<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 10, 1998
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. 41
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
AMENDMENT NO. 37
------------------------
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>
MICHAEL A. SILVER, ESQ. ARTHUR J. BROWN, ESQ.
CHANCELLOR LGT ASSET R. CHARLES MILLER, ESQ.
MANAGEMENT, INC. KIRKPATRICK & LOCKHART LLP
50 CALIFORNIA STREET, 27TH FLOOR 1800 MASSACHUSETTS AVENUE, N.W.,
SAN FRANCISCO, CALIFORNIA 94111 2ND FLOOR
(NAME AND ADDRESS OF AGENT FOR SERVICE) WASHINGTON, D.C. 20036
(202) 778-9000
</TABLE>
------------------------
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE:
/ / IMMEDIATELY UPON FILING PURSUANT TO PARAGRAPH (b) OF RULE 485.
/ / ON PURSUANT TO PARAGRAPH (b) OF RULE 485.
/X/ 60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (a)(1) OF RULE 485 OR SUCH
OTHER DATE AS IT MAY BE DECLARED EFFECTIVE BY THE SECURITIES AND
EXCHANGE COMMISSION.
/ / ON 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.
IF APPROPRIATE, CHECK THE FOLLOWING BOX:
/ / THIS POST-EFFECTIVE AMENDMENT DESIGNATES A NEW EFFECTIVE DATE FOR A
PREVIOUSLY FILED POST-EFFECTIVE AMENDMENT.
CERTAIN SERIES OF THE G.T. GLOBAL GROWTH SERIES ARE "FEEDER FUNDS" IN A
"MASTER/FEEDER" FUND ARRANGEMENT. THIS POST-EFFECTIVE AMENDMENT NO. 41 INCLUDES
A MANUALLY EXECUTED SIGNATURE PAGE FOR ONE 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...................... 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
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 -- APRIL 1, 1998
- --------------------------------------------------------------------------------
<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.
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 April 1, 1998, 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, CA 94111, or by calling (800)
824-1580. It is also available, along with other related materials, on the SEC's
Internet web site (http://www.sec.gov).
FOR FURTHER INFORMATION, CALL (800) 824-1580 OR CONTACT YOUR FINANCIAL ADVISOR.
[LOGO]
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus Page 1
<PAGE>
GT GLOBAL EQUITY FUNDS
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Prospectus Summary........................................................................ 3
Financial Highlights...................................................................... 8
Investment Objectives and Policies........................................................ 22
Risk Factors.............................................................................. 28
How to Invest............................................................................. 31
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................................................................................ 46
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 $79 billion in total assets as of December 31, 1997.
The Manager and its worldwide asset management affiliates maintain
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. Each
class has distinct advantages and disadvantages for different
investors, and investors should choose the class that best suits
their circumstances and objectives. See "How to Invest."
Class A Shares: Offered at net asset value plus any applicable sales charge
(maximum is 4.75% of public offering price) and subject to 12b-1
service and distribution fees at the annualized rate of up to
0.35% of the average daily net assets of Class A shares.
Class B Shares: Offered at net asset value with no initial sales charge (a maximum
contingent deferred sales charge of 5% of net asset value at the
time of purchase or sale, whichever is less, is imposed on certain
redemptions made within six years of date of purchase) and subject
to 12b-1 service and distribution fees at the annualized rate of
up to 1.00% of the average daily net assets of Class B shares.
Shares Available Through: Class A and Class B shares are available through broker/dealers,
banks and other financial service entities ("Financial
Institutions") that have entered into agreements 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 may be exchanged without a sales charge for shares of the
same class of any other GT Global Mutual Fund. See "How to Make
Exchanges" and "Shareholder Account Manual."
</TABLE>
Prospectus Page 4
<PAGE>
GT GLOBAL EQUITY FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Redemptions: Shares may be redeemed through Financial Institutions that sell
shares of the Fund 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.
Reinvestment: Dividends and other distributions may be reinvested automatically
in Fund shares of the distributing class or in shares of the
corresponding class of other GT Global Mutual Funds without a
sales charge.
First Purchase: $500 minimum ($100 for individual retirement accounts ("IRAs") and
reduced amounts for certain other retirement plans).
Subsequent Purchases: $100 minimum ($25 for IRAs and reduced amounts for certain other
retirement plans).
Net Asset Values: 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.................................... 0.49% 0.49% 0.49% 0.49% 0.61% 0.61% 0.57% 0.57%
------- ------- ------- ------- ------- ------- ------- -------
Total Fund Operating Expenses..................... 1.82% 2.47% 1.82% 2.47% 1.93% 2.58% 1.89% 2.54%
------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- -------
</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 reimbursement (includes
interest expense not subject to
reimbursement)).................................. 0.73% 0.73% 0.92% 0.92% 0.41% 0.41% 0.95% 0.95%
------- ------- ------- ------- ------- ------- ------- -------
Total Fund Operating Expenses..................... 2.06% 2.71% 2.00% 2.65% 1.48% 2.13% 2.03% 2.68%
------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- -------
</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)...................... $77 $110 $156 $283
Assuming no redemption................................................... $25 $ 78 $133 $283
GT Global International Growth Fund
Class A shares (4)......................................................... $65 $102 $142 $252
Class B shares
Assuming a complete redemption at end of period (5)...................... $77 $110 $156 $283
Assuming no redemption................................................... $25 $ 78 $133 $283
GT Global New Pacific Growth Fund
Class A shares (4)......................................................... $66 $106 $148 $264
Class B shares
Assuming a complete redemption at end of period (5)...................... $78 $113 $169 $294
Assuming no redemption................................................... $26 $ 81 $139 $294
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)...................... $77 $112 $159 $290
Assuming no redemption................................................... $26 $ 80 $137 $290
GT Global Japan Growth Fund
Class A shares (4)......................................................... $68 $110 $154 $277
Class B shares
Assuming a complete redemption at end of period (5)...................... $79 $117 $168 $307
Assuming no redemption................................................... $28 $ 85 $145 $307
GT Global America Small Cap Growth Fund
Class A shares (4)......................................................... $67 $108 $151 $271
Class B shares
Assuming a complete redemption at end of period (5)...................... $78 $115 $165 $301
Assuming no redemption................................................... $27 $ 83 $142 $301
GT Global America Mid Cap Growth Fund
Class A shares (4)......................................................... $62 $ 92 $125 $217
Class B shares
Assuming a complete redemption at end of period (5)...................... $73 $100 $138 $248
Assuming no redemption................................................... $22 $ 67 $115 $248
GT Global America Value Fund
Class A shares (4)......................................................... $67 $109 $153 $274
Class B shares
Assuming a complete redemption at end of period (5)...................... $79 $116 $166 $304
Assuming no redemption................................................... $27 $ 84 $144 $304
</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, 1997. "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 1.44% and 2.52%, respectively, for the America Small Cap Fund
(including its share of the expenses of its corresponding Portfolio) and
1.92% and 3.00%, respectively, for the America Value Fund (including its
share of the expenses of its corresponding Portfolio). With respect to Class
B shares, without reimbursements, "Other expenses" and "Total Fund Operating
Expenses" would have been 1.44% and 3.17%, respectively, for the America
Small Cap Fund and its corresponding Portfolio, and 1.92% and 3.65%,
respectively, for the America Value Fund and its corresponding Portfolio.
The Funds also offer Advisor Class shares, which are not subject to 12b-1
distribution and service fees, to certain categories of investors. See "How
to Invest." 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.
Effective January 1, 1998, the Manager and GT Global have undertaken to
limit each Fund's, other than America Small Cap Fund's, America Mid Cap
Fund's and America Value Fund's, expenses (exclusive of brokerage
commissions, taxes, interest and extraordinary expenses) to the annual rate
of 2.00% and 2.65% of the average daily net assets of the 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 Mid Cap Fund's and
America Value Fund's expenses (exclusive of brokerage commissions, taxes,
interest and extraordinary expenses) to the annual rate of 1.75% and 2.40%
of the average daily net assets of the Fund's Class A and Class B Shares,
respectively.
(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 Class A and Class B share of each Fund. 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, 1997 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 DEC. 31,
----------------------------------------------------------------------------------------
1997 1996* 1995* 1994 1993* 1992 1991 1990
-------- -------- -------- -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
period............................ $ 16.71 $ 16.82 $ 15.53 $ 17.47 $ 14.47 $ 14.07 $ 11.83 $ 13.63
-------- -------- -------- -------- -------- -------- -------- ----------
Net investment income (loss)....... 0.05 0.03 -- -- 0.04 0.07 0.10 0.11
Net realized and unrealized gain
(loss) on investments............. 1.55 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............. 1.60 1.82 1.74 (1.16) 3.96 0.46 2.39 (1.71)
-------- -------- -------- -------- -------- -------- -------- ----------
Distributions:
Net investment income............ (0.02) -- -- -- -- -- (0.15) (0.09)
Net realized gain on
investments..................... (4.03) (1.93) (0.45) (0.78) (0.96) (0.06) -- --
-------- -------- -------- -------- -------- -------- -------- ----------
Total distributions............ (4.05) (1.93) (0.45) (0.78) (0.96) (0.06) (0.15) (0.09)
-------- -------- -------- -------- -------- -------- -------- ----------
Net asset value, end of period..... $ 14.26 $ 16.71 $ 16.82 $ 15.53 $ 17.47 $ 14.47 $ 14.07 $ 11.83
-------- -------- -------- -------- -------- -------- -------- ----------
-------- -------- -------- -------- -------- -------- -------- ----------
Total investment return (a)(c)..... 10.00% 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)............................ $103,769 $125,556 $145,982 $182,467 $193,997 $141,310 $126,868 $ 85,894
Ratio of net investment income
(loss) to average net assets:
With expense reductions (b)...... 0.32% 0.14% (0.06)% (0.01)% 0.9% 0.5% 0.8% 0.7%
Without expense reductions (b)... 0.23% 0.06% (0.12)% (0.04)% N/A N/A N/A N/A
Ratio of expenses to average net
assets:
With expense reductions (b)...... 1.73% 1.72% 1.87% 1.81% 1.9% 2.1% 2.0% 2.1%
Without expense reductions (b)... 1.82% 1.80% 1.93% 1.84% --%(d) --%(d) --%(d) --%(d)
Portfolio turnover rate +++........ 92% 80% 113% 86% 92% 95% 122% 107%
Average commission rate per share
paid on portfolio transactions
+++............................... $ 0.0288 $ 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>
APRIL 1,
YEAR ENDED 1993
DEC. 31, YEAR ENDED DEC. 31, TO
---------------- ---------------------------------- DEC. 31,
1989 1988 1997 1996* 1995* 1994 1993*
------- ------- ------- ------- ------- ------- ------------
Per Share Operating Performance:
Net asset value, beginning of
period............................ $ 10.18 $ 8.84 $ 16.23 $ 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 1.49 1.75 1.73 (1.16) 2.72
------- ------- ------- ------- ------- ------- ------------
Net increase (decrease) in net
asset value resulting from
investment operations............. 3.81 1.44 1.44 1.66 1.61 (1.27) 2.68
------- ------- ------- ------- ------- ------- ------------
Distributions:
Net investment income............ -- -- -- -- -- -- --
Net realized gain on
investments..................... (0.36) (0.10) (4.03) (1.93) (0.45) (0.78) (0.96)
------- ------- ------- ------- ------- ------- ------------
Total distributions............ (0.36) (0.10) (4.03) (1.93) (0.45) (0.78) (0.96)
------- ------- ------- ------- ------- ------- ------------
Net asset value, end of period..... $ 13.63 $ 10.18 $ 13.64 $ 16.23 $ 16.50 $ 15.34 $ 17.39
------- ------- ------- ------- ------- ------- ------------
------- ------- ------- ------- ------- ------- ------------
Total investment return (a)(c)..... 37.6% 16.3% 9.22% 10.16% 10.52% (7.32)% 17.3%
------- ------- ------- ------- ------- ------- ------------
------- ------- ------- ------- ------- ------- ------------
Ratios and supplemental data:
Net assets, end of period (in
000's)............................ $38,263 $11,673 $45,010 $52,089 $56,095 $52,567 $20,592
Ratio of net investment income
(loss) to average net assets:
With expense reductions (b)...... (0.1)% 0.2% (0.33)% (0.51)% (0.71)% (0.66)% (0.4)%
Without expense reductions (b)... N/A N/A (0.42)% (0.59)% (0.77)% (0.69)% N/A
Ratio of expenses to average net
assets:
With expense reductions (b)...... 2.0% 2.0% 2.38% 2.37% 2.52% 2.46% 2.5%
Without expense reductions (b)... --% --% 2.47% 2.45% 2.58% 2.49% --%(d)
Portfolio turnover rate +++........ 91% 181% 92% 80% 113% 86% 92%
Average commission rate per share
paid on portfolio transactions
+++............................... N/A N/A $0.0288 $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.
------------------------------
<TABLE>
<CAPTION>
AVERAGE MONTHLY
NUMBER OF
AVERAGE REGISTRANT'S
AMOUNT OF DEBT AMOUNT OF DEBT SHARES AVERAGE AMOUNT OF
YEAR OUTSTANDING AT OUTSTANDING OUTSTANDING DEBT PER SHARE
ENDED END OF PERIOD DURING THE PERIOD DURING THE PERIOD DURING THE PERIOD
----------- --------------------- ----------------- ------------------ -------------------
<S> <C> <C> <C> <C> <C>
GT Global Worldwide Growth Fund..... 1997 $ 0 $ 21,918 9,622,077 $ 0.0023
</TABLE>
Prospectus Page 9
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL INTERNATIONAL GROWTH FUND
<TABLE>
<CAPTION>
CLASS A+
-----------------------------------------------------------------------------------------
YEAR ENDED DEC. 31,
-----------------------------------------------------------------------------------------
1997* 1996* 1995 1994 1993* 1992 1991 1990
-------- -------- -------- -------- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 8.92 $ 9.08 $ 9.17 $ 11.02 $ 8.21 $ 8.74 $ 7.82 $ 9.25
-------- -------- -------- -------- -------- -------- -------- -----------
Net investment income
(loss)....................... 0.03 (0.01) 0.03 (0.04) 0.03 0.11 0.14 0.10
Net realized and unrealized
gain (loss) on investments... 0.69 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........ 0.72 0.83 0.35 (0.86) 2.81 (0.51) 1.03 (1.32)
-------- -------- -------- -------- -------- -------- -------- -----------
Distributions:
Net investment income....... (0.03) -- -- (0.04) -- (0.02) (0.11) (0.11)
Net realized gain on
investments................ (1.94) (0.99) (0.24) (0.95) -- -- -- --
In excess of net realized
gain on investments........ -- -- (0.20) -- -- -- -- --
-------- -------- -------- -------- -------- -------- -------- -----------
Total distributions....... (1.97) (0.99) (0.44) (0.99) (0.00) (0.02) (0.11) (0.11)
-------- -------- -------- -------- -------- -------- -------- -----------
Net asset value, end of
period....................... $ 7.67 $ 8.92 $ 9.08 $ 9.17 $ 11.02 $ 8.21 $ 8.74 $ 7.82
-------- -------- -------- -------- -------- -------- -------- -----------
-------- -------- -------- -------- -------- -------- -------- -----------
Total investment return
(a)(c)....................... 8.51% 9.28% 3.88% (7.78)% 34.23% (5.83)% 13.2% (14.3)%
-------- -------- -------- -------- -------- -------- -------- -----------
-------- -------- -------- -------- -------- -------- -------- -----------
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $148,143 $196,601 $308,816 $430,701 $523,397 $421,693 $463,851 $ 343,949
Ratio of net investment income
(loss) to average net assets:
With expense reductions
(b)........................ 0.35% (0.14)% 0.24% (0.04)% 0.3% 1.2% 1.5% 1.4%
Without expense reductions
(b)........................ 0.22% (0.25)% 0.16% (0.09)% N/A N/A N/A N/A
Ratio of expenses to average
net assets:
With expense reductions
(b)........................ 1.69% 1.80% 1.70% 1.70% 1.8% 1.9% 1.9% 1.9%
Without expense reductions
(b)........................ 1.82% 1.91% 1.78% 1.75% --%(d) --%(d) --%(d) --%(d)
Portfolio turnover rate ++.... 72% 74% 75% 96% 90% 89% 83% 58%
Average commission rate per
share paid on portfolio
transactions ++.............. $ 0.0269 $ 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,
YEAR ENDED DEC. 31, 1993
YEAR ENDED DEC. 31, TO
------------------- ------------------------------------ DEC. 31,
1989** 1988** 1997* 1996* 1995* 1994 1993*
-------- ------- ------- ------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
period............................ $ 6.77 $ 5.71 $ 8.68 $ 8.91 $ 9.07 $ 10.98 $ 8.74
-------- ------- ------- ------- ------- ------- ------------
Net investment income (loss)....... 0.01 (0.01) (0.03) (0.07) (0.04) (0.10) (0.01)
Net realized and unrealized gain
(loss) on investments............. 2.60 1.12 0.65 0.83 0.32 (0.82) 2.25
-------- ------- ------- ------- ------- ------- ------------
Net increase (decrease) in net
asset value resulting from
investment operations............. 2.61 1.11 0.62 0.76 0.28 (0.92) 2.24
-------- ------- ------- ------- ------- ------- ------------
Distributions:
Net investment income............ -- -- -- -- -- (0.04) --
Net realized gain on
investments..................... (0.13) (0.05) (1.94) (0.99) (0.24) (0.95) --
In excess of net realized gain on
investments..................... -- -- -- -- (0.20) -- --
-------- ------- ------- ------- ------- ------- ------------
Total distributions............ (0.13) (0.05) (1.94) (0.99) (0.44) (0.99) --
-------- ------- ------- ------- ------- ------- ------------
Net asset value, end of period..... $ 9.25 $ 6.77 $ 7.36 $ 8.68 $ 8.91 $ 9.07 $ 10.98
-------- ------- ------- ------- ------- ------- ------------
-------- ------- ------- ------- ------- ------- ------------
Total investment return (a)(c)..... 38.6% 19.4% 7.71% 8.67% 3.15% (8.36)% 25.63%
-------- ------- ------- ------- ------- ------- ------------
-------- ------- ------- ------- ------- ------- ------------
Ratios and supplemental data:
Net assets, end of period (in
000's)............................ $136,975 $29,792 $56,023 $64,102 $69,654 $71,794 $30,745
Ratio of net investment income
(loss) to average net assets:
With expense reductions (b)...... 0.1% (0.2)% (0.30)% (0.79)% (0.41)% (0.69)% (0.4)%
Without expense reductions (b)... N/A N/A (0.43)% (0.90)% (0.49)% (0.74)% N/A
Ratio of expenses to average net
assets:
With expense reductions (b)...... 1.9% 2.1% 2.34% 2.45% 2.35% 2.35% 2.4%
Without expense reductions (b)... --%(d) --%(d) 2.47% 2.56% 2.43% 2.40% --%(d)
Portfolio turnover rate ++......... 82% 115% 72% 74% 75% 96% 90%
Average commission rate per share
paid on portfolio transactions
++................................ N/A N/A $0.0269 $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 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.
------------------------------
<TABLE>
<CAPTION>
AVERAGE MONTHLY
NUMBER OF
AVERAGE REGISTRANT'S
AMOUNT OF DEBT AMOUNT OF DEBT SHARES AVERAGE AMOUNT OF
YEAR OUTSTANDING AT OUTSTANDING OUTSTANDING DEBT PER SHARE
ENDED END OF PERIOD DURING THE PERIOD DURING THE PERIOD DURING THE PERIOD
----------- --------------------- ----------------- ------------------ -------------------
<S> <C> <C> <C> <C> <C>
GT Global International Growth
Fund............................... 1997 $ 0 $ 283,148 26,055,589 $ 0.0109
</TABLE>
Prospectus Page 11
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
<TABLE>
<CAPTION>
CLASS A+
-----------------------------------------------------------------------------------------
YEAR ENDED DEC. 31,
-----------------------------------------------------------------------------------------
1997* 1996* 1995* 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 13.12 $ 12.47 $ 12.10 $ 15.86 $ 10.31 $ 11.30 $ 10.57 $ 12.61
-------- -------- -------- -------- -------- -------- -------- -----------
Net investment income
(loss)....................... 0.05 0.02 0.11 0.02 (0.03) 0.07 0.11 0.13
Net realized and unrealized
gain (loss) on investments... (5.84) 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........ (5.79) 2.46 0.90 (3.13) 6.20 (0.90) 1.36 (1.38)
-------- -------- -------- -------- -------- -------- -------- -----------
Distributions:
Net investment income....... (0.03) -- (0.10) (0.01) -- (0.06) (0.08) (0.12)
Net realized gain on
investments................ (0.82) (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....... (0.85) (1.81) (0.53) (0.63) (0.65) (0.09) (0.63) (0.66)
-------- -------- -------- -------- -------- -------- -------- -----------
Net asset value, end of
period....................... $ 6.48 $ 13.12 $ 12.47 $ 12.10 $ 15.86 $ 10.31 $ 11.30 $ 10.57
-------- -------- -------- -------- -------- -------- -------- -----------
-------- -------- -------- -------- -------- -------- -------- -----------
Total investment return
(a)(c)....................... (44.24)% 20.04% 7.45% (19.73)% 60.61% (7.96)% 13.1% (11.0)%
-------- -------- -------- -------- -------- -------- -------- -----------
-------- -------- -------- -------- -------- -------- -------- -----------
Ratio and supplemental data:
Net assets, end of period (in
000's)....................... $135,807 $361,244 $383,722 $404,680 $498,898 $281,418 $333,800 $ 234,793
Ratio of net investment income
(loss) to average net
assets:......................
With expense reductions
(b)........................ 0.41% 0.17% 0.91% 0.11% (0.3)% 0.6% 1.0% 1.1%
Without expense reductions
(b)........................ 0.14% 0.04% 0.86% N/A N/A N/A N/A N/A
Ratio of expenses to average
net assets:
With expense reductions
(b)........................ 1.66% 1.86% 1.89% 1.81% 1.9% 2.0% 2.0% 2.1%
Without expense reductions
(b)........................ 1.93% 1.99% 1.94% --%(d) --%(d) --%(d) --%(d) --%(d)
Portfolio turnover rate ++.... 80% 93% 63% 87% 117% 72% 85% 75%
Average commission rate per
share paid on portfolio
transactions ++.............. $ 0.0066 $ 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,
YEAR ENDED DEC. 31, 1993
YEAR ENDED DEC. 31, TO
------------------- -------------------------------------- DEC. 31,
1989** 1988 1997* 1996* 1995* 1994 1993
-------- ------- -------- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value,
beginning of period..... $ 8.74 $ 7.25 $ 12.80 $ 12.29 $ 11.96 $ 15.79 $ 11.27
-------- ------- -------- -------- -------- -------- ------------
Net investment income
(loss).................. (0.01) 0.01 (0.03) (0.06) 0.03 (0.06) (0.10)
Net realized and
unrealized gain (loss)
on investments.......... 4.21 1.66 (5.67) 2.38 0.75 (3.15) 5.27
-------- ------- -------- -------- -------- -------- ------------
Net increase (decrease)
in net asset value
resulting from
investment operations... 4.20 1.67 (5.70) 2.32 0.78 (3.21) 5.17
-------- ------- -------- -------- -------- -------- ------------
Distributions:
Net investment
income................ -- -- -- -- (0.02) -- --
Net realized gain on
investments and
foreign currency...... (0.33) (0.18) (0.82) (1.81) (0.43) (0.55) (0.65)
In excess of net
realized gain on
investments........... -- -- -- -- -- (0.07) --
-------- ------- -------- -------- -------- -------- ------------
Total
distributions....... (0.33) (0.18) (0.82) (1.81) (0.45) (0.62) (0.65)
-------- ------- -------- -------- -------- -------- ------------
Net asset value, end of
period.................. $ 12.61 $ 8.74 $ 6.28 $ 12.80 $ 12.29 $ 11.96 $ 15.79
-------- ------- -------- -------- -------- -------- ------------
-------- ------- -------- -------- -------- -------- ------------
Total investment return
(a)(c).................. 48.1% 23.2% (44.65)% 19.28% 6.54% (20.30)% 46.3%
-------- ------- -------- -------- -------- -------- ------------
-------- ------- -------- -------- -------- -------- ------------
Ratio and supplemental
data:
Net assets, end of period
(in 000's).............. $170,071 $56,342 $ 55,820 $151,805 $130,887 $120,171 $72,122
Ratio of net investment
income (loss) to average
net assets:
With expense reductions
(b)................... (0.1)% 0.0% (0.24)% (0.48)% 0.26% (0.54)% (0.9)%
Without expense
reductions (b)........ N/A N/A (0.51)% (0.61)% 0.21% N/A N/A
Ratio of expenses to
average net assets:
With expense reductions
(b)................... 2.0% 2.2% 2.31% 2.51% 2.54% 2.46% 2.5%
Without expense
reductions (b)........ --%(d) --%(d) 2.58% 2.64% 2.59% --%(d) --%(d)
Portfolio turnover rate
++...................... 70% 107% 80% 93% 63% 87% 117%
Average commission rate
per share paid on
portfolio transactions
++...................... N/A N/A $ 0.0066 $ 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.
------------------------------
<TABLE>
<CAPTION>
AVERAGE MONTHLY
NUMBER OF
AVERAGE REGISTRANT'S
AMOUNT OF DEBT AMOUNT OF DEBT SHARES AVERAGE AMOUNT OF
YEAR OUTSTANDING AT OUTSTANDING OUTSTANDING DEBT PER SHARE
ENDED END OF PERIOD DURING THE PERIOD DURING THE PERIOD DURING THE PERIOD
----------- --------------------- ----------------- ------------------ -------------------
<S> <C> <C> <C> <C> <C>
GT Global New Pacific Growth Fund... 1997 $ 0 $ 3,020,567 33,807,469 $ 0.0893
</TABLE>
Prospectus Page 13
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL EUROPE GROWTH FUND
<TABLE>
<CAPTION>
CLASS A+
---------------------------------------------------------------------------------------------
YEAR ENDED DEC. 31,
---------------------------------------------------------------------------------------------
1997* 1996* 1995* 1994* 1993* 1992* 1991 1990
-------- -------- -------- -------- -------- -------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 12.89 $ 10.88 $ 10.03 $ 10.84 $ 8.51 $ 9.59 $ 9.33 $ 10.94
-------- -------- -------- -------- -------- -------- ---------- -------------
Net investment income......... (0.04) (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......... 1.48 2.16 0.95 (0.69) 2.36 (1.19) 0.19 (1.71)
-------- -------- -------- -------- -------- -------- ---------- -------------
Net increase (decrease) in net
asset value resulting from
investment operations........ 1.44 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................ (0.01) (0.12) (0.04) -- -- -- -- --
In excess of net investment
income..................... -- -- -- -- (0.02) -- -- --
In excess of net realized
gain on investments........ -- -- -- (0.13) -- -- -- --
-------- -------- -------- -------- -------- -------- ---------- -------------
Total distributions....... (0.01) (0.12) (0.14) (0.18) (0.08) -- (0.14) --
-------- -------- -------- -------- -------- -------- ---------- -------------
Net asset value, end of
year......................... $ 14.32 $ 12.89 $ 10.88 $ 10.03 $ 10.84 $ 8.51 $ 9.59 $ 9.33
-------- -------- -------- -------- -------- -------- ---------- -------------
-------- -------- -------- -------- -------- -------- ---------- -------------
Total investment return
(a)(c)....................... 11.20% 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)....................... $407,004 $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:
With expense reductions
(b)........................ (0.29)% (0.26)% 0.38% 0.61% 0.6% 1.2%*** 1.7% 1.1%
Without expense reductions
(b)........................ (0.43)% (0.32)% 0.32% 0.53% N/A N/A N/A N/A
Ratio of expenses to average
net assets:
With expense reductions
(b)........................ 1.75% 1.82% 1.83% 1.73% 1.9% 2.0%*** 1.8% 1.9%
Without expense reductions
(b)........................ 1.89% 1.88% 1.89% 1.81% --%(d) --%(d) --%(d) --%(d)
Portfolio turnover rate ++.... 107% 123% 108% 91% 67% 65% 55% 34%
Average commission rate per
share paid on portfolio
transactions ++.............. $ 0.0533 $ 0.0277 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.
*** 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,
YEAR ENDED DEC. 1993
31, YEAR ENDED DEC. 31, TO
---------------- ------------------------------------ DEC. 31,
1989** 1988** 1997* 1996* 1995* 1994* 1993*
-------- ------ ------- ------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 7.77 $7.76 $ 12.73 $ 10.81 $ 9.97 $ 10.79 $ 9.02
-------- ------ ------- ------- ------- ------- ------------
Net investment income
(loss)....................... (0.02) (0.07 ) (0.13) (0.11) (0.03) -- --
Net realized and unrealized
gain (loss) on investments
and foreign currency......... 3.19 0.87 1.47 2.15 0.94 (0.69) 1.85
-------- ------ ------- ------- ------- ------- ------------
Net increase (decrease) in net
asset value resulting from
investment operations........ 3.17 0.80 1.34 2.04 0.91 (0.69) 1.85
-------- ------ ------- ------- ------- ------- ------------
Distributions:
Net investment income....... -- -- -- -- (0.03) -- (0.06)
Net realized gain on
investments................ -- (0.79 ) (0.01) (0.12) (0.04) -- --
In excess of net investment
income..................... -- -- -- -- -- -- (0.02)
In excess of net realized
gain on investments........ -- -- -- -- -- (0.13) --
-------- ------ ------- ------- ------- ------- ------------
Total distributions....... -- (0.79 ) (0.01) (0.12) (0.07) (0.13) (0.08)
-------- ------ ------- ------- ------- ------- ------------
Net asset value, end of
period....................... $ 10.94 $7.77 $ 14.06 $ 12.73 $ 10.81 $ 9.97 $ 10.79
-------- ------ ------- ------- ------- ------- ------------
-------- ------ ------- ------- ------- ------- ------------
Total investment return
(a)(c)....................... 40.7% 11.1% 10.55% 18.79% 9.20% (6.38)% 20.5%
-------- ------ ------- ------- ------- ------- ------------
-------- ------ ------- ------- ------- ------- ------------
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $382,428 $8,376 $81,011 $87,092 $73,025 $81,602 $34,048
Ratio of net investment income
(loss) to average net assets:
With expense reductions
(b)........................ (0.6)% (1.0)% (0.94)% (0.91)% (0.27)% (0.04)% (0.1)%
Without expense reductions
(b)........................ N/A N/A (1.08)% (0.97)% (0.33)% (0.12)% N/A
Ratio of expenses to average
net assets:
With expense reductions
(b)........................ 1.9% 3.6% 2.40% 2.47% 2.48% 2.38% 2.6%
Without expense reductions
(b)........................ --% --% (d) 2.54% 2.53% 2.54% 2.46% --%(d)
Portfolio turnover rate ++.... 43% 153% 107% 123% 108% 91% 67%
Average commission rate per
share paid on portfolio
transactions ++.............. N/A N/A $0.0533 $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.
------------------------------
<TABLE>
<CAPTION>
AVERAGE MONTHLY
NUMBER OF
AVERAGE REGISTRANT'S
AMOUNT OF DEBT AMOUNT OF DEBT SHARES AVERAGE AMOUNT OF
YEAR OUTSTANDING AT OUTSTANDING OUTSTANDING DEBT PER SHARE
ENDED END OF PERIOD DURING THE PERIOD DURING THE PERIOD DURING THE PERIOD
----------- --------------------- ----------------- ------------------ -------------------
<S> <C> <C> <C> <C> <C>
GT Global Europe Growth Fund........ 1997 $ 0 $ 7,281,203 38,714,809 $ 0.1881
</TABLE>
Prospectus Page 15
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
<TABLE>
<CAPTION>
CLASS A(D) CLASS B(D)
----------------------------------- -----------------------------------
OCT. 18, 1995 OCT. 18, 1995
YEAR ENDED (COMMENCEMENT YEAR ENDED (COMMENCEMENT
DEC. 31, OF OPERATIONS) DEC. 31, OF OPERATIONS)
---------------- THROUGH DEC. 31, ---------------- THROUGH DEC. 31,
1997 1996 1995 1997 1996 1995
------- ------- ----------------- ------- ------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
year......................... $ 12.52 $ 11.80 $11.43 $ 12.42 $ 11.78 $11.43
------- ------- -------- ------- ------- -----------------
Net investment income
(loss)....................... (0.18 *** (0.05)** 0.04* (0.26 *** (0.14)** 0.02*
Net realized and unrealized
gain (loss) on investments... 2.20 1.69 0.33 2.17 1.70 0.33
------- ------- -------- ------- ------- -----------------
Net increase (decrease) in net
asset value resulting from
investment operations........ 2.02 1.64 0.37 1.91 1.56 0.35
------- ------- -------- ------- ------- -----------------
Distributions to shareholders:
From net realized gain on
investments................ (0.27) (0.92) -- (0.27) (0.92) --
------- ------- -------- ------- ------- -----------------
Total distributions....... (0.27) (0.92) -- (0.27) (0.92) --
------- ------- -------- ------- ------- -----------------
Net asset value, end of
year......................... $ 14.27 $ 12.52 $11.80 $ 14.06 $ 12.42 $11.78
------- ------- -------- ------- ------- -----------------
------- ------- -------- ------- ------- -----------------
Total investment return
(a)(c)....................... 16.23% 13.81% 3.24% 15.47% 13.14% 3.06%
------- ------- -------- ------- ------- -----------------
------- ------- -------- ------- ------- -----------------
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $10,896 $ 8,448 $1,931 $21,222 $10,694 $2,024
Ratio of net investment income
(loss) to average net assets:
With reimbursement by the
Manager (b)................ (1.40)% (0.38)% 1.68% (2.05)% (1.03)% 1.03%
Without reimbursement by the
Manager (b)................ (2.00)% (1.47)% (20.52)% (2.65)% (2.12)% (21.17)%
Ratio of expenses to average
net assets:
With reimbursement by the
Manager (b)................ 1.92% 2.00% 2.00% 2.57% 2.65% 2.65%
Without reimbursement by the
Manager (b)................ 2.52% 3.09% 24.20% 3.17% 3.74% 24.85%
Portfolio turnover rate +..... 233% 150% N/A 233% 150% N/A
Average commission rate per
share paid on portfolio
transactions +............... $0.0517 $0.0489 N/A $0.0517 $0.0489 N/A
</TABLE>
- --------------
* Before reimbursement by the Manager the net investment loss per share would
have been $(0.47) and $(0.49) for Class A and Class B shares, 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) and $(0.28) for Class A and Class B shares, respectively,
for the year ended December 31, 1996.
*** Before reimbursement by the Manager the net investment loss per share would
have been $(0.25) and $(0.33) for Class A and Class B shares, respectively,
for the year ended December 31, 1997.
+ 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.
------------------------------
<TABLE>
<CAPTION>
AVERAGE MONTHLY
NUMBER OF
AVERAGE REGISTRANT'S
AMOUNT OF DEBT AMOUNT OF DEBT SHARES
YEAR OUTSTANDING AT OUTSTANDING OUTSTANDING
ENDED END OF PERIOD DURING THE PERIOD DURING THE PERIOD
----------- --------------------- ------------------- ------------------
<S> <C> <C> <C> <C>
GT Global America Small Cap Growth
Fund............................... 1997 $ 0 $ 1,945 1,911,865
<CAPTION>
AVERAGE AMOUNT OF
DEBT PER SHARE
DURING THE PERIOD
-------------------
<S> <C>
GT Global America Small Cap Growth
Fund............................... $ 0.0010
</TABLE>
Prospectus Page 16
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL AMERICA MID CAP GROWTH FUND
<TABLE>
<CAPTION>
CLASS A+
-------------------------------------------------------------------------------------------
YEAR ENDED DEC. 31,
-------------------------------------------------------------------------------------------
1997 1996 1995 1994* 1993 1992 1991 1990
-------- -------- -------- -------- -------- -------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
year......................... $ 20.77 $ 19.07 $ 17.69 $ 17.17 $ 17.12 $ 14.13 $ 11.89 $ 12.84
-------- -------- -------- -------- -------- -------- ------- ----------
Net investment income
(loss)....................... (0.20) 0.03 0.24 0.04 (0.21) (0.11) 0.01 (0.01)
Net realized and unrealized
gain (loss) on investments... 3.00 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........ 2.80 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................ (2.56) (1.29) (2.58) (2.05) (1.30) (1.44) (0.04) --
-------- -------- -------- -------- -------- -------- ------- ----------
Total distributions....... (2.56) (1.29) (2.79) (2.07) (1.30) (1.44) (0.05) --
-------- -------- -------- -------- -------- -------- ------- ----------
Net asset value, end of
year......................... $ 21.01 $ 20.77 $ 19.07 $ 17.69 $ 17.17 $ 17.12 $ 14.13 $ 11.89
-------- -------- -------- -------- -------- -------- ------- ----------
-------- -------- -------- -------- -------- -------- ------- ----------
Total investment return
(a)(c)....................... 14.05% 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)....................... $255,674 $343,427 $396,291 $196,937 $116,468 $166,712 $88,041 $ 65,413
Ratio of net investment income
(loss) to average net assets:
With expense reductions
(b)........................ (0.90)% 0.12% 1.24% 0.17% (0.7)% (1.1)% 0.0% (0.1)%
Without expense reductions
(b)........................ (1.01)% 0.07% N/A N/A N/A N/A N/A N/A
Ratio of expenses to average
net assets:
With expense reductions..... 1.37% 1.36% 1.46% 1.58% 1.6% 1.8% 1.7% 2.0%
Without expense
reductions................. 1.48% 1.41% --%(d) --%(d) --%(d) --%(d) --%(d) --%(d)
Portfolio turnover rate ++.... 190% 253% 71% 102% 92% 114% 156% 145%
Average commission rate per
share paid on portfolio
transactions ++.............. $ 0.0574 $ 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+
---------------- ---------------------------------------------------------
APRIL 1,
YEAR ENDED 1993
DEC. 31, YEAR ENDED DEC. 31, TO
---------------- ----------------------------------------- DEC. 31,
1989 1988 1997 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 $ 20.28 $ 18.77 $ 17.50 $ 17.09 $15.90
------ ------ -------- -------- -------- ------- ------------
Net investment income
(loss)....................... 0.10** (0.40) (0.34) (0.11) 0.10 (0.09) (0.29)
Net realized and unrealized
gain (loss) on investments... 4.65 1.35 2.93 2.91 3.87 2.55 2.78
------ ------ -------- -------- -------- ------- ------------
Net increase (decrease) in net
asset value resulting from
investment operations........ 4.75 0.95 2.59 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) (2.56) (1.29) (2.58) (2.05) (1.30)
------ ------ -------- -------- -------- ------- ------------
Total distributions....... (0.67) (0.75) (2.56) (1.29) (2.70) (2.05) (1.30)
------ ------ -------- -------- -------- ------- ------------
Net asset value, end of
year......................... $12.84 $ 8.76 $ 20.31 $ 20.28 $ 18.77 $ 17.50 $17.09
------ ------ -------- -------- -------- ------- ------------
------ ------ -------- -------- -------- ------- ------------
Total investment return
(a)(c)....................... 54.8% 11.1% 13.35% 14.82% 22.42% 15.06% 16.1%
------ ------ -------- -------- -------- ------- ------------
------ ------ -------- -------- -------- ------- ------------
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $9,930 $1,548 $255,468 $334,590 $348,435 $80,060 $1,982
Ratio of net investment income
(loss) to average net assets:
With expense reductions
(b)........................ 1.2%** (4.7)% (1.55)% (0.53)% 0.59% (0.48)% (1.3)%
Without expense reductions
(b)........................ N/A N/A (1.66)% (0.58)% N/A N/A N/A
Ratio of expenses to average
net assets (b):
With expense reductions..... 1.9%** 5.1% 2.02% 2.01% 2.11% 2.23% 2.2%
Without expense
reductions................. --%(d) --%(d) 2.13% 2.06% --%(d) --%(d) --%(d)
Portfolio turnover rate ++.... 133% 184% 190% 253% 71% 102% 92%
Average commission rate per
share on portfolio
transactions ++.............. N/A N/A $ 0.0574 $ 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.
------------------------------
<TABLE>
<CAPTION>
AVERAGE MONTHLY
NUMBER OF
AVERAGE REGISTRANT'S
AMOUNT OF DEBT AMOUNT OF DEBT SHARES AVERAGE AMOUNT OF
YEAR OUTSTANDING AT OUTSTANDING OUTSTANDING DEBT PER SHARE
ENDED END OF PERIOD DURING THE PERIOD DURING THE PERIOD DURING THE PERIOD
----------- --------------------- ----------------- ------------------ -------------------
<S> <C> <C> <C> <C> <C>
GT Global America Mid Cap Growth
Fund............................... 1997 $ 0 $ 1,961,956 27,020,126 $ 0.0726
</TABLE>
Prospectus Page 18
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL AMERICA VALUE FUND
<TABLE>
<CAPTION>
CLASS A(D) CLASS B(D)
--------------------------------- -------------------------------------
OCT. 18, 1995 OCT. 18, 1995
YEAR ENDED (COMMENCEMENT YEAR ENDED (COMMENCEMENT
DEC. 31, OF OPERATIONS) DEC. 31, OF OPERATIONS)
-------------- THROUGH DEC. 31, ------------------ THROUGH DEC. 31,
1997 1996 1995 1997 1996 1995
------ ------ ----------------- -------- -------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of year................ $14.65 $12.76 $ 11.43 $ 14.54 $ 12.75 $ 11.43
------ ------ -------- -------- -------- --------
Net investment income (loss)...................... 0.09*** (0.01)** 0.03* (0.01 *** (0.10)** 0.01*
Net realized and unrealized gain (loss) on
investments...................................... 3.87 1.94 1.30 3.83 1.93 1.31
------ ------ -------- -------- -------- --------
Net increase (decrease) in net asset value
resulting from investment operations............. 3.96 1.93 1.33 3.82 1.83 1.32
------ ------ -------- -------- -------- --------
Distributions to shareholders:
From net investment income...................... (0.03) -- -- -- -- --
From net realized gain on investments........... (1.33) (0.04) -- (1.32) (0.04) --
------ ------ -------- -------- -------- --------
Total distributions........................... (1.36) (0.04) -- (1.32) (0.04) --
------ ------ -------- -------- -------- --------
Net asset value, end of year...................... $17.25 $14.65 $ 12.76 $ 17.04 $ 14.54 $ 12.75
------ ------ -------- -------- -------- --------
------ ------ -------- -------- -------- --------
Total investment return (a)(c).................... 27.23% 15.12% 11.64% 26.44% 14.35% 11.55%
------ ------ -------- -------- -------- --------
------ ------ -------- -------- -------- --------
Ratios and supplemental data:
Net assets, end of period (in 000's).............. $7,668 $2,529 $ 870 $ 16,717 $ 5,503 $ 1,254
Ratio of net investment income (loss) to average
net assets:
With reimbursement by the Manager (b)........... 0.56% (0.10)% 1.10% (0.09)% (0.75)% 0.45%
Without reimbursement by the Manager (b)........ (0.42)% (3.61)% (47.44)% (1.07)% (4.26)% (48.09)%
Ratio of expenses to average net assets:
With reimbursement by the Manager (b)........... 1.99% 2.00% 2.00% 2.64% 2.65% 2.65%
Without reimbursement by the Manager (b)........ 2.97% 5.51% 50.54% 3.62% 6.16% 51.19%
Ratio of interest expense to average net assets... 0.03% N/A N/A 0.03 N/A N/A
Portfolio turnover rate +......................... 93% 256% N/A 93% 256% N/A
Average turnover rate per share paid on portfolio
transactions +................................... $0.0278 $0.0551 N/A $ 0.0278 $ 0.0551 N/A
</TABLE>
- --------------
* Before reimbursement by the Manager the net investment loss per share would
have been $(1.11) and $(1.13) for Class A and Class B shares, respectively,
from October 18, 1995 to December 31, 1995.
** Before reimbursement by the Manager the net investment loss per share would
have been $(0.50) and $(0.59) for Class A and Class B shares, respectively,
for the year ended December 31, 1996.
*** Before reimbursement by the Manager the net investment loss per share would
have been $(0.07) and $(0.17) for Class A and Class B shares, respectively,
for the year ended December 31, 1997.
+ 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.
------------------------------
<TABLE>
<CAPTION>
AVERAGE MONTHLY
AVERAGE NUMBER OF
AMOUNT OF DEBT AMOUNT OF DEBT REGISTRANT'S SHARES
YEAR OUTSTANDING AT OUTSTANDING OUTSTANDING
ENDED END OF PERIOD DURING THE PERIOD DURING THE PERIOD
----------- --------------------- --------------------- -------------------
<S> <C> <C> <C> <C>
GT Global America Value Fund........ 1997 $ 0 $ 778 930,597
<CAPTION>
AVERAGE AMOUNT OF
DEBT PER SHARE
DURING THE PERIOD
-------------------
<S> <C>
GT Global America Value Fund........ $ 0.0008
</TABLE>
Prospectus Page 19
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL JAPAN GROWTH FUND
<TABLE>
<CAPTION>
CLASS A+
---------------------------------------------------------------------------------
YEAR ENDED DEC. 31,
---------------------------------------------------------------------------------
1997* 1996* 1995* 1994 1993 1992* 1991 1990
------- ------- -------- ------- ------- ------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 9.76 $ 11.00 $ 12.15 $ 11.61 $ 8.70 $ 11.16 $ 11.48 $ 16.39
------- ------- -------- ------- ------- ------- ------- -----------
Net investment income
(loss)....................... (0.08) (0.04) (0.04) (0.04) (0.14) --*** (0.09) (0.05)****
Net realized and unrealized
gain (loss) on investments... (0.70) (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........ (0.78) (0.81) 0.22 0.75 2.91 (2.40) (0.32) (4.65)
------- ------- -------- ------- ------- ------- ------- -----------
Distributions:
Net realized gain on
investments and foreign
currency................... (0.02) (0.43) (1.37) (0.21) -- (0.06) -- (0.26)
------- ------- -------- ------- ------- ------- ------- -----------
Total distributions....... (0.02) (0.43) (1.37) (0.21) -- (0.06) -- (0.26)
------- ------- -------- ------- ------- ------- ------- -----------
Net asset value, end of
period....................... $ 8.96 $ 9.76 $ 11.00 $ 12.15 $ 11.61 $ 8.70 $ 11.16 $ 11.48
------- ------- -------- ------- ------- ------- ------- -----------
------- ------- -------- ------- ------- ------- ------- -----------
Total investment return
(a)(c)....................... (7.99)% (7.43)% 1.94% 6.56% 33.45% (21.5)% (2.8)% (28.7)%
------- ------- -------- ------- ------- ------- ------- -----------
------- ------- -------- ------- ------- ------- ------- -----------
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $44,583 $63,585 $111,105 $98,066 $88,487 $93,865 $61,519 $ 51,693
Ratio of net investment income
(loss) to average net assets:
With expense reductions..... (0.61)% (0.40)% (0.40)% (0.32)% (0.3)% --%*** (1.5)% (1.2)%****
Without expense
reductions................. (0.68)% (0.50)% (0.55)% (0.44)% N/A N/A N/A N/A
Ratio of expenses to average
net assets:
With expense reductions..... 1.99% 1.84% 1.99% 1.91% 2.1% 2.2%*** 2.2% 2.2%****
Without expense
reductions................. 2.06% 1.94% 2.14% 2.03% --%(d) --%(d) --%(d) (--%d)
Portfolio turnover rate ++.... 58% 31% 67% 49% 104% 115% 251% 138%
Average commission rate per
share paid on portfolio
transactions ++.............. $0.0416 $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,
YEAR ENDED DEC. 1993
31, YEAR ENDED DEC. 31, TO
------------------ ------------------------------------- DEC. 31,
1989 1988** 1997* 1996* 1995* 1994 1993
------- ------- ------ -------- -------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 10.57 $ 10.36 $ 9.49 $ 10.78 $ 12.02 $ 11.57 $ 9.85
------- ------- ------ -------- -------- ------- ------------
Net investment income
(loss)....................... (0.19) (0.20) (0.14) (0.11) (0.12) (0.13) (0.18)
Net realized and unrealized
gain (loss) on investments... 6.57 2.44 (0.66) (0.75) 0.25 0.79 1.90
------- ------- ------ -------- -------- ------- ------------
Net increase (decrease) in net
asset value resulting from
investment operations........ 6.38 2.24 (0.80) (0.86) 0.13 0.66 1.72
------- ------- ------ -------- -------- ------- ------------
Distributions:
Net realized gain on
investments and foreign
currency................... (0.56) (2.03) (0.02) (0.43) (1.37) (0.21) --
------- ------- ------ -------- -------- ------- ------------
Total distributions....... (0.56) (2.03) (0.02) (0.43) (1.37) (0.21) --
------- ------- ------ -------- -------- ------- ------------
Net asset value, end of
period....................... $ 16.39 $ 10.57 $ 8.67 $ 9.49 $ 10.78 $ 12.02 $11.57
------- ------- ------ -------- -------- ------- ------------
------- ------- ------ -------- -------- ------- ------------
Total investment return
(a)(c)....................... 60.7% 21.9% (8.42)% (8.05)% 1.20% 5.81% 17.46%
------- ------- ------ -------- -------- ------- ------------
------- ------- ------ -------- -------- ------- ------------
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $48,405 $18,591 $24,250 $ 32,116 $ 41,274 $27,355 $3,699
Ratio of net investment income
(loss) to average net assets:
With expense reductions
(b)........................ (1.6)% (1.5)% (1.26)% (1.05)% (1.05)% (0.97)% (0.9)%
Without expense reductions
(b)........................ N/A N/A (1.33)% (1.15)% (1.20)% (1.09)% N/A
Ratio of expenses to average
net assets:
With expense reductions
(b)........................ 2.1% 2.2% 2.64% 2.49% 2.64% 2.56% 2.7%
Without expense reductions
(b)........................ --%(d) --%(d) 2.71% 2.59% 2.79% 2.68% --%(d)
Portfolio turnover rate ++.... 108% 150% 58% 31% 67% 49% 104%
Average commission rate per
share paid on portfolio
transactions ++.............. N/A N/A $0.0416 $ 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.
------------------------------
<TABLE>
<CAPTION>
AVERAGE MONTHLY
NUMBER OF
AVERAGE REGISTRANT'S
AMOUNT OF DEBT AMOUNT OF DEBT SHARES AVERAGE AMOUNT OF
YEAR OUTSTANDING AT OUTSTANDING OUTSTANDING DEBT PER SHARE
ENDED END OF PERIOD DURING THE PERIOD DURING THE PERIOD DURING THE PERIOD
----------- --------------- ------------------- ------------------ -------------------
<S> <C> <C> <C> <C> <C>
GT Global Japan Growth Fund......... 1997 $ 0 $ 0 10,542,000 $ 0.0000
1996 2,000,000 5,479 13,009,004 0.0004
</TABLE>
Prospectus Page 21
<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, a division of The McGraw-Hill Companies, Inc. ("S&P"), or, if
Prospectus Page 22
<PAGE>
GT GLOBAL EQUITY FUNDS
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 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 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
Prospectus Page 23
<PAGE>
GT GLOBAL EQUITY FUNDS
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.
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
Prospectus Page 24
<PAGE>
GT GLOBAL EQUITY FUNDS
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,
some of which may be investment vehicles or companies that are advised by the
Manager or its affiliates ("Affiliated Funds"), 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. The
Manager waives its advisory fee to the extent that such a Fund or a Portfolio
invests in an Affiliated Fund.
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 and 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,
Prospectus Page 25
<PAGE>
GT GLOBAL EQUITY FUNDS
enhance a Fund's total return. Each Fund and 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 or such other collateral as permitted by a Fund's investment program
and regulatory agencies, and as approved by the Board. 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 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. Each Fund may enter into forward currency
contracts either with respect to specific transactions or with respect to its
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
Prospectus Page 26
<PAGE>
GT GLOBAL EQUITY FUNDS
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 a 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 that is not approved by the Board or shareholders of its
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 its liquidity. 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 its
investment objective, policies and limitations discussed herein.
In addition to selling an interest therein to its corresponding Fund, each
Portfolio may sell interests therein 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 any or all of its assets 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 than 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.
Prospectus Page 27
<PAGE>
GT GLOBAL EQUITY FUNDS
The America Small Cap Fund and America Value Fund may each be materially
affected by the actions of other large investors, if any, in its corresponding
Portfolio. 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,
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 that 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
Prospectus Page 28
<PAGE>
GT GLOBAL EQUITY FUNDS
exchange rate of the currency would adversely affect the value of the security
expressed in U.S. dollars.
INVESTING IN EMERGING MARKETS. Because of the special risks associated with
investing in emerging markets, an investment in the Pacific Fund, International
Fund and Worldwide Fund should be considered speculative. Investors are strongly
advised to consider carefully the special risks involved in emerging markets,
which are in addition to the usual risks of investing in developed foreign
markets around the world.
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, 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 occurred in certain countries.
The risk also exists that an emergency situation may arise in one or more
emerging markets as a result of which trading of securities may cease or may be
substantially curtailed and prices for the Pacific Fund, International Fund
and/or Worldwide Fund's portfolio securities in such markets may not be readily
available. Section 22(e) of the 1940 Act permits a registered investment company
to suspend redemption of its shares for any period during which an emergency
exists, as determined by the SEC. Accordingly, when the Pacific Fund,
International Fund or Worldwide Fund believes that appropriate circumstances
warrant, it will promptly apply to the SEC for a determination that an emergency
exists within the meaning of Section 22(e). During the period commencing from
the Pacific Fund, International Fund or Worldwide Fund's identification of such
conditions until the date of SEC action, the portfolio securities of the Pacific
Fund, International Fund or Worldwide Value Fund in the affected markets will be
valued at fair value as determined in good faith by or under the direction of
the Company's Board of Trustees.
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 and the
Portfolios may be subject to greater risks and may experience greater volatility
than a fund that is more broadly diversified geographically.
Prospectus Page 29
<PAGE>
GT GLOBAL EQUITY FUNDS
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, which may be attributable in part to inefficiencies associated with
Japanese corporate operations. 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. Moreover, recent currency devaluations in some Pacific region
countries have resulted in high interest rate levels and sharp reductions in
economic activity and have diminished prospects for short-term growth in
corporate earnings. Certain countries, such as India, face serious exchange
constraints. Jurisdictional disputes also exist between South Korea and North
Korea.
In addition, Hong Kong reverted to Chinese administration on July 1, 1997. The
long-term effects of this reversion are not known at this time. However, a
Fund's investments in Hong Kong may now be subject to the same or similar risks
as any investment in China. 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 economy.
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
Prospectus Page 30
<PAGE>
GT GLOBAL EQUITY FUNDS
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; and (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.
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. Shares of a Fund may be purchased through Financial Institutions, some
of which may charge the investor a transaction fee. That fee will be in addition
to the sales charge payable by the investor, with respect to Class A shares.
Some of these Financial Institutions (or their designees) may be authorized to
accept purchase orders on behalf of a Fund. All purchase orders will be executed
at the public offering price next determined after the purchase order is
received, which includes any applicable sales charge for Class A shares. Orders
received by the Transfer Agent before the close of regular trading on the New
York Stock Exchange ("NYSE") (currently 4:00 p.m. Eastern Time, unless weather,
equipment failure or other factors contribute to an earlier closing time) on any
Business Day will be executed at the public offering price for the applicable
class of shares determined that day. Orders received by authorized institutions
(or their designees) before the close of regular trading on the NYSE on a
Business Day will be deemed to have been received by a Fund on such day and will
be effected that day, provided that such orders are transmitted to the Transfer
Agent prior to the time set for receipt of such orders. A "Business Day" is any
day Monday through Friday on which the NYSE is open for business. Financial
Institutions are responsible for forwarding the investor's order to the Transfer
Agent so that it will be received prior to the required time.
The minimum initial investment is $500 ($100 for IRAs and $25 for custodial
accounts under Section 403(b)(7) of the Internal Revenue Code of 1986, as
amended (the "Code"), and other tax-qualified employer-sponsored retirement
accounts, if made by such investors under a systematic investment plan providing
for monthly payments of at least that amount). The minimum for additional
purchases is $100 ($25 for IRAs, Code Section 403(b)(7) custodial accounts and
other tax-qualified employer-sponsored retirement accounts, as mentioned above).
THE 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
Prospectus Page 31
<PAGE>
GT GLOBAL EQUITY FUNDS
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 GT GLOBAL. After an initial investment is made and a
shareholder account is established through a Financial Institution, at the
investor's option, subsequent purchases may be made directly through GT Global.
See "Shareholder Account Manual." Investors may also make an initial investment
in the Fund and establish a shareholder account directly through GT Global 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.
DIFFERENCES BETWEEN THE CLASSES. The primary difference between the 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 a Fund represent interests in the same Fund and have the same rights, except
that each class bears the separate expenses of its 12b-1 distribution plan and
has exclusive voting rights with respect to such plan, each class can experience
other minor expense differences and, in addition to different sales charges,
each class has a separate exchange privilege.
The decision as to which class of shares is more beneficial to an investor
depends on the amount invested, the intended length of time the investment is
held and the investor's personal situation. Large investments may qualify for a
reduced Class A sales charge. Investors in Class B shares have 100% of the
purchase invested immediately. Consult your financial adviser. Financial
Institutions may receive different levels of compensation for selling a
particular class of shares.
ADVISOR CLASS SHARES. Advisor Class shares are offered through a separate
prospectus to (a) trustees or other fiduciaries purchasing shares for employee
benefit plans that are sponsored by organizations that have at least 1,000
employees; (b) any account with assets of at least $10,000 if (i) a financial
planner, trust company, bank trust department or registered investment adviser
has investment discretion over the account and (ii) the account holder pays such
person as compensation for its advice and other services an annual fee of at
least .50% of the assets in the account; (c) any account with assets of at least
$10,000 if (i) the account is established under a "wrap fee" program and (ii)
the account holder pays the sponsor of the program an annual fee of at least
.50% of the assets in the account; (d) accounts advised by one of the companies
composing or affiliated with Liechtenstein Global Trust; and (e) any of those
companies.
Prospectus Page 32
<PAGE>
GT GLOBAL EQUITY FUNDS
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
AMOUNT OF OF REALLOWANCE AS
PURCHASE AT -------------------------- PERCENTAGE OF THE
THE PUBLIC OFFERING NET 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 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
Prospectus Page 33
<PAGE>
GT GLOBAL EQUITY FUNDS
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.
(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 the Fund's shares.
(xi) Accounts for which a Financial Institution charges an account management
fee, provided the Financial Institution or broker/dealer has entered into an
agreement with GT Global regarding such accounts.
(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.
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. Gain on the redemption is taxable
notwithstanding exercise of the reinvestment privilege (although loss thereon
might not be deductible as a result of such exercise). See "Dividends, Other
Distributions and Federal Income Taxation."
REDUCED SALES CHARGE PLANS -- CLASS A SHARES. Class A shares may be purchased at
reduced sales charges either through the Right of Accumulation or under a Letter
of Intent. Investors should contact their Financial Institution or the Transfer
Agent for more information.
RIGHT OF ACCUMULATION. Pursuant to the Right of Accumulation, investors are
permitted to purchase shares of the 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 Financial Institution, 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
shares of GT Global Dollar Fund) in the following thirteen months. The LOI is
included as part of the Account Application located at the end of this
Prospectus. The sales charge applicable to that aggregate amount then becomes
the applicable sales charge on all purchases made concurrently with the
execution of the LOI and in the thirteen months following that execution. If an
investor executes an LOI within 90 days of a prior purchase of GT Global Mutual
Fund Class A shares (other than 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
Prospectus Page 34
<PAGE>
GT GLOBAL EQUITY FUNDS
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 a 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 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, realized on a 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 may not be purchased for a Savings Incentive
Match Plan for Employees IRA ("SIMPLE IRA") for which a designated financial
institution was selected by the employer on Form 5305-SIMPLE. However, Class B
Shares may be purchased for SIMPLE IRAs using Form 5304-SIMPLE. In addition,
Class A shares may be purchased for all SIMPLE IRAs.
Class B shares 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 other 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
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GT GLOBAL EQUITY FUNDS
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 would be sold without
a contingent deferred sales charge. The number of shares needed to fund the
remaining $335 of the redemption would equal 30.455. Using the lower of cost or
market price to determine the contingent deferred sales charge the original
purchase price of $10 per share would be used. The contingent deferred sales
charge calculation would therefore be 30.455 shares times $10 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.
Class B shares that are acquired pursuant to the exchange privilege during a
tender offer by GT Global Floating Rate Fund, Inc. ("Floating Rate Fund") will
be subject, in lieu of the contingent deferred sales charge described above, to
a contingent deferred sales charge equivalent to the early withdrawal charge on
the common stock of the Floating Rate Fund. The purchase of Class B shares of
the Fund will be deemed to have occurred at the time of the initial purchase of
the Floating Rate Fund's common stock.
For federal income tax purposes, the amount of the contingent deferred sales
charge will reduce the gain or increase the loss, as the case may be, realized
on a redemption. The amount of any contingent deferred sales charge will be paid
to GT Global.
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
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<PAGE>
GT GLOBAL EQUITY FUNDS
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 Financial Institution 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. 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 Financial Institution 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
GT Global Mutual Fund(s) in a shareholder's Personal Portfolio have appreciated
during a rebalancing period, the Program will result in shares of GT Global
Mutual Fund(s) that have appreciated most during the period being exchanged for
shares of GT Global Mutual Fund(s) that have appreciated least. SUCH EXCHANGES
ARE NOT TAX-FREE AND MAY RESULT IN A SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS
THE CASE MAY BE, FOR FEDERAL INCOME TAX PURPOSES. See "Dividends, Other
Distributions and Federal Income Taxation." Participation in 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
Prospectus Page 37
<PAGE>
GT GLOBAL EQUITY FUNDS
date. Once a shareholder establishes the Program for his or her Personal
Portfolio, a shareholder cannot cancel or change which rebalancing frequency,
which Funds or what allocation percentages are assigned to the Program, unless
canceled or changed in writing and received by the Transfer Agent in good order
at least five business days prior to the rebalancing date. Shareholders
participating in the Program may also participate in the Right of Accumulation,
Letter of Intent and Dollar Cost Averaging Programs. Certain Financial
Institutions may charge a fee for establishing accounts relating to the Program.
Investors should contact their Financial Institution or GT Global for more
information.
Prospectus Page 38
<PAGE>
GT GLOBAL EQUITY FUNDS
HOW TO MAKE EXCHANGES
- --------------------------------------------------------------------------------
Shares of a Fund may be exchanged for shares of the same class of any other GT
Global Mutual Fund, (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 FEDERAL INCOME
TAX PURPOSES. See "Dividends, Other Distributions and Federal Income Taxation."
In addition to the Funds, the GT Global Mutual Funds currently include:
-- GT GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND
-- GT GLOBAL DEVELOPING MARKETS FUND
-- GT GLOBAL DOLLAR FUND
-- GT GLOBAL EMERGING MARKETS FUND
-- GT GLOBAL FINANCIAL SERVICES FUND
-- GT GLOBAL GOVERNMENT INCOME FUND
-- GT GLOBAL GROWTH & INCOME FUND
-- GT GLOBAL HEALTH CARE FUND
-- GT GLOBAL HIGH INCOME FUND
-- GT GLOBAL INFRASTRUCTURE FUND
-- GT GLOBAL LATIN AMERICA GROWTH FUND
-- GT GLOBAL NATURAL RESOURCES FUND
-- GT GLOBAL NEW DIMENSION FUND
-- GT GLOBAL STRATEGIC INCOME FUND
-- GT GLOBAL TELECOMMUNICATIONS 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 or her Financial
Institution or the Transfer Agent to request the prospectus of the other GT
Global Mutual Fund(s) being considered. Certain Financial Institutions may
charge a fee for handling exchanges.
EXCHANGES BY TELEPHONE. A shareholder may give exchange instructions to the
shareholder's Financial Institution or 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 shareholder's
Financial Institution or to the Transfer Agent at the address set forth in the
Shareholder Account Manual.
LIMITATIONS ON PURCHASE ORDERS AND EXCHANGES. The GT Global Mutual Funds are not
intended to serve as vehicles for frequent trading in response to short-term
fluctuations in the market. Due to the disruptive effect that market-timing
investment strategies and excessive trading can have on efficient portfolio
management, each GT Global Mutual Fund and 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
more than one class of shares, the shareholder must specify the class of shares
to be redeemed.
REDEMPTIONS THROUGH FINANCIAL INSTITUTIONS. Shareholders with accounts at
Financial Institutions that sell shares of the Funds may submit redemption
requests to such Financial Institutions. If the shares are held in the name of
the Financial Institution, the redemption must be made through the Financial
Institution. Financial Institutions may honor a redemption request either by
repurchasing shares from a redeeming shareholder at the shares' net asset value
next determined after the Financial Institution receives the request or, as
described below, by forwarding such requests to the Transfer Agent (see "How to
Redeem Shares -- Redemptions Through the Transfer Agent"). Redemption proceeds
normally will be paid by check or, if offered by the Financial Institution,
credited to the shareholder's account at the Financial Institution at the
election of the shareholder. Financial Institutions may impose a service charge
for handling redemption transactions placed through them and may have other
requirements concerning redemptions. Accordingly, shareholders should contact
their Financial Institution for more details.
REDEMPTIONS THROUGH THE TRANSFER AGENT. Redemption requests may be transmitted
to the Transfer Agent by telephone or by mail, in accordance with the
instructions provided in the Shareholder Account Manual. Redemptions will be
effected at the net asset value (less any applicable contingent deferred sales
charge for Class B shares or, in limited circumstances, Class A shares) next
determined after the Transfer Agent has received the request or after an
Authorized Institution has received the request, provided that the request is
transmitted to the Transfer Agent prior to the time set for receipt of such
redemption requests. Redemptions will only be effected if the request is
received in good order and accompanied by 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
the shareholder's address of record has not been changed within the preceding
fifteen 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 $500. 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.
Prospectus Page 40
<PAGE>
GT GLOBAL EQUITY FUNDS
Shareholders who hold certificates for shares may not redeem by telephone.
REDEMPTION REQUESTS MAY NOT BE MADE BY TELEPHONE FOR FIFTEEN DAYS FOLLOWING ANY
CHANGE OF THE SHAREHOLDER'S ADDRESS OF RECORD.
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 preceding fifteen 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 Financial
Institution or the Transfer Agent for more information. With respect to Class A
shares, participation in the Systematic Withdrawal Plan concurrent with
purchases of Class A shares 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. Systematic withdrawal plans offered by
Financial Institutions may have different features. Accordingly, shareholders
should contact their Financial Institution for more details.
OTHER IMPORTANT REDEMPTION INFORMATION. A request for redemption will not be
processed until all of the necessary documentation has been received in good
order. A shareholder in doubt about what documents are required should contact
his or her Financial Institution or the Transfer Agent.
Except in extraordinary circumstances and as permitted under the 1940 Act,
payment for shares redeemed by telephone or by mail will be made promptly after
receipt of a redemption request, if in good order, but not later than seven days
after the date the request is executed. Requests for redemption which are
subject to any special conditions or which specify a future or past effective
date cannot be accepted.
If the Transfer Agent is requested to redeem shares for which a Fund has not yet
received good payment, the Fund may delay payment of redemption proceeds until
the Transfer Agent has assured itself that good payment has been collected for
the purchase of the shares. In the case of purchases by check, it can take up to
10 business days to confirm that the check has cleared and good payment has been
received. Redemption proceeds will not be delayed when shares have been paid for
by wire or when the investor's account holds a sufficient number of shares for
which funds already have been collected.
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 Financial Institutions. 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" for more information.
Each Fund's 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 Mutual Funds
P.O. Box 7345
San Francisco, CA 94120-7345
INVESTMENTS BY BANK WIRE
An investor opening a new account should call 1-800-223-2138 to obtain an
account number. WITHIN SEVEN DAYS OF PURCHASE A COMPLETED ACCOUNT APPLICATION
CONTAINING THE INVESTOR'S CERTIFIED TAXPAYER IDENTIFICATION NUMBER MUST BE SENT
TO THE ADDRESS PROVIDED ABOVE UNDER "INVESTMENTS BY MAIL." Wire instructions
must state Fund name, class of shares, shareholder's registered name and account
number. Bank wires should be sent through the Federal Reserve Bank Wire System
to:
WELLS FARGO BANK, N.A.
ABA 121000248
Attn: GT GLOBAL
Account No. 4023-050701
EXCHANGES BY TELEPHONE
Call the Transfer Agent at 1-800-223-2138.
EXCHANGES BY MAIL
Send complete instructions, including name of Fund exchanging from, 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 Mutual Funds
P.O. Box 7893
San Francisco, CA 94120-7893
REDEMPTIONS BY TELEPHONE
Call the Transfer Agent at 1-800-223-2138.
REDEMPTIONS BY MAIL
Send complete instructions, including name of Fund, class of shares, amount of
redemption, shareholder's registered name and account number, to:
GT Global Mutual Funds
P.O. Box 7893
San Francisco, CA 94120-7893
OVERNIGHT MAIL
Overnight mail services do not deliver to post office boxes. To send purchase,
exchange or redemption orders by overnight mail, follow the above instructions
but send to the following address:
GT Global Investor Services, Inc.
California Plaza
2121 N. California Boulevard
Suite 450
Walnut Creek, CA 94596
ADDITIONAL QUESTIONS
Shareholders with additional questions regarding purchase, exchange and
redemption procedures should call the Transfer Agent at 1-800-223-2138.
Prospectus Page 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 its proportionate share of the 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 cannot purchase or redeem shares of that Fund.
The different service and distribution fees borne by each class of shares of
each Fund will result in different net asset values. 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 each year 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-distribution date by the amount thereof.
Therefore, a dividend or other distribution paid shortly after a purchase of
shares would represent, in substance, a return of capital to the shareholder (to
the extent the distribution is paid on the shares so purchased), even though
subject to income tax, as discussed below.
TAXES. 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 it distributes 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.
Under the Taxpayer Relief Act of 1997, different maximum tax rates apply to a
noncorporate taxpayer's net capital gain depending on the taxpayer's holding
period and marginal rate of federal income tax -- generally, 28% for gain
recognized on securities held for more than one year but not more than 18 months
and 20% (10% for taxpayers in the 15% marginal tax bracket) for gain recognized
on securities held for more than 18 months. Each Fund may divide each net
capital gain distribution into a 28% rate gain distribution and a 20% rate gain
distribution (in accordance with the Fund's holding periods for the securities
it sold that generated the distributed gain), in which event its shareholders
must treat those portions accordingly.
Each Fund provides federal income tax information to its shareholders annually,
including information about dividends and capital gain distributions paid during
the preceding year and, under certain circumstances, the shareholders'
respective shares of any foreign taxes paid by the Fund 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. The information regarding capital gain distributions
designates the portions thereof subject to the different maximum rates of tax
applicable to noncorporate taxpayers' net capital gain indicated above.
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 income 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.
Prospectus Page 45
<PAGE>
GT GLOBAL EQUITY FUNDS
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' operations.
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 2.00% and 2.65% 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 1.75% and 2.40% 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
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 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,
compose Liechtenstein Global Trust ("LGT"). LGT is a provider of global asset
management and private banking
Prospectus Page 46
<PAGE>
GT GLOBAL EQUITY FUNDS
products and services to individual and institutional investors. LGT 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, 1997, the Manager and its worldwide affiliates managed
approximately $54 billion in assets. In the United States, as of December 31,
1997, the Manager managed or administered approximately $8 billion of assets of
the GT Global Mutual Funds. As of December 31, 1997, assets entrusted to
Liechtenstein Global Trust totaled approximately $79 billion.
On January 30, 1998, LGT, the indirect parent organization of Chancellor LGT
Asset Management, Inc. (the "Manager"), entered into an agreement with AMVESCAP
PLC ("AMVESCAP") pursuant to which AMVESCAP will acquire LGT's Asset Management
Division, which includes the Manager. AMVESCAP is a holding company formed in
1997 by the merger of INVESCO PLC and A I M Management Group Inc. Consummation
of the transaction is subject to a number of contingencies, including regulatory
approvals. Because the transaction would constitute an assignment of the
Company's investment management agreement under the Investment Company Act of
1940 (and, therefore, a termination of such agreement), it is anticipated that
the approval of the Company's Board of Trustees and the Company's shareholders
of new investment management arrangements will be sought. The Manager
anticipates that the investment management arrangements will be presented for
shareholder approval, and anticipates that the transaction will close, on or
about May 31, 1998.
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 each Fund's
investment objective.
The investment professionals primarily responsible for the portfolio management
of each Fund or Portfolio are as follows:
PACIFIC FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
- ----------------------- --------------------- ------------------------------------------------------------------------
<S> <C> <C>
Peter Eadon-Clarke Portfolio Manager Chief Investment Officer for the Pacific Rim (excluding Japan) and
Hong Kong since 1997 Portfolio Manager for the Manager and LGT Asset Management Ltd. (Hong
Kong), an affiliate of 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 BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
- ----------------------- --------------------- ------------------------------------------------------------------------
<S> <C> <C>
Nicholas S. Train Portfolio Manager Head of Investments for the United Kingdom and Europe for the Manager
London since 1998 and LGT Asset Management PLC (London) ("LGT Asset Management"), an
affiliate of the Manager, since 1996. Prior thereto, Mr. Train was a
Portfolio Manager for the Manager and LGT Asset Management from 1984 to
1996.
Nicholas J. Ford Portfolio Manager Portfolio Manager for the Manager since February 1998, and a Portfolio
London since 1998 Manager for LGT Asset Management since 1996. From 1994 to 1996, Mr.
Ford was Director of Equities for Lehman Brothers Global Asset
Management PLC (London). Prior thereto, he was a Portfolio Manager and
Head of European Equities for Hill Samuel Investment Management PLC
(London) from 1990 to 1994.
</TABLE>
Prospectus Page 47
<PAGE>
GT GLOBAL EQUITY FUNDS
SMALL CAP PORTFOLIO
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE PORTFOLIO PAST FIVE YEARS
- ----------------------- --------------------- ------------------------------------------------------------------------
<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>
AMERICA MID CAP FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
- ----------------------- --------------------- ------------------------------------------------------------------------
<S> <C> <C>
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 BUSINESS EXPERIENCE
NAME/OFFICE THE PORTFOLIO PAST FIVE YEARS
- ----------------------- --------------------- ------------------------------------------------------------------------
<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>
- --------------
* On October 31, 1996, Chancellor Capital Management, Inc. ("Chancellor
Capital") merged with LGT Asset Management, Inc. (San Francisco), and the
resulting entity was renamed Chancellor LGT Asset Management, Inc. Prior to
October 31, 1996, Mr. Cunneen, Mr. Clum, Mr. Ujazdowski, Mr. Scheiner and Mr.
Collins were employees only of Chancellor Capital.
Prospectus Page 48
<PAGE>
GT GLOBAL EQUITY FUNDS
WORLDWIDE FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
- ----------------------- --------------------- ------------------------------------------------------------------------
<S> <C> <C>
Roger Yates Portfolio Manager Mr. Yates has been Global Chief Investment Officer for the Manager and
London since 1996 LGT Asset Management since October 1997. He was International Chief
Investment Officer for the Manager and LGT Asset Management from
September 1996 to October 1997. 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 for the Manager since
London since 1997 1996. From 1992 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 See description above.
New York since 1997
</TABLE>
JAPAN FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
- ----------------------- --------------------- ------------------------------------------------------------------------
<S> <C> <C>
Andrew Callender Portfolio Manager Head of Investment for Japan for the Manager since 1997. From 1990 to
Tokyo since 1997 1997, Mr. Callender was a Portfolio Manager for the Manager.
</TABLE>
INTERNATIONAL FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
- ----------------------- --------------------- ------------------------------------------------------------------------
<S> <C> <C>
Roger Yates Portfolio Manager See description above.
London since 1996
Michael Lindsell Portfolio Manager See description above.
London since 1992
</TABLE>
- --------------
* On October 31, 1996, Chancellor Capital merged with LGT Asset Management, Inc.
(San Francisco), and the resulting entity was renamed Chancellor LGT Asset
Management, Inc. Prior to October 31, 1996, Mr. Collins was an employee only
of Chancellor Capital.
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 that
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, CA
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." GT Global also pays a commission equal to 4.00% of the amount invested
to broker/ dealers who sell Class B shares. From time to time, GT Global may pay
commissions in excess of these amounts. Commissions are not paid on exchanges or
certain reinvestments in Class B shares. In addition, with respect to both
classes of shares, GT Global makes ongoing payments to broker/dealers for
distribution and service activities in accordance with the Rule 12b-1 plans
described below.
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
Prospectus Page 50
<PAGE>
GT GLOBAL EQUITY FUNDS
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
such Plan continues in effect.
As of December 31, 1997, unreimbursed distribution expenses for the Worldwide
Fund, America Mid Cap Fund, America Small Cap Fund, America Value Fund, Japan
Fund, Europe Fund, Pacific Fund and International Fund amounted to approximately
$53,000, $164,000, $31,000, $26,000, $92,000, $119,000, $119,000 and $73,000,
respectively. Such amounts represented approximately .04%, .03%, .09%, .10%,
.09%, .02%, .06% and .04% of the net assets of the Worldwide Fund, America Mid
Cap Fund, America Small Cap Fund, America Value Fund, Japan Fund, Europe Fund,
Pacific Fund and International Fund, respectively.
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 calendar year on Form 1099-DIV. Under
certain circumstances, duplicate mailings of the foregoing reports to the same
household may be consolidated.
ORGANIZATION OF THE 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
Prospectus Page 51
<PAGE>
GT GLOBAL EQUITY FUNDS
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 of
the Company's independent accountants.
Normally there will be no annual meeting of shareholders in any year, 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.
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, CA 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
Prospectus Page 52
<PAGE>
GT GLOBAL EQUITY FUNDS
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 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, CA 94596.
CUSTODIAN. State Street Bank and Trust Company, 225 Franklin Street, Boston, MA
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, MA 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
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY GT GLOBAL FUND,
INCLUDING FEES, EXPENSES AND THE RISKS OF GLOBAL AND EMERGING MARKET
INVESTING 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 NEW DIMENSION FUND
Captures global growth opportunities by investing directly in the six GT Global
Theme Funds
GT GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity for U.S. investors by investing outside the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
GT GLOBAL DEVELOPING MARKETS FUND
Invests in debt and equity securities of developing market issuers
/ / GLOBAL THEME FUNDS
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL HEALTH CARE FUND
Invests in the growing health care industries worldwide
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA MID CAP GROWTH FUND
Concentrates on medium-sized companies in the U.S.
GT GLOBAL AMERICA VALUE FUND
Concentrates on equity securities of 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
Invests in 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 a portfolio of emerging market debt securities
GT GLOBAL FLOATING RATE FUND
Invests primarily in senior secured floating rate loans that have the potential
to achieve a high level of current income
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[LOGO]
NO DEALER, SALES REPRESENTATIVE OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
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 IN
SUCH JURISDICTION.
EQUPR610040MC
<PAGE>
GT GLOBAL EQUITY FUNDS: ADVISOR CLASS
PROSPECTUS -- APRIL 1, 1998
- --------------------------------------------------------------------------------
<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.
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 April 1, 1998, 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, CA 94111, or by calling (800)
824-1580. It is also available, along with other related materials, on the SEC's
Internet web site (http://www.sec.gov).
FOR FURTHER INFORMATION, CALL (800) 824-1580 OR CONTACT YOUR
FINANCIAL ADVISOR.
[LOGO]
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus Page 1
<PAGE>
GT GLOBAL 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................................ 36
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 $79 billion in total assets as of December 31, 1997.
The Manager and its worldwide asset management affiliates maintain
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 are available through Financial Advisers 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 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.
</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)................ .49% .49% .61% .57% .73% .92% .41% .95%
--------- ------------- ----------- --------- --------- --------- --------- ---------
Total Fund Operating
Expenses................... 1.47% 1.47% 1.58% 1.54% 1.71% 1.65% 1.13% 1.68%
--------- ------------- ----------- --------- --------- --------- --------- ---------
--------- ------------- ----------- --------- --------- --------- --------- ---------
</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....................................................... $15 $47 $81 $177
GT Global New Pacific Growth Fund
Advisor Class shares....................................................... $16 $50 $87 $189
GT Global Europe Growth Fund
Advisor Class shares....................................................... $16 $49 $85 $185
GT Global Japan Growth Fund
Advisor Class shares....................................................... $18 $54 $94 $203
GT Global America Small Cap Growth Fund
Advisor Class shares....................................................... $17 $52 $90 $197
GT Global America Mid Cap Growth Fund
Advisor Class shares....................................................... $12 $36 $63 $138
GT Global America Value Fund
Advisor Class shares....................................................... $17 $53 $92 $200
<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, 1997.
"Other expenses" include custody, transfer agent, legal, audit and other
operating expenses. Effective January 1, 1998, the Manager and GT Global
have undertaken to limit each Fund's, other than America Small Cap Fund's,
America Mid Cap Fund's and America Value Fund's, expenses (exclusive of
brokerage commissions, taxes, interest and extraordinary expenses) to the
annual rate of 1.65% of the average daily net assets of the Fund's Advisor
Class shares. Similarly, the Manager and GT Global have undertaken to limit
the America Small Cap Fund's, America Mid Cap Fund's and America Value
Fund's expenses (exclusive of brokerage commissions, taxes, interest and
extraordinary expenses) to the annual rate of 1.40% of the average daily
net assets of the Fund's Advisor Class shares. See "Management" herein and
the Statement of Additional Information for more information. Without
reimbursements, "Other expenses" and "Total Fund Operating Expenses" would
have been 1.44% and 2.17%, respectively, for the America Small Cap Fund
(including its share of the expenses of its corresponding Portfolio) and
1.92% and 2.65%, respectively, for the America Value Fund (including its
share of the expenses of its corresponding 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 ap-
proximately 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 Class A and Advisor Class share of each Fund. 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, 1997, 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 DEC. 31,
--------------------------------------------------------------------
1997 1996* 1995* 1994 1993* 1992 1991
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 16.71 $ 16.82 $ 15.53 $ 17.47 $ 14.47 $ 14.07 $ 11.83
-------- -------- -------- -------- -------- -------- --------
Net investment income
(loss)....................... 0.05 0.03 -- -- 0.04 0.07 0.10
Net realized and unrealized
gain (loss) on investments... 1.55 1.79 1.74 (1.16) 3.92 0.39 2.29
-------- -------- -------- -------- -------- -------- --------
Net increase (decrease) in net
asset value resulting from
investment operations........ 1.60 1.82 1.74 (1.16) 3.96 0.46 2.39
-------- -------- -------- -------- -------- -------- --------
Distributions:
Net investment income....... (0.02) -- -- -- -- -- (0.15)
Net realized gain on
investments................ (4.03) (1.93) (0.45) (0.78) (0.96) (0.06) --
-------- -------- -------- -------- -------- -------- --------
Total distributions....... (4.05) (1.93) (0.45) (0.78) (0.96) (0.06) (0.15)
-------- -------- -------- -------- -------- -------- --------
Net asset value, end of
period....................... $ 14.26 $ 16.71 $ 16.82 $ 15.53 $ 17.47 $ 14.47 $ 14.07
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
Total investment return
(a)(c)....................... 10.00% 10.92% 11.23% (6.65)% 27.6% 3.3% 20.3%
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $103,769 $125,556 $145,982 $182,467 $193,997 $141,310 $126,868
Ratio of net investment income
(loss) to average net assets:
With expense reductions
(b)........................ 0.32% 0.14% (0.06)% (0.01)% 0.9% 0.5% 0.8%
Without expense reductions
(b)........................ 0.23% 0.06% (0.12)% (0.04)% N/A N/A N/A
Ratio of expenses to average
net assets:
With expense reductions
(b)........................ 1.73% 1.72% 1.87% 1.81% 1.9% 2.1% 2.0%
Without expense reductions
(b)........................ 1.82% 1.80% 1.93% 1.84% --%(d) --%(d) --%(d)
Portfolio turnover rate +++... 92% 80% 113% 86% 92% 95% 122%
Average commission rate per
share paid on portfolio
transactions +++............. $0.0288 $0.0263 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.
+++ 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 7
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL WORLDWIDE GROWTH FUND (CONTINUED)
<TABLE>
<CAPTION>
CLASS A+ ADVISOR CLASS++
----------------------------- ------------------------------------
YEAR ENDED
YEAR ENDED DEC. 31, DEC. 31, JUNE 1, 1995
----------------------------- -------------------- TO
1990 1989 1988 1997 1996 DEC. 31, 1995
------- ------- ----------- ------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning
of period................. $ 13.63 $ 10.18 $ 8.84 $ 16.81 $ 16.86 $15.26
------- ------- ----------- ------- ----------- -------------
Net investment income
(loss).................... 0.11 (0.01) 0.02 0.12 0.09 0.03
Net realized and unrealized
gain (loss) on
investments............... (1.82) 3.82 1.42 1.57 1.79 2.02
------- ------- ----------- ------- ----------- -------------
Net increase (decrease) in
net asset value resulting
from investment
operations................ (1.71) 3.81 1.44 1.69 1.88 2.05
------- ------- ----------- ------- ----------- -------------
Distributions:
Net investment income.... (0.09) -- -- (0.09) -- --
Net realized gain on
investments............. -- (0.36) (0.10) (4.03) (1.93) (0.45)
------- ------- ----------- ------- ----------- -------------
Total distributions.... (0.09) (0.36) (0.10) (4.12) (1.93) (0.45)
------- ------- ----------- ------- ----------- -------------
Net asset value, end of
period.................... $ 11.83 $ 13.63 $ 10.18 $ 14.38 $ 16.81 $16.86
------- ------- ----------- ------- ----------- -------------
------- ------- ----------- ------- ----------- -------------
Total investment return
(a)(c).................... (12.5)% 37.6% 16.3% 10.43% 11.31% 13.46%
------- ------- ----------- ------- ----------- -------------
------- ------- ----------- ------- ----------- -------------
Ratios and supplemental
data:
Net assets, end of period
(in 000's)................ $85,894 $38,263 $ 11,673 $ 2,627 $ 2,455 $1,693
Ratio of net investment
income (loss) to average
net assets:
With expense reductions
(b)..................... 0.7% (0.1)% 0.2% 0.67% 0.49% 0.29%
Without expense
reductions (b).......... N/A N/A N/A 0.58% 0.41% 0.23%
Ratio of expenses to
average net assets:
With expense reductions
(b)..................... 2.1% 2.0% 2.0% 1.38% 1.37% 1.52%
Without expense
reductions (b).......... --%(d) --%(d) --%(d) 1.47% 1.45% 1.58%
Portfolio turnover rate
+++....................... 107% 91% 181% 92% 80% 113%
Average commission rate per
share paid on portfolio
transactions +++.......... N/A N/A N/A $0.0288 $ 0.0263 N/A
</TABLE>
- --------------
+ 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.
(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>
<CAPTION>
AVERAGE MONTHLY
NUMBER OF
AVERAGE AMOUNT REGISTRANT'S
AMOUNT OF DEBT OF DEBT SHARES
YEAR OUTSTANDING AT OUTSTANDING OUTSTANDING
ENDED END OF PERIOD DURING THE PERIOD DURING THE PERIOD
----------- --------------------- ----------------- ------------------
<S> <C> <C> <C> <C>
GT Global Worldwide Growth Fund......... 1997 $ 0 $ 21,918 9,622,077
<CAPTION>
AVERAGE AMOUNT OF
DEBT PER SHARE
DURING THE PERIOD
-------------------
<S> <C>
GT Global Worldwide Growth Fund......... $ 0.0023
</TABLE>
Prospectus Page 8
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL INTERNATIONAL GROWTH FUND
<TABLE>
<CAPTION>
CLASS A+
------------------------------------------------------------------------------
YEAR ENDED DEC. 31,
------------------------------------------------------------------------------
1997* 1996* 1995 1994 1993* 1992 1991 1990
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 8.92 $ 9.08 $ 9.17 $ 11.02 $ 8.21 $ 8.74 $ 7.82 $ 9.25
-------- -------- -------- -------- -------- -------- -------- --------
Net investment income
(loss)....................... 0.03 (0.01) 0.03 (0.04) 0.03 0.11 0.14 0.10
Net realized and unrealized
gain (loss) on investments... 0.69 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........ 0.72 0.83 0.35 (0.86) 2.81 (0.51) 1.03 (1.32)
-------- -------- -------- -------- -------- -------- -------- --------
Distributions:
Net investment income....... (0.03) -- -- (0.04) -- (0.02) (0.11) (0.11)
Net realized gain on
investments and foreign
currency................... (1.94) (0.99) (0.24) (0.95) -- -- -- --
In excess of net realized
gain on investments........ -- -- (0.20) -- -- -- -- --
-------- -------- -------- -------- -------- -------- -------- --------
Total distributions..... (1.97) (0.99) (0.44) (0.99) -- (0.02) (0.11) (0.11)
-------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of
period....................... $ 7.67 $ 8.92 $ 9.08 $ 9.17 $ 11.02 $ 8.21 $ 8.74 $ 7.82
-------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- --------
Total investment return
(a)(c)....................... 8.51% 9.28% 3.88% (7.78)% 34.23% 5.83% 13.2% (14.3)%
-------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- --------
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $148,143 $196,601 $308,816 $430,701 $523,397 $421,693 $463,851 $343,949
Ratio of net investment income
(loss) to average net assets:
With expense reductions..... 0.35% (0.14)% 0.24% (0.04)% 0.3% 1.2% 1.5% 1.4%
Without expense
reductions................. 0.22% (0.25)% 0.16% (0.09)% N/A N/A N/A N/A
Ratio of expenses to average
net assets:
With expense reductions..... 1.69% 1.80% 1.70% 1.70% 1.8% 1.9% 1.9% 1.9%
Without expense
reductions................. 1.82% 1.91% 1.78% 1.75% --%(d) --%(d) --%(d) --%(d)
Portfolio turnover rate +++... 72% 74% 75% 96% 90% 89% 83% 58%
Average commission rate per
share paid on portfolio
transactions +++............. $ 0.0269 $ 0.0267 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.
+++ 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.
(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+ ADVISOR CLASS++
----------------- ----------------------------------
YEAR ENDED DEC. YEAR ENDED DEC. 31, JUNE 1, 1995
31, TO
----------------- ------------------- DEC. 31,
1989** 1988** 1997* 1996* 1995
-------- ------- ------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 6.77 $ 5.71 $ 9.01 $ 9.11 $ 8.49
-------- ------- ------- ---------- ------------
Net investment income
(loss)....................... 0.01 (0.01) 0.07 0.02 0.03
Net realized and unrealized
gain (loss) on investments... 2.60 1.12 0.65 0.87 1.03
-------- ------- ------- ---------- ------------
Net increase (decrease) in net
asset value resulting from
investment operations........ 2.61 1.11 0.72 0.89 1.06
-------- ------- ------- ---------- ------------
Distributions:
Net investment income....... -- -- (0.07) -- --
Net realized gain on
investments and foreign
currency................... (0.13) (0.05) (1.94) (0.99) (0.24)
In excess of net realized
gain on investments........ -- -- -- -- (0.20)
-------- ------- ------- ---------- ------------
Total distributions..... (0.13) (0.05) (2.01) (0.99) (0.44)
-------- ------- ------- ---------- ------------
Net asset value, end of
period....................... $ 9.25 $ 6.77 $ 7.72 $ 9.01 $ 9.11
-------- ------- ------- ---------- ------------
-------- ------- ------- ---------- ------------
Total investment return
(a)(c)....................... 38.6% 19.4% 8.53% 9.79% 12.56%
-------- ------- ------- ---------- ------------
-------- ------- ------- ---------- ------------
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $136,975 $29,792 $ 284 $ 461 $ 381
Ratio of net investment income
(loss) to average net assets:
With expense reductions
(b)........................ 0.1% (0.2)% 0.70% 0.21% 0.59%
Without expense reductions
(b)........................ N/A N/A 0.57% 0.10% 0.51%
Ratio of expenses to average
net assets:
With expense reductions
(b)........................ 1.9% 2.1% 1.34% 1.45% 1.35%
Without expense reductions
(b)........................ --%(d) --%(d) 1.47% 1.56% 1.43%
Portfolio turnover rate +++... 82% 115% 72% 74% 75%
Average commission rate per
share paid on portfolio
transactions +++............. N/A N/A $0.0269 $ 0.0267 N/A
</TABLE>
- --------------
+ 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.
