DOMESTIC (U.S.) CUSTODY SERVICE
First $20 Million 7 Basis Points
Next $40 Million 3 Basis Points
Over $60 Million 1 Basis Point
GLOBAL (NON-U.S.) CUSTODY SERVICE
First $40 Million 20 Basis Points
Next $40 Million 18 Basis Points
Over $80 Million 15 Basis Points
Monthly Minimum $2,000
II. FULL SERVICE FUND ACCOUNTING
Maintain investment ledgers, provide selected portfolio transactions,
position and income reports. Maintain general ledger and capital stock
accounts. Prepare daily trial balance. Calculate net asset value daily.
Provide selected general ledger reports. Securities yield or market value
quotations will be provided to State Street by the Fund.
The administration fee shown below is an annual charge, billed and payable
monthly.
ANNUAL FEES PER PORTFOLIO
Per portfolio $40,000 annually
<PAGE>
III. PORTFOLIO TRADES - FOR EACH LINE ITEM PROCESSED (Domestic Trades Only)
State Street Bank Repos $7.00
DTC or Fed Book entry $12.00
New York Physical Settlements $25.00
Maturity Collections $8.00
All other trades $16.00
IV. Options
Option charge for each option written or closing
contract, per issue, per broker $25.00
Option expiration charge, per issue, per broker $15.00
Option exercised, per issue, per broker $15.00
V. Automated Pricing (Optional)
This service provides securities pricing on request. Services and
fees are based on the schedule below. Reports can be generated at
State Street or on a remote basis via PC. Reporting has both up load
and down load capabilities. Customized reports may require
programming fees.
Monthly charges for the State Street Bank Automated Pricing System are
determined by:
1. Mix of security positions.
2. The number of positions that are priced during the month.
Monthly Base Fee $375.00
Monthly Quote Charge:
Municipal Bonds via Muller Data $21.00
Municipal Bonds via Kenny Information Systems $16.00
Government, Corporate and Convertible Bonds
via Merrill Lynch $11.00
Corporate and Government Bonds via Muller Data $11.00
Options, Futures and Private Placements $6.00
Foreign Equities and Bonds via Extel Ltd. $6.00
Listed Equities, OTC Equities, and Bonds $6.00
Corporate, Municipal, Convertible and
Government Bonds, Adjustable Rate Preferred
Stocks via IDSI $6.00
<PAGE>
For billing purposes, the monthly quote charge will be based on the
average number of positions in the portfolio.
VI. LENDING OF SECURITIES
Deliver loaned securities versus cash collateral $20.00
Deliver loaned securities versus securities collateral $30.00
Receive/deliver additional cash collateral $6.00
Substitutions of securities collateral $30.00
Deliver cash collateral versus receipt of loaned
securities $15.00
Deliver securities collateral versus receipt of loaned
securities $25.00
Loan administration - mark-to-market per day, per loan $3.00
VII. INTEREST RATE FUTURES
Transactions -- no security movement $8.00
VIII. COUPON BONDS
Monitoring for calls and processing coupons --
for each coupon issued held -- monthly charge $5.00
IX. HOLDINGS CHARGE
For each issue maintained -- monthly charge $5.00
X. PRINCIPAL REDUCTION PAYMENTS
Per paydown $10.00
XI. DIVIDEND CHARGES (For items held at the Request of
Traders over record date in street form) $50.00
XII. SPECIAL SERVICES
Fees for activities of a non-recurring nature such as fund
consolidations or reorganizations, extraordinary security shipments
and the preparation of special reports will be subject to negotiation.
Fees for tax accounting/recordkeeping for options, financial futures,
and other special items will be negotiated separately.
XIII. OUT-OF-POCKET EXPENSES
<PAGE>
A billing for the recovery of applicable out-of-pocket expenses will
be made as of the end of each month. Out-of-pocket expenses include,
but are not limited to the following:
Telephone
Wire Charges ($4.70 per wire in and $4.55 out)
Postage and Insurance
Courier Service
Duplicating
Legal Fees
Supplies Related to Fund Records
Rush Transfer -- $8.00 Each
Transfer Fees
Sub-Custodian Charges
Price Waterhouse Audit Letter
Federal Reserve Fee for Return Check items over $2,500 - $4.25
GNMA Transfer - $15.00 each
XIV. PAYMENT
The above fees will be charged against the fund's custodian checking
account five (5) days after the invoice is mailed to the fund's
offices.
G.T. GLOBAL FUNDS STATE STREET BANK &
TRUST CO.
G.T. Worldwide Growth Fund
G.T. International Growth Fund
G.T. Europe Growth Fund
G.T. Pacific Growth Fund
G.T. Japan Growth Fund
G.T. America Growth Fund
G.T. Global Bond Fund
G.T. Government Income Fund
By: ______________________ By: Joseph Hooly
__________________________
Title: _____________________ Title: Vice President
_________________________
Date _____________________ Date: 10/4/88
_________________________
<PAGE>
TRANSFER AGENCY CONTRACT BETWEEN
G.T. GLOBAL GROWTH SERIES
AND
G.T. GLOBAL INVESTOR SERVICES, INC.
This Transfer Agency Contract ("Contract") is made as of May 25, 1990
between G. T. Global Growth Series ("Growth Series"), a Massachusetts business
trust, and G. T. Global Investor Services, Inc. ("G.T."), a California
corporation.
WHEREAS, Growth Series is registered under the Investment Company Act of
1940, as amended ("1940 Act"), as an open-end management investment company;
and
WHEREAS, Growth Series currently operates six separate mutual funds,
each organized as a separate and distinct series of the shares of beneficial
interest of Growth Series; and
WHEREAS, Growth Series may from time-to-time in the future establish one
or more additional funds, each organized as a separate and distinct series of
the shares of beneficial interest of Growth Series (Growth Series' existing
funds and such funds as may hereafter be established are referred to in this
Contract as the "Funds," and may singly be referred to as a "Fund"); and
WHEREAS, Growth Series desires to retain G.T. to act as transfer agent
and dividend disbursing agent to each of the Funds, and G.T. 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
Growth Series hereby appoints G.T. to act as transfer agent and dividend
disbursing agent of each Fund for the period and on the terms set forth in this
Contract. G.T. 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.
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(B) "Agent Firm" means an investment, stock brokerage or other business
firm employing an Agent.
(C) "Authorized Person" means any officer of Growth Series and any other
person, whether or not any such person is an officer or employee of Growth
Series, duly authorized by the Board of Directors, the President or any Vice
President of Growth Series to give Oral and Written Instructions on behalf of
Growth Series. Growth Series will provide to G.T. and keep current a written
list of all Authorized Persons.
(D) "Custodian" means the custodian or custodians employed by Growth
Series to maintain custody of the Funds' assets.
(E) "Distributor" means the principal underwriter of the Shares of each
Fund.
(F) "Governing Corporate Documents" means the Declaration of Trust,
By-Laws and other applicable governing corporate documents of Growth Series,
all as may be amended from time-to-time.
(G) "Oral Instructions" means oral instructions actually received by G.T.
from an Authorized Person or from a person reasonably believed by G.T. to be an
Authorized Person.
(H) "Prospectus" means the current prospectus and statement of additional
information of a Fund, taken together.
(I) "Shares" means shares of beneficial interest of any of the Funds.
(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
G.T. and signed by an Authorized Person.
III. AUTHORIZED AND REGISTERED SHARES
(A) As of the date of this Contract, Growth Series represents that an
unlimited number of Shares of each Fund are authorized for issuance under
Growth Series' Declaration of Trust, as amended. Growth Series agrees to
keep G.T. apprised, to the extent necessary for G.T. to adequately perform
its duties hereunder, of the number of shares of each Fund authorized for
issuance.
(B) As of the date of this Contract, Growth Series has filed a
declaration of its registration under the Securities Act of 1933 ("1933 Act")
of an indefinite number of Shares pursuant to rule 24f-2 under the 1940 Act;
Growth Series agrees to notify G.T.
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immediately if this declaration is terminated, and thereafter to keep G.T.
reasonably apprised of the number of shares registered under the 1933 Act.
IV. COMPLIANCE BY G.T. WITH GOVERNING CORPORATE
DOCUMENTS, PROSPECTUS AND APPLICABLE LAW AND
REGULATION
All of G.T.'s actions in fulfilling its responsibilities under this
Contract shall be made in accordance with the Prospectus, the Governing
Corporate Documents, the rules and regulations of the Securities and Exchange
Commission and the laws and regulations of the State of Maryland relating to
the issuance and transfer of securities such as the Shares.
V. RECORDS
(A) G.T. shall maintain records of the accounts for each Shareholder
which include the following information with respect to each Fund:
(1) name, address and United States Taxpayer Identification Number;
(2) number of Shares held and number of Shares for which
certificates, if any, have been issued, including certificate numbers and
denominations;
(3) historical information regarding the account of each
Shareholder, including dividends and distributions paid and the date and
price of all transactions in a Shareholder's account;
(4) any stop or restraining order placed against a Shareholder's
account;
(5) any correspondence relating to the current maintenance of
shareholder's account;
(6) information with respect to all tax withholdings;
(7) any information required to enable G.T. to perform any
calculations contemplated or required by this Agreement or that may reasonably
be requested by Growth Series.
(B) The books and records pertaining to Growth Series which are in the
possession of G.T. shall be the property of Growth Series. Such books and
records shall be prepared and maintained as required by the 1940 Act and other
applicable laws, rules and regulations. Growth Series or its authorized
representatives shall have access to such books and records at all times during
G.T.'s normal business hours. Upon the reasonable
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request of Growth Series, copies of any such books and records shall be
provided by G.T. to Growth Series or its authorized representatives, at
Growth Series' expense.
VI. TRANSACTIONS NOT REQUIRING INSTRUCTIONS
In the absence of contrary Written Instructions, G.T. 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 G.T. of a purchase order
for Shares from the Distributor or directly from an investor or an investor's
Agent, upon the further receipt by G.T. of sufficient information necessary
to enable G.T. to establish an account, and after confirmation of receipt of
payment for such Shares, G.T. 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 G.T. with instructions to transfer Shares
on the books of a Fund, and G.T. further receives such documentation as is
necessary to process the transfer, G.T. shall transfer the registration of
such Shares and if necessary deliver them pursuant to such instructions.
(3) REDEMPTIONS. Upon receipt of a redemption order from the
Distributor, a Shareholder or a Shareholder's Agent, G.T. shall redeem the
number of Shares indicated thereon from the redeeming Shareholder's account
and receive from the pertinent Fund's custodian and disburse to the redeeming
Shareholder or the Shareholder's Agent, if so instructed, the redemption
proceeds therefor.
(B) SHARE TRANSACTIONS -- CERTIFICATED SHARES
(1) Growth Series shall supply G.T. with a sufficient supply of
certificates representing Shares, in the form approved from time to time by
the Board of Directors or officers of Growth Series, and, from time-to-time,
shall replenish such supply upon the request of G.T. Certificates shall be
property executed, manually or by facsimile signature, by the duly authorized
officers of Growth Series. Notwithstanding the death, resignation or removal
of any officer of Growth Series, such executed certificates bearing the
manual or facsimile signature of such officer shall remain valid and may be
issued to Shareholders until G.T. 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 G.T.
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(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, G.T. shall issue the requested
certificate and deliver it to the Shareholder in accordance with the
Shareholder's instructions.
(4) G.T. 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, G.T.
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, G.T. shall reduce such Shares to uncertificated
status, while retaining the appropriate registration in the name of the
Shareholder upon the transfer books.
(C) SPECIAL INVESTMENT AND WITHDRAWAL PLANS. G.T. shall process
transactions of Shareholders participating in any special investment and/or
withdrawal plans or programs established by Growth Series 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 G.T. by Growth Series
or the Distributor.
VII. RELIANCE BY G.T. ON INSTRUCTIONS
Unless otherwise provided in this Contract, G.T. shall act only upon
Oral or Written Instructions (collectively, "Instructions"). G.T. shall be
entitled to rely upon any Instructions actually received by it under this
Contract. Growth Series agrees that G.T. shall incur no liability to Growth
Series in acting upon Instructions given to G.T. hereunder, provided that
such Instructions reasonably appear to have been received from an Authorized
Person.
VIII. DIVIDENDS AND DISTRIBUTION
(A) Growth Series shall furnish G.T. with appropriate evidence of
action by Growth Series' board of trustees declaring dividends and
distributions and authorizing their payment as described in the Prospectus.
After deducting any amount required to be withheld by any applicable tax
laws, rules and regulations or other applicable laws, rules and regulations,
in accordance with the instructions in proper form from a Shareholder and the
provisions of the Governing Corporate Documents and Prospectus, G. T. shall
issue and credit the account of the Shareholder with Shares or pay such
dividends or distributions to the Shareholder in cash, upon the election of
the Shareholder as provided for in the Prospectus. In lieu of receiving from
the Custodian and paying to Shareholders cash dividends or distributions,
G.T. may arrange for the direct payment of cash
5
<PAGE>
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 Growth Series, G. T. and the Custodian.
(B) G. T. shall prepare and file with the Internal Revenue Service and
other appropriate taxing authorities, and address and mail to Shareholders,
such returns and information relating to dividends and distributions paid by
the Funds as are required to be so prepared, filed and mailed by applicable
laws, rules and regulations, or such substitute form of notice as may from
time to time be permitted or required by the Internal Revenue Service. On
behalf of Growth Series, G.T. shall mail certain requests for Shareholders'
certifications under penalties of perjury of taxpayer identification numbers
and/or other information and pay on a timely basis to the appropriate Federal
authorities any taxes withheld on dividends and distributions paid by a Fund,
all as required by applicable Federal tax laws and regulations.
IX. COMMUNICATIONS WITH SHAREHOLDERS
(A) COMMUNICATIONS TO SHAREHOLDERS. G.T. will address and mail all
communications by Growth Series to the shareholders of the Funds, including
reports to Shareholders, confirmations of purchases and sales of Shares,
periodic account statements, dividend and distribution notices and proxy
materials for meetings of shareholders G. T. will receive and tabulate the
proxy cards for meetings of Shareholders, and, if requested by Growth Series,
attend meetings of Shareholders for purposes of reporting on and certifying
such tabulations.
(B) CORRESPONDENCE. G.T. 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 G.T.
and Growth Series.
X. OTHER ONGOING SERVICES
As requested by Growth Series, G.T. shall also provide the following
services on an ongoing basis:
(A) Furnish to Growth Series or its designated agent such state-by-state
registration reports reasonably necessary to enable Growth Series 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.
6
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(D) Provide Growth Series with Shareholder lists and such statistical
information as Growth Series reasonably may request.
(E) Provide the Custodian with such information as Investment Funds and
the Custodian reasonably may request.
(F) Mail duplicate confirmations and/or statements to Agents with
respect to their clients' accounts and transactions in Shares, whether such
transactions were executed through such Agents or directly through G.T.
(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 Growth Series and G.T.
(H) Provide to the custodian timely notification of Share transactions
and such other information as may be agreed upon from time to time by Growth
Series, G.T. and the Custodian.
XI. COOPERATION WITH ACCOUNTANTS
G.T. shall cooperate with Growth Series' 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 Funds.
XII. CONFIDENTIALITY
G.T. agrees on behalf of itself and its employees to treat
confidentially all records and other information relative to the Funds and
their prior, present or potential Shareholders, except, after prior
notification to and approval in writing by Growth Series, which approval
shall not be unreasonably withheld and may not be withheld when G.T. 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 G.T. during the term of
this Contract, each Fund will pay to G.T. monthly fees that shall be agreed
to from time to time by Growth Series and G.T. In addition, as may be agreed
to from time to time by Growth Series and G.T., each Fund shall reimburse
G.T. for certain expenses incurred by G.T. in rendering services with respect
to that Fund under this Contract.
XIV. STANDARD OF CARE
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(A) In the performance of its duties hereunder, G.T. 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) G.T. shall be under no duty to take any action on behalf of Growth
Series except as specifically set forth herein or as may be specifically agreed
to by G.T. in writing.
(C) G.T. shall be responsible and liable for all losses, damages and
costs (including reasonable attorneys fees) incurred by Growth Series which
is due to or caused by G.T.'s negligence in the performance of its duties
under this Contract or for G.T.'s negligent failure to perform such duties as
are specifically ascribed to G.T. in this Contract; provided that, to the
extent that duties, obligations and responsibilities are not expressly set
forth in this Contract, G.T. shall not be liable for any act or omission
which does not constitute willful misfeasance, bad faith or gross negligence
on the part of G.T. or reckless disregard by G.T. 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 G.T.'s duties under this Contract G.T. 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 G.T. reasonably
believes to be genuine;
or
(2) delays or errors or loss of data occurring by reason of
circumstances beyond G.T.'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 GROWTH SERIES. If G.T. is in doubt as to any action to
be taken or omitted by it, G.T. may request and shall receive from Growth
Series directions or advice including Oral or Written Instructions where
appropriate.
(B) ADVICE OF COUNSEL. If G.T. is in doubt as to any question of law
involved in any action to be taken or omitted by it, G.T. may request advice
from counsel of its own choosing (who may also be counsel for Growth Series,
the Distributor and/or the investment adviser of Growth Series).
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<PAGE>
(C) CONFLICTING ADVICE. In case of conflict between directions,
advice or Oral or Written Instructions received by G.T. pursuant to
subparagraph (A) of this Paragraph and advice received by G.T. pursuant to
subparagraph (b) of this Paragraph, G.T. shall be entitled to rely on and
follow the advice received pursuant to subparagraph (B) alone.
(D) PROTECTION OF G.T.
(1) G.T. 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 G.T.,
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 G.T. any obligation (a) to seek such
directions, advice or Oral or Written Instructions, or (b) to act in
accordance with such directions advice or Oral or Written Instructions when
received, unless, under the terms of another provision of this Contract, the
same is a condition to G.T.'s properly taking or omitting to take such
actions.
XVI. INDEMNIFICATION OF G.T.
Growth Series agrees to indemnify and hold harmless G.T. 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
G.T. 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 Growth Series;
(B) upon Oral or Written Instructions; or
(C) in the performance by G.T. of its responsibilities under this
Contract;
PROVIDED that G.T. shall not be indemnified against any liability to Growth
Series or the Shareholders (or any expenses incident to such liability)
arising out of G.T.'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.
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XVII. INDEMNIFICATION OF GROWTH SERIES
G. T. agrees to indemnify and hold harmless Growth Series 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 G.T. that does not meet the standard of care to which G.T. is
subject under Paragraph XIV of this Contract.
XVIII. LIMITATION OF LIABILITY OF SHAREHOLDERS AND
TRUSTEES OF GROWTH SERIES
It is expressly agreed that the obligations of Growth Series hereunder
shall not be binding upon any of the shareholders, trustees, nominees,
officers, agents or employees of Growth Series personally, but shall only
bind the assets and property of the pertinent Fund(s), as provided in Growth
Series' Declaration of Trust, as amended. The execution and delivery of this
Contract have been authorized by the trustees of Growth Series, and this
Contract has been executed and delivered by an authorized officer of Growth
Series acting as such; neither such authorization by such trustees nor such
execution and delivery by such officer shall be deemed to have been made by
any of them individually or to impose any liability on any of them
personally, but shall bind only the assets and property of the pertinent
Fund(s), as provided in Growth Series' Declaration of Trust, as amended.
XVIII. DURATION AND TERMINATION
This Contract shall continue with respect to each Fund until termination
with respect to that Fund by Growth Series or G.T. on sixty (60) days' prior
written notice.
XIX. REGISTRATION AS A TRANSFER AGENT
G.T. 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. G.T. agrees that it will promptly notify
Growth Series in the event of any material change in its status as a
registered transfer agent. Should G.T. fail to be registered with the
Securities and Exchange Commission as a transfer agent at any time during the
term of this Contract, Growth Series may immediately terminate this Contract,
upon written notice to G.T.
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.
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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 thereby. This Contract shall be binding
and shall inure to the benefit of the parties hereto and their respective
successors.
IN WITNESS WHEREOF, the parties hereto have caused this Contract to be
executed by their officers designated below on the day and year first written
above.
G.T. GLOBAL GROWTH SERIES
Attest: /s/Patricia J. Wojran By: /s/ James R. Tufts
--------------------------- ---------------------
G.T. GLOBAL INVESTOR
SERVICES, INC.
Attest: Patricia J. Wojran By: /s/ James W. Churm
--------------------------- ---------------------
<PAGE>
BROKER/DEALER SALES CONTRACT SALES CONTRACT
Between: G. T. GLOBAL FINANCIAL SERVICES, INC.
General Distributor of the
G.T. Global Group of Funds
50 California Street, 27th Floor
San Francisco, CA 94111
and: ________________________________
________________________________
________________________________
Phone __________________________
Date ___________________________
As a general distributor of the G. T. Global Group of Funds (the
"Funds"), we agree to sell you, subject to any limitations imposed by any of
the Funds and subject to confirmation by us in each instance, shares issued
by the Funds ("Shares"). The Funds shall also include any registered
investment company with which we now have or hereafter have signed an
agreement.
1. You will receive a discount from the public offering price on all
Shares purchased by you from us and may receive other compensation,
determined as outlined in the then current Prospectuses of the respective
Funds. The range of current dealer discounts and other compensation may be
obtained at any time upon request.
2. We reserve the right to cancel this agreement at any time without
notice if any Shares shall be offered for sale by you at less than the then
current public offering price determined by or for the respective Funds.
3. We will furnish you, without charge and on request, reasonable
quantities of the Funds' Prospectuses, shareholder reports and sales material.
4. We will furnish you on request with public offering prices for the
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 Shares offered to you for sale. Your attention is called specifically to
the fact that each price is always subject to confirmation, and will be the
price next computed after receipt of an order.
5. Under this agreement you act as principal and are not employed by
us as a broker, agent or employee; you are not authorized to act for us nor
to make any representation on our behalf; and in purchasing or selling Shares
hereunder you rely only upon the current Prospectus and Statement of
Additional Information and upon such written representations as may hereafter
be made by us to you over our signature. You also agree that every effort
shall be made by you to place Shares on an investment basis.
<PAGE>
Borker/Dealer Sales Contract Sales Contract
Page 2
6. Each party hereto represents that it is a member of the National
Association of Securities Dealers, Inc., and agrees to abide by all of its
Rules of Fair Practice, including, without limitation, the following
provisions:
(a) You shall not withhold placing customers' orders for any Shares so
as to profit yourself as a result of such withholding. We shall not purchase
any Shares from the Funds except for the purpose of covering purchase orders
already received, and you shall not purchase any Shares from us other than
for investment except for the purpose of covering purchase orders already
received.
(b) If any Shares purchased by you are repurchased by the Fund which
issued the same or by us for the account of such Fund, or are tendered for
redemption, within seven business days after confirmation by us of the
original purchase order for such Shares (1) you agree to forthwith refund to
us the full concession allowed to you on the original sale, such refund to be
paid by us to the Fund whose Shares have been so repurchased upon receipt and
(2) we shall forthwith pay to such Fund that part of the discount retained by
us on the original sale. Notice will be given to you of any such repurchase
or redemption within ten days of the date on which the certificate is
delivered to us or to such Fund.
(c) Neither party to this agreement shall, as principal, purchase any
Shares from a record holder at a price lower than the net asset value next
computed by or for the issuer thereof. Nothing in this subparagraph shall
prevent you from selling Shares for the account of a record holder to us or
to the Fund which issued such Shares at the net asset value then quoted by or
for such Fund and charging the investor a fair commission for handling the
transaction.
7. Either party hereto may cancel this agreement upon ten days'
notice. Furthermore, as a general distributor we reserve the priviledge of
revising the discount or other compensation referred to herein upon ten days'
written notice, which will be deemed given by supplementing or amending the
Prospectus or Statement of Additional Information of a Fund.
8. This agreement shall be binding upon receipt by us in San
Francisco, California, of a counterpart hereof duly accepted and signed by
you, and shall be construed in accordance with the laws of California.
Accepted:_________________________ G. T. GLOBAL FINANCIAL
Company Name SERVICES, INC.
By: By: /s/ David A. Minella
------------------------------- -------------------------------
Signature David A. Minella, President
_____________________________
Print Name and Date
<PAGE>
BANK SALES CONTRACT SALES CONTRACT
Between : G.T. GLOBAL FINANCIAL SERVICES, INC.
General Distributor of the
G.T. Global Group of Funds
50 California Street, 27th Floor
San Francisco, CA 94111
(415) 392-6181
and _______________________________________
_______________________________________
_______________________________________
(the "Bank")
Date: __________________________________
As a general distributor of the G.T. Global Group of Funds (the
"Funds"), we agree to sell to the Bank's customers, through the Bank as their
agent, subject to any limitations imposed by any of the Funds and subject to
confirmation by us in each instance, shares issued by the Funds ("Shares").
The Fund shall also include any registered investment company with which we
now have or hereafter have signed a principal underwriter's agreement.
1. The Bank will receive an agency commission, consisting of a portion
of the public offering price on all Shares purchased by the Bank as agent for
its customers from us, determined on the same basis as the "dealer discount"
described in the then current Prospectus and Statement of Additional
Information of the Fund, and such other compensation to dealers as may be
described in such Procpectus and Statement of Additional Information. The
range of current dealer discounts and other compensation may be obtained at
any time upon request. On the settlement date of each transaction, the Bank
will remit the full purchase price less an amount equal to its agency
commission. Remittance of the full purchase price less the Bank's agency
commission shall be made to, and received by us within seven (7) business
days after acceptance of its order or such shorter time as may be required by
law or applicable rules of the National Association of Securities Dealers
("NASD"). If such payment is not received by us within such period, we
reserve the right, with prior notice, forthwith to cancel the sale, or, at
our option, to sell the shares ordered by the Bank back to the Fund, in which
latter case we may hold the Bank responsible for any loss suffered by us or
by the Fund resulting from the Bank's failure to make payment aforesaid. On
any order sent directly to us by a customer of the Bank, we will remit the
Bank's agency commission on such transaction to the Bank.
2. We reserve the right to cancel this agreement at any time without
notice if any Shares shall be offered for sale by the Bank to its customers
at less than the then current public offering prices determined by or for the
respective Funds.
<PAGE>
BANK SALES CONTRACT SALES CONTRACT
Page 2
3. We will furnish the Bank, without charge and on request, reasonable
quantities of the Funds' Prospectuses, shareholder reports and sales material.
4. We will furnish the Bank on request with public offering prices for
the Shares in accordance with the then current Prospectuses of the respective
Funds, and the Bank agrees to quote such prices subject to confirmation by us
on any Shares offered to the Bank for sale. The Bank's attention is called
specifically to the fact that each price is always subject to confirmation,
and will be the price next computed after receipt of an order.
5. Under this agreement the Bank acts as agent for its customers and
is not employed by us as broker, agent or employee; the Bank is not
authorized to act for us nor to make any representations on our behalf; and
in purchasing or selling Shares hereunder the Bank relies only upon the
current Prospectus and Statement of Additional Information and upon such
written representations as may hereafter be made by us to the Bank over our
signature. The Bank also agrees that every effort shall be made by the Bank
to place Shares on an investment basis.
6. The Bank warrants and represents to us that the Bank is a "bank" as
defined in Section 3(a)(6) of the Securities Exchange Act of 1934 (the
"Act"), and that at the time of each transaction in Fund shares under this
agreement it shall not be required to register as a broker or dealer under
the Act. The Bank shall certify to us from time to time at our request that
this warranty and representation continues to be correct. The Bank
furthermore agrees to abide by all of the Rules of Fair Practice of the NASD
applicable to the sale of investment company shares to its customers
including, without limitation, the following provisions:
(a) The Bank shall not withhold placing customers' orders for any
Shares so as to profit itself as a result of such withholding. We shall not
purchase any Shares from the Funds except for the purpose of covering
purchase orders already received, and the Bank shall not purchase any Shares
from us other than as agent for the purpose of covering purchase orders
already received from its customers.
(b) If any Shares purchased by the Bank as agent for its customers are
repurchased by the Fund which issued the same or by us for the account of
such Fund, or are tendered for redemption, within seven business days after
confirmation by us of the original purchase order for such Shares (1) the
Bank agrees to forthwith refund to us the full agency commission paid to the
Bank on the original sale, such refund to be paid by us to the Fund whose
Shares have been so repurchased upon receipt and (2) we shall forthwith pay
to such Fund that part of the discount retained by us on the original sale.
Notice will be given to the Bank of any such repurchase or redemption within
ten days of the date on which the certificate is delivered to us or to such
Fund.
<PAGE>
BANK SALES CONTRACT SALES CONTRACT
Page 3
(c) Neither party to this agreement shall purchase any Shares from a
record holder at a price lower than the net asset value next computed by or
for the issuer thereof. Nothing in this subparagraph shall prevent the Bank
from selling Shares for the account of a record holder to us or to the issuer
thereof at the net asset value then quoted by or for such issuer and charging
the investor a fair commission for handling the transaction.
7. Either party hereto may cancel this agreement upon ten days'
written notice. The Bank will immediately notify us, and terminate this
agreement in the event that it becomes excluded from the definition of "bank"
under the Act or is otherwise required to register as a broker or dealer
under the Act. Furthermore, as a general distributor we reserve the privilege
of revising the commission or other compensation referred to herein, which is
the basis for determining the Bank's agency commission, upon ten days'
written notice, which notice will be deemed given by supplementing or
amending the Prospectus or Statement of Additional Information of a Fund.
8. The customers in question are for all purposes the Bank's customers
and not our customers. We shall execute transactions for each of the Bank's
customers only upon its authorization it being understood in all cases that
(a) the Bank is acting as the agent for the customer; (b) the transactions
are without recourse against the Bank by the customer; (c) as between the
Bank and the customer, the customer will have full beneficial ownership of
the shares; and (d) each transaction is initiated solely upon the order of
the customer and not for the Bank's account.
9. This agreement shall be binding upon receipt by us in San
Francisco, California, of a counterpart hereof duly accepted and signed by
the agent, and shall be construed in accordance with the laws of California.
Accepted:_________________________ G. T. GLOBAL FINANCIAL
Bank Name SERVICES, INC.
By: By: /s/ David A. Minella
------------------------------- --------------------------
Signature David A. Minella, President
_____________________________
Print Name and Date
<PAGE>
AGENT SALES CONTRACT SALES CONTRACT
Between : G.T. GLOBAL FINANCIAL SERVICES, INC.
General Distributor of the
G.T. Global Group of Funds
50 California Street, 27th Floor
San Francisco, CA 94111
(415) 392-6181
and _______________________________________
_______________________________________
_______________________________________
(the "Agent")
Date: __________________________________
As a general distributor of the G.T. Global Group of Funds (the
"Funds"), we agree to sell to the Agent's customers, through the Agent as
their agent, subject to any limitations imposed by any of the Funds and
subject to confirmation by us in each instance, shares issued by the Funds
("Shares"). The Fund shall also include any registered investment company
with which we now have or hereafter have signed a principal underwriter's
agreement.
1. The Agent will receive an agency commission, consisting of a
portion of the public offering price on all Shares purchased by the Agent as
agent for its customers from us, determined on the same basis as the "dealer
discount" described in the then current Prospectus and Statement of
Additional Information of the Fund, and such other compensation to dealers as
may be described in such Prospectus and Statement of Additional Information.
The range of current dealer discounts and other compensation may be obtained
at any time upon request. On the settlement date of each transaction, the
Agent will remit the full purchase price less an amount equal to its agency
commission. Remittance of the full purchase price less the Agent's agency
commission shall be made to, and receive by us within seven (7) business days
after acceptance of its order or such shorter time as may be required by law
or applicable rules of the National Association of Securities Dealers
("NASD"). If such payment is not received by us within such period, we
reserve the right, with prior notice, forthwith to cancel the sale, or, at
our option, to sell the shares ordered by the Agent back to the Fund, in
which latter case we may hold the Agent responsible for any loss suffered by
us or by the Fund resulting from the Agent's failure to make payment
aforesaid. On any order sent directly to us by a customer of the Agent, we
will remit the Agent's agency commission on such transaction to the Agent.
2. We reserve the right to cancel this agreement at any time without
notice if any Shares shall be offered for sale by the Agent to its customers
at less than the then current public offering prices determined by or for the
respective Funds.
<PAGE>
AGENT SALES CONTRACT SALES CONTRACT
Page 3
3. We will furnish the Agent, without charge and on request,
reasonable quantities of the Funds' Prospectuses, shareholder reports and
sales material.
4. We will furnish the Agent on request with public offering prices
for the Shares in accordance with the then current Prospectuses of the
respective Funds, and the Agent agrees to quote such prices subject to
confirmation by us on any Shares offered to the Agent for sale. The Agent's
attention is called specifically to the fact that each price is always
subject to confirmation, and will be the price next computed after receipt of
an order.
5. Under this agreement the Agent acts as agent for its customers and
is not employed by us as broker, agent or employee; the Agent is not
authorized to act for us nor to make any representation on our behalf; and in
purchasing or selling Shares hereunder the Agent relies only upon the current
Prospectus and Statement of Additional Information and upon such written
representations as may hereafter be made by us to the Agent over our
signature. The Agent also agrees that every effort shall be made by the
Agent to place Shares on an investment basis.
