As filed with the Securities and Exchange Commission on February 28, 1997
Registration No. 2-92136
File No. 811-4062
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
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Pre-Effective Amendment No. / /
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Post-Effective Amendment No. 30 / X /
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / X /
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Amendment No. 33
GAM FUNDS, INC.
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(Exact Name of Registrant as Specified in Charter)
135 East 57th Street, New York, New York 10022
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(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (212) 407-4600
GAM FUNDS, INC. Copy to:
135 East 57th Street, James B. Sitrick, Esq.
New York, New York 10022 Coudert Brothers
(Name and Address of Agent for Service) 1114 Avenue of the Americas
New York, New York 10036
Approximate Date of Proposed Public Offering: Effective date of this
Post-Effective Amendment.
It is proposed that this filing will become effective (check appropriate box)
[ X ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on April 30, 1998 pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on (date) pursuant to paragraph (a)(ii) 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.
DECLARATION PURSUANT TO RULE 24f-2
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, as amended, the
Registrant has registered an indefinite number or amount of securities under the
Securities Act of 1933. The Rule 24f-2 Notice for the Registrant's fiscal year
ended December 31, 1997 was filed on March 23, 1998.
<PAGE>
INDEX TO EXHIBITS APPEARS ON PAGE 133
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GAM FUNDS, INC.
Contents
This Registration Statement on Form N-1A consists of the following:
1. Facing Sheet
2. Cross-Reference Sheet
3. Part A - Prospectus
4. Part B - Statement of Additional Information
5. Part C - Other Information
6. Signature Sheet
<PAGE>
GAM FUNDS, INC.
Cross-Reference Sheet pursuant to Rule 495(a)
Form N-1A
Item No.
Part A Heading in Prospectus
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1. Cover Page Cover Page
2. Synopsis Expenses; Summary
3. Condensed Financial Information Financial Highlights
4. General Description of Investment Objective and
Registrant Policies and Risk Considerations
5. Management of the Fund Management of the Funds
6. Capital Stock and Other Description of Shares; Shareholder
Securities Transactions and Services;
Additional Information
7. Purchase of Securities Shareholder Transactions and Services;
Being Offered Management of the Funds
8. Redemption or Repurchase Redemption of Shares
9. Pending Legal Proceedings N.A.
<PAGE>
GLOBAL ASSET MANAGEMENT(R)
GAM FUNDS, INC.
PROSPECTUS
APRIL 30, 1998
GAM GLOBAL FUND
GAM INTERNATIONAL FUND
GAM PACIFIC BASIN FUND
GAM JAPAN CAPITAL FUND
GAM ASIAN CAPITAL FUND
GAM EUROPE FUND
GAM NORTH AMERICA FUND
GAMERICA CAPITAL FUND
GAM Funds, Inc. (the "Company") is a diversified open-end
management investment company which offers investors the
opportunity to invest in eight different portfolios (the
"Funds") investing primarily in equity securities. Shares of
one portfolio may be exchanged for shares of the same class
of another portfolio or for shares of the Reserve
Funds--Primary Fund, an open-end management investment
company (the "GAM Money Market Account.")
This Prospectus sets forth concisely information a
prospective investor should know about each GAM Fund before
investing. Investors are advised to read and retain this
Prospectus for future reference. The Company has filed a
Statement of Additional Information dated April 30, 1998
with the Securities and Exchange Commission. Such Statement
is incorporated by reference in this Prospectus, and is
available without charge upon request at the address and
telephone number indicated below.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION ("SEC") OR ANY STATE
SECURITIES COMMISSION, NOR HAS THE SEC OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
GAM FUNDS, INC.
135 East 57th Street, New York, NY 10022
Tel: (800) 426-4685 Fax: (212) 407-4684
Internet: http://www.usinfo.gam.com
<PAGE>
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Table of Contents
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Summary ............................................................. 1
Investor Expenses..................................................... 2
Financial Highlights.................................................. 4
Investment Objectives and Policies and Risk Considerations............ 15
Shareholder Transactions and Services................................. 21
Purchasing Shares................................................... 21
Selling Shares...................................................... 24
Exchanges........................................................... 27
Other Account Services.............................................. 28
Dividends and Tax Matters........................................... 28
Management of the Funds............................................... 29
Description of Shares................................................. 31
Additional Information................................................ 32
Purchase Application............................................. Back Cover
<PAGE>
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SUMMARY
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INVESTMENT OBJECTIVE AND POLICIES. The investment objective of each Fund
is to seek long-term capital appreciation. Each Fund seeks to achieve this
objective by investing in the particular geographic region established pursuant
to its own investment policy. Each Fund employs its own strategy and has its own
risk/reward profile. The Funds are not guaranteed to achieve their objective.
PRINCIPAL RISKS. GAM International, GAM Europe, GAM Pacific Basin, GAM
Asian Capital and GAM Japan Capital Funds each invest primarily in securities of
foreign issuers. GAM Global and GAM North America Funds and, to a lesser extent,
GAMerica Capital Fund, may invest in securities of foreign issuers. Generally,
investments in securities of foreign issuers involve greater risks than
investments in United States issuers. Certain investment techniques that may be
utilized by the Funds, such as hedging and leveraging techniques, also involve
risk. Because investors could lose money by investing in the Funds, investors
should be sure to read and understand these and all risk factors associated with
an investment in the Funds.
INVESTMENT ADVISERS AND UNDERWRITER. The Funds are managed by GAM
International Management Limited, a London-based affiliate of the Global Asset
Management (GAM) Group of companies, an international investment advisory
organization with approximately $12 billion under management and offices or
affiliates in Bermuda, New York, London, Zurich, Hong Kong, Rio de Janeiro,
Tokyo, Singapore, Dublin and the Isle of Man. Fayez Sarofim & Co., which serves
as co-investment adviser for GAM North America Fund, is based in Houston, Texas
and manages aggregate assets of approximately $52 billion. GAM Services, Inc.,
an affiliate of GAM, serves as principal underwriter for the Funds' shares.
Shares are continuously offered to the public through securities dealers and
other financial services firms that have entered into an agreement with GAM
Services Inc. to sell shares of the Funds.
MINIMUM INVESTMENT/SALES CHARGES/CDSC. The minimum initial investment is
$5,000 ($2,000 for IRA accounts); shareholders may make subsequent purchases for
as little as $500. Purchases of shares may be subject to a maximum initial sales
charge of 5% of the purchase price in the case of Class A shares, or 3.5% in the
case of Class D shares. Class B shares are sold without an initial sales charge
but are subject to a contingent deferred sales charge ("CDSC"), scaled down from
5.0% to 1.0%, payable upon most redemptions within six years after purchase.
Class C shares are sold without an initial sales charge but are subject to a
CDSC of 1.0% on most redemptions made within one year after purchase. Purchases
of Class B and C shares may not be available until after the date of this
Prospectus.
DIVIDENDS AND DISTRIBUTIONS. Each Fund intends to distribute annually
all of its net investment income and net realized capital gains. Dividends and
distributions may be reinvested automatically without a sales load.
ADDITIONAL FUND FEATURES. The Funds offer Exchanges at Net Asset Value;
Reduced Sales Charges through a Statement of Intention and Rights of
Accumulation; Telephone Exchanges and Redemptions; Automatic Investment and
Systematic Withdrawal Plans; and money market investment privileges through the
GAM Money Market Account.
- ------------------------------------- 1 ----------------------------------------
<PAGE>
INVESTOR EXPENSES
Fund investors pay various expenses either directly or indirectly. The figures
below show the expenses for the past year, adjusted to reflect any changes.
Future expenses may be greater or less than those shown below.
<TABLE>
<CAPTION>
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GAM INTERNATIONAL FUND GAM GLOBAL FUND GAM PACIFIC BASIN FUND
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
A B** C** D* A B** C** D* A B** C** D*
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed On Purchases
(as a percentage of offering price)(1) 5% None None 3.5% 5% None None 3.5% 5% None None 3.5%
Maximum Deferred Sales Charge None(2) 5% 1% None None(2) 5% 1% None None(2) 5% 1% None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of Average
Net Assets)
Management Fees (after expense
reimbursement) 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
12b-1 Fees (4) 0.30% 1.00% 1.00% 0.50% 0.30% 1.00% 1.00% 0.50% 0.30% 1.00% 1.00% 0.50%
Other Expenses (5) 0.38% 0.38% 0.38% 0.32% 0.53% 0.53% 0.53% 0.51% 0.68% 0.68% 0.68% 0.58%
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Total Fund Operating Expenses (4) 1.68% 2.38% 2.38% 1.82% 1.83% 2.53% 2.53% 2.01% 1.98% 2.68% 2.68% 2.08%
==== ==== ==== ==== ==== ==== ==== ==== ==== ==== ==== ====
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</TABLE>
<TABLE>
<CAPTION>
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GAM
ASIAN
CAPITAL
GAM EUROPE FUND GAM NORTH AMERICA FUND GAM JAPAN CAPITAL FUND GAMERICA CAPITAL FUND FUND
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
A B** C** A B** C** A B** C** A B** C** A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION
EXPENSES
Maximum Sales Charge
Imposed On Purchases
(as a percentage of
offering price) (1) 5% None None 5% None None 5% None None 5% None None 5%
Maximum Deferred
Sales Charge None(2) 5% 1% None(2) 5% 1% None(2) 5% 1% None(2) 5% 1% None(2)
ANNUAL FUND OPERATING
EXPENSES (as a
percentage of Average
Net Assets)
Management Fees
(after expense
reimbursement) 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
12b-1 Fees (4) 0.30% 1.00% 1.00% 0.30% 1.00% 1.00% 0.30% 1.00% 1.00% 0.30% 1.00% 1.00% 0.30%
Other Expenses (5) 0.51% 0.51% 0.51% 0.64% 0.64% 0.64% 0.85% 0.85% 0.85% 2.15% 2.15% 2.15% 0.51%
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Total Fund Operating
Expenses (4) 1.81% 2.51% 2.51% 1.94%(3) 2.64% 2.64% 2.15% 2.85% 2.85% 3.45% 4.15% 4.15% 1.81%(3)
==== ==== ==== ==== ==== ==== ==== ==== ==== ==== ==== ==== ====
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</TABLE>
* CLass D shares are currently offered only by GAM International Fund, GAM
Global Fund and GAM Pacific Basin Fund.
** Class B and Class C shares are currently offered only by GAM International
Fund, GAM Global Fund, GAM Pacific Basin Fund, GAM Europe Fund, GAM North
America Fund, GAM Japan Capital Fund, and GAMerica Capital Fund.
- ------------------------------------- 2 ----------------------------------------
<PAGE>
EXAMPLE
The table below shows what an investor would pay if he or she invested $1,000
over the various time frames indicated. The example assumes reinvestment of all
dividends, an average annual return of 5%, and that "Total Fund Operating
Expenses" remain the same each year.
<TABLE>
<CAPTION>
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GAM INTERNATIONAL FUND GAM GLOBAL FUND GAM PACIFIC BASIN FUND
CLASS A CLASS B CLASS C CLASS D CLASS A CLASS B CLASS C CLASS D CLASS A CLASS B CLASS C CLASS D
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 Year $ 66 76 35 $ 53 $ 68 77 36 $ 55 $ 69 79 38 $ 55
3 Year 100 108 75 90 105 113 80 96 109 117 84 98
5 Year 137 153 129 130 144 160 137 139 151 168 144 143
10 Year 239 281 281 241 254 297 297 261 269 312 312 268
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</TABLE>
<TABLE>
<CAPTION>
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GAM
ASIAN
CAPITAL
GAM EUROPE FUND GAM NORTH AMERICA FUND GAM JAPAN CAPITAL FUND GAMERICA CAPITAL FUND FUND
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
A B C A B C A B C A B C A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 Year $ 67 77 36 $ 69 $ 78 $ 37 $ 71 80 39 $ 83 $ 92 $ 52 $ 67
3 Year 104 110 78 108 114 82 114 120 88 151 157 126 104
5 Year 143 156 134 149 162 140 160 173 150 220 233 212 143
10 Year 252 285 285 265 297 297 286 318 318 404 433 433 252
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</TABLE>
This example is for comparison purposes only and is not a representation of
actual expenses and returns, either past or future.
NOTES TO TABLES
(1) The sales charge is reduced for investments of $100,000 or more, declining
to zero for large order purchases of $1 million or more. The sales charge may be
waived for certain investors. See "Shareholder Transactions and Services --
Purchasing Shares."
(2) Except for investments of $1 million or more. See "Shareholder Transactions
and Services -- Purchasing Shares".
(3) In the absence of an expense reimbursement, total expenses for GAM Asian
Capital Fund would have been 5.44%.
(4) Because of the 12b-1 fee, long term shareholders of Class B, Class C and
Class D shares may indirectly pay more than the equivalent of the maximum
permitted front-end sales charge.
(5) Other expenses include custodian, transfer agent, administrative, legal and
accounting fees and expenses. The Funds' expense ratios may be higher than those
of most registered investment companies since the cost of maintaining custody of
foreign securities is higher than those for most domestic funds and the rate of
the advisory fee paid by each Fund exceeds that of most registered investment
companies.
- -------------------------------------- 3 ---------------------------------------
<PAGE>
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FINANCIAL HIGHLIGHTS
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Unless otherwise noted, the selected financial information below is for the
fiscal periods ending December 31 of each year. The accounting firm of Coopers &
Lybrand L.L.P. audited the Funds' financial statements for the year ended
December 31, 1997. Their report is included in the Funds' Annual Report, which
contains further information about the performance of the Funds. A copy of the
Annual Report is incorporated by reference into the Statement of Additional
Information and available
<TABLE>
<CAPTION>
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GAM INTERNATIONAL FUND For the Periods
05-Sept-95*
to
1997 1997 1996 1996 1995 31-Dec-95 1994
Class A Class D Class A Class D Class A Class D Class A
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding
throughout the period)**
Net asset value
Beginning of period $23.15 $23.07 $21.37 $21.35 $17.21 $20.46 $23.90
------ ------ ------ ------ ------ ------ ------
Income from investment operations
Net investment income 0.08+ 0.01+ 0.57+ 0.45+ 0.52 0.10 0.34
Net realized and unrealized
gain/(loss) on investments 6.58 6.59 1.34 1.32 4.64 1.78 (2.58)
------ ------ ------ ------ ------ ------ ------
Total from investment operations 6.66 6.60 1.91 1.77 5.16 1.88 (2.24)
------ ------ ------ ------ ------ ------ ------
Less distributions
Dividends from net
investment income (0.18) (0.16) (0.09) (0.01) (0.47) (0.46) (0.66)
Distributions from net
realized gains (1.17) (1.17) (0.04) (0.04) (0.53) (0.53) (3.79)
------ ------ ------ ------ ------ ------ ------
Total distributions (1.35) (1.33) (0.13) (0.05) (1.00) (0.99) (4.45)
------ ------ ------ ------ ------ ------ ------
Net asset value
End of period $28.46 $28.34 $23.15 $23.07 $21.37 $21.35 $17.21
====== ====== ====== ====== ====== ====== ======
TOTAL RETURN++
(without deduction of
sales load) 28.93% 28.78% 8.98% 8.33% 30.09% 9.26% (10.23%)
Net assets, end of period
(000 omitted) $1,793,665 $99,283 $1,009,819 $38,716 $560,234 $8,714 $158,336
RATIOS TO AVERAGE NET ASSETS:
Expenses+ 1.68% 1.82% 1.56% 2.06% 1.57% 2.22%++ 1.60%
Net investment income 0.28% 0.05% 2.70% 2.13% 3.89% 1.90%++ 2.74%
Portfolio turnover rate 48% 48% 82% 82% 34.97% 34.97% 110.48%
Average Commission Rate Paid ss. 0.0444 0.0444 0.0202 0.0202 -- -- --
BANK LOANS
Amount outstanding at end of period
(000 omitted) -- -- -- -- -- -- --
Average amount of bank loans
outstanding during the period
(000 omitted) -- -- -- -- -- -- --
Average number of shares outstanding
during the period (monthly average)
(000 omitted) -- -- -- -- -- -- --
Average amount of debt per share
during the period -- -- -- -- -- -- --
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</TABLE>
* Commencement of offering of Class D shares.
** Per share amounts for years ended prior to December 31, 1995 have been
restated to reflect a 10-for-1 stock split effective December 19, 1995.
+ For the years ended 31st December 1996 and 1997, net investment income per
share has been determined based on the weighted average shares outstanding
method.
++ Total return calculated for a period of less than one year is not
annualized.
+ The ratios of expenses to average net assets for the year ended 31st
December, 1996 include amounts paid through expense offset arrangements.
Prior and subsequent period ratios exclude these amounts.
- ------------------------------------ 4 -----------------------------------------
<PAGE>
at no charge upon request to the Funds. The Funds' financial statements for
periods prior to 1996 were audited by other independent accountants. Expense and
income ratios and portfolio turnover rates have been annualized for periods less
than one year. Total returns for periods of less than one year are not
annualized. Classes B and C were not in existence for the period represented and
therefore are not reflected in the pertinent charts which follow.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
For the Periods
1993 1992 1991 1990 1989 1988 1987
Class A Class A Class A Class A Class A Class A Class A
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding
throughout the period)**
Net asset value
Beginning of period $14.56 $14.86 $12.87 $17.02 $14.81 $13.29 $21.91
------ ------ ------ ------ ------ ------ ------
Income from investment operations
Net investment income 0.25 0.71 0.36 0.17 0.03 0.04 0.11
Net realized and unrealized
gain/(loss) on investments 10.38 (0.28) 1.64 (1.41) 3.21 2.72 2.38
------ ------ ------ ------ ------ ------ ------
Total from investment operations 10.63 0.43 2.00 (1.24) 3.24 2.76 2.49
------ ------ ------ ------ ------ ------ ------
Less distributions
Dividends from net
investment income (0.34) (0.43) (0.01) -- -- (0.06) (0.23)
Distributions from net
realized gains (0.95) (0.30) -- (2.91) (1.03) (1.18) (10.88)
------ ------ ------ ------ ------ ------ ------
Total distributions (1.29) (0.73) (0.01) (2.91) (1.03) (1.24) (11.11)
------ ------ ------ ------ ------ ------ ------
Net asset value
End of period $23.90 $14.56 $14.86 $12.87 $17.02 $14.81 $13.29
====== ====== ====== ====== ====== ====== ======
TOTAL RETURN++
(without deduction of
sales load) 79.96% 3.08% 15.56% (7.30%) 22.46% 21.51% 12.05%
Net assets, end of period
(000 omitted) $80,776 $41,032 $40,355 $23,450 $20,537 $19,638 $21,167
RATIOS TO AVERAGE NET ASSETS
Expenses 1.99% 2.03% 2.11% 2.30% 2.74% 2.76% 2.23%
Net investment income 2.28% 4.85% 3.25% 1.32% 0.19% 0.27% 0.38%
Portfolio turnover rate 98.45% 109.16% 160.67% 253.89% 32.52% 22.86% 79.58%
Average Commission Rate Paid -- -- -- -- -- -- --
BANK LOANS
Amount outstanding at end of period
(000 omitted) $9,557 $2,743 -- -- -- -- --
Average amount of bank loans
outstanding during the period
(000 omitted) $2,042 $901 -- -- -- -- --
Average number of shares
outstanding during the period
(monthly average)
(000 omitted) 2,700 2,790 -- -- -- -- --
Average amount of debt per share
during the period $0.76 $0.32 -- -- -- -- --
- --------------------------------------------------------------------------------------------------------
</TABLE>
++ Annualized.
ss. For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades on
which a commission is charged. This amount includes commissions paid to
foreign brokers which may materially affect the rate shown. Amounts paid
in foreign currencies have been converted into US dollars using the
prevailing exchange rate on the date of the transaction.
- ------------------------------------ 5 -----------------------------------------
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
GAM GLOBAL FUND
For the Periods
05-Sep-95*
to
1997 1997 1996 1996 1995 31-Dec-95 1994
Class A Class D Class A Class D Class A Class D Class A
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding
throughout the period)**
Net asset value
Beginning of period $14.35 $14.22 $13.51 $13.48 $10.60 $13.46 $17.92
------ ------ ------ ------ ------ ------ ------
Income from investment operations
Net investment income (0.04)+ (0.09)+ (0.16)+ 0.07+ 0.35 -- 0.19
Net realized and unrealized
gain/(loss) on investments 5.04 5.02 1.55 1.47 3.48 0.92 (2.94)
------ ------ ------ ------ ------ ------ ------
Total from investment operations 5.00 4.93 1.71 1.54 3.83 0.92 (2.75)
------ ------ ------ ------ ------ ------ ------
Dividends from net
investment income (0.02) (0.03) (0.08) (0.01) (0.30) (0.28) (0.49)
Distributions from net
realized gains (0.62) (0.62) (0.79) (0.79) (0.62) (0.62) (4.08)
------ ------ ------ ------ ------ ------ ------
Total distributions (0.64) (0.65) (0.87) (0.80) (0.92) (0.90) (4.57)
------ ------ ------ ------ ------ ------ ------
Net asset value
End of period $18.71 $18.50 $14.35 $14.22 $13.51 $13.48 $10.60
====== ====== ====== ====== ====== ====== ======
TOTAL RETURN++
(without deduction of
sales load) 34.95% 34.80% 12.74% 11.54% 36.25% 6.97% (16.15%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $65,739 $3,768 $19,583 $815 $26,161 $295 $19,940
Ratios to average net assets
Expenses 1.83% 2.01% 2.26% 2.88% 2.16% 2.81% + 2.29%
Net investment income/(loss) (0.25%) (0.53%) 1.17% 0.52% 2.96% (0.09%)+ 0.91%
Portfolio turnover rate 48% 48% 107% 107% 60.18% 60.18% 123.33%
Average Commission Rate Paid ss. 0.0733 0.0733 0.0255 0.0255 -- -- --
BANK LOANS
Amount outstanding at end of period -- -- -- -- -- -- --
(000 omitted)
Average amount of bank loans
outstanding during the period
(000 omitted) -- -- -- -- -- -- --
Average number of shares outstanding
during the period (monthly average)
(000 omitted) -- -- -- -- -- -- --
Average amount of debt per share
during the period -- -- -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of offering of Class D shares.
** Per share amounts for years ended prior to December 31, 1995 have been
restated to reflect a 10-for-1 stock split effective December 19, 1995.
+ For the years ended 31st December 1996 and 1997, net investment income per
share has been determined based on the weighted average shares outstanding
method.
++ Total return calculated for a period of less than one year is not
annualized.
+ Annualized.
ss. For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades on
which a commission is charged. This amount includes commissions paid to
foreign brokers which may materially affect the rate shown. Amounts paid in
foreign currencies have been converted into US dollars using the prevailing
exchange rate on the date of the transaction.
- -------------------------------------- 6 ---------------------------------------
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
For the Periods
1993 1992 1991 1990 1989 1988 1987
Class A Class A Class A Class A Class A Class A Class A
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding
throughout the period)*
Net asset value
Beginning of period $10.33 $11.37 $10.28 $13.14 $11.08 $9.26 $10.47
------ ------ ------ ------ ------ ----- ------
Income from investment operations
Net investment income 0.24 0.64 0.28 0.06 0.04 (0.01) 0.12
Net realized and unrealized
gain/(loss) on investments 7.46 (1.15) 0.81 (1.54) 2.56 2.25 (0.38)
------ ------ ------ ------ ------ ----- ------
Total from investment operations 7.70 (0.51) 1.09 (1.48) 2.60 2.24 (0.26)
------ ------ ------ ------ ------ ----- ------
Dividends from net
investment income (0.11) (0.28) -- -- (0.03) -- (0.12)
Distributions from net
realized gains -- (0.25) -- (1.38) (0.51) (0.42) (0.83)
------ ------ ------ ------ ------ ----- ------
Total distributions (0.11) (0.53) -- (1.38) (0.54) (0.42) (0.95)
------ ------ ------ ------ ------ ----- ------
Net asset value
End of period $17.92 $10.33 $11.37 $10.28 $13.14 $11.08 $9.26
====== ====== ====== ====== ====== ====== =====
TOTAL RETURN+
(without deduction of
sales load) 75.30% (4.65%) 10.61% (11.26%) 24.20% 25.04% (2.47%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $33,416 $19,763 $23,990 $23,577 $22,794 $17,805 $18,229
Ratios to average net assets
Expenses 2.68% 2.37% 2.33% 2.45% 2.68% 2.94% 2.09%
Net investment income/(loss) 1.88% 5.25% 2.20% 0.58% 0.36% (0.05%) 0.90%
Portfolio turnover rate 106.73% 118.41% 180.52% 250.46% 31.28% 34.09% 67.35%
Average Commission Rate Paid ss. -- -- -- -- -- -- --
BANK LOANS
Amount outstanding at end of period
(000 omitted) $2,165 $9,010 -- -- -- -- $1,900
Average amount of bank loans
outstanding during the period
(000 omitted) $2,600 $1,401 -- -- -- -- $158
Average number of shares
outstanding during the
period (monthly average)
(000 omitted) 1,780 2,130 -- -- -- -- 2,200
Average amount of debt per share
during the period $ 1.48 $0.66 -- -- -- -- $0.72
- --------------------------------------------------------------------------------------------------------------
</TABLE>
* Per share amounts for periods ended prior to December 31, 1995 have been
restated to reflect a 10-for-1 stock split effective December 19, 1995.
+ Total return calculated for a period of less than one year is not
annualized.
ss. For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades on
which a commission is charged. This amount includes commissions paid to
foreign brokers which may materially affect the rate shown. Amounts paid in
foreign currencies have been converted into US dollars using the prevailing
exchange rate on the date of the transaction.
- ------------------------------------ 7 -----------------------------------------
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
GAM PACIFIC BASIN FUND
For the Periods
05-Sep-95*
to
1997 1997 1996 1996 1995 31-Dec-95 1994
Class A Class D Class A Class D Class A Class D Class A
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding
throughout the period)**
Net asset value
Beginning of period $15.26 $15.20 $16.97 $16.96 $17.62 $17.36 $19.20
------ ------ ------ ------ ------ ------ ------
Income from investment operations
Net investment income/(loss) 0.00+ 0.01+ 0.04+ (0.10)+ -- (0.02) (0.05)
Net realized and unrealized
gain/(loss) on investments (4.45) (4.47) (0.11) (0.11) 0.61 0.26 1.36
------ ------ ------ ------ ------ ------ ------
Total from investment operations (4.45) (4.46) (0.07) (0.21) 0.61 0.24 1.31
------ ------ ------ ------ ------ ------ ------
Less distributions
Dividends from net
investment income -- -- (0.74) (0.65) -- -- --
Distributions from net
realized gains (1.12) (1.12) (0.90) (0.90) (1.26) (0.64) (2.89)
------ ------ ------ ------ ------ ------ ------
Total distributions (1.12) (1.12) (1.64) (1.55) (1.26) (0.64) (2.89)
------ ------ ------ ------ ------ ------ ------
Net asset value
End of period $9.69 $9.62 $15.26 $15.20 $16.97 $16.96 $17.62
====== ====== ====== ====== ====== ====== ======
TOTAL RETURN++
(without deduction of sales
load) (30.00%) (30.18%) (0.39%) (1.19%) 4.50% 2.35% 7.41%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $23,046 $1,583 $49,808 $1,878 $53,944 $1,547 $48,527
Ratios to average net assets
Expenses 1.98% 2.08% 1.76% 2.28% 1.98% 2.63%+ 1.78%
Net investment income 0.02% (0.09%) 0.22% (0.57%) (0.07%) (1.49%) (0.35%)
Portfolio turnover rate 42% 42% 46% 46% 64.01% 64.01% 29.11%
Average Commission Rate Paid ss. 0.0168 0.0168 0.0251 0.0251
BANK LOANS:
Amount outstanding at end
of period (000 omitted) $2,102++ $144++ -- -- -- -- --
Average amount of bank
loans outstanding
during the period (000 omitted) $5.8 $0.4 -- -- -- -- --
Average number of shares
outstanding during the
period (monthly average)
(000 omitted) 3,265 140 -- -- -- -- --
Average amount of debt per share
during the period $0.002 $0.003 -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of offering of Class D shares.
** Per share amounts for years ended prior to December 31, 1995 have been
restated to reflect a 10-for-1 stock split effective December 19, 1995.
+ For the years ended 31st December 1996 and 1997, net investment income per
share has been determined based on the weighted average shares outstanding
method.
++ Total return calculated for a period of less than one year is not
annualized.
+ Annualized.
ss. For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades on
which a commission is charged. This amount includes commissions paid to
foreign brokers which may materially affect the rate shown. Amounts paid in
foreign currencies have been converted into US dollars using the prevailing
exchange rate on the date of the transaction.
++ The average daily interest rate during the period was 8.69%; and the
interest rate at 31st December, 1997 was 8.69%.
- -------------------------------------- 8 ---------------------------------------
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
For the Periods
06-May-87*
to
1993 1992 1991 1990 1989 1988 31-Dec-87
Class A Class A Class A Class A Class A Class A Class A
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding
throughout the period)**
Net asset value
Beginning of period $13.14 $13.77 $11.93 $14.21 $10.16 $8.25 $10.00
------ ------ ------ ------ ------ ----- ------
Income from investment operations
Net investment income (0.03) 0.01 (0.17) (0.04) (0.22) (0.41) (0.19)
Net realized and unrealized
gain/(loss) on investments 6.57 (0.06) (1.81) (1.11) 4.61 (2.32) (1.56)
------ ------ ------ ------ ------ ----- ------
Total from investment operations 6.54 (0.05) (1.98) (1.15) 4.39 1.91 (1.75)
------ ------ ------ ------ ------ ----- ------
Less distributions
Dividends from net
investment income (0.04) (0.09) -- -- -- -- --
Distributions from net
realized gains (0.44) (0.49) (0.14) (1.13) (0.34) -- --
------ ------ ------ ------ ------ ----- ------
Total distributions (0.48) (0.58) (0.14) (1.13) (0.34) -- --
------ ------ ------ ------ ------ ----- ------
Net asset value
End of period $19.20 $13.14 $13.77 $11.93 $14.21 $10.16 $8.25
====== ====== ====== ====== ====== ===== ======
TOTAL RETURN+
(without deduction of
sales load) 51.52% (0.37%) 16.71% (8.21%) 43.34% 23.21% (17.55%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $40,719 $28,206 $35,849 $20,811 $7,490 $4,341 $3,689
Ratios to average net assets
Expenses 1.93% 2.03% 2.29% 3.74% 5.93% 5.92% 6.80%
Net investment income/(loss) (0.29%) 0.09% 0.78% (0.31%) (3.39%) (3.29%) (4.47%)
Portfolio turnover rate 91.07% 74.78% 78.80% 103.05% 152.89% 147.87% 85.53%
Average Commission Rate Paid ss. -- -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of operations
** Per share amounts for periods ended prior to December 31, 1995 have been
restated to reflect a 10-for-1 stock split effective December 19, 1995.
+ Total return calculated for a period of less than one year is not
annualized.
ss. For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades on
which a commission is charged. This amount includes commissions paid to
foreign brokers which may materially affect the rate shown. Amounts paid in
foreign currencies have been converted into US dollars using the prevailing
exchange rate on the date of the transaction.
- ------------------------------------ 9 -----------------------------------------
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
GAM EUROPE FUND
For the Periods
01-Jan-90*
to
1997 1996 1995 1994 1993 1992 1991 31-Dec-90
Class A Class A Class A Class A Class A Class A Class A Class A
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding
throughout the period)**
Net asset value
Beginning of period $11.85 $10.04 $8.66 $8.93 $7.34 $8.33 $8.39 $10.00
------ ------ ----- ----- ----- ----- ----- ------
Income from investment operations
Net investment income 0.02+ 0.07+ 0.07 -- 0.24 0.40 0.22 (0.02)
Net realized and unrealized
gain/(loss) on investments 3.15 2.06 1.38 (0.27) 1.41 (0.78) (0.28) (1.59)
------ ------ ----- ----- ----- ----- ----- ------
Total from investment operations 3.17 2.13 1.45 (0.27) 1.65 (0.38) (0.06) (1.61)
------ ------ ----- ----- ----- ----- ----- ------
Less distributions
Dividends from net
investment income (0.06) (0.01) (0.06) -- (0.06) (0.22) -- --
Distributions from net
realized gains (2.39) (0.31) (0.01) -- -- (0.39) -- --
------ ------ ----- ----- ----- ----- ----- ------
Total distributions (2.45) (0.32) (0.07) -- (0.06) (0.61) -- --
------ ------ ----- ----- ----- ----- ----- ------
Net asset value
End of period $12.57 $11.85 $10.04 $8.66 $8.93 $7.34 $8.33 $8.39
====== ====== ===== ===== ===== ===== ===== ======
TOTAL RETURN++
(without deduction of
sales load) 27.55% 21.32% 16.77% (3.11%) 22.68% (4.91%) (0.70%) (16.07%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $39,101 $25,127 $22,961 $32,233 $14,398 $17,264 $13,558 $9,186
Ratios to average net assets
Expenses 1.81% 1.89% 2.12% 2.35% 2.64% 2.47% 2.76% 3.57%
Net investment income/(loss) 0.15% 0.59% 0.75% 0.06% 1.05% 5.06% 2.17% (0.22%)
Portfolio turnover rate 80% 76% 145.16% 74.96% 181.51% 72.20% 232.55% 325.62%
Average Commission Rate Paid ss. 0.0352 0.0168 -- -- -- -- -- --
BANK LOANS:
Amount outstanding at end
of period $884+ -- -- -- $1,860 $1,177 -- --
(000 omitted)
Average amount of bank loans
outstanding during the period
(000 omitted) $2.4 -- $123 -- $521 $347 -- --
Average number of shares
outstanding during the
period (monthly average)
(000 omitted) 2,688 -- 3,900 -- 1,680 2,400 -- --
Average amount of debt per share
during the period $0.001 -- $0.32 -- $0.31 $0.14 -- --
- -----------------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of operations
** Per share amounts for periods ended prior to December 31, 1995 have been
restated to reflect a 10-for-1 stock split effective December 19, 1995.
+ For the years ended 31st December 1996 and 1997, net investment income per
share has been determined based on the weighted average shares outstanding
method.
++ Total return calculated for a period of less than one year is not
annualized.
+ The average daily interest rate during the period was 8.69%; and the
interest rate at 31st December, 1997 was 8.69%.
ss. For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades on
which a commission is charged. This amount includes commissions paid to
foreign brokers which may materially affect the rate shown. Amounts paid in
foreign currencies have been converted into US dollars using the prevailing
exchange rate on the date of the transaction.
- ------------------------------------ 10 ----------------------------------------
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
GAM NORTH AMERICA FUND
For the Periods
1997 1996 1995 1994 1993 1992 1991 1990*
Class A Class A Class A Class A Class A Class A Class A Class A
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding
throughout the period)**
Net asset value
Beginning of period $13.56 $11.93 $ 9.14 $12.80 $13.63 $13.35 $10.21 $10.00
------ ------ ------ ------ ------ ------ ------ ------
Income from investment operations
Net investment income (loss) 0.00+ (0.05)+ -- 0.04 0.19 0.07 0.06 (0.22)
Net realized and unrealized
gain/(loss) on investments 3.99 2.93 2.83 0.23 (0.46) 0.25 3.08 0.43
------ ------ ------ ------ ------ ------ ------ ------
Total from investment operations 3.99 2.88 2.83 0.27 (0.27) 0.32 3.14 0.21
------ ------ ------ ------ ------ ------ ------ ------
Less distributions
Dividends from net
investment income -- -- -- (0.23) (0.07) (0.03) -- --
Distributions from net
realized gains (0.23) (1.25) (0.04) (3.70) (0.49) (0.01) -- --
------ ------ ------ ------ ------ ------ ------ ------
Total distributions (0.23) (1.25) (0.04) (3.93) (0.56) (0.04) -- --
------ ------ ------ ------ ------ ------ ------ ------
Net asset value
End of period $17.32 $13.56 $11.93 $ 9.14 $12.80 $13.63 $13.35 $10.21
====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN++
(without deduction of
sales load) 29.41% 24.10% 30.90% 2.97% (2.09%) 2.42% 30.69% 2.14%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $10,966 $5,853 $5,981 $1,887 $3,289 $11,781 $12,290 $1,862
Ratios to average net assets
Expenses, net of
reimbursement 1.94% 2.61% 2.98%+ 2.54%+ 2.10% 2.43% 2.96% 11.52%+
Net investment income 0% (0.39%) 0.01% 0.37% 0.69% 0.47% 0.45% (5.49%)
Portfolio turnover rate 15% 9% 8.57% 3.00% 3.42% 20.38% 3.44% 0.00%
Average Commission Rate Paid ss. 0.0600 0.06
- -----------------------------------------------------------------------------------------------------------
</TABLE>
* Commenced operations January 1, 1990. Fayez Sarofim & Co. was appointed
co-investment adviser of the Fund effective June 20, 1990.
** Per share amounts for years ended prior to December 31, 1995 have been
restated to reflect a 10-for-1 stock split effective December 19, 1995.
+ For the years ended 31st December 1996 and 1997, net investment income per
share has been determined based on the weighted average shares outstanding
method.
++ Total return calculated for a period of less than one year is not
annualized.
+ In the absence of the expense reimbursement, expenses on an annualized
basis would have represented 3.27%, 5.81% and 14.31% of the average net
assets, respectively, for the years ended December 31, 1995, 1994 and 1990.
ss. For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades on
which a commission is charged. This amount includes commissions paid to
foreign brokers which may materially affect the rate shown. Amounts paid in
foreign currencies have been converted into US dollars using the prevailing
exchange rate on the date of the transaction.
- ------------------------------------ 11 ----------------------------------------
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
GAM JAPAN CAPITAL FUND
For the Periods
01-Jul-94*
to
1997 1996 1995 31-Dec-94
Class A Class A Class A Class A
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding
throughout the period)**
Net asset value
Beginning of period $9.39 $10.16 $ 9.62 $10.00
----- ------ ------ ------
Income from investment operations
Net investment income (0.10)+ (0.05)+ (0.07) 0.02
Net realized and unrealized
gain/(loss) on investments (0.11) 0.07 0.69 (0.40)
----- ------ ------ ------
Total from investment operations (0.21) 0.02 0.62 (0.38)
----- ------ ------ ------
Less distributions
Dividends from net investment
income -- (0.70) (0.05) --
Distributions from net realized gains (0.74) (0.09) (0.03) --
----- ------ ------ ------
Total distributions (0.74) (0.79) (0.08) --
----- ------ ------ ------
Net asset value
End of period $8.44 $9.39 $10.16 $9.62
===== ====== ====== ======
TOTAL RETURN++
(without deduction of sales load) (2.58%) 0.15% 6.45% (3.77%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $30,872 $36,504 $13,600 $9,406
Ratios to average net assets
Expenses, net of reimbursement 2.15% 1.84% 3.61%+ 2.19%
Net investment income/(loss) (1.06%) (0.50%) (2.35%) 0.70%
Portfolio turnover rate 76% 23% 122.38% 7.02%
Average Commission Rate Paid 0.0554 0.0697 -- --
BANK LOANS:
Amount outstanding at end of period
(000 omitted) -- -- -- --
Average amount of bank loans
outstanding during the
period (000 omitted) $145.5++
Average number of shares outstanding
during the period (monthly average)
(000 omitted) 3,074 -- -- --
Average amount of debt per share
during the period ss. $0.047 -- -- --
- ---------------------------------------------------------------------------------------------
</TABLE>
* Commencement of operations
** Per share amounts for periods ended prior to December 31, 1995 have been
restated to reflect a 10-for-1 stock split effective December 19, 1995.
+ For the years ended 31st December 1996 and 1997, net investment income per
share has been determined based on the weighted average shares outstanding
method.
++ Total return calculated for a period of less than one year is not
annualized.
+ In the absence of the expense reimbursement, for the period ended December
31, 1995, expenses on an annualized basis would have represented 4.61% of
the average net assets.
++ The average daily interest rate during the period was 8.41%.
ss. For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades on
which a commission is charged. This amount includes commissions paid to
foreign brokers which may materially affect the rate shown. Amounts paid in
foreign currencies have been converted into US dollars using the prevailing
exchange rate on the date of the transaction.
- ------------------------------------ 12 ----------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
GAMERICA CAPITAL FUND
For the Periods
12-May-95*
to
1997 1996 31-Dec-95
Class A Class A Class A
PER SHARE OPERATING PERFORMANCE
(for a share outstanding
throughout the period)
Net asset value
Beginning of period $10.82 $10.03 $10.00
------ ------ ------
Income from investment operations
Net investment income (loss) (0.24)+ (0.42)+ 0.07
Net realized and unrealized
gain/(loss) on investments 4.23 2.22 0.07
------ ------ ------
Total from investment operations 3.99 1.80 0.14
------ ------ ------
Less distributions
Dividends from net investment
income -- -- (0.07)
Distributions from net realized gains (1.38) (1.01) (0.04)
------ ------ ------
Total distributions (1.38) (1.01) (0.11)
------ ------ ------
Net asset value
End of period $13.43 $10.82 $10.03
====== ====== ======
TOTAL RETURN++
(without deduction of sales load) 37.28% 18.31% 1.38%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $3,799 $ 1,924 $ 3,029
Ratios to average net assets
Expenses, net of reimbursement+ 3.45% 5.16% 3.73%
Net investment income/(loss) (2.04%) (3.79%) 1.36%
Portfolio turnover rate 22% 27% 10.90%
Average Commission Rate Paid ss. 0.0152 0.0533 --
- --------------------------------------------------------------------------------
* Commencement of operations
+ For the years ended 31st December 1996 and 1997, net investment income per
share has been determined based on the weighted average shares outstanding
method.
++ Total return calculated for a period of less than one year is not
annualized.
+ In the absence of the expense reimbursement, for the period ended December
31, 1995 and the year ended December 31, 1996, expenses on an annualized
basis would have represented 4.73% and 6.16%, respectively, of the average
net assets.
ss. For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades on
which a commission is charged. This amount includes commissions paid to
foreign brokers which may materially affect the rate shown. Amounts paid in
foreign currencies have been converted into US dollars using the prevailing
exchange rate on the date of the transaction.
- ------------------------------------ 13 ----------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
GAM ASIAN CAPITAL FUND
For the Periods
12-May-95*
to
1997 1996 31-Dec-95
Class A Class A Class A
PER SHARE OPERATING PERFORMANCE
(for a share outstanding
throughout the period)
Net asset value
Beginning of period $9.83 $9.53 $10.00
----- ----- ------
Income from investment operations
Net investment income (loss) 0.09+ (0.07)+ (0.01)
Net realized and unrealized
gain/(loss) on investments (3.48) 0.38 (0.42)
----- ----- ------
Total from investment operations (3.39) 0.31 (0.43)
----- ----- ------
Less distributions
Dividends from net
investment income (0.02) -- --
Distributions from net realized gains (0.40) (0.01) (0.04)
----- ----- ------
Total distributions (0.42) (0.01) (0.04)
----- ----- ------
Net asset value
End of period $6.02 $9.83 $9.53
===== ===== ======
TOTAL RETURN++
(without deduction of sales load) (35.34%) 3.28% (4.25%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $824 $5,629 $5,560
Ratios to average net assets
Expenses, net of reimbursement+ 1.81% 2.98% 3.11%
Net investment income/(loss) 1.04% (0.75%) (0.17%)
Portfolio turnover rate 68% 86% 17.01%
Average Commission Rate Paid ss. 0.0078 0.0124 --
* Commencement of operations
+ For the years ended 31st December 1996 and 1997, net investment income per
share has been determined based on the weighted average shares outstanding
method.
++ Total return calculated for a period of less than one year is not annualized.
+ In the absence of the expense reimbursement, for the period ended December
31, 1995 and the years ended December 31, 1996 and 1997, expenses on an
annualized basis would have represented 3.95%, 3.58% and 5.44%, respectively,
of the average net assets.
ss.For fiscal years beginning on or after September 1, 1995, a fund is required
to disclose its average commission rate per share for trades on which a
commission is charged. This amount includes commissions paid to foreign
brokers which may materially affect the rate shown. Amounts paid in foreign
currencies have been converted into US dollars using the prevailing exchange
rate on the date of the transaction.
PERFORMANCE INFORMATION
The Funds may advertise performance information representing each Fund's
total return for the periods indicated. Total return includes changes in the net
asset value of each Fund's shares and assumes reinvestment of all dividends and
capital gains distributions. Total return therefore reflects the expenses of
each Fund, but does not reflect any taxes due on dividends or distributions paid
to shareholders. The Funds may advertise total return both before and after
deduction of the sales load.
Past results may not be indicative of future performance. The investment
return and principal value of shares of each Fund will fluctuate so that your
shares, when redeemed, may be worth more or less than their original cost.
- ------------------------------------ 14 ----------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Investment Objectives and Policies and Risk Considerations
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES
Each Fund's investment objective is to seek long-term capital
appreciation. To pursue this goal, each Fund has adopted an investment policy
relating to a particular geographic region in which it intends to invest a
substantial portion of its assets. The policy of each Fund is described below.
Although the Funds generally intend to purchase securities for long-term
investment, each Fund may also engage in short-term trading based upon changes
affecting a particular company, industry, country or region or changes in
general market, economic or political conditions. Generally, each Fund expects
to achieve its objective by investing in equity securities (which include but
are not limited to common and preferred stocks and warrants). However, if it is
determined that the long-term capital appreciation of debt securities may equal
or exceed the return on equity securities, then a Fund may be substantially
invested in debt securities of companies or governments and their agencies and
instrumentalities. Each Fund is not required to maintain any particular
proportion of equity or debt securities in its portfolio. Any dividend or
interest income realized by a Fund on its investments will be incidental to its
goal of long-term capital appreciation.
The investment objective of each Fund and the investment policies set
forth below may be changed by the Board of Directors upon written notice to the
shareholders of the affected Fund(s). If there is a change in objective,
shareholders should consider whether the Fund remains an appropriate investment.
In light of each Fund's investment objective and anticipated portfolio, each
Fund should be considered as a vehicle for diversification and not as a balanced
investment program. There is no assurance that each Fund will achieve its
investment objective.
Each Fund has adopted the following investment policy relating to the
geographic areas in which it may invest. In the case of the GAM Pacific Basin,
GAM Japan Capital, GAM Asian Capital, GAM Europe, GAM North America and GAMerica
Capital Funds, each Fund intends to invest substantially all of its assets in
the region dictated by its investment policy and, under normal market
circumstances, will invest at least 65% of its total assets in securities of
companies or governments in the relevant geographic area.
GAM GLOBAL FUND may invest in securities issued by companies in any
country of the world, including the United States, and will normally invest in
securities issued by companies in the United States, Canada, the United Kingdom,
Continental Europe and the Pacific Basin. Under normal market conditions, GAM
Global Fund will invest in securities of companies in at least three different
countries.
GAM INTERNATIONAL FUND may invest in securities issued by companies in
any country other than the United States and will normally invest in securities
issued by companies in Canada, the United Kingdom, Continental Europe and the
Pacific Basin. Under normal market conditions, GAM International Fund will
invest in securities of companies in at least three foreign countries. For
temporary defensive purposes, GAM International Fund may invest in debt
securities of United States companies and the United States government and its
agencies and instrumentalities.
GAM PACIFIC BASIN FUND may invest primarily in securities of companies
in the Pacific Basin, including Japan, Hong Kong, Singapore, Malaysia, Thailand,
Vietnam, Indonesia, the Philippines, Korea, China, Taiwan, India, Australia and
New Zealand.
GAM JAPAN CAPITAL FUND may invest primarily in securities of companies
in Japan.
GAM ASIAN CAPITAL FUND may invest primarily in securities issued by
companies in Asia other than Japan. Countries in Asia include Hong Kong,
Singapore, Malaysia, Thailand, Vietnam, Indonesia, the Philippines, Korea,
China, Taiwan, India, Myanmar, Pakistan, Bangladesh and Sri Lanka.
GAM EUROPE FUND may invest primarily in securities issued by companies
in Europe, including the United Kingdom, Ireland, France, Germany, Denmark,
Norway, Sweden, Finland, Iceland, Switzerland, Austria, Belgium, Spain,
Portugal, Italy, Greece, Hungary, Poland, the Czech Republic and Slovakia.
- ------------------------------------ 15 ----------------------------------------
<PAGE>
GAM NORTH AMERICA FUND may invest primarily in securities issued by
companies in the United States and Canada.
GAMERICA CAPITAL FUND may invest primarily in securities of companies in
the United States.
A company will be considered to be in or from a particular country for
purposes of the preceding paragraphs if (a) at least 50% of the company's assets
are located in the country or at least 50% of its total revenues are derived
from goods or services produced in the country or sales made in the country; (b)
the principal trading market for the company's securities is in the country; or
(c) the company is incorporated under the laws of the country.
Each Fund will seek investment opportunities in all types of companies,
including smaller companies in the earlier stages of development. In making
investment decisions, each Fund will rely on the advice of its Investment
Adviser(s) and its own judgment rather than on any specific objective criteria.
The debt securities in which each Fund may invest are not required to
have any rating and may include securities of companies in default of interest
or principal payment obligations. None of the Funds may invest more than 5% of
its assets in debt securities which are rated lower than "investment grade" by a
rating service. Debt securities rated in the lowest "investment grade" by a
rating service (e.g., bonds rated BBB by S&P) or lower have speculative
characteristics, and changes in economic or other circumstances are more likely
to lead to a weakened capacity of the issuers of such securities to make
principal or interest payments than issuers of higher grade securities. A
decrease in the rating of debt securities held by a Fund may cause the Fund to
have more than 5% of its assets invested in debt securities which are not
"investment grade". In such a case, the Fund will not be required to sell such
debt securities.
Each Fund may, for temporary defensive purposes, invest in short-term
debt securities of foreign and United States companies, foreign governments and
the United States government, its agencies and instrumentalities, as well as in
money market instruments denominated in United States dollars or a foreign
currency. These money market instruments include negotiable or short-term
deposits with domestic or foreign banks with total assets of at least $50
million; high quality commercial paper; and repurchase agreements maturing
within seven days with domestic or foreign dealers, banks and other financial
institutions deemed to be creditworthy under guidelines approved by the Board of
Directors.
In order to have funds available for redemption and investment
opportunities, each Fund may hold a portion of its portfolio in cash or United
States and foreign money market instruments. At no point in time will more than
35% of each Fund's portfolio be so invested and/or held in cash except when the
Fund is in a temporary defensive posture.
The Funds' portfolio securities are generally purchased on stock
exchanges and in over-the-counter markets in the countries in which the
principal offices of the issuers of such securities are located. The Funds may
also invest in both sponsored and unsponsored American Depositary Receipts
("ADRs") or European Depositary Receipts ("EDRs") representing securities of
foreign companies. These securities may not necessarily be denominated in the
same currency as the securities which they represent. In addition, the
Investment Adviser of each Fund may buy or sell the same security at the same
time on behalf of the Funds and one or more other accounts managed by the
Investment Adviser. The Investment Adviser allocates available investments by
such means as, in its judgement, will result in fair treatment.
- ------------------------------------ 16 ----------------------------------------
<PAGE>
OTHER INVESTMENT POLICIES AND TECHNIQUES
The Funds will also utilize certain sophisticated investment techniques
described below, some of which involve substantial risks. Additional information
about some of the investment techniques described below and the related risks is
contained in the Statement of Additional Information.