------------------------------
<TABLE>
<CAPTION>
AVERAGE MONTHLY
NUMBER OF
AVERAGE AMOUNT REGISTRANT'S
AMOUNT OF DEBT OF DEBT SHARES AVERAGE AMOUNT OF
YEAR OUTSTANDING AT OUTSTANDING OUTSTANDING DEBT PER SHARE
ENDED END OF PERIOD DURING THE PERIOD DURING THE PERIOD DURING THE PERIOD
----------- --------------- ----------------- ------------------ -------------------
<S> <C> <C> <C> <C> <C>
GT Global International Growth Fund..... 1997 $ 0 $ 283,148 26,055,589 $ 0.0109
1996 129,000 131,860 32,830,494 0.0040
</TABLE>
Prospectus Page 10
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
<TABLE>
<CAPTION>
CLASS A+
------------------------------------------------------------------------------
YEAR ENDED DEC. 31,
------------------------------------------------------------------------------
1997* 1996* 1995* 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 13.12 $ 12.47 $ 12.10 $ 15.86 $ 10.31 $ 11.30 $ 10.57 $ 12.61
-------- -------- -------- -------- -------- -------- -------- --------
Net investment income
(loss)....................... 0.05 0.02 0.11 0.02 (0.03) 0.07 0.11 0.13
Net realized and unrealized
gain (loss) on investments... (5.84) 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........ (5.79) 2.46 0.90 (3.13) 6.20 (0.90) 1.36 (1.38)
-------- -------- -------- -------- -------- -------- -------- --------
Distributions:
Net investment income....... (0.03) -- (0.10) (0.01) -- (0.06) (0.08) (0.12)
Net realized gain on
investments and foreign
currency................... (0.82) (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....... (0.85) (1.81) (0.53) (0.63) (0.65) (0.09) (0.63) (0.66)
-------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of
period....................... $ 6.48 $ 13.12 $ 12.47 $ 12.10 $ 15.86 $ 10.31 $ 11.30 $ 10.57
-------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- --------
Total investment return
(a)(c)....................... (44.24)% 20.04% 7.45% (19.73)% 60.61% (7.96)% 13.1% (11.0)%
-------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- --------
Ratio and supplemental data:
Net assets, end of period (in
000's)....................... $135,807 $361,244 $383,722 $404,680 $498,898 $281,418 $333,800 $234,793
Ratio of net investment income
(loss) to average net assets:
With expense reductions..... 0.41% 0.17% 0.91% 0.11% (0.3)% 0.6% 1.0% 1.1%
Without expense
reductions................. 0.14% 0.04% 0.86% N/A N/A N/A N/A N/A
Ratio of expenses to average
net assets:
With expense reductions..... 1.66% 1.86% 1.89% 1.81% 1.9% 2.0% 2.0% 2.1%
Without expense
reductions................. 1.93% 1.99% 1.94% --%(d) --%(d) --%(d) --%(d) --%(d)
Portfolio turnover rate +++... 80% 93% 63% 87% 117% 72% 85% 75%
Average commission rate per
share paid on portfolio
transactions +++............. $ 0.0066 $ 0.0032 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.
+++ 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.
(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+ ADVISOR CLASS++
----------------- -----------------------------------
YEAR ENDED DEC. JUNE 1, 1995
31, YEAR ENDED DEC. 31, TO
----------------- ------------------- DEC. 31,
1989* 1988* 1997* 1996* 1995*
-------- ------- ------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 8.74 $ 7.25 $ 13.16 $ 12.45 $12.89
-------- ------- ------- ---------- -------------
Net investment income (loss)............ (0.01) 0.01 0.08 0.07 0.09
Net realized and unrealized gain (loss)
on investments......................... 4.21 1.66 (5.89) 2.45 0.05
-------- ------- ------- ---------- -------------
Net increase (decrease) in net asset
value resulting from investment
operations............................. 4.20 1.67 (5.81) 2.52 0.14
-------- ------- ------- ---------- -------------
Distributions:
Net investment income................. -- -- (0.08) -- (0.15)
Net realized gain on investments and
foreign currency..................... (0.33) (0.18) (0.82) (1.81) (0.43)
In excess of net investment income.... -- -- -- -- --
-------- ------- ------- ---------- -------------
Total distributions................. (0.33) (0.18) (0.90) (1.81) (0.58)
-------- ------- ------- ---------- -------------
Net asset value, end of period.......... $ 12.61 $ 8.74 $ 6.45 $ 13.16 $12.45
-------- ------- ------- ---------- -------------
-------- ------- ------- ---------- -------------
Total investment return (a)(c).......... 48.1% 23.2% (44.26)% 20.56% 1.07%
-------- ------- ------- ---------- -------------
-------- ------- ------- ---------- -------------
Ratio and supplemental data:
Net assets, end of period (in 000's).... $170,071 $56,342 $ 1,488 $ 1,575 $ 935
Ratio of net investment income (loss) to
average net assets:
With expense reductions (b)........... (0.1)% 0.0% 0.76% 0.52% 1.26%
Without expense reductions (b)........ N/A N/A 0.49% 0.39% 1.21%
Ratio of expenses to average net assets:
With expense reductions (b)........... 2.0% 2.2% 1.31% 1.51% 1.54%
Without expense reductions (b)........ --%(d) --%(d) 1.58% 1.64% 1.59%
Portfolio turnover rate +++............. 70% 107% 80% 93% 63%
Average commission rate per share paid
on portfolio transactions +++.......... N/A N/A $0.0066 $ 0.0032 N/A
</TABLE>
- --------------
+ 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.
(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>
<CAPTION>
AVERAGE MONTHLY
NUMBER OF
AVERAGE AMOUNT REGISTRANT'S
AMOUNT OF DEBT OF DEBT SHARES
YEAR OUTSTANDING AT OUTSTANDING OUTSTANDING
ENDED END OF PERIOD DURING THE PERIOD DURING THE PERIOD
----------- --------------------- ----------------- ------------------
<S> <C> <C> <C> <C>
GT Global New Pacific Growth Fund....... 1997 $ 0 $ 3,020,567 33,807,469
<CAPTION>
AVERAGE AMOUNT OF
DEBT PER SHARE
DURING THE PERIOD
-------------------
<S> <C>
GT Global New Pacific Growth Fund....... $ 0.0893
</TABLE>
Prospectus Page 12
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL EUROPE GROWTH FUND
<TABLE>
<CAPTION>
CLASS A+
----------------------------------------------------------------------------------
YEAR ENDED DEC. 31,
----------------------------------------------------------------------------------
1997* 1996* 1995* 1994* 1993* 1992* 1991 1990
-------- -------- -------- -------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 12.89 $ 10.88 $ 10.03 $ 10.84 $ 8.51 $ 9.59 $ 9.33 $ 10.94
-------- -------- -------- -------- -------- -------- ---------- ----------
Net investment income......... (0.04) (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......... 1.48 2.16 0.95 (0.69) 2.36 (1.19) 0.19 (1.71)
-------- -------- -------- -------- -------- -------- ---------- ----------
Net increase (decrease) in net
asset value resulting from
investment operations........ 1.44 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................ (0.01) (0.12) (0.04) -- -- -- -- --
In excess of net investment
income..................... -- -- -- -- (0.02) -- -- --
In excess of net realized
gain on investments........ -- -- -- (0.13) -- -- -- --
-------- -------- -------- -------- -------- -------- ---------- ----------
Total distributions..... (0.01) (0.12) (0.14) (0.18) (0.08) -- (0.14) --
-------- -------- -------- -------- -------- -------- ---------- ----------
Net asset value, end of year.. $ 14.32 $ 12.89 $ 10.88 $ 10.03 $ 10.84 $ 8.51 $ 9.59 $ 9.33
-------- -------- -------- -------- -------- -------- ---------- ----------
-------- -------- -------- -------- -------- -------- ---------- ----------
Total investment return
(a)(c)....................... 11.20% 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)....................... $407,004 $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:
With expense reductions
(b)........................ (0.29)% (0.26)% 0.38% 0.61% 0.6% 1.2%*** 1.7% 1.1%
Without expense reductions
(b)........................ (0.43)% (0.32)% 0.32% 0.53% N/A N/A N/A N/A
Ratio of expenses to average
net assets:
With expense reductions..... 1.75% 1.82% 1.83% 1.73% 1.9% 2.0%*** 1.8% 1.9%
Without expense reductions.. 1.89% 1.88% 1.89% 1.81% --%(d) --%(d) --%(d) --%(d)
Portfolio turnover rate +++... 107% 123% 108% 91% 67% 65% 55% 34%
Average commission rate per
share paid on portfolio
transactions +++............. $ 0.0533 $ 0.0277 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.
+++ 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.
(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>
CLASS A+ ADVISOR CLASS++
---------------- -----------------------------------------
YEAR ENDED DEC. YEAR ENDED DEC. 31, JUNE 1, 1995
31, TO
---------------- -------------------------- DEC. 31,
1989** 1988** 1997* 1996* 1995(D)
-------- ------ ------------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 7.77 $7.76 $ 12.92 $ 10.85 $ 10.24
-------- ------ ------------- ---------- ------------
Net investment income
(loss)....................... (0.02) (0.07 ) 0.01 0.01 0.08
Net realized and unrealized
gain (loss) on investments
and foreign currency......... 3.19 0.87 1.49 2.18 0.71
-------- ------ ------------- ---------- ------------
Net increase (decrease) in net
asset value resulting from
investment operations........ 3.17 0.80 1.50 2.19 0.79
-------- ------ ------------- ---------- ------------
Distributions:
Net investment income....... -- -- -- -- (0.14)
Net realized gain on
investments................ -- -- (0.01) (0.12) --
In excess of net investment
income..................... -- (0.79 ) -- -- (0.04)
In excess of net realized
gain on investments........ -- -- -- -- --
-------- ------ ------------- ---------- ------------
Total distributions..... -- (0.79 ) (0.01) (0.12) (0.18)
-------- ------ ------------- ---------- ------------
Net asset value, end of
period....................... $ 10.94 $7.77 $ 14.41 $ 12.92 $ 10.85
-------- ------ ------------- ---------- ------------
-------- ------ ------------- ---------- ------------
Total investment return
(a)(c)....................... 40.7% 11.1% 11.64% 20.21% 7.75%
-------- ------ ------------- ---------- ------------
-------- ------ ------------- ---------- ------------
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $382,428 $8,376 $ 3,239 $ 1,416 $ 718
Ratio of net investment income
(loss) to average net assets:
With expense reductions
(b)........................ (0.6)% (1.0)% 0.06% 0.09% 0.73%
Without expense reductions
(b)........................ N/A N/A (0.08)% 0.03% 0.67%
Ratio of expenses to average
net assets:
With expense reductions
(b)........................ 1.9% 3.6% 1.40% 1.47% 1.48%
Without expense reductions
(b)........................ --%(d) --% (d) 1.54% 1.53% 1.54%
Portfolio turnover rate +++... 43% 153% 107% 123% 108%
Average commission rate per
share paid on portfolio
transactions +++............. N/A N/A $ 0.0533 $ 0.0277 N/A
</TABLE>
- --------------
+ 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.
(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>
<CAPTION>
AVERAGE MONTHLY
NUMBER OF
AVERAGE AMOUNT REGISTRANT'S
AMOUNT OF DEBT OF DEBT SHARES
YEAR OUTSTANDING AT OUTSTANDING OUTSTANDING
ENDED END OF PERIOD DURING THE PERIOD DURING THE PERIOD
----------- --------------------- ----------------- ------------------
<S> <C> <C> <C> <C>
GT Global Europe Growth Fund............ 1997 $ 0 $ 7,281,203 38,714,809
<CAPTION>
AVERAGE AMOUNT OF
DEBT PER SHARE
DURING THE PERIOD
-------------------
<S> <C>
GT Global Europe Growth Fund............ $ 0.1881
</TABLE>
Prospectus Page 14
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
<TABLE>
<CAPTION>
CLASS A(D) ADVISOR CLASS(D)
--------------------------------------- ---------------------------------------
OCT. 18, 1995 OCT. 18, 1995
(COMMENCEMENT (COMMENCEMENT
YEAR ENDED DEC. 31, OF YEAR ENDED DEC. 31, OF
OPERATIONS) OPERATIONS)
----------------------- THROUGH ----------------------- THROUGH
1997 1996 DEC. 31, 1995 1997 1996 DEC. 31, 1995
---------- ---------- ------------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
year......................... $ 12.52 $ 11.80 $ 11.43 $ 12.58 $ 11.81 $ 11.43
---------- ---------- ------------- ---------- ---------- -------------
Net investment income
(loss)....................... (0.18)*** (0.05)** 0.04* (0.14)*** --** 0.05*
Net realized and unrealized
gain (loss) on investments... 2.20 1.69 0.33 2.22 1.69 0.33
---------- ---------- ------------- ---------- ---------- -------------
Net increase (decrease) in net
asset value resulting from
investment operations........ 2.02 1.64 0.37 2.08 1.69 0.38
---------- ---------- ------------- ---------- ---------- -------------
Distributions to shareholders:
From net realized gain on
investments................ (0.27) (0.92) -- (0.27) (0.92) --
---------- ---------- ------------- ---------- ---------- -------------
Total distributions......... (0.27) (0.92) -- (0.27) (0.92) --
---------- ---------- ------------- ---------- ---------- -------------
Net asset value, end of
year......................... $ 14.27 $ 12.52 $ 11.80 $ 14.39 $ 12.58 $ 11.81
---------- ---------- ------------- ---------- ---------- -------------
---------- ---------- ------------- ---------- ---------- -------------
Total investment return
(a)(c)....................... 16.23% 13.81% 3.24% 16.63% 14.22% 3.32%
---------- ---------- ------------- ---------- ---------- -------------
---------- ---------- ------------- ---------- ---------- -------------
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $ 10,896 $ 8,448 $ 1,931 $ 1,592 $ 435 $ 52
Ratio of net investment income
(loss) to average net assets:
With reimbursement by the
Manager (b)................ (1.40)% (0.38)% 1.68% (1.05)% (0.03)% 2.03%
Without reimbursement by the
Manager (b)................ (2.00)% (1.47)% (20.52)% (1.65)% (1.12)% (20.17)%
Ratio of expenses to average
net assets:
With reimbursement by the
Manager (b)................ 1.92% 2.00% 2.00% 1.57% 1.65% 1.65%
Without reimbursement by the
Manager (b)................ 2.52% 3.09% 24.20% 2.17% 2.74% 23.85%
Portfolio turnover rate +..... 233% 150% N/A 233% 150% N/A
Average commission rate per
share paid on portfolio
transactions +............... $0.0517 $0.0489 N/A $0.0517 $0.0489 N/A
</TABLE>
- ------------------
* Before reimbursement by the Manager the net investment loss per share would
have been $(0.47) and $(0.46) for Class A and Advisor Class shares,
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) and $(0.14) for Class A and Advisor Class shares,
respectively, for the year ended December 31, 1996.
*** Before reimbursement by the Manager the net investment loss per share would
have been $(0.25) and $(0.21) for Class A and Advisor Class shares,
respectively, for the year ended December 31, 1997.
(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.
------------------------------
<TABLE>
<CAPTION>
AVERAGE MONTHLY
NUMBER OF
AVERAGE AMOUNT REGISTRANT'S
AMOUNT OF DEBT OF DEBT SHARES
YEAR OUTSTANDING AT OUTSTANDING OUTSTANDING
ENDED END OF PERIOD DURING THE PERIOD DURING THE PERIOD
----------- --------------------- ------------------- ------------------
<S> <C> <C> <C> <C>
GT Global America Small Cap Growth
Fund................................... 1997 $ 0 $ 1,945 1,911,865
<CAPTION>
AVERAGE AMOUNT OF
DEBT PER SHARE
DURING THE PERIOD
-------------------
<S> <C>
GT Global America Small Cap Growth
Fund................................... $ 0.0010
</TABLE>
Prospectus Page 15
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL AMERICA MID CAP GROWTH FUND
<TABLE>
<CAPTION>
CLASS A+
-------------------------------------------------------------------
YEAR ENDED DEC. 31,
-------------------------------------------------------------------
1997 1996 1995 1994* 1993 1992 1991
-------- -------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
year......................... $ 20.77 $ 19.07 $ 17.69 $ 17.17 $ 17.12 $ 14.13 $ 11.89
-------- -------- -------- -------- -------- -------- -------
Net investment income
(loss)....................... (0.20) 0.03 0.24 0.04 (0.21) (0.11) 0.01
Net realized and unrealized
gain (loss) on investments... 3.00 2.96 3.93 2.55 1.56 4.54 2.28
-------- -------- -------- -------- -------- -------- -------
Net increase (decrease) in net
asset value resulting from
investment operations........ 2.80 2.99 4.17 2.59 1.35 4.43 2.29
-------- -------- -------- -------- -------- -------- -------
Distributions:
Net investment income....... -- -- (0.21) (0.02) -- -- (0.01)
Net realized gain on
investments................ (2.56) (1.29) (2.58) (2.05) (1.30) (1.44) (0.04)
-------- -------- -------- -------- -------- -------- -------
Total distributions....... (2.56) (1.29) (2.79) (2.07) (1.30) (1.44) (0.05)
-------- -------- -------- -------- -------- -------- -------
Net asset value, end of
year......................... $ 21.01 $ 20.77 $ 19.07 $ 17.69 $ 17.17 $ 17.12 $ 14.13
-------- -------- -------- -------- -------- -------- -------
-------- -------- -------- -------- -------- -------- -------
Total investment return
(a)(c)....................... 14.05% 15.65% 23.23% 15.69% 8.3% 31.7% 19.3%
-------- -------- -------- -------- -------- -------- -------
-------- -------- -------- -------- -------- -------- -------
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $255,674 $343,427 $396,291 $196,937 $116,468 $166,712 $88,041
Ratio of net investment income
(loss) to average net assets:
With expense reductions
(b)........................ (0.90)% 0.12% 1.24% 0.17% (0.7)% (1.1)% --%
Without expense reductions
(b)........................ (1.01)% 0.07 N/A N/A N/A N/A N/A
Ratio of expenses to average
net assets:
With expense reductions..... 1.37% 1.36% 1.46% 1.58% 1.6% 1.8% 1.7%
Without expense
reductions................. 1.48% 1.41% --%(d) --%(d) --%(d) --%(d) --%(d)
Portfolio turnover rate +++... 190% 253% 71% 102% 92% 114% 156%
Average commission rate per
share paid on portfolio
transactions +++............. $0.0574 $0.0536 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.
+++ 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++
CLASS A+ ------------------------------------
-----------------------
YEAR ENDED DEC. 31, JUNE 1, 1995
YEAR ENDED DEC. 31, TO
----------------------- ------------------- DEC. 31,
1990 1989 1988 1997 1996 1995
------- ------ ------ ------ ----------- --------------
Per Share Operating Performance:
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year...... $ 12.84 $ 8.76 $ 8.56 $20.76 $ 19.05 $20.61
------- ------ ------ ------ ----------- -------
Net investment income (loss)............ (0.01) 0.10** (0.40) (0.15) 0.09 0.21
Net realized and unrealized gain (loss)
on investments......................... (0.94) 4.65 1.35 3.05 2.91 1.09
------- ------ ------ ------ ----------- -------
Net increase (decrease) in net asset
value resulting from investment
operations............................. (0.95) 4.75 0.95 2.90 3.00 1.30
------- ------ ------ ------ ----------- -------
Distributions:
Net investment income................. -- (0.10) -- -- -- (0.28)
Net realized gain on investments...... -- (0.57) (0.75) (2.56) (1.29) (2.58)
------- ------ ------ ------ ----------- -------
Total distributions................. -- (0.67) (0.75) (2.56) (1.29) (2.86)
------- ------ ------ ------ ----------- -------
Net asset value, end of year............ $ 11.89 $12.84 $ 8.76 $21.10 $ 20.76 $19.05
------- ------ ------ ------ ----------- -------
------- ------ ------ ------ ----------- -------
Total investment return (a)(c).......... (7.4)% 54.8% 11.1% 14.54% 15.72% 6.01%
------- ------ ------ ------ ----------- -------
------- ------ ------ ------ ----------- -------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $65,413 $9,930 $1,548 $1,140 $ 1,986 $1,394
Ratio of net investment income (loss) to
average net assets:
With expense reductions (b)........... (0.1)% 1.2%* (4.7)% (0.55)% 0.47% 1.59%
Without expense reductions (b)........ N/A N/A N/A (0.66)% 0.42% N/A
Ratio of expenses to average net assets
(b):
With expense reductions............... 2.0% 1.9%* 5.1% 1.02% 1.01% 1.11%
Without expense reductions............ --%(d) --%(d) --%(d) 1.13% 1.06% --%(d)
Portfolio turnover rate +++............. 145% 133% 184% 190% 253% 71%
Average commission rate per share on
portfolio transactions +++............. N/A N/A N/A $0.0574 $ 0.0536 N/A
</TABLE>
- --------------
+ 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.
------------------------------
<TABLE>
<CAPTION>
AVERAGE MONTHLY
NUMBER OF
AVERAGE AMOUNT REGISTRANT'S
AMOUNT OF DEBT OF DEBT SHARES
YEAR OUTSTANDING AT OUTSTANDING OUTSTANDING
ENDED END OF PERIOD DURING THE PERIOD DURING THE PERIOD
----------- --------------------- ----------------- ------------------
<S> <C> <C> <C> <C>
GT Global America Mid Cap Growth Fund... 1997 $ 0 $ 1,961,956 27,020,126
<CAPTION>
AVERAGE AMOUNT OF
DEBT PER SHARE
DURING THE PERIOD
-------------------
<S> <C>
GT Global America Mid Cap Growth Fund... $ 0.0726
</TABLE>
Prospectus Page 17
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL AMERICA VALUE FUND
<TABLE>
<CAPTION>
CLASS A(D) ADVISOR CLASS(D)
--------------------------------------- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OCT. 18, 1995 OCT. 18, 1995
(COMMENCEMENT (COMMENCEMENT
YEAR ENDED DEC. 31, OF YEAR ENDED DEC. 31, OF
OPERATIONS) OPERATIONS)
----------------------- THROUGH ----------------------- THROUGH
1997 1996 DEC. 31, 1995 1997 1996 DEC. 31, 1995
---------- ---------- ------------- ---------- ---------- -------------
Per Share Operating Performance:
Net asset value, beginning of year...... $ 14.65 $ 12.76 $ 11.43 $ 14.72 $ 12.77 $ 11.43
---------- ---------- ------------- ---------- ---------- -------------
Net investment income (loss)............ 0.09*** (0.01)** 0.03* 0.15*** 0.03** 0.04*
Net realized and unrealized gain (loss)
on investments......................... 3.87 1.94 1.30 3.91 1.96 1.30
---------- ---------- ------------- ---------- ---------- -------------
Net increase (decrease) in net asset
value resulting from investment
operations............................. 3.96 1.93 1.33 4.06 1.99 1.34
---------- ---------- ------------- ---------- ---------- -------------
Distributions to shareholders:
From net investment income............ (0.03) -- -- (0.07) -- --
From net realized gain on
investments.......................... (1.33) (0.04) -- (1.34) (0.04) --
---------- ---------- ------------- ---------- ---------- -------------
Total distributions................... (1.36) (0.04) -- (1.41) (0.04) --
---------- ---------- ------------- ---------- ---------- -------------
Net asset value, end of year............ $ 17.25 $ 14.65 $ 12.76 $ 17.37 $ 14.72 $ 12.77
---------- ---------- ------------- ---------- ---------- -------------
---------- ---------- ------------- ---------- ---------- -------------
Total investment return (a)(c).......... 27.23% 15.12% 11.64% 27.78% 15.58% 11.72%
---------- ---------- ------------- ---------- ---------- -------------
---------- ---------- ------------- ---------- ---------- -------------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 7,668 $ 2,529 $ 870 $ 439 $ 191 $ 81
Ratio of net investment income (loss) to
average net assets:
With reimbursement by the Manager
(b).................................. 0.56% (0.10)% 1.10% 0.91% 0.25% 1.45%
Without reimbursement by the Manager
(b).................................. (0.42)% (3.61)% (47.44)% (0.07)% (3.26)% (47.09)%
Ratio of expenses to average net assets:
With reimbursement by the Manager
(b).................................. 1.99% 2.00% 2.00% 1.64% 1.65% 1.65%
Without reimbursement by the Manager
(b).................................. 2.97% 5.51% 50.54% 2.62% 5.16% 50.19%
Ratio of interest expense to average net
assets................................. 0.03% N/A N/A 0.03% N/A N/A
Portfolio turnover rate +............... 93% 256% N/A 93% 256% N/A
Average commission rate per share paid
on portfolio transactions +............ $ 0.0278 $ 0.0551 N/A $ 0.0278 $ 0.0551 N/A
</TABLE>
- ------------------
* Before reimbursement by the Manager the net investment loss per share would
have been $(1.11) and $(1.10) for Class A and Advisor Class shares,
respectively, from October 18, 1995 to December 31, 1995.
** Before reimbursement by the Manager the net investment loss per share would
have been $(0.50) and $(0.46) for Class A and Advisor Class shares,
respectively, for the year ended December 31, 1996
*** Before reimbursement by the Manager the net investment loss per share would
have been $(0.07) and $0.01 for Class A and Advisor Class shares,
respectively, for the year ended December 31, 1997
+ 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.
------------------------------
<TABLE>
<CAPTION>
AVERAGE MONTHLY
AVERAGE AMOUNT NUMBER OF
AMOUNT OF DEBT OF DEBT REGISTRANT'S SHARES
YEAR OUTSTANDING AT OUTSTANDING OUTSTANDING
ENDED END OF PERIOD DURING THE PERIOD DURING THE PERIOD
----------- --------------------- --------------------- -------------------
<S> <C> <C> <C> <C>
GT Global America Value Fund............ 1997 $ 0 $ 778 930,597
<CAPTION>
AVERAGE AMOUNT OF
DEBT PER SHARE
DURING THE PERIOD
-------------------
<S> <C>
GT Global America Value Fund............ $ 0.0008
</TABLE>
Prospectus Page 18
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL JAPAN GROWTH FUND
<TABLE>
<CAPTION>
CLASS A+
-----------------------------------------------------------------------
YEAR ENDED DEC. 31,
-----------------------------------------------------------------------
1997* 1996* 1995* 1994 1993 1992* 1991 1990
------- ------- -------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 9.76 $ 11.00 $ 12.15 $ 11.61 $ 8.70 $ 11.16 $ 11.48 $ 16.39
------- ------- -------- ------- ------- ------- ------- -------
Net investment income (loss)............ (0.08) (0.04) (0.04) (0.04) (0.14) --*** (0.09) (0.05)****
Net realized and unrealized gain (loss)
on investments......................... (0.70) (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............................. (0.78) (0.81) 0.22 0.75 2.91 (2.40) (0.32) (4.65)
------- ------- -------- ------- ------- ------- ------- -------
Distributions:
Net realized gain on investments and
foreign currency..................... (0.02) (0.43) (1.37) (0.21) -- (0.06) -- (0.26)
------- ------- -------- ------- ------- ------- ------- -------
Total distributions............... (0.02) (0.43) (1.37) (0.21) -- (0.06) -- (0.26)
------- ------- -------- ------- ------- ------- ------- -------
Net asset value, end of period.......... $ 8.96 $ 9.76 $ 11.00 $ 12.15 $ 11.61 $ 8.70 $ 11.16 $ 11.48
------- ------- -------- ------- ------- ------- ------- -------
------- ------- -------- ------- ------- ------- ------- -------
Total investment return (a)(c).......... (7.99)% (7.43)% 1.94% 6.56% 33.45% (21.5)% (2.8)% (28.7)%
------- ------- -------- ------- ------- ------- ------- -------
------- ------- -------- ------- ------- ------- ------- -------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $44,583 $63,585 $111,105 $98,066 $88,487 $93,865 $61,519 $51,693
Ratio of net investment income (loss) to
average net assets:
With expense reductions (b)........... (0.61)% (0.40)% (0.40)% (0.32)% (0.3)% --%*** (1.5)% (1.2)%****
Without expense reductions (b)........ (0.68)% (0.50)% (0.55)% (0.44)% N/A N/A N/A N/A
Ratio of expenses to average net assets:
With expense reductions (b)........... 1.99% 1.84% 1.99% 1.91% 2.1% 2.2%*** 2.2% 2.2%****
Without expense reductions (b)........ 2.06% 1.94% 2.14% 2.03% --%(d) --%(d) --%(d) --%(d)
Portfolio turnover rate +++............. 58% 31% 67% 49% 104% 115% 251% 138%
Average commission rate per share paid
on portfolio transactions +++.......... $0.0416 $0.0971 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.
+++ 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.
(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+ ADVISOR CLASS++
---------------- ------------------------------------
YEAR ENDED DEC. YEAR ENDED DEC. 31, JUNE 1, 1995
31, TO
---------------- -------------------- DEC. 31,
1989 1988** 1997* 1996* 1995*
------- ------- ------- ----------- -------------
Per Share Operating
Performance:
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period....................... $ 10.57 $ 10.36 $ 9.81 $ 11.02 $ 10.50
------- ------- ------- ----------- -------------
Net investment income
(loss)....................... (0.19) (0.20) (0.01) (0.01) --
Net realized and unrealized
gain (loss) on investments... 6.57 2.44 (0.73) (0.77) 1.89
------- ------- ------- ----------- -------------
Net increase (decrease) in net
asset value resulting from
investment operations........ 6.38 2.24 (0.74) (0.78) 1.89
------- ------- ------- ----------- -------------
Distributions:
Net realized gain on
investments and foreign
currency................... (0.56) (2.03) (0.02) (0.43) (1.37)
------- ------- ------- ----------- -------------
Total distributions..... (0.56) (2.03) (0.02) (0.43) (1.37)
------- ------- ------- ----------- -------------
Net asset value, end of
period....................... $ 16.39 $ 10.57 $ 9.05 $ 9.81 $ 11.02
------- ------- ------- ----------- -------------
------- ------- ------- ----------- -------------
Total investment return
(a)(c)....................... 60.7% 21.9% (7.54)% (7.14)% 18.14%
------- ------- ------- ----------- -------------
------- ------- ------- ----------- -------------
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $48,405 $18,591 $30,351 $ 413 $ 558
Ratio of net investment income
(loss) to average net assets:
With expense reductions
(b)........................ (1.6)% (1.5)% (0.26)% (0.05)% (0.05)%
Without expense reductions
(b)........................ N/A N/A (0.33)% (0.15)% (0.20)%
Ratio of expenses to average
net assets:
With expense reductions
(b)........................ 2.1% 2.2% 1.64% 1.49% 1.64%
Without expense reductions
(b)........................ --%(d) --%(d) 1.71% 1.59% 1.79%
Portfolio turnover rate +++... 108% 150% 58% 31% 67%
Average commission rate per
share paid on portfolio
transactions +++............. N/A N/A $0.0416 $ 0.0971 N/A
</TABLE>
- --------------
+ 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.
(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>
<CAPTION>
AVERAGE MONTHLY
NUMBER OF
AVERAGE AMOUNT REGISTRANT'S
AMOUNT OF DEBT OF DEBT SHARES AVERAGE AMOUNT OF
YEAR OUTSTANDING AT OUTSTANDING OUTSTANDING DEBT PER SHARE
ENDED END OF PERIOD DURING THE PERIOD DURING THE PERIOD DURING THE PERIOD
----------- --------------- ------------------- ------------------ -------------------
<S> <C> <C> <C> <C> <C>
GT Global Japan Growth Fund............. 1997 $ 0 $ 0 10,542,000 $ 0.0000
1996 2,000,000 5,479 13,009,004 0.0004
</TABLE>
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, a division of The McGraw-Hill Companies, Inc. ("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
Prospectus Page 21
<PAGE>
GT GLOBAL EQUITY FUNDS
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 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 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
Prospectus Page 22
<PAGE>
GT GLOBAL EQUITY FUNDS
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.
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,
some of which may be investment vehicles or companies that are advised by the
Manager or its affiliates ("Affiliated Funds"), 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. The
Manager waives its advisory fee to the extent that such a Fund or a Portfolio
invests in an Affiliated Fund.
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 and 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, enhance a Fund's total return. Each Fund and 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 or such other collateral as permitted by a Fund's
investment program and regulatory agencies, and as approved by the Board.
Prospectus Page 24
<PAGE>
GT GLOBAL EQUITY FUNDS
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 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. Each Fund may enter into forward currency
contracts either with respect to specific transactions or with respect to its
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.
Prospectus Page 25
<PAGE>
GT GLOBAL EQUITY FUNDS
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 a 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 that is not approved by the Board or shareholders of its
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 its liquidity. 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 its
investment objective, policies and limitations discussed herein.
In addition to selling an interest therein to its corresponding Fund, each
Portfolio may sell interests therein 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 any or all of its assets 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 than 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 other large investors, if any, in its corresponding
Portfolio. 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
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GT GLOBAL EQUITY FUNDS
RISK FACTORS
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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 that 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. Because of the special risks associated with
investing in emerging markets, an investment in the Pacific Fund, International
Fund and Worldwide Fund should be considered speculative. Investors are strongly
advised to consider carefully the special risks involved in emerging markets,
which are in addition to the usual risks of investing in developed foreign
markets around the world.
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.
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GT GLOBAL EQUITY FUNDS
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, 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 occurred in certain countries.
The risk also exists that an emergency situation may arise in one or more
emerging markets as a result of which trading of securities may cease or may be
substantially curtailed and prices for the Pacific Fund, International Fund
and/or Worldwide Fund's portfolio securities in such markets may not be readily
available. Section 22(e) of the 1940 Act permits a registered investment company
to suspend redemption of its shares for any period during which an emergency
exists, as determined by the SEC. Accordingly, when the Pacific Fund,
International Fund or Worldwide Fund believes that appropriate circumstances
warrant, it will promptly apply to the SEC for a determination that an emergency
exists within the meaning of Section 22(e). During the period commencing from
the Pacific Fund, International Fund or Worldwide Fund's identification of such
conditions until the date of SEC action, the portfolio securities of the Pacific
Fund, International Fund or Worldwide Value Fund in the affected markets will be
valued at fair value as determined in good faith by or under the direction of
the Company's Board of Trustees.
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 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.
Prospectus Page 28
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GT GLOBAL EQUITY FUNDS
The common stocks of many Japanese companies trade at high price-earnings
ratios, which may be attributable in part to inefficiencies associated with
Japanese corporate operations. 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. Moreover, recent currency devaluations in some Pacific region
countries have resulted in high interest rate levels and sharp reductions in
economic activity and have diminished prospects for short-term growth in
corporate earnings. Certain countries, such as India, face serious exchange
constraints. Jurisdictional disputes also exist between South Korea and North
Korea.
In addition, Hong Kong reverted to Chinese administration on July 1, 1997. The
long-term effects of this reversion are not known at this time. However, a
Fund's investments in Hong Kong may now be subject to the same or similar risks
as any investment in China. 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 economy.
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
Prospectus Page 29
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GT GLOBAL EQUITY FUNDS
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; and (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.
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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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 Advisers." Investors in Wrap Fee Accounts and Advisory
Accounts may only purchase Advisor Class shares through Financial Advisers 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 Advisers 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 Adviser 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
Prospectus Page 30
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GT GLOBAL EQUITY FUNDS
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
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
GT Global Mutual Fund(s) in a shareholder's Personal Portfolio have appreciated
during a rebalancing period, the Program will result in shares of GT Global
Mutual Fund(s) that have appreciated most during the period being exchanged for
shares of GT Global Mutual Fund(s) that have appreciated least. SUCH EXCHANGES
ARE NOT TAX-FREE AND MAY RESULT IN A SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS
THE CASE MAY BE, FOR FEDERAL INCOME TAX PURPOSES. See "Dividends, Other
Distributions and Federal Income Taxation." Participation in 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 canceled or
changed in writing and received by the Transfer Agent in good order at least
five business days prior to the rebalancing date. Certain 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
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Advisor Class shares of a Fund may be exchanged for Advisor Class shares of
other GT Global Mutual Fund (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 FEDERAL INCOME TAX PURPOSES. See "Dividends, Other
Distributions and Federal Income Taxation." In addition to the Funds, the GT
Global Mutual Funds currently include:
-- GT GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND
-- GT GLOBAL DEVELOPING MARKETS FUND
-- GT GLOBAL DOLLAR FUND
-- GT GLOBAL FINANCIAL SERVICES FUND
-- GT GLOBAL GOVERNMENT INCOME FUND
-- GT GLOBAL GROWTH & INCOME FUND
-- GT GLOBAL HEALTH CARE FUND
-- GT GLOBAL HIGH INCOME FUND
-- GT GLOBAL INFRASTRUCTURE FUND
-- GT GLOBAL LATIN AMERICA GROWTH FUND
-- GT GLOBAL NATURAL RESOURCES FUND
-- GT GLOBAL NEW DIMENSION FUND
-- GT GLOBAL STRATEGIC INCOME FUND
-- GT GLOBAL TELECOMMUNICATIONS 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 the
shareholder's Financial Adviser. Exchange orders will be accepted by telephone
provided that the exchange involves only uncertificated shares on deposit in the
shareholder's account or for which certificates 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 Advisers to request the prospectus of
the other GT Global Mutual Fund(s) being considered. Other investors should
contact GT Global.
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 fifteen 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 $500. 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
FIFTEEN 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 fifteen 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 Adviser.
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
the Transfer Agent has assured itself that good payment has been collected for
the purchase of the shares. In the case of purchases by check, it can take up to
10 business days to confirm that the check has cleared and good payment has been
received. Redemption proceeds will not be delayed when shares have been paid for
by wire or when the investor's account holds a sufficient number of shares for
which funds already have been collected.
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 Adviser.
Prospectus Page 34
<PAGE>
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 Adviser. 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" for more information.
Each Fund's 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 Mutual Funds
P.O. Box 7345
San Francisco, CA 94120-7345
INVESTMENTS BY BANK WIRE
A new account may be opened by calling 1-800-223-2138 to obtain an account
number. WITHIN SEVEN DAYS OF PURCHASE A COMPLETED ACCOUNT APPLICATION CONTAINING
THE INVESTOR'S CERTIFIED TAXPAYER IDENTIFICATION NUMBER MUST BE SENT TO THE
ADDRESS PROVIDED ABOVE UNDER "INVESTMENTS BY MAIL." Wire instructions must state
Fund name, class of shares, shareholder's registered name and account number.
Bank wires should be sent through the Federal Reserve Bank Wire System to:
WELLS FARGO BANK, N.A.
ABA 121000248
Attn: GT GLOBAL
Account No. 4023-050701
EXCHANGES BY TELEPHONE
Call the Transfer Agent at 1-800-223-2138.
EXCHANGES BY MAIL
Send complete instructions, including name of Fund exchanging from, 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 Mutual Funds
P.O. Box 7893
San Francisco, CA 94120-7893
REDEMPTIONS BY TELEPHONE
Call the Transfer Agent at 1-800-223-2138.
REDEMPTIONS BY MAIL
Send complete instructions, including name of Fund, class of shares, amount of
redemption, shareholder's registered name and account number, to:
GT Global Mutual Funds
P.O. Box 7893
San Francisco, CA 94120-7893
OVERNIGHT MAIL
Overnight mail services do not deliver to post office boxes. To send purchase,
exchange or redemption orders by overnight mail, comply with the above
instructions but send to the following address:
GT Global Investor Services, Inc.
California Plaza
2121 N. California Boulevard
Suite 450
Walnut Creek, CA 94596
ADDITIONAL QUESTIONS
Shareholders with additional questions regarding purchase, exchange and
redemption procedures should call the Transfer Agent at 1-800-223-2138.
Prospectus Page 35
<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 the America Value Fund,
is the value of its proportionate share of the 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 cannot purchase or redeem shares of that Fund.
- --------------------------------------------------------------------------------
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 each year 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
Prospectus Page 36
<PAGE>
GT GLOBAL EQUITY FUNDS
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-distribution date by the amount thereof.
Therefore, a dividend or other distribution paid shortly after a purchase of
shares would represent, in substance, a return of capital to the shareholder (to
the extent the distribution is paid on the shares so purchased), even though
subject to income tax, as discussed below.
TAXES. 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 it distributes 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.
Under the Taxpayer Relief Act of 1997, different maximum tax rates apply to a
noncorporate taxpayer's net capital gain depending on the taxpayer's holding
period and marginal rate of federal income tax -- generally, 28% for gain
recognized on securities held for more than one year but not more than 18 months
and 20% (10% for taxpayers in the 15% marginal tax bracket) for gain recognized
on securities held for more than 18 months. Each Fund may divide each net
capital gain distribution into a 28% rate gain distribution and a 20% rate gain
distribution (in accordance with the Fund's holding periods for the securities
it sold that generated the distributed gain), in which event its shareholders
must treat those portions accordingly.
Each Fund provides federal income tax information to its shareholders annually,
including information about dividends and capital gain distributions paid during
the preceding year and, under certain circumstances, the shareholders'
respective shares of any foreign taxes paid by the Fund 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. The information regarding capital gain distributions
designates the portions thereof subject to the different maximum rates of tax
applicable to noncorporate taxpayers' net capital gain indicated above.
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
Prospectus Page 37
<PAGE>
GT GLOBAL EQUITY FUNDS
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 income 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' operations.
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
Prospectus Page 38
<PAGE>
GT GLOBAL EQUITY FUNDS
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 1.65% 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 1.40% 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
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 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,
compose Liechtenstein Global Trust ("LGT"). LGT is a provider of global asset
management and private banking products and services to individual and
institutional investors. LGT 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.
On January 30, 1998, LGT, the indirect parent organization of Chancellor LGT
Asset Management, Inc. (the "Manager"), entered into an agreement with AMVESCAP
PLC ("AMVESCAP") pursuant to which AMVESCAP will acquire LGT's Asset Management
Division, which includes the Manager. AMVESCAP is a holding company formed in
1997 by the merger of INVESCO PLC and A I M Management Group Inc. Consummation
of the transaction is subject to a number of contingencies, including regulatory
approvals. Because the transaction would constitute an assignment of the
Company's investment management agreement under the Investment Company Act of
1940 (and, therefore, a termination of such agreement), it is anticipated that
the approval of the Company's Board of Trustees and the Company's shareholders
of new investment management arrangements will be sought. The Manager
anticipates that the investment management arrangements will be presented for
shareholder approval, and anticipates that the transaction will close, on or
about May 31, 1998.
As of December 31, 1997, the Manager and its worldwide affiliates managed
approximately $54 billion in assets. In the United States, as of December 31,
1997, the Manager managed or administered approximately $8 billion of assets of
the GT Global Mutual Funds. As of December 31, 1997, assets entrusted to
Liechtenstein Global Trust totaled approximately $79 billion.
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 each Fund's
investment objective.
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 BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
- ----------------------- --------------------- ------------------------------------------------------------------------
<S> <C> <C>
Peter Eadon-Clarke Portfolio Manager Chief Investment Officer for the Pacific Rim (excluding Japan) and
Hong Kong since 1997 Portfolio Manager for the Manager and LGT Asset Management Ltd. (Hong
Kong), an affiliate of 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 BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
- ----------------------- --------------------- ------------------------------------------------------------------------
<S> <C> <C>
Nicholas S. Train Portfolio Manager Head of Investments for the United Kingdom and Europe for the Manager
London since 1998 and LGT Asset Management PLC (London) ("LGT Asset Management"), an
affiliate of the Manager, since 1996. Prior thereto, Mr. Train was a
Portfolio Manager for the Manager and LGT Asset Management from 1984 to
1996.
Nicholas J. Ford Portfolio Manager Portfolio Manager for the Manager since February 1998, and a Portfolio
London since 1998 Manager for LGT Asset Management since 1996. From 1994 to 1996, Mr.
Ford was Director of Equities for Lehman Brothers Global Asset
Management PLC (London). Prior thereto, he was a Portfolio Manager and
Head of European Equities for Hill Samuel Investment Management PLC
(London) from 1990 to 1994.
</TABLE>
SMALL CAP PORTFOLIO
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE PORTFOLIO PAST FIVE YEARS
- ----------------------- --------------------- ------------------------------------------------------------------------
<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>
AMERICA MID CAP FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
- ----------------------- --------------------- ------------------------------------------------------------------------
<S> <C> <C>
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>
- --------------
* On October 31, 1996, Chancellor Capital Management, Inc. ("Chancellor
Capital") merged with LGT Asset Management, Inc. (San Francisco), and the
resulting entity was renamed Chancellor LGT Asset Management, Inc. Prior to
October 31, 1996, Mr. Cunneen and Mr. Clum were employees only of Chancellor
Capital.
Prospectus Page 40
<PAGE>
GT GLOBAL EQUITY FUNDS
VALUE PORTFOLIO
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE PORTFOLIO PAST FIVE YEARS
- ----------------------- --------------------- ------------------------------------------------------------------------
<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 BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
- ----------------------- --------------------- ------------------------------------------------------------------------
<S> <C> <C>
Roger Yates Portfolio Manager Mr. Yates has been Global Chief Investment Officer for the Manager and
London since 1996 LGT Asset Management since October 1997. He was International Chief
Investment Officer for the Manager and LGT Asset Management from
September 1996 to October 1997. 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 for the Manager since
London since 1997 1996. From 1992 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 See description above.
New York since 1997
</TABLE>
JAPAN FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
- ----------------------- --------------------- ------------------------------------------------------------------------
<S> <C> <C>
Andrew Callender Portfolio Manager Head of Investments for Japan for the Manager since 1997. From 1990 to
Tokyo since 1997 1997, Mr. Callender was a Portfolio Manager for the Manager.
</TABLE>
- --------------
* On October 31, 1996, Chancellor Capital merged with LGT Asset Management, Inc.
(San Francisco), and the resulting entity was renamed Chancellor LGT Asset
Management, Inc. Prior to October 31, 1996, Mr. Ujazdowski, Mr. Scheiner and
Mr. Collins were employees only of Chancellor Capital.
Prospectus Page 41
<PAGE>
GT GLOBAL EQUITY FUNDS
INTERNATIONAL FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
- ----------------------- --------------------- ------------------------------------------------------------------------
<S> <C> <C>
Roger Yates Portfolio Manager See description above.
London since 1996
Michael Lindsell Portfolio Manager See description above.
London since 1997
</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 that
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, CA
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 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.
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.
Prospectus Page 42
<PAGE>
GT GLOBAL EQUITY FUNDS
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 calendar year on Form
1099-DIV. Under certain circumstances, duplicate mailings of the foregoing
reports to the same household may be consolidated.
ORGANIZATION OF THE 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 of the Company's
independent accountants.
Normally there will be no annual meeting of shareholders in any year, 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 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
Prospectus Page 43
<PAGE>
GT GLOBAL EQUITY FUNDS
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, CA 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 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 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, CA 94596.
CUSTODIAN. State Street Bank and Trust Company, 225 Franklin Street, Boston, MA
02110 is custodian of each Fund's and each Portfolio's assets.
Prospectus Page 44
<PAGE>
GT GLOBAL EQUITY FUNDS
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, MA 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
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<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY GT GLOBAL FUND,
INCLUDING FEES, EXPENSES AND THE RISKS OF GLOBAL AND EMERGING MARKET
INVESTING 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 NEW DIMENSION FUND
Captures global growth opportunities by investing directly in the six GT Global
Theme Funds
GT GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity for U.S. investors by investing outside the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
GT GLOBAL DEVELOPING MARKETS FUND
Invests in debt and equity securities of developing market issuers
/ / GLOBAL THEME FUNDS
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL HEALTH CARE FUND
Invests in the growing health care industries worldwide
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA MID CAP GROWTH FUND
Concentrates on medium-sized companies in the U.S.
GT GLOBAL AMERICA VALUE FUND
Concentrates on equity securities of 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
Invests in 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 a portfolio of emerging market debt securities
GT GLOBAL FLOATING RATE FUND
Invests primarily in senior secured floating rate loans that have the potential
to achieve a high level of current income
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[LOGO]
NO DEALER, SALES REPRESENTATIVE OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
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 IN
SUCH JURISDICTION.
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, CA 94111
(415) 392-6181
Toll Free: (800) 824-1580
Statement of Additional Information
April 1, 1998
- --------------------------------------------------------------------------------
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
April 1, 1998, 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
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<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Investment Objectives and Policies....................................................................................... 2
Options, Futures and Currency Strategies................................................................................. 5
Risk Factors............................................................................................................. 13
Investment Limitations................................................................................................... 18
Execution of Portfolio Transactions...................................................................................... 20
Trustees and Executive Officers.......................................................................................... 22
Management............................................................................................................... 24
Valuation of Fund Shares................................................................................................. 26
Information Relating to Sales and Redemptions............................................................................ 27
Taxes.................................................................................................................... 30
Additional Information................................................................................................... 33
Investment Results....................................................................................................... 34
Description of Debt Ratings.............................................................................................. 42
Financial Statements..................................................................................................... 44
</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 (including investment
vehicles or companies advised by the Manager or its affiliates ("Affiliated
Funds")) 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. With respect to investments in
Affiliated Funds, the Manager waives its advisory fee to the extent that such
fees are based on assets of a Fund invested in Affiliated Funds.
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.
STATEMENT OF ADDITIONAL INFORMATION PAGE 2
<PAGE>
GT GLOBAL EQUITY FUNDS
DEPOSITORY RECEIPTS
Each Fund may hold securities of foreign issuers in the form of American
Depository Receipts ("ADRs"), American Depository Shares ("ADSs"), Global
Depository Receipts ("GDRs") 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. GDRs are similar to EDRs and are designed
for use in several international financial markets. 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, GDRs
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
STATEMENT OF ADDITIONAL INFORMATION PAGE 3
<PAGE>
GT GLOBAL EQUITY FUNDS
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 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, a
division of The McGraw-Hill Companies, Inc. ("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
<PAGE>
GT GLOBAL EQUITY FUNDS
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
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(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. 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 to avoid realizing losses that would result in a reduction of its
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 it purchased the security or currency, 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.
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
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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 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
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GT GLOBAL EQUITY FUNDS
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 purchases an index option and exercises it before the closing index
value for that day is available, it runs the risk that the level of the
underlying index may subsequently change. If such a change causes the exercised
option to fall out-of-the-money, the 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 only;
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 a 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.
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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 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
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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 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 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 entering into
a second contract, if its contra party agrees, entitling it to sell
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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 purchased by a Fund) 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 foreign 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.
In China, India, Indonesia, Malaysia, the Philippines, Singapore, South Korea
and Thailand, government regulation or a company's charter may limit the maximum
foreign aggregate ownership of equity in the company. South Korea generally
prohibits foreign investment in won-denominated debt securities, and Sri Lanka
prohibits foreign investment in government debt securities. South Korea
prohibits foreign investment in specified telecommunications companies, and the
Philippines prohibits foreign investment in mass media companies and companies
providing certain professional services. In the Philippines, a Fund may
generally invest in "B" shares of Philippine issuers engaged in partly
nationalized business activities, the market prices, liquidity and rights of
which may vary from shares owned by nationals. Similarly, in China, a Fund may
only invest in "B" shares of securities traded on The Shanghai Securities
Exchange and The Shenzhen Stock Exchange, currently the two officially
recognized securities exchanges in China. "B" shares traded on The Shanghai
Securities Exchange are settled in U.S. dollars, and those traded on The
Shenzhen Stock Exchange are generally settled in Hong Kong dollars.
If, because of restrictions on repatriation or conversion of funds, a Fund were
unable to timely distribute substantially all of its net investment income and
net capital gains, the Fund could be subject to federal income and excise taxes
that would not otherwise be incurred and could cease to qualify for the
favorable tax treatment afforded to regulated investment companies ("RICs")
under the Internal Revenue Code of 1986, as amended (the "Code"). In such case,
it would become subject to federal income tax on all of its income and net
gains.
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.
Few of the Pacific region countries have Western-style or fully democratic
governments. Some governments in the region are authoritarian in nature and
influenced by security forces. For example, during the course of the last 25
years, governments in the region have been installed or removed as a result of
military coups, while others have periodically demonstrated repressive police
state characteristics. In several Pacific region countries, the leadership
ability of the government has suffered as a result of recent corruption
scandals. Disparities of wealth, among other factors, have also led to social
unrest in some of the Asia Pacific region countries, accompanied, in certain
cases, by violence and labor unrest. Ethnic, religious and racial disaffection,
as evidenced in India, Pakistan, and Sri Lanka, for example, have created
social, economic and political problems. Such problems also have occurred in
other regions.
Starting in mid-1997, some Pacific region countries began to experience currency
devaluations that resulted in high interest rate levels and sharp reductions in
economic activity. While the currency crisis diminished prospects for short-term
corporate earnings growth, the Manager believes that high interest rate levels
may force governments and corporations to restructure the financial sector in a
manner that may facilitate a return to high levels of long-term economic
activity.
China assumed sovereignty over Hong Kong in July 1997. Although China has
committed by treaty to preserve the economic and social freedoms enjoyed in Hong
Kong for fifty years, the continuation of the current form of the economic
system in Hong Kong will depend on the actions of the government of China. In
addition, such assumption of sovereignty has increased sensitivity in Hong Kong
to political developments and statements by public figures in China. Business
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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 Chinese sovereignty over 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, if 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.
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
STATEMENT OF ADDITIONAL INFORMATION PAGE 17
<PAGE>
GT GLOBAL EQUITY FUNDS
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;
(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;
STATEMENT OF ADDITIONAL INFORMATION PAGE 18
<PAGE>
GT GLOBAL EQUITY FUNDS
(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 Company's Board of Trustees 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 19
<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 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 are in addition to, and not in lieu of, the services
required to be performed by the Manager under the applicable investment
management and administration contract. 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 its 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,
GDRs, CDRs or securities convertible into foreign equity securities. ADRs, ADSs,
EDRs, GDRs 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 20
<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, 1995, the Europe Fund paid to LGT Bank in
Liechtenstein AG and LGT Bank in Liechtenstein (Zurich), each an "affiliated"
broker as defined in the 1940 Act, 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 $6,284
and $8,378, respectively, for transactions involving purchases and sales of
portfolio securities which represented 0.09% and 0.50%, respectively, of the
total brokerage commissions paid by the International Fund, and 0.08% and 0.94%,
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.
For the fiscal year ended December 31, 1997, no payments were made to affiliated
brokers.
Aggregate brokerage commissions paid by the Funds for their three most recent
fiscal years were:
<TABLE>
<CAPTION>
FUND 1997 1996 1995
- -------------------------------------------------------------------------- ------------- ------------- -------------
<S> <C> <C> <C>
America Mid Cap Fund...................................................... $ 2,193,539 $ 2,760,768 $ 878,569
Europe Fund............................................................... $ 2,217,385 $ 2,711,139 $ 3,877,784
International Fund........................................................ $ 874,443 $ 1,496,178 $ 1,889,228
Japan Fund................................................................ $ 218,841 $ 253,623 $ 440,117
Pacific Fund.............................................................. $ 2,767,789 $ 5,151,533 $ 3,310,887
Worldwide Fund............................................................ $ 578,365 $ 792,165 $ 1,007,167
</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, 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
FUND 1997 1996
- ------------------------------------------------------------------------------------------------------ ---------- ----------
<S> <C> <C>
America Mid Cap Fund.................................................................................. 190% 253%
Europe Fund........................................................................................... 107% 123%
International Fund.................................................................................... 72% 74%
Japan Fund............................................................................................ 58% 31%
Pacific Fund.......................................................................................... 80% 93%
Worldwide Fund........................................................................................ 92% 80%
</TABLE>
STATEMENT OF ADDITIONAL INFORMATION PAGE 21
<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*, 39 Mr. Guilfoyle is President, GT Global, Inc. since 1995; Director, GT Global since 1991;
Trustee, Chairman of the Board and Senior Vice President and Director of Sales and Marketing, GT Global from May 1992 to
President April 1995; Vice President and Director of Marketing, GT Global from 1987 to 1992;
50 California Street Director, Liechtenstein Global Trust AG (holding company of the various international LGT
San Francisco, CA 94111 companies) Advisory Board since January 1996; Director, G.T. Global Insurance Agency
("G.T. Insurance") since 1996; President and Chief Executive Officer, G.T. Insurance since
1995; Senior Vice President and Director, Sales and Marketing, G.T. Insurance from April
1995 to November 1995; Senior Vice President, Retail Marketing, G.T. Insurance from 1992
to 1993. Mr. Guilfoyle is also a director or trustee of each of the other investment
companies registered under the 1940 Act that is managed or administered by the Manager.
C. Derek Anderson, 56 Mr. Anderson is President, Plantagenet Capital Management, LLC (an investment
Trustee partnership); Chief Executive Officer, Plantagenet Holdings, Ltd. (an investment banking
220 Sansome Street firm); Director, Anderson Capital Management, Inc. since 1988; Director, PremiumWear, Inc.
Suite 400 (formerly Munsingwear, Inc.)(a casual apparel company) and Director, "R" Homes, Inc. and
San Francisco, CA 94104 various other companies. Mr. Anderson is also a director or trustee of each of the other
investment companies registered under the 1940 Act that is managed or administered by the
Manager.
Frank S. Bayley, 58 Mr. Bayley is a partner of the law firm of Baker & McKenzie, and serves as a Director and
Trustee Chairman of C.D. Stimson Company (a private investment company). Mr. Bayley is also a
Two Embarcadero Center director or trustee of each of the other investment companies registered under the 1940
Suite 2400 Act that is managed or administered by the Manager.
San Francisco, CA 94111
Arthur C. Patterson, 54 Mr. Patterson is Managing Partner of Accel Partners (a venture capital firm). He also
Trustee serves as a director of Viasoft and PageMart, Inc. (both public software companies), as
428 University Avenue well as several other privately held software and communications companies. Mr. Patterson
Palo Alto, CA 94301 is also a director or trustee of each of the other investment companies registered under
the 1940 Act that is managed or administered by the Manager.
Ruth H. Quigley, 62 Miss Quigley is a private investor. From 1984 to 1986, she was President of Quigley
Trustee Friedlander & Co., Inc. (a financial advisory services firm). Miss Quigley is also a
1055 California Street director or trustee of each of the other investment companies registered under the 1940
San Francisco, CA 94108 Act that is managed or administered by the Manager.
Robert G. Wade, Jr.*, 70 Mr. Wade is Consultant to the Manager; Chairman of the Board of Chancellor Capital
Trustee Management, Inc. from January 1995 to October 1996; President, Chief Executive Officer and
1166 Avenue of the Americas Chairman of the Board of Chancellor Capital Management, Inc. from 1988 to January 1995.
New York, NY 10036 Mr. Wade is also a director or trustee of each of the other investment companies
registered under the 1940 Act that is managed or administered by the Manager.
</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 22
<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>
Kenneth W. Chancey, 52 Senior Vice President -- Mutual Fund Accounting, the Manager since 1997;
Vice President and Principal Vice President -- Mutual Fund Accounting, the Manager from 1992 to 1997;
Accounting Officer and Vice President, Putnam Fiduciary Trust Company from 1989 to 1992.
50 California Street
San Francisco, CA 94111
Helge K. Lee, 51 Chief Legal and Compliance Officer -- North America, the Manager since
Vice President and Secretary October 1997; Executive Vice President of the Asset Management Division
50 California Street of Liechtenstein Global Trust since October 1996; Senior Vice President,
San Francisco, CA 94111 General Counsel and Secretary of the Manager, GT Global, GT Services and
G.T. Insurance from February 1996 to October 1996; Vice President,
General Counsel and Secretary of LGT Asset Management, Inc., the
Manager, GT Global, GT Services and G.T. Insurance from May 1994 to
February 1996; Senior Vice President, General Counsel and Secretary of
Strong/Corneliuson Management, Inc. and Secretary of each of the Strong
Funds from October 1991 through May 1994.
</TABLE>
------------------------------
The Board has a Nominating and Audit Committee, comprised of Miss Quigley and
Messrs. Anderson, Bayley and Patterson, which is responsible for nominating
persons to serve as Trustees, reviewing audits of the 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. 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 47 series
managed or administered by the Manager. Each Trustee who is not a director,
officer or employee of the Manager or any affiliated company is paid aggregate
fees of $5,000 a year plus $300 per Fund for each meeting of the Board attended
by the Trustee, and reimbursed 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, 1997, the Company paid Mr. Anderson, Mr. Bayley, Mr.
Patterson and Miss Quigley, who are not directors, officers or employees of the
Manager or any affiliated company, total compensation of $19,276, $20,044,
$16,350 and $18,203, respectively, for their services as Trustees. For the year
ended December 31, 1997, Mr. Anderson, Mr. Bayley, Mr. Patterson and Miss
Quigley received total compensation of $103,654, $106,556, $89,700 and $98,038,
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 January 8, 1998, 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 23
<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 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 1997 1996 1995
- ---------------------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
America Mid Cap Fund................................ $3,999,732 $4,982,969 $4,425,913
Europe Fund......................................... $5,228,246 $5,416,280 $6,161,265
International Fund.................................. $2,309,873 $3,034,522 $4,027,923
Japan Fund.......................................... $1,017,788 $1,367,702 $1,167,576
Pacific Fund........................................ $3,736,264 $5,260,774 $5,176,333
Worldwide Fund...................................... $1,619,691 $1,885,798 $2,050,983
</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, 1997.
<TABLE>
<CAPTION>
FUND CLASS A CLASS B
- ------------------------------------------------------------------------------------ ------------- -------------
<S> <C> <C>
America Mid Cap Fund................................................................ $ 958,593 $ 2,781,908
Europe Fund......................................................................... $ 1,554,410 $ 910,363
International Fund.................................................................. $ 607,400 $ 625,899
Japan Fund.......................................................................... $ 212,419 $ 317,148
Pacific Fund........................................................................ $ 942,945 $ 1,119,211
Worldwide Fund...................................................................... $ 400,318 $ 496,417
</TABLE>
STATEMENT OF ADDITIONAL INFORMATION PAGE 24
<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 .......................................... 1997 $ 170,104 $ 38,700 $ 131,404
1996 363,803 90,365 273,438
1995 2,101,049 336,010 1,765,039
Europe Fund ................................................... 1997 $ 70,428 $ 4,461 $ 65,976
1996 155,198 39,684 115,514
1995 258,281 51,964 206,317
International Fund ............................................ 1997 $ 50,120 $ 11,166 $ 38,954
1996 106,879 28,270 78,609
1995 322,537 50,454 272,083
Japan Fund .................................................... 1997 $ 62,977 $ 23,200 $ 39,777
1996 117,891 47,700 70,191
1995 480,623 78,489 402,134
Pacific Fund .................................................. 1997 $ 145,896 $ 21,605 $ 124,291
1996 435,687 133,060 302,627
1995 734,983 141,263 593,720
Worldwide Fund ................................................ 1997 $ 43,631 $ 8,456 $ 35,175
1996 75,820 21,390 54,430
1995 180,015 28,527 151,488
</TABLE>
GT Global receives contingent deferred sales charges ("CDSCs") payable with
respect to redemptions of Class B shares and certain Class A shares. For the
fiscal years ended December 31, 1997, December 31, 1996 and December 31, 1995,
GT Global collected CDSCs in the following amounts:
<TABLE>
<CAPTION>
FUND 1997 1996 1995
- -------------------------------------------------------------------- ------------- ------------- -----------
<S> <C> <C> <C>
America Mid Cap Fund................................................ $ 2,340,777 $ 1,941,095 $ 925,863
Europe Fund......................................................... $ 516,795 $ 382,130 $ 510,319
International Fund.................................................. $ 358,415 $ 365,535 $ 329,959
Japan Fund.......................................................... $ 284,394 $ 349,093 $ 213,714
Pacific Fund........................................................ $ 936,835 $ 665,740 $ 758,951
Worldwide Fund...................................................... $ 275,669 $ 261,030 $ 260,049
</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, December 31, 1996 and December 31, 1997,
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,
$173,767 and $142,274; $62,660, $139,442 and $138,072; $40,655, $77,934 and
$59,416; $14,483, $35,119 and $26,210; $53,724, $135,182 and $99,321; and
$22,092, $48,430 and $41,680, respectively.
STATEMENT OF ADDITIONAL INFORMATION PAGE 25
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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.
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VALUATION OF FUND SHARES
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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, Martin Luther King Day, President's 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, GDRs 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 26
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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.
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INFORMATION RELATING TO SALES
AND REDEMPTIONS
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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.
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. Provided that an investor's bank
accepts the Bank Authorization Form, investment amounts will be drawn on the
designated dates (monthly on the 25th day or beginning quarterly on the 25th day
of the month the investor first selects) in order to purchase full and
fractional shares of a Fund at the public offering price determined on that day.
If the 25th day falls on a Saturday, Sunday or holiday, shares
STATEMENT OF ADDITIONAL INFORMATION PAGE 27
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GT GLOBAL EQUITY FUNDS
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 thirty days' written notice or by the participant, at
any time without penalty, upon written notice to the pertinent Fund or the
Transfer Agent.
LETTER OF INTENT -- CLASS A SHARES
A Letter of Intent ("LOI") is not a binding obligation to purchase the indicated
amount. While 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 the escrowed shares will be reinvested in additional
Class A shares or paid in cash, as specified by the shareholder. If the intended
investment is not completed within the specified thirteen-month period, the
purchaser must remit to GT Global the difference between the sales charge
actually paid and the sales charge 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 twenty days after written request, the appropriate number of
escrowed shares will be redeemed and the proceeds paid to GT Global.
A registered investment adviser, trust company or trust department seeking to
execute an LOI as a single purchaser with respect to accounts over which it
exercises investment discretion is required to provide the Transfer Agent with
information establishing that 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
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.
INDIVIDUAL RETIREMENT ACCOUNTS ("IRAS") AND OTHER TAX-DEFERRED PLANS
Class A or Class B shares of a Fund may be purchased as the underlying
investment for an IRA meeting the requirements of sections 408(a), 408A or 530
of the Code, as well as for qualified retirement plans described in Code section
401 and custodial accounts complying with Code section 403(b)(7).
IRAS: If you have earned income from employment (including self-employment), you
can contribute each year to an IRA up to the lesser of (1) $2,000 for yourself
or $4,000 for you and your spouse, regardless of whether your spouse is
employed, or (2) 100% of compensation. Some individuals may be able to take an
income tax deduction for the contribution. Regular contributions may not be made
for the year you become 70 1/2 or thereafter. Unless your and your spouse's
earnings exceed a certain level, you also may establish an "education IRA"
and/or a "Roth IRA." Although contributions to these new types of IRAs are
nondeductible, withdrawals from them will be tax-free under certain
circumstances. Please consult your tax adviser for more information. IRA
applications are available from brokers or GT Global.
ROLLOVER IRAS: Individuals who receive distributions from qualified retirement
plans (other than required distributions) and who wish to keep their savings
growing tax-deferred can roll over (or make a direct transfer of) their
distribution to a Rollover IRA. These accounts can also receive rollovers or
transfers from an existing IRA. If an "eligible rollover distribution" from a
qualified employer-sponsored retirement plan is not directly rolled over to an
IRA (or certain qualified plans), withholding at the rate of 20% will be
required for federal income tax purposes. A distribution from a qualified plan
that is not an "eligible rollover distribution," including a distribution that
is one of a series of substantially equal periodic payments, generally is
subject to regular wage withholding or withholding at the rate of 10% (depending
on the type and amount of the distribution), unless you elect not to have any
withholding apply. Please consult your tax adviser for more information.
SEP-IRAS: Simplified employee pension plans ("SEPs" or "SEP-IRAs") provide
self-employed individuals (and any eligible employees) with benefits similar to
Keogh plans (I.E., self-employed individual retirement plans) or Code section
401(k) plans, but with fewer administrative requirements and therefore
potentially lower annual administration expenses.
CODE SECTION 403(B)(7) CUSTODIAL ACCOUNTS: Employees of public schools and most
other tax-exempt organizations can make pre-tax salary reduction contributions
to these accounts.
PROFIT-SHARING (INCLUDING SECTION 401(K)) AND MONEY PURCHASE PENSION
PLANS: Corporations and other employers can sponsor these qualified defined
contribution plans for their employees. A section 401(k) plan, a type of
profit-sharing plan, additionally permits the eligible, participating employees
to make pre-tax salary reduction contributions to the plan (up to certain
limits).
STATEMENT OF ADDITIONAL INFORMATION PAGE 28
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GT GLOBAL EQUITY FUNDS
SIMPLE PLANS: Employers with no more than 100 employees that do not maintain
another retirement plan may establish a Savings Incentive Match Plan for
Employees ("SIMPLE") either as separate IRAs or as part of a section 401(k)
plan. SIMPLEs are not subject to the complicated nondiscrimination rules that
generally apply to qualified retirement plans.
EXCHANGES BETWEEN FUNDS
Shares of a Fund may be exchanged for shares of the corresponding class of other
GT Global Mutual Funds, based on their respective net asset values without
imposition of any sales charges, provided that the registration remains
identical. 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 those
funds upon sixty days' written notice to the shareholders of the 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 its investment objective(s).
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 $500. Costs in connection
with the administration of this service, including wire charges, will be borne
by the Funds. Proceeds of less than $500 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 fifteen 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 the realization of long-term or
short-term capital gains or losses. The SWP may be terminated at any time by the
Transfer Agent or a Fund upon thirty 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. However,
STATEMENT OF ADDITIONAL INFORMATION PAGE 29
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GT GLOBAL EQUITY FUNDS
despite the foregoing, the Company has filed with the SEC an election pursuant
to Rule 18f-1 under the 1940 Act. This means that the Fund will pay in cash all
requests for redemption made by any shareholder of record, limited in amount
with respect to each shareholder during any ninety-day period to the lesser of
$250,000 or 1% of the net asset value of the Fund at the beginning of such
period. This election will be irrevocable so long as Rule 18f-1 remains in
effect, unless the SEC by order upon application permits the withdrawal of such
election.
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TAXES
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GENERAL
Each Fund is treated as a separate corporation for federal income tax purposes.
To continue to qualify for treatment as a 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) 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 (3) at the close of each quarter of
the Fund's taxable year, not more than 25% of the value of its total assets may
be invested in securities (other than U.S. government securities or the
securities of other RICs) 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.
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, and gains realized thereby, may be
subject to income, withholding or other taxes imposed by foreign countries and
U.S. possessions ("foreign taxes") that would reduce the yield and/or total
return on its securities. Tax conventions between certain countries and the
United States may reduce or eliminate 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 taxes paid by it. Pursuant to
the election, a Fund would treat those taxes as dividends paid to its
shareholders and each shareholder would be required to (1) include in gross
income, and treat as paid by him, his share of those taxes, (2) treat his share
of those taxes
STATEMENT OF ADDITIONAL INFORMATION PAGE 30
<PAGE>
GT GLOBAL EQUITY FUNDS
and of any dividend paid by the Fund that represents its income from foreign and
U.S. possessions 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 foreign
taxes and income from sources within foreign countries and U.S. possessions if
it makes this election. Pursuant to the Taxpayer Relief Act of 1997 ("Tax Act"),
individuals who have no more than $300 ($600 for married persons filing jointly)
of creditable foreign taxes included on Forms 1099 and all of whose foreign
source income is "qualified passive income" may elect each year to be exempt
from the extremely complicated foreign tax credit limitation and will be able to
claim a foreign tax credit without having to file the detailed Form 1116 that
otherwise is required.
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 -- other than a "controlled foreign corporation" (I.E., a foreign
corporation in which, on any day during its taxable year, more than 50% of the
total voting power of all voting stock therein or the total value of all stock
therein is owned, directly, indirectly or constructively, by "U.S.
shareholders," defined as U.S. persons that individually own, directly,
indirectly or constructively, at least 10% of that voting power) as to which a
Fund is a U.S. shareholder -- 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 it distributes that income 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 (I.E.,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.
A Fund may elect to "mark to market" its stock in any PFIC. "Marking-to-market,"
in this context, means including in ordinary income each taxable year the
excess, if any, of the fair market value of the stock over the Fund's adjusted
basis therein as of the end of that year. Pursuant to the election, a Fund also
will be allowed to deduct (as ordinary, not capital, loss) the excess, if any,
of its adjusted basis in PFIC stock over the fair market value thereof as of the
taxable year-end, but only to the extent of any net mark-to-market gains with
respect to that stock included in income by the Fund for prior taxable years. A
Fund's adjusted basis in each PFIC's stock subject to the election will be
adjusted to reflect the amounts of income included and deductions taken
thereunder. Regulations proposed in 1992 would provide a similar election with
respect to the stock of certain PFICs.
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, however, to a dividend paid by a Fund to a foreign
shareholder that is "effectively connected with the conduct of a U.S. trade or
business," in which case the reporting and withholding requirements applicable
to domestic shareholders will apply. A distribution of net capital gain by 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
Each Fund's 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
amount, 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.
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
STATEMENT OF ADDITIONAL INFORMATION PAGE 31
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GT GLOBAL EQUITY FUNDS
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. As of the date of preparation of this Statement
of Additional Information, it is not entirely clear whether that 60% portion
will qualify for the reduced maximum tax rates on noncorporate taxpayers' net
capital gain enacted by the Tax Act -- 20% (10% for taxpayers in the 15%
marginal tax bracket) for gain recognized on capital assets held for more than
18 months -- instead of the 28% rate in effect before that legislation, which
now applies to gain on capital assets held for more than one year but no more
than 18 months. However, technical corrections legislation passed by the House
of Representatives late in 1997 would clarify that the lower rates apply.
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.
If a Fund has an "appreciated financial position" -- generally, an interest
(including an interest through an option, Futures or Forward Contract or short
sale) with respect to any stock, debt instrument (other than "straight debt") or
partnership interest the fair market value of which exceeds its adjusted basis
- -- and enters into a "constructive sale" of the same or substantially similar
property, the Fund will be treated as having made an actual sale thereof, with
the result that gain will be recognized at that time. A constructive sale
generally consists of a short sale, an offsetting notional principal contract or
Futures or Forward Contract entered into by a Fund or a related person with
respect to the same or substantially similar property. In addition, if the
appreciated financial position is itself a short sale or such a contract,
acquisition of the underlying property or substantially similar property will be
deemed a constructive sale.
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 32
<PAGE>
GT GLOBAL EQUITY FUNDS
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
LIECHTENSTEIN GLOBAL TRUST
Liechtenstein Global Trust AG is composed of the Manager and its worldwide
affiliates. Other worldwide affiliates of Liechtenstein Global Trust include LGT
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 and LGT Asset Management AG in Zurich, Switzerland.
Worldwide asset management affiliates also currently include LGT Asset
Management Inc. in Toronto, Canada; LGT Asset Management PLC in London; LGT
Asset Management Ltd. in Hong Kong; LGT Asset Management Ltd. in Tokyo; LGT
Asset Management Pte. Ltd. in Singapore; LGT Asset Management Ltd. in Sydney;
and LGT Asset Management GmbH in Frankfurt.
CUSTODIAN
State Street Bank and Trust Company ("State Street"), 225 Franklin Street,
Boston, MA 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, MA 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 33
<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 Dec. 31, 1997.......................................... 8.63% 8.35%
For the five years ended Dec. 31, 1997................................... 14.18% N/A
For the ten years ended Dec. 31, 1997.................................... 17.12% N/A
April 1, 1993 (commencement of operations) through Dec. 31, 1997......... N/A 17.00%
June 9, 1987 (commencement of operations) through Dec. 31, 1997.......... 14.44% 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 Dec. 31, 1997............................................................. 5.92% 5.55%
For the five years ended Dec. 31, 1997...................................................... 10.96% N/A
For the ten years ended Dec. 31, 1997....................................................... 7.58% N/A
April 1, 1993 (commencement of operations) through Dec. 31, 1997............................ N/A 10.37%
</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 Dec. 31, 1997................................................... 3.36% 3.47%
For the five years ended Dec. 31, 1997............................................ 7.75% N/A
For the ten years ended Dec. 31, 1997............................................. 8.18% N/A
April 1, 1993 (commencement of operations) through Dec. 31, 1997.................. N/A 6.90%
</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 Dec. 31, 1997................................................................ (12.76)% (12.99)%
For the five years ended Dec. 31, 1997......................................................... 3.30% N/A
For the ten years ended Dec. 31, 1997.......................................................... 2.28% N/A
April 1, 1993 (commencement of operations) through Dec. 31, 1997............................... N/A 0.86%
</TABLE>
STATEMENT OF ADDITIONAL INFORMATION PAGE 34
<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 Dec. 31, 1997.............................................................. (46.89)% (47.11)%
For the five years ended Dec. 31, 1997....................................................... (2.46)% N/A
For the ten years ended Dec. 31, 1997........................................................ 4.09% N/A
April 1, 1993 (commencement of operations) through Dec. 31, 1997............................. N/A (4.37)%
</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 Dec. 31, 1997....................................................... 4.78% 5.02%
For the five years ended Dec. 31, 1997................................................ 9.01% N/A
For the ten years ended Dec. 31, 1997................................................. 10.34% N/A
April 1, 1993 (commencement of operations) through Dec. 31, 1997...................... N/A 7.79%
June 9, 1987 (commencement of operations) through Dec. 31, 1997....................... 8.49% 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 Dec. 31, 1997.......................................... 14.05% 13.35%
April 1, 1993 (commencement of operations) through Dec. 31, 1997......... N/A 17.23%
June 9, 1987 (commencement of operations) through Dec. 31, 1997.......... 14.97% 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 Dec. 31, 1997............................................................. 11.20% 10.55%
April 1, 1993 (commencement of operations) through Dec. 31, 1997............................ N/A 10.66%
July 19, 1985 (commencement of operations) through Dec. 31, 1997............................ 12.77% 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 Dec. 31, 1997................................................... 8.51% 7.71%
April 1, 1993 (commencement of operations) through Dec. 31, 1997.................. N/A 7.18%
July 19, 1985 (commencement of operations) through Dec. 31, 1997.................. 13.21% N/A
</TABLE>
STATEMENT OF ADDITIONAL INFORMATION PAGE 35
<PAGE>
GT GLOBAL EQUITY FUNDS
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 Dec. 31, 1997................................................................ (7.99)% (8.42)%
April 1, 1993 (commencement of operations) through Dec. 31, 1997............................... N/A 1.22%
July 19, 1985 (commencement of operations) through Dec. 31, 1997............................... 11.78% N/A
</TABLE>
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 Dec. 31, 1997.............................................................. (44.24)% (44.65)%
April 1, 1993 (commencement of operations) through Dec. 31, 1997............................. N/A (4.09)%
January 19, 1977 (commencement of operations) through Dec. 31, 1997.......................... 9.96% 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 Dec. 31, 1997....................................................... 10.00% 9.22%
April 1, 1993 (commencement of operations) through Dec. 31, 1997...................... N/A 8.06%
June 9, 1987 (commencement of operations) through Dec. 31, 1997....................... 9.00% 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 Dec. 31, 1997......... N/A 112.80%
June 9, 1987 (commencement of operations) through Dec. 31, 1997.......... 336.53% 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 Dec. 31, 1997............................ N/A 61.77%
July 19, 1985 (commencement of operations) through Dec. 31, 1997............................ 346.82% 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 Dec. 31, 1997.................. N/A 39.01%
July 19, 1985 (commencement of operations) through Dec. 31, 1997.................. 368.84% 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 Dec. 31, 1997............................... N/A 5.91%
July 19, 1985 (commencement of operations) through Dec. 31, 1997............................... 300.11% 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 Dec. 31, 1997............................. N/A (17.99)%
January 19, 1977 (commencement of operations) through Dec. 31, 1997.......................... 630.10% N/A
</TABLE>
STATEMENT OF ADDITIONAL INFORMATION PAGE 36
<PAGE>
GT GLOBAL EQUITY FUNDS
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 Dec. 31, 1997...................... N/A 44.54%
June 9, 1987 (commencement of operations) through Dec. 31, 1997....................... 148.37% N/A
</TABLE>
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 Dec. 31, 1997......... N/A 110.80%
June 9, 1987 (commencement of operations) through Dec. 31, 1997.......... 315.79% 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 Dec. 31, 1997............................ N/A 59.77%
July 19, 1985 (commencement of operations) through Dec. 31, 1997............................ 325.59% 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 De. 31, 1997................... N/A 37.32%
July 19, 1985 (commencement of operations) through Dec. 31, 1997.................. 346.57% 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 Dec. 31, 1997............................... N/A 4.15%
July 19, 1985 (commencement of operations) through Dec. 31, 1997............................... 281.10% 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 Dec. 31, 1997............................. N/A (19.11)%
January 19, 1977 (commencement of operations) through Dec. 31, 1997.......................... 595.42% 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 Dec. 31, 1997...................... N/A 42.80%
June 9, 1987 (commencement of operations) through Dec. 31, 1997....................... 136.57% 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 the following, among others:
(1) The Consumer Price Index ("CPI"), which is a measure of the average
change in prices over time in a fixed market basket of goods and services
(e.g., food, clothing, shelter, fuels, transportation fares, charges for
doctors' and dentists' services, prescription medicines, and other goods and
services that people buy for day-to-day living). There
STATEMENT OF ADDITIONAL INFORMATION PAGE 37
<PAGE>
GT GLOBAL EQUITY FUNDS
is inflation risk which does not affect a security's value but its
purchasing power, i.e., the risk of changing price levels in the economy
that affects security prices or the price of goods and services.
(2) Data and mutual fund rankings and comparisons published or prepared
by Lipper Analytical Data Services, Inc. ("Lipper"), CDA/Wiesenberger
Investment Companies Service ("CDA/Wiesenberger"), Morningstar, Inc.
("Morningstar"), Micropal, Inc. and/or other companies that rank and/or
compare mutual funds by overall performance, investment objectives, assets,
expense levels, periods of existence and/or other factors. In this regard,
each Fund may be compared to its "peer group" as defined by Lipper,
CDA/Wiesenberger, Morningstar and/or other firms, as applicable or to
specific funds or groups of funds within or outside of such peer group.
Lipper generally ranks funds on the basis of total return, assuming
reinvestment of distributions, but does not take sales charges or redemption
fees into consideration, and is prepared without regard to tax consequences.
In addition to the mutual fund rankings, the Fund's performance may be
compared to mutual fund performance indices prepared by Lipper. Morningstar
is a mutual fund rating service that also rates mutual funds on the basis of
risk-adjusted performance. Morningstar ratings are calculated from a fund's
three, five and ten year average annual returns with appropriate fee
adjustments and a risk factor that reflects fund performance relative to the
three-month U.S. Treasury bill monthly returns. Ten percent of the funds in
an investment category receive five stars and 22.5% receive four stars. The
ratings are subject to change each month.
(3) Bear Stearns Foreign Bond Index, which provides simple average
returns for individual countries and gross national product ("GNP") weighted
index, beginning in 1975. The returns are broken down by local market and
currency.
(4) Ibbotson Associates International Bond Index, which provides a
detailed breakdown of local market and currency returns since 1960.
(5) Standard & Poor's 500 Composite Stock Price Index, which is a widely
recognized index composed of the capitalization-weighted average of the
prices of 500 of the largest publicly traded stocks in the U.S.
(6) Dow Jones Industrial Average.
(7) CNBC/Financial News Composite Index.
(8) Morgan Stanley Capital International World Indices, including, among
others, the Morgan Stanley Capital International Europe, Australia, Far East
Index ("EAFE Index"). The EAFE index is an unmanaged index of more than
1,000 companies in Europe, Australia and the Far East.
(9) Morgan Stanley Capital International All Country (AC) World Index
("MSCI"). The MSCI is a broad, unmanaged index of global stock prices,
currently comprising 2,500 different issuers, located in 47 countries, and
grouped in 38 separate industries.
(10) Salomon Brothers World Government Bond Index and Salomon Brothers
World Government Bond Index-Non-U.S., each of which is a widely used index
composed of world government bonds.
(11) The World Bank Publication of Trends in Developing Countries
("TIDE") provides brief reports on most of the World Bank's borrowing
members. The World Development Report is published annually and looks at
global and regional economic trends and their implications for the
developing economies.
(12) Salomon Brothers Global Telecommunications Index, which is composed
of telecommunications companies in the developing and emerging countries.
(13) Datastream and Worldscope, each of which is an on-line database
retrieval service for information, including but not limited to
international financial and economic data.
(14) International Financial Statistics, which is produced by the
International Monetary Fund.
(15) Various publications and annual reports produced by the World Bank
and its affiliates.
(16) Various publications from the International Bank for Reconstruction
and Development.
(17) Various publications produced by ratings agencies such as Moody's,
S&P and Fitch.
(18) Wilshire Associates, which is an on-line database for international
financial and economic data including performance measures for a wide range
of securities.
(19) Bank Rate National Monitor Index, which is an average of the quoted
rates for 100 leading banks and thrifts in ten U.S. cities.
STATEMENT OF ADDITIONAL INFORMATION PAGE 38
<PAGE>
GT GLOBAL EQUITY FUNDS
(20) International Finance Corporation ("IFC") Emerging Markets Data
Base, which provides detailed statistics on bond and stock markets in
developing countries.
(21) Various publications from the Organization for Economic Cooperation
and Development ("OECD").
(22) Average of savings accounts, which is a measure of all kinds of
savings deposits, including longer-term certificates. Savings accounts offer
a guaranteed rate of return on principal, but no opportunity for capital
growth. During a portion of the period, the maximum rates paid on some
savings deposits were fixed by law.
Indices, economic and financial data prepared by the research departments of
various financial organizations, such as Salomon Brothers, Inc., Lehman
Brothers, Merrill Lynch, Pierce, Fenner & Smith, Inc., Financial Research
Corporation, J. P. Morgan, Morgan Stanley, Smith Barney Shearson, S.G. Warburg,
Jardine Flemming, The Bank for International Settlements, Asian Development
Bank, Bloomberg, L.P., and Ibbotson Associates may be used as well as
information reported by the Federal Reserve and the respective Central Banks of
various nations. In addition, GT Global may use performance rankings, ratings
and commentary reported periodically in national financial publications,
including Money Magazine, Mutual Fund Magazine, Smart Money, Global Finance,
EuroMoney, Financial World, Forbes, Fortune, Business Week, Latin Finance, The
Wall Street Journal, Emerging Markets Weekly, Kiplinger's Guide To Personal
Finance, Barron's, The Financial Times, USA Today, The New York Times 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 that may be developed and made available in the future.
Information relating to foreign market performance, capitalization and
diversification is based on sources believed to be reliable but which may be
subject to revision and has not been independently verified by the Funds or GT
Global. The authors and publishers of such material are not to be considered as
"experts" under the 1933 Act on account of the inclusion of such information
herein.
A portion of the performance figures for each market includes the positive or
negative effects of the currency exchange rates effective at December 31 of each
year between the U.S. dollar and currency of the foreign market (e.g., Japanese
Yen, German Deutschemark and Hong Kong Dollar). A foreign currency that has
strengthened or weakened against the U.S. dollar will positively or negatively
affect the reported returns, as the case may be.
GT Global believes that this information may be useful to investors considering
whether and to what extent to diversify their investments through the purchase
of mutual funds investing in securities on a global basis. However, this data is
not a representation of the past performance of the 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 the Fund incurs expenses in its
operations, which will reduce performance. Each of these factors will cause the
performance of the Fund to differ from relevant indices.
From time to time, each Fund and GT Global may refer to the number of
shareholders in the Fund or the aggregate number of shareholders in all GT
Global Mutual Funds or the dollar amount of Fund assets under management or
rankings by DALBAR Surveys, Inc. in advertising materials.
GT Global believes the GT Global Equity Funds can be an appropriate investment
for long-term investment goals, including funding retirement, paying for
education or purchasing a house. GT Global may provide information designed to
help individuals understand their investment goals and explore various financial
strategies. For example, GT Global may describe general principles of investing,
such as asset allocation, diversification and risk tolerance. The GT Global
Equity Funds do not represent a complete investment program and the investors
should consider the Funds as appropriate for a portion of their overall
investment portfolio with regard to their long-term investment goals. There is
no assurance that any such information will lead to achieving these goals or
guarantee future results.
From time to time, GT Global may refer to or advertise the names of U.S. and
non-U.S. Companies and their products, although there can be no assurance that
any GT Global Mutual Fund may own the securities of these companies.
Ibbotson Associates of Chicago, Illinois ("Ibbotson") provides historical
returns of the capital markets in the United States, including common stocks,
small capitalization stocks, long-term corporate bonds, intermediate-term
government bonds, long-term government bonds, Treasury bills, the U.S. rate of
inflation (based on the CPI), and combinations of various capital markets. The
performance of these capital markets is 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 those of the Funds.
Ibbotson calculates total returns in the same method as the Funds.
STATEMENT OF ADDITIONAL INFORMATION PAGE 39
<PAGE>
GT GLOBAL EQUITY FUNDS
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 the Funds' historical share price fluctuations or total returns
to those of a benchmark.
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 describe in its sales material and advertisements how an investor
may invest in GT Global Mutual Funds through various retirement plans or other
programs that offer deferral of income taxes on investment earnings and pursuant
to which an investor may make deductible contributions. Because of their
advantages, these retirement plans and programs may produce returns superior to
comparable non-retirement investments. For example, a $10,000 investment earning
a taxable return of 10% annually would have an after-tax value of $17,976 after
ten years, assuming tax was deducted from the return each year at a 39.6% rate.
An equivalent tax-deferred investment would have an after-tax value of $19,626
after ten years, assuming tax was deducted at a 39.6% rate from the deferred
earnings at the end of the ten-year period. In sales materials and
advertisements, the Fund may also discuss these plans and programs. See
"Information Relating to Sales and Redemptions -- Individual Retirement Accounts
('IRAs') and Other Tax-Deferred Plans."
GT Global may from time to time in its sales methods 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 information regarding
industries, individual countries, regions, world stock exchanges, and economic
and demographic statistics from sources GT Global deems reliable, including the
economic and financial data of financial organizations, such as:
1) Stock market capitalization: Morgan Stanley Capital International World
Indices, IFC and Datastream.
2) Stock market trading volume: Morgan Stanley Capital International World
Indices and IFC.
3) The number of listed companies: IFC, GT Guide to World Equity Markets,
Salomon Brothers, Inc. and S.G. Warburg.
4) Wage rates: U.S. Department of Labor Statistics and Morgan Stanley Capital
International World 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 CPI and inflation rate: The World Bank, Datastream and IFC.
8) Gross Domestic Product ("GDP"): Datastream and The World Bank.
9) GDP growth rate: IFC, The World Bank and Datastream.
10) Population: The World Bank, Datastream and United Nations.
11) Average annual growth rate (%) of population: The World Bank, Datastream and
United Nations.
12) Age distribution within populations: OECD and United Nations.
13) Total exports and imports by year: IFC, The World Bank and Datastream.
14) Top three companies by country, industry, or market: IFC, GT Guide to World
Equity Markets, Salomon Brothers, Inc., and S.G. Warburg.
15) Foreign direct investments to developing countries: The World Bank and
Datastream.
16) Supply, consumption, demand and growth in demand of certain products,
services and industries, including, but not limited to electricity, water,
transportation, construction materials, natural resources, technology, other
basic infrastructure, financial services, health care services and supplies,
consumer products and services and telecommunications equipment and services
(sources of such information may include, but would not be limited to, The
World Bank, OECD, IMF, Bloomberg and Datastream).
STATEMENT OF ADDITIONAL INFORMATION PAGE 40
<PAGE>
GT GLOBAL EQUITY FUNDS
17) Standard deviation and performance returns for U.S. and non-U.S. equity and
bond markets: Morgan Stanley Capital International.
18) Countries restructuring their debt, including those under the Brady Plan:
the Manager.
19) Political and economic structure of countries: Economist Intelligence Unit.
20) Government and corporate bonds -- credit ratings, yield to maturity and
performance returns: Salomon Brothers, Inc.
21) Dividend yields for U.S. and non-U.S. companies: Bloomberg.
From time to time, GT Global may include in its advertisement and sales
material, information about privatization, which is an economic process
involving the sale of state-owned companies to the private sector.
In advertising and sales materials, GT Global may make reference to or discuss
its products, services and accomplishments. Among these accomplishments are that
in 1983 the Manager provided assistance to the government of Hong Kong in
linking its currency to the U.S. dollar, and that in 1987 Japan's Ministry of
Finance licensed LGT Asset Management Ltd. as one of the first foreign
discretionary investment managers for Japanese investors. Such accomplishments,
however, should not be viewed as an endorsement of the Manager by the government
of Hong Kong, Japan's Ministry of Finance or any other government or government
agency. Nor do any such accomplishments of the Manager provide any assurance
that the GT Global Mutual Funds' investment objectives will be achieved.