6. The Agent represents that it is member of the NASD and agrees to
abide by all of the Rules of Fair Practice of the NASD applicable to the sale
of investment company shares to its customers, including, without limitation,
the following provision:
(a) The Agent shall not withhold placing customers' orders for any
Shares so as to profit itself as a result of such withholding. We shall not
purchase any Shares from the Funds except for the purpose of covering
purchase orders already received, and the Agent shall not purchase any Shares
from us other than as agent for the purpose of covering purchase orders
already received from its customers.
(b) If any Shares purchased by the Agent as agent for its customers are
repurchased by the Fund which issued the same or by us for the account of
such Fund, or are tendered for redemption, within seven business days after
confirmation by us of the original purchase order for such Shares (1) the
Agent agrees to forthwith refund to us the full agency commission paid to the
Agent on the original sale, such refund to be paid by us to the Fund whose
Shares have been so repurchased upon receipt and (2) we shall forthwith pay
to such Fund that part of the discount retained by us on the original sale.
Notice will be given to the Agent of any such repurchase or redemption within
ten days of the date on which the certificate is delivered to us or to such
Fund.
(c) Neither party to this agreement shall purchase any Shares from a
record holder at a price lower than the net asset value next computed by or
for the issuer thereof. Nothing in this subparagraph shall prevent the Agent
from selling Shares for the account of a record holder to us or to the issuer
thereof at the net asset value then quoted by or for such issuer and charging
the investor a fair commission for handling the transaction.
<PAGE>
AGENT SALES CONTRACT SALES CONTRACT
Page 3
7. Either party hereto may cancel this agreement upon ten days'
written notice. Furthermore, as a general distributor we reserve the
privilege of revising the commission or other compensation referred to
herein, which is the basis for determining the Agent's agency commission,
upon ten days' written notice, which notice will be deemed given by
supplementing or amending the Prospectus or Statement of Additional
Information of a Fund.
8. The customers in question are for all purposes the Agent's
customers and not our customers. We shall execute transactions for each of
the Agent's customers only upon its authorization it being understood in all
cases that (a) the Agent is acting as the agent for the customer; (b) the
transactions are without recourse against the Agent by the customer; (c) as
between the Agent and the customer, the customer will have full beneficial
ownership of the shares; and (d) each transaction is initiated solely upon
the order of the customer and not for the Agent's account.
9. This agreement shall be binding upon receipt by us in San
Francisco, California, of a counterpart hereof duly accepted and signed by
the Agent, and shall be construed in accordance with the laws of California.
Accepted:_________________________ G. T. GLOBAL FINANCIAL
Agent Name SERVICES, INC.
By: By: /s/ David A. Minella
------------------------------- -------------------------------
Signature David A. Minella, President
_____________________________
Print Name and Date
<PAGE>
NOT FOR USE BETWEEN MEMBERS OF
THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.
FOREIGN SALES CONTRACT SALES CONTRACT
Between: G. T. GLOBAL FINANCIAL SERVICES, INC.
General Distributor of the
G.T. Global Group of Funds
50 California Street, 27th Floor
San Francisco, CA 94111
and: ________________________________
________________________________
________________________________
Phone __________________________
Date ___________________________
As a general distributor of the G. T. Global Group of Funds (the
"Funds"), we agree to sell you, subject to the terms and conditions of this
Foreign Sales Contract, to any limitations imposed by any of the Funds and to
confirmation by us in each instance, shares issued by the Funds ("Shares").
The Funds shall also include any registered investment company with which we
have now or hereafter have signed an agreement.
1. YOU WARRANT AND REPRESENT TO US THAT SHARES OF THE FUNDS MAY,
PURSUANT TO ALL APPLICABLE LAWS AND GOVERNMENTAL RULES, REGULATIONS AND
ORDERS, BE OFFERED FOR SALE AND SOLD BY YOU IN THE COUNTRY OR COUNTRIES WHERE
YOU CONDUCT YOUR BUSINESS OPERATIONS, AND THAT YOU MAY LAWFULLY CONDUCT SUCH
BUSINESS OPERATIONS AND HAVE ALL REQUIRED LICENSES AND PERMITS TO DO SO AS
MAY BE REQUIRED BY SUCH LAWS AND GOVERNMENTAL RULES, REGULATIONS AND ORDERS.
YOU AGREE TO INDEMNIFY AND SAVE US AND THE FUNDS HARMLESS FROM ALL
LIABILITIES, LOSSES, DAMAGES, CLAIMS AND EXPENSES, INCLUDING COUNSEL FEES, IN
CONNECTION WITH THE FOREGOING WARRANTIES AND REPRESENTATIONS.
2. We will furnish you, without charge and on request, reasonable
quantities of the Funds' Prospectuses, shareholder reports and sales
material, all in the English language. You are solely responsible for
providing accurate translations of such documents with such additional
information as may be necessary as required by applicable laws and
governmental rule, regulations and order.
<PAGE>
Broker/Dealer Sales Contract Sales Contract
Page 2
3. The price of Shares to you will be the net asset value as next
determined after we receive your order, together with our underwriting
commission. Your attention is called specifically to the fact that each
price is always subject to confirmation, and will be the price next computed
after an order and the payment therefore are received.
You will pay for Shares at the next quoted price in United States
dollars in New York Eastern Time Same Day Funds credited to our account at
the Connecticut Bank and Trust Co., N.A. during the hours that the New York
Stock Exchange is open (currently 8:30 a.m. to 4:00 p.m. Eastern Time). We
must receive payment before an order for Shares can be confirmed, and the
applicable price to you will be based upon the net asset value of Shares next
determined after we are advised that Same Day Funds are available to us.
We will also furnish you on request with public offering prices for
Shares (including sales charges) determined in accordance with the current
Prospectus of each Fund. You will advice us of the appropriate sales charge
to be included in the price of Shares shown in our confirmation to you or the
absence of such sales charge if you propose to sell such shares to your
customer at net asset value. Such sales charge must conform to one of the
stated rates in the current Prospectus of the Fund, but need not necessarily
be the same as would be charged to a U.S. investor for an order of like
amount.
4. We reserve the right to cancel this agreement at any time without
notice if any Shares shall be offered for sale by you at less than the then
net asset value determined by or for the respective Funds.
5. Under this agreement you act as principal and are not employed by
us as a broker, agent or employee; you are not authorized to act for us nor
to make any representations on our behalf; and in purchasing or selling
Shares hereunder you rely only upon the current Prospectus and Statement of
Additional Information and upon such written representations as may hereafter
be made by us to you over our signature. You also agree that every effort
shall be made by you to place Shares on an investment basis.
6. You agree that although you are not a member of the National
Association of Securities Dealers, Inc., you will abide by the Rules of Fair
Practice of such Association, including, without limitation, the following
provision:
(a) You shall not withhold placing customers' orders for any
Shares so as to profit yourself as a result of such respective Funds except
for the purpose of covering purchase orders already received, and you shall
not purchase any Shares from us other than for investment except for the
purpose of covering purchase orders already received; and
<PAGE>
Broker/Dealer Sales Contract Sales Contract
Page 3
(b) Neither party to this agreement shall, as principal, purchase
any Shares from a record holder at a price lower than the net asset value
next computed by or for the issuer thereof. Nothing in this subparagraph
shall prevent you from selling Shares for the account of a record holder to
us or the issuer thereof at the net asset value then quoted by or for such
issuer and charging the investor a fair commission for handling the
transaction.
You further agree that in selling Shares to a U.S. national, you
will not charge a sales charge in excess of that stated in the Prospectus of
the applicable Fund.
7. Either party hereto may cancel this agreement upon ten days'
written notice.
8. This agreement shall be binding upon receipt by us in San
Francisco, California, of a counterpart hereof duly accepted and signed by
you, and shall be construed in accordance with the laws of California.
Accepted:_________________________ G. T. GLOBAL FINANCIAL
Company Name SERVICES, INC.
By: By: /s/
------------------------------- -------------------------------
Signature David A. Minella, President
_____________________________
Print Name and Date
<PAGE>
EXHIBIT 99.11
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of G.T. Global Growth Series:
GT Global America Mid Cap Growth Fund
GT Global Europe Growth Fund
GT Global International Growth Fund
GT Global Japan Growth Fund
GT Global New Pacific Growth Fund
GT Global Worldwide Growth Fund
GT Global America Small Cap Growth Fund
GT Global America Value Fund
We consent to the inclusion in Post Effective Amendment No. 40 to the
Registration Statement of G.T. Global Growth Series on Form N-1A
(File No. 811-2699) of our reports dated February 14, 1997 on our audits of
the financial statements and financial highlights of the above referenced
funds which is included in the Annual Reports to Shareholders for the year
ended December 31, 1996 which is included in the Post Effective Amendment to
the Registration Statement.
We also consent to the reference to our Firm under the caption "Independent
Accountants."
/s/ COOPERS & LYBRAND L.L.P.
-----------------------------
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
April 29, 1997
<PAGE>
EXHIBIT 99.14(a)
---------------------
QUESTIONS AND ANSWERS
- ----------------------------------------------------------
Q. AM I ELIGIBLE FOR AN IRA?
A. Any individual who receives earned income from employment (including
self-employment) and who has not reached age 70 1/2 can contribute to an IRA.
Q. HOW MUCH CAN I CONTRIBUTE?
A. Each working individual can contribute up to $2,000 (or 100% of
compensation, whichever is less) per year to an IRA. If you are married, your
employed spouse can also contribute up to $2,000 each year to his or her own
IRA. Even a non-employed spouse can open an IRA: for each year after 1996 you
and your non-employed spouse can contribute a combined total of $4,000* (or 100%
of compensation, whichever is less) to your individual IRAs, provided no more
than $2,000 is invested in any one account.
Q. WHEN MUST I MAKE MY CONTRIBUTION?
A. You can make a contribution for each tax year any time between January 1 of
that year and April 15 of the following year. (If you make a contribution after
December 31 that you wish to be considered as a contribution for the prior year,
you will need to so designate in writing.) You are not required to make a
contribution every year, but you cannot over-contribute in any year to make up
for a year for which you did not contribute at all or made only a partial
contribution.
Q. ARE MY IRA CONTRIBUTIONS TAX-DEDUCTIBLE?
A. Over three-quarters of all Americans are still able to deduct all or part
of their annual IRA contributions. Whether and exactly how much you may deduct
depends on your adjusted gross income (AGI), marital status and whether you are
an "active participant" in an employer-
- --------------
* FOR YEARS PRIOR TO 1997, THE COMBINED MAXIMUM IS $2,250.
** THE IRS SPECIFICALLY DEFINES WHO IS AN "ACTIVE PARTICIPANT" IN AN
EMPLOYER-SPONSORED RETIREMENT PLAN. PLEASE SEE THE GT GLOBAL IRA DISCLOSURE
STATEMENT FOR MORE INFORMATION ON DEDUCTIBILITY.
sponsored retirement plan such as a SEP-IRA, SARSEP-IRA, 401(k), 403(b),
profit-sharing, money purchase or defined benefit plan.** If neither you nor
your spouse are an active participant in a retirement plan where you work, your
entire IRA contribution is tax-deductible. If either you or your spouse are
covered by an employer-sponsored plan and you file jointly, use the table below
to calculate your maximum deduction. You may, of course, contribute to your IRA
even if the contributions are not tax-deductible (subject to the contribution
limits described above).
<TABLE>
<CAPTION>
SINGLE TAXPAYER OR HEAD OF HOUSEHOLD
STATUS MARRIED TAXPAYERS FILING JOINTLY MAXIMUM DEDUCTION
<S> <C> <C>
MODIFIED ADJUSTED GROSS INCOME AT OR MODIFIED ADJUSTED GROSS INCOME AT OR ENTIRE CONTRIBUTION IS TAX DEDUCTIBLE
LESS THAN $25,000 LESS THAN $40,000
MODIFIED ADJUSTED GROSS INCOME $25,000 MODIFIED ADJUSTED GROSS INCOME $40,000 SUBTRACT MODIFIED ADJUSTED GROSS INCOME
TO $35,000 TO $50,000 FROM $35,000 ($50,000 FOR MARRIED
TAXPAYERS FILING JOINTLY) AND MULTIPLY
REMAINDER BY 20%
MODIFIED ADJUSTED GROSS INCOME OVER MODIFIED ADJUSTED GROSS INCOME OVER IRA CONTRIBUTIONS ARE NOT TAX DEDUCTIBLE
$35,000 $50,000
</TABLE>
SOURCE: INTERNAL REVENUE SERVICE, PUBLICATION 590
* GENERALLY, MODIFIED ADJUSTED GROSS INCOME IS ADJUSTED GROSS INCOME AS SHOWN ON
YOUR FEDERAL INCOME TAX RETURN, WITHOUT TAKING INTO ACCOUNT ANY IRA DEDUCTION.
PLEASE CONSULT IRS PUBLICATION 590 OR THE INSTRUCTIONS TO YOUR TAX RETURN FOR
FURTHER DETAILS.
No contributions may be made for the year you become 70 1/2, or thereafter.
[LOGO]
<PAGE>
----------------
GT GLOBAL IRA
Q. WHAT IF MY IRA CONTAINS BOTH DEDUCTIBLE AND NON-DEDUCTIBLE CONTRIBUTIONS?
A. The IRS requires that your deductible and non-deductible contributions be
withdrawn in the same proportion as they exist within your IRA. To avoid tax
penalties at withdrawal, it is therefore important to keep track of your
deductible and non-deductible contributions.
Q. WHEN CAN I WITHDRAW MONEY FROM MY IRA?
A. You can withdraw all or part of your money at any time, but ordinary income
taxes will be due on withdrawals of deductible contributions and earnings in the
year the withdrawals are made. In addition, if you withdraw money prior to
reaching age 59 1/2, you may be subject to a 10% federal penalty on early
withdrawals. After age 59 1/2 you may withdraw money from your IRA without
penalty. Under current law, you must begin withdrawing money by April 1
following the year in which you reach age 70 1/2.
Q. CAN I CONSOLIDATE MY OTHER IRA ASSETS WITH THE ASSETS IN MY GT GLOBAL IRA?
Yes, by using either an IRA Transfer or an IRA Rollover.
Q. WHAT IS THE DIFFERENCE BETWEEN AN IRA TRANSFER AND AN IRA ROLLOVER?
A. An IRA Transfer moves your IRA assets directly from one financial
institution to another. You may, for instance, consolidate your IRA at GT Global
by transferring IRA assets from a bank, trust company, insurance company or
mutual fund; your current custodian will liquidate your IRA assets (if not
currently held in GT Global Mutual Funds) and send the check directly to GT
Global.
An IRA Rollover reinvests IRA assets distributed to you. With a rollover you
can take receipt of your IRA assets for up to 60 days before reinvesting them
(please note that you must reinvest your IRA assets within 60 days to maintain
their tax-deferred status). You may do only one rollover in any 12-month period.
There is no restriction on the number of IRA Transfers you effect in a year.
Q. I AM ELIGIBLE TO RECEIVE A DISTRIBUTION FROM AN EMPLOYER-SPONSORED PLAN.
CAN I ROLL IT OVER AND KEEP IT TAX-DEFERRED?
A. Most any distribution from an employer-sponsored plan may be rolled over to
an IRA, with certain exceptions (e.g., minimum required distributions, annuity
payments, and installments over a period of ten or more years). Your eligible
rollover distribution will be subject to 20% income tax withholding unless you
have the distribution transferred directly to your IRA.
-- If you have your eligible rollover distribution paid directly to your IRA,
you avoid paying current tax (and, potentially, the 10% federal penalty on early
withdrawals) and keep all of your distribution money growing tax-deferred.
-- If, instead, your eligible rollover distribution is paid to you, the
distribution will be subject to 20% withholding and you will receive only 80% of
the payment, all or a portion of which may be rolled over into an IRA within 60
days of receipt. You will avoid paying current tax and penalties on the amount
rolled over into your IRA. (If you want to avoid being taxed on the amount that
was withheld, you will need to find other money to replace the 20% that was
withheld and contribute it to your IRA within the 60-day period.)
Q. WHAT FORMS OR REPORTS DO I FILE FOR MY IRA CONTRIBUTIONS?
A. If your IRA contributions are completely deductible, you file no special
forms with the IRS. If you make non-deductible contributions, you must file Form
8606 with the IRS (and you should keep copies of all IRS Forms 8606 that you
file).
You do not report any interest income, dividends or capital gains or losses
that occur in your IRA.
Q. WHAT FORMS OR REPORTS DOES GT GLOBAL FILE FOR MY IRA?
A. GT Global will report to the IRS: your annual contributions, if any; your
rollover contributions and the market value of your IRA at December 31 of each
year (Form 5498); and any distributions (Form 1099R).
<PAGE>
----------------
[LOGO]
GT GLOBAL INDIVIDUAL RETIREMENT
ACCOUNT
DISCLOSURE STATEMENT AND APPLICATION
- --------------------------------------------------------------------------------
- --------------------------------------------
1. GENERAL
- --------------------------------------------
Internal Revenue Service Regulations require that you be given this Disclosure
Statement for the purpose of informing you of the restrictions and limitations
on how you may use an Individual Retirement Account (IRA). Please read this
Disclosure Statement together with the Custodial Agreement and the
prospectus(es) for the GT Global Mutual Fund(s) in which you are investing. The
provisions of the Custodial Agreement and prospectus(es) must prevail over this
statement in any instance where the statement is incomplete or appears to be in
conflict.
- --------------------------------------------
2. IRREVOCABILITY OF ACCOUNT
- --------------------------------------------
The Internal Revenue Service requires that you receive this disclosure
statement at least 7 days prior to the establishment of your IRA. Because of
this requirement, your application will not be accepted by the Custodian until
at least 7 days after the date you received this disclosure statement, as
indicated by you in the IRA Custodial Agreement. Prior to such acceptance, you
may receive back the entire amount that you have contributed, without reduction
for fees or other expenses. You may request that your contribution be returned
to you by writing to GT Global Investor Services, Inc. (agent for the
Custodian), P.O. Box 7345, San Francisco, CA 94120-7345 or by calling GT Global
toll free at (800) 223-2138 within 7 days of the date you have signed the
Custodial Agreement. All telephone requests must be confirmed in writing. Once
your application for a GT Global IRA is accepted by the Custodian, it cannot be
revoked by you.
- --------------------------------------------
3. ELIGIBLE INDIVIDUAL
- --------------------------------------------
Generally, you may open an IRA at any time; however, you will not be able to
make any contribution in the year you become 70 1/2, or in any year thereafter.
- --------------------------------------------
4. YOUR IRA ACCOUNT
- --------------------------------------------
An Individual Retirement Account is a trust or custodial account created or
organized in the United States for your exclusive benefit or for the benefit of
your beneficiaries. The IRA must be created by written instrument that meets the
following requirements:
(1) The trustee or custodian must be a bank, federally insured credit union,
savings and loan association, or (under federal regulations) another person
eligible to act as trustee or custodian;
(2) Except for rollovers, transfers and certain employer-sponsored plans,
under applicable law, the trustee or custodian will not accept contributions of
more than $2,000 in any tax year. You may make rollover and transfer
contributions in amounts greater than $2,000. All contributions must be in cash.
(3) Your interest in the IRA is nonforfeitable; that is, it is fully vested at
all times;
(4) No part of the trust or custodial funds may be invested in life insurance
contracts or certain collectibles nor may the assets be commingled with other
property except in a common trust fund or common investment fund; and
(5) Your interest in the custodial account must begin to be distributed by
April 1 of the year following the year in which you reach age 70(1)/(2). The
distribution may be made in a single sum, or you may receive periodic
distributions, starting by April 1 of the year following the year in which you
reach age 70(1)/(2), so long as your entire interest in the custodial account is
distributed over one of the following periods:
(a) Your life;
(b) The joint lives of you and your designated beneficiary;
-------
DS-1
<PAGE>
----------------
GT GLOBAL IRA
(c) A specific period not extending beyond your life expectancy; or
(d) A specific period not extending beyond the life expectancy of you and
your designated beneficiary.
If the amount distributed is less than the minimum amount required to be
distributed to you under the Internal Revenue Code, an excise tax will be
imposed on you in an amount equal to 50% of the excess of the amount required to
be distributed to you over the amount you actually receive.
(6) If you die after distributions have begun, your beneficiary must receive
the remaining payments at least as rapidly as under the method of distribution
being used on the date of your death. If you die before distributions have begun
or if your surviving spouse dies before distributions have begun, any interest
remaining must, by December 31 of the calendar year which contains the fifth
anniversary of your death or the death of your surviving spouse, be distributed
in a single sum. If your (or your surviving spouse's) designated beneficiary
wishes to receive an immediate annuity which provides for payments over the
beneficiary's life or over a specific period not exceeding the beneficiary's
life expectancy, the beneficiary must elect to receive such payments by December
31 following the calendar year of your death. Such payments also must begin by
that date. If your designated beneficiary is your spouse, annuity payments need
not commence until December 31 of the year you would have attained 70(1)/(2).
This annuity contract will not allow one's life expectancy to be recalculated.
The election will also apply to beneficiaries who make additional contributions
or rollovers in their own names to the IRA. An amount is not distributed if it
is rolled over into an Individual Retirement Account, annuity, or retirement
bond for the benefit of the beneficiary.
(7) If your surviving spouse is your designated beneficiary, your IRA assets
may be rolled over into his or her own IRA. No rollover from your IRA is
available for a beneficiary other than your surviving spouse, and such
non-spouse beneficiary must take the IRA assets in the form of a taxable
distribution.
- --------------------------------------------
5. TAX DEDUCTIONS
- --------------------------------------------
ELIGIBILITY
If neither you, nor your spouse, is an active participant (see A. below) you
may make a contribution of up to the lesser of $2,000 (or, for years after 1996,
$4,000 in the case of a Spousal IRA) or 100% of compensation and take a
deduction for the entire amount contributed. If you or (in most cases) your
spouse are an active participant but have an adjusted gross income (AGI) below a
certain level (see B. below), you may make a fully deductible contribution as
under current law. If, however, you or (in most cases) your spouse is an active
participant and your combined AGI is above the specified level, the amount of
the deductible contribution you may make to an IRA is phased down and eventually
eliminated.
A. ACTIVE PARTICIPANT. You are an "active participant" for a year if you are
covered by a retirement plan. Generally, you are covered by a "retirement plan"
for a year if your employer or union has a retirement plan under which money is
added to your account or you are eligible to earn retirement credits. For
example, if you are covered under a profit-sharing plan, certain government
plans, a salary reduction arrangement (such as a tax sheltered annuity
arrangement or a 401(k) plan), a simplified employee pension plan (SEP) or a
plan which promises you a retirement benefit which is based upon the number of
years of service you have with the employer (a "defined benefit plan"), you are
likely to be an active participant. Your Form W-2 for the year should indicate
your participation status.
You are an active participant for a year even if you are not yet vested in
your retirement benefit. Also, if you make required contributions or voluntary
employee contributions to a retirement plan, you are an active participant. In
certain plans you may be an active participant even if you were only with the
employer for part of the year. You will be deemed an active participant in your
employer's defined benefit plan even if you do not make required contributions
and even if you elect not to participate or waive participation. In other plans,
however, you will not be deemed an active participant if you elect not to
participate.
You are generally not considered an active participant if you are covered in a
government-
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<PAGE>
----------------
GT GLOBAL IRA
sponsored plan only because of your services as 1) an Armed Forces Reservist,
for less than 91 days of active service, or 2) a volunteer firefighter covered
for firefighting service. Of course, if you are covered in any other plan, these
exceptions do not apply.
If you are married but file a separate return, your spouse's active
participation affects your ability to make deductible contributions if you lived
together for any part of the year. If you lived apart from your spouse for the
entire year and you file a separate return, you are treated as unmarried for
purposes of your IRA deductions and thus your spouse's active participation does
not affect your ability to make deductible contributions.
B. MODIFIED ADJUSTED GROSS INCOME (AGI). If you are an active participant, you
must look at your Adjusted Gross Income for the year (if you and your spouse
file a joint tax return you use your combined AGI) to determine whether you can
make deductible IRA contribution. Your tax return will show you how to calculate
your AGI which, for purposes of determining the deductible amount of your IRA
contribution, is calculated without taking into account any IRA deduction, any
foreign earned income or foreign housing exclusion or any excludable series EE
savings bond interest. If you are at or below a certain AGI level, called the
Threshold Level, you are treated as if you were not an active participant and
can make a deductible contribution under the same rules as a person who is not
an active participant.
If you are single (or if you are married, filed separately and lived apart
from your spouse during the entire year), your threshold AGI level is $25,000.
The threshold level if you are married and file a joint tax return is $40,000,
and if you are married but file a separate tax return, the Threshold Level is
$0.
If your AGI is $10,000 or more above your Threshold Level and you are an
active participant, you will not be able to deduct any of your contributions to
your IRA. If your AGI is less than $10,000 above your Threshold Level, you will
still be able to make a deductible contribution but it will be limited in
amount. The amount by which your AGI exceeds your Threshold Level (AGI-Threshold
Level) is called your Excess AGI. The Maximum Allowable Deduction is $2,000 (or
$4,000 for a Spousal IRA). You can calculate your Deduction Limit as follows:
<TABLE>
<S> <C> <C> <C> <C>
$10,000-EXCESS AGI MAXIMUM
$10,000 X ALLOWABLE DEDUCTION = DEDUCTION LIMIT
</TABLE>
You must round up the result to the next highest $10 level (the next highest
number which ends in zero). For example, if the result is $1,525, you must round
it up to $1,530. If the final result is below $200 but above zero, your
Deduction Limit is $200. Your Deduction Limit cannot, in any event, exceed 100%
of your compensation.
EXAMPLE 1: Ms. Smith, a single person, is an active participant and has an AGI
of $31,619. She calculates her deductible IRA contribution as follows:
HER AGI IS $31,619
HER THRESHOLD LEVEL IS $25,000
HER EXCESS AGI IS (AGI-THRESHOLD LEVEL) OR
($31,619-$25,000)=$6,619
HER MAXIMUM ALLOWABLE DEDUCTION IS $2,000
SO, HER IRA DEDUCTION LIMIT IS:
<TABLE>
<S> <C> <C> <C> <C>
$10,000-$6,619
$10,000 X $2,000 = $676 (ROUNDED TO $680)
</TABLE>
EXAMPLE 2: Mr. and Mrs. Young file a joint tax return. Each spouse earns more
than $2,000 and one is an active participant. They have a combined AGI of
$44,255. They may each contribute to an IRA and calculate their deductible
contributions to each IRA as follows:
THEIR AGI IS $44,255
THEIR THRESHOLD LEVEL IS $40,000
THEIR EXCESS AGI IS
(AGI-THRESHOLD LEVEL) OR ($44,255-$40,000)=$4,255
THE MAXIMUM ALLOWABLE DEDUCTION FOR EACH SPOUSE IS $2,000
So, each spouse may compute his or her IRA deduction limit as follows:
<TABLE>
<S> <C> <C> <C> <C>
$10,000-$4,255 $1,149 (ROUNDED TO
$10,000 X $2,000 = $1,150)
</TABLE>
EXAMPLE 3: If, in example 2, Mr. Young did not earn any compensation, or
elected to be treated as earning no compensation, Mrs. Young could establish a
Spousal IRA (consisting of an account for herself and one for her husband). The
amount of deductible contributions which could be made to the two IRAs is
calculated using a Maximum Allowable Deduction of $4,000 (for years after 1996)
rather than $2,000.
<TABLE>
<S> <C> <C> <C> <C>
$10,000-$4,255 $2,298 (ROUNDED TO
$10,000 X $4,000 = $2,300)
</TABLE>
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<PAGE>
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GT GLOBAL IRA
The $2,300 must then be divided between the two accounts so that each IRA may
receive a deductible contribution of $1,150.
EXAMPLE 4: Mr. Jones, a married person files a separate tax return and lived
with Mrs. Jones during the year and is an active participant. He has $1,500 of
compensation and wishes to make a deductible contribution to an IRA.
HIS AGI IS $1,500.
HIS THRESHOLD LEVEL IS $0.
HIS EXCESS AGI IS (AGI-THRESHOLD LEVEL) OR ($1,500-$0) = $1,500
HIS MAXIMUM ALLOWABLE DEDUCTION IS $2,000.
SO, HIS IRA DEDUCTION LIMIT IS:
<TABLE>
<C> <S>
$10,000-$1,500
$10,000 X $2,000 = $1,700
</TABLE>
Even through his IRA deduction limit under the formula is $1,700, Mr. Jones
may not deduct an amount in excess of his compensation, so, his actual deduction
is limited to $1,500.
EXAMPLE 5: If, in example 2, the Youngs filed separate tax returns but lived
together during any part of the year, Mr. and Mrs. Young are each considered an
active participant, even though only Mrs. Young was the active participant. If
Mr. Young's AGI is $21,000, he may contribute to his IRA and would calculate his
deductible contribution as follows:
HIS AGI IS $21,000.
HIS THRESHOLD LEVEL IS $0.
HIS EXCESS AGI IS (AGI-THRESHOLD LEVEL) OR ($21,000-$0) = $21,000
HIS MAXIMUM ALLOWABLE DEDUCTION IS $2,000.
SO, HIS IRA DEDUCTION LIMIT IS:
<TABLE>
<C> <S>
$10,000-$21,000
$10,000 X $2,000 = $0
</TABLE>
Mr. Young would not be entitled to claim any deduction for an IRA contribution
in these circumstances.
EXAMPLE 6: If, in example 5, Mr. and Mrs. Young lived apart the entire year,
Mr. Young would determine the deductibility of his IRA contribution under the
rules applicable to single persons who are not active participants. Accordingly,
Mr. Young would be entitled to deduct the full amount of his maximum allowable
contribution.
As an alternative, you may determine your Deduction Limit by consulting the
Table found in IRS Publication 590.
SPOUSAL IRAS
As noted in Example 3 above, under the Act you may contribute to a Spousal IRA
even if your spouse has earned some compensation during the year. Provided your
spouse does not make a contribution to an IRA, you may set up a Spousal IRA
consisting of an account for your spouse as well as an account for yourself. The
maximum deductible amount for the Spousal IRA (for years after 1996) is the
lesser of $4,000 or 100% of compensation.
NONDEDUCTIBLE CONTRIBUTIONS TO IRAS
Even if you are above the threshold level and thus may not make a deductible
contribution of $2,000 ($4,000 for a Spousal IRA), you may still contribute up
to the lesser of 100% of compensation or $2,000 to an IRA ($4,000 for a Spousal
IRA). The amount of your contribution which is not deductible will be a
nondeductible contribution to the IRA. You may also choose to make a
contribution nondeductible even if you could have deducted part or all of the
contribution. Interest or other earnings on your IRA contribution whether from
deductible or nondeductible contributions will not be taxed until taken out of
your IRA and distributed to you.
If you make a nondeductible contribution to an IRA you must report the amount
of the nondeductible contribution to the IRS as a part of your tax return for
the year.
You may make a $2,000 contribution at any time during the year, if your
compensation for the year will be at least $2,000, without having to know how
much will be deductible. When you fill out your tax return you may then figure
out how much is deductible.
You may withdraw an IRA contribution made for a year any time before April 15
of the following year. If you do so, you must also withdraw the earnings
attributable to that portion and report the earnings as income for the year for
which the contribution was made. If some portion of your contribution is not
deductible, you may decide either to withdraw the nondeductible amount, or to
leave it in the IRA and designate that portion as a nondeductible contribution
on your tax return.
IRA DISTRIBUTIONS
Because nondeductible IRA contributions are made using income which has
already been taxed (that is, they are not deductible contributions), the portion
of the IRA distributions consisting of nondeductible contributions will not be
taxed again when received by you. If you make any nondeductible IRA
contributions, each distribution from your IRA will consist of a nontaxable
portion (return of nondeductible
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DS-4
<PAGE>
----------------
GT GLOBAL IRA
contributions) and a taxable portion (return of deductible contributions, if
any, and account earnings).
Thus, you may not take a distribution which is entirely tax-free if you have
made any deductible contributions. The following formula is used to determine
the nontaxable portion of your distributions for a taxable year:
<TABLE>
<S> <C> <C> <C> <C>
REMAINING
NONDEDUCTIBLE TOTAL NONTAXABLE
CONTRIBUTIONS X DISTRIBUTIONS = DISTRIBUTIONS
YEAR-END TOTAL IRA (FOR THE (FOR THE
ACCOUNT BALANCES YEAR) YEAR)
</TABLE>
To figure the year-end total IRA account balance you treat all of your IRAs as a
single IRA. This includes all regular IRAs, as well as Simplified Employer
Pension (SEP) IRAs, and Rollover IRAs. You also add back the distributions taken
during the year.