OPTIONS AND WARRANTS. Each Fund may invest up to 5% of its net assets in
options on equity or debt securities or securities indices and up to 10% of its
net assets in warrants, including options and warrants traded in
over-the-counter markets. An option on a security gives the owner the right to
acquire ("call option") or dispose of ("put option") the underlying security at
a fixed price (the "strike price") on or before a specified date in the future.
A warrant is equivalent to a call option written by the issuer of the underlying
security.
Each Fund may write covered call options on securities in an amount
equal to not more than 100% of its net assets and secured put options in an
amount equal to not more than 50% of its net assets. A call option written by a
Fund is "covered" if the Fund owns the underlying securities subject to the
option or if the Fund holds a call at the same exercise price, for the same
period and on the same securities as the call written. A put option will be
considered "secured" if a Fund segregates liquid assets having a value equal to
or greater than the exercise price of the option, or if the Fund holds a put at
the same exercise price, for the same period and on the same securities as the
put written.
FUTURES CONTRACTS. Each Fund may invest up to 5% of its net assets in
initial margin or premiums for futures contracts and options on futures
contracts, including stock index futures and financial futures. A commodity
futures contract obligates one party to deliver and the other party to purchase
a specific quantity of a commodity at a fixed price at a specified future date,
time and place. In the case of a financial future, the underlying commodity is a
financial instrument, such as a U.S. Treasury Bond.
No consideration will be paid or received by a Fund upon the purchase or
sale of a futures contract. Initially, a Fund will be required to deposit with a
broker an amount of cash or cash equivalents equal to approximately 5% of the
contract amount. Subsequent payments to and from the broker will be made daily
as the price of the index or securities underlying the futures contract
fluctuates.
An option on a commodity futures contract gives the purchaser the right,
in exchange for the payment of a premium, to assume a position as a purchaser or
a seller in a futures contract at a specified exercise price at any time prior
to the expiration date of the option. The Funds will trade in commodity futures
and options thereon for bona fide hedging purposes and otherwise in accordance
with rules of the Commodity Futures Trading Commission.
FORWARD FOREIGN EXCHANGE CONTRACTS. Since the Funds may invest in
securities denominated in currencies other than the United States dollar,
changes in foreign currency exchange rates may affect the values of portfolio
securities. The rate of exchange between the United States dollar and other
currencies is determined by forces of supply and demand in the foreign exchange
markets. These forces are affected by the international balance of payments and
other economic and financial conditions, government intervention, speculation
and other factors.
The Funds may enter into forward foreign exchange contracts for the
purchase or sale of foreign currency to "lock in" the United States dollar price
of the securities denominated in a foreign currency or the United States dollar
equivalent of interest and dividends to be paid on such securities, or to hedge
against the possibility that the currency of a foreign country in which a Fund
has investments may suffer a decline against the United States dollar, or for
speculative purposes. A forward foreign currency exchange contract obligates one
party to purchase and the other party to sell an agreed amount of a foreign
currency on an agreed date and at an agreed price.
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<PAGE>
The Funds may purchase put and call options on foreign currencies. Put
options convey the right to sell the underlying currency at a price which is
anticipated to be higher than the spot prices of the currency at the time the
option expires. Call options convey the right to buy the underlying currency at
the time the option expires. Each Fund may also write covered call options in an
amount not to exceed the value of the Fund's portfolio securities or other
assets denominated in the relevant currency and secured put options in an amount
equal to 50% of its net assets.
ILLIQUID SECURITIES. Each Fund may invest up to 15% of its net assets in
illiquid securities, including restricted securities or private placements. An
illiquid security is a security that cannot be sold quickly in the ordinary
course of business. The absence of a trading market may adversely affect the
ability of the Funds to sell such illiquid securities promptly and at an
acceptable price, and may also make it more difficult to ascertain a market
value for such securities. Certain securities cannot be sold to the U.S. public
because of their terms or because of SEC regulation. The Investment Advisers may
determine that securities that cannot be sold to the U.S. public but that can be
sold to institutional investors (Rule 144A Securities) or on foreign markets are
liquid. The Investment Adviser will follow guidelines established by the Board
of Directors of the Company in making liquidity determinations for Rule 144A and
other securities.
BORROWING AND LENDING. Each Fund may borrow money from banks for
temporary emergency purposes in an amount not to exceed one-third of its total
assets. Borrowing by a Fund will cause it to incur interest and other expenses.
Borrowing by a Fund, also known as leverage, will also tend to exaggerate the
effect on the net asset value of the Fund's shares of any increase or decrease
in the market value of the Fund's assets.
Each Fund may lend its portfolio securities to institutions deemed
creditworthy pursuant to procedures established by the Board of Directors. No
such loan will be made which would cause the aggregate market value of all
securities lent by a Fund to exceed 15% of the value of the Fund's total assets.
ADJUSTABLE RATE INDEX NOTES. Each Fund may invest in adjustable rate
index notes (ARINs) or similar instruments. An ARIN is a form of promissory note
issued by a brokerage firm or other counterparty which provides that the amount
of principal or interest paid will vary inversely in proportion to changes in
the value of a specified security. Under such an instrument, the Fund will make
a profit if the value of the specified security decreases and will suffer a loss
if the value of the specified security increases. The effect of such an
instrument is equivalent to a short sale of the specified security, except that
the potential loss to the Fund is limited to the amount invested in the ARIN,
whereas in the case of a short sale the short seller is potentially subject to
unlimited risk of loss. The Funds could suffer losses in the event of a default
or insolvency of the brokerage firm or other counterparty issuing the ARIN.
OTHER INVESTMENT ACTIVITIES. It is likely that new investment products
will continue to develop which will combine elements of options, futures
contracts or debt securities with other types of derivative financial products,
such as swaps, caps and floors, or which will otherwise tie payments to be made
or received to the value of specific securities or to existing or new indices.
Swaps involve the exchange by two parties of their respective obligations to pay
or receive a stream of payments. For example, a Fund might exchange floating
interest payments for fixed interest payments, or a series of payments in one
currency for a series of payments in another currency. The purchase of a cap or
floor entitles the purchaser to receive payment on an agreed principal amount
from the seller if a specified index exceeds (in the case of a cap) or falls
below (in the case of a floor) a predetermined interest or exchange rate. A Fund
will not enter into swaps, caps or floors if on a net basis the aggregate
notional principal amount of such agreements exceeds the net assets of the Fund.
The Funds may invest and trade in derivative financial products to the
extent permitted by applicable regulations. Derivative products are frequently
traded on over-the-counter markets and will usually be subject to the
restriction that not more than 15% of the net assets of each Fund may be
invested in illiquid securities. The Funds will purchase or sell derivative
products for hedging purposes only, unless otherwise permitted by applicable
regulations.
- ------------------------------------ 18 ----------------------------------------
<PAGE>
DIVERSIFICATION; INVESTMENT RESTRICTIONS
The Investment Company Act of 1940, as amended, (the "Act") classifies
investment companies as either diversified or non-diversified. The Company
qualifies as a diversified company. Accordingly, each Fund's investments will be
diversified to the extent that, with respect to 75% of its total assets, no more
than 5% of its total assets will be invested in any one issuer, and a Fund will
not acquire more than 10% of the outstanding voting securities of any one
issuer. Each Fund's investments will be selected among different industries,
such that not more than 25% of its total assets will be invested in any one
industry. The preceding limitations will not apply to securities of the United
States government, its agencies or instrumentalities.
Each Fund is subject to certain fundamental investment restrictions and
limitations which are set forth in full in the Statement of Additional
Information. These fundamental policies cannot be changed without approval of a
majority of each Fund's outstanding voting securities. All restrictions, except
the restriction relating to borrowing, shall apply only at the time an
investment is made, and a subsequent change in the value of an investment or of
a Fund's assets shall not result in a violation.
RISK CONSIDERATIONS
INVESTING IN FOREIGN SECURITIES. GAM International, GAM Europe, GAM
Pacific Basin, GAM Asian Capital and GAM Japan Capital Funds will invest
primarily in securities of foreign issuers, and GAM Global, GAM North America,
and GAMerica Capital Funds may invest a portion of their assets in securities of
foreign issuers. Investors should carefully consider the risks involved in
investments in securities of non-U.S. companies and governments. Such risks
include fluctuations in foreign exchange rates, political or economic
instability in the country of issue, and the possible imposition of exchange
controls or other laws or restrictions. Securities prices in non-U.S. markets
are generally subject to different economic, financial, political and social
factors than are the prices of securities in U.S. markets. These factors may
result in either a larger gain or a larger loss than an investment in comparable
U.S. securities.
The Funds may enter into forward foreign exchange contracts in an
attempt to hedge against adverse fluctuations in the relative rates of exchange
between different currencies. However, attempting to hedge the value of a Fund's
portfolio securities against a decline in the value of a currency will not
eliminate fluctuations in the underlying prices of the securities. There can be
no assurance that such hedging attempts will be successful.
There is likely to be less publicly available information concerning
non-U.S. issuers of securities held by the Funds than is available concerning
U.S. companies. Foreign companies are not subject to the same accounting,
auditing and financial reporting standards as are applicable to U.S. companies.
There may be less government supervision and regulation of foreign
broker-dealers, financial institutions and listed companies than exists in the
United States.
Non-U.S. securities exchanges generally have less volume than the New
York Stock Exchange and may be subject to less government supervision and
regulation than those in the United States. Securities of non-U.S. companies may
be less liquid and more volatile than securities of comparable U.S. companies.
Non-U.S. brokerage commissions and custodial fees are generally higher
than those in the United States, and the settlement period for securities
transactions may be longer, in some countries up to 30 days. Dividend and
interest income from non-U.S. securities may be subject to withholding taxes.
GAM Pacific Basin and GAM Asian Capital Funds and, to a lesser extent,
GAM Europe, GAM International and GAM Global Funds may invest a portion of their
assets in securities of issuers in developing countries or emerging markets,
which generally involve greater potential for gain or loss. In comparison to the
United States and other developed countries, developing countries may have
relatively unstable governments, economies based on only a few industries and
securities markets that trade a smaller number of securities.
- ------------------------------------ 19 ----------------------------------------
<PAGE>
GAM Europe, GAM Pacific Basin, GAM Japan Capital, GAM Asian Capital, GAM
North America and GAMerica Capital Funds will invest primarily in specific
geographic areas. An investment in one of these Funds will tend to be affected
by political, economic, fiscal, regulatory or other developments in the relevant
geographic area to a greater extent than investments in the other Funds. For
example, securities markets in Europe may be affected by the efforts of certain
European countries to adopt a single currency, coordinate monetary and fiscal
policies and form a single market and trading block. Investments in the
securities of issuers in Eastern Europe typically would involve greater
potential for gain or loss than investments in securities of issuers in Western
European countries.
The extent of economic development, political stability and market depth
of different countries in the Pacific Basin varies widely. Certain countries in
the Pacific Basin are either comparatively underdeveloped or are in the process
of becoming developed, and investments in the securities of issuers in such
countries typically would involve greater potential for gain or loss than
investments in securities of issuers in developed countries.
A large part of the Japanese economy is dependent on international
trade, so that modifications in international trade barriers and fluctuations in
trade flows may indirectly affect the value of the Fund's shares. Japan and
other countries in Asia are currently in a recession and their stock markets
have experienced substantial declines in recent years. In recent years, Japanese
and other Asian securities markets have also experienced relatively high levels
of volatility.
INVESTING IN SMALLER COMPANIES. Each Fund may invest in all types of
companies, including companies in the earlier stages of development. Investing
in smaller, newer companies generally involves greater risk and potentially
greater reward than investing in larger, more established companies. Smaller,
newer companies often have limited product lines, markets or financial
resources, and they may be dependent upon one or a few key persons for
management. The securities of such companies may be subject to more abrupt or
erratic market movements than securities of larger, more established companies.
FIXED INCOME SECURITIES. The Funds will invest in fixed income
securities which involve interest rate risk. As interest rates rise, bond values
generally fall, and as interest rates fall, bond values generally rise. The
Funds may also purchase debt securities issued by smaller or financially
distressed companies, including securities of companies which may have defaulted
on interest or principal payment obligations. Such debt securities may have very
low ratings or no ratings, may be considered speculative investments, and
involve greater risk of loss of interest and principal.
OPTIONS, FUTURES AND OTHER DERIVATIVES. Trading in options, futures and
other forms of derivatives involves substantial risks. The low margin and
premiums normally required in such trading provide a large amount of leverage. A
relatively small change in the price of a security or index underlying a
derivative can produce a disproportionately larger profit or loss, and a Fund
may gain or lose more than its initial investment. There is no assurance that a
liquid secondary market will exist for options, futures or derivatives purchased
or sold, and a Fund may be required to maintain a position until exercise or
expiration, which could result in losses. There can be no assurance that the
Funds' hedging transactions will be successful. If the Investment Advisers
predict incorrectly, the effect on the value of a Fund's investments may be less
favorable than if the Fund had not engaged in such options and futures trading.
Foreign currency forward contracts, repurchase agreements, ARINS, and
certain other types of futures, options and derivatives are entered into
directly between the Funds and banks, brokerage firms and other investors in
over-the-counter markets rather than through the facilities of any exchange. A
Fund may experience losses or delays in the event of a default or bankruptcy of
a bank, broker-dealer or other investor with which the Fund entered into such an
agreement. Some derivatives may constitute illiquid securities which cannot
readily be resold.
--------------------
For more complete information regarding risks which investors should
consider before making an investment in a Fund, see "Investment Objective and
Policies -- Risk Considerations" in the Statement of Additional Information.
- ------------------------------------ 20 ----------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Shareholder Transactions and Services
- --------------------------------------------------------------------------------
Following is information relevant to purchasing, selling and exchanging
shares of the Funds, as well as a description of the shareholder services and
programs available. All transactions will be processed through the Funds'
transfer agent, Chase Global Funds Services Company (the "Transfer Agent") at
the address and telephone number set forth below under "Shareholder Inquiries".
The price or net asset value ("NAV") per share for each Fund and class,
other than GAM Japan Capital Fund, is determined at the close of regular trading
(normally 4 p.m. New York time) on each day the New York Stock Exchange is open
for business (normally Monday through Friday), GAM Japan Capital Fund's NAV is
calculated at the close of trading on the Tokyo Stock Exchange. NAV per share is
determined by dividing the value of a Fund's securities, cash and other assets
(including accrued interest), less all liabilities (including accrued expenses),
by the number of the Fund's shares outstanding. Purchase, sale and exchange
transactions in shares of the Funds will be processed based on the NAV per share
on the date the transaction request is received in good order and accepted.
Securities traded on foreign exchanges will ordinarily be valued at the
last quoted sale price available before the close of the New York Stock Exchange
(except as described above with respect to securities held by GAM Japan Capital
Fund). If a security is traded on more than one United States or foreign
exchange, the last quoted sales price on the exchange which represents the
primary market for the security will be used. Because some of the Funds'
portfolio securities may be traded on certain weekend days and on days that are
holidays in the United States but not in other countries where trading occurs,
the net asset value of a Fund's portfolio may be significantly affected at times
when a shareholder has no ability to purchase or redeem shares of the Fund.
PURCHASING SHARES
Shares of each Fund are offered on a continuous basis. Orders received
in good order prior to 4:00 p.m. New York time (or placed with a financial
service firm before such time and transmitted by the financial service firm
before the Fund processes that day's share transactions) will be processed based
on that day's closing price or NAV, plus any applicable initial sales charge.
Purchase orders must be accompanied by a completed and signed application, and
are subject to acceptance and collection of full payment. Each Fund and GAM
Services, Inc., the Funds' distributor ("GAM Services"), reserve the right to
reject any purchase order.
The minimum initial investment in each class of the Fund is $5,000 and
subsequent investments must be at least $500, except that the minimum initial
investment for IRA accounts is $2,000 and the minimum subsequent investment is
$500. With regard to custodial and Uniform Gifts to Minor accounts and employee
benefit plans, the Funds, at their discretion, may accept investments without
regard to any minimum amounts which would otherwise be required, if the Funds
had reason to believe that additional investments would increase the investment
in all accounts under such plans. You can initiate any purchase, exchange or
sale of shares through your financial services firm or shares may be purchased
by mail directly from the Transfer Agent by forwarding the Purchase Application
form attached to this Prospectus. Complete the appropriate parts of the Purchase
Application following the instructions set forth on the form and mail it with
your check payable to "GAM Funds, Inc." All purchases by check should be in U.S.
dollars. Payment for shares may also be made by wire transfer after you have
mailed in your Purchase Application. Wire instructions are included in the
Purchase Application. In addition to the Funds, investors may also purchase
directly or by exchange, without charge, shares of the GAM Money Market Account.
The GAM Money Market Account is offered through GAM Services, but is not a
series of the Company. Any contingent deferred sales charge ("CDSC") applicable
to the exchanged shares will apply to redemption of shares of the GAM Money
Market Account, and the time period used for computing the applicable CDSC will
include the time of the investment in the GAM Money Market Account.
- ------------------------------------ 21 ----------------------------------------
<PAGE>
Each Fund offers Class A shares. GAM International, GAM Global and GAM
Pacific Basin Funds offer Class D shares. GAM International, GAM Global, GAM
Pacific Basin, GAM Europe, GAM Japan Capital, GAMerica Capital and GAM North
America Funds offer Class B and Class C shares. Each class has its own cost
structure, allowing investors to choose the one that best meets their
requirements. See "Selecting a Particular Class." Investors should consult their
financial services firm to assist them with this decision. Share purchases and
other transactions are electronically recorded (book-entry shares). The Funds do
not generally issue certificates for shares purchased.
CLASS A SHARES
Class A shares are offered at net asset value plus an initial sales
charge as set forth below, unless the purchase qualifies for a complete waiver
of the charge. Large order purchases and purchases by eligible employee
retirement plans may be made without a sales charge; however, such purchases may
be subject to a contingent deferred sales charge. Class A shares are also
subject to an ongoing fee of 0.30% annually of the average daily net assets of
each Fund represented by Class A shares pursuant to the Class A Share Plan of
Distribution adopted by the Funds. (See "Management of the Funds -- The
Distributor".)
AMOUNT
REALLOWED
SALES LOAD SALES LOAD TO DEALERS
(AS % OF (AS % OF NET (AS % OF
PURCHASE AMOUNT OFFERING PRICE) AMOUNT INVESTED) OFFERING PRICE)
Up to $100,000 5.00% 5.26% 4.0%
$100,000- $299,999 4.0% 4.17% 3.0%
$300,000-$599,999 3.0% 3.09% 2.0%
$600,000-$999,999 2.0% 2.04% 1.0%
$1,000,000 and over 0% See Large Order
Purchases Below
CLASS B SHARES
Class B shares are offered at net asset value without an initial sales
charge. The maximum purchase for Class B shares is $300,000. Class B shares are
subject to a CDSC which scales down from 5.0% to 0%; for greater detail, see the
Contingent Deferred Sales Charge Alternative section which follows. Class B
shares are also subject to an ongoing fee of 1.0% annually of the average daily
net assets of each Fund represented by Class B shares pursuant to the Class B
Share Service and Distribution Plan adopted by the Funds. (See "Management of
the Funds -- The Distributor".)
CLASS C SHARES
Class C shares are offered at net asset value without an initial sales
charge. The maximum purchase for Class C shares is $1,000,000. Class C shares
are subject to a CDSC of 1.00% if redeemed within one year after purchase; for
greater detail see the Contingent Deferred Sales Charge Alternative section
which follows. Class C shares are also subject to an ongoing fee of 1.0%
annually of the average daily net assets of each Fund represented by Class C
shares pursuant to the Class C Share Service and Distribution Plan adopted by
the Funds. (See "Management of the Funds -- The Distributor".)
CLASS D SHARES
Class D shares are offered at net asset value plus an initial sales
charge which is lower than the sales charge imposed on Class A shares. Class D
shares are also subject to an ongoing fee of 0.50% annually of the average daily
net assets of each Fund represented by Class D shares pursuant to the Class D
Share Plan of Distribution adopted by the Funds. (See "Management of the Funds
- -- The Distributor".)
- ------------------------------------ 22 ----------------------------------------
<PAGE>
AMOUNT
REALLOWED
SALES LOAD SALES LOAD TO DEALERS
(AS % OF (AS % OF NET (AS % OF
PURCHASE AMOUNT OFFERING PRICE) AMOUNT INVESTED) OFFERING PRICE)
Up to $100,000 3.50% 3.63% 2.5%
$100,000- $299,999 2.5% 2.56% 1.5%
$300,000-$599,999 2.0% 2.04% 1.0%
$600,000-$999,999 1.5% 1.52% 1.0%
$1,000,000 and over* 0%
*Purchases of $1 million or more should be for Class A shares. Please consult
your financial services firm.
SELECTING A PARTICULAR CLASS
In deciding which class of Fund shares to purchase, investors should
consider the following factors, as well as any other relevant facts and
circumstances:
The decision as to which class of shares is more beneficial to each
investor depends on the amount and intended length of his or her investment.
Investors who prefer an initial sales charge alternative may elect to purchase
Class A or Class D shares. Investors qualifying for significantly reduced or, in
the case of purchases of $1 million or more, no initial sales charges may find
Class A or Class D shares particularly attractive because similar sales charge
reductions are not available with respect to Class B or Class C shares.
Moreover, Class A and Class D shares are subject to lower ongoing expenses than
are Class B or Class C shares over the term of the investment. Class A shares
generally have a higher initial front-end sales charge than Class D shares, but
are subject to lower ongoing expenses. As an alternative, Class B and Class C
shares are sold without any initial sales charge, so the entire purchase price
is immediately invested in the Fund. Any investment return on these additional
investment amounts may partially or wholly offset the higher annual expenses of
these Classes. Because a Fund's future return cannot be predicted, however,
there can be no assurance that this would be the case.
Finally, each investor should consider the effect of the CDSC period and
any conversion rights of the Classes in the context of his or her own investment
time frame. For example, although Class C shares are subject to a significantly
lower CDSC upon redemptions, they do not, unlike Class B shares, convert into
Class A shares after approximately eight years, and, therefore, are subject to
an ongoing 12b-1 fee of 1.0% (rather than the 0.30% fee applicable to Class A
shares) for an indefinite period of time. Thus, Class B shares may be more
effective than Class C shares to investors with longer term investment outlooks.
Other investors, however, may elect to purchase Class C shares if, for example,
they determine that they do not wish to be subject to a front-end sales charge
and they are uncertain as to the length of time they intend to hold their
shares.
Sales personnel may receive different compensation for selling each
class of shares. Investors should understand that the purpose of a CDSC is the
same as that of the initial sales charge in that the sales charges applicable to
each class provide for the financing of the distribution of shares of that
class. SALES CHARGE REDUCTIONS AND WAIVERS
REDUCTIONS. Certain purchases may qualify for reduced or eliminated
sales charges. Investors qualifying for a complete waiver of the sales charge
should purchase Class A shares. Please refer to the Purchase Application or
consult your financial services firm to take advantage of these purchase
options.
RIGHTS OF ACCUMULATION. You may add the value of any shares of the same
class already owned to the amount of your next investment in that class for
purposes of calculating the sales charge.
STATEMENT OF INTENTION. You may purchase shares of the same Class
subject to a sales load over a 13-month period and receive the same sales charge
as if all shares had been purchased at once.
- ------------------------------------ 23 ----------------------------------------
<PAGE>
COMBINATION PRIVILEGE. You may combine shares of the same class of more
than one Fund, and individuals may include shares purchased for themselves,
their spouse and children under the age of 21 for purposes of calculating the
sales charge.
WAIVERS OF FRONT-END SALES CHARGES. Shares may be offered without the
front-end sales charge to active and retired Fund directors and other persons
affiliated with the Fund or GAM Services or its affiliates, registered
representatives of broker-dealers having sales agreements with GAM Services, and
spouses and minor children of the foregoing persons or trusts; companies
exchanging shares with or selling assets to a Fund pursuant to a merger,
acquisition or exchange offer; persons investing the proceeds of a redemption of
shares of any other investment company managed or sponsored by an affiliate of
GAM Services; accounts managed by an affiliate of GAM Services; registered
investment advisors and accounts over which they have discretionary authority;
organizations providing administrative services with respect to persons in the
preceding category; registered investment advisors and other financial services
firms that purchase shares for the benefit of their clients participating in a
"wrap account" or similar program under which clients pay a fee to the
investment advisor or other firm; organizations described in Section 501(c)(3)
of the Internal Revenue Code of 1986; trust companies, bank trust departments;
retirement, deferred compensation plans and trusts used to fund those plans;
charitable remainder trusts; certain tax qualified plans of administrators who
have entered into a service agreement with GAM Services or the Fund; and other
categories of investors, at the discretion of the Board, as disclosed in the
then current Prospectus of the Funds.
LARGE ORDERS PURCHASES AND PURCHASES BY ELIGIBLE PLANS. Purchase orders
of $1 million or more and all purchase orders by employee retirement plans with
more than 100 participants will not be subject to the front-end sales charge.
GAM Services may advance to dealers a commission from its own resources in
connection with these purchases based upon cumulative sales in each year or
portion thereof except when such orders are received from other registered
investment companies or investment funds. GAM Services will pay 1% of sales up
to $2 million; 0.80% on sales of $2 million up to $3 million, 0.50% on sales of
$3 million up to $5 million, and 0.25% on sales of $5 million and above. Those
purchases for which GAM Services pays a commission (and the payment of which has
not been waived by the dealer) are subject to a 1% contingent deferred sales
charge ("CDSC") on any shares sold within 18 months of purchase. In the case of
eligible retirement plans, the CDSC will apply to redemptions at the plan level
only. 12b-1 fees earned on assets representing large order purchases or
purchases by eligible plans will be retained by GAM Services for one year after
the purchase is effected in order to reimburse it for a portion of the dealer
payment.
The CDSC is based on the lesser of the original purchase cost or the
current market value of the shares being sold, and is not charged on shares
acquired by reinvesting your dividends. To keep the CDSC as low as possible,
each time an investor places a request to sell shares, the Fund will first sell
any shares in your account that are not subject to a CDSC. See "Contingent
Deferred Sales Charge -- CDSC Waivers."
The CDSC will be waived on certain redemptions as described below under
"Contingent Deferred Sales Charge--CDSC Waivers."
SELLING SHARES
Shares may be sold on any day the New York Stock Exchange is open,
either through your financial services firm or directly to the Funds' Transfer
Agent. Financial services firms must receive requests before 4:00 p.m., New York
time, and are responsible for furnishing all necessary documentation to the
Transfer Agent.
You will receive the NAV per share on the date your request is received
in good order for processing, less any applicable CDSC.
Requests made directly to the Transfer Agent must be made in writing
unless you have elected telephone redemption privileges. (See "Telephone and
Facsimile Privileges" below.) The written request, signed by the
- ------------------------------------ 24 ----------------------------------------
<PAGE>
registered account holder(s), must be addressed and mailed to the Transfer
Agent, indicating the number of shares or dollar amount to be sold. If the
redemption proceeds are (i) $50,000 or more, (ii) to be paid to someone other
than the account holder of record (regardless of the amount) or (iii) to be
mailed to other than the address or record (regardless of the amount), your
signature(s) must be guaranteed by a bank, member firm of a national stock
exchange or another eligible guarantor institution. A notary public is not
acceptable. If you hold certificates representing your shares, the certificate,
endorsed for transfer, must accompany your request. Additional documentation is
required for sales by corporations, agents, fiduciaries, surviving joint owners
and individual retirement account holders. To prevent delays in processing these
requests, they must be submitted in good order. You should contact the Transfer
Agent to insure that your instructions are complete.
When you place a request to sell shares for which the purchase money has
not yet been collected, the request will be executed in a timely fashion, but
the Fund will not release the proceeds to you until your purchase payment
clears, which may take up to ten days after the purchase. In unusual
circumstances, a Fund may temporarily suspend the processing of redemption
requests, or may postpone payment of proceeds for up to three business days or
longer, as permitted by law. The value of your shares at the time of sale may be
more or less than you paid for them. The sale of shares may be a taxable event
to you. (See "Dividends and Tax Matters".)
INVOLUNTARY REDEMPTIONS. Except in the case of retirement accounts and
accounts maintained by administrators for retirement plans, if your account
value falls below $1,000 due to withdrawals other than by use of the systematic
withdrawal program described below, you may be asked to purchase more shares
within 30 days. If your account is not brought back to the minimum account size,
the Fund may close the account and mail the proceeds to the registered address
for the account. Your account will not be closed if the value has decreased due
to Fund performance or the payment of sales charges. No CDSC will be imposed on
accounts closed involuntarily.
REINSTATEMENT PRIVILEGE. If you sell shares of a Fund, you may reinvest
in your existing account (or a new account reopened under the same registration)
some or all of the proceeds in the same class of shares of any Fund within 60
days without a sales charge. If you paid a CDSC at the time of sale, you will be
credited with the portion of the CDSC paid in respect of the reinvested
proceeds.
CONTINGENT DEFERRED SALES CHARGE
CLASS A SHARES
Purchase orders of $1 million or more and all purchase orders by
employee retirement plans with more than 100 participants will not be subject to
the front-end sales charge. Those purchases for which GAM Services pays a
commission (and the payment of which has not been waived by the dealer) are
subject to a 1% contingent deferred sales charge ("CDSC") on any shares sold
within 18 months of purchase. In the case of Class A shares which have been
exchanged for Class A shares of the GAM Money Market Account, the period of time
the shares are held in the GAM Money Market Account is included in the holding
period for determining the CDSC.
CLASS B SHARES
Class B shares are sold at net asset value without an initial sales
charge, so that the full amount of an investor's purchase payment may be
immediately invested in the Fund. A CDSC, however, will be imposed on most Class
B shares redeemed within six years after purchase. The CDSC will be imposed on
any redemption of shares if after such redemption the aggregate current value of
a Class B account with the Fund falls below the aggregate amount of the
investor's purchase payments for Class B shares made during the six years
preceding the redemption. In addition, Class B shares are subject to an ongoing
12b-1 fee of 1% annually of the average daily net assets of each Fund
represented by Class B shares.
Except as noted below, Class B shares of the Fund which are held more
than six years after purchase (calculated from the last day of the month in
which the shares were purchased) will not be subject to any CDSC upon
redemption. In the case of Class B shares which have been exchanged for Class B
shares of the GAM
- ------------------------------------ 25 ----------------------------------------
<PAGE>
Money Market Account, the period of time the shares are held in the GAM Money
Market Account is included in the holding period for determining the CDSC.
Shares redeemed within six years of purchase may, however, be subject to a CDSC
which will be a percentage of the dollar amount of shares redeemed and will be
assessed on an amount equal to the lesser of the current market value or the
cost of the shares being redeemed. The size of the percentage will depend upon
how long the shares have been held, as set forth in the following table:
Year Since Purchase CDSC as a Percentage
Payment Made of Amount Redeemed
------------------- ------------------
First .....................................5.0%
Second ....................................4.0%
Third .....................................3.0%
Fourth ....................................3.0%
Fifth .....................................2.0%
Sixth .....................................1.0%
Seventh and thereafter ....................None
CONVERSION TO CLASS A SHARES. Class B shares will convert automatically
into Class A shares, based on the relative net asset values of the shares of the
two Classes on the conversion date, which will be approximately eight (8) years
after the date of the original purchase. In the case of Class B shares
previously exchanged (see "Exchanges"), the period of time the shares were held
in the GAM Money Market Account is included in the holding period for
conversion.
Effectiveness of the conversion feature is subject to the continuing
availability of a ruling of the Internal Revenue Service or an opinion of
counsel that (i) the conversion of shares does not constitute a taxable event
under the Internal Revenue Code, (ii) Class A shares received on conversion will
have a basis equal to the shareholder's basis in the converted Class B shares
immediately prior to the conversion, and (iii) Class A shares received on
conversion will have a holding period that includes the holding period of the
converted Class B shares. The conversion feature may be suspended if the ruling
or opinion is no longer available. In such event, Class B shares would continue
to be subject to Class B 12b-1 fees.
CLASS C SHARES
Class C shares are sold at net asset value without an initial sales
charge so that the full amount of an investor's purchase payment may be
immediately invested in the Fund. A CDSC of 1%, however, will be imposed on most
Class C shares redeemed within one year after purchase. The CDSC will be imposed
on any redemption of shares if after such redemption the aggregate current value
of a Class C account with the Fund falls below the aggregate amount of the
investor's purchase payments for Class C shares made during the one year
preceding the redemption. In addition, Class C shares are subject to an ongoing
12b-1 fee of 1% annually of the average daily net assets of each Fund
represented by Class C shares.
Except as noted below, Class C shares of the Fund which are held for one
year or more after purchase (calculated from the last day of the month in which
the shares were purchased) will not be subject to any CDSC upon redemption.
Shares redeemed earlier than one year after purchase may, however, be subject to
a CDSC which will be a percentage of the dollar amount of shares redeemed and
will be assessed on an amount equal to the lesser of the current market value of
the cost of the shares being redeemed. In the case of Class C shares which have
been exchanged for Class C shares of the GAM Money Market Account, the period of
time the shares are held in the GAM Money Market Account is included in the
holding period for determining the CDSC.
CDSC WAIVERS
A CDSC will not be imposed on (i) any amount which represents an
increase in value of shares purchased within the applicable period (18 months
for Class A, 6 years for Class B, one year for Class C) preceding the
redemption; (ii) the current net asset value of shares purchased prior to the
applicable period; or (iii) the current
- ------------------------------------ 26 ----------------------------------------
<PAGE>
net asset value of shares purchased through reinvestment of dividends or
distributions and/or shares acquired in exchange for shares of other GAM Funds.
Moreover, in determining whether a CDSC is applicable it will be assumed that
amounts described in (i), (ii) and (iii) above (in that order) are redeemed
first.
In addition, the CDSC, if otherwise applicable, will be waived in the
case of:
(1) redemptions of shares held at the time a shareholder dies or becomes
disabled, only if the shares are: (a) registered either in the name of an
individual shareholder (not a trust), or in the names of such shareholder and
his or her spouse as joint tenants with right of survivorship; or (b) held in a
qualified corporate or self-employed retirement plan, Individual Retirement
Account ("IRA") or Custodial Account under Section 403(b)(7) of the Internal
Revenue Code ("403(b) Custodial Account"), provided in either case that the
redemption is requested within one year of the death or initial determination of
disability;
(2) redemptions in connection with the following retirement plan
distributions: (a) lump-sum or other distributions from a qualified corporate or
self-employed retirement plan following retirement or attainment of age 591/2;
(b) required distributions from an IRA or 403(b) Custodial Account following
attainment of age 591/2; or (c) a tax-free return of an excess contribution to
an IRA;
(3) all redemptions of shares held for the benefit of a participant in a
Qualified Retirement Plan which offers investment companies managed by an
affiliate of GAM Services ("Eligible Plan"), provided that either: (a) the plan
continues to be an Eligible Plan after the redemption; or (b) the redemption is
in connection with the complete termination of the plan involving the
distribution of all plan assets to participants;
(4) redemptions under the Systematic Withdrawal Plan, subject to a
maximum of 10% per year of the account balance, and further subject to a minimum
balance of $10,000;
(5) in connection with exchanges for shares of the same class of another
GAM Fund.
With reference to (1) above, for the purpose of determining disability,
the Distributor utilizes the definition of disability contained in Section
72(m)(7) of the Internal Revenue Code, which relates to the inability to engage
in gainful employment. With reference to (2) above, the term "distribution" does
not encompass direct transfer of IRA, 403(b) Custodial Accounts or retirement
plan assets to a successor custodian or trustee. All waivers will be granted
only following receipt by the Distributor of confirmation of the shareholder's
entitlement.
EXCHANGES
Shares of one Fund may be exchanged for shares of the same class of
another Fund, including the GAM Money Market Account, generally without paying
any sales charge. The GAM Money Market Account does not offer Class D shares.
However, Class D shares of the Fund may be exchanged for Class A shares of the
GAM Money Market Account. Upon an exchange from the GAM Money Market Account
into a Fund, investors who purchased the GAM Money Market Account without the
imposition of a sales load must pay the initial sales charge imposed by the Fund
into which they exchange. Shares subject to a CDSC will be subject to the same
CDSC after the exchange, which will continue to age from the original purchase
date. A Fund may refuse any exchange order, and may change or cancel the
exchange privilege at any time upon 60 days' notice to shareholders. The
Exchange Privilege is not intended as a vehicle for short-term trading.
Excessive exchange activity may interfere with portfolio management and have an
adverse effect on shareholders. In order to limit excessive exchange activity
and in other circumstances where GAM or the Directors believe doing so would be
in the best interest of the Funds, each Fund reserves the right to revise or
terminate the Exchange Privilege, limit the amount or number of exchanges or
reject any exchange. Additionally, each Fund reserves the right to refuse any
order for the purchase of shares. Shareholders would be notified of any such
action to the extent required by law.
Unless an investor has elected the telephone or facsimile exchange
privilege, investors must request in writing the sale of all or a portion of
their current investment and a simultaneous purchase into a separate Fund(s),
- ------------------------------------ 27 ----------------------------------------
<PAGE>
which the investor must indicate on a new application form. An executed request
to sell and a Purchase Application must be mailed to the Transfer Agent for
processing. An exchange out of a Fund is treated as a sale and may result in a
gain or loss for tax purposes. (See "Dividends and Tax Matters".)
OTHER ACCOUNT SERVICES
DIVIDEND REINVESTMENT. Investors may opt to have their dividends
reinvested in additional shares of the same Fund and class. Unless you direct
otherwise, your distributions will be automatically reinvested. You can choose
on the Purchase Application to have a check for your dividends mailed to your
registered address. However, if your dividend checks are returned to the Fund
because they are not deliverable after two attempts, your dividends will
automatically be reinvested thereafter in additional shares of the same Fund and
class.
SYSTEMATIC WITHDRAWAL PLAN. This program allows investors to sell their
shares at regular periodic intervals and direct payment of the proceeds to
themselves or to a third party subject to a maximum of 10% per year of the
account balance. To initiate this option, you must have at least $10,000 worth
of shares in your account. You may elect this option by providing the
information required in the appropriate section of the Purchase Application.
Withdrawals concurrent with the purchase of shares of the Funds will be
disadvantageous because of the payment of duplicative sales loads, if
applicable. For this reason, additional purchases of Fund shares are discouraged
when participating in this program.
AUTOMATIC INVESTMENT PLAN. You may make additional purchases in
incremental amounts of $100 or more through an automatic investment program.
Monthly or quarterly investments will be debited automatically at your
instruction from your account at a financial institution. To enroll in this
program, please complete the appropriate sections of the Purchase Application or
contact the Transfer Agent. You may terminate the program at any time by written
notice to the Transfer Agent. Termination will become effective within 30 days
after receipt of your request. The Fund may immediately terminate your
participation in the event that any item is unpaid by your financial
institution.
TELEPHONE AND FACSIMILE PRIVILEGES. Telephone and facsimile redemption
and exchange privileges are available and can be initiated by properly
completing the appropriate sections of the Purchase Application or contacting
the Transfer Agent. For your protection, telephone requests may be recorded in
order to verify their accuracy. In addition, the Transfer Agent has procedures
in place to verify the identity of the caller. As long as the Fund and the
Transfer Agent follow instructions communicated by telephone that were
reasonably believed to be genuine at the time of their receipt, neither they nor
any of their affiliates will be liable for any loss to the account holder caused
by an unauthorized transaction. Proceeds of telephone and facsimile redemptions
will only be mailed to your registered address or sent by wire transfer to an
account designated in advance.
SHAREHOLDER INQUIRIES. Please contact your financial representative for
further instructions and assistance with your investment, or contact the
Transfer Agent at the following address or telephone numbers:
Chase Global Funds Services Company
73 Tremont Street
Boston, MA 02108
(800) 426-4685
(617) 557-8000 ext. 6610
Facsimile: (617) 557-8635
DIVIDENDS AND TAX MATTERS
So long as each Fund meets the requirements for being a tax-qualified
regulated investment company it pays no federal income tax on the earnings it
distributes to shareholders. Each Fund intends annually to pay a dividend
representing its entire net investment income and to distribute all its realized
net capital gains. In so doing, the Fund will avoid the imposition of any excise
taxes. Dividends, whether reinvested or taken as cash, are generally taxable.
Dividends from long-term capital gains are taxable as capital gains; dividends
from other sources are generally taxable as ordinary income.
- ------------------------------------ 28 ----------------------------------------
<PAGE>
After a Fund makes a distribution to shareholders, the value of each
outstanding share of the Fund will decrease by the amount of the distribution.
If a shareholder purchases shares immediately before the record date of the
distribution, the shareholder will pay the full price for the shares and then
receive some portion of the price back as a taxable dividend or capital gain
distribution. The Form 1099 DIV and Tax Notice that is mailed to you every
January details your distributions and their federal tax category.
Normally, any sale or exchange of shares of a Fund will be a taxable
event. Depending on the purchase price and the sale price of the shares you sell
or exchange, you may have a gain or a loss on the transaction. You should verify
your tax liability with your tax professional. Please consult the Statement of
Additional Information for a description of certain other tax consequences to
shareholders.
- --------------------------------------------------------------------------------
Management of the Funds
- --------------------------------------------------------------------------------
DIRECTORS AND OFFICERS
The business of the Funds is supervised by the Board of Directors, who
may exercise all powers not required by statute, the Articles of Incorporation
or the By-Laws to be exercised by the shareholders. When appropriate, the Board
of Directors will consider separately matters relating to each Fund or to any
class of shares of a Fund. The Board elects the officers of the Company and
retains various companies to carry out the Fund's operations, including the
investment advisers, custodian, administrator and transfer agent.
INVESTMENT ADVISERS
Each Fund is advised by GAM International Management Limited ("GAM"), a
corporation organized in 1984 under the laws of the United Kingdom, with its
principal offices located at 12 St. James Place, London SW1A 1NX England. Fayez
Sarofim & Co. ("Sarofim"), a Texas corporation organized in 1958 with offices at
Two Houston Center, Houston, TX 77010, serves as co-investment adviser to GAM
North America Fund. The individuals primarily responsible for the day-to-day
management of each Fund's portfolio are set forth below.
GAM GLOBAL AND GAM INTERNATIONAL FUNDS. John R. Horseman, Investment
Director, joined GAM initially as a member of the Asian team based in Hong Kong.
He commenced management of GAM International and GAM Global Funds on April 20,
1990 after moving to the London office. He is now responsible for a number of
GAM's other global and international funds, including the offshore fund, GAM
Universal US$ Inc.
GAM PACIFIC BASIN FUND. Michael S. Bunker, Investment Director, has
overall responsibility for Asian investment policy. He has over 20 years'
investment experience, primarily in Asian markets. He commenced management of
GAM Pacific Basin Fund on May 6, 1987. Mr. Bunker also manages the offshore fund
GAM Pacific Inc. He is now based in London after having lived in Hong Kong for
three years.
GAM JAPAN CAPITAL FUND. Paul S. Kirkby, Investment Director, is
responsible for investment in the Japanese market. Prior to joining GAM in 1985
as a Senior Fund Manager in Hong Kong, he was an investment analyst with New
Japan Securities Co. Ltd in Tokyo. He commenced management of GAM Japan Capital
Fund on July 1, 1994. Mr. Kirkby also manages the offshore fund GAM Japan Inc.
Mr. Kirkby is now based in London having lived in Hong Kong for seven years.
GAM ASIAN CAPITAL FUND. John Mytton is an Investment Director
responsible for Asian Markets excluding Japan. Prior to joining GAM in 1995, he
was Director of Swiss Bank Corporation International Finance (Asia). He
commenced management of the GAM Asian Capital Fund on April 1, 1998. Mr. Mytton
is based in Hong Kong.
GAM EUROPE FUND. John Bennett, Investment Director, is responsible for
European markets. Prior to joining GAM in 1993, he was a Senior Fund Manager at
Ivory & Sime, responsible for Continental European
- ------------------------------------ 29 ----------------------------------------
<PAGE>
equity portfolios. He commenced management of GAM Europe Fund on January 1,
1993. Mr. Bennett also manages the offshore fund GAM Pan European Inc. He is
based in Edinburgh.
GAM NORTH AMERICA FUND. Fayez Sarofim founded Fayez Sarofim & Co in 1958
and is the majority shareholder, President and Chairman of the Board. The firm,
which serves as co-investment adviser of GAM North America, currently manages
aggregate assets of approximately $52 billion under the supervision of Mr.
Sarofim. Mr. Sarofim is also a director of Allegheny Teledyne, Inc., Argonaut
Group, Unitrin, Inc., Imperial Holly Corp. and EXOR Group. He commenced
management of GAM North America Fund on June 29, 1990. Mr. Sarofim also manages
the offshore fund GAM US Inc.
GAMERICA CAPITAL FUND. Gordon Grender, Director, has been associated
with the GAM group since 1983. He has been actively involved in fund management
in North American stock markets since 1974. He commenced management of GAMerica
Capital Fund on May 12, 1995. Mr. Grender also manages GAMerica Inc., an
offshore fund with similar investment objectives.
GAM is an indirect subsidiary of Global Asset Management Ltd., which
itself is ultimately controlled, as to approximately 70%, by Lorelock, S.A.,
which itself is controlled by a discretionary trust of which Mr. de Botton,
President and Director of the Company, may be a potential beneficiary and, as to
approximately 30%, by St. James's Place Capital plc (a financial services
company organized under the laws of and based in the United Kingdom). Global
Asset Management Ltd., directly or indirectly through its subsidiaries, manages
domestic and foreign mutual funds and managed accounts with aggregate assets of
approximately $12 billion.
Subject to the direction and general supervision of the Board of
Directors, GAM furnishes the Funds with investment research and advice and makes
recommendations with respect to the Funds' purchases and sales of portfolio
securities and brokerage allocation, and both GAM and Sarofim provide such
services with respect to GAM North America Fund. As compensation for such
services, each Fund except GAM North America Fund pays GAM the equivalent to
1.0% per annum of the Fund's average daily net assets. GAM North America Fund
pays a fee equal to 0.50% of its average daily net assets to each of GAM and
Sarofim, representing an aggregate fee equal to 1.0% of its average daily net
assets.
The Funds' expense ratios may be higher than those of most registered
investment companies since the cost of maintaining custody of foreign securities
is higher than those for most domestic funds and the rate of the advisory fee
paid by each Fund exceeds that of most registered investment companies. The
Funds pay for all expenses of their operations.
DISTRIBUTOR AND SALES AND SERVICE COMPENSATION
GAM Services Inc., an affiliate of GAM with its principal offices
located at 135 East 57th Street, New York, New York 10022, serves as distributor
and principal underwriter of the Funds' shares. As such, GAM Services
compensates financial services firms which sell shares of the Funds pursuant to
agreements with GAM Services. Compensation payments originate from sales charges
paid by shareholders at the time of purchase and from 12b-1 fees paid out of
Fund assets.
Initial sales charges are deducted from payment for shares at the time
of investment and reallowed to financial services firms as set forth in the
table under "Purchase of Shares." These firms typically pass on a portion of
this selling compensation to their financial representatives who sell shares of
the Funds and provide personal account services to Fund shareholders.
12b-1 fees vary according to the 12b-1 Plan adopted by each Fund for
each class of shares. The Funds pay 12b-1 fees equal to 0.30% annually of the
average daily net assets represented by Class A shares. Of this amount, GAM
Services retains 0.05% annually and a service fee of 0.25% is reallowed to
financial services firms. Funds offering Class B shares pay 1.00% annually of
the average daily net assets represented by B shares. The Funds offering
- ------------------------------------ 30 ----------------------------------------
<PAGE>
Class C shares pay 1.00% annually of the average daily net assets represented by
C shares. Funds offering Class D shares pay 12b-1 fees equal to 0.50% annually
of those Funds' net assets represented by Class D shares. GAM Services reallows
the entire Class D share 12b-1 fee to financial services firms. In the case of
Class A, Class B, Class C and Class D share accounts which are not assigned to a
financial services firm, GAM Services retains the entire fee. Distribution fees
may be used to pay sales and service compensation to financial services firms
and to defray other distribution related expenses enumerated in the 12b-1 Plans.
Should the fees collected under the Plans exceed the expenses of GAM Services in
any year, GAM Services would realize a profit.
GAM Services, as distributor for the GAM Money Market Account, collects
a fee paid in part by the GAM Money Market Account pursuant to distribution and
shareholder service arrangements offered by The Reserve Funds and their
principal underwriter.
GAM Services or the Funds may also contract with banks, trust companies,
broker-dealers or other financial organizations to act as shareholder servicing
agents to provide administrative services for the Funds, such as processing
purchase and redemption transactions, transmitting and receiving funds for the
purchase and sale of shares in the Funds, answering routine inquiries regarding
the Funds, furnishing monthly and year-end statements and confirmations of
purchases and sales of shares, transmitting periodic reports, updated
prospectuses, proxy statements and other communications to shareholders, and
providing other services as agreed from time to time. For these services, each
Fund pays fees to shareholder servicing agents which may vary depending upon the
services provided, but do not exceed an annual rate of 0.25% of the daily net
asset value of the shares of a Fund owned by shareholders with whom the
shareholder servicing agent has a servicing relationship.
CUSTODIAN AND ADMINISTRATOR
Brown Brothers Harriman & Co., 40 Water Street, Boston, Massachusetts
02109, serves as custodian of the Funds' securities and cash and as their
administrator. Brown Brothers employs subcustodians for the purpose of providing
custodial services for the Funds' foreign assets held outside the United States.
TRANSFER AGENT; SHAREHOLDER SERVICING AGENTS
Chase Global Fund Services Company, P.O. Box 2798, Boston, Massachusetts
02208 (the "Transfer Agent") serves as shareholder service agent,
dividend-disbursing agent, transfer agent and registrar for the Funds. Pursuant
to an agreement with GAM Services, the Transfer Agent also provides information
to representatives of financial services companies. As referenced above, the
Funds and GAM Services also engage and compensate other entities for serving as
shareholder servicing and subaccounting agents for the benefit of discrete
groups of Fund shareholders.
- --------------------------------------------------------------------------------
Description of Shares
- --------------------------------------------------------------------------------
GAM Funds, Inc., a Maryland corporation, was organized on May 7, 1984.
The Company has eight series of common stock outstanding, each of which may be
divided into four classes of shares, Class A shares, Class B, Class C and Class
D shares. The four classes of shares of a series represent interests in the same
portfolio of investments, have the same rights, and are generally identical in
all respects, except that each class bears its separate distribution and certain
class expenses and has exclusive voting rights with respect to any matter on
which a separate vote of any class is required by the Act or Maryland law. The
net income attributable to each class and dividends payable on the shares of
each class will be reduced by the amount of distribution fees and other expenses
of each class. Class D shares bear higher 12b-1 fees than Class A shares, which
will cause the Class D shares to pay lower dividends than the Class A shares.
Class B and Class C shares pay higher 12b-1 fees than Class A and Class D
shares, which will cause the Class B and Class C shares to pay lower dividends
than the Class A and Class D shares. The Directors, in the exercise of their
fiduciary duties under the Act and Maryland law, will seek to ensure that no
conflicts arise among the classes of shares of a Fund.