GT GLOBAL ADVANTAGE
As part of Liechtenstein Global Trust, GT Global continues a 75-year tradition
of service to individuals and institutions. Today we bring investors a
combination of experience, worldwide resources, a global perspective, investment
talent and a time-tested investment discipline. With investment professionals in
nine offices worldwide, we witness world events and economic developments
firsthand. 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 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. With respect to stocks, a global stock
research ("GSR") database developed by GT Global is utilized in the selection
process. All stocks within the GSR database are systematically ranked by our
analysts on a 1-5 basis with 1 representing the most favored. The rankings,
along with our quantitative, fundamental research, determine which stocks are
bought and sold.
GT Global describes the major stages of economic development as revolving in a
"virtuous cycle." From time to time, each Fund and GT Global may discuss the
virtuous cycle in its sales literature and advertising. This cycle operates
worldwide, forcing companies to become increasingly competitive in an
ever-expanding global marketplace. GT Global has identified the following stages
within the virtuous cycle:
FALLING BORDERS AND TRADE BARRIERS: Barriers between countries diminish,
increasing the potential for world trade and promoting global competition.
CAPITAL FLOWS FROM DEVELOPED MARKETS TO EMERGING MARKETS: As barriers fall,
restrictions on the free movement of capital in and out of a country are often
reduced or removed. The flow of money from developed to developing markets gains
momentum.
INDUSTRIALIZATION OF EMERGING MARKETS: With capital flowing across borders, many
developing nations are able to quickly begin their process of industrialization.
INCREASED DEMAND FOR GLOBAL CONSUMER PRODUCTS: As people in emerging markets
experience rising standards of living due to increased industrialization, they
demand more consumer products which can help spur global trade flows.
GT Global believes that we increasingly live in a world without boundaries in
terms of trade, competition and investment opportunities. Therefore, GT Global
believes it's becoming more relevant to look at investing in terms of industrial
groupings, or themes, as an alternative to the traditional, primary focus on
regions. GT Global believes such themes make movement possible between stages in
the virtuous cycle of economic progress.
STATEMENT OF ADDITIONAL INFORMATION PAGE 41
<PAGE>
GT GLOBAL EQUITY FUNDS
ECONOMIC DEVELOPMENT IN EMERGING MARKETS
The Manager has identified six phases to track the progress of developing
economies.
In addition, the Manager focuses on the transitions between each phase:
BETWEEN PHASES 1 & 2, STABILIZATION: Developing nations recognize the need
for economic reform and launch initiatives to stabilize their economies. Typical
measures might include initiating monetary reforms to contain inflation,
controlling government spending, and addressing external trade imbalances.
BETWEEN PHASES 2 & 3, RENOVATION: Economic development gathers momentum as
the governments of developing nations take further steps to increase
productivity and external competitiveness. Typical reforms include easing market
regulations, privatizing state-owned industries, lowering trade barriers and
reforming the national tax structure.
BETWEEN PHASES 3 & 4, NEW CONSTRUCTION: As economic reforms take hold,
infrastructure improvements are needed to facilitate and support long-term
growth. The construction and upgrading of highways and airports, communications
and utility systems generally require financing in the form of public debt.
Similarly, as the private sector develops, bolstered by new privatizations,
corporate debt securities typically are issued to finance business expansion.
EMERGING MARKET TRADING VOLUME
The annual trading volume of debt securities from developing economies according
to Salomon Brothers, Inc. has grown from $90 billion in 1990 to $150 billion in
1991 to $400 billion in 1992 and was estimated to be $1,200 billion at the end
of 1993 and $1.5 trillion at the end of 1994, respectively.
- --------------------------------------------------------------------------------
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF BOND RATINGS
MOODY'S rates the debt securities issued by various entities from "Aaa" to
"C." Investment grade ratings are the first four categories:
Aaa -- Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred
to as "gilt 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 -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade 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 -- Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper-medium-grade obligations.
Factors giving security to principal and interest are considered adequate,
but elements may be present which suggest a susceptibility to impairment
some time in the future.
Baa -- Bonds which are rated Baa are considered as medium-grade
obligations, (i.e., they are neither highly protected nor poorly secured).
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
Ba -- Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate, and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B -- Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may
be small.
Caa -- Bonds which are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with respect to
principal or interest.
STATEMENT OF ADDITIONAL INFORMATION PAGE 42
<PAGE>
GT GLOBAL EQUITY FUNDS
Ca -- Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.
C -- Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
ABSENCE OF RATING: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies
that are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not
published in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa to Caa. 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 Company ranks in the
lower end of its generic rating category.
S&P rates the securities debt of various entities in categories ranging from
"AAA" to "D" according to quality. Investment grade ratings are the first four
categories:
AAA -- An obligation rated "AAA" has the highest rating assigned by S&P.
The obligor's capacity to meet its financial commitment on the obligation is
extremely strong.
AA -- An obligation rated "AA" differs from the highest rated
obligations only in a small degree. The obligor's capacity to meet its
financial commitment on the obligation is very strong.
A -- An obligation rated "A" is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than obligations
in higher rated categories.
BBB -- An obligation rated "BBB" exhibits adequate protection
parameters. However, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity of the obligor to meet its
financial commitment on the obligation.
BB, B, CCC, CC, C -- Obligations rated "BB," "B," "CCC," "CC," and "C"
are regarded as having significant speculative characteristics. "BB"
indicates the least degree of speculation and "C" the highest. While such
obligations will likely have some quality and protective characteristics,
these may be outweighed by large uncertainties or major exposures to adverse
conditions.
BB -- An obligation rated "BB" is less vulnerable to nonpayment than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to the obligor's inadequate capacity to meet its financial commitment
on the obligation.
B -- An obligation rated "B" is more vulnerable to nonpayment than
obligations rated "BB," but the obligor currently has the capacity to meet
its financial commitment on the obligation. Adverse business, financial, or
economic conditions will likely impair the obligor's capacity or willingness
to meet its financial commitment on the obligation.
CCC -- An obligation rated "CCC" is currently vulnerable to nonpayment,
and is dependent upon favorable business, financial, and economic conditions
for the obligor to meet its financial commitment on the obligation. In the
event of adverse business, financial, or economic conditions, the obligor is
not likely to have the capacity to meet its financial commitment on the
obligation.
CC -- An obligation rated "CC" is currently highly vulnerable to
nonpayment.
C -- The "C" rating may be used to cover a situation where a bankruptcy
petition has been filed or similar action has been taken, but payments on
this obligation are being continued.
D -- An obligation rated "D" is in payment default. The "D" rating
category is used when payments on an obligation are not made on the date due
even if the applicable grace period has not expired, unless S&P believes
that
STATEMENT OF ADDITIONAL INFORMATION PAGE 43
<PAGE>
GT GLOBAL EQUITY FUNDS
such payments will be made during such grace period. The "D" rating also
will be used upon the filing of a bankruptcy petition or the taking of a
similar action if payments on an obligation are jeopardized.
PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NR: Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
MOODY'S employs the designation "Prime-1" to indicate commercial paper
having 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. Issues rated Prime-2 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 ratings of commercial paper are graded into several categories ranging
from "A-1" for the highest quality obligations to "D" for the lowest. Issues in
the "A" category are delineated with numbers 1, 2, and 3 to indicate the
relative degree of safety. "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 payments on issues with this
designation is satisfactory; however, the relative degree of safety is not as
high as for issues designated "A-1."
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements of each Fund as of December 31, 1997, and for
the fiscal year then ended, appear on the following pages.
STATEMENT OF ADDITIONAL INFORMATION PAGE 44
<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, 1997, 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, 1997 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimated
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, 1997, 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 17, 1998
F1
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (26.9%)
Student Loan Marketing Association ........................ US 31,800 $ 4,424,175 2.9
OTHER FINANCIAL
Citicorp .................................................. US 31,600 3,995,420 2.6
BANKS-MONEY CENTER
Travelers Group, Inc. ..................................... US 70,500 3,798,187 2.5
INSURANCE - MULTI-LINE
Chase Manhattan Corp. ..................................... US 33,500 3,668,250 2.4
BANKS-MONEY CENTER
HSBC Holdings PLC ......................................... HK 104,000 2,563,593 1.7
BANKS-MONEY CENTER
Royal & Sun Alliance Insurance Group PLC .................. UK 235,000 2,365,435 1.6
INSURANCE - MULTI-LINE
Australia & New Zealand Banking Group Ltd. ................ AUSL 350,000 2,312,203 1.5
BANKS-REGIONAL
Nordbanken Holding AB-/- .................................. SWDN 398,006 2,251,426 1.5
OTHER FINANCIAL
Schroders PLC ............................................. UK 70,000 2,198,851 1.5
BANKS-MONEY CENTER
ING Groep N.V. ............................................ NETH 47,300 1,992,610 1.3
OTHER FINANCIAL
ForeningsSparbanken AB .................................... SWDN 84,560 1,922,932 1.3
BANKS-REGIONAL
State Bank of India Ltd. - GDR{\/} ........................ IND 103,400 1,848,275 1.2
BANKS-REGIONAL
Lloyds TSB Group PLC ...................................... UK 139,000 1,796,273 1.2
BANKS-REGIONAL
Old Mutual South Africa Trust PLC ......................... UK 971,000 1,550,571 1.0
REAL ESTATE INVESTMENT TRUST
Nichiei Co., Ltd. ......................................... JPN 10,400 1,107,739 0.7
OTHER FINANCIAL
Union Bank of Switzerland - Bearer ........................ SWTZ 588 850,237 0.6
BANKS-MONEY CENTER
United Overseas Bank Ltd. - Foreign ....................... SING 152,000 844,444 0.6
BANKS-MONEY CENTER
PSIL Bangkok Bank Co., Ltd. (Entitlement
Certificates){\/}{=} ..................................... THAI 249,000 458,160 0.3
OTHER FINANCIAL
Kookmin Bank .............................................. KOR 62,644 330,775 0.2
BANKS-MONEY CENTER
Abbey National PLC ........................................ UK 12,644 226,512 0.2
BANKS-SUPER REGIONAL
Kokusai Securities Co., Ltd. .............................. JPN 23,000 160,383 0.1
INVESTMENT MANAGEMENT
Bank Inicjatyw Gospodarczych BIG S.A. - GDR{\/} ........... POL 3,066 46,757 --
BANKS-REGIONAL
------------
40,713,208
------------
</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, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (23.2%)
Federated Department Stores, Inc.-/- ...................... US 82,200 $ 3,539,738 2.3
RETAILERS-APPAREL
Service Corporation International ......................... US 86,400 3,191,400 2.1
CONSUMER SERVICES
CVS Corp. ................................................. US 45,100 2,889,219 1.9
RETAILERS-OTHER
EMI Group PLC ............................................. UK 333,000 2,777,734 1.8
LEISURE & TOURISM
Woolworths Ltd. ........................................... AUSL 813,000 2,717,239 1.8
RETAILERS-OTHER
Telecom Corporation of New Zealand Ltd. - ADR{\/} ......... NZ 68,000 2,635,000 1.7
TELEPHONE NETWORKS
EMAP PLC .................................................. UK 158,000 2,354,433 1.6
BROADCASTING & PUBLISHING
Telecom Italia SpA ........................................ ITLY 308,900 1,977,100 1.3
TELEPHONE NETWORKS
Reuters Holdings PLC ...................................... UK 179,000 1,954,598 1.3
BROADCASTING & PUBLISHING
Telecomunicacoes Brasileiras S.A. (Telebras) - ADR{\/} .... BRZL 16,300 1,897,931 1.3
TELEPHONE NETWORKS
Koninklijke Ahold N.V. .................................... NETH 70,359 1,836,026 1.2
RETAILERS-FOOD
Telecel - Comunicacaoes Pessoais S.A.-/- .................. PORT 16,716 1,781,526 1.2
WIRELESS COMMUNICATIONS
SPT Telecom-/- ............................................ CZCH 15,100 1,616,328 1.1
TELEPHONE NETWORKS
Portugal Telecom S.A. - Registered ........................ PORT 33,450 1,552,516 1.0
TELEPHONE NETWORKS
Ezaki Glico Co., Ltd. ..................................... JPN 150,000 968,966 0.6
RETAILERS-FOOD
Vodafone Group PLC ........................................ UK 113,586 818,789 0.5
WIRELESS COMMUNICATIONS
Telstra Corp. Ltd.-/- ..................................... AUSL 333,100 703,136 0.5
TELEPHONE NETWORKS
------------
35,211,679
------------
Health Care (10.3%)
Bristol Myers Squibb Co. .................................. US 37,300 3,529,513 2.3
PHARMACEUTICALS
Warner-Lambert Co. ........................................ US 23,800 2,951,200 1.9
PHARMACEUTICALS
Roche Holding AG .......................................... SWTZ 239 2,373,473 1.6
PHARMACEUTICALS
Nycomed Amersham PLC ...................................... UK 55,400 2,057,714 1.4
PHARMACEUTICALS
Richter Gedeon Rt. - Reg S GDR{c} {\/} .................... HGRY 15,800 1,815,025 1.2
PHARMACEUTICALS
Schering AG ............................................... GER 16,580 1,599,461 1.1
PHARMACEUTICALS
</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, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Health Care (Continued)
Takeda Chemical Industries ................................ JPN 40,000 $ 1,140,230 0.8
PHARMACEUTICALS
M.L. Laboratories PLC-/- .................................. UK 1,091 1,478 --
PHARMACEUTICALS
------------
15,468,094
------------
Materials/Basic Industry (8.3%)
Monsanto Co. .............................................. US 67,900 2,851,800 1.9
CHEMICALS
Hercules, Inc. ............................................ US 54,000 2,703,375 1.8
CHEMICALS
Imperial Chemical Industries PLC - ADR{\/} ................ UK 35,300 2,292,294 1.5
CHEMICALS
Akzo Nobel N.V. ........................................... NETH 11,290 1,947,013 1.3
CHEMICALS
Kimberly-Clark de Mexico, S.A. de C.V. "A" ................ MEX 285,600 1,398,265 0.9
PAPER/PACKAGING
CRH PLC ................................................... UK 114,500 1,325,493 0.9
BUILDING MATERIALS & COMPONENTS
------------
12,518,240
------------
Energy (6.1%)
Petroleo Brasileiro S.A. (Petrobras) - ADR{\/} ............ BRZL 138,200 3,299,525 2.2
GAS PRODUCTION & DISTRIBUTION
Petroleum Geo-Services ASA-/- ............................. NOR 31,920 2,010,692 1.3
ENERGY EQUIPMENT & SERVICES
Shell Transport & Trading Co., PLC ........................ UK 265,000 1,914,614 1.3
OIL
Total S.A. "B" ............................................ FR 17,380 1,891,485 1.3
OIL
------------
9,116,316
------------
Technology (5.2%)
Compaq Computer Corp.-/- .................................. US 60,000 3,386,250 2.2
COMPUTERS & PERIPHERALS
Intel Corp. ............................................... US 44,500 3,126,125 2.1
SEMICONDUCTORS
Texas Instruments, Inc. ................................... US 31,144 1,401,480 0.9
SEMICONDUCTORS
------------
7,913,855
------------
Capital Goods (4.0%)
Textron, Inc. ............................................. US 43,800 2,737,500 1.8
AEROSPACE/DEFENSE
Alcatel Alsthom Compagnie Generale d'Electricite .......... FR 15,440 1,962,549 1.3
TELECOM EQUIPMENT
Canon, Inc. ............................................... JPN 60,000 1,397,701 0.9
OFFICE EQUIPMENT
------------
6,097,750
------------
</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, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Durables (3.5%)
Futuris Corp., Ltd. ....................................... AUSL 2,000,000 $ 2,189,068 1.4
AUTO PARTS
Ford Motor Co. ............................................ US 36,200 1,762,488 1.2
AUTOMOBILES
Bridgestone Corp. ......................................... JPN 65,000 1,409,579 0.9
AUTO PARTS
------------
5,361,135
------------
Consumer Non-Durables (3.4%)
RJR Nabisco Holdings Corp. ................................ US 73,300 2,748,750 1.8
TOBACCO
Asahi Breweries Ltd. ...................................... JPN 95,000 1,383,142 0.9
BEVERAGES - ALCOHOLIC
Amway Japan Ltd. .......................................... JPN 55,400 1,061,303 0.7
HOUSEHOLD PRODUCTS
------------
5,193,195
------------
Multi-Industry/Miscellaneous (1.2%)
Shanghai Industrial Holdings Ltd. ......................... HK 490,000 1,821,256 1.2
MULTI-INDUSTRY
------------ -----
TOTAL EQUITY INVESTMENTS (cost $124,048,794) ................ 139,414,728 92.1
------------ -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Co., due
January 2, 1998, for an effective yield of 5.80%,
collateralized by $11,755,000 U.S. Treasury Notes, 5.75%
due 12/31/98 (market value of collateral is $11,766,026,
including accrued interest). (cost $11,535,000) .......... 11,535,000 7.6
------------ -----
TOTAL INVESTMENTS (cost $135,583,794) * .................... 150,949,728 99.7
Other Assets and Liabilities ................................ 457,079 0.3
------------ -----
NET ASSETS .................................................. $151,406,807 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
{c} Security issued under Regulation S. Rule 144A and additional
restrictions may apply in the resale of such securities.
{=} Each share of Entitlement Certificates represents one local share
of PSIL Bangkok Bank Co., Ltd.
* For Federal income tax purposes, cost is $136,039,555 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 21,802,933
Unrealized depreciation: (6,892,760)
-------------
Net unrealized appreciation: $ 14,910,173
-------------
-------------
</TABLE>
Abbreviations:
ADR--American Depositary Receipt
GDR--Global Depositary Receipt
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, 1997
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1997, was concentrated in
the following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
------------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ------ ------------- -----
<S> <C> <C> <C>
Australia (AUSL/AUD) ................. 5.2 5.2
Brazil (BRZL/BRL) .................... 3.5 3.5
Czech Republic (CZCH/CSK) ............ 1.1 1.1
France (FR/FRF) ...................... 2.6 2.6
Germany (GER/DEM) .................... 1.1 1.1
Hong Kong (HK/HKD) ................... 2.9 2.9
Hungary (HGRY/HUF) ................... 1.2 1.2
India (IND/INR) ...................... 1.2 1.2
Italy (ITLY/ITL) ..................... 1.3 1.3
Japan (JPN/JPY) ...................... 5.6 5.6
Korea (KOR/KRW) ...................... 0.2 0.2
Mexico (MEX/MXN) ..................... 0.9 0.9
Netherlands (NETH/NLG) ............... 3.8 3.8
New Zealand (NZ/NZD) ................. 1.7 1.7
Norway (NOR/NOK) ..................... 1.3 1.3
Portugal (PORT/PTE) .................. 2.2 2.2
Singapore (SING/SGD) ................. 0.6 0.6
Sweden (SWDN/SEK) .................... 2.8 2.8
Switzerland (SWTZ/CHF) ............... 2.2 2.2
Thailand (THAI/THB) .................. 0.3 0.3
United Kingdom (UK/GBP) .............. 15.8 15.8
United States (US/USD) ............... 34.6 7.9 42.5
------ ----- -----
Total ............................... 92.1 7.9 100.0
------ ----- -----
------ ----- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $151,406,807.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
VALUE
(U.S. CONTRACT DELIVERY APPRECIATION
CONTRACTS TO BUY: DOLLARS) PRICE DATE (DEPRECIATION)
- ---------------------------------------- ---------- --------- ------- -------------
<S> <C> <C> <C> <C>
Deutsche Marks.......................... 613,677 1.76130 2/27/98 $ (10,861)
---------- -------------
Total Contracts to Buy (Payable amount
$624,538)............................ 613,677 (10,861)
---------- -------------
THE VALUE OF CONTRACTS TO BUY AS
PERCENTAGE OF NET ASSETS IS 0.41%
<CAPTION>
CONTRACTS TO SELL:
- ----------------------------------------
<S> <C> <C> <C> <C>
British Pounds.......................... 1,476,511 0.61245 1/20/98 $ (6,991)
British Pounds.......................... 1,476,511 0.60002 1/20/98 23,429
Deutsche Marks.......................... 1,729,455 1.73540 2/27/98 56,876
French Francs........................... 2,830,938 5.72800 2/6/98 136,939
Japanese Yen............................ 2,310,962 118.82300 2/4/98 213,801
Japanese Yen............................ 4,318,711 122.20000 2/12/98 263,940
Swiss Francs............................ 1,174,569 1.42180 3/19/98 21,099
---------- -------------
Total Contracts to Sell (Receivable
amount $16,026,750).................. 15,317,657 709,093
---------- -------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 10.12%
Total Open Forward Foreign Currency
Contracts, Net....................... $ 698,232
-------------
-------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F6
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $135,583,794) (Note 1).......................... $150,949,728
U.S. currency.................................................................. $ 48
Foreign currencies (cost $1,578,009)........................................... 1,536,226 1,536,274
---------
Receivable for Fund shares sold........................................................... 1,036,495
Receivable for open forward foreign currency contracts, net (Note 1)...................... 698,232
Dividends and dividend withholding tax reclaims receivable................................ 221,497
Receivable for securities sold............................................................ 194,078
Interest receivable....................................................................... 1,858
Miscellaneous receivable.................................................................. 646
-----------
Total assets............................................................................ 154,638,808
-----------
Liabilities:
Payable for Fund shares repurchased....................................................... 2,788,587
Payable for investment management and administration fees (Note 2)........................ 121,861
Payable for printing and postage expenses................................................. 96,022
Payable for transfer agent fees (Note 2).................................................. 89,810
Payable for service and distribution expenses (Note 2).................................... 67,726
Payable for professional fees............................................................. 37,204
Payable for custodian fees................................................................ 12,019
Payable for Trustees' fees and expenses (Note 2).......................................... 6,727
Payable for registration and filing fees.................................................. 5,626
Payable for fund accounting fees (Note 2)................................................. 1,924
Other accrued expenses.................................................................... 4,495
-----------
Total liabilities....................................................................... 3,232,001
-----------
Net assets.................................................................................. $151,406,807
-----------
-----------
Class A:
Net asset value and redemption price per share ($103,769,443 DIVIDED BY 7,275,753 shares
outstanding)............................................................................... $ 14.26
-----------
-----------
Maximum offering price per share (100/95.25 of $14.26) *.................................... $ 14.97
-----------
-----------
Class B:+
Net asset value and offering price per share ($45,009,871 DIVIDED BY 3,300,587 shares
outstanding)............................................................................... $ 13.64
-----------
-----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($2,627,493
DIVIDED BY 182,671 shares outstanding)..................................................... $ 14.38
-----------
-----------
Net assets consist of:
Paid in capital (Note 4).................................................................. $133,904,092
Undistributed net investment income....................................................... 95,296
Accumulated net realized gain on investments and foreign currency transactions............ 1,383,082
Net unrealized appreciation on translation of assets and liabilities in foreign
currencies............................................................................... 658,403
Net unrealized appreciation of investments................................................ 15,365,934
-----------
Total -- representing net assets applicable to capital shares outstanding................... $151,406,807
-----------
-----------
<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.
F7
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
STATEMENT OF OPERATIONS
Year ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of $275,397).............................. $ 2,764,013
Interest income........................................................................... 645,128
-----------
Total investment income................................................................. 3,409,141
-----------
Expenses:
Investment management and administration fees (Note 2).................................... 1,619,691
Service and distribution expenses: (Note 2)
Class A.................................................................... $ 400,318
Class B.................................................................... 496,417 896,735
-----------
Transfer agent fees (Note 2).............................................................. 455,298
Custodian fees............................................................................ 111,017
Printing and postage expenses (Note 2).................................................... 63,005
Registration and filing fees.............................................................. 53,920
Audit fees................................................................................ 47,254
Fund accounting fees...................................................................... 41,680
Legal fees................................................................................ 29,476
Trustees' fees and expenses (Note 2)...................................................... 13,218
Other expenses (Note 1)................................................................... 12,217
-----------
Total expenses before reductions........................................................ 3,343,511
-----------
Expense reductions (Notes 1 & 5)...................................................... (146,965)
-----------
Total net expenses...................................................................... 3,196,546
-----------
Net investment income....................................................................... 212,595
-----------
Net realized and unrealized gain (loss) on investments and foreign currencies:
(Note 1)
Net realized gain on investments............................................. 25,979,995
Net realized gain on foreign currency transactions........................... 2,164,063
-----------
Net realized gain during the year....................................................... 28,144,058
Net change in unrealized appreciation on translation of assets and
liabilities in foreign currencies........................................... 162,616
Net change in unrealized appreciation of investments......................... (11,824,112)
-----------
Net unrealized depreciation during the year............................................. (11,661,496)
-----------
Net realized and unrealized gain on investments and foreign currencies...................... 16,482,562
-----------
Net increase in net assets resulting from operations........................................ $16,695,157
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F8
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996
------------- -------------
Decrease in net assets
Operations:
Net investment income (loss)............................................. $ 212,595 $ (81,643)
Net realized gain on investments and foreign currency transactions....... 28,144,058 21,499,978
Net change in unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies............................ 162,616 111,081
Net change in unrealized appreciation (depreciation) of investments...... (11,824,112) (1,481,639)
------------- -------------
Net increase in net assets resulting from operations................... 16,695,157 20,047,777
------------- -------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income............................................... (109,138) --
From net realized gain on investments.................................... (22,666,381) (13,087,564)
Class B:
Distributions to shareholders: (Note 1)
From net realized gain on investments.................................... (10,444,406) (5,727,628)
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income............................................... (8,161) --
From net realized gain on investments.................................... (358,231) (175,598)
------------- -------------
Total distributions.................................................... (33,586,317) (18,990,790)
------------- -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested......................... 243,618,368 290,210,249
Decrease from capital shares repurchased................................. (256,140,244) (314,217,462)
------------- -------------
Net decrease from capital share transactions........................... (12,521,876) (24,007,213)
------------- -------------
Total decrease in net assets............................................... (29,413,036) (22,950,226)
Net assets:
Beginning of year........................................................ 180,819,843 203,770,069
------------- -------------
End of year *............................................................ $151,406,807 $180,819,843
------------- -------------
------------- -------------
* Includes undistributed net investment income of......................... $ 95,296 $ --
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F9
<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,
----------------------------------------------------------
1997 1996 (D) 1995 (D) 1994 1993 (D)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 16.71 $ 16.82 $ 15.53 $ 17.47 $ 14.47
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... 0.05 0.03 -- -- 0.04
Net realized and unrealized gain
(loss) on investments................ 1.55 1.79 1.74 (1.16) 3.92
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. 1.60 1.82 1.74 (1.16) 3.96
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ (0.02) -- -- -- --
From net realized gain on
investments.......................... (4.03) (1.93) (0.45) (0.78) (0.96)
---------- ---------- ---------- ---------- ----------
Total distributions................. (4.05) (1.93) (0.45) (0.78) (0.96)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 14.26 $ 16.71 $ 16.82 $ 15.53 $ 17.47
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 10.00% 10.92% 11.23% (6.65)% 27.6%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 103,769 $ 125,556 $ 145,982 $ 182,467 $ 193,997
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... 0.32% 0.14% (0.06)% (0.01)% 0.9%
Without expense reductions............ 0.23% 0.06% (0.12)% (0.04)% N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.73% 1.72% 1.87% 1.81% 1.9%
Without expense reductions............ 1.82% 1.80% 1.93% 1.84% N/A
Portfolio turnover rate++++............. 92% 80% 113% 86% 92%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0288 $ 0.0263 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.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F10
<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++
-------------------------------------------------------------
APRIL 1, 1993
YEAR ENDED DECEMBER 31, TO
---------------------------------------------- DECEMBER 31,
1997 1996 (D) 1995 (D) 1994 1993 (D)
---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 16.23 $ 16.50 $ 15.34 $ 17.39 $ 15.67
---------- ---------- ---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... (0.05) (0.09) (0.12) (0.11) (0.04)
Net realized and unrealized gain
(loss) on investments................ 1.49 1.75 1.73 (1.16) 2.72
---------- ---------- ---------- ---------- -------------
Net increase (decrease) from
investment operations.............. 1.44 1.66 1.61 (1.27) 2.68
---------- ---------- ---------- ---------- -------------
Distributions to shareholders:
From net investment income............ -- -- -- -- --
From net realized gain on
investments.......................... (4.03) (1.93) (0.45) (0.78) (0.96)
---------- ---------- ---------- ---------- -------------
Total distributions................. (4.03) (1.93) (0.45) (0.78) (0.96)
---------- ---------- ---------- ---------- -------------
Net asset value, end of period.......... $ 13.64 $ 16.23 $ 16.50 $ 15.34 $ 17.39
---------- ---------- ---------- ---------- -------------
---------- ---------- ---------- ---------- -------------
Total investment return (c)............. 9.22% 10.16% 10.52% (7.32)% 17.3%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 45,010 $ 52,809 $ 56,095 $ 52,567 $ 20,592
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... (0.33)% (0.51)% (0.71)% (0.66)% (0.4)%(a)
Without expense reductions............ (0.42)% (0.59)% (0.77)% (0.69)% N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.38% 2.37% 2.52% 2.46% 2.5%(a)
Without expense reductions............ 2.47% 2.45% 2.58% 2.49% N/A
Portfolio turnover rate++++............. 92% 80% 113% 86% 92%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0288 $ 0.0263 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.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F11
<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>
ADVISOR CLASS+++
-------------------------------------------
JUNE 1, 1995
YEAR ENDED DECEMBER 31, TO
---------------------------- DECEMBER 31,
1997 1996 (D) 1995 (D)
------------- ------------- -------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 16.81 $ 16.86 $ 15.26
------------- ------------- -------------
Income from investment operations:
Net investment income (loss).......... 0.12 0.09 0.03
Net realized and unrealized gain
(loss) on investments................ 1.57 1.79 2.02
------------- ------------- -------------
Net increase (decrease) from
investment operations.............. 1.69 1.88 2.05
------------- ------------- -------------
Distributions to shareholders:
From net investment income............ (0.09) -- --
From net realized gain on
investments.......................... (4.03) (1.93) (0.45)
------------- ------------- -------------
Total distributions................. (4.12) (1.93) (0.45)
------------- ------------- -------------
Net asset value, end of period.......... $ 14.38 $ 16.81 $ 16.86
------------- ------------- -------------
------------- ------------- -------------
Total investment return (c)............. 10.43% 11.31% 13.46%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 2,627 $ 2,455 $ 1,693
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... 0.67% 0.49% 0.29%(a)
Without expense reductions............ 0.58% 0.41% 0.23%(a)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.38% 1.37% 1.52%(a)
Without expense reductions............ 1.47% 1.45% 1.58%(a)
Portfolio turnover rate++++............. 92% 80% 113%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0288 $ 0.0263 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.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F12
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
NOTES TO
FINANCIAL STATEMENTS
December 31, 1997
- --------------------------------------------------------------------------------
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 a diversified, open-end management investment company. The
Company has eight 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 preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Funds in the preparation of the
financial statements.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of 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 fluctuation
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
F13
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
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 counter
party is unable to meet the terms of a contract or if 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, 1997, stocks with an aggregate value of approximately
$12,659,388 were on loan to brokers. The loans were secured by cash collateral
of $13,106,152, 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, 1997,
the Fund received securities lending fees of $137,889 which were used to reduce
the Fund's custodian and administrative expenses.
(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.
F14
<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 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 ("GT Funds") advised and/or
administered by the Manager, has a line of credit with the BankBoston and State
Street Bank & Trust Company. The arrangements with the banks allow the Fund and
GT Funds to borrow an aggregate maximum amount of $250,000,000. The Fund is
limited to borrowing up to 33 1/3% of the value of the Fund's total assets.
For the year ended December 31, 1997, 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 6.44%. Interest expense
for the year ended December 31, 1997 was $1,431, 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. 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. ("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, 1997, GT Global retained $8,456
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 $3,645 for the year ended December 31, 1997. GT Global also makes
ongoing shareholder servicing and trail commission payments to dealers whose
clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSC's, in accordance with the Fund's current
prospectus. During the year ended December 31, 1997, GT Global collected CDSC's
in the amount of $272,024. 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.
F15
<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%, 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.
Effective January 1, 1998, the Manager and GT Global have undertaken to limit
the Fund's Expenses (exclusive of brokerage commissions, taxes, interest, and
extraordinary expenses) to the annual rate 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. This undertaking may be changed or eliminated in the
future.
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, 1997, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $138,743,808 and $176,373,627, respectively. There were
no purchases or sales of U.S. government obligations by the Fund during the
year.
4. CAPITAL SHARES
At December 31, 1997, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
------------------------ ------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold...................................................... 9,536,130 $163,326,296 14,357,786 $250,471,583
Shares issued in connection with reinvestment of distributions... 1,372,411 19,227,529 670,053 11,082,654
---------- ------------ ---------- ------------
10,908,541 182,553,825 15,027,839 261,554,237
Shares repurchased............................................... (11,147,719) (193,303,890) (16,192,391) (283,412,820)
---------- ------------ ---------- ------------
Net decrease..................................................... (239,178) $(10,750,065) (1,164,552) $(21,858,583)
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
------------------------ ------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------- ---------- ------------ ---------- ------------
Shares sold...................................................... 1,034,341 $ 17,020,574 854,412 $ 14,531,361
Shares issued in connection with reinvestment of distributions... 688,809 9,238,884 308,538 4,961,416
---------- ------------ ---------- ------------
1,723,150 26,259,458 1,162,950 19,492,777
Shares repurchased............................................... (1,675,941) (28,047,548) (1,309,880) (22,330,821)
---------- ------------ ---------- ------------
Net increase (decrease).......................................... 47,209 $ (1,788,090) (146,930) $ (2,838,044)
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
------------------------ ------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------- ---------- ------------ ---------- ------------
Shares sold...................................................... 1,924,783 $ 34,438,694 521,049 $ 8,987,637
Shares issued in connection with reinvestment of distributions... 25,931 366,391 10,546 175,598
---------- ------------ ---------- ------------
1,950,714 34,805,085 531,595 9,163,235
Shares repurchased............................................... (1,914,043) (34,788,806) (485,979) (8,473,821)
---------- ------------ ---------- ------------
Net increase..................................................... 36,671 $ 16,279 45,616 $ 689,414
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
</TABLE>
F16
<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, 1997, the Fund's
expenses were reduced by $9,076 under these arrangements.
6. SUBSEQUENT EVENT
On January 30, 1998, Liechtenstein Global Trust ("LGT") and AMVESCAP PLC
("AMVESCAP") entered into an agreement by which AMVESCAP will acquire LGT's
Asset Management Division, including Chancellor LGT Asset Management, Inc.
AMVESCAP is the holding company of the AIM and INVESCO asset management
businesses.
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
For its fiscal year ended December 31, 1997, the total amount of income received
by the Fund from sources within foreign countries and possessions of the United
States was approximately $.2723 per share (representing an approximate total of
$2,266,869). The total amount of taxes paid by the Fund to such countries was
approximately $.0331 per share (representing an approximate total of $275,397).
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$22,856,473 as a capital gain dividend for the fiscal year ended December 31,
1997.
Pursuant to Section 854 of the Internal Revenue Code, the Fund designates 5.14%
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, 1997.
F17
<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, 1997, 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, 1997 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, 1997, 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 17, 1998
F18
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (26.7%)
HSBC Holdings PLC ......................................... HK 180,100 $ 4,439,453 2.2
BANKS-MONEY CENTER
Nordbanken Holding AB-/- .................................. SWDN 772,120 4,367,701 2.1
OTHER FINANCIAL
Australia & New Zealand Banking Group Ltd. ................ AUSL 625,600 4,132,897 2.0
BANKS-REGIONAL
Royal & Sun Alliance Insurance Group PLC .................. UK 405,000 4,076,601 2.0
INSURANCE - MULTI-LINE
M & G Group PLC ........................................... UK 175,000 4,044,540 2.0
INVESTMENT MANAGEMENT
ForeningsSparbanken AB .................................... SWDN 145,230 3,302,595 1.6
BANKS-REGIONAL
Abbey National PLC ........................................ UK 182,400 3,267,626 1.6
BANKS-SUPER REGIONAL
ING Groep N.V. ............................................ NETH 76,097 3,205,744 1.6
OTHER FINANCIAL
National Westminster Bank PLC ............................. UK 162,000 2,692,020 1.3
BANKS-MONEY CENTER
Lloyds TSB Group PLC ...................................... UK 196,000 2,532,874 1.2
BANKS-REGIONAL
Unidanmark AS "A" ......................................... DEN 34,300 2,518,341 1.2
BANKS-REGIONAL
Axa - UAP ................................................. FR 32,050 2,479,968 1.2
INSURANCE - MULTI-LINE
Nichiei Co., Ltd. ......................................... JPN 22,800 2,428,506 1.2
OTHER FINANCIAL
Schroders PLC ............................................. UK 76,000 2,387,323 1.2
BANKS-MONEY CENTER
State Bank of India Ltd. - GDR{\/} ........................ IND 125,000 2,234,375 1.1
BANKS-REGIONAL
Schweizerischer Bankverein (Swiss Bank Corp.) ............. SWTZ 6,554 2,037,187 1.0
BANKS-MONEY CENTER
Banque Nationale de Paris ................................. FR 35,379 1,880,492 0.9
BANKS-MONEY CENTER
United Overseas Bank Ltd. - Foreign ....................... SING 222,300 1,235,000 0.6
BANKS-MONEY CENTER
PSIL Bangkok Bank Co., Ltd. (Entitlement Certificates){\/}
{=} ...................................................... THAI 320,000 588,800 0.3
OTHER FINANCIAL
Kookmin Bank .............................................. KOR 84,910 448,345 0.2
BANKS-MONEY CENTER
Union Bank of Switzerland - Bearer ........................ SWTZ 275 397,645 0.2
BANKS-MONEY CENTER
------------
54,698,033
------------
Services (20.0%)
EMI Group PLC ............................................. UK 578,000 4,821,412 2.4
LEISURE & TOURISM
Woolworths Ltd. ........................................... AUSL 1,279,000 4,274,721 2.1
RETAILERS-OTHER
</TABLE>
The accompanying notes are an integral part of the financial statements.
F19
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
Telecom Italia SpA ........................................ ITLY 609,900 $ 3,903,636 1.9
TELEPHONE NETWORKS
Telecom Corporation of New Zealand Ltd. ................... NZ 725,500 3,515,509 1.7
TELEPHONE NETWORKS
Reuters Holdings PLC ...................................... UK 305,000 3,330,460 1.6
BROADCASTING & PUBLISHING
Koninklijke Ahold N.V. .................................... NETH 117,919 3,077,109 1.5
RETAILERS-FOOD
EMAP PLC .................................................. UK 180,000 2,682,266 1.3
BROADCASTING & PUBLISHING
Great Universal Stores PLC ................................ UK 208,000 2,619,639 1.3
RETAILERS-OTHER
Telecomunicacoes Brasileiras S.A. (Telebras) - ADR{\/} .... BRZL 21,400 2,491,763 1.2
TELEPHONE NETWORKS
Ezaki Glico Co., Ltd. ..................................... JPN 370,000 2,390,115 1.2
RETAILERS-FOOD
Portugal Telecom S.A. - Registered ........................ PORT 46,400 2,153,565 1.0
TELEPHONE NETWORKS
Telecel - Comunicacaoes Pessoais S.A.-/- .................. PORT 17,619 1,877,764 0.9
WIRELESS COMMUNICATIONS
Vendex International N.V. ................................. NETH 31,755 1,752,853 0.9
RETAILERS-OTHER
Vodafone Group PLC ........................................ UK 165,928 1,196,098 0.6
WIRELESS COMMUNICATIONS
Telstra Corp. Ltd.-/- ..................................... AUSL 437,200 922,880 0.4
TELEPHONE NETWORKS
Fast Retailing Co., Ltd. .................................. JPN 44 705 --
RETAILERS-APPAREL
------------
41,010,495
------------
Energy (10.5%)
Petroleo Brasileiro S.A. (Petrobras) - ADR{\/} ............ BRZL 197,900 4,724,863 2.3
GAS PRODUCTION & DISTRIBUTION
Shell Transport & Trading Co., PLC ........................ UK 478,000 3,453,530 1.7
OIL
Viag AG ................................................... GER 5,792 3,120,627 1.5
ELECTRICAL & GAS UTILITIES
Total S.A. "B" ............................................ FR 28,580 3,110,393 1.5
OIL
Petroleum Geo-Services ASA-/- ............................. NOR 47,990 3,022,967 1.5
ENERGY EQUIPMENT & SERVICES
Ente Nazionale Idrocarburi (ENI) S.p.A. ................... ITLY 355,200 2,029,542 1.0
OIL
Coflexip - ADR{\/} ........................................ FR 35,230 1,955,265 1.0
ENERGY EQUIPMENT & SERVICES
------------
21,417,187
------------
</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, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Health Care (8.7%)
Roche Holding AG .......................................... SWTZ 543 $ 5,392,449 2.6
PHARMACEUTICALS
Novartis AG ............................................... SWTZ 1,709 2,773,059 1.4
PHARMACEUTICALS
Richter Gedeon Rt. - Reg S GDR{c} {\/} .................... HGRY 23,400 2,688,075 1.3
PHARMACEUTICALS
Schering AG ............................................... GER 26,700 2,575,730 1.3
PHARMACEUTICALS
Takeda Chemical Industries ................................ JPN 80,000 2,280,460 1.1
PHARMACEUTICALS
Astra AB "A" .............................................. SWDN 115,313 1,997,573 1.0
MEDICAL TECHNOLOGY & SUPPLIES
M.L. Laboratories PLC-/- .................................. UK 21,368 28,947 --
PHARMACEUTICALS
------------
17,736,293
------------
Materials/Basic Industry (7.1%)
Kimberly-Clark de Mexico, S.A. de C.V. "A" ................ MEX 829,400 4,060,647 2.0
PAPER/PACKAGING
Ciba Specialty Chemicals AG-/- ............................ SWTZ 31,880 3,797,837 1.9
CHEMICALS
Akzo Nobel N.V. ........................................... NETH 15,210 2,623,035 1.3
CHEMICALS
BOC Group PLC ............................................. UK 136,000 2,235,402 1.1
CHEMICALS
CRH PLC ................................................... UK 138,600 1,604,483 0.8
BUILDING MATERIALS & COMPONENTS
------------
14,321,404
------------
Consumer Non-Durables (6.0%)
Asahi Breweries Ltd. ...................................... JPN 210,000 3,057,471 1.5
BEVERAGES - ALCOHOLIC
Nestle S.A. - Registered .................................. SWTZ 1,771 2,654,196 1.3
FOOD
Amway Japan Ltd. .......................................... JPN 125,000 2,394,636 1.2
HOUSEHOLD PRODUCTS
Diageo PLC ................................................ UK 235,000 2,158,990 1.0
BEVERAGES - ALCOHOLIC
South African Breweries Ltd. .............................. SAFR 42,000 1,036,184 0.5
BEVERAGES - ALCOHOLIC
Benckiser N.V. "B"-/- ..................................... NETH 24,500 1,013,985 0.5
HOUSEHOLD PRODUCTS
------------
12,315,462
------------
Capital Goods (4.9%)
Alcatel Alsthom Compagnie Generale d'Electricite .......... FR 31,500 4,003,905 2.0
TELECOM EQUIPMENT
Canon, Inc. ............................................... JPN 120,000 2,795,402 1.4
OFFICE EQUIPMENT
</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, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Capital Goods (Continued)
Nokia AB "A" .............................................. FIN 28,300 $ 1,979,602 1.0
TELECOM EQUIPMENT
Kurita Water Industries Ltd. .............................. JPN 95,000 968,199 0.5
ENVIRONMENTAL
------------
9,747,108
------------
Multi-Industry/Miscellaneous (3.3%)
BBA Group PLC ............................................. UK 395,000 2,646,305 1.3
MULTI-INDUSTRY
Shanghai Industrial Holdings Ltd. ......................... HK 686,000 2,549,758 1.2
MULTI-INDUSTRY
Hutchison Whampoa ......................................... HK 279,000 1,749,939 0.8
MULTI-INDUSTRY
------------
6,946,002
------------
Technology (3.3%)
Cap Gemini N.V. ........................................... NETH 69,120 2,356,054 1.1
COMPUTERS & PERIPHERALS
Matsushita-Kotobuki Electronics Ltd. ...................... JPN 88,000 2,211,801 1.1
COMPUTERS & PERIPHERALS
Baan Company N.V.-/- {\/} ................................. NETH 65,360 2,156,880 1.0
SOFTWARE
Koei Co., Ltd. ............................................ JPN 43,300 205,716 0.1
SOFTWARE
------------
6,930,451
------------
Consumer Durables (1.9%)
Futuris Corp., Ltd. ....................................... AUSL 2,226,000 2,436,432 1.2
AUTO PARTS
Cheung Kong (Holdings) Ltd. ............................... HK 212,000 1,388,527 0.7
HOUSING
------------
3,824,959
------------ -----
TOTAL EQUITY INVESTMENTS (cost $171,991,305) ................ 188,947,394 92.4
------------ -----
</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, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust
Co., due January 2, 1998, for an effective yield of 5.80%,
collateralized by $20,795,000 U.S. Treasury Notes, 5.75%
due 12/31/98 (market value of collateral is $20,814,506,
including accrued interest).
(cost $20,403,000) ...................................... $ 20,403,000 10.0
------------ -----
TOTAL INVESTMENTS (cost $192,394,305) * .................... 209,350,394 102.4
Other Assets and Liabilities ................................ (4,900,370) (2.4)
------------ -----
NET ASSETS .................................................. $204,450,024 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
{c} Security issued under Regulation S. Rule 144A and additional
restrictions may apply in the resale of such securities.
{=} Each share of Entitlement Certificates represents one local share
of PSIL Bangkok Bank Co., Ltd.
* For Federal income tax purposes, cost is $193,457,059 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 27,995,828
Unrealized depreciation: (12,102,493)
-------------
Net unrealized appreciation: $ 15,893,335
-------------
-------------
</TABLE>
Abbreviations:
ADR--American Depositary Receipt
GDR--Global Depositary Receipt
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, 1997
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1997, was concentrated in
the following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
-----------------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ------ ------------- ----------
<S> <C> <C> <C>
Australia (AUSL/AUD) ................. 5.7 5.7
Brazil (BRZL/BRL) .................... 3.5 3.5
Denmark (DEN/DKK) .................... 1.2 1.2
Finland (FIN/FIM) .................... 1.0 1.0
France (FR/FRF) ...................... 6.6 6.6
Germany (GER/DEM) .................... 2.8 2.8
Hong Kong (HK/HKD) ................... 4.9 4.9
Hungary (HGRY/HUF) ................... 1.3 1.3
India (IND/INR) ...................... 1.1 1.1
Italy (ITLY/ITL) ..................... 2.9 2.9
Japan (JPN/JPY) ...................... 9.3 9.3
Korea (KOR/KRW) ...................... 0.2 0.2
Mexico (MEX/MXN) ..................... 2.0 2.0
Netherlands (NETH/NLG) ............... 7.9 7.9
New Zealand (NZ/NZD) ................. 1.7 1.7
Norway (NOR/NOK) ..................... 1.5 1.5
Portugal (PORT/PTE) .................. 1.9 1.9
Singapore (SING/SGD) ................. 0.6 0.6
South Africa (SAFR/ZAR) .............. 0.5 0.5
Sweden (SWDN/SEK) .................... 4.7 4.7
Switzerland (SWTZ/CHF) ............... 8.4 8.4
Thailand (THAI/THB) .................. 0.3 0.3
United Kingdom (UK/GBP) .............. 22.4 22.4
United States (US/USD) ............... 7.6 7.6
------ --- ----------
Total ............................... 92.4 7.6 100.0
------ --- ----------
------ --- ----------
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $204,450,024.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET VALUE CONTRACT DELIVERY UNREALIZED
CONTRACTS TO SELL: (U.S. DOLLARS) PRICE DATE APPRECIATION
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
Deutsche Marks.......................... 3,904,418 1.72492 2/23/98 $ 153,742
French Francs........................... 5,079,036 5.72800 2/6/98 245,685
French Francs........................... 1,998,309 5.77490 2/6/98 79,649
Japanese Yen............................ 4,528,736 120.70000 1/7/98 367,702
Japanese Yen............................ 770,321 118.82300 2/4/98 71,267
Japanese Yen............................ 8,992,174 122.40000 2/12/98 533,970
Swiss Francs............................ 5,872,843 1.42180 3/19/98 105,494
-------------- --------------
Total Contracts to Sell (Receivable
amount $32,703,346).................. 31,145,837 1,557,509
-------------- --------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 15.23%.
Total Open Forward Foreign Currency Contracts................................... $ 1,557,509
--------------
--------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F24
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $171,991,305) (Note 1).......................... $188,947,394
Repurchase agreement, at value and cost................................................... 20,403,000
U.S. currency.................................................................. $ 518
Foreign currencies (cost $2,476,057)........................................... 2,469,130 2,469,648
---------
Receivable for open forward foreign currency contracts (Note 1)........................... 1,557,509
Receivable for securities sold............................................................ 409,819
Dividends and dividend withholding tax reclaims receivable................................ 280,212
Receivable for Fund shares sold........................................................... 36,825
Interest receivable....................................................................... 3,502
-----------
Total assets............................................................................ 214,107,909
-----------
Liabilities:
Payable for Fund shares repurchased....................................................... 8,454,213
Payable for securities purchased.......................................................... 746,544
Payable for investment management and administration fees (Note 2)........................ 164,822
Payable for service and distribution expenses (Note 2).................................... 88,263
Payable for printing and postage expenses................................................. 67,943
Payable for transfer agent fees (Note 2).................................................. 45,803
Payable for professional fees............................................................. 32,257
Payable for registration and filing fees.................................................. 17,314
Payable for custodian fees................................................................ 16,939
Payable for Trustees' fees and expenses (Note 2).......................................... 5,340
Payable for fund accounting fees (Note 2)................................................. 2,463
Other accrued expenses.................................................................... 15,984
-----------
Total liabilities....................................................................... 9,657,885
-----------
Net assets.................................................................................. $204,450,024
-----------
-----------
Class A:
Net asset value and redemption price per share ($148,143,474 DIVIDED BY 19,320,762 shares
outstanding)............................................................................... $ 7.67
-----------
-----------
Maximum offering price per share (100/95.25 of $7.67) *..................................... $ 8.05
-----------
-----------
Class B:+
Net asset value and offering price per share ($56,022,575 DIVIDED BY 7,606,803 shares
outstanding)............................................................................... $ 7.36
-----------
-----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($283,975 DIVIDED
BY 36,797 shares outstanding).............................................................. $ 7.72
-----------
-----------
Net assets consist of:
Paid in capital (Note 4).................................................................. $182,591,933
Accumulated net realized gain on investments and foreign currency transactions............ 3,346,785
Net unrealized appreciation on translation of assets and liabilities in foreign
currencies............................................................................... 1,555,217
Net unrealized appreciation of investments................................................ 16,956,089
-----------
Total -- representing net assets applicable to capital shares outstanding................... $204,450,024
-----------
-----------
<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.
F25
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
STATEMENT OF OPERATIONS
Year ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of $720,333).............................. $ 4,147,307
Interest income........................................................................... 693,646
-----------
Total investment income................................................................. 4,840,953
-----------
Expenses:
Investment management and administration fees (Note 2).................................... 2,309,873
Service and distribution expenses: (Note 2)
Class A.................................................................... $ 607,400
Class B.................................................................... 625,899 1,233,299
-----------
Transfer agent fees (Note 2).............................................................. 645,736
Custodian fees............................................................................ 199,701
Professional fees......................................................................... 82,923
Registration and filing fees.............................................................. 78,995
Fund accounting fees (Note 2)............................................................. 59,416
Printing and postage expenses............................................................. 42,984
Trustees' fees and expenses (Note 2)...................................................... 13,387
Other expenses (Note 1)................................................................... 44,923
-----------
Total expenses before reductions........................................................ 4,711,237
-----------
Expense reductions (Notes 1 & 5)...................................................... (298,050)
-----------
Total net expenses...................................................................... 4,413,187
-----------
Net investment income....................................................................... 427,766
-----------
Net realized and unrealized gain (loss) on investments and foreign currencies:
(Note 1)
Net realized gain on investments............................................. 32,730,836
Net realized gain on foreign currency transactions........................... 5,375,057
-----------
Net realized gain during the year....................................................... 38,105,893
Net change in unrealized appreciation on translation of assets and
liabilities in foreign currencies........................................... 286,534
Net change in unrealized appreciation of investments......................... (14,668,685)
-----------
Net unrealized depreciation during the year............................................. (14,382,151)
-----------
Net realized and unrealized gain on investments and foreign currencies...................... 23,723,742
-----------
Net increase in net assets resulting from operations........................................ $24,151,508
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F26
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996
------------- -------------
Decrease in net assets
Operations:
Net investment income (loss)............................................. $ 427,766 $ (860,684)
Net realized gain on investments and foreign currency transactions....... 38,105,893 37,931,580
Net change in unrealized appreciation on translation of assets and
liabilities in foreign currencies....................................... 286,534 205,239
Net change in unrealized depreciation of investments..................... (14,668,685) (7,070,173)
------------- -------------
Net increase in net assets resulting from operations................... 24,151,508 30,205,962
------------- -------------
Class A:
Distributions to shareholders:
From net investment income............................................... (425,877) --
From net realized gain on investments.................................... (29,789,043) (20,343,820)
Class B:
Distributions to shareholders:
From net investment income............................................... -- --
From net realized gain on investments.................................... (10,955,953) (6,672,791)
Advisor Class:
Distributions to shareholders:
From net investment income............................................... (1,888) --
From net realized gain on investments.................................... (56,864) (46,941)
------------- -------------
Total distributions.................................................... (41,229,625) (27,063,552)
------------- -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested......................... 663,662,225 1,289,311,201
Decrease from capital shares repurchased................................. (703,298,069) (1,410,140,865)
------------- -------------
Net decrease from capital share transactions........................... (39,635,844) (120,829,664)
------------- -------------
Total decrease in net assets............................................... (56,713,961) (117,687,254)
Net assets:
Beginning of year........................................................ 261,163,985 378,851,239
------------- -------------
End of year *............................................................ $204,450,024 $ 261,163,985
------------- -------------
------------- -------------
* Includes undistributed net investment income of......................... $ -- $ --
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F27
<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,
----------------------------------------------------------
1997 (D) 1996 (D) 1995 1994 1993 (D)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 8.92 $ 9.08 $ 9.17 $ 11.02 $ 8.21
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... 0.03 (0.01) 0.03 (0.04) 0.03
Net realized and unrealized gain
(loss) on investments................ 0.69 0.84 0.32 (0.82) 2.78
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. 0.72 0.83 0.35 (0.86) 2.81
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ (0.03) -- -- (0.04) --
From net realized gain on
investments.......................... (1.94) (0.99) (0.24) (0.95) --
In excess of net realized gain on
investments.......................... -- -- (0.20) -- --
---------- ---------- ---------- ---------- ----------
Total distributions................. (1.97) (0.99) (0.44) (0.99) --
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 7.67 $ 8.92 $ 9.08 $ 9.17 $ 11.02
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 8.51% 9.28% 3.88% (7.78)% 34.23%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 148,143 $ 196,601 $ 308,816 $ 430,701 $ 523,397
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... 0.35% (0.14)% 0.24% (0.04)% 0.3%
Without expense reductions............ 0.22% (0.25)% 0.16% (0.09)% N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.69% 1.80% 1.70% 1.70% 1.80%
Without expense reductions............ 1.82% 1.91% 1.78% 1.75% N/A
Portfolio turnover rate++++............. 72% 74% 75% 96% 90%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0269 $ 0.0267 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.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F28
<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++
-------------------------------------------------------------
APRIL 1, 1993
YEAR ENDED DECEMBER 31, TO
---------------------------------------------- DECEMBER 31,
1997 (D) 1996 (D) 1995 1994 1993 (D)
---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 8.68 $ 8.91 $ 9.07 $ 10.98 $ 8.74
---------- ---------- ---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... (0.03) (0.07) (0.04) (0.10) (0.01)
Net realized and unrealized gain
(loss) on investments................ 0.65 0.83 0.32 (0.82) 2.25
---------- ---------- ---------- ---------- -------------
Net increase (decrease) from
investment operations.............. 0.62 0.76 0.28 (0.92) 2.24
---------- ---------- ---------- ---------- -------------
Distributions to shareholders:
From net investment income............ -- -- -- (0.04) --
From net realized gain on
investments.......................... (1.94) (0.99) (0.24) (0.95) --
In excess of net realized gain on
investments.......................... -- -- (0.20) -- --
---------- ---------- ---------- ---------- -------------
Total distributions................. (1.94) (0.99) (0.44) (0.99) --
---------- ---------- ---------- ---------- -------------
Net asset value, end of period.......... $ 7.36 $ 8.68 $ 8.91 $ 9.07 $ 10.98
---------- ---------- ---------- ---------- -------------
---------- ---------- ---------- ---------- -------------
Total investment return (c)............. 7.71% 8.67% 3.15% (8.36)% 25.63%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 56,023 $ 64,102 $ 69,654 $ 71,794 $ 30,745
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... (0.30)% (0.79)% (0.41)% (0.69)% (0.4)%(a)
Without expense reductions............ (0.43)% (0.90)% (0.49)% (0.74)% N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.34% 2.45% 2.35% 2.35% 2.4%(a)
Without expense reductions............ 2.47% 2.56% 2.43% 2.40% N/A
Portfolio turnover rate++++............. 72% 74% 75% 96% 90%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0269 $ 0.0267 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.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F29
<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>
ADVISOR CLASS+++
-------------------------------------
YEAR ENDED DECEMBER JUNE 1, 1995
31, TO
---------------------- DECEMBER 31,
1997 (D) 1996 (D) 1995
---------- ---------- -------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 9.01 $ 9.11 $ 8.49
---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... 0.07 0.02 0.03
Net realized and unrealized gain
(loss) on investments................ 0.65 0.87 1.03
---------- ---------- -------------
Net increase (decrease) from
investment operations.............. 0.72 0.89 1.06
---------- ---------- -------------
Distributions to shareholders:
From net investment income............ (0.07) -- --
From net realized gain on
investments.......................... (1.94) (0.99) (0.24)
In excess of net realized gain on
investments.......................... -- -- (0.20)
---------- ---------- -------------
Total distributions................. (2.01) (0.99) (0.44)
---------- ---------- -------------
Net asset value, end of period.......... $ 7.72 $ 9.01 $ 9.11
---------- ---------- -------------
---------- ---------- -------------
Total investment return (c)............. 8.53% 9.79% 12.56%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 284 $ 461 $ 381
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... 0.70% 0.21% 0.59%(a)
Without expense reductions............ 0.57% 0.10% 0.51%(a)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.34% 1.45% 1.35%(a)
Without expense reductions............ 1.47% 1.56% 1.43%(a)
Portfolio turnover rate++++............. 72% 74% 75%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0269 $ 0.0267 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.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F30
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
- --------------------------------------------------------------------------------
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 a diversified, open-end management investment company. The
Company has eight 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 preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Funds in the preparation of the
financial statements.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of 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 fluctuation
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 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.
F31
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
(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, 1997, stocks with an aggregate value of approximately
$13,985,826 were on loan to brokers. The loans were secured by cash collateral
of $14,709,765, 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, 1997,
the Fund received securities lending fees of $277,743. Fees received from
securities loaned were used to reduce the Fund's custodian and administrative
expenses.
(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.
(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
F32
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
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 ("GT Funds") advised and/or
administered by the Manager, has a line of credit with BankBoston and State
Street Bank & Trust Company. The arrangements with the banks allow the Fund and
the GT Funds to borrow an aggregate maximum amount of $250,000,000. The Fund is
limited to borrowing up to 33 1/3% of the value of the Fund's total assets.
For the year ended December 31, 1997, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
was $3,563,759 with a weighted average interest rate of 6.32%. Interest expense
for the year ended December 31, 1997 was $18,147, and is 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. 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. ("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, 1997, GT Global retained $11,166
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. During the year ended December
31, 1997, GT Global collected CDSC's in the amount of $6,515. 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, 1997, GT Global collected CDSC's
in the amount of $351,900. 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.
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.
Effective January 1, 1998, the Manager and GT Global have undertaken to limit
the Fund's expenses (exclusive of brokerage commissions, taxes, interest, and
extraordinary expenses) to the annual rate 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. This undertaking may be changed or eliminated in the
future.
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
F33
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
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, 1997, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $157,702,649 and $236,135,186, respectively. There were
no purchases or sales of U.S. government obligations by the Fund during the
year.
4. CAPITAL SHARES
At December 31, 1997, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
----------------------------------- --------------------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- --------------- ------------------ ---------------- --------------------
<S> <C> <C> <C> <C>
Shares sold............................. 40,276,923 $ 372,306,238 122,327,179 $ 1,141,723,541
Shares issued in connection with
reinvestment of distributions......... 3,306,465 24,897,200 1,912,490 16,848,644
--------------- ------------------ ---------------- --------------------
43,583,388 397,203,438 124,239,669 1,158,572,185
Shares repurchased...................... (46,298,211) (433,072,839) (136,198,803) (1,274,970,792)
--------------- ------------------ ---------------- --------------------
Net decrease............................ (2,714,823) $ (35,869,401) (11,959,134) $ (116,398,607)
--------------- ------------------ ---------------- --------------------
--------------- ------------------ ---------------- --------------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
----------------------------------- --------------------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- --------------- ------------------ ---------------- --------------------
<S> <C> <C> <C> <C>
Shares sold............................. 25,433,444 $ 233,714,318 11,345,619 $ 103,852,840
Shares issued in connection with
reinvestment of distributions......... 1,311,193 9,480,349 678,796 5,819,941
--------------- ------------------ ---------------- --------------------
26,744,637 243,194,667 12,024,415 109,672,781
Shares repurchased...................... (26,525,397) (246,915,890) (12,451,843) (114,133,394)
--------------- ------------------ ---------------- --------------------
Net increase (decrease)................. 219,240 $ (3,721,223) (427,428) $ (4,460,613)
--------------- ------------------ ---------------- --------------------
--------------- ------------------ ---------------- --------------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
----------------------------------- --------------------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- --------------- ------------------ ---------------- --------------------
<S> <C> <C> <C> <C>
Shares sold............................. 2,419,305 $ 23,205,242 2,233,829 $ 21,033,137
Shares issued in connection with
reinvestment of distributions......... 7,757 58,878 3,723 33,098
--------------- ------------------ ---------------- --------------------
2,427,062 23,264,120 2,237,552 21,066,235
Shares repurchased...................... (2,441,431) (23,309,340) (2,228,201) (21,036,679)
--------------- ------------------ ---------------- --------------------
Net increase (decrease)................. (14,369) $ (45,220) 9,351 $ 29,556
--------------- ------------------ ---------------- --------------------
--------------- ------------------ ---------------- --------------------
</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, 1997, the Fund's
expenses were reduced by $20,307 under these arrangements.
6. SUBSEQUENT EVENT
On January 30, 1998, Liechtenstein Global Trust ("LGT") and AMVESCAP PLC
("AMVESCAP") entered into an agreement by which AMVESCAP will acquire LGT's
Asset Management Division, including Chancellor LGT Asset Management, Inc.
AMVESCAP is the holding company of the AIM and INVESCO asset management
businesses.
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
For its fiscal year ended December 31, 1997, the total amount of income received
by the Fund from sources within foreign countries and possessions of the United
States was approximately $.2321 per share (representing an approximate total of
$4,876,007). The total amount of taxes paid by the Fund to such countries was
approximately $.0343 per share (representing an approximate total of $720,333).
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$26,594,230 as a capital gain dividend for the fiscal year ended December 31,
1997.
F34
<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, 1997, 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, 1997 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, 1997, 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 17, 1998
F35
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (26.5%)
Hong Kong Telecommunications Ltd. ......................... HK 7,039,964 $ 14,491,505 7.5
TELEPHONE NETWORKS
Brambles Industries Ltd. .................................. AUSL 250,000 4,959,606 2.6
BUSINESS & PUBLIC SERVICES
Woolworths Ltd. ........................................... AUSL 1,440,000 4,812,822 2.5
RETAILERS-OTHER
Telekom Malaysia Bhd. ..................................... MAL 1,500,000 4,440,154 2.3
TELEPHONE NETWORKS
China Telecom (Hong Kong) Ltd.-/- ......................... HK 2,358,000 4,047,416 2.1
WIRELESS COMMUNICATIONS
Singapore Press Holdings Ltd. - Foreign ................... SING 302,000 3,786,215 2.0
BROADCASTING & PUBLISHING
Qantas Airways Ltd. ....................................... AUSL 1,770,000 3,132,009 1.6
TRANSPORTATION - AIRLINES
Genting Bhd. .............................................. MAL 1,109,000 2,783,205 1.4
LEISURE & TOURISM
Telstra Corp. Ltd. ........................................ AUSL 1,293,300 2,730,010 1.4
TELEPHONE NETWORKS
Telecom Corporation of New Zealand Ltd. ................... NZ 484,000 2,345,288 1.2
TELEPHONE NETWORKS
Philippine Long Distance Telephone Co. .................... PHIL 85,290 1,876,380 1.0
TELEPHONE - LONG DISTANCE
Mahanagar Telephone Nigam Ltd. - GDR-/- {\/} .............. IND 112,850 1,750,304 0.9
TELECOM - OTHER
------------
51,154,914
------------
Finance (22.1%)
Hang Seng Bank ............................................ HK 957,800 9,239,924 4.8
BANKS-MONEY CENTER
Australia & New Zealand Banking Group Ltd. ................ AUSL 1,370,000 9,050,621 4.7
BANKS-REGIONAL
Overseas-Chinese Banking Corp., Ltd. - Foreign ............ SING 1,139,000 6,632,323 3.4
BANKS-REGIONAL
Development Bank of Singapore - Foreign ................... SING 712,000 6,091,979 3.1
BANKS-MONEY CENTER
HSBC Holdings PLC ......................................... HK 180,000 4,436,988 2.3
BANKS-MONEY CENTER
United Overseas Bank Ltd. - Foreign ....................... SING 773,000 4,294,444 2.2
BANKS-MONEY CENTER
City Developments Ltd. .................................... SING 376,000 1,742,602 0.9
REAL ESTATE
State Bank of India Ltd. - GDR{\/} ........................ IND 76,100 1,360,288 0.7
BANKS-REGIONAL
------------
42,849,169
------------
Multi-Industry/Miscellaneous (10.7%)
Hutchison Whampoa ......................................... HK 1,500,000 9,408,273 4.9
MULTI-INDUSTRY
Pacific Dunlop Ltd. ....................................... AUSL 1,900,000 4,023,063 2.1
MULTI-INDUSTRY
</TABLE>
The accompanying notes are an integral part of the financial statements.
F36
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Multi-Industry/Miscellaneous (Continued)
Citic Pacific Ltd. ........................................ HK 950,000 $ 3,776,215 2.0
CONGLOMERATE
China Resources Enterprise Ltd. ........................... HK 1,500,000 3,349,035 1.7
CONGLOMERATE
------------
20,556,586
------------
Consumer Durables (10.0%)
New World Development Co., Ltd. ........................... HK 2,000,000 6,917,468 3.6
HOUSING
Cheung Kong (Holdings) Ltd. ............................... HK 942,000 6,169,775 3.2
HOUSING
Sun Hung Kai Properties Ltd. .............................. HK 880,000 6,132,800 3.2
HOUSING
------------
19,220,043
------------
Capital Goods (7.0%)
Cheung Kong Infrastructure Holdings ....................... HK 2,285,000 6,458,218 3.3
CONSTRUCTION
New World Infrastructure Ltd.-/- .......................... HK 2,000,000 4,504,098 2.3
CONSTRUCTION
Venture Manufacturing Ltd. ................................ SING 640,000 1,787,285 0.9
MACHINERY & ENGINEERING
Harbin Power Equipment Co., Ltd. .......................... HK 7,384,000 895,781 0.5
ELECTRICAL PLANT/EQUIPMENT
------------
13,645,382
------------
Materials/Basic Industry (6.9%)
Leighton Holdings Ltd. .................................... AUSL 1,365,000 4,766,695 2.5
BUILDING MATERIALS & COMPONENTS
Broken Hill Proprietary Co., Ltd. ......................... AUSL 370,000 3,435,077 1.8
MISC. MATERIALS & COMMODITIES
Pasminco Ltd. ............................................. AUSL 2,500,000 2,866,636 1.5
METALS - NON-FERROUS
QNI Ltd. .................................................. AUSL 3,160,000 2,099,941 1.1
METALS - NON-FERROUS
------------
13,168,349
------------
Energy (6.4%)
China Light & Power Co., Ltd. ............................. HK 1,059,000 5,876,879 3.0
ELECTRICAL & GAS UTILITIES
Hong Kong Electric Holdings Ltd. .......................... HK 968,000 3,679,112 1.9
ELECTRICAL & GAS UTILITIES
Manila Electric Co. "B" ................................... PHIL 500,000 1,675,000 0.9
ELECTRICAL & GAS UTILITIES
YTL Power International Bhd.-/- ........................... MAL 1,395,000 1,073,629 0.6
ENERGY SOURCES
------------
12,304,620
------------ -----
TOTAL EQUITY INVESTMENTS (cost $192,261,568) ................ 172,899,063 89.6
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
F37
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust
Co., due January 2, 1998, for an effective yield of 5.80%,
collateralized by $43,535,000 U.S. Treasury Notes, 5.75%
due 12/31/98 (market value of collateral is $43,575,836,
including accrued interest). (cost $42,717,000) .......... $ 42,717,000 22.1
------------ -----
TOTAL INVESTMENTS (cost $234,978,568) * .................... 215,616,063 111.7
Other Assets and Liabilities ................................ (22,500,776) (11.7)
------------ -----
NET ASSETS .................................................. $193,115,287 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $236,076,920 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 6,360,873
Unrealized depreciation: (26,821,730)
-------------
Net unrealized depreciation: $ (20,460,857)
-------------
-------------
</TABLE>
Abbreviation:
GDR--Global Depositary Receipt
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1997, was concentrated in
the following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
------------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ------ ------------- -----
<S> <C> <C> <C>
Australia (AUSL/AUD) ................. 21.8 21.8
Hong Kong (HK/HKD) ................... 46.3 46.3
India (IND/INR) ...................... 1.6 1.6
Malaysia (MAL/MYR) ................... 4.3 4.3
New Zealand (NZ/NZD) ................. 1.2 1.2
Philippines (PHIL/PHP) ............... 1.9 1.9
Singapore (SING/SGD) ................. 12.5 12.5
United States & Other (US/USD) ....... 10.4 10.4
------ ----- -----
Total ............................... 89.6 10.4 100.0
------ ----- -----
------ ----- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $193,115,287.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET VALUE
(U.S. CONTRACT DELIVERY UNREALIZED
CONTRACTS TO SELL: DOLLARS) PRICE DATE APPRECIATION
- ---------------------------------------- ------------ -------- -------- -------------
<S> <C> <C> <C> <C>
Australian Dollars...................... 20,137,999 1.44937 2/24/98 $ 1,160,974
Singapore Dollars....................... 9,970,754 1.67140 3/17/98 140,530
------------ -------------
Total Contracts to Sell (Receivable
amount $31,410,257).................. 30,108,753 1,301,504
------------ -------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 15.59%
Total Open Forward Foreign Currency
Contracts............................ $ 1,301,504
-------------
-------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F38
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $192,261,568) (Note 1)............................ $172,899,063
Repurchase agreement, at value and cost..................................................... 42,717,000
U.S. currency.................................................................... $ 896
Foreign currencies (cost $732,774)............................................... 741,289 742,185
---------
Receivable for open forward foreign currency contracts...................................... 1,301,504
Dividends and dividend withholding tax reclaims receivable.................................. 583,258
Receivable for Fund shares sold............................................................. 540,345
Receivable for securities sold.............................................................. 153,396
Miscellaneous receivable.................................................................... 15,083
Interest receivable......................................................................... 6,882
-----------
Total assets.............................................................................. 218,958,716
-----------
Liabilities:
Payable for Fund shares repurchased......................................................... 24,103,460
Payable for securities purchased............................................................ 1,206,279
Payable for investment management and administration fees (Note 2).......................... 163,399
Payable for service and distribution expenses (Note 2)...................................... 89,450
Payable for printing and postage expenses................................................... 86,532
Payable for transfer agent fees (Note 2).................................................... 84,573
Payable for professional fees............................................................... 38,325
Payable for custodian fees.................................................................. 33,378
Payable for registration and filing fees.................................................... 21,314
Payable for fund accounting fees (Note 2)................................................... 4,340
Payable for Trustees' fees and expenses (Note 2)............................................ 3,557
Other accrued expenses...................................................................... 8,822
-----------
Total liabilities......................................................................... 25,843,429
-----------
Net assets.................................................................................... $193,115,287
-----------
-----------
Class A:
Net asset value and redemption price per share ($135,807,280 DIVIDED BY 20,968,516 shares
outstanding)................................................................................. $ 6.48
-----------
-----------
Maximum offering price per share (100/95.25 of $6.48) *....................................... $ 6.80
-----------
-----------
Class B:+
Net asset value and offering price per share ($55,819,596 DIVIDED BY 8,895,437 shares
outstanding)................................................................................. $ 6.28
-----------
-----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($1,488,411 DIVIDED
BY 230,859 shares outstanding)............................................................... $ 6.45
-----------
-----------
Net assets consist of:
Paid in capital (Note 4).................................................................... $259,435,620
Accumulated net realized loss on investments and foreign currency transactions.............. (48,248,073)
Net unrealized appreciation on translation of assets and liabilities in foreign
currencies................................................................................. 1,290,245
Net unrealized depreciation of investments.................................................. (19,362,505)
-----------
Total -- representing net assets applicable to capital shares outstanding..................... $193,115,287
-----------
-----------
<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.
F39
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
STATEMENT OF OPERATIONS
Year ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income:
Dividend income (net of foreign withholding tax of $412,339) (Note 1).................... $ 7,263,612
Interest income.......................................................................... 674,416
------------
Total investment income................................................................ 7,938,028
------------
Expenses:
Investment management and administration fees (Note 2)................................... 3,736,264
Service and distribution expenses: (Note 2)
Class A.................................................................. $ 942,945
Class B.................................................................. 1,119,211 2,062,156
------------
Transfer agent fees (Note 2)............................................................. 1,240,570
Custodian fees........................................................................... 419,674
Registration and filing fees............................................................. 138,810
Printing and postage expenses............................................................ 103,925
Fund accounting fees (Note 2)............................................................ 99,321
Audit fees............................................................................... 58,095
Legal fees............................................................................... 35,175
Trustees' fees and expenses (Note 2)..................................................... 10,532
Other expenses (Note 1).................................................................. 213,092
------------
Total expenses before reductions....................................................... 8,117,614
------------
Expense reductions (Notes 1 & 5)..................................................... (1,043,893)
------------
Total net expenses..................................................................... 7,073,721
------------
Net investment income...................................................................... 864,307
------------
Net realized and unrealized loss on investments and foreign currencies: (Note
1)
Net realized loss on investments........................................... (48,105,392)
Net realized loss on foreign currency transactions......................... (548,158)
------------
Net realized loss during the year...................................................... (48,653,550)
Net change in unrealized appreciation on translation of assets and
liabilities in foreign currencies......................................... 1,286,651
Net change in unrealized appreciation of investments....................... (113,591,619)
------------
Net unrealized depreciation during the year............................................ (112,304,968)
------------
Net realized and unrealized loss on investments and foreign currencies..................... (160,958,518)
------------
Net decrease in net assets resulting from operations....................................... $(160,094,211)
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F40
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996
------------- -------------
Decrease in net assets
Operations:
Net investment income (loss)............................................. $ 864,307 $ (26,838)
Net realized gain (loss) on investments and foreign currency
transactions............................................................ (48,653,550) 94,284,448
Net change in unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies............................ 1,286,651 (106)
Net change in unrealized appreciation (depreciation) of investments...... (113,591,619) 36,883,188
------------- -------------
Net increase (decrease) in net assets resulting from operations........ (160,094,211) 131,140,692
------------- -------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income............................................... (427,042) --
From net realized gain on investments.................................... (15,152,919) (44,900,913)
Class B:
Distributions to shareholders: (Note 1)
From net investment income............................................... -- --
From net realized gain on investments.................................... (6,636,532) (18,754,735)
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income............................................... (13,447) --
From net realized gain on investments.................................... (179,887) (250,756)
------------- -------------
Total distributions.................................................... (22,409,827) (63,906,404)
------------- -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested......................... 1,697,761,633 5,158,291,909
Decrease from capital shares repurchased................................. (1,836,766,167) (5,226,446,724)
------------- -------------
Net decrease from capital share transactions........................... (139,004,534) (68,154,815)
------------- -------------
Total decrease in net assets............................................... (321,508,572) (920,527)
Net assets:
Beginning of year........................................................ 514,623,859 515,544,386
------------- -------------
End of year *............................................................ $ 193,115,287 $ 514,623,859
------------- -------------
------------- -------------
* Includes undistributed net investment income of......................... $ -- $ --
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F41
<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,
----------------------------------------------------------
1997 (D) 1996 (D) 1995 (D) 1994 1993
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 13.12 $ 12.47 $ 12.10 $ 15.86 $ 10.31
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... 0.05 0.02 0.11 0.02 (0.03)
Net realized and unrealized gain
(loss) on investments................ (5.84) 2.44 0.79 (3.15) 6.23
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. (5.79) 2.46 0.90 (3.13) 6.20
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ (0.03) -- (0.10) (0.01) --
From net realized gain on
investments.......................... (0.82) (1.81) (0.43) (0.55) (0.65)
In excess of net realized gain on
investments.......................... -- -- -- (0.07) --
---------- ---------- ---------- ---------- ----------
Total distributions................. (0.85) (1.81) (0.53) (0.63) (0.65)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 6.48 $ 13.12 $ 12.47 $ 12.10 $ 15.86
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (c)............. (44.24)% 20.04% 7.45% (19.73)% 60.61%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 135,807 $ 361,244 $ 383,722 $ 404,680 $ 498,898
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... 0.41% 0.17% 0.91% 0.11% (0.3)%
Without expense reductions............ 0.14% 0.04% 0.86% N/A N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.66% 1.86% 1.89% 1.81% 1.9%
Without expense reductions............ 1.93% 1.99% 1.94% N/A N/A
Portfolio turnover rate++++............. 80% 93% 63% 87% 117%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0066 $ 0.0032 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 period.
+ 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 and average commission rates are calculated on the
basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F42
<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++
-------------------------------------------------------------
APRIL 1, 1993
YEAR ENDED DECEMBER 31, TO
---------------------------------------------- DECEMBER 31,
1997 (D) 1996 (D) 1995 (D) 1994 1993
---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.80 $ 12.29 $ 11.96 $ 15.79 $ 11.27
---------- ---------- ---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... (0.03) (0.06) 0.03 (0.06) (0.10)
Net realized and unrealized gain
(loss) on investments................ (5.67) 2.38 0.75 (3.15) 5.27
---------- ---------- ---------- ---------- -------------
Net increase (decrease) from
investment operations.............. (5.70) 2.32 0.78 (3.21) 5.17
---------- ---------- ---------- ---------- -------------
Distributions to shareholders:
From net investment income............ -- -- (0.02) -- --
From net realized gain on
investments.......................... (0.82) (1.81) (0.43) (0.55) (0.65)
In excess of net realized gain on
investments.......................... -- -- -- (0.07) --
---------- ---------- ---------- ---------- -------------
Total distributions................. (0.82) (1.81) (0.45) (0.62) (0.65)
---------- ---------- ---------- ---------- -------------
Net asset value, end of period.......... $ 6.28 $ 12.80 $ 12.29 $ 11.96 $ 15.79
---------- ---------- ---------- ---------- -------------
---------- ---------- ---------- ---------- -------------
Total investment return (c)............. (44.65)% 19.28% 6.54% (20.30)% 46.30%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 55,820 $ 151,805 $ 130,887 $ 120,171 $ 72,122
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... (0.24)% (0.48)% 0.26% (0.54)% (0.9)%(a)
Without expense reductions............ (0.51)% (0.61)% 0.21% N/A N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.31% 2.51% 2.54% 2.46% 2.5%(a)
Without expense reductions............ 2.58% 2.64% 2.59% N/A N/A
Portfolio turnover rate++++............. 80% 93% 63% 87% 117%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0066 $ 0.0032 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 period.
+ 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 and average commission rates are calculated on the
basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F43
<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>
ADVISOR CLASS+++
-------------------------------------
YEAR ENDED DECEMBER JUNE 1, 1995
31, TO
---------------------- DECEMBER 31,
1997 (D) 1996 (D) 1995 (D)
---------- ---------- -------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 13.16 $ 12.45 $ 12.89
---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... 0.08 0.07 0.09
Net realized and unrealized gain
(loss) on investments................ (5.89) 2.45 0.05
---------- ---------- -------------
Net increase (decrease) from
investment operations.............. (5.81) 2.52 0.14
---------- ---------- -------------
Distributions to shareholders:
From net investment income............ (0.08) -- (0.15)
From net realized gain on
investments.......................... (0.82) (1.81) (0.43)
In excess of net realized gain on
investments.......................... -- -- --
---------- ---------- -------------
Total distributions................. (0.90) (1.81) (0.58)
---------- ---------- -------------
Net asset value, end of period.......... $ 6.45 $ 13.16 $ 12.45
---------- ---------- -------------
---------- ---------- -------------
Total investment return (c)............. (44.26)% 20.56% 1.07%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 1,488 $ 1,575 $ 935
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... 0.76% 0.52% 1.26%
Without expense reductions............ 0.49% 0.39% 1.21%
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.31% 1.51% 1.54%(a)
Without expense reductions............ 1.58% 1.64% 1.59%(a)
Portfolio turnover rate++++............. 80% 93% 63%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0066 $ 0.0032 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 period.
+ 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 and average commission rates are calculated on the
basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F44
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
- --------------------------------------------------------------------------------
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 a diversified, open-end management investment company. The
Company has eight 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 preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Funds in the preparation of the
financial statements.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
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 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
F45
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
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, 1997, stocks with an aggregate value of approximately $9,252,981
were on loan to brokers. The loans were secured by cash collateral of
$9,953,563, 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, 1997,
the Fund received securities lending fees of $756,559 which were used to reduce
custodian and administrative expenses.
(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
$3,081,427 which expires in 2005.
(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.
F46
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
(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 ("GT Funds") advised and/or
administered by the Manager, has a line of credit with BankBoston and State
Street Bank & Trust Company. The arrangements with the banks allow the Fund and
the GT Funds to borrow an aggregate maximum amount of $250,000,000. The Fund is
limited to borrowing up to 33 1/3% of the value of the Fund's total assets.
For the year ended December 31, 1997, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
was $8,681,157 with a weighted average interest rate of 6.32%. Interest expense
for the year ended December 31, 1997, was $193,664, and is 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. 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, 1997, GT Global retained $21,605
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 $42,069 for the year ended December 31, 1997. GT Global also makes
ongoing shareholder servicing and trail commission payments to dealers whose
clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSCs, in accordance with the Fund's current
prospectus. For the year ended December 31, 1997, GT Global collected CDSCs in
the amount of $894,766. 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.
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.
Effective January 1, 1998, the Manager and GT Global have undertaken to limit
the Fund's expenses (exclusive of brokerage commissions, taxes, interest, and
extraordinary expenses) to the annual rate 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. This undertaking may be changed or eliminated in the
future.
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
F47
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
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, 1997, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $290,053,136 and $442,944,807, respectively. There were
no purchases or sales of U.S. government obligations during the year.
4. CAPITAL SHARES
At December 31, 1997, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
-------------------------- --------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold................................................. 110,903,994 $1,213,154,082 285,658,529 $3,783,795,259
Shares issued in connection with reinvestment of
distributions............................................. 2,058,341 13,577,615 2,934,435 37,677,963
----------- ------------- ----------- -------------
112,962,335 1,226,731,697 288,592,964 3,821,473,222
Shares repurchased.......................................... (119,529,679) (1,324,924,362) (291,833,470) (3,895,314,036)
----------- ------------- ----------- -------------
Net decrease................................................ (6,567,344) $ (98,192,665) (3,240,506) $ (73,840,814)
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
-------------------------- --------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ ----------- ------------- ----------- -------------
Shares sold................................................. 37,888,593 $ 423,842,967 96,986,480 $1,263,551,513
Shares issued in connection with reinvestment of
distributions............................................. 856,732 5,478,474 1,241,219 15,565,185
----------- ------------- ----------- -------------
38,745,325 429,321,441 98,227,699 1,279,116,698
Shares repurchased.......................................... (41,705,872) (470,119,000) (97,020,480) (1,273,495,413)
----------- ------------- ----------- -------------
Net increase (decrease)..................................... (2,960,547) $ (40,797,559) 1,207,219 $ 5,621,285
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
-------------------------- --------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ ----------- ------------- ----------- -------------
Shares sold................................................. 4,493,439 $ 41,526,678 4,311,411 $ 57,463,326
Shares issued in connection with reinvestment of
distributions............................................. 25,872 181,817 18,530 238,663
----------- ------------- ----------- -------------
4,519,311 41,708,495 4,329,941 57,701,989
Shares repurchased.......................................... (4,408,085) (41,722,805) (4,285,455) (57,637,275)
----------- ------------- ----------- -------------
Net increase (decrease)..................................... 111,226 $ (14,310) 44,486 $ 64,714
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</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, 1997, the Fund's
expenses were reduced by $287,334 under these arrangements.
6. SUBSEQUENT EVENT
On January 30, 1998, Liechtenstein Global Trust ("LGT") and AMVESCAP PLC
("AMVESCAP") entered into an agreement by which AMVESCAP will acquire LGT's
Asset Management Division, including Chancellor LGT Asset Management, Inc.
AMVESCAP is the holding company of the AIM and INVESCO asset management
businesses.
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
For its fiscal year ended December 31, 1997, the total amount of income received
by the Fund from sources within foreign countries and possessions of the United
States was approximately $.2886 per share (representing an approximate total of
$7,701,422). The total amount of taxes paid by the Fund to such countries was
approximately $.0155 per share (representing an approximate total of $412,339).
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$20,539,592 as a capital gain dividend for the fiscal year ended December 31,
1997.
F48
<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, 1997, 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, 1997 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, 1997, 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 17, 1998
F49
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (29.2%)
ING Groep N.V. ............................................ NETH 449,610 $ 18,940,753 3.9
OTHER FINANCIAL
ForeningsSparbanken AB .................................... SWDN 732,160 16,649,643 3.4
BANKS-REGIONAL
Schweizerischer Bankverein (Swiss Bank Corp.) ............. SWTZ 44,940 13,968,753 2.8
BANKS-MONEY CENTER
General Accident PLC ...................................... UK 729,800 12,642,677 2.6
INSURANCE - PROPERTY-CASUALTY
Axa - UAP ................................................. FR 161,800 12,519,774 2.6
INSURANCE - MULTI-LINE
Lloyds TSB Group PLC ...................................... UK 949,000 12,263,760 2.5
BANKS-REGIONAL
National Westminster Bank PLC ............................. UK 658,000 10,934,253 2.2
BANKS-MONEY CENTER
Banque Nationale de Paris ................................. FR 203,000 10,790,014 2.2
BANKS-MONEY CENTER
Unidanmark AS "A" ......................................... DEN 136,300 10,007,284 2.0
BANKS-REGIONAL
Svenska Handelsbanken, Inc. "A" Free ...................... SWDN 288,900 9,991,061 2.0
BANKS-MONEY CENTER
Nordbanken Holding AB ..................................... SWDN 1,344,033 7,602,878 1.5
OTHER FINANCIAL
Abbey National PLC ........................................ UK 419,253 7,510,756 1.5
BANKS-SUPER REGIONAL
------------
143,821,606
------------
Energy (14.3%)
Petroleum Geo-Services ASA-/- ............................. NOR 249,800 15,735,300 3.2
ENERGY EQUIPMENT & SERVICES
Total S.A. "B" ............................................ FR 118,000 12,842,070 2.6
OIL
Shell Transport & Trading Co., PLC ........................ UK 1,534,000 11,083,087 2.3
OIL
Viag AG ................................................... GER 19,990 10,770,259 2.2
ELECTRICAL & GAS UTILITIES
Ente Nazionale Idrocarburi (ENI) S.p.A. ................... ITLY 1,790,700 10,231,703 2.1
OIL
Coflexip - ADR{\/} ........................................ FR 171,610 9,524,355 1.9
ENERGY EQUIPMENT & SERVICES
------------
70,186,774
------------
Services (14.0%)
VNU (Verenigde Nederlandse Uitgeversbedrijven Verenigd
Bezit) ................................................... NETH 573,300 16,176,381 3.3
BROADCASTING & PUBLISHING
Telecom Italia SpA ........................................ ITLY 2,465,000 15,777,115 3.2
TELEPHONE NETWORKS
Vodafone Group PLC ........................................ UK 1,650,000 11,894,089 2.4
WIRELESS COMMUNICATIONS
Telecel - Comunicacaoes Pessoais S.A.-/- .................. PORT 103,383 11,018,156 2.2
WIRELESS COMMUNICATIONS
</TABLE>
The accompanying notes are an integral part of the financial statements.
F50
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
Koninklijke Ahold N.V. .................................... NETH 386,359 $ 10,082,079 2.1
RETAILERS-FOOD
Kuoni Reisen Holdings "B" - Registered .................... SWTZ 1,061 3,977,116 0.8
LEISURE & TOURISM
------------
68,924,936
------------
Health Care (10.6%)
Roche Holding AG .......................................... SWTZ 1,600 15,889,361 3.2
PHARMACEUTICALS
Nycomed Amersham PLC ...................................... UK 253,300 9,408,286 1.9
PHARMACEUTICALS
Genset: ................................................... FR -- -- 1.8
BIOTECHNOLOGY
ADR-/- {\/} ............................................. -- 393,667 7,774,923 --
Common-/- ............................................... -- 14,900 891,252 --
Glaxo Wellcome PLC ........................................ UK 363,639 8,598,361 1.8
PHARMACEUTICALS
Schering AG ............................................... GER 63,630 6,138,340 1.3
PHARMACEUTICALS
Incentive AB "A" .......................................... SWDN 15,760 1,419,659 0.3
MEDICAL TECHNOLOGY & SUPPLIES
Nearmedic Ltd.-/- ......................................... ASTRI 618,200 1,272,722 0.3
PHARMACEUTICALS
M.L. Laboratories PLC-/- .................................. UK 141,507 191,697 --
PHARMACEUTICALS
------------
51,584,601
------------
Technology (7.6%)
Baan Company N.V.-/- {\/} ................................. NETH 478,400 15,787,200 3.2
SOFTWARE
TT Tieto Oy "B" ........................................... FIN 101,828 11,460,254 2.3
COMPUTERS & PERIPHERALS
Misys PLC ................................................. UK 337,828 10,151,482 2.1
SOFTWARE
------------
37,398,936
------------
Consumer Non-Durables (7.2%)
Cadbury Schweppes PLC ..................................... UK 1,236,700 12,458,382 2.5
BEVERAGES - NON-ALCOHOLIC
Nestle S.A. - Registered .................................. SWTZ 8,100 12,139,463 2.5
FOOD
Gucci Group - NY Registered Shares{\/} .................... NETH 260,550 10,910,531 2.2
TEXTILES & APPAREL
------------
35,508,376
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F51
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Capital Goods (7.1%)
Nokia AB "A" .............................................. FIN 269,400 $ 18,844,695 3.8
TELECOM EQUIPMENT
Alcatel Alsthom Compagnie Generale d'Electricite .......... FR 127,200 16,168,148 3.3
TELECOM EQUIPMENT
------------
35,012,843
------------
Materials/Basic Industry (6.0%)
Ciba Specialty Chemicals AG-/- ............................ SWTZ 166,000 19,775,431 4.0
CHEMICALS
Akzo Nobel N.V. ........................................... NETH 55,500 9,571,231 2.0
CHEMICALS
------------
29,346,662
------------ -----
TOTAL EQUITY INVESTMENTS (cost $412,654,262) ................ 471,784,734 96.0
------------ -----
<CAPTION>
NO. OF VALUE % OF NET
WARRANTS COUNTRY WARRANTS (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Union Bank of Switzerland Roche Warrants "C", expire 7/98
(cost $3,431,328) ........................................ SWTZ 481,700 3,644,246 0.8
------------ -----
PHARMACEUTICALS
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust
Co., due January 2, 1998, for an effective yield of 5.80%,
collateralized by $15,920,000 U.S. Treasury Notes, 5.75%
due 12/31/98 (market value of collateral is $15,934,933,
including accrued interest). (cost $15,622,000) .......... 15,622,000 3.2
------------ -----
TOTAL INVESTMENTS (cost $431,707,590) * .................... 491,050,980 100.0
Other Assets and Liabilities ................................ 202,831 --
------------ -----
NET ASSETS .................................................. $491,253,811 100.0
------------ -----
------------ -----
</TABLE>
- --------------
{\/} U.S. currency denominated.