EXAMPLE: An individual makes the following contributions to his or her IRAs:
<TABLE>
<CAPTION>
YEAR DEDUCTIBLE NONDEDUCTIBLE
- --------- ----------- --------------
<S> <C> <C>
1992 $ 2,000
1993 1,800
1994 1,000 $ 1,000
1995 600 1,400
----------- -------
$ 5,400 $ 2,400
</TABLE>
<TABLE>
<S> <C>
Deductible Contributions: $ 5,400
Nondeductible Contributions: 2,400
Earnings on IRAs: 1,200
---------
Total Account Balance of IRAs as of
12/31/95: $9,000
(including distributions in 1995)
</TABLE>
In 1995, the individual takes a distribution of $3,000. The total account
balance in the IRAs on 12/31/95, plus 1995 distributions, is $9,000. The
nontaxable portion of the distributions for 1995 is figured as follows:
<TABLE>
<S> <C> <C> <C>
TOTAL NONDEDUCTIBLE CONTRIBUTIONS $2,400
TOTAL ACCOUNT BALANCE IN THE ------ X $3,000 = $800
IRAS PLUS DISTRIBUTIONS $ 9,000
</TABLE>
Thus, $800 of the $3,000 distribution in 1995 will not be included in the
individual's taxable income. The remaining $2,200 will be taxable for 1995.
SIMPLIFIED EMPLOYEE PENSION ACCOUNTS
Your IRA may be used as part of a SEP established by your employer, or by you
if you are self-employed. Generally, your employer, or you if self-employed, may
contribute to your SEP-IRA up to a maximum of 15% of your compensation or
$22,500, whichever is less. If your IRA is used as part of a salary reduction
SEP, you may elect to reduce your compensation, up to a maximum of 15% of your
compensation or $9,500 (adjusted), whichever is less, and have your employer
contribute that amount to your SEP-IRA. If your employer maintains both a salary
reduction SEP and a regular SEP, the contribution limit to both SEPs together is
15% of your compensation or $22,500, whichever is less. It is your and your
employer's responsibility to see that contributions in excess of normal IRA
limits are made under a valid SEP and are, therefore, proper. Generally, under a
SEP, an IRA must be set up for each employee who is (1) at least 21 years old,
(2) has worked for the employer in any of the 3 of the 5 years immediately
preceding the particular tax year and (3) has received from the employer at
least $400 (or other amount resulting from cost-of-living adjustment) in
compensation for the tax year. Certain employees may be excluded from the Plan.
You should review the attached Form 5305-SEP for more information regarding your
Simplified Employee Pension.
- --------------------------------------------
6. TAX-FREE TRANSFER CONTRIBUTIONS
- --------------------------------------------
Transfers allow you to transfer IRA assets directly from one IRA trustee or
custodian to another on a tax-free basis. If you already have an IRA with
another trustee or custodian, you may direct that trustee or custodian to
transfer your IRA assets to your GT Global IRA without tax consequences, in
accordance with the rules of your existing account. You may not take a deduction
for the amount. To authorize the GT Global IRA Custodian to arrange a direct
transfer from your existing IRA, please complete the attached IRA Transfer
Authorization as well as the IRA Application.
- --------------------------------------------
7. TAX-FREE ROLLOVER CONTRIBUTIONS
- --------------------------------------------
Rollover contributions permit you to contribute amounts you are eligible to,
or actually, receive from one retirement program to another without incurring
any income tax liability. The source of a rollover contribution to an IRA is
typically either a distribution from a qualified retirement plan, a
tax-sheltered 403(b) annuity or custodial account, or another IRA. Most
distributions may be rolled over to an IRA without regard to whether it is a
total or a
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DS-5
<PAGE>
----------------
GT GLOBAL IRA
partial distribution, except for certain distributions such as minimum required
distributions, annuity payments, installments over a period of ten or more
years, and certain payments to non-spouse beneficiaries and alternate payees
that are not eligible for rollover treatment.
IF YOU ARE ELIGIBLE TO RECEIVE A DISTRIBUTION FROM A QUALIFIED PLAN OR A
403(B) PROGRAM, you may wish to have your eligible rollover distribution paid
directly to your GT Global IRA in order to avoid 20% withholding on the
distribution (which will be credited against your federal income taxes). If you
have a direct rollover of your eligible distribution, no income tax will be
withheld and your distribution will not be taxed until you take it out of your
IRA. To facilitate a direct rollover, please complete the attached IRA Direct
Rollover Instructions as well as the IRA Application. If, instead, you have your
eligible rollover distribution paid to you, you will receive only 80% of the
payment (because of the required 20% withholding) all or part of which may be
rolled over into a GT Global IRA within 60 days of your receipt of the
distribution. The amount rolled over will not be taxed until you take it out of
your IRA. NOTE that if you want to avoid being taxed on the amount that was
withheld, you will need to find other money to replace the 20% that was withheld
and contribute it to your IRA within the 60-day period.
This mandatory withholding does not apply to distributions you receive from
another IRA. All or part of an eligible distribution from another IRA may be
rolled over, into a GT Global IRA by the 60th day after you receive the benefits
from your first IRA.
Whether you do a direct rollover or a rollover of amounts that are initially
paid to you, you will not be taxed on (nor can you take a deduction for) the
amount you roll over. You will not be taxed on the amount transferred, and you
cannot take a tax deduction for that amount. You will be taxed on the portion of
the distribution, if any, which is not reinvested within 60 days. The following
summarizes some of the other rules applicable to rollover contributions.
Rollovers between individual retirement programs may occur only once in any
12-month period, BUT THIS LIMIT DOES NOT APPLY TO A TRUSTEE-TO-TRUSTEE TRANSFER
DESCRIBED IN SECTION 6 ABOVE.
If property has been received from a retirement program, it may be sold and
the proceeds of the sale rolled over. For example, if you were to receive a
distribution consisting of stock, you could sell the stock and contribute the
money you received from the sale to your IRA within the 60-day period from your
receipt of the stock. If you did not contribute all of the money you received
from the sale, you would be taxed on the portion not rolled over.
In general, you may roll over all or part of a distribution from your
employer's qualified plan or 403(b) program (except the portion, if any,
representing your own employee contributions to the plan) to your new IRA. You
may do this even though you are not otherwise allowed to make deductible
contributions into an IRA.
Tax-free rollover treatment will also apply, in certain circumstances, where
you receive a distribution in a parent-subsidiary or controlled group
relationship. Any amounts distributed from an employer's qualified plan will not
be eligible for five-year forward averaging if part of the distribution is
rolled-over into an IRA.
If you roll over an amount into an IRA from a qualified plan, you may be
allowed at a later date to roll those proceeds back into another qualified plan.
In order to do so, however, the proceeds may not have been mixed with regular
contributions or funds from other sources.
Since many of the rules with respect to rollover situations are rather
complex, you should check with your own tax adviser as to your ability to effect
a rollover in your particular circumstances.
- --------------------------------------------
8. EXCESS CONTRIBUTIONS
- --------------------------------------------
Generally, an excess contribution is the amount of any contributions to your
IRA (other than a proper rollover or transfer contribution) for a taxable year
that exceeds your IRA contribution limit for that year. If you make an excess
contribution, no income tax deduction will be allowed for the excess
contribution, and you may be subject to a 6% excise tax on the amount of the
excess contribution.
The 6% excise tax is imposed with respect to the tax year for which the excess
contribution is made and for each later year until the excess amount is
eliminated. The amount of this excise tax for any year cannot exceed 6% of the
value of the account, determined as of the close of that tax year.
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DS-6
<PAGE>
----------------
GT GLOBAL IRA
If you make a contribution to your IRA for a taxable year which exceeds your
IRA contribution limit, whether deductible or nondeductible, you may be
permitted to designate the contribution as a nondeductible IRA contribution by
the due date for filing your Federal income tax return, not including
extensions. As an alternative, you may withdraw the contribution from your IRA
and the earnings thereon at any time prior to the due date for filing your
Federal income tax return, including extensions, for the taxable year for which
the contribution was made. If this is done, the return of the contribution will
not be includible in your gross income as an IRA distribution, and the
contribution will not be subject to the 6% excise tax on excess contributions
(assuming the contribution is not deducted on your return). However, the
earnings on the contribution will be taxable income in the year for which the
contribution was made, and may possibly be subject to the 10% tax on early
distributions if you are under age 59 1/2 (see Section 10 below).
If you make an excess contribution to your IRA that exceeds your IRA
contribution limit, and you withdraw the excess contribution after the due date
for filing your Federal income tax return (including extensions), the returned
excess contribution will not be includible in your gross income as an IRA
distribution (subject to possible premature distribution penalties) if: (1) your
total IRA contributions for the year were not more than $2,250 ($4,000 for years
after 1996) and (2) you did not deduct the excess contribution on your return
(or if the deduction you claimed was disallowed by the Internal Revenue
Service). However, you must pay the 6% excise tax on the excess contribution for
each taxable year that it is still in your IRA at the end of the following year.
Under this procedure, you are not required to withdraw any earnings attributable
to the excess contribution.
You may also eliminate an excess contribution from your IRA in a subsequent
year by not contributing the maximum amount for that year and applying the
excess contribution to the subsequent year's contribution. You may be entitled
to a deduction for the amount of the excess contribution that is applied in the
subsequent year, provided you did not previously deduct the excess contribution
(or if the deduction you claimed was disallowed by the Internal Revenue
Service). However, if you incorrectly deducted an excess contribution in a
closed taxable year (i.e., one for which the period to assess a deficiency has
expired), the amount of the excess contribution cannot be deducted again in the
subsequent year in which it is applied.
- --------------------------------------------
9. DISTRIBUTIONS
- --------------------------------------------
Taxable distributions from your IRA are taxed as ordinary income regardless of
their source. They are not eligible for capital gains treatment or the special
5-year averaging rules that apply (for tax years beginning prior to 2000) to
lump sum distributions from qualified employer plans.
As provided in Form 5305-A, you may elect to have your IRA distributed in: a
single sum payment; an annuity contract; or equal annual installments over a
specified period not to exceed your life expectancy or the joint life and last
survivor expectancy of you and your designated beneficiary. In general, you must
begin receiving distributions from your IRA no later than April 1 following the
calendar year in which you reach age 70 1/2. There is a prescribed minimum
amount for such distributions and an excise tax may be imposed if the amount
distributed to you is less than the required amount. If you die before your IRA
is completely distributed to you, the remaining balance in your IRA will be
distributed to your beneficiary(ies) either in accordance with the method of
distribution in effect at your death (if on or after the required beginning
date) or as otherwise permitted (if your death occurs prior to the required
beginning date).
You may have to pay an additional 15% excess distribution tax on IRA and
qualified retirement plan distributions that exceed $150,000 (which is an
indexed amount and may be subject to further adjustment). This excise tax is
reduced by any tax you may owe on premature distributions which apply to this
excess distribution. This 15% tax may not apply in certain circumstances. You
should contact your own tax advisor for more information.
- --------------------------------------------
10. PREMATURE DISTRIBUTIONS
- --------------------------------------------
A penalty tax of 10% is imposed on taxable distributions made to you or your
beneficiaries before you attain age 59(1)/(2). No penalty tax will be imposed if
the distribution is (i) a return of nondeductible contributions, (ii) made on
account of your death or disability, (iii) made in substantially equal payments
over life or life
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DS-7
<PAGE>
----------------
GT GLOBAL IRA
expectancy as permitted in accordance with the provisions of Section 72(t)(2) of
the Code and the regulations promulgated thereunder, or (iv) contributed as a
"rollover" within 60 days. In addition, for distributions made after 1996, the
penalty tax does not apply if the distribution is made (i) to pay for medical
expenses in excess of 7.5% of your adjusted gross income or (ii) if you are
unemployed, to pay for medical insurance premiums after you have received
unemployment compensation for a specified period. This tax is in addition to any
tax that is due because you must include the portion of the premature
distribution attributable to deductible contributions and all earnings in your
gross income.
- --------------------------------------------
11. TAXABILITY OF ACCOUNT
- --------------------------------------------
Your IRA is exempt from tax unless you or your beneficiaries engage in a
prohibited transaction under Section 4975 of the Internal Revenue Code. Examples
of prohibited transactions include your borrowing from the IRA or your selling
property to or buying property from the IRA.
If you engage in a prohibited transaction, your IRA will lose its tax exempt
status as of the first day of the tax year in which the prohibited transaction
occurs. Once your IRA loses its exempt status, you must include the fair market
value of its assets in your income for that tax year. You will also be subject
to the 10% penalty tax on premature distributions.
If you use your IRA or any portion thereof as security for a loan, the portion
so used will be treated as distributed to you and will be currently taxable and
subject to the 10% tax on premature distributions.
- --------------------------------------------
12. FINANCIAL DISCLOSURES
- --------------------------------------------
Contributions to your IRA will be invested in shares of a GT Global Mutual
Fund. You may receive earnings on your shares in the form of income dividends or
net realized capital gain distributions. Such earnings will be reinvested in
additional shares of a GT Global Mutual Fund. The growth in value of the IRA is
neither guaranteed nor projected. The gross income received by a GT Global
Mutual Fund is reduced by the fees paid to the manager of the Fund, Chancellor
LGT Asset Management, Inc., and by expenses incurred by the Fund, such as
accounting fees, taxes, interest, trustee fees and brokerage charges. Each
Fund's prospectus contains more complete information including charges,
expenses, the risks of global investing and other matters of interest to a
prospective investor.
- --------------------------------------------
13. MISCELLANEOUS
- --------------------------------------------
You are required to file form 5329 (Return for Individual Retirement Savings
Arrangements) for a taxable year in which you are subject to penalty taxes in
connection with your IRA.
The enclosed agreement has been approved as to form for use in establishing
custodial accounts by the Internal Revenue Service. The Internal Revenue Service
approval is a determination as to form only and does not represent a
determination of the merits of the account.
The proceeds from the custodial account may be used by you as a rollover
contribution to another account or annuity or retirement bond.
- --------------------------------------------
14. ADDITIONAL INFORMATION
- --------------------------------------------
Additional information on Individual Retirement Accounts can be obtained from
any district office of the Internal Revenue Service (IRS Publication 590).
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DS-8
<PAGE>
[CAMERA READY COPY]
DS-9
<PAGE>
ARTICLE VIII
See Exhibit A to Form 5305-A for additional terms applicable to your GT Global
IRA. Exhibit A is incorporated in and made part of your GT Global IRA by this
reference.
DS-10
<PAGE>
----------------
GT GLOBAL IRA
EXHIBIT A TO FORM 5305-A,
ARTICLE VIII
- ----------------------------------------------------------
The following provisions constitute Article VIII of Form 5305-A which is used to
establish your GT Global IRA.
1. The Custodian is under no duty to compel the Depositor to make any
contributions to the Account and shall have no duty to assure that such
contributions are appropriate in amount (except to the extent that no annual
contributions may exceed $2,000 or such other maximum annual level as may be
later authorized by law).
2. The amount of each contribution by a Depositor shall be applied to the
purchase of shares of GT Global Mutual Funds (hereinafter "Funds"). The
Depositor acknowledges receipt of the appropriate current prospectus of the
Funds. All dividends and capital gain distributions received on securities held
in the Custodial Account (the "Account") shall be reinvested in additional
shares of the Funds and credited to the Account. Shares acquired in the Account
will be held beneficially for the Depositor in the name of the Custodian or its
nominee.
3. The Custodian shall deliver to the Depositor all shareholder notices and
reports, prospectuses, financial statements, proxy material and other material
as they are received from the Funds. The Custodian shall vote at all shareholder
meetings of the Funds in accordance with written instructions of the Depositor
which will be secured by the Custodian. If no written instructions are received
from the Depositor, the Depositor's shares shall not be voted.
4. The Custodian may resign upon at least 60 days written notice to the
Depositor and may be removed by the Depositor upon 60 days written notice to the
Custodian. Upon resignation by the Custodian, it shall transfer the assets of
the Account in such a manner as the Depositor shall designate, but in the
absence of such designation, the Custodian will use its best efforts to transfer
the assets of the Account to a successor custodian to be held under an
Individual Retirement Account qualifying under Section 408 of the Internal
Revenue Code. Upon removal of the Custodian by action of the Depositor, the
assets of the Account shall be transferred in accordance with the Depositor's
instructions.
5. If the Depositor does not effectively elect any of the methods of
distribution described above by the April 1 following the calendar year in which
he or she reaches age 70 1/2, the assets of the Account shall be distributed to
the Depositor in equal or substantially equal payments over the Depositor's life
expectancy in accordance with the minimum distribution requirements applicable
to the Account as described in Article IV of Form 5305-A unless the Depositor
effectively elects another method of distribution.
6. By completing the Beneficiary Designation section of the IRA Application,
the Depositor may designate one or more beneficiaries to receive such benefits
in the event of his death. Should the Depositor die without an effective
designation of beneficiary, the assets of the Account shall be distributed to
the Depositor's surviving spouse, or if there is no surviving spouse, to the
Depositor's estate in a single payment, unless another method of distribution
has been elected by such spouse or estate, as applicable.
7. In the event a Depositor's contribution to the Account in any year exceeds
$2,000, such excess amount shall be deemed to be a "rollover contribution"
permitted under Article I of the Account agreement, unless the Depositor
certifies otherwise to the Custodian in a form satisfactory to it.
-------
DS-11
<PAGE>
----------------
GT GLOBAL IRA
NOTES
- ----------------------------------------------------------
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DS-12
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT Global Mutual Funds
P.O. Box 7345, San Francisco, CA 94120-7345 IRA APPLICATION
800/223-2138
</TABLE>
<TABLE>
<S> <C> <C>
ACCOUNT REGISTRATION / / NEW ACCOUNT / / ACCOUNT REVISION (ACCOUNT NO. ________________________________)
TYPE OF ACCOUNT: / / CONTRIBUTORY / / ROLLOVER / / SIMPLIFIED EMPLOYEE PENSION-IRA
(SEP-IRA)
/ / THIS IS A TRANSFER. I HAVE ATTACHED A COMPLETED IRA TRANSFER AUTHORIZATION.
Telephone Number( ) ____________________________
Name ________________________________ ________________________________________________
Address______________________________ Social Security Number / / or Tax I.D. Number / / (Check
Street applicable box)
________________________________ If more than one owner, social security number or taxpayer
City State Zip Code identification number should be provided for first owner
listed.
Date of Birth______________________________
FUND SELECTION & INITIAL CONTRIBUTION
Enclosed is a check for $ ___________________ made payable to GT Global (as agent for the Custodian) to be invested in the Fund(s)
hereby specified. EACH GT GLOBAL MUTUAL FUND ISSUES THREE CLASSES OF SHARES. CLASS A SHARES ARE SOLD WITH AN INITIAL SALES CHARGE
WHILE CLASS B SHARES ARE SOLD WITHOUT AN INITIAL SALES CHARGE BUT ARE SUBJECT TO HIGHER EXPENSE LEVELS AND TO A CONTINGENT DEFERRED
SALES CHARGE PAYABLE ON CERTAIN REDEMPTIONS. ADVISOR CLASS SHARES ARE SOLD THROUGH A DIFFERENT PROSPECTUS THAN CLASS A AND CLASS B
SHARES, ARE NOT SOLD DIRECTLY TO THE GENERAL PUBLIC AND ARE ONLY AVAILABLE THROUGH CERTAIN EMPLOYEE BENEFIT PLANS, FINANCIAL
INSTITUTIONS AND OTHER ENTITIES THAT HAVE ENTERED INTO SPECIFIC AGREEMENTS WITH GT GLOBAL, INC. PLEASE READ THE PROSPECTUS OF SUCH
FUNDS CAREFULLY BEFORE YOU INVEST. (If this is a transfer from another IRA, please indicate Fund preference and the percentage of
the contribution you wish allocated to each Fund only. Also complete the separate IRA Transfer Authorization Form.)
</TABLE>
TO PURCHASE THE FUNDS LISTED BELOW PLEASE SELECT EITHER:
/ / CLASS A SHARES / /CLASS B SHARES (NOT AVAILABLE FOR PURCHASES OF $500,000
OR MORE OR FOR THE GT GLOBAL DOLLAR FUND) OR
/ / ADVISOR CLASS SHARES.
If a class share box is not checked, your investment will be made in Class A
shares.
<TABLE>
<CAPTION>
INITIAL CONTRIBUTION INITIAL CONTRIBUTION
<S> <C> <C> <C>
07 / / GT GLOBAL WORLDWIDE $ ______________ OR 03 / / GT GLOBAL EUROPE GROWTH $ ______________ OR
GROWTH FUND ______________% FUND ______________%
05 / / GT GLOBAL $ ______________ OR 13 / / GT GLOBAL LATIN AMERICA $ ______________ OR
INTERNATIONAL GROWTH FUND ______________% GROWTH FUND ______________%
16 / / GT GLOBAL EMERGING $ ______________ OR 24 / / GT GLOBAL AMERICA SMALL $ ______________ OR
MARKETS FUND ______________% CAP GROWTH FUND ______________%
22 / / GT GLOBAL CONSUMER $ ______________ OR 06 / / GT GLOBAL AMERICA MID $ ______________ OR
PRODUCTS AND SERVICES FUND ______________% CAP GROWTH FUND ______________%
17 / / GT GLOBAL FINANCIAL $ ______________ OR 23 / / GT GLOBAL AMERICA VALUE $ ______________ OR
SERVICES FUND ______________% FUND ______________%
11 / / GT GLOBAL HEALTH CARE $ ______________ OR 04 / / GT GLOBAL JAPAN GROWTH $ ______________ OR
FUND ______________% FUND ______________%
19 / / GT GLOBAL $ ______________ OR 10 / / GT GLOBAL GROWTH & $ ______________ OR
INFRASTRUCTURE FUND ______________% INCOME FUND ______________%
21 / / GT GLOBAL NATURAL $ ______________ OR 08 / / GT GLOBAL STRATEGIC $ ______________ OR
RESOURCES FUND ______________% INCOME FUND ______________%
15 / / GT GLOBAL $ ______________ OR 09 / / GT GLOBAL GOVERNMENT $ ______________ OR
TELECOMMUNICATIONS FUND ______________% INCOME FUND ______________%
02 / / GT GLOBAL NEW PACIFIC $ ______________ OR 18 / / GT GLOBAL HIGH INCOME $ ______________ OR
GROWTH FUND ______________% FUND ______________%
01 / / GT GLOBAL DOLLAR FUND $ ______________ OR TOTAL INITIAL CONTRIBUTION: $ ________________
______________%
CONTRIBUTION YEAR: ________________
</TABLE>
NOTE: Minimum Initial Contribution -- $100 per Fund
Maximum Annual Individual Contribution (except for rollovers and
transfers) -- $2,000
Maximum Annual Individual and Spousal Contribution (except for rollovers
and transfers) -- $4,000 ($2,250 for years prior to 1997, in any
combination, provided no more than $2,000 is invested in any one
account).
Maximum Annual SEP-IRA Contribution -- See Disclosure Statement
TELEPHONE EXCHANGE
I, either directly or through the Authorized Agent, if any, named below, hereby
authorize the Transfer Agent of the GT Global Mutual Fund, to honor any
telephone, telex or telegraphic instructions believed to be authentic for
exchange between any of the Funds distributed by GT Global, Inc. I understand
and agree that the account will be subject to the telephone exchange privilege
described in the applicable GT Global Mutual Fund's current prospectus and
agree that GT Global, Inc., GT Global Mutual Funds and the Funds' Transfer
Agent, their officers and employees, will not be responsible for the
authenticity of any telephone, telex, or telegraphic instructions nor be liable
for any loss arising out of any such telephone, telex or telegraphic
instructions effected including any such loss due to negligence on the part of
such entities.
FOR USE BY AUTHORIZED AGENT (BROKER/DEALER OR ADVISOR) ONLY
We hereby submit this IRA Application for the purchase of shares including
shares purchased under a Right of Accumulation or Letter of Intent in
accordance with the terms of our Selling Agreement with GT Global, Inc. and
with the Prospectus(es) for the GT Global Mutual Fund(s). We agree to notify
GT Global, Inc. of any purchases properly made under a Letter of Intent or
Right of Accumulation.
Investment Dealer or Advisor Name_____________________________________________
Main Office Address___________________________________________________________
Branch Number_______ Representative's Number______ Representative's Name______
<TABLE>
<S> <C>
Branch Address ______________________________________________ Telephone Number __________________
For Class A and B shares only:
Investment Dealer's Authorized Signature X __________________ Title _____________________________
For Advisor Class shares only:
We hereby submit this IRA Application for the purchase of Advisor Class shares in accordance with the terms of our Advisor Class
Agreement with GT Global, Inc. and with the Prospectus and Statement of Additional Information of each Fund purchased.
Advisor's Authorized Signature X ___________________________ Title _____________________________
</TABLE>
DS-13
<PAGE>
<TABLE>
<S> <C> <C>
DESIGNATION OF BENEFICIARY(IES)
If you require more room to name additional beneficiaries, please provide
the necessary information on a separate sheet, and indicate next to each
name whether beneficiary is primary or contingent.
PRIMARY BENEFICIARY(IES)
I hereby designate the following person(s) to receive any interest
remaining in my IRA upon my death:
</TABLE>
<TABLE>
<S> <C> <C> <C>
1. Name ________________________________ Address ______________________
Relationship ___________ DOB _________ Social Security Number ______________ Share of Account __%
2. Name ________________________________ Address ______________________
Relationship ___________ DOB _________ Social Security Number ______________ Share of Account __%
CONTINGENT BENEFICIARY(IES)
I hereby designate the following person(s) to receive any interest remaining in my IRA upon my death:
1. Name ________________________________ Address ______________________
Relationship ___________ DOB _________ Social Security Number ______________ Share of Account __%
2. Name ________________________________ Address ______________________
Relationship ___________ DOB _________ Social Security Number ______________ Share of Account __%
Unless otherwise indicated above, the benefit payable hereunder shall be paid
in equal shares to the Primary Beneficiaries who survive the Participant. If
no Primary Beneficiary(ies) survives the Participant, the payment shall be
made in equal shares (or as otherwise indicated above) to the Contingent
Beneficiary(ies) who survive the Participant. The Participant reserves the
right to change the above beneficiary by filing a new Beneficiary Designations
Form with the Custodian. Should no named beneficiary survive the date of
distribution, the account shall be distributed to my surviving spouse, or if
there is no surviving spouse, in a single payment to my estate. ONLY THE MOST
RECENT EXECUTED DESIGNATION OF BENEFICIARY(IES) ON FILE WITH GT GLOBAL
INVESTOR SERVICES, INC. (AS AGENT FOR THE CUSTODIAN) WILL BE HONORED.
CONSENT OF SPOUSE
I consent to the above Beneficiary Designation.
Signature of Spouse:
__________________________________________________________________
Date:
__________________
(Note: May be required in community property states if any person other than
or in addition to Participant's Spouse is designated as Beneficiary.)
REDUCED SALES CHARGES
</TABLE>
RIGHT OF ACCUMULATION -- CLASS A SHARES ONLY
/ / I certify that I qualify for the Right of Accumulation sales charge
discount described in the prospectus and statement of additional
information of the Fund(s) purchased.
/ / I own shares of more than one GT Global Mutual Fund. Below is a schedule
showing the numbers of each of my Shareholder Accounts.
/ / The registration of some of my shares differs from that shown on this IRA
Application. Below is a schedule showing the account number(s) and full
registration in each case.
STATEMENT OF INTENTION -- CLASS A SHARES ONLY
I agree to the Statement of Intention set forth in the Prospectus(es) for the
Fund(s) in which I am investing. Although I am not obligated to do so, it is my
intention to invest over a thirteen-month period in Class A shares of the GT
Global Mutual Funds, in an aggregate amount at least equal to:
/ / $50,000 / / $100,000 / / $250,000 / / $500,000
LIST OF OTHER GT GLOBAL MUTUAL FUND ACCOUNTS:
_______________________________________________ ___________________________
_______________________________________________ ___________________________
_______________________________________________ ___________________________
Account Numbers Account Registrations
AGREEMENT AND SIGNATURE
I acknowledge receipt of the Disclosure Statement and IRA Agreement (IRS Form
5305-A) for the GT Global IRA. I acknowledge receipt of the current
Prospectus(es) of the Fund(s) in which I have directed GT Global Investor
Services, Inc. (as agent for the Custodian) to invest my contribution(s). I
agree to the terms and provisions set forth in this IRA Application including
those contained in the Telephone Exchange section, the Disclosure Statement,
the Individual Retirement Custodial Account Agreement (IRS Form 5305-A) and
the Prospectus(es). AS REQUIRED BY THE INTERNAL REVENUE SERVICE, I CERTIFY,
UNDER PENALTIES OF PERJURY, THAT THE TAXPAYER IDENTIFICATION NUMBER GIVEN ON
THE FACE OF THIS IRA APPLICATION IS CORRECT AND THAT I AM NOT SUBJECT TO
BACKUP WITHHOLDING IN MY IRA(S). THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE
YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT OTHER THAN THE CERTIFICATIONS
REQUIRED TO AVOID BACKUP WITHHOLDING.
Signature X_______________________________ Date ______________________________
Individual
DS-14
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT Global Mutual Funds
P.O. Box 7345, San Francisco, IRA TRANSFER AUTHORIZATION
CA 94120-7345
800/223-2138
</TABLE>
Please complete a separate Transfer Authorization for each Account to be
transferred.
TO EXISTING CUSTODIAN:
Name of Existing Custodian_____________________ Telephone_(________)__________
Address
_______________________________________
Street
_______________________________________
City
____________________
State
____________________
Zip Code
Individual Policy or Account:______________________ in the name of ___________
Account Name Account Number Your Name
Please liquidate/transfer in kind* $________________ or ________________% of
my IRA identified above and transfer those funds by a check,
made payable to
GT Global, for __________________________, IRA Account #______________________
Investor's Name Existing GT Global
Account Number, if applicable
AGE 70 1/2 RESTRICTIONS
(Please complete this section if you will be age 70 1/2 or older in the
transfer year.)
The following transfer restrictions apply to this transaction:
<TABLE>
<S> <C>
1. Required Minimum Distribution. I authorize the Custodian or Trustee named above (select one):
/ / to distribute my required minimum distribution to me prior to transferring my IRA assets.
/ / to segregate and retain minimum distribution amount. Distribute on ________________, 19__.
2. Required Elections. (Complete only if you have reached your required beginning date, i.e.,
April 1, following the year in which you attain age 70 1/2.)
a. My oldest primary beneficiary with respect to the transferring IRA is:
Name _____________________ Birthdate _______________ Relationship ______________________
b. My life expectancy / / was / / was not being recalculated.
c. The life expectancy of my spouse beneficiary / / was / / was not being recalculated
/ / Not Applicable. I am aware that the elections indicated above became irrevocable as of my
required beginning date and will apply to the IRA with the new Custodian indicated below.
</TABLE>
THIS FORM, ALONG WITH ALL CHECK(S) SHOULD BE MAILED TO: GT GLOBAL (AS AGENT
FOR THE CUSTODIAN), P.O. BOX 7345, SAN FRANCISCO, CA 94120-7345.
<TABLE>
<S> <C> <C>
X
____________________ ____________________ ____________________
Investor's Signature Date Signature Guarantee
(if required by
current Custodian)
</TABLE>
* If this IRA currently holds shares of a GT Global Mutual Fund, you may
request a direct transfer of shares.
FOR GT GLOBAL USE ONLY
GT Global Investor Services, Inc. (as agent for the GT Global IRA Custodian)
agrees to accept the transfer described above and upon written receipt will
apply the proceeds to investments as designated by the Investor.
X_____________________________________________________ ____________
Signature of Custodian or its
Agent Date
DS-15
<PAGE>
DS-16
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT Global Mutual Funds
P.O. Box 7345, San Francisco, IRA DIRECT ROLLOVER
CA 94120-7345 AUTHORIZATION
800/223-2138
</TABLE>
TO CURRENT PLAN ADMINISTRATOR OR 403(b) CUSTODIAN:
Name of Current Plan Administrator or 403(b) Custodian:_____________
Telephone (________)__________________________________________________________
Address:_______________________ ______________________ ___________ ___________
Street City State Zip Code
Plan Account:_________________________________________________________________
Plan Account Name Plan Account Number Name of Plan
Participant
Please pay my entire eligible rollover distribution from the plan identified
above directly to my GT Global IRA Custodian, for
________________________________________________________________________, IRA
Account #_______________________________________________________________
Participant Name (GT Global Account #, if known)
I. ROLLOVER/DIRECT ROLLOVER FROM AN EMPLOYER PLAN
<TABLE>
<S> <C>
A. I certify that my employer's qualified plan, qualified annuity, or 403(b) plan has made
or will make an Eligible Rollover Distribution which is being paid in a Direct Rollover
to the Custodian of my IRA; or
B. This Direct Rollover is not part of a series of payments over my life expectancy(ies )
or over a period of 10 years or more.
C. This Direct Rollover does not include any "after tax" employee contributions made by
me to the employer's plan.
D. This Direct Rollover does not include any required minimum distributions with respect
to the employer's plan.