- ------------------------------------ 31 ----------------------------------------
<PAGE>
Each share outstanding is entitled to share equally in dividends and
other distributions and in the net assets of the respective series Fund on
liquidation. Shares are fully paid and nonassessable when issued, freely
transferable, have no pre-emptive, subscription or conversion rights and are
redeemable and subject to redemption under certain conditions described above.
Each share outstanding entitles the holder to one vote. If a Fund is
separately affected by a matter requiring a vote, the shareholders of each such
Fund shall vote separately. The Company is not required to hold annual meetings
of shareholders, although special meetings will be held for purposes such as
electing or removing directors, changing fundamental policies, or approving an
investment advisory agreement. Shareholders will be assisted in communicating
with other shareholders in connection with removing a director as if Section 16
(c) of the Act were applicable.
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Additional Information
- --------------------------------------------------------------------------------
This Prospectus does not contain all the information included in the
Registration Statement filed with the SEC with respect to the securities offered
hereby. The Registration Statement, including the exhibits filed therewith, may
be examined at the office of the SEC in Washington, D.C.
Statements contained in this Prospectus as to the contents of any
contract or other document referred to are not necessarily complete and, in each
instance, reference should be made to the copy of such contract or other
document filed as an exhibit to the Registration Statement of which this
Prospectus forms a part, each such statement being qualified in all respects by
such reference.
- ------------------------------------ 32 ----------------------------------------
<PAGE>
GLOBAL ASSET MANAGEMENT(R)
GAM FUNDS, INC.
PROSPECTUS
AND
APPLICATION
APRIL 30, 1998
No dealer, salesman, or any other person has been authorized to give any
information or to make any representations, other than those contained in this
Prospectus, in connection with the offer contained in this Prospectus, and, if
given or made, such other information or representations must not be relied upon
as having been authorized by the Company. This Prospectus does not constitute an
offer by the Company to sell or a 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 or solicitation in such jurisdiction.
<PAGE>
GAM FUNDS, INC. - NEW ACCOUNT APPLICATION
Mail to: Chase Global Funds Services Company, P.O. Box 2798, Boston, MA 02208
(73 Tremont Street, Boston MA 02108 for express mail services) with your check
or money order payable to "GAM Funds, Inc." To make payment by wire, please
notify Chase Global at (800) 356-5740 or (617) 557-8000, ext. 6610 of the
incoming wire and to receive a wire reference number. Instruct your bank to wire
the funds with the assigned reference number to: Chase Manhattan Bank, N.A. ABA#
021000021 for account of GAM [ ] Fund Subscription DDA #910-2-733186
================================================================================
ACCOUNT REGISTRATION
================================================================================
o JOINT TENANT REGISTRATION will be as "joint tenants with the right of
survivorship" and not as "tenants in common" unless specified, and both
registrants should sign this application.
o TRUST REGISTRATIONS should specify the name of the trust, trustee(s),
beneficiary(ies), date of trust instrument, and the trustee, or other
fiduciary, should sign this application.
o UNIFORM GIFTS/TRANSFERS TO MINORS REGISTRATION should be in the name of one
custodian and one minor and include the state under which the custodianship
is created (using the minor's Social Security Number and the custodian
should sign this application.)
o INSTITUTIONAL REGISTRATIONS should be in the name of the institution, and an
officer should sign, indicating corporate or partnership office or title,
this application.
o For an INDIVIDUAL RETIREMENT ACCOUNT (IRA), a different application is
required. Please call (800) 426-4685 ext. 1 or your investment
representative to obtain an IRA application.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Registration Type: (Choose One) o Individual o Gift/Transfer to Minor o Other--------------
o Joint Tenants o Trust
Investor(s) Information Owner Joint Owner
Name ---------------------------------------------- ----------------------------------------
Address ---------------------------------------------- ----------------------------------------
---------------------------------------------- ----------------------------------------
City/State/Zip ---------------------------------------------- ----------------------------------------
Taxpayer ID/Social
Security Number ---------------------------------------------- ----------------------------------------
Date of Birth ---------------------------------------------- ----------------------------------------
Daytime Phone (---)----------------------------------------- ----------------------------------------
</TABLE>
================================================================================
INVESTMENT SELECTION
================================================================================
The minimum initial investment is $5,000 per fund and subsequent investments are
$100 per fund.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Class Class Class Class Investment Class Class Class
Amount A B C D Amount A B C
GAM International Fund: $____________ / / / / / / / / GAM North America Fund: $____________ / / / / / /
GAM Global Fund: $____________ / / / / / / / / GAMerica Capital Fund: $____________ / / / / / /
GAM Pacific Basin Fund: $____________ / / / / / / / / GAM Europe Fund: $____________ / / / / / /
GAM Japan Capital Fund: $____________ / / / / / /
GAM Money Market Account: $____________ / / / / / /
GAM Asian Capital Fund: $____________ Class A shares only
</TABLE>
CAPITAL GAIN AND DIVIDEND DISTRIBUTIONS
All dividends and capital gains distributions will be reinvested in additional
shares of the same class of the same Fund unless the appropriate boxes below are
checked:
/ / Pay dividends in cash / / Pay capital gains distributions in cash
================================================================================
INVESTMENT ADVISOR/BROKER (IF APPLICABLE)
================================================================================
Representative's Name --------------------------- Branch Address-------------
Representative's Number ------------------------- ---------------------------
Representative's Phone Number (---)-------------- ---------------------------
Firm Name --------------------------------------- Branch Number--------------
================================================================================
ADDITIONAL FEATURES AVAILABLE
================================================================================
<PAGE>
TELEPHONE PRIVILEGES
By checking any box, you authorize the Funds or their agents to honor telephone
or facsimile requests from you after you have reasonably identified yourself.
/ / Telephone Exchange -- Exchange shares of any Fund for shares of any
other Fund in the same class.
/ / Telephone Redemption -- Redemption of shares by telephone.
WIRE TRANSFER
Please complete wiring instructions below if you wish to be able to instruct the
Funds to wire redemption proceeds. A nominal fee will be deducted from the
redemption proceeds.
Bank Name -------------------------- ABA #*--------------------------
Name on Account---------------------- Account #-----------------------
Bank Address------------------------- --------------------------------
* The ABA # is the nine-digit number that precedes your account number along
the bottom of your check.
** Savings and loan associations or credit unions may not be able to receive
wire redemptions.
AUTOMATIC INVESTMENT PLAN (OPTIONAL)
By completing the section below you authorize the Fund's Agent to initiate
Automated Clearing House ("ACH") debits on the 25th day of each month or the
next business day. Please attach a voided check.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Fund Investment Amount Monthly or Quarterly
- ------------------------------------- $----------------------------------- / / / /
- ------------------------------------- $----------------------------------- / / / /
Bank Name ------------------------------------------------------- ABA #*--------------------------------
Name on Account ------------------------------------------------------- Account # ----------------------------
Bank Address (City, State Only) -------------------------------------------------------------------------------------------
</TABLE>
* The ABA # is the nine-digit number that precedes your account number along
the bottom of your check.
OVER, PLEASE
<PAGE>
CONTINUED
SYSTEMATIC WITHDRAWAL PLAN* (OPTIONAL)
By completing the section below you authorize the Fund's Agent to redeem the
necessary number of shares from your account in order to make periodic payments.
The minimum is $100 per Fund.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Choose One
Fund Withdrawal Amount Monthly Quarterly Semi-annually Annually
- ----------------------------- $------------------------------ / / / / / / / /
- ----------------------------- $------------------------------ / / / / / / / /
</TABLE>
/ / Credit to bank account as designated under Wire Transfer or
/ / Send check to name and address of account registration
* This request for Systematic Withdrawal Plan must be received by the 18th day
of the month in which you wish withdrawals to begin. Redemption of shares
will occur on the 25th day of the month prior to payment or the next
business day.
STATEMENT OF INTENTION (OPTIONAL)
/ / I/we agree to the Statement of Intention and Escrow Agreement set forth
below. Although I/we am/are not obligated to do so, I/we intend to invest
in the Funds over a 13-month period at least:
/ / $100,000 / / $300,000 / / $600,000 / / $1,000,000
RIGHT OF ACCUMULATION (OPTIONAL)
/ / I/we qualify for the Right of Accumulation described in the Prospectus.
(Please identify in whose name shares are registered, in which Fund(s), the
shareholder's account number, and the shareholder's relationship to you):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET ASSET VALUE ELIGIBILITY
/ / Check here if eligible for waiver of sales load. (Reason must be stated or
sales load will be incurred. See page 22)
Specify Reason -----------------------------------------------------------------
AGREEMENT AND SIGNATURE(S)
1. I/we have received, read and carefully reviewed a copy of the Funds'
prospectus.
2. All share purchases are subject to acceptance and are governed by New York
law.
3. I/we authorize you to honor redemption requests by telephone or facsimile, if
so elected above.
4. I/we authorize you to accept telephone or facsimile exchange instructions, if
so elected above.
5. I/we authorize you to wire proceeds of redemptions, if so elected above.
6. I/we hereby agree that neither the Company nor Chase Global Funds Services
Company will be liable for any loss, liability or expense as a result of any
action taken upon instructions believed by it to be genuine and which were in
accordance with the procedures set forth in the prospectus.
- --------------------------------------------------------------------------------
______ U.S. CITIZEN/TAXPAYER: UNDER PENALTY OF PERJURY, I/WE CERTIFY THAT (1)
THE NUMBER SHOWN ON THIS FORM IS MY/OUR CORRECT TAXPAYER IDENTIFICATION NUMBER
AND (2) I/WE AM/ARE NOT SUBJECT TO BACKUP WITHHOLDING EITHER BECAUSE I/WE HAVE
NOT BEEN NOTIFIED BY THE INTERNAL REVENUE SERVICE THAT I/WE AM/ARE SUBJECT TO
BACKUP WITHHOLDING AS A RESULT OF FAILURE TO REPORT ALL INTEREST AND
DIVIDENDS, OR THE INTERNAL REVENUE SERVICE HAS NOTIFIED ME/US THAT I/WE AM/ARE
NO LONGER SUBJECT TO BACKUP WITHHOLDING. (IF YOU HAVE BEEN NOTIFIED BY THE
INTERNAL REVENUE SERVICE THAT YOU ARE CURRENTLY SUBJECT TO BACKUP WITHHOLDING,
STRIKE OUT PHRASE (2) ABOVE.) THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE
YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT OTHER THAN THE PRECEDING
CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING.
______ NON-U.S. CITIZENS/TAXPAYER: INDICATED COUNTRY OF RESIDENCE FOR TAX
PURPOSES______________________________________________________________________
UNDER PENALTIES OF PERJURY, I/WE CERTIFY THAT WE ARE NOT U.S. CITIZENS OR
RESIDENTS AND I/WE ARE EXEMPT FOREIGN PERSONS AS DEFINED BY INTERNAL REVENUE
SERVICE.
- --------------------------------------------------------------------------------
X----------------------------------- X---------------------------------
X----------------------------------- X---------------------------------
SIGNATURE(S) OF ALL APPLICANTS REGISTERED ABOVE - Sign exactly as name(s) of
registered owner(s) appear(s) above (including legal title if signing for
corporation, trust, custodial account, etc.).
Date -------------- 199--
<PAGE>
STATEMENT OF INTENTION
If you anticipate investing $100,000 or more in shares of the Funds within a
13-month period, you may obtain a reduced sales load as though the total
quantity were invested in one lump sum by filing a Statement of Intention within
90 days of the start of the purchases. To ensure that the reduced price will be
received on future purchases, you must inform Chase Global Funds Services
Company that this Statement is in effect each time shares are purchased.
Subject to the conditions mentioned below, each purchase will be made at the
public offering price applicable to a single transaction of the dollar amount
specified on the application, as described in the prospectus. You are not
committed to purchase additional shares, but if your purchases within 13 months
plus the value of shares credited toward completion do not total the sum
specified, you will pay the increased amount of the sales load prescribed in the
Escrow Agreement. Neither dividends nor capital gain distributions invested in
additional shares will apply toward the competition of this Statement. If the
total purchases under this Statement are large enough to qualify for an even
lower sales load than that applicable to the amount specified in the Statement,
then you must notify the Transfer Agent and all transactions will then be
recomputed at the expiration date of this Statement to give effect to the lower
load. Any difference in sales load as a result of these additional purchases
will be applied to the purchase of additional shares at the lower load if
specified by you or refunded to you in cash if you so specify.
This Statement is not effective until accepted by the Company.
ESCROW AGREEMENT
Out of the initial purchase (or subsequent purchases if necessary) 5% of the
dollar amount specified on the application shall be held in escrow by Chase
Global Funds Services Company in the form of shares registered in your name. All
dividends and capital gain distributions on escrowed shares will be paid to you
or to your order. When the minimum investment so specified is completed, the
escrowed shares will be released. If the investment is not completed, the
Company will redeem an appropriate number of the escrowed shares in order to
realize any difference between the sales load on the amount specified and on the
amount actually attained. Shares remaining after any such redemption will be
released from escrow.
In signing the application, you irrevocably constitute and appoint Chase Global
Funds Services Company your attorney to surrender for redemption any or all
escrowed shares with full power of substitution in the premises.
GLOBAL ASSET MANAGEMENT(R)
GAM FUNDS, INC.
PROSPECTUS
AND
APPLICATION
APRIL 30, 1998
No dealer, salesman, or any other person has been authorized to give any
information or to make any representations, other than those contained in
this Prospectus, in connection with the offer contained in this
Prospectus, and, if given or made, such other information or
representations must not be relied upon as having been authorized by the
Company. This Prospectus does not constitute an offer by the Company to
sell or a 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 or solicitation in such jurisdiction.
GAM(R)
<PAGE>
GAM FUNDS, INC.
135 East 57th Street
New York, NY 10022
Tel: (212) 407-4600/Fax: (212) 407-4684
STATEMENT OF ADDITIONAL INFORMATION
April 30, 1998
This Statement of Additional Information pertains to the funds listed below,
each of which is a separate series of common stock of GAM Funds, Inc. (the
"Company"), a diversified open-end management investment company. Each series of
the Company represents a separate portfolio of securities (each a "Fund" and
collectively the "Funds"). The investment objective of each Fund is to seek long
term capital appreciation through investment primarily in equity securities.
Each Fund seeks to achieve its objective by investing primarily within a
particular geographic region in accordance with its own investment policy. There
is no assurance that the Funds will achieve their objective.
The Funds are managed by GAM International Management Limited ("GAM"). Fayez
Sarofim & Co. ("Sarofim") serves as co-investment adviser to the GAM North
America Fund. (GAM and Sarofim are collectively referred to as the "Investment
Advisers".) GAM Services, Inc. ("GAM Services"), an affiliate of GAM, serves as
the principal underwriter for the Funds' securities.
GAM Global Fund invests primarily in the United States, Europe, the
Pacific Basin, and Canada.
GAM International Fund invests primarily in Europe, the Pacific
Basin and Canada.
GAM Pacific Basin Fund invests primarily in the Pacific Basin,
including Japan, Hong Kong, Korea, Taiwan, Singapore, Malaysia,
Thailand, Indonesia and Australia.
GAM Japan Capital Fund invests primarily in Japan.
GAM Asian Capital Fund invests primarily in Asia excluding Japan.
GAM Europe Fund invests primarily in Europe.
GAM North America Fund invests primarily in the United States and
Canada.
GAMerica Capital Fund investing primarily in the United States.
This Statement of Additional Information, which should be kept for future
reference, is not a prospectus. It should be read in conjunction with the
Prospectus of the Funds, dated April 30, 1998 which can be obtained without cost
upon request at the address indicated above.
1
<PAGE>
TABLE OF CONTENTS
Page
INVESTMENT OBJECTIVE AND POLICIES 3
Rating of Securities 3
United States Government Obligations 3
Repurchase Agreements 4
Options 4
Stock Index Futures and Options 5
Interest Rate Futures and Options 6
Foreign Currency Transactions 7
Lending Portfolio Securities 9
Warrants 9
Borrowing 9
Restricted Securities 9
Future Developments 10
Fundamental Investment Restrictions 10
Risk Considerations 11
Portfolio Turnover 13
MANAGEMENT OF THE COMPANY 14
Compensation of Directors and Executive Officers 15
Principal Holders of Securities 16
INVESTMENT ADVISORY AND OTHER SERVICES 18
Investment Advisers 18
Investment Advisory Contracts 18
Advisory Fees 19
Principal Underwriter and Plans of Distribution 21
Custodian and Administrator 24
Transfer Agent 24
Legal Counsel 24
Independent Accountants 24
Reports to Shareholders 25
BROKERAGE ALLOCATION 25
NET ASSET VALUE, DIVIDENDS AND TAXES 26
Net Asset Value 26
Suspension of the Determination of Net Asset Value 26
Tax Status 26
PERFORMANCE INFORMATION 27
FINANCIAL STATEMENTS 28
2
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The investment objective and policies of each Fund are described in the
Prospectus under the heading "Investment Objective and Policies and Risk
Considerations." Set forth below is additional information with respect to the
investment objective and policies of each Fund.
Rating of Securities. Each Fund may invest a substantial portion of its assets
in debt securities issued by companies or governments and their agencies and
instrumentalities if it determines that the long-term capital appreciation of
such debt securities may equal or exceed the return on equity securities. The
debt securities (bonds and notes) in which the Funds may invest will be rated C
or better by Moody's Investors Services, Inc. ("Moody's") or D or better by
Standard & Poor's Corporation ("S&P"), which are the lowest ratings, or, if
unrated, be comparable in quality as determined pursuant to guidelines
established by the Company's Board of Directors, since debt securities of
foreign companies and foreign governments are not generally rated by Moody's or
S&P. Each Fund may, for temporary defensive purposes, invest in debt securities
(with remaining maturities of five years or less) issued by companies and
governments and their agencies and instrumentalities and in money market
instruments denominated in currency of the United States or foreign nations. The
money market instruments include commercial paper which, when purchased, is
rated Prime-1 or better by Moody's or A-1 or better by S&P or, if not rated, is
issued by a company which at the date of investment has an outstanding debt
issue rated Aa or better by Moody's or AA or better by S&P or is of equivalent
investment quality as determined by the Company pursuant to guidelines
established and maintained in good faith by the Board of Directors.
None of the Funds will commit more than 5% of its assets, determined at the time
of investment, to investments in debt securities which are rated lower than
"investment grade" by a rating service. Debt securities rated lower than
"investment grade," also known as "junk bonds," are those debt securities not
rated in one of the four highest categories by a rating service (e.g., bonds
rated lower than BBB by S&P or lower than Baa by Moody's). Junk bonds, and debt
securities rated in the lowest "investment grade," have speculative
characteristics, and changes in economic circumstances or other circumstances
are more likely to lead to a weakened capacity on the part of issuers of such
lower rated debt securities to make principal and interest payments than issuers
of higher rated investment grade bonds. Developments such as higher interest
rates may lead to a higher incidence of junk bond defaults, and the market in
junk bonds may be more volatile and illiquid than that in investment grade
bonds.
United States Government Obligations. The Funds may invest in securities of the
United States government, its agencies and instrumentalities. United States
government securities include United States Treasury obligations, which include
United States Treasury bills, United States Treasury notes and United States
Treasury bonds; and obligations issued or guaranteed by United States government
agencies and instrumentalities. Agencies and instrumentalities include the
Federal Land Banks, Farmers Home Administration, Central Bank for Cooperatives,
Federal Intermediate Credit
3
<PAGE>
Banks, Federal Home Loan Bank, Student Loan Marketing Association, Federal
National Mortgage Association and Government National Mortgage Association.
Repurchase Agreements. Each Fund may, for temporary defensive purposes, invest
in repurchase agreements. In such a transaction, at the same time a Fund
purchases a security, it agrees to resell it to the seller and is obligated to
redeliver the security to the seller at a fixed price and time. This establishes
a yield during the Fund's holding period, since the resale price is in excess of
the purchase price and reflects an agreed-upon market rate. Such transactions
afford an opportunity for a Fund to invest temporarily available cash.
Repurchase agreements may be considered loans to the seller collateralized by
the underlying securities. The risk to a Fund is limited to the ability of the
seller to pay the agreed-upon sum on the delivery date; in the event of a
default the repurchase agreement provides that the Fund is entitled to sell the
underlying collateral. If the value of the collateral declines after the
agreement is entered into, however, and if the seller defaults when the value of
the underlying collateral is less than the repurchase price, a Fund could incur
a loss of both principal and interest. The collateral is marked-to-market daily
and the Investment Advisers monitor the value of the collateral in an effort to
determine that the value of the collateral always equals or exceeds the
agreed-upon sum to be paid to a Fund. If the seller were to be subject to a
United States bankruptcy proceeding, the ability of a Fund to liquidate the
collateral could be delayed or impaired because of certain provisions in the
bankruptcy law. Each Fund may only enter into repurchase agreements with
domestic or foreign securities dealers, banks and other financial institutions
deemed to be creditworthy under guidelines approved by the Board of Directors.
Options. The principal reason for writing covered call options is to realize,
through the receipt of premiums, a greater return than would be realized on a
Fund's portfolio securities alone. In return for a premium, the writer of a
covered call option forfeits the right to any appreciation in the value of the
underlying security above the strike price for the life of the option (or until
a closing purchase transaction can be effected). Nevertheless, the call writer
retains the risk of a decline in the price of the underlying security.
Similarly, the principal reason for writing secured put options is to realize
income in the form of premiums. The writer of a secured put option accepts the
risk of a decline in the price of the underlying security.
Although each Fund generally will purchase or write only those options for which
it believes there is an active secondary market so as to facilitate closing
transactions, there is no assurance that sufficient trading interest to create a
liquid secondary market on a securities exchange will exist for any particular
option or at any particular time, and for some options no such secondary market
may exist. A liquid secondary market in an option may cease to exist for a
variety of reasons. In such event, it might not be possible to effect closing
transactions in particular options. If, as a covered call option writer, a Fund
is unable to effect a closing purchase transaction in a secondary market, it
will not be able to sell the underlying security until the option expires or it
delivers the underlying security upon exercise.
The success of each Fund's options trading activities will depend on the ability
of the Investment Advisers to predict correctly future changes in the prices of
securities. Purchase or sale of options to hedge each Fund's existing securities
positions is also subject to the risk that the value of the option purchased or
sold may not move in perfect correlation with the price of the underlying
security.The greater leverage in options and futures trading may also tend to
increase the daily fluctuations in the value of a Fund's shares.
4
<PAGE>
Stock Index Futures and Options. Each Fund may purchase and sell stock index
futures contracts, and purchase, sell and write put and call options on stock
index futures contracts, for the purpose of hedging its portfolio. A stock index
fluctuates with changes in the market value of the stocks included in the index.
An option on a securities index gives the holder the right to receive, upon
exercise of the option, an amount of cash if the closing level of the securities
index upon which the option is based is greater than, in the case of a call
option, or less than, in the case of a put option, the strike price of the
option. Some stock index options are based on a broad market index, such as the
NYSE Composite Index, or a narrower market index, such as the Standard & Poor's
100. In the case of a stock index future, the seller of the futures contract is
obligated to deliver, and the purchaser obligated to take, an amount of cash
equal to a specific dollar amount multiplied by the difference between the value
of a specific stock index at the close of the last trading day of the contract
and the price at which the agreement is made. No physical delivery of the
underlying stocks in the index is made. If the assets of a Fund are
substantially invested in equity securities, the Fund might sell a futures
contract based on a stock index which is expected to reflect changes in prices
of stocks in the Fund's portfolio in order to hedge against a possible general
decline in market prices. A Fund may similarly purchase a stock index futures
contract to hedge against a possible increase in the price of stocks before the
Fund is able to invest cash or cash equivalents in stock in an orderly fashion.
The effectiveness of trading in stock index futures and options as a hedging
technique will depend upon the extent to which price movements in a Fund's
portfolio correlate with price movements of the stock index selected. Because
the value of an index future or option depends upon movements in the level of
the index rather than the price of a particular stock, whether a Fund will
realize a gain or loss from the purchase, sale or writing of a stock index
future or option depends upon movements in the level of stock prices in the
stock market generally, or in the case of certain indexes, in an industry or
market segment, rather than movements in the price of a particular stock.
In addition to the possibility that there may be an imperfect correlation, or no
correlation at all, between movements in a stock index and the portion of the
portfolio being hedged, the price of stock index futures may not correlate
perfectly with the movement in the stock index due to certain market
distortions. First, all participants in the futures market are subject to margin
deposit and maintenance requirements. Rather than meeting additional margin
deposit requirements, investors may close futures contracts through offsetting
transactions which would distort the normal relationship between the index and
futures markets. Secondly, from the point of view of speculators, the deposit
requirements in the futures market are less onerous than margin requirements in
the securities market. Therefore, increased participation by speculators in the
futures market also may cause temporary price distortions. Due to the
possibility of price distortions in the futures market and because of the
imperfect correlation between movements in the stock index and movements in the
price of stock index futures, a correct forecast of general market trends by the
Investment Advisers still may not result in a successful hedging transaction.
5
<PAGE>
Successful use of stock index futures by the Funds also is subject to the
ability of the Investment Adviser to predict correctly movements in the
direction of the market. For example, if a Fund has hedged against the
possibility of a decline in the market adversely affecting stocks held in its
portfolio and stock prices increase instead, the Fund will lose part or all of
the benefit of the increased value of its stocks which it has hedged because it
will have offsetting losses in its futures positions.
Each Fund may purchase and sell commodity futures contracts, and purchase, sell
or write options on futures contracts, for bona fide hedging purposes or
otherwise in accordance with applicable rules of the Commodity Futures Trading
Commission (the "CFTC"). CFTC rules permit an entity such as a Fund to acquire
commodity futures and options as part of its portfolio management strategy,
provided that the sum of the amount of initial margin deposits and premiums paid
for unexpired commodity futures contracts and options would not exceed 5% of the
fair market value of the assets of the Fund, after taking into account
unrealized profits and unrealized losses on such contracts it has entered into.
In the case of an option that is in-the-money at the time of purchase, the
in-the-money amount may be excluded in calculating the 5%.
When a Fund enters into a futures contract or writes an option on a futures
contract, it will instruct its custodian to segregate cash or liquid securities
having a market value which, when added to the margin deposited with the broker
or futures commission merchant, will at all times equal the purchase price of a
long position in a futures contract, the strike price of a put option written by
the Fund, or the market value (marked-to-market daily) of the commodity
underlying a short position in a futures contract or a call option written by
the Fund, or the Fund will otherwise cover the transaction.
Interest Rate Futures and Options. Each Fund may hedge against the possibility
of an increase or decrease in interest rates adversely affecting the value of
securities held in its portfolio by purchasing or selling a futures contract on
a specific debt security whose price is expected to reflect changes in interest
rates. However, if a Fund anticipates an increase in interest rates and rates
decrease instead, the Fund will lose part or all of the benefit of the increased
value of the securities which it has hedged because it will have offsetting
losses in its futures position.
A Fund may purchase call options on interest rate futures contracts to hedge
against a decline in interest rates and may purchase put options on interest
rate futures contracts to hedge its portfolio securities against the risk of
rising interest rates. A Fund will sell options on interest rate futures
contracts as part of closing purchase transactions to terminate its options
positions. No assurance can be given that such closing transactions can be
effected or that there will be a correlation between price movements in the
options on interest rate futures and price movements in the portfolio securities
of the Fund which are the subject of the hedge. In addition, a Fund's purchase
of such options will be based upon predictions as to anticipated interest rate
trends, which could prove to be inaccurate. The potential loss related to the
purchase of an option on an interest rate futures contracts is limited to the
premium paid for the option.
Although each Fund intends to purchase or sell commodity futures contracts only
if there is an active market for each such contract, no assurance can be given
that a liquid market will exist for the contracts at any particular time. Many
futures exchanges and boards of trade limit the amount of fluctuation permitted
in futures contract prices during a single trading day. Once the daily limit has
been reached in a particular contract, no trades may be made that day at a price
beyond that
6
<PAGE>
limit. Futures contract prices could move to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of futures positions and subjecting some futures traders to
substantial losses. In such event and in the event of adverse price movements, a
Fund would be required to make daily cash payments of variation margin. In such
circumstances, an increase in the value of the portion of the portfolio being
hedged, if any, may offset partially or completely losses on the futures
contract. However, no assurance can be given that the price of the securities
being hedged will correlate with the price movements in a futures contract and
thus provide an offset to losses on the futures contract.
Foreign Currency Transactions. Since investments in foreign securities will
usually involve currencies of foreign countries, and since each Fund may
temporarily hold funds in foreign or domestic bank deposits in foreign
currencies during the completion of investment programs, the value of the assets
of each Fund as measured in United States dollars may be affected favorably or
unfavorably by changes in foreign currency exchange rates and exchange control
regulations, and the Funds may incur costs in connection with conversions
between various currencies. The Funds may enter into foreign currency exchange
transactions either on a spot (i.e., cash) basis at the spot rate prevailing in
the foreign currency exchange market, or through entering into forward contracts
to purchase or sell foreign currencies. A forward foreign exchange contract
involves an obligation to purchase or sell a specific currency at a future date,
which may be any fixed number of days from the date of the contract agreed upon
by the parties, at a price set at the time of the contract. These 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 is consummated without payment of any
commission.
Each Fund may enter into forward foreign exchange contracts for speculative
purposes and under the following circumstances: When a Fund enters into a
contract for the purchase or sale of a security denominated in a foreign
currency, or when a Fund anticipates the receipt in a foreign currency of
dividends or interest payments on such a security which it purchases or already
holds, it may desire to "lock-in" the United States dollar price of the security
or the United States dollar equivalent of such dividend or interest payment, as
the case may be. By entering into a forward contract for the purchase or sale,
for a fixed amount of dollars, of the amount of foreign currency involved in the
underlying security transactions, the Fund will be able to protect itself
against a possible loss resulting from an adverse change in the relationship
between the United States dollar and the subject foreign currency during the
period between the date the security is purchased or sold, or on which the
dividend or interest payment is declared, and the date on which payment is made
or received.
If it is believed that the currency of a particular foreign country may suffer a
substantial decline against the United States dollar or another currency, a Fund
may enter into a forward contract to sell, for a fixed amount of dollars, the
amount of foreign currency approximating the value of some or all of the Fund's
portfolio securities denominated in such foreign currency. The precise matching
of the forward contract amounts and the value of the securities involved will
not generally be possible since 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.
The projection of short-term currency market movements is extremely difficult,
and the successful execution of a short-term hedging strategy is highly
uncertain. Each Fund will place cash or liquid securities in a separate custody
account of the Fund with the Company's custodian in an amount
7
<PAGE>
equal to the value of the Fund's total assets committed to the consummation of
the hedge contracts or otherwise cover such transactions. The securities placed
in the separate account will be marked-to-market daily. If the value of the
securities placed in the separate account declines, additional cash or liquid
securities will be placed in the account on a daily basis so that the value of
the account will equal the amount of the Fund's uncovered commitments with
respect to such contracts.
The Funds generally will not enter into a forward contract with a term of
greater than one year. At the maturity of a forward contract, a Fund may either
sell the portfolio security and make delivery of the foreign currency, or it may
retain the security and terminate its contractual obligation to deliver the
foreign currency by purchasing an "offsetting" contract with the same currency
trader obligating it to purchase, on the same maturity date, the same amount of
the foreign currency. A Fund may also purchase an "offsetting" contract prior to
the maturity of the underlying contract. There is no assurance that such an
"offsetting" contract will always be available to a Fund.
It is impossible to forecast with absolute precision what the market value of
portfolio securities will be at the expiration of a related forward contract.
Accordingly, it may be necessary for a Fund to purchase additional foreign
currency on the spot market (and bear the expense of such purchase) if the
market value of a security being sold is less than the amount of foreign
currency the Fund is obligated to deliver. Conversely, a Fund may sell on the
spot market some of the foreign currency received upon the sale of the portfolio
security if its market value exceeds the amount of foreign currency the Fund is
obligated to deliver.
If a Fund retains the portfolio security and engages in an offsetting
transaction, the Fund will incur a gain or a loss to the extent that there has
been movement in forward contract prices. If a Fund engages in an offsetting
transaction, it may subsequently enter into a new forward contract to sell the
foreign currency. Should forward prices decline during the period between a
Fund's entering into a forward contract for the sale of a foreign currency and
the date it enters into an offsetting contract for the purchase of the foreign
currency, the Fund will realize a gain to the extent the price of the currency
it has agreed to purchase is less than the price of the currency it has agreed
to sell. Should forward prices increase, the Fund will suffer a loss to the
extent the price of the currency it has agreed to purchase exceeds the price of
the currency it has agreed to sell.
A Fund is not required to enter into hedging transactions with regard to its
foreign currency-denominated securities and will not do so unless deemed
appropriate by the Investment Advisers. Hedging the value of a Fund's portfolio
securities against a decline in the value of a currency does not eliminate
fluctuations in the underlying prices of the securities. Although such contracts
tend to minimize the risk of loss due to a decline in the value of the hedged
currency, at the same time, they tend to limit any potential gain which might
result should the value of such currency increase.
The Funds may purchase or sell options to buy or sell foreign currencies and
options on foreign currency futures, or write such options, as a substitute for
entering into forward foreign exchange contracts in the circumstances described
above. For example, in order to hedge against the decline in value of portfolio
securities denominated in a specific foreign currency, a Fund may purchase an
option to sell, for a specified amount of dollars, the amount of foreign
currency represented by such portfolio securities. In such case, the Fund will
pay a "premium" to acquire the option, as well as the agreed exercise price if
it exercises the option.
Although each Fund values its assets daily in terms of United States dollars,
the Funds do not intend to convert their foreign currency holdings into United
States dollars on any regular basis. A
8
<PAGE>
Fund may so convert from time to time, and thereby incur certain currency
conversion charges. Although foreign exchange dealers do not generally charge a
fee for conversion, they do realize a profit based on the difference (the
"spread") between the prices at which they are buying and selling 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 the Fund desire to resell
that currency to the dealer.
Lending Portfolio Securities. Each Fund may lend its portfolio securities to
brokers, dealers and financial institutions considered creditworthy when secured
by collateral maintained on a daily marked-to-market basis in an amount equal to
at least 100% of the market value, determined daily, of the loaned securities. A
Fund may at any time call the loan and obtain the return of the securities
loaned. No such loan will be made which would cause the aggregate market value
of all securities lent by a Fund to exceed 15% of the value of the Fund's total
assets. The Fund will continue to receive the income on loaned securities and
will, at the same time, earn interest on the loan collateral. Any cash
collateral received under these loans will be invested in short-term money
market instruments.
Warrants. Each Fund may purchase warrants. The holder of a warrant has the right
to purchase a given number of shares of a particular issuer at a specified price
until expiration of the warrant. Such investments can provide a greater
potential for profit or loss than an equivalent investment in the underlying
security. Each Fund may invest up to 10% of its net assets, valued at the lower
of cost or market value, in warrants (other than those that have been acquired
in units or attached to other securities), including warrants not listed on
American or foreign stock exchanges. Prices of warrants do not move in tandem
with the prices of the underlying securities, and are speculative investments.
They pay no dividends and confer no rights other than a purchase option. If a
warrant is not exercised by the date of its expiration, a Fund will lose its
entire investment in such warrant.
Borrowing. Each Fund may borrow from banks for temporary emergency purposes.
Each Fund will maintain continuous asset coverage (that is, total assets
including borrowings, less liabilities exclusive of borrowings) of 300% of the
amount borrowed. If the 300% asset coverage should decline as a result of market
fluctuations or other reasons, a Fund may be required to sell some of its
portfolio holdings within three days to reduce the debt and restore the 300%
asset coverage, even though it may be disadvantageous from an investment
standpoint to sell portfolio holdings at the time.
Borrowing money, also known as leveraging, will cause a Fund to incur interest
charges, and may increase the effect of fluctuations in the value of the
investments of the Fund on the net asset value of its shares. A Fund will not
purchase additional securities for investment while there are bank borrowings
outstanding representing more than 5% of the total assets of the Fund.
Restricted Securities. The Funds may purchase securities that are not registered
for sale to the general public in the United States, but which can be resold to
institutional investors in the United States, including securities offered
pursuant to Rule 144A adopted by the United States Securities and Exchange
Commission ("SEC"). Provided that a dealer or institutional trading market in
such securities exists, either within or outside the United States, these
restricted securities will not be treated as illiquid securities for purposes of
the Funds' investment restrictions. The Board of Directors will establish
standards for determining whether or not 144A securities are liquid based on
the level of trading activity, availability of reliable price information and
other relevant considerations. The Funds may also purchase privately placed
restricted securities for which no
9
<PAGE>
institutional market exists. The absence of a trading market may adversely
affect the ability of the Funds to sell such illiquid securities promptly and at
an acceptable price, and may also make it more difficult to ascertain a market
value for illiquid securities held by the Funds.
Future Developments. The Funds may take advantage of opportunities in the area
of options and futures contracts and other derivative financial instruments
which are developed in the future, to the extent such opportunities are both
consistent with each Fund's investment objective and permitted by applicable
regulations. The Funds' Prospectus and Statement of Additional Information will
be amended or supplemented, if appropriate in connection with any such
practices.
Fundamental Investment Restrictions. Each Fund has adopted certain investment
restrictions which cannot be changed without approval by holders of a majority
of its outstanding voting shares. As defined in the Investment Company Act of
1940, as amended (the "Act"), this means the lesser of (a) 67% or more of the
shares of the Fund at a meeting where more than 50% of the outstanding shares
are present in person or by proxy or (b) more than 50% of the outstanding shares
of the Fund.
In accordance with these restrictions, each Fund may not:
1. With respect to 75% of its total assets, invest more than 5% of its total
assets in any one issuer (other than the United States government, its agencies
and instrumentalities) or purchase more than 10% of the voting securities, or
more than 10% of any class of securities, of any one issuer. (For this purpose
all outstanding debt securities of an issuer are considered as one class, and
all preferred stocks of an issuer are considered as one class.)
2. Invest for the purpose of exercising control or management of another
company.
3. Invest in real estate (including real estate limited partnerships), although
a Fund may invest in marketable securities which are secured by real estate and
securities of companies which invest or deal in real estate.
4. Concentrate more than 25% of the value of its total assets in any one
industry (including securities of non-United States governments).
5. Make loans, except that this restriction shall not prohibit (1) the purchase
of publicly distributed debt securities in accordance with a Fund's investment
objectives and policies, (2) the lending of portfolio securities, and (3)
entering into repurchase agreements.
10
<PAGE>
6. Borrow money, except from banks for temporary emergency purposes and, in no
event, in excess of 33 1/3% of its total assets at value or cost, whichever is
less; or pledge or mortgage its assets or transfer or assign or otherwise
encumber them in an amount exceeding the amount of the borrowing secured
thereby.
7. Underwrite securities issued by others except to the extent the Company may
be deemed to be an underwriter, under the Federal securities laws, in connection
with the disposition of its portfolio securities.
8. Purchase securities of other investment companies, except (a) in connection
with a merger, consolidation, reorganization or acquisition of assets or (b) a
Fund may purchase securities of closed-end investment companies up to (i) 3% of
the outstanding voting stock of any one investment company (including for this
purpose investments by any other series of the Company), (ii) 5% of the total
assets of the Fund with respect to any one investment company and (iii) 10% of
the total assets of the Fund in the aggregate.
9. Participate on a joint or a joint and several basis in any trading account in
securities.
10. Issue senior securities (as defined in the Act), other than as set forth in
paragraph 6.
11. Invest in commodities or commodity futures contracts, except that each Fund
may enter into forward foreign exchange contracts and may invest up to 5% of its
net assets in initial margin or premiums for futures contracts or options on
futures contracts.
Non-Fundamental Investment Restrictions. Each Fund has also adopted certain
investment restrictions which are deemed non-fundamental which cannot be
changed without a vote of the majority of the Fund Directors.
In addition to non-fundamental restrictions stated elsewhere, each Fund may not:
1. Make short sales of securities on margin, except for such short-term credits
as are necessary for the clearance of transactions. (Management may recommend to
the Board removal of this restriction.)
2. Invest more than 15% of the Fund's net assets in securities which cannot be
readily resold to the public because there are no market quotations readily
available because of legal or contractual restrictions or because there are no
market quotations readily available or in other " illiquid securities (including
non-negotiable deposits with banks and repurchase agreements of a duration of
more than seven days).
If a percentage restriction (other than the restriction on borrowing in
paragraph 6) is adhered to at the time of investment, a subsequent increase or
decrease in the percentage beyond the specified limit resulting from a change in
value or net assets will not be considered a violation. Whenever any investment
policy or investment restriction states a maximum percentage of a Fund's assets
which may be invested in any security or other property, it is intended that
such maximum percentage limitation be determined immediately after and as a
result of the acquisition of such security or property.
Risk Considerations. Investors should carefully consider the risks involved in
investments in securities of companies and governments of foreign nations, which
add to the usual risks inherent in domestic investments. Such special risks
include the lower level of government supervision and regulation of stock
exchanges, broker-dealers and listed companies, fluctuations in foreign exchange
rates, future political and economic developments, and the possible imposition
of exchange controls or other foreign governmental laws or restrictions. In
addition, securities prices
11
<PAGE>
in foreign countries are generally subject to different economic, financial,
political and social factors than prices of securities of United States issuers.
The Company anticipates that the portfolio securities of foreign issuers held by
each Fund generally will not be registered with the SEC nor will the issuers
thereof be subject to the reporting requirements of such agency. In addition,
the governments under which these companies are organized may impose less
government supervision than is required in the United States. Accordingly, there
may be less publicly available information concerning certain of the issuers of
securities held by the Funds than is available concerning United States
companies. In addition, foreign companies are not generally subject to uniform
accounting, auditing and financial reporting standards or to practices and
requirements comparable to those applicable to United States companies.
It is contemplated that the Funds' foreign portfolio securities generally will
be purchased on stock exchanges or in over-the-counter markets located in the
countries in which the principal offices of the issuers of the various
securities are located, if that is the best available market. Foreign stock
exchanges generally have substantially less volume than the New York Stock
Exchange and may be subject to less government supervision and regulation than
those in the United States. Accordingly, securities of foreign companies may be
less liquid and more volatile than securities of comparable United States
companies. Similarly, volume and liquidity in most foreign bond markets is less
than in the United States and, at times, price volatility can be greater than in
the United States.
The Funds may also invest in American Depositary Receipts ("ADRs") or European
Depositary Receipts ("EDRs") representing securities of foreign companies,
including both sponsored and unsponsored ADRs. Unsponsored ADRs may be created
without the participation of the foreign issuer. Holders of these ADRs generally
bear all the cost of the ADR facility, whereas foreign issuers typically bear
certain costs in a sponsored ADR. The bank or trust company depository of an
unsponsored ADR may be under no obligation to distribute shareholder
communications received from the foreign issuer or to pass through voting
rights. The markets for ADRs and EDRs, especially unsponsored ADRs, may be
substantially more limited and less liquid than the markets for the underlying
securities.
Foreign broker-dealers also may be subject to less government supervision than
those in the United States. Although the Funds endeavor to achieve the most
favorable net results on their portfolio transactions, fixed commissions for
transactions on certain foreign stock exchanges may be higher than negotiated
commissions available on United States exchanges.
With respect to certain foreign countries, there is the possibility of adverse
changes in investment or exchange control regulations, expropriation or
confiscatory taxation, and limitations on the transfer or exchange of funds or
other assets of the Funds. The Funds' ability and decisions to purchase or sell
portfolio securities may be affected by laws or regulations relating to the
convertibility and repatriation of assets. There is also the risk in certain
foreign countries of political or social instability, or diplomatic developments
which could affect United States investments as well as the prices of securities
in those countries. Moreover, individual foreign economies may differ favorably
or unfavorably from the United States economy in such respects as growth of
gross national product, rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position.
12
<PAGE>
Because the shares of the Funds are redeemable on a daily basis in United States
dollars, each Fund intends to manage its portfolio so as to give reasonable
assurance that it will be able to obtain United States dollars to the extent
necessary to meet anticipated redemptions. The Funds do not believe that this
consideration will have any significant effects on their portfolio strategies
under present conditions.
Portfolio Turnover. Portfolio turnover rate is calculated by dividing the lesser
of a Fund's sales or purchases of portfolio securities for the fiscal year
(exclusive of purchases or sales of all securities whose maturities or
expiration dates at the time of acquisition were one year or less) by the
monthly average value of the securities in a Fund's portfolio during the fiscal
year. A portfolio turnover rate in excess of 100% is considered to be high. A
high portfolio turnover rate may result in higher short-term capital gains to
shareholders for tax purposes and increased brokerage commissions and other
transaction costs borne by the Fund.
13
<PAGE>
MANAGEMENT OF THE COMPANY
The name, address, principal occupation during the past five years and other
information with respect to each of the Directors and Executive Officers of the
Company are as follows:
Name and Address:
Position(s) Held Principal Occupation(s)
With the Company During Past Five Years
---------------- ----------------------
Gilbert de Botton* (63) Chairman, Global Asset Management Limited,
Director/President investment adviser, and Global Asset
12 St. James's Place Management (U.K.) Ltd., holding company,
London SWlA 1NX 1983 to present; Vice President, Global
England Asset Management Limited (Bermuda),
investment adviser, 1989 to present.
George W. Landau (77) Chairman, Latin American Advisory Board of
Director Coca-Cola International, 1988 to present.
2601 South Bayshore Drive Director, Emigrant Savings Bank, Brazil
Suite 1109 Equity Fund, Chile Fund, Latin American
Coconut Grove, FL 33133 Investment Fund, South America Fund, Latin
American Equity Fund, Emerging Markets
Telecommunications Fund, Emerging Markets
Infrastructure Fund, and Fundacion Chile.
Former President, Americas Society and the
Council of the Americas, 1985-1993.
Robert J. McGuire (62) Attorney/Consultant, Morvillo, Abramowitz,
Director Grand, Iason & Silberberg, P.C., 1998 to
present; President/Chief Operating Officer,
Kroll Associates 1989-1997.
Roland Weiser (66) President, Intervista, business consulting,
Director 1984 to present. Director, GAM Diversity
86 Beekman Road Fund and Unimed Pharmaceuticals, Inc.
Summit, New Jersey 07901 Former Senior Vice President, Schering
Plough Corporation (International).
14
<PAGE>
Kevin Blanchfield Chief Operating Officer, Treasurer and
Vice President/Treasurer Assistant Secretary, Global Asset Management
135 East 57th Street (USA) Inc., GAM Investments, Inc. and GAM
New York, NY 10022 Services Inc., 1995 to present; Vice
President and Treasurer, Global Asset
Management (USA) Inc., GAM Investments, Inc.
and GAM Services Inc., 1993 to 1995; Senior
Vice President - Finance and Administration,
Lazard Freres & Co., 1991 to 1993.
Gordon E. Swartz General Counsel and Secretary, Global Asset
Secretary Management (USA) Inc. and Secretary of GAM
135 East 57th Street Services Inc., 1997 to present. From 1996 to
New York, NY 10022 1997 Attorney/Consultant to Financial
Markets International. From 1994 to 1996
Vice President and Counsel for NatWest
Bancorp. Senior Associate Counsel and Vice
President of The Chase Manhattan Bank NA
from 1990 to 1994.
- ----------
* Mr. de Botton is a director who is an "interested person"
of the Company within the definitions set forth in the Act.
Compensation of Directors and Executive Officers. Each independent Director of
the Company receives annual compensation from the Company of $5,000 per year
plus $500 for each meeting of the Board of Directors attended. Each Director is
reimbursed by the Company for travel expenses incurred in connection with
attendance at Board of Directors meetings. The officers and interested Directors
of the Company do not receive any compensation from the Company.
The name, position(s) and information related to the compensation of each of the
Directors in the most recent fiscal year are as follows.
<TABLE>
<CAPTION>
Pension or
Retirement Total
Aggregate Benefits Accrued Estimated Compensation
Name and Position(s) Compensation as Annual Benefits From the Company
Held From the Part of Company Upon and Fund Complex
With the Company Company Expenses Retirement Paid to Directors
- --------------------- ------------- ------------------- --------------- -------------------
<S> <C> <C> <C> <C>
Gilbert de Botton $0 $0
Director and
President
George W. Landau $7,000 $7,000
Director
Roland Weiser $8,000 $8,000
Director
</TABLE>
15
<PAGE>
Principal Holders of Securities. As of January 31, 1998, all Directors and
Officers of the Funds as a group owned beneficially or of record less than 1% of
the outstanding securities of any Fund except GAMerica Capital Fund, of which
the group held 2.5%. To the knowledge of the Funds, as of January 31, 1998, no
Shareholders owned beneficially (b) or of record (r) more than 5% of a Fund's
outstanding shares, except as set forth below. Mr. Gilbert de Botton, President
and Director of the Company, may be deemed to have shared voting or investment
power over shares owned by clients or held by custodians or nominees for clients
of Global Asset Management (USA) Inc. or other affiliates of GAM, or by employee
benefit plans for the benefit of employees of GAM and its affiliates, as a
result of the indirect ownership of interests in GAM and its affiliates by a
trust of which Mr. de Botton is a potential beneficiary. Mr. de Botton disclaims
beneficial ownership of such shares.
<TABLE>
<CAPTION>
INTERNATIONAL GLOBAL PACIFIC BASIN
Class A Class D Class A Class D Class A Class D
<C> <C> <C> <C> <C> <C>
Naidot & Co. 7.74%
c/o Bessemer Trust Co
100 Woodbridge Center Drive
Woodbridge, NJ 07095
FTC & Co. 11.54%
Attn: Datalynx
P0 Box 173736
Denver, CO 80217
National City TRSTE 10.80%
JDR&P GAM Inv. 2 DEF BEN
Attn: Trust Mutual Funds 617444906
P0 Box 94777
Cleveland, Ohio 44101-4777
Key Trust Co of OH NA Cust. 61.80%
University Orthopaedic Assoc.
Pension Plan
P0 Box 94870
Cleveland, Ohio 44101-4870
Fayez Sarofim & Co.
P0 Box 52830
Houston, TX 77052-2830
Resources Trust Company
for The Exclusive Benefit
Of Various Customers of IMS
P0 Box 3865
Englewood, CO 80 155-3865
NFSC FEBO X08-088536
Abdulla Omaran & Latifa Omran
NAJD 16 Roedean Way
Brighton, BN 25 RI England
NFSC FEBO X03-152595
Ola Omran
NAJD 16 Roedean Way
Brighton, BN 25 RJ England
Merrill Lynch Special 11.60% 9.37%
Custody a/c for the Exclusive
Benefit of Cust. of MLPF & S
Attn: GAM Funds Service Team
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
Mark E. Gilbert
Advantage Account
155 Howe Street
Martinez, CA 94553
Lehman Brothers Inc
FBO 834-04554-12
P0 Box 29198
Brooklyn, NY 11202-9198
Terry J Crofoot
and Kelly Crofoot JTWROS
Advantage account
P0 Box 53188
Lubbock, TX 79453
Lehman Brothers Inc
FBO 834-04555-11
PO Box 29198
Brooklyn, NY 11202-9198
Jan I Shrem &
Mitsuko Shrem JT TEN
c/o Rothschilds Bank AG
Zollikerstrasse 181
CH-8034 Zurich, Switzerland
Attn. M. Steiger
Post & Co. a/c 974792
c/o Bank of NY
Mutual Fund Reorg Dept
PO Box 1066
Wall Street Station
New York, NY 10268
Sam W. Klein TRSTE
FBO The S. Klein 1973
Declaration of TRST
U/A Dtd 1973
c/o Rothschilds Bank AG
Zollikerstrasse 181
CH-8034 Zurich, Switzerland
Attn. M. Steiger
Prudential Securities Inc. FBO
Ronald Cooper John Trobaugh
Barney Abis Co-Trustees
Delta Foremost Chem Corp PS Plan
One Seaport Plaza
New York, NY 10292
Bankers Trust Company
FBO 2448842424
P0 Box 9005
Church Street Station
New York, NY 10008
Royal Life Insurance International Ltd. 6.50%
FBO Acct. 6511
Royal Court, Castletown
Isle of Man, British Isle
IM9 1RA
Donaldson Lufkin Jenrette 5.62%
Securities Corporation Inc.