-/- Non-income producing security.
* For Federal income tax purposes, cost is $431,707,590 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 65,811,221
Unrealized depreciation: (6,467,831)
-------------
Net unrealized appreciation: $ 59,343,390
-------------
-------------
</TABLE>
Abbreviation:
ADR--American Depositary Receipt
The accompanying notes are an integral part of the financial statements.
F52
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1997, was concentrated in
the following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
-------------------------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY WARRANTS & OTHER TOTAL
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Austria (ASTRI/ATS) .................. 0.3 0.3
Denmark (DEN/DKK) .................... 2.0 2.0
Finland (FIN/FIM) .................... 6.1 6.1
France (FR/FRF) ...................... 14.4 14.4
Germany (GER/DEM) .................... 3.5 3.5
Italy (ITLY/ITL) ..................... 5.3 5.3
Netherlands (NETH/NLG) ............... 16.7 16.7
Norway (NOR/NOK) ..................... 3.2 3.2
Portugal (PORT/PTE) .................. 2.2 2.2
Sweden (SWDN/SEK) .................... 7.2 7.2
Switzerland (SWTZ/CHF) ............... 13.3 0.8 14.1
United Kingdom (UK/GBP) .............. 21.8 21.8
United States (US/USD) ............... 3.2 3.2
------ ----- ----- -----
Total ............................... 96.0 0.8 3.2 100.0
------ ----- ----- -----
------ ----- ----- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $491,253,811.
The accompanying notes are an integral part of the financial statements.
F53
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $431,707,590) (Note 1).......................... $491,050,980
U.S. currency................................................................. $ 317
Foreign currencies (cost $18,334,892)......................................... 18,199,857 18,200,174
----------
Receivable for securities sold............................................................ 19,572,716
Receivable for Fund shares sold........................................................... 1,953,987
Dividends and dividend withholding tax reclaims receivable................................ 186,252
Interest receivable....................................................................... 2,517
-----------
Total assets............................................................................ 530,966,626
-----------
Liabilities:
Payable for Fund shares repurchased....................................................... 33,388,567
Payable for securities purchased.......................................................... 5,169,750
Payable for investment management and administration fees (Note 2)........................ 415,152
Payable for transfer agent fees (Note 2).................................................. 256,798
Payable for service and distribution expenses (Note 2).................................... 195,095
Payable for printing and postage expenses................................................. 113,320
Payable for custodian fees................................................................ 26,846
Payable for registration and filing fees.................................................. 17,663
Payable for professional fees............................................................. 17,272
Payable for fund accounting fees (Note 2)................................................. 10,165
Payable for Trustees' fees and expenses (Note 2).......................................... 3,013
Other accrued expenses.................................................................... 99,174
-----------
Total liabilities....................................................................... 39,712,815
-----------
Net assets.................................................................................. $491,253,811
-----------
-----------
Class A:
Net asset value and redemption price per share ($407,003,587 DIVIDED BY 28,420,611 shares
outstanding)............................................................................... $ 14.32
-----------
-----------
Maximum offering price per share (100/95.25 of $14.32) *.................................... $ 15.03
-----------
-----------
Class B:+
Net asset value and offering price per share ($81,010,803 DIVIDED BY 5,763,649 shares
outstanding)............................................................................... $ 14.06
-----------
-----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($3,239,421
DIVIDED BY 224,847 shares outstanding)..................................................... $ 14.41
-----------
-----------
Net assets consist of:
Paid in capital (Note 4).................................................................. $427,588,285
Accumulated net realized gain on investments and foreign currency transactions............ 4,527,954
Net unrealized depreciation on translation of assets and liabilities in foreign
currencies............................................................................... (205,818)
Net unrealized appreciation of investments................................................ 59,343,390
-----------
Total -- representing net assets applicable to capital shares outstanding................... $491,253,811
-----------
-----------
<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.
F54
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
STATEMENT OF OPERATIONS
Year ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of $1,472,615)............................ $ 6,804,153
Interest income........................................................................... 1,008,013
-----------
Total investment income................................................................. 7,812,166
-----------
Expenses:
Investment management and administration fees (Note 2).................................... 5,228,246
Service and distribution expenses: (Note 2)
Class A.................................................................... $ 1,554,410
Class B.................................................................... 910,363 2,464,773
-----------
Transfer agent fees (Note 2).............................................................. 1,655,972
Custodian fees............................................................................ 433,551
Fund accounting fees (Note 2)............................................................. 138,072
Registration and filing fees.............................................................. 126,714
Printing and postage expenses............................................................. 112,239
Audit fees................................................................................ 38,142
Legal fees................................................................................ 20,986
Trustees' fees and expenses (Note 2)...................................................... 8,387
Other expenses (Note 1)................................................................... 497,313
-----------
Total expenses before reductions........................................................ 10,724,395
-----------
Expense reductions (Notes 1 & 5)...................................................... (748,353)
-----------
Total net expenses...................................................................... 9,976,042
-----------
Net investment loss......................................................................... (2,163,876)
-----------
Net realized and unrealized gain (loss) on investments and foreign currencies:
(Note 1)
Net realized gain on investments............................................. 107,873,761
Net realized loss on foreign currency transactions........................... (728,823)
-----------
Net realized gain during the year....................................................... 107,144,938
Net change in unrealized depreciation on translation of assets and
liabilities in foreign currencies........................................... (237,701)
Net change in unrealized appreciation of investments......................... (31,970,694)
-----------
Net unrealized depreciation during the year............................................. (32,208,395)
-----------
Net realized and unrealized gain on investments and foreign currencies...................... 74,936,543
-----------
Net increase in net assets resulting from operations........................................ $72,772,667
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F55
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996
-------------- --------------
Decrease in net assets
Operations:
Net investment loss...................................................... $ (2,163,876) $ (1,938,485)
Net realized gain on investments and foreign currency transactions....... 107,144,938 86,541,400
Net change in unrealized depreciation on translation of assets and
liabilities in foreign currencies....................................... (237,701) (218,619)
Net change in unrealized appreciation (depreciation) of investments...... (31,970,694) 23,691,090
-------------- --------------
Net increase in net assets resulting from operations................... 72,772,667 108,075,386
-------------- --------------
Class A:
Distributions to shareholders: (Note 1)
From net realized gain on investments.................................... (368,261) (4,360,146)
Class B:
Distributions to shareholders: (Note 1)
From net realized gain on investments.................................... (76,445) (815,186)
Advisor Class: (Note 1)
Distributions to shareholders:
From net realized gain on investments.................................... (1,099) (29,590)
-------------- --------------
Total distributions.................................................... (445,805) (5,204,922)
-------------- --------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested......................... 2,415,165,409 3,224,591,371
Decrease from capital shares repurchased................................. (2,538,538,626) (3,342,278,802)
-------------- --------------
Net decrease from capital share transactions........................... (123,373,217) (117,687,431)
-------------- --------------
Total decrease in net assets............................................... (51,046,355) (14,816,967)
Net assets:
Beginning of year........................................................ 542,300,166 557,117,133
-------------- --------------
End of year *............................................................ $ 491,253,811 $ 542,300,166
-------------- --------------
-------------- --------------
* Includes undistributed net investment income of......................... $ -- $ --
-------------- --------------
-------------- --------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F56
<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,
----------------------------------------------------------
1997 (D) 1996 (D) 1995 (D) 1994 (D) 1993 (D)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.89 $ 10.88 $ 10.03 $ 10.84 $ 8.51
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... (0.04) (0.03) 0.04 0.06 0.05
Net realized and unrealized gain
(loss) on investments................ 1.48 2.16 0.95 (0.69) 2.36
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. 1.44 2.13 0.99 (0.63) 2.41
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ -- -- (0.10) (0.05) (0.06)
From net realized gain on
investments.......................... (0.01) (0.12) (0.04) -- --
In excess of net investment income.... -- -- -- -- (0.02)
In excess of net realized gain on
investments.......................... -- -- -- (0.13) --
---------- ---------- ---------- ---------- ----------
Total distributions................. (0.01) (0.12) (0.14) (0.18) (0.08)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 14.32 $ 12.89 $ 10.88 $ 10.03 $ 10.84
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 11.20% 19.61% 9.86% (5.8)% 28.3%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 407,004 $ 453,792 $ 483,375 $ 646,313 $ 854,701
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... (0.29)% (0.26)% 0.38% 0.61% 0.6%
Without expense reductions............ (0.43)% (0.32)% 0.32% 0.53% N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.75% 1.82% 1.83% 1.73% 1.9%
Without expense reductions............ 1.89% 1.88% 1.89% 1.81% N/A
Portfolio turnover rate++++............. 107% 123% 108% 91% 67%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0533 $ 0.0277 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 period.
+ 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.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F57
<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++
-------------------------------------------------------------
APRIL 1, 1993
YEAR ENDED DECEMBER 31, TO
---------------------------------------------- DECEMBER 31,
1997 (D) 1996 (D) 1995 (D) 1994 (D) 1993 (D)
---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.73 $ 10.81 $ 9.97 $ 10.79 $ 9.02
---------- ---------- ---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... (0.13) (0.11) (0.03) -- --
Net realized and unrealized gain
(loss) on investments................ 1.47 2.15 0.94 (0.69) 1.85
---------- ---------- ---------- ---------- -------------
Net increase (decrease) from
investment operations.............. 1.34 2.04 0.91 (0.69) 1.85
---------- ---------- ---------- ---------- -------------
Distributions to shareholders:
From net investment income............ -- -- (0.03) -- (0.06)
From net realized gain on
investments.......................... (0.01) (0.12) (0.04) -- --
In excess of net investment income.... -- -- -- -- (0.02)
In excess of net realized gain on
investments.......................... -- -- -- (0.13) --
---------- ---------- ---------- ---------- -------------
Total distributions................. (0.01) (0.12) (0.07) (0.13) (0.08)
---------- ---------- ---------- ---------- -------------
Net asset value, end of period.......... $ 14.06 $ 12.73 $ 10.81 $ 9.97 $ 10.79
---------- ---------- ---------- ---------- -------------
---------- ---------- ---------- ---------- -------------
Total investment return (c)............. 10.55% 18.79% 9.20% (6.38)% 20.5%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 81,011 $ 87,092 $ 73,025 $ 81,602 $ 34,048
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... (0.94)% (0.91)% (0.27)% (0.04)% (0.1)%(a)
Without expense reductions............ (1.08)% (0.97)% (0.33)% (0.12)% N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.40% 2.47% 2.48% 2.38% 2.6%(a)
Without expense reductions............ 2.54% 2.53% 2.54% 2.46% N/A
Portfolio turnover rate++++............. 107% 123% 108% 91% 67%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0533 $ 0.0277 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 period.
+ 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.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F58
<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>
ADVISOR CLASS+++
-------------------------------------
YEAR ENDED DECEMBER JUNE 1, 1995
31, TO
---------------------- DECEMBER 31,
1997 (D) 1996 (D) 1995 (D)
---------- ---------- -------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.92 $ 10.85 $ 10.24
---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... 0.01 0.01 0.08
Net realized and unrealized gain
(loss) on investments................ 1.49 2.18 0.71
---------- ---------- -------------
Net increase (decrease) from
investment operations.............. 1.50 2.19 0.79
---------- ---------- -------------
Distributions to shareholders:
From net investment income............ -- -- (0.14)
From net realized gain on
investments.......................... (0.01) (0.12) (0.04)
In excess of net investment income.... -- -- --
In excess of net realized gain on
investments.......................... -- -- --
---------- ---------- -------------
Total distributions................. (0.01) (0.12) (0.18)
---------- ---------- -------------
Net asset value, end of period.......... $ 14.41 $ 12.92 $ 10.85
---------- ---------- -------------
---------- ---------- -------------
Total investment return (c)............. 11.64% 20.21% 7.75%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 3,239 $ 1,416 $ 718
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... 0.06% 0.09% 0.73%(a)
Without expense reductions............ (0.08)% 0.03% 0.67%(a)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.40% 1.47% 1.48%(a)
Without expense reductions............ 1.54% 1.53% 1.54%(a)
Portfolio turnover rate++++............. 107% 123% 108%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0533 $ 0.0277 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 period.
+ 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.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F59
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
NOTES TO
FINANCIAL STATEMENTS
December 31, 1997
- --------------------------------------------------------------------------------
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 preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Funds in the preparation of the
financial statements.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of 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 fluctuation
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 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.
F60
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
(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 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 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 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, 1997, stocks with an aggregate value of approximately
$19,959,963 were on loan to brokers. The loans were secured by cash collateral
of $20,701,800, 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, 1997,
the Fund received securities lending fees of $541,865. Fees received from
securities loaned were used to reduce the Fund's custodian and administrative
expenses.
(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.
(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
F61
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
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 ("GT Funds") advised and/or
administered by the Manager, has a line of credit with BankBoston and State
Street Bank & Trust Company. The arrangements with the banks allow the Fund and
the GT Funds to borrow an aggregate maximum amount of $250,000,000. The Fund is
limited to borrowing up to 33 1/3% of the value of the Fund's total assets.
For the year ended December 31, 1997, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
was $21,092,373 with a weighted average interest rate of 6.31%. Interest expense
for the year ended December 31, 1997, was $465,718, 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. 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. ("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, 1997, GT Global retained $4,461
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 $15,594 for the year ended December 31, 1997. GT Global also makes
ongoing shareholder servicing and trail commission payments to dealers whose
clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSC's, in accordance with the Fund's current
prospectus. During the year ended December 31, 1997, GT Global collected CDSC's
in the amount of $501,201. 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.
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.
Effective January 1, 1998, the Manager and GT Global have undertaken to limit
the Fund's expenses (exclusive of brokerage commissions, taxes, interest, and
extraordinary expenses) to the annual rate 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. This undertaking may be changed or eliminated in the
future.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and GT Global, is the transfer agent of the Fund. For
F62
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
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, 1997, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $540,359,758 and $667,512,449, respectively. There were
no purchases or sales of U.S. government obligations by the Fund during the
year.
4. CAPITAL SHARES
At December 31, 1997, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
-------------------------------------- --------------------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ---------------- -------------------- ---------------- --------------------
<S> <C> <C> <C> <C>
Shares sold............................. 146,863,882 $ 2,008,141,712 247,661,557 $ 2,968,073,960
Shares issued in connection with
reinvestment of distributions......... 20,229 286,488 261,336 3,297,924
---------------- -------------------- ---------------- --------------------
146,884,111 2,008,428,200 247,922,893 2,971,371,884
Shares repurchased...................... (153,681,853) (2,115,903,158) (257,136,969) (3,090,222,730)
---------------- -------------------- ---------------- --------------------
Net decrease............................ (6,797,742) $ (107,474,958) (9,214,076) $ (118,850,846)
---------------- -------------------- ---------------- --------------------
---------------- -------------------- ---------------- --------------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
-------------------------------------- --------------------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ---------------- -------------------- ---------------- --------------------
<S> <C> <C> <C> <C>
Shares sold............................. 25,162,463 $ 340,605,118 15,643,994 $ 188,596,754
Shares issued in connection with
reinvestment of distributions......... 4,768 66,175 53,171 663,732
---------------- -------------------- ---------------- --------------------
25,167,231 340,671,293 15,697,165 189,260,486
Shares repurchased...................... (26,243,592) (357,657,223) (15,609,973) (188,238,304)
---------------- -------------------- ---------------- --------------------
Net increase (decrease)................. (1,076,361) $ (16,985,930) 87,192 $ 1,022,182
---------------- -------------------- ---------------- --------------------
---------------- -------------------- ---------------- --------------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
-------------------------------------- --------------------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ---------------- -------------------- ---------------- --------------------
<S> <C> <C> <C> <C>
Shares sold............................. 4,798,844 $ 66,064,822 5,230,224 $ 63,929,457
Shares issued in connection with
reinvestment of distributions......... 77 1,094 2,336 29,544
---------------- -------------------- ---------------- --------------------
4,798,921 66,065,916 5,232,560 63,959,001
Shares repurchased...................... (4,683,709) (64,978,245) (5,189,081) (63,817,768)
---------------- -------------------- ---------------- --------------------
Net increase............................ 115,212 $ 1,087,671 43,479 $ 141,233
---------------- -------------------- ---------------- --------------------
---------------- -------------------- ---------------- --------------------
</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, 1997, the Fund's
expenses were reduced by $206,488 under these arrangements.
6. SUBSEQUENT EVENT
On January 30, 1998, Liechtenstein Global Trust ("LGT") and AMVESCAP PLC
("AMVESCAP") entered into an agreement by which AMVESCAP will acquire LGT's
Asset Management Division, including Chancellor LGT Asset Management, Inc.
AMVESCAP is the holding company of the AIM and INVESCO asset management
businesses.
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
For its fiscal year ended December 31, 1997, the total amount of income received
by the Fund from sources within foreign countries and possessions of the United
States was approximately $.2362 per share (representing an approximate total of
$8,046,337). The total amount of taxes paid by the Fund to such countries was
approximately $.0432 per share (representing an approximate total of
$1,472,615).
F63
<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, 1997, 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, 1997 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, 1997, 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 17, 1998
F64
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS SHARES (NOTE 1) ASSETS
- ----------------------------------------------------------------------- ----------- ----------- -------------
<S> <C> <C> <C>
Services (17.3%)
Ito-Yokado Co., Ltd. ................................................ 90,000 $ 4,586,207 4.6
RETAILERS-OTHER
Southland Corp.{l} -/- {\/} ......................................... 1,048,200 2,227,425 2.3
RETAILERS-OTHER
DDI Corp. ........................................................... 763 2,017,126 2.0
WIRELESS COMMUNICATIONS
Yoshinoya D&C Co., Ltd. ............................................. 200 1,823,755 1.8
RESTAURANTS
Secom ............................................................... 25,000 1,597,701 1.6
CONSUMER SERVICES
Fast Retailing Co., Ltd. ............................................ 99,000 1,585,517 1.6
RETAILERS-APPAREL
Aoyama Trading Co., Ltd. ............................................ 75,200 1,342,651 1.4
RETAILERS-APPAREL
Ezaki Glico Co., Ltd. ............................................... 167,000 1,078,782 1.1
RETAILERS-FOOD
Tsutsumi Jewelry Co., Ltd. .......................................... 31,800 389,885 0.4
RETAILERS-OTHER
Fujitsu Business Systems ............................................ 15,000 241,379 0.3
BUSINESS & PUBLIC SERVICES
Xebio Co., Ltd. ..................................................... 25,000 199,234 0.2
RETAILERS-APPAREL
Nitori Co. .......................................................... 400 2,066 --
RETAILERS-OTHER
-----------
17,091,728
-----------
Consumer Durables (11.7%)
Sony Corp. .......................................................... 55,000 4,888,889 4.9
CONSUMER ELECTRONICS
Bridgestone Corp. ................................................... 165,000 3,578,161 3.6
AUTO PARTS
Citizen Watch Co., Ltd. ............................................. 240,000 1,609,195 1.6
CONSUMER ELECTRONICS
Hitachi Ltd. ........................................................ 220,000 1,567,816 1.6
CONSUMER ELECTRONICS
-----------
11,644,061
-----------
Health Care (11.5%)
Takeda Chemical Industries{z} ....................................... 250,000 7,126,437 7.2
PHARMACEUTICALS
Yamanouchi Pharmaceutical ........................................... 135,000 2,896,552 2.9
PHARMACEUTICALS
Taisho Pharmaceuticals .............................................. 55,000 1,403,448 1.4
PHARMACEUTICALS
-----------
11,426,437
-----------
Technology (9.3%)
NEC Corp. ........................................................... 300,000 3,195,402 3.2
SEMICONDUCTORS
Matsushita-Kotobuki Electronics Ltd. ................................ 120,000 3,016,092 3.0
COMPUTERS & PERIPHERALS
Murata Manufacturing Co., Ltd. ...................................... 105,000 2,639,080 2.7
INSTRUMENTATION & TEST
Koei Co., Ltd. ...................................................... 87,400 415,234 0.4
SOFTWARE
-----------
9,265,808
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F65
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS SHARES (NOTE 1) ASSETS
- ----------------------------------------------------------------------- ----------- ----------- -------------
<S> <C> <C> <C>
Capital Goods (7.7%)
Canon, Inc. ......................................................... 200,000 $ 4,659,004 4.7
OFFICE EQUIPMENT
Tsudakoma Corp. ..................................................... 494,000 1,082,636 1.1
MACHINERY & ENGINEERING
Kurita Water Industries Ltd. ........................................ 80,000 815,326 0.8
ENVIRONMENTAL
Shima Seiki Manufacturing Ltd. ...................................... 20,000 749,425 0.8
MACHINE TOOLS
Higashi Nihon House ................................................. 73,000 332,835 0.3
CONSTRUCTION
NEC System Integration & Construction ............................... 60 920 --
CONSTRUCTION
Japan Foundation Engineering ........................................ 90 503 --
CONSTRUCTION
-----------
7,640,649
-----------
Finance (7.5%)
Nichiei Co., Ltd. ................................................... 60,000 6,390,805 6.5
OTHER FINANCIAL
Diamond Lease Co., Ltd. ............................................. 175,000 942,720 1.0
OTHER FINANCIAL
-----------
7,333,525
-----------
Consumer Non-Durables (4.6%)
Amway Japan Ltd. .................................................... 160,000 3,065,134 3.1
HOUSEHOLD PRODUCTS
Asahi Breweries Ltd. ................................................ 105,000 1,528,736 1.5
BEVERAGES - ALCOHOLIC
-----------
4,593,870
-----------
Materials/Basic Industry (1.8%)
Sekisui Chemical Co., Ltd. .......................................... 200,000 1,016,092 1.0
CHEMICALS
Toyo Exterior ....................................................... 80,000 524,138 0.5
BUILDING MATERIALS & COMPONENTS
Gakken .............................................................. 240,000 336,552 0.3
PAPER/PACKAGING
-----------
1,876,782
----------- -----
TOTAL EQUITY INVESTMENTS (cost $92,954,815) ........................... 70,872,860 71.4
----------- -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
F66
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C>
Corporate Bonds (0.8%)
Japan (0.8%)
Higashi Nihon House Co., Convertible Bond, 0.375% due
4/30/00 (cost $1,089,201) ............................... CHF 1,150,000 $ 771,601 0.8
----------- -----
<CAPTION>
NUMBER OF
OPTIONS CONTRACTS
- -------------------------------------------------------------- -----------
<S> <C> <C> <C>
Simex Nikkei Put Options, strike JPY15,500, expire 3/98 .... JPY 120 455,172 0.5
INDEX OPTIONS
Simex Nikkei Put Options, strike JPY14,000, expire 3/98 .... JPY 20 30,651 --
INDEX OPTIONS
----------- -----
TOTAL OPTIONS (cost $334,778) ................................ 485,823 0.5
----------- -----
<CAPTION>
REPURCHASE AGREEMENT
- --------------------------------------------------------------
<S> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust Co.,
due January 2, 1998, for an effective yield of 5.80%,
collateralized by $23,430,000 U.S. Treasury Notes, 5.75%
due 12/31/98 (market value of collateral is $23,451,977,
including accrued interest). (cost $22,989,000) .......... 22,989,000 23.2
----------- -----
TOTAL INVESTMENTS (cost $117,367,794) * ..................... 95,119,284 95.9
Other Assets and Liabilities ................................. 4,064,999 4.1
----------- -----
NET ASSETS ................................................... $99,184,283 100.0
----------- -----
----------- -----
</TABLE>
- --------------
{z} All or part of the Fund's holdings in this security is segregated
as collateral for written futures. See Note 1 to the 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 $119,887,833 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 6,797,228
Unrealized depreciation: (31,565,777)
-------------
Net unrealized depreciation: $ (24,768,549)
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F67
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET VALUE CONTRACT DELIVERY UNREALIZED
CONTRACTS TO SELL: (U.S. DOLLARS) PRICE DATE APPRECIATION
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
Japanese Yen............................ 21,593,557 122.50000 2/12/98 $ 1,263,586
Japanese Yen............................ 16,966,366 122.40000 2/12/98 1,007,490
Japanese Yen............................ 8,483,183 122.50500 2/12/98 496,042
-------------- --------------
Total Contracts to Sell (Receivable
amount $49,810,224).................. 47,043,106 $ 2,767,118
-------------- --------------
--------------
THE VALUE OF CONTRACTS TO SELL AS A
PERCENTAGE OF NET ASSETS IS 47.43%.
</TABLE>
- ----------------
See Note 1 to the financial statements.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
WRITTEN FUTURES CONTRACTS OUTSTANDING
DECEMBER 31, 1997
<TABLE>
<CAPTION>
EXPIRATION NO. OF MARKET
DESCRIPTION DATE CONTRACTS CURRENCY VALUE
- ---------------------------------------- ---------- --------- -------- ----------
<S> <C> <C> <C> <C>
Simex Nikkei 225 Index Future (Face
$7,173,761)............................ 3/16/98 100 JPY $6,542,693
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F68
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $94,378,794) (Note 1)........................... $72,130,284
Repurchase agreement, at value and cost................................................... 22,989,000
U.S. currency.................................................................. $ 124
Foreign currencies (cost $2,767,554)........................................... 2,751,171 2,751,295
---------
Receivable for open forward foreign currency contracts (Note 1)........................... 2,767,118
Receivable for miscellaneous, initial and variation margin (Note 1)....................... 826,113
Receivable for Fund shares sold........................................................... 275,360
Dividends receivable...................................................................... 53,462
Interest receivable....................................................................... 4,204
-----------
Total assets............................................................................ 101,796,836
-----------
Liabilities:
Payable for Fund shares repurchased....................................................... 2,364,729
Payable for investment management and administration fees (Note 2)........................ 83,695
Payable for transfer agent fees (Note 2).................................................. 44,494
Payable for service and distribution expenses (Note 2).................................... 35,023
Payable for printing and postage expenses................................................. 31,839
Payable for professional fees............................................................. 23,063
Payable for custodian fees................................................................ 12,832
Payable for registration and filing fees.................................................. 6,592
Payable for Trustees' fees and expenses (Note 2).......................................... 5,377
Payable for fund accounting fees.......................................................... 1,383
Other accrued expenses.................................................................... 3,526
-----------
Total liabilities....................................................................... 2,612,553
-----------
Net assets.................................................................................. $99,184,283
-----------
-----------
Class A:
Net asset value and redemption price per share ($44,582,914 DIVIDED BY 4,973,256 shares
outstanding)............................................................................... $ 8.96
-----------
-----------
Maximum offering price per share (100/95.25 of $8.96) *..................................... $ 9.41
-----------
-----------
Class B:+
Net asset value and offering price per share ($24,250,220 DIVIDED BY 2,798,472 shares
outstanding)............................................................................... $ 8.67
-----------
-----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($30,351,149
DIVIDED BY 3,352,861 shares outstanding)................................................... $ 9.05
-----------
-----------
Net assets consist of:
Paid in capital (Note 4).................................................................. $123,922,965
Accumulated net realized loss on investments and foreign currency transactions............ (5,869,899)
Net unrealized appreciation on translation of assets and liabilities in foreign
currencies............................................................................... 2,748,659
Net unrealized depreciation of investments................................................ (21,617,442)
-----------
Total -- representing net assets applicable to capital shares outstanding................... $99,184,283
-----------
-----------
<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.
F69
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
STATEMENT OF OPERATIONS
Year ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Interest income............................................................................ $ 916,186
Dividend income (net of foreign withholding tax of $92,217)................................ 523,661
----------
Total investment income.................................................................. 1,439,847
----------
Expenses:
Investment management and administration fees (Note 2)..................................... 1,017,788
Service and distribution expenses: (Note 2)
Class A...................................................................... $ 212,419
Class B...................................................................... 317,148 529,567
----------
Transfer agent fees (Note 2)............................................................... 407,750
Registration and filing fees............................................................... 107,110
Custodian fees............................................................................. 78,324
Printing and postage expenses.............................................................. 53,056
Audit fees................................................................................. 45,260
Legal fees................................................................................. 31,455
Fund accounting fees (Note 2).............................................................. 26,210
Trustees' fees and expenses (Note 2)....................................................... 13,140
Other expenses............................................................................. 4,283
----------
Total expenses before reductions......................................................... 2,313,943
----------
Expense reductions (Notes 1 & 5)....................................................... (72,248)
----------
Total net expenses....................................................................... 2,241,695
----------
Net investment loss.......................................................................... (801,848)
----------
Net realized and unrealized gain (loss) on investments and foreign currencies:
(Note 1)
Net realized loss on investments............................................... (8,229,791)
Net realized gain on foreign currency transactions............................. 6,920,240
----------
Net realized loss during the year........................................................ (1,309,551)
Net change in unrealized appreciation on translation of assets and liabilities
in foreign currencies......................................................... 630,890
Net change in unrealized depreciation of investments........................... (8,170,261)
----------
Net unrealized depreciation during the year.............................................. (7,539,371)
----------
Net realized and unrealized loss on investments and foreign currencies....................... (8,848,922)
----------
Net decrease in net assets resulting from operations......................................... $(9,650,770)
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F70
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996
------------- -------------
Increase (Decrease) in net assets
Operations:
Net investment loss...................................................... $ (801,848) $ (841,456)
Net realized gain (loss) on investments and foreign currency
transactions............................................................ (1,309,551) 3,852,937
Net change in unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies............................ 630,890 (464,975)
Net change in unrealized depreciation of investments..................... (8,170,261) (11,261,238)
------------- -------------
Net decrease in net assets resulting from operations................... (9,650,770) (8,714,732)
------------- -------------
Class A:
Distributions to shareholders: (Note 1)
From net realized gain on investments.................................... (110,678) (2,883,812)
Class B:
Distributions to shareholders: (Note 1)
From net realized gain on investments.................................... (61,407) (1,472,016)
Advisor Class:
Distributions to shareholders: (Note 1)
From net realized gain on investments.................................... (71,057) (18,593)
------------- -------------
Total distributions.................................................... (243,142) (4,374,421)
------------- -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested......................... 280,419,107 510,718,392
Decrease from capital shares repurchased................................. (267,455,599) (554,451,474)
------------- -------------
Net increase (decrease) from capital share transactions................ 12,963,508 (43,733,082)
------------- -------------
Total increase (decrease) in net assets.................................... 3,069,596 (56,822,235)
Net assets:
Beginning of year........................................................ 96,114,687 152,936,922
------------- -------------
End of year *............................................................ $99,184,283 $96,114,687
------------- -------------
------------- -------------
* Includes undistributed net investment income of......................... $ -- $ --
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F71
<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,
----------------------------------------------------------
1997 (D) 1996 (D) 1995 (D) 1994 1993
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 9.76 $ 11.00 $ 12.15 $ 11.61 $ 8.70
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment loss................... (0.08) (0.04) (0.04) (0.04) (0.14)
Net realized and unrealized gain
(loss) on investments................ (0.70) (0.77) 0.26 0.79 3.05
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. (0.78) (0.81) 0.22 0.75 2.91
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.02) (0.43) (1.37) (0.21) --
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 8.96 $ 9.76 $ 11.00 $ 12.15 $ 11.61
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (c)............. (7.99)% (7.43)% 1.94% 6.56% 33.45%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 44,583 $ 63,585 $ 111,105 $ 98,066 $ 88,487
Ratio of net investment loss to average
net assets:
With expense reductions (Notes 1 &
5)................................... (0.61)% (0.40)% (0.40)% (0.32)% (0.3)%
Without expense reductions............ (0.68)% (0.50)% (0.55)% (0.44)% N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.99% 1.84% 1.99% 1.91% 2.1%
Without expense reductions............ 2.06% 1.94% 2.14% 2.03% N/A
Portfolio turnover rate++++............. 58% 31% 67% 49% 104%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0416 $ 0.0971 N/A N/A N/A
</TABLE>
- ----------------
(a) Annualized.
(b) Not Annualized.
(c) Total investment return does not include sales charge.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
+ 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.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F72
<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++
-------------------------------------------------------------
APRIL 1, 1993
YEAR ENDED DECEMBER 31, TO
---------------------------------------------- DECEMBER 31,
1997 (D) 1996 (D) 1995 (D) 1994 1993
---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 9.49 $ 10.78 $ 12.02 $ 11.57 $ 9.85
---------- ---------- ---------- ---------- -------------
Income from investment operations:
Net investment loss................... (0.14) (0.11) (0.12) (0.13) (0.18)
Net realized and unrealized gain
(loss) on investments................ (0.66) (0.75) 0.25 0.79 1.90
---------- ---------- ---------- ---------- -------------
Net increase (decrease) from
investment operations.............. (0.80) (0.86) 0.13 0.66 1.72
---------- ---------- ---------- ---------- -------------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.02) (0.43) (1.37) (0.21) --
---------- ---------- ---------- ---------- -------------
Net asset value, end of period.......... $ 8.67 $ 9.49 $ 10.78 $ 12.02 $ 11.57
---------- ---------- ---------- ---------- -------------
---------- ---------- ---------- ---------- -------------
Total investment return (c)............. (8.42)% (8.05)% 1.20% 5.81% 17.46%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 24,250 $ 32,116 $ 41,274 $ 27,355 $ 3,699
Ratio of net investment loss to average
net assets:
With expense reductions (Notes 1 &
5)................................... (1.26)% (1.05)% (1.05)% (0.97)% (0.9)%(a)
Without expense reductions............ (1.33)% (1.15)% (1.20)% (1.09)% N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.64% 2.49% 2.64% 2.56% 2.7%(a)
Without expense reductions............ 2.71% 2.59% 2.79% 2.68% N/A
Portfolio turnover rate++++............. 58% 31% 67% 49% 104%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0416 $ 0.0971 N/A N/A N/A
</TABLE>
- ----------------
(a) Annualized.
(b) Not Annualized.
(c) Total investment return does not include sales charge.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
+ 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.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F73
<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>
ADVISOR CLASS+++
-------------------------------------
YEAR ENDED DECEMBER JUNE 1, 1995
31, TO
---------------------- DECEMBER 31,
1997 (D) 1996 (D) 1995 (D)
---------- ---------- -------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 9.81 $ 11.02 $ 10.50
---------- ---------- -------------
Income from investment operations:
Net investment loss................... (0.01) (0.01) (0.00)
Net realized and unrealized gain
(loss) on investments................ (0.73) (0.77) 1.89
---------- ---------- -------------
Net increase (decrease) from
investment operations.............. (0.74) (0.78) 1.89
---------- ---------- -------------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.02) (0.43) (1.37)
---------- ---------- -------------
Net asset value, end of period.......... $ 9.05 $ 9.81 $ 11.02
---------- ---------- -------------
---------- ---------- -------------
Total investment return (c)............. (7.54)% (7.14)% 18.14%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 30,351 $ 413 $ 558
Ratio of net investment loss to average
net assets:
With expense reductions (Notes 1 &
5)................................... (0.26)% (0.05)% (0.05)%(a)
Without expense reductions............ (0.33)% (0.15)% (0.20)%(a)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.64% 1.49% 1.64%(a)
Without expense reductions............ 1.71% 1.59% 1.79%(a)
Portfolio turnover rate++++............. 58% 31% 67%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0416 $ 0.0971 N/A
</TABLE>
- ----------------
(a) Annualized.
(b) Not Annualized.
(c) Total investment return does not include sales charge.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
+ 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.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F74
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
NOTES TO
FINANCIAL STATEMENTS
December 31, 1997
- --------------------------------------------------------------------------------
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 a diversified, open-end management investment company. The Company has
eight 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 preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Funds in the preparation of the
financial statements.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
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
F75
<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, 1997, the Fund had segregated securities valued at $7,126,437 and cash of
$824,000 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, 1997, stocks with an aggregate value of $5,491,954 were on loan
to brokers. The loans were secured by cash collateral of $5,811,500 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, 1997, the Fund received securities lending fees of
$53,675 which were used to reduce custodian and administrative expenses.
(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, and
F76
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
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 ("GT Funds") advised and/or
administered by the Manager, has a line of credit with BankBoston and State
Street Bank & Trust Company. The arrangements with the banks allow the Fund and
the GT Funds to borrow an aggregate maximum amount of $250,000,000. The Fund is
limited to borrowing up to 33 1/3% of the value of the Fund's total assets. For
the year ended December 31, 1997, the Fund had no outstanding loan balance.
2. RELATED PARTIES
Chancellor LGT Asset Management, Inc. is the Fund's investment manager and
administrator. The 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, 1997, GT Global retained $23,200
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 $24,083 for the year ended December 31, 1997. GT Global also makes
ongoing shareholder servicing and trail commission payments to dealers whose
clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSCs, in accordance with the Fund's current
prospectus. During the year ended December 31, 1997, GT Global collected such
CDSCs in the amount of $260,311. 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 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
F77
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
and/or reimbursements by the Manager or GT Global of portions of the Fund's
other operating expenses.
Effective January 1, 1998, the Manager and GT Global have undertaken to limit
the Fund's expenses (exclusive of brokerage commissions, taxes, interest, and
extraordinary expenses) to the annual rate 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. This undertaking may be changed or eliminated in the
future.
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, 1997, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $53,454,101 and $47,110,095, respectively. There were no
purchases or sales of U.S. government obligations by the Fund during the year.
4. CAPITAL SHARES
At December 31, 1997, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
-------------------------------------- --------------------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ---------------- -------------------- ---------------- --------------------
<S> <C> <C> <C> <C>
Shares sold............................. 18,880,969 $ 187,727,101 39,042,903 $ 423,073,924
Shares issued in connection with
reinvestment of distributions......... 9,319 84,712 225,741 2,221,785
---------------- -------------------- ---------------- --------------------
18,890,288 187,811,813 39,268,644 425,295,709
Shares repurchased...................... (20,434,942) (203,841,370) (42,853,058) (464,603,203)
---------------- -------------------- ---------------- --------------------
Net decrease............................ (1,544,654) $ (16,029,557) (3,584,414) $ (39,307,494)
---------------- -------------------- ---------------- --------------------
---------------- -------------------- ---------------- --------------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
-------------------------------------- --------------------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ---------------- -------------------- ---------------- --------------------
<S> <C> <C> <C> <C>
Shares sold............................. 5,059,734 $ 49,439,098 7,303,169 $ 77,038,650
Shares issued in connection with
reinvestment of distributions......... 4,729 41,630 111,715 1,070,181
---------------- -------------------- ---------------- --------------------
5,064,463 49,480,728 7,414,884 78,108,831
Shares repurchased...................... (5,648,959) (54,991,415) (7,859,944) (82,438,811)
---------------- -------------------- ---------------- --------------------
Net decrease............................ (584,496) $ (5,510,687) (445,060) $ (4,329,980)
---------------- -------------------- ---------------- --------------------
---------------- -------------------- ---------------- --------------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
-------------------------------------- --------------------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ---------------- -------------------- ---------------- --------------------
<S> <C> <C> <C> <C>
Shares sold............................. 4,149,684 $ 43,125,403 666,196 $ 7,296,458
Shares issued in connection with
reinvestment of distributions......... 126 1,163 1,759 17,394
---------------- -------------------- ---------------- --------------------
4,149,810 43,126,566 667,955 7,313,852
Shares repurchased...................... (839,053) (8,622,814) (676,463) (7,409,460)
---------------- -------------------- ---------------- --------------------
Net increase (decrease)................. 3,310,757 $ 34,503,752 (8,508) $ (95,608)
---------------- -------------------- ---------------- --------------------
---------------- -------------------- ---------------- --------------------
</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, 1997, the Fund's
expenses were reduced by $18,573 under these arrangements.
F78
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
6. SUBSEQUENT EVENT
On January 30, 1998, Liechtenstein Global Trust ("LGT") and AMVESCAP PLC
("AMVESCAP") entered into an agreement by which AMVESCAP will acquire LGT's
Asset Management Division, including Chancellor LGT Asset Management, Inc.
AMVESCAP is the holding company of the AIM and INVESCO asset management
businesses.
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
Pursuant to Section 852 of the Internal Revenue Code, the GT Global Japan Growth
Fund designates $194,123 as a capital gain dividend for the fiscal year ended
December 31, 1997.
F79
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY GT GLOBAL FUND,
INCLUDING FEES, EXPENSES AND THE RISKS OF GLOBAL AND EMERGING MARKET
INVESTING AND THE RISKS OF INVESTING IN RELATED INDUSTRIES, PLEASE CONTACT
YOUR FINANCIAL ADVISER OR CALL GT GLOBAL DIRECTLY AT 1-800-824-1580.
GROWTH FUNDS
/ / GLOBALLY DIVERSIFIED FUNDS
GT GLOBAL NEW DIMENSION FUND
Captures global growth opportunities by investing directly in the six GT Global
Theme Funds
GT GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity for U.S. investors by investing outside the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
GT GLOBAL DEVELOPING MARKETS FUND
Invests in debt and equity securities of developing market issuers
/ / GLOBAL THEME FUNDS
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL HEALTH CARE FUND
Invests in the growing health care industries worldwide
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA MID CAP GROWTH FUND
Concentrates on medium-sized companies in the U.S.
GT GLOBAL AMERICA VALUE FUND
Concentrates on equity securities of 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
Invests in 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 a portfolio of emerging market debt securities
GT GLOBAL FLOATING RATE FUND
Invests primarily in senior secured floating rate loans that have the potential
to achieve a high level of income
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[LOGO]
NO DEALER, SALES REPRESENTATIVE OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
STATEMENT OF ADDITIONAL INFORMATION AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY 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, CA 94111
(415) 392-6181
Toll Free: (800) 824-1580
Statement of Additional Information
April 1, 1998
- --------------------------------------------------------------------------------
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 April 1,
1998, 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................................................................................................... 20
Execution of Portfolio Transactions...................................................................................... 22
Trustees and Executive Officers.......................................................................................... 24
Management............................................................................................................... 26
Valuation of Fund Shares................................................................................................. 27
Information Relating to Sales and Redemptions............................................................................ 28
Taxes.................................................................................................................... 30
Additional Information................................................................................................... 33
Investment Results....................................................................................................... 34
Description of Debt Ratings.............................................................................................. 41
Financial Statements..................................................................................................... 43
</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 (including investment
vehicles or companies advised by the Manager or its affiliates ("Affiliated
Funds")) 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. With respect to investments in
Affiliated Funds, the Manager waives its advisory fee to the extent that such
fees are based on assets of a Fund invested in Affiliated Funds.
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.
Statement of Additional Information Page 2
<PAGE>
GT GLOBAL EQUITY FUNDS
DEPOSITORY RECEIPTS
Each Fund may hold securities of foreign issuers in the form of American
Depository Receipts ("ADRs"), American Depository Shares ("ADSs"), Global
Depository Receipts ("GDRs") 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. GDRs are similar to EDRs and are designed
for use in several international financial markets. 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, GDRs
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
Statement of Additional Information Page 3
<PAGE>
GT GLOBAL EQUITY FUNDS
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 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, a
division of The McGraw-Hill Companies, Inc ("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
<PAGE>
GT GLOBAL EQUITY FUNDS
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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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. 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 to avoid realizing losses that would result in a reduction of its
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 it purchased the security or currency, 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 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.
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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
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GT GLOBAL EQUITY FUNDS
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 purchases an index option and exercises it before the closing index
value for that day is available, it runs the risk that the level of the
underlying index may subsequently change. If such a change causes the exercised
option to fall out-of-the-money, the 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 only;
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
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GT GLOBAL EQUITY FUNDS
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 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.
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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 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
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(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 entering into
a second contract if its contra party agrees, entitling it to sell the same
amount of the same currency on the maturity date of the first contract. 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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COVER
Transactions using Forward Contracts, Futures Contracts and options (other than
options purchased by a Fund) 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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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 foreign 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
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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.
In China, India, Indonesia, Malaysia, the Philippines, Singapore, South Korea
and Thailand, government regulation or a company's charter may limit the maximum
foreign aggregate ownership of equity in the company. South Korea generally
prohibits foreign investment in won-denominated debt securities, and Sri Lanka
prohibits foreign investment in government debt securities. South Korea
prohibits foreign investment in specified telecommunications companies, and the
Philippines prohibits foreign investment in mass media companies and companies
providing certain professional services. In the Philippines, a Fund may
generally invest in "B" shares of Philippine issuers engaged in partly
nationalized business activities, the market prices, liquidity and rights of
which may vary from shares owned by nationals. Similarly, in China, a Fund may
only invest in "B" shares of securities traded on The Shanghai Securities
Exchange and The Shenzhen Stock Exchange, currently the two officially
recognized securities exchanges in China. "B" shares traded on The Shanghai
Securities Exchange are settled in U.S. dollars, and those traded on The
Shenzhen Stock Exchange are generally settled in Hong Kong dollars.
If, because of restrictions on repatriation or conversion of funds, a Fund were
unable to timely distribute substantially all of its net investment income, and
net capital gains, the Fund could be subject to federal income and excise taxes
that would not otherwise be incurred and could cease to qualify for the
favorable tax treatment afforded to regulated investment companies ("RICs")
under the Internal Revenue Code of 1986, as amended (the "Code"). In such case,
it would become subject to federal income tax on all of its income and net
gains.
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.
Few of the Pacific region countries have Western-style or fully democratic
governments. Some governments in the region are authoritarian in nature and
influenced by security forces. For example, during the course of the last 25
years, governments in the region have been installed or removed as a result of
military coups, while others have periodically demonstrated repressive police
state characteristics. In several Pacific region countries, the leadership
ability of the government has suffered as a result of recent corruption
scandals. Disparities of wealth, among other factors, have also led to social
unrest in some of the Asia Pacific region countries, accompanied, in certain
cases, by violence and labor unrest. Ethnic, religious and racial disaffection,
as evidenced in India, Pakistan, and Sri Lanka, for example, have created
social, economic and political problems. Such problems also have occurred in
other regions.
Starting in mid-1997, some Pacific region countries began to experience currency
devaluations that resulted in high interest rate levels and sharp reductions in
economic activity. While the currency crisis diminished prospects for short-
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term corporate earnings growth, the Manager believes that high interest rate
levels may force governments and corporations to restructure the financial
sector in a manner that may facilitate a return to high levels of long-term
economic activity.
China assumed sovereignty over Hong Kong in July 1997. Although China has
committed by treaty to preserve the economic and social freedoms enjoyed in Hong
Kong for fifty years, the continuation of the current form of the economic
system in Hong Kong will depend on the actions of the government of China. In
addition, such assumption of sovereignty 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 Chinese sovereignty over 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, if 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.
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.
Statement of Additional Information Page 18
<PAGE>
GT GLOBAL EQUITY FUNDS
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 19
<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 20
<PAGE>
GT GLOBAL EQUITY FUNDS
The following investment limitations of each Fund are not fundamental policies
and may be changed by vote of the Company's Board of Trustees 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 21
<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 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 are in addition to, and not in lieu of, the services
required to be performed by the Manager under the applicable investment
management and administration contract. 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 its 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,
GDRs, CDRs or securities convertible into foreign equity securities. ADRs, ADSs,
EDRs, GDRs 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 22
<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, 1995, the Europe Fund paid to LGT Bank in
Liechtenstein AG and LGT Bank in Liechtenstein (Zurich), each an "affiliated"
broker as defined in the 1940 Act, 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 $6,284
and $8,378, respectively, for transactions involving purchases and sales of
portfolio securities which represented 0.09% and 0.50%, respectively, of the
total brokerage commissions paid by the International Fund, and 0.08% and 0.94%,
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.
For the fiscal year ended December 31, 1997, no payments were made to affiliated
brokers.
Aggregate brokerage commissions paid by the Funds for their three most recent
fiscal years were:
<TABLE>
<CAPTION>
FUND 1997 1996 1995
- -------------------------------------------------------------------------- ------------- ------------- -------------
<S> <C> <C> <C>
America Mid Cap Fund...................................................... $ 2,193,539 $ 2,760,768 $ 878,569
Europe Fund............................................................... $ 2,217,385 $ 2,711,139 $ 3,877,784
International Fund........................................................ $ 874,443 $ 1,496,178 $ 1,889,228
Japan Fund................................................................ $ 218,841 $ 253,623 $ 440,117
Pacific Fund.............................................................. $ 2,767,789 $ 5,151,533 $ 3,310,887
Worldwide Fund............................................................ $ 578,365 $ 792,165 $ 1,007,167
</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, 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
FUND 1997 1996
- ------------------------------------------------------------------------------------------------------ ---------- ----------
<S> <C> <C>
America Mid Cap Fund.................................................................................. 190% 253%
Europe Fund........................................................................................... 107% 123%
International Fund.................................................................................... 72% 74%
Japan Fund............................................................................................ 58% 31%
Pacific Fund.......................................................................................... 80% 93%
Worldwide Fund........................................................................................ 92% 80%
</TABLE>
Statement of Additional Information Page 23
<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*, 39 Mr. Guilfoyle is President, GT Global, Inc. since 1995; Director, GT Global since 1991;
Trustee, Chairman of the Board and Senior Vice President and Director of Sales and Marketing, GT Global from May 1992 to
President April 1995; Vice President and Director of Marketing, GT Global from 1987 to 1992;
50 California Street Director, Liechtenstein Global Trust AG (holding company of the various international LGT
San Francisco, CA 94111 companies) Advisory Board since January 1996; Director, G.T. Global Insurance Agency
("G.T. Insurance") since 1996; President and Chief Executive Officer, G.T. Insurance since
1995; Senior Vice President and Director, Sales and Marketing, G.T. Insurance from April
1995 to November 1995; Senior Vice President, Retail Marketing, G.T. Insurance from 1992
to 1993. Mr. Guilfoyle is also a director or trustee of each of the other investment
companies registered under the 1940 Act that is managed or administered by the Manager.
C. Derek Anderson, 56 Mr. Anderson is President, Plantagenet Capital Management, LLC (an investment
Trustee partnership); Chief Executive Officer, Plantagenet Holdings, Ltd. (an investment banking
220 Sansome Street firm); Director, Anderson Capital Management, Inc. since 1988; Director, PremiumWear, Inc.
Suite 400 (formerly Munsingwear, Inc.)(a casual apparel company) and Director, "R" Homes, Inc. and
San Francisco, CA 94104 various other companies. Mr. Anderson is also a director or trustee of each of the other
investment companies registered under the 1940 Act that is managed or administered by the
Manager.
Frank S. Bayley, 58 Mr. Bayley is a partner of the law firm of Baker & McKenzie, and serves as a Director and
Trustee Chairman of C.D. Stimson Company (a private investment company). Mr. Bayley is also a
Two Embarcadero Center director or trustee of each of the other investment companies registered under the 1940
Suite 2400 Act that is managed or administered by the Manager.
San Francisco, CA 94111
Arthur C. Patterson, 54 Mr. Patterson is Managing Partner of Accel Partners (a venture capital firm). He also
Trustee serves as a director of Viasoft and PageMart, Inc. (both public software companies), as
428 University Avenue well as several other privately held software and communications companies. Mr. Patterson
Palo Alto, CA 94301 is also a director or trustee of each of the other investment companies registered under
the 1940 Act that is managed or administered by the Manager.
Ruth H. Quigley, 62 Miss Quigley is a private investor. From 1984 to 1986, she was President of Quigley
Trustee Friedlander & Co., Inc. (a financial advisory services firm). Miss Quigley is also a
1055 California Street director or trustee of each of the other investment companies registered under the 1940
San Francisco, CA 94108 Act that is managed or administered by the Manager.
Robert G. Wade, Jr.*, 70 Mr. Wade is Consultant to the Manager; Chairman of the Board of Chancellor Capital
Trustee Management, Inc. from January 1995 to October 1996; President, Chief Executive Officer and
1166 Avenue of the Americas Chairman of the Board of Chancellor Capital Management, Inc. from 1988 to January 1995.
New York, NY 10036 Mr. Wade is also a director or trustee of each of the other investment companies
registered under the 1940 Act that is managed or administered by the Manager.
</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 24
<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>
Kenneth W. Chancey, 52 Senior Vice President -- Mutual Fund Accounting, the Manager since 1997;
Vice President and Principal Vice President -- Mutual Fund Accounting, the Manager from 1992 to 1997;
Accounting Officer and Vice President, Putnam Fiduciary Trust Company from 1989 to 1992.
50 California Street
San Francisco, CA 94111
Helge K. Lee, 51 Chief Legal and Compliance Officer -- North America, the Manager since
Vice President and Secretary October 1997; Executive Vice President of the Asset Management Division
50 California Street of Liechtenstein Global Trust since October 1996; Senior Vice President,
San Francisco, CA 94111 General Counsel and Secretary of the Manager, GT Global, GT Services and
G.T. Insurance from February 1996 to October 1996; Vice President,
General Counsel and Secretary of LGT Asset Management, Inc., the
Manager, GT Global, GT Services and G.T. Insurance from May 1994 to
February 1996; Senior Vice President, General Counsel and Secretary of
Strong/Corneliuson Management, Inc. and Secretary of each of the Strong
Funds from October 1991 through May 1994.
</TABLE>
------------------------------
The Board has a Nominating and Audit Committee, comprised of Miss Quigley and
Messrs. Anderson, Bayley and Patterson, which is responsible for nominating
persons to serve as Trustees, reviewing audits of the 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. 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 47 series
managed or administered by the Manager. Each Trustee who is not a director,
officer or employee of the Manager or any affiliated company is paid aggregate
fees of $5,000 a year plus $300 per Fund for each meeting of the Board attended
by the Trustee, and reimbursed 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, 1997, the Company paid Mr. Anderson, Mr. Bayley, Mr.
Patterson and Miss Quigley, who are not directors, officers or employees of the
Manager or any affiliated company, total compensation of $19,276, $20,044,
$16,350 and $18,203, respectively, for their services as Trustees. For the year
ended December 31, 1997, Mr. Anderson, Mr. Bayley, Mr. Patterson and Miss
Quigley received total compensation of $103,654, $106,556, $89,700 and $98,038,
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 January 8, 1998, 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 25
<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 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 1997 1996 1995
- ------------------------------------------------------------ --------------- --------------- ---------------
<S> <C> <C> <C>
America Mid Cap Fund........................................ $ 3,999,732 $ 4,982,969 $ 4,425,913
Europe Fund................................................. $ 5,228,246 $ 5,416,280 $ 6,161,265
International Fund.......................................... $ 2,309,873 $ 3,034,522 $ 4,027,923
Japan Fund.................................................. $ 1,017,788 $ 1,367,702 $ 1,167,576
Pacific Fund................................................ $ 3,736,264 $ 5,260,774 $ 5,176,333
Worldwide Fund.............................................. $ 1,619,691 $ 1,885,798 $ 2,050,983
</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, December 31, 1996 and December 31, 1997,
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,
$173,767 and $142,274, $62,660, $139,442 and $138,072, $40,655, $77,934 and
$59,416, $14,483, $35,119 and $26,210, $53,724, $135,182 and $99,321, and
$22,092, $48,430 and $41,680, 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,
Statement of Additional Information Page 26
<PAGE>
GT GLOBAL EQUITY FUNDS
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 FUND 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, Martin Luther King Day, President's 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, GDRs 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
Statement of Additional Information Page 27
<PAGE>
GT GLOBAL EQUITY FUNDS
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 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.
INDIVIDUAL RETIREMENT ACCOUNTS ("IRAS") AND OTHER TAX-DEFERRED PLANS
IRAS: If you have earned income from employment (including self-employment), you
can contribute each year to an IRA up to the lesser of (1) $2,000 for yourself
or $4,000 for you and your spouse, regardless of whether your spouse is
employed, or (2) 100% of compensation. Some individuals may be able to take an
income tax deduction for the contribution. Regular contributions may not be made
for the year you become 70 1/2 or thereafter. Unless your and your spouse's
earnings exceed a certain level, you also may establish an "education IRA"
and/or a "Roth IRA." Although contributions to these new types of IRAs are
nondeductible, withdrawals from them will be tax-free under certain
circumstances. Please consult your tax adviser for more information. IRA
applications are available from brokers or GT Global.
Statement of Additional Information Page 28
<PAGE>
GT GLOBAL EQUITY FUNDS
ROLLOVER IRAS: Individuals who receive distributions from qualified retirement
plans (other than required distributions) and who wish to keep their savings
growing tax-deferred can roll over (or make a direct transfer of) their
distribution to a Rollover IRA. These accounts can also receive rollovers or
transfers from an existing IRA. If an "eligible rollover distribution" from a
qualified employer-sponsored retirement plan is not directly rolled over to an
IRA (or certain qualified plans), withholding at the rate of 20% will be
required for federal income tax purposes. A distribution from a qualified plan
that is not an "eligible rollover distribution," including a distribution that
is one of a series of substantially equal periodic payments, generally is
subject to regular wage withholding or withholding at the rate of 10% (depending
on the type and amount of the distribution), unless you elect not to have any
withholding apply. Please consult your tax adviser for more information.
SEP-IRAS: Simplified employee pension plans ("SEPs" or "SEP-IRAs") provide
self-employed individuals (and any eligible employees) with benefits similar to
Keogh plans (I.E., self-employed individual retirement plans) or Code section
401(k) plans, but with fewer administrative requirements and therefore
potentially lower annual administration expenses.
CODE SECTION 403(B)(7) CUSTODIAL ACCOUNTS: Employees of public schools and most
other tax-exempt organizations can make pre-tax salary reduction contributions
to these accounts.
PROFIT-SHARING (INCLUDING SECTION 401(k)), AND MONEY PURCHASE PENSION
PLANS: Corporations and other employers can sponsor these qualified defined
contribution plans for their employees. A section 401(k) plan, a type of
profit-sharing plan, additionally permits the eligible, participating employees
to make pre-tax salary reduction contributions to the plan (up to certain
limits).
SIMPLE PLANS: Employers with no more than 100 employees that do not maintain
another retirement plan may establish a Savings Incentive Match Plan for
Employees ("SIMPLE") either as separate IRAs or as part of a section 401(k)
plan. SIMPLEs are not subject to the complicated nondiscrimination rules that
generally apply to qualified retirement plans.
EXCHANGES BETWEEN FUNDS
Shares of a Fund may be exchanged for shares of the corresponding class of other
GT Global Mutual Funds, based on their respective net asset values without
imposition of any sales charges, provided that the registration remains
identical. The exchange privilege is not an option or right to purchase shares
but is permitted under the current policies of the respective GT Global Mutual
Funds. The privilege may be discontinued or changed at any time by any of the
Funds upon sixty days' written notice to the shareholders of the 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 its investment objective(s).
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 $500. Costs in connection
with the administration of this service, including wire charges, will be borne
by the appropriate Funds. Proceeds of less than $500 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 fifteen 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.
Statement of Additional Information Page 29
<PAGE>
GT GLOBAL EQUITY FUNDS
Shareholders receiving such securities would incur brokerage costs in selling
any such securities so received. However, despite the foregoing, the Company has
filed with the SEC an election pursuant to Rule 18f-1 under the 1940 Act. This
means that the Fund will pay in cash all requests for redemption made by any
shareholder of record, limited in amount with respect to each shareholder during
any ninety-day period to the lesser of $250,000 or 1% of the net asset value of
the Fund at the beginning of such period. This election will be irrevocable so
long as Rule 18f-1 remains in effect, unless the SEC by order upon application
permits the withdrawal of such election.
- --------------------------------------------------------------------------------
TAXES
- --------------------------------------------------------------------------------
GENERAL
Each Fund is treated as a separate corporation for federal income tax purposes.
To continue to qualify for treatment as a 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) 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 (3) at the close of each quarter of
the Fund's taxable year, not more than 25% of the value of its total assets may
be invested in securities (other than U.S. government securities or the
securities of other RICs) 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.
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, and gains realized thereby, may be
subject to income, withholding or other taxes imposed by foreign countries and
U.S. possessions ("foreign taxes") that would reduce the yield and/or total
return on its securities. Tax conventions between certain countries and the
United States may reduce or eliminate 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 taxes paid by it. Pursuant
Statement of Additional Information Page 30
<PAGE>
GT GLOBAL EQUITY FUNDS
to the election, a Fund would treat those taxes as dividends paid to its
shareholders and each shareholder would be required to (1) include in gross
income, and treat as paid by him, his share of those taxes, (2) treat his share
of those taxes and of any dividend paid by the Fund that represents its income
from foreign and U.S. possessions 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 foreign taxes and income from sources within foreign countries and U.S.
possessions if it makes this election. Pursuant to the Taxpayer Relief Act of
1997 ("Tax Act"), individuals who have no more than $300 ($600 for married
persons filing jointly) of creditable foreign taxes included on Forms 1099 and
all of whose foreign source income is "qualified passive income" may elect each
year to be exempt from the extremely complicated foreign tax credit limitation
and will be able to claim a foreign tax credit without having to file the
detailed Form 1116 that otherwise is required.
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 -- other than a "controlled foreign corporation" (I.E., a foreign
corporation in which, on any day during its taxable year, more than 50% of the
total voting power of all voting stock therein or the total value of all stock
therein is owned, directly, indirectly or constructively, by "U.S.
shareholders," defined as U.S. persons that individually own, directly,
indirectly or constructively, at least 10% of that voting power) as to which a
Fund is a U.S. shareholder -- 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 it distributes that income 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 (I.E., 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.
A Fund may elect to "mark to market" its stock in any PFIC. "Marking-to-market,"
in this context, means including in ordinary income each taxable year the
excess, if any, of the fair market value of the stock over the Fund's adjusted
basis therein as of the end of that year. Pursuant to the election, a Fund also
will be allowed to deduct (as ordinary, not capital, loss) the excess, if any,
of its adjusted basis in PFIC stock over the fair market value thereof as of the
taxable year-end, but only to the extent of any net mark-to-market gains with
respect to that stock included in income by the Fund for prior taxable years. A
Fund's adjusted basis in each PFIC's stock subject to the election will be
adjusted to reflect the amounts of income included and deductions taken
thereunder. Regulations proposed in 1992 would provide a similar election with
respect to the stock of certain PFICs.
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, however, to a dividend paid by a Fund to a foreign
shareholder that is "effectively connected with the conduct of a U.S. trade or
business," in which case the reporting and withholding requirements applicable
to domestic shareholders will apply. A distribution of net capital gain by a
Fund to foreign shareholders 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
Each Fund's 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
amount, 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,
Statement of Additional Information Page 31
<PAGE>
GT GLOBAL EQUITY FUNDS
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.
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. As of the date of
preparation of this Statement of Additional Information, it is not entirely
clear whether that 60% portion will qualify for the reduced maximum tax rates on
noncorporate taxpayers' net capital gain enacted by the Tax Act -- 20% (10% for
taxpayers in the 15% marginal tax bracket) for gain recognized on capital assets
held for more than 18 months -- instead of the 28% rate in effect before that
legislation, which now applies to gain on capital assets held for more than one
year but no more than 18 months. However, technical corrections legislation
passed by the House of Representatives late in 1997 would clarify that the lower
rates apply.
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.
If a Fund has an "appreciated financial position" -- generally, an interest
(including an interest through an option, Futures or Forward Contract or short
sale) with respect to any stock, debt instrument (other than "straight debt") or
partnership interest the fair market value of which exceeds its adjusted basis
- -- and enters into a "constructive sale" of the same or substantially similar
property, the Fund will be treated as having made an actual sale thereof, with
the result that gain will be recognized at that time. A constructive sale
generally consists of a short sale, an offsetting notional principal contract or
Futures or Forward Contract entered into by a Fund or a related person with
respect to the same or substantially similar property. In addition, if the
appreciated financial position is itself a short sale or such a contract,
acquisition of the underlying property or substantially similar property will be
deemed a constructive sale.
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 32
<PAGE>
GT GLOBAL EQUITY FUNDS
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
LIECHTENSTEIN GLOBAL TRUST
Liechtenstein Global Trust AG is composed of the Manager and its worldwide
affiliates. Other worldwide affiliates of the Liechtenstein Global Trust include
LGT 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 and LGT Asset Management AG Zurich, Switzerland.
Worldwide asset management affiliates also currently include LGT Asset
Management Inc. in Toronto, Canada; LGT Asset Management PLC in London; LGT
Asset Management Ltd. in Hong Kong; LGT Asset Management Ltd. in Tokyo; LGT
Asset Management Pte. Ltd. in Singapore; LGT Asset Management Ltd. in Sydney;
and LGT Asset Management GmbH in Frankfurt.
CUSTODIAN
State Street Bank and Trust Company ("State Street"), 225 Franklin Street,
Boston, MA 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, MA 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 33
<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 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 Advisor Class shares, deduction of a sales charge is
not applicable; (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 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
PERIOD (CLASS A) (ADVISOR CLASS)
- ------------------------------------------------------------------------- ----------------------- -----------------------
<S> <C> <C>
Fiscal year ended Dec. 31, 1997.......................................... 8.63% 14.54%
For the five years ended Dec. 31, 1997................................... 14.18% n/a
For the ten years ended Dec. 31, 1997.................................... 17.12% n/a
June 1, 1995 (commencement of operations) through Dec. 31, 1997.......... n/a 14.05%
April 1, 1993 (commencement of operations) through Dec. 31, 1997......... n/a n/a
June 9, 1987 (commencement of operations) through Dec. 31, 1997.......... 14.44% n/a
</TABLE>
The Standardized Returns for the Class A 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
PERIOD (CLASS A) (ADVISOR CLASS)
- ------------------------------------------------------------------------------------------ ------------- ---------------
<S> <C> <C>
Fiscal year ended Dec. 31, 1997........................................................... 5.92% 11.64%
For the five years ended Dec. 31, 1997.................................................... 10.96% n/a
For the ten years ended Dec. 31, 1997..................................................... 7.58% n/a
June 1, 1995 (commencement of operations) through Dec. 31, 1997........................... n/a 15.33%
April 1, 1993 (commencement of operations) through Dec. 31, 1997.......................... n/a n/a
</TABLE>
The Standardized Returns for the Class A 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
PERIOD (CLASS A) (ADVISOR CLASS)
- ---------------------------------------------------------------------------------- ------------------- -------------------
<S> <C> <C>
Fiscal year ended Dec. 31, 1997................................................... 3.36% 8.53%
For the five years ended Dec. 31, 1997............................................ 7.75% n/a
For the ten years ended Dec. 31, 1997............................................. 8.18% n/a
June 1, 1995 (commencement of operations) through Dec. 31, 1997................... n/a 12.02%
April 1, 1993 (commencement of operations) through Dec. 31, 1997.................. n/a n/a
</TABLE>
The Standardized Returns for the Class A 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
PERIOD (CLASS A) (ADVISOR CLASS)
- -------------------------------------------------------------------------------------------- ----------- ---------------
<S> <C> <C>
Fiscal year ended Dec. 31, 1997............................................................. (12.36)% (7.54)%
For the five years ended Dec. 31, 1997...................................................... 3.30% n/a
For the ten years ended Dec. 31, 1997....................................................... 2.28% n/a
June 1, 1995 (commencement of operations) through Dec. 31, 1997............................. n/a 0.55%
April 1, 1993 (commencement of operations) through Dec. 31, 1997............................ n/a n/a
</TABLE>
Statement of Additional Information Page 34
<PAGE>
GT GLOBAL EQUITY FUNDS
The Standardized Returns for the Class A 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
PERIOD (CLASS A) (ADVISOR CLASS)
- ------------------------------------------------------------------------------------------- ------------- ---------------
<S> <C> <C>
Fiscal year ended Dec. 31, 1997............................................................ (46.89)% (44.26)%
For the five years ended Dec. 31, 1997..................................................... (2.46)% n/a
For the ten years ended Dec. 31, 1997...................................................... 4.09% n/a
June 1, 1995 (commencement of operations) through Dec. 31, 1997............................ n/a (13.89)%
April 1, 1993 (commencement of operations) through Dec. 31, 1997........................... n/a n/a
</TABLE>
The Standardized Returns for the Class A 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
PERIOD (CLASS A) (ADVISOR CLASS)
- -------------------------------------------------------------------------------------- ----------------- -----------------
<S> <C> <C>
Fiscal year ended Dec. 31, 1997....................................................... 4.78% 10.43%
For the five years ended Dec. 31, 1997................................................ 9.01% n/a
For the ten years ended Dec. 31, 1997................................................. 10.34% n/a
June 1, 1995 (commencement of operations) through Dec. 31, 1997....................... n/a 13.73%
April 1, 1993 (commencement of operations) through Dec. 31, 1997...................... n/a n/a
June 9, 1987 (commencement of operations) through Dec. 31, 1997....................... 8.49% 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 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 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 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
PERIOD (CLASS A) (ADVISOR CLASS)
- ------------------------------------------------------------------------- ----------------------- -----------------------
<S> <C> <C>
June 1, 1995 (commencement of operations) through Dec. 31, 1997.......... n/a 40.51%
April 1, 1993 (commencement of operations) through Dec. 31, 1997......... n/a n/a
June 9, 1987 (commencement of operations) through Dec. 31, 1997.......... 336.53% n/a
</TABLE>
The aggregate Non-Standardized Returns (not taking sales charges into account)
for the Class A and Advisor Class shares of the Europe Fund, stated as aggregate
total returns for the periods shown, were:
<TABLE>
<CAPTION>
EUROPE FUND EUROPE FUND
PERIOD (CLASS A) (ADVISOR CLASS)
- ------------------------------------------------------------------------------------------ ------------- ---------------
<S> <C> <C>
June 1, 1995 (commencement of operations) through Dec. 31, 1997........................... n/a 44.60%
April 1, 1993 (commencement of operations) through Dec. 31, 1997.......................... n/a n/a
July 19, 1985 (commencement of operations) through Dec. 31, 1997.......................... 346.82% n/a
</TABLE>
The aggregate Non-Standardized Returns (not taking sales charges into account)
for the Class A and Advisor Class shares of the International Fund, stated as
aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
INTERNATIONAL FUND INTERNATIONAL FUND
PERIOD (CLASS A) (ADVISOR CLASS)
- ---------------------------------------------------------------------------------- ------------------ -------------------
<S> <C> <C>
June 1, 1995 (commencement of operations) through Dec. 31, 1997................... n/a 34.12%
April 1, 1993 (commencement of operations) through Dec. 31, 1997.................. n/a n/a
July 19, 1985 (commencement of operations) through Dec. 31, 1997.................. 368.84% n/a
</TABLE>
Statement of Additional Information Page 35
<PAGE>
GT GLOBAL EQUITY FUNDS
The aggregate Non-Standardized Returns (not taking sales charges into account)
for the Class A and Advisor Class shares of the Japan Fund, stated as aggregate
total returns for the periods shown, were:
<TABLE>
<CAPTION>
JAPAN FUND JAPAN FUND
PERIOD (CLASS A) (ADVISOR CLASS)
- -------------------------------------------------------------------------------------------- ----------- -----------------
<S> <C> <C>
June 1, 1995 (commencement of operations) through Dec. 31, 1997............................. n/a 1.44%
April 1, 1993 (commencement of operations) through Dec. 31, 1997............................ n/a n/a
July 19, 1985 (commencement of operations) through Dec. 31, 1997............................ 300.11% n/a
</TABLE>
The aggregate Non-Standardized Returns (not taking sales charges into account)
for the Class A and Advisor Class shares of the Pacific Fund, stated as
aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
PACIFIC FUND PACIFIC FUND
PERIOD (CLASS A) (ADVISOR CLASS)
- ------------------------------------------------------------------------------------------- ------------ ---------------
<S> <C> <C>
June 1, 1995 (commencement of operations) through Dec. 31, 1997............................ n/a (32.08)%
April 1, 1993 (commencement of operations) through Dec. 31, 1997........................... n/a n/a
July 19, 1985 (commencement of operations) through Dec. 31, 1997........................... 630.10% n/a
</TABLE>
The aggregate Non-Standardized Returns (not taking sales charges into account)
for the Class A and Advisor Class shares of the Worldwide Fund, stated as
aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
WORLDWIDE FUND WORLDWIDE FUND
PERIOD (CLASS A) (ADVISOR CLASS)
- -------------------------------------------------------------------------------------- ---------------- -----------------
<S> <C> <C>
June 1, 1995 (commencement of operations) through Dec. 31, 1997....................... n/a 39.47%
April 1, 1993 (commencement of operations) through Dec. 31, 1997...................... n/a n/a
June 9, 1987 (commencement of operations) through Dec. 31, 1997....................... 148.37% 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 Funds with the following, among others:
(1) The Consumer Price Index ("CPI"), which is a measure of the average
change in prices over time in a fixed market basket of goods and services
(e.g., food, clothing, shelter, fuels, transportation fares, charges for
doctors' and dentists' services, prescription medicines, and other goods and
services that people buy for day-to-day living). There is inflation risk
which does not affect a security's value but its purchasing power, i.e., the
risk of changing price levels in the economy that affects security prices or
the price of goods and services.
(2) Data and mutual fund rankings and comparisons published or prepared
by Lipper Analytical Data Services, Inc. ("Lipper"), CDA/Wiesenberger
Investment Companies Service ("CDA/Wiesenberger"), Morningstar, Inc.
("Morningstar"), Micropal, Inc. and/or other companies that rank and/or
compare mutual funds by overall performance, investment objectives, assets,
expense levels, periods of existence and/or other factors. In this regard,
each Fund may be compared to its "peer group" as defined by Lipper,
CDA/Wiesenberger, Morningstar and/or other firms, as applicable or to
specific funds or groups of funds within or outside of such peer group.
Lipper generally ranks funds on the basis of total return, assuming
reinvestment of distributions, but does not take sales charges or redemption
fees into consideration, and is prepared without regard to tax consequences.
In addition to the mutual fund rankings, the Fund's performance may be
compared to mutual fund performance indices prepared by Lipper. Morningstar
is a mutual fund rating service that also rates mutual funds on the basis of
risk-adjusted performance. Morningstar ratings are calculated from a fund's
three, five and ten year average annual returns with appropriate fee
adjustments and a risk factor that reflects fund performance relative to the
three-month U.S. Treasury bill monthly returns. Ten percent of the funds in
an investment category receive five stars and 22.5% receive four stars. The
ratings are subject to change each month.
(3) Bear Stearns Foreign Bond Index, which provides simple average
returns for individual countries and gross national product ("GNP") weighted
index, beginning in 1975. The returns are broken down by local market and
currency.
Statement of Additional Information Page 36
<PAGE>
GT GLOBAL EQUITY FUNDS
(4) Ibbotson Associates International Bond Index, which provides a
detailed breakdown of local market and currency returns since 1960.
(5) Standard & Poor's 500 Composite Stock Price Index, which is a widely
recognized index composed of the capitalization-weighted average of the
prices of 500 of the largest publicly traded stocks in the U.S.
(6) Dow Jones Industrial Average.
(7) CNBC/Financial News Composite Index.
(8) Morgan Stanley Capital International World Indices, including, among
others, the Morgan Stanley Capital International Europe, Australia, Far East
Index ("EAFE Index"). The EAFE index is an unmanaged index of more than
1,000 companies in Europe, Australia and the Far East.
(9) Morgan Stanley Capital International All Country (AC) World Index
("MSCI"). The MSCI is a broad, unmanaged index of global stock prices,
currently comprising 2,500 different issuers, located in 47 countries, and
grouped in 38 separate industries.
(10) Salomon Brothers World Government Bond Index and Salomon Brothers
World Government Bond Index-Non-U.S., each of which is a widely used index
composed of world government bonds.
(11) The World Bank Publication of Trends in Developing Countries
("TIDE") provides brief reports on most of the World Bank's borrowing
members. The World Development Report is published annually and looks at
global and regional economic trends and their implications for the
developing economies.
(12) Salomon Brothers Global Telecommunications Index, which is composed
of telecommunications companies in the developing and emerging countries.
(13) Datastream and Worldscope, each of which is an on-line database
retrieval service for information, including but not limited to
international financial and economic data.
(14) International Financial Statistics, which is produced by the
International Monetary Fund.
(15) Various publications and annual reports produced by the World Bank
and its affiliates.
(16) Various publications from the International Bank for Reconstruction
and Development.
(17) Various publications produced by ratings agencies such as Moody's,
S&P and Fitch.
(18) Wilshire Associates, which is an on-line database for international
financial and economic data including performance measures for a wide range
of securities.
(19) Bank Rate National Monitor Index, which is an average of the quoted
rates for 100 leading banks and thrifts in ten U.S. cities.
(20) International Finance Corporation ("IFC") Emerging Markets Data
Base, which provides detailed statistics on bond and stock markets in
developing countries.
(21) Various publications from the Organization for Economic Cooperation
and Development ("OECD").
(22) Average of savings accounts, which is a measure of all kinds of
savings deposits, including longer-term certificates. Savings accounts offer
a guaranteed rate of return on principal, but no opportunity for capital
growth. During a portion of the period, the maximum rates paid on some
savings deposits were fixed by law.
Indices, economic and financial data prepared by the research departments of
various financial organizations, such as Salomon Brothers, Inc., Lehman
Brothers, Merrill Lynch, Pierce, Fenner & Smith, Inc., Financial Research
Corporation, J. P. Morgan, Morgan Stanley, Smith Barney Shearson, S.G. Warburg,
Jardine Fleming, The Bank for International Settlements, Asian Development Bank,
Bloomberg, L.P., and Ibbotson Associates may be used as well as information
reported by the Federal Reserve and the respective Central Banks of various
nations. In addition, GT Global may use performance rankings, ratings and
commentary reported periodically in national financial publications, including
Money Magazine, Mutual Fund Magazine, Smart Money, Global Finance, EuroMoney,
Financial World, Forbes, Fortune, Business Week, Latin Finance, The Wall Street
Journal, Emerging Markets Weekly, Kiplinger's Guide To Personal Finance,
Barron's, The Financial Times, USA Today, The New York Times 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 that may be developed and made available in the future.
Statement of Additional Information Page 37
<PAGE>
GT GLOBAL EQUITY FUNDS
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 has not been independently verified by the Funds or GT
Global. The authors and publishers of such material are not to be considered as
"experts" under the 1933 Act, on account of the inclusion of such information
herein.
A portion of the performance figures for each market includes the positive or
negative effects of the currency exchange rates effective at December 31 of each
year between the U.S. dollar and currency of the foreign market (e.g., Japanese
Yen, German Deutschemark and Hong Kong Dollar). A foreign currency that has
strengthened or weakened against the U.S. dollar will positively or negatively
affect the reported returns, as the case may be.
GT Global believes that this information may be useful to investors considering
whether and to what extent to diversify their investments through the purchase
of mutual funds investing in securities on a global basis. However, this data is
not a representation of the past performance of the 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 the Fund incurs expenses in its
operations, which will reduce performance. Each of these factors will cause the
performance of the Fund to differ from relevant indices.
From time to time, each Fund and GT Global may refer to the number of
shareholders in the Fund or the aggregate number of shareholders in all GT
Global Mutual Funds or the dollar amount of Fund assets under management or
rankings by DALBAR Surveys, Inc. in advertising materials.
GT Global believes the GT Global Equity Funds can be an appropriate investment
for long-term investment goals, including funding retirement, paying for
education or purchasing a house. GT Global may provide information designed to
help individuals understand their investment goals and explore various financial
strategies. For example, GT Global may describe general principles of investing,
such as asset allocation, diversification and risk tolerance. The GT Global
Equity Funds do not represent a complete investment program and the investors
should consider the Funds as appropriate for a portion of their overall
investment portfolio with regard to their long-term investment goals. There is
no assurance that any such information will lead to achieving these goals or
guarantee future results.
From time to time, GT Global may refer to or advertise the names of U.S. and
non-U.S. companies and their products, although there can be no assurance that
any GT Global Mutual Fund may own the securities of these companies.
Ibbotson Associates of Chicago, Illinois ("Ibbotson") provides historical
returns of the capital markets in the United States, including common stocks,
small capitalization stocks, long-term corporate bonds, intermediate-term
government bonds, long-term government bonds, Treasury bills, the U.S. rate of
inflation (based on the CPI), and combinations of various capital markets. The
performance of these capital markets is 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 those of the Funds.
Ibbotson calculates total returns in the same method as the Funds.
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 the Funds' historical share price fluctuations or total returns to
those of a benchmark.
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 describe in its sales material and advertisements how an investor
may invest in GT Global Mutual Funds through various retirement plans or other
programs that offer deferral of income taxes on investment earnings and pursuant
to which an investor may make deductible contributions. Because of their
advantages, these retirement plans and programs may produce returns superior to
comparable non-retirement investments. For example, a $10,000 investment earning
a taxable return of 10% annually would have an after-tax value of $17,976 after
ten years, assuming tax was deducted from the return each year at a 39.6% rate.
An equivalent tax-deferred investment would have an after-tax value of $19,626
after ten years, assuming tax was deducted at a 39.6% rate from the deferred
earnings at the end of the ten-year
Statement of Additional Information Page 38
<PAGE>
GT GLOBAL EQUITY FUNDS
period. In sales materials and advertisements, the Fund may also discuss these
plans and programs. See "Information Relating to Sales and Redemptions --
Individual Retirement Accounts ('IRAs') and Other Tax-Deferred Plans."
GT Global may from time to time in its sales methods and advertising discuss the
risks inherent in investing. The major types of investment risk are market risk,
industry risk, credit risk, interest rate risk, liquidity risk and inflation
risk. Risk represents the possibility that you may lose some or all of your
investment over a period of time. A basic tenet of investing is the greater the
potential reward, the greater the risk.
From time to time, the Funds and GT Global will quote information regarding
industries, individual countries, regions, world stock exchanges, and economic
and demographic statistics from sources GT Global deems reliable, including the
economic and financial data of financial organizations, such as:
1) Stock market capitalization: Morgan Stanley Capital International World
Indices, IFC and Datastream.
2) Stock market trading volume: Morgan Stanley Capital International World
Indices and IFC.
3) The number of listed companies: IFC, GT Guide to World Equity Markets,
Salomon Brothers, Inc. and S.G. Warburg.
4) Wage rates: U.S. Department of Labor Statistics and Morgan Stanley Capital
International World 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 CPI and inflation rate: The World Bank, Datastream and IFC.
8) Gross Domestic Product ("GDP"): Datastream and The World Bank.
9) GDP growth rate: IFC, The World Bank and Datastream.
10) Population: The World Bank, Datastream and United Nations.
11) Average annual growth rate (%) of population: The World Bank, Datastream and
United Nations.
12) Age distribution within populations: OECD and United Nations.
13) Total exports and imports by year: IFC, The World Bank and Datastream.
14) Top three companies by country, industry, or market: IFC, GT Guide to World
Equity Markets, Salomon Brothers, Inc., and S.G. Warburg.
15) Foreign direct investments to developing countries: The World Bank and
Datastream.
16) Supply, consumption, demand and growth in demand of certain products,
services and industries, including, but not limited to electricity, water,
transportation, construction materials, natural resources, technology, other
basic infrastructure, financial services, health care services and supplies,
consumer products and services and telecommunications equipment and services
(sources of such information may include, but would not be limited to, The
World Bank, OECD, IMF, Bloomberg and Datastream).
17) Standard deviation and performance returns for U.S. and non-U.S. equity and
bond markets: Morgan Stanley Capital International.
18) Countries restructuring their debt, including those under the Brady Plan:
the Manager.
19) Political and economic structure of countries: Economist Intelligence Unit.
20) Government and corporate bonds -- credit ratings, yield to maturity and
performance returns: Salomon Brothers, Inc.
21) Dividend yields for U.S. and non-U.S. companies: Bloomberg.
From time to time, GT Global may include in its advertisement and sales
material, information about privatization, which is an economic process
involving the sale of state-owned companies to the private sector.
In advertising and sales materials, GT Global may make reference to or discuss
its products, services and accomplishments. Among these accomplishments are that
in 1983 the Manager provided assistance to the government of Hong Kong in
linking its currency to the U.S. dollar, and that in 1987 Japan's Ministry of
Finance licensed LGT Asset Management
Statement of Additional Information Page 39
<PAGE>
GT GLOBAL EQUITY FUNDS
Ltd. as one of the first foreign discretionary investment managers for Japanese
investors. Such accomplishments, however, should not be viewed as an endorsement
of the Manager by the government of Hong Kong, Japan's Ministry of Finance or
any other government or government agency. Nor do any such accomplishments of
the Manager provide any assurance that the GT Global Mutual Funds' investment
objectives will be achieved.
GT GLOBAL ADVANTAGE
As part of Liechtenstein Global Trust, GT Global continues a 75-year tradition
of service to individuals and institutions. Today we bring investors a
combination of experience, worldwide resources, a global perspective, investment
talent and a time-tested investment discipline. With investment professionals in
nine offices worldwide, we witness world events and economic developments
firsthand. 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 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. With respect to stocks, a global stock
research ("GSR") database developed by GT Global is utilized in the selection
process. All stocks within the GSR database are systematically ranked by our
analysts on a 1-5 basis with 1 representing the most favored. The rankings,
along with our quantitative, fundamental research, determine which stocks are
bought and sold.
GT Global describes the major stages of economic development as revolving in a
"virtuous cycle." From time to time, each Fund and GT Global may discuss the
virtuous cycle in its sales literature and advertising. This cycle operates
worldwide, forcing companies to become increasingly competitive in an
ever-expanding global marketplace. GT Global has identified the following stages
within the virtuous cycle:
FALLING BORDERS AND TRADE BARRIERS: Barriers between countries diminish,
increasing the potential for world trade and promoting global competition.
CAPITAL FLOWS FROM DEVELOPED MARKETS TO EMERGING MARKETS: As barriers fall,
restrictions on the free movement of capital in and out of a country are often
reduced or removed. The flow of money from developed to developing markets gains
momentum.
INDUSTRIALIZATION OF EMERGING MARKETS: With capital flowing across borders, many
developing nations are able to quickly begin their process of industrialization.
INCREASED DEMAND FOR GLOBAL CONSUMER PRODUCTS: As people in emerging markets
experience rising standards of living due to increased industrialization, they
demand more consumer products which can help spur global trade flows.
GT Global believes that we increasingly live in a world without boundaries in
terms of trade, competition and investment opportunities. Therefore, GT Global
believes it's becoming more relevant to look at investing in terms of industrial
groupings, or themes, as an alternative to the traditional, primary focus on
regions. GT Global believes such themes make movement possible between stages in
the virtuous cycle of economic progress.
ECONOMIC DEVELOPMENT IN EMERGING MARKETS
The Manager has identified six phases to track the progress of developing
economies.
In addition, the Manager focuses on the transitions between each phase:
BETWEEN PHASES 1 & 2, STABILIZATION: Developing nations recognize the need
for economic reform and launch initiatives to stabilize their economies. Typical
measures might include initiating monetary reforms to contain inflation,
controlling government spending, and addressing external trade imbalances.
BETWEEN PHASES 2 & 3, RENOVATION: Economic development gathers momentum as
the governments of developing nations take further steps to increase
productivity and external competitiveness. Typical reforms include easing market
regulations, privatizing state-owned industries, lowering trade barriers and
reforming the national tax structure.
BETWEEN PHASES 3 & 4, NEW CONSTRUCTION: As economic reforms take hold,
infrastructure improvements are needed to facilitate and support long-term
growth. The construction and upgrading of highways and airports, communications
and
Statement of Additional Information Page 40
<PAGE>
GT GLOBAL EQUITY FUNDS
utility systems generally require financing in the form of public debt.
Similarly, as the private sector develops, bolstered by new privatizations,
corporate debt securities typically are issued to finance business expansion.
EMERGING MARKET TRADING VOLUME
The annual trading volume of debt securities from developing economies according
to Salomon Brothers, Inc. has grown from $90 billion in 1990 to $150 billion in
1991 to $400 billion in 1992 and was estimated to be $1,200 billion at the end
of 1993 and $1.5 trillion at the end of 1994, respectively.
- --------------------------------------------------------------------------------
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF BOND RATINGS
MOODY'S rates the debt securities issued by various entities from "Aaa" to
"C." Investment Grade Ratings are the first four categories:
Aaa -- Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred
to as "gilt 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 -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade 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 -- Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper-medium-grade obligations.
Factors giving security to principal and interest are considered adequate,
but elements may be present which suggest a susceptibility to impairment
some time in the future.
Baa -- Bonds which are rated Baa are considered as medium-grade
obligations, (i.e., they are neither highly protected nor poorly secured).
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
Ba -- Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate, and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B -- Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may
be small.
Caa -- Bonds which are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with respect to
principal or interest.
Ca -- Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.
C -- Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
ABSENCE OF RATING: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies
that are not rated as a matter of policy.
Statement of Additional Information Page 41
<PAGE>
GT GLOBAL EQUITY FUNDS
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 Caa. 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 Company ranks in the
lower end of its generic rating category.
S&P rates the securities debt of various entities in categories ranging from
"AAA" to "D" according to quality. Investment grade ratings are the first four
categories:
AAA -- An obligation rated "AAA" has the highest rating assigned by S&P.
The obligor's capacity to meet its financial commitment on the obligation is
extremely strong.
AA -- An obligation rated "AA" differs from the highest rated
obligations only in a small degree. The obligor's capacity to meet its
financial commitment on the obligation is very strong.
A -- An obligation rated "A" is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than obligations
in higher rated categories.
BBB -- An obligation rated "BBB" exhibits adequate protection
parameters. However, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity of the obligor to meet its
financial commitment on the obligation.
BB, B, CCC, CC, C -- Obligations rated "BB," "B," "CCC," "CC," and "C"
are regarded as having significant speculative characteristics. "BB"
indicates the least degree of speculation and "C" the highest. While such
obligations will likely have some quality and protective characteristics,
these may be outweighed by large uncertainties or major exposures to adverse
conditions.
BB -- An obligation rated "BB" is less vulnerable to nonpayment than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to the obligor's inadequate capacity to meet its financial commitment
on the obligation.
B -- An obligation rated "B" is more vulnerable to nonpayment than
obligations rated "BB," but the obligor currently has the capacity to meet
its financial commitment on the obligation. Adverse business, financial, or
economic conditions will likely impair the obligor's capacity or willingness
to meet its financial commitment on the obligation.
CCC -- An obligation rated "CCC" is currently vulnerable to nonpayment,
and is dependent upon favorable business, financial and economic conditions
for the obligor to meet its financial commitment on the obligation. In the
event of adverse business, financial, or economic conditions, the obligor is
not likely to have the capacity to meet its financial commitment on the
obligation.
CC -- An obligation rated "CC" is currently highly vulnerable to
nonpayment.
C -- The "C" rating may be used to cover a situation where a bankruptcy
petition has been filed or similar action has been taken, but payments on
this obligation are being continued.
D -- An obligation rated "D" is in payment default. The "D" rating
category is used when payments on an obligation are not made on the date due
even if the applicable grace period has not expired, unless S&P believes
that such payments will be made during such grace period. The "D" rating
also will be used upon the filing of a bankruptcy petition or the taking of
a similar action if payments on an obligation are jeopardized.
PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NR: Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
Statement of Additional Information Page 42
<PAGE>
GT GLOBAL EQUITY FUNDS
DESCRIPTION OF COMMERCIAL PAPER RATINGS
MOODY'S employs the designation "Prime-1" to indicate commercial paper
having 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. Issues rated Prime-2 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 alternative liquidity is maintained.
S&P ratings of commercial paper are graded into several categories ranging
from "A-1" for the highest quality obligations to "D" for the lowest. Issues in
the "A" category are delineated with numbers 1, 2, and 3 to indicate the
relative degree of safety. "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 payments on issues with this
designation is satisfactory; however, the relative degree of safety is not as
high as for issues designated "A-1."
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements of each Fund as of December 31, 1997, and for
the year then ended, appear on the following pages.