E. I certify that I am eligible to establish an IRA with this Direct Rollover of an Eligible
Rollover Distribution, and that I am:
/ / 1. the plan participant;
/ / 2. the surviving spouse of the deceased plan participant; or
/ / 3. the spouse or former spouse of the plan participant under a Qualified Domestic Relations Order.
</TABLE>
II. ADDITIONAL INFORMATION FOR ROLLOVERS BEGINNING AT AGE 70 1/2
(Complete the following only if the direct rollover is being made after the
Participant's required beginning date, the April 1st following the calendar
year during which the Participant attained age 70 1/2):
1. My oldest primary beneficiary under the distribution plan is:
__________________________________________________________________
Birthdate _________________________ Relationship _______________________
2. My life expectancy / / was / / was not being recalculated. The life
expectancy of my spouse beneficiary / / was / / was not being recalculated.
III. COMMINGLING AUTHORIZATION
(Check if applicable):
/ / I authorize the Custodian to commingle this direct rollover with my
regular IRA contributions. I understand that commingling regular IRA
contributions with direct rollover contributions from employer plans may
preclude me from rolling over funds in my rollover IRA into another
qualified plan or 403(b) plan. With such knowledge, I authorize and direct
the Custodian to place regular IRA contributions in my rollover IRA or
vice versa.
Please make this direct payment either in the form of a check made payable, or
by wire, to GT Global, for the benefit of my IRA. All checks should be mailed
to GT Global (as agent for the Custodian), P.O. Box 7345, San Francisco, CA
94120-7345.
SIGNATURE OF PARTICIPANT
I hereby irrevocably elect, pursuant to IRS Regulation 1.402(a)(5)-1T to treat
this contribution as a rollover contribution. I understand that this will not
be a valid IRA rollover unless PART I and PART II (and, if applicable, PART
III) are correct statements. I acknowledge that, due to the complexities
involved in the tax treatment of eligible rollover distributions from
qualified plans, qualified annuities, or 403(b) plans and direct rollovers to
IRAs, the Custodian has recommended that I consult with my tax advisor or the
Internal Revenue Service before completing this transaction to make certain
that this transaction qualifies as a rollover and is appropriate in my
individual circumstances. I hereby release the Custodian from any claim for
damages on account of the failure of this transaction to qualify as a valid
rollover.
<TABLE>
<S> <C> <C>
X
______________________________ _____ ______________________________
Participant's Signature Date Signature Guarantee (if
required by current plan)
</TABLE>
FOR GT GLOBAL USE ONLY
GT Global Investor Services, Inc., (as agent for the GT Global IRA Custodian)
agrees to accept the direct rollover described above and upon receipt of such
rollover funds will apply those funds to investments as designated by the
Participant.
X___________________________________________________ _____________
Signature of Custodian or its Agent Date
DS-17
<PAGE>
IRA DIRECT ROLLOVER INSTRUCTIONS
Since the eligible rollover distributions(1) that you take from an
employer-sponsored qualified plan(2) are subject to 20% federal income tax
withholding unless you roll over these assets directly to an IRA or other
eligible retirement plan, you may wish to arrange for a direct rollover to a GT
Global IRA.
TO FACILITATE A DIRECT ROLLOVER TO A GT GLOBAL IRA, PLEASE FOLLOW THESE STEPS:
1. Complete the front portion of this form;
2. Complete the GT Global IRA Application; and
3. Return them to GT Global at P.O. Box 7345, San Francisco, CA 94120-7345.
GT Global will establish an IRA in your name, and provide you and your current
plan administrator or 403(b) custodian with your GT Global IRA account number.
Your current plan administrator or 403(b) custodian can then send the assets
directly to your GT Global IRA (by check or wire), or give you a check made
payable to your GT Global IRA.
(1) An "eligible rollover distribution" subject to 20% withholding is generally
any partial or total distribution, except: (a) substantially equal periodic
payments made for life or joint lives (or life expectancy or joint life
expectancies) or for a specified period of 10 years or more; (b) required
minimum distributions; (c) non-taxable distributions (e.g., after-tax
contributions); and (d) certain DE MINIMIS distributions, corrective
distributions, loans and other distributions specified in the Internal
Revenue Code and applicable regulations. You should verify with the
distributing employer and your tax adviser whether a distribution is an
"eligible rollover distribution."
(2) "Qualified" plans include 401(k), 403(b) and other pension and
profit-sharing plans. Section 457 deferred compensation plans for
government and tax-exempt entity employees are not "qualified." An IRA is
not considered a "qualified" plan, even if the assets held in the IRA
originated from a qualified plan. You may use the IRA Transfer
Authorization to transfer your IRA assets to a GT Global IRA. If you
receive a distribution from another IRA, you may be eligible to roll it
over to a GT Global IRA.
DS-18
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT Global Mutual Funds SUPPLEMENTAL APPLICATION
P.O. Box 7345, San Francisco, CA 94120-7345 FOR AUTOMATIC INVESTMENT PLAN
800/223-2138
</TABLE>
<TABLE>
<S> <C> <C>
ACCOUNT REGISTRATION
PLEASE NOTE: Automatic Investment Plan may ONLY be used for current year IRA contributions.
Please supply the following information exactly as it appears on the Fund's records.
__________________________________________________ __________________________________________________
Name Account Number
__________________________________________________ __________________________________________________
Address Telephone Number
__________________________________________________ __________________________________________________
City State Zip Code Social Security Number
____________________________________
AUTOMATIC INVESTMENT PLAN Date of Birth
I hereby authorize the Transfer Agent of the GT Global Mutual Funds to debit my personal checking account
on the designated dates in order to purchase shares in the Fund(s) indicated at the applicable public
offering price determined on that day. Please indicate if your purchase is for Class B shares / /. If the
Class B share box is not checked, your purchase will be made in Class A shares.
Fund: ____________ $________ or _____% Fund: ____________ $________ or _____%
Fund: ____________ $________ or _____% Fund: ____________ $________ or _____%
Fund: ____________ $________ or _____% Fund: ____________ $________ or _____%
/ / Monthly on the 25th day / / Quarterly beginning on the 25th day of the month you first select:__________________
(MONTH)
(The request for participation in the Plan must be received by the 1st day of the month in which you wish
investments to begin.)
Amount of each debit (minimum $100) $__________
NOTE: A Bank Authorization Form (below) and a voided personal check must accompany the Automatic
Investment Plan Application.
</TABLE>
<TABLE>
<S> <C>
[LOGO]
GT Global Mutual Funds
P.O. Box 7345, San Francisco, CA 94120-7345 AUTOMATIC INVESTMENT PLAN
800/223-2138
</TABLE>
<TABLE>
<S> <C> <C>
BANK AUTHORIZATION
</TABLE>
<TABLE>
<S> <C> <C> <C>
________________________ ____________________________________ ____________
Bank Name Bank Address Bank Account Number
I/we authorize you, the above named bank, to debit my/our account for amounts drawn by the Transfer Agent of the
GT Global Mutual Funds, acting as my agent. I/we agree that your rights in respect to each withdrawal shall be
the same as if it were a check drawn upon you and signed by me/us. This authority shall remain in effect until
I/we revoke it in writing and you receive it. I/we agree that you shall incur no liability when honoring any
such debit.
I/we further agree that you will incur no liability to me/us if you dishonor any such withdrawal. This will be
so even though such dishonor results in the forfeiture of investment.
_______________________________________________________ _______________________________________________________
Account Holder's Name Joint Account Holder's Name
X __________________________ _____________ X _________________________
Account Holder's Signature Date Joint Account Holder's Signature _____________________ ___________
Date
</TABLE>
(OVER)
DS-19
<PAGE>
<TABLE>
<S> <C> <C> <C>
AGREEMENT AND SIGNATURES
The investor certifies and agrees that the certifications,
authorizations, directions and restrictions contained herein
will continue until the Transfer Agent of the GT Global Mutual
Funds receives written notice of any change or revocation. Any
change in these instructions must be in writing with all
signatures guaranteed (if applicable).
__________________________________________
Date
X
__________________________________________
__________________________________________
Signature Guarantee* (if applicable)
*Acceptable signature guarantors: (1) any U.S. bank; (2) U.S.
trust company; (3) a member firm of a U.S. stock exchange; (4) a
foreign branch of any of the foregoing; or (5) any other
eligible guarantor institution. A notary public is not an
acceptable guarantor. An investor uncertain about the GT Global
Mutual Funds signature guarantee requirement should contact the
Transfer Agent.
</TABLE>
INDEMNIFICATION AGREEMENT
To: Bank Named on the Reverse
In consideration of your compliance with the request and authorization of the
depositor(s) named on the reverse, the Transfer Agent of the GT Global Mutual
Funds hereby agrees:
1. To indemnify and hold you harmless from any loss you may incur because of the
payment by you and of any debit by the Transfer Agent to its own order on the
account of such depositor(s) and received by you in the regular course of
business for payment, or arising out of the dishonor by you of any debit,
provided there are sufficient funds in such account to pay the same upon
presentation.
2. To defend at its own expense any action which might be brought by any
depositor or any other persons because of your actions taken pursuant to the
above mentioned request or in any manner arising by reason of your participation
in connection with such request.
DS-20
<PAGE>
[CAMERA READY COPY]
DS-21
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GT GLOBAL IRA
NOTES
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DS-22
<PAGE>
----------------
GT GLOBAL IRA
NOTES
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DS-23
<PAGE>
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GT GLOBAL IRA
NOTES
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DS-24
<PAGE>
EXHIBIT 99.14(b)
------------------------
QUESTIONS AND ANSWERS
FOR EMPLOYEES
- ----------------------------------------------------------
Q. AM I ELIGIBLE FOR A SIMPLE IRA?
A. You are eligible to participate in your employer's SIMPLE IRA for a
calendar year if (i) you are an employee of an "eligible employer," (ii) you
received at least $5,000 in compensation from your employer during any two
preceding calendar years, and (iii) you are reasonably expected to receive at
least $5,000 in compensation during the current calendar year. Depending on the
criteria selected by your employer, you might not be eligible to participate in
your employer's SIMPLE IRA if (i) you are covered under a collective bargaining
agreement for which retirement benefits were the subject of good faith
bargaining, or (ii) you are a nonresident alien and you received no earned
income from your employer from sources within the United States. Consult your
employer's plan document (Form 5305-SIMPLE if your employer designates the
custodian for your SIMPLE IRA or Form 5304-SIMPLE if your employer does not
designate the required custodian) to determine whether you are eligible to
participate in its SIMPLE IRA.
You are an employee of an eligible employer for a calendar year if your
employer (i) employs no more than 100 employees who received at least $5,000 of
compensation from your employer during the preceding calendar year and (ii) does
not maintain another qualified plan for the calendar year. If your employer was
eligible for a particular calendar year and in a subsequent calendar year
exceeds this 100 employee limit, your employer will be an eligible employer for
an additional two calendar years.
Q. HOW MUCH CAN I CONTRIBUTE?
A. You can contribute up to $6,000 per year to your SIMPLE IRA through a
Salary Reduction Agreement that designates the percentage of your compensation
that your employer will withhold from your paycheck, on a pre-tax basis, and
contribute to your SIMPLE IRA. This limit may be adjusted from time to time by
the Internal Revenue Service to reflect increases in the cost of living.
Q. WHEN CAN I START MAKING CONTRIBUTIONS?
A. You can elect to make contributions to your SIMPLE IRA for a calendar year
at any time during November and December of the preceding calendar year by
completing a Salary Reduction Agreement and filing it with your employer. For
future calendar years, you do not need to refile a Salary Reduction Agreement,
but you can change your contributions for a calendar year by completing a new
Salary Reduction Agreement and giving it to your employer during November or
December of the preceding calendar year. For example, you can increase your
contributions from 5% of your compensation in 1997 to 6% of your compensation in
1998 by filing a new Salary Reduction Agreement with your employer in November
or December of 1997.
You can stop making contributions to your SIMPLE IRA at any time; however, if
you stop making contributions at any time during a calendar year, you may not be
eligible to start making contributions again until the beginning of the next
calendar year (and will need to complete a new Salary Reduction Agreement and
give it to your employer during November or December of the preceding calendar
year).
Q. HOW MUCH DOES MY EMPLOYER CONTRIBUTE?
A. Generally, for any calendar year, your employer will contribute to your
SIMPLE IRA an amount equal to 100% of your contributions to your SIMPLE IRA, up
to a maximum of 3% of your compensation for that calendar year. However, your
employer may choose either (i) to match 100% of your contributions, up to a
maximum of 1% of your compensation for a calendar year (but your employer may
only elect this lower maximum contribution twice during any five year period),
or (ii) to contribute an amount equal to 2% of your compensation (not taking
into account compensation over $160,000, as adjusted by the Internal Revenue
Service to reflect increases in the cost of living) for a calendar year if you
receive at least $5,000
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of compensation from your employer for that year. If your employer elects to
contribute anything other than 100% of your contributions, up to 3% of your
compensation for a calendar year, it will notify you within a reasonable amount
of time before November 1st of the preceding calendar year so that you can
adjust your contributions for the coming calendar year.
Q. ARE CONTRIBUTIONS TO MY SIMPLE IRA TAXABLE?
A. Your contributions to your SIMPLE IRA are made on a "pre-tax" basis, which
means that compensation that would otherwise have been subject to federal income
tax at the time you received it will not be taxed if, instead, it is withheld
from your paycheck by your employer and contributed to your SIMPLE IRA. Your
contributions are taken into account, however, for purposes of social security,
medicare, railroad retirement, and unemployment taxes. Amounts contributed by
your employer to your SIMPLE IRA are not subject to federal income tax at the
time they are contributed nor taken into account for purposes of social
security, medicare, railroad retirement, and unemployment taxes. Contributions
and earnings on contributions to your SIMPLE IRA are not taxed until
distributed.
Q. WHEN CAN I WITHDRAW MONEY FROM MY SIMPLE IRA?
A. You can withdraw all or part of your money at any time, but ordinary
federal (and, in most cases, state or local) income taxes will be due on
withdrawals of contributions and earnings from your SIMPLE IRA in the year the
withdrawals are made. In addition, if you withdraw money prior to reaching age
59 1/2, you may be subject to a 10% federal penalty on early withdrawals. This
penalty is increased to 25% if you make a withdrawal from your SIMPLE IRA at any
time during the two-year period beginning on the date you first participated in
a SIMPLE IRA. After age 59 1/2, you may withdraw money from your IRA without
penalty. Under current law, you must begin withdrawing money by April 1
following the year in which you reach age 70 1/2.
Q. CAN I CONSOLIDATE MY SIMPLE IRA ASSETS WITH MY OTHER IRA ASSETS?
A. You may transfer your SIMPLE IRA assets to another SIMPLE IRA or, at any
time after expiration of the two-year period beginning on the date you first
participated in a SIMPLE IRA, to any other IRA. However, you may not include
regular or spousal IRA assets in your SIMPLE IRA.
Q. WHAT IS THE DIFFERENCE BETWEEN A SIMPLE IRA TRANSFER AND A SIMPLE IRA
ROLLOVER?
A. A SIMPLE IRA transfer moves your SIMPLE IRA assets directly from one
financial institution to another. You may, for instance, consolidate your SIMPLE
IRA at GT Global by transferring SIMPLE IRA assets from a bank, trust company,
insurance company or mutual fund to your SIMPLE IRA or to another IRA at GT
Global (presumably, in the latter case after the two-year participation
requirement in your other SIMPLE IRA is met); your current custodian will
liquidate your SIMPLE IRA assets (if not currently held in GT Global Mutual
Funds) and send the check directly to GT Global.
A SIMPLE IRA rollover reinvests SIMPLE IRA assets distributed to you. With a
rollover you can take receipt of your SIMPLE IRA assets for up to 60 days before
reinvesting them in another SIMPLE IRA or, after the two-year period described
above, another IRA. (Please note that you must reinvest your SIMPLE IRA assets
within 60 days to maintain their tax-deferred status.) You may do only one
rollover in any 12-month period. There is no restriction on the number of SIMPLE
IRA transfers you may effect in a year.
Q. WHAT FORMS OR REPORTS DO I FILE FOR MY SIMPLE IRA CONTRIBUTIONS?
A. You file no special forms with the Internal Revenue Service regarding your
contributions to your SIMPLE IRA.
Q. WHAT FORMS OR REPORTS DOES MY EMPLOYER FILE FOR MY SIMPLE IRA?
A. Your employer will give you a copy of the completed plan document (either
Form 5305-SIMPLE or Form 5304-SIMPLE). Your employer will also report your
contributions to your SIMPLE IRA on Form W-2.
Q. WHAT REPORTS WILL GT GLOBAL PROVIDE?
A. Prior to January 31 of each year, GT Global will provide you with a
statement showing your SIMPLE IRA account balance as of December 31st of the
previous year and your SIMPLE IRA account activity for that previous year. If
your employer has used Form 5305-SIMPLE to establish its SIMPLE plan you will
also receive by January 31 of each year a copy of Form 1099-R filed with the
Internal Revenue Service showing
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GT GLOBAL SIMPLE IRA
distributions made from your SIMPLE IRA during the previous year. Otherwise, the
custodian you designated on Form 5304-SIMPLE will provide you with this
information. GT Global will also report your contributions and account value to
the IRS on Form 5498.
Q. IF I ALREADY HAVE AN IRA, CAN MY EMPLOYER AND I MAKE THE SIMPLE IRA
CONTRIBUTIONS TO THAT?
A. No. You need to establish a separate SIMPLE IRA and may use Form 5305-SA to
do so.
----------------------------------------------------------
QUESTIONS AND ANSWERS
FOR EMPLOYERS
- ----------------------------------------------------------
Q. AM I ELIGIBLE TO ESTABLISH A SIMPLE IRA FOR MY EMPLOYEES?
A. If you (i) employ no more than 100 employees who received at least $5,000
in compensation from you during the preceding calendar year and (ii) do not
maintain another qualified plan during the current year. Generally, if you were
eligible for a particular calendar year and in a subsequent calendar year employ
more than 100 employees, you will be an eligible employer for an additional two
calendar years.
Q. WHAT EMPLOYEES MUST BE COVERED?
A. At a minimum, any employee is eligible to participate who (i) received at
least $5,000 in compensation from you during any two preceding calendar years,
and (ii) is reasonably expected to receive at least $5,000 in compensation
during the calendar year. You may choose to make all your employees eligible or
expand the group of eligible employees by reducing the minimum compensation
necessary for the current year or prior years, or both. You may exclude any
employee who (i) is covered by a collective bargaining agreement for which
retirement benefits were the subject of good faith bargaining between you and
the employee's union or (ii) is a nonresident alien and received no United
States-sourced income from you.
Q. HOW MUCH CAN AN EMPLOYEE CONTRIBUTE?
A. Each employee can contribute up to $6,000 per year to his or her SIMPLE IRA
through a Salary Reduction Agreement that designates the percentage of the
employee's compensation that will be withheld from his or her paycheck, on a
pre-tax basis, and contributed to his or her SIMPLE IRA. This limit may be
adjusted from time to time by the Internal Revenue Service to reflect increases
in the cost of living.
Q. WHEN CAN EMPLOYEES START MAKING CONTRIBUTIONS?
A. Employees can elect to make contributions to a SIMPLE IRA for a calendar
year at any time during November and December of the preceding calendar year by
completing a Salary Reduction Agreement and filing it with the employer. For
future calendar years, employees do not need to refile a Salary Reduction
Agreement, but employees can change their contributions for a calendar year by
completing a new Salary Reduction Agreement and giving it to the employer during
November or December of the preceding calendar year. An employee may terminate
his or her contributions to the SIMPLE IRA at any time; however, if an employee
stops making contributions at any time during a calendar year, you may elect,
under your SIMPLE IRA plan, to preclude the employee from making contributions
again until the beginning of the next calendar year after completing a new
Salary Reduction Agreement during November or December of the preceding calendar
year.
Q. HOW MUCH DOES THE EMPLOYER CONTRIBUTE?
A. Generally, for any calendar year, the employer will contribute to each
employee's SIMPLE IRA an amount equal to 100% of the employee's contributions to
his or her SIMPLE IRA, up to a maximum of 3% of the employee's compensation for
that calendar year. However, an employer may elect (i) to match 100% of each
employee's contributions up to a maximum of 1% of compensation for a calendar
year (but the employer may only elect this lower maximum contribution twice
during any five year period), or (ii) to contribute an amount equal to 2% of
each employee's compensation (not taking into account compensation over
$160,000, as adjusted from time to time by the Internal Revenue Service to
reflect increases in the cost of living) for a calendar year, but only to the
extent
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GT GLOBAL SIMPLE IRA
that such employee receives compensation from the employer for that year in
excess of $5,000. If you elect to contribute anything other than 100% of the
employee contributions, up to 3% of the employee's compensation for a calendar
year, you must notify your employees within a reasonable amount of time before
November 1st of the preceding calendar year so that the employees can adjust
their contributions for the next calendar year.
Q. ARE MY CONTRIBUTIONS DEDUCTIBLE?
A. As an employer, your contributions are deductible for federal income tax
purposes in your tax year including the end of the calendar year for which they
are made. Contributions are treated as made for a particular tax year if they
are made for that year and paid by the due date (including extensions) of your
federal income tax return for that year.
Q. ARE SIMPLE IRA CONTRIBUTIONS TAXABLE?
A. Subject to the applicable limits, all contributions to an employee's SIMPLE
IRA are made on a "pre-tax" basis and not taxed until distributed. Salary
reduction contributions are taken into account, however, for purposes of social
security, medicare, railroad retirement, and unemployment taxes (but employer
contributions are not).
Q. WHEN CAN AN EMPLOYEE WITHDRAW MONEY FROM HIS OR HER SIMPLE IRA?
A. An employee can withdraw all or part of his or her money at any time, but
ordinary federal (and, in most cases, state or local) income taxes will be due
on withdrawals of contributions and earnings from a SIMPLE IRA in the year the
withdrawals are made. In addition, if an employee withdraws money prior to
reaching age 59 1/2, he or she may be subject to a 10% federal penalty on early
withdrawals. This penalty is increased to 25% if the withdrawal is made at any
time during the two-year period beginning on the date the employee first
participated in a SIMPLE IRA. After age 59 1/2, an employee may withdraw money
from his or her SIMPLE IRA without penalty. Under current law, an employee must
begin withdrawing money by April 1 following the year in which he or she reaches
age 70 1/2.
An employee may transfer his or her SIMPLE IRA assets to another SIMPLE IRA
or, anytime after having participated in the SIMPLE IRA for two years, to any
other IRA.
Q. WHAT'S THE DIFFERENCE BETWEEN FORM 5305-SIMPLE AND FORM 5304-SIMPLE?
A. If you want to be sure that all your employees have the same SIMPLE IRA
custodian (the GT Global SIMPLE IRA Custodian) which you designate, use Form
5305-SIMPLE to establish your SIMPLE plan. Otherwise, if you will permit each
employee to select his or her own custodian, use Form 5304-SIMPLE. Form
5304-SIMPLE also requires that either you or the custodian selected by the
employee provide the employee with the procedures for withdrawal of SIMPLE IRA
contributions. With Form 5304-SIMPLE, your employees may still select the GT
Global SIMPLE IRA Custodian as their Custodian.
If you use Form 5305-SIMPLE and a designated financial institution, only Class
A or Advisor Class GT Global Mutual Fund shares may be purchased for employees'
SIMPLE IRAs. With Form 5304-SIMPLE, Class A, Class B or Advisor Class shares may
be purchased for the SIMPLE IRAs. Advisor Class shares are not sold directly to
the general public and are only available through certain employee benefit
plans, financial institutions and other entities that have entered into specific
agreements with GT Global. Please see a Fund prospectus for more information.
Q. WHAT FORMS OR REPORTS DOES AN EMPLOYER FILE FOR A SIMPLE IRA PLAN?
A. All SIMPLE IRA contributions made by an employee are reported on Form W-2.
You do not have to file any annual information returns (such as Form 5500).
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GT GLOBAL SIMPLE
INDIVIDUAL RETIREMENT ACCOUNT
DISCLOSURE STATEMENT AND APPLICATION
- --------------------------------------------------------------------------------
- --------------------------------------------
1. GENERAL
- --------------------------------------------
Internal Revenue Service Regulations require that you be given this Disclosure
Statement for the purpose of informing you of the restrictions and limitations
on how you may use a SIMPLE Individual Retirement Account (SIMPLE IRA). Please
read this Disclosure Statement together with the Form 5305-SIMPLE or Form
5304-SIMPLE signed by your employer that is used to establish the SIMPLE plan,
the Custodial Agreement or Form 5305-SA that is used to establish the IRA into
which SIMPLE contributions will be made and the prospectus(es) for the GT Global
Mutual Fund(s) in which you are investing. The provisions of the Form
5305-SIMPLE or Form 5304-SIMPLE, Custodial Agreement and prospectus(es) must
prevail over this statement in any instance where the statement is incomplete or
appears to be in conflict.
- --------------------------------------------
2. IRREVOCABILITY OF ACCOUNT
- --------------------------------------------
The Internal Revenue Service requires that you receive this disclosure
statement at least 7 days prior to the establishment of your SIMPLE IRA. Because
of this requirement, your application will not be accepted by the Custodian
until at least 7 days after the date you received this disclosure statement.
Prior to such acceptance, you may receive back the entire amount that you have
contributed, without reduction for fees or other expenses. If your employer used
Form 5305-SIMPLE or your employer used Form 5304-SIMPLE and you selected the GT
Global SIMPLE IRA Custodian, you may request that your contribution be returned
to you by writing to GT Global Investor Services, Inc. (agent for the
Custodian), P.O. Box 7345, San Francisco, CA 94120-7345 or by calling GT Global
toll free at (800) 223-2138 within 7 days of the date you have signed the
Custodial Agreement. All telephone requests must be confirmed in writing. If you
selected a Custodian other than the GT Global SIMPLE IRA Custodian, you should
send the written request to your Custodian within 7 days of signing the
Custodial Agreement. Once your application for a GT Global SIMPLE IRA is
accepted by the Custodian, it cannot be revoked by you.
- --------------------------------------------
3. ELIGIBLE EMPLOYEE
- --------------------------------------------
You are eligible to participate in a GT Global SIMPLE IRA for a calendar year
if (i) you are an employee of an "eligible employer" and your employer has
authorized your participation in a SIMPLE IRA by signing Form 5305-SIMPLE or
Form 5304-SIMPLE, (ii) you received at least $5,000 in compensation from your
employer during any two preceding calendar years, and (iii) you are reasonably
expected to receive at least $5,000 in compensation during the current calendar
year. You must also establish an IRA into which SIMPLE plan contributions can be
made.
Depending on the criteria selected by your employer, as set forth in Form
5305-SIMPLE or Form 5304-SIMPLE, you may not be eligible to participate in a
SIMPLE IRA if you are (i) covered under a collective bargaining agreement for
which retirement benefits were the subject of good faith bargaining, or (ii) a
nonresident alien receiving no United States-sourced earned income from your
employer.
An eligible employer for a calendar year is an employer that (i) employs no
more than 100 employees who received at least $5,000 in compensation during the
preceding calendar year and (ii) does not maintain another qualified plan for
that calendar year. If your employer was eligible for a particular calendar year
and in a subsequent calendar year exceeds this 100 employee limit, your employer
will be an eligible employer for an additional two calendar years.
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GT GLOBAL SIMPLE IRA
- --------------------------------------------
4. YOUR SIMPLE IRA
- --------------------------------------------
A SIMPLE IRA is a combination of a SIMPLE plan and individual retirement
account (IRA). Under the SIMPLE plan, your employer makes salary reduction and
other contributions to an IRA on your behalf, as described in Section 5. Your
SIMPLE IRA is a trust or custodial account created or organized in the United
States for your exclusive benefit or for the benefit of your beneficiaries. The
SIMPLE IRA must be created by written instrument that meets the following
requirements:
(1) The trustee or custodian must be a bank, federally insured credit union,
savings and loan association, or (under federal regulations) another person
eligible to act as trustee or custodian;
(2) Your interest in the SIMPLE IRA is nonforfeitable; that is, it is fully
vested at all times;
(3) No part of the trust or custodial funds may be invested in life insurance
contracts or certain collectibles nor may the assets be commingled with other
property except in a common trust fund or common investment fund; and
(4) Your interest in the SIMPLE IRA must begin to be distributed by April 1 of
the year following the year in which you reach age 70 1/2. The distribution
may be made in a single sum, or you may receive periodic distributions, starting
by April 1 of the year following the year in which you reach age 70 1/2, so
long as your entire interest in the SIMPLE IRA is distributed over one of the
following periods:
(a) Your life;
(b) The joint lives of you and your designated beneficiary;
(c) A specific period not extending beyond your life expectancy; or
(d) A specific period not extending beyond the life expectancy of you and
your designated beneficiary.
If the amount distributed is less than the minimum amount required to be
distributed to you under the Internal Revenue Code, an excise tax will be
imposed on you in an amount equal to 50% of the excess of the amount required to
be distributed to you over the amount you actually receive.
(5) If you die after distributions have begun, your beneficiary must receive
the remaining payments at least as rapidly as under the method of distribution
being used on the date of your death. If you die before distributions have begun
or if your surviving spouse dies before distributions have begun, any interest
remaining must, by December 31 of the calendar year which contains the fifth
anniversary of your death or the death of your surviving spouse, be distributed
in a single sum. If your (or your surviving spouse's) designated beneficiary
wishes to receive an immediate annuity which provides for payments over the
beneficiary's life or over a specific period not exceeding the beneficiary's
life expectancy, the beneficiary must elect to receive such payments by December
31 following the calendar year of your death. Such payments also must begin by
that date. If your designated beneficiary is your spouse, annuity payments need
not commence until December 31 of the year you would have attained age
70 1/2. This annuity contract will not allow one's life expectancy to be
recalculated. The election will also apply to beneficiaries who make additional
contributions or rollovers in their own names to the IRA. An amount is not
distributed if it is rolled over into an Individual Retirement Account, annuity,
or retirement bond for the benefit of the beneficiary.
(6) If your surviving spouse is your designated beneficiary, your SIMPLE IRA
assets may be rolled over into his or her own IRA. No rollover from your SIMPLE
IRA is available for a beneficiary other than your surviving spouse, and such
non-spouse beneficiary must take the SIMPLE IRA assets in the form of a taxable
distribution.
- --------------------------------------------
5. CONTRIBUTIONS
- --------------------------------------------
Contributions to your SIMPLE IRA are made by your employer in the form of (i)
your salary reduction contributions, and (ii) additional employer contributions.
SALARY REDUCTION CONTRIBUTIONS
You may elect to have withheld from your regular paycheck, on a pre-tax basis,
a percentage of your compensation, which your employer will contribute on your
behalf to your SIMPLE IRA. The maximum amount of salary reduction contributions
that may be made on your behalf for a calendar year is $6,000. This limit may be
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GT GLOBAL SIMPLE IRA
adjusted from time to time to reflect increases in the cost of living increases
announced by the Internal Revenue Service.
ADDITIONAL EMPLOYER CONTRIBUTIONS
Generally, for any calendar year, your employer will contribute to your SIMPLE
IRA an amount equal to 100% of your salary reduction contributions to your
SIMPLE IRA, up to a maximum of 3% of your compensation for that calendar year.
However, your employer may choose either (i) to match 100% of your contributions
up to a maximum of 1% of your compensation for a calendar year (but your
employer may elect this lower maximum contribution only twice during any five
year period), or (ii) to contribute an amount equal to 2% of your compensation
for a calendar year if you receive at least $5,000 from your employer for that
year. For purposes of determining the 2% additional employer contribution, your
employer may not take into account any compensation that you earn in excess of
$160,000. This limit may be adjusted from time to time to reflect cost of living
increases announced by the Internal Revenue Service. This limit does not apply
for purposes of determining the amount of an employer matching contribution.
- --------------------------------------------
6. TAXATION OF CONTRIBUTIONS AND EARNINGS
- --------------------------------------------
Your salary reduction contributions to your SIMPLE IRA are made on a "pre-tax"
basis, which means that compensation that would otherwise have been subject to
federal income tax at the time you received it will not be taxed if, instead, it
is withheld from your paycheck by your employer and contributed to your SIMPLE
IRA, subject to the $6,000 maximum, as adjusted. Your contributions are taken
into account for purposes of federal social security, medicare, railroad
retirement and unemployment taxes.
Your employer's contributions to your SIMPLE IRA, to the extent not in excess
of the maximum contributions described above, are not included in your gross
income in the year of contribution for federal income tax purposes or for
purposes of federal social security, medicare, railroad retirement and
unemployment taxes.
Contributions to your SIMPLE IRA are not taxed until distributed, as described
in Section 8 below.