P0 Box 2052
Jersey City, NJ 07303-9998
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
NORTH JAPAN ASIAN
EUROPE AMERICA CAPITAL CAPITAL GAMERICA
<C> <C> <C> <C> <C>
Naidot & Co.
c/o Bessemer Trust Co
100 Woodbridge Center Drive
Woodbridge, NJ 07095
FTC & Co.
Attn: Datalynx
P0 Box 173736
Denver, CO 80217
National City TRSTE 13.14%
JDR&P GAM Inv. 2 DEF BEN
Attn: Trust Mutual Funds 617444906
P0 Box 94777
Cleveland, Ohio 44101-4777
Key Trust Co of OH NA Cust.
University Orthopaedic Assoc.
Pension Plan
P0 Box 94870
Cleveland, Ohio 44101-4870
Fayez Sarofim & Co. 21.46%
P0 Box 52830
Houston, TX 77052-2830
Resources Trust Company 16.78% 14.12% 16.96%
for The Exclusive Benefit
Of Various Customers of IMS
P0 Box 3865
Englewood, CO 80 155-3865
NFSC FEBO X08-088536 6.76%
Abdulla Omaran & Latifa Omran
NAJD 16 Roedean Way
Brighton, BN 25 RI England
NFSC FEBO X03-152595 5.95%
Ola Omran
NAJD 16 Roedean Way
Brighton, BN 25 RJ England
Merrill Lynch Special 5.93%
Custody a/c for the Exclusive
Benefit of Cust. of MLPF & S
Attn: GAM Funds Service Team
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
Mark E. Gilbert 12.39%
Advantage Account
155 Howe Street
Martinez, CA 94553
Lehman Brothers Inc 6.74%
FBO 834-04554-12
P0 Box 29198
Brooklyn, NY 11202-9198
Terry J Crofoot 5.47%
and Kelly Crofoot JTWROS
Advantage account
P0 Box 53188
Lubbock, TX 79453
Lehman Brothers Inc 5.06%
FBO 834-04555-11
PO Box 29198
Brooklyn, NY 11202-9198
Jan I Shrem & 5.00% 5.48% 15.02%
Mitsuko Shrem JT TEN
c/o Rothschilds Bank AG
Zollikerstrasse 181
CH-8034 Zurich, Switzerland
Attn. M. Steiger
Post & Co. a/c 974792 7.56%
c/o Bank of NY
Mutual Fund Reorg Dept
PO Box 1066
Wall Street Station
New York, NY 10268
Sam W. Klein TRSTE 6.12%
FBO The S. Klein 1973
Declaration of TRST
U/A Dtd 1973
c/o Rothschilds Bank AG
Zollikerstrasse 181
CH-8034 Zurich, Switzerland
Attn. M. Steiger
Prudential Securities Inc. FBO 5.18%
Ronald Cooper John Trobaugh
Barney Abis Co-Trustees
Delta Foremost Chem Corp PS Plan
One Seaport Plaza
New York, NY 10292
Bankers Trust Company 5.91%
FBO 2448842424
P0 Box 9005
Church Street Station
New York, NY 10008
Royal Life Insurance International Ltd.
FBO Acct. 6511
Royal Court, Castletown
Isle of Man, British Isle
IM9 1RA
Donaldson Lufkin Jenrette
Securities Corporation Inc.
P0 Box 2052
Jersey City, NJ 07303-9998
</TABLE>
17
<PAGE>
INVESTMENT ADVISORY AND OTHER SERVICES
Investment Advisers. All of the Investment Advisers are registered under the
United States Investment Advisers Act of 1940, as amended. GAM is controlled by
and under common control with other investment advisers (as described below)
which have substantial experience managing foreign mutual funds and which have
aggregate assets under management of approximately $12 billion as of December
31, 1997. As of that date, Sarofim had aggregate assets under management of
approximately $52 billion.
The Directors of GAM and their principal occupations are as follows:
Name and Position Held
with Investment Adviser Principal Occupation
- ---------------------------------------------------------
Gilbert de Botton, Director. See "Management of the Company" above.
Count Ulric von Rosen, Director. President, Bonnier Medical Division of
Bonnier Medical Group, Sweden.
Paul S. Kirkby, Director. Investment Director, Global Asset Management
(H.K.) Ltd.
David J. Miller, Director. Finance Director, Global Asset Management
(U.K.) Ltd.
Alan McFarlane, Director. Managing Director (Institutional), Global
Asset Management Ltd., investment adviser.
Denis G. Raeburn, Director. Managing Director, Global Asset Management
Ltd. and Global Asset Management (U.K.)
Ltd., holding company.
Gordon Grender, Director. Investment manager.
GAM is a wholly-owned subsidiary of Global Asset Management (U.K.) Limited, a
holding company. Global Asset Management Ltd., an investment adviser organized
under the laws of Bermuda, controls the Investment Adviser through its
wholly-owned subsidiaries, Greenpark Management N.V. and GAMAdmin B.V. (the
latter of which is the direct parent of Global Asset Management (U.K.) Limited).
Lorelock, SA., which is controlled directly by Metrolis Anstalt, a Lichtenstein
company, and indirectly by a discretionary trust of which Mr. de Botton, a
Director and President of the Fund, may be deemed to be a beneficiary, owns
approximately 70% of the voting securities of Global Asset Management Ltd. St.
James's Place Capital plc, an international, diversified financial services
company, owns approximately 30%. St. James's Place Capital plc controls,
individually and collectively and directly and indirectly, a number of
subsidiaries, which provide financial services and investment management
services for various investment companies, among others, and which are involved
internationally in various financial service businesses.
The Directors and principal executive officers of Sarofim and their principal
occupations are as follows:
Fayez S. Sarofim Chairman, Director and President, Sarofim
Raye G. White Executive Vice President, Secretary
-Treasurer and Director, Sarofim
Ralph B. Thomas Senior Vice President, Sarofim
William K. McGee, Jr. Senior Vice President, Sarofim
Russell M. Frankel Senior Vice President, Sarofim
Charles E. Sheedy Senior Vice President, Sarofim
Russell B. Hawkins Senior Vice President, Sarofim
A majority of the outstanding stock of Sarofim is owned by Fayez S. Sarofim. In
addition, Mr. Sarofim is a director of Allegheny Teledyne, Inc., Unitrin, Inc.,
Argonaut Group, Imperial Holly Corp. and EXOR Group, each of which is a publicly
traded corporation with principal offices in the United States. Mr. Sarofim is a
past director of Teledyne, Inc., MESA, Inc., Alley Theatre, Houston Ballet
Foundation and the Museum of Fine Arts Houston.
Investment Advisory Contracts. The Amended and Restated Investment Advisory
Contract dated April 14, 1994 (the "GAM Contract") between the Company and GAM,
as amended, was last approved by the Board of Directors (including a majority of
the Directors who were not parties to the GAM Contract or interested persons of
any such party) on behalf of each Fund on November 6, 1997 and by the
shareholders of each Fund (other than GAM Japan Capital Fund, GAMerica Capital
Fund and GAM Asian Capital Fund) on April 14, 1994. The investment advisory
agreement dated June 29, 1990 between the Company and Sarofim (the "Sarofim
Contract") was last approved by the Board of Directors, including a majority of
the Directors who are not parties to the Sarofim Contract or interested persons
of any such party, on November 6, 1997 and by the shareholders of GAM North
America Fund on April 14, 1994. The GAM Contract and the Sarofim Contract will
each continue in effect from year to year thereafter if approved annually by the
Board of Directors or by the vote of a majority of the outstanding shares of
each Fund (as defined in the Act) and, in either event, by the approval of a
majority of those Directors who are not parties to the GAM Contract or the
Sarofim Contract or interested persons of any such party.
The GAM Contract requires GAM to conduct and maintain a continuous review of
each Fund's portfolio and to make all investment decisions regarding purchases
and sales of portfolio securities and brokerage allocation for each Fund other
than GAM North America Fund. GAM will render its services to each fund from
outside the United States. The Sarofim Contract requires Sarofim to provide the
same services to GAM North America Fund subject to the supervision and oversight
of GAM. Sarofim commenced providing investment advisory services to GAM North
America Fund on June 29, 1990.
The GAM Contract and the Sarofim Contract (the "Contracts") each provides that
the Investment Advisers will select brokers and dealers for execution of each
Fund's portfolio transactions consistent with the Company's brokerage policy
(see "Brokerage Allocation"). Although the services provided by broker-dealers
in accordance with the brokerage policy incidentally may help reduce the
expenses of or otherwise benefit the other investment advisory clients of the
Investment Advisers or their affiliates, as well as the Funds, the value of such
services is indeterminable and the Investment Advisers' fees are not reduced by
any offset arrangement by reason thereof.
Each of the Contracts provides that the Investment Advisers shall have no
liability to the Company or to any shareholder of a Fund for any error of
judgment, mistake of law, or any loss arising out of any investment or other act
or omission in the performance by an Investment Adviser of its duties under such
Contracts or for any loss or damage resulting from the imposition by any
government of exchange control restrictions which might affect the liquidity of
a Fund's assets maintained with custodians or securities depositories in foreign
countries or from any political acts of any foreign governments to which such
assets might be exposed, except for liability resulting from willful
misfeasance, bad faith or gross negligence on the Investment Adviser's part or
reckless disregard of its duties under the Contract.
Each Contract will terminate automatically in the event of its assignment, as
such term is defined under the Act, and may be terminated by each Fund at any
time without payment of any penalty on 60 days' written notice, with the
approval of a majority of the Directors of the Company or by vote of a majority
of the outstanding shares of a Fund (as defined in the Act).
18
<PAGE>
The Company acknowledges that it has obtained its corporate name by consent of
GAM and agrees that if (i) GAM should cease to be the Company's investment
adviser or (ii) Global Asset Management Ltd. should cease to own a majority
equity interest in GAM, the Company, upon request of GAM, shall submit to its
shareholders for their vote a proposal to delete the initials "GAM" from its
name and cease to use the name "GAM Funds, Inc." or any other name using or
derived from "GAM" or "Global Asset Management, any component thereof or any
name deceptively similar thereto, and indicate on all letterheads and other
promotional material that GAM is no longer the Company's investment adviser. If
GAM makes such request because Global Asset Management Ltd. no longer owns a
majority equity interest in GAM, the question of continuing the GAM Contract
must be submitted to a vote of the Company's shareholders. The Company has
agreed that GAM or any of its successors or assigns may use or permit the use of
the names "Global Asset Management" and "GAM" or any component or combination
thereof in connection with any entity or business, whether or not the same
directly or indirectly competes or conflicts with the Company and its business
in any manner.
Advisory Fees. For its services to the Funds, GAM receives a quarterly fee of
0.25% of the average daily net assets of each of GAM International Fund, GAM
Global Fund, GAM Pacific Basin Fund, GAM Japan Capital Fund, GAM Asian Capital
Fund, GAMerica Capital Fund and GAM Europe Fund during the quarter preceding
each payment; and GAM and Sarofim each receives a quarterly fee equal to 0.1 %
of the average daily net assets of GAM North America Fund. In each case the
aggregate advisory fees are equivalent to an annual fee of 1.0% of the average
daily net assets of each Fund during the year. The level of advisory fees paid
by each Fund is higher than the rate of advisory fee paid by most registered
investment companies. The actual advisory fee paid by each Fund during the
fiscal years ended December 31, 1997, 1996 and 1995 are set forth below:
<TABLE>
<CAPTION>
Inter- Pacific North Japan GAMerica Asian
National Global Basin Europe America Capital Capital Capital
-------- ------ ----- ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 $14,631,974 $379,486 $502,073 $366,938 $85,196 $293,314 $22,409 $27,653
1996 $8,746,443 $206,365 $710,064 $270,703 $57,701 $350,646 $23,247 $66,992
1995 $3,085,111 $208,022 $414,221 $203,030 $38,934 $57,489 $16,082 $28,041
</TABLE>
Expenses incurred in connection with each Fund's organization, initial
registration and initial offering under Federal and state securities laws,
including printing, legal and registration fees, and the period over which such
expenses are amortized, are set forth below (except for the expenses of GAM
International Fund, GAM Global Fund, GAM Pacific Basin Fund, GAM Europe Fund and
GAM North American Fund, which have been fully amortized):
Japan GAMerica Asian
Capital Capital Capital
-------------------------------
Organizational Expenses $34,166 $30,036 $30,036
Amortized over 5 years beginning 7/1/94 5/12/95 5/12/95
The expense ratio of each Fund may be higher than that of most registered
investment companies since the cost of maintaining the custody of foreign
securities is higher than that for most domestic
19
<PAGE>
funds and the rate of advisory fees paid by the Funds exceeds that of most
registered investment companies. In addition, each Fund bears its own operating
expenses.
20
<PAGE>
Principal Underwriter and Plans of Distribution. The Company has entered into
distribution agreements (the "Distribution Agreements") with GAM Services under
which GAM Services has agreed to act as principal underwriter and to use
reasonable efforts to distribute each Fund's Class A, Class B, Class C and Class
D shares. GAM Services is an indirect wholly-owned subsidiary of Global Asset
Management Ltd., which also controls GAM.
Pursuant to the Distribution Agreements, GAM Services receives the sales load on
sales of each Class of the Funds' shares and reallows a portion of the sales
load to dealers/brokers. GAM Services also receives the distribution fees
payable pursuant to the Funds' Plans of Distribution for Class A, Class B, Class
C and Class D Shares described below (the "Plans"). The Distribution Agreements
may be terminated at any time upon 60 days' written notice, without payment of a
penalty, by GAM Services, by vote of a majority of the outstanding class of
voting securities of the affected Fund, or by vote of a majority of the
Directors of the Fund who are not "interested Persons" of the Fund and who have
no direct or indirect financial interest in the operation of the Distribution
Agreements. The Distribution Agreements will terminate automatically in the
event of their assignment.
In addition to the amount paid to dealers pursuant to the sales charge table in
the Prospectus, GAM Services from time to time may offer assistance to dealers
and their registered representatives in the form of business and educational or
training seminars. Dealers may not use sales of any of the Funds' shares to
qualify for or participate in such programs to the extent such may be prohibited
by a dealer's internal procedures or by the laws of any state or any
self-regulatory agency, such as the National Association of Securities Dealers,
Inc. Costs associated with incentive or training programs are borne by GAM
Services and paid from its own resources or from fees collected under the Plans.
GAM Services from time to time may reallow all or a portion of the sales charge
on Class A and Class D shares to individual selling dealers. Such additional
reallowance generally will be made only when the selling dealer commits to
substantial marketing support such as internal wholesaling through dedicated
personnel, internal communications and mass mailings.
21
<PAGE>
The aggregate dollar amount of underwriting commissions and the amount retained
by the Distributor for each of the last three fiscal years is as follows:
1997
(000's omitted)
Class A Class D
------------------------- ------------------------
After After
Aggregate Reallowance Aggregate Reallowance
GAM International Fund $ 9,147 $ 2,345 $ 1,321 $ 463
GAM Global Fund 639 173 228 28
GAM Pacific Basin Fund 85 25 25 6
GAM North America Fund 38 11
GAM Europe Fund 35 13
GAM Japan Capital Fund 267 76
GAM Asian Capital Fund 22 11
GAMerica Capital Fund 5 4
For the fiscal year ended 12/31/97, GAM Services received front-end sales loads
of $3,156,062 from the sale of Fund shares.
1996
(000's omitted)
Class A Class D
------------------------- ------------------------
After After
Aggregate Reallowance Aggregate Reallowance
International Fund $9,386 $3,591 $584 $199
Global Fund 217 65 23 7
Pacific Basin Fund 215 91 15 6
Japan Capital Fund 122 59 NA
Asian Capital Fund 6 3 N/A
Europe Fund 17 11 N/A
North America Fund 9 2 N/A
GAMerica Fund - - N/A
For the fiscal year ended 12/31/96, GAM Services received front-end sales loads
of $2,062,895 from the sale of Fund shares.
1995
(000's omitted)
Class A Class D*
---------------------------- ----------------------------
After After
Aggregate Reallowance Aggregate Reallowance
International Fund $2,523 $1,656 $ -- $ --
Global Fund 101 64 -- --
Pacific Basin Fund 110 80 -- --
Japan Capital Fund 8 7
Asian Capital Fund 9 8
Europe Fund 16 15
North America Fund 25 22
GAMerica Fund 2 2
*Class D Shares were first offered on September 5, 1995.
For the fiscal year ended 12/31/95, GAM Services received front-end sales loads
of $1,668,969 from the sale of Fund shares.
22
<PAGE>
Each Fund has adopted separate distribution plans under Rule 12b-1 of the 1940
Act for each class of its shares The Plans permit each Fund to compensate GAM
Services in connection with activities intended to promote the sale of each
class of shares of each Fund. Pursuant to the Plan for Class A shares, each Fund
may pay GAM Services up to 0.30% of average daily net assets of the Fund's Class
A shares. Under the Plan for Class B shares, each Fund may pay GAM Services up
to 1.00% of daily net assets of the Fund's Class B shares. The Class C shares
under the Plan for Class C shares may pay GAM Services up to 1.00% of daily net
assets of the Fund's Class C shares. Under the Plan for Class D shares, each
Fund may pay GAM Services up to 0.50% of the average daily net assets
attributable to Class D shares of the Fund. Expenditures by GAM Services under
the Plans may consist of: (i) commissions to sales personnel for selling shares
of the Funds; including travel & entertainment expenses (ii) compensation, sales
incentives and payments to sales, marketing and service personnel; (iii)
payments to broker-dealers and other financial institutions that have entered
into agreements with GAM Services in the form of a Dealer Agreement for GAM
Funds, Inc. for services rendered in connection with the sale and distribution
of shares of the Funds; (iv) payment of expenses incurred in sales and
promotional activities, including advertising expenditures related to the Funds;
(v) the costs of preparing and distributing promotional materials; (vi) the cost
of printing the Funds' Prospectus and SAI for distribution to potential
investors; and (vii) other activities that are reasonably calculated to result
in the sale of shares of the Funds.
A portion of the fees paid to GAM Services pursuant to the Plans not exceeding
0.25% annually of the average daily net assets of each Fund's shares may be paid
as compensation for providing services to each Fund's shareholders, including
assistance in connection with inquiries related to shareholder accounts (the
'Service Fees'). In order to receive Service Fees under the Plans, participants
must meet such qualifications as are established in the sole discretion of GAM
Services, such as services to each Fund's shareholders; services providing each
Fund with more efficient methods of offering shares to coherent groups of
clients, members or prospects of a participant; services permitting more
efficient methods of purchasing and selling shares, or transmission of orders
for the purchase or sale of shares by computerized tape or other electronic
equipment; or other processing.
The Directors have concluded that there is a reasonable likelihood that the
Plans will benefit each Fund and its shareholders and that the Plans should
result in greater sales and/or fewer redemptions of Fund shares. On a quarterly
basis, the Directors will review a report on expenditures under the Plans and
the purposes for which expenditures were made. The Directors will conduct an
additional, more extensive review annually in determining whether the Plans
shall be continued. Continuation of the Plans from year to year is contingent on
annual approval by a majority of the Directors acting separately on behalf of
each Fund and class and by a majority of the Directors who are not 'interested
persons" (as defined in the 1940 Act) and who have no direct or indirect
financial interest in the operation of the Plans or any related agreements (the
"Plan Directors"). The Plans provide that they may not be amended to increase
materially the costs that a Fund may bear pursuant to the applicable Plan
without approval of the shareholders of the affected class of shares of each
Fund and that other material amendments to the Plans must be approved by a
majority of the Plan Directors acting separately on behalf of each Fund, by vote
cast in person at a meeting called for the purpose of considering such
amendments. The Plans further provide that while each Plan is in effect, the
selection and nomination of Directors who are not "interested persons" shall be
committed to the discretion of the Directors who are not "interested persons." A
Plan may be terminated at any time by vote of a majority of the Plan Directors
or a majority of the outstanding Class of shares of the affected Fund to which
the Plan relates.
Total dollar amounts paid by each of the Funds pursuant to the Plans for the
fiscal year ended December 31, 1997 are as follows:
CLASS A CLASS D
---------- --------
GAM International Fund $4,210,893 $330,875
GAM Global Fund 109,036 8,594
GAM Pacific Basin Fund 144,537 10,036
GAM Japan Capital Fund 88,004 N/A
GAM Europe Fund 111,466 N/A
GAM North America Fund 25,911 N/A
GAM Asian Capital Fund 8,195 N/A
GAMerica Capital Fund 16,745 N/A
23
<PAGE>
Custodian and Administrator. Brown Brothers Harriman & Co., 40 Water Street,
Boston, Massachusetts 02109 ("Brown Brothers"), serves as custodian of the
Company's securities and cash and as its fund accounting agent and
administrator. As such, Brown Brothers maintains certain records for the Company
required by the Act and applicable Federal and state tax laws, keeps books of
account, renders reports and statements, including financial statements, and
disburses funds in payment of the Company's bills and obligations.
Brown Brothers is reimbursed by the Company for its disbursements, expenses and
charges (including counsel fees but excluding salaries and usual overhead
expenses) incurred in connection with the foregoing services and receives a fee
from the Company based on a fee schedule in effect from time to time (which is
based on the net asset value of each Fund). The agreement provides for
termination by either party on 60 days' written notice.
Transfer Agent. Chase Global Funds Service Company, P.O. Box 2798, Boston,
Massachusetts 02208, serves as shareholder service agent, dividend-disbursing
agent, transfer agent and registrar for the Funds. The Funds also engage other
entities to act as shareholder servicing agents and to perform subaccounting
services for the benefit of discrete groups of Fund shareholders.
Legal Counsel. Coudert Brothers, 1114 Avenue of the Americas, New York, New York
10036, acts as legal counsel for the Funds and GAM.
Independent Accountants. Coopers & Lybrand L.L.P., 1301 Avenue of the Americas,
New York, New York 10019-6013, are the independent accountants for the Company
for the fiscal year ending December 31, 1997. In addition to reporting annually
on the financial statements of each Fund, the Company's accountants will review
certain filings of the Company with the SEC and will prepare the Company's
Federal and state corporation tax returns.
24
<PAGE>
Reports to Shareholders. The fiscal year of the Company ends on December 31.
Shareholders of each Fund will be provided at least semi-annually with reports
showing the portfolio of the Fund and other information, including an annual
report with financial statements audited by independent accountants.
BROKERAGE ALLOCATION
The Contracts provide that the Investment Advisers shall be responsible for the
selection of brokers and dealers for the execution of the portfolio transactions
of each Fund and, when applicable, the negotiation of commissions in connection
therewith.
Purchase and sale orders will usually be placed with brokers who are selected
based on their ability to achieve "best execution" of such orders. "Best
execution" means prompt and reliable execution at the most favorable security
price, taking into account the other provisions hereinafter set forth. The
determination of what may constitute best execution and price in the execution
of a securities transaction by a broker involves a number of considerations,
including the overall direct net economic result to the Fund (involving both
price paid or received and any commissions and other costs paid), the efficiency
with which the transaction is effected, the ability to effect the transaction at
all where a large block is involved, the availability of the broker to stand
ready to execute possibly difficult transactions in the future, and the
financial strength and stability of the broker. Such considerations are weighed
by the Investment Advisers in determining the overall reasonableness of
brokerage commissions.
Each Investment Adviser is authorized to allocate brokerage and principal
business to brokers who have provided brokerage and research services, as such
services are defined in Section 28(e) of the Securities Exchange Act of 1934, as
amended (the "1934 Act"), for the Company and/or other accounts for which the
Investment Adviser exercises investment discretion (as defined in Section
3(a)(35) of the 1934 Act) and, as to transactions for which fixed minimum
commission rates are not applicable, to cause a Fund to pay a commission for
effecting a securities transaction in excess of the amount another broker would
have charged for effecting that transaction, if the Investment Adviser
determines in good faith that such amount of commission is reasonable in
relation to the value of the brokerage and research services provided by such
broker, viewed in terms of either that particular transaction or the Investment
Adviser's overall responsibilities with respect to the Fund and the other
accounts as to which it exercises investment discretion. In reaching such
determination, the Investment Advisers will not be required to place or to
attempt to place a specific dollar value on the research or execution services
of a broker or on the portion of any commission reflecting either of said
services.
Research services provided by brokers to the Investment Advisers includes that
which brokerage houses customarily provide to institutional investors and
statistical and economic data and research reports on particular companies and
industries. Research furnished by brokers may be used by each Investment Adviser
for any of its accounts, and not all such research may be used by the Investment
Advisers for the Funds.
The amount of brokerage commissions paid by each Fund during the three fiscal
years ended December 31, 1997, 1996 and 1995 are set forth below:
<TABLE>
<CAPTION>
Inter- Pacific North Japan GAMerica Asian
national Global Basin Europe America Capital Capital Capital
-------- ------ ----- ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 $4,380,158 $151,482 $238,964 $137,778 $4,728 $159,168 $346 $35,465
</TABLE>
25
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 3,778,350 109,863 362,709 93,545 2,512 139,479 3,385 47,627
1995 706,834 51,949 268,565 149,546 3,906 96,322 6,336 30,158
</TABLE>
NET ASSET VALUE, DIVIDENDS AND TAXES
Net Asset Value. Each Fund (except the GAM Japan Capital Fund) determines its
net asset value each day the New York Stock Exchange is open for trading. The
New York Stock Exchange is closed on the following holidays, in addition to
Saturdays and Sundays: New Year's Day, President's Day, Martin Luther King, Jr.
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day. GAM Japan Capital Fund determines its net asset value each
day the Tokyo Stock Exchange is open for trading.
Portfolio securities, including ADR's, EDR's and options, which are traded on
stock exchanges or a national securities market will be valued at the last sale
price as of the close of business on the day the securities are being valued or,
lacking any sales, at the last available bid price. Securities traded in the
over-the-counter market will be valued at the last available bid price in the
over-the-counter market prior to the time of valuation. Money market securities
will be valued at market value, except that instruments maturing within 60 days
of the valuation are valued at amortized cost. The other securities and assets
of each Fund for which market quotations may not be readily available (including
restricted securities which are subject to limitations as to their sale) will be
valued at fair value as determined in good faith by or under the direction of
the Board of Directors. Securities quoted in foreign currencies will be
converted to United States dollar equivalents using prevailing market exchange
rates.
Suspension of the Determination of Net Asset Value. The Board of Directors may
suspend the determination of net asset value and, accordingly, redemptions for a
Fund for the whole or any part of any period during which (1) the New York Stock
Exchange is closed (other than for customary weekend and holiday closings), (2)
trading on the New York Stock Exchange is restricted, (3) an emergency exists as
a result of which disposal of securities owned by the Fund is not reasonably
practicable or it is not reasonably practicable for the Fund fairly to determine
the value of its net assets, or (4) the Securities and Exchange Commission may
by order permit for the protection of the holders of the Fund's shares.
Tax Status. Although each Fund is a series of the Company, it is treated as a
separate corporation for purposes of the Internal Revenue Code of 1986, as
amended (the "Code"). Each Fund expects to meet certain diversification-of-
assets and other requirements in order to qualify under the Code as a regulated
investment company. If it qualifies, a Fund will not be subject to United States
Federal income tax on net ordinary income and net capital gains which are
distributed to its shareholders within certain time periods specified in the
Code. Each Fund intends to distribute annually all of its net ordinary income
and net capital gains. If a Fund were to fail to distribute timely substantially
all such income and gains, it would be subject to Federal corporate income tax
and, in certain circumstances, a 4% excise tax on its undistributed income and
gains.
Distributions from net ordinary income and net short-term capital gains are
taxable to shareholders as ordinary income. The 70% deduction available to
corporations for dividends received from a Fund will apply to ordinary income
distributions only to the extent that they are attributable to a Fund's dividend
income from United States corporations. Distributions from net long-term capital
gains are taxable to a shareholder as long-term capital gains regardless of the
length of time the shares in respect of which such distributions are received
have been held by the shareholder. Dividends declared in December will be
treated as received in December as long as they are actually paid before
February 1 of the following year.
Income from foreign securities purchased by a Fund may be reduced by a
withholding tax at the source. If as of the fiscal year-end of a Fund more than
50% of the Fund's assets are invested in securities of foreign corporations,
then the Fund may make an election which will result in the shareholders having
the option to elect either to deduct their pro rata share of the foreign taxes
paid by the Fund or to use their pro rata share of the foreign taxes paid by the
Fund in calculating the foreign tax credit to which they are entitled.
Distributions by a Fund will be treated as United States source income for
purposes other than computing the foreign tax credit limitation.
Distributions of net ordinary income or net short-term capital gains received by
a non-resident alien individual or foreign corporation which is not engaged in a
trade or business in the United States generally will be subject to Federal
withholding tax at the rate of 30%, unless such rate is reduced by an applicable
income tax treaty to which the United States is a party. However, gains from the
sale by such shareholders of shares of the Funds and distributions to such
shareholders from long-term capital gains generally will not be subject to the
Federal withholding tax.
Ordinarily, distributions and redemption proceeds earned by a United States
shareholder of a Fund are not subject to withholding of Federal income tax.
However, distributions or redemption proceeds paid by a Fund to a shareholder
may be subject to 20% backup withholding if the shareholder fails to supply the
Fund or its agent with such shareholder's taxpayer identification number or an
applicable exemption certificate.
In addition to the Federal income tax consequences described above relating to
an investment in a Fund, there may be other Federal, state or local tax
considerations that depend upon the circumstances of each particular investor.
Prospective shareholders are therefore urged to consult their tax advisors with
respect to the effect of this investment on their own specific situations.
26
<PAGE>
PERFORMANCE INFORMATION
The average annual total return of each Fund for the periods ended December 31,
1997 are set forth in the table below. Average annual total return is computed
by finding the average annual compounded rates of return over the periods
indicated that would equate the initial amount invested in a Fund to the
redemption value at the end of the period. All dividends and distributions are
assumed to be reinvested. The results are shown both with and without deduction
of the sales load, since the sales load can be waived for certain investors.
Average Annual Return
---------------------
After Deduction of Without Deduction
Maximum Sales Load of Sales Load
------------------ -------------
GAM International Fund (Class A)
1 year 22.48% 28.93%
5 years 22.92% 24.18%
10 years 16.51% 17.11%
From inception (1/2/85) 21.18% 21.66%
GAM International Fund (Class D)
1 year 24.27% 28.78%
From inception (9/5/95) 18.43% 20.29%
GAM Global Fund (Class A)
1 year 28.20% 34.95%
5 years 23.68% 24.96%
10 years 15.45% 16.04%
From inception (5/28/86) 13.40% 13.90%
GAM Global Fund (Class D)
1 year 30.08% 34.80%
From inception (9/5/95) 21.57% 23.52%
GAM Pacific Basin Fund (Class A)
27
<PAGE>
1 year (33.50)% (30.00)%
5 years 2.41% 3.47%
10 years 7.83% 8.39%
From inception (5/6/87) 5.41% 5.91%
GAM Pacific Basin Fund (Class D)
1 year (32.63)% (30.18)%
From inception (9/5/95) (16.03)% (14.66)%
GAM Europe Fund
1 year 21.17% 27.55%
5 years 15.33% 16.52%
From inception (1/1/90) 6.19% 6.88%
GAM North America Fund
1 year 22.94% 29.41%
5 years 15.02% 16.21%
From inception (1/1/90) 13.50% 14.23%
GAM Japan Capital Fund
1 year (7.44)% (2.58)%
From inception (7/1/94) (1.47)% (0.02)%
GAM Asian Capital Fund
1 year (38.57)% (35.34)%
From inception (5/12/95) (17.21)% (15.58)%
GAMerica Capital Fund
1 year 30.41% 37.28%
From inception (5/12/95) 18.47% 20.80%
Prospective investors should note that past results may not be indicative of
future performance. The investment return and principal value of shares of a
Fund will fluctuate so that an investor's shares, when redeemed, may be worth
more or less than their original cost.
Comparative performance information may be used from time to time in advertising
each Fund's shares. The performance of GAM Global Fund may be compared to the
Morgan Stanley Capital International (MSCI) World Index. The performance of GAM
International Fund may be compared to the MSCI Europe, Australia, Far East
(EAFE) Index. The performance of GAM Pacific Basin Fund may be compared to the
MSCI Pacific Index. The performance of GAM Asian Capital Fund may be compared to
the MSCI Combined Far East Index ex Japan. The performance of GAM Japan Capital
Fund may be compared to the Tokyo Stock Exchange Index. The performance of GAM
North America Fund and GAMerica Capital Fund may be compared to the Standard &
Poor's 500 Composite Stock Price Index and the Dow Jones Industrial Average. The
performance of GAM Europe Fund may be compared to the MSCI Europe and Financial
Times Actuaries World Indices--Europe. Each stock index is an unmanaged index of
common stock prices, converted into U.S. dollars where appropriate. Any index
selected by a Fund may not compute total return in the same manner as the Funds
and may exclude, for example, dividends paid on stocks included in the index and
brokerage or other fees.
FINANCIAL STATEMENTS
The audited financial statements of each Fund for the fiscal year ended December
31, 1997 and the report of the Funds' independent auditors in connection
therewith are included in the 1997 Annual Report to Shareholders and are
incorporated by reference in this Statement of Additional Information.
28
<PAGE>
- --------------------------------------------------------------------------------
GAM International Fund - Statement of Investments
- --------------------------------------------------------------------------------
as at 31st December, 1997
Market
value
Holdings Description US$
- ----------------------------------------------------------------------------
Adjustable Rate Index Notes 4.9%
France - 0.7%
+ DLJ ARIN, Indexed to 311,824 shares
Peugeot 1998-11-18 12,486,431
--------------
12,486,431
--------------
Hong Kong - 0.3%
+ DLJ ARIN, Indexed to 100,000 shares
China Telecom ADR 1998-11-10 1,644,557
+ DLJ ARIN, Indexed to 6,000,000 shares
China Telecom 1998-11-12 4,287,972
--------------
5,932,529
--------------
United Kingdom - 3.9%
+ DLJ ARIN, Indexed to 3,200,000 shares
British Biotech 1998-04-03 5,655,569
+ DLJ ARIN, Indexed to 13,000,000 shares
British Steel 1998-11-09 20,427,566
+ DLJ ARIN, Indexed to 1,000,000 shares
Flextech 1998-05-28 7,975,399
+ DLJ ARIN, Indexed to 1,000,000 shares
Flextech 1998-06-12 6,111,726
+ DLJ ARIN, Indexed to 1,000,000 shares
Flextech 1998-10-08 4,385,308
+ DLJ ARIN, Indexed to 4,407,192 shares
General Cable 1998-12-07 9,306,620
+ DLJ ARIN, Indexed to 1,944,000 shares
Siebe 1998-12-07 13,829,064
+ DLJ ARIN, Indexed to 7,650,000 shares
TeleWest Communications 1998-12-07 7,122,730
--------------
74,813,982
--------------
Total Adjustable Rate Index Notes (Cost $75,513,308) 93,232,942
--------------
Bonds 0.3%
Germany - 0.3%
9,750,000 Bundes Deutschland 6.25% 2024-01-04 5,694,455
--------------
Total Bonds (Cost $5,946,465) 5,694,455
--------------
Bond Warrants 1.8%
France - 0.7%
*9,066,000 OAT 6% Wts 13,195,673
April 1998
Germany - 1.1%
*5,674,000 Bundes Deutschland 6.25% Wts
February 1998 19,838,499
--------------
Total Bond Warrants (Cost $15,180,656) 33,034,172
--------------
Currency Warrants 1.7%
Germany - 1.7%
*5,900,800 US Salomon USD/DEM Call Wts
1998-03-13 31,980,434
--------------
Total Currency Warrants (Cost $18,872,132) 31,980,434
--------------
Equities 85.4%
Belgium - 1.7%
73,950 Kredietbank 30,989,306
1,440 Kredietbank New 603,443
--------------
31,592,749
--------------
Denmark - 2.2%
311,100 Den Danske Bank 41,453,113
--------------
41,453,113
--------------
France - 9.2%
475,000 AXA - UAP 36,754,590
1,140,818 Credit Lyonnais 59,329,739
69,285 L'Oreal 27,110,771
877,028 Lagardere Groupe Registered 28,998,683
166,260 Union des Assurances Federales 21,823,611
--------------
174,017,394
--------------
Hong Kong - 4.2%
17,701,800 Hong Kong & China Gas 34,380,190
1,715,892 HSBC Holdings (HKD) 42,293,892
6,889,000 JCG Holdings 2,955,985
--------------
79,630,067
--------------
Hungary - 1.1%
171,260 Gedeon Richter GDR 19,908,975
--------------
19,908,975
--------------
Italy - 1.5%
6,300,000 Telecom Italia Mobile Spa 29,073,090
--------------
29,073,090
--------------
F-1
<PAGE>
- --------------------------------------------------------------------------------
GAM International Fund -- Statement of Investments (continued)
- --------------------------------------------------------------------------------
as at 31st December, 1997
Market
value
Holdings Description US$
- ----------------------------------------------------------------------------
Japan - 15.9%
1,939,000 Canon 45,134,456
1,373,000 Credit Saison 33,851,914
5,200 East Japan Railway 23,451,761
1,040,000 Honda Motor 38,143,951
1,938,000 Ricoh 24,039,510
280,000 Rohm 28,514,548
393,200 Sony 34,924,349
1,322,000 Takeda Chemical 37,655,743
465,000 TDK 35,035,222
--------------
300,751,454
--------------
Netherlands - 6.5%
2,075,214 ABN AMRO Holding 40,424,727
1,276,614 Fortis AMEV 55,654,333
644,110 ING 27,127,204
--------------
123,206,264
--------------
Singapore - 0.4%
5,104,000 Want Want Holdings 7,043,520
*672,600 Want Want Holdings New 887,832
--------------
7,931,352
--------------
Sweden - 1.2%
637,770 OM Gruppen 23,234,929
--------------
23,234,929
--------------
Switzerland - 10.1%
35,650 Nestle Registered 53,406,686
47,650 Novartis Registered 77,286,135
5,999 Roche Holding Genussscheine 59,550,708
--------------
190,243,529
--------------
United Kingdom - 31.4%
10,273,703 Bank of Scotland 93,307,779
3,172,057 Barclays 84,437,127
1,060,627 British Aerospace 30,222,325
5,525,300 Corporate Services Group 19,328,635
3,601,000 Dairy Crest Group 14,903,538
1,403,000 Dixons Group 14,078,766
2,363,300 Emap Publishing 35,165,174
2,359,208 Hyder 37,506,566
4,345,200 National Express Group 48,883,924
*4,296,930 Newsquest 18,736,502
3,852,301 Prudential 46,906,396
2,856,382 Severn Trent 45,879,730
2,368,824 Severn Trent Class B 1,206,036
2,614,000 Stagecoach Holdings 35,847,409
2,584,116 Thames Water 38,472,068
844,000 Zeneca 29,892,876
--------------
594,774,851
--------------
Total Equities (Cost $1,286,114,689) 1,615,817,767
--------------
Equity Warrants 1.6%
Hong Kong - 0.6%
*1,858,800 HSBC Wts 1998-12-31 11,277,775
--------------
11,277,775
--------------
Japan - 1.0%
*13,591,000 Sony Wts 1998-12-04 18,811,334
--------------
18,811,334
--------------
Switzerland - 0.0%
*3,000 Roche Holding Wts 1998-05-05 314,125
*7,800 Swiss Bank Corp Bearer Wts 2000 109,431
--------------
423,556
--------------
Total Equity Warrants (Cost $29,109,657) 30,512,665
--------------
Options 1.3%
France - 1.0%
*10,102 CAC 40 Index 1998-09-30
3,100 FRF Calls 19,764,235
--------------
19,764,235
--------------
Japan - 0.3%
*1,692 Nikkei Index 1998-02-28
15,500 JPY Puts 5,247,014
--------------
Total Options (Cost $20,244,029) 25,011,249
--------------
F-2
<PAGE>
- --------------------------------------------------------------------------------
GAM International Fund -- Statement of Investments (continued)
- --------------------------------------------------------------------------------
Market
value
Holdings Description US$
- ----------------------------------------------------------------------------
Time Deposits - 1.1%
United States - 1.1%
20,892,793 First National Bank of Chicago
5.0% 1998-01-02 20,892,793
714,499 Republic National Bank
5.0% 1998-01-02 714,499
--------------
Total Time Deposits (Cost $21,607,292) 21,607,292
--------------
Total Investments (Cost $1,472,588,228**) - 98.1% 1,856,890,976
Net current assets - 1.9% 36,057,036
--------------
Total net assets - 100% 1,892,948,012
==============
* Non-income producing security.
** Cost for federal income tax purposes is $1,489,420,421 (Note 5).
+ Adjustable rate index notes are inversely indexed to the value of the
underlying security.
Glossary of terms:
ADR - American Depositary Receipt
FRF - French Franc
GDR - Global Depository Receipt
HKD - Hong Kong Dollar
JPY - Japanese Yen
See notes to financial statements.
[The following table was depicted as a pie chart in the printed material]
Geographic Analysis as at
31st December, 1997
UNITED KINGDOM 35.37%
JAPAN 17.16%
FRANCE 11.59%
HONG KONG 5.12%
NETHERLANDS 6.51%
SWITZERLAND 10.07%
GERMANY 3.05%
DENMARK 2.19%
OTHER AREAS 7.04%
NET CURRENT ASSETS 1.90%
[The following table was depicted as a pie chart in the printed material]
Investment Analysis as at
31st December, 1997 (unaudited)
BANKING 20.2%
HEALTH & PERSONAL CARE 14.2%
INSURANCE 9.0%
BUSINESS & PUBLIC SERVICES 7.1%
TRANSPORT - ROAD & RAIL 5.6%
FOOD & HOUSEHOLD PRODUCTS 4.5%
FINANCIAL SERVICES 4.0%
OTHER 35.4%
F-3
<PAGE>
- --------------------------------------------------------------------------------
GAM Global Fund - Statement of Investments
- --------------------------------------------------------------------------------
as at December 31, 1997
Market
value
Holdings Description US$
- ----------------------------------------------------------------------------
Adjustable Rate Index Notes - 3.9%
United Kingdom - 1.6%
+ DLJ ARIN Indexed to 115,000 shares
British Biotech 1998-05-08 203,604
+ DLJ ARIN Indexed to 85,000 shares
Flextech 1998-10-13 400,686
+ DLJ ARIN Indexed to 120,360 shares
General Cable 1998-06-10 221,251
+ DLJ ARIN Indexed to 75,000 shares
TeleWest Communications 1998-03-24 124,603
+ DLJ ARIN Indexed to 100,000 shares
TeleWest Communications 1998-04-02 156,218
--------------
1,106,362
--------------
United States - 2.3%
+ DLJ ARIN Indexed to 25,000 shares
Global Star Tele 1998-11-12 346,015
+ DLJ ARIN Indexed to 8,000 shares
Global Star Tele 1998-12-31 81,288
+ DLJ ARIN Indexed to 12,500 shares
Worldcom 1998-10-28 165,496
+ DLJ ARIN Indexed to 25,000 shares
Worldcom 1998-10-19 511,003
+ DLJ ARIN Indexed to 18,000 shares
Worldcom 1998-11-12 246,333
+ DLJ ARIN Indexed to 14,000 shares
Worldcom 1998-12-29 220,251
--------------
1,570,386
--------------
Total Adjustable Rate Index Notes (Cost $2,326,698) 2,676,748
--------------
Bond Warrants - 0.3%
Germany
*34,600 Salomon Bundes 6.25% Wts February 1998 120,975
--------------
France - 0.1%
*42,000 OAT 6% Wts April 1998 61,131
--------------
Total Bond Warrants (Cost $74,775) 182,106
--------------
Currency Warrants - 1.9%
Germany - 1.9%
*554,600 Goldman Sachs Sony Wts /DEM/ 767,623
*104,100 Salomon Bros C/Wt USD Lnkd 1.698 564,188
--------------
1,331,811
--------------
Total Currency Warrants (Cost $1,047,602) 1,331,811
--------------
Equities - 82.6%
France - 3.2%
*16,806 Credit Lyonnais 874,018
1,734 L'Oreal 678,503
4,922 Union des Assurances Federales 646,071
--------------
2,198,592
--------------
Hong Kong - 4.2%
512,920 Hong Kong & China Gas 996,186
77,781 HSBC Holdings (HKD) 1,917,173
--------------
2,913,359
--------------
Japan - 9.1%
59,000 Canon 1,373,354
46,000 Honda Motor 1,687,136
9,000 Rohm 916,539
12,000 Sony 1,065,850
17,000 TDK 1,280,857
--------------
6,323,736
--------------
Netherlands - 3.0%
59,736 ABM-AMRO Holding 1,163,644
21,439 Fortis AMEV 934,639
--------------
2,098,283
--------------
Sweden - 1.2%
22,641 OM Gruppen 824,846
--------------
824,846
--------------
Switzerland - 3.2%
1,307 Novartis Registered 2,119,895
9 Roche Holding Genusscheine 89,341
--------------
2,209,236
--------------
United Kingdom - 5.5%
74,558 Barclays 1,984,663
59,457 Hyder 945,244
58,541 Thames Water 871,553
--------------
3,801,460
--------------
F-4
<PAGE>
- --------------------------------------------------------------------------------
GAM Global Fund - Statement of Investments (continued)
- --------------------------------------------------------------------------------
Market
value
Holdings Description US$
- ----------------------------------------------------------------------------
United States 53.2%
10,495 American International Group 1,141,331
11,830 Burlington Northern/Santa Fe 1,099,451
15,103 Chase Manhattan 1,653,778
23,630 Compaq Computer 1,333,618
30,175 Computer Associates International 1,595,503
*11,680 Computer Sciences 975,280
18,805 Delta Air Lines 2,237,795
36,710 Depuy 1,055,413
27,812 Federal Home Loan Mortgage 1,166,366
24,846 First Union 1,273,358
47,265 Galileo Intl 1,305,696
30,536 Intel 2,145,154
21,596 Johnson & Johnson 1,422,637
38,380 Kroger 1,417,661
46,235 MBNA 1,262,793
23,620 Medtronic 1,235,621
41,720 Merrill Lynch 3,042,953
*17,350 Microsoft 2,242,488
17,740 Morgan Stan. /Dean Witter Disc 1,048,878
38,048 NationsBank 2,313,794
*11,823 Rambus 540,902
30,680 Republic Group 502,385
20,086 Schering-Plough 1,247,843
*24,090 Sungard Data 746,790
*48,070 Usair Group 3,004,375
--------------
37,011,863
--------------
Total Equities (Cost $48,516,185) 57,381,375
--------------
Equity Warrants - 0.0%
Switzerland - 0.0%
*54 Roche Holdings Genusscheine
Wts 1998 5,654
*195 Swiss Bank Corp Bearer Wts. 2000 2,736
--------------
Total Equity Warrants (Cost $1,545) 8,390
--------------
Options - 1.1%
France - 0.9%
*334 CAC 40 Index
3,100 FRF Calls 1998-09-30 653,460
--------------
653,460
--------------
Japan - 0.2%
*54 Nikkei Index
15,500 JPY Puts 1998-02-12 167,458
--------------
167,458
--------------
Total Options (Cost $772,621) 820,918
--------------
Time Deposits - 8.4%
United States - 8.4%
5,868,444 First National Bank of Chicago
5.0% 1998-01-02 5,868,444
--------------
Total Time Deposits (Cost $5,868,444) 5,868,444
--------------
Total Investments (Cost $58,607,870**) - 98.2% 68,269,792
--------------
Net current assets - 1.8% 1,237,706
--------------
Total net assets - 100% 69,507,498
==============
* Non-income producing security.
** Cost for federal income tax purposes is $58,673,744 (Note 5).
+ Adjustable rate index notes are inversely indexed to the value of the
underlying security.
Glossary of terms:
FRF - French Franc
HKD - Hong Kong Dollar
JPY - Japanese Yen
See notes to financial statements.
F-5
<PAGE>
- --------------------------------------------------------------------------------
GAM Global Fund - Statement of Investments (continued)
- --------------------------------------------------------------------------------
Geographic Analysis as at
31st December, 1997
[The following table was depicted as a pie chart in the printed material]
UNITED STATES 63.90%
UNITED KINGDOM 7.10%
GERMANY 2.10%
HONG KONG 4.20%
NETHERLANDS 3.00%
SWITZERLAND 3.20%
JAPAN 9.30%
FRANCE 4.20%
SWEDEN 1.20%
NET CURRENT ASSETS 1.80%
Investment Analysis as at
31st December, 1997 (unaudited)
[The following table was depicted as a pie chart in the printed material]
BUSINESS & PUBLIC SERVICES 12.3%
BANKING 11.9%
ELECTRONIC COMP. & INSTRUMENTS 7.6%
TRANSPORTATION - AIRLINES 7.1%
OTHER 27.8%
CASH 7.2%
HEALTH & PERSONAL CARE 13.3%
FINANCIAL SERVICES 12.8%
F-6
<PAGE>
- --------------------------------------------------------------------------------
GAM Europe Fund - Statement of Investments
- --------------------------------------------------------------------------------
as at 31st December, 1997
Market
value
Holdings Description US$
- --------------------------------------------------------------------------------
Adjustable Rate Index Notes 0.2%
Germany - 0.2%
+9,200 DLJ ARIN, Indexed to 9,200 shares
Siemens 1998-11-16 90,175
----------
Total Adjustable Rate Index Notes (Cost $132,972) 90,175
----------
Equities 97.1%
Belgium - 2.2%
1,939 Generale de Banque 842,599
----------
842,599
----------
Denmark - 7.0%
10,300 Bang & Olufsen Holding Class B 613,315
7,880 Den Danske Bank 1,049,986
18,000 Spar Nord Holding 1,050,140
----------
2,713,441
----------
Finland - 2.8%
43,950 Kesko 681,530
30,635 Valmet Class A (Fria) 422,209
----------
1,103,739
----------
France - 24.4%
3,515 Accor 653,532
5,985 Alcatel Alsthom 760,742
12,830 AXA - UAP 992,761
13,480 Banque Nationale de Paris 716,499
10,634 Bertrand Faure 756,050
1,175 CGIP 421,700
5,310 IMETAL 659,945
5,175 Plastic Omnium 682,720
7,540 Societe National Elf Aquitaine 876,963
4,905 Technip 517,517
14,590 Total B 1,587,846
13,625 Valeo 924,105
----------
9,550,380
----------
Germany - 8.1%
*2,705 Alliance 697,677
18,370 BASF 655,561
*35,300 BHW Holding 578,849
18,175 Veba 1,237,597
----------
3,169,684
----------
F-7
<PAGE>
- --------------------------------------------------------------------------------
GAM Europe Fund - Statement of Investments (continued)
- --------------------------------------------------------------------------------
Market
value
Holdings Description US$
- --------------------------------------------------------------------------------
Italy - 5.7%
133,795 ENI Spa 758,465
230,910 Telecom Italia Spa 1,474,741
----------
2,233,206
----------
Netherlands - 9.3%
29,985 ABN-AMRO Holding 584,101
25,535 Heijmans Group 591,863
*14,945 ING 629,421
26,450 Royal Dutch Petroleum 1,451,804
20,710 Telegraaf Holding 390,149
----------
3,647,338
----------
Norway - 4.6%
24,550 Kverneland Gruppen 399,458
8,740 Orkla Class A 754,899
17,560 Sparbanken 623,826
----------
1,778,183
----------
Portugal - 1.3%
*13,975 Brisa Auto Estradas 500,618
*++8,297 Sotancro --
----------
500,618
----------
Spain - 2.6%
14,660 Banco Popular Registered 1,024,393
----------
1,024,393
----------
Sweden - 7.9%
23,495 Atlas Copco Class A 701,945
20,100 Cardo 524,500
23,470 Kalmar Industries 378,706
23,570 Sandvik Class A 671,502
23,236 Svenska Handlesbank Class A 804,050
----------
3,080,703
----------
Switzerland - 7.6%
720 Novartis Registered 1,167,807
79 Roche Holding Genussscheine 784,215
*715 Union Bank Of Switzerland 1,033,452
----------
2,985,474
----------
United Kingdom - 13.6%
109,410 Bank Of Scotland 993,683
244,101 Burford Holdings 400,899
31,170 Daily Mail & General Trust Class A 1,013,603
31,485 Glaxo Wellcome 750,551
186,010 Lasmo 827,887
328,425 Metalrax Group 488,147
25,460 Prudential 310,006
159,250 Somerfield 549,243
----------
5,334,019
----------
Total Equities (Cost $32,686,260) 37,963,777
----------
Equity Rights 0.0%
Belgium - 0.0%
90 Generale de Banque Rts 24
----------
Total Equity Rights (Cost $113) 24
----------
Total Investments (Cost $32,819,345**) - 97.3% 38,053,976
----------
Net current assets - 2.7% 1,046,612
----------
Total net assets - 100% 39,100,588
==========
* Non-income producing security.