Statement of Additional Information Page 43
<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, 1997, 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, 1997 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimated
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, 1997, 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 17, 1998
F1
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (26.9%)
Student Loan Marketing Association ........................ US 31,800 $ 4,424,175 2.9
OTHER FINANCIAL
Citicorp .................................................. US 31,600 3,995,420 2.6
BANKS-MONEY CENTER
Travelers Group, Inc. ..................................... US 70,500 3,798,187 2.5
INSURANCE - MULTI-LINE
Chase Manhattan Corp. ..................................... US 33,500 3,668,250 2.4
BANKS-MONEY CENTER
HSBC Holdings PLC ......................................... HK 104,000 2,563,593 1.7
BANKS-MONEY CENTER
Royal & Sun Alliance Insurance Group PLC .................. UK 235,000 2,365,435 1.6
INSURANCE - MULTI-LINE
Australia & New Zealand Banking Group Ltd. ................ AUSL 350,000 2,312,203 1.5
BANKS-REGIONAL
Nordbanken Holding AB-/- .................................. SWDN 398,006 2,251,426 1.5
OTHER FINANCIAL
Schroders PLC ............................................. UK 70,000 2,198,851 1.5
BANKS-MONEY CENTER
ING Groep N.V. ............................................ NETH 47,300 1,992,610 1.3
OTHER FINANCIAL
ForeningsSparbanken AB .................................... SWDN 84,560 1,922,932 1.3
BANKS-REGIONAL
State Bank of India Ltd. - GDR{\/} ........................ IND 103,400 1,848,275 1.2
BANKS-REGIONAL
Lloyds TSB Group PLC ...................................... UK 139,000 1,796,273 1.2
BANKS-REGIONAL
Old Mutual South Africa Trust PLC ......................... UK 971,000 1,550,571 1.0
REAL ESTATE INVESTMENT TRUST
Nichiei Co., Ltd. ......................................... JPN 10,400 1,107,739 0.7
OTHER FINANCIAL
Union Bank of Switzerland - Bearer ........................ SWTZ 588 850,237 0.6
BANKS-MONEY CENTER
United Overseas Bank Ltd. - Foreign ....................... SING 152,000 844,444 0.6
BANKS-MONEY CENTER
PSIL Bangkok Bank Co., Ltd. (Entitlement
Certificates){\/}{=} ..................................... THAI 249,000 458,160 0.3
OTHER FINANCIAL
Kookmin Bank .............................................. KOR 62,644 330,775 0.2
BANKS-MONEY CENTER
Abbey National PLC ........................................ UK 12,644 226,512 0.2
BANKS-SUPER REGIONAL
Kokusai Securities Co., Ltd. .............................. JPN 23,000 160,383 0.1
INVESTMENT MANAGEMENT
Bank Inicjatyw Gospodarczych BIG S.A. - GDR{\/} ........... POL 3,066 46,757 --
BANKS-REGIONAL
------------
40,713,208
------------
</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, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (23.2%)
Federated Department Stores, Inc.-/- ...................... US 82,200 $ 3,539,738 2.3
RETAILERS-APPAREL
Service Corporation International ......................... US 86,400 3,191,400 2.1
CONSUMER SERVICES
CVS Corp. ................................................. US 45,100 2,889,219 1.9
RETAILERS-OTHER
EMI Group PLC ............................................. UK 333,000 2,777,734 1.8
LEISURE & TOURISM
Woolworths Ltd. ........................................... AUSL 813,000 2,717,239 1.8
RETAILERS-OTHER
Telecom Corporation of New Zealand Ltd. - ADR{\/} ......... NZ 68,000 2,635,000 1.7
TELEPHONE NETWORKS
EMAP PLC .................................................. UK 158,000 2,354,433 1.6
BROADCASTING & PUBLISHING
Telecom Italia SpA ........................................ ITLY 308,900 1,977,100 1.3
TELEPHONE NETWORKS
Reuters Holdings PLC ...................................... UK 179,000 1,954,598 1.3
BROADCASTING & PUBLISHING
Telecomunicacoes Brasileiras S.A. (Telebras) - ADR{\/} .... BRZL 16,300 1,897,931 1.3
TELEPHONE NETWORKS
Koninklijke Ahold N.V. .................................... NETH 70,359 1,836,026 1.2
RETAILERS-FOOD
Telecel - Comunicacaoes Pessoais S.A.-/- .................. PORT 16,716 1,781,526 1.2
WIRELESS COMMUNICATIONS
SPT Telecom-/- ............................................ CZCH 15,100 1,616,328 1.1
TELEPHONE NETWORKS
Portugal Telecom S.A. - Registered ........................ PORT 33,450 1,552,516 1.0
TELEPHONE NETWORKS
Ezaki Glico Co., Ltd. ..................................... JPN 150,000 968,966 0.6
RETAILERS-FOOD
Vodafone Group PLC ........................................ UK 113,586 818,789 0.5
WIRELESS COMMUNICATIONS
Telstra Corp. Ltd.-/- ..................................... AUSL 333,100 703,136 0.5
TELEPHONE NETWORKS
------------
35,211,679
------------
Health Care (10.3%)
Bristol Myers Squibb Co. .................................. US 37,300 3,529,513 2.3
PHARMACEUTICALS
Warner-Lambert Co. ........................................ US 23,800 2,951,200 1.9
PHARMACEUTICALS
Roche Holding AG .......................................... SWTZ 239 2,373,473 1.6
PHARMACEUTICALS
Nycomed Amersham PLC ...................................... UK 55,400 2,057,714 1.4
PHARMACEUTICALS
Richter Gedeon Rt. - Reg S GDR{c} {\/} .................... HGRY 15,800 1,815,025 1.2
PHARMACEUTICALS
Schering AG ............................................... GER 16,580 1,599,461 1.1
PHARMACEUTICALS
</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, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Health Care (Continued)
Takeda Chemical Industries ................................ JPN 40,000 $ 1,140,230 0.8
PHARMACEUTICALS
M.L. Laboratories PLC-/- .................................. UK 1,091 1,478 --
PHARMACEUTICALS
------------
15,468,094
------------
Materials/Basic Industry (8.3%)
Monsanto Co. .............................................. US 67,900 2,851,800 1.9
CHEMICALS
Hercules, Inc. ............................................ US 54,000 2,703,375 1.8
CHEMICALS
Imperial Chemical Industries PLC - ADR{\/} ................ UK 35,300 2,292,294 1.5
CHEMICALS
Akzo Nobel N.V. ........................................... NETH 11,290 1,947,013 1.3
CHEMICALS
Kimberly-Clark de Mexico, S.A. de C.V. "A" ................ MEX 285,600 1,398,265 0.9
PAPER/PACKAGING
CRH PLC ................................................... UK 114,500 1,325,493 0.9
BUILDING MATERIALS & COMPONENTS
------------
12,518,240
------------
Energy (6.1%)
Petroleo Brasileiro S.A. (Petrobras) - ADR{\/} ............ BRZL 138,200 3,299,525 2.2
GAS PRODUCTION & DISTRIBUTION
Petroleum Geo-Services ASA-/- ............................. NOR 31,920 2,010,692 1.3
ENERGY EQUIPMENT & SERVICES
Shell Transport & Trading Co., PLC ........................ UK 265,000 1,914,614 1.3
OIL
Total S.A. "B" ............................................ FR 17,380 1,891,485 1.3
OIL
------------
9,116,316
------------
Technology (5.2%)
Compaq Computer Corp.-/- .................................. US 60,000 3,386,250 2.2
COMPUTERS & PERIPHERALS
Intel Corp. ............................................... US 44,500 3,126,125 2.1
SEMICONDUCTORS
Texas Instruments, Inc. ................................... US 31,144 1,401,480 0.9
SEMICONDUCTORS
------------
7,913,855
------------
Capital Goods (4.0%)
Textron, Inc. ............................................. US 43,800 2,737,500 1.8
AEROSPACE/DEFENSE
Alcatel Alsthom Compagnie Generale d'Electricite .......... FR 15,440 1,962,549 1.3
TELECOM EQUIPMENT
Canon, Inc. ............................................... JPN 60,000 1,397,701 0.9
OFFICE EQUIPMENT
------------
6,097,750
------------
</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, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Durables (3.5%)
Futuris Corp., Ltd. ....................................... AUSL 2,000,000 $ 2,189,068 1.4
AUTO PARTS
Ford Motor Co. ............................................ US 36,200 1,762,488 1.2
AUTOMOBILES
Bridgestone Corp. ......................................... JPN 65,000 1,409,579 0.9
AUTO PARTS
------------
5,361,135
------------
Consumer Non-Durables (3.4%)
RJR Nabisco Holdings Corp. ................................ US 73,300 2,748,750 1.8
TOBACCO
Asahi Breweries Ltd. ...................................... JPN 95,000 1,383,142 0.9
BEVERAGES - ALCOHOLIC
Amway Japan Ltd. .......................................... JPN 55,400 1,061,303 0.7
HOUSEHOLD PRODUCTS
------------
5,193,195
------------
Multi-Industry/Miscellaneous (1.2%)
Shanghai Industrial Holdings Ltd. ......................... HK 490,000 1,821,256 1.2
MULTI-INDUSTRY
------------ -----
TOTAL EQUITY INVESTMENTS (cost $124,048,794) ................ 139,414,728 92.1
------------ -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Co., due
January 2, 1998, for an effective yield of 5.80%,
collateralized by $11,755,000 U.S. Treasury Notes, 5.75%
due 12/31/98 (market value of collateral is $11,766,026,
including accrued interest). (cost $11,535,000) .......... 11,535,000 7.6
------------ -----
TOTAL INVESTMENTS (cost $135,583,794) * .................... 150,949,728 99.7
Other Assets and Liabilities ................................ 457,079 0.3
------------ -----
NET ASSETS .................................................. $151,406,807 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
{c} Security issued under Regulation S. Rule 144A and additional
restrictions may apply in the resale of such securities.
{=} Each share of Entitlement Certificates represents one local share
of PSIL Bangkok Bank Co., Ltd.
* For Federal income tax purposes, cost is $136,039,555 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 21,802,933
Unrealized depreciation: (6,892,760)
-------------
Net unrealized appreciation: $ 14,910,173
-------------
-------------
</TABLE>
Abbreviations:
ADR--American Depositary Receipt
GDR--Global Depositary Receipt
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, 1997
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1997, was concentrated in
the following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
------------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ------ ------------- -----
<S> <C> <C> <C>
Australia (AUSL/AUD) ................. 5.2 5.2
Brazil (BRZL/BRL) .................... 3.5 3.5
Czech Republic (CZCH/CSK) ............ 1.1 1.1
France (FR/FRF) ...................... 2.6 2.6
Germany (GER/DEM) .................... 1.1 1.1
Hong Kong (HK/HKD) ................... 2.9 2.9
Hungary (HGRY/HUF) ................... 1.2 1.2
India (IND/INR) ...................... 1.2 1.2
Italy (ITLY/ITL) ..................... 1.3 1.3
Japan (JPN/JPY) ...................... 5.6 5.6
Korea (KOR/KRW) ...................... 0.2 0.2
Mexico (MEX/MXN) ..................... 0.9 0.9
Netherlands (NETH/NLG) ............... 3.8 3.8
New Zealand (NZ/NZD) ................. 1.7 1.7
Norway (NOR/NOK) ..................... 1.3 1.3
Portugal (PORT/PTE) .................. 2.2 2.2
Singapore (SING/SGD) ................. 0.6 0.6
Sweden (SWDN/SEK) .................... 2.8 2.8
Switzerland (SWTZ/CHF) ............... 2.2 2.2
Thailand (THAI/THB) .................. 0.3 0.3
United Kingdom (UK/GBP) .............. 15.8 15.8
United States (US/USD) ............... 34.6 7.9 42.5
------ ----- -----
Total ............................... 92.1 7.9 100.0
------ ----- -----
------ ----- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $151,406,807.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
VALUE
(U.S. CONTRACT DELIVERY APPRECIATION
CONTRACTS TO BUY: DOLLARS) PRICE DATE (DEPRECIATION)
- ---------------------------------------- ---------- --------- ------- -------------
<S> <C> <C> <C> <C>
Deutsche Marks.......................... 613,677 1.76130 2/27/98 $ (10,861)
---------- -------------
Total Contracts to Buy (Payable amount
$624,538)............................ 613,677 (10,861)
---------- -------------
THE VALUE OF CONTRACTS TO BUY AS
PERCENTAGE OF NET ASSETS IS 0.41%
<CAPTION>
CONTRACTS TO SELL:
- ----------------------------------------
<S> <C> <C> <C> <C>
British Pounds.......................... 1,476,511 0.61245 1/20/98 $ (6,991)
British Pounds.......................... 1,476,511 0.60002 1/20/98 23,429
Deutsche Marks.......................... 1,729,455 1.73540 2/27/98 56,876
French Francs........................... 2,830,938 5.72800 2/6/98 136,939
Japanese Yen............................ 2,310,962 118.82300 2/4/98 213,801
Japanese Yen............................ 4,318,711 122.20000 2/12/98 263,940
Swiss Francs............................ 1,174,569 1.42180 3/19/98 21,099
---------- -------------
Total Contracts to Sell (Receivable
amount $16,026,750).................. 15,317,657 709,093
---------- -------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 10.12%
Total Open Forward Foreign Currency
Contracts, Net....................... $ 698,232
-------------
-------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F6
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $135,583,794) (Note 1).......................... $150,949,728
U.S. currency.................................................................. $ 48
Foreign currencies (cost $1,578,009)........................................... 1,536,226 1,536,274
---------
Receivable for Fund shares sold........................................................... 1,036,495
Receivable for open forward foreign currency contracts, net (Note 1)...................... 698,232
Dividends and dividend withholding tax reclaims receivable................................ 221,497
Receivable for securities sold............................................................ 194,078
Interest receivable....................................................................... 1,858
Miscellaneous receivable.................................................................. 646
-----------
Total assets............................................................................ 154,638,808
-----------
Liabilities:
Payable for Fund shares repurchased....................................................... 2,788,587
Payable for investment management and administration fees (Note 2)........................ 121,861
Payable for printing and postage expenses................................................. 96,022
Payable for transfer agent fees (Note 2).................................................. 89,810
Payable for service and distribution expenses (Note 2).................................... 67,726
Payable for professional fees............................................................. 37,204
Payable for custodian fees................................................................ 12,019
Payable for Trustees' fees and expenses (Note 2).......................................... 6,727
Payable for registration and filing fees.................................................. 5,626
Payable for fund accounting fees (Note 2)................................................. 1,924
Other accrued expenses.................................................................... 4,495
-----------
Total liabilities....................................................................... 3,232,001
-----------
Net assets.................................................................................. $151,406,807
-----------
-----------
Class A:
Net asset value and redemption price per share ($103,769,443 DIVIDED BY 7,275,753 shares
outstanding)............................................................................... $ 14.26
-----------
-----------
Maximum offering price per share (100/95.25 of $14.26) *.................................... $ 14.97
-----------
-----------
Class B:+
Net asset value and offering price per share ($45,009,871 DIVIDED BY 3,300,587 shares
outstanding)............................................................................... $ 13.64
-----------
-----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($2,627,493
DIVIDED BY 182,671 shares outstanding)..................................................... $ 14.38
-----------
-----------
Net assets consist of:
Paid in capital (Note 4).................................................................. $133,904,092
Undistributed net investment income....................................................... 95,296
Accumulated net realized gain on investments and foreign currency transactions............ 1,383,082
Net unrealized appreciation on translation of assets and liabilities in foreign
currencies............................................................................... 658,403
Net unrealized appreciation of investments................................................ 15,365,934
-----------
Total -- representing net assets applicable to capital shares outstanding................... $151,406,807
-----------
-----------
<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.
F7
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
STATEMENT OF OPERATIONS
Year ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of $275,397).............................. $ 2,764,013
Interest income........................................................................... 645,128
-----------
Total investment income................................................................. 3,409,141
-----------
Expenses:
Investment management and administration fees (Note 2).................................... 1,619,691
Service and distribution expenses: (Note 2)
Class A.................................................................... $ 400,318
Class B.................................................................... 496,417 896,735
-----------
Transfer agent fees (Note 2).............................................................. 455,298
Custodian fees............................................................................ 111,017
Printing and postage expenses (Note 2).................................................... 63,005
Registration and filing fees.............................................................. 53,920
Audit fees................................................................................ 47,254
Fund accounting fees...................................................................... 41,680
Legal fees................................................................................ 29,476
Trustees' fees and expenses (Note 2)...................................................... 13,218
Other expenses (Note 1)................................................................... 12,217
-----------
Total expenses before reductions........................................................ 3,343,511
-----------
Expense reductions (Notes 1 & 5)...................................................... (146,965)
-----------
Total net expenses...................................................................... 3,196,546
-----------
Net investment income....................................................................... 212,595
-----------
Net realized and unrealized gain (loss) on investments and foreign currencies:
(Note 1)
Net realized gain on investments............................................. 25,979,995
Net realized gain on foreign currency transactions........................... 2,164,063
-----------
Net realized gain during the year....................................................... 28,144,058
Net change in unrealized appreciation on translation of assets and
liabilities in foreign currencies........................................... 162,616
Net change in unrealized appreciation of investments......................... (11,824,112)
-----------
Net unrealized depreciation during the year............................................. (11,661,496)
-----------
Net realized and unrealized gain on investments and foreign currencies...................... 16,482,562
-----------
Net increase in net assets resulting from operations........................................ $16,695,157
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F8
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996
------------- -------------
Decrease in net assets
Operations:
Net investment income (loss)............................................. $ 212,595 $ (81,643)
Net realized gain on investments and foreign currency transactions....... 28,144,058 21,499,978
Net change in unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies............................ 162,616 111,081
Net change in unrealized appreciation (depreciation) of investments...... (11,824,112) (1,481,639)
------------- -------------
Net increase in net assets resulting from operations................... 16,695,157 20,047,777
------------- -------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income............................................... (109,138) --
From net realized gain on investments.................................... (22,666,381) (13,087,564)
Class B:
Distributions to shareholders: (Note 1)
From net realized gain on investments.................................... (10,444,406) (5,727,628)
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income............................................... (8,161) --
From net realized gain on investments.................................... (358,231) (175,598)
------------- -------------
Total distributions.................................................... (33,586,317) (18,990,790)
------------- -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested......................... 243,618,368 290,210,249
Decrease from capital shares repurchased................................. (256,140,244) (314,217,462)
------------- -------------
Net decrease from capital share transactions........................... (12,521,876) (24,007,213)
------------- -------------
Total decrease in net assets............................................... (29,413,036) (22,950,226)
Net assets:
Beginning of year........................................................ 180,819,843 203,770,069
------------- -------------
End of year *............................................................ $151,406,807 $180,819,843
------------- -------------
------------- -------------
* Includes undistributed net investment income of......................... $ 95,296 $ --
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F9
<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,
----------------------------------------------------------
1997 1996 (D) 1995 (D) 1994 1993 (D)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 16.71 $ 16.82 $ 15.53 $ 17.47 $ 14.47
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... 0.05 0.03 -- -- 0.04
Net realized and unrealized gain
(loss) on investments................ 1.55 1.79 1.74 (1.16) 3.92
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. 1.60 1.82 1.74 (1.16) 3.96
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ (0.02) -- -- -- --
From net realized gain on
investments.......................... (4.03) (1.93) (0.45) (0.78) (0.96)
---------- ---------- ---------- ---------- ----------
Total distributions................. (4.05) (1.93) (0.45) (0.78) (0.96)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 14.26 $ 16.71 $ 16.82 $ 15.53 $ 17.47
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 10.00% 10.92% 11.23% (6.65)% 27.6%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 103,769 $ 125,556 $ 145,982 $ 182,467 $ 193,997
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... 0.32% 0.14% (0.06)% (0.01)% 0.9%
Without expense reductions............ 0.23% 0.06% (0.12)% (0.04)% N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.73% 1.72% 1.87% 1.81% 1.9%
Without expense reductions............ 1.82% 1.80% 1.93% 1.84% N/A
Portfolio turnover rate++++............. 92% 80% 113% 86% 92%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0288 $ 0.0263 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.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F10
<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++
-------------------------------------------------------------
APRIL 1, 1993
YEAR ENDED DECEMBER 31, TO
---------------------------------------------- DECEMBER 31,
1997 1996 (D) 1995 (D) 1994 1993 (D)
---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 16.23 $ 16.50 $ 15.34 $ 17.39 $ 15.67
---------- ---------- ---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... (0.05) (0.09) (0.12) (0.11) (0.04)
Net realized and unrealized gain
(loss) on investments................ 1.49 1.75 1.73 (1.16) 2.72
---------- ---------- ---------- ---------- -------------
Net increase (decrease) from
investment operations.............. 1.44 1.66 1.61 (1.27) 2.68
---------- ---------- ---------- ---------- -------------
Distributions to shareholders:
From net investment income............ -- -- -- -- --
From net realized gain on
investments.......................... (4.03) (1.93) (0.45) (0.78) (0.96)
---------- ---------- ---------- ---------- -------------
Total distributions................. (4.03) (1.93) (0.45) (0.78) (0.96)
---------- ---------- ---------- ---------- -------------
Net asset value, end of period.......... $ 13.64 $ 16.23 $ 16.50 $ 15.34 $ 17.39
---------- ---------- ---------- ---------- -------------
---------- ---------- ---------- ---------- -------------
Total investment return (c)............. 9.22% 10.16% 10.52% (7.32)% 17.3%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 45,010 $ 52,809 $ 56,095 $ 52,567 $ 20,592
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... (0.33)% (0.51)% (0.71)% (0.66)% (0.4)%(a)
Without expense reductions............ (0.42)% (0.59)% (0.77)% (0.69)% N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.38% 2.37% 2.52% 2.46% 2.5%(a)
Without expense reductions............ 2.47% 2.45% 2.58% 2.49% N/A
Portfolio turnover rate++++............. 92% 80% 113% 86% 92%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0288 $ 0.0263 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.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F11
<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>
ADVISOR CLASS+++
-------------------------------------------
JUNE 1, 1995
YEAR ENDED DECEMBER 31, TO
---------------------------- DECEMBER 31,
1997 1996 (D) 1995 (D)
------------- ------------- -------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 16.81 $ 16.86 $ 15.26
------------- ------------- -------------
Income from investment operations:
Net investment income (loss).......... 0.12 0.09 0.03
Net realized and unrealized gain
(loss) on investments................ 1.57 1.79 2.02
------------- ------------- -------------
Net increase (decrease) from
investment operations.............. 1.69 1.88 2.05
------------- ------------- -------------
Distributions to shareholders:
From net investment income............ (0.09) -- --
From net realized gain on
investments.......................... (4.03) (1.93) (0.45)
------------- ------------- -------------
Total distributions................. (4.12) (1.93) (0.45)
------------- ------------- -------------
Net asset value, end of period.......... $ 14.38 $ 16.81 $ 16.86
------------- ------------- -------------
------------- ------------- -------------
Total investment return (c)............. 10.43% 11.31% 13.46%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 2,627 $ 2,455 $ 1,693
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... 0.67% 0.49% 0.29%(a)
Without expense reductions............ 0.58% 0.41% 0.23%(a)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.38% 1.37% 1.52%(a)
Without expense reductions............ 1.47% 1.45% 1.58%(a)
Portfolio turnover rate++++............. 92% 80% 113%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0288 $ 0.0263 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.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F12
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
NOTES TO
FINANCIAL STATEMENTS
December 31, 1997
- --------------------------------------------------------------------------------
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 a diversified, open-end management investment company. The
Company has eight 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 preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Funds in the preparation of the
financial statements.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of 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 fluctuation
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
F13
<PAGE>
GT GLOBAL WORLDWIDE GROWTH FUND
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 counter
party is unable to meet the terms of a contract or if 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, 1997, stocks with an aggregate value of approximately
$12,659,388 were on loan to brokers. The loans were secured by cash collateral
of $13,106,152, 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, 1997,
the Fund received securities lending fees of $137,889 which were used to reduce
the Fund's custodian and administrative expenses.
(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.
F14
<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 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 ("GT Funds") advised and/or
administered by the Manager, has a line of credit with the BankBoston and State
Street Bank & Trust Company. The arrangements with the banks allow the Fund and
GT Funds to borrow an aggregate maximum amount of $250,000,000. The Fund is
limited to borrowing up to 33 1/3% of the value of the Fund's total assets.
For the year ended December 31, 1997, 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 6.44%. Interest expense
for the year ended December 31, 1997 was $1,431, 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. 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. ("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, 1997, GT Global retained $8,456
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 $3,645 for the year ended December 31, 1997. GT Global also makes
ongoing shareholder servicing and trail commission payments to dealers whose
clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSC's, in accordance with the Fund's current
prospectus. During the year ended December 31, 1997, GT Global collected CDSC's
in the amount of $272,024. 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.
F15
<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%, 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.
Effective January 1, 1998, the Manager and GT Global have undertaken to limit
the Fund's Expenses (exclusive of brokerage commissions, taxes, interest, and
extraordinary expenses) to the annual rate 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. This undertaking may be changed or eliminated in the
future.
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, 1997, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $138,743,808 and $176,373,627, respectively. There were
no purchases or sales of U.S. government obligations by the Fund during the
year.
4. CAPITAL SHARES
At December 31, 1997, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
------------------------ ------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold...................................................... 9,536,130 $163,326,296 14,357,786 $250,471,583
Shares issued in connection with reinvestment of distributions... 1,372,411 19,227,529 670,053 11,082,654
---------- ------------ ---------- ------------
10,908,541 182,553,825 15,027,839 261,554,237
Shares repurchased............................................... (11,147,719) (193,303,890) (16,192,391) (283,412,820)
---------- ------------ ---------- ------------
Net decrease..................................................... (239,178) $(10,750,065) (1,164,552) $(21,858,583)
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
------------------------ ------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------- ---------- ------------ ---------- ------------
Shares sold...................................................... 1,034,341 $ 17,020,574 854,412 $ 14,531,361
Shares issued in connection with reinvestment of distributions... 688,809 9,238,884 308,538 4,961,416
---------- ------------ ---------- ------------
1,723,150 26,259,458 1,162,950 19,492,777
Shares repurchased............................................... (1,675,941) (28,047,548) (1,309,880) (22,330,821)
---------- ------------ ---------- ------------
Net increase (decrease).......................................... 47,209 $ (1,788,090) (146,930) $ (2,838,044)
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
------------------------ ------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------- ---------- ------------ ---------- ------------
Shares sold...................................................... 1,924,783 $ 34,438,694 521,049 $ 8,987,637
Shares issued in connection with reinvestment of distributions... 25,931 366,391 10,546 175,598
---------- ------------ ---------- ------------
1,950,714 34,805,085 531,595 9,163,235
Shares repurchased............................................... (1,914,043) (34,788,806) (485,979) (8,473,821)
---------- ------------ ---------- ------------
Net increase..................................................... 36,671 $ 16,279 45,616 $ 689,414
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
</TABLE>
F16
<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, 1997, the Fund's
expenses were reduced by $9,076 under these arrangements.
6. SUBSEQUENT EVENT
On January 30, 1998, Liechtenstein Global Trust ("LGT") and AMVESCAP PLC
("AMVESCAP") entered into an agreement by which AMVESCAP will acquire LGT's
Asset Management Division, including Chancellor LGT Asset Management, Inc.
AMVESCAP is the holding company of the AIM and INVESCO asset management
businesses.
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
For its fiscal year ended December 31, 1997, the total amount of income received
by the Fund from sources within foreign countries and possessions of the United
States was approximately $.2723 per share (representing an approximate total of
$2,266,869). The total amount of taxes paid by the Fund to such countries was
approximately $.0331 per share (representing an approximate total of $275,397).
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$22,856,473 as a capital gain dividend for the fiscal year ended December 31,
1997.
Pursuant to Section 854 of the Internal Revenue Code, the Fund designates 5.14%
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, 1997.
F17
<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, 1997, 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, 1997 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, 1997, 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 17, 1998
F18
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (26.7%)
HSBC Holdings PLC ......................................... HK 180,100 $ 4,439,453 2.2
BANKS-MONEY CENTER
Nordbanken Holding AB-/- .................................. SWDN 772,120 4,367,701 2.1
OTHER FINANCIAL
Australia & New Zealand Banking Group Ltd. ................ AUSL 625,600 4,132,897 2.0
BANKS-REGIONAL
Royal & Sun Alliance Insurance Group PLC .................. UK 405,000 4,076,601 2.0
INSURANCE - MULTI-LINE
M & G Group PLC ........................................... UK 175,000 4,044,540 2.0
INVESTMENT MANAGEMENT
ForeningsSparbanken AB .................................... SWDN 145,230 3,302,595 1.6
BANKS-REGIONAL
Abbey National PLC ........................................ UK 182,400 3,267,626 1.6
BANKS-SUPER REGIONAL
ING Groep N.V. ............................................ NETH 76,097 3,205,744 1.6
OTHER FINANCIAL
National Westminster Bank PLC ............................. UK 162,000 2,692,020 1.3
BANKS-MONEY CENTER
Lloyds TSB Group PLC ...................................... UK 196,000 2,532,874 1.2
BANKS-REGIONAL
Unidanmark AS "A" ......................................... DEN 34,300 2,518,341 1.2
BANKS-REGIONAL
Axa - UAP ................................................. FR 32,050 2,479,968 1.2
INSURANCE - MULTI-LINE
Nichiei Co., Ltd. ......................................... JPN 22,800 2,428,506 1.2
OTHER FINANCIAL
Schroders PLC ............................................. UK 76,000 2,387,323 1.2
BANKS-MONEY CENTER
State Bank of India Ltd. - GDR{\/} ........................ IND 125,000 2,234,375 1.1
BANKS-REGIONAL
Schweizerischer Bankverein (Swiss Bank Corp.) ............. SWTZ 6,554 2,037,187 1.0
BANKS-MONEY CENTER
Banque Nationale de Paris ................................. FR 35,379 1,880,492 0.9
BANKS-MONEY CENTER
United Overseas Bank Ltd. - Foreign ....................... SING 222,300 1,235,000 0.6
BANKS-MONEY CENTER
PSIL Bangkok Bank Co., Ltd. (Entitlement Certificates){\/}
{=} ...................................................... THAI 320,000 588,800 0.3
OTHER FINANCIAL
Kookmin Bank .............................................. KOR 84,910 448,345 0.2
BANKS-MONEY CENTER
Union Bank of Switzerland - Bearer ........................ SWTZ 275 397,645 0.2
BANKS-MONEY CENTER
------------
54,698,033
------------
Services (20.0%)
EMI Group PLC ............................................. UK 578,000 4,821,412 2.4
LEISURE & TOURISM
Woolworths Ltd. ........................................... AUSL 1,279,000 4,274,721 2.1
RETAILERS-OTHER
</TABLE>
The accompanying notes are an integral part of the financial statements.
F19
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
Telecom Italia SpA ........................................ ITLY 609,900 $ 3,903,636 1.9
TELEPHONE NETWORKS
Telecom Corporation of New Zealand Ltd. ................... NZ 725,500 3,515,509 1.7
TELEPHONE NETWORKS
Reuters Holdings PLC ...................................... UK 305,000 3,330,460 1.6
BROADCASTING & PUBLISHING
Koninklijke Ahold N.V. .................................... NETH 117,919 3,077,109 1.5
RETAILERS-FOOD
EMAP PLC .................................................. UK 180,000 2,682,266 1.3
BROADCASTING & PUBLISHING
Great Universal Stores PLC ................................ UK 208,000 2,619,639 1.3
RETAILERS-OTHER
Telecomunicacoes Brasileiras S.A. (Telebras) - ADR{\/} .... BRZL 21,400 2,491,763 1.2
TELEPHONE NETWORKS
Ezaki Glico Co., Ltd. ..................................... JPN 370,000 2,390,115 1.2
RETAILERS-FOOD
Portugal Telecom S.A. - Registered ........................ PORT 46,400 2,153,565 1.0
TELEPHONE NETWORKS
Telecel - Comunicacaoes Pessoais S.A.-/- .................. PORT 17,619 1,877,764 0.9
WIRELESS COMMUNICATIONS
Vendex International N.V. ................................. NETH 31,755 1,752,853 0.9
RETAILERS-OTHER
Vodafone Group PLC ........................................ UK 165,928 1,196,098 0.6
WIRELESS COMMUNICATIONS
Telstra Corp. Ltd.-/- ..................................... AUSL 437,200 922,880 0.4
TELEPHONE NETWORKS
Fast Retailing Co., Ltd. .................................. JPN 44 705 --
RETAILERS-APPAREL
------------
41,010,495
------------
Energy (10.5%)
Petroleo Brasileiro S.A. (Petrobras) - ADR{\/} ............ BRZL 197,900 4,724,863 2.3
GAS PRODUCTION & DISTRIBUTION
Shell Transport & Trading Co., PLC ........................ UK 478,000 3,453,530 1.7
OIL
Viag AG ................................................... GER 5,792 3,120,627 1.5
ELECTRICAL & GAS UTILITIES
Total S.A. "B" ............................................ FR 28,580 3,110,393 1.5
OIL
Petroleum Geo-Services ASA-/- ............................. NOR 47,990 3,022,967 1.5
ENERGY EQUIPMENT & SERVICES
Ente Nazionale Idrocarburi (ENI) S.p.A. ................... ITLY 355,200 2,029,542 1.0
OIL
Coflexip - ADR{\/} ........................................ FR 35,230 1,955,265 1.0
ENERGY EQUIPMENT & SERVICES
------------
21,417,187
------------
</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, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Health Care (8.7%)
Roche Holding AG .......................................... SWTZ 543 $ 5,392,449 2.6
PHARMACEUTICALS
Novartis AG ............................................... SWTZ 1,709 2,773,059 1.4
PHARMACEUTICALS
Richter Gedeon Rt. - Reg S GDR{c} {\/} .................... HGRY 23,400 2,688,075 1.3
PHARMACEUTICALS
Schering AG ............................................... GER 26,700 2,575,730 1.3
PHARMACEUTICALS
Takeda Chemical Industries ................................ JPN 80,000 2,280,460 1.1
PHARMACEUTICALS
Astra AB "A" .............................................. SWDN 115,313 1,997,573 1.0
MEDICAL TECHNOLOGY & SUPPLIES
M.L. Laboratories PLC-/- .................................. UK 21,368 28,947 --
PHARMACEUTICALS
------------
17,736,293
------------
Materials/Basic Industry (7.1%)
Kimberly-Clark de Mexico, S.A. de C.V. "A" ................ MEX 829,400 4,060,647 2.0
PAPER/PACKAGING
Ciba Specialty Chemicals AG-/- ............................ SWTZ 31,880 3,797,837 1.9
CHEMICALS
Akzo Nobel N.V. ........................................... NETH 15,210 2,623,035 1.3
CHEMICALS
BOC Group PLC ............................................. UK 136,000 2,235,402 1.1
CHEMICALS
CRH PLC ................................................... UK 138,600 1,604,483 0.8
BUILDING MATERIALS & COMPONENTS
------------
14,321,404
------------
Consumer Non-Durables (6.0%)
Asahi Breweries Ltd. ...................................... JPN 210,000 3,057,471 1.5
BEVERAGES - ALCOHOLIC
Nestle S.A. - Registered .................................. SWTZ 1,771 2,654,196 1.3
FOOD
Amway Japan Ltd. .......................................... JPN 125,000 2,394,636 1.2
HOUSEHOLD PRODUCTS
Diageo PLC ................................................ UK 235,000 2,158,990 1.0
BEVERAGES - ALCOHOLIC
South African Breweries Ltd. .............................. SAFR 42,000 1,036,184 0.5
BEVERAGES - ALCOHOLIC
Benckiser N.V. "B"-/- ..................................... NETH 24,500 1,013,985 0.5
HOUSEHOLD PRODUCTS
------------
12,315,462
------------
Capital Goods (4.9%)
Alcatel Alsthom Compagnie Generale d'Electricite .......... FR 31,500 4,003,905 2.0
TELECOM EQUIPMENT
Canon, Inc. ............................................... JPN 120,000 2,795,402 1.4
OFFICE EQUIPMENT
</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, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Capital Goods (Continued)
Nokia AB "A" .............................................. FIN 28,300 $ 1,979,602 1.0
TELECOM EQUIPMENT
Kurita Water Industries Ltd. .............................. JPN 95,000 968,199 0.5
ENVIRONMENTAL
------------
9,747,108
------------
Multi-Industry/Miscellaneous (3.3%)
BBA Group PLC ............................................. UK 395,000 2,646,305 1.3
MULTI-INDUSTRY
Shanghai Industrial Holdings Ltd. ......................... HK 686,000 2,549,758 1.2
MULTI-INDUSTRY
Hutchison Whampoa ......................................... HK 279,000 1,749,939 0.8
MULTI-INDUSTRY
------------
6,946,002
------------
Technology (3.3%)
Cap Gemini N.V. ........................................... NETH 69,120 2,356,054 1.1
COMPUTERS & PERIPHERALS
Matsushita-Kotobuki Electronics Ltd. ...................... JPN 88,000 2,211,801 1.1
COMPUTERS & PERIPHERALS
Baan Company N.V.-/- {\/} ................................. NETH 65,360 2,156,880 1.0
SOFTWARE
Koei Co., Ltd. ............................................ JPN 43,300 205,716 0.1
SOFTWARE
------------
6,930,451
------------
Consumer Durables (1.9%)
Futuris Corp., Ltd. ....................................... AUSL 2,226,000 2,436,432 1.2
AUTO PARTS
Cheung Kong (Holdings) Ltd. ............................... HK 212,000 1,388,527 0.7
HOUSING
------------
3,824,959
------------ -----
TOTAL EQUITY INVESTMENTS (cost $171,991,305) ................ 188,947,394 92.4
------------ -----
</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, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust
Co., due January 2, 1998, for an effective yield of 5.80%,
collateralized by $20,795,000 U.S. Treasury Notes, 5.75%
due 12/31/98 (market value of collateral is $20,814,506,
including accrued interest).
(cost $20,403,000) ...................................... $ 20,403,000 10.0
------------ -----
TOTAL INVESTMENTS (cost $192,394,305) * .................... 209,350,394 102.4
Other Assets and Liabilities ................................ (4,900,370) (2.4)
------------ -----
NET ASSETS .................................................. $204,450,024 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
{c} Security issued under Regulation S. Rule 144A and additional
restrictions may apply in the resale of such securities.
{=} Each share of Entitlement Certificates represents one local share
of PSIL Bangkok Bank Co., Ltd.
* For Federal income tax purposes, cost is $193,457,059 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 27,995,828
Unrealized depreciation: (12,102,493)
-------------
Net unrealized appreciation: $ 15,893,335
-------------
-------------
</TABLE>
Abbreviations:
ADR--American Depositary Receipt
GDR--Global Depositary Receipt
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, 1997
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1997, was concentrated in
the following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
-----------------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ------ ------------- ----------
<S> <C> <C> <C>
Australia (AUSL/AUD) ................. 5.7 5.7
Brazil (BRZL/BRL) .................... 3.5 3.5
Denmark (DEN/DKK) .................... 1.2 1.2
Finland (FIN/FIM) .................... 1.0 1.0
France (FR/FRF) ...................... 6.6 6.6
Germany (GER/DEM) .................... 2.8 2.8
Hong Kong (HK/HKD) ................... 4.9 4.9
Hungary (HGRY/HUF) ................... 1.3 1.3
India (IND/INR) ...................... 1.1 1.1
Italy (ITLY/ITL) ..................... 2.9 2.9
Japan (JPN/JPY) ...................... 9.3 9.3
Korea (KOR/KRW) ...................... 0.2 0.2
Mexico (MEX/MXN) ..................... 2.0 2.0
Netherlands (NETH/NLG) ............... 7.9 7.9
New Zealand (NZ/NZD) ................. 1.7 1.7
Norway (NOR/NOK) ..................... 1.5 1.5
Portugal (PORT/PTE) .................. 1.9 1.9
Singapore (SING/SGD) ................. 0.6 0.6
South Africa (SAFR/ZAR) .............. 0.5 0.5
Sweden (SWDN/SEK) .................... 4.7 4.7
Switzerland (SWTZ/CHF) ............... 8.4 8.4
Thailand (THAI/THB) .................. 0.3 0.3
United Kingdom (UK/GBP) .............. 22.4 22.4
United States (US/USD) ............... 7.6 7.6
------ --- ----------
Total ............................... 92.4 7.6 100.0
------ --- ----------
------ --- ----------
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $204,450,024.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET VALUE CONTRACT DELIVERY UNREALIZED
CONTRACTS TO SELL: (U.S. DOLLARS) PRICE DATE APPRECIATION
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
Deutsche Marks.......................... 3,904,418 1.72492 2/23/98 $ 153,742
French Francs........................... 5,079,036 5.72800 2/6/98 245,685
French Francs........................... 1,998,309 5.77490 2/6/98 79,649
Japanese Yen............................ 4,528,736 120.70000 1/7/98 367,702
Japanese Yen............................ 770,321 118.82300 2/4/98 71,267
Japanese Yen............................ 8,992,174 122.40000 2/12/98 533,970
Swiss Francs............................ 5,872,843 1.42180 3/19/98 105,494
-------------- --------------
Total Contracts to Sell (Receivable
amount $32,703,346).................. 31,145,837 1,557,509
-------------- --------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 15.23%.
Total Open Forward Foreign Currency Contracts................................... $ 1,557,509
--------------
--------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F24
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $171,991,305) (Note 1).......................... $188,947,394
Repurchase agreement, at value and cost................................................... 20,403,000
U.S. currency.................................................................. $ 518
Foreign currencies (cost $2,476,057)........................................... 2,469,130 2,469,648
---------
Receivable for open forward foreign currency contracts (Note 1)........................... 1,557,509
Receivable for securities sold............................................................ 409,819
Dividends and dividend withholding tax reclaims receivable................................ 280,212
Receivable for Fund shares sold........................................................... 36,825
Interest receivable....................................................................... 3,502
-----------
Total assets............................................................................ 214,107,909
-----------
Liabilities:
Payable for Fund shares repurchased....................................................... 8,454,213
Payable for securities purchased.......................................................... 746,544
Payable for investment management and administration fees (Note 2)........................ 164,822
Payable for service and distribution expenses (Note 2).................................... 88,263
Payable for printing and postage expenses................................................. 67,943
Payable for transfer agent fees (Note 2).................................................. 45,803
Payable for professional fees............................................................. 32,257
Payable for registration and filing fees.................................................. 17,314
Payable for custodian fees................................................................ 16,939
Payable for Trustees' fees and expenses (Note 2).......................................... 5,340
Payable for fund accounting fees (Note 2)................................................. 2,463
Other accrued expenses.................................................................... 15,984
-----------
Total liabilities....................................................................... 9,657,885
-----------
Net assets.................................................................................. $204,450,024
-----------
-----------
Class A:
Net asset value and redemption price per share ($148,143,474 DIVIDED BY 19,320,762 shares
outstanding)............................................................................... $ 7.67
-----------
-----------
Maximum offering price per share (100/95.25 of $7.67) *..................................... $ 8.05
-----------
-----------
Class B:+
Net asset value and offering price per share ($56,022,575 DIVIDED BY 7,606,803 shares
outstanding)............................................................................... $ 7.36
-----------
-----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($283,975 DIVIDED
BY 36,797 shares outstanding).............................................................. $ 7.72
-----------
-----------
Net assets consist of:
Paid in capital (Note 4).................................................................. $182,591,933
Accumulated net realized gain on investments and foreign currency transactions............ 3,346,785
Net unrealized appreciation on translation of assets and liabilities in foreign
currencies............................................................................... 1,555,217
Net unrealized appreciation of investments................................................ 16,956,089
-----------
Total -- representing net assets applicable to capital shares outstanding................... $204,450,024
-----------
-----------
<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.
F25
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
STATEMENT OF OPERATIONS
Year ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of $720,333).............................. $ 4,147,307
Interest income........................................................................... 693,646
-----------
Total investment income................................................................. 4,840,953
-----------
Expenses:
Investment management and administration fees (Note 2).................................... 2,309,873
Service and distribution expenses: (Note 2)
Class A.................................................................... $ 607,400
Class B.................................................................... 625,899 1,233,299
-----------
Transfer agent fees (Note 2).............................................................. 645,736
Custodian fees............................................................................ 199,701
Professional fees......................................................................... 82,923
Registration and filing fees.............................................................. 78,995
Fund accounting fees (Note 2)............................................................. 59,416
Printing and postage expenses............................................................. 42,984
Trustees' fees and expenses (Note 2)...................................................... 13,387
Other expenses (Note 1)................................................................... 44,923
-----------
Total expenses before reductions........................................................ 4,711,237
-----------
Expense reductions (Notes 1 & 5)...................................................... (298,050)
-----------
Total net expenses...................................................................... 4,413,187
-----------
Net investment income....................................................................... 427,766
-----------
Net realized and unrealized gain (loss) on investments and foreign currencies:
(Note 1)
Net realized gain on investments............................................. 32,730,836
Net realized gain on foreign currency transactions........................... 5,375,057
-----------
Net realized gain during the year....................................................... 38,105,893
Net change in unrealized appreciation on translation of assets and
liabilities in foreign currencies........................................... 286,534
Net change in unrealized appreciation of investments......................... (14,668,685)
-----------
Net unrealized depreciation during the year............................................. (14,382,151)
-----------
Net realized and unrealized gain on investments and foreign currencies...................... 23,723,742
-----------
Net increase in net assets resulting from operations........................................ $24,151,508
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F26
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996
------------- -------------
Decrease in net assets
Operations:
Net investment income (loss)............................................. $ 427,766 $ (860,684)
Net realized gain on investments and foreign currency transactions....... 38,105,893 37,931,580
Net change in unrealized appreciation on translation of assets and
liabilities in foreign currencies....................................... 286,534 205,239
Net change in unrealized depreciation of investments..................... (14,668,685) (7,070,173)
------------- -------------
Net increase in net assets resulting from operations................... 24,151,508 30,205,962
------------- -------------
Class A:
Distributions to shareholders:
From net investment income............................................... (425,877) --
From net realized gain on investments.................................... (29,789,043) (20,343,820)
Class B:
Distributions to shareholders:
From net investment income............................................... -- --
From net realized gain on investments.................................... (10,955,953) (6,672,791)
Advisor Class:
Distributions to shareholders:
From net investment income............................................... (1,888) --
From net realized gain on investments.................................... (56,864) (46,941)
------------- -------------
Total distributions.................................................... (41,229,625) (27,063,552)
------------- -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested......................... 663,662,225 1,289,311,201
Decrease from capital shares repurchased................................. (703,298,069) (1,410,140,865)
------------- -------------
Net decrease from capital share transactions........................... (39,635,844) (120,829,664)
------------- -------------
Total decrease in net assets............................................... (56,713,961) (117,687,254)
Net assets:
Beginning of year........................................................ 261,163,985 378,851,239
------------- -------------
End of year *............................................................ $204,450,024 $ 261,163,985
------------- -------------
------------- -------------
* Includes undistributed net investment income of......................... $ -- $ --
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F27
<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,
----------------------------------------------------------
1997 (D) 1996 (D) 1995 1994 1993 (D)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 8.92 $ 9.08 $ 9.17 $ 11.02 $ 8.21
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... 0.03 (0.01) 0.03 (0.04) 0.03
Net realized and unrealized gain
(loss) on investments................ 0.69 0.84 0.32 (0.82) 2.78
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. 0.72 0.83 0.35 (0.86) 2.81
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ (0.03) -- -- (0.04) --
From net realized gain on
investments.......................... (1.94) (0.99) (0.24) (0.95) --
In excess of net realized gain on
investments.......................... -- -- (0.20) -- --
---------- ---------- ---------- ---------- ----------
Total distributions................. (1.97) (0.99) (0.44) (0.99) --
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 7.67 $ 8.92 $ 9.08 $ 9.17 $ 11.02
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 8.51% 9.28% 3.88% (7.78)% 34.23%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 148,143 $ 196,601 $ 308,816 $ 430,701 $ 523,397
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... 0.35% (0.14)% 0.24% (0.04)% 0.3%
Without expense reductions............ 0.22% (0.25)% 0.16% (0.09)% N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.69% 1.80% 1.70% 1.70% 1.80%
Without expense reductions............ 1.82% 1.91% 1.78% 1.75% N/A
Portfolio turnover rate++++............. 72% 74% 75% 96% 90%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0269 $ 0.0267 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.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F28
<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++
-------------------------------------------------------------
APRIL 1, 1993
YEAR ENDED DECEMBER 31, TO
---------------------------------------------- DECEMBER 31,
1997 (D) 1996 (D) 1995 1994 1993 (D)
---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 8.68 $ 8.91 $ 9.07 $ 10.98 $ 8.74
---------- ---------- ---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... (0.03) (0.07) (0.04) (0.10) (0.01)
Net realized and unrealized gain
(loss) on investments................ 0.65 0.83 0.32 (0.82) 2.25
---------- ---------- ---------- ---------- -------------
Net increase (decrease) from
investment operations.............. 0.62 0.76 0.28 (0.92) 2.24
---------- ---------- ---------- ---------- -------------
Distributions to shareholders:
From net investment income............ -- -- -- (0.04) --
From net realized gain on
investments.......................... (1.94) (0.99) (0.24) (0.95) --
In excess of net realized gain on
investments.......................... -- -- (0.20) -- --
---------- ---------- ---------- ---------- -------------
Total distributions................. (1.94) (0.99) (0.44) (0.99) --
---------- ---------- ---------- ---------- -------------
Net asset value, end of period.......... $ 7.36 $ 8.68 $ 8.91 $ 9.07 $ 10.98
---------- ---------- ---------- ---------- -------------
---------- ---------- ---------- ---------- -------------
Total investment return (c)............. 7.71% 8.67% 3.15% (8.36)% 25.63%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 56,023 $ 64,102 $ 69,654 $ 71,794 $ 30,745
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... (0.30)% (0.79)% (0.41)% (0.69)% (0.4)%(a)
Without expense reductions............ (0.43)% (0.90)% (0.49)% (0.74)% N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.34% 2.45% 2.35% 2.35% 2.4%(a)
Without expense reductions............ 2.47% 2.56% 2.43% 2.40% N/A
Portfolio turnover rate++++............. 72% 74% 75% 96% 90%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0269 $ 0.0267 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.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F29
<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>
ADVISOR CLASS+++
-------------------------------------
YEAR ENDED DECEMBER JUNE 1, 1995
31, TO
---------------------- DECEMBER 31,
1997 (D) 1996 (D) 1995
---------- ---------- -------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 9.01 $ 9.11 $ 8.49
---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... 0.07 0.02 0.03
Net realized and unrealized gain
(loss) on investments................ 0.65 0.87 1.03
---------- ---------- -------------
Net increase (decrease) from
investment operations.............. 0.72 0.89 1.06
---------- ---------- -------------
Distributions to shareholders:
From net investment income............ (0.07) -- --
From net realized gain on
investments.......................... (1.94) (0.99) (0.24)
In excess of net realized gain on
investments.......................... -- -- (0.20)
---------- ---------- -------------
Total distributions................. (2.01) (0.99) (0.44)
---------- ---------- -------------
Net asset value, end of period.......... $ 7.72 $ 9.01 $ 9.11
---------- ---------- -------------
---------- ---------- -------------
Total investment return (c)............. 8.53% 9.79% 12.56%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 284 $ 461 $ 381
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... 0.70% 0.21% 0.59%(a)
Without expense reductions............ 0.57% 0.10% 0.51%(a)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.34% 1.45% 1.35%(a)
Without expense reductions............ 1.47% 1.56% 1.43%(a)
Portfolio turnover rate++++............. 72% 74% 75%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0269 $ 0.0267 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.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F30
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
- --------------------------------------------------------------------------------
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 a diversified, open-end management investment company. The
Company has eight 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 preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Funds in the preparation of the
financial statements.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of 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 fluctuation
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 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.
F31
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
(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, 1997, stocks with an aggregate value of approximately
$13,985,826 were on loan to brokers. The loans were secured by cash collateral
of $14,709,765, 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, 1997,
the Fund received securities lending fees of $277,743. Fees received from
securities loaned were used to reduce the Fund's custodian and administrative
expenses.
(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.
(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
F32
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
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 ("GT Funds") advised and/or
administered by the Manager, has a line of credit with BankBoston and State
Street Bank & Trust Company. The arrangements with the banks allow the Fund and
the GT Funds to borrow an aggregate maximum amount of $250,000,000. The Fund is
limited to borrowing up to 33 1/3% of the value of the Fund's total assets.
For the year ended December 31, 1997, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
was $3,563,759 with a weighted average interest rate of 6.32%. Interest expense
for the year ended December 31, 1997 was $18,147, and is 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. 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. ("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, 1997, GT Global retained $11,166
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. During the year ended December
31, 1997, GT Global collected CDSC's in the amount of $6,515. 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, 1997, GT Global collected CDSC's
in the amount of $351,900. 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.
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.
Effective January 1, 1998, the Manager and GT Global have undertaken to limit
the Fund's expenses (exclusive of brokerage commissions, taxes, interest, and
extraordinary expenses) to the annual rate 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. This undertaking may be changed or eliminated in the
future.
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
F33
<PAGE>
GT GLOBAL INTERNATIONAL GROWTH FUND
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, 1997, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $157,702,649 and $236,135,186, respectively. There were
no purchases or sales of U.S. government obligations by the Fund during the
year.
4. CAPITAL SHARES
At December 31, 1997, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
----------------------------------- --------------------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- --------------- ------------------ ---------------- --------------------
<S> <C> <C> <C> <C>
Shares sold............................. 40,276,923 $ 372,306,238 122,327,179 $ 1,141,723,541
Shares issued in connection with
reinvestment of distributions......... 3,306,465 24,897,200 1,912,490 16,848,644
--------------- ------------------ ---------------- --------------------
43,583,388 397,203,438 124,239,669 1,158,572,185
Shares repurchased...................... (46,298,211) (433,072,839) (136,198,803) (1,274,970,792)
--------------- ------------------ ---------------- --------------------
Net decrease............................ (2,714,823) $ (35,869,401) (11,959,134) $ (116,398,607)
--------------- ------------------ ---------------- --------------------
--------------- ------------------ ---------------- --------------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
----------------------------------- --------------------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- --------------- ------------------ ---------------- --------------------
<S> <C> <C> <C> <C>
Shares sold............................. 25,433,444 $ 233,714,318 11,345,619 $ 103,852,840
Shares issued in connection with
reinvestment of distributions......... 1,311,193 9,480,349 678,796 5,819,941
--------------- ------------------ ---------------- --------------------
26,744,637 243,194,667 12,024,415 109,672,781
Shares repurchased...................... (26,525,397) (246,915,890) (12,451,843) (114,133,394)
--------------- ------------------ ---------------- --------------------
Net increase (decrease)................. 219,240 $ (3,721,223) (427,428) $ (4,460,613)
--------------- ------------------ ---------------- --------------------
--------------- ------------------ ---------------- --------------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
----------------------------------- --------------------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- --------------- ------------------ ---------------- --------------------
<S> <C> <C> <C> <C>
Shares sold............................. 2,419,305 $ 23,205,242 2,233,829 $ 21,033,137
Shares issued in connection with
reinvestment of distributions......... 7,757 58,878 3,723 33,098
--------------- ------------------ ---------------- --------------------
2,427,062 23,264,120 2,237,552 21,066,235
Shares repurchased...................... (2,441,431) (23,309,340) (2,228,201) (21,036,679)
--------------- ------------------ ---------------- --------------------
Net increase (decrease)................. (14,369) $ (45,220) 9,351 $ 29,556
--------------- ------------------ ---------------- --------------------
--------------- ------------------ ---------------- --------------------
</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, 1997, the Fund's
expenses were reduced by $20,307 under these arrangements.
6. SUBSEQUENT EVENT
On January 30, 1998, Liechtenstein Global Trust ("LGT") and AMVESCAP PLC
("AMVESCAP") entered into an agreement by which AMVESCAP will acquire LGT's
Asset Management Division, including Chancellor LGT Asset Management, Inc.
AMVESCAP is the holding company of the AIM and INVESCO asset management
businesses.
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
For its fiscal year ended December 31, 1997, the total amount of income received
by the Fund from sources within foreign countries and possessions of the United
States was approximately $.2321 per share (representing an approximate total of
$4,876,007). The total amount of taxes paid by the Fund to such countries was
approximately $.0343 per share (representing an approximate total of $720,333).
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$26,594,230 as a capital gain dividend for the fiscal year ended December 31,
1997.
F34
<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, 1997, 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, 1997 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, 1997, 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 17, 1998
F35
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (26.5%)
Hong Kong Telecommunications Ltd. ......................... HK 7,039,964 $ 14,491,505 7.5
TELEPHONE NETWORKS
Brambles Industries Ltd. .................................. AUSL 250,000 4,959,606 2.6
BUSINESS & PUBLIC SERVICES
Woolworths Ltd. ........................................... AUSL 1,440,000 4,812,822 2.5
RETAILERS-OTHER
Telekom Malaysia Bhd. ..................................... MAL 1,500,000 4,440,154 2.3
TELEPHONE NETWORKS
China Telecom (Hong Kong) Ltd.-/- ......................... HK 2,358,000 4,047,416 2.1
WIRELESS COMMUNICATIONS
Singapore Press Holdings Ltd. - Foreign ................... SING 302,000 3,786,215 2.0
BROADCASTING & PUBLISHING
Qantas Airways Ltd. ....................................... AUSL 1,770,000 3,132,009 1.6
TRANSPORTATION - AIRLINES
Genting Bhd. .............................................. MAL 1,109,000 2,783,205 1.4
LEISURE & TOURISM
Telstra Corp. Ltd. ........................................ AUSL 1,293,300 2,730,010 1.4
TELEPHONE NETWORKS
Telecom Corporation of New Zealand Ltd. ................... NZ 484,000 2,345,288 1.2
TELEPHONE NETWORKS
Philippine Long Distance Telephone Co. .................... PHIL 85,290 1,876,380 1.0
TELEPHONE - LONG DISTANCE
Mahanagar Telephone Nigam Ltd. - GDR-/- {\/} .............. IND 112,850 1,750,304 0.9
TELECOM - OTHER
------------
51,154,914
------------
Finance (22.1%)
Hang Seng Bank ............................................ HK 957,800 9,239,924 4.8
BANKS-MONEY CENTER
Australia & New Zealand Banking Group Ltd. ................ AUSL 1,370,000 9,050,621 4.7
BANKS-REGIONAL
Overseas-Chinese Banking Corp., Ltd. - Foreign ............ SING 1,139,000 6,632,323 3.4
BANKS-REGIONAL
Development Bank of Singapore - Foreign ................... SING 712,000 6,091,979 3.1
BANKS-MONEY CENTER
HSBC Holdings PLC ......................................... HK 180,000 4,436,988 2.3
BANKS-MONEY CENTER
United Overseas Bank Ltd. - Foreign ....................... SING 773,000 4,294,444 2.2
BANKS-MONEY CENTER
City Developments Ltd. .................................... SING 376,000 1,742,602 0.9
REAL ESTATE
State Bank of India Ltd. - GDR{\/} ........................ IND 76,100 1,360,288 0.7
BANKS-REGIONAL
------------
42,849,169
------------
Multi-Industry/Miscellaneous (10.7%)
Hutchison Whampoa ......................................... HK 1,500,000 9,408,273 4.9
MULTI-INDUSTRY
Pacific Dunlop Ltd. ....................................... AUSL 1,900,000 4,023,063 2.1
MULTI-INDUSTRY
</TABLE>
The accompanying notes are an integral part of the financial statements.
F36
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Multi-Industry/Miscellaneous (Continued)
Citic Pacific Ltd. ........................................ HK 950,000 $ 3,776,215 2.0
CONGLOMERATE
China Resources Enterprise Ltd. ........................... HK 1,500,000 3,349,035 1.7
CONGLOMERATE
------------
20,556,586
------------
Consumer Durables (10.0%)
New World Development Co., Ltd. ........................... HK 2,000,000 6,917,468 3.6
HOUSING
Cheung Kong (Holdings) Ltd. ............................... HK 942,000 6,169,775 3.2
HOUSING
Sun Hung Kai Properties Ltd. .............................. HK 880,000 6,132,800 3.2
HOUSING
------------
19,220,043
------------
Capital Goods (7.0%)
Cheung Kong Infrastructure Holdings ....................... HK 2,285,000 6,458,218 3.3
CONSTRUCTION
New World Infrastructure Ltd.-/- .......................... HK 2,000,000 4,504,098 2.3
CONSTRUCTION
Venture Manufacturing Ltd. ................................ SING 640,000 1,787,285 0.9
MACHINERY & ENGINEERING
Harbin Power Equipment Co., Ltd. .......................... HK 7,384,000 895,781 0.5
ELECTRICAL PLANT/EQUIPMENT
------------
13,645,382
------------
Materials/Basic Industry (6.9%)
Leighton Holdings Ltd. .................................... AUSL 1,365,000 4,766,695 2.5
BUILDING MATERIALS & COMPONENTS
Broken Hill Proprietary Co., Ltd. ......................... AUSL 370,000 3,435,077 1.8
MISC. MATERIALS & COMMODITIES
Pasminco Ltd. ............................................. AUSL 2,500,000 2,866,636 1.5
METALS - NON-FERROUS
QNI Ltd. .................................................. AUSL 3,160,000 2,099,941 1.1
METALS - NON-FERROUS
------------
13,168,349
------------
Energy (6.4%)
China Light & Power Co., Ltd. ............................. HK 1,059,000 5,876,879 3.0
ELECTRICAL & GAS UTILITIES
Hong Kong Electric Holdings Ltd. .......................... HK 968,000 3,679,112 1.9
ELECTRICAL & GAS UTILITIES
Manila Electric Co. "B" ................................... PHIL 500,000 1,675,000 0.9
ELECTRICAL & GAS UTILITIES
YTL Power International Bhd.-/- ........................... MAL 1,395,000 1,073,629 0.6
ENERGY SOURCES
------------
12,304,620
------------ -----
TOTAL EQUITY INVESTMENTS (cost $192,261,568) ................ 172,899,063 89.6
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
F37
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust
Co., due January 2, 1998, for an effective yield of 5.80%,
collateralized by $43,535,000 U.S. Treasury Notes, 5.75%
due 12/31/98 (market value of collateral is $43,575,836,
including accrued interest). (cost $42,717,000) .......... $ 42,717,000 22.1
------------ -----
TOTAL INVESTMENTS (cost $234,978,568) * .................... 215,616,063 111.7
Other Assets and Liabilities ................................ (22,500,776) (11.7)
------------ -----
NET ASSETS .................................................. $193,115,287 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $236,076,920 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 6,360,873
Unrealized depreciation: (26,821,730)
-------------
Net unrealized depreciation: $ (20,460,857)
-------------
-------------
</TABLE>
Abbreviation:
GDR--Global Depositary Receipt
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1997, was concentrated in
the following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
------------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ------ ------------- -----
<S> <C> <C> <C>
Australia (AUSL/AUD) ................. 21.8 21.8
Hong Kong (HK/HKD) ................... 46.3 46.3
India (IND/INR) ...................... 1.6 1.6
Malaysia (MAL/MYR) ................... 4.3 4.3
New Zealand (NZ/NZD) ................. 1.2 1.2
Philippines (PHIL/PHP) ............... 1.9 1.9
Singapore (SING/SGD) ................. 12.5 12.5
United States & Other (US/USD) ....... 10.4 10.4
------ ----- -----
Total ............................... 89.6 10.4 100.0
------ ----- -----
------ ----- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $193,115,287.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET VALUE
(U.S. CONTRACT DELIVERY UNREALIZED
CONTRACTS TO SELL: DOLLARS) PRICE DATE APPRECIATION
- ---------------------------------------- ------------ -------- -------- -------------
<S> <C> <C> <C> <C>
Australian Dollars...................... 20,137,999 1.44937 2/24/98 $ 1,160,974
Singapore Dollars....................... 9,970,754 1.67140 3/17/98 140,530
------------ -------------
Total Contracts to Sell (Receivable
amount $31,410,257).................. 30,108,753 1,301,504
------------ -------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 15.59%
Total Open Forward Foreign Currency
Contracts............................ $ 1,301,504
-------------
-------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F38
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $192,261,568) (Note 1)............................ $172,899,063
Repurchase agreement, at value and cost..................................................... 42,717,000
U.S. currency.................................................................... $ 896
Foreign currencies (cost $732,774)............................................... 741,289 742,185
---------
Receivable for open forward foreign currency contracts...................................... 1,301,504
Dividends and dividend withholding tax reclaims receivable.................................. 583,258
Receivable for Fund shares sold............................................................. 540,345
Receivable for securities sold.............................................................. 153,396
Miscellaneous receivable.................................................................... 15,083
Interest receivable......................................................................... 6,882
-----------
Total assets.............................................................................. 218,958,716
-----------
Liabilities:
Payable for Fund shares repurchased......................................................... 24,103,460
Payable for securities purchased............................................................ 1,206,279
Payable for investment management and administration fees (Note 2).......................... 163,399
Payable for service and distribution expenses (Note 2)...................................... 89,450
Payable for printing and postage expenses................................................... 86,532
Payable for transfer agent fees (Note 2).................................................... 84,573
Payable for professional fees............................................................... 38,325
Payable for custodian fees.................................................................. 33,378
Payable for registration and filing fees.................................................... 21,314
Payable for fund accounting fees (Note 2)................................................... 4,340
Payable for Trustees' fees and expenses (Note 2)............................................ 3,557
Other accrued expenses...................................................................... 8,822
-----------
Total liabilities......................................................................... 25,843,429
-----------
Net assets.................................................................................... $193,115,287
-----------
-----------
Class A:
Net asset value and redemption price per share ($135,807,280 DIVIDED BY 20,968,516 shares
outstanding)................................................................................. $ 6.48
-----------
-----------
Maximum offering price per share (100/95.25 of $6.48) *....................................... $ 6.80
-----------
-----------
Class B:+
Net asset value and offering price per share ($55,819,596 DIVIDED BY 8,895,437 shares
outstanding)................................................................................. $ 6.28
-----------
-----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($1,488,411 DIVIDED
BY 230,859 shares outstanding)............................................................... $ 6.45
-----------
-----------
Net assets consist of:
Paid in capital (Note 4).................................................................... $259,435,620
Accumulated net realized loss on investments and foreign currency transactions.............. (48,248,073)
Net unrealized appreciation on translation of assets and liabilities in foreign
currencies................................................................................. 1,290,245
Net unrealized depreciation of investments.................................................. (19,362,505)
-----------
Total -- representing net assets applicable to capital shares outstanding..................... $193,115,287
-----------
-----------
<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.
F39
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
STATEMENT OF OPERATIONS
Year ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income:
Dividend income (net of foreign withholding tax of $412,339) (Note 1).................... $ 7,263,612
Interest income.......................................................................... 674,416
------------
Total investment income................................................................ 7,938,028
------------
Expenses:
Investment management and administration fees (Note 2)................................... 3,736,264
Service and distribution expenses: (Note 2)
Class A.................................................................. $ 942,945
Class B.................................................................. 1,119,211 2,062,156
------------
Transfer agent fees (Note 2)............................................................. 1,240,570
Custodian fees........................................................................... 419,674
Registration and filing fees............................................................. 138,810
Printing and postage expenses............................................................ 103,925
Fund accounting fees (Note 2)............................................................ 99,321
Audit fees............................................................................... 58,095
Legal fees............................................................................... 35,175
Trustees' fees and expenses (Note 2)..................................................... 10,532
Other expenses (Note 1).................................................................. 213,092
------------
Total expenses before reductions....................................................... 8,117,614
------------
Expense reductions (Notes 1 & 5)..................................................... (1,043,893)
------------
Total net expenses..................................................................... 7,073,721
------------
Net investment income...................................................................... 864,307
------------
Net realized and unrealized loss on investments and foreign currencies: (Note
1)
Net realized loss on investments........................................... (48,105,392)
Net realized loss on foreign currency transactions......................... (548,158)
------------
Net realized loss during the year...................................................... (48,653,550)
Net change in unrealized appreciation on translation of assets and
liabilities in foreign currencies......................................... 1,286,651
Net change in unrealized appreciation of investments....................... (113,591,619)
------------
Net unrealized depreciation during the year............................................ (112,304,968)
------------
Net realized and unrealized loss on investments and foreign currencies..................... (160,958,518)
------------
Net decrease in net assets resulting from operations....................................... $(160,094,211)
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F40
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996
------------- -------------
Decrease in net assets
Operations:
Net investment income (loss)............................................. $ 864,307 $ (26,838)
Net realized gain (loss) on investments and foreign currency
transactions............................................................ (48,653,550) 94,284,448
Net change in unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies............................ 1,286,651 (106)
Net change in unrealized appreciation (depreciation) of investments...... (113,591,619) 36,883,188
------------- -------------
Net increase (decrease) in net assets resulting from operations........ (160,094,211) 131,140,692
------------- -------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income............................................... (427,042) --
From net realized gain on investments.................................... (15,152,919) (44,900,913)
Class B:
Distributions to shareholders: (Note 1)
From net investment income............................................... -- --
From net realized gain on investments.................................... (6,636,532) (18,754,735)
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income............................................... (13,447) --
From net realized gain on investments.................................... (179,887) (250,756)
------------- -------------
Total distributions.................................................... (22,409,827) (63,906,404)
------------- -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested......................... 1,697,761,633 5,158,291,909
Decrease from capital shares repurchased................................. (1,836,766,167) (5,226,446,724)
------------- -------------
Net decrease from capital share transactions........................... (139,004,534) (68,154,815)
------------- -------------
Total decrease in net assets............................................... (321,508,572) (920,527)
Net assets:
Beginning of year........................................................ 514,623,859 515,544,386
------------- -------------
End of year *............................................................ $ 193,115,287 $ 514,623,859
------------- -------------
------------- -------------
* Includes undistributed net investment income of......................... $ -- $ --
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F41
<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,
----------------------------------------------------------
1997 (D) 1996 (D) 1995 (D) 1994 1993
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 13.12 $ 12.47 $ 12.10 $ 15.86 $ 10.31
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... 0.05 0.02 0.11 0.02 (0.03)
Net realized and unrealized gain
(loss) on investments................ (5.84) 2.44 0.79 (3.15) 6.23
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. (5.79) 2.46 0.90 (3.13) 6.20
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ (0.03) -- (0.10) (0.01) --
From net realized gain on
investments.......................... (0.82) (1.81) (0.43) (0.55) (0.65)
In excess of net realized gain on
investments.......................... -- -- -- (0.07) --
---------- ---------- ---------- ---------- ----------
Total distributions................. (0.85) (1.81) (0.53) (0.63) (0.65)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 6.48 $ 13.12 $ 12.47 $ 12.10 $ 15.86
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (c)............. (44.24)% 20.04% 7.45% (19.73)% 60.61%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 135,807 $ 361,244 $ 383,722 $ 404,680 $ 498,898
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... 0.41% 0.17% 0.91% 0.11% (0.3)%
Without expense reductions............ 0.14% 0.04% 0.86% N/A N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.66% 1.86% 1.89% 1.81% 1.9%
Without expense reductions............ 1.93% 1.99% 1.94% N/A N/A
Portfolio turnover rate++++............. 80% 93% 63% 87% 117%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0066 $ 0.0032 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 period.
+ 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 and average commission rates are calculated on the
basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F42
<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++
-------------------------------------------------------------
APRIL 1, 1993
YEAR ENDED DECEMBER 31, TO
---------------------------------------------- DECEMBER 31,
1997 (D) 1996 (D) 1995 (D) 1994 1993
---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.80 $ 12.29 $ 11.96 $ 15.79 $ 11.27
---------- ---------- ---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... (0.03) (0.06) 0.03 (0.06) (0.10)
Net realized and unrealized gain
(loss) on investments................ (5.67) 2.38 0.75 (3.15) 5.27
---------- ---------- ---------- ---------- -------------
Net increase (decrease) from
investment operations.............. (5.70) 2.32 0.78 (3.21) 5.17
---------- ---------- ---------- ---------- -------------
Distributions to shareholders:
From net investment income............ -- -- (0.02) -- --
From net realized gain on
investments.......................... (0.82) (1.81) (0.43) (0.55) (0.65)
In excess of net realized gain on
investments.......................... -- -- -- (0.07) --
---------- ---------- ---------- ---------- -------------
Total distributions................. (0.82) (1.81) (0.45) (0.62) (0.65)
---------- ---------- ---------- ---------- -------------
Net asset value, end of period.......... $ 6.28 $ 12.80 $ 12.29 $ 11.96 $ 15.79
---------- ---------- ---------- ---------- -------------
---------- ---------- ---------- ---------- -------------
Total investment return (c)............. (44.65)% 19.28% 6.54% (20.30)% 46.30%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 55,820 $ 151,805 $ 130,887 $ 120,171 $ 72,122
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... (0.24)% (0.48)% 0.26% (0.54)% (0.9)%(a)
Without expense reductions............ (0.51)% (0.61)% 0.21% N/A N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.31% 2.51% 2.54% 2.46% 2.5%(a)
Without expense reductions............ 2.58% 2.64% 2.59% N/A N/A
Portfolio turnover rate++++............. 80% 93% 63% 87% 117%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0066 $ 0.0032 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 period.
+ 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 and average commission rates are calculated on the
basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F43
<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>
ADVISOR CLASS+++
-------------------------------------
YEAR ENDED DECEMBER JUNE 1, 1995
31, TO
---------------------- DECEMBER 31,
1997 (D) 1996 (D) 1995 (D)
---------- ---------- -------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 13.16 $ 12.45 $ 12.89
---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... 0.08 0.07 0.09
Net realized and unrealized gain
(loss) on investments................ (5.89) 2.45 0.05
---------- ---------- -------------
Net increase (decrease) from
investment operations.............. (5.81) 2.52 0.14
---------- ---------- -------------
Distributions to shareholders:
From net investment income............ (0.08) -- (0.15)
From net realized gain on
investments.......................... (0.82) (1.81) (0.43)
In excess of net realized gain on
investments.......................... -- -- --
---------- ---------- -------------
Total distributions................. (0.90) (1.81) (0.58)
---------- ---------- -------------
Net asset value, end of period.......... $ 6.45 $ 13.16 $ 12.45
---------- ---------- -------------
---------- ---------- -------------
Total investment return (c)............. (44.26)% 20.56% 1.07%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 1,488 $ 1,575 $ 935
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... 0.76% 0.52% 1.26%
Without expense reductions............ 0.49% 0.39% 1.21%
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.31% 1.51% 1.54%(a)
Without expense reductions............ 1.58% 1.64% 1.59%(a)
Portfolio turnover rate++++............. 80% 93% 63%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0066 $ 0.0032 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 period.
+ 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 and average commission rates are calculated on the
basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F44
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
- --------------------------------------------------------------------------------
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 a diversified, open-end management investment company. The
Company has eight 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 preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Funds in the preparation of the
financial statements.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
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 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
F45
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
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, 1997, stocks with an aggregate value of approximately $9,252,981
were on loan to brokers. The loans were secured by cash collateral of
$9,953,563, 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, 1997,
the Fund received securities lending fees of $756,559 which were used to reduce
custodian and administrative expenses.
(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
$3,081,427 which expires in 2005.
(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.
F46
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
(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 ("GT Funds") advised and/or
administered by the Manager, has a line of credit with BankBoston and State
Street Bank & Trust Company. The arrangements with the banks allow the Fund and
the GT Funds to borrow an aggregate maximum amount of $250,000,000. The Fund is
limited to borrowing up to 33 1/3% of the value of the Fund's total assets.
For the year ended December 31, 1997, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
was $8,681,157 with a weighted average interest rate of 6.32%. Interest expense
for the year ended December 31, 1997, was $193,664, and is 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. 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, 1997, GT Global retained $21,605
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 $42,069 for the year ended December 31, 1997. GT Global also makes
ongoing shareholder servicing and trail commission payments to dealers whose
clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSCs, in accordance with the Fund's current
prospectus. For the year ended December 31, 1997, GT Global collected CDSCs in
the amount of $894,766. 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.
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.
Effective January 1, 1998, the Manager and GT Global have undertaken to limit
the Fund's expenses (exclusive of brokerage commissions, taxes, interest, and
extraordinary expenses) to the annual rate 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. This undertaking may be changed or eliminated in the
future.
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
F47
<PAGE>
GT GLOBAL NEW PACIFIC GROWTH FUND
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, 1997, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $290,053,136 and $442,944,807, respectively. There were
no purchases or sales of U.S. government obligations during the year.
4. CAPITAL SHARES
At December 31, 1997, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
-------------------------- --------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold................................................. 110,903,994 $1,213,154,082 285,658,529 $3,783,795,259
Shares issued in connection with reinvestment of
distributions............................................. 2,058,341 13,577,615 2,934,435 37,677,963
----------- ------------- ----------- -------------
112,962,335 1,226,731,697 288,592,964 3,821,473,222
Shares repurchased.......................................... (119,529,679) (1,324,924,362) (291,833,470) (3,895,314,036)
----------- ------------- ----------- -------------
Net decrease................................................ (6,567,344) $ (98,192,665) (3,240,506) $ (73,840,814)
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
-------------------------- --------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ ----------- ------------- ----------- -------------
Shares sold................................................. 37,888,593 $ 423,842,967 96,986,480 $1,263,551,513
Shares issued in connection with reinvestment of
distributions............................................. 856,732 5,478,474 1,241,219 15,565,185
----------- ------------- ----------- -------------
38,745,325 429,321,441 98,227,699 1,279,116,698
Shares repurchased.......................................... (41,705,872) (470,119,000) (97,020,480) (1,273,495,413)
----------- ------------- ----------- -------------
Net increase (decrease)..................................... (2,960,547) $ (40,797,559) 1,207,219 $ 5,621,285
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
-------------------------- --------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ ----------- ------------- ----------- -------------
Shares sold................................................. 4,493,439 $ 41,526,678 4,311,411 $ 57,463,326
Shares issued in connection with reinvestment of
distributions............................................. 25,872 181,817 18,530 238,663
----------- ------------- ----------- -------------
4,519,311 41,708,495 4,329,941 57,701,989
Shares repurchased.......................................... (4,408,085) (41,722,805) (4,285,455) (57,637,275)
----------- ------------- ----------- -------------
Net increase (decrease)..................................... 111,226 $ (14,310) 44,486 $ 64,714
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</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, 1997, the Fund's
expenses were reduced by $287,334 under these arrangements.
6. SUBSEQUENT EVENT
On January 30, 1998, Liechtenstein Global Trust ("LGT") and AMVESCAP PLC
("AMVESCAP") entered into an agreement by which AMVESCAP will acquire LGT's
Asset Management Division, including Chancellor LGT Asset Management, Inc.
AMVESCAP is the holding company of the AIM and INVESCO asset management
businesses.
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
For its fiscal year ended December 31, 1997, the total amount of income received
by the Fund from sources within foreign countries and possessions of the United
States was approximately $.2886 per share (representing an approximate total of
$7,701,422). The total amount of taxes paid by the Fund to such countries was
approximately $.0155 per share (representing an approximate total of $412,339).
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$20,539,592 as a capital gain dividend for the fiscal year ended December 31,
1997.
F48
<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, 1997, 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, 1997 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, 1997, 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 17, 1998
F49
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (29.2%)
ING Groep N.V. ............................................ NETH 449,610 $ 18,940,753 3.9
OTHER FINANCIAL
ForeningsSparbanken AB .................................... SWDN 732,160 16,649,643 3.4
BANKS-REGIONAL
Schweizerischer Bankverein (Swiss Bank Corp.) ............. SWTZ 44,940 13,968,753 2.8
BANKS-MONEY CENTER
General Accident PLC ...................................... UK 729,800 12,642,677 2.6
INSURANCE - PROPERTY-CASUALTY
Axa - UAP ................................................. FR 161,800 12,519,774 2.6
INSURANCE - MULTI-LINE
Lloyds TSB Group PLC ...................................... UK 949,000 12,263,760 2.5
BANKS-REGIONAL
National Westminster Bank PLC ............................. UK 658,000 10,934,253 2.2
BANKS-MONEY CENTER
Banque Nationale de Paris ................................. FR 203,000 10,790,014 2.2
BANKS-MONEY CENTER
Unidanmark AS "A" ......................................... DEN 136,300 10,007,284 2.0
BANKS-REGIONAL
Svenska Handelsbanken, Inc. "A" Free ...................... SWDN 288,900 9,991,061 2.0
BANKS-MONEY CENTER
Nordbanken Holding AB ..................................... SWDN 1,344,033 7,602,878 1.5
OTHER FINANCIAL
Abbey National PLC ........................................ UK 419,253 7,510,756 1.5
BANKS-SUPER REGIONAL
------------
143,821,606
------------
Energy (14.3%)
Petroleum Geo-Services ASA-/- ............................. NOR 249,800 15,735,300 3.2
ENERGY EQUIPMENT & SERVICES
Total S.A. "B" ............................................ FR 118,000 12,842,070 2.6
OIL
Shell Transport & Trading Co., PLC ........................ UK 1,534,000 11,083,087 2.3
OIL
Viag AG ................................................... GER 19,990 10,770,259 2.2
ELECTRICAL & GAS UTILITIES
Ente Nazionale Idrocarburi (ENI) S.p.A. ................... ITLY 1,790,700 10,231,703 2.1
OIL
Coflexip - ADR{\/} ........................................ FR 171,610 9,524,355 1.9
ENERGY EQUIPMENT & SERVICES
------------
70,186,774
------------
Services (14.0%)
VNU (Verenigde Nederlandse Uitgeversbedrijven Verenigd
Bezit) ................................................... NETH 573,300 16,176,381 3.3
BROADCASTING & PUBLISHING
Telecom Italia SpA ........................................ ITLY 2,465,000 15,777,115 3.2
TELEPHONE NETWORKS
Vodafone Group PLC ........................................ UK 1,650,000 11,894,089 2.4
WIRELESS COMMUNICATIONS
Telecel - Comunicacaoes Pessoais S.A.-/- .................. PORT 103,383 11,018,156 2.2
WIRELESS COMMUNICATIONS
</TABLE>
The accompanying notes are an integral part of the financial statements.
F50
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
Koninklijke Ahold N.V. .................................... NETH 386,359 $ 10,082,079 2.1
RETAILERS-FOOD
Kuoni Reisen Holdings "B" - Registered .................... SWTZ 1,061 3,977,116 0.8
LEISURE & TOURISM
------------
68,924,936
------------
Health Care (10.6%)
Roche Holding AG .......................................... SWTZ 1,600 15,889,361 3.2
PHARMACEUTICALS
Nycomed Amersham PLC ...................................... UK 253,300 9,408,286 1.9
PHARMACEUTICALS
Genset: ................................................... FR -- -- 1.8
BIOTECHNOLOGY
ADR-/- {\/} ............................................. -- 393,667 7,774,923 --
Common-/- ............................................... -- 14,900 891,252 --
Glaxo Wellcome PLC ........................................ UK 363,639 8,598,361 1.8
PHARMACEUTICALS
Schering AG ............................................... GER 63,630 6,138,340 1.3
PHARMACEUTICALS
Incentive AB "A" .......................................... SWDN 15,760 1,419,659 0.3
MEDICAL TECHNOLOGY & SUPPLIES
Nearmedic Ltd.-/- ......................................... ASTRI 618,200 1,272,722 0.3
PHARMACEUTICALS
M.L. Laboratories PLC-/- .................................. UK 141,507 191,697 --
PHARMACEUTICALS
------------
51,584,601
------------
Technology (7.6%)
Baan Company N.V.-/- {\/} ................................. NETH 478,400 15,787,200 3.2
SOFTWARE
TT Tieto Oy "B" ........................................... FIN 101,828 11,460,254 2.3
COMPUTERS & PERIPHERALS
Misys PLC ................................................. UK 337,828 10,151,482 2.1
SOFTWARE
------------
37,398,936
------------
Consumer Non-Durables (7.2%)
Cadbury Schweppes PLC ..................................... UK 1,236,700 12,458,382 2.5
BEVERAGES - NON-ALCOHOLIC
Nestle S.A. - Registered .................................. SWTZ 8,100 12,139,463 2.5
FOOD
Gucci Group - NY Registered Shares{\/} .................... NETH 260,550 10,910,531 2.2
TEXTILES & APPAREL
------------
35,508,376
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F51
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Capital Goods (7.1%)
Nokia AB "A" .............................................. FIN 269,400 $ 18,844,695 3.8
TELECOM EQUIPMENT
Alcatel Alsthom Compagnie Generale d'Electricite .......... FR 127,200 16,168,148 3.3
TELECOM EQUIPMENT
------------
35,012,843
------------
Materials/Basic Industry (6.0%)
Ciba Specialty Chemicals AG-/- ............................ SWTZ 166,000 19,775,431 4.0
CHEMICALS
Akzo Nobel N.V. ........................................... NETH 55,500 9,571,231 2.0
CHEMICALS
------------
29,346,662
------------ -----
TOTAL EQUITY INVESTMENTS (cost $412,654,262) ................ 471,784,734 96.0
------------ -----
<CAPTION>
NO. OF VALUE % OF NET
WARRANTS COUNTRY WARRANTS (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Union Bank of Switzerland Roche Warrants "C", expire 7/98
(cost $3,431,328) ........................................ SWTZ 481,700 3,644,246 0.8
------------ -----
PHARMACEUTICALS
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust
Co., due January 2, 1998, for an effective yield of 5.80%,
collateralized by $15,920,000 U.S. Treasury Notes, 5.75%
due 12/31/98 (market value of collateral is $15,934,933,
including accrued interest). (cost $15,622,000) .......... 15,622,000 3.2
------------ -----
TOTAL INVESTMENTS (cost $431,707,590) * .................... 491,050,980 100.0
Other Assets and Liabilities ................................ 202,831 --
------------ -----
NET ASSETS .................................................. $491,253,811 100.0
------------ -----
------------ -----
</TABLE>
- --------------
{\/} U.S. currency denominated.
-/- Non-income producing security.
* For Federal income tax purposes, cost is $431,707,590 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 65,811,221
Unrealized depreciation: (6,467,831)
-------------
Net unrealized appreciation: $ 59,343,390
-------------
-------------
</TABLE>
Abbreviation:
ADR--American Depositary Receipt
The accompanying notes are an integral part of the financial statements.
F52
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1997, was concentrated in
the following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
-------------------------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY WARRANTS & OTHER TOTAL
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Austria (ASTRI/ATS) .................. 0.3 0.3
Denmark (DEN/DKK) .................... 2.0 2.0
Finland (FIN/FIM) .................... 6.1 6.1
France (FR/FRF) ...................... 14.4 14.4
Germany (GER/DEM) .................... 3.5 3.5
Italy (ITLY/ITL) ..................... 5.3 5.3
Netherlands (NETH/NLG) ............... 16.7 16.7
Norway (NOR/NOK) ..................... 3.2 3.2
Portugal (PORT/PTE) .................. 2.2 2.2
Sweden (SWDN/SEK) .................... 7.2 7.2
Switzerland (SWTZ/CHF) ............... 13.3 0.8 14.1
United Kingdom (UK/GBP) .............. 21.8 21.8
United States (US/USD) ............... 3.2 3.2
------ ----- ----- -----
Total ............................... 96.0 0.8 3.2 100.0
------ ----- ----- -----
------ ----- ----- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $491,253,811.
The accompanying notes are an integral part of the financial statements.
F53
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $431,707,590) (Note 1).......................... $491,050,980
U.S. currency................................................................. $ 317
Foreign currencies (cost $18,334,892)......................................... 18,199,857 18,200,174
----------
Receivable for securities sold............................................................ 19,572,716
Receivable for Fund shares sold........................................................... 1,953,987
Dividends and dividend withholding tax reclaims receivable................................ 186,252
Interest receivable....................................................................... 2,517
-----------
Total assets............................................................................ 530,966,626
-----------
Liabilities:
Payable for Fund shares repurchased....................................................... 33,388,567
Payable for securities purchased.......................................................... 5,169,750
Payable for investment management and administration fees (Note 2)........................ 415,152
Payable for transfer agent fees (Note 2).................................................. 256,798
Payable for service and distribution expenses (Note 2).................................... 195,095
Payable for printing and postage expenses................................................. 113,320
Payable for custodian fees................................................................ 26,846
Payable for registration and filing fees.................................................. 17,663
Payable for professional fees............................................................. 17,272
Payable for fund accounting fees (Note 2)................................................. 10,165
Payable for Trustees' fees and expenses (Note 2).......................................... 3,013
Other accrued expenses.................................................................... 99,174
-----------
Total liabilities....................................................................... 39,712,815
-----------
Net assets.................................................................................. $491,253,811
-----------
-----------
Class A:
Net asset value and redemption price per share ($407,003,587 DIVIDED BY 28,420,611 shares
outstanding)............................................................................... $ 14.32
-----------
-----------
Maximum offering price per share (100/95.25 of $14.32) *.................................... $ 15.03
-----------
-----------
Class B:+
Net asset value and offering price per share ($81,010,803 DIVIDED BY 5,763,649 shares
outstanding)............................................................................... $ 14.06
-----------
-----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($3,239,421
DIVIDED BY 224,847 shares outstanding)..................................................... $ 14.41
-----------
-----------
Net assets consist of:
Paid in capital (Note 4).................................................................. $427,588,285
Accumulated net realized gain on investments and foreign currency transactions............ 4,527,954
Net unrealized depreciation on translation of assets and liabilities in foreign
currencies............................................................................... (205,818)
Net unrealized appreciation of investments................................................ 59,343,390
-----------
Total -- representing net assets applicable to capital shares outstanding................... $491,253,811
-----------
-----------
<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.
F54
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
STATEMENT OF OPERATIONS
Year ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of $1,472,615)............................ $ 6,804,153
Interest income........................................................................... 1,008,013
-----------
Total investment income................................................................. 7,812,166
-----------
Expenses:
Investment management and administration fees (Note 2).................................... 5,228,246
Service and distribution expenses: (Note 2)
Class A.................................................................... $ 1,554,410
Class B.................................................................... 910,363 2,464,773
-----------
Transfer agent fees (Note 2).............................................................. 1,655,972
Custodian fees............................................................................ 433,551
Fund accounting fees (Note 2)............................................................. 138,072
Registration and filing fees.............................................................. 126,714
Printing and postage expenses............................................................. 112,239
Audit fees................................................................................ 38,142
Legal fees................................................................................ 20,986
Trustees' fees and expenses (Note 2)...................................................... 8,387
Other expenses (Note 1)................................................................... 497,313
-----------
Total expenses before reductions........................................................ 10,724,395
-----------
Expense reductions (Notes 1 & 5)...................................................... (748,353)
-----------
Total net expenses...................................................................... 9,976,042
-----------
Net investment loss......................................................................... (2,163,876)
-----------
Net realized and unrealized gain (loss) on investments and foreign currencies:
(Note 1)
Net realized gain on investments............................................. 107,873,761
Net realized loss on foreign currency transactions........................... (728,823)
-----------
Net realized gain during the year....................................................... 107,144,938
Net change in unrealized depreciation on translation of assets and
liabilities in foreign currencies........................................... (237,701)
Net change in unrealized appreciation of investments......................... (31,970,694)
-----------
Net unrealized depreciation during the year............................................. (32,208,395)
-----------
Net realized and unrealized gain on investments and foreign currencies...................... 74,936,543
-----------
Net increase in net assets resulting from operations........................................ $72,772,667
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F55
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996
-------------- --------------
Decrease in net assets
Operations:
Net investment loss...................................................... $ (2,163,876) $ (1,938,485)
Net realized gain on investments and foreign currency transactions....... 107,144,938 86,541,400
Net change in unrealized depreciation on translation of assets and
liabilities in foreign currencies....................................... (237,701) (218,619)
Net change in unrealized appreciation (depreciation) of investments...... (31,970,694) 23,691,090
-------------- --------------
Net increase in net assets resulting from operations................... 72,772,667 108,075,386
-------------- --------------
Class A:
Distributions to shareholders: (Note 1)
From net realized gain on investments.................................... (368,261) (4,360,146)
Class B:
Distributions to shareholders: (Note 1)
From net realized gain on investments.................................... (76,445) (815,186)
Advisor Class: (Note 1)
Distributions to shareholders:
From net realized gain on investments.................................... (1,099) (29,590)
-------------- --------------
Total distributions.................................................... (445,805) (5,204,922)
-------------- --------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested......................... 2,415,165,409 3,224,591,371
Decrease from capital shares repurchased................................. (2,538,538,626) (3,342,278,802)
-------------- --------------
Net decrease from capital share transactions........................... (123,373,217) (117,687,431)
-------------- --------------
Total decrease in net assets............................................... (51,046,355) (14,816,967)
Net assets:
Beginning of year........................................................ 542,300,166 557,117,133
-------------- --------------
End of year *............................................................ $ 491,253,811 $ 542,300,166
-------------- --------------
-------------- --------------
* Includes undistributed net investment income of......................... $ -- $ --
-------------- --------------
-------------- --------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F56
<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,
----------------------------------------------------------
1997 (D) 1996 (D) 1995 (D) 1994 (D) 1993 (D)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.89 $ 10.88 $ 10.03 $ 10.84 $ 8.51
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... (0.04) (0.03) 0.04 0.06 0.05
Net realized and unrealized gain
(loss) on investments................ 1.48 2.16 0.95 (0.69) 2.36
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. 1.44 2.13 0.99 (0.63) 2.41
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ -- -- (0.10) (0.05) (0.06)
From net realized gain on
investments.......................... (0.01) (0.12) (0.04) -- --
In excess of net investment income.... -- -- -- -- (0.02)
In excess of net realized gain on
investments.......................... -- -- -- (0.13) --
---------- ---------- ---------- ---------- ----------
Total distributions................. (0.01) (0.12) (0.14) (0.18) (0.08)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 14.32 $ 12.89 $ 10.88 $ 10.03 $ 10.84
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 11.20% 19.61% 9.86% (5.8)% 28.3%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 407,004 $ 453,792 $ 483,375 $ 646,313 $ 854,701
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... (0.29)% (0.26)% 0.38% 0.61% 0.6%
Without expense reductions............ (0.43)% (0.32)% 0.32% 0.53% N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.75% 1.82% 1.83% 1.73% 1.9%
Without expense reductions............ 1.89% 1.88% 1.89% 1.81% N/A
Portfolio turnover rate++++............. 107% 123% 108% 91% 67%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0533 $ 0.0277 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 period.