- --------------------------------------------
7. TRANSFERS AND ROLLOVERS
- --------------------------------------------
Transfers allow you to transfer IRA assets directly from one IRA to another on
a tax-free basis. You may transfer assets between SIMPLE IRAs (regardless of
whether they are maintained by the same trustee or custodian) on a tax-free
basis at any time in accordance with the rules of the SIMPLE IRAs involved in
the transfer. In addition, if you have participated in a SIMPLE IRA for at least
two years, you may transfer your SIMPLE IRA assets to an IRA that is not a
SIMPLE IRA (regardless of whether the IRA and the SIMPLE IRA are maintained by
the same trustee or custodian) in accordance with the rules of the IRA and
SIMPLE IRA involved in the transfer.
You may rollover all or a portion of certain distributions from a SIMPLE IRA
to a SIMPLE IRA maintained by another trustee or custodian, at any time. In
addition, if you have participated in a SIMPLE IRA for at least two years, you
may rollover all or a portion of certain distributions from the SIMPLE IRA to an
IRA that is not a SIMPLE IRA (regardless of whether the IRA and the SIMPLE IRA
are maintained by the same trustee or custodian). In order to be treated as a
rollover, the rollover must be completed within 60 days of the distribution.
Only certain distributions are eligible for rollover treatment. These include
one-time lump sum distributions of the entire balance of your SIMPLE IRA and
installments distributions of less than 10 years. Distributions in the form of
annuities and required distributions (based upon your attainment of age 70 1/2)
are not eligible for rollover treatment. Generally, you are permitted to
rollover a distribution from your SIMPLE IRA no more than once during any
12-month period.
Rollover distributions are not subject to federal income tax at the time of
the rollover; however, if the rollover is not accomplished directly (i.e., you
take possession of the distribution and roll it over within 60 days thereafter),
the distribution will be subject to mandatory federal income tax withholding. If
you do not replace the amount withheld in the amount rolled over, the amount
withheld will be treated as a distribution and subject to federal income tax.
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GT GLOBAL SIMPLE IRA
- --------------------------------------------
8. DISTRIBUTIONS
- --------------------------------------------
Distributions from your SIMPLE IRA are taxed as ordinary income for the
calendar year in which they are received, regardless of their source. They are
not eligible for capital gains treatment or the special 5-year averaging rules
that apply (for tax years beginning prior to 2000) to lump sum distributions
from qualified employer plans.
As provided in Form 5305-SA, you may elect to have your SIMPLE IRA distributed
in: a single sum payment; an annuity contract; or equal annual installments over
a specified period not to exceed your life expectancy or the joint life and last
survivor expectancy of you and your designated beneficiary. In general, you must
begin receiving distributions from your SIMPLE IRA no later than April 1
following the calendar year in which you reach age 70 1/2. There is a prescribed
minimum amount for such distributions and an excise tax may be imposed if the
amount distributed to you is less than the required amount. If you die before
your SIMPLE IRA is completely distributed to you, the remaining balance in your
SIMPLE IRA will be distributed to your beneficiary(ies) either in accordance
with the method of distribution in effect at your death (if on or after the
required beginning date) or as otherwise permitted (if your death occurs prior
to the required beginning date).
You may have to pay an additional 15% excess distribution tax on IRA and
qualified retirement plan distributions that exceed $160,000 for an installment
distribution or $800,000 for a lump sum distribution (each of which is an
indexed amount and may be subject to further adjustment). This excise tax is
reduced by any tax you may owe on premature distributions which apply to this
excess distribution. This 15% tax does not apply to distributions in 1997, 1998
or 1999 and may not apply in certain other circumstances. You should contact
your own tax adviser for more information.
- --------------------------------------------
9. PREMATURE DISTRIBUTIONS
- --------------------------------------------
A penalty tax of 10% is imposed on taxable distributions made to you or your
beneficiaries before you attain age 59(1)/(2). No penalty tax will be imposed if
the distribution is (i) a return of nondeductible contributions, (ii) made on
account of your death or disability, (iii) made in substantially equal payments
over life or life expectancy as permitted in accordance with the provisions of
Section 72(t)(2) of the Code and the regulations promulgated thereunder, or (iv)
contributed as a "rollover" within 60 days. In addition, for distributions made
after 1996, the penalty tax does not apply if the distribution is made (i) to
pay for medical expenses in excess of 7.5% of your adjusted gross income or (ii)
if you are unemployed, to pay for medical insurance premiums after you have
received unemployment compensation for a specified period. This tax is in
addition to any tax that is due because you must include the premature
distribution in your gross income. If this 10% penalty tax otherwise applies and
you receive a distribution from your SIMPLE IRA within the two-year period
beginning on the date you first participated in the SIMPLE IRA, the penalty tax
applicable to that distribution is increased to 25%.
- --------------------------------------------
10. TAXABILITY OF ACCOUNT
- --------------------------------------------
Your SIMPLE IRA is exempt from tax unless you or your beneficiaries engage in
a prohibited transaction under Section 4975 of the Internal Revenue Code.
Examples of prohibited transactions include your borrowing from the SIMPLE IRA
or your selling property to or buying property from the SIMPLE IRA.
If you engage in a prohibited transaction, your IRA will lose its tax exempt
status as of the first day of the tax year in which the prohibited transaction
occurs. Once your SIMPLE IRA loses its exempt status, you must include the fair
market value of its assets in your income for that tax year. You will also be
subject to the 10% or 25% penalty tax on premature distributions.
If you use your SIMPLE IRA or any portion thereof as security for a loan, the
portion so used will be treated as distributed to you and will be currently
taxable and subject to the 10% or 25% tax on premature distributions.
- --------------------------------------------
11. FINANCIAL DISCLOSURES
- --------------------------------------------
Contributions to your SIMPLE IRA will be invested in shares of a GT Global
Mutual Fund. You may receive earnings on your shares in the form of income
dividends or net realized capital gain distributions. Such earnings will be
reinvested in additional shares of a GT Global Mutual Fund. The growth in value
of the
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GT GLOBAL SIMPLE IRA
SIMPLE IRA is neither guaranteed nor projected. The gross income received by a
GT Global Mutual Fund is reduced by the fees paid to the manager of the Fund,
Chancellor LGT Asset Management, Inc., and by expenses incurred by the Fund,
such as accounting fees, taxes, interest, trustee fees and brokerage charges.
Each Fund's prospectus contains more complete information including charges,
expenses, the risks of global and emerging market investing and other matters of
interest to a prospective investor.
- --------------------------------------------
12. MISCELLANEOUS
- --------------------------------------------
You are required to file form 5329 (Return for Individual Retirement Savings
Arrangements) for a taxable year in which you are subject to penalty taxes in
connection with your SIMPLE IRA.
The enclosed agreement has been approved as to form for use in establishing
custodial accounts by the Internal Revenue Service. The Internal Revenue Service
approval is a determination as to form only and does not represent a
determination of the merits of the account.
- --------------------------------------------
13. ADDITIONAL INFORMATION
- --------------------------------------------
Additional information on Individual Retirement Accounts (including IRS
Publication 590) can be obtained from any district office of the Internal
Revenue Service.
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FORM 5305-SA
[ CAMERA READY COPY ]
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[ARTICLE VIII INSERT TO CAMERA READY COPY]
See Exhibit A to Form 5305-SA for additional terms applicable to your GT Global
SIMPLE IRA. Exhibit A is incorporated in and made part of your GT Global SIMPLE
IRA by this reference.
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GT GLOBAL SIMPLE IRA
EXHIBIT A TO FORM 5305-SA,
ARTICLE VIII
- ----------------------------------------------------------
The following provisions constitute Article VIII of Form 5305-SA which is used
to establish your GT Global SIMPLE IRA.
1. The Custodian is under no duty to compel the Participant to make any
contributions to the Account and shall have no duty to assure that such
contributions are appropriate in amount.
2. The amount of each contribution by a Participant or by Participant's
employer shall be applied to the purchase of shares of GT Global Mutual Funds
(hereinafter "Funds"). The Participant acknowledges receipt of the appropriate
current prospectus of the Funds. All dividends and capital gain distributions
received on securities held in the Custodial Account (the "Account") shall be
reinvested in additional shares of the Funds and credited to the Account. Shares
acquired in the Account will be held beneficially for the Participant in the
name of the Custodian or its nominee.
3. The Custodian shall deliver to the Participant all shareholder notices and
reports, prospectuses, financial statements, proxy material and other material
as they are received from the Funds. The Custodian shall vote at all shareholder
meetings of the Funds in accordance with written instructions of the Participant
which will be secured by the Custodian. If no written instructions are received
from the Participant, the Participant's shares shall not be voted.
4. The Custodian may resign upon at least 60 days written notice to the
Participant and Participant's employer, as applicable, and may be removed by the
Participant upon 60 days written notice to the Custodian and Participant's
employer, as applicable. Upon resignation by the Custodian, it shall transfer
the assets of the Account in such a manner as the Participant shall designate,
but in the absence of such designation, the Custodian will use its best efforts
to transfer the assets of the Account to a successor custodian to be held under
an Individual Retirement Account qualifying under Section 408 of the Internal
Revenue Code. Upon removal of the Custodian by action of the Participant, the
assets of the Account shall be transferred in accordance with the Participant's
instructions.
5. If the Participant does not effectively elect any of the methods of
distribution described above by the April 1 following the calendar year in which
he or she reaches age 70 1/2, the assets of the Account shall be distributed to
the Participant in equal or substantially equal payments over the Participant's
life expectancy in accordance with the minimum distribution requirements
applicable to the Account as described in Article IV of Form 5305-SA unless the
Participant effectively elects another method of distribution.
6. By completing the Beneficiary Designation section of the SIMPLE IRA
Application, the Participant may designate one or more beneficiaries to receive
such benefits in the event of his or her death. Should the Participant die
without an effective designation of beneficiary, the assets of the Account shall
be distributed to the Participant's surviving spouse, or if there is no
surviving spouse, to the Participant's estate in a single payment, unless
another method of distribution has been elected by such spouse or estate, as
applicable.
-------
DS-8
<PAGE>
FORM 5305-SIMPLE
[ CAMERA READY COPY ]
DS-9
<PAGE>
[ARTICLE VI INSERT TO CAMERA READY COPY]
See Exhibit A to Form 5305-SIMPLE for additional terms applicable to your GT
Global SIMPLE plan. Exhibit A on page DS-14 is incorporated in and made part of
your GT Global SIMPLE plan by this reference.
DS-10
<PAGE>
FORM 5305-SIMPLE, PG. 3
[ CAMERA READY COPY ]
DS-11
<PAGE>
FORM 5305-SIMPLE, PG. 4
[ CAMERA READY COPY ]
DS-12
<PAGE>
FORM 5305-SIMPLE, PG. 5
[ CAMERA READY COPY ]
DS-13
<PAGE>
FORM 5305-SIMPLE, PG. 6
[ CAMERA READY COPY ]
EXHIBIT A TO FORM 5305-SIMPLE
ARTICLE VI
The following provisions constitute Article VI of Form 5305-SIMPLE which is used
to establish your GT Global SIMPLE Plan.
WITHDRAWALS (INCLUDING TRANFERS AND ROLLOVERS).
An employee may withdraw all or a part of his or her contribution to the
employee's SIMPLE IRA by submitting to GT Global Investor Services, Inc., as
agent for the GT Global SIMPLE IRA Custodian, a request in such form as the
Custodian may reasonably require. Further information about how to make
withdrawals from your SIMPLE IRA, including the forms which may be necessary,
may be obtained by calling GT Global at 1-800-223-2138. A request for a transfer
of the employee's SIMPLE IRA account balance to another SIMPLE IRA (or, after at
least two years from the employee's initial participation in this SIMPLE plan,
to another IRA) will be made without cost or penalty if made at any time, in
writing, during the 60-day period preceding January 1 each year (i.e., from
November 1 to December 31), or for the year the employee first becomes eligible
to participate, the 60-day period beginning when the employee becomes eligible.
DS-14
<PAGE>
FORM 5304-SIMPLE, PG. 1
[ CAMERA READY COPY ]
DS-15
<PAGE>
FORM 5304-SIMPLE, PG. 2
[ CAMERA READY COPY ]
DS-16
<PAGE>
FORM 5304-SIMPLE, PG. 3
[ CAMERA READY COPY ]
DS-17
<PAGE>
FORM 5304-SIMPLE, PG. 4
[ CAMERA READY COPY ]
DS-18
<PAGE>
FORM 5304-SIMPLE, PG. 5
[ CAMERA READY COPY ]
DS-19
<PAGE>
FORM 5304-SIMPLE, PG. 6
[ CAMERA READY COPY ]
DS-20
<PAGE>
[LOGO]
GT Global Mutual Funds
P.O. Box 7345, San Francisco, CA 94120-7345 SIMPLE IRA APPLICATION
800/223-2138
<TABLE>
<S> <C> <C>
Account Registration
TYPE OF ACCOUNT: / / CONTRIBUTORY / / SIMPLE IRA ROLLOVER* / / SIMPLE IRA TRANSFER**
* I have attached a completed SIMPLE IRA Direct Rollover Authorization, if applicable.
** I have attached a completed SIMPLE IRA Transfer Authorization.
Name____________________________________ Employer Name______________________________
Address_________________________________ Address ___________________________________
STREET STREET
________________________________________ ___________________________________________
CITY STATE ZIP CODE CITY STATE ZIP CODE
Tel. No.( )_________ Fax No.( )_________ Tel. No.( )__________ Fax No.( )___________
Form of employer's plan:
Social Security Number__________________ / / Form 5305-SIMPLE. (Please send this
(or Tax Identification Number) Application and the Custodial Account
Agreement (Form 5305-SA) to GT Global.)
Date of Birth___________________________ / / Form 5304-SIMPLE. (Please send this
Application and the Custodial Account
Agreement (Form 5305-SA) to the institution
you selected as custodian.)
Fund Selection & Initial Contribution
Each GT Global Mutual Fund issues three classes of shares. Class A
shares are sold with an initial sales charge while Class B shares
are sold without an initial sales charge but are subject to higher
expense levels and to a contingent deferred sales charge payable
on certain redemptions. Advisor Class shares are sold through a
different prospectus than Class A and Class B shares, are not sold
directly to the general public and are only available through
certain employee benefit plans, financial institutions and other
entities that have entered into specific agreements with GT
Global, Inc. Please read the prospectus of such Funds carefully
before you invest. Please check applicable box:
</TABLE>
/ /Enclosed is a check for $________ made payable to GT Global (as agent for
the Custodian) to be invested as a rollover contribution from another
SIMPLE IRA in the Fund(s) hereby specified.
/ /This is a transfer from another SIMPLE IRA to be invested in the Fund(s)
hereby specified. (Please indicate only the PERCENTAGE of the transfer you
wish allocated to each Fund. Please complete the separate SIMPLE IRA
Transfer Authorization Form.)
/ /The above-referenced employer will make contributions to my SIMPLE-IRA to
be invested in the Fund(s) hereby specified. (Please indicate only the
PERCENTAGE of each contribution that you wish allocated to each Fund.)
TO PURCHASE THE FUNDS LISTED BELOW PLEASE SELECT EITHER: / / CLASS A SHARES
/ / CLASS B SHARES (NOT AVAILABLE IF YOUR EMPLOYER USED FORM 5305-SIMPLE OR
FOR PURCHASES OF $500,000 OR MORE OR FOR THE GT GLOBAL DOLLAR FUND) OR / /
ADVISOR CLASS SHARES.
If a class share box is not checked, your investment will be made in Class A
shares.
<TABLE>
<CAPTION>
INITIAL CONTRIBUTION
<S> <C> <C>
07 / / GT GLOBAL WORLDWIDE GROWTH FUND $____ OR ___% 03 / / GT GLOBAL EUROPE GROWTH FUND $____ OR ___%
05 / / GT GLOBAL INTERNATIONAL GROWTH FUND $____ OR ___% 13 / / GT GLOBAL LATIN AMERICA GROWTH FUND $____ OR ___%
16 / / GT GLOBAL EMERGING MARKETS FUND $____ OR ___% 24 / / GT GLOBAL AMERICA SMALL CAP GROWTH FUND $____ OR ___%
22 / / GT GLOBAL CONSUMER PRODUCTS AND $____ OR ___% 06 / / GT GLOBAL AMERICA MID CAP GROWTH FUND $____ OR ___%
SERVICES FUND
17 / / GT GLOBAL FINANCIAL SERVICES FUND $____ OR ___% 23 / / GT GLOBAL AMERICA VALUE FUND $____ OR ___%
11 / / GT GLOBAL HEALTH CARE FUND $____ OR ___% 04 / / GT GLOBAL JAPAN GROWTH FUND $____ OR ___%
19 / / GT GLOBAL INFRASTRUCTURE FUND $____ OR ___% 10 / / GT GLOBAL GROWTH & INCOME FUND $____ OR ___%
21 / / GT GLOBAL NATURAL RESOURCES FUND $____ OR ___% 08 / / GT GLOBAL STRATEGIC INCOME FUND $____ OR ___%
15 / / GT GLOBAL TELECOMMUNICATIONS FUND $____ OR ___% 09 / / GT GLOBAL GOVERNMENT INCOME FUND $____ OR ___%
02 / / GT GLOBAL NEW PACIFIC GROWTH FUND $____ OR ___% 18 / / GT GLOBAL HIGH INCOME FUND $____ OR ___%
01 / / GT GLOBAL DOLLAR FUND $____ OR ___% TOTAL INITIAL CONTRIBUTION: $____ OR ___%
CONTRIBUTION YEAR:
</TABLE>
NOTE: Minimum Initial Contribution -- $100 per Fund
Maximum Annual SIMPLE IRA Contribution -- See Disclosure Statement
<TABLE>
<S> <C> <C>
Telephone Exchange
I, either directly or through the Authorized Agent, if any, named below, hereby
authorize the Transfer Agent of the GT Global Mutual Fund, to honor any
telephone, telex or telegraphic instructions believed to be authentic for
exchange between any of the Funds distributed by GT Global, Inc. I understand and
agree that the account will be subject to the telephone exchange privilege
described in the applicable GT Global Mutual Fund's current prospectus and agree
that GT Global, Inc., GT Global Mutual Funds and the Funds' Transfer Agent, their
officers and employees, will not be responsible for the authenticity of any
telephone, telex, or telegraphic instructions nor be liable for any loss arising
out of any such telephone, telex or telegraphic instructions effected including
any such loss due to negligence on the part of such entities.
For Use by Authorized Agent (Broker/Dealer or Advisor) Only
We hereby submit this SIMPLE IRA Application for the purchase of shares including
shares purchased under a Right of Accumulation or Letter of Intent in accordance
with the terms of our Selling Agreement with GT Global, Inc. and with the
Prospectus(es) for the GT Global Mutual Fund(s). We agree to notify GT Global,
Inc. of any purchases properly made under a Letter of Intent or Right of
Accumulation.
</TABLE>
Investment Dealer or Advisor Name_____________________________________________
Main Office Address___________________________________________________________
Branch Number_______ Representative's Number______ Representative's Name______
Branch Address________________________ Telephone Number________________________
For Class A and B shares only:
Investment Dealer's Authorized Signature X__________________ Title_____________
For Advisor Class shares only: We hereby submit this SIMPLE IRA Application for
the purchase of Advisor Class shares in accordance with the terms of our
Advisor Class Agreement with GT Global, Inc. and with the Prospectus and
Statement of Additional Information of each Fund purchased.
Advisor's Authorized Signature X________________________ Title________________
DS-21
<PAGE>
Designation of Beneficiary(ies)
If you require more room to name additional beneficiaries, please provide
the necessary information on a separate sheet, and indicate next to each
name whether beneficiary is primary or contingent.
PRIMARY BENEFICIARY(IES)
I hereby designate the following person(s) to receive any interest
remaining in my SIMPLE IRA upon my death:
<TABLE>
<S> <C> <C> <C>
1. Name______________________________________ Address______________________________________________________
Relationship_________ Date of Birth_______ Social Security Number____________ Share of Account__________%
2. Name______________________________________ Address______________________________________________________
Relationship_________ DOB_________________ Social Security Number____________ Share of Account__________%
CONTINGENT BENEFICIARY(IES)
I hereby designate the following person(s) to receive any interest remaining in my SIMPLE IRA upon my death:
1. Name______________________________________ Address______________________________________________________
Relationship_________ DOB_________________ Social Security Number____________ Share of Account__________%
2. Name______________________________________ Address______________________________________________________
Relationship_________ DOB_________________ Social Security Number____________ Share of Account__________%
</TABLE>
Unless otherwise indicated above, the benefit payable hereunder shall be paid
in equal shares to the Primary Beneficiaries who survive the Participant. If
no Primary Beneficiary(ies) survives the Participant, the payment shall be
made in equal shares (or as otherwise indicated above) to the Contingent
Beneficiary(ies) who survive the Participant. The Participant reserves the
right to change the above beneficiary by filing a new Beneficiary Designations
Form with the Custodian. Should no named beneficiary survive the date of
distribution, the account shall be distributed to my surviving spouse, or if
there is no surviving spouse, in a single payment to my estate. ONLY THE MOST
RECENT EXECUTED DESIGNATION OF BENEFICIARY(IES) ON FILE WITH GT GLOBAL
INVESTOR SERVICES, INC. (AS AGENT FOR THE CUSTODIAN) WILL BE HONORED.
Consent of Spouse
I consent to the above Beneficiary Designation.
Signature of Spouse:___________________________ Date:_____________________
(Note: May be required in community property states if any person other than
or in addition to Participant's Spouse is designated as Beneficiary.)
Reduced Sales Charges
RIGHT OF ACCUMULATION -- CLASS A SHARES ONLY
/ / I certify that I qualify for the Right of Accumulation sales charge
discount described in the prospectus and statement of additional
information of the Fund(s) purchased.
/ / I own shares of more than one GT Global Mutual Fund. Below is a schedule
showing the numbers of each of my Shareholder Accounts.
/ / The registration of some of my shares differs from that shown on this
SIMPLE IRA Application. Below is a schedule showing the account number(s)
and full registration in each case.
STATEMENT OF INTENTION -- CLASS A SHARES ONLY
I agree to the Statement of Intention set forth in the Prospectus(es) for the
Fund(s) in which I am investing. Although I am not obligated to do so, it is my
intention to invest over a thirteen-month period in Class A shares of the GT
Global Mutual Funds, in an aggregate amount at least equal to:
/ / $50,000 / / $100,000 / / $250,000 / / $500,000
LIST OF OTHER GT GLOBAL MUTUAL FUND ACCOUNTS:
__________________ _______________________________________
__________________ _______________________________________
__________________ _______________________________________
Account Numbers Account Registrations
Agreement and Signature
I acknowledge receipt of the Disclosure Statement and IRA Agreement (IRS Form
5305-SA) for the GT Global SIMPLE IRA. I acknowledge receipt of the current
Prospectus(es) of the Fund(s) in which I have directed GT Global Investor
Services, Inc. (as agent for the Custodian) to invest my contribution(s). I
agree to the terms and provisions set forth in this SIMPLE IRA Application
including those contained in the Telephone Exchange section, the Disclosure
Statement, the Individual Retirement Custodial Account Agreement (IRS Form
5305-SA) and the Prospectus(es). AS REQUIRED BY THE INTERNAL REVENUE SERVICE,
I CERTIFY, UNDER PENALTIES OF PERJURY, THAT THE TAXPAYER IDENTIFICATION NUMBER
GIVEN ON THE FACE OF THIS SIMPLE IRA APPLICATION IS CORRECT AND THAT I AM NOT
SUBJECT TO BACKUP WITHHOLDING IN MY IRA(S). THE INTERNAL REVENUE SERVICE DOES
NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT OTHER THAN THE
CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING.
Signature X_______________________________ Date ______________________________
Individual
DS-22
<PAGE>
[LOGO]
GT Global Mutual Funds SIMPLE IRA
P.O. Box 7345, San Francisco, CA 94120-7345 TRANSFER AUTHORIZATION
800/223-2138
Please complete a separate Transfer Authorization for each SIMPLE IRA Account
to be transferred.
To Existing SIMPLE IRA Custodian:
Name of Existing SIMPLE IRA Custodian______________ Telephone_(________)______
Address________________________ ______________________ ___________ ___________
Street City State Zip Code
Individual Account:_____________________________ in the name of ______________
Account Name Account Number Your Name
Please liquidate/transfer in kind* $________________ or ________________% of
my SIMPLE IRA identified above and transfer those funds by a check, made
payable to
GT Global, for ____________________, SIMPLE IRA Account #_____________________
Investor's Name Existing GT Global
Account Number, if
applicable
Age 70 1/2 Restrictions
(Please complete this section if you will be age 70 1/2 or older in the
transfer year.)
The following transfer restrictions apply to this transaction:
<TABLE>
<S> <C>
1. Required Minimum Distribution. I authorize the Custodian or Trustee named above (select one):
/ / to distribute my required minimum distribution to me prior to transferring my SIMPLE IRA assets.
/ / to segregate and retain minimum distribution amount. Distribute on , 19.
2. Required Elections. (Complete only if you have reached your required beginning date, i.e., April 1, following the year
in which you attain age 70 1/2.)
a. My oldest primary beneficiary with respect to the transferring SIMPLE IRA is:
Name Birthdate Relationship
b. My life expectancy / / was / / was not being recalculated.
c. The life expectancy of my spouse beneficiary / / was / / was not being recalculated / / Not Applicable. I am aware
that the elections indicated above became irrevocable as of my required beginning date and will apply to the SIMPLE IRA
with the new Custodian indicated below.
THIS FORM, ALONG WITH ALL CHECK(S), SHOULD BE MAILED TO:
IF YOUR EMPLOYER HAS USED FORM 5305-SIMPLE:
GT GLOBAL (AS AGENT FOR THE CUSTODIAN), P.O. BOX 7345, SAN FRANCISCO, CA
94120-7345
IF YOUR EMPLOYER HAS USED FORM 5304-SIMPLE:
------------------------------------------------------------------------------
Name of Your Custodian Address
X
------------------------------------------------ ------------------------ ----------------------------------------------
Investor's Signature Date Signature Guarantee
(if required by current Custodian)
</TABLE>
* If this SIMPLE IRA currently holds shares of a GT Global Mutual Fund, you may
request a direct transfer of shares.
For GT Global or Custodian Use Only
GT Global Investor Services, Inc. (as agent for the GT Global SIMPLE IRA
Custodian), or if applicable, the undersigned Custodian, agrees to accept the
transfer described above and upon written receipt will apply the proceeds to
investments as designated by the Investor.
X________________________________________ ______________
Signature of Custodian or its Agent Date
DS-23
<PAGE>
DS-24
<PAGE>
[LOGO]
GT Global Mutual Funds
P.O. Box 7345, San Francisco, CA 94120-7345 SIMPLE IRA DIRECT ROLLOVER
800/223-2138 AUTHORIZATION
<TABLE>
<CAPTION>
<S> <C>
TO CURRENT SIMPLE IRA TRUSTEE OR CUSTODIAN:
Name of Current SIMPLE IRA TRUSTEE or Custodian:___________________ Telephone (__)_________
Address:_____________________ ______________________ ___________ ___________
Street City State Zip Code
SIMPLE IRA Account:______________________________________________________________________________________
SIMPLE IRA Account Name SIMPLE IRA Account Number Name of SIMPLE IRA Participant
Please pay my entire eligible rollover distribution from the SIMPLE IRA
identified above directly to my GT Global SIMPLE IRA Custodian, for
_________________________________________________, SIMPLE IRA Account #_______________________________
Participant Name (GT Global Account #, if known)
I. Direct Rollover from a SIMPLE IRA Plan
A. I certify that my SIMPLE IRA has made or will make an Eligible Rollover Distribution which is being paid in a Direct
Rollover to the Custodian of my SIMPLE IRA; or
B. This Direct Rollover is not part of a series of payments over my life or life expectancy(ies) or over a period of 10
years or more.
C. This Direct Rollover does not include any "after tax" employee contributions made by me to the SIMPLE IRA.
D. This Direct Rollover does not include any required minimum distributions with respect to the SIMPLE IRA.
E. I certify that I am eligible to establish a SIMPLE IRA with this Direct Rollover of an Eligible Rollover Distribution,
and that I am the SIMPLE IRA plan participant.
II. Additional Information for Rollovers Beginning at age 70 1/2
(Complete the following only if the direct rollover is being made after the
Participant's required beginning date, the April 1st following the calendar
year during which the Participant attained age 70 1/2):
1. My oldest primary beneficiary under the distribution plan is:______________
Birthdate________________________ Relationship _____________________________
2. My life expectancy / / was / / was not being recalculated. The life
expectancy of my spouse beneficiary / / was / / was not being recalculated.
Signature of Participant
I hereby irrevocably elect, pursuant to IRS Regulation 1.402(a)(5)-1T, to
treat this contribution as a rollover contribution. I understand that this
will not be a valid SIMPLE IRA rollover unless PART I and PART II are correct
statements. I acknowledge that, due to the complexities involved in the tax
treatment of eligible rollover distributions and direct rollovers to SIMPLE
IRAs, the Custodian has recommended that I consult with my tax adviser or the
Internal Revenue Service before completing this transaction to make certain
that this transaction qualifies as a rollover and is appropriate in my
individual circumstances. I hereby release the Custodian from any claim for
damages on account of the failure of this transaction to qualify as a valid
rollover.
X
_________________________________ _____________________ ____________________________________________________
Participant's Signature Date Signature Guarantee (if required by current plan)
</TABLE>
For GT Global or Custodian Use Only
GT Global Investor Services, Inc., (as agent for the GT Global SIMPLE IRA
Custodian), or if applicable, the undersigned Custodian, agrees to accept the
direct rollover described above and upon receipt of such rollover funds will
apply those funds to investments as designated by the Participant.
X_______________________________________________ _________________
Signature of Custodian or its Agent Date
DS-25
<PAGE>
SIMPLE IRA DIRECT ROLLOVER INSTRUCTIONS
Since the eligible rollover distributions(1) that you take from a SIMPLE IRA
are subject to 20% federal income tax withholding unless you roll over these
assets directly to another SIMPLE IRA (or, if you have participated in the
SIMPLE IRA for at least two years, into an IRA) you may wish to arrange for a
direct rollover to a GT Global SIMPLE IRA.
TO FACILITATE A DIRECT ROLLOVER TO A GT GLOBAL SIMPLE IRA, PLEASE FOLLOW THESE
STEPS:
1. Complete the front portion of this form;
2. Complete the GT Global SIMPLE IRA Application and Custodian Agreement (Form
5305-SA); and
3. IF YOUR EMPLOYER HAS USED FORM 5305-SIMPLE: Return them to GT Global at P.O.
Box 7345, San Francisco, CA 94120-7345.
GT Global will establish a SIMPLE IRA in your name, and provide you and your
current SIMPLE IRA trustee or custodian with your GT Global SIMPLE IRA account
number. Your current SIMPLE IRA trustee or custodian can then send the assets
directly to your GT Global SIMPLE IRA (by check or wire), or give you a check
made payable to your GT Global SIMPLE IRA.
IF YOUR EMPLOYER HAS USED FORM 5304-SIMPLE: Return them to the Custodian you
selected. That Custodian will establish your GT Global SIMPLE IRA and receive
the assets from your current SIMPLE IRA trustee or Custodian.
(1) An "eligible rollover distribution" subject to 20% withholding is generally
any partial or total distribution, except: (a) substantially equal periodic
payments made for life or joint lives (or life expectancy or joint life
expectancies) or for a specified period of 10 years or more; (b) required
minimum distributions; (c) non-taxable distributions (e.g., after-tax
contributions); and (d) certain DE MINIMIS distributions, corrective
distributions, loans and other distributions specified in the Internal
Revenue Code and applicable regulations. You should verify with the
distributing employer and your tax adviser whether a distribution is an
"eligible rollover distribution."
DS-26
<PAGE>
[LOGO]
GT Global, Inc.
Fifty California Street SUPPLEMENTAL APPLICATION
27th Floor PORTFOLIO REBALANCING PROGRAM
San Francisco, CA 94111-4624
<TABLE>
<S> <C>
ACCOUNT REGISTRATION EXISTING SHAREHOLDER ACCOUNT NUMBER ____________________
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
-------------------------------------- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Participant / / Social Security Number or / / Tax I.D. Number "TIN"
- -------------------------------------- (Check applicable box)
Street Address Resident of / / U.S. / / Other (specify)------------------------------
( ) ( )
------------------------------------------------------------------------------------------------------------------------------
City, State, Zip Code Home Telephone Business Telephone
FUND SELECTION $500 MINIMUM INITIAL INVESTMENT REQUIRED FOR EACH FUND SELECTED
FOR CLASS A AND CLASS B SHARES.
CHECKS SHOULD BE MADE PAYABLE TO "GT GLOBAL."
TO PURCHASE THE FUNDS LISTED BELOW PLEASE SELECT EITHER / / Class A Shares
/ / Class B Shares or / / Advisor Class
Class B shares are not available if your employer used Form 5305-SIMPLE or for
purchases of $500,000 or more or for the GT Global Dollar Fund.
Advisor Class shares are sold through a different prospectus than Class A and
Class B shares, are not sold directly to the general public and are only
available through certain employee benefit plans, financial institutions and
other entities that have entered into specific agreements with GT Global, Inc.