** Cost for federal income tax purposes is $32,824,543 (Note 5).
+ Adjustable rate index notes are inversely indexed to the value of the
underlying security.
++ Fair value determined by the board of directors.
See notes to financial statements.
F-8
<PAGE>
- --------------------------------------------------------------------------------
GAM Europe Fund - Statement of Investments (continued)
- --------------------------------------------------------------------------------
Geographic Analysis as at
31st December, 1997
[GRAPHIC OMITTED]
[The following information was depicted as a pie graph in the printed material.]
UNITED KINGDOM 13.64%
NETHERLANDS 9.32%
GERMANY 8.34%
SWEDEN 7.89%
SWITZERLAND 7.64%
DENMARK 6.95%
FRANCE 24.42%
ITALY 5.71%
NORWAY 4.55%
FINLAND 2.82%
SPAIN 2.62%
NET CURRENT ASSETS 2.68%
OTHER AREAS 3.42%
Investment Analysis as at
31st December, 1997 (unaudited)
[GRAPHIC OMITTED]
[The following information was depicted as a pie graph in the printed material.]
BANKING 21.90%
ENERGY SOURCE 12.60%
HEALTH & PERSONAL CARE 7.70%
MACHINERY & ENGINEERING 7.50%
INSURANCE 6.90%
FINANCIAL SERVICES 5.80%
TELECOMMUNICATIONS 5.60%
OTHER 32.00%
F-9
<PAGE>
- --------------------------------------------------------------------------------
GAM Pacific Basin Fund - Statement of Investments
- --------------------------------------------------------------------------------
as at 31st December, 1997
Market
value
Holdings Description US$
- --------------------------------------------------------------------------------
Equities - 100.3%
Australia - 13.0%
58,500 Broken Hill Proprietary 543,315
370,000 Colonial 1,056,226
305,000 Novus Petroleum 795,135
43,475 Rio Tinto 507,279
*146,000 Telstra Corp Installment Receipts 308,304
----------
3,210,259
----------
Hong Kong - 31.4%
417,000 Amoy Properties 365,931
203,000 Cheung Kong (Holdings) 1,329,494
517,800 Hong Kong & China Gas 1,005,664
*273,000 Hong Kong Land Holdings 524,160
179,000 Hong Kong Telecommunications 369,596
42,400 HSBC Holdings (HKD) 1,045,090
381,000 Kerry Properties 629,346
130,000 Sun Hung Kai Properties 910,118
138,000 Swire Pacific Class A 760,434
372,352 Wharf (Holdings) 804,865
----------
7,744,698
----------
Indonesia - 2.6%
1,438,800 Bank Bali 176,580
760,000 Hero Supermarket 186,546
1,018,000 Mayorah Indah 87,918
462,000 Modern Photo Film 134,400
309,000 Mustika Ratu 54,777
----------
640,221
----------
Japan - 32.0%
42,000 Canon 977,642
16,000 Canon Sales 182,542
74 DDI 195,482
14,000 Japan Associated Finance 498,469
61,000 JGC 128,446
29,000 Joshin Denki 67,726
51,000 Keisei Electric Railway 133,162
163,000 Long Term Credit Bank Of Japan 260,850
63,000 Mitsubishi Estate 684,992
12,000 Murata Manufacturing 301,378
70,000 Nagoya Railroad 240,123
76,000 Nissan Fire & Marine Insurance 231,026
22,400 ORIX 1,560,796
34,000 Sekisui Chemical 172,603
14,400 Sony 1,279,020
58,000 Sumitomo Marine & Fire Insurance 306,432
10,000 Tachihi Enterprise 211,332
41,000 Taiyo Yuden 284,112
19,500 Xebio 155,283
----------
7,871,416
----------
Korea - 1.1%
48,000 Hyundai Motor GDR 74,880
41,508 Shinhan Bank 184,888
----------
259,768
----------
Philippines - 4.2%
811,500 Ayala Land B 320,593
280,400 Bank of The Phillipine Islands 616,188
*3,766,000 Cebu Holdings Inc (PHP) 92,988
----------
1,029,769
----------
Singapore - 12.7%
104,000 DBS Land 159,193
104,750 Development Bank Of Singapore (FR) 894,927
78,000 Keppel 223,981
699,000 Kim Eng Holdings 228,093
280,718 Overseas Chinese Banking (FR) 1,632,178
----------
3,138,372
----------
Thailand - 3.3%
63,000 Bangkok Bank (FR) 157,009
116,000 Krung Thai Bank (FR) 24,091
181,750 Post Publishing (FR) 103,803
118,000 Siam Commercial Bank (FR) 134,787
88,610 Thai Farmers Bank (FR) 161,025
249,700 Thai Glass Industries (FR) 191,877
180,900 Thai Military Bank (FR) 37,570
----------
810,162
----------
Total Equities (Cost $39,917,202) 24,704,665
----------
Equity Warrants - 0.2%
Australia - 0.1%
*432,000 Colonial Ltd Wts 1998-02-02 20,835
----------
20,835
----------
Indonesia - 0.0%
*5,600 Bank Bali (FR) Wts 2000-08-29 51
----------
51
----------
Japan - 0.1%
*170 Kyocera Wts 1998-01-23 4,250
*490 Tobu Railway Wts 1998-03-17 12,250
----------
16,500
----------
F-10
<PAGE>
- --------------------------------------------------------------------------------
GAM Pacific Basin Fund - Statement of Investments (continued)
- --------------------------------------------------------------------------------
Market
value
Holdings Description US$
- --------------------------------------------------------------------------------
Thailand - 0.0%
*17,763 Thai Farmers Bank Wts 2002-09-15 (FR) 1,881
----------
1,881
----------
Total Equity Warrants (Cost $522,627) 39,267
----------
Total Investments (Cost $40,439,829**) - 100.5% 24,743,932
Net current liabilities - (0.5)% (115,592)
----------
Total net assets - 100.0% 24,628,340
==========
* Non-income producing security.
** Cost for federal income tax purposes is $41,524,738 (Note 5).
Glossary of terms:
GDR - Global Depository Receipt
FR - Foreign Registered
HKD - Hong Kong Dollar
PHP - Phillipine Peso
See notes to financial statements.
Geographic Analysis
as at 31st December, 1997
[GRAPHIC OMITTED]
[The following information was depicted as a pie graph in the printed material.]
JAPAN 32.03%
HONG KONG 31.45%
AUSTRALIA 13.12%
SINGAPORE 12.74%
INDONESIA 2.60%
THAILAND 3.30%
PHILLIPINES 4.18%
KOREA 1.05%
NET CURRENT LIABILITES (0.47)%
Investment Analysis
as at 31st December, 1997 (unaudited)
[GRAPHIC OMITTED]
[The following information was depicted as a pie graph in the printed material.]
REAL ESTATE 18.70%
BANKING 17.50%
FINANCIAL SERVICES 13.30%
ENERGY SOURCES 4.90%
TELECOMMUNICATION 4.40%
APPLIANCES & HOUSEHOLD DURABLES 4.00%
OTHER 26.70%
CASH 10.50%
F-11
<PAGE>
- --------------------------------------------------------------------------------
GAM Japan Capital Fund - Statement of Investments
- --------------------------------------------------------------------------------
Market
Value
Holdings Description US$
- ----------------------------------------------------------------------------
Convertibles - 0.2%
Financial Services - 0.2%
8,000,000 Ab Intl Cayman Tr Pfd 46,248
----------
Total Convertibles (Cost $68,912) 46,248
----------
Equities - 70.9%
Appliances & Household Durables - 4.8%
16,600 Sony 1,474,426
----------
1,474,426
----------
Automobiles - 1.4%
63,000 Mazda Motor 149,541
32,000 Suzuki Motor 289,127
----------
438,668
----------
Banking - 2.7%
36,000 Bank of Kyoto 135,069
14,000 Keiyo Bank 28,943
143,000 Long Term Credit Bank of Japan 228,844
118,000 Sakura Bank 337,014
20,000 Tochigi Bank 99,694
----------
829,564
----------
Broadcasting & Publishing - 0.7%
6,000 Broadcasting System Niigata 43,645
4,000 Nippon Broadcasting System 158,040
----------
201,685
----------
Building Materials & Components - 0.2%
5,000 Almetax Manufacturing 15,544
11,000 Daikin Kogyo 41,440
2,000 Okabe 5,896
----------
62,880
----------
Business & Public Services - 2.0%
9,200 Sanix 147,933
7,000 Secom 447,014
14,600 Wesco 35,773
----------
630,720
----------
Chemicals - 2.0%
32,000 Shin-Etsu Chemical 610,107
----------
610,107
----------
Construction & Housing - 0.3%
19,000 Ataka Construction & Engineering 59,793
13,000 JGC 27,374
----------
87,167
----------
Data Processing & Reproduction - 6.0%
42,000 Canon 977,642
5,500 I-O Data Device 41,060
3,300 Nidec 138,974
56,000 Ricoh 694,640
----------
1,852,316
----------
Electrical & Electronics - 1.8%
700 Fuji Soft ABC 23,959
28,000 Nippon Denwa Shisetsu 107,198
27,000 Omron 421,746
----------
552,903
----------
Electronic Comp. & Instruments - 7.4%
2,100 Keyence 310,337
10,000 Mimasu Semiconductor Industry 139,357
22,000 Mitsumi Electric 313,323
10,000 Rohm 1,018,377
17,000 Taiyo Yuden 117,802
36,000 Yamatake-Honeywell 383,155
----------
2,282,351
----------
Financial Services - 16.4%
*9,400 Aiful 636,983
23,900 Credit Saison 589,265
12,000 Japan Associated Finance 427,259
8,400 Nichiei (8577) 894,028
22,500 ORIX 1,567,764
3,100 Shohkoh Fund 944,717
----------
5,060,016
----------
Health & Personal Care - 2.7%
23,000 Eisai 350,459
8,000 Santen Pharmaceutical 91,884
11,000 Sawai Pharmaceutical 63,254
16,000 Terumo 235,222
14,000 Towa Pharmaceutical 91,654
----------
832,473
----------
Industrial Components - 3.3%
94,000 Minebea 1,007,657
----------
1,007,657
----------
Insurance - 3.0%
33,000 Dai Tokyo Fire & Marine Insurance 113,201
34,000 Dowa Fire & Marine Insurance 101,271
104,000 Nissan Fire & Marine Insurance 316,141
76,000 Sumitomo Marine & Fire Insurance 401,531
----------
932,144
----------
Leisure & Tourism - 0.1%
4,700 Yellow Hat 33,650
----------
33,650
----------
Machinery & Engineering - 0.1%
7,000 Higashi Nihon House 31,892
1,000 Sansei Yusoki 2,191
----------
34,083
----------
Merchandising 10.1%
12,800 Amway Japan 245,023
7,800 Aoyama Trading 139,158
17,800 Circle K Japan 851,838
1,900 Daimon 3,783
35,900 DeoDeo Corp 310,620
12,000 Joshin Denki 28,025
32,000 Juel Verite Ohkubo 65,421
19,000 Jusco 267,688
21,100 Matsumotokiyoshi 807,810
7,800 Paris Miki 83,614
14,300 Shimachu 224,464
12,600 Xebio 100,337
----------
3,127,781
----------
Metals - Steel - 0.6%
88,000 Nisshin Steel 96,355
30,500 Tokyo Steel 102,990
----------
199,345
----------
Real Estate - 3.2%
16,000 Mitsubishi Estate 173,966
61,000 Mitsui Real Estate 588,515
8,000 Sankei Building 18,989
2,000 Tachihi Enterprise 42,266
22,000 TOC 166,769
----------
990,505
----------
Telecommunications - 0.1%
7 DDI 18,492
----------
18,492
----------
F-12
<PAGE>
- --------------------------------------------------------------------------------
GAM Japan Capital Fund - Statement of Investments (continued)
- --------------------------------------------------------------------------------
Market
Value
Holdings Description US$
- ----------------------------------------------------------------------------
Transportation - Road & Rail - 1.7%
79,000 Keisei Electric Railway 206,261
100 West Japan Railway 318,530
----------
524,791
----------
Utilities - Electric & Gas - 0.1%
2,900 Okinawa Electric Power 44,411
----------
44,411
----------
Wholesale & International Trade - 0.2%
21,000 Nakayamafuku 64,802
----------
64,802
----------
Total Equities (Cost $27,718,045) 21,892,937
----------
Options 0.4%
Index - 0.4%
*14 P/O Nikkei 225 Index 14,500 (JPY)
1998-02-13 45,023
*15 P/O Nikkei 225 Index 15,000 (JPY)
1998-02-13 67,764
*2 P/O Nikkei 225 Index 16,500 (JPY)
1998-02-21 22,971
----------
135,758
----------
Total Options (Cost $178,449) 135,758
----------
Equity Warrants - 0.0%
Transportation - Road & Rail - 0.0%
*170 Tobu Railway Wts 1998 4,250
----------
Total Equity Warrants (Cost $85,000) 4,250
----------
Preferred Shares - 0.5%
Financial Services - 0.5%
30,000,000 Sakura Finance Bermuda
75% CV Pfd 2001 167,400
----------
Total Preferred Shares (Cost $272,047) 167,400
----------
Time Deposits - 21.0 %
United States - 21.0 %
6,478,474 Chase Manhattan Bank 5.0% 1998-01-02 6,478,474
----------
Total Time Deposits (Cost $6,478,474) 6,478,474
----------
Total Investments (Cost $34,800,927**) - 93.0% 28,725,067
Net current assets - 7.0% 2,146,707
----------
Total net assets - 100% 30,871,774
==========
* Non-income producing security.
** Cost for federal income tax purposes is $36,090,938 (Note 5).
Glossary of terms:
JPY - Japanese Yen
See notes to financial statements.
F-13
<PAGE>
- --------------------------------------------------------------------------------
GAM North America Fund - Statement of Investments
- --------------------------------------------------------------------------------
as at 31st December, 1997
Market
Value
Holdings Description US$
- ----------------------------------------------------------------------------
Equities - 94.1 %
Aerospace/Military Technology - 1.1 %
2,208 Boeing 108,054
184 Raytheon 9,074
----------
117,128
----------
Automobile Parts & Equipment - 0.1%
599 Meritor Automotive Inc 12,616
----------
12,616
----------
Automobiles - 6.1%
4,800 Chrysler 168,900
6,718 Ford Motor 327,083
2,900 General Motors 175,812
----------
671,795
----------
Banking - 6.8%
2,500 Bankamerica 182,500
2,400 Chase Manhattan 262,800
2,400 Citicorp 303,450
----------
748,750
----------
Beverages & Tobacco - 11.6%
8,600 Coca-Cola 572,975
7,200 PepsiCo 262,350
9,600 Philip Morris 435,000
----------
1,270,325
----------
Broadcasting & Publishing - 0.7%
1,000 McGraw-Hill 74,000
----------
74,000
----------
Chemicals - 1.9%
3,400 DuPont de Nemours 204,212
----------
204,212
----------
Computer Software - 1.2%
*1,000 Microsoft 129,250
----------
129,250
----------
Data Processing & Reproduction - 3.7%
2,900 Compaq Computer 163,669
2,400 First Data 70,200
2,800 Hewlett Packard 175,000
----------
408,869
----------
Electrical & Electronics - 4.0%
800 Emerson Electric 45,150
5,400 General Electric 396,225
----------
441,375
----------
Electronic Comp. & Instruments - 3.1%
4,900 Intel 344,225
----------
344,225
----------
Energy Sources - 7.5%
2,700 British Petroleum ADR 215,156
2,500 Chevron 192,500
3,800 Exxon 232,512
2,500 Mobil 180,469
----------
820,637
----------
Financial Services - 2.0%
3,800 Federal National Mortgage Association 216,837
----------
216,837
----------
Food & Household Products - 4.4%
2,100 Kellogg 104,213
4,800 Proctor & Gamble 383,100
----------
487,313
----------
Health & Personal Care - 20.4%
2,900 Abbott Laboratories 190,131
2,700 American Home Products 206,550
900 Estee Lauder Class A 46,294
3,400 Gillette 341,487
5,300 Johnson & Johnson 349,137
4,300 Merck 456,875
8,600 Pfizer 641,238
----------
2,231,712
----------
IndustrialComponents - 0.9%
1,900 Rockwell International 99,275
----------
99,275
----------
Insurance - 0.9%
1,900 American General 102,719
----------
102,719
----------
Leisure & Tourism - 1.7%
2,900 McDonald's 138,475
*1,650 Tricon Global Restaurants 47,953
----------
186,428
----------
F-14
<PAGE>
- --------------------------------------------------------------------------------
GAM North America Fund - Statement of Investments (continued)
- --------------------------------------------------------------------------------
Market
Value
Holdings Description US$
- ----------------------------------------------------------------------------
Machinery & Engineering - 1.0%
2,200 Caterpillar 106,837
----------
106,837
----------
Merchandising - 2.1%
1,900 Wal-Mart Stores 74,931
4,800 Walgreen 150,600
----------
225,531
----------
Multi-Industry - 4.8%
3,500 Allied Signal 136,281
*6 Berkshire Hathaway 276,000
1,400 Minnesota Mining & Manufacturing 114,888
----------
527,169
----------
Networking Products - 1.1%
2,100 Cisco Systems 117,075
----------
117,075
----------
Recreation, Other Consumer Goods - 1.5%
1,200 Eastman Kodak 72,975
2,400 Nike Class B 94,200
----------
167,175
----------
Telecommunications - 3.3%
2,700 Bellsouth 152,044
2,782 SBC Communications 203,782
----------
355,826
----------
Textiles & Apparel - 0.8%
*3,800 Polo Ralph Lauren Class A 92,388
----------
92,388
----------
Transportation - Road & Rail - 1.4%
5,100 Norfolk Southern 157,144
----------
157,144
----------
Total Equities (Cost $6,882,866) 10,316,611
----------
Preferred Shares - 0.5%
Broadcasting & Publishing - 0.5%
2,900 News Corp ADR (Pfd) 57,638
----------
Total Preferred Shares (Cost $58,537) 57,638
----------
Time Deposits - 7.1%
776,873 Morgan Guaranty London
5.0% 1998-01-02 776,873
----------
Total Time Deposits (Cost$776,873) 776,873
----------
Total Investments (Cost $7,718,276**) - 101.7% 11,151,122
Net current liabilities - (1.7)% (184,949)
----------
Total net assets - 100% 10,966,173
==========
* Non-income producing security
** Cost for federal income tax purposes is identical.
Glossary of terms
ADR - American Depository Receipt
See notes to financial statements.
F-15
<PAGE>
- --------------------------------------------------------------------------------
GAM Asian Capital Fund - Statement of Investments
- --------------------------------------------------------------------------------
as at 31st December, 1997
Market
Value
Holdings Description US$
- ----------------------------------------------------------------------------
Equities - 102.5%
Hong Kong - 80.0%
*8000 Asia Satellite Telecom 13,679
2,800 Bank Of East Asia 6,558
7,000 Cheung Kong Holdings 40,073
2,000 Cheung Kong Holdings 11,450
11,600 Dah Sing Financial 27,918
10,500 Dickson Concepts International 15,312
*12,000 First Tractor (HKD) 7,240
47,330 HKR International 34,815
27,600 Hong Kong & China Gas 53,604
12,500 Hong Kong Electric 47,667
3,200 HSBC Holdings (HKD) 78,875
8,000 Hutchison Whampoa 50,071
28,000 JCG Holdings 12,014
19,000 Kerry Properties 31,385
9,000 Li & Fung 12,602
9,000 New World Development 31,127
*9,000 New World Infrastructure 20,383
4,000 Sun Hung Kai Properties 28,004
8,000 Swire Pacific Class A 44,083
28,000 Tai Cheung Holdings 11,111
4,000 Television Broadcasting 11,408
15,000 Wharf Holdings 32,424
32,000 Wheelock 37,373
----------
659,176
----------
New Zealand - 1.6%
5,000 Fernz 12,919
----------
12,919
----------
Philippines - 3.0%
32,000 Ayala Land 12,444
31,000 Ayala Land Class B 12,247
----------
24,691
----------
Republic Of China - 1.0%
19,000 Beijing Datang Power (HKD) 8,704
----------
8,704
----------
Singapore - 16.9%
11,000 DBS Land 16,838
2,600 Development Bank Of Singapore (FR) 22,213
6,000 Osprey Maritime 4,806
*5,000 Overseas Chinese Banking (FR) 29,071
4,000 Overseas Union Bank (FR) 15,307
1,000 Singapore Airlines (FR) 6,526
1,000 Singapore Press Holdings (FR) 12,519
3,000 United Overseas Bank (FR) 16,642
13,000 Wing Tai Holdings 15,194
----------
139,116
----------
Total Equities (Cost $1,129,066) 844,606
----------
Time Deposits - 19.8%
United States - 19.8%
163,097 Morgan Guaranty London 5.0% 1998-01-02 163,097
----------
Total Time Deposits (Cost $163,097) 163,097
----------
Total Investments (Cost $1,292,163**) - 122.3% 1,007,703
Net current liabilities - (22.3%) (183,490)
----------
Total net assets - 100% 824,213
==========
* Non-income producing security.
** Cost for federal income tax purposes is $1,301,706 (Note 5).
Glossary of terms:
FR - Foreign Registered
HKD - Hong Kong Dollar
See notes to financial statements.
F-16
<PAGE>
- --------------------------------------------------------------------------------
GAM Asian Capital Fund - Statement of Investments
- --------------------------------------------------------------------------------
[The following table was depicted as a pie chart in the printed material]
Geographic Analysis as at
31st December, 1997
NET CURRENT LIABILITIES (22.26)%
HONG KONG 79.98%
UNITED STATES 19.79%
CHINA 1.05%
PHILIPPINES 3.00%
NEW ZEALAND 1.57%
SINGAPORE 16.87%
[The following table was depicted as a pie chart in the printed material]
Investment Analysis as at
31st December, 1997 (unaudited)
BANKING 17.80%
REAL ESTATE 17.70%
MULTI-INDUSTRY 14.30%
UTILITIES - ELECTRICAL & GAS 10.00%
BROADCASTING & PUBLISHING 3.00%
TRANSPORTATION - AIRLINES 1.80%
OTHER 6.60%
CASH 28.80%
F-17
<PAGE>
GAMerica Capital Fund - Statement of Investments
- --------------------------------------------------------------------------------
as at 31st December, 1997
Market
Value
Holdings Description US$
- ---------------------------------------------------------------------------
Equities - 59.4%
Beverages & Tobacco - 3.1%
2,000 Fortune Brands 74,125
2,000 Gallaher Group ADR 42,750
---------
116,875
---------
Business & Public Services - 4.3%
*26,400 Titan 165,000
---------
165,000
---------
Construction & Housing - 5.8%
*7,812 Palm Harbor Homes 220,689
---------
220,689
---------
Electrical & Electronics - 1.2%
2,500 AVX 46,094
---------
46,094
---------
Energy Sources - 3.1%
3,000 Unocal 116,437
---------
116,437
---------
Financial Services - 1.4%
*3,000 Friedman, Billings, Ramsey Group 53,813
---------
53,813
---------
Food & Household Products - 1.9%
3,307 Archer-Daniels-Midland 71,721
---------
71,721
---------
Health & Personal Care - 7.5%
*4,500 ClinTrials Research 35,437
8,000 Intimate Brands Class A 192,500
*30,000 Unilab 56,250
---------
284,187
---------
Industrial Components - 3.4%
*12,000 Foamex International 130,500
---------
130,500
---------
Merchandising - 17.1%
*6,000 Best Buy 221,250
6,250 Fred's Class A 128,125
*12,500 Jumbosports 18,750
2,000 Mercantile Stores 121,750
*5,000 Party City 161,250
---------
651,125
---------
Recreation, Other Consumer Goods - 1.9%
*5,000 N2K 73,125
---------
73,125
---------
Real Estate - 3.9%
7,000 Bradley Real Estate 147,000
---------
147,000
---------
Telecommunications - 4.8%
*6,000 World Com 181,500
---------
181,500
---------
Total Equities (Cost $1,730,847) - 59.4% 2,258,066
---------
Time Deposits - 37.0%
1,404,078 First National Bank of Chicago
5.0% 1998-01-02 1,404,078
---------
Total Time Deposits (Cost $1,404,078) 1,404,078
---------
Total Investments (Cost $3,134,925**) - 96.4% 3,662,144
Net current assets - 3.6% 136,913
---------
Total net assets - 100% 3,799,057
=========
* Non-income producing security.
** Cost for federal income tax purposes is identical.
Glossary of terms:
ADR - American Depository Receipt
See notes to financial statements.
F-18
<PAGE>
- --------------------------------------------------------------------------------
GAM Funds, Inc. - Statements of Assets and Liabilities
- --------------------------------------------------------------------------------
at 31st December, 1997
<TABLE>
<CAPTION>
GAM
GAM GAM GAM Pacific
International Global Europe Basin
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets (in US$)
Investments in securities at value $1,856,890,976 $68,269,792 $38,053,976 $24,743,932
Cash - - 709 596
Cash - Foreign currencies 1,655,233 - 1,224,539 344,221
Receivables:
Securities sold 6,023,319 - 1,225,238 2,059,299
Capital shares sold 9,285,594 1,109,006 31,726 164,553
Dividends, interest and other 2,648,277 36,677 53,896 43,943
Net equity in foreign currency exchange contracts (Note 6) 39,450,165 724,888 800,316 1,041,068
Deferred organizational expenses and other assets - - - -
--------------- ------------ ----------- ------------
Total assets 1,915,953,564 70,140,363 41,390,400 28,397,612
--------------- ------------ ----------- ------------
Liabilities
Payables:
Securities purchased 14,606,721 336,655 1,228,328 1,067,398
Capital shares redeemed 1,951,817 58,698 - 229,374
Loans - - 884,000 2,246,000
Accrued management fee 4,465,800 147,318 105,784 94,897
Accrued distribution fee 1,398,663 44,307 38,345 24,603
Accrued expenses and other 582,551 45,887 33,355 107,000
--------------- ------------ ----------- ------------
Total liabilities 23,005,552 632,865 2,289,812 3,769,272
--------------- ------------ ----------- ------------
Net assets $1,892,948,012 $69,507,498 $39,100,588 $24,628,340
=============== ============ =========== ============
Source of net assets
Net capital paid in on shares of capital stock (Note 4) $1,504,197,109 $58,668,062 $32,521,009 $45,301,039
Accumulated net investment income/(loss) (8,350,974) (155,350) 89,676 (310,853)
Accumulated net realized gains/(losses) (26,603,436) 608,107 461,339 (5,705,626)
Net unrealized appreciation/(depreciation) 423,705,313 10,386,679 6,028,564 (14,656,220)
--------------- ------------ ----------- ------------
Net assets $1,892,948,012 $69,507,498 $39,100,588 $24,628,340
=============== ============ =========== ============
Class A shares outstanding 63,022,600 3,513,547 3,110,245 2,379,009
Class A net assets $1,793,665,482 $65,739,091 $39,100,588 $23,045,699
Net asset value and redemption value per share (Note 4) $28.46 $18.71 $12.57 $9.69
Offering price per share (100/95 x net asset value
per share reduced on sales of $100,000 or more) $29.96 $19.69 $13.23 $10.20
Class D shares outstanding 3,502,721 203,699 164,585
Class D net assets $99,282,530 $3,768,407 $1,582,641
Net asset value and redemption value per share (Note 4) $28.34 $18.50 $9.62
Offering price per share (100/96.5 x net asset value
per share reduced on sales of $100,000 or more) $29.37 $19.17 $9.97
Identified cost of investments $1,472,588,228 $58,607,870 $32,819,345 $40,439,829
</TABLE>
See notes to financial statements.
F-19
<PAGE>
- --------------------------------------------------------------------------------
GAM Funds, Inc. - Statements of Assets and Liabilities (continued)
- --------------------------------------------------------------------------------
at 31st December, 1997
<TABLE>
<CAPTION>
GAM GAM GAM
Japan North Asian GAMerica
Capital America Capital Capital
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets (in US$)
Investments in securities at value $28,725,067 $11,151,122 $1,007,703 $3,662,144
Cash - - - -
Cash - Foreign currencies 965,396 - 36,070 -
Receivables:
Securities sold - - 229,956 -
Capital shares sold 143,930 27,730 17,298 155,114
Dividends, interest and other 3,211 13,714 1,299 -
Net equity in foreign currency exchange contracts (Note 6) 1,324,546 - - -
Deferred organizational expenses and other assets 10,644 - 13,480 13,562
--------------- ------------ ----------- ------------
Total assets 31,172,794 11,192,566 1,305,806 3,830,820
--------------- ------------ ----------- ------------
Liabilities
Payables:
Securities purchased - 160,348 7,438 -
Capital shares redeemed 150,091 10,000 437,716 -
Accrued management fee 80,779 26,423 3,937 7,250
Accrued distribution fee 24,390 9,206 1,368 2,193
Accrued expenses and other 45,760 20,416 31,134 22,320
--------------- ------------ ----------- ------------
Total liabilities 301,020 226,393 481,593 31,763
--------------- ------------ ----------- ------------
Net assets $30,871,774 $10,966,173 $824,213 $3,799,057
=============== ============ =========== ============
Source of net assets
Net capital paid in on shares of capital stock (Note 4) $39,943,356 $7,238,788 $1,952,697 $3,109,977
Accumulated net investment income/(loss) (410,969) - (5,597) -
Accumulated net realized gains/(losses) (3,900,870) 294,541 (837,951) 161,861
Net unrealized appreciation/(depreciation) (4,759,743) 3,432,844 (284,936) 527,219
--------------- ------------ ----------- ------------
Net assets $30,871,774 $10,966,173 $824,213 $3,799,057
=============== ============ =========== ============
Class A shares outstanding 3,656,282 633,097 137,015 282,816
Class A net assets $30,871,774 $10,966,173 $824,213 $3,799,057
Net asset value and redemption value per share (Note 4) $8.44 $17.32 $6.02 $13.43
Offering price per share (100/95 x net asset value
per share reduced on sales of $100,000 or more) $8.88 $18.23 $6.34 $14.14
Identified cost of investments $34,800,927 $7,718,276 $1,292,163 $3,134,925
</TABLE>
See notes to financial statements.
F-20
<PAGE>
- --------------------------------------------------------------------------------
GAM Funds, Inc. - Statements of Operations
- --------------------------------------------------------------------------------
for the year ended 31st December, 1997
<TABLE>
<CAPTION>
GAM
GAM GAM GAM Pacific
International Global Europe Basin
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment income (in US$)
Dividends (Note 5) $24,332,055 $459,140 $630,428 $893,756
Interest (Note 5) 4,448,310 140,838 91,130 111,566
--------------- ------------ ----------- ------------
28,780,365 599,978 721,558 1,005,322
--------------- ------------ ----------- ------------
Expenses
Investment advisory fee (Note 2) 14,631,974 379,486 366,938 502,073
Custodian fees and expenses 1,779,162 55,116 92,056 128,265
Transfer agent fees and expenses 761,329 24,662 19,532 30,772
Shareholder servicing fees 920,356 10,973 14,180 42,349
Distribution fee - Class A (Note 2) 4,210,893 109,036 111,466 144,537
Distribution fee - Class D (Note 2) 330,875 8,594 - 10,036
Professional fees 65,539 32,956 32,359 33,835
Administrative expense 1,463,486 54,473 13,749 69,776
Printing 197,246 7,809 4,210 11,133
Amortization of organization costs - - - -
Filing fees 299,434 1,744 1,280 4,894
Other 108,672 7,307 6,273 12,075
--------------- ------------ ----------- ------------
Total operating expenses 24,768,966 692,156 662,043 989,745
Expenses reimbursed (Note 2) - - - -
Interest expense 18,611 7,068 3,378 7,518
--------------- ------------ ----------- ------------
Total expense 24,787,577 699,224 665,421 997,263
--------------- ------------ ----------- ------------
Net investment income/(loss) 3,992,788 (99,246) 56,137 8,059
--------------- ------------ ----------- ------------
Realized and unrealized
gain/(loss) from investments
and foreign currency
Net realized gain/(loss) from:
Securities and futures 5,496,347 2,265,518 4,224,970 (5,029,765)
Foreign currency transaction 36,414,005 479,874 2,495,699 2,029,961
--------------- ------------ ----------- ------------
41,910,352 2,745,392 6,720,669 (2,999,804)
--------------- ------------ ----------- ------------
Unrealized appreciation/(depreciation) for the period:
Securities and futures 259,590,424 5,933,500 1,121,157 (12,184,320)
Foreign currency translation of
assets and liabilities other than investments 37,422,289 593,305 833,847 268,360
--------------- ------------ ----------- ------------
297,012,713 6,526,805 1,955,004 (11,915,960)
--------------- ------------ ----------- ------------
Net gain/(loss) on investments and foreign currencies 338,923,065 9,272,197 8,675,673 (14,915,764)
--------------- ------------ ----------- ------------
Net increase/(decrease) in net assets from operations $342,915,853 $9,172,951 $8,731,810 ($14,907,705)
=============== ============ =========== ============
</TABLE>
See notes to financial statements.
F-21
<PAGE>
- --------------------------------------------------------------------------------
GAM Funds, Inc. - Statements of Operations (continued)
- --------------------------------------------------------------------------------
for the year ended 31st December, 1997
<TABLE>
<CAPTION>
GAM GAM GAM
Japan North Asian GAMerica
Capital America Capital Capital
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment income (in US$)
Dividends (Note 5) $146,961 $141,453 $73,906 $22,826
Interest (Note 5) 173,488 23,880 4,200 8,946
--------------- ------------ ----------- ------------
320,449 165,333 78,106 31,772
--------------- ------------ ----------- ------------
Expenses
Investment advisory fee (Note 2) 293,314 85,196 27,653 22,409
Custodian fees and expenses 109,391 7,605 46,273 8,152
Transfer agent fees and expenses 17,563 6,049 3,940 2,174
Shareholder servicing fees 9,083 3,486 1,172 700
Distribution fee - Class A (Note 2) 88,004 25,911 8,195 6,745
Distribution fee - Class D (Note 2) - - - -
Professional fees 24,474 19,541 24,295 17,035
Administrative expenses 36,937 9,841 7,573 3,000
Printing 4,537 2,646 8,068 2,876
Amortization of organization costs 6,650 - 5,267 5,201
Filing fees 15,657 52 - -
Other 11,770 4,902 7,959 4,193
--------------- ------------ ----------- ------------
Total operating expenses 617,380 165,229 140,395 72,485
Expenses reimbursed (Note 2) - - (100,000) -
Interest expense 12,758 50 9,174 5,136
--------------- ------------ ----------- ------------
Total expenses 630,138 165,279 49,569 77,621
--------------- ------------ ----------- ------------
Net investment income/(loss) (309,689) 54 28,537 (45,849)
--------------- ------------ ----------- ------------
Realized and unrealized
gain/(loss) from investments
and foreign currency
Net realized gain/(loss) from:
Securities and futures (2,863,500) 390,977 (623,152) 400,765
Foreign currency transactions 2,336,871 - (17,639) -
--------------- ------------ ----------- ------------
(526,629) 390,977 (640,791) 400,765
--------------- ------------ ----------- ------------
Unrealized appreciation/(depreciation) for the period:
Securities and futures (2,288,040) 1,513,490 (318,739) 351,466
Foreign currency translation of
assets and liabilities other than investments 570,218 - (424) -
--------------- ------------ ----------- ------------
(1,717,822) 1,513,490 (319,163) 351,466
--------------- ------------ ----------- ------------
Net gain/(loss) on investments and foreign currencies (2,244,451) 1,904,467 (959,954) 752,231
--------------- ------------ ----------- ------------
Net increase/(decrease) in net assets from operations ($2,554,140) $1,904,521 ($931,417) $706,382
=============== ============ =========== ============
</TABLE>
See notes to financial statements.
F-22
<PAGE>
- --------------------------------------------------------------------------------
GAM Funds, Inc. - Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GAM International GAM Global GAM Europe
------------------------------- --------------------------- ---------------------------
For the year For the year For the year For the year For the year For the year
ended ended ended ended ended ended
31st Dec., 31st Dec., 31st Dec., 31st Dec., 31st Dec., 31st Dec.,
1997 1996 1997 1996 1997 1996
<S> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------
Increase/(Decrease) in net
assets from:
Operations
Net investment income/(loss) $3,992,788 $23,352,061 ($99,246) $236,346 $56,137 $157,888
Net realized gain/(loss) 41,910,352 (3,924,932) 2,745,392 1,542,721 6,720,669 1,945,168
Unrealized appreciation/(depreciation)
for the year 297,012,713 75,798,692 6,526,805 292,207 1,955,004 2,542,288
-------------- -------------- ------------ ------------ ------------ ------------
Net increase in
net assets from operations 342,915,853 95,225,821 9,172,951 2,071,274 8,731,810 4,645,344
Dividends paid to shareholders from:
Net investment income
Class A (9,853,914) (3,931,303) (41,404) (104,667) (157,450) (12,643)
Class D (446,919) (20,209) (3,430) (765) - -
Net realized gain on investments
Class A (69,883,955) (1,784,396) (1,964,612) (1,034,220) (6,689,436) (709,600)
Class D (3,900,288) (63,253) (113,298) (43,139) - -
Capital share transactions (Note 4) 585,581,903 390,160,627 42,059,028 (6,945,972) 12,088,259 (1,757,129)
-------------- -------------- ------------ ------------ ------------ ------------
Total increase/(decrease)
in net assets 844,412,680 479,587,287 49,109,235 (6,057,489) 13,973,183 2,165,972
Net assets
Beginning of year 1,048,535,332 568,948,045 20,398,263 26,455,752 25,127,405 22,961,433
-------------- -------------- ------------ ------------ ------------ ------------
End of year $1,892,948,012 $1,048,535,332 $69,507,498 $20,398,263 $39,100,588 $25,127,405
============== ============== ============ ============ ============ ============
</TABLE>
See notes to financial statements.
F-23
<PAGE>
- --------------------------------------------------------------------------------
GAM Funds, Inc. - Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GAM Pacific Basin GAM Japan Capital GAM North America
---------------------------- --------------------------- ---------------------------
For the year For the year For the year For the year For the year For the year
ended ended ended ended ended ended
31st Dec., 31st Dec., 31st Dec., 31st Dec., 31st Dec., 31st Dec.,
1997 1996 1997 1996 1997 1996
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Increase/(Decrease) in net
assets from:
Operations
Net investment income/(loss) $ 8,059 $ 136,753 $ (309,689) $ (173,050) $ 54 $ (21,847)
Net realized gain/(loss) (2,999,804) 7,490,904 (526,629) 3,411,826 390,977 562,745
Unrealized appreciation/(depreciation)
for the year (11,915,960) (9,000,460) (1,717,822) (4,080,940) 1,513,490 710,420
------------ ----------- ----------- ----------- ----------- ----------
Net increase/(decrease) in
net assets from operations (14,907,705) (1,372,803) (2,554,140) (842,164) 1,904,521 1,251,318
Dividends paid to shareholders from:
Net investment income
Class A -- (2,363,071) -- (2,786,341) (576) --
Class D -- (73,778) -- -- -- --
Net realized gain on investments
Class A (3,364,522) (3,041,344) (2,411,374) (326,642) (130,244) (506,891)
Class D (168,365) (101,996) -- -- -- --
Capital share transactions (Note 4) (8,616,881) 3,147,400 (679,565) 26,871,997 3,339,649 (872,358)
------------ ----------- ----------- ----------- ----------- ----------
Total increase/(decrease)
in net assets (27,057,473) (3,805,592) (5,645,079) 22,916,850 5,113,350 (127,931)
Net assets
Beginning of year 51,685,813 55,491,405 36,516,853 13,600,003 5,852,823 5,980,754
------------ ----------- ----------- ----------- ----------- ----------
End of year $ 24,628,340 $51,685,813 $30,871,774 $36,516,853 $10,966,173 $5,852,823
============ =========== =========== =========== =========== ==========
</TABLE>
See notes to financial statements.
F-24
<PAGE>
- --------------------------------------------------------------------------------
GAM Funds, Inc. - Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GAM Asian Capital GAMerica Capital
--------------------------- --------------------------
For the year For the year For the year For the year
ended ended ended ended
31st Dec., 31st Dec., 31st Dec., 31st Dec.,
1997 1996 1997 1996
-------------------------------------------------------
<S> <C> <C> <C> <C>
Increase/(Decrease) in net
assets from:
Operations
Net investment income/(loss) $ 28,537 $ (50,095) $ (45,849) $ (87,946)
Net realized gain/(loss) (640,791) (84,553) 400,765 292,631
Unrealized appreciation/(depreciation)
for the year (319,163) 235,381 351,466 175,800
----------- ---------- ---------- -----------
Net increase/(decrease) in
net assets from operations (931,417) 100,733 706,382 380,485
Dividends paid to shareholders from:
Net investment income
Class A (3,857) -- -- --
Class D -- -- -- --
Net realized gain on investments
Class A (74,195) (8,786) (228,865) (169,707)
Class D -- -- -- --
Capital share transactions (Note 4) (3,795,577) (23,103) 1,397,530 (1,316,024)
----------- ---------- ---------- -----------
Total increase/(decrease)
in net assets (4,805,046) 68,844 1,875,047 (1,105,246)
Net assets
Beginning of year 5,629,259 5,560,415 1,924,010 3,029,256
----------- ---------- ---------- -----------
End of year $ 824,213 $5,629,259 $3,799,057 $ 1,924,010
=========== ========== ========== ===========
</TABLE>
See notes to financial statements.
F-25
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
Note 1. Significant accounting policies
GAM Funds, Inc. (the "Company"), is an open-end diversified investment company
registered under the Investment Company Act of 1940 comprised of eight
portfolios: GAM International Fund, GAM Global Fund, GAM Europe Fund, GAM
Pacific Basin Fund, GAM Japan Capital Fund, GAM North America Fund, GAM Asian
Capital Fund, and GAMerica Capital Fund (the Funds).
Each Fund seeks long-term capital appreciation by investing primarily in equity
securities. GAM International Fund invests primarily in securities of companies
in Europe, the Pacific Basin and Canada. GAM Global Fund invests primarily in
securities of companies in the United States, Europe, the Pacific Basin and
Canada. GAM Europe Fund invests primarily in securities of companies in Europe.
GAM Pacific Basin Fund invests primarily in securities of companies in the
Pacific Basin. GAM Japan Capital Fund invests primarily in securities of
companies in Japan. GAM North America Fund invests primarily in securities of
companies in the United States and Canada. GAM Asian Capital Fund invests
primarily in securities of companies in Asia excluding Japan. GAMerica Capital
Fund invests primarily in securities of companies in the United States.
The Funds offer Class A and Class D shares however, Class D shares currently are
available only for GAM International Fund, GAM Global Fund and GAM Pacific Basin
Fund. Class A shares are sold with a front-end sales charge of up to 5.0% and
Class D shares are sold with a front-end sales charge of up to 3.5%. The two
classes of shares have identical voting, dividend, liquidation and other rights,
except that each class bears its separate distribution and certain class
expenses, and has exclusive voting rights with respect to any matter on which a
separate vote of any class is required by federal or state law. The following is
a summary of significant accounting policies followed in the preparation of the
Company's financial statements.
Valuation of securities
Investment securities are stated at value based on the last sale price on the
principal exchange on which the securities are traded, or, lacking any sales, at
the last available bid price. Securities traded in the over-the-counter market
are valued at the last available bid price. Short-term securities maturing in 60
days or less are valued on an amortized cost basis which approximates market
value. Forward foreign currency contracts are valued at the forward rate and are
marked to market daily. Other securities for which market quotations are not
readily available are valued at fair value as determined by or under the
direction of the Board of Directors.
Adjustable Rate Index Notes
Each Fund may invest in adjustable rate index notes (ARINs) or similar
instruments. An ARIN is a form of promissory note issued by a brokerage firm or
other counterparty which provides that the amount of principal or interest paid
will vary inversely in proportion to changes in the value of a specified
security. The Funds could suffer losses in the event of a default or insolvency
of the brokerage firm or other counterparty issuing the ARIN.
Foreign currency
Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into US dollar amounts at date of valuation. Purchases
and sales of portfolio securities and income items denominated in foreign
currencies are translated into US dollar amounts on the respective dates of such
transactions.
The Funds do 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.
F-26
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
Reported net realized foreign exchange gains or losses arise from sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, the difference between the amounts
of dividends, interest and foreign withholding taxes recorded on the Funds'
books, and the US 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 fiscal period
end, resulting from changes in the exchange rate.
Foreign currency contracts
Each Fund may enter into forward foreign currency exchange contracts primarily
in order to hedge against foreign currency exchange rate risks on the non-US
dollar denominated investment securities. These contracts are valued daily and
the Funds' equity therein, representing unrealized gain or loss on the
contracts, is included in the Statement of Assets and Liabilities. Realized and
unrealized gains and losses on these contracts are included in the Statement of
Operations.
Futures contracts
Initial margin deposits made with respect to futures contracts traded on
domestic exchanges are maintained by the Funds' custodian in segregated asset
accounts. Initial margin deposits made upon entering into futures contracts
traded on foreign exchanges are recognized as assets due from the broker (the
Funds' agent in acquiring the futures positions). Subsequent changes in the
daily valuation of open contracts are recognized as unrealized gains or losses.
Variation margin payments are made or received on domestically traded futures as
appreciation or depreciation in the value of these contracts occurs. Realized
gains or losses are recorded when a contract is closed.
Federal income taxes
It is each Fund's policy to satisfy the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to shareholders. Therefore, no provision for Federal income taxes
is required.
Option contracts
The Funds may invest, for hedging and other purposes, in call and put options on
securities, currencies and futures contracts. Call and put options give the
Funds the right but not the obligation to buy (calls) or sell (puts) the
instrument underlying the option at a specified price. The premium paid on the
option, should it be excercised, will, on a call, increase the cost of the
instrument acquired and, on a put, reduce the proceeds received from the sale of
the instrument underlying the option. If the options are not exercised, the
premium paid will be recorded as a capital loss upon expiration. The Funds may
incur additional risk to the extent that the value of the underlying instrument
does not correlate with the movement of the option value.
Distributions to shareholders
Distributions are recorded on the ex-dividend date. Income and capital gain
distributions are determined in accordance with income tax regulations which may
differ from generally accepted accounting principles. These differences, which
may result in distribution reclassifications, are primarily due to differing
treatments for futures transactions, foreign currency transactions, passive
foreign investment companies (PFIC), capital loss carryforwards and losses
deferred due to wash sales and excise tax regulations. Permanent book and tax
basis differences relating to shareholder distributions will result in
reclassifications to paid-in capital and may affect the per share distribution
between net investment income and realized and unrealized gain/(loss). The
calculation of Net Investment Income per share in the Selected Financial
Information excludes these adjustments. Undistributed net investment
income/(loss) and accumulated undistributed net realized gain/(loss) on
investments and foreign currency transactions may include temporary book and tax
basis differences which will reverse in a subsequent period. Any taxable income
or gain remaining at fiscal year end is distributed in the following year.
F-27
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
Deferred organization expenses
Organization costs for GAM Japan Capital Fund, GAM Asian Capital Fund and
GAMerica Capital Fund have been deferred and are being amortized on a
straight-line basis over a five-year period from each Fund's commencement of
operations.
Use of estimates
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 expense during the reporting period. Actual
results could differ from those estimates.
Other
Securities transactions are recorded on the trade date basis. Interest is
accrued on a daily basis and market discount is accreted on a straight-line
basis. Dividend income is recorded on the ex-dividend date, except that certain
dividends on foreign securities are recorded as soon as information is available
to the Fund.
Note 2. Investment advisory fee and other transactions with affiliates
The Investment Adviser, GAM International Management Limited, receives a fee
under its agreement with the Company equivalent to 1% per annum of each Fund's
average daily net assets, except for GAM North America Fund. With respect to GAM
North America Fund, GAM International Management Limited and Fayez Sarofim & Co.
serve as co-investment advisers to the Fund. Each co-adviser receives a fee
under its agreement equivalent to 0.50% per annum of the Fund's average daily
net assets. For the year ended 31st December, 1997 GAM International Management
Limited waived its entire advisory fee due from the GAM Asian Capital Fund and
assumed additional fund expenses totalling $72,347.
GAM Services, Inc. acts as principal underwriter of the Fund. For the year ended
31st December, 1997, GAM Services, Inc. received front-end sales load charges of
$3,156,062 from the sale of the Funds' shares.
Effective 5th September, 1995, the Funds adopted a Class D Distribution Plan
pursuant to Rule 12b-1 under the Investment Company Act of 1940 which provides
for payments by the Funds to GAM Services at the annual rate of up to 0.50% of
each applicable Fund's average net assets attributable to Class D shares.
Effective 9th October, 1996, the Funds adopted a Class A Distribution Plan
pursuant to this rule which provides for payments by the Funds to GAM Services
at the annual rate of up to 0.30% of each applicable Fund's average net assets
attributable to Class A shares.