+ 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.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F57
<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++
-------------------------------------------------------------
APRIL 1, 1993
YEAR ENDED DECEMBER 31, TO
---------------------------------------------- DECEMBER 31,
1997 (D) 1996 (D) 1995 (D) 1994 (D) 1993 (D)
---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.73 $ 10.81 $ 9.97 $ 10.79 $ 9.02
---------- ---------- ---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... (0.13) (0.11) (0.03) -- --
Net realized and unrealized gain
(loss) on investments................ 1.47 2.15 0.94 (0.69) 1.85
---------- ---------- ---------- ---------- -------------
Net increase (decrease) from
investment operations.............. 1.34 2.04 0.91 (0.69) 1.85
---------- ---------- ---------- ---------- -------------
Distributions to shareholders:
From net investment income............ -- -- (0.03) -- (0.06)
From net realized gain on
investments.......................... (0.01) (0.12) (0.04) -- --
In excess of net investment income.... -- -- -- -- (0.02)
In excess of net realized gain on
investments.......................... -- -- -- (0.13) --
---------- ---------- ---------- ---------- -------------
Total distributions................. (0.01) (0.12) (0.07) (0.13) (0.08)
---------- ---------- ---------- ---------- -------------
Net asset value, end of period.......... $ 14.06 $ 12.73 $ 10.81 $ 9.97 $ 10.79
---------- ---------- ---------- ---------- -------------
---------- ---------- ---------- ---------- -------------
Total investment return (c)............. 10.55% 18.79% 9.20% (6.38)% 20.5%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 81,011 $ 87,092 $ 73,025 $ 81,602 $ 34,048
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... (0.94)% (0.91)% (0.27)% (0.04)% (0.1)%(a)
Without expense reductions............ (1.08)% (0.97)% (0.33)% (0.12)% N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.40% 2.47% 2.48% 2.38% 2.6%(a)
Without expense reductions............ 2.54% 2.53% 2.54% 2.46% N/A
Portfolio turnover rate++++............. 107% 123% 108% 91% 67%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0533 $ 0.0277 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 period.
+ 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.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F58
<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>
ADVISOR CLASS+++
-------------------------------------
YEAR ENDED DECEMBER JUNE 1, 1995
31, TO
---------------------- DECEMBER 31,
1997 (D) 1996 (D) 1995 (D)
---------- ---------- -------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.92 $ 10.85 $ 10.24
---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... 0.01 0.01 0.08
Net realized and unrealized gain
(loss) on investments................ 1.49 2.18 0.71
---------- ---------- -------------
Net increase (decrease) from
investment operations.............. 1.50 2.19 0.79
---------- ---------- -------------
Distributions to shareholders:
From net investment income............ -- -- (0.14)
From net realized gain on
investments.......................... (0.01) (0.12) (0.04)
In excess of net investment income.... -- -- --
In excess of net realized gain on
investments.......................... -- -- --
---------- ---------- -------------
Total distributions................. (0.01) (0.12) (0.18)
---------- ---------- -------------
Net asset value, end of period.......... $ 14.41 $ 12.92 $ 10.85
---------- ---------- -------------
---------- ---------- -------------
Total investment return (c)............. 11.64% 20.21% 7.75%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 3,239 $ 1,416 $ 718
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... 0.06% 0.09% 0.73%(a)
Without expense reductions............ (0.08)% 0.03% 0.67%(a)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.40% 1.47% 1.48%(a)
Without expense reductions............ 1.54% 1.53% 1.54%(a)
Portfolio turnover rate++++............. 107% 123% 108%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0533 $ 0.0277 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 period.
+ 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.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F59
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
NOTES TO
FINANCIAL STATEMENTS
December 31, 1997
- --------------------------------------------------------------------------------
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 preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Funds in the preparation of the
financial statements.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of 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 fluctuation
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 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.
F60
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
(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 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 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 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, 1997, stocks with an aggregate value of approximately
$19,959,963 were on loan to brokers. The loans were secured by cash collateral
of $20,701,800, 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, 1997,
the Fund received securities lending fees of $541,865. Fees received from
securities loaned were used to reduce the Fund's custodian and administrative
expenses.
(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.
(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
F61
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
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 ("GT Funds") advised and/or
administered by the Manager, has a line of credit with BankBoston and State
Street Bank & Trust Company. The arrangements with the banks allow the Fund and
the GT Funds to borrow an aggregate maximum amount of $250,000,000. The Fund is
limited to borrowing up to 33 1/3% of the value of the Fund's total assets.
For the year ended December 31, 1997, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
was $21,092,373 with a weighted average interest rate of 6.31%. Interest expense
for the year ended December 31, 1997, was $465,718, 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. 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. ("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, 1997, GT Global retained $4,461
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 $15,594 for the year ended December 31, 1997. GT Global also makes
ongoing shareholder servicing and trail commission payments to dealers whose
clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSC's, in accordance with the Fund's current
prospectus. During the year ended December 31, 1997, GT Global collected CDSC's
in the amount of $501,201. 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.
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.
Effective January 1, 1998, the Manager and GT Global have undertaken to limit
the Fund's expenses (exclusive of brokerage commissions, taxes, interest, and
extraordinary expenses) to the annual rate 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. This undertaking may be changed or eliminated in the
future.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and GT Global, is the transfer agent of the Fund. For
F62
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
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, 1997, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $540,359,758 and $667,512,449, respectively. There were
no purchases or sales of U.S. government obligations by the Fund during the
year.
4. CAPITAL SHARES
At December 31, 1997, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
-------------------------------------- --------------------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ---------------- -------------------- ---------------- --------------------
<S> <C> <C> <C> <C>
Shares sold............................. 146,863,882 $ 2,008,141,712 247,661,557 $ 2,968,073,960
Shares issued in connection with
reinvestment of distributions......... 20,229 286,488 261,336 3,297,924
---------------- -------------------- ---------------- --------------------
146,884,111 2,008,428,200 247,922,893 2,971,371,884
Shares repurchased...................... (153,681,853) (2,115,903,158) (257,136,969) (3,090,222,730)
---------------- -------------------- ---------------- --------------------
Net decrease............................ (6,797,742) $ (107,474,958) (9,214,076) $ (118,850,846)
---------------- -------------------- ---------------- --------------------
---------------- -------------------- ---------------- --------------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
-------------------------------------- --------------------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ---------------- -------------------- ---------------- --------------------
<S> <C> <C> <C> <C>
Shares sold............................. 25,162,463 $ 340,605,118 15,643,994 $ 188,596,754
Shares issued in connection with
reinvestment of distributions......... 4,768 66,175 53,171 663,732
---------------- -------------------- ---------------- --------------------
25,167,231 340,671,293 15,697,165 189,260,486
Shares repurchased...................... (26,243,592) (357,657,223) (15,609,973) (188,238,304)
---------------- -------------------- ---------------- --------------------
Net increase (decrease)................. (1,076,361) $ (16,985,930) 87,192 $ 1,022,182
---------------- -------------------- ---------------- --------------------
---------------- -------------------- ---------------- --------------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
-------------------------------------- --------------------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ---------------- -------------------- ---------------- --------------------
<S> <C> <C> <C> <C>
Shares sold............................. 4,798,844 $ 66,064,822 5,230,224 $ 63,929,457
Shares issued in connection with
reinvestment of distributions......... 77 1,094 2,336 29,544
---------------- -------------------- ---------------- --------------------
4,798,921 66,065,916 5,232,560 63,959,001
Shares repurchased...................... (4,683,709) (64,978,245) (5,189,081) (63,817,768)
---------------- -------------------- ---------------- --------------------
Net increase............................ 115,212 $ 1,087,671 43,479 $ 141,233
---------------- -------------------- ---------------- --------------------
---------------- -------------------- ---------------- --------------------
</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, 1997, the Fund's
expenses were reduced by $206,488 under these arrangements.
6. SUBSEQUENT EVENT
On January 30, 1998, Liechtenstein Global Trust ("LGT") and AMVESCAP PLC
("AMVESCAP") entered into an agreement by which AMVESCAP will acquire LGT's
Asset Management Division, including Chancellor LGT Asset Management, Inc.
AMVESCAP is the holding company of the AIM and INVESCO asset management
businesses.
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
For its fiscal year ended December 31, 1997, the total amount of income received
by the Fund from sources within foreign countries and possessions of the United
States was approximately $.2362 per share (representing an approximate total of
$8,046,337). The total amount of taxes paid by the Fund to such countries was
approximately $.0432 per share (representing an approximate total of
$1,472,615).
F63
<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, 1997, 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, 1997 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, 1997, 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 17, 1998
F64
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS SHARES (NOTE 1) ASSETS
- ----------------------------------------------------------------------- ----------- ----------- -------------
<S> <C> <C> <C>
Services (17.3%)
Ito-Yokado Co., Ltd. ................................................ 90,000 $ 4,586,207 4.6
RETAILERS-OTHER
Southland Corp.{l} -/- {\/} ......................................... 1,048,200 2,227,425 2.3
RETAILERS-OTHER
DDI Corp. ........................................................... 763 2,017,126 2.0
WIRELESS COMMUNICATIONS
Yoshinoya D&C Co., Ltd. ............................................. 200 1,823,755 1.8
RESTAURANTS
Secom ............................................................... 25,000 1,597,701 1.6
CONSUMER SERVICES
Fast Retailing Co., Ltd. ............................................ 99,000 1,585,517 1.6
RETAILERS-APPAREL
Aoyama Trading Co., Ltd. ............................................ 75,200 1,342,651 1.4
RETAILERS-APPAREL
Ezaki Glico Co., Ltd. ............................................... 167,000 1,078,782 1.1
RETAILERS-FOOD
Tsutsumi Jewelry Co., Ltd. .......................................... 31,800 389,885 0.4
RETAILERS-OTHER
Fujitsu Business Systems ............................................ 15,000 241,379 0.3
BUSINESS & PUBLIC SERVICES
Xebio Co., Ltd. ..................................................... 25,000 199,234 0.2
RETAILERS-APPAREL
Nitori Co. .......................................................... 400 2,066 --
RETAILERS-OTHER
-----------
17,091,728
-----------
Consumer Durables (11.7%)
Sony Corp. .......................................................... 55,000 4,888,889 4.9
CONSUMER ELECTRONICS
Bridgestone Corp. ................................................... 165,000 3,578,161 3.6
AUTO PARTS
Citizen Watch Co., Ltd. ............................................. 240,000 1,609,195 1.6
CONSUMER ELECTRONICS
Hitachi Ltd. ........................................................ 220,000 1,567,816 1.6
CONSUMER ELECTRONICS
-----------
11,644,061
-----------
Health Care (11.5%)
Takeda Chemical Industries{z} ....................................... 250,000 7,126,437 7.2
PHARMACEUTICALS
Yamanouchi Pharmaceutical ........................................... 135,000 2,896,552 2.9
PHARMACEUTICALS
Taisho Pharmaceuticals .............................................. 55,000 1,403,448 1.4
PHARMACEUTICALS
-----------
11,426,437
-----------
Technology (9.3%)
NEC Corp. ........................................................... 300,000 3,195,402 3.2
SEMICONDUCTORS
Matsushita-Kotobuki Electronics Ltd. ................................ 120,000 3,016,092 3.0
COMPUTERS & PERIPHERALS
Murata Manufacturing Co., Ltd. ...................................... 105,000 2,639,080 2.7
INSTRUMENTATION & TEST
Koei Co., Ltd. ...................................................... 87,400 415,234 0.4
SOFTWARE
-----------
9,265,808
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F65
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS SHARES (NOTE 1) ASSETS
- ----------------------------------------------------------------------- ----------- ----------- -------------
<S> <C> <C> <C>
Capital Goods (7.7%)
Canon, Inc. ......................................................... 200,000 $ 4,659,004 4.7
OFFICE EQUIPMENT
Tsudakoma Corp. ..................................................... 494,000 1,082,636 1.1
MACHINERY & ENGINEERING
Kurita Water Industries Ltd. ........................................ 80,000 815,326 0.8
ENVIRONMENTAL
Shima Seiki Manufacturing Ltd. ...................................... 20,000 749,425 0.8
MACHINE TOOLS
Higashi Nihon House ................................................. 73,000 332,835 0.3
CONSTRUCTION
NEC System Integration & Construction ............................... 60 920 --
CONSTRUCTION
Japan Foundation Engineering ........................................ 90 503 --
CONSTRUCTION
-----------
7,640,649
-----------
Finance (7.5%)
Nichiei Co., Ltd. ................................................... 60,000 6,390,805 6.5
OTHER FINANCIAL
Diamond Lease Co., Ltd. ............................................. 175,000 942,720 1.0
OTHER FINANCIAL
-----------
7,333,525
-----------
Consumer Non-Durables (4.6%)
Amway Japan Ltd. .................................................... 160,000 3,065,134 3.1
HOUSEHOLD PRODUCTS
Asahi Breweries Ltd. ................................................ 105,000 1,528,736 1.5
BEVERAGES - ALCOHOLIC
-----------
4,593,870
-----------
Materials/Basic Industry (1.8%)
Sekisui Chemical Co., Ltd. .......................................... 200,000 1,016,092 1.0
CHEMICALS
Toyo Exterior ....................................................... 80,000 524,138 0.5
BUILDING MATERIALS & COMPONENTS
Gakken .............................................................. 240,000 336,552 0.3
PAPER/PACKAGING
-----------
1,876,782
----------- -----
TOTAL EQUITY INVESTMENTS (cost $92,954,815) ........................... 70,872,860 71.4
----------- -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
F66
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C>
Corporate Bonds (0.8%)
Japan (0.8%)
Higashi Nihon House Co., Convertible Bond, 0.375% due
4/30/00 (cost $1,089,201) ............................... CHF 1,150,000 $ 771,601 0.8
----------- -----
<CAPTION>
NUMBER OF
OPTIONS CONTRACTS
- -------------------------------------------------------------- -----------
<S> <C> <C> <C>
Simex Nikkei Put Options, strike JPY15,500, expire 3/98 .... JPY 120 455,172 0.5
INDEX OPTIONS
Simex Nikkei Put Options, strike JPY14,000, expire 3/98 .... JPY 20 30,651 --
INDEX OPTIONS
----------- -----
TOTAL OPTIONS (cost $334,778) ................................ 485,823 0.5
----------- -----
<CAPTION>
REPURCHASE AGREEMENT
- --------------------------------------------------------------
<S> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust Co.,
due January 2, 1998, for an effective yield of 5.80%,
collateralized by $23,430,000 U.S. Treasury Notes, 5.75%
due 12/31/98 (market value of collateral is $23,451,977,
including accrued interest). (cost $22,989,000) .......... 22,989,000 23.2
----------- -----
TOTAL INVESTMENTS (cost $117,367,794) * ..................... 95,119,284 95.9
Other Assets and Liabilities ................................. 4,064,999 4.1
----------- -----
NET ASSETS ................................................... $99,184,283 100.0
----------- -----
----------- -----
</TABLE>
- --------------
{z} All or part of the Fund's holdings in this security is segregated
as collateral for written futures. See Note 1 to the 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 $119,887,833 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 6,797,228
Unrealized depreciation: (31,565,777)
-------------
Net unrealized depreciation: $ (24,768,549)
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F67
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET VALUE CONTRACT DELIVERY UNREALIZED
CONTRACTS TO SELL: (U.S. DOLLARS) PRICE DATE APPRECIATION
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
Japanese Yen............................ 21,593,557 122.50000 2/12/98 $ 1,263,586
Japanese Yen............................ 16,966,366 122.40000 2/12/98 1,007,490
Japanese Yen............................ 8,483,183 122.50500 2/12/98 496,042
-------------- --------------
Total Contracts to Sell (Receivable
amount $49,810,224).................. 47,043,106 $ 2,767,118
-------------- --------------
--------------
THE VALUE OF CONTRACTS TO SELL AS A
PERCENTAGE OF NET ASSETS IS 47.43%.
</TABLE>
- ----------------
See Note 1 to the financial statements.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
WRITTEN FUTURES CONTRACTS OUTSTANDING
DECEMBER 31, 1997
<TABLE>
<CAPTION>
EXPIRATION NO. OF MARKET
DESCRIPTION DATE CONTRACTS CURRENCY VALUE
- ---------------------------------------- ---------- --------- -------- ----------
<S> <C> <C> <C> <C>
Simex Nikkei 225 Index Future (Face
$7,173,761)............................ 3/16/98 100 JPY $6,542,693
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F68
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $94,378,794) (Note 1)........................... $72,130,284
Repurchase agreement, at value and cost................................................... 22,989,000
U.S. currency.................................................................. $ 124
Foreign currencies (cost $2,767,554)........................................... 2,751,171 2,751,295
---------
Receivable for open forward foreign currency contracts (Note 1)........................... 2,767,118
Receivable for miscellaneous, initial and variation margin (Note 1)....................... 826,113
Receivable for Fund shares sold........................................................... 275,360
Dividends receivable...................................................................... 53,462
Interest receivable....................................................................... 4,204
-----------
Total assets............................................................................ 101,796,836
-----------
Liabilities:
Payable for Fund shares repurchased....................................................... 2,364,729
Payable for investment management and administration fees (Note 2)........................ 83,695
Payable for transfer agent fees (Note 2).................................................. 44,494
Payable for service and distribution expenses (Note 2).................................... 35,023
Payable for printing and postage expenses................................................. 31,839
Payable for professional fees............................................................. 23,063
Payable for custodian fees................................................................ 12,832
Payable for registration and filing fees.................................................. 6,592
Payable for Trustees' fees and expenses (Note 2).......................................... 5,377
Payable for fund accounting fees.......................................................... 1,383
Other accrued expenses.................................................................... 3,526
-----------
Total liabilities....................................................................... 2,612,553
-----------
Net assets.................................................................................. $99,184,283
-----------
-----------
Class A:
Net asset value and redemption price per share ($44,582,914 DIVIDED BY 4,973,256 shares
outstanding)............................................................................... $ 8.96
-----------
-----------
Maximum offering price per share (100/95.25 of $8.96) *..................................... $ 9.41
-----------
-----------
Class B:+
Net asset value and offering price per share ($24,250,220 DIVIDED BY 2,798,472 shares
outstanding)............................................................................... $ 8.67
-----------
-----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($30,351,149
DIVIDED BY 3,352,861 shares outstanding)................................................... $ 9.05
-----------
-----------
Net assets consist of:
Paid in capital (Note 4).................................................................. $123,922,965
Accumulated net realized loss on investments and foreign currency transactions............ (5,869,899)
Net unrealized appreciation on translation of assets and liabilities in foreign
currencies............................................................................... 2,748,659
Net unrealized depreciation of investments................................................ (21,617,442)
-----------
Total -- representing net assets applicable to capital shares outstanding................... $99,184,283
-----------
-----------
<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.
F69
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
STATEMENT OF OPERATIONS
Year ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Interest income............................................................................ $ 916,186
Dividend income (net of foreign withholding tax of $92,217)................................ 523,661
----------
Total investment income.................................................................. 1,439,847
----------
Expenses:
Investment management and administration fees (Note 2)..................................... 1,017,788
Service and distribution expenses: (Note 2)
Class A...................................................................... $ 212,419
Class B...................................................................... 317,148 529,567
----------
Transfer agent fees (Note 2)............................................................... 407,750
Registration and filing fees............................................................... 107,110
Custodian fees............................................................................. 78,324
Printing and postage expenses.............................................................. 53,056
Audit fees................................................................................. 45,260
Legal fees................................................................................. 31,455
Fund accounting fees (Note 2).............................................................. 26,210
Trustees' fees and expenses (Note 2)....................................................... 13,140
Other expenses............................................................................. 4,283
----------
Total expenses before reductions......................................................... 2,313,943
----------
Expense reductions (Notes 1 & 5)....................................................... (72,248)
----------
Total net expenses....................................................................... 2,241,695
----------
Net investment loss.......................................................................... (801,848)
----------
Net realized and unrealized gain (loss) on investments and foreign currencies:
(Note 1)
Net realized loss on investments............................................... (8,229,791)
Net realized gain on foreign currency transactions............................. 6,920,240
----------
Net realized loss during the year........................................................ (1,309,551)
Net change in unrealized appreciation on translation of assets and liabilities
in foreign currencies......................................................... 630,890
Net change in unrealized depreciation of investments........................... (8,170,261)
----------
Net unrealized depreciation during the year.............................................. (7,539,371)
----------
Net realized and unrealized loss on investments and foreign currencies....................... (8,848,922)
----------
Net decrease in net assets resulting from operations......................................... $(9,650,770)
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F70
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996
------------- -------------
Increase (Decrease) in net assets
Operations:
Net investment loss...................................................... $ (801,848) $ (841,456)
Net realized gain (loss) on investments and foreign currency
transactions............................................................ (1,309,551) 3,852,937
Net change in unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies............................ 630,890 (464,975)
Net change in unrealized depreciation of investments..................... (8,170,261) (11,261,238)
------------- -------------
Net decrease in net assets resulting from operations................... (9,650,770) (8,714,732)
------------- -------------
Class A:
Distributions to shareholders: (Note 1)
From net realized gain on investments.................................... (110,678) (2,883,812)
Class B:
Distributions to shareholders: (Note 1)
From net realized gain on investments.................................... (61,407) (1,472,016)
Advisor Class:
Distributions to shareholders: (Note 1)
From net realized gain on investments.................................... (71,057) (18,593)
------------- -------------
Total distributions.................................................... (243,142) (4,374,421)
------------- -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested......................... 280,419,107 510,718,392
Decrease from capital shares repurchased................................. (267,455,599) (554,451,474)
------------- -------------
Net increase (decrease) from capital share transactions................ 12,963,508 (43,733,082)
------------- -------------
Total increase (decrease) in net assets.................................... 3,069,596 (56,822,235)
Net assets:
Beginning of year........................................................ 96,114,687 152,936,922
------------- -------------
End of year *............................................................ $99,184,283 $96,114,687
------------- -------------
------------- -------------
* Includes undistributed net investment income of......................... $ -- $ --
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F71
<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,
----------------------------------------------------------
1997 (D) 1996 (D) 1995 (D) 1994 1993
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 9.76 $ 11.00 $ 12.15 $ 11.61 $ 8.70
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment loss................... (0.08) (0.04) (0.04) (0.04) (0.14)
Net realized and unrealized gain
(loss) on investments................ (0.70) (0.77) 0.26 0.79 3.05
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. (0.78) (0.81) 0.22 0.75 2.91
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.02) (0.43) (1.37) (0.21) --
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 8.96 $ 9.76 $ 11.00 $ 12.15 $ 11.61
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (c)............. (7.99)% (7.43)% 1.94% 6.56% 33.45%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 44,583 $ 63,585 $ 111,105 $ 98,066 $ 88,487
Ratio of net investment loss to average
net assets:
With expense reductions (Notes 1 &
5)................................... (0.61)% (0.40)% (0.40)% (0.32)% (0.3)%
Without expense reductions............ (0.68)% (0.50)% (0.55)% (0.44)% N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.99% 1.84% 1.99% 1.91% 2.1%
Without expense reductions............ 2.06% 1.94% 2.14% 2.03% N/A
Portfolio turnover rate++++............. 58% 31% 67% 49% 104%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0416 $ 0.0971 N/A N/A N/A
</TABLE>
- ----------------
(a) Annualized.
(b) Not Annualized.
(c) Total investment return does not include sales charge.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
+ 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.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F72
<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++
-------------------------------------------------------------
APRIL 1, 1993
YEAR ENDED DECEMBER 31, TO
---------------------------------------------- DECEMBER 31,
1997 (D) 1996 (D) 1995 (D) 1994 1993
---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 9.49 $ 10.78 $ 12.02 $ 11.57 $ 9.85
---------- ---------- ---------- ---------- -------------
Income from investment operations:
Net investment loss................... (0.14) (0.11) (0.12) (0.13) (0.18)
Net realized and unrealized gain
(loss) on investments................ (0.66) (0.75) 0.25 0.79 1.90
---------- ---------- ---------- ---------- -------------
Net increase (decrease) from
investment operations.............. (0.80) (0.86) 0.13 0.66 1.72
---------- ---------- ---------- ---------- -------------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.02) (0.43) (1.37) (0.21) --
---------- ---------- ---------- ---------- -------------
Net asset value, end of period.......... $ 8.67 $ 9.49 $ 10.78 $ 12.02 $ 11.57
---------- ---------- ---------- ---------- -------------
---------- ---------- ---------- ---------- -------------
Total investment return (c)............. (8.42)% (8.05)% 1.20% 5.81% 17.46%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 24,250 $ 32,116 $ 41,274 $ 27,355 $ 3,699
Ratio of net investment loss to average
net assets:
With expense reductions (Notes 1 &
5)................................... (1.26)% (1.05)% (1.05)% (0.97)% (0.9)%(a)
Without expense reductions............ (1.33)% (1.15)% (1.20)% (1.09)% N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.64% 2.49% 2.64% 2.56% 2.7%(a)
Without expense reductions............ 2.71% 2.59% 2.79% 2.68% N/A
Portfolio turnover rate++++............. 58% 31% 67% 49% 104%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0416 $ 0.0971 N/A N/A N/A
</TABLE>
- ----------------
(a) Annualized.
(b) Not Annualized.
(c) Total investment return does not include sales charge.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
+ 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.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F73
<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>
ADVISOR CLASS+++
-------------------------------------
YEAR ENDED DECEMBER JUNE 1, 1995
31, TO
---------------------- DECEMBER 31,
1997 (D) 1996 (D) 1995 (D)
---------- ---------- -------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 9.81 $ 11.02 $ 10.50
---------- ---------- -------------
Income from investment operations:
Net investment loss................... (0.01) (0.01) (0.00)
Net realized and unrealized gain
(loss) on investments................ (0.73) (0.77) 1.89
---------- ---------- -------------
Net increase (decrease) from
investment operations.............. (0.74) (0.78) 1.89
---------- ---------- -------------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.02) (0.43) (1.37)
---------- ---------- -------------
Net asset value, end of period.......... $ 9.05 $ 9.81 $ 11.02
---------- ---------- -------------
---------- ---------- -------------
Total investment return (c)............. (7.54)% (7.14)% 18.14%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 30,351 $ 413 $ 558
Ratio of net investment loss to average
net assets:
With expense reductions (Notes 1 &
5)................................... (0.26)% (0.05)% (0.05)%(a)
Without expense reductions............ (0.33)% (0.15)% (0.20)%(a)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.64% 1.49% 1.64%(a)
Without expense reductions............ 1.71% 1.59% 1.79%(a)
Portfolio turnover rate++++............. 58% 31% 67%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0416 $ 0.0971 N/A
</TABLE>
- ----------------
(a) Annualized.
(b) Not Annualized.
(c) Total investment return does not include sales charge.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
+ 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.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F74
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
NOTES TO
FINANCIAL STATEMENTS
December 31, 1997
- --------------------------------------------------------------------------------
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 a diversified, open-end management investment company. The Company has
eight 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 preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Funds in the preparation of the
financial statements.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
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
F75
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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, 1997, the Fund had segregated securities valued at $7,126,437 and cash of
$824,000 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, 1997, stocks with an aggregate value of $5,491,954 were on loan
to brokers. The loans were secured by cash collateral of $5,811,500 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, 1997, the Fund received securities lending fees of
$53,675 which were used to reduce custodian and administrative expenses.
(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, and
F76
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GT GLOBAL JAPAN GROWTH FUND
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 ("GT Funds") advised and/or
administered by the Manager, has a line of credit with BankBoston and State
Street Bank & Trust Company. The arrangements with the banks allow the Fund and
the GT Funds to borrow an aggregate maximum amount of $250,000,000. The Fund is
limited to borrowing up to 33 1/3% of the value of the Fund's total assets. For
the year ended December 31, 1997, the Fund had no outstanding loan balance.
2. RELATED PARTIES
Chancellor LGT Asset Management, Inc. is the Fund's investment manager and
administrator. The 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, 1997, GT Global retained $23,200
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 $24,083 for the year ended December 31, 1997. GT Global also makes
ongoing shareholder servicing and trail commission payments to dealers whose
clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSCs, in accordance with the Fund's current
prospectus. During the year ended December 31, 1997, GT Global collected such
CDSCs in the amount of $260,311. 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 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
F77
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GT GLOBAL JAPAN GROWTH FUND
and/or reimbursements by the Manager or GT Global of portions of the Fund's
other operating expenses.
Effective January 1, 1998, the Manager and GT Global have undertaken to limit
the Fund's expenses (exclusive of brokerage commissions, taxes, interest, and
extraordinary expenses) to the annual rate 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. This undertaking may be changed or eliminated in the
future.
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, 1997, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $53,454,101 and $47,110,095, respectively. There were no
purchases or sales of U.S. government obligations by the Fund during the year.
4. CAPITAL SHARES
At December 31, 1997, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
-------------------------------------- --------------------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ---------------- -------------------- ---------------- --------------------
<S> <C> <C> <C> <C>
Shares sold............................. 18,880,969 $ 187,727,101 39,042,903 $ 423,073,924
Shares issued in connection with
reinvestment of distributions......... 9,319 84,712 225,741 2,221,785
---------------- -------------------- ---------------- --------------------
18,890,288 187,811,813 39,268,644 425,295,709
Shares repurchased...................... (20,434,942) (203,841,370) (42,853,058) (464,603,203)
---------------- -------------------- ---------------- --------------------
Net decrease............................ (1,544,654) $ (16,029,557) (3,584,414) $ (39,307,494)
---------------- -------------------- ---------------- --------------------
---------------- -------------------- ---------------- --------------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
-------------------------------------- --------------------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ---------------- -------------------- ---------------- --------------------
<S> <C> <C> <C> <C>
Shares sold............................. 5,059,734 $ 49,439,098 7,303,169 $ 77,038,650
Shares issued in connection with
reinvestment of distributions......... 4,729 41,630 111,715 1,070,181
---------------- -------------------- ---------------- --------------------
5,064,463 49,480,728 7,414,884 78,108,831
Shares repurchased...................... (5,648,959) (54,991,415) (7,859,944) (82,438,811)
---------------- -------------------- ---------------- --------------------
Net decrease............................ (584,496) $ (5,510,687) (445,060) $ (4,329,980)
---------------- -------------------- ---------------- --------------------
---------------- -------------------- ---------------- --------------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
-------------------------------------- --------------------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ---------------- -------------------- ---------------- --------------------
<S> <C> <C> <C> <C>
Shares sold............................. 4,149,684 $ 43,125,403 666,196 $ 7,296,458
Shares issued in connection with
reinvestment of distributions......... 126 1,163 1,759 17,394
---------------- -------------------- ---------------- --------------------
4,149,810 43,126,566 667,955 7,313,852
Shares repurchased...................... (839,053) (8,622,814) (676,463) (7,409,460)
---------------- -------------------- ---------------- --------------------
Net increase (decrease)................. 3,310,757 $ 34,503,752 (8,508) $ (95,608)
---------------- -------------------- ---------------- --------------------
---------------- -------------------- ---------------- --------------------
</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, 1997, the Fund's
expenses were reduced by $18,573 under these arrangements.
F78
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GT GLOBAL JAPAN GROWTH FUND
6. SUBSEQUENT EVENT
On January 30, 1998, Liechtenstein Global Trust ("LGT") and AMVESCAP PLC
("AMVESCAP") entered into an agreement by which AMVESCAP will acquire LGT's
Asset Management Division, including Chancellor LGT Asset Management, Inc.
AMVESCAP is the holding company of the AIM and INVESCO asset management
businesses.
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
Pursuant to Section 852 of the Internal Revenue Code, the GT Global Japan Growth
Fund designates $194,123 as a capital gain dividend for the fiscal year ended
December 31, 1997.
F79
<PAGE>
GT GLOBAL EQUITY FUNDS
GT GLOBAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY GT GLOBAL FUND,
INCLUDING FEES, EXPENSES AND THE RISKS OF GLOBAL AND EMERGING MARKET
INVESTING AND THE RISKS OF INVESTING IN RELATED INDUSTRIES, PLEASE CONTACT
YOUR FINANCIAL ADVISER OR CALL GT GLOBAL DIRECTLY AT 1-800-824-1580.
GROWTH FUNDS
/ / GLOBALLY DIVERSIFIED FUNDS
GT GLOBAL NEW DIMENSION FUND
Captures global growth opportunities by investing directly in the six GT Global
Theme Funds
GT GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity for U.S. investors by investing outside the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
GT GLOBAL DEVELOPING MARKETS FUND
Invests in debt and equity securities of developing market issuers
/ / GLOBAL THEME FUNDS
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL HEALTH CARE FUND
Invests in the growing health care industries worldwide
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA MID CAP GROWTH FUND
Concentrates on medium-sized companies in the U.S.
GT GLOBAL AMERICA VALUE FUND
Concentrates on equity securities of 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
Invests in 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 a portfolio of emerging market debt securities
GT GLOBAL FLOATING RATE FUND
Invests primarily in senior secured floating rate loans that have the potential
to achieve a high level of income
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[LOGO]
NO DEALER, SALES REPRESENTATIVE OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
STATEMENT OF ADDITIONAL INFORMATION AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY 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, CA 94111
(415) 392-6181
Toll Free: (800) 824-1580
Statement of Additional Information
April 1, 1998
- --------------------------------------------------------------------------------
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
April 1, 1998, 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 Fund Shares............................................................................................... 21
Information Relating to Sales and Redemptions.......................................................................... 22
Taxes.................................................................................................................. 25
Additional Information................................................................................................. 27
Investment Results..................................................................................................... 28
Description of Debt Ratings............................................................................................ 33
Financial Statements................................................................................................... 35
</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 New York Common Law Trust registered as an 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
(including investment vehicles or companies advised by the Manager or its
affiliates ("Affiliated Funds")) 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. With respect to
investments in Affiliated Funds, the Manager waives its advisory fee to the
extent that such fees are based on assets of a Fund invested in Affiliated
Funds.
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"), Global Depository Receipts ("GDRs") 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. GDRs
are similar to EDRs and are designed for use in several international financial
markets. 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, GDRs 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
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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 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.
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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 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, a
division of The McGraw-Hill Companies, Inc. ("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
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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 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.
Neither Portfolio considers 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.
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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 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. 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
to avoid realizing losses that would result in a reduction of its 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 it
purchased the security, 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.
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
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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 purchases an index option and exercises it before the closing
index value for that day is available, it runs the risk that the level of the
underlying index may subsequently change. If such a change causes the exercised
option to fall out-of-the-money, the 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").
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
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GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
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
only; 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 a 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 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
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GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
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 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
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GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
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 purchased
by a Portfolio) 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.
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RISK FACTORS
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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 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.
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GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
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.
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INVESTMENT LIMITATIONS
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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:
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GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
(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;
(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
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GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
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.
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EXECUTION OF PORTFOLIO TRANSACTIONS
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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 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 are in addition to, and not in lieu of, the
services required to be performed by the Manager under the applicable investment
management and administration contract. 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 its 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.
Statement of Additional Information Page 14
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GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
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 years ended December 31, 1997 and 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 $91,971,
$54,241 and $3,317, respectively. For the fiscal years ended December 31, 1997
and 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 $22,202, $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 years ended December 31, 1997 and December 31,
1996, the Small Cap Portfolio's and Value Portfolio's portfolio turnover rates
were 233% and 150%, and 93% and 256%, respectively.
Statement of Additional Information Page 15
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GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
TRUSTEES AND EXECUTIVE OFFICERS
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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*, 39 Mr. Guilfoyle is President, GT Global, Inc. since 1995; Director, GT Global since 1991;
Trustee, Chairman of the Board and Senior Vice President and Director of Sales and Marketing, GT Global from May 1992 to
President April 1995; Vice President and Director of Marketing, GT Global from 1987 to 1992;
50 California Street Director, Liechtenstein Global Trust AG (holding company of the various international LGT
San Francisco, CA 94111 companies) Advisory Board since January 1996; Director, G.T. Global Insurance Agency
("G.T. Insurance") since 1996; President and Chief Executive Officer, G.T. Insurance since
1995; Senior Vice President and Director, Sales and Marketing, G.T. Insurance from April
1995 to November 1995; Senior Vice President, Retail Marketing, G.T. Insurance from 1992
to 1993. Mr. Guilfoyle is also a director or trustee of each of the other investment
companies registered under the 1940 Act that is managed or administered by the Manager.
C. Derek Anderson, 56 Mr. Anderson is President, Plantagenet Capital Management, LLC (an investment
Trustee partnership); Chief Executive Officer, Plantagenet Holdings, Ltd. (an investment banking
220 Sansome Street firm); Director, Anderson Capital Management, Inc. since 1988; Director, PremiumWear, Inc.
Suite 400 (formerly Munsingwear, Inc.)(a casual apparel company) and Director, "R" Homes, Inc. and
San Francisco, CA 94104 various other companies. Mr. Anderson is also a director or trustee of each of the other
investment companies registered under the 1940 Act that is managed or administered by the
Manager.
Frank S. Bayley, 58 Mr. Bayley is a partner of the law firm of Baker & McKenzie, and serves as a Director and
Trustee Chairman of C.D. Stimson Company (a private investment company). Mr. Bayley is also a
Two Embarcadero Center director or trustee of each of the other investment companies registered under the 1940
Suite 2400 Act that is managed or administered by the Manager.
San Francisco, CA 94111
Arthur C. Patterson, 54 Mr. Patterson is Managing Partner of Accel Partners (a venture capital firm). He also
Trustee serves as a director of Viasoft and PageMart, Inc. (both public software companies), as
428 University Avenue well as several other privately held software and communications companies. Mr. Patterson
Palo Alto, CA 94301 is also a director or trustee of each of the other investment companies registered under
the 1940 Act that is managed or administered by the Manager.
Ruth H. Quigley, 62 Miss Quigley is a private investor. From 1984 to 1986, she was President of Quigley
Trustee Friedlander & Co., Inc. (a financial advisory services firm). Miss Quigley is also a
1055 California Street director or trustee of each of the other investment companies registered under the 1940
San Francisco, CA 94108 Act that is managed or administered by the Manager.
Robert G. Wade, Jr.*, 70 Mr. Wade is Consultant to the Manager; Chairman of the Board of Chancellor Capital
Trustee Management, Inc. from January 1995 to October 1996; President, Chief Executive Officer and
1166 Avenue of the Americas Chairman of the Board of Chancellor Capital Management, Inc. from 1988 to January 1995.
New York, NY 10036 Mr. Wade is also a director or trustee of each of the other investment companies
registered under the 1940 Act that is managed or administered by the Manager.
</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>
Kenneth W. Chancey, 52 Senior Vice President -- Mutual Fund Accounting, the Manager since 1997;
Vice President and Principal Vice President -- Mutual Fund Accounting, the Manager from 1992 to 1997;
Accounting Officer and Vice President, Putnam Fiduciary Trust Company from 1989 to 1992.
50 California Street
San Francisco, CA 94111
Helge K. Lee, 51 Chief Legal and Compliance Officer -- North America, the Manager since
Vice President and Secretary October 1997; Executive Vice President of the Asset Management Division
50 California Street of Liechtenstein Global Trust since October 1996; Senior Vice President,
San Francisco, CA 94111 General Counsel and Secretary of the Manager, GT Global, GT Services and
G.T. Insurance from February 1996 to October 1996; Vice President,
General Counsel and Secretary of LGT Asset Management, Inc., the
Manager, GT Global, GT Services and G.T. Insurance from May 1994 to
February 1996; Senior Vice President, General Counsel and Secretary of
Strong/Corneliuson Management, Inc. and Secretary of each of the Strong
Funds from October 1991 through May 1994.
</TABLE>
------------------------
The Company's Board of Trustees has a Nominating and Audit Committee, comprised
of Miss Quigley and Messrs. Anderson, Bayley and Patterson, which is responsible
for nominating persons to serve as Trustees, reviewing audits of the 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. 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 47
series managed or administered by the Manager. Each Trustee who is not a
director, officer or employee of the Manager or any affiliated company is paid
aggregate fees of $5,000 a year plus $300 per Fund for each meeting of the Board
attended by the Trustee, and reimbursed 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, 1997, Mr. Anderson, Mr. Bayley, Mr. Patterson and Miss
Quigley, who are not directors, officers or employees of the Manager or any
affiliated company, received total compensation of $6,425, $6,681, $5,450 and
$6,068, respectively, from the Company for their services as Trustees. For the
year ended December 31, 1997, Mr. Anderson, Mr. Bayley, Mr. Patterson and Miss
Quigley received total compensation of $103,654, $106,556, $89,700 and $98,038,
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 January 8, 1998, 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 years ended December 31, 1997 and December 31, 1996, the Small
Cap Portfolio and the Value Portfolio paid fees of $120,544 and $73,312; and
$74,372 and $27,487, respectively, to the Manager. For the same periods, the
Small Cap Fund and America Value Fund paid administration fees of $63,460 and
$39,004; and $39,171 and $14,722, respectively, to the Manager. For the fiscal
years ended December 31, 1997 and 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 $67,837 and $73,312; and
$74,372 and $27,487, respectively; for the same periods, the Manager reimbursed
the Small Cap Fund and America Value Fund for their respective administration
fees in the amounts of $63,460 and $39,004; and $39,171 and $14,722,
respectively. Accordingly, the Manager reimbursed each Fund and its
corresponding Portfolio investment management and administration fees in the
aggregate amounts of $131,297 and $112,316; and $113,543 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.
Statement of Additional Information Page 18
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
For the fiscal years ended December 31, 1997 and 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 $0 and $58,269; and
$38,419 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.
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, 1997 by the
Small Cap Fund and America Value Fund for Class A and Class B shares were
$33,776 and $148,043; and $17,701 and $102,587, 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 three
fiscal years.
<TABLE>
<CAPTION>
SALES CHARGES AMOUNTS AMOUNTS
YEAR ENDED DEC. 31, 1997 COLLECTED RETAINED REALLOWED
- ----------------------------------------------------------------------------------- ------------- ----------- -----------
<S> <C> <C> <C>
Small Cap Fund..................................................................... $ 24,222 $ 5,417 $ 18,805
America Value Fund................................................................. 11,413 5,770 5,643
<CAPTION>
SALES CHARGES AMOUNTS AMOUNTS
YEAR ENDED DEC. 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
<CAPTION>
SALES CHARGES AMOUNTS AMOUNTS
OCT. 18, 1995 (COMMENCEMENT OF OPERATIONS) TO DEC. 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
</TABLE>
GT Global receives any contingent deferred sales charges ("CDSCs") 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 years ended
December 31, 1996 and December 31, 1997, GT Global collected CDSCs for the Small
Cap Fund and America Value Fund of $28,162 and $60,107; and $5,608 and $55,700,
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 years ended December 31, 1997 and December 31, 1996, and
the period
Statement of Additional Information Page 19
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
October 18, 1995 (commencement of operations) to December 31, 1995, the Small
Cap Fund and America Value Fund paid accounting services fees of $6,379, $3,900
and $76; and $3,938, $1,472 and $36, 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 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.
Statement of Additional Information Page 20
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
VALUATION OF FUND 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, Martin Luther King Day, President's 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, including ADRs, ADSs, GDRs 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.
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 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 21
<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.
AUTOMATIC INVESTMENT PLAN -- CLASS A SHARES AND CLASS B SHARES
To establish participation in a Fund's 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 the designated 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 a Fund upon thirty days' written notice or by the participant at any
time, without penalty, upon written notice to the pertinent Fund or the Transfer
Agent.
LETTER OF INTENT -- CLASS A SHARES
A Letter of Intent ("LOI") is not a binding obligation to purchase the indicated
amount. While 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 the escrowed shares will be reinvested in additional
Class A shares or paid in cash, as specified by the shareholder. If the intended
investment is not completed within the specified thirteen-month period, the
purchaser must remit to GT Global the difference between the sales charge
actually paid and the sales charge 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 twenty days after written request, the appropriate number of
escrowed shares will be redeemed and the proceeds paid to GT Global.
A registered investment adviser, trust company or trust department seeking to
execute an LOI as a single purchaser with respect to accounts over which it
exercises investment discretion is required to provide the Transfer Agent with
information establishing that such entity has discretionary authority with
respect to the money invested (e.g. by providing a copy of
Statement of Additional Information Page 22
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
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.
INDIVIDUAL RETIREMENT ACCOUNTS ("IRAS") AND OTHER TAX-DEFERRED PLANS
Class A or Class B shares of a Fund may be purchased as the underlying
investment for an IRA meeting the requirements of sections 408(a), 408A or 530
of the Internal Revenue Code of 1986, as amended (the "Code"), as well as for
qualified retirement plans described in Code section 401 and custodial accounts
complying with Code section 403(b)(7).
IRAS: If you have earned income from employment (including self-employment), you
can contribute each year to an IRA up to the lesser of (1) $2,000 for yourself
or $4,000 for you and your spouse, regardless of whether your spouse is
employed, or (2) 100% of compensation. Some individuals may be able to take an
income tax deduction for the contribution. Regular contributions may not be made
for the year you become 70 1/2 or thereafter. Unless your and your spouse's
earnings exceed a certain level, you also may establish an "education IRA"
and/or a "Roth IRA." Although contributions to these new types of IRAs are
nondeductible, withdrawals from them will be tax-free under certain
circumstances. Please consult your tax adviser for more information. IRA
applications are available from brokers or GT Global.
ROLLOVER IRAS: Individuals who receive distributions from qualified retirement
plans (other than required distributions) and who wish to keep their savings
growing tax-deferred can roll over (or make a direct transfer of) their
distribution to a Rollover IRA. These accounts can also receive rollovers or
transfers from an existing IRA. If an "eligible rollover distribution" from a
qualified employer-sponsored retirement plan is not directly rolled over to an
IRA (or certain qualified plans), withholding at the rate of 20% will be
required for federal income tax purposes. A distribution from a qualified plan
that is not an "eligible rollover distribution," including a distribution that
is one of a series of substantially equal periodic payments, generally is
subject to regular wage withholding or withholding at the rate of 10% (depending
on the type and amount of the distribution), unless you elect not to have any
withholding apply. Please consult your tax adviser for more information.
SEP-IRAS: Simplified employee pension plans ("SEPs" or "SEP-IRAs") provide
self-employed individuals (and any eligible employees) with benefits similar to
Keogh plans (I.E., self-employed individual retirement plans) or Code section
401(k) plans, but with fewer administrative requirements and therefore
potentially lower annual administration expenses.
CODE SECTION 403(b)(7) CUSTODIAL ACCOUNTS: Employees of public schools and most
other tax-exempt organizations can make pre-tax salary reduction contributions
to these accounts.
PROFIT-SHARING (INCLUDING SECTION 401(K)) AND MONEY PURCHASE PENSION
PLANS: Corporations and other employers can sponsor these qualified defined
contribution plans for their employees. A section 401(k) plan, a type of
profit-sharing plan, additionally permits the eligible, participating employees
to make pre-tax salary reduction contributions to the plan (up to certain
limits).
SIMPLE PLANS: Employers with no more than 100 employees that do not maintain
another retirement plan may establish a Savings Incentive Match Plan for
Employees ("SIMPLE") either as separate IRAs or as part of a Section 401(k)
plan. SIMPLEs are not subject to the complicated nondiscrimination rules that
generally apply to qualified retirement plans.
EXCHANGES BETWEEN FUNDS
Shares of a Fund may be exchanged for shares of the corresponding class of other
GT Global Mutual Funds, based on their respective net asset values without
imposition of any sales charges, provided that the registration remains
identical. 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 those
funds upon sixty days' written notice to the shareholders of the 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).
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
Statement of Additional Information Page 23
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
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
$500. Costs in connection with the administration of this service, including
wire charges, will be borne by the appropriate Fund. Proceeds of less than $500
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 fifteen 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 the realization of long-term or
short-term capital gains or losses. The SWP may be terminated at any time by the
Transfer Agent or a Fund upon thirty 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 marketable securities. Such securities would be valued at the same value
assigned to them in computing the net asset value per share. Shareholders
receiving such securities would incur brokerage costs in selling any such
securities so received. However, despite the foregoing, the Company has filed
with the SEC an election pursuant to Rule 18f-1 under the 1940 Act. This means
that the Fund will pay in cash all requests for redemption made by any
shareholder of record, limited in amount with respect to each shareholder during
any ninety-day period to the lesser of $250,000 or 1% of the net asset value of
the Fund at the beginning of such period. This election will be irrevocable so
long as Rule 18f-1 remains in effect, unless the SEC by order upon application
permits the withdrawal of such election.
Statement of Additional Information Page 24
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
TAXES
- --------------------------------------------------------------------------------
TAXATION OF THE FUNDS
Each Fund is treated as a separate corporation for federal income tax purposes.
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) 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) 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 (3) at the close of each
quarter of the Fund's taxable year, not more than 25% of the value of its total
assets may be invested in securities (other than U.S. government securities or
the securities of other RICs) 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
THE PORTFOLIOS AND THEIR RELATIONSHIP TO THE FUNDS. 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
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
amount, character
Statement of Additional Information Page 25
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
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.
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. As of the date of preparation of this Statement of
Additional Information, it is not entirely clear whether that 60% portion will
qualify for the reduced maximum tax rates on noncorporate taxpayers' net capital
gain (i.e., the excess of net long-term capital gain over net short-term capital
loss) enacted by the Taxpayer Relief Act of 1997 -- 20% (10% for taxpayers in
the 15% marginal tax bracket) for gain recognized on capital assets held for
more than 18 months -- instead of the 28% rate in effect before that
legislation, which now applies to gain on capital assets held for more than one
year but not more than 18 months. However, technical corrections legislation
passed by the House of Representatives late in 1997 would clarify that the lower
rates apply.
If a Portfolio has an "appreciated financial position" -- generally, an interest
(including an interest through an option, Futures Contract or short sale) with
respect to any stock, debt instrument (other than "straight debt") or
partnership interest the fair market value of which exceeds its adjusted basis
- -- and enters into a "constructive sale" of the same or substantially similar
property, the Portfolio will be treated as having made an actual sale thereof,
with the result that gain will be recognized at that time. A constructive sale
generally consists of a short sale, an offsetting notional principal contract or
Futures Contract entered into by a Portfolio or a related person with respect to
the same or substantially similar property. In addition, if the appreciated
financial position is itself a short sale or such a contract, acquisition of the
underlying property or substantially similar property will be deemed a
constructive sale.
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, however, to a dividend paid by a Fund to a foreign
shareholder that is "effectively connected with the conduct of a U.S. trade or
business," in which case the reporting and withholding requirements applicable
to domestic shareholders will apply. A distribution of net capital gain by 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 26
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
LIECHTENSTEIN GLOBAL TRUST
Liechtenstein Global Trust AG is composed of the Manager and its worldwide
affiliates. Other worldwide affiliates of Liechtenstein Global Trust include LGT
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 and LGT Asset Management AG in Zurich, Switzerland.
Worldwide asset management affiliates also currently include LGT Asset
Management Inc. in Toronto, Canada; LGT Asset Management PLC in London; LGT
Asset Management Ltd. in Hong Kong; LGT Asset Management Ltd. in Tokyo; LGT
Asset Management Pte. Ltd. in Singapore; LGT Asset Management Ltd. in Sydney;
and LGT Asset Management GmbH in Frankfurt.
CUSTODIAN
State Street Bank and Trust Company, 225 Franklin Street, Boston, MA 02110, acts
as custodian of the Portfolios' assets.
INDEPENDENT ACCOUNTANTS
The Company's, the Funds' and the Portfolios' independent accountants are
Coopers & Lybrand L.L.P., One Post Office Square, Boston, MA 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 27
<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 Dec. 31, 1997...................................................... 10.70% 10.47% 21.19%
Oct. 18, 1995 (commencement of operations) through Dec. 31, 1997..................... 12.68% 13.29% 22.28%
<CAPTION>
AMERICA
VALUE
FUND
PERIOD (CLASS B)
- ------------------------------------------------------------------------------------- -----------
<S> <C>
Fiscal year ended Dec. 31, 1997...................................................... 21.44%
Oct. 18, 1995 (commencement of operations) through Dec. 31, 1997..................... 23.18%
</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 Dec. 31, 1997...................................................... 16.23% 15.47% 27.23%
Oct. 18, 1995 (commencement of operations) through Dec. 31, 1997..................... 15.19% 14.46% 25.01%
<CAPTION>
AMERICA
VALUE
FUND
PERIOD (CLASS B)
- ------------------------------------------------------------------------------------- -----------
<S> <C>
Fiscal year ended Dec. 31, 1997...................................................... 26.44%
Oct. 18, 1995 (commencement of operations) through Dec. 31, 1997..................... 24.23%
</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 28
<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>
Oct. 18, 1995 (commencement of operations) through Dec. 31, 1997..................... 36.55% 34.65% 63.52%
<CAPTION>
AMERICA
VALUE
FUND
PERIOD (CLASS B)
- ------------------------------------------------------------------------------------- -----------
<S> <C>
Oct. 18, 1995 (commencement of operations) through Dec. 31, 1997..................... 61.28%
</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>
Oct. 18, 1995 (commencement of operations) through Dec. 31, 1997..................... 30.07% 31.65% 55.75%
<CAPTION>
AMERICA
VALUE
FUND
PERIOD (CLASS B)
- ------------------------------------------------------------------------------------- -----------
<S> <C>
Oct. 18, 1995 (commencement of operations) through Dec. 31, 1997..................... 58.28%
</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 Funds with the following, among others:
(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 ("CPI"), which is a measure of the average
change in prices over time in a fixed market basket of goods and services
(e.g., food, clothing, shelter, fuels, transportation fares, charges for
doctors' and dentists' services, prescription medicines, and other goods and
services that people buy for day-to-day living). There is inflation risk
which does not affect a security's value but its purchasing power i.e. the
risk of changing price levels in the economy that affects security prices or
the price of goods and services.
(3) Data and mutual fund rankings and comparisons published or prepared
by Lipper Analytical Data Services, Inc. ("Lipper"), CDA/Wiesenberger
Investment Companies Services ("CDA/Wiesenberger"), Morningstar, Inc.,
Micropal, Inc. and/or other companies that rank and/or compare mutual funds
by overall performance, investment objectives, assets, expense levels,
periods of existence and/or other factors. In this regard, each Fund may be
compared to its "peer group" as defined by Lipper, CDA/Wiesenberger,
Morningstar and/or other firms, as applicable or to specific funds or groups
of funds within or outside of such peer group. Lipper generally ranks funds
on the basis of total return, assuming reinvestment of distributions, but
does not take sales charges or redemption fees into consideration, and is
prepared without regard to tax consequences. In addition to the mutual fund
rankings, the Fund's performance may be compared to mutual fund performance
indices prepared by Lipper. Morningstar is a mutual fund rating service that
also rates mutual funds on the basis of risk-adjusted performance.
Morningstar ratings are calculated from a fund's three, five and ten year
average annual returns with appropriate fee adjustments and a risk factor
that reflects fund performance relative to the three-month U.S. Treasury
bill monthly returns. Ten percent of the funds in an investment category
receive five stars and 22.5% receive four stars. The ratings are subject to
change each month.
(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 U.S.
(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 29
<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 of which is an on-line database
retrieval service for information including, but not limited to,
international financial and economic data.
(10) Various publications produced by 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 measures 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. Savings accounts offer
a guaranteed rate of return on principal, but no opportunity for capital
growth. During a portion of the period, the maximum rates paid on some
savings deposits were fixed by law.
Indices, economic and financial data prepared by the research departments of
various financial organizations, such as Salomon Brothers, Inc., Lehman
Brothers, Merrill Lynch, Pierce, Fenner & Smith, Inc., Financial Research
Corporation, J. P. Morgan, Morgan Stanley, Smith Barney Shearson, S.G. Warburg,
Jardine Fleming, The Bank for International Settlements, Asian Development Bank,
Bloomberg, L.P., and Ibbotson Associates may be used as well as information
reported by the Federal Reserve and the respective Central Banks of various
nations. In addition, GT Global may use performance rankings, ratings and
commentary reported periodically in national financial publications, including
Money Magazine, Mutual Fund Magazine, Smart Money, Global Finance, EuroMoney,
Financial World, Forbes, Fortune, Business Week, Latin Finance, The Wall Street
Journal, Emerging Markets Weekly, Kiplinger's Guide To Personal Finance,
Barron's, The Financial Times, USA Today, The New York Times 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 that may be developed and made available in the future.
Information relating to foreign market performance, capitalization and
diversification is based on sources believed to be reliable but may be subject
to revision and has not been independently verified by the Funds or GT Global.
The authors and publishers of such material are not to be considered as
"experts" under the 1933 Act, on account of the inclusion of such information
herein.
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 the Funds, nor is it a
prediction of such performance. The performance of the Fund will differ from the
historical performance of relevant indices. The performance of indices does not
take expenses into account, while the Fund incurs expenses in its operations,
which will reduce performance. Each of these factors will cause the performance
of the Fund to differ from relevant indices.
From time to time, each Fund and GT Global may refer to the number of
shareholders in the Fund or the aggregate number of shareholders in all GT
Global Mutual Funds or the dollar amount of Fund assets under management or
rankings by DALBAR Surveys, Inc. in advertising materials.
GT Global believes GT Global America Small Cap Growth Fund and GT Global America
Value Fund can be 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. GT Global America Small Cap Growth Fund and
GT Global America Value Fund do 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 U.S. and
non-U.S. companies and their products, although there can be no assurance that
any GT Global Mutual Fund may own the securities of these companies.
Statement of Additional Information Page 30
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
Ibbotson Associates of Chicago, Illinois ("Ibbotson") provides historical
returns of the capital markets in the United States, including common stocks,
small capitalization stocks, long-term corporate bonds, intermediate-term
government bonds, long-term government bonds, Treasury bills, the U.S. rate of
inflation (based on the CPI), and combinations of various capital markets. The
performance of these capital markets are based on the returns of different
indices.
GT Global 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.
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 the Funds' historical share price fluctuations or total return to
those of a benchmark.
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 describe in its sales material and advertisements how an investor
may invest in GT Global Mutual Funds through various retirement plans or other
programs that offer deferral of income taxes on investment earnings and pursuant
to which an investor may make deductible contributions. Because of their
advantages, these retirement plans and programs may produce returns superior to
comparable non-retirement investments. For example, a $10,000 investment earning
a taxable return of 10% annually would have an after-tax value of $17,976 after
ten years, assuming tax was deducted from the return each year at a 39.6% rate.
An equivalent tax-deferred investment would have an after-tax value of $19,626
after ten years, assuming tax was deducted at a 39.6% rate from the deferred
earnings at the end of the ten-year period. In sales materials and
advertisements, the Fund may also discuss these plans and programs. See
"Information Relating to Sales and Redemptions -- Individual Retirement Accounts
('IRAs') and Other Tax-Deferred Plans."
GT Global may from time to time in its sales methods and advertising discuss the
risks inherent in investing. The major types of investment risk are market risk,
industry risk, credit risk, interest rate risk, liquidity risk and inflation
risk. Risk represents the possibility that you may lose some or all of your
investment over a period of time. A basic tenet of investing is the greater the
potential reward, the greater the risk.
From time to time, the Funds and GT Global will quote information regarding
industries, individual countries, regions, world stock exchanges, and economic
and demographic statistics from sources GT Global deems reliable, including the
economic and financial data of financial organizations, such as:
1) Stock market capitalization: Morgan Stanley Capital International World
Indices, IFC and Datastream.
2) Stock market trading volume: Morgan Stanley Capital International World
Indices and IFC.
3) The number of listed companies: IFC, GT Guide to World Equity Markets,
Salomon Brothers, Inc. and S.G. Warburg.
4) Wage rates: U.S. Department of Labor Statistics and Morgan Stanley Capital
International World 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 CPI and inflation rate: The World Bank, Datastream and IFC.
8) Gross Domestic Product ("GDP"): Datastream and The World Bank.
9) GDP growth rate: IFC, The World Bank and Datastream.
10) Population: The World Bank, Datastream and United Nations.
11) Average annual growth rate (%) of population: The World Bank, Datastream and
United Nations.
12) Age distribution within populations: OECD and United Nations.
Statement of Additional Information Page 31
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
13) Total exports and imports by year: IFC, The World Bank and Datastream.
14) Top three companies by country, industry or market: IFC, GT Guide to World
Equity Markets, Salomon Brothers, Inc. and S.G. Warburg.
15) Foreign direct investments to developing countries: The World Bank and
Datastream.
16) Supply, consumption, demand and growth in demand of certain products,
services and industries, including, but not limited to electricity, water,
transportation, construction materials, natural resources, technology, other
basic infrastructure, financial services, health care services and supplies,
consumer products and services and telecommunications equipment and services
(sources of such information may include, but would not be limited to, The
World Bank, OECD, IMF, Bloomberg and Datastream).
17) Standard deviation and performance returns for U.S. and non-U.S. equity and
bond markets: Morgan Stanley Capital International.
18) Countries restructuring their debt, including those under the Brady Plan:
the 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 advertisements and sales
material, information about privatization, which is an economic process
involving the sale of state-owned companies to the private sector.
In advertising and sales materials, GT Global may make reference to or discuss
its products, services and accomplishments. Among these accomplishments are that
in 1983 the Manager provided assistance to the government of Hong Kong in
linking its currency to the U.S. dollar, and that in 1987 Japan's Ministry of
Finance licensed LGT Asset Management Ltd. as one of the first foreign
discretionary investment managers for Japanese investors. Such accomplishments,
however, should not be viewed as an endorsement of the Manager by the government
of Hong Kong, Japan's Ministry of Finance or any other government or government
agency. Nor do any such accomplishments of the Manager provide any assurance
that the GT Global Mutual Funds' investment objectives will be achieved.
GT GLOBAL ADVANTAGE
As part of Liechtenstein Global Trust, GT Global continues a 75-year tradition
of service to individuals and institutions. Today we bring investors a
combination of experience, worldwide resources, a global perspective, investment
talent and a time-tested investment discipline. With investment professionals in
nine offices worldwide, we witness world events and economic developments
firsthand. 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 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. With respect to stocks, a global stock
research ("GSR") database developed by GT Global is utilized in the selection
process. All stocks within the GSR database are systematically ranked by our
analysts on a 1-5 basis with 1 representing the most favored. The rankings,
along with our quantitative, fundamental research, determine which stocks are
bought and sold.
Statement of Additional Information Page 32
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF BOND RATINGS
MOODY'S rates the debt securities issued by various entities from "Aaa" to
"C." Investment grade ratings are the first four categories:
Aaa -- Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred
to as "gilt 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 -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade 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 -- Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper-medium-grade obligations.
Factors giving security to principal and interest are considered adequate,
but elements may be present which suggest a susceptibility to impairment
some time in the future.
Baa -- Bonds which are rated Baa are considered as medium-grade
obligations, (i.e., they are neither highly protected nor poorly secured).
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
Ba -- Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate, and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B -- Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may
be small.
Caa -- Bonds which are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with respect to
principal or interest.
Ca -- Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.
C -- Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
ABSENCE OF RATING: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies
that are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not
published in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Statement of Additional Information Page 33
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
Note: Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa to Caa. 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 Company ranks in the
lower end of its generic rating category.
S&P rates the securities debt of various entities in categories ranging from
"AAA" to "D" according to quality. Investment grade ratings are the first four
categories:
AAA -- An obligation rated "AAA" has the highest rating assigned by S&P.
The obligor's capacity to meet its financial commitment on the obligation is
extremely strong.
AA -- An obligation rated "AA" differs from the highest rated
obligations only in a small degree. The obligor's capacity to meets its
financial commitment on the obligation is very strong.
A -- An obligation rated "A" is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than obligations
in higher rated categories.
BBB -- An obligation rated "BBB" exhibits adequate protection
parameters. However, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity of the obligor to meet its
financial commitment on the obligation.
BB, B, CCC, CC, C -- Obligations rated "BB," "B," "CCC," "CC," and "C"
are regarded as having significant speculative characteristics. "BB"
indicates the least degree of speculation and "C" the highest. While such
obligations will likely have some quality and protective characteristics,
these may be outweighed by large uncertainties or major exposures to adverse
conditions.
BB -- An obligation rated "BB" is less vulnerable to nonpayment than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to the obligor's inadequate capacity to meet its financial commitment
on the obligation.
B -- An obligation rated "B" is more vulnerable to nonpayment than
obligations rated "BB," but the obligor currently has the capacity to meet
its financial commitment on the obligation. Adverse business, financial, or
economic conditions will likely impair the obligor's capacity or willingness
to meet its financial commitment on the obligation.
CCC -- An obligation rated "CCC" is currently vulnerable to nonpayment,
and is dependent upon favorable business, financial, and economic conditions
for the obligor to meet its financial commitment on the obligation. In the
event of adverse business, financial, or economic conditions, the obligor is
not likely to have the capacity to meet its financial commitment on the
obligation.
CC -- An obligation rated "CC" is currently highly vulnerable to
nonpayment.
C -- The "C" rating may be used to cover a situation where a bankruptcy
petition has been filed or similar action has been taken, but payments on
this obligation are being continued.
D -- An obligation rated "D" is in payment default. The "D" rating
category is used when payments on an obligation are not made on the date due
even if the applicable grace period has not expired, unless S&P believes
that such payments will be made during such grace period. The "D" rating
also will be used upon the filing of a bankruptcy petition or the taking of
a similar action if payments on an obligation are jeopardized.
PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NR: Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
MOODY'S employs the designation "Prime-1" to indicate commercial paper
having 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. Issues rated Prime-2 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
Statement of Additional Information Page 34
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
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 ratings of commercial paper are graded into several categories ranging
from "A-1" for the highest quality obligations to "D" for the lowest. Issues in
the "A" category are delineated with numbers 1, 2, and 3 to indicate the
relative degree of safety. "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 payments on issues with this
designation is satisfactory; however, the relative degree of safety is not as
high as for issues designated "A-1."
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements of each Fund as of December 31, 1997, and for
the fiscal year then ended, appear on the following pages.
Statement of Additional Information Page 35
<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 Small Cap Growth Fund - Consolidated, GT Global America Mid Cap
Growth Fund, 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, 1997, and the related statements 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
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, 1997, 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 the
GT Global America Small Cap Growth Fund - Consolidated, GT Global America Mid
Cap Growth Fund, and GT Global America Value Fund - Consolidated, as of December
31, 1997, the results of their operations for the year then ended, the changes
in their net assets for each of the two years in the period then ended 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 17, 1998
F1
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (33.0%)
Signature Resorts, Inc.-/- ................................ US 45,550 $ 996,400 3.0
LEISURE & TOURISM
Personnel Group of America, Inc.-/- ....................... US 25,700 848,100 2.5
BUSINESS & PUBLIC SERVICES
Insight Enterprises, Inc.-/- .............................. US 20,700 760,725 2.3
RETAILERS-OTHER
Vistana, Inc.-/- .......................................... US 26,900 618,700 1.8
LEISURE & TOURISM
American Disposal Services, Inc.-/- ....................... US 16,700 609,550 1.8
CONSUMER SERVICES
CDW Computer Centers, Inc.-/- ............................. US 11,000 573,375 1.7
RETAILERS-OTHER
Superior Services, Inc.-/- ................................ US 18,000 519,750 1.5
CONSUMER SERVICES
Lason Holdings, Inc.-/- ................................... US 19,000 505,875 1.5
CONSUMER SERVICES
BA Merchant Services, Inc. "A"-/- ......................... US 28,400 504,100 1.5
BUSINESS & PUBLIC SERVICES
Comfort Systems USA, Inc.-/- .............................. US 22,800 450,300 1.3
BUSINESS & PUBLIC SERVICES
HA-LO Industries, Inc.-/- ................................. US 17,200 447,200 1.3
CONSUMER SERVICES
Clear Channel Communications, Inc.-/- ..................... US 5,600 444,850 1.3
TELECOM - OTHER
Caribiner International, Inc.-/- .......................... US 9,300 413,850 1.2
CONSUMER SERVICES
Henry Schein, Inc.-/- ..................................... US 11,400 399,000 1.2
RETAILERS-OTHER
Lamar Advertising Co.-/- .................................. US 9,700 385,575 1.1
BUSINESS & PUBLIC SERVICES
C.H. Robinson Worldwide, Inc. ............................. US 16,600 371,425 1.1
TRANSPORTATION - SHIPPING
Jevic Transportation, Inc.-/- ............................. US 21,100 340,238 1.0
TRANSPORTATION - SHIPPING
Universal Outdoor Holdings, Inc.-/- ....................... US 5,900 306,800 0.9
BUSINESS & PUBLIC SERVICES
Bright Horizons, Inc.-/- .................................. US 16,000 300,000 0.9
CONSUMER SERVICES
Hagler Bailly, Inc.-/- .................................... US 10,900 245,250 0.7
BUSINESS & PUBLIC SERVICES
Service Experts, Inc.-/- .................................. US 8,400 240,450 0.7
CONSUMER SERVICES
Industrial Distribution Group, Inc.-/- .................... US 13,900 218,056 0.6
WHOLESALE & INTERNATIONAL TRADE
Execustay Corp.-/- ........................................ US 19,300 188,175 0.6
LEISURE & TOURISM
BridgeStreet Accommodations, Inc.-/- ...................... US 17,700 179,766 0.5
CONSUMER SERVICES
EduTrek International, Inc. "A"-/- ........................ US 4,900 127,400 0.4
BUSINESS & PUBLIC SERVICES
</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, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
Linens 'N Things, Inc.-/- ................................. US 1,800 $ 78,525 0.2
RETAILERS-APPAREL
NEXTLINK Communications, Inc. "A"-/- ...................... US 3,600 76,725 0.2
TELEPHONE - REGIONAL/LOCAL
Coldwater Creek, Inc.-/- .................................. US 1,800 60,750 0.2
RETAILERS-OTHER
------------
11,210,910
------------
Health Care (14.3%)
Jones Medical Industries, Inc. ............................ US 16,700 638,775 1.9
MEDICAL TECHNOLOGY & SUPPLIES
SangStat Medical Corp.-/- ................................. US 9,400 380,700 1.1
MEDICAL TECHNOLOGY & SUPPLIES
Atria Communities, Inc.-/- ................................ US 21,300 364,763 1.1
HEALTH CARE SERVICES
ESC Medical Systems Ltd.-/- {\/} .......................... ISRL 9,400 364,250 1.1
MEDICAL TECHNOLOGY & SUPPLIES
SEQUUS Pharmaceuticals, Inc.-/- ........................... US 47,900 356,256 1.1
PHARMACEUTICALS
AmeriSource Health Corp. "A"-/- ........................... US 5,600 329,000 1.0
HEALTH CARE SERVICES
Waters Corp.-/- ........................................... US 8,500 319,813 1.0
MEDICAL TECHNOLOGY & SUPPLIES
Arris Pharmaceutical Corp.-/- ............................. US 36,800 308,200 0.9
PHARMACEUTICALS
Pharmacopeia, Inc.-/- ..................................... US 18,100 289,600 0.9
BIOTECHNOLOGY
Lunar Corp.-/- ............................................ US 13,800 282,900 0.8
MEDICAL TECHNOLOGY & SUPPLIES
VIVUS, Inc.-/- ............................................ US 24,600 261,375 0.8
MEDICAL TECHNOLOGY & SUPPLIES
COR Therapeutics, Inc.-/- ................................. US 9,700 218,250 0.6
BIOTECHNOLOGY
Focal, Inc.-/- ............................................ US 18,000 191,250 0.6
MEDICAL TECHNOLOGY & SUPPLIES
Nitinol Medical Technologies, Inc.-/- ..................... US 15,000 120,000 0.4
MEDICAL TECHNOLOGY & SUPPLIES
Gilead Sciences, Inc.-/- .................................. US 2,700 103,275 0.3
BIOTECHNOLOGY
AmeriPath, Inc.-/- ........................................ US 5,800 98,600 0.3
HEALTH CARE SERVICES
Depotech Corp.-/- ......................................... US 23,500 83,719 0.3
PHARMACEUTICALS
Sofamor Danek Group, Inc.-/- .............................. US 600 39,038 0.1
MEDICAL TECHNOLOGY & SUPPLIES
------------
4,749,764
------------
</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, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Technology (13.2%)
Software AG Systems, Inc.-/- .............................. US 31,600 $ 458,200 1.4
SOFTWARE
Documentum, Inc.-/- ....................................... US 10,000 421,250 1.3
SOFTWARE
Analysts International Corp. .............................. US 11,050 381,225 1.1
COMPUTERS & PERIPHERALS
Roper Industries, Inc. .................................... US 12,600 355,950 1.1
INSTRUMENTATION & TEST
Pegasystems, Inc.-/- ...................................... US 16,000 323,000 1.0
SOFTWARE
Integrated Circuit Systems, Inc.-/- ....................... US 10,900 310,650 0.9
SEMICONDUCTORS
MRV Communications, Inc.-/- ............................... US 12,900 307,988 0.9
TELECOM TECHNOLOGY
Ciber, Inc.-/- ............................................ US 4,800 278,400 0.8
COMPUTERS & PERIPHERALS
Inacom Corp.-/- ........................................... US 9,300 260,981 0.8
COMPUTERS & PERIPHERALS
Peerless Systems Corp.-/- ................................. US 18,500 238,188 0.7
SOFTWARE
Metro Information Services, Inc.-/- ....................... US 7,700 213,675 0.6
COMPUTERS & PERIPHERALS
Aspect Development, Inc.-/- ............................... US 3,400 176,800 0.5
SOFTWARE
Logility, Inc.-/- ......................................... US 18,100 176,475 0.5
SOFTWARE
Cirrus Logic, Inc.-/- ..................................... US 15,800 167,875 0.5
SEMICONDUCTORS
Pericom Semiconductor Corp.-/- ............................ US 15,400 112,613 0.3
SEMICONDUCTORS
FactSet Research Systems, Inc.-/- ......................... US 2,300 70,725 0.2
COMPUTERS & PERIPHERALS
Aehr Test Systems-/- ...................................... US 8,400 67,200 0.2
INSTRUMENTATION & TEST
PRI Automation, Inc.-/- ................................... US 2,000 57,750 0.2
COMPUTERS & PERIPHERALS
Excel Switching Corp.-/- .................................. US 2,800 50,050 0.2
TELECOM TECHNOLOGY
------------
4,428,995
------------
Finance (9.3%)
AmeriCredit Corp.-/- ...................................... US 15,100 418,081 1.2
CONSUMER FINANCE
Camden Property Trust ..................................... US 13,400 415,400 1.2
REAL ESTATE INVESTMENT TRUST
LaSalle Partners, Inc.-/- ................................. US 11,500 409,688 1.2
REAL ESTATE
Affiliated Managers Group, Inc.-/- ........................ US 13,000 377,000 1.1
INVESTMENT MANAGEMENT
</TABLE>
The accompanying notes are an integral part of the financial statements.
F4
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (Continued)
ARM Financial Group, Inc. "A"-/- .......................... US 13,200 $ 348,150 1.0
INVESTMENT MANAGEMENT
HomeSide, Inc.-/- ......................................... US 12,000 330,750 1.0
SAVINGS & LOANS
Stirling Cooke Brown Holdings Ltd.-/- ..................... US 8,900 218,050 0.6
INSURANCE - PROPERTY-CASUALTY
Resource America, Inc. "A" ................................ US 3,900 178,425 0.5
CONSUMER FINANCE
American Capital Strategies Ltd. .......................... US 9,800 177,625 0.5
CONSUMER FINANCE
PAULA Financial-/- ........................................ US 5,800 133,400 0.4
REAL ESTATE
Tower Realty Trust, Inc. .................................. US 5,100 125,588 0.4
REAL ESTATE INVESTMENT TRUST
Citizens National Bank of Texas ........................... US 6,600 82,500 0.2
BANKS-REGIONAL
------------
3,214,657
------------
Capital Goods (7.4%)
General Cable Corp.-/- .................................... US 17,500 633,281 1.9
INDUSTRIAL COMPONENTS
Knoll, Inc.-/- ............................................ US 18,400 591,100 1.8
OFFICE EQUIPMENT
Chart Industries, Inc. .................................... US 17,100 390,094 1.2
MACHINERY & ENGINEERING
OSI Systems, Inc.-/- ...................................... US 22,300 273,175 0.8
ELECTRICAL PLANT/EQUIPMENT
Wyman-Gordon Co.-/- ....................................... US 13,700 268,863 0.8
ELECTRICAL PLANT/EQUIPMENT
The Middleby Corp.-/- ..................................... US 20,700 161,719 0.5
MACHINERY & ENGINEERING
Power-One, Inc.-/- ........................................ US 9,000 123,750 0.4
INDUSTRIAL COMPONENTS
------------
2,441,982
------------
Energy (5.4%)
Newfield Exploration Co.-/- ............................... US 27,900 650,419 1.9
OIL
Hanover Compressor Co.-/- ................................. US 27,800 556,000 1.7
ENERGY EQUIPMENT & SERVICES
Pride International, Inc.-/- .............................. US 10,400 262,600 0.8
OIL
ADAC Laboratories-/- ...................................... US 13,100 258,725 0.8
ENERGY EQUIPMENT & SERVICES
Dril-Quip, Inc.-/- ........................................ US 2,000 70,250 0.2
ENERGY EQUIPMENT & SERVICES
------------
1,797,994
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F5
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Non-Durables (4.2%)
JLK Direct Distribution, Inc. "A"-/- ...................... US 20,200 $ 565,600 1.7
OTHER CONSUMER GOODS
DM Management Co.-/- ...................................... US 20,900 326,563 1.0
OTHER CONSUMER GOODS
GameTech International, Inc.-/- ........................... US 30,100 323,575 1.0
RECREATION
Meadowcraft, Inc.-/- ...................................... US 13,600 159,800 0.5
HOUSEHOLD PRODUCTS
------------
1,375,538
------------
Materials/Basic Industry (3.9%)
Cambrex Corp. ............................................. US 10,100 464,600 1.4
CHEMICALS
Gibraltar Steel Corp.-/- .................................. US 22,600 446,350 1.3
METALS - STEEL
Crompton & Knowles Corp. .................................. US 12,700 336,550 1.0
CHEMICALS
Steel Dynamics, Inc.-/- ................................... US 4,200 67,200 0.2
METALS - STEEL
------------
1,314,700
------------
Consumer Durables (3.8%)
Avis Rent A Car, Inc.-/- .................................. US 17,000 542,938 1.6
AUTOMOBILES
Tower Automotive, Inc.-/- ................................. US 10,800 454,275 1.3
AUTO PARTS
Aftermarket Technology Corp.-/- ........................... US 17,400 315,375 0.9
AUTO PARTS
------------
1,312,588
------------
Multi-Industry/Miscellaneous (2.5%)
Cornell Corrections, Inc.-/- .............................. US 23,500 487,625 1.4
MISCELLANEOUS
Equity Corporation International-/- ....................... US 15,600 360,750 1.1
MISCELLANEOUS
------------
848,375
------------ -----
TOTAL EQUITY INVESTMENTS (cost $31,799,304) ................. 32,695,503 97.0
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
F6
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Repurchase Agreement (Note 1) Assets
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust
Co., due January 2, 1998, for an effective yield of 5.80%
collateralized by $905,000 U.S. Treasury Notes, 5.75% due
12/31/98 (market value of collateral is $905,993,
including accrued interest). (cost $884,000) ............ $ 884,000 2.6
------------ -----
TOTAL INVESTMENTS (cost $32,683,304) * ..................... 33,579,503 99.6
Other Assets and Liabilities ................................ 131,240 0.4
------------ -----
NET ASSETS .................................................. $ 33,710,743 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $32,768,260 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 2,952,339
Unrealized depreciation: (2,141,096)
-------------
Net unrealized appreciation: $ 811,243
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F7
<PAGE>
GT GLOBAL AMERICA MID CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (36.5%)
Cendant Corp.-/- .......................................... US 924,232 $ 31,770,471 6.2
RETAILERS-OTHER
Snyder Communications, Inc.-/- ............................ US 571,700 20,867,050 4.1
CONSUMER SERVICES
Outdoor Systems, Inc.-/- .................................. US 477,325 18,317,347 3.6
BUSINESS & PUBLIC SERVICES
Signature Resorts, Inc.-/- ................................ US 789,900 17,279,063 3.4
LEISURE & TOURISM
Hilton Hotels Corp. ....................................... US 502,100 14,937,475 2.9
LEISURE & TOURISM
U.S. Office Products Co.-/- ............................... US 734,650 14,417,506 2.8
CONSUMER SERVICES
Caribiner International, Inc.-/- .......................... US 320,500 14,262,250 2.8
CONSUMER SERVICES
Universal Outdoor Holdings, Inc.-/- ....................... US 264,900 13,774,800 2.7
BUSINESS & PUBLIC SERVICES
Mirage Resorts, Inc.-/- ................................... US 381,900 8,688,225 1.7
LEISURE & TOURISM
Nextel Communications, Inc. "A"-/- ........................ US 303,300 7,885,800 1.5
WIRELESS COMMUNICATIONS
Valassis Communications, Inc.-/- .......................... US 209,400 7,747,800 1.5
BROADCASTING & PUBLISHING
Paychex, Inc. ............................................. US 140,200 7,097,625 1.4
CONSUMER SERVICES
Service Corporation International ......................... US 137,500 5,078,906 1.0
CONSUMER SERVICES
Wolverine World Wide, Inc. ................................ US 201,600 4,561,200 0.9
RETAILERS-APPAREL
------------
186,685,518
------------
Finance (14.6%)
Conseco, Inc. ............................................. US 348,200 15,821,338 3.1
INSURANCE - MULTI-LINE
GreenPoint Financial Corp. ................................ US 154,100 11,181,881 2.2
BANKS-REGIONAL
CMAC Investment Corp. ..................................... US 149,700 9,038,138 1.8
INSURANCE - PROPERTY-CASUALTY
National Commerce Bancorp. ................................ US 252,800 8,911,200 1.7
OTHER FINANCIAL
Exel Ltd. ................................................. US 120,500 7,636,688 1.5
INSURANCE - PROPERTY-CASUALTY
The CIT Group, Inc. "A"-/- ................................ US 228,400 7,365,900 1.4
CONSUMER FINANCE
Consolidated Capital Corp.-/- ............................. US 323,500 6,571,094 1.3
INVESTMENT MANAGEMENT
Student Loan Marketing Association ........................ US 42,800 5,954,550 1.2
OTHER FINANCIAL
Ace Ltd. .................................................. US 20,100 1,939,650 0.4
INSURANCE - PROPERTY-CASUALTY
------------
74,420,439
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F8
<PAGE>
GT GLOBAL AMERICA MID CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Health Care (11.1%)
AmeriSource Health Corp. "A"-/- ........................... US 214,600 $ 12,607,750 2.5
HEALTH CARE SERVICES
McKesson Corp. ............................................ US 114,600 12,398,288 2.4
HEALTH CARE SERVICES
HBO & Co. ................................................. US 203,800 9,782,400 1.9
HEALTH CARE SERVICES
Quintiles Transnational Corp.-/- .......................... US 246,100 9,413,325 1.8
HEALTH CARE SERVICES
Covance, Inc.-/- .......................................... US 337,000 6,697,875 1.3
HEALTH CARE SERVICES
Guidant Corp. ............................................. US 97,400 6,063,150 1.2
MEDICAL TECHNOLOGY & SUPPLIES
------------
56,962,788
------------
Technology (11.1%)
PeopleSoft, Inc.-/- ....................................... US 380,600 14,843,400 2.9
SOFTWARE
Sterling Commerce, Inc.-/- ................................ US 365,200 14,037,375 2.7
SOFTWARE
Ciena Corp.-/- ............................................ US 186,700 11,412,038 2.2
TELECOM TECHNOLOGY
CBT Group PLC - ADR-/- {\/} ............................... IRE 110,800 9,099,450 1.8
COMPUTERS & PERIPHERALS
Pegasystems, Inc.-/- ...................................... US 371,300 7,495,619 1.5
SOFTWARE
------------
56,887,882
------------
Materials/Basic Industry (9.7%)
Crompton & Knowles Corp. .................................. US 529,200 14,023,800 2.7
CHEMICALS
International Specialty Products, Inc.-/- ................. US 834,000 12,457,875 2.4
CHEMICALS
Sealed Air Corp.-/- ....................................... US 201,000 12,411,750 2.4
PLASTICS & RUBBER
J. Ray McDermott S.A.-/- .................................. US 263,900 11,347,700 2.2
BUILDING MATERIALS & COMPONENTS
------------
50,241,125
------------
Energy (8.6%)
Cooper Cameron Corp.-/- ................................... US 170,500 10,400,500 2.0
ENERGY EQUIPMENT & SERVICES
BJ Services Co.-/- ........................................ US 120,600 8,675,663 1.7
ENERGY EQUIPMENT & SERVICES
Anadarko Petroleum Corp. .................................. US 138,900 8,429,494 1.7
OIL
Smith International, Inc.-/- .............................. US 135,600 8,322,450 1.6
ENERGY EQUIPMENT & SERVICES
</TABLE>
The accompanying notes are an integral part of the financial statements.
F9
<PAGE>
GT GLOBAL AMERICA MID CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Energy (Continued)
Santa Fe International Corp. .............................. US 198,200 $ 8,064,263 1.6
ENERGY EQUIPMENT & SERVICES
------------
43,892,370
------------
Consumer Durables (4.1%)
Avis Rent A Car, Inc.-/- .................................. US 326,900 10,440,369 2.0
AUTOMOBILES
Hertz Corp. "A" ........................................... US 152,500 6,138,125 1.2
AUTOMOBILES
Dollar Thrifty Automotive Group, Inc.-/- .................. US 235,000 4,817,500 0.9
AUTOMOBILES
------------
21,395,994
------------
Multi-Industry/Miscellaneous (2.4%)
Corrections Corporation of America-/- ..................... US 324,500 12,026,781 2.4
------------
MISCELLANEOUS
Consumer Non-Durables (1.3%)
International Home Foods, Inc.-/- ......................... US 240,400 6,731,200 1.3
------------
FOOD
Capital Goods (1.3%)
U.S. Filter Corp.-/- ...................................... US 213,100 6,379,681 1.3
ENVIRONMENTAL
------------ -----
TOTAL EQUITY INVESTMENTS (cost $450,142,030) ................ 515,623,778 100.7
------------ -----
<CAPTION>
Value % of Net
Repurchase Agreement (Note 1) Assets
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust
Co., due January 2, 1998, for an effective yield of 5.80%,
collateralized by $20,985,000 U.S. Treasury Notes, 5.75%
due 12/31/98 (market value of collateral is $21,004,684,
including accrued interest).
(cost $20,589,000) ...................................... 20,589,000 4.0
------------ -----
TOTAL INVESTMENTS (cost $470,731,030) * .................... 536,212,778 104.7
Other Assets and Liabilities ................................ (23,930,616) (4.7)
------------ -----
NET ASSETS .................................................. $512,282,162 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $472,057,961 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 72,285,341
Unrealized depreciation: (8,130,524)
-------------
Net unrealized appreciation: $ 64,154,817
-------------
-------------
</TABLE>
Abbreviation:
ADR--American Depositary Receipt
The accompanying notes are an integral part of the financial statements.
F10
<PAGE>
GT GLOBAL AMERICA VALUE FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (36.6%)
Student Loan Marketing Association ........................ US 5,175 $ 719,972 2.9
OTHER FINANCIAL
Travelers Group, Inc. ..................................... US 11,850 638,419 2.6
INSURANCE - MULTI-LINE
Allstate Corp. ............................................ US 6,875 624,766 2.5
INSURANCE - MULTI-LINE
Chase Manhattan Corp. ..................................... US 5,675 621,413 2.5
BANKS-MONEY CENTER
Household International, Inc. ............................. US 4,600 586,779 2.4
OTHER FINANCIAL
NationsBank Corp. ......................................... US 9,600 583,800 2.3
BANKS-SUPER REGIONAL
First Union Corp. (N.C.) .................................. US 11,300 579,125 2.3
BANKS-SUPER REGIONAL
Exel Ltd. ................................................. US 8,900 564,038 2.3
INSURANCE - PROPERTY-CASUALTY
BankAmerica Corp. ......................................... US 7,250 529,250 2.1
BANKS-SUPER REGIONAL
Citicorp .................................................. US 4,100 518,394 2.1
BANKS-MONEY CENTER
Fleet Financial Group, Inc. ............................... US 5,800 434,638 1.8
BANKS-SUPER REGIONAL
GreenPoint Financial Corp. ................................ US 5,900 428,119 1.7
BANKS-REGIONAL
Norwest Corp. ............................................. US 10,950 422,944 1.7
BANKS-REGIONAL
Equity Office Properties Trust ............................ US 9,700 306,156 1.2
REAL ESTATE INVESTMENT TRUST
Crescent Real Estate Equities Co. ......................... US 7,200 283,500 1.1
REAL ESTATE INVESTMENT TRUST
Tower Realty Trust, Inc. .................................. US 11,100 273,338 1.1
REAL ESTATE INVESTMENT TRUST
Patriot American Hospitality, Inc. ........................ US 9,198 265,017 1.1
REAL ESTATE INVESTMENT TRUST
Equity Residential Property Trust ......................... US 4,875 246,492 1.0
REAL ESTATE INVESTMENT TRUST
Highwoods Properties, Inc. ................................ US 6,425 238,930 1.0
REAL ESTATE INVESTMENT TRUST
Felcor Suite Hotels, Inc. ................................. US 6,025 213,888 0.9
REAL ESTATE INVESTMENT TRUST
------------
9,078,978
------------
Energy (16.4%)
McDermott International, Inc. ............................. US 13,900 509,088 2.0
ENERGY EQUIPMENT & SERVICES
Mobil Corp. ............................................... US 6,300 454,781 1.8
OIL
Amerada Hess Corp. ........................................ US 8,025 440,372 1.8
OIL
</TABLE>
The accompanying notes are an integral part of the financial statements.
F11
<PAGE>
GT GLOBAL AMERICA VALUE FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Energy (Continued)
Tosco Corp. ............................................... US 10,600 $ 400,813 1.6
GAS PRODUCTION & DISTRIBUTION
Unocal Corp. .............................................. US 9,800 380,363 1.5
OIL
Ultramar Diamond Shamrock Corp. ........................... US 11,925 380,109 1.5
OIL
Pinnacle West Capital Corp. ............................... US 8,025 340,059 1.4
ELECTRICAL & GAS UTILITIES
Texaco, Inc. .............................................. US 5,850 318,094 1.3
OIL
Edison International ...................................... US 10,300 280,031 1.1
ELECTRICAL & GAS UTILITIES
Central & South West Corp. ................................ US 8,700 235,444 1.0
ELECTRICAL & GAS UTILITIES
GPU, Inc. ................................................. US 5,225 220,103 0.9
ELECTRICAL & GAS UTILITIES
CMS Energy Corp. .......................................... US 2,550 112,359 0.5
ELECTRICAL & GAS UTILITIES
------------
4,071,616
------------
Services (14.5%)
Bell Atlantic Corporation ................................. US 7,500 682,500 2.8
TELEPHONE - REGIONAL/LOCAL
Federated Department Stores, Inc.-/- ...................... US 15,800 680,388 2.7
RETAILERS-APPAREL
U.S. West, Inc. ........................................... US 12,500 564,063 2.3
TELEPHONE - REGIONAL/LOCAL
Burlington Northern, Inc. ................................. US 6,000 557,625 2.3
TRANSPORTATION - ROAD & RAIL
The Limited, Inc. ......................................... US 19,825 505,538 2.0
RETAILERS-APPAREL
Time Warner, Inc. ......................................... US 5,525 342,550 1.4
BROADCASTING & PUBLISHING
ITT Corp.-/- .............................................. US 3,100 256,913 1.0
LEISURE & TOURISM
------------
3,589,577
------------
Materials/Basic Industry (11.2%)
Imperial Chemical Industries PLC - ADR{\/} ................ UK 10,900 707,819 2.9
CHEMICALS
Hercules, Inc. ............................................ US 8,075 404,255 1.6
CHEMICALS
Stone Container Corp.-/- .................................. US 38,600 402,888 1.6
PAPER/PACKAGING
Crompton & Knowles Corp. .................................. US 14,400 381,600 1.5
CHEMICALS
W.R. Grace & Co. .......................................... US 4,225 339,848 1.4
CHEMICALS
Aluminum Company of America (ALCOA) ....................... US 4,400 309,650 1.2
METALS - NON-FERROUS
</TABLE>
The accompanying notes are an integral part of the financial statements.