Special account requirements apply to Advisor Class shares. Please see an
Advisor Class prospectus for complete information.
If a class share box is not checked, your investment will be made in Class A
shares. Minimum 2 funds; Maximum 10 funds; Minimum 5% allocation per fund.
07 GT GLOBAL WORLDWIDE GROWTH FUND ---------- 13 GT GLOBAL LATIN AMERICA GROWTH FUND ----------
05 GT GLOBAL INTERNATIONAL GROWTH FUND ---------- 24 GT GLOBAL AMERICA SMALL CAP GROWTH FUND ----------
16 GT GLOBAL EMERGING MARKETS FUND ---------- 06 GT GLOBAL AMERICA MID CAP GROWTH FUND ----------
11 GT GLOBAL HEALTH CARE FUND ---------- 23 GT GLOBAL AMERICA VALUE FUND ----------
15 GT GLOBAL TELECOMMUNICATIONS FUND ---------- 04 GT GLOBAL JAPAN GROWTH FUND ----------
19 GT GLOBAL INFRASTRUCTURE FUND ---------- 10 GT GLOBAL GROWTH & INCOME FUND ----------
17 GT GLOBAL FINANCIAL SERVICES FUND ---------- 09 GT GLOBAL GOVERNMENT INCOME FUND ----------
21 GT GLOBAL NATURAL RESOURCES FUND ---------- 08 GT GLOBAL STRATEGIC INCOME FUND ----------
22 GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND ---------- 18 GT GLOBAL HIGH INCOME FUND ----------
02 GT GLOBAL NEW PACIFIC GROWTH FUND ---------- 01 GT GLOBAL DOLLAR FUND ----------
03 GT GLOBAL EUROPE GROWTH FUND ----------
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
Rebalance frequency - check one
/ / Monthly / / Quarterly / / Semi annual / / Annual Total percentage must equal 100%.
</TABLE>
<TABLE>
<S> <C>
AGREEMENTS & SIGNATURES
The investor(s) certifies(y) and agree(s) that the certifications, authorizations, directions and restrictions contained herein
will continue until the Transfer Agent of the GT Global Mutual Funds receives written notice of any change or revocation. ANY
CHANGE IN THESE INSTRUCTIONS MUST BE IN WRITING WITH ALL SIGNATURES GUARANTEED (IF APPLICABLE).
- ------------------------------------------------------------
Date
X X
- ----------------------------------------------- -----------------------------------------------
Signature Signature
- ------------------------------------------------------------ -----------------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
X X
- ----------------------------------------------- -----------------------------------------------
Signature Signature
- ------------------------------------------------------------ -----------------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
*Acceptable signature guarantors: (1) a commercial bank; (2) a U.S. trust company; (3) a member firm of a U.S. stock exchange;
(4) a foreign branch of any of the foregoing; or (5) any other eligible guarantor institution. A notary public is NOT an
acceptable guarantor. An investor with questions concerning the GT Global Mutual Funds signature guarantee requirement should
contact the Transfer Agent.
</TABLE>
DS-27
<PAGE>
------------------------
GT GLOBAL SIMPLE IRA
NOTES
- ----------------------------------------------------------
March 1997
-------
DS-28
<PAGE>
------------------------
GT GLOBAL SIMPLE IRA
NOTES
- ----------------------------------------------------------
-------
DS-29
<PAGE>
------------------------
GT GLOBAL SIMPLE IRA
NOTES
- ----------------------------------------------------------
-------
DS-30
<PAGE>
------------------------
GT GLOBAL SIMPLE IRA
NOTES
- ----------------------------------------------------------
-------
DS-31
<PAGE>
EXHIBIT 99.14(c)
--------------------
QUESTIONS AND ANSWERS
FOR EMPLOYEES
- ----------------------------------------------------------
Q. AM I ELIGIBLE FOR A SEP-IRA?
A. You are eligible to participate in your employer's SEP for a calendar year
if (i) you have established an IRA into which contributions can be made, (ii)
your employer has adopted a SEP-IRA arrangement, (iii) you are at least 21 years
old, and (iv) you have performed services for your employer in at least three of
the preceding five calendar years. Depending on the criteria selected by your
employer, you might not be eligible to participate in your employer's SEP-IRA if
(i) you did not receive at least $400 (or other amount as adjusted by the
Internal Revenue Service to reflect cost-of-living increases) in compensation
from the employer in the calendar year, (ii) you are covered under a collective
bargaining agreement for which retirement benefits were the subject of good
faith bargaining, or (iii) you are a nonresident alien and you received no
earned income from your employer from sources within the United States. Consult
your employer's Form 5305-SEP to determine whether you are eligible to
participate in its SEP-IRA.
Q. HOW MUCH DOES MY EMPLOYER CONTRIBUTE?
A. Generally, for 1997 and subsequent years, your employer may, but is not
required to, contribute up to a maximum of 15% of your compensation for that
year (not taking into account compensation in excess of $160,000) or $24,000,
whichever is less, to your SEP-IRA. (However, if your employer makes
contributions for you under any other qualified retirement plan, your employer's
total contributions on your behalf to your SEP-IRA and such plans(s) generally
may not exceed 25% of your compensation for that year or $30,000, whichever is
less.) The $160,000, $24,000 and $30,000 limitations may be adjusted from time
to time by the Internal Revenue Service to reflect increases in the cost of
living.
Q. HOW MUCH CAN I CONTRIBUTE?
A. Since you have an IRA into which your employer's SEP-IRA contributions are
made, you may contribute to that IRA. The same rules apply to your SEP-IRA
contributions as for a regular IRA. You can contribute up to the lesser of
$2,000 or 100% of compensation per year to your SEP-IRA (or up to the lesser of
$4,000 or 100% of compensation to your SEP-IRA and a spousal IRA established on
behalf of your spouse, provided no more than $2,000 is contributed to each). The
deductibility of your SEP-IRA contribution generally depends on whether you are
an active participant in an employer's retirement plan and on your adjusted
gross income for the year. You will be treated as an active participant for any
year in which your employer makes a contribution to your SEP-IRA, and if your
adjusted gross income exceeds certain levels, the amount of your IRA
contribution that is deductible is phased down and ultimately eliminated. (See
Section 6 of the Disclosure Statement for further details.)
Q. ARE THE EMPLOYER'S CONTRIBUTIONS TO MY SEP-IRA TAXABLE?
A. Amounts contributed by your employer to your SEP-IRA, to the extent not in
excess of the applicable limitations, are not subject to federal income tax at
the time they are contributed nor taken into account for purposes of social
security, medicare, railroad retirement, and unemployment taxes. Employer
contributions, as well as deductible contributions by you, and earnings on these
contributions to your SEP-IRA are not taxed until distributed.
[LOGO]
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GT GLOBAL SEP-IRA
Q. WHEN CAN I WITHDRAW MONEY FROM MY SEP-IRA?
A. You can withdraw all or part of your money at any time, but ordinary
federal (and, in most cases, state or local) income taxes will be due on
withdrawals of contributions (other than your non-deductible contributions) and
earnings from your SEP-IRA in the year the withdrawals are made. In addition, if
you withdraw money prior to reaching age 59 1/2, you may be subject to a 10%
federal penalty on early withdrawals. Under current law, you must begin
withdrawing money by April 1 following the year in which you reach age 70 1/2.
Q. CAN I CONSOLIDATE MY SEP-IRA ASSETS WITH MY OTHER IRA ASSETS?
A. You may transfer your SEP-IRA assets to any other IRA at any time.
Q. WHAT IS THE DIFFERENCE BETWEEN A SEP-IRA TRANSFER AND A SEP-IRA ROLLOVER?
A. A SEP-IRA transfer moves your IRA assets directly from one financial
institution to another. You may, for instance, consolidate your SEP-IRA at GT
Global by transferring SEP-IRA assets from a bank, trust company, insurance
company or mutual fund to your SEP-IRA or to another IRA at GT Global; your
current custodian will liquidate your SEP-IRA assets (if not currently held in
GT Global Mutual Funds) and send the check directly to GT Global.
A SEP-IRA rollover reinvests SEP-IRA assets distributed to you. With a
rollover you can take receipt of your SEP-IRA assets for up to 60 days before
reinvesting them in another SEP-IRA or another IRA. (Please note that you must
reinvest your SEP-IRA assets within 60 days to maintain their tax-deferred
status.) You may do only one rollover in any 12-month period. There is no
restriction on the number of SEP-IRA transfers you may effect in a year.
Q. WHAT FORMS OR REPORTS DO I FILE FOR MY SEP-IRA CONTRIBUTIONS?
A. Your deductible SEP-IRA contributions are reported on your Form 1040. You
must report your nondeductible SEP-IRA contributions on Form 8606 and file it
with the Internal Revenue Service along with your Form 1040 for the year. If you
are subject to a penalty tax for excess contributions or early distributions,
you may also have to file Form 5329 with your Form 1040.
Q. WHAT FORMS OR REPORTS DOES MY EMPLOYER FILE FOR MY SEP-IRA?
A. Your employer need not file annual information returns (such as Form 5500)
with the Internal Revenue Service if the employer has established the SEP using
Form 5305-SEP and given you a copy of the completed Form 5305-SEP. Employer
contributions that are within the applicable limits are not reported on Form
W-2.
Q. WHAT REPORTS WILL I RECEIVE FROM
GT GLOBAL?
A. Prior to January 31 of each year, GT Global will provide you with a
statement showing your SEP-IRA account balance as of December 31st of the
previous year and your SEP-IRA account activity for that previous year. You will
also receive by January 31 of each year a copy of Form 1099-R filed with the
Internal Revenue Service showing distributions made from your SEP-IRA during the
previous year. In addition, GT Global will send you a copy of Form 5498 that
reports to the Internal Revenue Service any contributions that you make to your
SEP-IRA between January 1 of the previous year and April 15 of the current year,
as well as the account's value on December 31.
Q. CAN I PARTICIPATE IN MY EMPLOYER'S
SAR-SEP?
A. You may be eligible to participate in your employer's SAR-SEP if it was
established prior to 1997 (no new SAR-SEP may be established after 1996). The
eligibility requirements for a SAR-SEP generally are the same as for a SEP-IRA
(see the first question above). Consult your employer's form 5305A-SEP or other
SAR-SEP documents to determine whether you are eligible to participate in its
SAR-SEP.
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GT GLOBAL SEP-IRA
If you are eligible, in general you may contribute up to $9,500 or 15% of your
compensation (not taking into account compensation in excess of $160,000),
whichever is less, through elective deferrals each year. However, your elective
deferrals plus any SEP-IRA contributions from your employer may not exceed 15%
of your compensation or $30,000, whichever is less. Special rules may apply to
limit your SAR-SEP deferral contribution if you are a "highly compensated
employee" or more than half of the company's eligible employees choose not to
make elective deferrals. Your elective deferrals are not subject to income tax
when contributed, although they are treated as wages for purposes of social
security, medicare, railroad retirement and unemployment taxes.
----------------------------------------------------------
QUESTIONS AND ANSWERS
FOR EMPLOYERS
- ----------------------------------------------------------
Q. AM I ELIGIBLE TO ESTABLISH A SEP-IRA FOR MY EMPLOYEES?
A. Yes. Generally, you may use the enclosed Form 5305-SEP to establish the SEP
if (i) you do not currently maintain any other qualified retirement or did not
previously maintain a defined benefit plan, (ii) you do not use the services of
leased employees, (iii) you are not a member of an affiliated service group or
controlled group (if you are, then all eligible employees of the members of the
group must participate in the SEP), and (iv) each eligible employee has
established an IRA into which SEP contributions can be made.
Q. WHAT EMPLOYEES MUST BE COVERED?
A. At a minimum, any employee is eligible to participate who (i) has
established an IRA into which contributions can be made, (ii) is at least 21
years old, and (iii) has performed services for you in at least three of the
preceding five calendar years. You may choose to make all your employees
eligible or expand the group of eligible employees by reducing the minimum age
or service necessary, or both. You may exclude any employee who does not have at
least $400 (or such amount as adjusted by the Internal Revenue Service) in
compensation from you for the year, is covered by a collective bargaining
agreement for which retirement benefits were the subject of good faith
bargaining between you and the employee's union, or is a nonresident alien and
receives no United States-source earned income from you.
Q. HOW MUCH CAN AN EMPLOYEE CONTRIBUTE?
A. An employee makes no contributions under the SEP. An employee may, however,
contribute to his or her IRA, subject to applicable limits.
Q. HOW MUCH DOES THE EMPLOYER CONTRIBUTE?
A. Generally, for 1997 and subsequent years, the employer may, but is not
required to, contribute up to a maximum of 15% of each employee's compensation
for that year (not taking into account compensation in excess of $160,000) or
$24,000, whichever is less, to his or her SEP-IRA. (However, if you make
contributions for an employee under any other qualified retirement plan, the
total contributions on that employee's behalf to the employee's SEP-IRA and such
plans(s) generally may not exceed 25% of the employee's compensation for that
year or $30,000, whichever is less.) The $160,000, $24,000 and $30,000
limitations may be adjusted from time to time by the Internal Revenue Service to
reflect increases in the cost of living. Form 5305-SEP requires that your
contributions be a uniform percentage of each eligible employee's compensation.
Q. ARE MY CONTRIBUTIONS DEDUCTIBLE?
A. As an employer, your contributions are deductible for federal income tax
purposes in your tax year including the end of the calendar year for which they
are made. Contributions are treated as made for a particular tax year if they
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GT GLOBAL SEP-IRA
are made for that year and paid by the due date (including extensions) of your
federal income tax return for that year.
Q. ARE THE EMPLOYER'S SEP-IRA CONTRIBUTIONS TAXABLE?
A. Subject to the applicable limits, all employer contributions to an
employee's SEP-IRA are made on a "pre-tax" basis and not taxed until
distributed.
Q. WHEN CAN AN EMPLOYEE WITHDRAW MONEY FROM HIS OR HER SEP-IRA?
A. An employee can withdraw all or part of his or her money at any time, but
ordinary federal (and, in most cases, state or local) income taxes will be due
on withdrawals of contributions (other than the employee's non-deductible
contributions) and earnings from the SEP-IRA in the year the withdrawals are
made. In addition, if an employee withdraws money prior to reaching age 59 1/2,
he or she may be subject to a 10% federal penalty on early withdrawals. After
age 59 1/2, an employee may withdraw money from his or her IRA without penalty.
Under current law, an employee must begin withdrawing money by April 1 following
the year in which he or she reaches age 70 1/2.
An employee may transfer his or her SEP-IRA assets to another SEP-IRA or to
any other IRA.
Q. WHAT FORMS OR REPORTS DOES AN EMPLOYER FILE FOR A SEP-IRA PLAN?
A. If you use Form 5305-SEP to establish the SEP and give a completed copy to
each eligible employee, you do not have to file any annual information returns
(such as Form 5500). Your SEP-IRA contributions are not reported on Form W-2.
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[LOGO]
GT GLOBAL SIMPLIFIED EMPLOYEE PENSION
INDIVIDUAL RETIREMENT ACCOUNT
DISCLOSURE STATEMENT AND APPLICATION
- --------------------------------------------------------------------------------
- --------------------------------------------
1. GENERAL
- --------------------------------------------
Internal Revenue Service Regulations require that you be given this Disclosure
Statement for the purpose of informing you of the restrictions and limitations
on how you may use a Simplified Employee Pension Individual Retirement Account
(SEP-IRA). Please read this Disclosure Statement together with the Custodial
Agreement and the prospectus(es) for the GT Global Mutual Fund(s) in which you
are investing. The provisions of the Custodial Agreement and prospectus(es) must
prevail over this statement in any instance where the statement is incomplete or
appears to be in conflict.
- --------------------------------------------
2. IRREVOCABILITY OF ACCOUNT
- --------------------------------------------
The Internal Revenue Service requires that you receive this disclosure
statement at least 7 days prior to the establishment of your SEP-IRA. Because of
this requirement, your application will not be accepted by the Custodian until
at least 7 days after the date you received this disclosure statement, as
indicated by you in the IRA Custodial Agreement. Prior to such acceptance, you
may receive back the entire amount that you have contributed, without reduction
for fees or other expenses. You may request that your contribution be returned
to you by writing to GT Global Investor Services, Inc. (agent for the
Custodian), P.O. Box 7345, San Francisco, CA 94120-7345 or by calling GT Global
toll free at (800) 223-2138 within 7 days of the date you have signed the
Custodial Agreement. All telephone requests must be confirmed in writing. Once
your application for a GT Global SEP-IRA is accepted by the Custodian, it cannot
be revoked by you.
- --------------------------------------------
3. ELIGIBLE EMPLOYEE
- --------------------------------------------
You are eligible to participate in a GT Global SEP-IRA if (i) your employer
has adopted a SEP-IRA arrangement by using Form 5305-SEP and (ii) you are
designated by your employer as an "eligible employee." You must also establish
an IRA into which your employer's contributions can be made.
Generally, you are an "eligible employee" and must be allowed to participate
for any year in which you (i) are at least 21 years old and (ii) have performed
services for your employer in at least three of the immediately preceding five
calendar years. However, you may be excluded from participation in any year if
you (i) did not receive at least $400 in compensation from the employer for the
calendar year (an amount that is adjusted from time to time to reflect increases
in the cost of living), (ii) are covered under a collective bargaining agreement
for which retirement benefits were the subject of good faith bargaining, or
(iii) are a nonresident alien receiving no United States-sourced earned income
from your employer. Consult your employer's Form 5305-SEP to determine whether
you are eligible to participate in its SEP-IRA.
- --------------------------------------------
4. YOUR IRA ACCOUNT
- --------------------------------------------
A SEP-IRA is a combination of a simplified employer pension (SEP) and an
individual retirement account (IRA). Under the SEP, your employer (or you, if
you are self-employed) may make contributions to an individual retirement
account (IRA) for your retirement. Your IRA is a trust or custodial account
created or organized in the United States for your exclusive benefit or for the
benefit of your beneficiaries. The IRA must be created by written instrument
that meets the following requirements:
(1) The trustee or custodian must be a bank, federally insured credit union,
savings and loan
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GT GLOBAL SEP-IRA
association, or (under federal regulations) another person eligible to act as
trustee or custodian;
(2) Except for rollovers, transfers and employer contributions, under
applicable law, the trustee or custodian will not accept employee contributions
of more than $2,000 in any tax year. You may make rollover and transfer
contributions in amounts greater than $2,000. Employer contributions may also be
made to your SEP-IRA. Both employee and employer contributions to your SEP-IRA
are subject to the limitations described below. All contributions must be in
cash.
(3) Your interest in the SEP-IRA is nonforfeitable; that is, it is fully
vested at all times;
(4) No part of the trust or custodial funds may be invested in life insurance
contracts or certain collectibles nor may the assets be commingled with other
property except in a common trust fund or common investment fund; and
(5) Your interest in the SEP-IRA must begin to be distributed by April 1 of
the year following the year in which you reach age 70 1/2. The distribution
may be made in a single sum, or you may receive periodic distributions, starting
by April 1 of the year following the year in which you reach age 70 1/2, so
long as your entire interest in the custodial account is distributed over one of
the following periods:
(a) Your life;
(b) The joint lives of you and your designated beneficiary;
(c) A specific period not extending beyond your life expectancy; or
(d) A specific period not extending beyond the life expectancy of you and
your designated beneficiary.
If the amount distributed is less than the minimum amount required to be
distributed to you under the Internal Revenue Code, an excise tax will be
imposed on you in an amount equal to 50% of the excess of the amount required to
be distributed to you over the amount you actually receive.
(6) If you die after distributions have begun, your beneficiary must receive
the remaining payments at least as rapidly as under the method of distribution
being used on the date of your death. If you die before distributions have begun
or if your surviving spouse dies before distributions have begun, any interest
remaining must, by December 31 of the calendar year which contains the fifth
anniversary of your death or the death of your surviving spouse, be distributed
in a single sum. If your (or your surviving spouse's) designated beneficiary
wishes to receive an immediate annuity which provides for payments over the
beneficiary's life or over a specific period not exceeding the beneficiary's
life expectancy, the beneficiary must elect to receive such payments by December
31 following the calendar year of your death. Such payments also must begin by
that date. If your designated beneficiary is your spouse, annuity payments need
not commence until December 31 of the year you would have attained 70 1/2.
This annuity contract will not allow one's life expectancy to be recalculated.
The election will also apply to beneficiaries who make additional contributions
or rollovers in their own names to the IRA. An amount is not distributed if it
is rolled over into an Individual Retirement Account, annuity, or retirement
bond for the benefit of the beneficiary.
(7) If your surviving spouse is your designated beneficiary, your SEP-IRA
assets may be rolled over into his or her own IRA (whether or not a SEP-IRA). No
rollover from your IRA is available for a beneficiary other than your surviving
spouse, and such non-spouse beneficiary must take the IRA assets in the form of
a taxable distribution.
If you maintain an IRA other than the IRA(s) into which your employer's SEP
contributions are made, that IRA may provide different rates of return and
different terms concerning, among other things, transfers and withdrawal of
funds from the IRA.
- --------------------------------------------
5. EMPLOYER CONTRIBUTIONS
- --------------------------------------------
Generally, for any calendar year after 1996, your employer (or you, if you are
self-employed) may, but is not required to, contribute to your SEP-IRA up to a
maximum of 15% of your compensation for that calendar year or $24,000, whichever
is less. You and your employer must ensure that contributions in excess of
general IRA limits are made under a valid SEP and are proper. The total
contributions by your employer on your behalf to your SEP-IRA and any other
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GT GLOBAL SEP-IRA
qualified retirement plan may not exceed 25% of your compensation for that
calendar year or $30,000, whichever is less.
Form 5305-SEP requires your employer to make contributions to the SEP-IRAs of
its eligible employees in amounts that are a uniform percentage of each eligible
employee's compensation. For purposes of determining the amount of your
employer's contribution, your employer may not take into account any
compensation that you earn in excess of $160,000. Your compensation does not
include your employer's contribution to your SEP-IRA.
Your employer's contributions to your SEP-IRA, to the extent not in excess of
the maximum contributions described above, are not included in your gross income
in the year of contribution for federal income tax purposes or for purposes of
federal social security and unemployment taxes. Employer contributions and
earnings on those contributions are not taxed until distributed, as described in
Section 10 below.
- --------------------------------------------
6. EMPLOYEE CONTRIBUTIONS
- --------------------------------------------
ELIGIBILITY
If neither you nor your spouse is an active participant (see A. below), you
may make a contribution of up to the lesser of $2,000 (or, for years after 1996,
$4,000 in the case of a SEP-IRA and a Spousal IRA) or 100% of compensation and
take a deduction for the entire amount contributed. If you or your spouse (in
most cases) are an active participant but have an adjusted gross income (AGI)
below a certain level (see B. below), you may make a fully deductible
contribution as under current law. If, however, you or your spouse (in most
cases) is an active participant and your combined AGI is above the specified
level, the amount of the deductible contribution you may make to a SEP-IRA is
phased down and eventually eliminated.
A. ACTIVE PARTICIPANT. You are an "active participant" for a year if you are
covered by a retirement plan. Generally, you are covered by a "retirement plan"
for a year if your employer or union has a retirement plan under which money is
added to your account or you are eligible to earn retirement credits. For
example, if you are covered under a profit-sharing plan, certain government
plans, a salary reduction arrangement (such as a tax sheltered annuity
arrangement or a 401(k) plan), or a plan which promises you a retirement benefit
which is based upon the number of years of service you have with the employer (a
"defined benefit plan"), you are likely to be an active participant. Your Form
W-2 for the year should indicate your participation status. If you are eligible
to participate in your employer's SEP-IRA, you will be deemed to be an active
participant for any year in which your employer makes a contribution to your
SEP-IRA.
You are an active participant for a year even if you are not yet vested in
your retirement benefit. Also, if you make required contributions or voluntary
employee contributions to a retirement plan, you are an active participant. In
certain plans you may be an active participant even if you were only with the
employer for part of the year. You will be deemed an active participant in your
employer's defined benefit plan even if you do not make required contributions
and even if you elect not to participate or waive participation. In other plans,
however, you will not be deemed an active participant if you elect not to
participate.
You are generally not considered an active participant if you are covered in a
government-sponsored plan only because of your services as 1) an Armed Forces
Reservist, for less than 91 days of active service, or 2) a volunteer
firefighter covered for firefighting service. Of course, if you are covered in
any other plan, these exceptions do not apply.
If you are married but file a separate return, your spouse's active
participation affects your ability to make deductible contributions if you lived
together for any part of the year. If you lived apart from your spouse for the
entire year and you file a separate return, you are treated as unmarried for
purposes of your SEP-IRA deductions and thus your spouse's active participation
does not affect your ability to make deductible contributions.
B. MODIFIED ADJUSTED GROSS INCOME (AGI). If you are an active participant, you
must look at your Adjusted Gross Income for the year (if you and your spouse
file a joint tax return you use your combined AGI) to determine whether you can
make deductible SEP-IRA contributions. Your tax return will show you how to
calculate your AGI which, for purposes of determining the
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GT GLOBAL SEP-IRA
deductible amount of your SEP-IRA contribution, is calculated without taking
into account any SEP-IRA deduction, any foreign earned income or foreign housing
exclusion or any excludable series EE savings bond interest. If you are at or
below a certain AGI level, called the Threshold Level, you are treated as if you
were not an active participant and can make a deductible contribution under the
same rules as a person who is not an active participant.
If you are single (or if you are married, filed separately and lived apart
from your spouse during the entire year), your threshold AGI level is $25,000.
The threshold level if you are married and file a joint tax return is $40,000,
and if you are married but file a separate tax return, the Threshold Level is
$0.
If your AGI is $10,000 or more above your Threshold Level and you are an
active participant, you will not be able to deduct any of your contributions to
your SEP-IRA. If your AGI is less than $10,000 above your Threshold Level, you
will still be able to make a deductible contribution but it will be limited in
amount. The amount by which your AGI exceeds your Threshold Level (AGI-Threshold
Level) is called your Excess AGI. The Maximum Allowable Deduction is $2,000 (or
$4,000 for a Spousal IRA). You can calculate your Deduction Limit as follows:
<TABLE>
<S> <C> <C> <C> <C>
$10,000-EXCESS AGI MAXIMUM
$10,000 X ALLOWABLE DEDUCTION = DEDUCTION LIMIT
</TABLE>
You must round up the result to the next highest $10 level (the next highest
number which ends in zero). For example, if the result is $1,525, you must round
it up to $1,530. If the final result is below $200 but above zero, your
Deduction Limit is $200. Your Deduction Limit cannot, in any event, exceed 100%
of your compensation.
EXAMPLE 1: Ms. Smith, a single person, is an active participant and has an AGI
of $31,619. She calculates her deductible SEP-IRA contribution as follows:
HER AGI IS $31,619.
HER THRESHOLD LEVEL IS $25,000.
HER EXCESS AGI IS (AGI-THRESHOLD LEVEL) OR
($31,619-$25,000) = $6,619.
HER MAXIMUM ALLOWABLE DEDUCTION IS $2,000.
SO, HER SEP-IRA DEDUCTION LIMIT IS:
<TABLE>
<S> <C> <C> <C> <C>
$10,000-$6,619
$10,000 X $2,000 = $676 (ROUNDED TO $680)
</TABLE>
EXAMPLE 2: Mr. and Mrs. Young file a joint tax return. Each spouse earns more
than $2,000 and one is an active participant. They have a combined AGI of
$44,255. They may each contribute to an IRA or SEP-IRA and calculate their
deductible contributions to each IRA as follows:
THEIR AGI IS $44,255.
THEIR THRESHOLD LEVEL IS $40,000.
THEIR EXCESS AGI IS (AGI-THRESHOLD LEVEL) OR
($44,255-$40,000) = $4,255.
THE MAXIMUM ALLOWABLE DEDUCTION FOR EACH SPOUSE IS $2,000.
SO, EACH SPOUSE MAY COMPUTE HIS OR HER IRA DEDUCTION LIMIT AS FOLLOWS:
<TABLE>
<S> <C> <C> <C> <C>
$10,000-$4,255 $1,149 (ROUNDED TO
$10,000 X $2,000 = $1,150)
</TABLE>
EXAMPLE 3: If, in example 2, Mr. Young did not earn any compensation, or
elected to be treated as earning no compensation, Mrs. Young could establish a
Spousal IRA (consisting of an account for herself and one for her husband). The
amount of deductible contributions which could be made to the SEP-IRA and the
Spousal IRA is calculated using a Maximum Allowable Deduction of $4,000 (for
years after 1996) rather than $2,000.
<TABLE>
<S> <C> <C> <C> <C>
$10,000-$4,255 $2,298 (ROUNDED TO
$10,000 X $4,000 = $2,300)
</TABLE>
The $2,300 must then be divided between the two accounts so that the SEP-IRA
and the Spousal IRA may each receive a deductible contribution of $1,150.
EXAMPLE 4: Mr. Jones, a married person, files a separate tax return and lived
with Mrs. Jones during the year and is an active participant. He has $1,500 of
compensation and wishes to make a deductible contribution to a SEP-IRA.
HIS AGI IS $1,500.
HIS THRESHOLD LEVEL IS $0.
HIS EXCESS AGI IS (AGI-THRESHOLD LEVEL) OR
($1,500-$0) = $1,500.
HIS MAXIMUM ALLOWABLE DEDUCTION IS $2,000.
SO, HIS SEP-IRA DEDUCTION LIMIT IS:
<TABLE>
<C> <S>
$10,000-$1,500
$10,000 X $2,000 = $1,700
</TABLE>
Even through his SEP-IRA deduction limit under the formula is $1,700, Mr.
Jones may not deduct an amount in excess of his compensation, so, his actual
deduction is limited to $1,500.
EXAMPLE 5: If, in example 2, the Youngs filed separate tax returns but lived
together during any part of the year, Mr. and Mrs. Young are each considered an
active participant, even
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GT GLOBAL SEP-IRA
though only Mrs. Young was the active participant. If Mr. Young's AGI is
$21,000, he may contribute to his SEP-IRA and would calculate his deductible
contribution as follows:
HIS AGI IS $21,000.
HIS THRESHOLD LEVEL IS $0.
HIS EXCESS AGI IS (AGI-THRESHOLD LEVEL) OR
($21,000-$0) = $21,000.
HIS MAXIMUM ALLOWABLE DEDUCTION IS $2,000.
SO, HIS SEP-IRA DEDUCTION LIMIT IS:
<TABLE>
<C> <S>
$10,000-$21,000
$10,000 X $2,000 = $0
</TABLE>
Mr. Young would not be entitled to claim any deduction for a SEP-IRA
contribution in these circumstances.
EXAMPLE 6: If, in example 5, Mr. and Mrs. Young lived apart the entire year,
Mr. Young would determine the deductibility of his SEP-IRA contribution under
the rules applicable to single persons who are not active participants.
Accordingly, Mr. Young would be entitled to deduct the full amount of his
maximum allowable contribution.
As an alternative, you may determine your Deduction Limit by consulting the
Table found in IRS Publication 590.
SPOUSAL IRAS
As noted in Example 3 above, you may contribute to a Spousal IRA even if your
spouse has earned some compensation during the year. Provided your spouse does
not make a contribution to an IRA, you may set up a Spousal IRA consisting of an
account for your spouse as well as an account for yourself. The maximum
deductible amount for the Spousal IRA (for years after 1996) is the lesser of
$4,000 or 100% of compensation.
NONDEDUCTIBLE CONTRIBUTIONS TO SEP-IRAS
Even if you are above the threshold level and thus may not make a deductible
contribution of $2,000 ($4,000 with a Spousal IRA), you may still contribute up
to the lesser of 100% of compensation or $2,000 to a SEP-IRA ($4,000 with a
Spousal IRA). The amount of your contribution which is not deductible will be a
nondeductible contribution to the SEP-IRA. You may also choose to make a
contribution nondeductible even if you could have deducted part or all of the
contribution. Interest or other earnings on your SEP-IRA contribution whether
from deductible or nondeductible contributions will not be taxed until taken out
of your SEP-IRA and distributed to you.
If you make a nondeductible contribution to a SEP-IRA you must report the
amount of the nondeductible contribution to the IRS as a part of your tax return
for the year.
You may make a $2,000 contribution at any time during the year, if your
compensation for the year will be at least $2,000, without having to know how
much will be deductible. When you fill out your tax return you may then figure
out how much is deductible.
You may withdraw a SEP-IRA contribution made for a year any time before April
15 of the following year. If you do so, you must also withdraw the earnings
attributable to that portion and report the earnings as income for the year for
which the contribution was made. If some portion of your contribution is not
deductible, you may decide either to withdraw the nondeductible amount, or to
leave it in the SEP-IRA and designate that portion as a nondeductible
contribution on your tax return.
SEP-IRA DISTRIBUTIONS
Because nondeductible SEP-IRA contributions are made using income which has
already been taxed (that is, they are not deductible contributions), the portion
of the SEP-IRA distributions consisting of nondeductible contributions will not
be taxed again when received by you. If you make any nondeductible SEP-IRA
contributions, each distribution from your SEP-IRA will consist of a nontaxable
portion (return of nondeductible contributions) and a taxable portion (return of
deductible contributions, if any, and account earnings).