Note 3. Directors fees
The Funds do not pay any compensation to their officers or to any directors,
officers or employees of GAM International Management Limited, GAM Services Inc.
or their affiliates. Each disinterested director is compensated by each Fund as
follows:
<TABLE>
<CAPTION>
GAM GAM GAM GAM GAM GAM GAM GAMerica
International Global Europe Pacific Basin Japan Capital North America Asian Capital Capital
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Annual Retainer $625 $625 $625 $625 $625 $625 $625 $625
Meeting Fee 63 63 63 63 63 63 63 63
</TABLE>
F-28
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
Note 4. Capital stock
The Company declared a 10-for-1 stock split to shareholders of record as of 19th
December, 1995. All per share data have been restated to reflect the stock
split.
At 31st December, 1997, GAM Funds, Inc. had 700,000,000 shares of common stock,
$0.001 par value authorized. For each of the eight active funds shares were
allocated as follows: 150,000,000 and 50,000,000 shares, respectively, were
allocated to each of Class A and Class D of GAM International, 50,000,000 and
25,000,000 shares, respectively, were allocated to Class A and Class D of GAM
Global, GAM Europe, GAM Pacific Basin and GAM North America, 25,000,000 shares,
were allocated to each of Class A and Class D of GAMerica Capital, while
45,000,000 and 12,500,000 shares, respectively, were allocated to each of Class
A and Class D of GAM Japan Capital and GAM Asian Capital. Changes in each Fund's
capital stock are summarized as follows:
<TABLE>
<CAPTION>
GAM International Fund
For the Periods
------------------------------------------------------------
01-Jan-97 to 31-Dec-97 01-Jan-96 to 31-Dec-96
Shares US$ Shares US$
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Class A
Shares sold 29,334,376 797,964,527 33,365,859 692,156,317
Shares issued on reinvestment of dividends 2,500,837 69,462,995 219,386 4,843,204
Shares redeemed (12,437,416) (332,541,512) (16,170,479) (333,081,923)
----------- ------------ ----------- ------------
Net increase 19,397,797 534,886,010 17,414,766 363,917,598
=========== ============ =========== ============
Class D
Shares sold 2,142,282 59,042,169 1,461,453 30,255,446
Shares issued on reinvestment of dividends 134,583 3,717,035 3,688 78,975
Shares redeemed (452,108) (12,063,311) (195,341) (4,091,392)
----------- ------------ ----------- ------------
Net increase/(decrease) 1,824,757 50,695,893 1,269,800 26,243,029
=========== ============ =========== ============
<CAPTION>
GAM Global Fund
For the Periods
------------------------------------------------------------
01-Jan-97 to 31-Dec-97 01-Jan-96 to 31-Dec-96
Shares US$ Shares US$
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Class A
Shares sold 3,043,487 53,815,753 899,878 11,907,144
Shares issued on reinvestment of dividends 95,084 1,743,330 64,567 915,513
Shares redeemed (989,599) (16,207,961) (1,535,935) (20,228,744)
----------- ------------ ----------- ------------
Net increase/(decrease) 2,148,972 39,351,122 (571,490) (7,406,087)
=========== ============ =========== ============
Class D
Shares sold 164,316 3,018,076 54,061 697,624
Shares issued on reinvestment of dividends 5,659 102,511 2,735 38,450
Shares redeemed (23,624) (412,681) (21,328) (275,959)
----------- ------------ ----------- ------------
Net increase/(decrease) 146,351 2,707,906 35,468 460,115
=========== ============ =========== ============
</TABLE>
F-29
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GAM Europe Fund
For the Periods
------------------------------------------------------------
01-Jan-97 to 31-Dec-97 01-Jan-96 to 31-Dec-96
Shares US$ Shares US$
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Class A
Shares sold 2,155,335 28,650,194 1,072,701 12,022,756
Shares issued on reinvestment of dividends 382,881 4,693,020 47,646 542,923
Shares redeemed (1,547,698) (21,254,955) (1,287,490) (14,322,808)
---------- ------------ ----------- ------------
Net increase/(decrease) 990,518 12,088,259 (167,143) (1,757,129)
========== ============ =========== ============
<CAPTION>
GAM Pacific Basin Fund
For the Periods
------------------------------------------------------------
01-Jan-97 to 31-Dec-97 01-Jan-96 to 31-Dec-96
Shares US$ Shares US$
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Class A
Shares sold 1,941,999 28,048,990 2,466,475 43,289,379
Shares issued on reinvestment of dividends 236,407 2,658,787 265,013 4,074,012
Shares redeemed (3,062,559) (39,899,633) (2,646,254) (44,771,351)
---------- ------------ ----------- ------------
Net increase/(decrease) (884,153) (9,191,856) 85,234 2,592,040
========== ============ =========== ============
Class D
Shares sold 51,066 746,179 53,648 907,532
Shares issued on reinvestment of dividends 14,840 163,481 1,072 17,934
Shares redeemed (24,922) (334,685) (22,302) (370,106)
---------- ------------ ----------- ------------
Net increase/(decrease) 40,984 574,975 32,418 555,360
========== ============ =========== ============
</TABLE>
F-30
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GAM Japan Capital Fund
For the Periods
-----------------------------------------------------------
01-Jan-97 to 31-Dec-97 01-Jan-96 to 31-Dec-96
Shares US$ Shares US$
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Class A
Shares sold 3,911,543 38,716,276 4,134,008 43,069,239
Shares issued on reinvestment of dividends 219,840 1,969,882 232,747 2,201,623
Shares redeemed (4,362,649) (41,365,723) (1,817,450) (18,398,865)
---------- ----------- ---------- -----------
Net increase/(decrease) (231,266) (679,565) 2,549,305 26,871,997
========== =========== ========== ===========
<CAPTION>
GAM North America Fund
For the Periods
-----------------------------------------------------------
01-Jan-97 to 31-Dec-97 01-Jan-96 to 31-Dec-96
Shares US$ Shares US$
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Class A
Shares sold 392,721 6,494,878 69,484 911,748
Shares issued on reinvestment of dividends 5,909 101,515 26,418 360,609
Shares redeemed (197,145) (3,256,744) (165,717) (2,144,715)
---------- ----------- ---------- -----------
Net increase/(decrease) 201,485 3,339,649 (69,815) (872,358)
========== =========== ========== ===========
</TABLE>
F-31
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GAM Asian Capital Fund
For the Periods
---------------------------------------------------------
01-Jan-97 to 31-Dec-97 01-Jan-96 to 31-Dec-96
Shares US$ Shares US$
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Class A
Shares sold 180,437 1,471,448 414,332 4,143,499
Shares issued on reinvestment of dividends 10,133 75,019 146 1,512
Shares redeemed (626,223) (5,342,044) (425,435) (4,168,114)
-------- ---------- -------- ----------
Net increase/(decrease) (435,653) (3,795,577) (10,957) (23,103)
======== ========== ======== ==========
<CAPTION>
GAMerica Capital Fund
For the Periods
---------------------------------------------------------
01-Jan-97 to 31-Dec-97 01-Jan-96 to 31-Dec-96
Shares US$ Shares US$
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Class A
Shares sold 168,956 2,197,313 21,800 269,201
Shares issued on reinvestment of dividends 9,395 124,173 9,804 102,358
Shares redeemed (73,313) (923,956) (155,887) (1,687,583)
-------- ---------- -------- ----------
Net increase/(decrease) 105,038 1,397,530 (124,283) (1,316,024)
======== ========== ======== ==========
</TABLE>
F-32
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
Note 5. Investment Transactions
The cost of purchases and proceeds of sales of investment securities for the
year ended 31st December, 1997 excluding short-term securities, were as follows:
<TABLE>
<CAPTION>
GAM GAM GAM GAM GAM GAM GAM GAMerica
International Global Europe Pacific Basin Japan Capital North America Asian Capital Capital
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
In US$
Purchases 1,116,659,837 49,848,083 34,319,310 19,611,861 19,366,786 3,801,870 1,852,186 478,500
Sales 665,661,509 17,131,044 27,028,226 30,418,744 25,744,372 1,243,057 5,767,264 879,012
</TABLE>
Realized gains and losses are reported on an identified cost basis. At 31st
December, 1997, the aggregate gross unrealized appreciation and depreciation of
securities, based on cost for federal income taxes purposes, were as follows:
<TABLE>
<CAPTION>
GAM GAM GAM GAM GAM GAM GAM GAMerica
International Global Europe Pacific Basin Japan Capital North America Asian Capital Capital
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
In US$
Appreciation 395,669,646 10,437,765 6,133,636 2,083,055 1,792,003 3,538,945 18,807 743,007
Depreciation (28,199,091) (841,717) (904,203) (18,863,861) (9,157,874) (106,099) (312,810) (215,788)
----------- ---------- --------- ---------- --------- --------- ------- -------
Net 367,470,555 9,596,048 5,229,433 (16,780,806) (7,365,871) 3,432,846 (294,003) 527,219
=========== ========== ========= ========== ========= ========= ======= =======
</TABLE>
At 31st December, 1997, the Funds had tax basis net capital losses as follows.
These losses may be carried over to offset future capital gains through the
expiration dates shown:
<TABLE>
<CAPTION>
GAM GAM GAM GAM GAM GAM GAM GAMerica
International Global Europe Pacific Basin Japan Capital North America Asian Capital Capital
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
In US$ -- -- -- 770,561 507,841 -- 291,731 --
2,414,939
Carryforward -- -- -- 31st Dec, 31st Dec, -- 31st Dec, --
Expiration
dates -- -- -- 2005 2003 & 2005 -- 2005 --
</TABLE>
Foreign taxes withheld from dividends and interest for the year ended 31st
December, 1997, were as follows:
<TABLE>
<CAPTION>
GAM GAM GAM GAM GAM GAM GAM GAMerica
International Global Europe Pacific Basin Japan Capital North America Asian Capital Capital
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
In US$
Dividends 3,312,224 24,965 78,203 75,952 30,251 401 1,606 241
Interest -- -- -- -- 13 -- -- --
</TABLE>
F-33
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
Note 6. Financial Instruments
During the period, several of the Funds have been party to financial instruments
with off-balance sheet risks, including forward foreign currency contracts and
futures contracts, primarily in an attempt to minimize the risk to the Fund, in
respect of its portfolio transactions. These instruments involve market and/or
credit risk in excess of the amount recognized in the Statement of Assets and
Liabilities. Risks arise from the possible inability of counterparties to meet
the terms of their contracts and from unexpected movement in currencies,
securities values and interest rates. The contract amounts indicate the extent
of the Funds' involvement in such contracts.
Forwards: When entering a forward currency contract, the Fund agrees to receive
or deliver a fixed quantity of foreign currency for an agreed upon price on an
agreed upon future date.
At 31st December, 1997 the Fund had outstanding forward contracts for the
purchase and sale of currencies as set out below. The contracts are reported in
the financial statements at the Fund's net equity, as measured by the difference
between the forward foreign exchange rates at the dates of entry into the
contracts and the forward rates at the reporting date, or the date an offsetting
position, if any, has been entered into.
GAM INTERNATIONAL FUND
Unrealized
appreciation/
(depreciation)
--------------
US$
550,125,000 Belgian francs sold vs. 15,000,000 US$
23rd January, 1998 150,595
323,820,000 Belgian francs sold vs. 9,000,000 US$
29th April, 1998 210,336
245,905,200 Swiss francs sold vs. 172,000,000 US$
17th April, 1998 1,604,583
220,468,600 German marks sold vs. 125,999,999 US$,
14th January, 1998 (115,398)
201,699,000 Dutch guilders sold vs. 30,000,000 US$
29th June, 1998 294,015
7,093,005,000 Spanish pesetas sold vs. 47,000,000 US$,
14th January, 1998 (116,769)
348,360,000 French francs sold vs. 60,000,000 US$,
5th January, 1998 (145,505)
984,059,700 French francs sold vs. 166,000,000 US$
14th January, 1998 987,968
53,406,000 French francs sold vs 9,000,000 US$
6th July, 1998 32,314
177,260,721 UK Pound sterling sold vs. 280,000,000 US$
9th February, 1998 (10,641,937)
43,465,000,000 Italian lire sold vs. 25,000,000 US$
9th June, 1998 407,232
4,047,200,000 Japanese yen sold vs. 36,000,000 US$,
5th January, 1998 4,384,408
38,723,609,000 Japanese yen sold vs. 336,700,000 US$,
22nd January, 1998 39,232,491
F-34
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
Unrealized
appreciation/
(depreciation)
--------------
US$
3,798,000,000 Japanese yen sold vs. 30,000,000 US$,
6th July, 1998 91,348
321,885,700 Dutch guilders sold vs. 164,000,000 US$,
14th January, 1998 3,055,401
142,254,000 Swedish krona sold vs. 18,000,000 US$
30th January, 1998 37,306
570,280,000 Japanese yen bought vs. 4,384,408 US$,
5th January, 1998 (18,223)
----------
Net equity in foreign currency exchange contracts 39,450,165
==========
GAM GLOBAL FUND
US$
2,468,380 Swiss francs sold vs. 1,728,000 US$
17th April, 1998 17,582
8,063,515 French francs sold vs. 1,350,000 US$
14th January, 1998 8,991
7,056,000 French francs sold vs. 1,200,000 US$
16th June, 1998 16,470
3,617,305 German Marks sold vs. 1,850,000 US$
12th January, 1998 64,488
1,141,087 UK Pound sterling sold vs. 1,800,000 US$
9th February, 1998 (70,959)
78,071,000 Japanese yen sold vs. 700,000 US$
5th January, 1998 99,777
812,071,900 Japanese yen sold vs. 6,830,000 US$
22nd January, 1998 591,815
88,620,000 Japanese yen sold vs. 700,000 US$
6th July, 1998 2,131
653,835 Dutch guilders sold vs. 350,000 US$
14th January, 1998 (13,791)
3,530,124 Swedish krona sold vs. 456,000 US$
15th June, 1998 8,799
12,978,000 Japanese yen bought vs. 99,777 US$
5th January, 1998 (415)
----------
Net equity in foreign currency exchange contracts 724,888
==========
F-35
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
GAM EUROPE FUND
Unrealized
appreciation/
(depreciation)
--------------
US$
29,000,000 Belgian francs sold vs. 802,768 US$
26th January, 1998 19,837
3,750,000 Swiss francs sold vs. 2,656,654 US$
26th January, 1998 81,894
7,500,000 German marks sold vs 4,282,778 US$
26th January, 1998 77,175
15,500,000 Danish krone sold vs. 2,323,490 US$
26th January, 1998 57,708
132,000,000 Spanish pesetas sold vs. 889,428 US$
26th January, 1998 22,489
5,350,000 Finnish markka sold vs. 1,011,591 US$
26th January, 1998 27,516
52,000,000 French francs sold vs. 8,872,812 US$
26th January, 1998 218,528
4,250,000,000 Italian lire sold vs. 2,465,583 US$
26th January, 1998 62,971
5,700,000 Dutch guilders sold vs. 2,888,782 US$
26th January, 1998 72,622
14,000,000 Norwegian kroner sold vs. 1,957,221 US$
26th January, 1998 54,894
95,000,000 Portuguese escudos sold vs. 526,987 US$
26th January, 1998 10,385
25,500,000 Swedish krona sold vs. 3,313,840 US$
26th January, 1998 94,297
----------
Net equity in foreign currency exchange contracts 800,316
==========
GAM PACIFIC BASIN FUND
US$
1,556,100,000 Japanese yen sold vs. 13,000,000 US$
22nd January, 1998 956,308
5,688,623 Australian dollar sold vs. 3,800,000 US$
16th March, 1998 84,760
----------
Net equity in foreign currency exchange contracts 1,041,068
==========
F-36
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
GAM JAPAN CAPITAL FUND
Unrealized
appreciation/
(depreciation)
--------------
US$
119,620,000 Japanese yen sold vs. 1,000,000 US$
14th January, 1998 82,217
837,550,000 Japanese yen sold vs. 7,000,000 US$
20th January, 1998 568,053
1,020,680,000 Japanese yen sold vs. 8,500,000 US$
6th February, 1998 641,805
384,210,000 Japanese yen sold vs. 3,000,000 US$
9th March, 1998 28,845
128,500,000 Japanese yen sold vs. 1,000,000 US$
26th March, 1998 3,626
Net equity in foreign currency exchange contracts 1,324,546
At 31st December, 1997 the Funds had sufficient cash and/or securities to cover
any commitments under these contracts.
F-37
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
Note 7. Selected financial information
<TABLE>
<CAPTION>
Per share operating performance (for a share outstanding throughout the period)
-----------------------------------------------------------------------------------------------------------------
Income from investment operations Less distributions
----------------------------------------- ----------------------------------------
Net realized Dividends Distributions
Net asset value, Net and unrealized Total from from net from net Net asset
beginning investment gain/(loss) on investment investment realized Total value, end
of period income/(loss) investments operations income gains Distributions of period
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
01-Jan-97 to
31-Dec-97
US$
GAM International
Class A US$ 23.15 0.08+ 6.58 6.66 (0.18) (1.17) (1.35) US$ 28.46
Class D US$ 23.07 0.01+ 6.59 6.60 (0.16) (1.17) (1.33) US$ 28.34
GAM Global
Class A US$ 14.35 (0.04)+ 5.04 5.00 (0.02) (0.62) (0.64) US$ 18.71
Class D US$ 14.22 (0.09)+ 5.02 4.93 (0.03) (0.62) (0.65) US$ 18.50
GAM Europe
Class A US$ 11.85 0.02+ 3.15 3.17 (0.06) (2.39) (2.45) US$ 12.57
GAM Pacific Basin
Class A US$ 15.26 0.00+ (4.45) (4.45) -- (1.12) (1.12) US$ 9.69
Class D US$ 15.20 0.01+ (4.47) (4.46 ) -- (1.12) (1.12) US$ 9.62
GAM Japan Capital
Class A US$ 9.39 (0.10)+ (0.11) (0.21) -- (0.74) (0.74) US$ 8.44
GAM North America
Class A US$ 13.56 0.00+ 3.99 3.99 -- (0.23) (0.23) US$ 17.32
GAM Asian Capital
Class A US$ 9.83 0.09+ (3.48) (3.39) (0.02) (0.40) (0.42) US$ 6.02
GAMerica Capital
Class A US$ 10.82 (0.24)+ 4.23 3.99 0.00 (1.38) (1.38) US$ 13.43
01-Jan-96 to
31-Dec-96
US$
GAM International
Class A US$ 21.37 0.57+ 1.34 1.91 (0.09) (0.04) (0.13) US$ 23.15
Class D US$ 21.35 0.45+ 1.32 1.77 (0.01) (0.04) (0.05) US$ 23.07
GAM Global
Class A US$ 13.51 0.16+ 1.55 1.71 (0.08) (0.79) (0.87) US$ 14.35
Class D US$ 13.48 0.07+ 1.47 1.54 (0.01) (0.79) (0.80) US$ 14.22
GAM Europe
Class A US$ 10.04 0.07+ 2.06 2.13 (0.01) (0.31) (0.32) US$ 11.85
GAM Pacific Basin
Class A US$ 16.97 0.04+ (0.11) (0.07) (0.74) (0.90) (1.64) US$ 15.26
Class D US$ 16.96 (0.10)+ (0.11) (0.21) (0.65) (0.90) (1.55) US$ 15.20
GAM Japan Capital
Class A US$ 10.16 (0.05)+ 0.07 0.02 (0.70) (0.09) (0.79) US$ 9.39
GAM North America
Class A US$ 11.93 (0.05)+ 2.93 2.88 -- (1.25) (1.25) US$ 13.56
GAM Asian Capital
Class A US$ 9.53 (0.07)+ 0.38 0.31 -- (0.01) (0.01) US$ 9.83
GAMerica Capital
Class A US$ 10.03 (0.42)+ 2.22 1.80 -- (1.01) (1.01) US$ 10.82
</TABLE>
F-38
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Per share operating performance (for a share outstanding throughout the period)
-----------------------------------------------------------------------------------------------------------------
Income from investment operations Less distributions
----------------------------------------- ----------------------------------------
Net realized Dividends Distributions
Net asset value, Net and unrealized Total from from net from net Net asset
beginning investment gain/(loss) on investment investment realized Total value, end
of period income/(loss) investments operations income gains Distributions of period
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
01-Jan-95 to
31-Dec-95
US$
GAM International
Class A US$ 17.21 0.52 4.64 5.16 (0.47) (0.53) (1.00) US$ 21.37
Class D US$ 20.46 0.10 1.78 1.88 (0.46) (0.53) (0.99) US$ 21.35
GAM Global
Class A US$ 10.60 0.35 3.48 3.83 (0.30) (0.62) (0.92) US$ 13.51
Class D US$ 13.46 -- 0.92 0.92 (0.28) (0.62) (0.90) US$ 13.48
GAM Europe
Class A US$ 8.66 0.07 1.38 1.45 (0.06) (0.01) (0.07) US$ 10.04
GAM Pacific Basin
Class A US$ 17.62 -- 0.61 0.61 -- (1.26) (1.26) US$ 16.97
Class D US$ 17.36 (0.02) 0.26 0.24 -- (0.64) (0.64) US$ 16.96
GAM Japan Capital
Class A US$ 9.62 (0.07) 0.69 0.62 (0.05) (0.03) (0.08) US$ 10.16
GAM North America
Class A US$ 9.14 -- 2.83 2.83 -- (0.04) (0.04) US$ 11.93
GAM Asian
Capital **
Class A US$ 10.00 (0.01) (0.42) (0.43) -- (0.04) (0.04) US$ 9.53
GAMerica
Capital **
Class A US$ 10.00 0.07 0.07 0.14 (0.07) (0.04) (0.11) US$ 10.03
01-Jan-94 to
31-Dec-94
US$
GAM International US$ 23.90 0.34 (2.58) (2.24) (0.66) (3.79) (4.45) US$ 17.21
GAM Global US$ 17.92 0.19 (2.94) (2.75) (0.49) (4.08) (4.57) US$ 10.60
GAM Europe US$ 8.93 -- (0.27) (0.27) -- -- -- US$ 8.66
GAM Pacific Basin US$ 19.20 (0.05) 1.36 1.31 -- (2.89) (2.89) US$ 17.62
GAM Japan
Capital* US$ 10.00 0.02 (0.40) (0.38) -- -- -- US$ 9.62
GAM North America US$ 12.80 0.04 0.23 0.27 (0.23) (3.70) (3.93) US$ 9.14
01-Jan-93 to
31-Dec-93
US$
GAM International US$ 14.56 0.25 10.38 10.63 (0.34) (0.95) (1.29) US$ 23.90
GAM Global US$ 10.33 0.24 7.46 7.70 (0.11) -- (0.11) US$ 17.92
GAM Europe US$ 7.34 0.24 1.41 1.65 (0.06) -- (0.06) US$ 8.93
GAM Pacific Basin US$ 13.14 (0.03) 6.57 6.54 (0.04) (0.44) (0.48) US$ 19.20
GAM North America US$ 13.63 0.19 (0.46) (0.27) (0.07) (0.49) (0.56) US$ 12.80
</TABLE>
+ For the years ended 31st December 1996 and 1997, net investment income per
share has been determined based on the weighted average shares outstanding
method.
* Period from 1st July, 1994 (Inception) to 31st December, 1994.
** Period from 12th May, 1995 (Inception) to 31st December, 1995.
F-39
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/supplemental data
------------------------------------------------------------------------------------------
Ratios to average net assets
----------------------------
Total return
(without Net assets Net Portfolio Average
deduction of end of period investment turnover commission
sales load)++++ (000 omitted) Expenses income/(loss) rate rate paid ss.
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
01-Jan-97 to
31-Dec-97
US$
GAM International
Class A 28.93% US$ 1,793,665 1.68% 0.28% 48% 0.0444
Class D 28.78% US$ 99,283 1.82% 0.05% 48% 0.0444
GAM Global
Class A 34.95% US$ 65,739 1.83% (0.25)% 48% 0.0733
Class D 34.80% US$ 3,768 2.01% (0.53)% 48% 0.0733
GAM Europe
Class A 27.55% US$ 39,101 1.81% 0.15% 80% 0.0352
GAM Pacific Basin
Class A (30.00)% US$ 23,046 1.98% 0.02% 42% 0.0168
Class D (30.18)% US$ 1,583 2.08% (0.09)% 42% 0.0168
GAM Japan Capital
Class A (2.58)% US$ 30,872 2.15% (1.06)% 76% 0.0554
GAM North America
Class A 29.41% US$ 10,966 1.94% 0% 15% 0.0600
GAM Asian Capital **
Class A (35.34)% US$ 824 1.81% 1.04% 68% 0.0078
GAMerica Capital
Class A 37.28% US$ 3,799 3.45% (2.04)% 22% 0.0152
01-Jan-96 to
31-Dec-96
US$
GAM International+++
Class A 8.98% US$ 1,009,819 1.56% 2.70% 82% 0.0202
Class D 8.33% US$ 38,716 2.06% 2.13% 82% 0.0202
GAM Global+++
Class A 12.74% US$ 19,583 2.26% 1.17% 107% 0.0255
Class D 11.54% US$ 815 2.88% 0.52% 107% 0.0255
GAM Europe+++
Class A 21.32% US$ 25,127 1.89% 0.59% 76% 0.0168
GAM Pacific Basin+++
Class A (0.39)% US$ 49,808 1.76% 0.22% 46% 0.0251
Class D (1.19)% US$ 1,878 2.28% (0.57)% 46% 0.0251
GAM Japan Capital+++
Class A 0.15% US$ 36,504 1.84% (0.50)% 23% 0.0697
GAM North America+++
Class A 24.10% US$ 5,853 2.61% (0.39)% 9% 0.0600
GAM Asian Capital**+++
Class A 3.28% US$ 5,629 2.98% (0.75)% 86% 0.0124
GAMerica Capital**+++
Class A 18.31% US$ 1,927 5.16% (3.79)% 27% 0.0533
</TABLE>
F-40
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/supplemental data
------------------------------------------------------------------------------------------
Ratios to average net assets
----------------------------
Total return
(without Net assets Net Portfolio Average
deduction of end of period investment turnover commission
sales load)++++ (000 omitted) Expenses income/(loss) rate rate paid ss.
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
01-Jan-95 to
31-Dec-95
US$
GAM International
Class A 30.09% US$ 560,234 1.57% 3.89% 35% -
Class D 9.26% US$ 8,714 2.22%* 1.90%* 35% -
GAM Global
Class A 36.25% US$ 26,161 2.16% 2.96% 60% -
Class D 6.97% US$ 295 2.81%* (0.09)%* 60% -
GAM Europe
Class A 16.77% US$ 22,961 2.12% 0.75% 145% -
GAM Pacific Basin
Class A 4.50% US$ 53,944 1.98% (0.07)% 64% -
Class D 2.35% US$ 1,547 2.63%* (1.49)% 64% -
GAM Japan Capital**
Class A 6.45% US$ 13,600 3.61% (2.35)% 122% -
GAM North America**
Class A 30.90% US$ 5,981 2.98% 0.01% 9% -
GAM Asian Capital++**
Class A (4.25)% US$ 5,560 3.11%* (0.17)%* 17% -
GAMerica Capital++**
Class A 1.38% US$ 3,029 3.73%* 1.36%* 11% -
01-Jan-94 to
31-Dec-94
US$
GAM International (10.23)% US$ 158,336 1.60% 2.74% 110% -
GAM Global (16.15)% US$ 19,940 2.29% 0.91% 123% -
GAM Europe (3.11)% US$ 32,233 2.35% 0.06% 75% -
GAM Pacific Basin 7.41% US$ 48,527 1.78% (0.35)% 29% -
GAM Japan Capital+ (3.77)% US$ 9,406 2.19%* 0.70%* 7% -
GAM North America** 2.97% US$ 1,887 2.54% 0.37% 3% -
1-Jan-93 to
31-Dec-93
US$
GAM International 79.96% US$ 80,776 1.99% 2.28% 98% -
GAM Global 75.30% US$ 33,416 2.68% 1.88% 107% -
GAM Europe 22.68% US$ 14,398 2.64% 1.05% 182% -
GAM Pacific Basin 51.52% US$ 40,719 1.93% (0.29)% 91% -
GAM North America (2.09)% US$ 3,289 2.10% 0.69% 3% -
</TABLE>
+ Period from 1st July, 1994 (Inception) to 31st December, 1994.
++ Period from 12th May, 1995 (Inception) to 31st December, 1995.
* Annualized.
** In the absence of expense reimbursement, expenses on an annualized basis
would have represented 5.44 % for GAM Asian Capital for the year ended 31st
December, 1997. Expenses on an annualized basis would have represented 3.59 %
for GAM Asian Capital and 6.16 % for GAMerica Capital of average net assets
respectively, for the year ended 31st December, 1996. Expenses on an annualized
basis would have represented 4.61 % for GAM Japan Capital, 3.27 % for GAM North
America, 3.95 % for GAM Asian Capital and 4.73 % for GAMerica Capital of average
net assets, respectively, for the period ended 31st December, 1995 and 5.81 % of
average net assets for GAM North America Fund for the year ended 31st December
1994.
+++ The ratios of expenses to average net assets for the year ended 31st
December, 1996 include amounts paid through expense offset arrangements. Prior
and subsequent period ratios exclude these amounts.
++++ Total return calculated for a period of less than one year is not
annualized.
ss. For fiscal years beginning on or after September 1, 1995, a fund is required
to disclose its average commission rate per share for trades on which a
commission is charged. This amount includes commissions paid to foreign brokers
which may materially affect the rate shown. Amounts paid in foreign currencies
have been converted into US dollars using the prevailing exchange rate on the
date of the transaction.
F-41
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Bank loans
---------------------------------------------------------------------------------------
Average
Average amount number of shares Average
Amounts of bank loans oustanding amount of
outstanding outstanding during the period debt per share
end of period during the period (monthly average) during
(000 omitted) (000 omitted) (000 omitted) the period
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
01-Jan-97 to
31-Dec-97
US$
GAM International
Class A
Class D
GAM Global
Class A
Class D
GAM Europe+++ US$ 884 US$ 2.4 2,688 0.001
Class A
GAM Pacific Basin+++ US$ 2,102 US$ 5.8 3,265 0.002
Class A US$ 144 US$ 0.4 140 0.003
Class D
GAM Japan Capital+++
Class A - US$ 145.5 3,074 0.047
GAM North America
Class A
GAM Asian Capital
Class A
GAMerica Capital
Class A
01-Jan-96 to
31-Dec-96
US$
GAM International
Class A
Class D
GAM Global
Class A
Class D
GAM Europe
Class A
GAM Pacific Basin
Class A
Class D
GAM Japan Capital
Class A
GAM North America
Class A
GAM Asian Capital
Class A
GAMerica Capital
Class A
</TABLE>
F-42
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Bank loans
---------------------------------------------------------------------------------------
Average
Average amount number of shares Average
Amounts of bank loans oustanding amount of
outstanding outstanding during the period debt per share
end of period during the period (monthly average) during
(000 omitted) (000 omitted) (000 omitted) the period
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
01-Jan-95 to
31-Dec-95
US$
GAM International
Class A
Class D
GAM Global
Class A
Class D
GAM Europe
Class A - US$ 123 390 US$ 0.32
GAM Pacific Basin
Class A
Class D
GAM Japan Capital
Class A
GAM North America
Class A
GAM Asian Capital++
Class A
GAMerica Capital++
Class A
01-Jan-94 to
31-Dec-94
US$
GAM International
GAM Global
GAM Europe
GAM Pacific Basin
GAM Japan Capital+
GAM North America
01-Jan-93 to
31-Dec-93
US$
GAM International US$ 9,557 US$ 2,042 2,700 US$ 0.76
GAM Global US$ 2,165 US$ 2,600 1,780 US$ 1.48
GAM Europe US$ 1,860 US$ 521 1,680 US$ 0.31
GAM Pacific Basin US$ - US$ - - US$ -
GAM North America US$ - US$ - - US$ -
</TABLE>
+ Period from 1st July, 1994 (Inception) to 31st December, 1994.
++ Period from 12th May, 1995 (Inception) to 31st December, 1995.
+++ The average daily interest rate during the period was 8.69 % for GAM Europe,
8.69 % for GAM Pacific Basin and 8.41 % for GAM Japan Capital, respectively. The
interest rate at 31st December, 1997 was 8.69 % for GAM Europe and GAM Pacific
Basin.
F-43
<PAGE>
- --------------------------------------------------------------------------------
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Board of Directors and Shareholders of
GAM Funds, Inc.
We have audited the accompanying statements of assets and liabilities, including
the statements of investments, of GAM Funds, Inc. (comprising, respectively, GAM
International Fund, GAM Global Fund, GAM Europe Fund, GAM Pacific Basin Fund,
GAM Japan Capital Fund, GAM North America Fund, GAM Asian Capital Fund, and
GAMerica Capital Fund) as of December 31, 1997, and the related statements of
operations for the year then ended, the statements of changes in net assets and
the selected financial information for the two years in the period then ended.
These financial statements and selected financial information are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and selected financial information based
on our audits. The selected financial information for each of the three years in
the period ended December 31, 1995, were audited by other auditors whose report,
dated February 2, 1996, expressed an unqualified opinion thereon.
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 selected
financial information 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 selected financial information
referred to above present fairly, in all material respects, the financial
position of each of the respective portfolios constituting GAM Funds, Inc. as of
December 31, 1997 and the results of their operations for the year ended, the
changes in their net assets and the selected financial information for each of
the two years in the period then ended, in conformity with generally accepted
accounting principles.
Boston, Massachusetts
February 19, 1998 Coopers & Lybrand L.L.P.
F-44
<PAGE>
GAM Funds, Inc.
Post-Effective Amendment No. 30
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS:
The following financial statements for the year ended December
31, 1997 are incorporated herein as part of the Statement of
Additional Information for GAM International, Global, Pacific
Basin, Europe, Japan Capital, North America, Asian Capital
and GAMerica Capital Funds:
Statements of Investments
Statements of Assets and Liabilities
Statements of Operations
Statements of Changes in Net Assets
Notes to Financial Statements
(b) EXHIBITS:
(1)(a) Articles of Incorporation of Registrant, as amended
or supplemented from time to time, are incorporated
by reference to the Registrant's Registration
Statement on Form N-1A which has been previously
filed with the Commission ("Form N-1A").
(1)(b) Certificate of Correction to the Registrant's
Articles of Incorporation is incorporated by
reference to the Registrant's Form N-SAR filed for
the period ended December 31, 1995.
(1)(c) Articles Supplementary to the Registrant's Articles
of Incorporation increasing number of authorized
shares and classifying shares of each of the Funds as
Class A Shares or Class D Shares are incorporated by
reference to the Registrant's Form N-SAR filed for
the period ended December 31, 1995.
(1)(d) Articles of Amendment to the Registrant's Articles of
Incorporation redesignating the shares of each of the
Funds as Class A Shares are incorporated by reference
to PEA No. 27 to Registrant's Registration Statement
("PEA 27").
(1)(e) Articles Supplementary adding GAM Mid-Cap U.S. Fund
are incorporated by reference to PEA 27.
(l)(f) Articles Supplementary to Registrant's Articles of
Incorporation increasing the number of authorized
shares and classifying shares of certain Funds as
Class B and Class C shares are incorporated herein.*
<PAGE>
(2) Bylaws of Registrant are incorporated herein by
reference to the Registrant's Post-Effective
Amendment No. 4 to the Registration Statement on Form
N-1A, filed on December 31, 1985 ("PEA No. 4").
(3) Not applicable.
(4) Specimen stock certificates of the Registrant are
incorporated by reference to PEA No. 4.
(5)(a) Amended and Restated Investment Advisory Agreement
with GAM International Management Limited, dated
April 14, 1994, is incorporated by reference to PEA
No. 27.
(5)(b) Amendment No. 1 to Amended and Restated Investment
Advisory Agreement with GAM International Management
Limited, dated March 10, 1995, is incorporated by
reference to PEA 27 .
(5)(c) Amendment No. 2 to Amended and Restated Investment
Advisory Agreement with GAM International Management
Limited, dated August 17, 1995, is incorporated by
reference to PEA 27.
(5)(d) Investment Advisory Agreement with Fayez Sarofim &
Co., dated June 29, 1990, is incorporated by
reference to the Registrant's Post-Effective
Amendment No. 15 to the Registration Statement on
Form N-1A, filed on August 29, 1990.
(5)(e) Investment Advisory Agreement with Forstmann-Leff
Associates Inc., dated August 17, 1995, is
incorporated by reference to PEA 27.
(6)(a) Second Amended and Restated Distribution Agreement
For Class A Shares with GAM Services, Inc. dated
November 1, 1996 is incorporated by reference to the
Registrant's Post-Effective Amendment No. 28 to the
Registration Statement on form N-1A filed on March 3,
1997 ("PEA 28").
(6)(b) First Amended Distribution Agreement For Class D
Shares with GAM Services, Inc., dated November 1,
1996, is filed incorporated by reference to PEA 28.
(6)(c) Amended Form of Dealer Agreement between GAM
Services, Inc. and designated dealers is incorporated
by reference to PEA 28.
(6)(d) Agreement for Distribution of Class B and Class C
shares are incorporated herein.*
(7) Not Applicable.
(8) Custodian Agreement with Brown Brothers Harriman &
Co., dated April 26, 1995, is incorporated by
reference to PEA 26.
(9) Transfer Agency Agreement with Chase Global Funds
Service Company (as successor to AIM Financial
Services, Inc.), as amended, is incorporated herein
by reference to the Registrant's Post-Effective
Amendment No. 2 to the Registration Statement on Form
N-1A, filed on June 26, 1985, the Registrant's
Post-Effective Amendment No. 6 to the Registration
Statement on Form N-1A, filed on October 31, 1986,
and the Registrant's Post-Effective Amendment No. 11
to the Registration Statement on Form N-1A, filed on
April 27, 1989.
<PAGE>
(9)(b) Administration Agreement with Brown Brothers Harriman
& Co. dated October 1, 1995 is incorporated by
reference to PEA 28.
(10) Opinion of Counsel is incorporated by reference to
PEA 28.
(11) Consent of Coopers & Lybrand L.L.P. is incorporated
herein*.
(12) Not Applicable.
(13)(a) Subscription Agreement with Global Asset Management
(USA) Inc. for shares of GAM Mid-Cap U.S. Fund, dated
September 5, 1995, is incorporated by reference to
PEA 27.
(14) Not Applicable.
(15)(a) Class D Distribution Plan adopted by the Registrant
pursuant to Rule 12b-1 under the Investment Company
Act of 1940, as amended, (the "1940 Act") is
incorporated by reference to PEA 27.
(15)(b) Class A Distribution Plan adopted by the Registrant
pursuant to Rule 12b-1 under the 1940 Act is
incorporated by reference to PEA 28.
(15)(c) Class B and Class C Distribution Plans adopted by the
Registrant pursuant to Rule 12b-1 under the 1940 Act
are incorporated herein.*
(16) Schedule of computation of performance quotations
provided in the Statement of Additional Information
is incorporated herein.*
(17) Financial Data Schedules are incorporated herein.*
(18) Amended Multiple Class Plan For Class A and D Shares
adopted by the Registrant pursuant to Rule 18f-3
under the 1940 Act incorporated by reference to
PEA 28.
(18)(a) Amended Multiple Class Plan for Class B and C Shares
adopted by the Registrant pursuant to Rule 18f-3
under the 1940 Act is incorporated herein.*
(19) Powers of Attorney for Mr. Weiser, Mr. Landau and
Mr. de Botton are incorporated by reference to PEA
28.
(19)(a) Power of Attorney for Mr. Robert J. McGuire is
incorporated herein.*
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
N/A
<PAGE>
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
Number of Record Holders
Title of Series as of January 31, 1998
--------------- -------------------------
GAM International Fund
Class A Common Stock 33,927
Class D Common Stock 3,593
GAM Global Fund
Class A Common Stock 2,117
Class D Common Stock 279
GAM Pacific Basin Fund
Class A Common Stock 791
Class D Common Stock 57
GAM Europe Fund
Class A Common Stock 245
GAM North America Fund
Class A Common Stock 140
GAM Japan Capital Fund
Class A Common Stock 486
GAMerica Capital Fund
Class A Common Stock 65
GAM Asian Capital Fund
Class A Common Stock 95
ITEM 27. INDEMNIFICATION.
All officers, directors, employees and agents of the Registrant
are to be indemnified to the fullest extent permitted by law for
any liabilities of any nature whatsoever incurred in connection
with the affairs of the Registrant, except in cases where willful
misfeasance, bad faith, gross negligence or reckless disregard of
duties to the Registrant are established. See Article NINTH of
the Articles of Incorporation of the Registrant, as amended, for
a more complete description of matters related to
indemnification.
GAM Services Inc. ("GAM Services"), the Registrant's principal
underwriter, will be indemnified against all claims, demands,
liabilities and expenses which may be incurred by it arising out
of any untrue statement, or alleged untrue statement, of a
material fact contained in the Registrant's registration
statement or material omission, or alleged material omission,
therein.
<PAGE>
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISERS.
PAUL S. KIRKBY
Global Asset Management (H.K.) Ltd., 1801 Two Exchange Square,
Central, Hong Kong, investment adviser, director, 1985 to
present.
GAM (Asia) Retirement Scheme, 1801 Two Exchange Square,
Central, Hong Kong, trustee, 1986 to present.
Hanningfield Investments Ltd., 1801 Two Exchange Square,
Central, Hong Kong, investment adviser, director, 1987 to
present.
GAM Japan Inc. and GAM Pacific Inc., Craigmuir Chambers, P.O.
Box 71, Road Town, Tortola, British Virgin Islands, director.
Exeter Investments Ltd., 11/F Alexandra House, Central, Hong
Kong, investment company, director, 1987 to present.
NICHOLAS J. EELEY
Global Asset Management Limited, 12 St. James's Place, London
SWlA 1NX, England, investment adviser, director, 1984 to
present.
GAM Pacific Inc. and GAM Arbitrage Inc., Craigmuir Chambers,
P.O. Box 71, Road Town, Tortola, British Virgin Islands,
director.
DAVID J. MILLER
Global Asset Management (U.K.) Ltd., 12 St. James's Place,
London SW1A 1NX, England, investment adviser, chief financial
officer, 1987 to present.
GAM Fund Management Ltd., Dublin.
GAM Administration Limited, 11 Athol Street, Douglas, Isle of
Man, director.
ALAN MCFARLANE
Global Asset Management Ltd., 12 St. James's Place, London
SW1A 1NX, England, managing director (institutional), 1993 to
present.
DENIS G. RAEBURN
Global Asset Management Ltd. and Global Asset Management
(U.K.) Ltd., 12 St. James's Place, London SW1A 1NX, England,
managing director, 1987 to present.
Cellcom Limited, Denmark House, Staples Corner, London NW9
7BW, England, director, 1983 to present.
Global Asset Management (USA) Inc., 135 East 57th Street, New
York, NY 10022, director, 1990 to present.
Mr. Raeburn is also a director of various other companies
controlled by GAM and of various investment funds organized
outside the United States in the GAM group of funds.
<PAGE>
GORDON GRENDER
Global Asset Management (U.K.) Ltd., 12 St. James's Place,
London SW1A 1NX, England, independent contractor and fund
manager, 1994 to present.
Stephens Inc., 111 Center Street, Little Rock, AK. Consultant,
1995 to present.
Neilson Management Ltd., 65 London Wall, London, England,
January 1997 to present.
Cognito Ltd., 12 Swinegate, Leeds, England. Alternate
Director, January 1997 to present.
Foreign & Colonial US Smaller Companies plc, Exchange House,
Primrose Street, London EC2A 2NY, England, director, 1993 to
present.
Investco Overseas Holdings Limited, 81 Carter Lane, London EC4
5EP, England, director, 1987 to present.
Flexbale Limited, 2 Chapel Court, London SE1 1HR, England,
director, 1983 to present.
Adrian Berkeley & Associates Limited, The Estate Office,
Normanby, Scunthorpe, South Humberside DN15 9HS, England,
director, 1969 to present.
Mr. Grender also acts as portfolio manager for GAM North
American Unit Trust and GAMerica, Inc.
The directors and officers of Sarofim and their only
activities of a substantial nature during the past two years
are set forth in the Statement of Additional Information under
"Investment Advisers."
ITEM 29. PRINCIPAL UNDERWRITERS.
<TABLE>
<CAPTION>
(a) None.
(b) Name and Positions and Positions and
Principal Offices with Offices with
Business Address Underwriter Registrant
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Kevin Blanchfield Chief Operating Officer, Vice President
135 East 57th Street Treasurer and Treasurer
New York, NY 10022 and Director
Gordon E. Swartz Secretary Secretary
135 East 57th Street
New York, NY 10022
(c) N/A
</TABLE>
<PAGE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
The accounts, books and other documents required to be maintained
by Registrant pursuant to Rule 31a-1(a) of the Act are maintained
as follows:
Accounts and Records
Pursuant to Rule Location
-------------------- --------
31a - 1(b)(1) Brown Brothers Harriman & Co.
31a - 1(b)(2)(i) 40 Water Street
31a - 1(b)(2)(ii) Boston, Massachusetts 02109
31a - 1(b)(2)(iii)
31a - 1(b)(3)
31a - 1(b)(5)-(8)
31a - 1(b)(10)
31a - 1(b)(1) Chase Global Funds Service Company
31a - 1(b)(2)(iv) P.O. Box 2798
Boston, Massachusetts 02208
31a - 1(b)(9)-(11) GAM International Management
Limited
12 St. James's Place
London SWIA 1NX, England
Fayez Sarofim & Co.
Suite 2907
Two Houston Center
Houston, Texas 77010
31a - 1(b)(4) Coudert Brothers
1114 Avenue of the Americas
New York, New York 10036
ITEM 31. N/A
ITEM 32. UNDERTAKINGS
(a) N/A
(b) N/A
(c) Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest annual report to
shareholders for each series upon request and without charge.
<PAGE>
SIGNATURES.
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Amendment to the Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused
this Post-Effective Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York
and State of New York, on the 30th day of April, 1998.
GAM FUNDS, INC.
Registrant
By /s/ Kevin J. Blanchfield
----------------------------
Kevin J. Blanchfield
Vice President and Treasurer
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, this Amendment to the Registration Statement has been
signed below by the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
Signature: Title: Date:
- ---------- ------ -----
<S> <C> <C>
/s/ Gilbert de Botton* President and April 30, 1998
- --------------------------------------------- Director
Gilbert de Botton (Principal Executive Officer)
/s/ Kevin J. Blanchfield Vice President/ April 30, 1998
- --------------------------------------------- Treasurer
Kevin J. Blanchfield (Principal
Financial and
Accounting Officer)
/s/ Roland Weiser* Director April 30, 1998
- ---------------------------------------------
Roland Weiser
/s/ George W. Landau* Director April 30, 1998
- ---------------------------------------------
George W. Landau
</TABLE>
*By: /s/ Kevin Blanchfield
---------------------
Executed by Kevin Blanchfield on behalf of those indicated pursuant to
Powers of Attorney which have been previously filed.
<PAGE>
EXHIBIT INDEX
(1)(a) Articles of Incorporation of Registrant, as amended
or supplemented from time to time, are incorporated
by reference to the Registrant's Registration
Statement on Form N-1A which has been previously
filed with the Commission ("Form N-1A").
(1)(b) Certificate of Correction to the Registrant's
Articles of Incorporation is incorporated by
reference to the Registrant's Form N-SAR filed for
the period ended December 31, 1995.
(1)(c) Articles Supplementary to the Registrant's Articles
of Incorporation increasing number of authorized
shares and classifying shares of each of the Funds as
Class A Shares or Class D Shares are incorporated by
reference to the Registrant's Form N-SAR filed for
the period ended December 31, 1995.
(1)(d) Articles of Amendment to the Registrant's Articles of
Incorporation redesignating the shares of each of the
Funds as Class A Shares are incorporated by reference
to PEA No. 27 to Registrant's Registration Statement
("PEA 27").
(1)(e) Articles Supplementary adding GAM Mid-Cap U.S. Fund
are incorporated by reference to PEA 27.
(l)(f) Articles Supplementary to Registrant's Articles of
Incorporation increasing the number of authorized
shares and classifying shares of certain Funds as
Class B and Class C shares are incorporated herein.*
<PAGE>
(2) Bylaws of Registrant are incorporated herein by
reference to the Registrant's Post-Effective
Amendment No. 4 to the Registration Statement on Form
N-1A, filed on December 31, 1985 ("PEA No. 4").
(3) Not applicable.
(4) Specimen stock certificates of the Registrant are
incorporated by reference to PEA No. 4.
(5)(a) Amended and Restated Investment Advisory Agreement
with GAM International Management Limited, dated
April 14, 1994, is incorporated by reference to PEA
No. 27.
(5)(b) Amendment No. 1 to Amended and Restated Investment
Advisory Agreement with GAM International Management
Limited, dated March 10, 1995, is incorporated by
reference to PEA 27 .
(5)(c) Amendment No. 2 to Amended and Restated Investment
Advisory Agreement with GAM International Management
Limited, dated August 17, 1995, is incorporated by
reference to PEA 27.
(5)(d) Investment Advisory Agreement with Fayez Sarofim &
Co., dated June 29, 1990, is incorporated by
reference to the Registrant's Post-Effective
Amendment No. 15 to the Registration Statement on
Form N-1A, filed on August 29, 1990.
(5)(e) Investment Advisory Agreement with Forstmann-Leff
Associates Inc., dated August 17, 1995, is
incorporated by reference to PEA 27.
(6)(a) Second Amended and Restated Distribution Agreement
For Class A Shares with GAM Services, Inc. dated
November 1, 1996 is incorporated by reference to the
Registrant's Post-Effective Amendment No. 28 to the
Registration Statement on form N-1A filed on March 3,
1997 ("PEA 28").
(6)(b) First Amended Distribution Agreement For Class D
Shares with GAM Services, Inc., dated November 1,
1996, is filed incorporated by reference to PEA 28.
(6)(c) Amended Form of Dealer Agreement between GAM
Services, Inc. and designated dealers is incorporated
by reference to PEA 28.
(6)(d) Agreement for Distribution of Class B and Class C
shares are incorporated herein.*
(7) Not Applicable.
(8) Custodian Agreement with Brown Brothers Harriman &
Co., dated April 26, 1995, is incorporated by
reference to PEA 26.
(9) Transfer Agency Agreement with Chase Global Funds
Service Company (as successor to AIM Financial
Services, Inc.), as amended, is incorporated herein
by reference to the Registrant's Post-Effective
Amendment No. 2 to the Registration Statement on Form
N-1A, filed on June 26, 1985, the Registrant's
Post-Effective Amendment No. 6 to the Registration
Statement on Form N-1A, filed on October 31, 1986,
and the Registrant's Post-Effective Amendment No. 11
to the Registration Statement on Form N-1A, filed on
April 27, 1989.
<PAGE>
(9)(b) Administration Agreement with Brown Brothers Harriman
& Co. dated October 1, 1995 is incorporated by
reference to PEA 28.
(10) Opinion of Counsel is incorporated herein.*
(11) Consent of Coopers & Lybrand L.L.P. is incorporated
herein*.
(12) Not Applicable.
(13)(a) Subscription Agreement with Global Asset Management
(USA) Inc. for shares of GAM Mid-Cap U.S. Fund, dated
September 5, 1995, is incorporated by reference to
PEA 27.
(14) Not Applicable.