F12
<PAGE>
GT GLOBAL AMERICA VALUE FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (Continued)
PPG Industries, Inc. ...................................... US 4,200 $ 239,925 1.0
CHEMICALS
------------
2,785,985
------------
Consumer Durables (6.4%)
Ford Motor Co. ............................................ US 14,650 713,272 2.9
AUTOMOBILES
Chrysler Corp. ............................................ US 12,725 447,761 1.8
AUTOMOBILES
Dollar Thrifty Automotive Group, Inc.-/- .................. US 20,000 410,000 1.7
AUTOMOBILES
------------
1,571,033
------------
Consumer Non-Durables (5.2%)
RJR Nabisco Holdings Corp. ................................ US 16,875 632,813 2.5
TOBACCO
Philip Morris Cos., Inc. .................................. US 8,550 387,422 1.6
TOBACCO
Fruit of the Loom, Inc.-/- ................................ US 10,700 274,188 1.1
TEXTILES & APPAREL
------------
1,294,423
------------
Technology (4.9%)
International Business Machines Corp. ..................... US 7,000 731,938 2.9
COMPUTERS & PERIPHERALS
Compaq Computer Corp.-/- .................................. US 8,950 505,116 2.0
COMPUTERS & PERIPHERALS
------------
1,237,054
------------
Capital Goods (1.2%)
Textron, Inc. ............................................. US 4,800 300,000 1.2
AEROSPACE/DEFENSE
------------ -----
TOTAL EQUITY INVESTMENTS (cost $21,927,922) ................. 23,928,666 96.4
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
F13
<PAGE>
GT GLOBAL AMERICA VALUE FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Repurchase Agreement (Note 1) Assets
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust
Co., due January 2, 1998, for an effective yield of 5.80%,
collateralized by $1,130,000 U.S. Treasury Notes, 5.75%
due 12/31/98 (market value of collateral is $1,131,060,
including accrued interest).
(cost $1,104,000) ....................................... $ 1,104,000 4.4
------------ -----
TOTAL INVESTMENTS (cost $23,031,922) * ..................... 25,032,666 100.8
Other Assets and Liabilities ................................ (208,051) (0.8)
------------ -----
NET ASSETS .................................................. $ 24,824,615 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $23,069,999 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 2,281,685
Unrealized depreciation: (319,018)
-------------
Net unrealized appreciation: $ 1,962,667
-------------
-------------
</TABLE>
Abbreviation:
ADR--American Depositary Receipt
The accompanying notes are an integral part of the financial statements.
F14
<PAGE>
GT GLOBAL AMERICA FUNDS
STATEMENTS OF ASSETS
AND LIABILITIES
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT Global
---------------------------------------------
America America
Small Cap Mid Cap America
Growth Growth Value
Fund-Consolidated Fund Fund-Consolidated
-------------- ------------- --------------
<S> <C> <C> <C>
Assets:
Investments in securities, at value (cost $32,683,304; $470,731,030;
and $23,031,922, respectively) (Note 1)............................ $33,579,503 $536,212,778 $25,032,666
U.S. currency....................................................... 927 295 988
Dividends receivable................................................ 10,766 125,429 42,920
Interest receivable................................................. 142 3,317 177
Receivable for Fund shares sold..................................... 358,830 628,959 306,827
Receivable for securities sold...................................... 887,683 -- 90,237
Unamortized organizational costs (Note 1)........................... 49,458 -- 49,458
-------------- ------------- --------------
Total assets...................................................... 34,887,309 536,970,778 25,523,273
-------------- ------------- --------------
Liabilities:
Payable for custodian fees.......................................... 2,924 25,081 2,892
Payable for Directors' and Trustees' fees and expenses (Note 2)..... 5,310 5,062 5,725
Payable for fund accounting fees (Note 2)........................... 1,488 9,945 652
Payable for Fund shares repurchased................................. 716,716 3,845,129 356,809
Payable for investment management and administration fees (Note
2)................................................................. 19,707 306,242 417
Payable for printing and postage expenses........................... 16,077 31,815 16,948
Payable for professional fees....................................... 15,217 27,546 19,018
Payable for registration and filing fees............................ 15,960 3,900 8,146
Payable for securities purchased.................................... 348,610 19,887,085 263,514
Payable for service and distribution expenses (Note 2).............. 21,124 285,634 15,365
Payable for transfer agent fees (Note 2)............................ 11,763 231,778 5,430
Other accrued expenses.............................................. 1,570 29,399 3,642
-------------- ------------- --------------
Total liabilities................................................. 1,176,466 24,688,616 698,558
Minority interest (Notes 1 & 2)..................................... 100 -- 100
-------------- ------------- --------------
Net assets............................................................ $33,710,743 $512,282,162 $24,824,615
-------------- ------------- --------------
-------------- ------------- --------------
Class A:
Net asset value and redemption price per share ($10,896,107 DIVIDED BY
763,367;
$255,674,204 DIVIDED BY 12,169,079; and $7,668,100 DIVIDED BY 444,643
shares outstanding, respectively) ................................... $ 14.27 $ 21.01 $ 17.25
-------------- ------------- --------------
-------------- ------------- --------------
Maximum offering price per share (100/95.25 of $14.27; 100/95.25 of
$21.01; and 100/95.25 of $17.25, respectively) *..................... $ 14.98 $ 22.06 $ 18.11
-------------- ------------- --------------
-------------- ------------- --------------
Class B:+
Net asset value and offering price per share $21,222,157 DIVIDED BY
1,509,212; $255,468,031 DIVIDED BY 12,580,716; and $16,717,458
DIVIDED BY 981,035 shares outstanding, respectively)................. $ 14.06 $ 20.31 $ 17.04
-------------- ------------- --------------
-------------- ------------- --------------
Advisor Class:
Net asset value and offering price per share, and redemption price per
share ($1,592,479 DIVIDED BY 110,687; $1,139,927 DIVIDED BY 54,025;
and $439,057 DIVIDED BY 25,283 shares outstanding, respectively)..... $ 14.39 $ 21.10 $ 17.37
-------------- ------------- --------------
-------------- ------------- --------------
Net assets consist of:
Paid in capital (Note 4)............................................ $31,557,971 $430,679,692 $22,421,981
Accumulated net realized gain on investments........................ 1,256,573 16,120,722 401,890
Net unrealized appreciation of investments.......................... 896,199 65,481,748 2,000,744
-------------- ------------- --------------
Total -- representing net assets applicable to capital shares
outstanding.......................................................... $33,710,743 $512,282,162 $24,824,615
-------------- ------------- --------------
-------------- ------------- --------------
<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.
F15
<PAGE>
GT GLOBAL AMERICA FUNDS
STATEMENTS OF OPERATIONS
Year ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT Global
------------------------------------------
America America
Small Cap Mid Cap America
Growth Growth Value
Fund-Consolidated Fund Fund-Consolidated
------------- ------------ -------------
<S> <C> <C> <C>
Investment income: (Note 1)
Dividend income.............................................. $ 35,957 $2,095,256 $ 357,943
Interest income.............................................. 95,213 519,576 46,139
------------- ------------ -------------
Total investment income.................................... 131,170 2,614,832 404,082
------------- ------------ -------------
Expenses:
Investment management and administration fees (Note 2)....... 184,004 3,999,732 113,543
Amortization of organization costs (Note 1).................. 17,702 -- 17,702
Custodian Fees............................................... 21,876 137,385 9,431
Directors' and Trustees' fees and expenses (Note 2).......... 14,813 12,580 12,042
Fund accounting fees (Note 2)................................ 6,379 142,274 3,938
Printing and postage expenses................................ 61,435 102,242 51,829
Professional fees............................................ 63,468 72,533 71,745
Registration and filing fees................................. 72,360 73,688 65,399
Service and distribution expenses: (Note 2)
Class A.................................................... 33,776 958,593 17,701
Class B.................................................... 148,043 2,781,908 102,587
Transfer agent fees (Note 2)................................. 102,790 1,545,314 59,946
Other expenses (Note 1)...................................... 5,430 156,232 9,271
------------- ------------ -------------
Total expenses before reductions and reimbursement......... 732,076 9,982,481 535,134
------------- ------------ -------------
Expenses reimbursed by Chancellor LGT Asset Management,
Inc. (Note 2)........................................... (131,297) -- (151,962)
Expense reductions (Notes 1 & 5)......................... (20,049) (600,349) (1,332)
------------- ------------ -------------
Total net expenses......................................... 580,730 9,382,132 381,840
------------- ------------ -------------
Net investment income (loss)................................... (449,560) (6,767,300) 22,242
------------- ------------ -------------
Net realized and unrealized gain on investments: (Note 1)
Net realized gain on investments............................. 2,524,251 91,288,360 1,352,859
Net change in unrealized appreciation (depreciation) of
investments................................................. 1,674,235 (23,043,968) 2,016,032
------------- ------------ -------------
Net realized and unrealized gain on investments................ 4,198,486 68,244,392 3,368,891
------------- ------------ -------------
Net increase in net assets resulting from operations........... $ 3,748,926 $61,477,092 $ 3,391,133
------------- ------------ -------------
------------- ------------ -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F16
<PAGE>
GT GLOBAL AMERICA FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT Global
----------------------------------------------------------------------------
America Small Cap America Mid Cap America Value
Growth Fund-Consolidated Growth Fund Fund-Consolidated
------------------------ ------------------------ ------------------------
Year ended Year ended Year ended Year ended Year ended Year ended
December December December December December December
31, 31, 31, 31, 31, 31,
1997 1996 1997 1996 1997 1996
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss).......... $(449,560) $(110,516) $(6,767,300) $(1,367,346) $ 22,242 $ (30,160)
Net realized gain on investments and
foreign currency transactions........ 2,524,251 1,264,689 91,288,360 24,339,369 1,352,859 733,904
Net change in unrealized appreciation
(depreciation) of investments........ 1,674,235 (782,829) (23,043,968) 76,318,599 2,016,032 (69,965)
----------- ----------- ----------- ----------- ----------- -----------
Net increase in net assets resulting
from operations.................... 3,748,926 371,344 61,477,092 99,290,622 3,391,133 633,779
----------- ----------- ----------- ----------- ----------- -----------
Class A:
Distributions to shareholders: (Note 1)
From net investment income............ -- -- -- -- (12,256) --
From net realized gain on
investments.......................... (213,287) (564,752) (27,861,047) (21,518,831) (482,262) (7,007)
Class B:
Distributions to shareholders: (Note 1)
From net investment income............ -- -- -- -- -- --
From net realized gain on
investments.......................... (410,555) (727,944) (29,550,073) (20,232,121) (1,128,861) (14,950)
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income............ -- -- -- -- (1,610) --
From net realized gain on
investments.......................... (32,021) (28,106) (120,835) (167,680) (30,657) (443)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions................. (655,863) (1,320,802) (57,531,955) (41,918,632) (1,655,646) (22,400)
----------- ----------- ----------- ----------- ----------- -----------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested........................... 60,411,522 43,976,336 783,255,935 2,122,781,710 33,884,259 11,770,124
Decrease from capital shares
repurchased.......................... (49,371,158) (27,455,528) (954,921,988) (2,246,270,951) (19,018,130) (6,364,460)
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) from capital
share transactions................. 11,040,364 16,520,808 (171,666,053) (123,489,241) 14,866,129 5,405,664
----------- ----------- ----------- ----------- ----------- -----------
Total increase (decrease) in net
assets................................. 14,133,427 15,571,350 (167,720,916) (66,117,251) 16,601,616 6,017,043
Net assets:
Beginning of year..................... 19,577,316 4,005,966 680,003,078 746,120,329 8,222,999 2,205,956
----------- ----------- ----------- ----------- ----------- -----------
End of year *........................ 3$3,710,743 1$9,577,316 $512,282,162 $680,003,078 2$4,824,615 $8,222,999
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
* Includes undistributed/accumulated
net investment income (loss) of...... $ -- $ -- $ -- $ -- $ -- $ --
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F17
<PAGE>
GT GLOBAL AMERICA FUNDS
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>
Small Cap Growth Fund
------------------------------------------
Class A
------------------------------------------
October 18,
1995
(commencement
of operations)
Year ended Year ended to December
December 31, December 31, 31,
1997 (d) 1996 (d) 1995 (d)
------------ ------------ --------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.52 $ 11.80 $ 11.43
------------ ------------ --------------
Income from investment operations:
Net investment income (loss).......... (0.18) ** (0.05) ** 0.04*
Net realized and unrealized gain on
investments.......................... 2.20 1.69 0.33
------------ ------------ --------------
Net increase from investment
operations......................... 2.02 1.64 0.37
------------ ------------ --------------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.27) (0.92) --
------------ ------------ --------------
Total distributions................. (0.27) (0.92) --
------------ ------------ --------------
Net asset value, end of period.......... $ 14.27 $ 12.52 $ 11.80
------------ ------------ --------------
------------ ------------ --------------
Total investment return (c)............. 16.23 % 13.81 % 3.24 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 10,896 $ 8,448 $ 1,931
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... (1.40)% (0.38)% 1.68 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (2.00)% (1.47)% (20.52)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 1.92 % 2.00 % 2.00 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 2.52 % 3.09 % 24.20 %(a)
Portfolio turnover rate+................ 233 % 150 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0517 $ 0.0489 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total Investment Return does not include sales charges.
(d) Calculated based upon 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.
* * * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.25), $(0.33), and
$(0.21) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1997.
+ 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.
The accompanying notes are an integral part of the financial statements.
F18
<PAGE>
GT GLOBAL AMERICA FUNDS
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>
Small Cap Growth Fund
------------------------------------------
Class B
------------------------------------------
October 18,
1995
(commencement
of operations)
Year ended Year ended to December
December 31, December 31, 31,
1997 (d) 1996 (d) 1995 (d)
------------ ------------ --------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.42 $ 11.78 $ 11.43
------------ ------------ --------------
Income from investment operations:
Net investment income (loss).......... (0.26) ** (0.14) ** 0.02*
Net realized and unrealized gain on
investments.......................... 2.17 1.70 0.33
------------ ------------ --------------
Net increase from investment
operations......................... 1.91 1.56 0.35
------------ ------------ --------------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.27) (0.92) --
------------ ------------ --------------
Total distributions................. (0.27) (0.92) --
------------ ------------ --------------
Net asset value, end of period.......... $ 14.06 $ 12.42 $ 11.78
------------ ------------ --------------
------------ ------------ --------------
Total investment return (c)............. 15.47 % 13.14 % 3.06 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 21,222 $ 10,694 $ 2,024
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... (2.05)% (1.03)% 1.03 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (2.65)% (2.12)% (21.17)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 2.57 % 2.65 % 2.65 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 3.17 % 3.74 % 24.85 %(a)
Portfolio turnover rate+................ 233 % 150 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0517 $ 0.0489 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total Investment Return does not include sales charges.
(d) Calculated based upon 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.
* * * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.25), $(0.33), and
$(0.21) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1997.
+ 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.
The accompanying notes are an integral part of the financial statements.
F19
<PAGE>
GT GLOBAL AMERICA FUNDS
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>
Small Cap Growth Fund
------------------------------------------
Advisor Class
------------------------------------------
October 18,
1995
(commencement
of operations)
Year ended Year ended to December
December 31, December 31, 31,
1997 (d) 1996 (d) 1995 (d)
------------ ------------ --------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.58 $ 11.81 $ 11.43
------------ ------------ --------------
Income from investment operations:
Net investment income (loss).......... (0.14) ** --** 0.05*
Net realized and unrealized gain on
investments.......................... 2.22 1.69 0.33
------------ ------------ --------------
Net increase from investment
operations......................... 2.08 1.69 0.38
------------ ------------ --------------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.27) (0.92) --
------------ ------------ --------------
Total distributions................. (0.27) (0.92) --
------------ ------------ --------------
Net asset value, end of period.......... $ 14.39 $ 12.58 $ 11.81
------------ ------------ --------------
------------ ------------ --------------
Total investment return (c)............. 16.63 % 14.22 % 3.32 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 1,592 $ 435 $ 52
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... (1.05)% (0.03)% 2.03 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (1.65)% (1.12)% (20.17)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 1.57 % 1.65 % 1.65 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 2.17 % 2.74 % 23.85 %(a)
Portfolio turnover rate+................ 233 % 150 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0517 $ 0.0489 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total Investment Return does not include sales charges.
(d) Calculated based upon 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.
* * * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.25), $(0.33), and
$(0.21) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1997.
+ 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.
The accompanying notes are an integral part of the financial statements.
F20
<PAGE>
GT GLOBAL AMERICA FUNDS
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>
Mid Cap Growth Fund
----------------------------------------------------------
Class A+
----------------------------------------------------------
Year ended December 31,
----------------------------------------------------------
1997 1996 1995 1994 (d) 1993
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 20.77 $ 19.07 $ 17.69 $ 17.17 $ 17.12
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... (0.20) 0.03 0.24 0.04 (0.21)
Net realized and unrealized gain on
investments.......................... 3.00 2.96 3.93 2.55 1.56
---------- ---------- ---------- ---------- ----------
Net increase from investment
operations......................... 2.80 2.99 4.17 2.59 1.35
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ -- -- (0.21) (0.02) --
From net realized gain on
investments.......................... (2.56) (1.29) (2.58) (2.05) (1.30)
---------- ---------- ---------- ---------- ----------
Total distributions................. (2.56) (1.29) (2.79) (2.07) (1.30)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 21.01 $ 20.77 $ 19.07 $ 17.69 $ 17.17
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 14.05% 15.65% 23.23% 15.69% 8.3%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 255,674 $ 343,427 $ 396,291 $ 196,937 $ 116,468
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... (0.90)% 0.12% 1.24% 0.17% (0.7)%
Without expense reductions............ (1.01)% 0.07% N/A N/A N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.37% 1.36% 1.46% 1.58% 1.6%
Without expense reductions............ 1.48% 1.41% N/A N/A N/A
Portfolio turnover rate++++............. 190% 253% 71% 102% 92%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0574 $ 0.0536 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.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F21
<PAGE>
GT GLOBAL AMERICA FUNDS
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>
Mid Cap Growth Fund
-------------------------------------------------------------
Class B++
-------------------------------------------------------------
April 1, 1993
Year ended December 31, to
---------------------------------------------- December 31,
1997 1996 1995 1994 (d) 1993
---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 20.28 $ 18.77 $ 17.50 $ 17.09 $ 15.90
---------- ---------- ---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... (0.34) (0.11) 0.10 (0.09) (0.29)
Net realized and unrealized gain on
investments.......................... 2.93 2.91 3.87 2.55 2.78
---------- ---------- ---------- ---------- -------------
Net increase from investment
operations......................... 2.59 2.80 3.97 2.46 2.49
---------- ---------- ---------- ---------- -------------
Distributions to shareholders:
From net investment income............ -- -- (0.12) -- --
From net realized gain on
investments.......................... (2.56) (1.29) (2.58) (2.05) (1.30)
---------- ---------- ---------- ---------- -------------
Total distributions................. (2.56) (1.29) (2.70) (2.05) (1.30)
---------- ---------- ---------- ---------- -------------
Net asset value, end of period.......... $ 20.31 $ 20.28 $ 18.77 $ 17.50 $ 17.09
---------- ---------- ---------- ---------- -------------
---------- ---------- ---------- ---------- -------------
Total investment return (c)............. 13.35% 14.82% 22.42% 15.06% 16.1%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 255,468 $ 334,590 $ 348,435 $ 80,060 $ 1,982
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... (1.55)% (0.53)% 0.59% (0.48)% (1.3)%(a)
Without expense reductions............ (1.66)% (0.58)% N/A N/A N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.02% 2.01% 2.11% 2.23% 2.2%(a)
Without expense reductions............ 2.13% 2.06% N/A N/A N/A
Portfolio turnover rate++++............. 190% 253% 71% 102% 92%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0574 $ 0.0536 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.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F22
<PAGE>
GT GLOBAL AMERICA FUNDS
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>
Mid Cap Growth Fund
-----------------------------------------
Advisor Class+++
-----------------------------------------
June 1, 1995
Year ended Year ended to
December 31, December 31, December 31,
1997 1996 1995
------------ ------------ -------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 20.76 $ 19.05 $ 20.61
------------ ------------ -------------
Income from investment operations:
Net investment income (loss).......... (0.15) 0.09 0.21
Net realized and unrealized gain on
investments.......................... 3.05 2.91 1.09
------------ ------------ -------------
Net increase from investment
operations......................... 2.90 3.00 1.30
------------ ------------ -------------
Distributions to shareholders:
From net investment income............ -- -- (0.28)
From net realized gain on
investments.......................... (2.56) (1.29) (2.58)
------------ ------------ -------------
Total distributions................. (2.56) (1.29) (2.86)
------------ ------------ -------------
Net asset value, end of period.......... $ 21.10 $ 20.76 $ 19.05
------------ ------------ -------------
------------ ------------ -------------
Total investment return (c)............. 14.54 % 15.72 % 6.01%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 1,140 $ 1,986 $ 1,394
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... (0.55)% 0.47 % 1.59%(a)
Without expense reductions............ (0.66)% 0.42 % N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.02 % 1.01 % 1.11%(a)
Without expense reductions............ 1.13 % 1.06 % N/A
Portfolio turnover rate++++............. 190 % 253 % 71%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0574 $ 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.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F23
<PAGE>
GT GLOBAL AMERICA FUNDS
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>
Value Fund
------------------------------------------
Class A
------------------------------------------
October 18,
1995
(commencement
of operations)
Year ended Year ended to December
December 31, December 31, 31,
1997 (d) 1996 (d) 1995 (d)
------------ ------------ --------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.65 $ 12.76 $ 11.43
------------ ------------ --------------
Income from investment operations:
Net investment income (loss).......... 0.09 * * (0.01) * * 0.03*
Net realized and unrealized gain on
investments.......................... 3.87 1.94 1.30
------------ ------------ --------------
Net increase from investment
operations......................... 3.96 1.93 1.33
------------ ------------ --------------
Distributions to shareholders:
From net investment income............ (0.03) -- --
From net realized gain on
investments.......................... (1.33) (0.04) --
------------ ------------ --------------
Total distributions................. (1.36) (0.04) --
------------ ------------ --------------
Net asset value, end of period.......... $ 17.25 $ 14.65 $ 12.76
------------ ------------ --------------
------------ ------------ --------------
Total investment return (c)............. 27.23 % 15.12 % 11.64 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 7,668 $ 2,529 $ 870
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 0.56 % (0.10)% 1.10 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (0.42)% (3.61)% (47.44)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 1.99 % 2.00 % 2.00 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 2.97 % 5.51 % 50.54 %(a)
Ratio of interest expense to average net
assets................................. 0.03 % N/A N/A
Portfolio turnover rate+................ 93 % 256 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0278 $ 0.0551 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 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.
* * * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment gain (loss) per share would have been $(.07), $(.17), and
$(.01) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1997.
+ 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.
The accompanying notes are an integral part of the financial statements.
F24
<PAGE>
GT GLOBAL AMERICA FUNDS
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>
Value Fund
------------------------------------------
Class B
------------------------------------------
October 18,
1995
(commencement
of operations)
Year ended Year ended to December
December 31, December 31, 31,
1997 (d) 1996 (d) 1995 (d)
------------ ------------ --------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.54 $ 12.75 $ 11.43
------------ ------------ --------------
Income from investment operations:
Net investment income (loss).......... (0.01) ** (0.10) * * 0.01*
Net realized and unrealized gain on
investments.......................... 3.83 1.93 1.31
------------ ------------ --------------
Net increase from investment
operations......................... 3.82 1.83 1.32
------------ ------------ --------------
Distributions to shareholders:
From net investment income............ -- -- --
From net realized gain on
investments.......................... (1.32) (0.04) --
------------ ------------ --------------
Total distributions................. (1.32) (0.04) --
------------ ------------ --------------
Net asset value, end of period.......... $ 17.04 $ 14.54 $ 12.75
------------ ------------ --------------
------------ ------------ --------------
Total investment return (c)............. 26.44 % 14.35 % 11.55 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 16,717 $ 5,503 $ 1,254
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... (0.09)% (0.75)% 0.45 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (1.07)% (4.26)% (48.09)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 2.64 % 2.65 % 2.65 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 3.62 % 6.16 % 51.19 %(a)
Ratio of interest expense to average net
assets................................. 0.03 % N/A N/A
Portfolio turnover rate+................ 93 % 256 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0278 $ 0.0551 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 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.
* * * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment gain (loss) per share would have been $(.07), $(.17), and
$(.01) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1997.
+ 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.
The accompanying notes are an integral part of the financial statements.
F25
<PAGE>
GT GLOBAL AMERICA FUNDS
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>
Value Fund
------------------------------------------
Advisor Class
------------------------------------------
October 18,
1995
(commencement
of operations)
Year ended Year ended to December
December 31, December 31, 31,
1997 (d) 1996 (d) 1995 (d)
------------ ------------ --------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.72 $ 12.77 $ 11.43
------------ ------------ --------------
Income from investment operations:
Net investment income (loss).......... 0.15 * * 0.03* * 0.04*
Net realized and unrealized gain on
investments.......................... 3.91 1.96 1.30
------------ ------------ --------------
Net increase from investment
operations......................... 4.06 1.99 1.34
------------ ------------ --------------
Distributions to shareholders:
From net investment income............ (0.07) -- --
From net realized gain on
investments.......................... (1.34) (0.04) --
------------ ------------ --------------
Total distributions................. (1.41) (0.04) --
------------ ------------ --------------
Net asset value, end of period.......... $ 17.37 $ 14.72 $ 12.77
------------ ------------ --------------
------------ ------------ --------------
Total investment return (c)............. 27.78 % 15.58 % 11.72 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 439 $ 191 $ 81
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 0.91 % 0.25 % 1.45 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (0.07)% (3.26)% (47.09)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 1.64 % 1.65 % 1.65 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 2.62 % 5.16 % 50.19 %(a)
Ratio of interest expense to average net
assets................................. 0.03 % N/A N/A
Portfolio turnover rate+................ 93 % 256 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0278 $ 0.0551 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 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.
* * * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment gain (loss) per share would have been $(.07), $(.17), and
$(.01) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1997.
+ 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.
The accompanying notes are an integral part of the financial statements.
F26
<PAGE>
GT GLOBAL AMERICA FUNDS
NOTES TO
FINANCIAL STATEMENTS
December 31, 1997
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
GT Global America Small Cap Growth Fund, GT Global America Mid 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, 1997, 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 preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Funds in the preparation of the
financial statements.
(A) Portfolio Valuation
The 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" herein after 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
F27
<PAGE>
GT GLOBAL AMERICA FUNDS
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 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, 1997, stocks with an aggregate value listed below were on loan
to brokers. The loans were secured by cash collateral received by the funds:
<TABLE>
<CAPTION>
December 31, 1997 Year ended
-------------------------------- December 31, 1997
Aggregate Value Cash -----------------
GT Global on Loan Collateral Fees Received
- ---------------------------------------- --------------- -------------- -----------------
<S> <C> <C> <C>
America Small Cap Growth Fund........... $ 1,812,494 $ 1,869,550 $ 17,489
America Mid Cap Growth Fund............. 45,019,438 45,567,400 516,083
America Value Fund...................... 794,531 810,000 896
</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
Portfolios' 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
F28
<PAGE>
GT GLOBAL AMERICA FUNDS
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.
(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 ("GT Funds") advised and/or
administered by the Manager, has a line of credit with BankBoston and State
Street Bank & Trust Company. The arrangements with the banks allow the Funds and
the GT Funds to borrow an aggregate maximum amount of $250,000,000. Each of
these three funds is limited to borrowing up to 33 1/3% of the value of each
Funds' total assets. The Funds had no loans outstanding at December 31, 1997.
For the year ended December 31, 1997, the average outstanding daily balance of
bank loans (based on the number of days the loans were outstanding) for GT
Global America Small Cap Growth Fund, GT Global America Mid Cap Growth Fund, and
GT Global America Value Fund was $101,429, $6,068,763, and $284,000 with a
weighted average interest rate of 6.34%, 6.33%, and 6.31%, respectively.
Interest expense for GT Global America Small Cap Growth Fund, GT Global America
Mid Cap Growth Fund, and GT Global America Value Fund for the year ended
December 31, 1997 was $125, $125,935, and $50, respectively, 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. 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, 1997, GT Global retained the
following sales charges: $5,417 for the GT Global America Small Cap Growth Fund,
$38,700 for the GT Global America Mid Cap Growth Fund, and $5,770 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 $23,780 for the year ended December 31, 1997 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, 1997, GT Global collected such CDSCs
in the amount of: $60,107 for the GT Global America Small Cap Growth Fund,
$2,316,997 for the GT Global America Mid Cap Growth Fund, and $55,700 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
F29
<PAGE>
GT GLOBAL AMERICA FUNDS
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 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.
Effective January 1, 1998, the Manager and GT Global have undertaken to limit
the Fund's expenses (exclusive of brokerage commissions, taxes, interest, and
extraordinary expenses) to the annual rate of 1.75%, 2.40%, and 1.40% of the
average daily net assets of the Fund's Class A, Class B, Advisor Class Shares,
respectively. This undertaking may be changed or eliminated in the future.
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, 1997, 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, 1997, 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 $1,037,388,895, $66,820,422 and $25,951,699, 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 $1,221,752,474, $55,910,483 and
$13,967,002, respectively. There were no purchases or sales of U.S. government
obligations by a Fund or Portfolio during the year.
F30
<PAGE>
GT GLOBAL AMERICA FUNDS
4. Capital Shares
At December 31, 1997, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the
Funds were as follows:
Capital Share Transactions
GT Global America Small Cap Growth Fund
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1997 December 31, 1996
---------------------------- -----------------------------
Class A Shares Amount Shares Amount
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 2,067,494 $ 28,341,345 1,491,083 $ 20,216,595
Shares issued in connection with
reinvestment of distributions......... 14,194 195,720 39,998 505,573
------------ -------------- ------------ ---------------
2,081,688 28,537,065 1,531,081 20,722,168
Shares repurchased...................... (1,992,960) (27,546,271) (1,019,989) (13,880,892)
------------ -------------- ------------ ---------------
Net increase............................ 88,728 $ 990,794 511,092 $ 6,841,276
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
Year ended Year ended
December 31, 1997 December 31, 1996
---------------------------- -----------------------------
Class B Shares Amount Shares Amount
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 2,192,656 $ 29,216,057 1,665,796 $ 22,115,741
Shares issued in connection with
reinvestment of distributions......... 26,438 359,234 52,848 663,246
------------ -------------- ------------ ---------------
2,219,094 29,575,291 1,718,644 22,778,987
Shares repurchased...................... (1,570,899) (20,624,826) (1,029,367) (13,501,795)
------------ -------------- ------------ ---------------
Net increase............................ 648,195 $ 8,950,465 689,277 $ 9,277,192
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
Year ended Year ended
December 31, 1997 December 31, 1996
---------------------------- -----------------------------
Advisor Class Shares Amount Shares Amount
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 156,123 $ 2,292,127 33,521 $ 447,953
Shares issued in connection with
reinvestment of distributions......... 507 7,039 2,144 27,228
------------ -------------- ------------ ---------------
156,630 2,299,166 35,665 475,181
Shares repurchased...................... (80,540) (1,200,061) (5,440) (72,841)
------------ -------------- ------------ ---------------
Net increase............................ 76,090 $ 1,099,105 30,225 $ 402,340
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
</TABLE>
F31
<PAGE>
GT GLOBAL AMERICA FUNDS
GT Global America Mid Cap Growth Fund
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1997 December 31, 1996
---------------------------- -----------------------------
Class A Shares Amount Shares Amount
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 24,801,099 $ 522,081,212 89,962,964 $ 1,853,673,285
Shares issued in connection with
reinvestment of distributions......... 1,170,749 23,490,213 853,598 17,867,701
------------ -------------- ------------ ---------------
25,971,848 545,571,425 90,816,562 1,871,540,986
Shares repurchased...................... (30,338,852) (637,412,658) (95,061,922) (1,956,032,031)
------------ -------------- ------------ ---------------
Net decrease............................ (4,367,004) $ (91,841,233) (4,245,360) $ (84,491,045)
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
Year ended Year ended
December 31, 1997 December 31, 1996
---------------------------- -----------------------------
Class B Shares Amount Shares Amount
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 9,218,434 $ 190,231,954 11,161,651 $ 224,412,718
Shares issued in connection with
reinvestment of distributions......... 1,240,395 24,063,873 803,575 16,429,676
------------ -------------- ------------ ---------------
10,458,829 214,295,827 11,965,226 240,842,394
Shares repurchased...................... (14,376,532) (293,260,545) (14,026,348) (280,392,879)
------------ -------------- ------------ ---------------
Net decrease............................ (3,917,703) $ (78,964,718) (2,061,122) $ (39,550,485)
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
Year ended Year ended
December 31, 1997 December 31, 1996
---------------------------- -----------------------------
Advisor Class Shares Amount Shares Amount
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 1,056,271 $ 23,267,932 485,169 $ 10,230,701
Shares issued in connection with
reinvestment of distributions......... 5,993 120,751 8,013 167,629
------------ -------------- ------------ ---------------
1,062,264 23,388,683 493,182 10,398,330
Shares repurchased...................... (1,103,923) (24,248,785) (470,673) (9,846,041)
------------ -------------- ------------ ---------------
Net increase (decrease)................. (41,659) $ (860,102) 22,509 $ 552,289
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
</TABLE>
F32
<PAGE>
GT GLOBAL AMERICA FUNDS
GT Global America Value Fund
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1997 December 31, 1996
---------------------------- -----------------------------
Class A Shares Amount Shares Amount
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 781,797 $ 13,117,280 392,444 $ 5,443,835
Shares issued in connection with
reinvestment of distributions......... 26,859 454,725 365 5,408
------------ -------------- ------------ ---------------
808,656 13,572,005 392,809 5,449,243
Shares repurchased...................... (536,657) (9,148,725) (288,378) (3,812,666)
------------ -------------- ------------ ---------------
Net increase............................ 271,999 $ 4,423,280 104,431 $ 1,636,577
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
Year ended Year ended
December 31, 1997 December 31, 1996
---------------------------- -----------------------------
Class B Shares Amount Shares Amount
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 1,148,582 $ 19,043,834 445,266 $ 6,167,388
Shares issued in connection with
reinvestment of distributions......... 60,093 1,004,744 918 13,509
------------ -------------- ------------ ---------------
1,208,675 20,048,578 446,184 6,180,897
Shares repurchased...................... (606,167) (9,803,021) (166,052) (2,502,350)
------------ -------------- ------------ ---------------
Net increase............................ 602,508 $ 10,245,557 280,132 $ 3,678,547
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
Year ended Year ended
December 31, 1997 December 31, 1996
---------------------------- -----------------------------
Advisor Class Shares Amount Shares Amount
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 14,203 $ 230,962 10,181 $ 139,541
Shares issued in connection with
reinvestment of distributions......... 1,920 32,714 30 443
------------ -------------- ------------ ---------------
16,123 263,676 10,211 139,984
Shares repurchased...................... (3,834) (66,384) (3,594) (49,444)
------------ -------------- ------------ ---------------
Net increase............................ 12,289 $ 197,292 6,617 $ 90,540
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
</TABLE>
5. 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, 1997, the
expenses of Small Cap Growth Portfolio, GT Global America Mid Cap Growth Fund
and Value Portfolio were reduced by $2,560, $84,266 and $436 respectively, under
these arrangements.
6. Subsequent Event
On January 30, 1998, Liechtenstein Global Trust ("LGT") and AMVESCAP PLC
("AMVESCAP") entered into an agreement by which AMVESCAP will acquire LGT's
Asset Management Division, including Chancellor LGT Asset Management, Inc.
AMVESCAP is the holding company of the A I M and INVESCO asset management
businesses.
- --------------
Federal Tax Information (Unaudited):
Pursuant to Section 852 of the Internal Revenue Code, the GT Global America Mid
Cap Growth Fund designates $9,085,505, and the GT Global America Value Fund
designates $23,905 as capital gains dividends for the fiscal year ended December
31, 1997.
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, 1997:
<TABLE>
<CAPTION>
Fund
- ----------------------------------------
<S> <C>
GT Global America Small Cap Growth
Fund................................... 3.06%
GT Global America Mid Cap Growth Fund... 3.13%
GT Global America Value Fund............ 16.05%
</TABLE>
F33
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
GT GLOBAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY GT GLOBAL FUND,
INCLUDING FEES, EXPENSES AND THE RISKS OF GLOBAL AND EMERGING MARKET
INVESTING AND THE RISKS OF INVESTING IN RELATED INDUSTRIES, PLEASE CONTACT
YOUR FINANCIAL ADVISER OR CALL GT GLOBAL DIRECTLY AT 1-800-824-1580.
GROWTH FUNDS
/ / GLOBALLY DIVERSIFIED FUNDS
GT GLOBAL NEW DIMENSION FUND
Captures global growth opportunities by investing directly in the six GT Global
Theme Funds
GT GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity for U.S. investors by investing outside the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
GT GLOBAL DEVELOPING MARKETS FUND
Invests in debt and equity securities of developing market issuers
/ / GLOBAL THEME FUNDS
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL HEALTH CARE FUND
Invests in the growing health care industries worldwide
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA MID CAP GROWTH FUND
Concentrates on medium-sized companies in the U.S.
GT GLOBAL AMERICA VALUE FUND
Concentrates on equity securities of 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
Invests in 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 a portfolio of emerging market debt securities
GT GLOBAL FLOATING RATE FUND
Invests primarily in senior secured floating rate loans that have the potential
to achieve a high level of income
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[LOGO]
NO DEALER, SALES REPRESENTATIVE OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
STATEMENT OF ADDITIONAL INFORMATION AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY GT
GLOBAL 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, CA 94111
(415) 392-6181
Toll Free: (800) 824-1580
Statement of Additional Information
April 1, 1998
- --------------------------------------------------------------------------------
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 April 1,
1998, 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...................................................................................... 14
Trustees and Executive Officers.......................................................................................... 16
Management............................................................................................................... 18
Valuation of Fund 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 New York Common Law Trust registered as an 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
(including investment vehicles or companies advised by the Manager or its
affiliates ("Affiliated Funds")) 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. With respect to
investments in Affiliated Funds, the Manager waives its advisory fee to the
extent that such fees are based on assets of a Fund invested in Affiliated
Funds.
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"), Global Depository Receipts ("GDRs") 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. GDRs
are similar to EDRs and are designed for use in several international financial
markets. 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, GDRs 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
Statement of Additional Information Page 2
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
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 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
Statement of Additional Information Page 3
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
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 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, a
division of The McGraw-Hill Companies, Inc. ("S&P"), at the time of investment
or, if unrated, deemed by the Manager to be of comparable quality.
- --------------------------------------------------------------------------------
OPTIONS AND FUTURES
- --------------------------------------------------------------------------------
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
Statement of Additional Information Page 4
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
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 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.
Neither Portfolio considers 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
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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 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. 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
to avoid realizing losses that would result in a reduction of its 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 it
purchased the security, 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.
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
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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 purchases an index option and exercises it before the closing
index value for that day is available, it runs the risk that the level of the
underlying index may subsequently change. If such a change causes the exercised
option to fall out-of-the-money, the 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").
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
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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
only; 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 a 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 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
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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 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
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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 purchased
by a Portfolio) 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.
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RISK FACTORS
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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 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.
Statement of Additional Information Page 11
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
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
<PAGE>
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
<PAGE>
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.
- --------------------------------------------------------------------------------
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 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
Statement of Additional Information Page 14
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
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 are in addition to, and not in lieu of, the
services required to be performed by the Manager under the applicable investment
management and administration contract. 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 its 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 years ended December 31, 1997 and 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 $91,971,
$54,241 and $3,317, respectively. For the fiscal years ended December 31, 1997
and 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 $22,202, $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 years ended December 31, 1997 and December 31,
1996, the Small Cap Portfolio's and Value Portfolio's portfolio turnover rates
were 233% and 150%, and 93% 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
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
William J. Guilfoyle*, 39 Mr. Guilfoyle is President, GT Global, Inc. since 1995; Director, GT Global since 1991;
Trustee, Chairman of the Board and Senior Vice President and Director of Sales and Marketing, GT Global from May 1992 to
President April 1995; Vice President and Director of Marketing, GT Global from 1987 to 1992;
50 California Street Director, Liechtenstein Global Trust AG (holding company of the various international LGT
San Francisco, CA 94111 companies) Advisory Board since January 1996; Director, G.T. Global Insurance Agency
("G.T. Insurance") since 1996; President and Chief Executive Officer, G.T. Insurance since
1995; Senior Vice President and Director, Sales and Marketing, G.T. Insurance from April
1995 to November 1995; Senior Vice President, Retail Marketing, G.T. Insurance from 1992
to 1993. Mr. Guilfoyle is also a director or trustee of each of the other investment
companies registered under the 1940 Act that is managed or administered by the Manager.
C. Derek Anderson, 56 Mr. Anderson is President, Plantagenet Capital Management, LLC (an investment
Trustee partnership); Chief Executive Officer, Plantagenet Holdings, Ltd. (an investment banking
220 Sansome Street firm); Director, Anderson Capital Management, Inc. since 1988; Director, PremiumWear, Inc.
Suite 400 (formerly Munsingwear, Inc.)(a casual apparel company) and Director, "R" Homes, Inc. and
San Francisco, CA 94104 various other companies. Mr. Anderson is also a director or trustee of each of the other
investment companies registered under the 1940 Act that is managed or administered by the
Manager.
Frank S. Bayley, 58 Mr. Bayley is a partner of the law firm of Baker & McKenzie, and serves as a Director and
Trustee Chairman of C.D. Stimson Company (a private investment company). Mr. Bayley is also a
Two Embarcadero Center director or trustee of each of the other investment companies registered under the 1940
Suite 2400 Act that is managed or administered by the Manager.
San Francisco, CA 94111
Arthur C. Patterson, 54 Mr. Patterson is Managing Partner of Accel Partners (a venture capital firm). He also
Trustee serves as a director of Viasoft and PageMart, Inc. (both public software companies), as
428 University Avenue well as several other privately held software and communications companies. Mr. Patterson
Palo Alto, CA 94301 is also a director or trustee of each of the other investment companies registered under
the 1940 Act that is managed or administered by the Manager.
Ruth H. Quigley, 62 Miss Quigley is a private investor. From 1984 to 1986, she was President of Quigley
Trustee Friedlander & Co., Inc. (a financial advisory services firm). Miss Quigley is also a
1055 California Street director or trustee of each of the other investment companies registered under the 1940
San Francisco, CA 94108 Act that is managed or administered by the Manager.
Robert G. Wade, Jr.*, 70 Mr. Wade is Consultant to the Manager; Chairman of the Board of Chancellor Capital
Trustee Management, Inc. from January 1995 to October 1996; President, Chief Executive Officer and
1166 Avenue of the Americas Chairman of the Board of Chancellor Capital Management, Inc. from 1988 to January 1995.
New York, NY 10036 Mr. Wade is also a director or trustee of each of the other investment companies
registered under the 1940 Act that is managed or administered by the Manager.
</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 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
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
Kenneth W. Chancey, 52 Senior Vice President -- Mutual Fund Accounting, the Manager since 1997;
Vice President and Vice President -- Mutual Fund Accounting, the Manager from 1992 to 1997;
Principal Accounting Officer and Vice President, Putnam Fiduciary Trust Company from 1989 to 1992.
50 California Street
San Francisco, CA 94111
Helge K. Lee, 51 Chief Legal and Compliance Officer -- North America, the Manager since
Vice President and Secretary October 1997; Executive Vice President of the Asset Management Division
50 California Street of Liechtenstein Global Trust since October 1996; Senior Vice President,
San Francisco, CA 94111 General Counsel and Secretary of the Manager, GT Global, GT Services and
G.T. Insurance from February 1996 to October 1996; Vice President,
General Counsel and Secretary of LGT Asset Management, Inc., the
Manager, GT Global, GT Services and G.T. Insurance from May 1994 to
February 1996; Senior Vice President, General Counsel and Secretary of
Strong/Corneliuson Management, Inc. and Secretary of each of the Strong
Funds from October 1991 through May 1994.
</TABLE>
------------------------
The Company's Board of Trustees has a Nominating and Audit Committee, comprised
of Miss Quigley and Messrs. Anderson, Bayley and Patterson, which is responsible
for nominating persons to serve as Trustees, reviewing audits of the 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. 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 47
series managed or administered by the Manager. Each Trustee who is not a
director, officer or employee of the Manager or any affiliated company is paid
aggregate fees of $5,000 a year plus $300 per Fund for each meeting of the Board
attended by the Trustee, and reimbursed 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, 1997, Mr. Anderson, Mr. Bayley, Mr. Patterson and Miss
Quigley, who are not directors, officers or employees of the Manager or any
affiliated company, received total compensation of $6,425, $6,681, $5,450 and
$6,068, respectively, from the Company for their services as Trustees. For the
year ended December 31, 1997, Mr. Anderson, Mr. Bayley, Mr. Patterson and Miss
Quigley received total compensation of $103,654, $106,556, $89,700 and $98,038,
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 January 8, 1998, 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 years ended December 31, 1997 and December 31, 1996, the Small
Cap Portfolio and the Value Portfolio paid fees of $120,544 and $73,312; and
$74,372 and $27,487, respectively, to the Manager. For the same periods, the
Small Cap Fund and America Value Fund paid administration fees of $63,460 and
$39,004; and $39,171 and $14,722, respectively, to the Manager. For the fiscal
years ended December 31, 1997 and 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 $67,837 and $73,312; and
$74,372 and $27,487, respectively; for the same periods, the Manager reimbursed
the Small Cap Fund and America Value Fund for their respective administration
fees in the amounts of $63,460 and $39,004; and $39,171 and $14,722,
respectively. Accordingly, the Manager reimbursed each Fund and its
corresponding Portfolio investment management and administration fees in the
aggregate amounts of $131,297 and $112,316; and $113,543 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
Statement of Additional Information Page 18
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
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 years ended December 31, 1997 and 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 $0 and $58,269; and
$38,419 and $164,683, respectively.
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, 1997 and 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
$6,379, $3,900 and $76; and $3,938, $1,472 and $36, 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.
Statement of Additional Information Page 19
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
VALUATION OF FUND 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, Martin Luther King Day, President's 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, including ADRs, ADSs, GDRs, 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.
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 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 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.
INDIVIDUAL RETIREMENT ACCOUNTS ("IRAS") AND OTHER TAX-DEFERRED PLANS
IRAS: If you have earned income from employment (including self-employment), you
can contribute each year to an IRA up to the lesser of (1) $2,000 for yourself
or $4,000 for you and your spouse, regardless of whether your spouse is
employed, or (2) 100% of compensation. Some individuals may be able to take an
income tax deduction for the contribution. Regular contributions may not be made
for the year you become 70 1/2 or thereafter. Unless your and your spouse's
earnings exceed a certain level, you also may establish an "education IRA"
and/or a "Roth IRA." Although contributions to these new types of IRAs are
nondeductible, withdrawals from them will be tax-free under certain
circumstances. Please consult your tax adviser for more information. IRA
applications are available from brokers or GT Global.
ROLLOVER IRAS: Individuals who receive distributions from qualified retirement
plans (other than required distributions) and who wish to keep their savings
growing tax-deferred can roll over (or make a direct transfer of) their
distribution to a Rollover IRA. These accounts can also receive rollovers or
transfers from an existing IRA. If an "eligible rollover distribution" from a
qualified employer-sponsored retirement plan is not directly rolled over to an
IRA (or certain qualified plans), withholding at the rate of 20% will be
required for federal income tax purposes. A distribution from a qualified plan
that is not an "eligible rollover distribution," including a distribution that
is one of a series of substantially equal periodic payments, generally is
subject to regular wage withholding or withholding at the rate of 10% (depending
on the type and amount of the distribution), unless you elect not to have any
withholding apply. Please consult your tax adviser for more information.
SEP-IRAS: Simplified employee pension plans ("SEPs" or "SEP-IRAs") provide
self-employed individuals (and any eligible employees) with benefits similar to
Keogh plans (I.E., self-employed individual retirement plans) or Code section
401(k) plans, but with fewer administrative requirements and therefore
potentially lower annual administration expenses.
CODE SECTION 403(b)(7) CUSTODIAL ACCOUNTS: Employees of public schools and most
other tax-exempt organizations can make pre-tax salary reduction contributions
to these accounts.
Statement of Additional Information Page 21
<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 and other employers can sponsor these qualified defined
contribution plans for their employees. A section 401(k) plan, a type of
profit-sharing plan, additionally permits the eligible, participating employees
to make pre-tax salary reduction contributions to the plan (up to certain
limits).
SIMPLE PLANS: Employers with no more than 100 employees that do not maintain
another retirement plan may establish a Savings Incentive Match Plan for
Employees ("SIMPLE") either as separate IRAs or as part of a Section 401(k)
plan. SIMPLEs are not subject to the complicated nondiscrimination rules that
generally apply to qualified retirement plans.
EXCHANGES BETWEEN FUNDS
Shares of a Fund may be exchanged for shares of the corresponding class of other
GT Global Mutual Funds, based on their respective net asset values without
imposition of any sales charges, provided that the registration remains
identical. 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 those
funds upon sixty days' written notice to the shareholders of the 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 its investment objective(s).
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 $500. Costs in connection
with the administration of this service, including wire charges, will be borne
by the appropriate Fund. Proceeds of less than $500 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 fifteen 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. However, despite the foregoing, the Company filed with
the SEC an election pursuant to Rule 18f-1 under the 1940 Act. This means that
the Fund will pay in cash all requests for redemption made by any shareholder of
record, limited in amount with respect to each shareholder during any ninety-day
period to the lesser of $250,000 or 1% of the net asset value of the Fund at the
beginning of such period. This election will be irrevocable so long as Rule
18f-1 remains in effect, unless the SEC by order upon application permits the
withdrawal of such election.
Statement of Additional Information Page 22
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
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 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) 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 (3) at the close of each
quarter of the Fund's taxable year, not more than 25% of the value of its total
assets may be invested in securities (other than U.S. government securities or
the securities of other RICs) 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.
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
THE PORTFOLIOS AND THEIR RELATIONSHIP TO THE FUND. 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
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.
Statement of Additional Information Page 23
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
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.
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. As of the date of preparation of this Statement of
Additional Information, it is not entirely clear whether that 60% portion will
qualify for the reduced maximum tax rates on noncorporate taxpayers' net capital
gain (i.e., the excess of net long-term capital gain over net short-term capital
loss) enacted by the Taxpayer Relief Act of 1997 -- 20% (10% for taxpayers in
the 15% marginal tax bracket) for gain recognized on capital assets held for
more than 18 months -- instead of the 28% rate in effect before that
legislation, which now applies to gain on capital assets held for more than one
year but not more than 18 months. However, technical corrections legislation
passed by the House of Representatives late in 1997 would clarify that the lower
rates apply.
If a Portfolio has an "appreciated financial position" -- generally, an interest
(including an interest through an option, Futures Contract or short sale) with
respect to any stock, debt instrument (other than "straight debt") or
partnership interest the fair market value of which exceeds its adjusted basis
- -- and enters into a "constructive sale" of the same or substantially similar
property, the Portfolio will be treated as having made an actual sale thereof,
with the result that gain will be recognized at that time. A constructive sale
generally consists of a short sale, an offsetting notional principal contract or
Futures Contract entered into by a Portfolio or a related person with respect to
the same or substantially similar property. In addition, if the appreciated
financial position is itself a short sale or such a contract, acquisition of the
underlying property or substantially similar property will be deemed a
constructive sale.
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, however, to a dividend paid by a Fund to a foreign
shareholder that is "effectively connected with the conduct of a U.S. trade or
business," in which case the reporting and withholding requirements applicable
to domestic shareholders will apply. A distribution of net capital gain by 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 is composed of the Manager and its worldwide
affiliates. Other worldwide affiliates of Liechtenstein Global Trust include LGT
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 and LGT Asset Management AG in Zurich, Switzerland.
Worldwide asset management affiliates also currently include LGT Asset
Management Inc. in Toronto, Canada; LGT Asset Management PLC in London; LGT
Asset Management Ltd. in Hong Kong; LGT Asset Management Ltd. in Tokyo; LGT
Asset Management Pte. Ltd. in Singapore; LGT Asset Management Ltd. in Sydney;
and LGT Asset Management GmbH in Frankfurt.
CUSTODIAN
State Street Bank and Trust Company, 225 Franklin Street, Boston, MA 02110, acts
as custodian of the Portfolios' assets.
INDEPENDENT ACCOUNTANTS
The Company's, the Funds' and the Portfolios' independent accountants are
Coopers & Lybrand L.L.P., One Post Office Square, Boston, MA 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 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 Advisor Class shares, deduction of a sales charge is
not applicable; (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 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 FUND
FUND (ADVISOR
PERIOD (CLASS A) CLASS)
- -------------------------------------------------- ----------- ------------
<S> <C> <C>
Fiscal year ended Dec. 31, 1997................... 10.70% 16.63%
Oct. 18, 1995 (commencement of operations) through
Dec. 31, 1997.................................... 12.68% 15.61%
</TABLE>
The Standardized Returns for the Class A and Advisor Class shares of the America
Value Fund, stated as average annualized total returns for the periods shown,
were:
<TABLE>
<CAPTION>
AMERICA
AMERICA VALUE FUND
VALUE FUND (ADVISOR
PERIOD (CLASS A) CLASS)
- -------------------------------------------------- ----------- ------------
<S> <C> <C>
Fiscal year ended Oct. 31, 1997................... 21.19% 27.78%
Oct. 18, 1995 (commencement of operations) through
Dec. 31, 1997.................................... 22.28% 25.53%
</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 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 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 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 FUND
FUND (ADVISOR
PERIOD (CLASS A) CLASS)
- -------------------------------------------------- ----------- ------------
<S> <C> <C>
Oct. 18, 1995 (commencement of operations) through
Dec. 31, 1997.................................... 36.55% 37.64%
</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 and Advisor Class shares of the America Value Fund, stated as
aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
AMERICA
AMERICA VALUE FUND
VALUE FUND (ADVISOR
PERIOD (CLASS A) CLASS)
- -------------------------------------------------- ----------- ------------
<S> <C> <C>
Oct. 18, 1995 (commencement of operations) through
Dec. 31, 1997.................................... 63.52% 65.00%
</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 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 ("CPI"), which is a measure of the average
change in prices over time in a fixed market basket of goods and services
(e.g., food, clothing, shelter, fuels, transportation fares, charges for
doctors' and dentists' services, prescription medicines, and other goods and
services that people buy for day-to-day living). There is inflation risk
which does not affect a security's value but its purchasing power, i.e., the
risk of changing price levels in the economy that affects security prices or
the price of goods and services.
(3) Data and mutual fund rankings and comparisons published or prepared
by Lipper Analytical Data Services, Inc. ("Lipper"), CDA/Wiesenberger
Investment Companies Services ("CDA/Wiesenberger"), Morningstar, Inc.
("Morningstar"), Micropal, Inc. and/or other companies that rank and/or
compare mutual funds by overall performance, investment objectives, assets,
expense levels, periods of existence and/or other factors. In this regard,
each Fund may be compared to its "peer group" as defined by Lipper,
CDA/Wiesenberger, Morningstar and/or other firms, as applicable or to
specific funds or groups of funds within or outside of such peer group.
Lipper generally ranks funds on the basis of total return, assuming
reinvestment of distributions, but does not take sales charges or redemption
fees into consideration, and is prepared without regard to tax consequences.
In addition to the mutual fund rankings, the Fund's performance may be
compared to mutual fund performance indices prepared by Lipper. Morningstar
is a mutual fund rating service that also rates mutual funds on the basis of
risk-adjusted performance. Morningstar ratings are calculated from a fund's
three, five and ten year average annual returns with appropriate fee
adjustments and a risk factor that reflects fund performance relative to the
three-month U.S. Treasury bill monthly returns. Ten percent of the funds in
an investment category receive five stars and 22.5% receive four stars. The
ratings are subject to change each month.
(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 U.S.
(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 of which is an on-line database
retrieval service for information, including but not limited to
international financial and economic data.
Statement of Additional Information Page 27
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
(10) Various publications produced by 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 measures 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. Savings accounts offer
a guaranteed rate of return on principal, but no opportunity for capital
growth. During a portion of the period, the maximum rates paid on some
savings deposits were fixed by law.
Indices, economic and financial data prepared by the research departments of
various financial organizations, such as Salomon Brothers, Inc., Lehman
Brothers, Merrill Lynch, Pierce, Fenner & Smith, Inc., Financial Research
Corporation, J. P. Morgan, Morgan Stanley, Smith Barney Shearson, S.G. Warburg,
Jardine Fleming, The Bank for International Settlements, Asian Development Bank,
Bloomberg, L.P., and Ibbotson Associates may be used as well as information
reported by the Federal Reserve and the respective Central Banks of various
nations. In addition, GT Global may use performance rankings, ratings and
commentary reported periodically in national financial publications, including
Money Magazine, Mutual Fund Magazine, Smart Money, Global Finance, EuroMoney,
Financial World, Forbes, Fortune, Business Week, Latin Finance, The Wall Street
Journal, Emerging Markets Weekly, Kiplinger's Guide To Personal Finance,
Barron's, The Financial Times, USA Today, The New York Times 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 that may be developed and made available in the future.
Information relating to foreign market performance, capitalization and
diversification is based on sources believed to be reliable but may be subject
to revision and has not been independently verified by the Funds or GT Global.
The authors and publishers of such material are not to be considered as
"experts" under the 1933 Act, on account of the inclusion of such information
herein.
GT Global believes that this information may be useful to investors considering
whether and to what extent to diversify their investments through the purchase
of mutual funds investing in securities on a global basis. However, this data is
not a representation of the past performance of the Funds, nor is it a
prediction of such performance. The performance of the Fund will differ from the
historical performance of relevant indices. The performance of indices does not
take expenses into account, while the Fund incurs expenses in its operations,
which will reduce performance. Each of these factors will cause the performance
of the Fund to differ from relevant indices.
From time to time, each Fund and GT Global may refer to the number of
shareholders in the Fund or the aggregate number of shareholders in all GT
Global Mutual Funds or the dollar amount of Fund assets under management or
rankings by DALBAR Surveys, Inc. in advertising materials.
GT Global believes GT Global America Small Cap Growth Fund and GT Global America
Value Fund can be 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. GT Global America Small Cap Growth Fund and
GT Global America Value Fund do not represent a complete investment program and
the investors should consider the Funds as appropriate for a portion of their
overall investment portfolio with regard to their long-term investment goals.
There is no assurance that any such information will lead to achieving these
goals or guarantee future results.
From time to time, GT Global may refer to or advertise the names of U.S. and
non-U.S. companies and their products, although there can be no assurance that
any GT Global Mutual Fund may own the securities of these companies.
Ibbotson Associates of Chicago, Illinois ("Ibbotson") provides historical
returns of the capital markets in the United States, including common stocks,
small capitalization stocks, long-term corporate bonds, intermediate-term
government bonds, long-term government bonds, Treasury bills, the U.S. rate of
inflation (based on the CPI), and combinations of various capital markets. The
performance of these capital markets is 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
Statement of Additional Information Page 28
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
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.
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 the Funds' historical share price fluctuations or total return to
those of a benchmark.
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 describe in its sales material and advertisements how an investor
may invest in GT Global Mutual Funds through various retirement plans or other
programs that offer deferral of income taxes on investment earnings and pursuant
to which an investor may make deductible contributions. Because of their
advantages, these retirement plans and programs may produce returns superior to
comparable non-retirement investments. For example, a $10,000 investment earning
a taxable return of 10% annually would have an after-tax value of $17,976 after
ten years, assuming tax was deducted from the return each year at a 39.6% rate.
An equivalent tax-deferred investment would have an after-tax value of $19,626
after ten years, assuming tax was deducted at a 39.6% rate from the deferred
earnings at the end of the ten-year period. In sales materials and
advertisements, the Fund may also discuss these plans and programs. See
"Information Relating to Sales and Redemptions -- Individual Retirement Accounts
('IRAs') and Other Tax-Deferred Plans."
GT Global may from time to time in its sales methods and advertising discuss the
risks inherent in investing. The major types of investment risk are market risk,
industry risk, credit risk, interest rate risk, liquidity risk and inflation
risk. Risk represents the possibility that you may lose some or all of your
investment over a period of time. A basic tenet of investing is the greater the
potential reward, the greater the risk.
From time to time, the Funds and GT Global will quote information regarding
industries, individual countries, regions, world stock exchanges, and economic
and demographic statistics from sources GT Global deems reliable, including the
economic and financial data of financial organizations, such as:
1) Stock market capitalization: Morgan Stanley Capital International World
Indices, IFC and Datastream.
2) Stock market trading volume: Morgan Stanley Capital International World
Indices and IFC.
3) The number of listed companies: IFC, GT Guide to World Equity Markets,
Salomon Brothers, Inc., and S.G. Warburg.
4) Wage rates: U.S. Department of Labor Statistics and Morgan Stanley Capital
International World 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 CPI and inflation rate: The World Bank, Datastream and IFC.
8) Gross Domestic Product ("GDP"): Datastream and The World Bank.
9) GDP growth rate: IFC, The World Bank and Datastream.
10) Population: The World Bank, Datastream and United Nations.
11) Average annual growth rate (%) of population: The World Bank, Datastream and
United Nations.
12) Age distribution within populations: OECD and United Nations.
13) Total exports and imports by year: IFC, The World Bank and Datastream.
14) Top three companies by country, industry or market: IFC, GT Guide to World
Equity Markets, Salomon Brothers, Inc., and S.G. Warburg.
15) Foreign direct investments to developing countries: The World Bank and
Datastream.
Statement of Additional Information Page 29
<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, 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 advertisements and sales
material, information about privatization, which is an economic process
involving the sale of state-owned companies to the private sector.
In advertising and sales materials, GT Global may make reference to or discuss
its products, services and accomplishments. Among these accomplishments are that
in 1983 the Manager provided assistance to the government of Hong Kong in
linking its currency to the U.S. dollar, and that in 1987 Japan's Ministry of
Finance licensed LGT Asset Management Ltd. as one of the first foreign
discretionary investment managers for Japanese investors. Such accomplishments,
however, should not be viewed as an endorsement of the Manager by the government
of Hong Kong, Japan's Ministry of Finance or any other government or government
agency. Nor do any such accomplishments of the Manager provide any assurance
that the GT Global Mutual Funds' investment objectives will be achieved.
GT GLOBAL ADVANTAGE
As part of Liechtenstein Global Trust, GT Global continues a 75-year tradition
of service to individuals and institutions. Today we bring investors a
combination of experience, worldwide resources, a global perspective, investment
talent and a time-tested investment discipline. With investment professionals in
nine offices worldwide, we witness world events and economic developments
firsthand. 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 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. With respect to stocks, a global stock
research ("GSR") database developed by GT Global is utilized in the selection
process. All stocks within the GSR database are systematically ranked by our
analysts on a 1-5 basis with 1 representing the most favored. The rankings,
along with our quantitative, fundamental research, determine which stocks are
bought and sold.
Statement of Additional Information Page 30
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF BOND RATINGS
MOODY'S rates the debt securities issued by various entities from "Aaa" to
"C." Investment grade ratings are the first four categories:
Aaa -- Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred
to as "gilt 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 -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade 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 -- Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper-medium-grade obligations.
Factors giving security to principal and interest are considered adequate,
but elements may be present which suggest a susceptibility to impairment
some time in the future.
Baa -- Bonds which are rated Baa are considered as medium-grade
obligations, (i.e., they are neither highly protected nor poorly secured).
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
Ba -- Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate, and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B -- Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may
be small.
Caa -- Bonds which are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with respect to
principal or interest.
Ca -- Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.
C -- Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
ABSENCE OF RATING: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies
that are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not
published in Moody's publications.
Statement of Additional Information Page 31
<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 Caa. 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 Company ranks in the
lower end of its generic rating category.
S&P, rates the securities debt of various entities in categories ranging
from "AAA" to "D" according to quality. Investment grade ratings are the first
four categories:
AAA -- An obligation rated "AAA" has the highest rating assigned by S&P.
The obligor's capacity to meet its financial commitment on the obligation is
extremely strong.
AA -- An obligation rated "AA" differs from the highest rated
obligations only in a small degree. The obligor's capacity to meet its
financial commitment on the obligation is very strong.
A -- An obligation rated "A" is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than obligations
in higher rated categories.
BBB -- An obligation rated "BBB" exhibits adequate protection
parameters. However, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity of the obligor to meet its
financial commitment on the obligation.
BB, B, CCC, CC, C -- Obligations rated "BB," "B," "CCC," "CC," and "C"
are regarded as having significant speculative characteristics. "BB"
indicates the least degree of speculation and "C" the highest. While such
obligations will likely have some quality and protective characteristics,
these may be outweighed by large uncertainties or major exposures to adverse
conditions.
BB -- An obligation rated "BB" is less vulnerable to nonpayment than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to the obligor's inadequate capacity to meet its financial commitment
on the obligation.
B -- An obligation rated "B" is more vulnerable to nonpayment than
obligations rated "BB," but the obligor currently has the capacity to meet
its financial commitment on the obligation. Adverse business, financial, or
economic conditions will likely impair the obligor's capacity or willingness
to meet its financial commitment on the obligation.
CCC -- An obligation rated "CCC" is currently vulnerable to nonpayment,
and is dependent upon favorable business, financial, and economic conditions
for the obligor to meet its financial commitment on the obligation. In the
event of adverse business, financial, or economic conditions, the obligor is
not likely to have the capacity to meet its financial commitment on the
obligation.
CC -- An obligation rated "CC" is currently highly vulnerable to
nonpayment.
C -- The "C" rating may be used to cover a situation where a bankruptcy
petition has been filed or similar action has been taken, but payments on
this obligation are being continued.
D -- An obligation rated "D" is in payment default. The "D" rating
category is used when payments on an obligation are not made on the date due
even if the applicable grace period has not expired, unless S&P believes
that such payments will be made during such grace period. The "D" rating
also will be used upon the filing of a bankruptcy petition or the taking of
a similar action if payments on an obligation are jeopardized.
PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NR: Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
MOODY'S employs the designation "Prime-1" to indicate commercial paper
having 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
Statement of Additional Information Page 32
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
fixed financial charges and high internal cash generation; and well-established
access to a range of financial markets and assured sources of alternate
liquidity. Issues rated Prime-2 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 ratings of commercial paper are graded into several categories ranging
from "A-1" for the highest quality obligations to "D" for the lowest. Issues in
the "A" category are delineated with numbers 1, 2, and 3 to indicate the
relative degree of safety. "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 payments on issues with this
designation is satisfactory; however, the relative degree of safety is not as
high as for issues designated "A-1."
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements of each Fund as of December 31, 1997, 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 Small Cap Growth Fund - Consolidated, GT Global America Mid Cap
Growth Fund, 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, 1997, and the related statements 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
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, 1997, 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 the
GT Global America Small Cap Growth Fund - Consolidated, GT Global America Mid
Cap Growth Fund, and GT Global America Value Fund - Consolidated, as of December
31, 1997, the results of their operations for the year then ended, the changes
in their net assets for each of the two years in the period then ended 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 17, 1998
F1
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (33.0%)
Signature Resorts, Inc.-/- ................................ US 45,550 $ 996,400 3.0
LEISURE & TOURISM
Personnel Group of America, Inc.-/- ....................... US 25,700 848,100 2.5
BUSINESS & PUBLIC SERVICES
Insight Enterprises, Inc.-/- .............................. US 20,700 760,725 2.3
RETAILERS-OTHER
Vistana, Inc.-/- .......................................... US 26,900 618,700 1.8
LEISURE & TOURISM
American Disposal Services, Inc.-/- ....................... US 16,700 609,550 1.8
CONSUMER SERVICES
CDW Computer Centers, Inc.-/- ............................. US 11,000 573,375 1.7
RETAILERS-OTHER
Superior Services, Inc.-/- ................................ US 18,000 519,750 1.5
CONSUMER SERVICES
Lason Holdings, Inc.-/- ................................... US 19,000 505,875 1.5
CONSUMER SERVICES
BA Merchant Services, Inc. "A"-/- ......................... US 28,400 504,100 1.5
BUSINESS & PUBLIC SERVICES
Comfort Systems USA, Inc.-/- .............................. US 22,800 450,300 1.3
BUSINESS & PUBLIC SERVICES
HA-LO Industries, Inc.-/- ................................. US 17,200 447,200 1.3
CONSUMER SERVICES
Clear Channel Communications, Inc.-/- ..................... US 5,600 444,850 1.3
TELECOM - OTHER
Caribiner International, Inc.-/- .......................... US 9,300 413,850 1.2
CONSUMER SERVICES
Henry Schein, Inc.-/- ..................................... US 11,400 399,000 1.2
RETAILERS-OTHER
Lamar Advertising Co.-/- .................................. US 9,700 385,575 1.1
BUSINESS & PUBLIC SERVICES
C.H. Robinson Worldwide, Inc. ............................. US 16,600 371,425 1.1
TRANSPORTATION - SHIPPING
Jevic Transportation, Inc.-/- ............................. US 21,100 340,238 1.0
TRANSPORTATION - SHIPPING
Universal Outdoor Holdings, Inc.-/- ....................... US 5,900 306,800 0.9
BUSINESS & PUBLIC SERVICES
Bright Horizons, Inc.-/- .................................. US 16,000 300,000 0.9
CONSUMER SERVICES
Hagler Bailly, Inc.-/- .................................... US 10,900 245,250 0.7
BUSINESS & PUBLIC SERVICES
Service Experts, Inc.-/- .................................. US 8,400 240,450 0.7
CONSUMER SERVICES
Industrial Distribution Group, Inc.-/- .................... US 13,900 218,056 0.6
WHOLESALE & INTERNATIONAL TRADE
Execustay Corp.-/- ........................................ US 19,300 188,175 0.6
LEISURE & TOURISM
BridgeStreet Accommodations, Inc.-/- ...................... US 17,700 179,766 0.5
CONSUMER SERVICES
EduTrek International, Inc. "A"-/- ........................ US 4,900 127,400 0.4
BUSINESS & PUBLIC SERVICES
</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, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
Linens 'N Things, Inc.-/- ................................. US 1,800 $ 78,525 0.2
RETAILERS-APPAREL
NEXTLINK Communications, Inc. "A"-/- ...................... US 3,600 76,725 0.2
TELEPHONE - REGIONAL/LOCAL
Coldwater Creek, Inc.-/- .................................. US 1,800 60,750 0.2
RETAILERS-OTHER
------------
11,210,910
------------
Health Care (14.3%)
Jones Medical Industries, Inc. ............................ US 16,700 638,775 1.9
MEDICAL TECHNOLOGY & SUPPLIES
SangStat Medical Corp.-/- ................................. US 9,400 380,700 1.1
MEDICAL TECHNOLOGY & SUPPLIES
Atria Communities, Inc.-/- ................................ US 21,300 364,763 1.1
HEALTH CARE SERVICES
ESC Medical Systems Ltd.-/- {\/} .......................... ISRL 9,400 364,250 1.1
MEDICAL TECHNOLOGY & SUPPLIES
SEQUUS Pharmaceuticals, Inc.-/- ........................... US 47,900 356,256 1.1
PHARMACEUTICALS
AmeriSource Health Corp. "A"-/- ........................... US 5,600 329,000 1.0
HEALTH CARE SERVICES
Waters Corp.-/- ........................................... US 8,500 319,813 1.0
MEDICAL TECHNOLOGY & SUPPLIES
Arris Pharmaceutical Corp.-/- ............................. US 36,800 308,200 0.9
PHARMACEUTICALS
Pharmacopeia, Inc.-/- ..................................... US 18,100 289,600 0.9
BIOTECHNOLOGY
Lunar Corp.-/- ............................................ US 13,800 282,900 0.8
MEDICAL TECHNOLOGY & SUPPLIES
VIVUS, Inc.-/- ............................................ US 24,600 261,375 0.8
MEDICAL TECHNOLOGY & SUPPLIES
COR Therapeutics, Inc.-/- ................................. US 9,700 218,250 0.6
BIOTECHNOLOGY
Focal, Inc.-/- ............................................ US 18,000 191,250 0.6
MEDICAL TECHNOLOGY & SUPPLIES
Nitinol Medical Technologies, Inc.-/- ..................... US 15,000 120,000 0.4
MEDICAL TECHNOLOGY & SUPPLIES
Gilead Sciences, Inc.-/- .................................. US 2,700 103,275 0.3
BIOTECHNOLOGY
AmeriPath, Inc.-/- ........................................ US 5,800 98,600 0.3
HEALTH CARE SERVICES
Depotech Corp.-/- ......................................... US 23,500 83,719 0.3
PHARMACEUTICALS
Sofamor Danek Group, Inc.-/- .............................. US 600 39,038 0.1
MEDICAL TECHNOLOGY & SUPPLIES
------------
4,749,764
------------
</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, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Technology (13.2%)
Software AG Systems, Inc.-/- .............................. US 31,600 $ 458,200 1.4
SOFTWARE
Documentum, Inc.-/- ....................................... US 10,000 421,250 1.3
SOFTWARE
Analysts International Corp. .............................. US 11,050 381,225 1.1
COMPUTERS & PERIPHERALS
Roper Industries, Inc. .................................... US 12,600 355,950 1.1
INSTRUMENTATION & TEST
Pegasystems, Inc.-/- ...................................... US 16,000 323,000 1.0
SOFTWARE
Integrated Circuit Systems, Inc.-/- ....................... US 10,900 310,650 0.9
SEMICONDUCTORS
MRV Communications, Inc.-/- ............................... US 12,900 307,988 0.9
TELECOM TECHNOLOGY
Ciber, Inc.-/- ............................................ US 4,800 278,400 0.8
COMPUTERS & PERIPHERALS
Inacom Corp.-/- ........................................... US 9,300 260,981 0.8
COMPUTERS & PERIPHERALS
Peerless Systems Corp.-/- ................................. US 18,500 238,188 0.7
SOFTWARE
Metro Information Services, Inc.-/- ....................... US 7,700 213,675 0.6
COMPUTERS & PERIPHERALS
Aspect Development, Inc.-/- ............................... US 3,400 176,800 0.5
SOFTWARE
Logility, Inc.-/- ......................................... US 18,100 176,475 0.5
SOFTWARE
Cirrus Logic, Inc.-/- ..................................... US 15,800 167,875 0.5
SEMICONDUCTORS
Pericom Semiconductor Corp.-/- ............................ US 15,400 112,613 0.3
SEMICONDUCTORS
FactSet Research Systems, Inc.-/- ......................... US 2,300 70,725 0.2
COMPUTERS & PERIPHERALS
Aehr Test Systems-/- ...................................... US 8,400 67,200 0.2
INSTRUMENTATION & TEST
PRI Automation, Inc.-/- ................................... US 2,000 57,750 0.2
COMPUTERS & PERIPHERALS
Excel Switching Corp.-/- .................................. US 2,800 50,050 0.2
TELECOM TECHNOLOGY
------------
4,428,995
------------
Finance (9.3%)
AmeriCredit Corp.-/- ...................................... US 15,100 418,081 1.2
CONSUMER FINANCE
Camden Property Trust ..................................... US 13,400 415,400 1.2
REAL ESTATE INVESTMENT TRUST
LaSalle Partners, Inc.-/- ................................. US 11,500 409,688 1.2
REAL ESTATE
Affiliated Managers Group, Inc.-/- ........................ US 13,000 377,000 1.1
INVESTMENT MANAGEMENT
</TABLE>
The accompanying notes are an integral part of the financial statements.
F4
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (Continued)
ARM Financial Group, Inc. "A"-/- .......................... US 13,200 $ 348,150 1.0
INVESTMENT MANAGEMENT
HomeSide, Inc.-/- ......................................... US 12,000 330,750 1.0
SAVINGS & LOANS
Stirling Cooke Brown Holdings Ltd.-/- ..................... US 8,900 218,050 0.6
INSURANCE - PROPERTY-CASUALTY
Resource America, Inc. "A" ................................ US 3,900 178,425 0.5
CONSUMER FINANCE
American Capital Strategies Ltd. .......................... US 9,800 177,625 0.5
CONSUMER FINANCE
PAULA Financial-/- ........................................ US 5,800 133,400 0.4
REAL ESTATE
Tower Realty Trust, Inc. .................................. US 5,100 125,588 0.4
REAL ESTATE INVESTMENT TRUST
Citizens National Bank of Texas ........................... US 6,600 82,500 0.2
BANKS-REGIONAL
------------
3,214,657
------------
Capital Goods (7.4%)
General Cable Corp.-/- .................................... US 17,500 633,281 1.9
INDUSTRIAL COMPONENTS
Knoll, Inc.-/- ............................................ US 18,400 591,100 1.8
OFFICE EQUIPMENT
Chart Industries, Inc. .................................... US 17,100 390,094 1.2
MACHINERY & ENGINEERING
OSI Systems, Inc.-/- ...................................... US 22,300 273,175 0.8
ELECTRICAL PLANT/EQUIPMENT
Wyman-Gordon Co.-/- ....................................... US 13,700 268,863 0.8
ELECTRICAL PLANT/EQUIPMENT
The Middleby Corp.-/- ..................................... US 20,700 161,719 0.5
MACHINERY & ENGINEERING
Power-One, Inc.-/- ........................................ US 9,000 123,750 0.4
INDUSTRIAL COMPONENTS
------------
2,441,982
------------
Energy (5.4%)
Newfield Exploration Co.-/- ............................... US 27,900 650,419 1.9
OIL
Hanover Compressor Co.-/- ................................. US 27,800 556,000 1.7
ENERGY EQUIPMENT & SERVICES
Pride International, Inc.-/- .............................. US 10,400 262,600 0.8
OIL
ADAC Laboratories-/- ...................................... US 13,100 258,725 0.8
ENERGY EQUIPMENT & SERVICES
Dril-Quip, Inc.-/- ........................................ US 2,000 70,250 0.2
ENERGY EQUIPMENT & SERVICES
------------
1,797,994
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F5
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Non-Durables (4.2%)
JLK Direct Distribution, Inc. "A"-/- ...................... US 20,200 $ 565,600 1.7
OTHER CONSUMER GOODS
DM Management Co.-/- ...................................... US 20,900 326,563 1.0
OTHER CONSUMER GOODS
GameTech International, Inc.-/- ........................... US 30,100 323,575 1.0
RECREATION
Meadowcraft, Inc.-/- ...................................... US 13,600 159,800 0.5
HOUSEHOLD PRODUCTS
------------
1,375,538
------------
Materials/Basic Industry (3.9%)
Cambrex Corp. ............................................. US 10,100 464,600 1.4
CHEMICALS
Gibraltar Steel Corp.-/- .................................. US 22,600 446,350 1.3
METALS - STEEL
Crompton & Knowles Corp. .................................. US 12,700 336,550 1.0
CHEMICALS
Steel Dynamics, Inc.-/- ................................... US 4,200 67,200 0.2
METALS - STEEL
------------
1,314,700
------------
Consumer Durables (3.8%)
Avis Rent A Car, Inc.-/- .................................. US 17,000 542,938 1.6
AUTOMOBILES
Tower Automotive, Inc.-/- ................................. US 10,800 454,275 1.3
AUTO PARTS
Aftermarket Technology Corp.-/- ........................... US 17,400 315,375 0.9
AUTO PARTS
------------
1,312,588
------------
Multi-Industry/Miscellaneous (2.5%)
Cornell Corrections, Inc.-/- .............................. US 23,500 487,625 1.4
MISCELLANEOUS
Equity Corporation International-/- ....................... US 15,600 360,750 1.1
MISCELLANEOUS
------------
848,375
------------ -----
TOTAL EQUITY INVESTMENTS (cost $31,799,304) ................. 32,695,503 97.0
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
F6
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Repurchase Agreement (Note 1) Assets
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust
Co., due January 2, 1998, for an effective yield of 5.80%
collateralized by $905,000 U.S. Treasury Notes, 5.75% due
12/31/98 (market value of collateral is $905,993,
including accrued interest). (cost $884,000) ............ $ 884,000 2.6
------------ -----
TOTAL INVESTMENTS (cost $32,683,304) * ..................... 33,579,503 99.6
Other Assets and Liabilities ................................ 131,240 0.4
------------ -----
NET ASSETS .................................................. $ 33,710,743 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $32,768,260 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 2,952,339
Unrealized depreciation: (2,141,096)
-------------
Net unrealized appreciation: $ 811,243
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F7
<PAGE>
GT GLOBAL AMERICA MID CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (36.5%)
Cendant Corp.-/- .......................................... US 924,232 $ 31,770,471 6.2
RETAILERS-OTHER
Snyder Communications, Inc.-/- ............................ US 571,700 20,867,050 4.1
CONSUMER SERVICES
Outdoor Systems, Inc.-/- .................................. US 477,325 18,317,347 3.6
BUSINESS & PUBLIC SERVICES
Signature Resorts, Inc.-/- ................................ US 789,900 17,279,063 3.4
LEISURE & TOURISM
Hilton Hotels Corp. ....................................... US 502,100 14,937,475 2.9
LEISURE & TOURISM
U.S. Office Products Co.-/- ............................... US 734,650 14,417,506 2.8
CONSUMER SERVICES
Caribiner International, Inc.-/- .......................... US 320,500 14,262,250 2.8
CONSUMER SERVICES
Universal Outdoor Holdings, Inc.-/- ....................... US 264,900 13,774,800 2.7
BUSINESS & PUBLIC SERVICES
Mirage Resorts, Inc.-/- ................................... US 381,900 8,688,225 1.7
LEISURE & TOURISM
Nextel Communications, Inc. "A"-/- ........................ US 303,300 7,885,800 1.5
WIRELESS COMMUNICATIONS
Valassis Communications, Inc.-/- .......................... US 209,400 7,747,800 1.5
BROADCASTING & PUBLISHING
Paychex, Inc. ............................................. US 140,200 7,097,625 1.4
CONSUMER SERVICES
Service Corporation International ......................... US 137,500 5,078,906 1.0
CONSUMER SERVICES
Wolverine World Wide, Inc. ................................ US 201,600 4,561,200 0.9
RETAILERS-APPAREL
------------
186,685,518
------------
Finance (14.6%)
Conseco, Inc. ............................................. US 348,200 15,821,338 3.1
INSURANCE - MULTI-LINE
GreenPoint Financial Corp. ................................ US 154,100 11,181,881 2.2
BANKS-REGIONAL
CMAC Investment Corp. ..................................... US 149,700 9,038,138 1.8
INSURANCE - PROPERTY-CASUALTY
National Commerce Bancorp. ................................ US 252,800 8,911,200 1.7
OTHER FINANCIAL
Exel Ltd. ................................................. US 120,500 7,636,688 1.5
INSURANCE - PROPERTY-CASUALTY
The CIT Group, Inc. "A"-/- ................................ US 228,400 7,365,900 1.4
CONSUMER FINANCE
Consolidated Capital Corp.-/- ............................. US 323,500 6,571,094 1.3
INVESTMENT MANAGEMENT
Student Loan Marketing Association ........................ US 42,800 5,954,550 1.2
OTHER FINANCIAL
Ace Ltd. .................................................. US 20,100 1,939,650 0.4
INSURANCE - PROPERTY-CASUALTY
------------
74,420,439
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F8
<PAGE>
GT GLOBAL AMERICA MID CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Health Care (11.1%)
AmeriSource Health Corp. "A"-/- ........................... US 214,600 $ 12,607,750 2.5
HEALTH CARE SERVICES
McKesson Corp. ............................................ US 114,600 12,398,288 2.4
HEALTH CARE SERVICES
HBO & Co. ................................................. US 203,800 9,782,400 1.9
HEALTH CARE SERVICES
Quintiles Transnational Corp.-/- .......................... US 246,100 9,413,325 1.8
HEALTH CARE SERVICES
Covance, Inc.-/- .......................................... US 337,000 6,697,875 1.3
HEALTH CARE SERVICES
Guidant Corp. ............................................. US 97,400 6,063,150 1.2
MEDICAL TECHNOLOGY & SUPPLIES
------------
56,962,788
------------
Technology (11.1%)
PeopleSoft, Inc.-/- ....................................... US 380,600 14,843,400 2.9
SOFTWARE
Sterling Commerce, Inc.-/- ................................ US 365,200 14,037,375 2.7
SOFTWARE
Ciena Corp.-/- ............................................ US 186,700 11,412,038 2.2
TELECOM TECHNOLOGY
CBT Group PLC - ADR-/- {\/} ............................... IRE 110,800 9,099,450 1.8
COMPUTERS & PERIPHERALS
Pegasystems, Inc.-/- ...................................... US 371,300 7,495,619 1.5
SOFTWARE
------------
56,887,882
------------
Materials/Basic Industry (9.7%)
Crompton & Knowles Corp. .................................. US 529,200 14,023,800 2.7
CHEMICALS
International Specialty Products, Inc.-/- ................. US 834,000 12,457,875 2.4
CHEMICALS
Sealed Air Corp.-/- ....................................... US 201,000 12,411,750 2.4
PLASTICS & RUBBER
J. Ray McDermott S.A.-/- .................................. US 263,900 11,347,700 2.2
BUILDING MATERIALS & COMPONENTS
------------
50,241,125
------------
Energy (8.6%)
Cooper Cameron Corp.-/- ................................... US 170,500 10,400,500 2.0
ENERGY EQUIPMENT & SERVICES
BJ Services Co.-/- ........................................ US 120,600 8,675,663 1.7
ENERGY EQUIPMENT & SERVICES
Anadarko Petroleum Corp. .................................. US 138,900 8,429,494 1.7
OIL
Smith International, Inc.-/- .............................. US 135,600 8,322,450 1.6
ENERGY EQUIPMENT & SERVICES
</TABLE>
The accompanying notes are an integral part of the financial statements.
F9
<PAGE>
GT GLOBAL AMERICA MID CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Energy (Continued)
Santa Fe International Corp. .............................. US 198,200 $ 8,064,263 1.6
ENERGY EQUIPMENT & SERVICES
------------
43,892,370
------------
Consumer Durables (4.1%)
Avis Rent A Car, Inc.-/- .................................. US 326,900 10,440,369 2.0
AUTOMOBILES
Hertz Corp. "A" ........................................... US 152,500 6,138,125 1.2
AUTOMOBILES
Dollar Thrifty Automotive Group, Inc.-/- .................. US 235,000 4,817,500 0.9
AUTOMOBILES
------------
21,395,994
------------
Multi-Industry/Miscellaneous (2.4%)
Corrections Corporation of America-/- ..................... US 324,500 12,026,781 2.4
------------
MISCELLANEOUS
Consumer Non-Durables (1.3%)
International Home Foods, Inc.-/- ......................... US 240,400 6,731,200 1.3
------------
FOOD
Capital Goods (1.3%)
U.S. Filter Corp.-/- ...................................... US 213,100 6,379,681 1.3
ENVIRONMENTAL
------------ -----
TOTAL EQUITY INVESTMENTS (cost $450,142,030) ................ 515,623,778 100.7
------------ -----
<CAPTION>
Value % of Net
Repurchase Agreement (Note 1) Assets
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust
Co., due January 2, 1998, for an effective yield of 5.80%,
collateralized by $20,985,000 U.S. Treasury Notes, 5.75%
due 12/31/98 (market value of collateral is $21,004,684,
including accrued interest).
(cost $20,589,000) ...................................... 20,589,000 4.0
------------ -----
TOTAL INVESTMENTS (cost $470,731,030) * .................... 536,212,778 104.7
Other Assets and Liabilities ................................ (23,930,616) (4.7)
------------ -----
NET ASSETS .................................................. $512,282,162 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $472,057,961 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 72,285,341
Unrealized depreciation: (8,130,524)
-------------
Net unrealized appreciation: $ 64,154,817
-------------
-------------
</TABLE>
Abbreviation:
ADR--American Depositary Receipt
The accompanying notes are an integral part of the financial statements.
F10
<PAGE>
GT GLOBAL AMERICA VALUE FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (36.6%)
Student Loan Marketing Association ........................ US 5,175 $ 719,972 2.9
OTHER FINANCIAL
Travelers Group, Inc. ..................................... US 11,850 638,419 2.6
INSURANCE - MULTI-LINE
Allstate Corp. ............................................ US 6,875 624,766 2.5
INSURANCE - MULTI-LINE
Chase Manhattan Corp. ..................................... US 5,675 621,413 2.5
BANKS-MONEY CENTER
Household International, Inc. ............................. US 4,600 586,779 2.4
OTHER FINANCIAL
NationsBank Corp. ......................................... US 9,600 583,800 2.3
BANKS-SUPER REGIONAL
First Union Corp. (N.C.) .................................. US 11,300 579,125 2.3
BANKS-SUPER REGIONAL
Exel Ltd. ................................................. US 8,900 564,038 2.3
INSURANCE - PROPERTY-CASUALTY
BankAmerica Corp. ......................................... US 7,250 529,250 2.1
BANKS-SUPER REGIONAL
Citicorp .................................................. US 4,100 518,394 2.1
BANKS-MONEY CENTER
Fleet Financial Group, Inc. ............................... US 5,800 434,638 1.8
BANKS-SUPER REGIONAL
GreenPoint Financial Corp. ................................ US 5,900 428,119 1.7
BANKS-REGIONAL
Norwest Corp. ............................................. US 10,950 422,944 1.7
BANKS-REGIONAL
Equity Office Properties Trust ............................ US 9,700 306,156 1.2
REAL ESTATE INVESTMENT TRUST
Crescent Real Estate Equities Co. ......................... US 7,200 283,500 1.1
REAL ESTATE INVESTMENT TRUST
Tower Realty Trust, Inc. .................................. US 11,100 273,338 1.1
REAL ESTATE INVESTMENT TRUST
Patriot American Hospitality, Inc. ........................ US 9,198 265,017 1.1
REAL ESTATE INVESTMENT TRUST
Equity Residential Property Trust ......................... US 4,875 246,492 1.0
REAL ESTATE INVESTMENT TRUST
Highwoods Properties, Inc. ................................ US 6,425 238,930 1.0
REAL ESTATE INVESTMENT TRUST
Felcor Suite Hotels, Inc. ................................. US 6,025 213,888 0.9
REAL ESTATE INVESTMENT TRUST
------------
9,078,978
------------
Energy (16.4%)
McDermott International, Inc. ............................. US 13,900 509,088 2.0
ENERGY EQUIPMENT & SERVICES
Mobil Corp. ............................................... US 6,300 454,781 1.8
OIL
Amerada Hess Corp. ........................................ US 8,025 440,372 1.8
OIL
</TABLE>
The accompanying notes are an integral part of the financial statements.