Thus, you may not take a distribution which is entirely tax-free if you have
made any deductible contributions. The following formula is used to determine
the nontaxable portion of your distributions for a taxable year:
<TABLE>
<S> <C> <C> <C> <C>
REMAINING
NONDEDUCTIBLE TOTAL NONTAXABLE
CONTRIBUTIONS X DISTRIBUTIONS = DISTRIBUTIONS
YEAR-END TOTAL IRA (FOR THE (FOR THE
ACCOUNT BALANCES YEAR) YEAR)
</TABLE>
To figure the year-end total IRA account balance you treat all of your IRAs as
a single IRA. This includes all regular IRAs, as well as SEP-IRAs and Rollover
IRAs. You also add back the distributions taken during the year.
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DS-5
<PAGE>
--------------------
GT GLOBAL SEP-IRA
EXAMPLE: An individual makes the following contributions to his or her IRAs
and SEP-IRAs:
<TABLE>
<CAPTION>
YEAR DEDUCTIBLE NONDEDUCTIBLE
- --------- ----------- --------------
<S> <C> <C>
1992 $ 2,000
1993 1,800
1994 1,000 $ 1,000
1995 600 1,400
----------- -------
$ 5,400 $ 2,400
</TABLE>
<TABLE>
<S> <C>
Deductible Contributions: $ 5,400
Nondeductible Contributions: 2,400
Earnings on IRAs and
SEP-IRAs: 1,200
---------
Total Account Balance of IRAs
and SEP-IRAs as of 12/31/96: $9,000
(including distributions in 1996)
</TABLE>
In 1996, the individual takes a distribution of $3,000. The total account
balance in the IRAs and SEP-IRAs on 12/31/96, plus 1996 distributions, is
$9,000. The nontaxable portion of the distributions for 1996 is figured as
follows:
<TABLE>
<S> <C> <C> <C>
TOTAL NONDEDUCTIBLE CONTRIBUTIONS $2,400
TOTAL ACCOUNT BALANCE IN THE ------ X $3,000 = $800
IRAS AND SEP-IRAS PLUS $ 9,000
DISTRIBUTIONS
</TABLE>
Thus, $800 of the $3,000 distribution in 1996 will not be included in the
individual's taxable income. The remaining $2,200 will be taxable for 1995.
SALARY REDUCTION CONTRIBUTIONS
Generally, if your SEP-IRA is used as part of a salary reduction SEP (a
SAR-SEP) established before 1997, you may elect to reduce your annual
compensation, up to a maximum of $9,500 or 15% of compensation (not taking into
account compensation in excess of $160,000), whichever is less, and contribute
that amount to your SEP-IRA. If your employer also contributes to your SEP-IRA,
these contributions plus your elective deferrals may not exceed 15% of your
compensation (not taking into account compensation in excess of $160,000) or
$30,000, whichever is less.
- --------------------------------------------
7. TAX-FREE TRANSFER CONTRIBUTIONS
- --------------------------------------------
Transfers allow you to transfer IRA assets directly from one IRA trustee or
custodian to another on a tax-free basis. If you already have an IRA with
another trustee or custodian, you may direct that trustee or custodian to
transfer your IRA assets to your GT Global SEP-IRA without tax consequences, in
accordance with the rules of your existing account. You may not take a deduction
for the amount. To authorize the GT Global SEP-IRA Custodian to arrange a direct
transfer from your existing IRA, please complete the attached IRA Transfer
Authorization as well as the SEP-IRA Application.
- --------------------------------------------
8. TAX-FREE ROLLOVER CONTRIBUTIONS
- --------------------------------------------
Rollover contributions permit you to contribute amounts you are eligible to,
or actually, receive from one retirement program to another without incurring
any income tax liability. The source of a rollover contribution to an IRA or
SEP-IRA is typically either a distribution from a qualified retirement plan, a
tax-sheltered 403(b) annuity or custodial account, or another IRA or SEP-IRA.
Most distributions may be rolled over to an IRA or SEP-IRA without regard to
whether it is a total or a partial distribution, except for certain
distributions such as minimum required distributions, annuity payments,
installments over a period of ten or more years, and certain payments to
non-spouse beneficiaries and alternate payees that are not eligible for rollover
treatment.
IF YOU ARE ELIGIBLE TO RECEIVE A DISTRIBUTION FROM A QUALIFIED PLAN OR A
403(B) PROGRAM, you may wish to have your eligible rollover distribution paid
directly to your GT Global SEP-IRA in order to avoid 20% withholding on the
distribution (which will be credited against your federal income taxes). If you
have a direct rollover of your eligible distribution, no income tax will be
withheld and your distribution will not be taxed until you take it out of your
SEP-IRA. To facilitate a direct rollover, please complete the attached IRA
Direct Rollover Authorization as well as the SEP-IRA Application. If, instead,
you have your eligible rollover distribution paid to you, you will receive only
80% of the payment (because of the required 20% withholding), all or part of
which may be rolled over into a GT Global SEP-IRA within 60 days of your receipt
of the distribution. The amount rolled over will not be taxed until you take it
out of your SEP-IRA. NOTE that if you want to avoid being taxed on the amount
that was withheld, you will need to find other money to replace the 20% that was
withheld and contribute it to your SEP-IRA within the 60-day period.
This mandatory withholding does not apply to distributions you receive from
another IRA.
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DS-6
<PAGE>
--------------------
GT GLOBAL SEP-IRA
All or part of an eligible distribution from another IRA may be rolled over into
a GT Global SEP-IRA by the 60th day after you receive the benefits from your
first IRA.
Whether you do a direct rollover or a rollover of amounts that are initially
paid to you, you will not be taxed on (nor can you take a deduction for) the
amount you roll over. You will not be taxed on the amount transferred, and you
cannot take a tax deduction for that amount. You will be taxed on the portion of
the distribution, if any, which is not reinvested within 60 days. The following
summarizes some of the other rules applicable to rollover contributions.
Rollovers between individual retirement programs may occur only once in any
12-month period, BUT THIS LIMIT DOES NOT APPLY TO A TRUSTEE-TO-TRUSTEE TRANSFER
DESCRIBED IN SECTION 7 ABOVE.
If property has been received from a retirement program, it may be sold and
the proceeds of the sale rolled over. For example, if you were to receive a
distribution consisting of stock, you could sell the stock and contribute the
money you received from the sale to your SEP-IRA within the 60-day period from
your receipt of the stock. If you did not contribute all of the money you
received from the sale, you would be taxed on the portion not rolled over.
In general, you may roll over all or part of a distribution from your
employer's qualified plan or 403(b) program (except the portion, if any,
representing your own employee contributions to the plan) to your new SEP-IRA.
You may do this even though you are not otherwise allowed to make deductible
contributions into an IRA or SEP-IRA.
Tax-free rollover treatment will also apply, in certain circumstances, where
you receive a distribution in a parent-subsidiary or controlled group
relationship. Any amounts distributed from an employer's qualified plan will not
be eligible for five-year forward averaging if part of the distribution is
rolled-over into an IRA.
If you roll over an amount into an IRA from a qualified plan, you may be
allowed at a later date to roll those proceeds back into another qualified plan.
In order to do so, however, the proceeds may not have been mixed with regular
contributions or funds from other sources.
Since many of the rules with respect to rollover situations are rather
complex, you should check with your own tax adviser as to your ability to effect
a rollover in your particular circumstances.
- --------------------------------------------
9. EXCESS CONTRIBUTIONS
- --------------------------------------------
Generally, an excess contribution is the amount of any contributions to your
SEP-IRA (other than a proper rollover or transfer contribution) for a taxable
year that exceeds your IRA contribution limit (including, for a SAR-SEP, your
elective deferral limit) for that year. If you make an excess contribution, no
income tax deduction will be allowed for the excess contribution, and you may be
subject to a 6% excise tax on the amount of the excess contribution.
The 6% excise tax is imposed with respect to the tax year for which the excess
contribution is made and for each later year until the excess amount is
eliminated. The amount of this excise tax for any year cannot exceed 6% of the
value of the account, determined as of the close of that tax year.
If you make a contribution to your SEP-IRA for a taxable year which exceeds
your SEP-IRA contribution limit, whether deductible or nondeductible, you may be
permitted to designate the contribution as a nondeductible IRA contribution by
the due date for filing your Federal income tax return, not including
extensions. As an alternative, you may withdraw the contribution from your
SEP-IRA and the earnings thereon at any time prior to the due date for filing
your Federal income tax return (including extensions) for the taxable year for
which the contribution was made. If this is done, the return of the contribution
will not be includible in your gross income as an IRA distribution, and the
contribution will not be subject to the 6% excise tax on excess contributions
(assuming the contribution is not deducted on your return). However, the
earnings on the contribution will be taxable income in the year for which the
contribution was made, and may possibly be subject to the 10% tax on early
distributions if you are under age 59 1/2 (see Section 11 below).
If you make an excess contribution to your SEP-IRA that exceeds your SEP-IRA
contribution limit, and you withdraw the excess contribution after the due date
for filing your Federal income tax return (including extensions), the returned
excess contribution will not be includible in your gross income as an IRA
distribution (subject to
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DS-7
<PAGE>
--------------------
GT GLOBAL SEP-IRA
possible premature distribution penalties) if: (1) your total IRA and SEP-IRA
contributions for the year were not more than $2,250 ($4,000 for years after
1996) with a Spousal IRA and (2) you did not deduct the excess contribution on
your return (or if the deduction you claimed was disallowed by the Internal
Revenue Service). However, you must pay the 6% excise tax on the excess
contribution for each taxable year that it is still in your SEP-IRA at the end
of the following year. Under this procedure, you are not required to withdraw
any earnings attributable to the excess contribution.
You may also eliminate an excess contribution from your SEP-IRA in a
subsequent year by not contributing the maximum amount for that year and
applying the excess contribution to the subsequent year's contribution. You may
be entitled to a deduction for the amount of the excess contribution that is
applied in the subsequent year, provided you did not previously deduct the
excess contribution (or if the deduction you claimed was disallowed by the
Internal Revenue Service). However, if you incorrectly deducted an excess
contribution in a closed taxable year (i.e., one for which the period to assess
a deficiency has expired), the amount of the excess contribution cannot be
deducted again in the subsequent year in which it is applied.
- --------------------------------------------
10. DISTRIBUTIONS
- --------------------------------------------
Taxable distributions from your SEP-IRA are taxed as ordinary income
regardless of their source. They are not eligible for capital gains treatment or
the special five-year averaging rules that apply (for tax years beginning prior
to 2000) to lump sum distributions from qualified employer plans.
As provided in Form 5305-A, you may elect to have your SEP-IRA distributed in:
a single sum payment; an annuity contract; or equal annual installments over a
specified period not to exceed your life expectancy or the joint life and last
survivor expectancy of you and your designated beneficiary. In general, you must
begin receiving distributions from your SEP-IRA no later than April 1 following
the calendar year in which you reach age 70 1/2. There is a prescribed minimum
amount for such distributions and an excise tax may be imposed if the amount
distributed to you is less than the required amount. If you die before your
SEP-IRA is completely distributed to you, the remaining balance in your SEP-IRA
will be distributed to your beneficiary(ies) either in accordance with the
method of distribution in effect at your death (if on or after the required
beginning date) or as otherwise permitted (if your death occurs prior to the
required beginning date).
You may have to pay an additional 15% excess distribution tax on SEP-IRA and
qualified retirement plan distributions that exceed $160,000 for an installment
distribution or $800,000 for a lump sum distribution (each of which is an
indexed amount and may be subject to further adjustment). This excise tax is
reduced by any tax you may owe on premature distributions which apply to this
excess distribution. This 15% tax does not apply to distributions in 1997, 1998
or 1999 and may not apply in certain other circumstances. You should contact
your own tax adviser for more information.
- --------------------------------------------
11. PREMATURE DISTRIBUTIONS
- --------------------------------------------
A penalty tax of 10% is imposed on taxable distributions made to you or your
beneficiaries before you attain age 59(1)/(2). No penalty tax will be imposed if
the distribution is (i) a return of nondeductible contributions, (ii) made on
account of your death or disability, (iii) made in substantially equal payments
over life or life expectancy as permitted in accordance with the provisions of
Section 72(t)(2) of the Code and the regulations promulgated thereunder, or (iv)
contributed as a "rollover" within 60 days. In addition, for distributions made
after 1996, the penalty tax does not apply if the distribution is made (i) to
pay for medical expenses in excess of 7.5% of your adjusted gross income or (ii)
if you are unemployed, to pay for medical insurance premiums after you have
received unemployment compensation for a specified period. This tax is in
addition to any tax that is due because you must include the portion of the
premature distribution attributable to deductible contributions and all earnings
in your gross income.
- --------------------------------------------
12. TAXABILITY OF ACCOUNT
- --------------------------------------------
Your SEP-IRA is exempt from tax unless you or your beneficiaries engage in a
prohibited transaction under Section 4975 of the Internal
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DS-8
<PAGE>
--------------------
GT GLOBAL SEP-IRA
Revenue Code. Examples of prohibited transactions include your borrowing from
the SEP-IRA or your selling property to or buying property from the SEP-IRA.
If you engage in a prohibited transaction, your SEP-IRA will lose its tax
exempt status as of the first day of the tax year in which the prohibited
transaction occurs. Once your SEP-IRA loses its exempt status, you must include
the fair market value of its assets in your income for that tax year. You will
also be subject to the 10% penalty tax on premature distributions.
If you use your SEP-IRA or any portion thereof as security for a loan, the
portion so used will be treated as distributed to you and will be currently
taxable and subject to the 10% tax on premature distributions.
- --------------------------------------------
13. FINANCIAL DISCLOSURES
- --------------------------------------------
Contributions to your SEP-IRA will be invested in shares of a GT Global Mutual
Fund. You may receive earnings on your shares in the form of income dividends or
net realized capital gain distributions. Such earnings will be reinvested in
additional shares of a GT Global Mutual Fund. The growth in value of the SEP-IRA
is neither guaranteed nor projected. The gross income received by a GT Global
Mutual Fund is reduced by the fees paid to the manager of the Fund, Chancellor
LGT Asset Management, Inc., and by expenses incurred by the Fund, such as
accounting fees, taxes, interest, trustee fees and brokerage charges. Each
Fund's prospectus contains more complete information including charges,
expenses, the risks of global and emerging market investing and other matters of
interest to a prospective investor.
- --------------------------------------------
14. MISCELLANEOUS
- --------------------------------------------
You are required to file form 5329 (Return for Individual Retirement Savings
Arrangements) for a taxable year in which you are subject to penalty taxes in
connection with your SEP-IRA.
The enclosed agreement has been approved as to form for use in establishing
custodial accounts by the Internal Revenue Service. The Internal Revenue Service
approval is a determination as to form only and does not represent a
determination of the merits of the account.
The proceeds from the custodial account may be used by you as a rollover
contribution to another account or annuity or retirement bond.
- --------------------------------------------
15. ADDITIONAL INFORMATION
- --------------------------------------------
Additional information on Individual Retirement Accounts can be obtained from
any district office of the Internal Revenue Service (IRS Publication 590).
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DS-9
<PAGE>
--------------------
GT GLOBAL SEP-IRA
NOTES
- ----------------------------------------------------------
-------
DS-10
<PAGE>
[CAMERA READY COPY]
DS-11
<PAGE>
ARTICLE VIII
See Exhibit A to Form 5305-A for additional terms applicable to your GT Global
SEP-IRA. Exhibit A is incorporated in and made part of your GT Global SEP-IRA by
this reference.
DS-12
<PAGE>
--------------------
GT GLOBAL SEP-IRA
EXHIBIT A TO FORM 5305-A,
ARTICLE VIII
- ----------------------------------------------------------
The following provisions constitute Article VIII of Form 5305-A which is used to
establish your GT Global SEP-IRA.
1. The Custodian is under no duty to compel the Depositor to make any
contributions to the Account and shall have no duty to assure that such
contributions are appropriate in amount (except to the extent that no annual
employee contributions (other than elective deferrals) may exceed $2,000 or such
other maximum annual level as may be later authorized by law).
2. The amount of each contribution by a Depositor or by Depositor's employer
shall be applied to the purchase of shares of GT Global Mutual Funds
(hereinafter "Funds"). The Depositor acknowledges receipt of the appropriate
current prospectus of the Funds. All dividends and capital gain distributions
received on securities held in the Custodial Account (the "Account") shall be
reinvested in additional shares of the Funds and credited to the Account. Shares
acquired in the Account will be held beneficially for the Depositor in the name
of the Custodian or its nominee.
3. The Custodian shall deliver to the Depositor all shareholder notices and
reports, prospectuses, financial statements, proxy material and other material
as they are received from the Funds. The Custodian shall vote at all shareholder
meetings of the Funds in accordance with written instructions of the Depositor
which will be secured by the Custodian. If no written instructions are received
from the Depositor, the Depositor's shares shall not be voted.
4. The Custodian may resign upon at least 60 days written notice to the
Depositor and Depositor's employer, as applicable, and may be removed by the
Depositor upon 60 days written notice to the Custodian and Depositor's employer,
as applicable. Upon resignation by the Custodian, it shall transfer the assets
of the Account in such a manner as the Depositor shall designate, but in the
absence of such designation, the Custodian will use its best efforts to transfer
the assets of the Account to a successor custodian to be held under an
Individual Retirement Account qualifying under Section 408 of the Internal
Revenue Code. Upon removal of the Custodian by action of the Depositor, the
assets of the Account shall be transferred in accordance with the Depositor's
instructions.
5. If the Depositor does not effectively elect any of the methods of
distribution described above by the April 1 following the calendar year in which
he or she reaches age 70 1/2, the assets of the Account shall be distributed to
the Depositor in equal or substantially equal payments over the Depositor's life
expectancy in accordance with the minimum distribution requirements applicable
to the Account as described in Article IV of Form 5305-A unless the Depositor
effectively elects another method of distribution.
6. By completing the Beneficiary Designation section of the SEP-IRA
Application, the Depositor may designate one or more beneficiaries to receive
such benefits in the event of his or her death. Should the Depositor die without
an effective designation of beneficiary, the assets of the Account shall be
distributed to the Depositor's surviving spouse, or if there is no surviving
spouse, to the Depositor's estate in a single payment, unless another method of
distribution has been elected by such spouse or estate, as applicable.
7. In the event a Depositor's contribution to the Account (other than elective
deferrals) in any year exceeds $2,000, such excess amount shall be deemed to be
a "rollover contribution" permitted under Article I of the Account agreement,
unless the Depositor certifies otherwise to the Custodian in a form satisfactory
to it.
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DS-13
<PAGE>
--------------------
GT GLOBAL SEP-IRA
NOTES
- ----------------------------------------------------------
-------
DS-14
<PAGE>
[CAMERA READY COPY]
[5305-SEP]
DS-15
<PAGE>
[CAMERA READY COPY]
DS-16
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT Global Mutual Funds
P.O. Box 7345, San Francisco, CA 94120-7345 SEP-IRA APPLICATION
800/223-2138
</TABLE>
<TABLE>
<S> <C>
Account Registration / / SEP-IRA / / SAR SEP-IRA (ESTABLISHED BY YOUR EMPLOYER BEFORE 1997)
TYPE OF ACCOUNT: / / CONTRIBUTORY / / ROLLOVER / / TRANSFER.
Name __________________________________ Employer Name _________________________________________
Address________________________________ Address________________________________________________
STREET STREET
_______________________________________ _______________________________________________________
CITY STATE ZIP CODE CITY STATE ZIP CODE
Tel. No.(__)________ Fax No.(__)_______ Tel. No.(__)______________ Fax No.(__)________________
Social Security Number_________________
Date of Birth__________________________
Fund Selection & Initial Contribution
Each GT Global Mutual Fund issues three classes of shares. Class A Shares are sold with an initial sales charge while Class
B shares are sold without an initial sales charge but are subject to higher expense levels and to a contingent deferred
sales charge payable on certain redemptions. Advisor Class shares are sold through a different prospectus than Class A and
Class B shares, are not sold directly to the general public and are only available through certain employee benefit plans,
financial institutions and other entities that have entered into specific agreements with GT Global, Inc. Please read the
prospectus of such Funds carefully before you invest. Please check applicable box:
</TABLE>
/ /Enclosed is a check for $________ made payable to GT Global (as agent for
the Custodian) to be invested in the Fund(s) hereby specified.
/ /This is a transfer from another IRA to be invested in the Fund(s) hereby
specified. (Please indicate only the PERCENTAGE of the transfer you wish
allocated to each Fund. Please complete the separate IRA Transfer
Authorization Form.)
/ /The above-referenced employer will make contributions to my SEP-IRA to be
invested in the Fund(s) hereby specified. (Please indicate only the
PERCENTAGE of each contribution that you wish allocated to each Fund.)
TO PURCHASE THE FUNDS LISTED BELOW PLEASE SELECT EITHER:
/ / CLASS A SHARES / /CLASS B SHARES (NOT AVAILABLE FOR / / ADVISOR CLASS
PURCHASES OF $500,000 OR MORE OR FOR SHARES.
THE GT GLOBAL DOLLAR FUND) OR
If a class share box is not checked, your investment will be made in Class A
shares.
<TABLE>
<CAPTION>
INITIAL CONTRIBUTION INITIAL CONTRIBUTION
<S> <C> <C> <C>
07 / / GT GLOBAL WORLDWIDE $_____ OR ___% 03 / / GT GLOBAL EUROPE GROWTH $_____ OR ___%
GROWTH FUND FUND
05 / / GT GLOBAL INTERNATIONAL $_____ OR ___% 13 / / GT GLOBAL LATIN AMERICA $_____ OR ___%
GROWTH FUND GROWTH FUND
16 / / GT GLOBAL EMERGING $_____ OR ___% 24 / / GT GLOBAL AMERICA SMALL $_____ OR ___%
MARKETS FUND CAP GROWTH FUND
22 / / GT GLOBAL CONSUMER $_____ OR ___% 06 / / GT GLOBAL AMERICA MID $_____ OR ___%
PRODUCTS SERVICES FUND CAP GROWTH FUND
17 / / GT GLOBAL FINANCIAL $_____ OR ___% 23 / / GT GLOBAL AMERICA VALUE $_____ OR ___%
SERVICES FUND FUND
11 / / GT GLOBAL HEALTH CARE $_____ OR ___% 04 / / GT GLOBAL JAPAN GROWTH $_____ OR ___%
FUND FUND
19 / / GT GLOBAL $_____ OR ___% 10 / / GT GLOBAL GROWTH & $_____ OR ___%
INFRASTRUCTURE FUND INCOME FUND
21 / / GT GLOBAL NATURAL $_____ OR ___% 08 / / GT GLOBAL STRATEGIC $_____ OR ___%
RESOURCES FUND INCOME FUND
15 / / GT GLOBAL $_____ OR ___% 09 / / GT GLOBAL GOVERNMENT $_____ OR ___%
TELECOMMUNICATIONS FUND INCOME FUND
02 / / GT GLOBAL NEW PACIFIC $_____ OR ___% 18 / / GT GLOBAL HIGH INCOME $_____ OR ___%
GROWTH FUND FUND
01 / / GT GLOBAL DOLLAR FUND $_____ OR ___% TOTAL INITIAL CONTRIBUTION: $
CONTRIBUTION YEAR:
NOTE: Minimum Initial Contribution -- $100 per Fund
Maximum Annual Individual Contribution (except for rollovers and transfers) -- $2,000
Maximum Annual SEP-IRA Contribution -- See Disclosure Statement
Telephone Exchange
I, either directly or through the Authorized Agent, if any, named below, hereby authorize the Transfer Agent of the GT Global
Mutual Fund, to honor any telephone, telex or telegraphic instructions believed to be authentic for exchange between any of
the Funds distributed by GT Global, Inc. I understand and agree that the account will be subject to the telephone exchange
privilege described in the applicable GT Global Mutual Fund's current prospectus and agree that GT Global, Inc., GT Global
Mutual Funds and the Funds' Transfer Agent, their officers and employees, will not be responsible for the authenticity of any
telephone, telex, or telegraphic instructions nor be liable for any loss arising out of any such telephone, telex or
telegraphic instructions effected including any such loss due to negligence on the part of such entities.
For Use by Authorized Agent (Broker/Dealer or Advisor) Only
We hereby submit this SEP-IRA Application for the purchase of shares including shares purchased under a Right of Accumulation
or Letter of Intent in accordance with the terms of our Selling Agreement with GT Global, Inc. and with the Prospectus(es) for
the GT Global Mutual Fund(s). We agree to notify GT Global, Inc. of any purchases properly made under a Letter of Intent or
Right of Accumulation.
Investment Dealer or Advisor Name_____________________________________________
Main Office Address___________________________________________________________
Branch Number____________ Representative's Number____________ Representative's Name________________
Branch Address____________________________ Telephone Number____________________________
For Class A and B shares only:
Investment Dealer's Authorized Signature X_____________________ Title_______________________
For Advisor Class shares only:
We hereby submit this SEP-IRA Application for the purchase of Advisor Class shares in accordance with the terms of our
Advisor Class Agreement with GT Global, Inc. and with the Prospectus and Statement of Additional Information of each Fund
purchased.
Advisor's Authorized Signature X__________________________ Title____________________________
</TABLE>
DS-17
<PAGE>
<TABLE>
<S> <C>
Designation of Beneficiary(ies)
If you require more room to name additional beneficiaries, please provide the necessary information on a separate sheet,
and indicate next to each name whether beneficiary is primary or contingent.
PRIMARY BENEFICIARY(IES)
I hereby designate the following person(s) to receive any interest remaining in my SEP-IRA upon my death:
</TABLE>
<TABLE>
<S> <C> <C>
1. Name_________________________________________________ Address___________________________________________________
Relationship _______________Date of Birth____________ Social Security Number___________ Share of Account _______%
2. Name_________________________________________________ Address___________________________________________________
Relationship _______________DOB______________________ Social Security Number___________ Share of Account _______%
CONTINGENT BENEFICIARY(IES)
I hereby designate the following person(s) to receive any interest remaining in my SEP-IRA upon my death:
1. Name_________________________________________________ Address___________________________________________________
Relationship _______________DOB______________________ Social Security Number___________ Share of Account _______%
2. Name_________________________________________________ Address___________________________________________________
Relationship _______________DOB______________________ Social Security Number___________ Share of Account _______%
</TABLE>
Unless otherwise indicated above, the benefit payable hereunder shall be paid
in equal shares to the Primary Beneficiaries who survive the Participant. If
no Primary Beneficiary(ies) survives the Participant, the payment shall be
made in equal shares (or as otherwise indicated above) to the Contingent
Beneficiary(ies) who survive the Participant. The Participant reserves the
right to change the above beneficiary by filing a new Beneficiary Designations
Form with the Custodian. Should no named beneficiary survive the date of
distribution, the account shall be distributed to my surviving spouse, or if
there is no surviving spouse, in a single payment to my estate. ONLY THE MOST
RECENT EXECUTED DESIGNATION OF BENEFICIARY(IES) ON FILE WITH GT GLOBAL
INVESTOR SERVICES, INC. (AS AGENT FOR THE CUSTODIAN) WILL BE HONORED.
Consent of Spouse
I consent to the above Beneficiary Designation.
Signature of Spouse:_____________________________ Date:______________________
(Note: May be required in community property states if any person other than
or in addition to Participant's Spouse is designated as Beneficiary.)
Reduced Sales Charges
RIGHT OF ACCUMULATION -- CLASS A SHARES ONLY
/ / I certify that I qualify for the Right of Accumulation sales charge
discount described in the Prospectus and Statement of Additional
Information of the Fund(s) purchased.
/ / I own shares of more than one GT Global Mutual Fund. Below is a schedule
showing the numbers of each of my Shareholder Accounts.
/ / The registration of some of my shares differs from that shown on this
SEP-IRA Application. Below is a schedule showing the account number(s) and
full registration in each case.
STATEMENT OF INTENTION -- CLASS A SHARES ONLY
I agree to the Statement of Intention set forth in the Prospectus(es) for the
Fund(s) in which I am investing. Although I am not obligated to do so, it is my
intention to invest over a thirteen-month period in Class A shares of the GT
Global Mutual Funds, in an aggregate amount at least equal to:
/ / $50,000 / / $100,000 / / $250,000 / / $500,000
LIST OF OTHER GT GLOBAL MUTUAL FUND ACCOUNTS:
______________________ ___________________________________
______________________ ___________________________________
______________________ ___________________________________
Account Numbers Account Registrations
Agreement and Signature
I acknowledge receipt of the Disclosure Statement and IRA Agreement (IRS Form
5305-A) for the GT Global SEP-IRA. I acknowledge receipt of the current
Prospectus(es) of the Fund(s) in which I have directed GT Global Investor
Services, Inc. (as agent for the Custodian) to invest my contribution(s). I
agree to the terms and provisions set forth in this SEP-IRA Application
including those contained in the Telephone Exchange section, the Disclosure
Statement, the Individual Retirement Custodial Account Agreement (IRS Form
5305-A) and the Prospectus(es). AS REQUIRED BY THE INTERNAL REVENUE SERVICE, I
CERTIFY, UNDER PENALTIES OF PERJURY, THAT THE TAXPAYER IDENTIFICATION NUMBER
GIVEN ON THE FACE OF THIS SEP-IRA APPLICATION IS CORRECT AND THAT I AM NOT
SUBJECT TO BACKUP WITHHOLDING IN MY IRA(S). THE INTERNAL REVENUE SERVICE DOES
NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT OTHER THAN THE
CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING.
Signature X_______________________________ Date ______________________________
Individual
DS-18
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT Global Mutual Funds
P.O. Box 7345, San Francisco, CA 94120-7345 IRA TRANSFER AUTHORIZATION
800/223-2138
Please complete a separate Transfer Authorization for each Account to be
transferred.
To Existing Custodian:
Name of Existing Custodian_________________________ Telephone (__)___________
Address__________________________ ________________ _______________ ________
Street City State Zip Code
Individual Policy or Account:_________________________________________________ in the name of ___________
Account Name Account Number Your Name
Please liquidate/transfer in kind* $________ or _______% of my IRA identified above and transfer those funds by a check,
made payable to
GT Global, for_______________, SEP-IRA Account #________________________________________________
Investor's Name Existing GT Global Account Number, if applicable
</TABLE>
Age 70 1/2 Restrictions
(Please complete this section if you will be age 70 1/2 or older in the
transfer year.)
The following transfer restrictions apply to this transaction:
<TABLE>
<S> <C> <C>
1. Required Minimum Distribution. I authorize the Custodian or Trustee named above (select one):
/ / to distribute my required minimum distribution to me prior to transferring my IRA assets.
/ / to segregate and retain minimum distribution amount. Distribute on __________, 19__.
Required Elections. (Complete only if you have reached your required beginning date, i.e., April 1
2. following the year in which you attain age 70 1/2.)
a. My oldest primary beneficiary with respect to the transferring IRA is:
Name_____________________________ Birthdate_________ Relationship __________________
b. My life expectancy / / was / / was not being recalculated.
c. The life expectancy of my spouse beneficiary / / was / / was not being recalculated / / Not
Applicable. I am aware that the elections indicated above became irrevocable as of my required
beginning date and will apply to the SEP-IRA with the new Custodian indicated below.
</TABLE>
THIS FORM, ALONG WITH ALL CHECK(S) SHOULD BE MAILED TO: GT GLOBAL (AS AGENT
FOR THE CUSTODIAN), P.O. BOX 7345, SAN FRANCISCO, CA 94120-7345.
<TABLE>
<S> <C> <C>
X
_________________________________ ________________________ _____________________________________
Investor's Signature Date Signature Guarantee
(if required by current Custodian)
</TABLE>
* If this IRA currently holds shares of a GT Global Mutual Fund, you may
request a direct transfer of shares.
For GT Global Use Only
GT Global Investor Services, Inc. (as agent for the GT Global IRA Custodian)
agrees to accept the transfer described above and upon written receipt will
apply the proceeds to investments as designated by the Investor.
X
________________________________________________ ________________
Signature of Custodian or its Agent Date
DS-19
<PAGE>
DS-20
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT Global Mutual Funds
P.O. Box 7345, San Francisco, CA 94120-7345 IRA DIRECT ROLLOVER AUTHORIZATION
800/223-2138
TO CURRENT PLAN ADMINISTRATOR OR 403(B) CUSTODIAN:
Name of Current Plan Administrator or 403(b) Custodian:_____________ Telephone (___)______________
Address:_______________________ ______________________ ___________ ___________
Street City State Zip Code
Plan Account:_____________________________________________________________________________________
Plan Account Name Plan Account Number Name of Plan Participant
Please pay my entire eligible rollover distribution from the plan identified
above directly to my GT Global SEP-IRA Custodian, for
________________________________________________________________________, SEP-IRA Account #______________
Participant Name (GT Global Account #, if known)
I. Rollover/Direct Rollover from an Employer Plan
A. I certify that my employer's qualified plan, qualified annuity, or 403(b) plan has made or will make
an Eligible Rollover Distribution which is being paid in a Direct Rollover to the Custodian of my
SEP-IRA; or
B. This Direct Rollover is not part of a series of payments over my life or life expectancy(ies ) or
over a period of 10 years or more.