(15)(a) Class D Distribution Plan adopted by the Registrant
pursuant to Rule 12b-1 under the Investment Company
Act of 1940, as amended, (the "1940 Act") is
incorporated by reference to PEA 27.
(15)(b) Class A Distribution Plan adopted by the Registrant
pursuant to Rule 12b-1 under the 1940 Act is
incorporated by reference to PEA 28.
(15)(c) Class B and Class C Distribution Plans adopted by the
Registrant pursuant to Rule 12b-1 under the 1940 Act
are incorporated herein.*
(16) Schedule of computation of performance quotations
provided in the Statement of Additional Information
is incorporated herein.*
(17) Financial Data Schedules are incorporated herein.*
(18) Amended Multiple Class Plan For Class A and D Shares
adopted by the Registrant pursuant to Rule 18f-3
under the 1940 Act incorporated by reference to
PEA 28.
(18)(a) Amended Multiple Class Plan for Class B and C Shares
adopted by the Registrant pursuant to Rule 18f-3
under the 1940 Act is incorporated herein.*
(19) Powers of Attorney for Mr. Weiser, Mr. Landau and
Mr. de Botton are incorporated by reference to PEA
28.
(19)(a) Power of Attorney for Mr. Robert J. McGuire is
incorporated herein.*
GAM FUNDS, INC.
ARTICLES SUPPLEMENTARY
GAM Funds, Inc., a Maryland corporation (hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The charter of the corporation is hereby amended by striking out
Article FIFTH (1) and (2) of the Articles of Incorporation, which read as
follows:
FIFTH: The total number of shares of stock which the
corporation has authority to issue is Seven Hundred Million
(700,000,000), all of which are of a par value of One
Thousandth of a Dollar ($.001) each, and of which Two Hundred
Million (200,000,000) are designated GAM International Fund
Common Stock, Seventy-Five Million (75,000,000) are
designated GAM Global Fund Common Stock, Seventy-Five Million
(75,000,000) are designated GAM Pacific Basin Fund Common
Stock, Seventy-Five Million (75,000,000) GAM Europe Fund
Common Stock, Seventy-Five Million (75,000,000) are
designated GAM North American Fund Common Stock, Fifty-Seven
Million Five Hundred Thousand (57,500,000) are designated GAM
Japan Capital Fund Common Stock, Fifty Million (50,000,000)
are designated GAMerica Capital Fund Common Stock,
Fifty-Seven Million Five Hundred Thousand (57,500,000) are
designated GAM Asian Capital Fund Common Stock, and
Thirty-Five Million (35,000,000) are designated GAM Mid Cap
US Fund Common Stock.
(2) The aggregate par value of all the authorized
shares of Common Stock is Seven Hundred Thousand Dollars
($700,000).
and inserting in lieu thereof the following:
FIFTH: (1) The total number of shares of stock which the
corporation has authority to issue is One Billion Five
Hundred Fifty Million (1,550,000,000), all of which are of a
par value of One Thousandth of a Dollar ($.001) each, and of
which Five
<PAGE>
-2-
Hundred Forty-Five Million (545,000,000) are designated GAM
International Fund Common Stock, Two Hundred Five Million
(205,000,000) are designated GAM Global Fund Common Stock,
One Hundred Fifty-Five Million (155,000,000) are designated
GAM Pacific Basin Fund Common Stock, One Hundred Fifty-Five
Million (155,000,000) are designated GAM Europe Fund Common
Stock, One Hundred Forty-Five Million (145,000,000) are
designated GAM North America Fund Common Stock, One Hundred
Thirty-Seven Million Five Hundred Thousand (137,500,000) are
designated GAM Japan Capital Fund Common Stock, Ninety-Five
Million (95,000,000) are designated GAMerica Capital Fund
Common Stock, Seventy-Two Million Five Hundred Thousand
(72,500,000) are designated GAM Asian Capital Fund Common
Stock, and Forty Million (40,000,000) are designated GAM
Developing Markets Common Stock.
(2) The aggregate par value of all the authorized
shares of Common Stock is One Million Five Hundred Thousand
Dollars ($ 1,550,000).
SECOND: The amendment to the charter of the corporation set forth above
has been duly authorized by the Board of Directors at a meeting held on April
29, 1998. This amendment has not altered in any way the rights and preferences
(as described in Section 2-607(b)(2)(i) of the Maryland General Corporation Law)
of the existing series of stock.
THIRD: The Corporation had previously authorized 700,000,000 shares of
the par value of $.001 per share of the Common Stock of the Corporation
previously classified and allocated in the Articles of Incorporation of the
Corporation and subsequent Articles Supplementary thereto as follows:
<PAGE>
-3-
Number of Shares of
Common Stock Previously
Name of Series Classified and Allocated
-------------- ------------------------
GAM International Fund - Class A 150,000,000 shares
GAM International Fund - Class D 50,000,000 shares
GAM Global Fund - Class A 50,000,000 shares
GAM Global Fund - Class D 25,000,000 shares
GAM Pacific Basin Fund - Class A 50,000,000 shares
GAM Pacific Basin Fund - Class D 25,000,000 shares
GAM Europe Fund - Class A 50,000,000 shares
GAM Europe Fund - Class D 25,000,000 shares
GAM North America Fund - Class A 50,000,000 shares
GAM North America Fund - Class D 25,000,000 shares
GAM Japan Capital Fund - Class A 45,000,000 shares
GAM Japan Capital Fund - Class D 12,500,000 shares
GAMerica Capital Fund - Class A 25,000,000 shares
GAMerica Capital Fund - Class D 25,000,000 shares
GAM Asian Capital Fund - Class A 45,000,000 shares
GAM Asian Capital Fund - Class D 12,500,000 shares
GAM Mid-Cap U.S. Fund - Class A 17,500,000 shares
GAM Mid-Cap U.S. Fund - Class D 17,500,000 shares
FOURTH: The Board of Directors of the Corporation at a meeting duly
convened and held on April 29, 1998 adopted a resolution authorizing the
issuance of 850,000,000 additional shares of Common Stock and reclassifying the
Common Stock of the Corporation into nine (9)
<PAGE>
-4-
Series (each, a "Series"), each of which has four (4) classes of Common Stock,
Class A Common Stock, Class B Common Stock, Class C Common Stock, and Class D
Common Stock. Such resolution changed the designation and classification of the
Common Stock as follows:
Number of Shares of
Common Stock Classified
Name of Series and Allocated
-------------- -----------------------
GAM International Fund - Class A 260,000,000 shares
GAM International Fund - Class B 160,000,000 shares
GAM International Fund - Class C 75,000,000 shares
GAM International Fund - Class D 50,000,000 shares
GAM Global Fund - Class A 85,000,000 shares
GAM Global Fund - Class B 75,000,000 shares
GAM Global Fund - Class C 20,000,000 shares
GAM Global Fund - Class D 25,000,000 shares
GAM Pacific Basin Fund - Class A 60,000,000 shares
GAM Pacific Basin Fund - Class B 50,000,000 shares
GAM Pacific Basin Fund - Class C 20,000,000 shares
GAM Pacific Basin Fund - Class D 25,000,000 shares
GAM Europe Fund - Class A 60,000,000 shares
GAM Europe Fund - Class B 50,000,000 shares
GAM Europe Fund - Class C 20,000,000 shares
GAM Europe Fund - Class D 25,000,000 shares
GAM North America Fund - Class A 55,000,000 shares
GAM North America Fund - Class B 50,000,000 shares
GAM North America Fund - Class C 15,000,000 shares
GAM North America Fund - Class D 25,000,000 shares
GAM Japan Capital Fund - Class A 55,000,000 shares
GAM Japan Capital Fund - Class B 50,000,000 shares
GAM Japan Capital Fund - Class C 20,000,000 shares
GAM Japan Capital Fund - Class D 12,500,000 shares
GAMerica Capital Fund - Class A 30,000,000 shares
GAMerica Capital Fund - Class B 25,000,000 shares
GAMerica Capital Fund - Class C 15,000,000 shares
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GAMerica Capital Fund - Class D 25,000,000 shares
GAM Asian Capital Fund - Class A 25,000,000 shares
GAM Asian Capital Fund - Class B 25,000,000 shares
GAM Asian Capital Fund - Class C 10,000,000 shares
GAM Asian Capital Fund - Class D 12,500,000 shares
GAM Developing Markets Fund - Class A 10,000,000 shares
GAM Developing Markets Fund - Class B 10,000,000 shares
GAM Developing Markets Fund - Class C 10,000,000 shares
GAM Developing Markets Fund - Class D 10,000,000 shares
Pursuant to that resolution, all of the shares of Common Stock of the
Corporation previously authorized, except as otherwise noted herein, have the
same rights and privileges, so that all of the Class A and Class D Common Stock
retain all of the same rights and privileges as they had before adoption of the
resolution.
FIFTH: A description of the shares so reclassified with the
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of
redemption as set or changed by the Board of Directors of the Corporation are as
follows:
(a) The shares of each Series of Common Stock shall have the
following preferences, conversion and other rights, restrictions, limitations as
to dividends, qualifications, and terms and conditions of redemption:
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(1) All consideration received by the Corporation for the issue
or sale of shares of a Series, together with all income, earnings,
profits and proceeds thereof, including any proceeds derived from the
sale, exchange or liquidation thereof, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the
same may be, shall irrevocably belong to such Series for all purposes,
subject only to the rights of creditors, and shall be so recorded upon
the books of account of the Corporation. Such consideration, income,
earnings, profits and proceeds thereof, including any proceeds derived
from the sale, exchange or liquidation thereof, and any funds or
payments derived from any reinvestment of such proceeds, in whatever
form the same may be, are herein referred to as "assets belonging to"
such Series.
(2) Dividends or distributions on shares of a Series, whether
payable in stock or cash, shall be paid only out of earnings, surplus
or other assets belonging to such Series.
(3) In the event of the liquidation or dissolution of the
Corporation, stockholders of each Series shall be entitled to receive,
as a class, out of the assets of the Corporation available for
distribution to stockholders, the assets belonging to the Series of
which they are stockholders. The assets so distributable to the
stockholders of such Series shall be distributed among such
stockholders in
<PAGE>
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proportion to the number of shares of the Series held by them and
recorded on the books of the Corporation.
(4) The assets belonging to each Series shall be charged with
the liabilities of the Corporation in respect of such Series and with
such Series' share of the general liabilities of the Corporation, in
the latter case in the proportion that the net asset value of such
Series bears to the net asset value of all Series as determined by
Article SIXTH of the Articles of Incorporation. The determination of
the Board of Directors shall be conclusive as to the allocation of
assets and liabilities, including accrued expenses and reserves, to a
given Series.
(b) The shares of each Class of Common Stock shall have the following
preferences, conversion and other rights, restrictions, limitations as to
dividends, qualifications, and terms and conditions of redemption:
(1) Except as otherwise noted herein, Class A, Class B, Class C,
and Class D Shares of each Series shall represent the same interest in
the Corporation and in each Series and have identical voting, dividend,
liquidation and other rights.
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(2) Class A, Class B, Class C, and Class D shares may be subject
to such front-end sales loads, which may differ between the Classes, as
may be established by the Board of Directors from time to time in
accordance with the Investment Company Act of 1940 (the "1940 Act") and
applicable rules and regulations of the National Association of
Securities Dealers, Inc.
(3) Expenses related solely to a particular Class (including,
without limitation, distribution expenses under a Rule 12b-1 plan and
administrative expenses under an administration or service agreement,
plan or other arrangement, however designated, which may differ between
the Classes) shall be borne by that Class and shall be appropriately
reflected (in the manner determined by the Board of Directors) in the
net asset value, dividends, distribution and liquidation rights of the
shares of that Class. The assets belonging to each Class shall also be
charged with such Class's share of the general liabilities of the
Corporation in the proportion that the net asset value of such Class
bears to the total net asset value of all Classes of the Corporation's
Common Stock as determined by Article SIXTH of the Articles of
Incorporation. The determination of the Board of Directors shall be
conclusive as to the allocation of assets and liabilities, including
accrued expenses and reserves, to a given Class.
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(4) At such times as shall be permitted under the 1940 Act or
any applicable rules and regulations thereunder and as may be
determined by the Board of Directors and disclosed in the then current
prospectus for the Fund, shares of each Class of a Series may be
exchanged for shares of the same Class of another Series.
(c) On each matter submitted to a vote of the stockholders, each holder
of a share of stock shall be entitled to one vote for each such share standing
in such stockholder's name on the books of the Corporation irrespective of the
Series or Class thereof; provided, however, that to the extent class or series
voting is required by the 1940 Act or Maryland law as to any such matter, those
requirements shall apply. Any fractional share, if any such fractional share is
outstanding, shall carry proportionately all the rights of a whole share,
including the right to vote and the right to receive dividends.
(d) Except as provided in Paragraphs (a), (b) and (c) of this Article
FIFTH, the provisions of the Articles of Incorporation relating to stock of the
Corporation shall apply to shares of and to the holders of each Series and each
Class of the Corporation's Common Stock.
SIXTH: The shares aforesaid have been duly reclassified by the Board of
Directors pursuant to the authority and power contained in the Articles of
Incorporation of the Corporation.
<PAGE>
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SEVENTH: These Articles of Amendment shall become effective on the date
that they are accepted for record by the State of Maryland.
IN WITNESS WHEREOF, GAM Funds, Inc. has caused these presents to be signed
in its name and on its behalf by its duly authorized officers who acknowledge
that these Articles Supplementary are the act of the Corporation, that to the
best of their knowledge, information and belief all matters and facts set forth
herein relating to the authorization and approval of the Articles are true in
all material respects and that this statement is made under the penalties of
perjury.
GAM FUNDS, INC.
By:
--------------------------------------
Vice President
ATTEST:
- --------------------------------
Assistant Secretary
DISTRIBUTION AGREEMENT
FOR CLASS B SHARES
THIS AGREEMENT, made as of the __th day of April, 1998 by and between
GAM FUNDS, INC. a Maryland corporation (the "Fund"), and GAM SERVICES INC., a
Delaware corporation ("GAM Services").
WHEREAS, the Fund is registered as an open-end, diversified, management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, in accordance with the Fund's plan pursuant to Rule 12b-1
under the 1940 Act with respect to its Class B Shares (the "Plan"), the Fund and
GAM Services desire to enter into an agreement to provide distribution Services
for the Fund's Class B Shares on the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt whereof is
hereby acknowledged, the parties hereto agree as follows:
1. APPOINTMENT. The Fund hereby appoints GAM Services as distributor of
the Class B Shares of the Fund for the period and on the terms set forth in this
Agreement. GAM Services accepts such appointment and agrees to render the
services herein set forth, for the compensation herein provided.
2. DELIVERY OF DOCUMENTS. The Fund has furnished GAM Services with true
and correct copies of each of the following:
(a) the Fund's Certificate of Incorporation and all amendments
thereto (such Certificate of Incorporation, as presently in effect and
as it shall from time to time be amended, is herein called the
"Certificate");
(b) the Fund's By-Laws and all amendments thereto (such By-Laws, as
presently in effect and as they shall from time to time be amended, are
herein called the "By-Laws");
(c) the Fund's Registration Statement on Form N-1A under the
Securities Act of 1933, as amended (the "1933 Act"), and under the 1940
Act as filed with the Securities and Exchange Commission (the "SEC")
relating to the shares of the Fund and all amendments thereto;
<PAGE>
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(d) the Fund's most recent prospectus and statement of additional
information (such prospectus and statement of additional information,
as presently in effect and all amendments and supplements thereto, are
herein called the "Prospectus" and "SAI", respectively); and
(e) the Plan.
The Fund will furnish GAM Services from time to time with copies of all
amendments or supplements to the foregoing, if any.
3. DUTIES AS DISTRIBUTOR. GAM Services shall give the Fund the benefit
of its best judgment, efforts and facilities in rendering its services as
distributor of the Fund's Class B Shares. In carrying out its obligations
hereunder, GAM Services shall:
(a) receive orders for the purchase of the Fund's Class B Shares,
accept or reject such orders on behalf of the Fund in accordance with
the Fund's currently effective Prospectus and SAI and transmit such
orders as are so accepted to the Fund's transfer agent as promptly as
possible;
(b) receive requests for redemption from holders of the Fund's Class
B Shares and transmit such redemption requests to the Fund's transfer
agent as promptly as possible; and
(c) respond to inquiries from the Fund's Class B shareholders
concerning the status of their accounts with the Fund.
4. DISTRIBUTION OF CLASS B SHARES. GAM Services shall be exclusive
distributor of the Fund's Class B Shares. It is mutually understood and agreed
that GAM Services does not undertake to sell all or any specific portion of the
Class B Shares of the Fund. The Fund shall not sell any of its Class B Shares
through any securities dealer other than GAM Services. Notwithstanding the
provisions of the foregoing sentence:
(a) the Fund may issue its Class B Shares to any other investment
company or personal holding company, or to the shareholders thereof, in
exchange for all or a majority of the shares or assets of any such
company;
(b) the Fund may issue its Class B Shares at their net asset value
to any shareholder of the Fund purchasing such shares with dividends or
other cash distributions received from the Fund pursuant to an offer
made to all shareholders;
(c) GAM Services may enter into shareholder processing and servicing
agreements in accordance with Section 7 hereof;
<PAGE>
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(d) GAM Services may, and when requested by the Fund shall, suspend
its efforts to effectuate sales of the Class B Shares of the Fund at
any time when in the opinion of GAM Services or of the Fund no sales
should be made because of market or other economic considerations or
abnormal circumstances of any kind;
(e) the Fund may withdraw the offering of its Class B Shares (i) at
any time with the consent of GAM Services, or (ii) without such consent
when so required by the provisions of any statute or of any order, rule
or regulation of any governmental body having jurisdiction; and
(f) the price at which the Class B Shares may be sold (the "offering
price") shall be the net asset value per Class B Share plus any
applicable sales load as determined in the manner established from time
to time by the Fund's Board of Directors and as set forth in the Fund's
then current Prospectus and SAI.
5. CONTROL BY BOARD OF DIRECTORS. Any distribution activities
undertaken by GAM Services pursuant to this Agreement, as well as any other
activities undertaken by GAM Services on behalf of the Fund pursuant thereto,
shall at all times be subject to any applicable directives of the Board of
Directors of the Fund.
6. COMPLIANCE WITH APPLICABLE REQUIREMENTS. In carrying out its
obligations under this Agreement, GAM Services shall at all times conform to:
(a) all applicable provisions of the 1940 Act and any rules and
regulations adopted thereunder;
(b) the provisions of the Registration Statement of the Fund under
the 1933 Act and the 1940 Act;
(c) the provisions of the Certificate of the Fund;
(d) the provisions of the By-Laws of the Fund;
(e) the rules and regulations of the National Association of
Securities Dealers, Inc. ("NASD") and all other self-regulatory
organizations applicable to the sale of investment company shares; and
(f) any other applicable provision of state and Federal law.
7. DEALER AND SHAREHOLDER SERVICE AGREEMENTS. GAM Services may enter
into dealer and shareholder service agreements (the "Dealer Agreements") with
any securities dealer
<PAGE>
-4-
("Securities Dealer") who is registered under the Securities Exchange Act of
1934 (the "1934 Act") and a member in good standing of the NASD (or who is not
required to be so registered or a member of the NASD because such Securities
Dealer does not have any customers in the United States), who may wish to
establish accounts or sub-accounts on behalf of such Securities Dealer's
customers. GAM Services may enter into shareholder processing and service
agreements ("Shareholder Service Agreements") with persons other than Securities
Dealers ("Shareholder Service Agents") who are not required to be registered
under the 1934 Act or members in good standing of the NASD, who are exempt from
registration as a broker or a dealer under the 1934 Act or who may otherwise
lawfully furnish services to Fund shareholders without registration under the
1934 Act. GAM Services will supervise the Fund's relations with Securities
Dealers and Shareholder Service Agents. GAM Services will make payments to
Securities Dealers and Shareholder Service Agents in such amounts as GAM
Services may determine from time to time in its discretion.
8. EXPENSES. The expenses connected with the Fund shall be allocable
between the Fund and GAM Services as follows:
(a) GAM Services shall furnish, at its expense and without cost to
the Fund, the services of personnel to the extent that such services
are required to carry out its obligations under this Agreement.
(b) GAM Services shall bear the fees payable to Securities Dealers
and Shareholder Service Agents as set forth in Section 7 above, except
that the Fund may pay fees to Securities Dealers and Shareholders
Service Agents in an amount not to exceed an annual rate of 0.25% of
the daily net asset value of the Class B Shares of the Fund owned by
shareholders with whom such Securities Dealer or Shareholder Service
Agent has a servicing relationship in exchange for administrative
services provided to such shareholders as described in the Prospectus
and SAI.
(c) The expenses of printing and distributing Prospectuses and SAI
(other than those Prospectuses and SAI distributed to shareholders of
the Fund) and any other promotional or sales literature used by GAM
Services or furnished by GAM Services to investors, Securities Dealers
or Shareholder Service Agents in connection with the public offering of
the Fund's Class B Shares, and other advertising or promotional
expenses incurred in connection with such public offering, shall be
paid by GAM Services.
(d) The Fund assumes and shall pay or cause to be paid all other
expenses of the Fund (other than those expressly assumed by the Fund's
investment advisors), including, without limitation: the fees of the
Fund's investment advisors; the charges and expenses of any registrar,
any custodian or depository appointed by the Fund for the safekeeping
of its cash, portfolio securities and other property, and any transfer,
dividend or accounting agent or agents appointed by the Fund; brokers'
commissions chargeable to
<PAGE>
-5-
the Fund in connection with portfolio securities transactions to which
the Fund is a party; all taxes, including securities issuance and
transfer taxes, and fees payable by the Fund to Federal, state or other
governmental agencies; the costs and expenses of engraving or printing
of certificates representing shares of the Fund; all costs and expenses
in connection with the registration and maintenance of registration of
the Fund and its shares with the SEC and various states and other
jurisdictions (including filing fees, legal fees and disbursements of
counsel); the costs and expenses of printing, including typesetting,
and distributing the Prospectuses and SAI of the Fund and supplements
thereto to the Fund's shareholders; all expenses of shareholders' and
directors' meetings and of preparing, printing and mailing of proxy
statements and reports to shareholders; fees and travel expenses of
directors or members of any advisory board or committee; all expenses
incident to the payment of any dividend, distribution, withdrawal or
redemption, whether in shares or in cash; charges and expenses of any
outside service used for pricing of the Fund's shares; fees and
expenses of legal counsel and of independent accountants, in connection
with any matter relating to the Fund; membership dues of industry
associations; interest payable on Fund borrowings; postage; insurance
premiums on property or personnel (including officers and directors) of
the Fund; extraordinary expenses (including, but not limited to, legal
claims and liabilities and litigation costs and any indemnification
related thereto); and all other charges and costs of the Fund's
operation unless otherwise explicitly provided herein.
9. COMPENSATION. The Fund shall pay or cause to be paid to GAM
Services: (i) any contingent deferred sales charge ("CDSC") received by the Fund
with respect to the sale of its Class B Shares in accordance with the Prospectus
and SAI, (ii) compensation at the annual rate of 0.75% of the average daily net
assets of each series of the Fund attributable to the Class B Shares (the
"Distribution Fee"), and (iii) compensation at the annual rate of 0.25% of the
average daily net assets of each series of the Fund attributable to the Class B
Shares (the "Service Fee"), which shall be calculated and accrued daily and paid
monthly or at such other intervals as the Board of Directors and GAM Services
shall mutually agree. GAM Services will be deemed to have performed all services
required to be performed in order to be entitled to receive the Distribution Fee
payable in respect of the Class B Shares of the Fund upon the settlement date of
each sale of a share of such class taken into account in determining the
Distribution Fee in respect of such class. The Fund's obligation to pay GAM
Services the Distribution Fee shall not be terminated or modified for any reason
(including a termination of this Agreement) except to the extent required by a
change in the 1940 Act, the rules thereunder or the Conduct Rules of the NASD,
or in connection with a Complete Termination of the Plan (as defined below). The
Fund will not take any action to waive or change any CDSC in respect of the
Class B Shares of the Fund, except as provided in the Fund's Prospectus or SAI,
without the consent of GAM Services or its assigns. Neither the termination of
the role of GAM Services as principal distributor of the Class B Shares of the
Fund nor the termination of this Agreement will terminate GAM Services' right to
the Distribution Fees, the Service Fees or the CDSCs. For purposes of this
Agreement, the term "Complete Termination" of the Plan means a termination of
the Plan involving the
<PAGE>
-6-
complete cessation of the payment of Distribution Fees in respect of all Class B
Shares of the Fund, and the termination of the distribution plans and the
complete cessation of the payment of distribution fees pursuant to every other
Distribution Plan pursuant to Rule 12b-1 in respect of the Class B Shares of the
Fund and for every future class of shares which has substantially similar
characteristics to the Class B Shares of the Fund taking into account the manner
of payment and amount of sales charge, contingent deferred sales charge or other
similar charges borne directly or indirectly by the holders of such shares.
10. NON-EXCLUSIVITY. The services of GAM Services to the Fund are not
to be deemed to be exclusive, and GAM Services and its officers and directors
shall be free to render distribution or other services to others (including
other investment companies) and to engage in other activities.
11. TERM. This Agreement shall become effective on the date hereof and
shall continue in force and effect, subject to Section 13 hereof, until the
first anniversary of the date hereof.
12. RENEWAL. Following the expiration of its initial one-year term,
this Agreement shall continue in force and effect, subject to Section 13 hereof,
provided that such continuance is specifically approved at least annually:
(a) by the Fund's Board of Directors; and
(b) by the affirmative vote of a majority of the Directors who are
not parties to this Agreement or "interested persons" (as defined by
the 1940 Act) of any such party and have no direct or indirect
financial interest in the operation of this Agreement or any agreement
related to this Agreement, by votes cast in person at a meeting
specifically called for the purpose of voting on such approval.
13. TERMINATION. This Agreement may be terminated at any time, without
the payment of any penalty, (i) by vote of the Fund's Board of Directors, (ii)
by vote of a majority of the members of the Board of Directors of the Fund who
are not "interested persons" of the Fund and have no direct or indirect
financial interest in the operation of this Agreement or in any agreement
related to this Agreement, (iii) with respect to any Series of the Fund, by vote
of a majority of the outstanding Class B Shares of such Series (as defined in
Section 2(a)(42) of the 1940 Act), or (iv) by GAM Services, on sixty (60) days'
written notice to the other party. The notice provided for herein may be waived
by either party. This Agreement shall automatically terminate in the event of
its "assignment" as defined in Section 2(a)(4) of the 1940 Act; provided,
however, that GAM Services may assign, sell or pledge (collectively, "Transfer")
its rights to the Distribution Fees, Service Fees and CDSCs (but not GAM
Services' obligations to the Fund under this Agreement) to raise funds to make
the expenditures related to the distribution of Class B Shares of the Fund, and
in connection therewith, upon receipt of notice of such
<PAGE>
-7-
Transfer, the Fund shall pay to the assignee, purchaser or pledgee (collectively
with their subsequent transferees, "Transferees"), as third party beneficiaries,
such portion of the Service Fees, Distribution Fees or CDSCs in respect of the
Class B Shares so Transferred. Notwithstanding anything to the contrary set
forth in this Agreement, to the extent GAM Services has Transferred its rights
to any portion of the Distribution Fees, Service Fees and CDSCs, the Fund's
obligation to pay such portion of the Distribution Fees, Service Fees and CDSCs
payable in respect of the Class B Shares shall be absolute and unconditional and
shall not be subject to dispute, set-offs, counterclaim or any defense
whatsoever, at law or equity, including, without limitation, any of the
foregoing based on the insolvency or bankruptcy of GAM Services (it being
understood that such provision is not a waiver of the Fund's right to pursue GAM
Services and enforce such claims against the assets of GAM Services other than
its right to the Distribution Fees, Service Fees and CDSCs in respect of the
Class B Shares of the Fund transferred in connection with such Transfer).
14. AMENDMENTS.
(a) This Agreement may be amended by the parties hereto only if such
amendment is specifically approved (i) by the Board of Directors of the
Fund and (ii) by a majority of those Directors who are not parties to
this Agreement or "interested persons" of any such party, which vote
must be cast in person at a meeting called for the purpose of voting on
such approval.
(b) In the event that this Agreement is proposed to be amended to
increase materially the amount to be spent by the Fund for
distribution, such amendment will not be effected with respect to any
Series without the approval of the holders of Class B Shares of such
Series.
15. LIABILITY OF THE DISTRIBUTOR. In the performance of its duties
hereunder, GAM Services shall be obligated to exercise care and diligence and to
act in good faith and to use its best efforts within reasonable limits to ensure
the accuracy of all services performed under this Agreement, but GAM Services
shall not be liable for any act or omission which does not constitute willful
misfeasance, bad faith or gross negligence on the part of GAM Services or
reckless disregard by GAM Services of its duties under this Agreement.
16. INDEMNIFICATION.
(a) The Fund agrees to indemnify, defend and hold GAM Services, its
officers and directors and any person who controls GAM Services within
the meaning of Section 15 of the 1933 Act, free and harmless from and
against any and all claims, demands, liabilities and expenses
(including the cost of investigating or defending such claims, demands
or liabilities and any counsel fees incurred in connection therewith)
which GAM Services, its officers, directors or any such controlling
person may incur arising out of or based upon any untrue statement of a
material fact contained in the Registration Statement, Prospectus or
SAI or arising out of or based upon any alleged omission to state a
material fact required to be stated therein or necessary
<PAGE>
-8-
to make the statements therein not misleading, except insofar as such
claims, demands, liabilities or expenses arise out of or are based upon
any such untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with information
furnished in writing by GAM Services to the Fund for use in the
Registration Statement, Prospectus or SAI; provided, however, that this
indemnity agreement, to the extent that it might require indemnity of
any person who is also an officer or director of the Fund or who
controls the Fund within the meaning of Section 15 of the 1933 Act,
shall not inure to the benefit of such officer, director or controlling
person unless a court of competent jurisdiction shall determine, or it
shall have been determined by controlling precedent, that such result
would not be against public policy as expressed in the 1933 Act; and
further provided, that in no event shall anything contained herein be
so construed as to protect GAM Services against any liability to the
Fund or to its security holders to which GAM Services would otherwise
be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of its
reckless disregard of its obligations under this Agreement. In the
event that GAM Services becomes a party to any action or proceeding in
respect of which indemnification may be sought hereunder, GAM Services
shall promptly notify the Fund thereof. Following such notice, the Fund
shall be entitled to participate therein, and to the extent that it may
wish, to assume the defense thereof with counsel reasonably
satisfactory to GAM Services. After notice from the Fund to GAM
Services of an election so to assume the defense thereof, the Fund
shall not be liable to GAM Services hereunder for any legal or other
expenses subsequently incurred by GAM Services in connection with the
defense thereof other than reasonable costs of investigation.
(b) GAM Services agrees to indemnify, defend and hold the Fund, its
officers and directors and any person who controls the Fund, if any,
within the meaning of Section 15 of the 1933 Act, free and harmless
from and against any and all claims, demands, liabilities and expenses
(including the costs of investigating or defending against such claims,
demands or liabilities and any counsel fees incurred in connection
therewith) which the Fund, its directors or officers or any such
controlling person may incur, but only to the extent that such
liability or expense incurred by the Fund, its directors or officers or
such controlling person resulting from such claims or demands shall
arise out of or be based upon any alleged untrue statement of a
material fact contained in information furnished in writing by GAM
Services to the Fund for use in the Registration Statement, Prospectus
or SAI or shall arise out of or be based upon any alleged omission to
state a material fact in connection with such information required to
be stated in the Registration Statement, Prospectus or SAI or necessary
to make such information not misleading.
(c) Neither party to this Agreement shall be liable under this
Section 16 for any settlement of any action or claim effected without
its prior written consent.
17. REPORTS. GAM Services shall provide to the Board of Directors of
the Fund, and the Board of Directors shall review, at least quarterly, a written
report of the amounts expended
<PAGE>
-9-
pursuant to this Agreement and the purposes for which such expenditures were
made, including, without limitation, commissions, advertising, printing,
interest, carrying charges and allocated overhead expenses. GAM Services shall
also provide the Board of Directors of the Fund with such other information
regarding the implementation of this Agreement as the Board of Directors may
reasonably request from time to time.
18. NOTICES. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of each party
for this purpose shall be 135 East 57th Street, New York, New York 10022.
19. INTERPRETATION. This Agreement shall be implemented and construed
in a manner consistent with the provisions of the 1940 Act. Any question of
interpretation of any term or provision of this Agreement having a counterpart
in or otherwise derived from a term or provision of the 1940 Act shall be
resolved by reference to such term or provision of the 1940 Act and to
interpretations thereof, if any, by the United States courts or, in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the SEC issued pursuant to the 1940 Act. In addition, where the effect of a
requirement of the 1940 Act reflected in any provision of this Agreement is
revised by rule, regulation or order of the SEC, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers on the day and year first above written.
GAM FUNDS, INC.
By:
--------------------------------------------
Name:
Title:
GAM SERVICES, INC.
By:
--------------------------------------------
Name:
Title:
DISTRIBUTION AGREEMENT
FOR CLASS C SHARES
THIS AGREEMENT, made as of the __th day of April, 1998 by and between
GAM FUNDS, INC. a Maryland corporation (the "Fund"), and GAM SERVICES INC., a
Delaware corporation ("GAM Services").
WHEREAS, the Fund is registered as an open-end, diversified, management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, in accordance with the Fund's plan pursuant to Rule 12b-1
under the 1940 Act, the Fund and Gam Services desire to enter into an agreement
to provide distribution Services for the Fund's Class C Shares on the terms and
conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt whereof is
hereby acknowledged, the parties hereto agree as follows:
1. APPOINTMENT. The Fund hereby appoints GAM Services as distributor of
the Class C Shares of the Fund for the period and on the terms set forth in this
Agreement. GAM Services accepts such appointment and agrees to render the
services herein set forth, for the compensation herein provided.
2. DELIVERY OF DOCUMENTS. The Fund has furnished GAM Services with true
and correct copies of each of the following:
(a) the Fund's Certificate of Incorporation and all amendments
thereto (such Certificate of Incorporation, as presently in effect and
as it shall from time to time be amended, is herein called the
"Certificate");
(b) the Fund's By-Laws and all amendments thereto (such By-Laws, as
presently in effect and as they shall from time to time be amended, are
herein called the "By-Laws");
(c) the Fund's Registration Statement on Form N-1A under the
Securities Act of 1933, as amended (the "1933 Act"), and under the 1940
Act as filed with the Securities and Exchange Commission (the "SEC")
relating to the shares of the Fund and all amendments thereto;
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(d) the Fund's most recent prospectus and statement of additional
information (such prospectus and statement of additional information,
as presently in effect and all amendments and supplements thereto, are
herein called the "Prospectus" and "SAI", respectively); and
(e) the Fund's Plan of Distribution for Class C Shares.
The Fund will furnish GAM Services from time to time with copies of all
amendments or supplements to the foregoing, if any.
3. DUTIES AS DISTRIBUTOR. GAM Services shall give the Fund the benefit
of its best judgment, efforts and facilities in rendering its services as
distributor of the Fund's Class C Shares. In carrying out its obligations
hereunder, GAM Services shall:
(a) receive orders for the purchase of the Fund's Class C Shares,
accept or reject such orders on behalf of the Fund in accordance with
the Fund's currently effective Prospectus and SAI and transmit such
orders as are so accepted to the Fund's transfer agent as promptly as
possible;
(b) receive requests for redemption from holders of the Fund's Class
C Shares and transmit such redemption requests to the Fund's transfer
agent as promptly as possible; and
(c) respond to inquiries from the Fund's Class C shareholders
concerning the status of their accounts with the Fund.
4. DISTRIBUTION OF CLASS C SHARES. GAM Services shall be exclusive
distributor of the Fund's Class C Shares. It is mutually understood and agreed
that GAM Services does not undertake to sell all or any specific portion of the
Class C Shares of the Fund. The Fund shall not sell any of its Class C Shares
through any securities dealer other than GAM Services. Notwithstanding the
provisions of the foregoing sentence:
(a) the Fund may issue its Class C Shares to any other investment
company or personal holding company, or to the shareholders thereof, in
exchange for all or a majority of the shares or assets of any such
company;
(b) the Fund may issue its Class C Shares at their net asset value
to any shareholder of the Fund purchasing such shares with dividends or
other cash distributions received from the Fund pursuant to an offer
made to all shareholders;
(c) GAM Services may enter into shareholder processing and servicing
agreements in accordance with Section 7 hereof;
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(d) GAM Services may, and when requested by the Fund shall, suspend
its efforts to effectuate sales of the Class C Shares of the Fund at
any time when in the opinion of GAM Services or of the Fund no sales
should be made because of market or other economic considerations or
abnormal circumstances of any kind;
(e) the Fund may withdraw the offering of its Class C Shares (i) at
any time with the consent of GAM Services, or (ii) without such consent
when so required by the provisions of any statute or of any order, rule
or regulation of any governmental body having jurisdiction; and
(f) the price at which the Class C Shares may be sold (the "offering
price") shall be the net asset value per Class C Share plus any
applicable sales load as determined in the manner established from time
to time by the Fund's Board of Directors and as set forth in the Fund's
then current Prospectus and SAI.
5. CONTROL BY BOARD OF DIRECTORS. Any distribution activities
undertaken by GAM Services pursuant to this Agreement, as well as any other
activities undertaken by GAM Services on behalf of the Fund pursuant thereto,
shall at all times be subject to any applicable directives of the Board of
Directors of the Fund.
6. Compliance with Applicable Requirements. In carrying out its
obligations under this Agreement, GAM Services shall at all times conform to:
(a) all applicable provisions of the 1940 Act and any rules and
regulations adopted thereunder;
(b) the provisions of the Registration Statement of the Fund under
the 1933 Act and the 1940 Act;
(c) the provisions of the Certificate of the Fund;
(d) the provisions of the By-Laws of the Fund;
(e) the rules and regulations of the National Association of
Securities Dealers, Inc. ("NASD") and all other self-regulatory
organizations applicable to the sale of investment company shares; and
(f) any other applicable provision of state and Federal law.
7. DEALER AND SHAREHOLDER SERVICE AGREEMENTS. GAM Services may enter
into dealer and shareholder service agreements (the "Dealer Agreements") with
any securities dealer
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("Securities Dealer") who is registered under the Securities Exchange Act of
1934 (the "1934 Act") and a member in good standing of the NASD (or who is not
required to be so registered or a member of the NASD because such Securities
Dealer does not have any customers in the United States), who may wish to
establish accounts or sub-accounts on behalf of such Securities Dealer's
customers. GAM Services may enter into shareholder processing and service
agreements ("Shareholder Service Agreements") with persons other than Securities
Dealers ("Shareholder Service Agents") who are not required to be registered
under the 1934 Act or members in good standing of the NASD, who are exempt from
registration as a broker or a dealer under the 1934 Act or who may otherwise
lawfully furnish services to Fund shareholders without registration under the
1934 Act. GAM Services will supervise the Fund's relations with Securities
Dealers and Shareholder Service Agents. GAM Services will make payments to
Securities Dealers and Shareholder Service Agents in such amounts as GAM
Services may determine from time to time in its discretion.
8. EXPENSES. The expenses connected with the Fund shall be allocable
between the Fund and GAM Services as follows:
(a) GAM Services shall furnish, at its expense and without cost to
the Fund, the services of personnel to the extent that such services
are required to carry out its obligations under this Agreement.
(b) GAM Services shall bear the fees payable to Securities Dealers
and Shareholder Service Agents as set forth in Section 7 above, except
that the Fund may pay fees to Securities Dealers and Shareholders
Service Agents in an amount not to exceed an annual rate of 0.25% of
the daily net asset value of the Class C Shares of the Fund owned by
shareholders with whom such Securities Dealer or Shareholder Service
Agent has a servicing relationship in exchange for administrative
services provided to such shareholders as described in the Prospectus
and SAI.
(c) The expenses of printing and distributing Prospectuses and SAI
(other than those Prospectuses and SAI distributed to shareholders of
the Fund) and any other promotional or sales literature used by GAM
Services or furnished by GAM Services to investors, Securities Dealers
or Shareholder Service Agents in connection with the public offering of
the Fund's Class C Shares, and other advertising or promotional
expenses incurred in connection with such public offering, shall be
paid by GAM Services.
(d) The Fund assumes and shall pay or cause to be paid all other
expenses of the Fund (other than those expressly assumed by the Fund's
investment advisors), including, without limitation: the fees of the
Fund's investment advisors; the charges and expenses of any registrar,
any custodian or depository appointed by the Fund for the safekeeping
of its cash, portfolio securities and other property, and any transfer,
dividend or accounting agent or agents appointed by the Fund; brokers'
commissions chargeable to
<PAGE>
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the Fund in connection with portfolio securities transactions to which
the Fund is a party; all taxes, including securities issuance and
transfer taxes, and fees payable by the Fund to Federal, state or other
governmental agencies; the costs and expenses of engraving or printing
of certificates representing shares of the Fund; all costs and expenses
in connection with the registration and maintenance of registration of
the Fund and its shares with the SEC and various states and other
jurisdictions (including filing fees, legal fees and disbursements of
counsel); the costs and expenses of printing, including typesetting,
and distributing the Prospectuses and SAI of the Fund and supplements
thereto to the Fund's shareholders; all expenses of shareholders' and
directors' meetings and of preparing, printing and mailing of proxy
statements and reports to shareholders; fees and travel expenses of
directors or members of any advisory board or committee; all expenses
incident to the payment of any dividend, distribution, withdrawal or
redemption, whether in shares or in cash; charges and expenses of any
outside service used for pricing of the Fund's shares; fees and
expenses of legal counsel and of independent accountants, in connection
with any matter relating to the Fund; membership dues of industry
associations; interest payable on Fund borrowings; postage; insurance
premiums on property or personnel (including officers and directors) of
the Fund; extraordinary expenses (including, but not limited to, legal
claims and liabilities and litigation costs and any indemnification
related thereto); and all other charges and costs of the Fund's
operation unless otherwise explicitly provided herein.
9. COMPENSATION. he Fund shall pay or cause to be paid to GAM
Services: (i) any contingent derferred sales charge received by the Fund with
respect to the sale of its Class C Shares in accordance with the Prospectus and
SAI, and (ii) compensation at the annual rate of 1.0% of the average daily net
assets of each series of the Fund attributable to the Class C Shares, which
shall be calculated and accrued daily and paid monthly or at such other
intervals as the Board of Directors and GAM Services shall mutually agree.
10. NON-EXCLUSIVITY. The services of GAM Services to the Fund are not
to be deemed to be exclusive, and GAM Services and its officers and directors
shall be free to render distribution or other services to others (including
other investment companies) and to engage in other activities.
11. TERM. This Agreement shall become effective on the date hereof and
shall continue in force and effect, subject to Section 13 hereof, until the
first anniversary of the date hereof.
12. RENEWAL. Following the expiration of its initial one-year term,
this Agreement shall continue in force and effect, subject to Section 13 hereof,
provided that such continuance is specifically approved at least annually:
(a) by the Fund's Board of Directors; and
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(b) by the affirmative vote of a majority of the Directors who are
not parties to this Agreement or "interested persons" (as defined by
the 1940 Act) of any such party and have no direct or indirect
financial interest in the operation of this Agreement or any agreement
related to this Agreement, by votes cast in person at a meeting
specifically called for the purpose of voting on such approval.
13. TERMINATION. This Agreement may be terminated at any time, without
the payment of any penalty, (i) by vote of the Fund's Board of Directors, (ii)
by vote of a majority of the members of the Board of Directors of the Fund who
are not "interested persons" of the Fund and have no direct or indirect
financial interest in the operation of this Agreement or in any agreement
related to this Agreement, (iii) with respect to any Series of the Fund, by vote
of a majority of the outstanding Class C Shares of such Series (as defined in
Section 2(a)(42) of the 1940 Act), or (iv) by GAM Services, on sixty (60) days'
written notice to the other party. The notice provided for herein may be waived
by either party. This Agreement shall automatically terminate in the event of
its "assignment" as defined in Section 2(a)(4) of the 1940 Act.
14. AMENDMENTS.
(a) This Agreement may be amended by the parties hereto only if such
amendment is specifically approved (i) by the Board of Directors of the
Fund and (ii) by a majority of those Directors who are not parties to
this Agreement or "interested persons" of any such party, which vote
must be cast in person at a meeting called for the purpose of voting on
such approval.
(b) In the event that this Agreement is proposed to be amended to
increase materially the amount to be spent by the Fund for
distribution, such amendment will not be effected with respect to any
Series without the approval of the holders of Class C Shares of such
Series.
15. LIABILITY OF THE DISTRIBUTOR. In the performance of its duties
hereunder, GAM Services shall be obligated to exercise care and diligence and to
act in good faith and to use its best efforts within reasonable limits to ensure
the accuracy of all services performed under this Agreement, but GAM Services
shall not be liable for any act or omission which does not constitute willful
misfeasance, bad faith or gross negligence on the part of GAM Services or
reckless disregard by GAM Services of its duties under this Agreement.
16. INDEMNIFICATION.
(a) The Fund agrees to indemnify, defend and hold GAM Services, its
officers and directors and any person who controls GAM Services within
the meaning of Section 15 of the 1933 Act, free and harmless from and
against any and all claims, demands, liabilities and expenses
(including the cost of investigating or defending such claims, demands
or liabilities and any counsel fees incurred in connection therewith)
which GAM Services, its officers, directors
<PAGE>
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or any such controlling person may incur arising out of or based upon
any untrue statement of a material fact contained in the Registration
Statement, Prospectus or SAI or arising out of or based upon any
alleged omission to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, except
insofar as such claims, demands, liabilities or expenses arise out of
or are based upon any such untrue statement or omission or alleged
untrue statement or omission made in reliance upon and in conformity
with information furnished in writing by GAM Services to the Fund for
use in the Registration Statement, Prospectus or SAI; provided,
however, that this indemnity agreement, to the extent that it might
require indemnity of any person who is also an officer or director of
the Fund or who controls the Fund within the meaning of Section 15 of
the 1933 Act, shall not inure to the benefit of such officer, director
or controlling person unless a court of competent jurisdiction shall
determine, or it shall have been determined by controlling precedent,
that such result would not be against public policy as expressed in the
1933 Act; and further provided, that in no event shall anything
contained herein be so construed as to protect GAM Services against any
liability to the Fund or to its security holders to which GAM Services
would otherwise be subject by reason of willful misfeasance, bad faith
or gross negligence in the performance of its duties, or by reason of
its reckless disregard of its obligations under this Agreement. In the
event that GAM Services becomes a party to any action or proceeding in
respect of which indemnification may be sought hereunder, GAM Services
shall promptly notify the Fund thereof. Following such notice, the Fund
shall be entitled to participate therein, and to the extent that it may
wish, to assume the defense thereof with counsel reasonably
satisfactory to GAM Services. After notice from the Fund to GAM
Services of an election so to assume the defense thereof, the Fund
shall not be liable to GAM Services hereunder for any legal or other
expenses subsequently incurred by GAM Services in connection with the
defense thereof other than reasonable costs of investigation.
(b) GAM Services agrees to indemnify, defend and hold the Fund, its
officers and directors and any person who controls the Fund, if any,
within the meaning of Section 15 of the 1933 Act, free and harmless
from and against any and all claims, demands, liabilities and expenses
(including the costs of investigating or defending against such claims,
demands or liabilities and any counsel fees incurred in connection
therewith) which the Fund, its directors or officers or any such
controlling person may incur, but only to the extent that such
liability or expense incurred by the Fund, its directors or officers or
such controlling person resulting from such claims or demands shall
arise out of or be based upon any alleged untrue statement of a
material fact contained in information furnished in writing by GAM
Services to the Fund for use in the Registration Statement, Prospectus
or SAI or shall arise out of or be based upon any alleged omission to
state a material fact in connection with such information required to
be stated in the Registration Statement, Prospectus or SAI or necessary
to make such information not misleading.
(c) Neither party to this Agreement shall be liable under this
Section 16 for any settlement of any action or claim effected without
its prior written consent.
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17. REPORTS. GAM Services shall provide to the Board of Directors of
the Fund, and the Board of Directors shall review, at least quarterly, a written
report of the amounts expended pursuant to this Agreement and the purposes for
which such expenditures were made, including, without limitation, commissions,
advertising, printing, interest, carrying charges and allocated overhead
expenses. GAM Services shall also provide the Board of Directors of the Fund
with such other information regarding the implementation of this Agreement as
the Board of Directors may reasonably request from time to time.
18. NOTICES. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of each party
for this purpose shall be 135 East 57th Street, New York, New York 10022.
19. INTERPRETATION. This Agreement shall be implemented and construed
in a manner consistent with the provisions of the 1940 Act. Any question of
interpretation of any term or provision of this Agreement having a counterpart
in or otherwise derived from a term or provision of the 1940 Act shall be
resolved by reference to such term or provision of the 1940 Act and to
interpretations thereof, if any, by the United States courts or, in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the SEC issued pursuant to the 1940 Act. In addition, where the effect of a
requirement of the 1940 Act reflected in any provision of this Agreement is
revised by rule, regulation or order of the SEC, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers on the day and year first above written.
GAM FUNDS, INC.
By:
--------------------------------------------
Name:
Title:
GAM SERVICES, INC.
By:
--------------------------------------------
Name:
Title:
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
GAM Funds, Inc.:
We consent to the incorporation by reference in the Post-Effective
Amendment No.30 to the Registration Statement of GAM Funds, Inc. on Form N-1A
(File No. 2-92136) of our report dated February 19, 1998 on our audit of the
financial statements and financial highlights of the GAM Funds, Inc. which
report is included in the Annual Report for GAM Funds, Inc. for the year ended
December 31, 1997 which is incorporated by reference in the Registration
Statement. We also consent to the reference to our firm under the caption
"Independent Accountants".
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
April 27, 1998
GAM FUNDS, INC.
CLASS B SHARE SERVICE AND DISTRIBUTION PLAN
WHEREAS, GAM Funds, Inc. (the "Fund") is an open-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, the Fund desires to adopt a Plan of Distribution pursuant to
Rule 12b-1 under the 1940 Act (the "Plan") with respect to shares of its Class B
common stock, par value $.001 per share, (the "Class B Shares") of each series
of the Fund (the "Series"), and the Board of Directors has determined that there
is a reasonable likelihood that adoption of the Plan will benefit each Series
and its stockholders; and
WHEREAS, the Fund employs GAM Services Inc. (the "Distributor") as
distributor of the Class B Shares; and
WHEREAS, the Fund and the Distributor intend to enter into a separate
Distribution Agreement with the Fund for the Class B Shares, pursuant to which
the Fund will employ the Distributor as distributor for the continuous offering
of Class B Shares;
NOW, THEREFORE, the Fund hereby adopts, and the Distributor hereby
agrees to the terms of, the Plan with respect to the Class B Shares of each
Series in accordance with Rule 12b-1 under the 1940 Act on the following terms
and conditions:
1. SERVICE FEE. The Fund will pay to the Distributor, and each
successor principal distributor of such Fund's shares pursuant to this Plan, so
long as it shall be providing shareholder services, as compensation for
providing, or arranging for the provision of, shareholder services in respect of
the Class B Shares of the Fund, a monthly service fee (the "Service Fee") at the
annual rate of 0.25 of 1% of the average daily net assets of each Series
attributable to the Class B Shares, as determined at the close of each business
day during the month. The Distributor may pay all or any portion of the Service
Fee to securities dealers as service fees pursuant to agreements with such
dealers for providing personal services to investors in shares of the Fund
and/or the maintenance of shareholder accounts, or may use all or any portion of
the Service Fee to pay for expenses of the Distributor (including overhead
expenses) incurred in connection with the provision of personal services
provided to investors in shares of the Fund and/or the maintenance of
shareholder accounts, including without limitation, expenses of personnel and
communications equipment used in servicing shareholder accounts. All payments of
Service Fees under this plan are intended to qualify as "service fees" within
the meaning of the Conduct Rules of the National Association of Securities
Dealers, Inc. ("NASD"), as in effect from time to time.