F11
<PAGE>
GT GLOBAL AMERICA VALUE FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Energy (Continued)
Tosco Corp. ............................................... US 10,600 $ 400,813 1.6
GAS PRODUCTION & DISTRIBUTION
Unocal Corp. .............................................. US 9,800 380,363 1.5
OIL
Ultramar Diamond Shamrock Corp. ........................... US 11,925 380,109 1.5
OIL
Pinnacle West Capital Corp. ............................... US 8,025 340,059 1.4
ELECTRICAL & GAS UTILITIES
Texaco, Inc. .............................................. US 5,850 318,094 1.3
OIL
Edison International ...................................... US 10,300 280,031 1.1
ELECTRICAL & GAS UTILITIES
Central & South West Corp. ................................ US 8,700 235,444 1.0
ELECTRICAL & GAS UTILITIES
GPU, Inc. ................................................. US 5,225 220,103 0.9
ELECTRICAL & GAS UTILITIES
CMS Energy Corp. .......................................... US 2,550 112,359 0.5
ELECTRICAL & GAS UTILITIES
------------
4,071,616
------------
Services (14.5%)
Bell Atlantic Corporation ................................. US 7,500 682,500 2.8
TELEPHONE - REGIONAL/LOCAL
Federated Department Stores, Inc.-/- ...................... US 15,800 680,388 2.7
RETAILERS-APPAREL
U.S. West, Inc. ........................................... US 12,500 564,063 2.3
TELEPHONE - REGIONAL/LOCAL
Burlington Northern, Inc. ................................. US 6,000 557,625 2.3
TRANSPORTATION - ROAD & RAIL
The Limited, Inc. ......................................... US 19,825 505,538 2.0
RETAILERS-APPAREL
Time Warner, Inc. ......................................... US 5,525 342,550 1.4
BROADCASTING & PUBLISHING
ITT Corp.-/- .............................................. US 3,100 256,913 1.0
LEISURE & TOURISM
------------
3,589,577
------------
Materials/Basic Industry (11.2%)
Imperial Chemical Industries PLC - ADR{\/} ................ UK 10,900 707,819 2.9
CHEMICALS
Hercules, Inc. ............................................ US 8,075 404,255 1.6
CHEMICALS
Stone Container Corp.-/- .................................. US 38,600 402,888 1.6
PAPER/PACKAGING
Crompton & Knowles Corp. .................................. US 14,400 381,600 1.5
CHEMICALS
W.R. Grace & Co. .......................................... US 4,225 339,848 1.4
CHEMICALS
Aluminum Company of America (ALCOA) ....................... US 4,400 309,650 1.2
METALS - NON-FERROUS
</TABLE>
The accompanying notes are an integral part of the financial statements.
F12
<PAGE>
GT GLOBAL AMERICA VALUE FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Equity Investments Country Shares (Note 1) Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (Continued)
PPG Industries, Inc. ...................................... US 4,200 $ 239,925 1.0
CHEMICALS
------------
2,785,985
------------
Consumer Durables (6.4%)
Ford Motor Co. ............................................ US 14,650 713,272 2.9
AUTOMOBILES
Chrysler Corp. ............................................ US 12,725 447,761 1.8
AUTOMOBILES
Dollar Thrifty Automotive Group, Inc.-/- .................. US 20,000 410,000 1.7
AUTOMOBILES
------------
1,571,033
------------
Consumer Non-Durables (5.2%)
RJR Nabisco Holdings Corp. ................................ US 16,875 632,813 2.5
TOBACCO
Philip Morris Cos., Inc. .................................. US 8,550 387,422 1.6
TOBACCO
Fruit of the Loom, Inc.-/- ................................ US 10,700 274,188 1.1
TEXTILES & APPAREL
------------
1,294,423
------------
Technology (4.9%)
International Business Machines Corp. ..................... US 7,000 731,938 2.9
COMPUTERS & PERIPHERALS
Compaq Computer Corp.-/- .................................. US 8,950 505,116 2.0
COMPUTERS & PERIPHERALS
------------
1,237,054
------------
Capital Goods (1.2%)
Textron, Inc. ............................................. US 4,800 300,000 1.2
AEROSPACE/DEFENSE
------------ -----
TOTAL EQUITY INVESTMENTS (cost $21,927,922) ................. 23,928,666 96.4
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
F13
<PAGE>
GT GLOBAL AMERICA VALUE FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value % of Net
Repurchase Agreement (Note 1) Assets
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust
Co., due January 2, 1998, for an effective yield of 5.80%,
collateralized by $1,130,000 U.S. Treasury Notes, 5.75%
due 12/31/98 (market value of collateral is $1,131,060,
including accrued interest).
(cost $1,104,000) ....................................... $ 1,104,000 4.4
------------ -----
TOTAL INVESTMENTS (cost $23,031,922) * ..................... 25,032,666 100.8
Other Assets and Liabilities ................................ (208,051) (0.8)
------------ -----
NET ASSETS .................................................. $ 24,824,615 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $23,069,999 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 2,281,685
Unrealized depreciation: (319,018)
-------------
Net unrealized appreciation: $ 1,962,667
-------------
-------------
</TABLE>
Abbreviation:
ADR--American Depositary Receipt
The accompanying notes are an integral part of the financial statements.
F14
<PAGE>
GT GLOBAL AMERICA FUNDS
STATEMENTS OF ASSETS
AND LIABILITIES
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT Global
---------------------------------------------
America America
Small Cap Mid Cap America
Growth Growth Value
Fund-Consolidated Fund Fund-Consolidated
-------------- ------------- --------------
<S> <C> <C> <C>
Assets:
Investments in securities, at value (cost $32,683,304; $470,731,030;
and $23,031,922, respectively) (Note 1)............................ $33,579,503 $536,212,778 $25,032,666
U.S. currency....................................................... 927 295 988
Dividends receivable................................................ 10,766 125,429 42,920
Interest receivable................................................. 142 3,317 177
Receivable for Fund shares sold..................................... 358,830 628,959 306,827
Receivable for securities sold...................................... 887,683 -- 90,237
Unamortized organizational costs (Note 1)........................... 49,458 -- 49,458
-------------- ------------- --------------
Total assets...................................................... 34,887,309 536,970,778 25,523,273
-------------- ------------- --------------
Liabilities:
Payable for custodian fees.......................................... 2,924 25,081 2,892
Payable for Directors' and Trustees' fees and expenses (Note 2)..... 5,310 5,062 5,725
Payable for fund accounting fees (Note 2)........................... 1,488 9,945 652
Payable for Fund shares repurchased................................. 716,716 3,845,129 356,809
Payable for investment management and administration fees (Note
2)................................................................. 19,707 306,242 417
Payable for printing and postage expenses........................... 16,077 31,815 16,948
Payable for professional fees....................................... 15,217 27,546 19,018
Payable for registration and filing fees............................ 15,960 3,900 8,146
Payable for securities purchased.................................... 348,610 19,887,085 263,514
Payable for service and distribution expenses (Note 2).............. 21,124 285,634 15,365
Payable for transfer agent fees (Note 2)............................ 11,763 231,778 5,430
Other accrued expenses.............................................. 1,570 29,399 3,642
-------------- ------------- --------------
Total liabilities................................................. 1,176,466 24,688,616 698,558
Minority interest (Notes 1 & 2)..................................... 100 -- 100
-------------- ------------- --------------
Net assets............................................................ $33,710,743 $512,282,162 $24,824,615
-------------- ------------- --------------
-------------- ------------- --------------
Class A:
Net asset value and redemption price per share ($10,896,107 DIVIDED BY
763,367;
$255,674,204 DIVIDED BY 12,169,079; and $7,668,100 DIVIDED BY 444,643
shares outstanding, respectively) ................................... $ 14.27 $ 21.01 $ 17.25
-------------- ------------- --------------
-------------- ------------- --------------
Maximum offering price per share (100/95.25 of $14.27; 100/95.25 of
$21.01; and 100/95.25 of $17.25, respectively) *..................... $ 14.98 $ 22.06 $ 18.11
-------------- ------------- --------------
-------------- ------------- --------------
Class B:+
Net asset value and offering price per share $21,222,157 DIVIDED BY
1,509,212; $255,468,031 DIVIDED BY 12,580,716; and $16,717,458
DIVIDED BY 981,035 shares outstanding, respectively)................. $ 14.06 $ 20.31 $ 17.04
-------------- ------------- --------------
-------------- ------------- --------------
Advisor Class:
Net asset value and offering price per share, and redemption price per
share ($1,592,479 DIVIDED BY 110,687; $1,139,927 DIVIDED BY 54,025;
and $439,057 DIVIDED BY 25,283 shares outstanding, respectively)..... $ 14.39 $ 21.10 $ 17.37
-------------- ------------- --------------
-------------- ------------- --------------
Net assets consist of:
Paid in capital (Note 4)............................................ $31,557,971 $430,679,692 $22,421,981
Accumulated net realized gain on investments........................ 1,256,573 16,120,722 401,890
Net unrealized appreciation of investments.......................... 896,199 65,481,748 2,000,744
-------------- ------------- --------------
Total -- representing net assets applicable to capital shares
outstanding.......................................................... $33,710,743 $512,282,162 $24,824,615
-------------- ------------- --------------
-------------- ------------- --------------
<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.
F15
<PAGE>
GT GLOBAL AMERICA FUNDS
STATEMENTS OF OPERATIONS
Year ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT Global
------------------------------------------
America America
Small Cap Mid Cap America
Growth Growth Value
Fund-Consolidated Fund Fund-Consolidated
------------- ------------ -------------
<S> <C> <C> <C>
Investment income: (Note 1)
Dividend income.............................................. $ 35,957 $2,095,256 $ 357,943
Interest income.............................................. 95,213 519,576 46,139
------------- ------------ -------------
Total investment income.................................... 131,170 2,614,832 404,082
------------- ------------ -------------
Expenses:
Investment management and administration fees (Note 2)....... 184,004 3,999,732 113,543
Amortization of organization costs (Note 1).................. 17,702 -- 17,702
Custodian Fees............................................... 21,876 137,385 9,431
Directors' and Trustees' fees and expenses (Note 2).......... 14,813 12,580 12,042
Fund accounting fees (Note 2)................................ 6,379 142,274 3,938
Printing and postage expenses................................ 61,435 102,242 51,829
Professional fees............................................ 63,468 72,533 71,745
Registration and filing fees................................. 72,360 73,688 65,399
Service and distribution expenses: (Note 2)
Class A.................................................... 33,776 958,593 17,701
Class B.................................................... 148,043 2,781,908 102,587
Transfer agent fees (Note 2)................................. 102,790 1,545,314 59,946
Other expenses (Note 1)...................................... 5,430 156,232 9,271
------------- ------------ -------------
Total expenses before reductions and reimbursement......... 732,076 9,982,481 535,134
------------- ------------ -------------
Expenses reimbursed by Chancellor LGT Asset Management,
Inc. (Note 2)........................................... (131,297) -- (151,962)
Expense reductions (Notes 1 & 5)......................... (20,049) (600,349) (1,332)
------------- ------------ -------------
Total net expenses......................................... 580,730 9,382,132 381,840
------------- ------------ -------------
Net investment income (loss)................................... (449,560) (6,767,300) 22,242
------------- ------------ -------------
Net realized and unrealized gain on investments: (Note 1)
Net realized gain on investments............................. 2,524,251 91,288,360 1,352,859
Net change in unrealized appreciation (depreciation) of
investments................................................. 1,674,235 (23,043,968) 2,016,032
------------- ------------ -------------
Net realized and unrealized gain on investments................ 4,198,486 68,244,392 3,368,891
------------- ------------ -------------
Net increase in net assets resulting from operations........... $ 3,748,926 $61,477,092 $ 3,391,133
------------- ------------ -------------
------------- ------------ -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F16
<PAGE>
GT GLOBAL AMERICA FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT Global
-----------------------------------------------------------------------------
America Small Cap America Mid Cap America Value
Growth Fund-Consolidated Growth Fund Fund-Consolidated
------------------------ ------------------------- ------------------------
Year ended Year ended Year ended Year ended Year ended
December December December Year ended December December
31, 31, 31, December 31, 31, 31,
1997 1996 1997 1996 1997 1996
----------- ----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss).......... $(449,560) $(110,516) $(6,767,300) $ (1,367,346) $ 22,242 $ (30,160)
Net realized gain on investments and
foreign currency transactions........ 2,524,251 1,264,689 91,288,360 24,339,369 1,352,859 733,904
Net change in unrealized appreciation
(depreciation) of investments........ 1,674,235 (782,829) (23,043,968) 76,318,599 2,016,032 (69,965)
----------- ----------- ----------- ------------ ----------- -----------
Net increase in net assets resulting
from operations.................... 3,748,926 371,344 61,477,092 99,290,622 3,391,133 633,779
----------- ----------- ----------- ------------ ----------- -----------
Class A:
Distributions to shareholders: (Note 1)
From net investment income............ -- -- -- -- (12,256) --
From net realized gain on
investments.......................... (213,287) (564,752) (27,861,047) (21,518,831) (482,262) (7,007)
Class B:
Distributions to shareholders: (Note 1)
From net investment income............ -- -- -- -- -- --
From net realized gain on
investments.......................... (410,555) (727,944) (29,550,073) (20,232,121) (1,128,861) (14,950)
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income............ -- -- -- -- (1,610) --
From net realized gain on
investments.......................... (32,021) (28,106) (120,835) (167,680) (30,657) (443)
----------- ----------- ----------- ------------ ----------- -----------
Total distributions................. (655,863) (1,320,802) (57,531,955) (41,918,632) (1,655,646) (22,400)
----------- ----------- ----------- ------------ ----------- -----------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested........................... 60,411,522 43,976,336 783,255,935 2,122,781,710 33,884,259 11,770,124
Decrease from capital shares
repurchased.......................... (49,371,158) (27,455,528) (954,921,988) (2,246,270,951) (19,018,130) (6,364,460)
----------- ----------- ----------- ------------ ----------- -----------
Net increase (decrease) from capital
share transactions................. 11,040,364 16,520,808 (171,666,053) (123,489,241) 14,866,129 5,405,664
----------- ----------- ----------- ------------ ----------- -----------
Total increase (decrease) in net
assets................................. 14,133,427 15,571,350 (167,720,916) (66,117,251) 16,601,616 6,017,043
Net assets:
Beginning of year..................... 19,577,316 4,005,966 680,003,078 746,120,329 8,222,999 2,205,956
----------- ----------- ----------- ------------ ----------- -----------
End of year *........................ 3$3,710,743 1$9,577,316 $512,282,162 $680,003,078 2$4,824,615 $8,222,999
----------- ----------- ----------- ------------ ----------- -----------
----------- ----------- ----------- ------------ ----------- -----------
* Includes undistributed/accumulated
net investment income (loss) of...... $ -- $ -- $ -- $ -- $ -- $ --
----------- ----------- ----------- ------------ ----------- -----------
----------- ----------- ----------- ------------ ----------- -----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F17
<PAGE>
GT GLOBAL AMERICA FUNDS
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>
Small Cap Growth Fund
------------------------------------------
Class A
------------------------------------------
October 18,
1995
(commencement
of operations)
Year ended Year ended to December
December 31, December 31, 31,
1997 (d) 1996 (d) 1995 (d)
------------ ------------ --------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.52 $ 11.80 $ 11.43
------------ ------------ --------------
Income from investment operations:
Net investment income (loss).......... (0.18) ** (0.05) ** 0.04*
Net realized and unrealized gain on
investments.......................... 2.20 1.69 0.33
------------ ------------ --------------
Net increase from investment
operations......................... 2.02 1.64 0.37
------------ ------------ --------------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.27) (0.92) --
------------ ------------ --------------
Total distributions................. (0.27) (0.92) --
------------ ------------ --------------
Net asset value, end of period.......... $ 14.27 $ 12.52 $ 11.80
------------ ------------ --------------
------------ ------------ --------------
Total investment return (c)............. 16.23 % 13.81 % 3.24 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 10,896 $ 8,448 $ 1,931
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... (1.40)% (0.38)% 1.68 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (2.00)% (1.47)% (20.52)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 1.92 % 2.00 % 2.00 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 2.52 % 3.09 % 24.20 %(a)
Portfolio turnover rate+................ 233 % 150 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0517 $ 0.0489 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total Investment Return does not include sales charges.
(d) Calculated based upon 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.
* * * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.25), $(0.33), and
$(0.21) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1997.
+ 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.
The accompanying notes are an integral part of the financial statements.
F18
<PAGE>
GT GLOBAL AMERICA FUNDS
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>
Small Cap Growth Fund
------------------------------------------
Class B
------------------------------------------
October 18,
1995
(commencement
of operations)
Year ended Year ended to December
December 31, December 31, 31,
1997 (d) 1996 (d) 1995 (d)
------------ ------------ --------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.42 $ 11.78 $ 11.43
------------ ------------ --------------
Income from investment operations:
Net investment income (loss).......... (0.26) ** (0.14) ** 0.02*
Net realized and unrealized gain on
investments.......................... 2.17 1.70 0.33
------------ ------------ --------------
Net increase from investment
operations......................... 1.91 1.56 0.35
------------ ------------ --------------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.27) (0.92) --
------------ ------------ --------------
Total distributions................. (0.27) (0.92) --
------------ ------------ --------------
Net asset value, end of period.......... $ 14.06 $ 12.42 $ 11.78
------------ ------------ --------------
------------ ------------ --------------
Total investment return (c)............. 15.47 % 13.14 % 3.06 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 21,222 $ 10,694 $ 2,024
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... (2.05)% (1.03)% 1.03 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (2.65)% (2.12)% (21.17)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 2.57 % 2.65 % 2.65 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 3.17 % 3.74 % 24.85 %(a)
Portfolio turnover rate+................ 233 % 150 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0517 $ 0.0489 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total Investment Return does not include sales charges.
(d) Calculated based upon 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.
* * * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.25), $(0.33), and
$(0.21) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1997.
+ 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.
The accompanying notes are an integral part of the financial statements.
F19
<PAGE>
GT GLOBAL AMERICA FUNDS
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>
Small Cap Growth Fund
------------------------------------------
Advisor Class
------------------------------------------
October 18,
1995
(commencement
of operations)
Year ended Year ended to December
December 31, December 31, 31,
1997 (d) 1996 (d) 1995 (d)
------------ ------------ --------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.58 $ 11.81 $ 11.43
------------ ------------ --------------
Income from investment operations:
Net investment income (loss).......... (0.14) ** --** 0.05*
Net realized and unrealized gain on
investments.......................... 2.22 1.69 0.33
------------ ------------ --------------
Net increase from investment
operations......................... 2.08 1.69 0.38
------------ ------------ --------------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.27) (0.92) --
------------ ------------ --------------
Total distributions................. (0.27) (0.92) --
------------ ------------ --------------
Net asset value, end of period.......... $ 14.39 $ 12.58 $ 11.81
------------ ------------ --------------
------------ ------------ --------------
Total investment return (c)............. 16.63 % 14.22 % 3.32 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 1,592 $ 435 $ 52
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... (1.05)% (0.03)% 2.03 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (1.65)% (1.12)% (20.17)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 1.57 % 1.65 % 1.65 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 2.17 % 2.74 % 23.85 %(a)
Portfolio turnover rate+................ 233 % 150 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0517 $ 0.0489 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total Investment Return does not include sales charges.
(d) Calculated based upon 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.
* * * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.25), $(0.33), and
$(0.21) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1997.
+ 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.
The accompanying notes are an integral part of the financial statements.
F20
<PAGE>
GT GLOBAL AMERICA FUNDS
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>
Mid Cap Growth Fund
----------------------------------------------------------
Class A+
----------------------------------------------------------
Year ended December 31,
----------------------------------------------------------
1997 1996 1995 1994 (d) 1993
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 20.77 $ 19.07 $ 17.69 $ 17.17 $ 17.12
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... (0.20) 0.03 0.24 0.04 (0.21)
Net realized and unrealized gain on
investments.......................... 3.00 2.96 3.93 2.55 1.56
---------- ---------- ---------- ---------- ----------
Net increase from investment
operations......................... 2.80 2.99 4.17 2.59 1.35
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ -- -- (0.21) (0.02) --
From net realized gain on
investments.......................... (2.56) (1.29) (2.58) (2.05) (1.30)
---------- ---------- ---------- ---------- ----------
Total distributions................. (2.56) (1.29) (2.79) (2.07) (1.30)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 21.01 $ 20.77 $ 19.07 $ 17.69 $ 17.17
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 14.05% 15.65% 23.23% 15.69% 8.3%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 255,674 $ 343,427 $ 396,291 $ 196,937 $ 116,468
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... (0.90)% 0.12% 1.24% 0.17% (0.7)%
Without expense reductions............ (1.01)% 0.07% N/A N/A N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.37% 1.36% 1.46% 1.58% 1.6%
Without expense reductions............ 1.48% 1.41% N/A N/A N/A
Portfolio turnover rate++++............. 190% 253% 71% 102% 92%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0574 $ 0.0536 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.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F21
<PAGE>
GT GLOBAL AMERICA FUNDS
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>
Mid Cap Growth Fund
-------------------------------------------------------------
Class B++
-------------------------------------------------------------
April 1, 1993
Year ended December 31, to
---------------------------------------------- December 31,
1997 1996 1995 1994 (d) 1993
---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 20.28 $ 18.77 $ 17.50 $ 17.09 $ 15.90
---------- ---------- ---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... (0.34) (0.11) 0.10 (0.09) (0.29)
Net realized and unrealized gain on
investments.......................... 2.93 2.91 3.87 2.55 2.78
---------- ---------- ---------- ---------- -------------
Net increase from investment
operations......................... 2.59 2.80 3.97 2.46 2.49
---------- ---------- ---------- ---------- -------------
Distributions to shareholders:
From net investment income............ -- -- (0.12) -- --
From net realized gain on
investments.......................... (2.56) (1.29) (2.58) (2.05) (1.30)
---------- ---------- ---------- ---------- -------------
Total distributions................. (2.56) (1.29) (2.70) (2.05) (1.30)
---------- ---------- ---------- ---------- -------------
Net asset value, end of period.......... $ 20.31 $ 20.28 $ 18.77 $ 17.50 $ 17.09
---------- ---------- ---------- ---------- -------------
---------- ---------- ---------- ---------- -------------
Total investment return (c)............. 13.35% 14.82% 22.42% 15.06% 16.1%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 255,468 $ 334,590 $ 348,435 $ 80,060 $ 1,982
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... (1.55)% (0.53)% 0.59% (0.48)% (1.3)%(a)
Without expense reductions............ (1.66)% (0.58)% N/A N/A N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.02% 2.01% 2.11% 2.23% 2.2%(a)
Without expense reductions............ 2.13% 2.06% N/A N/A N/A
Portfolio turnover rate++++............. 190% 253% 71% 102% 92%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0574 $ 0.0536 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.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F22
<PAGE>
GT GLOBAL AMERICA FUNDS
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>
Mid Cap Growth Fund
-----------------------------------------
Advisor Class+++
-----------------------------------------
June 1, 1995
Year ended Year ended to
December 31, December 31, December 31,
1997 1996 1995
------------ ------------ -------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 20.76 $ 19.05 $ 20.61
------------ ------------ -------------
Income from investment operations:
Net investment income (loss).......... (0.15) 0.09 0.21
Net realized and unrealized gain on
investments.......................... 3.05 2.91 1.09
------------ ------------ -------------
Net increase from investment
operations......................... 2.90 3.00 1.30
------------ ------------ -------------
Distributions to shareholders:
From net investment income............ -- -- (0.28)
From net realized gain on
investments.......................... (2.56) (1.29) (2.58)
------------ ------------ -------------
Total distributions................. (2.56) (1.29) (2.86)
------------ ------------ -------------
Net asset value, end of period.......... $ 21.10 $ 20.76 $ 19.05
------------ ------------ -------------
------------ ------------ -------------
Total investment return (c)............. 14.54 % 15.72 % 6.01%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 1,140 $ 1,986 $ 1,394
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... (0.55)% 0.47 % 1.59%(a)
Without expense reductions............ (0.66)% 0.42 % N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.02 % 1.01 % 1.11%(a)
Without expense reductions............ 1.13 % 1.06 % N/A
Portfolio turnover rate++++............. 190 % 253 % 71%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0574 $ 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.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F23
<PAGE>
GT GLOBAL AMERICA FUNDS
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>
Value Fund
------------------------------------------
Class A
------------------------------------------
October 18,
1995
(commencement
of operations)
Year ended Year ended to December
December 31, December 31, 31,
1997 (d) 1996 (d) 1995 (d)
------------ ------------ --------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.65 $ 12.76 $ 11.43
------------ ------------ --------------
Income from investment operations:
Net investment income (loss).......... 0.09 * * (0.01) * * 0.03*
Net realized and unrealized gain on
investments.......................... 3.87 1.94 1.30
------------ ------------ --------------
Net increase from investment
operations......................... 3.96 1.93 1.33
------------ ------------ --------------
Distributions to shareholders:
From net investment income............ (0.03) -- --
From net realized gain on
investments.......................... (1.33) (0.04) --
------------ ------------ --------------
Total distributions................. (1.36) (0.04) --
------------ ------------ --------------
Net asset value, end of period.......... $ 17.25 $ 14.65 $ 12.76
------------ ------------ --------------
------------ ------------ --------------
Total investment return (c)............. 27.23 % 15.12 % 11.64 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 7,668 $ 2,529 $ 870
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 0.56 % (0.10)% 1.10 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (0.42)% (3.61)% (47.44)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 1.99 % 2.00 % 2.00 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 2.97 % 5.51 % 50.54 %(a)
Ratio of interest expense to average net
assets................................. 0.03 % N/A N/A
Portfolio turnover rate+................ 93 % 256 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0278 $ 0.0551 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 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.
* * * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment gain (loss) per share would have been $(.07), $(.17), and
$(.01) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1997.
+ 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.
The accompanying notes are an integral part of the financial statements.
F24
<PAGE>
GT GLOBAL AMERICA FUNDS
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>
Value Fund
------------------------------------------
Class B
------------------------------------------
October 18,
1995
(commencement
of operations)
Year ended Year ended to December
December 31, December 31, 31,
1997 (d) 1996 (d) 1995 (d)
------------ ------------ --------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.54 $ 12.75 $ 11.43
------------ ------------ --------------
Income from investment operations:
Net investment income (loss).......... (0.01) ** (0.10) * * 0.01*
Net realized and unrealized gain on
investments.......................... 3.83 1.93 1.31
------------ ------------ --------------
Net increase from investment
operations......................... 3.82 1.83 1.32
------------ ------------ --------------
Distributions to shareholders:
From net investment income............ -- -- --
From net realized gain on
investments.......................... (1.32) (0.04) --
------------ ------------ --------------
Total distributions................. (1.32) (0.04) --
------------ ------------ --------------
Net asset value, end of period.......... $ 17.04 $ 14.54 $ 12.75
------------ ------------ --------------
------------ ------------ --------------
Total investment return (c)............. 26.44 % 14.35 % 11.55 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 16,717 $ 5,503 $ 1,254
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... (0.09)% (0.75)% 0.45 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (1.07)% (4.26)% (48.09)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 2.64 % 2.65 % 2.65 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 3.62 % 6.16 % 51.19 %(a)
Ratio of interest expense to average net
assets................................. 0.03 % N/A N/A
Portfolio turnover rate+................ 93 % 256 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0278 $ 0.0551 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 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.
* * * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment gain (loss) per share would have been $(.07), $(.17), and
$(.01) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1997.
+ 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.
The accompanying notes are an integral part of the financial statements.
F25
<PAGE>
GT GLOBAL AMERICA FUNDS
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>
Value Fund
------------------------------------------
Advisor Class
------------------------------------------
October 18,
1995
(commencement
of operations)
Year ended Year ended to December
December 31, December 31, 31,
1997 (d) 1996 (d) 1995 (d)
------------ ------------ --------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.72 $ 12.77 $ 11.43
------------ ------------ --------------
Income from investment operations:
Net investment income (loss).......... 0.15 * * 0.03* * 0.04*
Net realized and unrealized gain on
investments.......................... 3.91 1.96 1.30
------------ ------------ --------------
Net increase from investment
operations......................... 4.06 1.99 1.34
------------ ------------ --------------
Distributions to shareholders:
From net investment income............ (0.07) -- --
From net realized gain on
investments.......................... (1.34) (0.04) --
------------ ------------ --------------
Total distributions................. (1.41) (0.04) --
------------ ------------ --------------
Net asset value, end of period.......... $ 17.37 $ 14.72 $ 12.77
------------ ------------ --------------
------------ ------------ --------------
Total investment return (c)............. 27.78 % 15.58 % 11.72 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 439 $ 191 $ 81
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 0.91 % 0.25 % 1.45 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (0.07)% (3.26)% (47.09)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 1.64 % 1.65 % 1.65 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 2.62 % 5.16 % 50.19 %(a)
Ratio of interest expense to average net
assets................................. 0.03 % N/A N/A
Portfolio turnover rate+................ 93 % 256 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0278 $ 0.0551 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 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.
* * * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment gain (loss) per share would have been $(.07), $(.17), and
$(.01) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1997.
+ 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.
The accompanying notes are an integral part of the financial statements.
F26
<PAGE>
GT GLOBAL AMERICA FUNDS
NOTES TO
FINANCIAL STATEMENTS
December 31, 1997
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
GT Global America Small Cap Growth Fund, GT Global America Mid 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, 1997, 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 preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Funds in the preparation of the
financial statements.
(A) Portfolio Valuation
The 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" herein after 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
F27
<PAGE>
GT GLOBAL AMERICA FUNDS
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 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, 1997, stocks with an aggregate value listed below were on loan
to brokers. The loans were secured by cash collateral received by the funds:
<TABLE>
<CAPTION>
December 31, 1997 Year ended
-------------------------------- December 31, 1997
Aggregate Value Cash -----------------
GT Global on Loan Collateral Fees Received
- ---------------------------------------- --------------- -------------- -----------------
<S> <C> <C> <C>
America Small Cap Growth Fund........... $ 1,812,494 $ 1,869,550 $ 17,489
America Mid Cap Growth Fund............. 45,019,438 45,567,400 516,083
America Value Fund...................... 794,531 810,000 896
</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
Portfolios' 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
F28
<PAGE>
GT GLOBAL AMERICA FUNDS
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.
(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 ("GT Funds") advised and/or
administered by the Manager, has a line of credit with BankBoston and State
Street Bank & Trust Company. The arrangements with the banks allow the Funds and
the GT Funds to borrow an aggregate maximum amount of $250,000,000. Each of
these three funds is limited to borrowing up to 33 1/3% of the value of each
Funds' total assets. The Funds had no loans outstanding at December 31, 1997.
For the year ended December 31, 1997, the average outstanding daily balance of
bank loans (based on the number of days the loans were outstanding) for GT
Global America Small Cap Growth Fund, GT Global America Mid Cap Growth Fund, and
GT Global America Value Fund was $101,429, $6,068,763, and $284,000 with a
weighted average interest rate of 6.34%, 6.33%, and 6.31%, respectively.
Interest expense for GT Global America Small Cap Growth Fund, GT Global America
Mid Cap Growth Fund, and GT Global America Value Fund for the year ended
December 31, 1997 was $125, $125,935, and $50, respectively, 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. 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, 1997, GT Global retained the
following sales charges: $5,417 for the GT Global America Small Cap Growth Fund,
$38,700 for the GT Global America Mid Cap Growth Fund, and $5,770 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 $23,780 for the year ended December 31, 1997 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, 1997, GT Global collected such CDSCs
in the amount of: $60,107 for the GT Global America Small Cap Growth Fund,
$2,316,997 for the GT Global America Mid Cap Growth Fund, and $55,700 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
F29
<PAGE>
GT GLOBAL AMERICA FUNDS
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 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.
Effective January 1, 1998, the Manager and GT Global have undertaken to limit
the Fund's expenses (exclusive of brokerage commissions, taxes, interest, and
extraordinary expenses) to the annual rate of 1.75%, 2.40%, and 1.40% of the
average daily net assets of the Fund's Class A, Class B, Advisor Class Shares,
respectively. This undertaking may be changed or eliminated in the future.
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, 1997, 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, 1997, 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 $1,037,388,895, $66,820,422 and $25,951,699, 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 $1,221,752,474, $55,910,483 and
$13,967,002, respectively. There were no purchases or sales of U.S. government
obligations by a Fund or Portfolio during the year.
F30
<PAGE>
GT GLOBAL AMERICA FUNDS
4. Capital Shares
At December 31, 1997, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the
Funds were as follows:
Capital Share Transactions
GT Global America Small Cap Growth Fund
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1997 December 31, 1996
---------------------------- -----------------------------
Class A Shares Amount Shares Amount
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 2,067,494 $ 28,341,345 1,491,083 $ 20,216,595
Shares issued in connection with
reinvestment of distributions......... 14,194 195,720 39,998 505,573
------------ -------------- ------------ ---------------
2,081,688 28,537,065 1,531,081 20,722,168
Shares repurchased...................... (1,992,960) (27,546,271) (1,019,989) (13,880,892)
------------ -------------- ------------ ---------------
Net increase............................ 88,728 $ 990,794 511,092 $ 6,841,276
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
Year ended Year ended
December 31, 1997 December 31, 1996
---------------------------- -----------------------------
Class B Shares Amount Shares Amount
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 2,192,656 $ 29,216,057 1,665,796 $ 22,115,741
Shares issued in connection with
reinvestment of distributions......... 26,438 359,234 52,848 663,246
------------ -------------- ------------ ---------------
2,219,094 29,575,291 1,718,644 22,778,987
Shares repurchased...................... (1,570,899) (20,624,826) (1,029,367) (13,501,795)
------------ -------------- ------------ ---------------
Net increase............................ 648,195 $ 8,950,465 689,277 $ 9,277,192
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
Year ended Year ended
December 31, 1997 December 31, 1996
---------------------------- -----------------------------
Advisor Class Shares Amount Shares Amount
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 156,123 $ 2,292,127 33,521 $ 447,953
Shares issued in connection with
reinvestment of distributions......... 507 7,039 2,144 27,228
------------ -------------- ------------ ---------------
156,630 2,299,166 35,665 475,181
Shares repurchased...................... (80,540) (1,200,061) (5,440) (72,841)
------------ -------------- ------------ ---------------
Net increase............................ 76,090 $ 1,099,105 30,225 $ 402,340
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
</TABLE>
F31
<PAGE>
GT GLOBAL AMERICA FUNDS
GT Global America Mid Cap Growth Fund
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1997 December 31, 1996
---------------------------- -----------------------------
Class A Shares Amount Shares Amount
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 24,801,099 $ 522,081,212 89,962,964 $ 1,853,673,285
Shares issued in connection with
reinvestment of distributions......... 1,170,749 23,490,213 853,598 17,867,701
------------ -------------- ------------ ---------------
25,971,848 545,571,425 90,816,562 1,871,540,986
Shares repurchased...................... (30,338,852) (637,412,658) (95,061,922) (1,956,032,031)
------------ -------------- ------------ ---------------
Net decrease............................ (4,367,004) $ (91,841,233) (4,245,360) $ (84,491,045)
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
Year ended Year ended
December 31, 1997 December 31, 1996
---------------------------- -----------------------------
Class B Shares Amount Shares Amount
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 9,218,434 $ 190,231,954 11,161,651 $ 224,412,718
Shares issued in connection with
reinvestment of distributions......... 1,240,395 24,063,873 803,575 16,429,676
------------ -------------- ------------ ---------------
10,458,829 214,295,827 11,965,226 240,842,394
Shares repurchased...................... (14,376,532) (293,260,545) (14,026,348) (280,392,879)
------------ -------------- ------------ ---------------
Net decrease............................ (3,917,703) $ (78,964,718) (2,061,122) $ (39,550,485)
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
Year ended Year ended
December 31, 1997 December 31, 1996
---------------------------- -----------------------------
Advisor Class Shares Amount Shares Amount
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 1,056,271 $ 23,267,932 485,169 $ 10,230,701
Shares issued in connection with
reinvestment of distributions......... 5,993 120,751 8,013 167,629
------------ -------------- ------------ ---------------
1,062,264 23,388,683 493,182 10,398,330
Shares repurchased...................... (1,103,923) (24,248,785) (470,673) (9,846,041)
------------ -------------- ------------ ---------------
Net increase (decrease)................. (41,659) $ (860,102) 22,509 $ 552,289
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
</TABLE>
F32
<PAGE>
GT GLOBAL AMERICA FUNDS
GT Global America Value Fund
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1997 December 31, 1996
---------------------------- -----------------------------
Class A Shares Amount Shares Amount
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 781,797 $ 13,117,280 392,444 $ 5,443,835
Shares issued in connection with
reinvestment of distributions......... 26,859 454,725 365 5,408
------------ -------------- ------------ ---------------
808,656 13,572,005 392,809 5,449,243
Shares repurchased...................... (536,657) (9,148,725) (288,378) (3,812,666)
------------ -------------- ------------ ---------------
Net increase............................ 271,999 $ 4,423,280 104,431 $ 1,636,577
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
Year ended Year ended
December 31, 1997 December 31, 1996
---------------------------- -----------------------------
Class B Shares Amount Shares Amount
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 1,148,582 $ 19,043,834 445,266 $ 6,167,388
Shares issued in connection with
reinvestment of distributions......... 60,093 1,004,744 918 13,509
------------ -------------- ------------ ---------------
1,208,675 20,048,578 446,184 6,180,897
Shares repurchased...................... (606,167) (9,803,021) (166,052) (2,502,350)
------------ -------------- ------------ ---------------
Net increase............................ 602,508 $ 10,245,557 280,132 $ 3,678,547
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
Year ended Year ended
December 31, 1997 December 31, 1996
---------------------------- -----------------------------
Advisor Class Shares Amount Shares Amount
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 14,203 $ 230,962 10,181 $ 139,541
Shares issued in connection with
reinvestment of distributions......... 1,920 32,714 30 443
------------ -------------- ------------ ---------------
16,123 263,676 10,211 139,984
Shares repurchased...................... (3,834) (66,384) (3,594) (49,444)
------------ -------------- ------------ ---------------
Net increase............................ 12,289 $ 197,292 6,617 $ 90,540
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
</TABLE>
5. 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, 1997, the
expenses of Small Cap Growth Portfolio, GT Global America Mid Cap Growth Fund
and Value Portfolio were reduced by $2,560, $84,266 and $436 respectively, under
these arrangements.
6. Subsequent Event
On January 30, 1998, Liechtenstein Global Trust ("LGT") and AMVESCAP PLC
("AMVESCAP") entered into an agreement by which AMVESCAP will acquire LGT's
Asset Management Division, including Chancellor LGT Asset Management, Inc.
AMVESCAP is the holding company of the AIM and INVESCO asset management
businesses.
- --------------
Federal Tax Information (Unaudited):
Pursuant to Section 852 of the Internal Revenue Code, the GT Global America Mid
Cap Growth Fund designates $9,085,505, and the GT Global America Value Fund
designates $23,905 as capital gains dividends for the fiscal year ended December
31, 1997.
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, 1997:
<TABLE>
<CAPTION>
Fund
- ----------------------------------------
<S> <C>
GT Global America Small Cap Growth
Fund................................... 3.06%
GT Global America Mid Cap Growth Fund... 3.13%
GT Global America Value Fund............ 16.05%
</TABLE>
F33
<PAGE>
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
GT GLOBAL AMERICA VALUE FUND
GT GLOBAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY GT GLOBAL FUND,
INCLUDING FEES, EXPENSES AND THE RISKS OF GLOBAL AND EMERGING MARKET
INVESTING AND THE RISKS OF INVESTING IN RELATED INDUSTRIES, PLEASE CONTACT
YOUR FINANCIAL ADVISER OR CALL GT GLOBAL DIRECTLY AT 1-800-824-1580.
GROWTH FUNDS
/ / GLOBALLY DIVERSIFIED FUNDS
GT GLOBAL NEW DIMENSION FUND
Captures global growth opportunities by investing directly in the six GT Global
Theme Funds
GT GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity for U.S. investors by investing outside the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
GT GLOBAL DEVELOPING MARKETS FUND
Invests in debt and equity securities of developing market issuers
/ / GLOBAL THEME FUNDS
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL HEALTH CARE FUND
Invests in the growing health care industries worldwide
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA MID CAP GROWTH FUND
Concentrates on medium-sized companies in the U.S.
GT GLOBAL AMERICA VALUE FUND
Concentrates on equity securities of 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
Invests in 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 a portfolio of emerging market debt securities
GT GLOBAL FLOATING RATE FUND
Invests primarily in senior secured floating rate loans that have the potential
to achieve a high level of income
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[LOGO]
NO DEALER, SALES REPRESENTATIVE OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
STATEMENT OF ADDITIONAL INFORMATION AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY GT
GLOBAL 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.
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, 1997, and for the fiscal year then ended, for Class A, Class B and
Advisor Class Shares 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.
<TABLE>
<S> <C>
(1)(a) The Registrant's Agreement and Declaration of Trust, as amended(3).
(1)(b) Certificate of Secretary amending the Registrant's Agreement and
Declaration of Trust dated May 4, 1995(2).
(2) The Registrant's By-Laws, as amended(6).
(3) Not Applicable.
(4) Instruments Defining the Rights of Holders of Registrant's Shares of
beneficial interest(7).
(5)(a) Investment Management and Administration Contract dated April 24, 1989
relating to the Initial Six Series(6).
(5)(b) Form of Administration Contract relating to: GT Global America Small Cap
Growth Fund and GT Global America Value Fund(3).
(6)(a) Distribution Agreement relating to Class A shares(6).
(6)(b) Distribution Agreement relating to Class B shares(6).
(6)(c) Distribution Agreement relating to Advisor Class shares(6).
(7) Not Applicable.
(8)(a) Custodian Agreement between the Registrant and State Street Bank and Trust
Company(6).
(9)(a) Transfer Agency Contract dated May 25, 1990(6).
(9)(b) Fund Accounting and Pricing Agent Agreement -- Filed herewith.
(9)(c) Other material contracts:
</TABLE>
(i) Broker/dealer sales contract(6).
(ii) Bank sales contract(6).
(iii) Agency sales contract(6).
(iv) Foreign sales contract(6).
<TABLE>
<S> <C>
(10)(a) Opinion and Consent of Counsel relating to the Initial Six Series(1).
</TABLE>
C-1
<PAGE>
<TABLE>
<S> <C>
(10)(b) Opinion and Consent of Counsel relating to GT Global America Small Cap
Growth Fund and GT Global America Value Fund(3).
(11) Consents of Coopers & Lybrand L.L.P., Independent Accountants relating to:
</TABLE>
(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.
<TABLE>
<S> <C>
(12) Not Applicable.
(13) Not Applicable.
(14)(a) Model Retirement Plan -- GT Global Individual Retirement Account Disclosure
Statement and Application(6).
(14)(b) Model Retirement Plan -- GT Global SIMPLE Individual Retirement Account
Disclosure Statement and Application(8).
(14)(c) Model Retirement Plan -- GT Global Simplified Employee Pension Individual
Retirement Account Disclosure Statement and Application(8).
(14)(d) Model Retirement Plan -- Roth IRA(8).
(14)(e) 403(b)(7) Custodial Agreement(8).
(15)(a) Distribution Plan adopted pursuant to Rule 12b-1 relating to Class A
shares(6).
(15)(b) Distribution Plan adopted pursuant to Rule 12b-1 relating to Class B
shares(6).
(16) Schedules of Computation of Performance Quotations relating to the Class A,
Class B and Advisor Class shares of:
</TABLE>
(a) GT Global America Mid Cap Growth Fund(4).
(b) GT Global Europe Growth Fund(4).
(c) GT Global International Growth Fund(4).
(d) GT Global Japan Growth Fund(4).
(e) GT Global New Pacific Growth Fund(4).
(f) GT Global Worldwide Growth Fund(4).
(g) GT Global America Small Cap Growth Fund(4).
(h) GT Global America Value Fund(4).
<TABLE>
<S> <C>
(17) Financial Data Schedule -- Filed herewith.
(18) Multiple Class Plan adopted pursuant to Rule 18f-3 -- Filed herewith.
</TABLE>
<TABLE>
<S> <C>
Other Exhibits:
(a) Power of Attorney for Helge K. Lee and Michael A. Silver for G.T. Global
Growth Series -- Filed herewith.
(b) Power of Attorney for Helge K. Lee and Michael A. Silver for Growth
Portfolio -- Filed herewith.
</TABLE>
- ------------------------
(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. 34 to the Registration Statement on Form N-1A,
filed on May 24, 1995.
(3) 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.
(4) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 38 to the Registration Statement on Form N-1A,
filed on April 19, 1996.
(5) 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.
(6) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 41 to the Registration Statement on Form N1-A,
filed on April 29, 1997.
(7) Incorporated by reference to Articles V, VI and X of Registrant's
Declaration of Trust and to Article I of Registrant's By-Laws.
(8) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 51 to the Registration Statement of G.T.
Investment Funds, Inc. on Form N-1A, filed on January 30, 1998.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE REGISTRANT
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
As of February 26, 1998:
<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................................. 22,475
GT Global America Mid Cap Growth Fund Class B................................. 21,423
GT Global America Mid Cap Growth Fund Advisor Class........................... 219
GT Global Europe Growth Fund Class A.......................................... 47,052
GT Global Europe Growth Fund Class B.......................................... 9,174
GT Global Europe Growth Fund Advisor Class.................................... 147
GT Global International Growth Fund Class A................................... 15,492
GT Global International Growth Fund Class B................................... 6,015
GT Global International Growth Fund Advisor Class............................. 82
GT Global Japan Growth Fund Class A........................................... 7,344
GT Global Japan Growth Fund Class B........................................... 3,388
GT Global Japan Growth Fund Advisor Class..................................... 73
GT Global New Pacific Growth Fund Class A..................................... 26,195
GT Global New Pacific Growth Fund Class B..................................... 11,920
GT Global New Pacific Growth Fund Advisor Class............................... 263
GT Global Worldwide Growth Fund Class A....................................... 9,643
GT Global Worldwide Growth Fund Class B....................................... 5,300
GT Global Worldwide Growth Fund Advisor Class................................. 144
GT Global America Small Cap Growth Fund Class A............................... 1,557
GT Global America Small Cap Growth Fund Class B............................... 2,108
GT Global America Small Cap Growth Fund Advisor Class......................... 230
GT Global America Value Fund Class A.......................................... 1,249
GT Global America Value Fund Class B.......................................... 1,977
GT Global America Value Fund Advisor Class.................................... 157
</TABLE>
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.
C-3
<PAGE>
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended ("1933 Act"), may be permitted to Trustees, officers and
controlling persons by the Registrant's Declaration of Trust, By-Laws, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission ("Commission") such indemnification is against public
policy as expressed in the 1933 Act, and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a Trustee, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such Trustee, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to 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 thirteen funds
currently in operation: GT Global Strategic Income Fund, GT Global Government
Income Fund, GT Global High Income Fund, GT Global Growth & Income Fund, GT
Global Latin America Growth Fund, GT Global Telecommunications Fund, GT Global
Health Care Fund, GT Global Financial Services Fund, GT Global Infrastructure
Fund, GT Global Consumer Products and Services Fund, GT Global Natural Resources
Fund, GT Global Developing Markets Fund and GT Global Emerging Markets Fund); GT
Global Series Trust (which includes GT Global New Dimension 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); 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); and GT Global Floating Rate Fund, Inc.
(b) Directors and Officers of GT Global, Inc.
Unless otherwise indicated, the business address of each person listed is 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 Chairman of the Chairman of the Board of Trustees
Board and President
Raymond R. Cunningham Senior Vice President -- None
Director of Sales and Director
</TABLE>
C-4
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- -------------------------------------------- ---------------------------------- ----------------------------------
<S> <C> <C>
Richard W. Healey Senior Vice President -- None
Director of Marketing and
Director
Helge K. Lee Secretary and Chief Legal and Vice President and Secretary
Compliance Officer
David P. Hess Assistant Secretary and Director Assistant Secretary
of Mutual Fund Compliance
Michael A. Silver Assistant Secretary and Assistant Assistant Secretary
General Counsel
Philip D. Edelstein Senior Vice President -- Regional None
9 Huntly Circle Sales Manager
Palm Beach Gardens, FL 33418
Stephen A. Maginn Senior Vice President -- None
519 S. Juanita Regional Sales Manager
Redondo Beach, CA 90277
Peter J. Wolfert Senior Vice President -- None
Information Technology
Christine M. Pallatto Senior Vice President -- Director None
of Human Resources
Earle A. Malm II Chief Operating Officer None
Margo A. Tammen Vice President -- Finance & None
Administration
Gary M. Castro Assistant Treasurer & Controller None
Dennis W. Reichert Assistant Treasurer & Budget Assistant Treasurer
Director
Kenneth W. Chancey Senior Vice President -- Fund Vice President, Principal
Accounting Accounting Officer and (Acting)
CFO
Hallie L. Baron Vice President -- Public Relations None
& Shareholder Communications
Claus te Wildt Vice President -- Director of None
Strategy and Business Planning
Pamela Ruddock Vice President -- Fund None
Administration
Paul Wozniak Vice President -- Fund Accounting None
Christine C. Mangan Vice President -- Dealer Marketing None
</TABLE>
C-5
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- -------------------------------------------- ---------------------------------- ----------------------------------
<S> <C> <C>
Donna B. Abrahamson Vice President -- Account None
Management
Jon Burke Vice President None
31 Darlene Drive
Southboro, MA 01772
Phil Christopher Vice President None
3621 59th Avenue, SW
Seattle, WA 98116
Anthony DiBacco Vice President None
30585 Via Lindosa Way
Laguna Niguel, CA 92677
Stephen Duffy Vice President None
1120 Gables Drive
Atlanta, GA 30319
Glenn R. Farinacci Vice President None
86 University Place
Staten Island, NY 10301
Ned E. Hammond Vice President None
5901 McFarland Ct.
Plano, TX 75093-4317
Richard Kashnowski Vice President None
1368 South Ridge Drive
Mandeville, LA 70448
Allen M. Kuhn Vice President None
19655 Red Maple Lane
Jupiter, FL 33458
Steven C. Manns Vice President None
1941 West Wolfram
Chicago, IL 60657
Wayne F. Meyer Vice President None
2617 Sun Meadow Drive
Chesterfield, MO 63005
Dean Phillips Vice President None
3406 Bishop Park Drive, #428
Winter Park, FL 32792
Philip Schertz Vice President None
25 Ivy Place
Wayne, NJ 07470
Peter Sykes Vice President None
1655 E. Sherman Ave.
Salt Lake City, UT 84105
Lance Vetter Vice President None
10915 La Salinas Circle
Boca Raton, FL 33428
</TABLE>
C-6
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- -------------------------------------------- ---------------------------------- ----------------------------------
<S> <C> <C>
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
Eric T. Zeigler Vice President None
437 30th Street
Manhattan Beach, CA 90266
</TABLE>
(c) None.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
Accounts, books and other records required by Rules 31a-1 and 31a-2 under
the Investment Company Act of 1940, as amended, are maintained and held in the
offices of the Registrant and its investment manager, Chancellor LGT Asset
Management, Inc., 50 California Street, San Francisco, CA 94111 and its
custodian, State Street Bank and Trust Company, 225 Franklin Street, Boston, MA
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, CA 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, MA 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 has duly caused
this Post-Effective Amendment to its 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 9th day of March, 1998.
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 9th day of March, 1998.
<TABLE>
<S> <C>
William J. Guilfoyle* President, Trustee and
Chairman of the Board
(Principal Executive Officer)
/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/ MICHAEL A. SILVER
-------------------------------------------
Michael A. Silver
Attorney-in-Fact, pursuant to
Power of Attorney filed herewith
</TABLE>
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
9th day of March, 1998.
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 9th day of March, 1998.
<TABLE>
<S> <C>
William J. Guilfoyle* President, Trustee and
Chairman of the Board
(Principal Executive Officer)
/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/ MICHAEL A. SILVER
-------------------------------------------
Michael A. Silver
Attorney-in-Fact, pursuant to
Power of Attorney filed herewith
</TABLE>
C-9
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
Helge K. Lee and Michael A. Silver, and each of them, with full power to act
without the other, his or her true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for him or her and in his or her
name, place and stead, in any and all capacities (until revoked in writing) to
sign the Registration Statement and any and all Amendments to the Registration
Statement (including Post-Effective Amendments), and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
G.T. GLOBAL GROWTH SERIES
<TABLE>
<S> <C> <C>
/s/ WILLIAM J. GUILFOYLE Trustee, Chairman of the
- ---------------------------------------- Board and President October 14, 1997
William J. Guilfoyle
/s/ C. DEREK ANDERSON
- ---------------------------------------- Trustee October 14, 1997
C. Derek Anderson
/s/ FRANK S. BAYLEY
- ---------------------------------------- Trustee October 14, 1997
Frank S. Bayley
/s/ ARTHUR C. PATTERSON
- ---------------------------------------- Trustee October 14, 1997
Arthur C. Patterson
/s/ RUTH H. QUIGLEY
- ---------------------------------------- Trustee October 14, 1997
Ruth H. Quigley
/s/ ROBERT G. WADE JR.
- ---------------------------------------- Trustee October 14, 1997
Robert G. Wade Jr.
</TABLE>
C-10
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
Helge K. Lee and Michael A. Silver, and each of them, with full power to act
without the other, his or her true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for him or her and in his or her
name, place and stead, in any and all capacities (until revoked in writing) to
sign the Registration Statement of G.T. Global Growth Series and any and all
Amendments to the Registration Statement (including Post-Effective Amendments),
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing ratifying and confirming all that
said attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
GROWTH PORTFOLIO
<TABLE>
<S> <C> <C>
/s/ WILLIAM J. GUILFOYLE Trustee, Chairman of the December 23,
- ---------------------------------------- Board and President 1997
William J. Guilfoyle
/s/ C. DEREK ANDERSON December 23,
- ---------------------------------------- Trustee 1997
C. Derek Anderson
/s/ FRANK S. BAYLEY December 23,
- ---------------------------------------- Trustee 1997
Frank S. Bayley
/s/ ARTHUR C. PATTERSON December 23,
- ---------------------------------------- Trustee 1997
Arthur C. Patterson
/s/ RUTH H. QUIGLEY December 23,
- ---------------------------------------- Trustee 1997
Ruth H. Quigley
/s/ ROBERT G. WADE JR. December 23,
- ---------------------------------------- Trustee 1997
Robert G. Wade Jr.
</TABLE>
C-11
<PAGE>
FUND ACCOUNTING AND PRICING AGENT AGREEMENT
This Fund Accounting and Pricing Agent Agreement (the "Agreement") is made
as of January 13, 1998, by and between G.T. Global Growth Series (the "Company")
and Chancellor LGT Asset Management, Inc. ("Chancellor LGT").
WHEREAS, the Company is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company;
WHEREAS, the Company currently operates eight separate mutual funds, each
organized as a separate and distinct series consisting of shares of beneficial
interest (such existing funds and such funds as may hereafter be established
being referred to in this Agreement as the "Funds" and singly as a "Fund");
WHEREAS, the Company is part of a complex of investment companies that are
managed and/or administered by Chancellor LGT and with which Chancellor LGT has
entered into Fund Accounting and Pricing Agent Agreements (the "GT Global Group
of Funds");
WHEREAS, the Company desires to retain Chancellor LGT to act as its
accounting and pricing agent, and Chancellor LGT is willing to act in such
capacities.
NOW, THEREFORE, in consideration of the foregoing and the terms and
conditions hereinafter set forth, the Company and Chancellor LGT hereby agree as
follows:
SECTION 1. APPOINTMENT. The Company hereby appoints Chancellor LGT
to act as the accounting and pricing agent for each Fund for the period and on
the terms and conditions set forth in this Agreement. Chancellor LGT hereby
accepts such appointment and agrees to render the services set forth for the
compensation herein provided.
SECTION 2. DEFINITIONS. As used in this Agreement and in addition to
the terms defined elsewhere herein, the following terms shall have the meanings
assigned to them in this Section:
(a) "Authorized Person" means any officer of the Company and any
other person, whether or not any such person is an officer or employee of
the Company, duly authorized by the Board of Trustees (the "Board"), the
President or any Vice President of the Fund to give Oral and/or Written
Instructions on behalf of the Company or any Fund.
(b) "Commission" means the Securities and Exchange Commission.
(c) "Custodian" means the custodian or custodians employed by
the Company to maintain custody of the Fund's assets.
<PAGE>
(d) "Governing Documents" means the Declaration of Trust, By-
Laws and other applicable charter documents of the Company, all as they may
be amended from time to time.
(e) "Oral Instruction" means oral instructions actually received
by Chancellor LGT from an Authorized Person or from a person reasonably
believed by Chancellor LGT to be an Authorized Person, provided that, any
Oral Instruction shall be promptly confirmed by Written Instructions.
(f) "Prospectus" means the current prospectus and statement of
additional information of a Fund, taken together.
(g) "Shares" means shares of beneficial interest of any of the
Funds.
(h) "Shareholder" means any owner of Shares.
(i) "Written Instructions" means written instructions delivered
by hand, mail, tested telegram or telex, cable or facsimile sending device
received by Chancellor LGT and signed by an Authorized Person.
SECTION 3. COMPLIANCE WITH LAWS, ETC. In performing its
responsibilities hereunder, Chancellor LGT shall comply with all terms and
provisions of the Governing Documents, the Prospectus and all applicable state
and federal laws including, without limitation, the 1940 Act and the rules and
regulations promulgated by the Commission thereunder.
SECTION 4. SERVICES. In consideration of the compensation payable
hereunder and subject to the supervision and control of the Company's Boards,
Chancellor LGT shall provide the following services to the Funds:
(a) PRICING AGENT. As pricing agent, Chancellor LGT shall:
(1) Obtain security market quotes from services approved by
the investment manager of the Funds or, if such quotes are
unavailable, then obtain such prices from the investment manager of
the Funds or from such sources as the investment manager may direct,
and, in either case, calculate the market value of the Funds'
investments; and
(2) Value the assets of the Funds and compute the net asset
value per Share of the Funds at such dates and times and in the manner
specified in the then currently effective Prospectus and transmit to
the Funds' investment manager.
(b) ACCOUNTING AGENT. As fund accounting agent, Chancellor LGT
shall:
- 2 -
<PAGE>
(1) Calculate the net income of each Fund;
(2) Calculate capital gains or losses for each Fund from
the sale or disposition of assets, if any;
(3) Maintain the general ledger and other accounts, books
and financial records of the Company, as required under Section 31(a)
of the 1940 Act and the rules promulgated by the Commission thereunder
in connection with the services provided by Chancellor LGT;
(4) Perform the following functions on a daily basis:
(A) journalize each Fund's investment, capital share
and income and expense activities;
(B) reconcile cash and investment balances of each
Fund with the Custodian and provide the Funds' investment
manager with the beginning cash balance available for
investment purposes and update the cash availability
throughout the day as required by the investment manager;
(C) verify investment buy/sell trade tickets received
from a Fund's investment manager and transmit trades to a
Fund's Custodian for proper settlement;
(D) maintain individual ledgers for investment
securities;
(E) maintain historical tax lots for investment
securities;
(F) calculate various contractual expenses (e.g.,
advisory and custody fees);
(G) post to and prepare the Funds' statement of assets
and liabilities and statement of operations; and
(H) monitor expense accruals and notify an Authorized
Person of any proposed adjustments;
(5) Receive and act upon notices, Oral and Written
Instructions, certificates, instruments or other communications from a
Fund's shareholder servicing and transfer agent;
(6) Assist in the preparation of financial statements
semiannually
- 3 -
<PAGE>
which will include the following items:
(A) schedule of investments;
(B) statement of assets and liabilities;
(C) statement of operations;
(D) changes in net assets;
(E) cash statement; and
(F) schedule of capital gains and losses;
(7) Prepare monthly security transaction listings;
(8) Prepare quarterly broker security transactions
summaries; and
(9) At the reasonable request of the Company, assist in the
preparation of various reports or other financial documents required
by federal, state and other appropriate laws and regulations.
SECTION 5. COMPENSATION. As compensation for the services rendered
by Chancellor LGT hereunder during the term of the Agreement, each Fund shall
pay to Chancellor LGT monthly such fees as shall be agreed to from time to time
by the Company and Chancellor LGT, in writing and attached hereto as Schedule A.
In addition, as may be agreed to from time to time in writing by the Company and
Chancellor LGT, each Fund shall reimburse Chancellor LGT for certain expenses
that it incurs in rendering services with respect to that Fund under this
Agreement.
SECTION 6. RELIANCE BY CHANCELLOR LGT ON INSTRUCTIONS. Unless
otherwise provided in this Agreement, Chancellor LGT shall act only upon Oral or
Written Instructions. Chancellor LGT shall be entitled to rely upon any such
Instructions actually received by it under this Agreement. The Company agrees
that Chancellor LGT shall incur no liability to the Company or any of the Funds
in acting upon Oral or Written Instructions given to Chancellor LGT hereunder,
provided that, such Instructions reasonably appear to have been received from an
Authorized Person.
SECTION 7. COOPERATION WITH AGENTS OF THE COMPANY. Chancellor LGT
shall cooperate with the Company's agents and employees, including, without
limitation, their independent accountants, and shall take all reasonable action
in the performance of its obligations under this Agreement to assure that all
necessary information is made available to such agents to the extent necessary
in the performance of their duties to the Company.
- 4 -
<PAGE>
SECTION 8. CONFIDENTIALITY. Chancellor LGT, on behalf of itself and
its employees, agrees to treat confidentially all records and other information
relating to the Company and the Funds except when requested to divulge such
information by duly constituted authorities provided that notification and prior
approval is obtained from the Company, which approval shall not be unreasonably
withheld and may not be withheld if Chancellor LGT, in its judgment, may be
subject to civil or criminal contempt proceedings for failure to comply.
SECTION 9. STANDARD OF CARE. In the performance of its
responsibilities hereunder, Chancellor LGT shall exercise care and diligence in
the performance of its duties and act in good faith and use its best efforts to
ensure the accuracy and completeness of all services under this Agreement. In
performing services hereunder, Chancellor LGT:
(a) shall be under no duty to take any action on behalf of the
Company or the Funds except as specifically set forth herein or as may be
specifically agreed to by Chancellor LGT in writing, and in computing the
net asset value per Share of a Fund, Chancellor LGT may rely upon any
information furnished to it including, without limitation, information (1)
as to the accrual of liabilities of a Fund and as to liabilities of a Fund
not appearing on the books of account kept by Chancellor LGT, (2) as to the
existence, status and proper treatment of reserves, if any, authorized by a
Fund, (3) as to the sources of quotations to be used in computing net asset
value, (4) as to the fair value to be assigned to any securities or other
property for which price quotations are not readily available and (5) as to
the sources of information with respect to "corporate actions" affecting
portfolio securities of a Fund (information as to "corporate actions" shall
include information as to dividends, distributions, interest payments,
prepayments, stock splits, stock dividends, rights offerings, conversions,
exchanges, recapitalizations, mergers, redemptions, calls, maturity dates
and similar actions, including ex-dividend and record dates and the amounts
and terms thereof);
(b) shall be responsible and liable for all losses, damages and
costs (including reasonable attorneys' fees) incurred by the Company or any
Fund which is due to or caused by Chancellor LGT's negligence in the
performance of its duties under this Agreement or for Chancellor LGT's
negligent failure to perform such duties as are specifically assumed by
Chancellor LGT in this Agreement, provided that, to the extend that duties,
obligations and responsibilities are not expressly set forth in this
Agreement, Chancellor LGT shall not be liable for any act or omission that
does not constitute willful misfeasance, bad faith or negligence on the
part of Chancellor LGT or reckless disregard by Chancellor LGT of such
duties, obligations and responsibilities; and
(c) without limiting the generality of the foregoing,
Chancellor LGT shall not, in connection with Chancellor LGT's duties under
this Agreement, be under any duty or obligation to inquire into and shall
not be liable for or in respect of:
(1) the validity or invalidity or authority or lack of
authority of any Oral or Written Instruction, notice or
other instrument which conforms
- 5 -
<PAGE>
to the applicable requirements of this Agreement, if any and
that Chancellor LGT reasonably believes to be genuine; and
(2) delays or errors or loss of data occurring by
reason of circumstances beyond Chancellor LGT's control
including, without limitation, acts of civil or military
authorities, national emergencies, labor difficulties, fire,
mechanical breakdown, denial of access, earthquake, flood or
catastrophe, acts of God, insurrection, war, riots, or
failure of the mails, transportation, communication or power
supply.
Notwithstanding any other provisions of this Agreement, the following provisions
shall apply with respect to Chancellor LGT's computation of a Fund's net asset
value: Chancellor LGT shall be held to the exercise of reasonable care in
computing and determining net asset value as provided in Section 4(a), above,
but shall not be held accountable or liable for any losses, damages or expenses
of a Fund or any Shareholder or former Shareholder may incur arising from or
based upon errors or delays in the determination of such net asset value unless
such error or delay was due to Chancellor LGT's negligence or willful
misfeasance in the computation and determination of such net asset value. The
parties hereto acknowledge, however, that Chancellor LGT causing an error or
delay in the determination of net asset value may, but does not in an of itself,
constitute negligence or willful misfeasance. In no event shall Chancellor LGT
be liable or responsible to the Company or a Fund or any other party for any
error or delay which continued or was undetected after the date of an audit of
the Company or any Fund performed by the certified public accountants employed
by the Company if, in the exercise of reasonable care in accordance with
generally accepted accounting principles, such accountants should have become
aware of such error or delay in the course of performing such audit. Chancellor
LGT's liability for any such negligence or willful misfeasance which results in
an error in determination of such net asset value be limited to the direct out-
of-pocket loss a Fund and/or any Shareholder or former Shareholder shall
actually incur.
Without limiting the generality of the foregoing, Chancellor LGT shall
not be held accountable or liable to a Fund a Shareholder or former Shareholder
or any other person for any delays or losses, damages or expenses any of them
may suffer or incur resulting from (1) Chancellor LGT's failure to receive
timely and suitable notification concerning quotations, corporate actions or
similar matters relating to or affecting portfolio securities of a Fund or (2)
any errors in the computation of a net asset value based upon or arising out of
quotations or information as to corporate actions if received by Chancellor LGT
from a source that Chancellor LGT was authorized to rely upon. Nevertheless,
Chancellor LGT will use its best judgment in determining whether to verify
through other sources any information that it has received as to quotations or
corporate actions if Chancellor LGT has reason to believe that any such
information is incorrect.
SECTION 10. RECEIPT OF ADVICE. If Chancellor LGT is in doubt as to
any action to be taken or omitted by it, Chancellor LGT may request, and shall
be entitled to rely upon, directions and advice from the Company, including Oral
or Written Instructions where
- 6 -
<PAGE>
appropriate, or from counsel of its own choosing (who may also be counsel for
the Company or any Fund), with respect to any question of law. In case of
conflict between directions, advice or Oral and Written Instructions received by
Chancellor LGT pursuant to this Section, Chancellor LGT shall be entitled to
rely on and follow the advice received from counsel as described above.
Chancellor LGT shall be protected in any action or in action that it takes in
reliance on any directions, advice or Oral or Written Instructions received
pursuant to this Section that Chancellor LGT, after the receipt of the same, in
good faith believes to be consistent with such directions, advice or Oral or
Written Instructions, as the case may be. Notwithstanding the foregoing,
nothing in this Section shall be construed as imposing on Chancellor LGT any
obligation to seek such directions, advice or Oral or Written Instruction, or to
act in accordance with them when received, unless the same is a condition to
Chancellor LGT's properly taking or omitting to take such action under the terms
of this Agreement.
SECTION 11. INDEMNIFICATION OF CHANCELLOR LGT. The Company agrees to
indemnify and hold harmless Chancellor LGT and its officers, directors,
employees, nominees and subcontractors, if any, from all taxes, charges,
expenses, assessments, claims and liabilities, including, without limitation,
liabilities arising under the 1940 Act, the Securities Act of 1933, as amended,
the Securities Exchange Act of 1934, as amended, the Commodities Exchange Act
and any state or foreign securities or blue sky laws, and expenses, including,
without limitation, reasonable attorneys' fees and disbursements, arising
directly or indirectly from any action or thing that Chancellor LGT takes or
omits to take or do:
(a) at the request or on the direction of or in reliance upon
the advice of the Company;
(b) upon Oral or Written Instructions; or
(c) in the performance by Chancellor LGT of its responsibilities
under this Agreement;
provided that, Chancellor LGT shall not be indemnified against any liability to
the Company or the Funds, or any expenses incident thereto, arising out of
Chancellor LGT's own willful misfeasance, bad faith or negligence or reckless
disregard of its duties in connection with the performance of its duties and
obligations specifically described in this Agreement.
SECTION 12. INDEMNIFICATION OF THE COMPANY. Chancellor LGT agrees to
indemnify and hold harmless the Company and its officers, trustees, directors
and employees, from all taxes, charges, expenses, assessments, claims and
liabilities, including, without limitation, liabilities arising under the 1940
Act, the Securities Act of 1933, as amended, the Securities Exchange Act of
1934, as amended, the Commodities Exchange Act and any state or foreign
securities or blue sky laws, and expenses, including, without limitation,
reasonable attorneys' fees and disbursements, arising directly or indirectly
from any action or omission of Chancellor LGT that does not meet the standard of
care to which Chancellor LGT is subject under Section 9, above.
- 7 -
<PAGE>
SECTION 13. LIMITATION OF LIABILITY OF SHAREHOLDERS AND TRUSTEES OF
THE COMPANY. It is expressly agreed that the obligations of the Company
hereunder shall not be binding upon any of the shareholders, trustees,
directors, officers, nominees, agents or employees of the Company personally,
but shall only bind the assets and property of the applicable Funds, as provided
in the Governing Documents. The execution and delivery of this Agreement has
been authorized by the Board of the Company, and this Agreement has been
executed and delivered by an authorized officer of the Company acting as such,
and neither such authorization by the Board 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 applicable Fund as provided in the Governing Documents.
SECTION 14. DURATION AND TERMINATION. This Agreement shall continue
with respect to the Company and each Fund until termination with respect to the
Company, or with respect to one or more Funds, is effected by the Company or
Chancellor LGT upon sixty days' prior written notice to the other. In the event
of the "assignment" of this Agreement within the meaning of the 1940 Act, this
Agreement shall terminate automatically.
SECTION 15. NOTICES. All notices and other communications hereunder,
including Written Instructions, shall be in writing or by confirming telegram,
cable, telex or facsimile sending device. Notices with respect to a party shall
be directed to such address as may from time to time be designated by that party
to the other.
SECTION 16. FURTHER ACTIONS. The Company and Chancellor LGT agree to
perform such further acts and to execute such further documents as may be
necessary or appropriate to effect the purposes of this Agreement.
SECTION 17. AMENDMENTS. This Agreement, or any part thereof, may be
amended only by an instrument in writing signed by the Company and Chancellor
LGT.
SECTION 18. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together constitute one and the same instrument.
SECTION 19. MISCELLANEOUS. This Agreement embodies the entire
agreement and understanding between the Company and Chancellor LGT and
supersedes all prior agreements and understandings relating to the subject
matter hereof, provided that the Company and Chancellor LGT may embody in one or
more separate documents their agreement or agreements with respect to such
matters that this Agreement provides may be later agreed to by and between the
Company and Chancellor LGT from time to time. The captions in this Agreement
are included for convenience of reference only and in no way define or delimit
any of the provisions hereof or otherwise affect their construction or effect.
This Agreement shall be governed by and construed in accordance with California
law. If any provision of this
- 8 -
<PAGE>
Agreement shall be held or made invalid by a court decision, statute, rule or
otherwise, the remainder of this Agreement shall not be affected thereby. This
Agreement shall be binding upon and shall inure to the benefit of the Company
and Chancellor LGT and their respective successors.
IN WITNESS WHEREOF, the Company and Chancellor LGT have caused this
Agreement to be executed by their officers designated below as of this day,
month and year first above written.
G.T. GLOBAL GROWTH SERIES
By:
----------------------------
Attest:
-----------------------
CHANCELLOR LGT ASSET MANAGEMENT, INC.
By:
----------------------------
Attest:
-----------------------
- 9 -
<PAGE>
SCHEDULE A
FUND ACCOUNTING AND PRICING AGENT FEES
The Fund shall pay a Fee to Chancellor LGT determined as a percentage of
the Fund's net assets. The annualized rate at which the fee is paid (the Fee
Rate) and the Fee shall be calculated as set forth below:
- - An ASSET MULTIPLIER is determined by multiplying .0003 times the first $5
billion in average net assets of the GT Global Funds plus .0002 times the
net assets over $5 billion.
- - The FEE RATE is determined by dividing the Asset Multiplier by the net
assets of the GT Global Funds.
- - The MONTHLY FEE is determined then by multiplying the average daily Fee
Rate by the number of days in the month and by the Fund's average daily net
assets then dividing by 365/or 366
Example: For Fund X having $100 million in average net assets during December
1997, in which the GT Global Funds have average net assets of $8 billion:
Asset Multiplier = (.0003) ($5 billion) + (.0002) ($3 billion)
= $2.1 million
Fee Rate = $2.1 million = .0002625
------------
$8 billion
Monthly Fee = ( 31 ) (.0002625) ($100 million) = $2,229.45
-------
( 365 )
- 10 -
<PAGE>
[LETTERHEAD]
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of GT Global Growth Series:
RE: GT Global Worldwide Fund
GT Global International Growth Fund
GT Global New Pacific Fund
GT Global Europe Growth Fund
GT Global America Small Cap Growth Fund
GT Global America Mid Cap Growth Fund
GT Global America Value Fund
GT Global Japan Growth Fund
We hereby consent to the inclusion of our reports dated February 17, 1998
on our audits of the financial statements and financial highlights of the above
referenced funds as of December 31, 1997 in the Statement of Additional
Information with respect to the Post-Effective Amendment to the Registration
Statements on Form N-1A under the Securities Act of 1933, as amended, of the GT
Global Growth Series. We further consent to the reference to our Firm under the
captions "Financial Highlights" and "Other Information" in the Prospectus and
"Independent Accountants" in the Statement of Additional Information.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
March 6, 1998
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<PAGE>
<ARTICLE> 6
<LEGEND>
THIS LEGEND CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATMENTS AND IS QUALFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000202032
<NAME> G.T. GLOBAL GROWTH SERIES
<SERIES>
<NUMBER> 011
<NAME> GT GLOBAL AMERICA MID CAP GROWTH FUND - CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 470731
<INVESTMENTS-AT-VALUE> 536213
<RECEIVABLES> 758
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 536971
<PAYABLE-FOR-SECURITIES> 19887
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4802
<TOTAL-LIABILITIES> 24689
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 430680
<SHARES-COMMON-STOCK> 12169
<SHARES-COMMON-PRIOR> 16536
<ACCUMULATED-NII-CURRENT> 16121
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 65482
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 512282
<DIVIDEND-INCOME> 2095
<INTEREST-INCOME> 520
<OTHER-INCOME> 0
<EXPENSES-NET> 9382
<NET-INVESTMENT-INCOME> (6767)
<REALIZED-GAINS-CURRENT> 91288
<APPREC-INCREASE-CURRENT> (23044)
<NET-CHANGE-FROM-OPS> 61477
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (27861)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 24801
<NUMBER-OF-SHARES-REDEEMED> (30339)
<SHARES-REINVESTED> 1171
<NET-CHANGE-IN-ASSETS> (167721)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4000
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 9982
<AVERAGE-NET-ASSETS> 527416
<PER-SHARE-NAV-BEGIN> 20.77
<PER-SHARE-NII> (0.20)
<PER-SHARE-GAIN-APPREC> 3.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (2.56)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 21.01
<EXPENSE-RATIO> 1.37
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS LEGEND CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATMENTS AND IS QUALFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000202032
<NAME> G.T. GLOBAL GROWTH SERIES
<SERIES>
<NUMBER> 012
<NAME> GT GLOBAL AMERICA MID CAP GROWTH FUND - CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 470731
<INVESTMENTS-AT-VALUE> 536213
<RECEIVABLES> 758
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 536971
<PAYABLE-FOR-SECURITIES> 19887
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4802
<TOTAL-LIABILITIES> 24689
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 430680
<SHARES-COMMON-STOCK> 12581
<SHARES-COMMON-PRIOR> 16498
<ACCUMULATED-NII-CURRENT> 16121
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 65482
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 512282
<DIVIDEND-INCOME> 2095
<INTEREST-INCOME> 520
<OTHER-INCOME> 0
<EXPENSES-NET> 9382
<NET-INVESTMENT-INCOME> (6767)
<REALIZED-GAINS-CURRENT> 91288
<APPREC-INCREASE-CURRENT> (23044)
<NET-CHANGE-FROM-OPS> 61477
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (29550)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 9218
<NUMBER-OF-SHARES-REDEEMED> (14377)
<SHARES-REINVESTED> 1240
<NET-CHANGE-IN-ASSETS> (167721)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4000
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 9982
<AVERAGE-NET-ASSETS> 527416
<PER-SHARE-NAV-BEGIN> 20.28
<PER-SHARE-NII> (0.34)
<PER-SHARE-GAIN-APPREC> 2.93
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (2.56)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 20.31
<EXPENSE-RATIO> 2.02
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS LEGEND CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATMENTS AND IS QUALFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000202032
<NAME> G.T. GLOBAL GROWTH SERIES
<SERIES>
<NUMBER> 013
<NAME> GT GLOBAL AMERICA MID CAP GROWTH FUND - ADVISOR CLASS
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 470731
<INVESTMENTS-AT-VALUE> 536213
<RECEIVABLES> 758
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 536971
<PAYABLE-FOR-SECURITIES> 19887
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4802
<TOTAL-LIABILITIES> 24689
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 430680
<SHARES-COMMON-STOCK> 54
<SHARES-COMMON-PRIOR> 96
<ACCUMULATED-NII-CURRENT> 16121
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 65482
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 512282
<DIVIDEND-INCOME> 2095
<INTEREST-INCOME> 520
<OTHER-INCOME> 0
<EXPENSES-NET> 9382
<NET-INVESTMENT-INCOME> (6767)
<REALIZED-GAINS-CURRENT> 91288
<APPREC-INCREASE-CURRENT> (23044)
<NET-CHANGE-FROM-OPS> 61477
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (121)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1056
<NUMBER-OF-SHARES-REDEEMED> (1104)
<SHARES-REINVESTED> 6
<NET-CHANGE-IN-ASSETS> (167721)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4000
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 9982
<AVERAGE-NET-ASSETS> 527416
<PER-SHARE-NAV-BEGIN> 20.76
<PER-SHARE-NII> (0.15)
<PER-SHARE-GAIN-APPREC> 3.05
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (2.56)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 21.10
<EXPENSE-RATIO> 1.02
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS LEGEND CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATMENTS AND IS QUALFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000202032
<NAME> G.T. GLOBAL GROWTH SERIES
<SERIES>
<NUMBER> 021
<NAME> GT GLOBAL EUROPE GROWTH FUND - CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 431708
<INVESTMENTS-AT-VALUE> 491051
<RECEIVABLES> 21715
<ASSETS-OTHER> 18200
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 530967
<PAYABLE-FOR-SECURITIES> 5170
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 34543
<TOTAL-LIABILITIES> 39713
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 427588
<SHARES-COMMON-STOCK> 28421
<SHARES-COMMON-PRIOR> 35218
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 4528
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 59138
<NET-ASSETS> 491254
<DIVIDEND-INCOME> 6804
<INTEREST-INCOME> 1008
<OTHER-INCOME> 0
<EXPENSES-NET> 9976
<NET-INVESTMENT-INCOME> (2164)
<REALIZED-GAINS-CURRENT> 107145
<APPREC-INCREASE-CURRENT> (32208)
<NET-CHANGE-FROM-OPS> 72773
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (368)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 146864
<NUMBER-OF-SHARES-REDEEMED> (153682)
<SHARES-REINVESTED> 20
<NET-CHANGE-IN-ASSETS> (51046)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5228
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 10724
<AVERAGE-NET-ASSETS> 514337
<PER-SHARE-NAV-BEGIN> 12.89
<PER-SHARE-NII> (0.04)
<PER-SHARE-GAIN-APPREC> 1.48
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (0.01)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 14.32
<EXPENSE-RATIO> 1.75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS LEGEND CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATMENTS AND IS QUALFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 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
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 431708
<INVESTMENTS-AT-VALUE> 491051
<RECEIVABLES> 21715
<ASSETS-OTHER> 18200
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 530967
<PAYABLE-FOR-SECURITIES> 5170
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 34543
<TOTAL-LIABILITIES> 39713
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 427588
<SHARES-COMMON-STOCK> 5764
<SHARES-COMMON-PRIOR> 6840
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 4528
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 59138
<NET-ASSETS> 491254
<DIVIDEND-INCOME> 6804
<INTEREST-INCOME> 1008
<OTHER-INCOME> 0
<EXPENSES-NET> 9976
<NET-INVESTMENT-INCOME> (2164)
<REALIZED-GAINS-CURRENT> 107145
<APPREC-INCREASE-CURRENT> (32208)
<NET-CHANGE-FROM-OPS> 72773
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (76)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 25162
<NUMBER-OF-SHARES-REDEEMED> (26244)
<SHARES-REINVESTED> 5
<NET-CHANGE-IN-ASSETS> (51046)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5228
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 10724
<AVERAGE-NET-ASSETS> 514337
<PER-SHARE-NAV-BEGIN> 12.73
<PER-SHARE-NII> (0.13)
<PER-SHARE-GAIN-APPREC> 1.47
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (0.01)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 14.06
<EXPENSE-RATIO> 2.40
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS LEGEND CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATMENTS AND IS QUALFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000202032
<NAME> G.T. GLOBAL GROWTH SERIES
<SERIES>
<NUMBER> 023
<NAME> GT GLOBAL EUROPE GROWTH FUND - ADVISOR CLASS
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
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<INVESTMENTS-AT-VALUE> 491051
<RECEIVABLES> 21715
<ASSETS-OTHER> 18200
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 530967
<PAYABLE-FOR-SECURITIES> 5170
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 34543
<TOTAL-LIABILITIES> 39713
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 427588
<SHARES-COMMON-STOCK> 225
<SHARES-COMMON-PRIOR> 110
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 4528
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 59138
<NET-ASSETS> 491254
<DIVIDEND-INCOME> 6804
<INTEREST-INCOME> 1008
<OTHER-INCOME> 0
<EXPENSES-NET> 9976
<NET-INVESTMENT-INCOME> (2164)
<REALIZED-GAINS-CURRENT> 107145
<APPREC-INCREASE-CURRENT> (32208)
<NET-CHANGE-FROM-OPS> 72773
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (1)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4799
<NUMBER-OF-SHARES-REDEEMED> (4684)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (51046)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5228
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 10724
<AVERAGE-NET-ASSETS> 514337
<PER-SHARE-NAV-BEGIN> 12.92
<PER-SHARE-NII> 0.01
<PER-SHARE-GAIN-APPREC> 1.49
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (0.01)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 14.41
<EXPENSE-RATIO> 1.40
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS LEGEND CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATMENTS AND IS QUALFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000202032
<NAME> G.T. GLOBAL GROWTH SERIES
<SERIES>
<NUMBER> 031
<NAME> GT GLOBAL INTERNATIONAL GROWTH FUND - CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 192394
<INVESTMENTS-AT-VALUE> 209350
<RECEIVABLES> 2288
<ASSETS-OTHER> 2470
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 214108
<PAYABLE-FOR-SECURITIES> 747
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 8911
<TOTAL-LIABILITIES> 9658
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 182592
<SHARES-COMMON-STOCK> 19231
<SHARES-COMMON-PRIOR> 22036
<ACCUMULATED-NII-CURRENT> 3347
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1555
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 16956
<NET-ASSETS> 204450
<DIVIDEND-INCOME> 4147
<INTEREST-INCOME> 694
<OTHER-INCOME> 0
<EXPENSES-NET> 4413
<NET-INVESTMENT-INCOME> 428
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<NAME> G.T. GLOBAL GROWTH SERIES
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<NAME> G.T. GLOBAL GROWTH SERIES
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<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 535
<AVERAGE-NET-ASSETS> 19750
<PER-SHARE-NAV-BEGIN> 14.54
<PER-SHARE-NII> 0.00
<PER-SHARE-GAIN-APPREC> 3.82
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (1.32)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 17.04
<EXPENSE-RATIO> 2.56
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS LEGEND CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATMENTS AND IS QUALFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000202032
<NAME> G.T. GLOBAL GROWTH SERIES
<SERIES>
<NUMBER> 083
<NAME> GT GLOBAL AMERICA VALUE FUND - ADVISOR CLASS
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 22903
<INVESTMENTS-AT-VALUE> 24903
<RECEIVABLES> 307
<ASSETS-OTHER> 35
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 25246
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 421
<TOTAL-LIABILITIES> 421
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 22422
<SHARES-COMMON-STOCK> 25
<SHARES-COMMON-PRIOR> 13
<ACCUMULATED-NII-CURRENT> 4
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 398
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2001
<NET-ASSETS> 24825
<DIVIDEND-INCOME> 358
<INTEREST-INCOME> 46
<OTHER-INCOME> 0
<EXPENSES-NET> 382
<NET-INVESTMENT-INCOME> 22
<REALIZED-GAINS-CURRENT> 1353
<APPREC-INCREASE-CURRENT> 2016
<NET-CHANGE-FROM-OPS> 3391
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2)
<DISTRIBUTIONS-OF-GAINS> (31)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 14
<NUMBER-OF-SHARES-REDEEMED> (4)
<SHARES-REINVESTED> 2
<NET-CHANGE-IN-ASSETS> 16602
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 535
<AVERAGE-NET-ASSETS> 19750
<PER-SHARE-NAV-BEGIN> 14.72
<PER-SHARE-NII> 0.17
<PER-SHARE-GAIN-APPREC> 3.89
<PER-SHARE-DIVIDEND> (0.07)
<PER-SHARE-DISTRIBUTIONS> (1.34)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 17.37
<EXPENSE-RATIO> 1.56
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
G.T. GLOBAL GROWTH SERIES
AMENDED MULTIPLE CLASS PLAN PURSUANT TO RULE 18f-3
G.T. Global Growth Series ("Trust") hereby adopts this Amended Multiple
Class Plan pursuant to Rule 18f-3 under the Investment Company Act of 1940, as
amended (the "1940 Act") on behalf of its current series, GT Global America
Small Cap Growth Fund, GT Global America Mid Cap Growth Fund, GT Global America
Value 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, and any series that may commence operations in the future
(referred to hereinafter as the "Funds").
A. GENERAL DESCRIPTION OF CLASSES THAT ARE OFFERED
1. CLASS A SHARES. Class A shares of the Funds are sold to the general
public subject to an initial sales charge of up to 4.75% of the public offering
price. The initial sales charge is waived for certain eligible purchasers and
reduced or waived for certain large volume purchases, all as set forth in the
prospectus of the Trust.
Class A shares of the Funds are subject to a "service" fee at the
annualized rate of up to 0.25% of the average daily net assets for the Funds'
Class A shares. Class A shares of the Funds also are subject to a
"distribution" fee at the annualized rate of up to 0.50% of the average daily
net assets for the Funds' Class A shares, less any amounts paid by the Funds as
the aforementioned service fee. Such fees are paid pursuant to a plan of
distribution adopted in accordance with Rule 12b-1 under the 1940 Act.
Class A shares of the Funds that are purchased without an initial sales
charge due to the sales charge waiver for purchases of $500,000 or more are
subject to a contingent deferred sales charge ("CDSC") on redemptions of shares
made within one year after the date of purchase. The Class A CDSC is equal to
1% of the lower of (i) the original purchase price, or (ii) the net asset value
of the shares at the time of redemption. Class A shares that are redeemed will
not be subject to a CDSC to the extent that the value of such shares represents:
(i) reinvestment of dividends or other distributions, or (ii) Class A shares
redeemed one year or more after their purchase. Class A shares purchased in
amounts of at least $500,000 without a sales charge may be exchanged for Class A
shares of another GT Global Mutual Fund (other than GT Global Dollar Fund)
without the imposition of a CDSC, although the CDSC will apply to the redemption
of the shares acquired through an exchange.
2. CLASS B SHARES. Class B shares of the Funds are sold to the general
public without imposition of an initial sales charge; however, a CDSC is imposed
on certain redemptions of Class B shares. The maximum CDSC for Class B shares
is equal to 5% of the lesser of the original purchase price or the net asset
value of the shares at the time of redemption. The CDSC is waived for certain
exchanges and redemptions.
<PAGE>
Class B shares that are redeemed will not be subject to a CDSC to the
extent that the value of such shares represents: (i) reinvestment of dividends
or other distributions, or (ii) shares redeemed more than six years after their
purchase.
Class B shares are subject to a service fee at the annualized rate of up to
0.25% of the average daily net assets of the Class B shares of the Funds and a
distribution fee at the annualized rate of up to 0.75% of the average daily net
assets of the Funds' Class B shares. Such fees are paid pursuant to a plan of
distribution adopted in accordance with Rule 12b-1 under the 1940 Act.
Class B shares automatically will convert to Class A shares as of the close
of business on the last business day of the month in which the seventh
anniversary of the initial issuance of such Class B shares occurs. For purposes
of calculating the holding period required for conversion of Class B shares, the
initial issuance date is (i) the date on which such Class B shares were issued;
or (ii) for Class B shares obtained through an exchange, or a series of
exchanges, the date on which the original Class B shares were issued. The
conversion would be effected at the relative net asset value per share of each
class. At the time of conversion, a portion of Class B shares owned as a result
of reinvestment of dividends or other distributions ("Dividend Shares") also
would convert to Class A shares. The portion of Dividend Shares that would
convert would be determined by the ratio of converting Class B non-Dividend
Shares to the total Class B non-Dividend Shares held by the shareholder.
3. CLASS C SHARES. Class C shares of the Funds are sold to the general
public without imposition of an initial sales charge; however, a CDSC equal to
1% of the lesser of the original purchase price or the net asset value of the
shares at the time of redemption is imposed on certain redemptions of Class C
shares made within one year of purchase. Class C shares that are redeemed will
not be subject to a CDSC to the extent that the value of such shares represents:
(i) reinvestment of dividends or other distributions, or (ii) shares redeemed
more than one year after their purchase.
Class C shares are subject to a service fee at the annualized rate of up to
0.25% of the average daily net assets of the Class C shares of the Funds and a
distribution fee at the annualized rate of up to 0.75% of the average daily net
assets of the Funds' Class C shares. Such fees are paid pursuant to a plan of
distribution adopted in accordance with Rule 12b-1 under the 1940 Act.
4. ADVISOR CLASS SHARES. Advisor Class shares are sold without
imposition of an initial sales charge or CDSC and are not subject to any service
or distribution fees. Advisor Class shares of the Funds are offered only to
such investors as are eligible to purchase Advisor Class shares as described in
the prospectuses of the Trust.
2
<PAGE>
B. EXPENSE ALLOCATIONS OF EACH CLASS
Certain expenses may be attributable to a particular Class of shares
("Class Expenses"). Class Expenses are charged directly to the net assets of
the particular Class and, thus, are borne on a pro rata basis by the outstanding
shares of that Class.
In addition to the service and distribution fees described above, each
Class also could pay a different amount of the following other expenses:
(1) transfer agent fees identified as being attributable to a
specific Class of shares;
(2) stationary, printing, postage, and delivery expenses related to
preparing and distributing materials such as shareholder reports,
prospectuses, and proxy statements to current shareholders of a
specific Class of shares;
(3) Blue Sky fees incurred by a specific Class of shares;
(4) SEC registration fees incurred by a specific Class of shares;
(5) expenses of administrative personnel and services as required to
support the shareholders of a specific Class of shares;
(6) Trustees' fees or expenses incurred as a result of issues
relating to a specific Class of shares;
(7) accounting expenses relating solely to a specific Class of
shares;
(8) auditors' fees, litigation expenses, and legal fees and expenses
relating to a specific Class of shares; and
(9) expenses incurred in connection with shareholders meetings as a
result of issues relating to a specific Class of shares.
C. EXCHANGE PRIVILEGES
Class A shares of any Fund may be exchanged only for Class A shares of
other GT Global Mutual Funds, as listed in the Funds' Prospectus. Class B
shares of any Fund may be exchanged only for Class B shares of other GT Global
Mutual Funds, as listed in the Funds' Prospectus. Class C shares of any Fund
may be exchanged only for Class C shares of other GT Global Mutual Funds, as
listed in the Funds' Prospectus. Advisor Class shares of any Fund may
3
<PAGE>
be exchanged only for Advisor Class shares of other GT Global Mutual Funds, as
listed in the Funds' Prospectus.
This exchange privilege is available only in those jurisdictions where the
sale of GT Global Mutual Fund shares to be acquired may be legally made. The
terms of the exchange privileges may be modified at any time, on sixty days'
prior written notice to shareholders.
D. ADDITIONAL INFORMATION
The prospectus for the Funds contains additional information about the
Classes and the Funds' multiple class structure. This Amended Multiple Class
Plan is subject to the terms of the then current prospectus for the applicable
Classes; provided, however, that none of the terms set forth in any such
prospectus shall be inconsistent with the terms of the Classes contained in this
Plan.
E. DATE OF EFFECTIVENESS
This Amended Multiple Class Plan will become effective on January 13, 1998.
Before any material amendment of this Amended Multiple Class Plan, a majority of
the Trustees of the Trust, and a majority of the Trustees who are not interested
persons of the Trust, shall find that the plan as proposed to be adopted or
amended, including the expense allocation, is in the best interests of each
Class individually and the Trust as a whole.
4