C. This Direct Rollover does not include any "after tax" employee contributions made by me to the
employer's plan.
D. This Direct Rollover does not include any required minimum distributions with respect to the
employer's plan.
E. I certify that I am eligible to establish an IRA with this Direct Rollover of an Eligible Rollover
Distribution, and that I am:
/ / 1. the plan participant;
/ / 2. the surviving spouse of the deceased plan participant; or
/ / 3. the spouse or former spouse of the plan participant under a Qualified Domestic Relations
Order.
</TABLE>
II. Additional Information for Rollovers Beginning at age 70 1/2
(Complete the following only if the direct rollover is being made after the
Participant's required beginning date, the April 1st following the calendar
year during which the Participant attained age 70 1/2):
1. My oldest primary beneficiary under the distribution plan is:_____________
Birthdate_____________________ Relationship _______________________
2. My life expectancy / / was / / was not being recalculated. The life
expectancy of my spouse beneficiary / / was / / was not being recalculated.
III. Commingling Authorization
(Check if applicable):
/ / I authorize the Custodian to commingle this direct rollover with my
regular IRA contributions. I understand that commingling regular IRA
contributions with direct rollover contributions from employer plans may
preclude me from rolling over funds in my rollover IRA into another
qualified plan or 403(b) plan. With such knowledge, I authorize and direct
the Custodian to place regular IRA contributions in my rollover IRA or
vice versa.
Please make this direct payment either in the form of a check made payable, or
by wire, to GT Global, for the benefit of my SEP-IRA. All checks should be
mailed to GT Global (as agent for the Custodian), P.O. Box 7345, San
Francisco, CA 94120-7345.
Signature of Participant
I hereby irrevocably elect, pursuant to IRS Regulation 1.402(a)(5)-1T, to
treat this contribution as a rollover contribution. I understand that this
will not be a valid IRA rollover unless PART I and PART II (and, if
applicable, PART III) are correct statements. I acknowledge that, due to the
complexities involved in the tax treatment of eligible rollover distributions
from qualified plans, qualified annuities, or 403(b) plans and direct
rollovers to IRAs, the Custodian has recommended that I consult with my tax
adviser or the Internal Revenue Service before completing this transaction to
make certain that this transaction qualifies as a rollover and is appropriate
in my individual circumstances. I hereby release the Custodian from any claim
for damages on account of the failure of this transaction to qualify as a
valid rollover.
X
_______________________________ _______________ ____________________________
Participant's Signature Date Signature Guarantee
(if required by current plan)
For GT Global Use Only
GT Global Investor Services, Inc., (as agent for the GT Global SEP-IRA
Custodian) agrees to accept the direct rollover described above and upon
receipt of such rollover funds will apply those funds to investments as
designated by the Participant.
X___________________________________________ ___________________________
Signature of Custodian or its Agent Date
DS-21
<PAGE>
IRA DIRECT ROLLOVER INSTRUCTIONS
Since the eligible rollover distributions(1) that you take from an
employer-sponsored qualified plan(2) are subject to 20% federal income tax
withholding unless you roll over these assets directly to an IRA or other
eligible retirement plan, you may wish to arrange for a direct rollover to a GT
Global SEP-IRA.
TO FACILITATE A DIRECT ROLLOVER TO A GT GLOBAL SEP-IRA, PLEASE FOLLOW THESE
STEPS:
1. Complete the front portion of this form;
2. Complete the GT Global SEP-IRA Application; and
3. Return them to GT Global at P.O. Box 7345, San Francisco, CA 94120-7345.
GT Global will establish a SEP-IRA in your name, and provide you and your
current plan administrator or 403(b) custodian with your GT Global SEP-IRA
account number. Your current plan administrator or 403(b) custodian can then
send the assets directly to your GT Global SEP-IRA (by check or wire), or give
you a check made payable to your GT Global SEP-IRA.
(1) An "eligible rollover distribution" subject to 20% withholding is generally
any partial or total distribution, except: (a) substantially equal periodic
payments made for life or joint lives (or life expectancy or joint life
expectancies) or for a specified period of 10 years or more; (b) required
minimum distributions; (c) non-taxable distributions (e.g., after-tax
contributions); and (d) certain DE MINIMIS distributions, corrective
distributions, loans and other distributions specified in the Internal
Revenue Code and applicable regulations. You should verify with the
distributing employer and your tax adviser whether a distribution is an
"eligible rollover distribution."
(2) "Qualified" plans include 401(k), 403(b) and other pension and
profit-sharing plans. Section 457 deferred compensation plans for
government and tax-exempt entity employees are not "qualified." An IRA is
not considered a "qualified" plan, even if the assets held in the IRA
originated from a qualified plan. You may use the IRA Transfer
Authorization to transfer your IRA assets to a GT Global IRA. If you
receive a distribution from another IRA, you may be eligible to roll it
over to a GT Global SEP-IRA.
DS-22
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT Global Mutual Funds SUPPLEMENTAL APPLICATION
P.O. Box 7345, San Francisco, CA 94120-7345 FOR AUTOMATIC INVESTMENT PLAN
800/223-2138
Account Registration
PLEASE NOTE: Automatic Investment Plan may ONLY be used for current year IRA contributions.
Please supply the following information exactly as it appears on the Fund's records.
__________________________________________________ ______________________________________________________
Name Account Number
__________________________________________________ ______________________________________________________
Address Telephone Number
__________________________________________________ ______________________________________________________
City State Zip Code Social Security Number
______________________________________________________
Automatic Investment Plan Date of Birth
I hereby authorize the Transfer Agent of the GT Global Mutual Funds to debit my personal checking account on the
designated dates in order to purchase shares in the Fund(s) indicated at the applicable public offering price
determined on that day. Please indicate if your purchase is for Class B shares / /. If the Class B share box is
not checked, your purchase will be made in Class A shares.
Fund:_____________________ $__________ or ____% Fund:_____________________ $__________ or ____%
Fund:_____________________ $__________ or ____% Fund:_____________________ $__________ or ____%
Fund:_____________________ $__________ or ____% Fund:_____________________ $__________ or ____%
/ / Monthly on the 25th day / / Quarterly beginning on the 25th day of the month you first select: __________
(MONTH)
(The request for participation in the Plan must be received by the 1st day of the month in which you wish
investments to begin.)
Amount of each debit (minimum $100) $_____________________
NOTE: A Bank Authorization Form (below) and a voided personal check must accompany the Automatic Investment Plan Application.
[LOGO]
GT Global Mutual Funds
P.O. Box 7345, San Francisco, CA 94120-7345 AUTOMATIC INVESTMENT PLAN
800/223-2138
Bank Authorization
__________________________ _____________________________________ ________________________________
Bank Name Bank Address Bank Account Number
I/we authorize you, the above named bank, to debit my/our account for amounts drawn by the Transfer Agent of the
GT Global Mutual Funds, acting as my agent. I/we agree that your rights in respect to each withdrawal shall be
the same as if it were a check drawn upon you and signed by me/us. This authority shall remain in effect until
I/we revoke it in writing and you receive it. I/we agree that you shall incur no liability when honoring any
such debit.
I/we further agree that you will incur no liability to me/us if you dishonor any such withdrawal. This will be
so even though such dishonor results in the forfeiture of investment.
________________________________________________ ____________________________________________________
Account Holder's Name Joint Account Holder's Name
X X
____________________________ __________________ ________________________________________ __________
Account Holder's Signature Date Joint Account Holder's Signature Date
</TABLE>
(OVER)
DS-23
<PAGE>
AGREEMENT AND SIGNATURES
The investor certifies and agrees that the certifications, authorizations,
directions and restrictions contained herein will continue until the Transfer
Agent of the GT Global Mutual Funds receives written notice of any change or
revocation. Any change in these instructions must be in writing with all
signatures guaranteed (if applicable).
_____________________________________
Date
X
_____________________________________
_____________________________________
Signature Guarantee* (if applicable)
*Acceptable signature guarantors: (1) any U.S. bank; (2) U.S. trust company;
(3) a member firm of a U.S. stock exchange; (4) a foreign branch of any of
the foregoing; or (5) any other eligible guarantor institution. A notary
public is not an acceptable guarantor. An investor uncertain about the GT
Global Mutual Funds signature guarantee requirement should contact the
Transfer Agent.
INDEMNIFICATION AGREEMENT
To: Bank Named on the Reverse
In consideration of your compliance with the request and authorization of the
depositor(s) named on the reverse, the Transfer Agent of the GT Global Mutual
Funds hereby agrees:
1. To indemnify and hold you harmless from any loss you may incur because of the
payment by you and of any debit by the Transfer Agent to its own order on the
account of such depositor(s) and received by you in the regular course of
business for payment, or arising out of the dishonor by you of any debit,
provided there are sufficient funds in such account to pay the same upon
presentation.
2. To defend at its own expense any action which might be brought by any
depositor or any other persons because of your actions taken pursuant to the
above mentioned request or in any manner arising by reason of your participation
in connection with such request.
DS-24
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT Global, Inc.
Fifty California Street SUPPLEMENTAL APPLICATION
27th Floor PORTFOLIO REBALANCING PROGRAM
San Francisco, CA 94111-4624
ACCOUNT REGISTRATION EXISTING SHAREHOLDER ACCOUNT NUMBER ----------------------------------
-------------------------------------- -------------------------------------------------------
Participant / / Social Security Number or / / Tax I.D. Number "TIN"
- -------------------------------------- (Check applicable box)
Street Address Resident of / / U.S. / / Other (specify)------------------------------
( ) ( )
------------------------------------------------------------------------------------------------------------------------------
City, State, Zip Code Home Telephone Business
Telephone
FUND SELECTION $500 MINIMUM INITIAL INVESTMENT REQUIRED FOR EACH FUND SELECTED
FOR CLASS A AND CLASS B SHARES.
CHECKS SHOULD BE MADE PAYABLE TO "GT GLOBAL."
TO PURCHASE THE FUNDS LISTED BELOW PLEASE SELECT EITHER
/ / Class A Shares / / Class B Shares or / / Advisor Class
Advisor Class shares are sold through a different prospectus than Class A and
Class B shares, are not sold directly to the general public and are only
available through certain employee benefit plans, financial institutions and
other entities that have entered into specific agreements with GT Global, Inc.
Special account requirements apply to Advisor Class shares. Please see an
Advisor Class prospectus for complete information.
If a class share box is not checked, your investment will be made in Class A
shares. Minimum 2 funds; Maximum 10 funds; Minimum 5% allocation per fund.
07 GT GLOBAL WORLDWIDE GROWTH FUND ---------- 13 GT GLOBAL LATIN AMERICA GROWTH FUND ----------
05 GT GLOBAL INTERNATIONAL GROWTH FUND ---------- 24 GT GLOBAL AMERICA SMALL CAP GROWTH FUND ----------
16 GT GLOBAL EMERGING MARKETS FUND ---------- 06 GT GLOBAL AMERICA MID CAP GROWTH FUND ----------
11 GT GLOBAL HEALTH CARE FUND ---------- 23 GT GLOBAL AMERICA VALUE FUND ----------
15 GT GLOBAL TELECOMMUNICATIONS FUND ---------- 04 GT GLOBAL JAPAN GROWTH FUND ----------
19 GT GLOBAL INFRASTRUCTURE FUND ---------- 10 GT GLOBAL GROWTH & INCOME FUND ----------
17 GT GLOBAL FINANCIAL SERVICES FUND ---------- 09 GT GLOBAL GOVERNMENT INCOME FUND ----------
21 GT GLOBAL NATURAL RESOURCES FUND ---------- 08 GT GLOBAL STRATEGIC INCOME FUND ----------
22 GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND ---------- 18 GT GLOBAL HIGH INCOME FUND ----------
02 GT GLOBAL NEW PACIFIC GROWTH FUND ---------- 01 GT GLOBAL DOLLAR FUND ----------
03 GT GLOBAL EUROPE GROWTH FUND ----------
Rebalance frequency - check one
/ / Monthly / / Quarterly / / Semi annual / / Annual Total percentage must equal 100%.
AGREEMENTS & SIGNATURES
The investor(s) certifies(y) and agree(s) that the certifications, authorizations, directions and restrictions contained herein
will continue until the Transfer Agent of the GT Global Mutual Funds receives written notice of any change or revocation. ANY
CHANGE IN THESE INSTRUCTIONS MUST BE IN WRITING WITH ALL SIGNATURES GUARANTEED (IF APPLICABLE).
- ------------------------------------------------------------
Date
X X
- ----------------------------------------------- -----------------------------------------------
Signature Signature
- ------------------------------------------------------------ -----------------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
X X
- ----------------------------------------------- -----------------------------------------------
Signature Signature
- ------------------------------------------------------------ -----------------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
*Acceptable signature guarantors: (1) a commercial bank; (2) a U.S. trust company; (3) a member firm of a U.S. stock exchange;
(4) a foreign branch of any of the foregoing; or (5) any other eligible guarantor institution. A notary public is NOT an
acceptable guarantor. An investor with questions concerning the GT Global Mutual Funds signature guarantee requirement should
contact the Transfer Agent.
</TABLE>
DS-25
<PAGE>
----------------
GT GLOBAL IRA
NOTES
- --------------------------------------------------------------------------------
DS-26
<PAGE>
----------------
GT GLOBAL IRA
NOTES
- --------------------------------------------------------------------------------
DS-27
<PAGE>
----------------
GT GLOBAL IRA
NOTES
- --------------------------------------------------------------------------------
DS-28
<PAGE>
----------------
GT GLOBAL IRA
NOTES
- --------------------------------------------------------------------------------
DS-29
<PAGE>
PLAN OF DISTRIBUTION OF
G.T. GLOBAL GROWTH SERIES -- CLASS A SHARES
WHEREAS, G.T. Global Growth Series ("Company") is registered under the
Investment Company Act of 1940, as amended ("1940 Act"), as an open-end
management investment company, and offers for public sale distinct series of
shares of beneficial interest, each corresponding to a distinct portfolio; and
WHEREAS, the Company's Board of Trustees ("Board") has established G.T.
America Growth Fund ("America Fund"), G.T. Europe Growth Fund ("Europe Fund"),
G.T. International Growth Fund ("International Fund"), G.T. Japan Growth Fund
("Japan Fund"), G.T. Pacific Growth Fund ("Pacific Fund") and G.T. Worldwide
Growth Fund ("Worldwide Fund") as series of shares of beneficial interest of the
Company; and
WHEREAS, the Company hereafter may establish additional series of shares of
beneficial interest (any such additional series together with the series named
in the immediately preceding paragraph collectively are referred to herein as
the "Funds," and singly may be referred to as a "Fund"); and
WHEREAS, the Company's Board of Trustees ("Board") has established Class A
and Class B shares of each Fund; and
WHEREAS, the existing Class A shares of each Fund are subject to a Plan of
Distribution ("Plan") in effect since March 31, 1993, the substance of which is
substantially similar to that contained in this Plan; and
WHEREAS, the Company desires to adopt an amended Plan pursuant to Rule
12b-1 under the 1940 Act with respect to the Class A shares of the above-
referenced Funds; and
WHEREAS, the Company has entered into a Distribution Contract
("Distribution Contract") with G.T. Global Financial Services, Inc. ("G.T.
Global" or "Distributor") pursuant to which G.T. Global serves as Distributor of
the Class A shares of each such Fund;
NOW, THEREFORE, the Company hereby adopts this Plan with respect to the
Class A shares of each Fund in accordance with Rule 12b-1 under the 1940 Act.
1. A. Each Fund is authorized to pay G.T. Global a service fee for the
Fund's Class A shares at the annualized rate of up to 0.25% of
the average daily net assets of the Fund's Class A shares.
B. Each Fund is authorized to pay G.T. Global for its expenditures
incurred in providing services as Distributor of the Fund's Class
A shares at the annualized rate of up to 0.35%, less any amounts
paid as the aforementioned service fees, of the average daily net
assets of the Fund's Class A shares.
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<PAGE>
C. If the Company establishes additional Funds in the future and the
applicability of the Plan with respect to such Funds is approved
in the manner set forth in paragraph 4 of this Plan, as well as
by the then sole shareholder of the Class A shares of such
Fund(s), this Plan may be amended to provide that each such
additional Fund will pay G.T. Global at rates to be established
by the Board.
D. Reimbursement amounts under this Plan shall be calculated and
accrued daily by each Fund and paid monthly to G.T. Global or at
such other intervals as the Company and G.T. Global shall agree.
2. A Fund may reimburse G.T. Global at a lesser rate than the fee
specified in paragraph 1 of this Plan, as agreed upon by the Board and G.T.
Global and as approved in the manner specified in paragraph 4 of this Plan.
3. As Distributor of the Funds' Class A shares, G.T. Global may spend
such amounts as it deems appropriate on any activities or expenses primarily
intended to result in the sale of each Fund's Class A shares or the servicing
and maintenance of shareholder accounts, including, but not limited to, payment
of ongoing commissions and other payments to brokers, dealers, financial
institutions or others who sell Class A shares and/or service Class A
shareholder accounts; compensation to employees of G.T. Global; compensation to
and expenses, including overhead and telephone expenses, of G.T. Global; the
printing of prospectuses, statements of additional information and reports for
other than existing Class A shareholders; and the preparation, printing and
distribution of sales literature and advertising materials.
4. This Plan shall take effect with respect to the Class A shares of any
Fund on July 7, 1993, together with any related agreements, immediately after it
has been approved by votes of a majority of both (a) the Board and (b) those
Trustees of the Company who are not interested persons of the Company and have
no direct or indirect financial interest in the operation of this Plan or any
agreements related thereto ("Independent Trustees"), cast in person at a meeting
(or meetings) called for the purpose of voting on such approval; and after the
Trustees who approve the Plan with respect to such Fund's Class A shares have
reached the conclusion required by Rule 12b-1(e) under the 1940 Act.
5. This Plan shall continue in effect until June 30, 1994, and shall
continue thereafter in full force and effect for successive periods of up to one
year provided that each such continuance is approved in the manner provided in
paragraph 4.
6. G.T. Global shall provide to the Board and the Independent Trustees
shall review and approve, in exercise of their fiduciary duties, at least
quarterly, a written report of the amounts expended with respect to the Class A
shares of each Fund by G.T. Global under this Plan and the Distribution Contract
and the purposes for which such expenditures were made.
-2-
<PAGE>
7. For purposes of this Plan, "distribution fees" shall mean any fees for
activities in connection with G.T. Global's performance of its obligations under
the Plan or the Distribution Contract that are not deemed "service fees."
"Service fees" shall mean fees for activities covered by the definition of
"service fee" contained in Article III, Section 26(b) of the National
Association of Securities Dealers, Inc.'s Rules of Fair Practice, as amended.
8. This Plan may be terminated at any time with respect to the Class A
shares of any Fund by vote of the Board, by vote of a majority of the
Independent Trustees, or by vote of a majority of the outstanding voting
securities of the Class A shares of that Fund. Termination of the Plan with
respect to the Class A shares of one Fund shall not affect the continued
effectiveness of this Plan with respect to the Class A shares of any other Fund.
9. This Plan may not be amended to increase materially the amount of
reimbursement a Fund is authorized to make under paragraph 1 hereof unless such
amendment is approved in the manner provided for initial approval in paragraph 4
hereof, and such amendment is further approved by a majority of the outstanding
voting securities of the Fund, and no other material amendment to the Plan shall
be made unless approved in the manner provided for approval and annual renewal
in paragraph 5 hereof.
10. If and to the extent that any of the expenses of the Class A shares of
a Fund listed below in this paragraph are considered to be "primarily intended
to result in the sale of shares" issued by the Fund within the meaning of Rule
12b-1 under that 1940 Act, that Fund's payment of such expenses is authorized
without limit under this Plan, without regard to reimbursements made by the Fund
pursuant to paragraph 1 of this Plan or the requirements for approval of any
increase in such fees under paragraph 9 of this Plan. These expenses include:
(i) the costs of preparing, printing and mailing all required reports and
notices to Class A shareholders, irrespective of whether such reports or notices
contain or are accompanied by material intended to result in the sale of Class A
shares of the Fund or other funds or other investments; (ii) the costs of
preparing, printing and mailing all prospectuses; (iii) the costs of preparing,
printing and mailing any proxy statements and proxies, irrespective of whether
such proxy statements include any item relating to, or directed toward, the sale
of the Fund's Class A shares; (iv) all legal and accounting fees relating to the
preparation of any such reports, prospectuses, proxies and proxy statements;
(v) all fees and expenses relating to the qualification of the Fund and/or its
Class A shares under the securities or "Blue Sky" laws of any jurisdiction;
(vi) all fees under the 1940 Act and the Securities Act of 1933, including fees
in connection with any application for exemption relating to or directed toward
the sale of the Fund's Class A shares; (vii) all fees and assessments of the
Investment Company Institute or any successor organization, irrespective of
whether some of its activities are designed to provide sales assistance;
(viii) all costs of processing Class A share transactions, preparing and mailing
confirmations of Class A shares sold or redeemed or share certificates, and
reports of Class A share balances; and (ix) all costs of responding to telephone
or mail inquiries of investors or prospective investors.
11. It is recognized that the costs of distributing a Fund's Class A
shares may exceed the sum of the sales charges collected on sales of Class A
shares of such Fund and
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<PAGE>
reimbursements made by that Fund pursuant to paragraph 1 of this Plan. In
view of this, if and to the extent that any investment management and
administration fees paid by a Fund might be considered as indirectly
financing any activity which is primarily intended to result in the sale of
that Fund's Class A shares, the payment by the Fund of such fees hereby is
authorized under this Plan.
12. While this Plan is in effect, the selection and nomination of Trustees
who are not interested persons of the Company shall be committed to the
discretion of the Trustees who are not interested persons of the Company.
13. As used in this Plan, the terms "majority of the outstanding voting
Class A shares" shall have the same meaning as the phrase "majority of the
outstanding voting securities," has in the 1940 Act, and the phrase "interested
person" shall have the same meaning as that term has in the 1940 Act.
14. The Company shall preserve copies of this Plan (including any
amendments thereto) and any related agreements and all reports made pursuant to
paragraph 6 thereof for a period of not less than six years from the date of
this Plan, the first two years in an easily accessible place.
IN WITNESS WHEREOF, the Company has executed this Plan of Distribution on
July 7, 1993.
Attest: G.T. GLOBAL GROWTH SERIES
/s/ Peter R. Guarino By: /s/ David A. Minella
- ------------------------------- ---------------------------------
Peter R. Guarino David A. Minella
Assistant Secretary President
SEAL:
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PLAN OF DISTRIBUTION OF
G.T. GLOBAL GROWTH SERIES -- CLASS B SHARES
WHEREAS, G.T. Global Growth Series ("Company") is registered under the
Investment Company Act of 1940, as amended ("1940 Act"), as an open-end
management investment company, and offers for public sale distinct series of
shares of beneficial interest, each corresponding to a distinct portfolio; and
WHEREAS, the Company's Board of Trustees ("Board") has established G.T.
America Growth Fund ("America Fund"), G.T. Europe Growth Fund ("Europe
Fund"), G.T. International Growth Fund ("International Fund"), G.T. Japan
Growth Fund ("Japan Fund"), G.T. Pacific Growth Fund ("Pacific Fund") and
G.T. Worldwide Growth Fund ("Worldwide Fund") as series of shares of
beneficial interest of the Company; and
WHEREAS, the Company hereafter may establish additional series of shares
of beneficial interest (any such additional series together with the series
named in the immediately preceding paragraph collectively are referred to
herein as the "Funds," and singly may be referred to as a "Fund"); and
WHEREAS, the Company's Board of Trustees ("Board") has established Class
A and Class B shares of each Fund; and
WHEREAS, the existing Class B shares of the Fund are subject to a Plan
of Distribution ("Plan") in effect since March 31, 1993, the substance of
which is substantially similar to that contained in this Plan; and
WHEREAS, the Company desires to adopt an amended new Plan pursuant to
Rule 12b-1 under the 1940 Act with respect to the Class B shares of the
above-referenced Funds; and
WHEREAS, the Company has entered into a Distribution Contract
("Distribution Contract") with G.T. Global Financial Services, Inc. ("G.T.
Global" or "Distributor") pursuant to which G.T. Global serves as Distributor
of the Class B shares of each such Fund and pursuant to which G.T. Global is
entitled to receive payments of contingent deferred sales charges imposed
with respect to certain redemptions of Class B shares;
NOW, THEREFORE, the Company hereby adopts this Plan with respect to the
Class B shares of each Fund in accordance with Rule 12b-1 under the 1940 Act.
1. A. Each Fund is authorized to pay G.T. Global for its
expenditures incurred in providing services as
Distributor of the Fund's Class B shares at the
annualized rate of 0.75% of the average daily net
assets of the Fund's Class B shares.
B. Each Fund is authorized to pay G.T. Global a service
fee for the Fund's Class B shares at the annualized
rate of 0.25% of the average daily net assets of the
Fund's Class B shares.
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C. If the Company establishes additional Funds in the
future and the applicability of the Plan with respect
to such Funds is approved in the manner set forth in
paragraph 4 of this Plan, as well as by the then sole
shareholder of the Class B shares of such Funds, this
Plan may be amended to provide that each such
additional Fund will reimburse G.T. Global at rates to
be established by the Board.
D. Distribution fees and service fees under this Plan
shall be calculated and accrued daily by each Fund and
paid monthly to G.T. Global or at such other intervals
as the Company and G.T. Global shall agree.
E. Each Fund shall accrue and carry forward amounts
reimbursable that are not paid because they exceed the
annualized rate of 0.75%, in the case of distribution
fees, and 0.25%, in the case of service fees, of the
average daily net assets of such Fund's Class B shares
and shall pay such amounts within the 0.75% and 0.25%
per annum payment rate limitations as long as this
Plan, including any amendments hereto, is in effect.
2. A Fund may reimburse G.T. Global at a lesser rate than the fee
specified in paragraph 1 of this Plan, as agreed upon by the Board and G.T.
Global and as approved in the manner specified in paragraph 4 of this Plan.
The terms of paragraph 1.E. of this Plan shall apply to such lesser agreed
upon rate, if any. Although a Fund is not liable for unreimbursed
distribution expenses, in the event of termination or discontinuation of the
Plan, the Board may consider the appropriateness of having the Class B shares
of the Fund reimburse G.T. Global for the then outstanding carry forward
amounts plus interest thereon to the extent permitted by applicable law from
the effective date of the Plan.
3. As Distributor of the Funds' Class B shares, G.T. Global may spend
such amounts as it deems appropriate on any activities or expenses primarily
intended to result in the sale of each Fund's Class B shares and the
servicing and maintenance of shareholder accounts, including, but not limited
to, payment of sales commissions, ongoing commissions and other payments to
brokers, dealers, financial institutions or others who sell Class B shares
and/or service Class B shareholder accounts; compensation to employees of
G.T. Global; compensation to and expenses, including overhead and telephone
expenses, of G.T. Global; the printing of prospectuses, statements of
additional information and reports for other than existing Class B
shareholders; and the preparation, printing and distribution of sales
literature and advertising materials. In addition, G.T. Global may be
entitled, to the extent permitted by applicable law, to interest on
unreimbursed amounts carried forward pursuant to paragraph 1.E. hereunder at
a rate equal to that paid by G.T. Global for bank borrowings. Proceeds from
contingent deferred sales charges received by G.T. Global (in connection with
the redemption of Fund shares) will be applied to reduce the costs incurred
as described above.
4. This Plan shall take effect with respect to the Class B shares of
any Fund on July 7, 1993, together with any related agreements, immediately
after it has been approved, by votes of a majority of both (a) the Board and
(b) those Trustees of the Company who are not interested
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persons of the Company and have no direct or indirect financial interest in
the operation of this Plan or any agreements related thereto ("Independent
Trustees"), cast in person at a meeting (or meetings) called for the purpose
of voting on such approval; and until the Trustees who approve the Plan with
respect to such Fund's Class B shares have reached the conclusion required by
Rule 12b-1(e) under the 1940 Act.
5. The Plan shall continue in full force and effect until June 30,
1994 and shall continue thereafter in full force and effect for successive
periods of up to one year provided that each such continuance is approved in
the manner provided in paragraph 4.
6. G.T. Global shall provide to the Board and the Independent Trustees
shall review and approve, in exercise of their fiduciary duties, at least
quarterly, a written report of the amounts expended with respect to the Class
B shares of each Fund by G.T. Global under this Plan and the Distribution
Contract and the purposes for which such expenditures were made.
7. For purposes of this Plan, "distribution fees" shall mean any fees
for activities in connection with G.T. Global's performance of its
obligations under the Plan or the Distribution Contract that are not deemed
"service fees." "Service fees" shall mean fees for activities covered by the
definition of "service fee" contained in Article III, Section 26(b) of the
National Association of Securities Dealers, Inc.'s Rules of Fair Practice, as
amended.
8. This Plan may be terminated at any time with respect to the Class B
shares of any Fund by vote of the Board, by vote of a majority of the
Independent Trustees, or by vote of a majority of the outstanding voting
securities of the Class B shares of that Fund. Termination of the Plan with
respect to the Class B shares of one Fund shall not affect the continued
effectiveness of this Plan with respect to the Class B shares of any other
Fund.
9. This Plan may not be amended to increase materially the amount of
reimbursement a Fund is authorized to make under paragraph 1 hereof unless
such amendment is approved in the manner provided for initial approval in
paragraph 4 hereof, and such amendment is further approved by a majority of
the outstanding voting securities of the Fund, and no other material
amendment to the Plan shall be made unless approved in the manner provided
for approval and annual renewal in paragraph 5 hereof.
10. If and to the extent that any of the expenses of the Class B shares
of a Fund listed below in this paragraph are considered to be "primarily
intended to result in the sale of shares" issued by that Fund within the
meaning of Rule 12b-1 under the 1940 Act, the Fund's payment of such expenses
is authorized without limit under this Plan, without regard to reimbursements
made by the Fund pursuant to paragraph 1 of this Plan or the requirements for
approval of any increase in such fees under paragraph 9 of this Plan. These
expenses include: (i) the costs of preparing, printing and mailing all
required reports and notices to Class B shareholders, irrespective of whether
such reports or notices contain or are accompanied by material intended to
result in the sale of Class B shares of the Fund or other funds or other
investments; (ii) the costs of preparing, printing and mailing all
prospectuses; (iii) the costs of preparing, printing and mailing any proxy
statements and proxies, irrespective of whether such proxy statements include
any item relating to, or directed toward, the sale of the Fund's Class B
shares; (iv) all legal and
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accounting fees relating to the preparation of any such reports,
prospectuses, proxies and proxy statements; (v) all fees and expenses
relating to the qualification of the Fund and/or its Class B shares under the
securities or "Blue Sky" laws of any jurisdiction; (vi) all fees under the
1940 Act and the Securities Act of 1933, including fees in connection with
any application for exemption relating to or directed toward the sale of the
Fund's Class B shares; (vii) all fees and assessments of the Investment
Company Institute or any successor organization, irrespective of whether some
of its activities are designed to provide sales assistance; (viii) all costs
of processing Class B share transactions, preparing and mailing confirmations
of Class B shares sold or redeemed or share certificates, and reports of
Class B share balances; and (ix) all costs of responding to telephone or mail
inquiries of investors or prospective investors.
11. It is recognized that the costs of distributing a Fund's Class B
shares may exceed the sum of the contingent deferred sales charges collected
on sales of Class B shares of such Fund and reimbursements made by that Fund
pursuant to paragraph 1 of this Plan. In view of this, if and to the extent
that any investment management and administration fees paid by a Fund might
be considered as indirectly financing any activity which is primarily
intended to result in the sale of that Fund's Class B shares, the payment by
that Fund of such fees hereby is authorized under this Plan.
12. While this Plan is in effect, the selection and nomination of
Trustees who are not interested persons of the Company shall be committed to
the discretion of the Trustees who are not interested persons of the Company.
13. As used in this Plan, the terms "majority of the outstanding voting
Class B shares" shall have the same meaning as the phrase "majority of the
outstanding voting securities" has in the 1940 Act, and the phrase
"interested person" shall have the same meaning as that phrase has in the
1940 Act.
14. The Company shall preserve copies of this Plan (including any
amendments thereto) and any related agreements and all reports made pursuant
to paragraph 6 thereof for a period of not less than six years from the date
of this Plan, the first two years in an easily accessible place.
IN WITNESS WHEREOF, the Company has executed this Plan of Distribution
on July 7, 1993.
Attest: G.T. GLOBAL GROWTH SERIES
/s/ Peter R. Guarino By: /s/ David A. Minella
- ----------------------------- --------------------------------
Peter R. Guarino David A. Minella
Assistant Secretary President
SEAL:
4