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2
2. DISTRIBUTION FEE. In addition to the Service Fee, the Fund will pay
to the Distributor, as compensation for acting as principal distributor in
respect of the Class B Shares of the Fund and as reimbursement of the
distribution expenditures incurred in connection therewith, including those
listed below, its "Allocable Portion" (as hereinafter defined) of a fee (the
"Distribution Fee") computed at the annual rate of 0.75 of 1% of the average
daily net assets of each Series attributable to the Class B Shares. Such
expenditures may consist of: (i) commissions to sales personnel for selling
shares of the Fund (including interest and other financing costs); (ii)
compensation, sales incentives and payments to sales, marketing and service
personnel; (iii) payments to broker-dealers and other financial institutions
which have entered into agreements with the Distributor for distribution
services rendered in connection with the sale and distribution of shares of the
Fund; (iv) payment of expenses incurred in sales and promotional activities,
including advertising expenditures related to each class of shares of the Funds;
(v) the costs of preparing and distributing promotional materials; (vi) the cost
of printing the Fund's Prospectus and Statement of Additional Information for
distribution to potential investors; and (vii) such other similar services that
the Board of Directors of the Fund determines are reasonably calculated to
result in sales of shares of the Fund. Any payment of Distribution Fees under
this Plan is intended to constitute an "asset-based sales charge" within the
meaning of the Conduct Rules of the NASD.
3. PAYMENT. The Service Fee and Distribution Fee shall be calculated
and accrued daily, and paid monthly or at such other intervals as the Board of
Directors and Distributor shall agree.
4. The Distribution Agreement between the Fund and the Distributor
relating to the Class B Shares of the Fund (the "Distributor's Contract") shall
provide that: (i) the Distributor will be deemed to have performed all services
required to be performed in order to be entitled to receive its Allocable
Portion of the Distribution Fee payable in respect of the Class B Shares of the
Fund upon the settlement date of each sale of a "Commission Share" (as defined
below) of such class taken into account in determining such Distributor's
Allocable Portion of such Distribution Fee in respect of such class; (ii) the
Fund's obligation to pay the Distributor its Allocable Portion of the
Distribution Fee payable in respect of such class shall not be terminated or
modified for any reason (including a termination of the Distributor's Contract
between such Distributor and the Fund) except to the extent required by a change
in the Investment Company Act of 1940 (the "Act"), the rules thereunder or the
Conduct Rules of the NASD, or in connection with a "Complete Termination" (as
hereinafter defined) of this Plan in respect of the Class B Shares of the Fund;
(iii) the Fund will not take any action to waive or change any contingent
deferred sales charge ("CDSC") in respect of the Class B Shares of the Fund,
except as provided in the Fund's Prospectus or Statement of Additional
Information, without the consent of the Distributor or its assigns; (iv) neither
the termination of the Distributor's role as principal distributor of the Class
B Shares of the Fund, nor the termination of the Distributor's Contract nor the
termination of this Plan will terminate the Distributor's right to its Allocable
Portion of the CDSCs; and (v) the Distributor may assign, sell or pledge
(collectively, "Transfer") its rights to the Service Fees and its Allocable
Portion of the Distribution Fees and CDSCs (but not the
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3
Distributor's obligations to the Fund under the Distributor's Contract) to raise
funds to make the expenditures related to the distribution of Class B Shares of
the Fund and in connection therewith, upon receipt of notice of such Transfer,
the Fund shall pay to the assignee, purchaser or pledgee (collectively with
their subsequent transferees, "Transferees"), as third party beneficiaries, such
portion of the Distributor's Service Fees, Allocable Portion of the Distribution
Fees or CDSCs in respect of the Class B Shares of such Fund so Transferred and
except as provided in (ii) above, notwithstanding anything to the contrary set
forth in this Plan or in the Distributor's Contract, to the extent the
Distributor has Transferred its rights to its Allocable Portion of the
Distribution Fees and CDSCs, the Fund's obligation to pay the Distributor's
Allocable Portion of the Distribution Fees and CDSCs payable in respect of the
Class B Shares of such Fund shall be absolute and unconditional and shall not be
subject to dispute, set-offs, counterclaim or any defense whatsoever, at law or
equity, including, without limitation, any of the foregoing based on the
insolvency or bankruptcy of the Distributor (it being understood that such
provision is not a waiver of the Fund's right to pursue the Distributor and
enforce such claims against the assets of the Distributor other than its right
to the Distribution Fees and CDSCs in respect of the Class B Shares of the Fund
transferred in connection with such Transfer). For purposes of this Plan, the
term "Allocable Portion" of Distribution Fees or CDSCs payable in respect of the
Class B Shares of the Fund as applied to any Distribution Fees or CDSCs payable
in respect of the Class B Shares of the Fund as applied to the Distributor shall
mean the portion of Distribution Fees or CDSCs payable in respect of the Fund
allocated to the Distributor. For purposes of this Plan, the term "Complete
Termination" of this Plan in respect of any Class B Shares of the Fund means a
termination of this Plan involving the complete cessation of the payment of
Distribution Fees in respect of all Class B Shares of the Fund, and the
termination of the distribution plans and the complete cessation of the payment
of distribution fees pursuant to every other Distribution Plan pursuant to Rule
12b-1 in respect of the Class B Shares of the Fund and for every future class of
shares which has substantially similar characteristics to the Class B Shares of
the Fund taking into account the manner of payment and amount of sales charge,
contingent deferred sales charge or other similar charges borne directly or
indirectly by the holders of such shares.
5. This Plan shall not take effect with respect to each Series until it
has been approved, together with any related agreements, (a) by votes of a
majority of both (i) the Board of Directors of the Fund and (ii) those Directors
of the Fund who are not "interested persons" of the Fund (as defined in the 1940
Act) and have no direct or indirect financial interest in the operation of this
Plan or any agreements related to it (the "Rule 12b-1 Directors"), cast in
person at a meeting (or meetings) called for the purpose of voting on this Plan
and such related agreements, and (b) if required by the 1940 Act, by a vote of
at least a majority (as defined in the 1940 Act) of the outstanding Class B
Shares of such Series.
6. This Plan shall continue in effect for one year from the date of its
adoption, and thereafter the Plan shall continue in effect for so long as such
continuance is specifically approved at least annually in the manner provided
for approval of this Plan in Paragraph 5.
<PAGE>
4
7. The Distributor shall provide to the Board of Directors of the Fund,
and the Board of Directors shall review, at least quarterly, a written report of
the amounts expended pursuant to this Plan and any related agreements and the
purposes for which such expenditures were made, including commissions,
advertising, printing, interest, carrying charges and allocated overhead
expenses.
8. Any agreement related to this Plan shall provide:
a. that such agreement may be terminated with respect to the
Class B Shares of any Series at any time, without payment of
any penalty, by vote of a majority of the Rule 12b-1 Directors
or by vote of a majority of the outstanding voting securities
of such Shares, on not more than sixty (60) days' written
notice to any other party to the agreement; and
b. that such agreement shall terminate automatically in the
event of its assignment.
9. All amounts expended under this Plan for the benefit of the Class B
Shares of a specific Series as to which this Plan is effective will be charged
to the Class B Shares of that Series, and any expenses pursuant to this Plan
which are deemed by the Board of Directors of the Fund to benefit all such
Series equally will be charged to the Class B Shares of each such Series on the
basis of the net asset value of the Class B Shares of such Series in relation to
the net asset value of all of the outstanding Class B Shares of the Fund.
10. This Plan may be terminated with respect to the Class B Shares of
any Series at any time by vote of a majority of the Rule 12b-1 Directors, or by
a vote of a majority of the outstanding Class B Shares of such Series.
11. This Plan may not be amended with respect to the Class B Shares of
any Series to increase materially the amount of compensation provided for in
Paragraphs 1 or 2 hereof unless such amendment is approved in the manner
provided for initial approval in Paragraph 5 hereof, and no material amendment
to the Plan of any kind, including an amendment which would increase materially
the amount of such compensation, shall be made unless approved in the manner
provided for approval and annual renewal in Paragraphs 5 and 6 hereof.
12. While this Plan is in effect, the selection and nomination of
Directors who are not interested persons (as defined in the 1940 Act) of the
Fund shall be committed to the discretion of the then current Directors who are
not interested persons (as defined in the 1940 Act) of the Fund.
13. The Fund shall preserve copies of this Plan and any related
agreements and all reports made pursuant to Paragraph 7 hereof for a period of
not less than six (6) years from the
<PAGE>
5
date of this Plan, such agreements or such reports, as the case may be, the
first two (2) years in an easily accessible place.
<PAGE>
GAM FUNDS, INC.
CLASS C SHARE SERVICE AND DISTRIBUTION PLAN
WHEREAS, GAM Funds, Inc. (the "Fund") is an open-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, the Fund desires to adopt a Plan of Distribution pursuant to
Rule 12b-1 under the 1940 Act (the "Plan") with respect to shares of its Class C
common stock, par value $.001 per share, (the "Class C Shares") of each series
of the Fund (the "Series"), and the Board of Directors has determined that there
is a reasonable likelihood that adoption of the Plan will benefit each Series
and its stockholders; and
WHEREAS, the Fund employs GAM Services Inc. (the "Distributor") as
distributor of the Class C Shares; and
WHEREAS, the Fund and the Distributor intend to enter into a separate
Distribution Agreement with the Fund for the Class C Shares, pursuant to which
the Fund will employ the Distributor as distributor for the continuous offering
of Class C Shares;
NOW, THEREFORE, the Fund hereby adopts, and the Distributor hereby
agrees to the terms of, the Plan with respect to the Class C Shares of each
Series in accordance with Rule 12b-1 under the 1940 Act on the following terms
and conditions:
1. SERVICE FEE. The Fund will pay to the Distributor and each successor
principal distributor of such Fund's shares pursuant to this Plan, so long as it
shall be providing shareholder services, as compensation for providing, or
arranging for the provision of, shareholder services in respect of the Class C
Shares of the Fund, a monthly service fee (the "Service Fee") at the annual rate
of 0.25 of 1% of the average daily net assets of each Series attributable to the
Class C Shares, as determined at the close of each business day during the
month. The Distributor may pay all or any portion of the Service Fee to
securities dealers as service fees pursuant to agreements with such dealers for
providing personal services to investors in shares of the Fund and/or the
maintenance of shareholder accounts, or may use all or any portion of the
Service Fee to pay for expenses of the Distributor (including overhead expenses)
incurred in connection with the provision of personal services provided to
investors in shares of the Fund and/or the maintenance of shareholder accounts,
including without limitation, expenses of personnel and communications equipment
used in servicing shareholder accounts. All payments of Service Fees under this
plan are intended to qualify as "service fees" within the meaning of the Conduct
Rules of the National Association of Securities Dealers, Inc. ("NASD"), as in
effect from time to time.
<PAGE>
2
2. DISTRIBUTION FEE. In addition to the Service Fee, the Fund will pay
to the Distributor, as compensation for acting as principal distributor in
respect of the Class C Shares of the Fund and as reimbursement of the
distribution expenditures incurred in connection therewith, including those
listed below, its "Allocable Portion" (as hereinafter defined) of a fee (the
"Distribution Fee") computed at the annual rate of 0.75 of 1% of the average
daily net assets of each Series attributable to the Class C Shares. Such
expenditures may consist of: (i) commissions to sales personnel for selling
shares of the Fund (including interest and other financing costs); (ii)
compensation, sales incentives and payments to sales, marketing and service
personnel; (iii) payments to broker-dealers and other financial institutions
which have entered into agreements with the Distributor for distribution
services rendered in connection with the sale and distribution of shares of the
Fund; (iv) payment of expenses incurred in sales and promotional activities,
including advertising expenditures related to each class of shares of the Funds;
(v) the costs of preparing and distributing promotional materials; (vi) the cost
of printing the Fund's Prospectus and Statement of Additional Information for
distribution to potential investors; and (vii) such other similar services that
the Board of Directors of the Fund determines are reasonably calculated to
result in sales of shares of the Fund. Any payment of Distribution Fees under
this Plan is intended to constitute an "asset-based sales charge" within the
meaning of the Conduct Rules of the NASD.
3. PAYMENT. The Service Fee and Distribution Fee shall be calculated
and accrued daily, and paid monthly or at such other intervals as the Board of
Directors and Distributor shall agree.
4. This Plan shall not take effect with respect to each Series until it
has been approved, together with any related agreements, (a) by votes of a
majority of both (i) the Board of Directors of the Fund and (ii) those Directors
of the Fund who are not "interested persons" of the Fund (as defined in the 1940
Act) and have no direct or indirect financial interest in the operation of this
Plan or any agreements related to it (the "Rule 12b-1 Directors"), cast in
person at a meeting (or meetings) called for the purpose of voting on this Plan
and such related agreements, and (b) if required by the 1940 Act, by a vote of
at least a majority (as defined in the 1940 Act) of the outstanding Class C
Shares of such Series.
5. This Plan shall continue in effect for one year from the date of its
adoption, and thereafter the Plan shall continue in effect for so long as such
continuance is specifically approved at least annually in the manner provided
for approval of this Plan in Paragraph 4.
6. The Distributor shall provide to the Board of Directors of the Fund,
and the Board of Directors shall review, at least quarterly, a written report of
the amounts expended pursuant to this Plan and any related agreements and the
purposes for which such expenditures were made, including commissions,
advertising, printing, interest, carrying charges and allocated overhead
expenses.
<PAGE>
3
7. Any agreement related to this Plan shall provide:
a. that such agreement may be terminated with respect to the
Class C Shares of any Series at any time, without payment of
any penalty, by vote of a majority of the Rule 12b-1 Directors
or by vote of a majority of the outstanding voting securities
of such Shares, on not more than sixty (60) days' written
notice to any other party to the agreement; and
b. that such agreement shall terminate automatically in the
event of its assignment.
8. All amounts expended under this Plan for the benefit of the Class C
Shares of a specific Series as to which this Plan is effective will be charged
to the Class C Shares of that Series, and any expenses pursuant to this Plan
which are deemed by the Board of Directors of the Fund to benefit all such
Series equally will be charged to the Class C Shares of each such Series on the
basis of the net asset value of the Class C Shares of such Series in relation to
the net asset value of all of the outstanding Class C Shares of the Fund.
9. This Plan may be terminated with respect to the Class C Shares of
any Series at any time by vote of a majority of the Rule 12b-1 Directors, or by
a vote of a majority of the outstanding Class C Shares of such Series.
10. This Plan may not be amended with respect to the Class C Shares of
any Series to increase materially the amount of compensation provided for in
Paragraphs 1 and 2 hereof unless such amendment is approved in the manner
provided for initial approval in Paragraph 4 hereof, and no material amendment
to the Plan of any kind, including an amendment which would increase materially
the amount of such compensation, shall be made unless approved in the manner
provided for approval and annual renewal in Paragraphs 4 and 5 hereof.
11. While this Plan is in effect, the selection and nomination of
Directors who are not interested persons (as defined in the 1940 Act) of the
Fund shall be committed to the discretion of the then current Directors who are
not interested persons (as defined in the 1940 Act) of the Fund.
12. The Fund shall preserve copies of this Plan and any related
agreements and all reports made pursuant to Paragraph 6 hereof for a period of
not less than six (6) years from the date of this Plan, such agreements or such
reports, as the case may be, the first two (2) years in an easily accessible
place.
Exhibit 16
GAM ASIAN CAPITAL FUND
PRICE DATA
Date Div. Amount Price Factor Acc. Factor Adj. Price
5/12/95 100.00 1.0000 100.00
12/18/95 83.8800 9.32 10.0000 10.0000
12/26/95 0.0443 9.41 1.0047 10.0471
12/31/95 9.53 10.0471 95.75
8/12/96 0.0120 9.58 1.0013 10.0597
12/31/96 9.83 10.0597 9.89
8/18/97 0.2490 9.07 1.0275 10.336
12/15/97 0.1650 5.97 1.0276 10.621 6.39
AVERAGE ANNUAL RETURNS
With 0.5% sales load
1 Year -35.34% -38.57%
Since incept. -15.58% -17.21%
GAMERICA CAPITAL FUND
PRICE DATA
Date Div. amount Price Factor Acc. factor Adj. price
5/12/95 100.00 1.0000 100.00
12/18/95 89.9100 9.99 10.0000 10.0000
12/26/95 0.1070 9.97 1.0107 10.1073
12/31/95 10.03 10.1073 101.38
12/23/96 1.0100 10.44 1.0967 11.0851
12/31/96 10.82 11.0851 11.99
8/18/97 0.2250 12.86 1.0175 11.279
12/15/97 1.1570 13.30 1.0870 12.26 16.46
AVERAGE ANNUAL RETURNS
With 0.5% sales load
1 Year 37.28% 30.41%
Since incept. 20.80% 18.47%
GAM EUROPE FUND
PRICE DATA
Date Div. amount Price Factor Acc. factor Adj. price
1/1/90 100.00 1.0000 100.00
12/31/91 83.34 1.0000 83.34
1/2/92 6.0000 76.99 1.0779 1.0779
3/16/92 0.1600 72.44 1.0022 1.0803
1/4/93 0.5400 72.28 1.0075 1.0884
12/18/95 88.2000 9.80 10.0000 10.8838
12/26/95 0.0658 9.91 1.0066 10.9561
12/31/95 10.04 10.9561 110.00
8/12/96 0.1180 11.08 1.0106 11.0728
12/23/96 0.1990 11.69 1.0170 11.2613
12/31/96 11.85 11.2613 13.34
8/18/97 0.2090 13.90 1.0150 11.431
12/15/97 2.2380 12.12 1.1847 13.541 17.02
AVERAGE ANNUAL RETURNS
With 0.5% sales load
1 Year 27.55% 21.18%
5 Year 16.52% 15.33%
Since incept. 6.88% 6.19%
GAM GLOBAL FUND (CLD)
PRICE DATA
Date Div. amount Price Factor Acc. factor Adj. price
10/6/95 134.92 1.0000 134.92
12/18/95 127.1700 14.13 10.0000 10.0000
12/26/95 0.9024 13.31 1.0678 10.6780
12/31/95 13.48 10.6780 143.94
8/12/96 0.0350 13.35 1.0026 10.7060
12/23/96 0.7680 14.08 1.0545 11.2899
12/31/96 14.22 11.2899 16.05
8/18/97 0.0400 18.49 1.0022 11.314
12/15/97 0.6130 18.10 1.0339 11.698 21.64
AVERAGE ANNUAL RETURNS
With 0.35% sales load
1 Year 34.80% 30.08%
Since incept. 23.52% 21.57%
<PAGE>
GAM GLOBAL FUND (CLA)
PRICE DATA
Date Div. amount Price Factor Acc. factor Adj. price
5/28/86 100.00 1.0000 100.00
12/31/86 104.69 1.0000 104.69
12/21/87 9.5600 92.72 1.1031 1.1031
3/18/88 4.2500 94.46 1.0450 1.1527
5/19/89 2.8100 108.45 1.0259 1.1826
12/20/89 2.6100 126.83 1.0206 1.2069
2/27/90 0.5100 125.67 1.0041 1.2118
12/28/90 13.2600 102.49 1.1294 1.3686
12/31/91 113.73 1.3686 155.65
1/2/92 4.3700 108.99 1.0401 1.4235
3/16/92 0.9700 100.87 1.0096 1.4372
1/4/93 1.0500 103.94 1.0101 1.4517
1/3/94 6.0500 174.34 1.0347 1.5021
7/1/94 13.3500 136.91 1.0975 1.6486
12/20/94 26.3500 105.92 1.2488 2.0587
8/22/95 0.0510 129.38 1.0004 2.0595
12/18/95 127.6200 14.18 10.0000 20.5948
12/26/95 0.9111 13.36 1.0682 21.9993
12/31/95 13.51 21.9993 297.21
8/12/96 0.0350 13.54 1.0026 22.0562
12/23/96 0.8340 14.21 1.0587 23.3507
12/31/96 14.35 23.3507 33.51
8/18/97 0.0270 18.68 1.0014 23.384
12/15/97 0.6130 18.30 1.0335 24.168 42.22
AVERAGE ANNUAL RETURNS
With 0.5% sales load
1 Year 34.95% 28.20%
5 Year 24.96% 23.68%
10 Year 16.04% 15.45%
Since incept. 13.90% 13.40%
GAM PACIFIC BASIN FUND (CLA)
PRICE DATA
Date Div. amount Price Factor Acc. factor Adj. price
5/6/87 100.00 1.0000 100.00
12/20/89 3.4500 137.36 1.0251 1.0251
2/27/90 7.7000 123.98 1.0621 1.0888
12/28/90 3.5800 119.42 1.0300 1.1214
3/12/91 1.4100 131.13 1.0108 1.1335
12/31/91 137.72 1.1335 156.11
1/2/92 4.6200 133.49 1.0346 1.1727
3/16/92 1.2100 125.04 1.0097 1.1841
1/4/93 3.9400 126.72 1.0311 1.2209
4/13/93 0.8000 150.80 1.0053 1.2274
1/3/94 9.6500 182.54 1.0529 1.2922
7/1/94 8.8500 185.81 1.0476 1.3538
12/20/94 10.4300 170.53 1.0612 1.4366
8/22/95 6.1620 171.32 1.0360 1.4883
12/18/95 156.5100 17.39 10.0000 14.8825
12/26/95 0.8015 16.89 1.0475 15.5888
12/31/95 16.97 15.5888 264.54
8/12/96 0.1610 16.83 1.0096 15.7379
12/23/96 1.4720 15.14 1.0972 17.2680
12/31/96 15.26 17.2680 26.35
8/18/97 0.4020 15.44 1.0260 17.718
12/15/97 0.7140 9.59 1.0745 19.037 18.45
AVERAGE ANNUAL RETURNS
With 0.5% sales load
1 Year -30.00% -33.50%
5 Year 3.47% 2.41%
10 Year 8.39% 7.83%
Since incept. 5.91% 5.41%
GAM INTERNATIONAL FUND (CLD)
PRICE DATA
Date Div. amount Price Factor Acc. factor Adj. price
9/18/95 204.46 1.0000 204.46
12/18/95 199.1700 22.13 10.0000 10.0000
12/26/95 0.9925 21.12 1.0470 10.4699
12/31/95 21.35 10.4699 223.53
8/12/96 0.0424 20.78 1.0020 10.4913
12/23/96 0.0120 22.53 1.0005 10.4969
12/31/96 23.07 10.4969 24.22
8/18/97 0.1650 28.91 1.0057 10.557
12/15/97 1.1660 27.50 1.0424 11.004 31.19
AVERAGE ANNUAL RETURNS
With 0.35% sales load
1 Year 28.79% 24.28%
5 Year 20.29% 18.43%
Since incept.
GAM INTERNATIONAL FUND (CLA)
PRICE DATA
Date Div. amount Price Factor Acc. factor Adj. price
1/2/85 100.00 1.0000 100.00
3/7/86 12.4000 171.98 1.0721 1.0721
12/31/86 219.12 1.0721 234.92
2/17/87 64.7700 175.43 1.3692 1.4679
12/28/87 46.3500 132.75 1.3492 1.9805
4/8/88 5.3900 132.27 1.0407 2.0612
12/22/88 7.0000 146.15 1.0479 2.1599
5/19/89 1.5400 141.04 1.0109 2.1835
12/20/89 8.7000 161.83 1.0538 2.3009
2/27/90 0.9400 162.72 1.0058 2.3141
12/28/90 28.1200 128.60 1.2187 2.8202
3/12/91 0.1300 135.42 1.0010 2.8229
12/31/91 148.63 2.8229 419.57
1/2/92 7.3300 141.05 1.0520 2.9696
1/4/93 12.8700 133.34 1.0965 3.2562
1/3/94 18.9000 222.66 1.0849 3.5326
7/1/94 7.0900 191.12 1.0371 3.6636
12/20/94 18.5400 170.93 1.1085 4.0610
12/18/95 199.5300 22.17 10.0000 40.6101
12/26/95 1.0032 21.15 1.0474 42.5363
12/31/95 21.37 42.5363 909.00
8/12/96 0.0426 20.89 1.0020 42.6231
12/23/96 0.0900 22.59 1.0040 42.7929
12/31/96 23.15 42.7929 99.07
8/18/97 0.1820 29.01 1.0063 43.061
12/15/97 1.1660 27.61 1.0422 44.880 127.73
AVERAGE ANNUAL RETURNS
With 0.5% sales load
1 Year 28.93% 22.48%
5 Year 24.18% 22.92%
10 Year 17.11% 16.51%
Since incept. 21.66% 21.18%
<PAGE>
GAM JAPAN CAPITAL FUND
PRICE DATA
Date Div. amount Price Factor Acc. factor Adj. price
7/1/94 100.00 1.0000 100.00
8/22/95 0.7680 93.99 1.0082 1.0082
12/18/95 88.5600 9.84 10.0000 10.0817
12/31/95 10.16 10.0817 102.43
8/12/96 0.0870 10.41 1.0084 10.1660
12/23/96 0.6950 9.31 1.0747 10.9249
12/31/96 9.39 10.9249 10.26
8/15/97 0.1830 10.92 1.0168 11.108
12/12/97 0.5600 8.48 1.0660 11.842 9.94
AVERAGE ANNUAL RETURNS
With 0.5% sales load
1 Year -2.57% -7.44%
5 Year
Since incept.
GAM NORTH AMERICA FUND
PRICE DATA
Date Div. amount Price Factor Acc. factor Adj. price
1/1/90 100.00 1.0000 100.00
12/31/91 133.49 1.0000 133.49
1/2/92 0.4100 133.12 1.0031 1.0031
1/4/93 5.6100 130.64 1.0429 1.0462
1/3/94 37.3500 90.68 1.4119 1.4771
12/20/94 1.9000 91.42 1.0208 1.5078
12/18/95 107.1000 11.90 10.0000 15.0775
12/26/95 0.0363 11.88 1.0031 15.1236
12/31/95 11.93 15.1236 180.42
12/23/96 1.2530 13.65 1.0918 16.5118
12/31/96 13.56 16.5118 23.39
8/19/97 0.0600 16.62 1.0036 16.571
12/16/97 0.1660 17.39 1.0095 16.730 28.97
AVERAGE ANNUAL RETURNS
With 0.5% sales load
1 Year 29.41% 22.94%
5 Year 16.21% 15.02%
Since incept. 14.23% 13.50%
GAM PACIFIC BASIN FUND (CLD)
PRICE DATA
Date Div. amount Price Factor Acc. factor Adj. price
10/18/95 173.77 1.0000 173.77
12/18/95 156.4200 17.38 10.0000 10.0000
12/26/95 0.7983 16.87 1.0473 10.4732
12/31/95 16.96 10.4732 177.63
8/12/96 0.1610 16.74 1.0096 10.5739
12/23/96 1.3870 15.08 1.0920 11.5465
12/31/96 15.20 11.5465 17.55
8/18/97 0.4020 15.36 1.0262 11.849
12/15/97 0.7140 9.52 1.0750 12.737 12.25
AVERAGE ANNUAL RETURNS
With 0.35% sales load
1 Year -30.18% -32.63%
Since incept. -14.66% -16.03%
GAM FUNDS, INC.
RULE 18F-3 MULTIPLE CLASS PLAN
FOR CLASS A, CLASS B, CLASS C AND CLASS D SHARES
I. INTRODUCTION
A. AUTHORITY. This Rule 18f-3 Multiple Class Plan, as amended (the
"Plan") is adopted by the Board of Directors (the "Board") of GAM Funds, Inc.
(the "Fund"), including a majority of the Directors of the Fund who are not
"interested persons" of the Fund as defined in the Investment Company Act of
1940, as amended (the "1940 Act"), (the "Independent Directors"), pursuant to
Rule 18f-3 under the 1940 Act.
B. PLAN REQUIREMENTS. The Fund currently has two classes of shares,
Class A Shares and Class D Shares, authorized for each series of Common Stock
(the "Series"). It is adding two new classes of shares, Class B and Class C ,to
the existing classes. Pursuant to Rule 1 8f-3, the Fund is required to adopt a
written plan specifying all of the differences between the Fund's Class A, Class
B, Class C and Class D Shares, including shareholder services, distribution
arrangements, expense allocations, and any related conversion features or
exchange options. Before the first issuance of Class B and Class C Shares of any
Series, and before any material amendment of the Plan, a majority of the Board,
and a majority of the independent Directors, must find that the Plan, as
proposed to be adopted or amended, including the expense allocations, is in the
best interests of each class individually and the Fund as a whole. In making its
findings, the Board should consider the relationship between the classes and
examine potential conflicts of interest between the classes regarding the
allocation of fees, services, waivers and reimbursements of expenses, and voting
rights. The Board should evaluate the level of services provided to each class
and the cost of those services to ensure that the services are appropriate and
that the allocation of expenses is reasonable.
II. ATTRIBUTES OF SHARE CLASSES
The shares of each class of a particular Series represent an equal PRO
RATA interest in the Series and have identical voting, dividend, liquidation and
other rights, preferences, powers, restrictions, limitations, qualifications,
designations and terms and conditions, except that: (i) each class of shares has
a different class designation (i.e., Class A or Class B Shares); (ii) each class
of shares separately bears any distribution expenses in connection with any plan
adopted pursuant to Rule 12b-1 under the 1940 Act (a "Rule 12b- 1 Plan") for
such class (and any other costs relating to obtaining shareholder approval of
the Rule 12b-1 Plan for such class, or an amendment of such plan); (iii) only
the holders of the shares of the class involved are entitled to vote on matters
pertaining to the Rule 12b-1 Plan relating to such class (e.g., the adoption,
amendment or termination of a Rule 12b-1 Plan); (iv) each class of shares
separately bears shareholder servicing expenses for such class; (v) each class
of shares bears all other expenses of the operations of a particular Series that
are directly attributable to such class ("Class Expenses")(1); (vi) each class
of shares has exchange privileges unique to such class; and (vii) the
- ----------------------
(1)Class Expenses may include: (i) transfer agent fees identified as being
attributable to a specific class of shares; (ii) stationery, printing, postage,
and delivery expenses related to preparing and distributing materials such as
shareholder reports, prospectuses, and proxy statements to current shareholders
of a
<PAGE>
expenses of a specific class of shares may be waived or reimbursed by GAM
Services Inc., the Fund's distributor (the "Distributor"), or by the Fund's
investment advisers or other providers of services.
A. CLASS A SHARES
Each Series has a class of shares designated as its "Class A Shares"
which are offered subject to the following terms and conditions:
(1) SALES LOADS. Class A Shares are offered with a maximum
front-end sales charge of 5.0% of the offering price of the shares. The
Distributor receives the sales charges and usually reallows all or a substantial
part of such charges to authorized dealers that have effected sales of Class A
Shares. Currently the Distributor may make payments to authorized dealers in
amounts up to 4%. The sales charge is reduced at four break points, and
purchases of $1 million or more are offered at net asset value, subject to a
contingent deferred sales charge of 1% on redemptions made within one year of
the date of purchase and 0.50% on redemptions made during the second year of
investment (declining to 0 thereafter). The CDSC is imposed to reimburse the
Distributor for amounts paid to selling dealers at the time of sale, the maximum
level of which is 1%, declining to 0.25% for purchase amounts of $50 million and
above.
Shares purchased through the reinvestment of dividends and other distributions
paid in respect of Class A Shares will also be Class A Shares, although such
shares will not be subject to the front-end sales charge. However, such shares
will be subject to the 0.30% annual 12b-1 fee and the 0.25% annual
administrative services fee, each of which is described below.
(2) 12b-1 FEES. Class A Shares are subject to an annual
distribution fee of 0.30% of the average daily net assets attributable to the
Class A Shares of the relevant Series pursuant to a Rule 1 2b- 1 Plan currently
in effect for Class A Shares for such Series. Pursuant to the Plan, distribution
fees may be utilized to compensate the Distributor for services provided and
expenses incurred by it as principal underwriter of the Fund's Class A Shares.
All or any part of such fee may be reallowed to authorized dealers that effected
sales of Class A Shares, part of which may be classified as a shareholder
servicing fee, as contemplated in the NASD's maximum sales charge rule, subject
to the limitation of 0.25% of assets annually set forth in such rule.
(3) ADMINISTRATIVE SERVICES FEES ("ASF"). Class A Shares owned
by shareholders that have a servicing relationship with banks, trust companies,
or financial service organizations ("shareholder servicing agents") that have
contracted with the Fund to provide administrative services for the Fund may be
subject to an annual servicing fee of up to 0.25% of the average daily net
assets attributable to such Class A Shares. The administrative services fee is
used to compensate the shareholder servicing agents for providing administrative
services with respect to the holders of Class A Shares, such as processing
purchase and redemption
- --------------------------------------------------------------------------------
specific class; (iii) Blue Sky registration fees incurred by a class of shares;
(iv) SEC registration fees incurred by a class of shares; (v) expenses of
administrative personnel and services as required to support the shareholders of
a specific class; (vi) directors' fees or expenses incurred as a result of
issues relating solely to a class of shares; (vii) accounting expenses relating
solely to a class of shares; (viii) auditors' fees, litigation expenses, and
legal fees and expenses relating solely to a class of shares; and (ix) expenses
incurred in connection with shareholders meetings as a result of issues relating
solely to a class of shares.
<PAGE>
transactions, transmitting and receiving funds for the purchase and sale of
Class A Shares, answering routine inquiries regarding the Fund, furnishing
monthly and year-end statements and confirmations of purchases and sales of
shares, transmitting periodic reports, updated prospectuses, proxy statements
and other communications to shareholders, and providing other services as agreed
from time to time.
(4) EXCHANGE PRIVILEGES AND CONVERSION FEATURE. Class A Shares
of each Series are exchangeable only for Class A Shares of any other Series, and
for shares of the Money Market Primary Fund Account offered by The Reserve Fund
a separate investment company distributed by the Fund's Distributor.
Class A Shares have no conversion feature.
B. CLASS B SHARES
Each Series may offer a class of shares designated as its Class B
Shares subject to the following terms and conditions:
(1) SALES LOADS. Class B Shares are sold to the general public
subject to a contingent deferred sales charge ("CDSC"), but
without imposition of an initial sales charge. The CDSC for Class
B Shares scales down from 5.0% to 0% if held six years or longer
after purchase. In addition to Class B Shares held over six
years, Class B shares acquired through reinvestment of dividends
or capital gains distribution are not subject to the CDSC.
However, such shares will be subject to the ongoing 1.00% annual
12b- 1 fee and the 0.25% annual administrative fee, each of which
is described below.
Shares purchased through the reinvestment of dividends and other distributions
paid in respect of Class A Shares will also be Class A Shares, although such
shares will not be subject to the front-end sales charge. However, such shares
will be subject to the 0.30% annual 1 2b- 1 fee and the 0.25% annual
administrative services fee, each of which is described below and for shares of
the Money Market Primary Fund Account offered by The Reserve Funds, a separate
investment company
(2) 12b-1 FEES. Class B Shares are subject to an annual distribution fee of
1.00% of the average daily net assets attributable to the Class A Shares of the
relevant Series pursuant to a Rule 1 2b- 1 Plan currently in effect for Class A
Shares for such Series. Pursuant to the Plan, distribution fees may be utilized
to compensate the Distributor for services provided and expenses incurred by it
as principal underwriter of the Fund's Class B Shares. All or any part of such
fee may be reallowed to authorized dealers that effected sales of Class B
Shares, part of which may be classified as a shareholder servicing fee, as
contemplated in the NASD's maximum sales charge rule, subject to the limitation
of 0.25% of assets annually set forth in such rule.
(3) ADMINISTRATIVE SERVICES FEES ("ASF"). Class B Shares owned
by shareholders that have a servicing relationship with banks, trust companies,
or financial service organizations ("shareholder servicing agents") that have
contracted with the Fund to provide administrative services for the Fund may be
subject to an annual servicing fee of up to 0.25% of the average daily net
assets attributable to such Class B Shares. The administrative services fee is
used to compensate the shareholder servicing agents for providing administrative
services with respect to the holders of Class B Shares, such as processing
purchase and redemption transactions, transmitting and receiving funds for the
purchase and sale of Class B Shares,
<PAGE>
answering routine inquiries regarding the Fund, furnishing monthly and year-end
statements and confirmations of purchases and sales of shares, transmitting
periodic reports, updated prospectuses, proxy statements and other
communications to shareholders, and providing other services as agreed from time
to time.
(4) EXCHANGE PRIVILEGES AND CONVERSION FEATURE. Class B Shares
of each Series are exchangeable only for Class B Shares of any other Series, and
for shares of the Money Market Primary Fund Account offered by The Reserve Fund
a separate investment company distributed by the Fund's Distributor. Class B
Shares automatically convert into Class A Shares eight years after purchase.
C. CLASS C SHARES
Each Series has a class of shares designated as its "Class C Shares" which are
offered subject to the following terms and conditions.
(1) SALES LOADS Class C Shares are sold without the imposition
of an initial sales charge. so that the full amount of an
investor's purchase may be immediately invested. A CDSC of 1%
will be imposed on most Class C Shares redeemed within one year
after purchase. The CDSC will be imposed on any redemption of
shares if after the redemption the aggregate current value of a
Class c account with the Funds falls below the aggregate amount
of the investors purchase payments for Class C Shares made during
the one year preceding the redemption.
Shares purchased through the reinvestment of dividends and other
distributions paid in respect of Class C Shares will also be
Class C Shares.. However, such shares will be subject to the
1.00% annual 1 2b- 1 fee and the 0.25% annual administrative
services fee, each of which is described below.
(2) 12b-1 FEES. Class C Shares are subject to an annual distribution
fee of 1.00 % of the average daily net assets attributable to the Class C Shares
of the relevant Series pursuant to a Rule 1 2b- 1 Plan currently in effect for
Class C Shares for such Series. Pursuant to the Plan, distribution fees may be
utilized to compensate the Distributor for services provided and expenses
incurred by it as principal underwriter of the Fund's Class C Shares. All or any
part of such fee may be reallowed to authorized dealers that effected sales of
Class C Shares, part of which may be classified as a shareholder servicing fee,
as contemplated in the NASD's maximum sales charge rule, subject to the
limitation of 0.25% of assets annually set forth in such rule.
(3) ADMINISTRATIVE SERVICES FEES ("ASF"). Class C Shares owned
by shareholders that have a servicing relationship with banks, trust companies,
or financial service organizations ("shareholder servicing agents") that have
contracted with the Fund to provide administrative services for the Fund may be
subject to an annual servicing fee of up to 0.25% of the average daily net
assets attributable to such Class C Shares. The administrative services fee is
used to compensate the shareholder servicing agents for providing administrative
services with respect to the holders of Class C Shares, such as processing
purchase and redemption transactions, transmitting and receiving funds for the
purchase and sale of Class C Shares, answering routine inquiries regarding the
Fund, furnishing monthly and year-end statements and confirmations of purchases
and sales of shares, transmitting periodic reports, updated
<PAGE>
prospectuses, proxy statements and other communications to shareholders, and
providing other services as agreed from time to time.
(4) EXCHANGE PRIVILEGES AND CONVERSION FEATURE. Class C Shares
of each Series are exchangeable only for Class C Shares of any other Series, and
for shares of the Money Market Primary Fund Account offered by The Reserve Fund
a separate investment company distributed by the Fund's Distributor.
Class C Shares have no conversion feature.
D. CLASS D SHARES
Each Series may offer a class of shares designated as its "Class D
Shares" subject to the following terms and conditions:
(1) SALES LOADS. Class D Shares are offered with a maximum front-end
sales charge of 3.5% of the offering price of the shares. The sales charge is
reduced at four break points, and purchases of $1,000,000 or more are not
subject to the front-end sales charge.
The Distributor receives the sales charges and reallows all or a
substantial part of such charges to authorized dealers that have effected sales
of Class D Shares. Currently the Distributor may make payments to authorized
dealers in amounts up to 2.5% of the offering price.
Shares purchased through the reinvestment of dividends and other
distributions paid in respect of Class D Shares will also be Class D Shares,
although such shares will not be subject to the front-end sales charge. However,
such shares will be subject to the 0.50% annual distribution fee and the 0.25%
annual administrative services fee, each of which is described below.
(2) 12b-1 FEES. Class D Shares are subject to an annual distribution
fee of 0.50% of the average daily net assets attributable to the Class D Shares
of the relevant Series pursuant to the Rule 1 2b- 1 Plan currently in effect for
Class D Shares for such Series. Pursuant to the Plan, distribution fees may be
utilized to compensate the Distributor for services provided and expenses
incurred by it as principal underwriter of the Fund's Class D Shares. All or any
part of such fee may be reallowed to authorized dealers that effected sales of
Class D Shares, part of which may be classified as a shareholder servicing fee,
as contemplated in the NASD's maximum sales charge rule, subject to the
limitation of 0.25% of assets annually set forth in such rule.
(3) ADMINISTRATIVE SERVICES FEES ("ASF") CLASS D Shares owned by
shareholders that have a servicing relationship with banks, trust companies, or
financial services organizations ("shareholder servicing agents") that have
contracted with the Fund to provide administrative services for the Fund may be
subject to an annual servicing fee of up to 0.25% of the average daily net
assets attributable to such Class D Shares. The administrative services fee is
used to compensate the shareholder servicing agents for providing administrative
services with respect to the holders of Class D Shares, such as processing
purchase and redemption transactions, transmitting and receiving funds for the
purchase and sale of Class D Shares, answering routine inquiries regarding the
Fund, furnishing monthly and year-end statements and confirmations of purchases
and sales of shares, transmitting periodic reports, updated prospectuses, proxy
statements and other communications to shareholders, and providing other
services as agreed from time to time.
<PAGE>
(4) EXCHANGE PRIVILEGES AND CONVERSION FEATURE. Class D Shares of each
Series are exchangeable only for Class D Shares of any other Series, and for
shares of the Money Market Primary Fund Account offered by The Reserve Fund, a
separate investment company distributed by the Fund's Distributor. Class D
Shares have no conversion feature.
III. CALCULATION OF DIVIDENDS.
Dividends paid by a Series with respect to each class of its shares, to
the extent any dividends are paid, must be calculated in the same manner, at the
same time, on the same day and in the same amount, except that: (i) distribution
and shareholder servicing payments associated with any Rule 12b-1 Plan or
administrative services agreement relating to each respective class of shares
(including any costs relating to implementing such plans or any amendment
thereto) will be borne exclusively by that particular class; (ii) any
incremental transfer agency fee relating to a particular class will be borne
exclusively by that class; and (iii) Class Expenses relating to a particular
class will be borne exclusively by that class.
IV. EXPENSE ALLOCATIONS.
All amounts expended for the benefit of a particular class of shares
will be charged to that class of shares and any expenses which are deemed by the
Board of Directors of the Fund to benefit both classes of shares equally will be
charged to each class of shares on the basis of the net asset value of such
class of shares in relation to the net asset value of all of the outstanding
shares of the Fund.
The methodology and procedures for calculating the net asset value and
dividends and distributions with respect to each class of shares of the Fund and
the proper allocation of income and expenses between the classes of shares of
the Fund are required to be reviewed pursuant to the American Institute of
Certified Public Accountants' Statement on Auditing Standards No.55, which
requires a review of the Fund's internal control structure.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of GAM Funds,
Inc., a Maryland corporation (the "Fund"), does hereby constitute and appoint
Kevin J. Blanchfield, Gordon E. Swartz, Christopher M. Wells and Jeffrey L.
Steele, or any of them, the true and lawful attorneys and agents of the
undersigned, with full powers of substitution, to do any and all acts and things
and execute any and all instruments that said attorneys or agents, or any of
them, may deem necessary or advisable or which may be required to enable the
Fund to comply with the Securities Act of 1933, as amended, the Investment
Company Act of 1940, as amended, and the securities laws of the jurisdictions in
which securities of the fund may be offered and sold, and any rules, regulations
or requirements of the Securities and Exchange Commission ("SEC"), or of the
securities commission or other agency of any such jurisdiction in respect
thereof, in connection with the registration and qualification of the Fund and
its share of common stock for sale under the securities law of any such
jurisdiction, including specifically, but without limiting the generality of the
foregoing, the power and authority to sign in the name and on behalf of the
undersigned (individually and as a director of the Fund), the Fund's
Registration Statement on Form N-1A, any other registration statement or form
adopted by the SEC or any such jurisdiction, any amendment or post-effective
amendments to any of the foregoing, and any other instruments or documents filed
as part of or in connection with any such registration statements; and the
undersigned does hereby ratify and confirm all that said attorneys and agents,
or any of them, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents as of
this 30th day of April, 1998.
/s/ Robert J. McGuire
-----------------------------
Robert J. McGuire
<TABLE> <S> <C>
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<NUMBER> 001
<NAME> GAM ASIAN
<MULTIPLIER> 1
<S> <C>
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<PERIOD-START> Jan-01-1997
<PERIOD-END> Dec-31-1997
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 474,155
<TOTAL-LIABILITIES> 481,593
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,952,697
<SHARES-COMMON-STOCK> 137,015
<SHARES-COMMON-PRIOR> 572,668
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (5,597)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (837,951)
<ACCUM-APPREC-OR-DEPREC> (284,936)
<NET-ASSETS> 824,213
<DIVIDEND-INCOME> 73,906
<INTEREST-INCOME> 4,200
<OTHER-INCOME> 0
<EXPENSES-NET> 49,569
<NET-INVESTMENT-INCOME> 28,537
<REALIZED-GAINS-CURRENT> (640,791)
<APPREC-INCREASE-CURRENT> (319,163)
<NET-CHANGE-FROM-OPS> (931,417)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3,857)
<DISTRIBUTIONS-OF-GAINS> (74,195)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,471,448
<NUMBER-OF-SHARES-REDEEMED> (5,342,044)
<SHARES-REINVESTED> 75,019
<NET-CHANGE-IN-ASSETS> (4,805,046)
<ACCUMULATED-NII-PRIOR> 0
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<OVERDISTRIB-NII-PRIOR> (129,251)
<OVERDIST-NET-GAINS-PRIOR> (23,991)
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<PER-SHARE-NII> .09
<PER-SHARE-GAIN-APPREC> (3.48)
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<TABLE> <S> <C>
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<SERIES>
<NUMBER> 011
<NAME> GAM AMERICA
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Jan-01-1997
<PERIOD-END> Dec-31-1997
<INVESTMENTS-AT-COST> 3,134,925
<INVESTMENTS-AT-VALUE> 3,662,144
<RECEIVABLES> 155,114
<ASSETS-OTHER> 13,562
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,830,820
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<OTHER-ITEMS-LIABILITIES> 31,763
<TOTAL-LIABILITIES> 31,763
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,109,977
<SHARES-COMMON-STOCK> 282,816
<SHARES-COMMON-PRIOR> 177,778
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 161,861
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 527,219
<NET-ASSETS> 3,799,057
<DIVIDEND-INCOME> 22,826
<INTEREST-INCOME> 8,946
<OTHER-INCOME> 0
<EXPENSES-NET> 77,621
<NET-INVESTMENT-INCOME> (45,849)
<REALIZED-GAINS-CURRENT> 400,765
<APPREC-INCREASE-CURRENT> 351,466
<NET-CHANGE-FROM-OPS> 706,382
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (228,865)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,197,313
<NUMBER-OF-SHARES-REDEEMED> (923,956)
<SHARES-REINVESTED> 124,173
<NET-CHANGE-IN-ASSETS> 1,875,047
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 35,810
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<GROSS-EXPENSE> 77,621
<AVERAGE-NET-ASSETS> 2,249,419
<PER-SHARE-NAV-BEGIN> 10.82
<PER-SHARE-NII> (.24)
<PER-SHARE-GAIN-APPREC> 4.23
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</TABLE>
<TABLE> <S> <C>
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<NUMBER> 021
<NAME> GAM EUROPE
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<S> <C>
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<PERIOD-START> Jan-01-1997
<PERIOD-END> Dec-31-1997
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<INVESTMENTS-AT-VALUE> 38,053,976
<RECEIVABLES> 1,310,860
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<OTHER-ITEMS-LIABILITIES> 1,061,484
<TOTAL-LIABILITIES> 2,289,812
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 32,521,009
<SHARES-COMMON-STOCK> 3,110,245
<SHARES-COMMON-PRIOR> 2,119,727
<ACCUMULATED-NII-CURRENT> 89,676
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 461,339
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6,028,564
<NET-ASSETS> 39,100,588
<DIVIDEND-INCOME> 630,428
<INTEREST-INCOME> 91,130
<OTHER-INCOME> 0
<EXPENSES-NET> 665,421
<NET-INVESTMENT-INCOME> 56,137
<REALIZED-GAINS-CURRENT> 6,720,669
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<NAME> GAM JAPAN
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<NET-ASSETS> 30,871,774
<DIVIDEND-INCOME> 146,961
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<OTHER-INCOME> 0
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<NET-INVESTMENT-INCOME> (309,689)
<REALIZED-GAINS-CURRENT> (526,629)
<APPREC-INCREASE-CURRENT> (1,717,822)
<NET-CHANGE-FROM-OPS> (2,554,140)
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<NAME> GAM NORTH AMERICA
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<SHARES-COMMON-PRIOR> 431,612
<ACCUMULATED-NII-CURRENT> 0
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<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,432,844
<NET-ASSETS> 10,966,173
<DIVIDEND-INCOME> 141,453
<INTEREST-INCOME> 23,880
<OTHER-INCOME> 0
<EXPENSES-NET> 165,279
<NET-INVESTMENT-INCOME> 54
<REALIZED-GAINS-CURRENT> 390,977
<APPREC-INCREASE-CURRENT> 1,513,490
<NET-CHANGE-FROM-OPS> 1,904,521
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (576)
<DISTRIBUTIONS-OF-GAINS> (130,244)
<DISTRIBUTIONS-OTHER> 0
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<NUMBER-OF-SHARES-REDEEMED> (3,256,744)
<SHARES-REINVESTED> 101,515
<NET-CHANGE-IN-ASSETS> 5,113,350
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 34,330
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<INTEREST-EXPENSE> 50
<GROSS-EXPENSE> 165,279
<AVERAGE-NET-ASSETS> 8,525,323
<PER-SHARE-NAV-BEGIN> 13.56
<PER-SHARE-NII> .00
<PER-SHARE-GAIN-APPREC> 3.99
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</TABLE>
<TABLE> <S> <C>
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<SERIES>
<NUMBER> 051
<NAME> GAM GLOBAL Class A
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Jan-1-1997
<PERIOD-END> Dec-31-1997
<INVESTMENTS-AT-COST> 58,607,870
<INVESTMENTS-AT-VALUE> 68,269,792
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